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EXHIBIT 10.7
PURCHASE AND SALE-LEASEBACK AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
UGLY DUCKLING PORTFOLIO
By and Between
CHAMPION ACCEPTANCE CORPORATION, AN ARIZONA CORPORATION, UGLY DUCKLING CAR
SALES, INC., AN ARIZONA CORPORATION, UGLY DUCKLING CAR SALES NEW MEXICO, INC., A
NEW MEXICO CORPORATION, UGLY DUCKLING CAR SALES FLORIDA, INC., A FLORIDA
CORPORATION, AND UGLY DUCKLING CAR SALES TEXAS, L.L.P., AN ARIZONA LIMITED
LIABILITY PARTNERSHIP
as Sellers
and
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP.
as Buyer
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TABLE OF CONTENTS
Section Page(s)
1. AGREEMENT TO SELL.............................................. 1
2. CERTAIN DEFINITIONS............................................ 1
3. PURCHASE PRICE................................................. 2
4. PAYMENT OF PURCHASE PRICE...................................... 2
5. OPENING AND CLOSE OF ESCROW.................................... 2
6. CONTINGENCIES.................................................. 3
7. SELLER'S OBLIGATIONS........................................... 5
8. SELLER REPRESENTATIONS AND WARRANTIES.......................... 5
9. BUYER'S REPRESENTATIONS AND WARRANTIES......................... 9
10. CONDITIONS TO CLOSE OF ESCROW.................................. 10
11. DELIVERIES TO ESCROW HOLDER.................................... 11
12. COSTS AND EXPENSES............................................. 12
13. PRORATIONS AND ADJUSTMENTS..................................... 12
14. DISBURSEMENTS AND OTHER ACTIONS BY ESCROW HOLDER............... 13
15. INDEMNIFICATION................................................ 13
16. RIGHT OF ENTRY................................................. 13
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17. DAMAGE OR CONDEMNATION PRIOR TO CLOSING........................ 14
18. BROKERS........................................................ 14
19. LIMITATION OF LIABILITY........................................ 14
20. NOTICES........................................................ 14
21. REQUIRED ACTIONS OF BUYER AND SELLERS.......................... 15
22. PARTIAL INVALIDITY............................................. 15
23. WAIVERS........................................................ 15
24. SUCCESSORS AND ASSIGNS......................................... 16
25. REMEDIES....................................................... 16
26. SURVIVAL....................................................... 16
27. CONSENTS AND APPROVALS......................................... 16
28. INDEMNIFICATION................................................ 16
29. PROFESSIONAL FEES.............................................. 17
30. ENTIRE AGREEMENT; AMENDMENT.................................... 17
31. CONSTRUCTION OF AGREEMENT; KNOWLEDGE OF SELLERS................ 18
32. GOVERNING LAW.................................................. 18
33. WAIVER OF JURY TRIAL........................................... 18
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TABLE OF DEFINED TERMS
Term Page(s)
AGREEMENT 1
APPLICABLE LAWS 5
APPLICABLE PROPERTIES 10
BILL OF SALE 8
BUYER 1
CLAIM 11
CLOSE OF ESCROW 2
CLOSING DATE 2
CONTINGENCIES 2
DEALERSHIP 1
DEALERSHIPS 1
DEED 8
ENVIRONMENTAL REPORT 3
ESCROW 1
ESCROW HOLDER 1
EXISTING CONTRACTS 5
EXTRACTION RIGHTS 2
HAZARD INSURANCE POLICY 6
ICCMC 1
IMPROVEMENTS 1
INTANGIBLE PROPERTY 1
LAND 1
LEASE 8
LEASE GUARANTY 8
LIEN 5
OPENING OF ESCROW 2
OTHER PROPERTIES 10
OUTSIDE CLOSING DATE 2
OWNER'S TITLE COMMITMENT 7
OWNER'S TITLE POLICY 7
PERSONAL PROPERTY 1
PROPERTIES 1
PROPERTY 1
PTR 3
PTRS 3
REAL PROPERTY 2
SELLER 1
SELLER INFORMATION 2
SELLERS 1
TITLE COMPANY 3
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Escrow No. ___________
PURCHASE AND SALE-LEASEBACK AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
UGLY DUCKLING PORTFOLIO
This Purchase and Sale-Leaseback Agreement and Joint Escrow
Instructions (this "AGREEMENT"), is entered into as of May 13, 1998, by and
between CHAMPION ACCEPTANCE CORPORATION, an Arizona corporation, UGLY DUCKLING
CAR SALES, INC., an Arizona corporation, UGLY DUCKLING CAR SALES NEW MEXICO,
INC., a New Mexico corporation, UGLY DUCKLING CAR SALES FLORIDA, INC., a Florida
corporation, and UGLY DUCKLING CAR SALES TEXAS, L.L.P., an Arizona limited
liability partnership (collectively, "SELLERS"; individually, a "SELLER"), and
IMPERIAL CREDIT COMMERCIAL MORTGAGE INVESTMENT CORP., a Maryland corporation
("ICCMC"), or its assignees (ICCMC or its assignees are referred to herein,
collectively, as "BUYER"), and constitutes an agreement to purchase and sell
real property, and escrow instructions directed to Fidelity National Title
Insurance Company ("ESCROW Holder"), to establish an escrow (the "ESCROW") to
accommodate the transactions contemplated by this Agreement.
RECITALS
A. The Sellers are the owners of the "Properties" (as hereinafter
defined), which consist principally of the real estate assets associated with
the twenty (20) car dealerships (individually, a "Dealership"; collectively, the
"DEALERSHIPS"), identified on Exhibit "A" hereto. The particular Seller that
owns each Dealership is indicated on Exhibit "A".
B. Sellers desire to sell and then leaseback from Buyer, and Buyer
desires to purchase and then leaseback to Sellers, the Properties on the terms
and subject to the conditions hereinafter set forth.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the premises and the
respective undertakings of the parties hereinafter set forth, it is hereby
agreed as follows:
1. AGREEMENT TO SELL. On the terms and conditions hereinafter set
forth, Sellers shall sell to Buyer, and Buyer shall purchase from Sellers, the
Properties.
2. CERTAIN DEFINITIONS.
2.1 "PROPERTIES" means the "Land", the "Improvements", the
"Personal Property", the "Intangible Property" and the "Extraction Rights"
relating to the Dealerships, collectively. "PROPERTY" means the "Land", the
"Improvements", the "Personal Property", the "Intangible Property" and the
"Extraction Rights" relating to a specific Dealership.
2.2 "LAND" with respect to a particular Dealership means the
real property described on Exhibit "B" hereto with respect to such Dealership,
together with all and singular the respective tenements, hereditaments,
easements, rights-of-way and appurtenances belonging or in anywise
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appertaining to the same, and all other rights ancillary, appurtenant or related
thereto, and all trees, shrubs and other landscaping located thereon.
2.3 "IMPROVEMENTS" with respect to a particular Dealership
means all improvements, structures and fixtures, excluding trade fixtures used
exclusively in the operation of the business of the Dealership, now or on the
"Closing Date" (as hereinafter defined) for such Dealership located on the Land
with respect to such Dealership.
2.4 "PERSONAL PROPERTY" with respect to a particular
Dealership means all tangible personal property now or on the Closing Date for
such Dealership located on or about the Land with respect to such Dealership or
attached or appurtenant thereto or used in connection with the operation
thereof, but excluding any personal property used exclusively in the operation
of the business of the Dealership (and not used for the operation or maintenance
of the Improvements), such as portable tools and equipment, above ground
portable lifts, air compressors, office furniture, Ugly Duckling signage, all of
which is excluded from Personal Property and shall be retained by Sellers.
2.5 "INTANGIBLE PROPERTY" with respect to a particular
Dealership means all intangible property now or on the Closing Date for such
Dealership owned or held in connection with the Land, the Improvements, the
Personal Property or the Extraction Rights with respect to such Dealership,
including all permits, certificates of occupancy and warranties (including those
relating to construction or fabrication), plans, drawings, renderings, surveys,
title insurance policies, claims under insurance policies or otherwise, rights
to receive proceeds of a condemnation or taking of all or any portion of the
Land or Improvements with respect to such Dealership, topographical maps, and
landscape plans in any way related to the Land, the Improvements, the Personal
Property and potential future improvements contemplated to be located on the
Land, or Extraction Rights, with respect to such Dealership, or any part
thereof, but excluding any intangible property used exclusively in the operation
of the business of such Dealership.
2.6 "EXTRACTION RIGHTS" with respect to a particular
Dealership means all water and water rights, and all minerals, hydrocarbons,
natural gas, metals, ores and other substances now or hereafter existing beneath
the surface of the Land with respect to such Dealership and all rights related
to the extraction thereof.
2.7 "REAL PROPERTY" with respect to a particular Dealership,
means the Land, Extraction Rights and Improvements with respect to such
Dealership.
3. PURCHASE PRICE. The purchase price for each Property is as
provided on Exhibit "A" hereto (the "PURCHASE PRICE").
4. PAYMENT OF PURCHASE PRICE. Buyer shall deposit the Purchase
Price for each Property, as adjusted for the allocations of transaction costs
and prorations to be made pursuant to Sections 12 and 13 of this Agreement (as
determined by Escrow Holder), into Escrow in cash or other immediately available
funds on the Closing Date for such Property. Escrow Holder shall deliver the
funds so deposited, as adjusted for the allocations of transaction costs and
prorations to be made pursuant to Sections 12 and 13, to the Seller of each
particular Property at the Close of Escrow for such Property.
5. OPENING AND CLOSE OF ESCROW.
5.1 OPENING OF ESCROW. For the purposes of this Agreement, the
"OPENING OF ESCROW" shall be the date on which Escrow Holder has received a
fully executed original or executed
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counterpart copies of this Agreement signed by Buyer and Sellers. Escrow Holder
is instructed to notify Buyer and Sellers, in writing (which may be by facsimile
transmission), of the date of Opening of Escrow. Buyer and Sellers shall
execute, deliver and be bound by any reasonable and customary supplemental
instructions that may be reasonably requested by Escrow Holder or that may be
necessary or convenient to consummate the transaction contemplated by this
Agreement. However, the supplemental instructions shall not supersede this
Agreement as between Buyer and Sellers, and in all cases this Agreement shall
control as between them. All supplemental instructions shall be in writing
(including by facsimile transmission).
5.2 CLOSE OF ESCROW.
5.2.1 CLOSING UPON RECORDATION. "CLOSE OF ESCROW" for
any particular Property shall mean the date and time that the "Deed" (as
hereinafter defined) for such Property is recorded in the official records of
the county wherein such Property is located.
5.2.2 NEW YORK STYLE CLOSING. At Buyer's written
election, the sale of any particular Property may be closed by means of a
so-called New York Style closing, with the concurrent delivery of the documents
of title, transfer of interest, delivery of the "Owner's Title Policy" or
"Owner's Title Commitment" (as such quoted terms are hereinafter defined) for
such Property, and the payment of the Purchase Price for such Property, as
adjusted for the allocations of transaction costs and prorations provided
herein. In the event of a New York Style Closing for any particular Property,
(a) the "CLOSE OF ESCROW" for such Property shall be the date of such concurrent
deliveries, and (b) the applicable Seller (or all the Sellers if required by
Escrow Holder) shall provide any undertaking, affidavit or indemnity (including
a gap indemnity) to assist or enable the Title Company to accommodate the New
York Style Closing. In no event shall Buyer be required to furnish any
undertaking, affidavit or indemnity for a New York Style Closing.
5.2.3 OUTSIDE CLOSING DATE. Close of Escrow for each
Property shall take place on a date (the "CLOSING DATE" for such Property) no
later than the date listed on Exhibit "A" (the "OUTSIDE CLOSING DATE"), subject
to the terms and conditions hereinafter set forth. Buyer may elect in writing
for the Close of Escrow to occur on any earlier date for any particular Property
on two (2) business days' notice to the applicable Seller, subject to the terms
and conditions hereinafter set forth.
6. CONTINGENCIES.
6.1 LISTING OF CONTINGENCIES. Buyer's obligations to
consummate the purchase of each Property contemplated by this Agreement is
expressly subject to and contingent upon satisfaction or written waiver by Buyer
of each of the following contingencies (the "CONTINGENCIES") at or before the
Close of Escrow for each Property:
6.1.1 Sellers' delivery to Buyer and Buyer's approval
of all contracts, documents, studies, reports, surveys, data and all
other information in Sellers' files or readily obtainable by Sellers
that relates to the Properties or any portion thereof (collectively,
the "SELLER INFORMATION").
6.1.2 Sellers' delivery to Buyer, and Buyer's
approval of, an environmental assessment report (the "ENVIRONMENTAL
REPORT") with respect to such Property prepared by an environmental
consultant acceptable to Buyer at Sellers' expense, each such
Environmental Report to include such scope of work and to be in such
detail as Buyer may require. Without limitation on Seller's other
obligations hereunder, Sellers shall, at Seller's sole cost, cause the
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Environmental Report for each Property to be assigned to Buyer on or
before the Closing Date for such Property and cause each Environmental
Report to be updated to a date not earlier than sixty (60) days before
the applicable Closing Date.
6.1.3 Buyer's approval of the zoning, entitlements,
building restrictions, building plans, assessments, availability of
utilities, feasibility of development and/or use of such Property for
Buyer's intended purposes, and other similar information and analyses
relating to such Property, if Buyer should choose to obtain and review
any of such information or make any of such analyses.
6.1.4 Buyer's approval of the exceptions to clear
title to such Property as are shown on a preliminary title report or a
commitment for title insurance, as the case may be (collectively the
"PTRS"; individually a "PTR") issued by Escrow Holder (the "TITLE
COMPANY") with respect to such Property. Seller shall (i) cause the
Title Company to deliver the PTR, together with legible copies of the
documents underlying each of the exceptions to title referenced
therein, and (ii) deliver a current ALTA Class A survey of the Land and
Improvements for such Property prepared by a licensed land surveyor and
legibly showing all matters described in the PTR, to Buyer not less
than ten (10) days prior to the Closing Date, with a certification
acceptable to Buyer. Any exception to title to be shown on the Owner's
Title Policy for such Property in addition to those shown in the PTR
shall, unless caused by Buyer, be subject to Buyer's approval, which
may be granted or denied by Buyer, at any time prior to the date of
Close of Escrow for such Property.
6.1.5 Buyer's approval of the structural components,
plumbing systems, sewer and/or septic systems, heating, ventilation and
air conditioning systems, electrical systems, built-in appliances,
roof(s), geology and soils compaction, foundation, and mechanical
systems, of, serving or at, as applicable, the Land and Improvements
for such Property.
6.1.6 Sellers' delivery to Buyer and Buyer's approval
of all appraisals or other documents relating to the value of such
Property reasonably accessible to any Seller.
6.1.7 Sellers' delivery to Buyer and Buyer's approval
of all tax returns, if any, relating to such Property for the last five
(5) years.
6.1.8 Sellers' delivery to Buyer and Buyer's approval
of all permits, certificates of occupancy and other government
approvals relating to such Property.
6.1.9 Buyer's approval of all other aspects of the
physical, legal, general economic and environmental condition of such
Property.
6.1.10 The satisfaction of each of the foregoing
contingencies with respect to each other Property.
Buyer's approval shall in no way limit Sellers' obligations under the
representations, warranties, indemnities and other provisions of this Agreement.
At any time prior to the Close of Escrow for a particular Property, Buyer may
elect not to purchase such Property by giving written notice of its election to
Seller; provided, however, that if Buyer so elects, in its sole and absolute
discretion, not to acquire any of the Properties, Buyer shall pay to Seller a
fee in the amount of $100 as consideration of its rights granted hereunder.
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6.2 EFFECT OF ELECTION NOT TO ACQUIRE. If Buyer elects not to
purchase any particular Property, this Agreement shall terminate as to such
Property, and the parties shall thereafter have no further rights, duties or
obligations under this Agreement with regard to such Property except to the
extent this Agreement expressly provides otherwise. Except as otherwise herein
provided, this Agreement shall remain in full force and effect with respect to
any Property with respect to which this Agreement is not so terminated. In
addition, if Buyer elects not to purchase any particular Property and such
decision was not based on any default by Seller hereunder, Seller may elect,
within five (5) business days after receipt of written notification from Buyer
that Buyer has elected not to purchase any particular Property, to terminate
this Agreement with regard to all other Properties as to which Close of Escrow
has not occurred.
6.3 DELIVERIES. Seller agrees to deliver to Buyer all of the
documents, contracts, reports, surveys, data and other items listed in Section
6.1 above.
7. SELLER'S OBLIGATIONS. So long as this Agreement remains in
effect with respect to a Property:
7.1 ENCUMBRANCES; OFFERS. None of the Sellers shall, without
the prior written consent of Buyer (such consent in Buyer's sole discretion),
convey any interest in such Property or subject such Property to any liens,
encumbrances, covenants, conditions, easements, rights of way or similar matters
after the date of this Agreement. Seller shall remove any and all monetary liens
or judgments against each Property prior to the Close of Escrow for such
Property.
7.2 CONTRACTS. Without the prior written consent of Buyer,
none of the Sellers shall modify, extend, renew, replace, or otherwise change
any of the terms, covenants or conditions of any agreement affecting or relating
to such Property or the use, operation, maintenance, management, or occupancy of
such Property, nor enter into any other obligations or agreements affecting such
Property, excluding agreements relating solely to the operation of the
Dealership and not necessary or desirable for the ownership of the Property
without regard to its use as a Dealership.
7.3 PTR. If Sellers have not done so previously, promptly
after the date of Opening of Escrow, Sellers shall cause the Title Company to
deliver to Buyer the PTR for such Property and legible copies of all of the
documents recorded against such Property and governing each of the exceptions
set forth therein, together with a survey for such Property meeting the
requirements of Section 6.1.5, above. Sellers shall not permit any exception to
title to the Land or Improvements other than those shown in the PTRs to exist or
be recorded.
7.4 EVALUATIONS. If Sellers have not done so previously,
promptly after the date of Opening of Escrow, Sellers shall deliver to Buyer
true, complete and correct copies of all surveys, studies, reports, plans,
analyses, investigations, appraisals and other evaluations regarding such
Property or any aspect or portion thereof performed by or for any of the Sellers
or their affiliates, or in any Seller's possession, or obtainable by any of
them. In addition, if after the date hereof and prior to the Close of Escrow for
such Property any Seller or its affiliates should obtain or be able to obtain
any item that, if now possessed by any Seller, Sellers would be required to
deliver to Buyer pursuant to the preceding sentence, promptly after such Seller
or its affiliates obtain the same, such Seller shall deliver a true, complete
and correct copy thereof to Buyer.
8. SELLER REPRESENTATIONS AND WARRANTIES. Each of the Sellers
hereby represents, warrants, covenants and acknowledges to Buyer that:
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8.1 Each Seller has been duly organized and is validly
existing in good standing under the laws of the State of its incorporation (as
provided in this first paragraph of this Agreement), and has all licenses
necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in the states where any of its assets are located
if and to the extent the laws of such states require licensing or qualification
in order to conduct business of the type conducted by such Seller.
8.2 Each Seller has the legal power, right and actual
authority to enter into this Agreement and the documents and instruments to be
executed by such Seller pursuant to this Agreement, and has the power, right,
capacity and authority to consummate the transactions contemplated by this
Agreement. The individuals executing this Agreement, and the instruments to be
executed by each Seller pursuant to this Agreement, on behalf of such Seller
have the legal power, right, capacity and actual authority to bind such Seller
to the terms and conditions of this Agreement and those documents and
instruments. The execution and delivery by each Seller of this Agreement, and
the other agreements and instruments to be executed by it as contemplated hereby
and thereby, and the performance and compliance by each Seller with the terms
hereof and thereof, are within the power and actual authority (corporate, trust,
partnership or otherwise) of such Seller and have been duly authorized by all
necessary action on the part of such Seller, this Agreement has been duly and
validly executed and delivered by each Seller and, assuming due authorization,
execution and delivery by the Buyer, constitutes, and the other agreements and
instruments to be executed by each Seller as contemplated hereby constitutes and
will constitute, the legal, valid and binding obligations of each Seller,
enforceable against them in accordance with their respective terms, subject to
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally and to general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law.
8.3 The consummation of the transactions contemplated by this
Agreement is in the ordinary course of each of the Sellers' business. Neither
the execution, delivery and performance by any of the Sellers of, nor the
compliance with their obligations under, this Agreement, and the other
agreements and instruments to be executed by it as contemplated hereby and
thereby, will conflict with or result in breach of, or constitute a default (or
an event which, with notice or the lapse of time, or both, would constitute a
default) or result in the acceleration of any obligation under, the
organizational documents of any of the Sellers, or any of the provisions of any
law, governmental rule, regulation, judgment, decree or order binding on any of
the Sellers or its assets, or any of the provisions of any indenture, mortgage,
contract or other instrument to which any of the Sellers is a party or by which
any are bound, or result in the creation or imposition of any lien, charge or
encumbrance upon any of its property pursuant to the terms of any such
indenture, mortgage, contract or other instrument. Neither the sale of any
Property, nor the consummation of the transactions contemplated by this
Agreement, are or will result in violation of any applicable federal, state or
local statute, law, rule, code, ordinance or regulation.
8.4 No license, consent, approval, authorization or order of,
or registration or filing with, or notice to any court or governmental agency,
is required for the execution, delivery or performance by any Seller of this
Agreement, and the other agreements and instruments to be executed by it as
contemplated hereby; and no such licenses, consent, approval, authorization,
order, registration or filing is required for the performance by any Seller of
its obligations hereunder or thereunder.
8.5 No litigation, arbitration, governmental investigation or
other proceeding, adverse claim or action of any kind or nature is pending or,
threatened that (i) could bring into question the validity of this Agreement,
the documents and instruments to be entered into by any Seller as contemplated
by this Agreement or any action taken or to be taken in connection with the
obligations of any Seller contemplated hereby, (ii) presents a material risk
that any Seller could be prevented from
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entering into this Agreement, or the other documents and instruments to be
entered into by it as contemplated hereby or (iii) may materially and adversely
affect any Seller's ability to perform its obligations under this Agreement, or
such other documents and instruments. Each Seller shall notify Buyer promptly
upon becoming aware of any such pending litigation, arbitration, governmental
investigation or other proceeding, adverse claim or action.
8.6 Each Seller is solvent and neither the sale of any
Property or any portion thereof nor the performance of its obligations hereunder
would cause any Seller to become insolvent. No sale of a Property is being
undertaken with the intent to hinder, delay or defraud any of the Sellers'
creditors.
8.7 No portion of any Property or the business conducted
thereon is in violation of any applicable building code, zoning or land use law,
or any other law, order, ordinance, statute, rule, code or regulation applicable
thereto (collectively, "APPLICABLE LAWS"). All inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of all of the Real Property and, with respect to the use and occupancy of the
same, including certificates of occupancy and fire underwriting certificates,
have been made or obtained from the appropriate authorities and are in full
force and effect, and each Property is lawfully occupied under applicable law.
Each Property is, and as of the Close of Escrow for such Property will be, in
all material respects, in compliance with, and is used and occupied in
accordance with, all Applicable Laws and all restrictive covenants of record
applicable to each Property.
8.8 No proceeding is pending or, to any Seller's knowledge,
threatened or under consideration for the total or partial condemnation of any
of the Properties, and no portion of any of the Properties has suffered any
damage from waste, fire, water, earthquake or earth movement, windstorm, flood,
tornado, or otherwise, in a manner that could affect adversely the value of a
Property or the use for which any of the premises therein were intended.
8.9 No litigation is pending or, to Sellers' knowledge,
threatened or under consideration that could affect any Property or any portion
thereof or interest therein, or that could affect any Seller's ability to
perform its obligations under this Agreement.
8.10 There is no lease or other contract with respect to the
occupancy of a Property or any portion thereof or interest therein, nor will
there be any such lease or other contract at the Close of Escrow for such
Property, that would bind Buyer or such Property or any portion thereof from and
after the Close of Escrow for any Property except for the "Lease" (as defined
herein and matters described in the PTRs). Sellers have delivered to Buyer true,
complete and correct copies of each of the contracts (the "EXISTING CONTRACTS")
included in the Intangible Property, and each of the other items constituting
the Intangible Property. Each of the Existing Contracts, including all
amendments thereto, is listed on Exhibit "F". Each of the Existing Contracts is
in full force and effect and free from default. Sellers have obtained any
approvals required to assign their interests in the Intangible Property to
Buyer. Each Existing Contract affecting a Property shall be terminated at Close
of Escrow for such Property, at Seller's sole cost and expense, or shall
continue as a direct agreement between the applicable Seller and the other
party(ies) under such Existing Contract (with no obligation or liability on
Buyer or the Property whatsoever).
8.11 Sellers have good and marketable fee simple title to the
Properties and each portion thereof and interest therein, free and clear of any
and all liens, claims, encumbrances, participation interests, equities, pledges,
charges or security interests of any nature (collectively, a "LIEN"), other than
any such Lien to be released on or before the Close of Escrow and prior to or
simultaneously with the consummation of the purchase and sale of the affected
Property as contemplated
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herein. Without limiting the generality of the foregoing, there are no
mechanics' or similar liens or claims which have been filed for work, labor or
material (and no rights are outstanding that under law could give rise to such
lien) which are or may become liens on any Property or any portion thereof or
interest therein. Sellers' interest in the Properties and right to sell and
convey the same to Buyer is not subject to any interest or participation of, or
right of first offer or refusal or other right or option in favor of, or other
agreement with, any other party, and immediately upon the sale and conveyance of
any Property as herein contemplated, the Buyer or its designee shall have good
indefeasible fee simple title to, and will be the sole legal owner of, each
Property free and clear of any Lien.
8.12 All taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, rents under all ground leases and similar
charges which have become due and owing with respect to each Property and each
portion thereof and interest therein have been paid. With respect to the
Properties located in the State of Texas, none are assessed as "agricultural" or
"open space" land for tax purposes.
8.13 All of the Improvements constructed or under construction
on the Land for each Property lie wholly within the boundaries and building
restriction lines of the Land, and no improvements on adjoining properties
encroach upon the Land except as shown in the surveys delivered to Buyer
pursuant to Section 6.1.5.
8.14 All Improvements are insured by an insurer licensed to do
business in the state where the applicable Property is located against loss by
fire, hazards of extended coverage and such other hazards as are customary in
the areas where each Real Property is located, in an amount sufficient to
prevent the owner thereof from being deemed a co-insurer and to provide coverage
on a full replacement cost basis (in some cases, exclusive of foundations and
footings), and if any portion of the Real Property is in an area identified on a
Flood Hazard Boundary Map or Flood Hazard Rate Map issued by the Federal
Emergency Management Agency or the Secretary of Housing and Urban Development,
as having special flood hazards, a flood insurance policy is in effect with
respect to such Real Property issued by a generally acceptable flood insurance
carrier in an amount which is at least equal to the lesser of (i) the maximum
insurable value of such Real Property, and (ii) the amount necessary to fully
compensate for any damage or loss to the improvements which are a part of such
Real Property on a replacement cost basis, in each case in an amount not less
than such amount as is necessary to avoid the application of any co-insurance
clause contained in the related hazard insurance policy. In addition, each
business carried on upon any Real Property or any portion thereof (or the owner
of such business) carries workers' compensation insurance. Sellers have no
knowledge that any action, omission, misrepresentation, negligence, fraud or
other similar occurrence has taken place that could present a material risk of a
failure or impairment of full and timely coverage under any such insurance
policy. All such insurance policies (collectively, the "HAZARD INSURANCE
POLICY") are the valid and binding obligation of the insurer named therein and
contain a standard endorsement naming the Sellers, their successors and assigns,
as a co-insured thereunder, and each such insurance policy may not be terminated
or expire without thirty (30) days' prior written notice to the Sellers or their
successors-in-interest (except where applicable law requires a shorter period).
No notice of termination, cancellation or non-renewal with respect to any of
such policies has been given, and all premiums thereon have been paid.
8.15 Each Real Property is owned in fee by Sellers.
8.16 Each Property is in good repair and free and clear of any
damage or condition that would materially affect the use, enjoyment, value or
marketability of such Property; each Property is comprised of one or more
separate and lawfully created parcels that abuts or has access to a dedicated,
physically open road; each Property is served by public utilities and services
generally available in the
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surrounding community and by well or public water and sewer systems (or septic
facilities); each Property has all parking required under applicable law for the
operation of the facilities currently existing or businesses currently conducted
thereon; no part of any of the Improvements for any Property lies outside the
boundaries of, or building setback and other restriction lines applicable to,
such Property except as disclosed by the surveys delivered to Buyer pursuant to
Section 6.1.5; and no improvements on adjoining properties encroach onto any
Property except for encroachments that do not adversely affect the use,
enjoyment, value or marketability of such Property.
8.17 No portion of any Property or any interest therein is
subject to a bankruptcy plan.
8.18 No statement, report or other document within the Seller
Information prepared by any Sellers, or to each Sellers' knowledge in any report
prepared by any other party, contains any untrue statement of material fact or
omits to state a material fact necessary to make the statements and information
contained therein not misleading.
8.19 Each Property and each portion thereof is in compliance
with all environmental laws, statutes, ordinances, regulations, orders, rules,
decrees and similar requirements of federal, state, municipal and any other
governmental and quasi-governmental authorities, agencies and instrumentalities
relating thereto, and no hazardous material or substance was or is incorporated
in, stored on, transported to or from, disposed of or located above, on or below
or discharged from any portion of any Property by Sellers (except if the same
(1) was in the ordinary course of business, (2) was in full compliance with all
Applicable Laws pertaining thereto, (3) did not involve any release, spill,
disposition or discharge, and (4) did not and does not create any health or
safety hazard). There are no underground storage tanks at any Property except as
disclosed in the Environmental Reports. The Sellers have not received
notification from any federal, state or other governmental or quasi-governmental
authority, agency or instrumentality of any actual, potential, known, or threat
of release of hazardous materials or substances on, above, below or from any
Property or any potential or known liability that has resulted in or may result
in a lien on any Property except as disclosed in the Environmental Reports. For
purposes of this representation, the terms hazardous material and hazardous
substance (a) shall have all the meanings given to them under any applicable
federal, state, municipal, or other jurisdiction's, laws, statutes, rules,
regulations and ordinances, and (b) without limiting the generality of the
foregoing, shall include any substance which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous, or any substance which contains gasoline, diesel fuel or other
petroleum hydrocarbons, polychlorinated biphenyls (PCBs), or radon gas, urea
formaldehyde, asbestos, lead or mercury.
8.20 Each Property is a separate tax parcel, separate and
apart from any other property owned by the Seller or any other person or entity.
8.21 Each Deed will be in recordable form and legal, valid and
binding against Sellers in accordance with its terms, and at the Close of Escrow
will be recorded or filed in the appropriate records or files of the applicable
jurisdiction and in a manner sufficient to put third parties on constructive
notice of the conveyance of the Property to Buyer or its designee.
9. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Sellers that, as of the date of this Agreement:
9.1 Buyer is a corporation, duly formed and presently existing
in good standing under the laws of the State of Maryland. Buyer has the legal
power, right and authority to enter into this
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Agreement and the instruments to be executed by Buyer pursuant to this
Agreement, and to consummate the transactions contemplated by this Agreement.
9.2 The individuals executing this Agreement and the
instruments to be executed by Buyer pursuant to this Agreement on behalf of
Buyer have the legal power, right and actual authority to bind Buyer to the
terms and conditions of this Agreement and those instruments.
9.3 Neither the execution and delivery of this Agreement and
the documents referred to in this Agreement, nor the incurring of the
obligations set forth in this Agreement, nor the consummation of the
transactions contemplated in this Agreement, nor compliance with the terms of
this Agreement and the documents referred to in this Agreement, conflict with or
result in a material breach of any terms, conditions or provisions of, or
constitute a default under, any bond, note or other evidence of indebtedness or
any contract, indenture, mortgage, deed of trust, loan, partnership agreement,
lease or other agreement or instrument to which Buyer is a party, nor any law,
governmental rule, regulation, judgment, decree or order binding on Buyer.
9.4 Buyer is entering into this Agreement and desires to
purchase the Property for its own account, and not as an undisclosed agent for
any third party, and Buyer acknowledges that Buyer's obligations under this
Agreement are not contingent on Buyer's ability to secure financing for its
acquisition of the Property or a tenant for the Property or any portion thereof.
10. CONDITIONS TO CLOSE OF ESCROW.
10.1 Buyer's obligation to purchase each Property is subject
to and conditioned upon the satisfaction or Buyer's written waiver of each of
the following conditions on or before the Closing Date for such Property:
10.1.1 The Title Company shall have delivered to
Buyer its irrevocable and unconditional commitment (the "OWNER'S TITLE
COMMITMENT" for such property) to issue an ALTA (1970 Form B) extended
coverage owner's policy of title insurance (the "OWNER'S TITLE POLICY"
for such Property) effective as of the date and time the Deed for such
Property is recorded with coverage in the amount of the Purchase Price
for such Property, naming Buyer as the insured, showing fee simple
title to the Property to be vested in Buyer, free and clear of all
liens and encumbrances other than non-delinquent real property taxes
and assessments and those matters shown on the PTR for such Property
approved by Buyer pursuant to Section 6.1.5, plus any additional
exceptions that Buyer may have approved in writing or which Buyer may
have caused, together with endorsements in form reasonably satisfactory
to Buyer with respect to access, contiguity, tax parcel,
non-imputation, fairway, survey, comprehensive, zoning and such other
matters as Buyer may reasonably request. With respect to the Properties
located in the State of Texas, however, the Owner's Title Policy must
insure that, after the completion of the Close of Escrow, Purchaser is
the owner of indefeasible fee simple title to each Texas Property,
subject only to those matters shown on the PTR for such Property
approved by Buyer pursuant to Section 6.1.5, plus (i) any additional
exceptions that Buyer may have approved in writing or which Buyer may
have caused and (ii) the standard printed exceptions included in a
Texas Standard Form Owner Policy of Title Insurance; provided, however,
the printed form survey exception must be, at Buyer's expense, limited
to "shortages in area;" the printed form exception for restrictive
covenants must be deleted or must list only those restrictive covenants
that have been approved by Buyer; there must be no exception for rights
of parties in possession; and the standard exception for taxes must
read: "Standby fees, taxes and assessments by any taxing
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authority for the 1998 and subsequent years, and subsequent taxes and
assessments by any taxing authority for prior years due to change in
land usage or ownership."
10.1.2 Sellers' timely delivery to Escrow Holder of
each of the items required to be delivered by Sellers pursuant to this
Agreement.
10.1.3 Satisfaction of each of the Contingencies set
forth in Section 6.1 above as to such Property.
10.1.4 Sellers' representations and warranties under
Section 8 above having been true, complete and correct in all material
respects, and not having been misleading in any material respect, on
the date of this Agreement or on the Closing Date for such Property.
10.1.5 Sellers not being in default in the
performance of any of its obligations under this Agreement.
10.1.6 The subject Property being in the same
condition as at the date of this Agreement, reasonable wear and tear
excepted.
10.2 Sellers' obligation to sell each Property is subject
to and conditioned upon the satisfaction or Sellers' written waiver of each of
the following conditions on or before the Closing Date for such Property:
10.2.1 Buyer's representations and warranties under
Section 9 above having been true, complete and correct in all material
respects, and not misleading in any material respect, on the date of
this Agreement or at the time of Close of Escrow.
10.2.2 Buyer's timely delivery into Escrow of all
sums required from Buyer to close Escrow, as set forth in Section 4
above, subject to Sections 12 and 13 below, and all documents and
instruments required to close Escrow as contemplated by this Agreement.
11. DELIVERIES TO ESCROW HOLDER.
11.1 On the business day prior to the Closing Date for each
Property, the Seller owning such Property shall deliver or cause to be delivered
to Escrow Holder the following documents:
11.1.1 A deed (the "DEED") duly executed by Seller
and properly acknowledged, in the form of Exhibit "G" (or such other
form as required by Buyer, in Buyer's good-faith discretion, to satisfy
any requirements of the law in which any particular Property is
located), conveying the Land, Improvements and Extraction Rights
included in such Property.
11.1.2 A certification duly executed by such Seller
under penalty of perjury, in the form of Exhibit "H", stating that
Seller is not a foreign corporation, a foreign partnership, a foreign
trust, or a foreign estate, as those terms are defined in the Internal
Revenue Code and the income tax regulations promulgated under the
Internal Revenue Code, together with any state equivalent non-foreign
status/withholding certificate.
11.1.3 Such evidence as Buyer and the title company
issuing the owner's policy of title insurance may require as to
authority of such Seller to convey the Property to Buyer.
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11.1.4 A bill of sale (the "BILL OF SALE"), in the
form of Exhibit "I", duly executed by the Seller for such Property,
conveying the Personal Property and Intangible Property included in
each Property.
11.1.5 A lease of such Property (the "LEASE" for such
Property), in the form of Exhibit "J", duly executed by such Seller.
11.1.6 A guaranty of the Lease for such Property (the
"LEASE GUARANTY" for such Property), in the form of Exhibit "K", duly
executed by Ugly Duckling Corporation.
11.1.7 To the extent not previously delivered to
Buyer, originals (or, if originals are not available, certified copies)
of all contracts, warranties, licenses, permits and other documents
included in the Intangible Property for such Property.
11.1.8 A certificate in form reasonably satisfactory
to Buyer and duly executed by Sellers under which Sellers jointly and
severally represent and warrant that all of the representations and
warranties of Sellers under this Agreement are true and correct on the
Closing Date for such Property as if made on and as of such Closing
Date.
11.1.9 An owner's affidavit and such other customary
documents as may be required by the Title Company.
11.1.10 For any Property located in Arizona, an
Affidavit of Real Property Value executed by Seller (and to be executed
by Buyer).
11.1.11 Such other documents as Buyer reasonably may
request in connection with the transactions contemplated hereby.
11.2 Buyer shall deliver or cause to be delivered to
Escrow Holder, on the Closing Date for each Property, the Purchase Price for
such Property.
12. COSTS AND EXPENSES. Sellers shall pay all closing costs for
the sale of each Property including (1) all state, county and local transfer and
recording taxes and all recording charges, (2) all escrow fees and relating
charges imposed by Escrow Holder, (3) all charges in connection with the title
insurance and surveys contemplated by this Agreement, including the premiums for
the policies of title insurance to be issued to Buyer, and (4) all of Buyer's
due diligence costs and expenses, including appraisals, environmental reports
and reasonable attorneys' fees and disbursements of Buyer in connection with its
due diligence, the preparation, negotiation of this Agreement and the documents
contemplated hereby and the closing of the transactions contemplated hereby. The
foregoing expenses shall be paid regardless of whether any particular Property
is acquired under this Agreement and such obligations shall survive the
termination of the Agreement with respect to any particular Property or with
respect to all Properties. Buyer may credit any of the foregoing costs and
expenses incurred and not reimbursed prior to Closing against the Purchase Price
for any Property.
13. PRORATIONS AND ADJUSTMENTS. At the Close of Escrow for each
Property, the Lease for such Property will be entered into and will provide for
the payment of all expenses with respect to such Property by the tenant under
such Lease (and such tenant shall be the Seller for such Property). Accordingly,
there will be no prorations hereunder and Buyer shall have no responsibility
whatsoever for any of the costs and expenses associated with any Property.
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14. DISBURSEMENTS AND OTHER ACTIONS BY ESCROW HOLDER. Upon the
Close of Escrow for any particular Property, Escrow Holder shall promptly
undertake all of the following in the manner indicated:
14.1 Cause the Deed and any other documents that the parties
to this Agreement may mutually direct, to be recorded in the official records of
the county in which such Property is located, with documentary transfer stamps
(or, in jurisdictions outside California, with information regarding the
purchase price paid by Buyer) not affixed to the Deed or recorded and an
appropriate affidavit in lieu thereof to be recorded, if the same is reasonably
possible.
14.2 Disburse all funds deposited with Escrow Holder by Buyer,
and not previously disbursed, as follows:
14.2.1 Pay to the parties entitled thereto amounts
chargeable to the account of any Seller under the terms of this
Agreement, including any prepayment fees to any lender or broker's
commission payable by any Seller pursuant to Section 18, and charge
those amounts to the applicable Seller's account.
14.2.2 Pay the remaining balance of the Purchase
Price as directed by Sellers, after giving appropriate credit for any
amount that may have been paid directly by Buyer to Sellers against the
Purchase Price and of which Escrow Holder has been notified jointly by
Buyer and Sellers.
14.2.3 When the foregoing disbursements have been
made, refund any remaining balance in the Escrow to Buyer.
14.3 Direct the Title Company to issue the Owner's Title
Policy and deliver an original of that policy to Buyer.
14.4 Deliver to both Buyer and Seller copies of all documents
delivered to either party to, or recorded pursuant to, this Agreement.
14.5 Deliver to both Buyer and Seller a closing statement
showing the distribution, application, receipt and earnings of all funds
processed through Escrow.
15. INDEMNIFICATION. If the Close of Escrow occurs for any
Property, then Sellers shall protect, defend, indemnify and hold harmless Buyer
and such Property from and against: (a) any "Claim" (as hereinafter defined) in
any way related to any such Property and arising or accruing prior to the
Closing Date; and (b) any Claim that results from any breach or default by
Sellers under this Agreement.
16. RIGHT OF ENTRY. Buyer and Buyer's agents and representatives
shall have the right to enter upon each Property and each portion thereof at all
reasonable times prior to the Close of Escrow or earlier termination of this
Agreement, on reasonable prior notice to Sellers, in order to conduct such
inspections, surveys, tests or studies as Buyer may deem necessary or
appropriate in connection with satisfying the Contingencies set forth in Section
6.1 of this Agreement, or otherwise. Sellers shall cooperate fully with Buyer in
connection with all of such inspections, surveys, tests and studies. Any
physical damage directly and negligently caused to the Property by Buyer or
Buyer's agents and representatives during any such inspection, survey, test, or
study shall be promptly repaired by Buyer at Buyer's cost. In addition, Buyer
may contact any and all other occupants of the Real Property, both at the Real
Property and elsewhere, for any purpose.
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17. DAMAGE OR CONDEMNATION PRIOR TO CLOSING. Sellers shall
promptly notify Buyer of any damage to any Property that has occurred, and of
any condemnation proceedings that are commenced or proposed against any Property
or any portion thereof after the execution of this Agreement and prior to the
Close of Escrow. If such events should occur, Buyer may elect to keep this
Agreement to continue in effect as to such Property, without delay or abatement
of the Purchase Price for such Property, in which event, Sellers shall assign
and transfer to Buyer at the Close of Escrow all of Sellers' rights with respect
to the insurance proceeds relating to any damage and any and all condemnation
proceeds (including severance damages) that Sellers may have received or be
entitled to receive; and if any damage is not covered by insurance or the
insurance proceeds are inadequate to cover the reasonable cost of repair of the
damage, but this Agreement continues in effect, then the uninsured portion
thereof shall be credited toward the Purchase Price of the particular Property
at the Close of Escrow. Notwithstanding the foregoing, Buyer may, at its option,
at any time after such event, elect to terminate this Agreement as to the
affected Property.
18. BROKERS. Each Seller represents and warrants to Buyer, and
Buyer represents and warrants to each Seller, that no broker or finder has been
engaged by it, respectively, in connection with any of the transactions
contemplated by this Agreement or to its knowledge is in any way connected with
any of such transactions. In the event of a Claim for broker's or finder's fee
or commissions in connection herewith, then Sellers shall indemnify, protect,
defend and hold Buyer harmless from and against the same if it shall be based
upon any statement or agreement alleged to have been made by any Seller
(including any Claims in connection with the Brokers), and Buyer shall
indemnify, protect, defend and hold each Seller harmless from and against the
same if it shall be based upon any statement or agreement alleged to have been
made by Buyer.
19. LIMITATION OF LIABILITY. No present or future partner, member,
director, officer, shareholder, employee, advisor, affiliate or agent of or in
Buyer or any affiliate of Buyer shall have any personal liability, directly or
indirectly, under or in connection with this Agreement or any agreement made or
entered into under or in connection with the provisions of this Agreement, or
any amendment or amendments to any of the foregoing made at any time or times,
heretofore or hereafter, and Seller and its successors and assigns and, without
limitation, all other persons and entities, shall look solely to Buyer's assets
for the payment of any Claim or for any performance, and Seller hereby waives
any and all such personal liability. For purposes of this Section 19, no
negative capital account or any contribution or payment obligation of any
partner or member in Buyer shall constitute an asset of Buyer. In addition,
neither Buyer nor any successor or assign of Buyer intends to assume any
personal liability, directly or indirectly, under or in connection with any
agreement or instrument to which any Property is now or hereafter subject, and
no such assumption shall be implied except to the extent expressly set forth in
the Bill of Sale. In the event this Agreement is assigned by Buyer to an
assignee with respect to one or more Properties (the "APPLICABLE PROPERTIES"),
but not all the Properties (the Properties other than the Applicable Properties
being herein called the "OTHER PROPERTIES"), then such assignee shall have no
obligation or liability under this Agreement or any document executed in
connection herewith except to the extent expressly assumed and then only to the
extent such obligation or liability relates to the Applicable Properties and not
the Other Properties. The limitations of liability contained in this Section are
in addition to, and not in limitation of, any limitation on liability applicable
to Buyer provided elsewhere in this Agreement or by law or by any other
contract, agreement or instrument.
20. NOTICES. Any notice which a party is required or may desire to
give under this Agreement, shall be in writing and may be sent by personal
delivery or by mail (either [i] by United States registered or certified mail,
return receipt requested, postage prepaid, or [ii] by Federal Express or similar
generally recognized overnight carrier regularly providing proof of delivery),
addressed as
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hereinafter provided. Any notice so given by mail shall be deemed to have been
given as of the date of delivery (whether accepted or refused) established by
U.S. Post Office return receipt or the overnight carrier's proof of delivery, as
the case may be. Any such notice not so given shall be deemed given upon actual
receipt of the same by the party to whom the same is to be given. Notices may be
given by facsimile transmission and shall be deemed given upon the actual
receipt of the same by the individual to which they are addressed, and shall be
promptly followed by a hard copy notice by mail as provided above. Each notice
hereunder shall be addressed as follows:
If to Buyer: Imperial Credit Commercial Mortgage
Investment Corp.
11601 Wilshire Boulevard, Suite 2080
Los Angeles, California 90025
Attention: Mr. Daniel J. Occelli
With a copy to: Imperial Credit Commercial Mortgage
Investment Corp.
11601 Wilshire Boulevard, Suite 2080
Los Angeles, California 90025
Attention: Norbert M. Seifert, Esq.
If to Seller: Ugly Duckling Corporation
2525 East Camelback Road, Suite 1150
Phoenix, Arizona 85016
Attention: Chief Executive Officer
With a copy to: Ugly Duckling Corporation
2525 East Camelback Road, Suite 1150
Phoenix, Arizona 85016
Attention: General Counsel
Any address for service of notice on any party may be changed by that party
serving a notice upon the other and Escrow Holder of the new address at least
five (5) days in advance, except that any change of address to a post office box
shall not be effective unless a street address is also specified for use in
effectuating personal service.
21. REQUIRED ACTIONS OF BUYER AND SELLERS. Following the
satisfaction or Buyer's waiver of all Contingencies with respect to a Property,
Buyer and Sellers shall execute all instruments and documents and take all other
actions that may be reasonably required in order to consummate the purchase and
sale of such Property contemplated in this Agreement, and shall use their best
efforts to accomplish the Close of Escrow for such Property in accordance with
the provisions of this Agreement.
22. PARTIAL INVALIDITY. If any term or provision of this
Agreement, or its application to any person or circumstance, shall be invalid or
unenforceable to any extent, the remainder of this Agreement, and the
application of the term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected,
and each term and provision of this Agreement shall be valid and be enforced to
the fullest extent permitted by law.
23. WAIVERS. No waiver of any breach of any covenant or provision
shall be deemed a waiver of any preceding or succeeding breach of that or any
other covenant or provision. No waiver of a condition shall constitute a waiver
or a default unless specifically agreed to in writing. No waiver with
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respect to the Close of Escrow of any Property will constitute a waiver for any
other Property. No extension of time for performance of any obligation or act
shall be deemed an extension of the time for performance of any other obligation
or act.
24. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the respective successors and assigns of Buyer
and Sellers. Buyer may assign its right to acquire any of the Properties to one
or more affiliates of Buyer.
25. REMEDIES. No remedy conferred upon a party in this Agreement
is intended to be exclusive of any other remedy herein or by law provided or
permitted, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law, in equity or by
statute (except as otherwise expressly herein provided). Each Seller shall be
primarily (jointly and severally) liable for the obligations and liabilities of
Sellers and any Seller under this Agreement and each of the documents executed
by Sellers or any Seller in connection with this Agreement. Each Seller hereby
waives any suretyship or guarantor rights and defenses that might otherwise
apply (in the absence of this waiver), and without limitation on the foregoing,
each of the waivers set forth in paragraph 8 of the form of guaranty attached
hereto as Exhibit "K" are hereby incorporated, mutatis mutandis, and shall apply
to each Seller as though set forth in full in this Section (with such changes as
would be appropriate to apply the same to this Agreement as opposed to the
"Lease" therein described).
26. SURVIVAL. Unless otherwise expressly provided for in this
Agreement, the representations, warranties, indemnification obligations and
covenants of the parties set forth in this Agreement shall survive the
consummation of the transaction contemplated by this Agreement and the delivery
and recordation of each of the Deeds. All warranties and representations shall
be effective regardless of any investigation made or which could have been made.
27. CONSENTS AND APPROVALS. No consent or approval provided to be
given by a party hereunder shall be effective unless in writing and, except as
otherwise expressly provided herein, each such approval and consent may be given
or withheld in the absolute discretion of such party.
28. INDEMNIFICATION. The indemnification obligations under this
Agreement shall be subject to the following provisions:
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28.1 The party seeking indemnification ("Indemnitee") shall notify
the other party ("Indemnitor") of any Claim against Indemnitee within fifteen
(15) days after it has notice of such Claim, but failure to notify Indemnitor
shall in no case prejudice the rights of Indemnitee under this Agreement unless
Indemnitor shall be prejudiced by such failure and then only to the extent of
such prejudice. Should Indemnitor fail to discharge or undertake to defend
Indemnitee against such liability (with counsel approved by Indemnitee), within
ten (10) days after Indemnitee gives Indemnitor written notice of the same, then
Indemnitee may settle such Claim, and Indemnitor's liability to Indemnitee shall
be conclusively established by such settlement, the amount of such liability to
include both the settlement consideration and the reasonable costs and expenses,
including attorneys' fees, incurred by Indemnitee in effecting such settlement.
Indemnitee shall have the right to employ its own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of Indemnitee
unless: (a) the employment of such counsel shall have been authorized in writing
by Indemnitor in connection with the defense of such action, (b) Indemnitor
shall not have employed counsel to direct the defense of such action, or (c)
Indemnitee shall have reasonably concluded that there may be defenses available
to it which are different from or additional to those available to Indemnitor
(in which case Indemnitor shall not have the right to direct the defense of such
action or of Indemnitee), in any of which events such fees and expenses shall be
borne by Indemnitor.
28.2 The indemnification obligations under this Agreement
shall also extend to any present or future advisor, trustee, director, officer,
partner, member, employee, beneficiary, shareholder, participant or agent of or
in Indemnitee or any entity now or hereafter having a direct or indirect
ownership interest in Indemnitee.
28.3 "CLAIM" means any obligation, liability, claim (including any
claim for damage to property or injury to or death of any persons), lien or
encumbrance, loss, damage, cost or expense (including any judgment, award,
settlement, reasonable attorneys' fees and other costs and expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim [including appellate proceedings], and any collection costs or enforcement
costs).
29. PROFESSIONAL FEES. If any party becomes involved in litigation
(including bankruptcy and appellate proceedings) arising out of or relating to
this Agreement, the court in the litigation (including bankruptcy or appellate
proceedings) or arbitrator in any arbitration shall award legal expenses
(including, but not limited to attorneys' fees, court costs and other legal
expenses) to the prevailing party. The award for legal expenses shall not be
computed in accordance with any court schedule, but shall be as necessary to
fully reimburse all attorneys' fees and other legal expenses actually incurred
in good faith, regardless of the size of the judgment, it being the intention of
the parties to fully compensate for all the attorneys' fees and other legal
expenses paid in good faith. For the purpose of this Agreement, the terms
"attorneys' fees" or "attorneys' fees and costs" shall mean the reasonable fees
and expenses of counsel to the parties hereto, which may include printing,
duplicating and other expenses, air freight charges, and fees billed for law
clerks, paralegals, librarians and others not admitted to the bar but performing
services under the supervision of an attorney. The terms "attorneys' fees" or
"attorneys' fees and costs" shall also include all reasonable fees and expenses
incurred with respect to appeals, arbitrations and bankruptcy proceedings, and
whether or not any action or proceeding is brought with respect to the matter
for which said fees and expenses were incurred.
30. ENTIRE AGREEMENT; AMENDMENT. This Agreement (including all
exhibits attached) is the final expression of, and contains the entire agreement
between, the parties with respect to the subject matter addressed in this
Agreement and supersedes all prior understandings with respect to that subject
matter. This Agreement may not be modified, changed, supplemented or terminated,
nor may any obligation under this Agreement be waived, except by written
instrument signed by the party to be
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charged or by its agent duly authorized in writing. The parties do not intend to
confer any benefit under this Agreement on any person, entity, firm or
corporation other than Buyer and Sellers.
31. CONSTRUCTION OF AGREEMENT; KNOWLEDGE OF SELLERS. Headings at
the beginning of each section and subsection are solely for the convenience of
the parties and are not a part of this Agreement. Whenever required by the
context of this Agreement, the singular shall include the plural and the
masculine shall include the feminine and vice versa. This Agreement has been
fully negotiated by Buyer and Sellers; accordingly, this Agreement shall not be
construed as if it had been prepared by one of the parties, but rather as if
both parties together had prepared it. Accordingly, any generally applicable
rule of construction to the effect that ambiguities in a document are to be
construed in the manner less (or least) favorable to the drafting party shall
not apply to this Agreement and the terms and conditions set forth herein.
Unless otherwise indicated, all references to sections and subsections are to
sections and subsections in this Agreement. All exhibits referred to in this
Agreement are attached and incorporated by this reference. In the event the date
on which Buyer or Sellers is required to take any action under the terms of this
Agreement is not a business day, the actions shall be taken on the next
succeeding business day. As used in this Agreement, (i) references to the
"knowledge" of any Seller shall be deemed to refer to the actual knowledge of
such Seller or to such knowledge that such Seller would have had if it had
conducted a reasonably diligent and complete investigation, and (ii) the term
"including" and "include" shall mean "including without limitation" and "include
without limitation", respectively.
32. GOVERNING LAW. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with the laws of the
State of California applicable to transactions to be performed wholly within the
State of California. Each party agrees to submit to the jurisdiction of the
courts of Los Angeles County, California, as necessary to effectuate the terms
of this Agreement, and that proper venue in any matter so litigated shall be in
the Central District of the Los Angeles County Superior Court or of the
Municipal Court of the Los Angeles Judicial District, as appropriate.
33. WAIVER OF JURY TRIAL. To the maximum extent permitted by law,
each of the Sellers and Buyer hereby knowingly, voluntarily and intentionally
waive the right to a trial by jury in respect of any litigation based hereon,
arising out of, under or in connection with this Agreement or any course of
conduct, course of dealing, statement (whether verbal or written) or action of
either party or any exercise by any party of their respective rights under this
Agreement or in any way relating to the Properties (including, without
limitation, any action to rescind or cancel this Agreement, and any claim or
defense asserting that this Agreement was fraudulently induced or is otherwise
void or voidable). This waiver is a material inducement for Seller to enter this
Agreement.
34. NEW MEXICO INDEMNIFICATION PROVISION. To the extent, if at
all, that NMSA Section 56-7-1 is applicable to this Agreement, any
indemnification will not extend to liability, claims, damages, losses or
expenses, including attorneys' fees, arising out of (A) the preparation or
approval of maps, drawings, opinions, reports, surveys, change orders, designs,
or specifications by indemnitee, or the agents or employees of indemnitee, and
(B) the giving of or the failure to give direction or instructions by
indemnitee, or the agents or employees of indemnitee, where such giving or
failure to give directions or instructions is the primary cause of bodily injury
to persons or damages.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
"SELLERS":
18
23
CHAMPION ACCEPTANCE CORPORATION,
AN ARIZONA CORPORATION
By: /s/ Steven P. Johnson
-------------------------------
Name: Steven P. Johnson
------------------------------
Title: Secretary
-----------------------------
UGLY DUCKLING CAR SALES, INC.,
AN ARIZONA CORPORATION
By: /s/ Steven P. Johnson
-------------------------------
Name: Steven P. Johnson
------------------------------
Title: Secretary
-----------------------------
UGLY DUCKLING CAR SALES NEW MEXICO,
INC.,
A NEW MEXICO CORPORATION
By: /s/ Steven P. Johnson
-------------------------------
Name: Steven P. Johnson
------------------------------
Title: Secretary
-----------------------------
UGLY DUCKLING CAR SALES FLORIDA, INC.,
A FLORIDA CORPORATION
By: /s/ Steven P. Johnson
-------------------------------
Name: Steven P. Johnson
------------------------------
Title: Secretary
-----------------------------
19
24
UGLY DUCKLING CAR SALES TEXAS, L.L.P.,
AN ARIZONA LIMITED LIABILITY PARTNERSHIP
By: Ugly Duckling Car Sales, Inc.,
an Arizona corporation
Its: General Partner
By: /s/ Steven P. Johnson
-------------------------------
Name: Steven P. Johnson
------------------------------
Title: Secretary
-----------------------------
"BUYER":
IMPERIAL CREDIT COMMERCIAL MORTGAGE
INVESTMENT CORP.,
A MARYLAND CORPORATION
By: /s/ James M. Flagg
-------------------------------
Name: James M. Flagg
------------------------------
Title: Sr. Vice President
-----------------------------
The undersigned accepts its appointment as Escrow Holder in accordance with the
foregoing terms and conditions and confirms that it has opened an escrow upon
those terms and conditions:
"ESCROW HOLDER":
FIDELITY NATIONAL TITLE COMPANY
By:
-------------------------------
Name:
------------------------------
Title:
-----------------------------
Date: May , 1998
20
25
EXHIBIT LIST
A - Description of Dealerships, Purchase Price and Outside Closing Date
B - Description of Land
C - Omitted
D - Omitted
E - Omitted
F - List of Existing Contracts
G - Form of Deed
H - Form of Non-Foreign Status Certificate
I - Form of Bill of Sale
J - Form of Lease
K - Form of Lease Guaranty
Schedule 8.1 List of Sellers and Jurisdiction of Incorporation
21
26
EXHIBIT "A"
DESCRIPTION OF DEALERSHIPS, PURCHASE PRICE
AND OUTSIDE CLOSING DATE
22
27
EXHIBIT "A"
NO. PROPERTY SELLER/TENANT BOOK VALUE FIDELITY NATIONAL CLOSING
SALE PRICE TITLE ESCROW NO. DATE
1 1515 E. Bell Rd., Ugly Duckling Car Sales, $ 1,896,975 82091876 May
Phoenix, AZ Inc.
2 330 N. 24th St., Ugly Duckling Car Sales, $ 1,557,158 82091877 May
Phoenix, AZ Inc.
3 333 S. Alma School, Ugly Duckling Car Sales, $ 2,559,979 82091878 May
Mesa, AZ Inc.
4 5017 W. Glendale -
Intentionally Deleted
5 5104 W. Glendale, Ugly Duckling Car Sales, $ 1,426,555 82091880 May
Glendale, AZ Inc.
6 9650 N. 19th Ave., Ugly Duckling Car Sales, $ 894,035 82091881 May
Phoenix, AZ Inc.
7 1030 N. Colorado, Champion Acceptance $ 3,476,573 82091883 May
Gilbert, AZ Corporation
8 1002 S. 52nd Street -
Intentionally Deleted
9 400 N. Arizona Ave., Ugly Duckling Car Sales, $ 804,889 82091884 May
Chandler, AZ Inc.
10 4121 S. Central Ave., Ugly Duckling Car Sales, $ 642,854 82091885 May
Phoenix, AZ Inc.
11 4515 E. Miami, Phoenix, Ugly Duckling Car Sales, $ 2,544,127 82091886 May
AZ Inc.
12 2301 N. Oracle, Tucson, Ugly Duckling Car Sales, $ 1,395,615 82091887 May
AZ Inc.
13 1901 W. Copper, Tucson, Ugly Duckling Car Sales, $ 626,496 82091888 May
AZ Inc.
14 3434 E. Broadway, Champion Acceptance $ 1,273,400 82091889 May
Tucson, AZ Corporation
15 4700 4th Street, NW, Ugly Duckling Car Sales $ 1,473,751 82091890 May
Albuquerque, NM New Mexico, Inc.
17 1219 S.E. Military Dr., Ugly Duckling Car Sales $ 1,273,535 82091892 May
San Antonio, TX Texas, L.L.P.
SUBTOTAL - MAY $21,845,942
16 700 Wyoming Blvd., Ugly Duckling Car Sales $ 2,787,207 8209191 July 31
Albuquerque, NM New Mexico, Inc.
18 1507 Bandera Road, San Ugly Duckling Car Sales $ 1,180,215 82091893 July 31
Antonio, TX Texas, L.L.P.
19 350 S. W.W. White, San Ugly Duckling Car Sales $ 1,261,987 82091894 July 31
Antonio, TX Texas, L.L.P.
20 11704 N. Florida Ave., Ugly Duckling Car Sales $ 1,640,261 82091895 July 31
Tampa, FL Florida, Inc.
28
21 8805 E. Adamo Dr., Ugly Duckling Car Sales $ 1,091,000 82091896 July 31
Brandon, FL Florida, Inc.
22 7501 North Dale Mabry Ugly Duckling Car Sales $ 1,600,000 July 31
Hwy., Tampa, FL Florida, Inc.
SUBTOTAL - JULY $ 9,560,670
GRAND TOTAL $31,406,612
29
EXHIBIT "B"
DESCRIPTION OF LAND
[OMITTED]
30
EXHIBIT "C"
OMITTED
31
EXHIBIT "D"
OMITTED
32
EXHIBIT "E"
OMITTED
33
EXHIBIT "F"
LIST OF EXISTING CONTRACTS -- OMITTED
34
EXHIBIT "G"
FORM OF DEED
35
GENERAL WARRANTY DEED
For the consideration of Ten Dollars, and other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the undersigned,
, a , the
- ---------------- ------------------------------ ----------------------
Grantor herein, does hereby convey to , a
----------------------------------
, the Grantee, the following real
- ------------ -------------------------
property situated in Maricopa County, Arizona, together with all rights and
privileges appurtenant thereto, to wit:
SEE EXHIBIT "A" ATTACHED HERETO AND INCORPORATED HEREIN BY
THIS REFERENCE.
SUBJECT TO current taxes and assessments, reservations in
patents, and all easements, rights of way, encumbrances,
liens, covenants, conditions, restrictions, obligations and
liabilities as may appear of record.
AND the Grantor hereby binds itself and its successors to warrant and
defend the title, subject to the matters above set forth.
GRANTOR:
----------------------------------
By:
-------------------------------------
Name:
-------------------------------------
Title:
----------------------------------
36
EXHIBIT "H"
FIRPTA STATEMENT
37
CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code provides that a transferee of
a U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform , a ("BUYER"),
------------------ ------------------------
and that withholding of tax is not required
---------------------------------
upon the disposition of a U.S. real property interest by ,
---------------------
a ("SELLER"), the undersigned hereby swears, affirms and
----------------------
certifies the following on behalf of Seller:
1. Seller is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations).
2. Seller's U.S. employer identification number is .
-------------------
3. Seller's office address is:
---------------------------------
---------------------------------
Attention:
-----------------------
Telecopier:
-----------------------
4. Seller understands that this certification may be disclosed to the
Internal Revenue Service by Buyer and that any false statement contained herein
could be punished by fine, imprisonment, or both.
Under penalties of perjury, the undersigned declares that he has
examined this certification and to the best of his knowledge and belief it is
true, correct and complete, and he/she further declares that he has the
authority to sign this document on behalf of Seller.
Executed as of the day of , 1998.
------- ----------------
-----------------------------,
a
----------------------------
By:
----------------------------
Name:
-------------------------
Title:
-------------------------
38
EXHIBIT "I"
BILL OF SALE
39
BILL OF SALE AND ASSIGNMENT
FOR VALUABLE CONSIDERATION, receipt and adequacy of which is hereby
acknowledged, the undersigned, , a
--------------------- --------------------
("ASSIGNOR"), hereby sells, transfers, assigns and conveys to
, a ("ASSIGNEE"), the following:
- ------------------ --------------------------
(1) the "Personal Property" and (2) the "Intangible Property." The terms
"Personal Property" and "Intangible Property" shall have the respective
definitions set forth in that certain agreement ("PURCHASE AGREEMENT") captioned
"PURCHASE AND SALE - LEASE BACK AGREEMENT AND JOINT ESCROW INSTRUCTIONS", dated
as of April , 1998, by and between Assignor and Assignee.
The covenants, agreements, representations, warranties, indemnities and
limitations provided in the Purchase Agreement with respect to the property
conveyed hereunder, are hereby incorporated herein by this reference as if
herein set out in full and shall inure to the benefit of and shall be binding
upon Assignee and Assignor and their respective successors and assigns.
IN WITNESS WHEREOF, Assignor has executed this Bill of Sale and
Assignment as of , 1998.
-------------------
ASSIGNOR:
------------------------,
a
-----------------------
By:
----------------------
Name:
----------------------
Title:
----------------------
40
EXHIBIT "J"
LEASE
41
LEASE
THIS LEASE (this "Lease") is entered into as of the ____ day of
_______________, 1998 (the "Commencement Date"), by and between [ICCMIC entity],
a_______________ (the "Landlord"), whose address for purposes of notice
hereunder is Attention: Mr. James M. Flagg, c/o Imperial Credit Mortgage
Investment Corporation, 11601 Wilshire Boulevard, Suite 2080, Los Angeles,
California 90025, and UGLY DUCKLING CAR SALES, INC., an Arizona corporation (the
"Tenant"), whose address for purposes of notice hereunder is Attention: General
Counsel, 2525 East Camelback Road, Suite 1150, Phoenix, Arizona 85016.
R E C I T A L S
This Lease is made with reference to the following facts and
objectives:
Landlord is the owner of the following: (i) certain tract(s) or
parcel(s) of land located in the _________, and more particularly described on
the attached and incorporated Exhibit "A" (the land described above, together
with all rights, interests, easements, rights of way and appurtenances related
thereto, shall hereinafter be referred to as the "Land"); and (ii) a building or
buildings located or to be located on the Land and all other structures and
improvements existing or to be constructed on the Land, together with all
fixtures and equipment therein owned by Landlord (collectively, the
"Improvements"). The Land and Improvements are hereinafter collectively referred
to as the "Premises." No easement for light, air or view is included with or
appurtenant to the Premises.
Pursuant to all of the terms, conditions, covenants and provisions of
this Lease, Tenant desires to lease the Premises from Landlord, and Landlord
desires to lease the Premises to Tenant, for the rents and during the terms
hereinafter set forth.
Landlord acquired the Premises on the Commencement Date and for the
period of at least _________ years prior to the Commencement Date, Tenant owned,
occupied and operated the Premises.
Tenant has examined the title of the Premises, the physical condition
of the Premises, environmental studies and reports of the Premises, and the
economic feasibility of conducting its business in and from the Premises. Tenant
has determined that the same are satisfactory to Tenant, and Tenant accepts the
Premises on an "AS IS - WHERE IS" basis. TENANT ACKNOWLEDGES THAT LANDLORD
(WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND
WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, INCLUDING ANY
WARRANTY OR REPRESENTATION AS TO ITS FITNESS FOR USE OR PURPOSE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE QUALITY OF THE MATERIAL
OR WORKMANSHIP THEREIN, LATENT OR PATENT, AS TO LANDLORD'S TITLE THERETO, OR AS
TO VALUE, COMPLIANCE WITH SPECIFICATIONS, LOCATION, USE, CONDITION,
MERCHANTABILITY, QUALITY, DESCRIPTION, DURABILITY OR OPERATION, IT BEING AGREED
THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. Tenant acknowledges
that the Premises are of its selection and to its specifications, that the
Premises have been inspected by Tenant and are satisfactory to it, and that in
deciding to lease the Premises, Tenant is relying solely on its own
investigation of the Premises and not upon any representation or warranty from
Landlord or its agents. In
42
the event of any defect or deficiency in the Premises of any nature, whether
patent or latent, Landlord shall not have any responsibility or liability with
respect thereto or for any incidental or consequential damages (including strict
liability in tort).
It is the parties' objective to provide for an absolute "bond
equivalent" net net net lease to Landlord; the Basic Rent (as hereinafter
defined) payable by Tenant hereunder shall be an absolute "bond equivalent" net
net net return to Landlord and Tenant shall pay all costs and expenses relating
to the Premises and Tenant's operations thereon. Landlord would not have entered
into this Lease if it did not meet the aforesaid criteria.
NOW, THEREFORE, IN CONSIDERATION of the aforesaid Recitals, and in
consideration of the Premises leased by Landlord to Tenant hereby, and in
consideration of the rents and covenants to be paid and performed by Tenant
hereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties covenant and agree as
follows:
I. LEASE.
1.1. Demise of Premises. Landlord hereby demises the Premises
to Tenant, and Tenant hereby lets and accepts the Premises from Landlord, for
the term herein described.
1.2. Title and Condition. The Premises are demised and let "as
is" subject to all matters of record and all other title exceptions, including
but not limited to (a) the rights of any parties in possession and the existing
state of the title as of the commencement of the term of this Lease, (b) any
state of facts which an accurate survey or physical inspection thereof might
show, (c) all zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
by any governmental authority having jurisdiction over the condition of any
buildings, structures and other improvements located thereon, all as of the
commencement of the term of this Lease, without representation or warranty by
Landlord. Tenant represents that it has examined the title to and the condition
of the Premises and has found the same to be satisfactory to it.
2
43
1.3. Use of Leased Premises.
(a) Tenant is currently operating the Premises for
the purpose of used car sales and activities incidental and related thereto (the
"Intended Use"). Tenant agrees to remain open for business and to operate the
Intended Use in all or substantially all of the Premises during the Term. Tenant
may occupy and use the Premises for no use other than the Intended Use without
Landlord's consent, which shall not be unreasonably withheld, conditioned or
delayed. In no event, however, shall the Premises be used for a use which would
(i) have a material adverse effect on the value of the Premises, (ii) increase
(when compared to use as the Intended Use) the likelihood that Tenant, Landlord
or Lender would incur liability under any provisions of any Environmental Laws,
or (iii) result in or give rise to any material environmental deterioration or
degradation of the Premises. Tenant shall not create or suffer to exist any
public or private nuisance, hazardous or illegal condition or waste on or with
respect to the Premises. Tenant shall not use, occupy or permit any of the
Premises to be used or occupied, nor do or permit anything to be done in or on
any of the Premises, in a manner which would (A) make void or voidable any
insurance which Tenant is required hereunder to maintain then in force with
respect to any of the Premises, or (B) affect the ability of Tenant to obtain
any insurance which Tenant is required to furnish hereunder, (C) impair
Landlord's title to the Premises, or in such manner as might reasonably make
possible a claim or claims of adverse usage or adverse possession by the public,
as such, or third Persons, or of implied dedication of the Premises or any
portion thereof, or (D) conflict with the terms or conditions of any instrument
or agreement binding upon Landlord, Tenant or the Premises. Nothing contained in
this Lease and no action by Landlord shall be construed to mean that Landlord
has granted to Tenant any authority to do any act or make any agreement that may
create any such third party or public right, title, interest, lien, charge or
other encumbrance upon the estate of the Landlord in the Premises.
(b) Tenant represents and warrants to Landlord that
all necessary certificates of occupancy, permits, licenses and consents from any
and all appropriate governmental authorities have been obtained by Tenant and
are in full force and effect, and Tenant agrees to maintain them in full force
and effect during the Term.
1.4. Quiet Enjoyment. For so long as no Event of Default (as
hereinafter defined) exists hereunder, Landlord warrants peaceful and quiet
enjoyment of the Premises by Tenant against acts of Landlord or anyone claiming
through Landlord, provided that Landlord and its agents may enter upon and
examine the Premises at reasonable times. Exercise by Landlord of its rights to
come upon the Premises as set forth in this Lease shall not constitute a
violation of this Section.
II. TERM.
2.1. Term. Subject to the terms and conditions hereof, Tenant
shall have and hold the Premises for a primary term (herein called the "Primary
Term") commencing on the Commencement Date and ending at midnight on
_______________, 2018, unless this Lease shall be sooner terminated or extended.
Tenant shall have the right and option to extend this Lease for four (4)
consecutive extended terms, of five (5) years each (herein, collectively called
the "Extended Terms" and individually, an "Extended Term" and together with the
Primary Term, sometimes hereinafter called the "Term" "term of this Lease" or
"term hereof"). If no Event of Default shall exist at the time of exercise of
such option, each Extended Term shall commence on the day immediately succeeding
the expiration date of the Primary Term or the preceding Extended Term and shall
end at midnight on the day immediately preceding the fifth anniversary of the
first day of such Extended Term. Provided no Event of Default shall exist at the
time of exercise of such option, Tenant may exercise each said option to extend
this Lease for an Extended Term by giving written notice to that effect at least
one (1) year prior to the
3
44
expiration of the then existing term. If Tenant fails to exercise an option to
extend the Term one (1) year or more prior to the expiration of the then current
Term, Tenant's option to extend the Term shall not be terminated and this Lease
shall not expire unless Landlord delivers to Tenant written notice of Tenant's
failure to exercise its option to extend the Term of this Lease and Tenant then
fails to exercise the option within fifteen (15) days after receipt of the
written notice from Landlord. If Tenant does not exercise any such option in a
timely manner, then Landlord shall have the right during the remainder of the
Term of this Lease to advertise the availability of the Premises for reletting
and/or sale and to erect upon the Premises signs appropriate for the purpose of
indicating such availability. Landlord shall also have such right in the final
year of the fourth Extended Term. The term "Lease Year" shall mean a calendar
year, except that the first partial "Lease Year" (the "First Lease Year") shall
commence on the "Commencement Date and expire on December 31, 1998.
III. BASIC RENT; ADDITIONAL RENT.
3.1. Basic Rent. Tenant covenants to pay to Landlord as and
for the rental of the Premises the amounts set forth below (which amounts, as
increased by the amounts provided for in Section 3.2 hereof, is together called
the "Basic Rent"):
(a) For and with respect to the First Lease Year the
amount of $ ___________, payable in equal monthly installments of $____________
(but if the Commencement Date does not occur on the first day of a calendar
month, the installment for the period from the Commencement Date to the end of
the calendar month in which the Commencement Date occurs shall be paid on the
Commencement Date and shall be prorated based on a thirty (30) day month).
(b) For and with respect to the second Lease Year
(i.e., calendar year 1999), the amount of $ ___________, payable in equal
monthly installments of $____________ .
(c) Basic Rent shall be adjusted commencing with the
first (1st) day of the third Lease Year and as of the first (1st) day of each
Lease Year thereafter (each such date being referred to herein as an "BR
Adjustment Date" and each such Lease Year commencing with the third Lease Year
being referred to herein as a "BR Period"). Basic Rent for the first BR Period
will be adjusted on the first BR Adjustment Date by an amount calculated by
multiplying the Basic Rent then in effect by the percentage increase, if any, in
the "CPI", as defined below in this paragraph, from the month immediately
preceding the BR Adjustment Date over the CPI for the month immediately
preceding the second Lease Year. Basic Rent for each subsequent BR Period will
be adjusted on each subsequent BR Adjustment Date by an amount calculated by
multiplying the Basic Rent then in effect, by the percentage increase, if any,
in the CPI from the last month of the BR Period then ending over the CPI for the
last month of the most recent prior BR Adjustment Date. If the aforesaid
calculations can not be made by the BR Adjustment Date, there shall be an
adjustment retroactive to the BR Adjustment Date as soon as possible after such
calculations can be made. Notwithstanding the foregoing to the contrary, in no
event shall the percentage increase for any such Lease Year exceed five percent
(5%) or be less than two percent (2%). The "CPI" shall mean (and charges subject
to adjustment pursuant to the CPI under this Lease shall mean adjustment
pursuant to changes in) the "Consumer Price Index For All Urban Consumers
(1982-84=100) U.S. City Average, published by the Bureau of Labor Statistics of
the U.S. Department of Labor. If no CPI is published for the month for which CPI
is to be utilized pursuant to this Lease, the most recent prior month shall be
utilized. In the event the CPI is not published by the Bureau of Labor
Statistics or another governmental agency at any time during the Term, the most
comparable statistics on the purchasing power of the consumer dollar as
published by a responsible financial authority and as selected by Landlord shall
be used for making such computation.
4
45
(d) If an option to extend the Term is exercised, for
and with respect to the applicable Extended Term, at the rate equal to one
hundred percent (100%) of fair market rental value, but in no event less than
the Basic Rent payable in the last year of the prior portion of the Term
("Extended Term Basic Rent"). Fair market rental value will be determined as of
the first day of the applicable Extended Term but at the time and on the basis
set forth in Section 11.3 hereof.
Tenant unconditionally and irrevocably agrees to make the
Basic Rent payments directly to Landlord or Landlord's designee and to pay the
same on the first day of each month, commencing on the Commencement Date. After
any Event of Default, Landlord shall have the right to require that such
payments be made in immediately available funds.
3.2. Additional Rent. Tenant shall pay and discharge before
the imposition of any fine, lien, interest or penalty may be added thereto for
late payment thereof, as Additional Rent, all other amounts and obligations
which Tenant assumes or agrees to pay or discharge pursuant to this Lease,
together with every fine, penalty, interest and cost which may be added by the
party to whom such payment is due for nonpayment or late payment thereof. In the
event of any failure by Tenant to pay or discharge any of the foregoing,
Landlord shall have all rights, powers and remedies provided herein, by law or
otherwise, in the event of nonpayment of Basic Rent.
3.3. Late Charge. If any installment of Basic Rent is not paid
within five (5) days after notice that the same is due and not paid, Tenant
shall pay to Landlord or Lender, as the case may be, on demand, as Additional
Rent, a late charge equal to three percent (3%) (the "Late Charge") on such
overdue installment of Basic Rent. Such payment shall be in addition to, and not
in lieu of, the interest payable pursuant to Section 11.18.
3.4. True Lease. Landlord and Tenant agree that this Lease is
a true lease and does not represent a financing arrangement. Each party shall
reflect the transactions represented by this Lease in all applicable books,
records and reports (including, without limitation, income tax filings) in a
manner consistent with "true lease" treatment rather than "financing" treatment.
3.5. Net Lease; Non-Terminability.
(a) This is an absolutely net lease to Landlord. It
is the intent of the parties hereto that the Basic Rent payable under this Lease
shall be an absolutely net return to Landlord and that Tenant shall pay all
costs and expenses relating to the Premises and operations carried on therein,
including but not limited to costs and expenses relating to any period prior to
the Premises which is not expressly declared to be that of Landlord shall be
deemed to be an obligation of Tenant to be timely performed by Tenant at
Tenant's expense. Basic Rent, Additional Rent and all other sums payable
hereunder by Tenant, shall be paid without notice, demand, set-off,
counterclaim, abatement, suspension, deduction or defense.
(b) This Lease shall not terminate nor shall Tenant
have any right to terminate this Lease, nor shall Tenant be entitled to any
abatement or reduction of rent hereunder, nor shall the obligations of Tenant
under this Lease be affected by reason of: (i) any damage to or destruction of
all or any part of the Premises from whatever cause; (ii) the taking in whole or
in part of the Premises or any portion thereof by condemnation, requisition or
otherwise except as provided in Article VII; (iii) the prohibition, limitation
or restriction of Tenant's use of all or any part of the Premises, or any
interference with such use; (iv) any eviction by paramount title or otherwise;
(v) Tenant's acquisition or ownership of all or any of the Premises otherwise
than as expressly provided herein; (vi) any default on the part of Landlord
under this Lease, or under any other agreement to which Landlord and Tenant may
be parties; (vii) any abandonment of the Premises by Tenant or (viii) any other
5
46
cause whether similar or dissimilar to the foregoing, any present or future law
to the contrary notwithstanding. It is the intention of the parties hereto that
the obligations of Tenant hereunder shall be separate and independent covenants
and agreements, that the Basic Rent, the Additional Rent and all other sums
payable by Tenant hereunder shall continue to be payable in all events and that
the obligations of Tenant hereunder shall continue unaffected, unless the
requirement to pay or perform the same shall have been terminated pursuant to
Article VII of this Lease.
(c) Tenant agrees that it will remain obligated under
this Lease in accordance with its terms, and it will not take any action to
terminate, rescind or avoid this Lease because of: (i) any readjustment,
liquidation, dissolution, or winding-up or other proceeding affecting Landlord
or its successors-in-interest or (ii) any action with respect to this Lease
which may be taken by any trustee or receiver of Landlord or its
successors-in-interest or by any court in any such proceeding.
(d) To the extent permitted by applicable law, Tenant
waives all rights which may now or hereafter be conferred by law (i) to quit,
terminate or surrender this Lease or the Premises or any part thereof, or (ii)
to any abatement, suspension, deferment or reduction of the Basic Rent,
Additional Rent or any other sums payable under this Lease.
IV. PAYMENT OF IMPOSITIONS, TAXES AND ASSESSMENTS; COMPLIANCE WITH LAW;
ENVIRONMENTAL MATTERS.
4.1. Payment of Impositions. Tenant shall pay or discharge all
Impositions (as hereinafter defined) when due, including but not limited to
Impositions relating to any period prior to the Commencement Date.
Notwithstanding the foregoing provision of this Section 4.1, Tenant shall not be
required to pay any franchise, corporate, estate, inheritance, succession,
transfer (other than transfer taxes, recording fees, or similar charges payable
in connection with a conveyance hereunder to Tenant), income or excess profits
taxes of Landlord hereunder. Tenant agrees to furnish to Landlord and Lender,
evidence of the payment of the taxes described in Section 11.12(a)(i) within
thirty (30) days after payment thereof. Tenant agrees to furnish evidence of
payment of other Impositions with fifteen (15) days of Landlord's request
therefor. In the event that any Imposition levied or assessed against the
Premises becomes due and payable during the term hereof and may be legally paid
in installments, Tenant shall have the option to pay such Imposition in
installments. In such event, Tenant shall be liable only for those installments
which relate (on an accrual basis) to the term hereof or any period prior to the
term hereof. On or prior to the Termination Date, all accrued Impositions
relating to the term hereof shall be paid by Tenant to Landlord (whether or not
the tax bill therefor is then due and payable, but subject to readjustment in
the event of any error in calculation).
4.2. Compliance with Laws. Tenant shall, at its expense,
comply with and shall cause the Premises to comply with all governmental
statutes, laws, rules, orders, regulations and ordinances, including without
limitation, the Americans with Disabilities Act of 1990, as the same may be
amended from time to time, all fire regulations, occupational health and safety
laws, applicable point of sale laws, building codes, Environmental Laws, zoning
and land use laws and regulations, and any other law the failure to comply with
which at any time would affect Landlord or the Premises or any part thereof, or
the use thereof, including those which require the making of any structural,
unforeseen or extraordinary changes, whether or not any of the same involve a
change of policy on the part of the body enacting the same. Tenant shall, at its
expense, comply with all changes required in order to obtain the Required
Insurance (as hereinafter defined), and with the provisions of all contracts,
agreements,
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instruments and restrictions existing at the commencement of this Lease or
thereafter suffered or permitted by Tenant affecting the Premises or any part
thereof or the ownership, occupancy or use thereof.
4.3. Permitted Contests. Provided that Tenant shall have
complied with, and shall continue to comply with, its obligations under Section
4.2 (including but not limiting to any governmental requirement of payment under
protest as a condition to a contest), Tenant may contest, in good faith and at
its expense and in accordance with all laws and governmental requirements, the
existence, the amount or the validity of the requirements imposed pursuant to
Section 4.2, or the extent of its liability therefor, by appropriate
proceedings. At least thirty (30) days prior to any such contest, and as a
condition thereto, Tenant shall notify Landlord as to the proposed contest in
reasonable detail, and Landlord shall have the right to require Tenant to post
security in amount and form reasonably required by Landlord. No such contest or
proceedings shall in any way eliminate or otherwise interfere with Tenant's
obligation to make timely payments of Basic Rent and Additional Rent under this
Lease. Tenant further agrees that each such contest shall be promptly prosecuted
to a final conclusion. Tenant shall pay, defend, indemnify, protect and save
Landlord harmless against, any and all losses, judgments, decrees and costs
(including all attorneys' fees, appearance costs and expenses) incurred by
Landlord in connection with any such contest (but this shall not be construed so
as to require Tenant to pay Impositions which relate to a period after the Term
even if such Impositions are increased in connection with a contest) and shall,
promptly after the final settlement, compromise or determination of such
contest, fully pay and discharge the amounts which shall be levied, assessed,
charged or imposed or be determined to be payable therein or in connection
therewith, together with all penalties, fines, interests, costs and expenses
thereof or in connection therewith, and perform all acts, the performance of
which shall be ordered or decreed as a result thereof. No such contest shall
subject Landlord to the risk of any criminal liability or shall subject the
Premises to the risk of foreclosure.
4.4. Hazardous Materials. Tenant shall:
(a) not cause, or permit any Hazardous Material (as
defined below) to exist on or discharge from the Premises (except for items (1)
sold or used in the ordinary course of Tenant's business, (2) in full compliance
with all Environmental Laws pertaining thereto, (3) not involving any release,
spill, disposition or discharge, and (4) not creating any health or safety
hazard), and shall promptly: (i) pay any claim against Tenant, Landlord, Lender
or the Premises; (ii) remove any charge or lien upon any of the Premises; and
(iii) defend, indemnify, protect and hold Landlord and Lender harmless from any
and all claims, expenses, liability, loss or damage (including reasonable
attorneys' fees) resulting from any Hazardous Material that at any time exists
on or is discharged from the Premises except to the extent it is the direct
result of the actual gross negligence or willful misconduct of Landlord;
(b) not cause or permit any Hazardous Material to
exist on or discharge from any property owned or used by Tenant which would
result in any charge or lien upon the Premises and shall promptly: (i) pay any
claim against Tenant, Landlord, Lender or the Premises; (ii) remove any charge
or lien upon the Premises; and (iii) defend, indemnify, protect and hold
Landlord and Lender harmless from any and all claims, expenses, liability, loss
or damage (including reasonable attorneys' fees) resulting from the existence or
discharge of any such Hazardous Material except to the extent it is the direct
result of the actual gross negligence or willful misconduct of Landlord;
(c) notify Landlord and Lender within ten (10) days
after Tenant first has knowledge of any of the following:
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(i) that Hazardous Material exists on
or has been discharged from or onto the Premises (whether originating thereon or
migrating to the Premises from other property);
(ii) that Tenant is subject to
investigation by any governmental authority evaluating whether any remedial
action is needed to respond to the release or threatened release of any
Hazardous Material into the environment from the Premises;
(iii) notice or claim to the effect that
Tenant is or may be liable to any person as a result of the release or
threatened release of any Hazardous Material into the environment from the
Premises;
(iv) notice that the Premises are subject
to an environmental lien;
(v) notice of violation to Tenant or
awareness by Tenant of a condition which might reasonably result in a notice of
violation of any applicable Environmental Law.
(d) comply, and cause the Premises to comply, with
all statutes, laws, ordinances, rules and regulations of all local, state or
federal authorities having authority over the Premises or any portion thereof or
their use, including without limitation, relative to any Hazardous Material,
petroleum products, asbestos containing materials or PCB's.
(e) "Hazardous Material" means any hazardous or toxic
material, substance or waste which is defined by those or similar terms or is
regulated as such under any Environmental Laws ), and without limiting the
generality of the foregoing, shall include any substance which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous, or any substance which contains gasoline,
diesel fuel or other petroleum hydrocarbons, polychlorinated biphenyls (PCBs),
or radon gas, urea formaldehyde, asbestos, lead or mercury.
(f) "Environmental Laws" means any statute, law,
ordinance, rule or regulation of any local, county, state or federal authority
having jurisdiction over the Property or any portion thereof or its use as the
same may be amended from time to time, including but not limited to: (i) the
Federal Water Pollution Control Act (33 U.S.C. Section 1317) as amended; (ii)
the Federal Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.) as amended; (iii) the Comprehensive Environmental Response Compensation
and Liability Act (42 U.S.C. Section 9601 et seq.) as amended; (iv) the Toxic
Substance Control Act (15 U.S.C. Section 2601) as amended; and (v) the Clean Air
Act (42 U.S.C. Section 7401) as amended.
(g) The Tenant's obligations and liabilities under
this Section 4.4 shall survive the expiration or termination of this Lease and
shall include, without limitation, matters arising prior to the Commencement
Date.
V. MAINTENANCE AND REPAIR; ALTERATIONS.
5.1. Maintenance and Repair. Tenant acknowledges that it has
received the Premises in good condition, repair and appearance. Tenant agrees
that, at its expense, it will keep and maintain the Premises, including any
altered, rebuilt, additional or substituted buildings, structures and other
improvements thereto, in good condition and repair. It will make promptly, all
structural and nonstructural, foreseen and unforeseen, ordinary and
extraordinary changes and repairs or replacements of every kind which may be
required to be made to keep and maintain the Premises in such good
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condition, repair and appearance and it will keep the Premises orderly and free
and clear of rubbish. Tenant covenants not to install any underground storage
tanks on the Premises. Tenant agrees that its obligation to maintain and repair
the Premises as set forth in this Section 5.1 benefit both Landlord and Tenant,
are the sole responsibility of Tenant, and may not be delegated. Tenant further
covenants to perform or observe all terms, covenants or conditions of any
reciprocal easement or maintenance agreement to which it may at any time be a
party or to which the Premises are currently subject. Tenant shall, at its
expense, use its best efforts to enforce compliance with any reciprocal easement
or maintenance agreement benefiting the Premises by any other person subject to
such agreement. Landlord shall not be required to maintain, repair or rebuild,
or to make any Alterations of any nature to the Premises, or any part thereof,
whether ordinary or extraordinary, structural or nonstructural, foreseen or not
foreseen, or to maintain the Premises or any part thereof in any way. Tenant
hereby expressly waives the right to make repairs at the expense of Landlord
which may be provided for in any law in effect at the time of the commencement
of the term of this Lease or which may thereafter be enacted. In the event that
the Premises shall violate any law and as a result of such violation an
enforcement action is threatened or commenced against Tenant or with respect to
the Premises, then Tenant shall either (i) obtain valid and effective waivers or
settlements of all claims, liabilities and damages resulting from each such
violation, whether the same shall affect Landlord, Tenant or both, or (ii) take
such action as shall be necessary to remove such violation, including, if
necessary, making any necessary repairs or replacements, structural or
otherwise.
5.2. Engineering Report. Beginning the Sixth Lease Year, and
every five (5) years thereafter, Tenant shall provide Landlord, upon Landlord's
written request, with an engineering study of the Premises ("Engineering
Report") addressed to Landlord, in form, content and scope reasonably acceptable
to Landlord, prepared by a qualified engineering firm. The Engineering Report
shall include, without limitation, a study or analysis of (a) all structural
components of the Premises, (b) all mechanical, electrical, plumbing, HVAC,
sprinkler, fire suppression, elevators, and other building systems and equipment
designated by Landlord, and (c) the roof of all buildings. Tenant shall also
provide to Landlord Hazardous Materials audits addressed to Landlord, in form,
content and scope reasonably acceptable to Landlord, prepared by a qualified
Hazardous Materials consulting firm. The first such Hazardous Materials audit
shall be provided to Landlord no later than sixty (60) days after the
Commencement Date, and Hazardous Materials audits shall thereafter be provided
to Landlord every five (5) years after the Commencement Date (or more frequently
if Landlord so requests in writing).
5.3. Encroachments. If any Improvements situated on the
Premises at any time during the Term of this Lease shall encroach upon any
property, street or right-of-way adjoining or adjacent to the Premises, or shall
violate the agreements or conditions contained in any restrictive covenant
affecting the Premises or any part thereof, or shall impair the rights of others
under or hinder or obstruct any easement or right-of-way to which the Premises
are subject, then, promptly after the written request of Landlord or any person
affected by any such encroachment, violation, impairment, hindrance or
obstruction, Tenant shall, at its expense, either (i) obtain effective waivers,
or settlements of all claims, liabilities and damages resulting from each such
encroachment, violation, impairment, hindrance or obstruction whether the same
shall affect Landlord, Tenant or both, or (ii) make such changes in the
improvements on the Premises and take such other action as shall be necessary to
remove such encroachments, hindrances or obstructions and to end such violations
or impairments, including, if necessary, the alteration or removal of any
improvement on the Premises. Any such alteration or removal shall be made in
conformity with the requirements of Section 5.4 hereof to the same extent as if
such alteration or removal were an Alteration under the provisions of Section
5.4.
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5.4. Alterations.
(a) Tenant may, at its expense, make additions to and
alterations of the Improvements to the Premises and make substitutions
and replacements thereto (sometimes hereinafter collectively referred
to as "Alterations"), provided that: (i) Landlord approves, which
approval shall not be unreasonably withheld, conditioned or delayed,
any Alterations to the Premises before such alterations are commenced,
after having received from Tenant a complete set of plans and
specifications for the proposed work,(ii) in Landlord's reasonable
judgment, the market value of the Premises and the Intended Use shall
not thereby be reduced or impaired and the appearance of the Property
will not be adversely affected; (iii) the Alterations are
architecturally consistent with existing Improvements; (iv) the
Alterations shall be performed in a good and workmanlike manner; (v)
such work shall not violate any term of any restriction to which the
Premises are subject or the requirements of any insurance policy
required to be maintained by Tenant hereunder, and shall be
expeditiously completed in compliance with all laws, ordinances, rules,
regulations and requirements applicable thereto, including without
limitation, the Americans with Disabilities Act of 1990 and all
regulations issued thereunder, as the same may be amended from time to
time; and (vi) no Improvements shall be demolished unless Tenant shall
have first furnished Landlord with such surety bonds or other security
acceptable to Landlord as shall be necessary to assure rebuilding of
such Improvements. Tenant shall promptly pay all costs and expenses of
each such Alteration, discharge all liens arising therefrom and procure
and pay for all permits and licenses required in connection therewith.
All such Alterations shall be and remain part of the realty and the
property of Landlord and shall be subject to this Lease. Tenant may
place upon the Premises any inventory, trade fixtures, machinery or
equipment belonging to Tenant or third parties and may remove the same
at any time during the Term. Tenant shall repair any damage to the
Premises or any portion thereof (including all Improvements thereon)
caused by such removal.
5.5. No Liens. Tenant will not, directly or indirectly, create
or permit to be created or to remain, and shall within thirty (30) days of
filing of any, mechanics, contractors or other liens, discharge or bond, at its
expense, any liens with respect to, the Premises or any part thereof or Tenant's
interest therein or the Basic Rent, Additional Rent or other sums payable by
Tenant under this Lease, other than the lien for real estate taxes which are not
yet due and payable. Nothing contained in this Lease shall be construed as
constituting the consent or request, expressed or implied, by Landlord to the
performance of any labor or services or of the furnishing of any materials for
any Alterations, repair or demolition of or to the Premises or any part thereof
by any contractor, subcontractor, laborer, materialman or vendor. Notice is
hereby given that Landlord will not be liable for any labor, services or
materials furnished or to be furnished to Tenant, or to anyone holding the
Premises or any part thereof, and that no mechanic's or other liens for any such
labor services or materials shall attach to or affect the interest of Landlord
in and to the Premises.
[THE FOLLOWING SECTION IS APPLICABLE ONLY TO THE MIAMI STREET
SITE IN PHOENIX, ARIZONA:
5.6 SEWER SYSTEM AGREEMENT. TENANT SHALL COMPLY WITH ALL OF
THE OBLIGATIONS IMPOSED PURSUANT TO THAT CERTAIN SEWER SYSTEM AGREEMENT DATED
NOVEMBER 17, 1997, RECORDED NOVEMBER 18, 1997 AS INSTRUMENT NO. 97-0808576 OF
THE OFFICIAL RECORDS OF THE COUNTY IN WHICH THE PREMISES IS LOCATED, AS SUCH
SEWER SYSTEM AGREEMENT MAY BE AMENDED, AND ALL DOCUMENTS RELATED THERETO
(COLLECTIVELY, THE "SEWER AGREEMENT") UPON LICENSEE (AS DEFINED IN THE SEWER
AGREEMENT), THE PREMISES OR THE OWNER OF THE PREMISES. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING: (a) TENANT SHALL PAY ALL COSTS, EXPENSES, FEES AND
CHARGES THEREUNDER AND SHALL OBTAIN AND MAINTAIN IN FULL FORCE AND EFFECT ALL
PERMITS REQUIRED THEREUNDER; (b) TENANT SHALL PERFORM ANY
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CONSTRUCTION WORK REQUIRED OR PERMITTED THEREUNDER IN ACCORDANCE WITH THE
TERMS AND CONDITIONS OF THIS LEASE; AND (c) TENANT SHALL NOT AMEND OR TERMINATE
THE SEWER AGREEMENT OR ASSIGN ANY OF ITS RIGHTS OR OBLIGATIONS THEREUNDER
WITHOUT LANDLORD'S PRIOR WRITTEN CONSENT.]
VI. INSURANCE; INDEMNIFICATION.
6.1. Insurance. Tenant shall maintain, or cause to be
maintained, at its sole expense, the following insurance on the Premises (herein
called the "Required Insurance"):
(a) Insurance against loss or damage to the
Improvements (the "Improvements Insurance") under a fire and broad form of all
risk extended coverage insurance policy (which shall include flood insurance if
the Premises is located within a flood hazard area, and earthquake insurance)
together with an agreed value endorsement. Such insurance shall be in amounts
sufficient to prevent Landlord or Tenant from becoming a co-insurer under the
applicable policies, and not less than the full replacement cost of the
Improvements (excluding footings and foundations and other parts of the
Improvements which are not insurable) as reasonably determined from time to time
by Landlord but not more frequently than once in any 12-month period. Such
insurance policies may contain reasonable exclusions and deductible amounts as
are common to properties similar to the Premises.
(b) Commercial general liability insurance for the
benefit of Landlord, Tenant and Lender against claims for damages to person or
property occurring on, in or about the Premises and the adjoining streets,
sidewalks, gutters, curbs, passageways and other areas adjacent thereto, if any,
with a combined single limit of at least Five Million Dollars ($5,000,000.00)
for personal injury and property damage or such greater amounts as may
reasonably be required by Landlord, consistent with coverage on properties
similarly constructed, occupied and maintained, such insurance to include full
coverage of the indemnity set forth in Section 6.10. Policies for such insurance
shall be for the mutual benefit of Landlord, Tenant and Lender, as their
respective interests may appear.
(c) Workers' compensation insurance to the extent
necessary to protect Landlord, Tenant and the Premises against workers'
compensation claims, covering all persons employed in connection with any work
done on or about the Premises with respect to which claims for death or bodily
injury could be asserted against Landlord, Tenant or the Premises. Such policy
of workers' compensation insurance shall comply with all of the requirements of
applicable state law.
(d) At any time when any portion of the Premises are
being constructed, altered or replaced, builder's risk insurance (in completed
value non-reporting form) in an amount no less than the actual replacement value
of the Improvements, exclusive of foundations and excavations.
(e) At least twelve (12) months of business
interruption insurance; boiler and sprinkler leakage insurance; and such other
insurance on the Premises, in such amounts and against such other hazards which
may be reasonably required by Landlord or Lender, consistent with coverage on
properties similarly constructed, occupied and maintained.
6.2. Permitted Insurers. The Required Insurance shall be
written by companies of recognized financial standing authorized to do insurance
business in the state in which the Premises are located and have Bests ratings
of A X or better. The Required Insurance shall name as the insured parties
thereunder Landlord and Tenant, as their interests may appear, and Lender as an
additional insured under a standard "mortgagee" endorsement or its equivalent
satisfactory to Landlord. Landlord shall not be required to prosecute any claim
against, or to contest any settlement proposed by, an insurer.
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Tenant may, at its expense, prosecute any such claim or contest any such
settlement in the name of Landlord, Tenant or both with the consent of Landlord,
and Landlord will join therein at Tenant's written request upon the receipt by
Landlord of an indemnity from Tenant against all costs, liabilities and expenses
in connection therewith.
6.3. Insurance Claims. Insurance claims by reason of damage to
or destruction of any portion of the Premises shall be primarily adjusted by
Tenant, but both Landlord and Lender shall have the right to join with Tenant in
adjusting any such loss and approve any adjustment proposed by Tenant.
6.4. Insured Parties. Any loss under any such policy shall be
made payable to Landlord (or, if Landlord so elects, to Lender), subject to the
requirements of Section 6.9. Every policy of Required Insurance shall contain an
agreement that the insurer will not cancel such policy except after thirty (30)
days' written notice to Landlord and Lender and that any loss otherwise payable
thereunder shall be payable notwithstanding any act or negligence of Landlord,
Tenant or Lender which might, absent such agreement, result in a forfeiture of
all or a part of such insurance payment and notwithstanding (i) any foreclosure
or other action taken by a creditor pursuant to any provision of any Mortgage or
other Loan Document upon the happening of a default or Event of Default
thereunder or (ii) any change in ownership of the Premises.
6.5. Delivery of Policies. Tenant shall deliver to Landlord
promptly after the delivery of this Lease, the original or duplicate policies or
Accord-27 form certificates of insurers, satisfactory to Lender, evidencing all
of the Required Insurance. Tenant shall, prior to the expiration of any such
policy, deliver to Landlord another original or duplicate of such policy or
certificates evidencing the renewal of any such policy. If Tenant fails to
maintain or renew any Required Insurance, or to pay the premium therefor, or to
deliver such certificate, then Landlord, at its option, but without obligation
to do so, procure such insurance. Any sums so expended by Landlord shall be
Additional Rent hereunder and shall be repaid by Tenant within five (5) days
after notice to Tenant of such expenditure and the amount thereof. together with
interest thereon at the Interest Rate.
6.6. No Double Coverage. Tenant shall not obtain or carry
separate insurance covering the same risks as any Required Insurance unless
Tenant, Landlord and Lender are included therein as named insured, with loss
payable as provided in this Lease and the policy contains a first mortgagee
endorsement in favor of the Lender. Tenant shall immediately notify Landlord
whenever any such separate insurance is obtained and shall deliver to Landlord
the policies or certificates evidencing the same. Any insurance which Landlord
may elect to carry shall be excess and not primary coverage.
6.7. Blanket Insurance. Anything contained in this Article VI
to the contrary notwithstanding, all Required Insurance may be carried under a
"blanket" or "umbrella" policy or policies covering other property or
liabilities of Tenant, provided that such policies otherwise comply with the
provisions of this Lease and specify the coverage and amounts thereof with
respect to the Premises.
6.8. Damages for Tenant's Failure to Properly Insure. Landlord
or Lender shall not be limited in the proof of any damages which Landlord or
Lender may claim against Tenant arising out of or by reason of Tenant's failure
to provide and keep in force insurance, as provided above, to the amount of the
insurance premium or premiums not paid or incurred by Tenant and which would
have been payable under such insurance; but Landlord and Lender shall also be
entitled to recover as damages for such breach, the uninsured amount of any
loss, to the extent of any deficiency in the Required Insurance and damages,
costs and expenses of suit suffered or incurred by reason of or damage to, or
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destruction of, the Premises, occurring during any period when Tenant shall have
failed to provide the Required Insurance. Tenant shall indemnify, defend,
protect and hold harmless Landlord and Lender for any liability incurred by
Landlord or Lender arising out of any deductibles for Required Insurance.
6.9. Casualty. If all or any part of the Premises shall be
damaged or destroyed by casualty which is insured or required to be insured
under this Lease, or by any other casualty if the cost to repair such other
casualty does not exceed twenty percent (20%) of the total replacement cost of
the Improvements, Tenant shall promptly notify the Landlord thereof, and shall,
with reasonable promptness and diligence, rebuild, replace and repair any damage
or destruction to the Premises, at its expense, in conformity with the
requirements of Section 5.4(a) hereof, in such manner as to restore the same to
the same or better condition as existed prior to such casualty, using materials
of the same or better grade than that of the materials being replaced, and there
shall be no abatement of Basic Rent or Additional Rent. Proceeds of casualty
insurance of $100,000.00 or less shall be paid to Tenant. Proceeds in excess of
$100,000.00 shall be held by Landlord or a proceeds trustee (which may be
Lender, an escrow or title company, or a bank or trust company designated by
Landlord) and paid to Tenant, but only against certificates of Tenant,
appropriate lien waivers and such other information reasonably required by
Landlord or the proceeds trustee delivered to Landlord from time to time, but
not more frequently than once per calendar month, as such work or repair
progresses. Each such certificate shall describe the work or repair for which
Tenant is requesting payment and the cost incurred by Tenant in connection
therewith and stating that Tenant has not theretofore received payment for such
work and has sufficient funds remaining to complete the work free of liens or
claims. Any proceeds remaining after Tenant has repaired the Premises shall be
delivered to Tenant. No payment shall be made to Tenant if there exists any
Event of Default under this Lease. If Tenant is not required to restore after a
casualty, this Lease shall nevertheless remain in full force and effect, with no
abatement of Basic Rent or Additional Rent, except that Landlord shall have the
right to terminate this Lease by notice to Tenant if Tenant does not agree to
restore within sixty (60) days after the casualty, or if Tenant agrees to
restore but does not diligently proceed to do so.
6.10. INDEMNIFICATION.
(A) TENANT AGREES TO PAY, AND TO PROTECT, DEFEND,
INDEMNIFY AND SAVE HARMLESS LANDLORD, LENDER, THEIR AFFILIATED ENTITIES, AND
EACH OF THE FOREGOING PARTIES' RESPECTIVE PARTNERS, DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS (COLLECTIVELY, THE "INDEMNITEES" OR INDIVIDUALLY, AN
"INDEMNITEE") FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, COSTS,
EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS' FEES AND EXPENSES), CAUSES OF
ACTION, SUITS, CLAIMS, DEMANDS OR JUDGMENTS OF ANY NATURE WHATSOEVER (I) ARISING
FROM ANY INJURY TO, OR THE DEATH OF, ANY PERSON OR DAMAGE TO PROPERTY (INCLUDING
PROPERTY OF EMPLOYEES AND INVITEES OF TENANT) ON THE PREMISES OR UPON ADJOINING
SIDEWALKS, STREETS OR WAYS, UNLESS EXCLUSIVELY OCCASIONED BY THE ACTUAL GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF INDEMNITEES, (II) ARISING FROM THE USE,
NON-USE, CONDITION, MAINTENANCE, REPAIR OR OCCUPATION OF THE PREMISES OR ANY
PART THEREOF OR ADJOINING SIDEWALKS, STREETS OR WAYS, UNLESS EXCLUSIVELY
OCCASIONED BY THE ACTUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF INDEMNITEES,
(III) ARISING FROM VIOLATION BY TENANT OF ANY AGREEMENT OR CONDITION OF THIS
LEASE OR ANY SUBLEASE (INCLUDING WITHOUT LIMITATION THE FAILURE TO PAY
IMPOSITIONS), OR ANY CONTRACT OR AGREEMENT TO WHICH TENANT IS A PARTY, OR ANY
RESTRICTION, LAW, ORDINANCE OR REGULATION (INCLUDING WITHOUT LIMITATION, THE
AMERICANS
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WITH DISABILITIES ACT OF 1990 AND ALL REGULATIONS ISSUED THEREUNDER) AFFECTING
THE PREMISES OR ANY PART THEREOF OR THE OWNERSHIP, OCCUPANCY OR USE THEREOF,
UNLESS EXCLUSIVELY OCCASIONED BY THE ACTUAL GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF INDEMNITEES; OR (IV) ARISING OUT OF ANY PERMITTED CONTEST REFERRED
TO IN SECTION 4.3 (COLLECTIVELY, "INDEMNIFIED MATTERS"), EVEN IF SUCH
INDEMNIFIED MATTERS ARISE FROM OR ARE ATTRIBUTABLE TO THE SOLE OR CONCURRENT
NEGLIGENCE OF ANY INDEMNITEE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
THE INDEMNIFIED MATTERS SHALL INCLUDE MATTERS ARISING PRIOR TO THE COMMENCEMENT
DATE. IF LANDLORD, LENDER OR ANY OTHER INDEMNITEE SHALL BE MADE A PARTY TO ANY
SUCH LITIGATION COMMENCED AGAINST TENANT, AND IF TENANT, AT ITS EXPENSE, SHALL
FAIL TO PROVIDE THE INDEMNITEES WITH COUNSEL (UPON LANDLORD'S REQUEST)
REASONABLY APPROVED BY LANDLORD, TENANT SHALL PAY ALL COSTS AND ATTORNEYS' FEES
AND EXPENSES INCURRED OR PAID BY THE INDEMNITEES IN CONNECTION WITH SUCH
LITIGATION. TENANT'S OBLIGATIONS AND LIABILITIES UNDER THIS SECTION 6.10 SHALL
SURVIVE THE EXPIRATION OF THIS LEASE. TENANT WAIVES ALL CLAIMS AGAINST THE
INDEMNITEES ARISING FROM ANY LIABILITY DESCRIBED IN THIS SECTION 6.10 (A),
UNLESS EXCLUSIVELY OCCASIONED BY THE ACTUAL GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE INDEMNITEES. THE WAIVER AND INDEMNITY PROVISIONS IN THIS
PARAGRAPH ARE INTENDED TO EXCULPATE AND INDEMNIFY THE INDEMNITEES (I) FROM AND
AGAINST THE DIRECT CONSEQUENCES OF THEIR OWN NEGLIGENCE OR FAULT WHEN THE
INDEMNITEES ARE SOLELY NEGLIGENT OR CONTRIBUTORILY, PARTIALLY, JOINTLY,
COMPARATIVELY OR CONCURRENTLY NEGLIGENT WITH TENANT OR ANY OTHER PERSON (BUT IS
NOT EXCLUSIVELY AND GROSSLY NEGLIGENT, AND HAS NOT COMMITTED WILLFUL MISCONDUCT)
AND (II) FROM AND AGAINST ANY LIABILITY OF THE INDEMNITEES BASED ON ANY
APPLICABLE DOCTRINE OF STRICT LIABILITY UNLESS RESULTING FROM THE EXCLUSIVE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNITEES.
(B) SHOULD ANY CLAIM BE MADE AGAINST ANY INDEMNITEE
BY A PERSON NOT A PARTY TO THIS LEASE WITH RESPECT TO ANY INDEMNIFIED MATTER,
LANDLORD SHALL PROMPTLY GIVE TENANT WRITTEN NOTICE OF ANY SUCH CLAIM, AND TENANT
SHALL THEREAFTER DEFEND OR SETTLE ANY SUCH CLAIM, AT ITS SOLE EXPENSE, ON ITS
OWN BEHALF AND WITH COUNSEL OF ITS SELECTION; PROVIDED, HOWEVER, THAT TENANT'S
COUNSEL SHALL BE COMPETENT COUNSEL EXPERIENCED IN THE TYPE OF LITIGATION OR
CLAIM AT ISSUE AND SHALL BE ACCEPTABLE TO LANDLORD, ACTING REASONABLY. UPON
TENANT'S ASSUMPTION OF THE DEFENSE OF ANY CLAIM PURSUANT TO TENANT'S INDEMNITY,
LANDLORD SHALL HAVE THE RIGHT TO PARTICIPATE IN THE DEFENSE OR SETTLEMENT OF THE
CLAIM, WITH COUNSEL RETAINED AND PAID BY IT UNLESS: (A) THE EMPLOYMENT OF SUCH
COUNSEL SHALL HAVE BEEN AUTHORIZED IN WRITING BY TENANT IN CONNECTION WITH THE
DEFENSE OF SUCH ACTION, (B) TENANT SHALL NOT HAVE EMPLOYED COUNSEL TO DIRECT THE
DEFENSE OF SUCH ACTION, OR (C) LANDLORD SHALL HAVE REASONABLY CONCLUDED THAT
THERE MAY BE DEFENSES AVAILABLE TO IT WHICH ARE DIFFERENT FROM OR ADDITIONAL TO
THOSE AVAILABLE TO TENANT (IN WHICH CASE TENANT SHALL NOT HAVE THE RIGHT TO
DIRECT THE DEFENSE OF SUCH ACTION), IN ANY OF WHICH EVENTS SUCH FEES AND
EXPENSES SHALL BE BORNE BY TENANT. TENANT SHALL CAUSE THE ATTORNEYS RETAINED BY
IT TO CONSULT
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AND COOPERATE FULLY WITH COUNSEL FOR LANDLORD. IN SUCH DEFENSE OR SETTLEMENT OF
ANY CLAIMS, LANDLORD SHALL PROVIDE TENANT WITH ORIGINALS OR COPIES OF ALL
RELEVANT DOCUMENTS AND SHALL COOPERATE WITH AND ASSIST TENANT, AT NO EXPENSE TO
LANDLORD. NOTWITHSTANDING ANY PROVISION OF THIS SECTION 6.10 TO THE CONTRARY,
TENANT SHALL NOT ENTER INTO ANY SETTLEMENT OR AGREEMENT IN CONNECTION WITH ANY
INDEMNIFIED MATTERS BINDING UPON OR ADVERSELY AFFECTING LANDLORD OR LENDER OR
ANY OTHER INDEMNITEE, OR ADMIT ANY LIABILITY OR FACT IN CONTROVERSY BINDING UPON
OR ADVERSELY AFFECTING LANDLORD OR LENDER OR ANY OTHER INDEMNITEE, WITHOUT THE
PRIOR WRITTEN CONSENT OF SUCH INDEMNITEE, IN ITS SOLE DISCRETION.
(C) LANDLORD AGREES TO PAY, AND TO PROTECT, DEFEND,
INDEMNIFY AND SAVE HARMLESS TENANT AND ITS AGENTS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, DAMAGES, COSTS, EXPENSES (INCLUDING ALL REASONABLE
ATTORNEYS' FEES AND EXPENSES OF TENANT), CAUSES OF ACTION, SUITS, CLAIMS,
DEMANDS OR JUDGMENTS OF ANY NATURE WHATSOEVER ARISING EXCLUSIVELY FROM THE
ACTUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNITEES IN CONNECTION
WITH THE PREMISES.
[FOR NEW MEXICO PREMISES ADD:
(D) TO THE EXTENT, IF AT ALL, THAT NMSA SECTION
56-7-1 IS APPLICABLE TO THIS LEASE, ANY INDEMNIFICATION WILL NOT EXTEND TO
LIABILITY, CLAIMS, DAMAGES, LOSSES OR EXPENSES, INCLUDING ATTORNEYS' FEES,
ARISING OUT OF (A) THE PREPARATION OR APPROVAL OF MAPS, DRAWINGS, OPINIONS,
REPORTS, SURVEYS, CHANGE ORDERS, DESIGNS, OR SPECIFICATIONS BY THE INDEMNITEES;
AND (B) THE GIVING OF OR THE FAILURE TO GIVE DIRECTION OR INSTRUCTIONS BY THE
INDEMNITEES, WHERE SUCH GIVING OR FAILURE TO GIVE DIRECTIONS OR INSTRUCTIONS IS
THE PRIMARY CAUSE OF BODILY INJURY TO PERSONS OR DAMAGE.]
VII. CONDEMNATION.
7.1. Assignment of Award. Subject to the rights of Tenant set
forth in this Article VII, Tenant hereby irrevocably assigns to Landlord any
award or payment to which Tenant may be or become entitled with respect to
Complete, Partial or Temporary Taking of the Premises or any part thereof, by
condemnation or other eminent domain proceedings pursuant to any law, general or
special, by any governmental authority, whether the same shall be paid or
payable in respect of Tenant's leasehold interest hereunder or otherwise.
Notwithstanding the foregoing, Tenant may recover the value of its personal
property at the Premises, if taken, so long as the amount of the Net Award
received by Landlord is at least equal to the higher of (a) the net book value
of the Premises as reflected on Landlord's financial statements, or (b) the fair
market value of the Premises, on the date of the Complete, Partial or Temporary
Taking. Landlord and Lender shall be entitled to participate in any such
proceeding.
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7.2. Definitions for Article VII.
(a) "Complete Taking" shall mean the occurrence of
any actual or threatened condemnation or other eminent domain proceeding
pursuant to any general or special law, or any agreement with an authority
having the power of eminent domain, which results in the taking or conveyance of
(i) the entire Premises or (ii) such a significant portion of the Premises that,
in the good faith judgment of either Tenant or Landlord, it is uneconomic to
rebuild or restore the remaining portion of the Premises for the continued
operation of the business.
(b) "Partial Taking" shall mean the occurrence of any
taking of a portion of the Premises by condemnation or other eminent domain
proceedings, or any agreement with an authority having the power of eminent
domain, which does not result in the taking or conveyance of such a significant
portion of the Premises that, in the good faith judgment of either Tenant or
Landlord, it is uneconomic to rebuild or restore the remaining portion of the
Premises for the continued operation of the business.
(c) "Temporary Taking" shall mean the occurrence of a
temporary taking of the use or occupancy of the Premises or any part thereof by
any governmental authority.
(d) "Net Award" shall mean all amounts payable as a
result of any condemnation or other eminent domain proceeding and all amounts
payable pursuant to any agreement with any condemning authority (which agreement
shall be deemed to be a taking) which has been made in settlement of or under
threat of any condemnation or other eminent domain proceeding affecting the
Premises, less all expenses incurred as a result thereof not otherwise paid by
Tenant and the collection of such amounts.
7.3. Complete Taking.
Upon the occurrence of a Complete Taking, this Lease
shall terminate. The Termination Date shall occur ten (10) days after Landlord
shall have received the Net Award, and this Lease shall continue in full force
and effect without abatement of Basic Rent or Additional Rent or other sums
payable by Tenant until the Termination Date; provided, however, that on or
prior to the Termination Date (and, at Landlord's option, as a condition to the
termination of this Lease) Tenant shall pay (and Tenant hereby agrees to pay) a
termination payment in the amount, if any, by which the Net Award is exceeded by
the Leasehold Amount. The "Leasehold Amount" shall be the present value of the
Basic Rent payable during the balance of the Term (exclusive of any unexercised
Extended Term) after the Termination Date, using the discount rate specified in
Section 10.2(f) of this Lease.
7.4. Partial Taking. Upon the occurrence of any Partial
Taking, this Lease shall continue in full effect without abatement or reduction
of Basic Rent, Additional Rent or other sums payable by Tenant. In the event
Landlord receives a Net Award in connection with any such Partial Taking
Landlord shall, provided there is no Event of Default hereunder, make the Net
Award available to Tenant, and Tenant shall, regardless of the adequacy of the
award, make repairs in accordance with the requirements of Section 5.4(a) hereof
so that, thereafter, the Premises shall be, as nearly as possible, in a
condition as good as the condition thereof immediately prior to such Taking,
but, if such Net Award shall be in excess of One Hundred Thousand Dollars
($100,000), the proceeds shall be held by Landlord or a proceeds trustee (which
may be Lender or Lender's designee, or a bank or trust company designated by
Landlord), and paid only upon delivery to Landlord of (i) certificates of Tenant
identifying the repair work for which Tenant is requesting payment and the cost
incurred by Tenant in connection therewith
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and stating that Tenant has not theretofore received payment for such work; (ii)
appropriate lien waivers; and (iii) such other information as may be reasonably
required by the proceeds trustee. Any Net Award remaining after such repairs
have been made shall (subject to the next sentence) be delivered to Tenant,
except that if an Event of Default exists, the excess shall be paid to Landlord.
If a Partial Taking occurs during the last five (5) years of the Primary Term or
during any Extended Term and the excess Net Award therefor would, by reason of
the preceding sentence be delivered to Tenant, such excess net Award shall
instead be paid as follows: (a) if such Partial Taking occurs during the last
49th through 60th months of the Primary Term or any Extended Term, 20% of the
excess Net Award shall be delivered to Landlord and the balance shall be
delivered to Tenant; (b) if such Partial Taking occurs during the last 37th
through 48th months of the Primary Term or any Extended Term, 40% of the excess
Net Award shall be delivered to Landlord and the balance shall be delivered to
Tenant; (c) if such Partial Taking occurs during the last 25th through 36th
months of the Primary Term or any Extended Term, 60% of the excess Net Award
shall be delivered to Landlord and the balance shall be delivered to Tenant; (d)
if such Partial Taking occurs during the last 13th through 24th months of the
Primary Term or any Extended Term, 80% of the excess Net Award shall be
delivered to Landlord and the balance shall be delivered to Tenant; and (e) if
such Partial Taking occurs during the last 12 months of the Primary Term or any
Extended Term, 100% of the excess Net Award shall be delivered to Landlord.
7.5. Temporary Taking. Upon the occurrence of any Temporary
Taking, Tenant shall, promptly after any such Temporary Taking ceases, at its
expense, repair any damage caused thereby in conformity with the requirements of
Section 5.4(a) hereof so that, thereafter, the Premises shall be, as nearly as
possible, in a condition as good as the condition thereof immediately prior to
such Temporary Taking. In the event of such Temporary Taking, Tenant shall be
entitled to receive the entire Net Award payable by reason of such Temporary
Taking, less any costs incurred by the Landlord in connection therewith. If the
cost of any repairs required to be made by Tenant pursuant to this Section 7.5
shall exceed the amount of the Net Award, the deficiency shall be paid by
Tenant. No payments shall be made to Tenant pursuant to this Section 7.5, if any
Event of Default shall exist under this Lease. No Basic Rent or Additional Rent
shall abate through the duration of such Temporary Taking.
VIII. ASSIGNMENT AND SUBLETTING.
8.1. Power to Assign and Sublet. Tenant shall not sublet all
or any portion of the Premises nor assign any or all of its rights and interests
under this Lease without Landlord's prior written consent, which shall not be
unreasonably withheld, conditioned or delayed (except that Landlord may withhold
consent to a sublease of less than all of the Premises in its sole and absolute
discretion). Any sublease or assignment shall expressly be made subject to all
of the provisions, including the use provisions in Section 1.3, of this Lease.
Tenant shall, within ten (10) days after the execution and delivery of any such
assignment or the sublease of all of the Premises, deliver a conformed copy
thereof to Landlord. An assignment of this Lease shall also be deemed to occur
in the event Ugly Duckling Corporation, the guarantor under the Guaranty, ceases
to own, directly or indirectly, 100% of the common stock of Tenant.
8.2. Assumption by Assignee; Tenant Remains Liable. If Tenant
assigns its rights and interests under this Lease, the assignee under such
assignment shall expressly assume all the obligations of Tenant hereunder in an
instrument delivered to Landlord at the time of such assignment. No assignment
or sublease made as permitted by this Article VIII shall affect or reduce any of
the obligations of Tenant hereunder or the obligations of any guarantor of
Tenant, and all such obligations shall continue in full force and effect as
obligations of a principal and not as obligations of a guarantor or surety, to
the same extent as though no assignment or subletting had been made, provided
that performance by any such assignee or sublessee of any of the obligations of
Tenant under this Lease shall
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be deemed to be performance by Tenant. No sublease or assignment made as
permitted by this Article VIII shall impose any obligations on Landlord or
otherwise affect any of the rights of Landlord under this Lease. Tenant hereby
absolutely assigns to Landlord all subleases and all rents, issues and profits
derived and to be derived therefrom, to secure performance of Tenant's
obligations under this Lease. Landlord hereby grants to Tenant a license to
collect all rents payable under any sublease (up to one month in advance), but
upon any Event of Default, Landlord may in its sole discretion revoke such
license and collect the rents directly from any sublessee and retain the same.
8.3. Other Transfers Void. Neither this Lease nor any interest
of Tenant therein, nor the Term hereby demised shall be mortgaged by Tenant, nor
shall Tenant mortgage or pledge the interest of Tenant in and to any sublease of
the Premises or the rentals payable thereunder. Any mortgage, pledge, sublease
or assignment made in violation of this Article VIII shall be void.
IX. FINANCIAL INFORMATION.
9.1. Financial Statements. Tenant will furnish to Landlord and
Lender (i) Tenant's annual audited financial statements within ninety (90) days
after the end of Tenant's fiscal year, and (ii) Tenant's unaudited quarterly
financial statements within forty-five (45) days after the end of each quarter.
X. DEFAULT.
10.1. Events of Default. Any of the following occurrences or
acts shall constitute an event of default (herein called an "Event of Default")
under this Lease:
(a) If Tenant, at any time during the continuance of
this Lease (and regardless of the pendency of any bankruptcy, reorganization,
receivership, insolvency or other proceedings at law, in equity, or before any
administrative tribunal, which have or might have the effect of preventing
Tenant from complying with the terms of this Lease), shall (i) fail to make any
payment of Basic Rent, Additional Rent or other sum herein required to be paid
by Tenant hereunder for five (5) days after written notice of such failure; (ii)
fail to continuously operate the Premises for the Intended Use in accordance
with the terms and conditions of Section 1.3 of this Lease for thirty (30) days
after written notice of such failure; or (iii) fail to observe or perform any
other provision hereof for thirty (30) days after written notice of such failure
to observe or perform; or
(b) If any representation or warranty of Tenant
hereunder or set forth in any notice, certificate, demand, request or other
instrument delivered pursuant to, or in connection with this Lease or in
connection with the acquisition of the Premises by Landlord, shall either prove
to be false or misleading in any material respect as of the time when the same
shall have been made and Landlord actually suffers damages as a proximate cause
thereof which are not paid by Tenant; or
(c) If Tenant shall file a petition commencing a
voluntary case under the Federal Bankruptcy Code or any federal or state law (as
now or hereafter in effect) relating bankruptcy, insolvency, reorganization,
winding-up or adjustment of debts (hereinafter collectively called "Bankruptcy
Law") or if Tenant shall: (i) apply for or consent to the appointment of, or the
taking of possession by, any receiver, custodian, trustee, United States Trustee
or liquidator (or other similar official) of the Premises or any part thereof or
of any substantial portion of Tenant's property; or (ii) generally not pay its
debts as they become due, or admit in writing its inability to pay its debts
generally as they become due; or (iii) make a general assignment for the benefit
of its creditors; or (iv) file a petition commencing a voluntary case under or
seeking to take advantage of any Bankruptcy
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Law; or (v) fail to controvert in timely and appropriate manner, or in writing
acquiesce to, any petition commencing an involuntary case against Tenant or
otherwise filed against Tenant pursuant to any Bankruptcy Law; or (vi) take any
action in furtherance of any of the foregoing; or
(d) If an order for relief against Tenant shall be
entered in any involuntary case under the Federal Bankruptcy Code or any similar
order against Tenant shall be entered pursuant to any other Bankruptcy Law, or
if a petition commencing an involuntary case against Tenant or proposing the
reorganization of Tenant under any Bankruptcy Law shall be filed and not be
discharged or denied within ninety (90)) days after such filing, or if a
proceeding or case shall be commenced in any court of competent jurisdiction
seeking: (i) the liquidation, reorganization, dissolution, winding-up or
adjustment of debts of Tenant; or (ii) the appointment of a receiver, custodian,
trustee, United States Trustee or liquidator (or any similar official) of the
Premises or any part thereof or of Tenant or of any substantial portion of
Tenant's property; (iii) the attachment of the Premises or any portion thereof,
or (iv) any similar relief as to Tenant pursuant to any Bankruptcy Law, and any
such proceeding or case shall continue undismissed for ninety (90) days after
such relief is granted; or
(e) If the Premises shall be left both unattended and
without maintenance as provided herein, for a period of thirty (30) consecutive
days or more; or
(f) If there occurs an "Event of Default" (as defined
therein) under any of the leases listed on Exhibit "C".
10.2. Landlord's Remedies.
(a) In the event of an Event of Default, Landlord
shall have the right at its election to give Tenant ten (10) days' written
notice of Landlord's intention to terminate the term of this Lease on a date
specified in such notice. Thereupon, the term of this Lease and the estate
hereby granted shall terminate on such date as completely and with the same
effect as if such date were the date fixed herein for the expiration of the term
of this Lease, and all rights of Tenant hereunder shall terminate, but Tenant
shall remain liable as provided herein.
(b) In the event of an Event of Default, Landlord
shall have the immediate right, whether or not the term of this Lease shall have
been terminated pursuant to Section 10.2(a), to (i) re-enter and repossess the
Premises or any part thereof by force, summary proceedings, ejection or
otherwise, and (ii) remove all persons and property therefrom, Tenant hereby
expressly waiving any and all notices to quit, cure or vacate provided by
current or any future law. Landlord shall be under no liability by reason of any
such re-entry, repossession or removal. No such re-entry or taking of possession
of the Premises by Landlord shall be construed as an election on Landlord's part
to terminate the term of this Lease unless a written notice of such intention to
be given to Tenant pursuant to Section 10.2(a).
(c) At any time or from time to time after the
repossession of the Premises or any part thereof pursuant to Section 10.2(b),
whether or not the term of this Lease shall have been terminated pursuant to
Section 10.2(a), Landlord will use reasonable efforts to relet the Premises or
any part thereof for the account of Tenant, in the name of Tenant or Landlord or
otherwise, without notice to Tenant, for such term or terms (which may be
greater or less than the period which would otherwise have constituted the
balance of the term of this Lease) and on such reasonable conditions (which may
include concessions or free rent) and for such uses as Landlord may reasonably
determine, and Landlord may collect and receive any rents payable by reason of
such reletting. Landlord shall not be responsible or liable for any failure to
relet the Premises or any part thereof or for any failure to collect any rent
due
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upon any such reletting.
(d) No termination of the term of this Lease pursuant
to Section 10.2(a), by operation of law or otherwise, and no repossession of the
Premises or any part thereof pursuant to Section 10.2(b) or otherwise, and no
reletting of the Premises or any part thereof pursuant to Section 10.2(c), shall
relieve Tenant of its liabilities and obligations hereunder, all of which shall
survive such expiration, termination, repossession or reletting.
(e) In the event of any such termination or
repossession, Tenant will pay to Landlord the Basic Rent, Additional Rent and
other sums required to be paid by Tenant to and including the date of such
termination or repossession (together with interest at the Interest Rate on past
due amounts); and, thereafter, Tenant shall, until the end of what would have
been the term of this Lease in the absence of such termination or repossession,
and whether or not the Premises or any part thereof shall have been relet, be
liable to Landlord for, and shall pay to Landlord, as liquidated and agreed
current damages: (i) the Basic Rent, Additional Rent and other sums which would
be payable under this Lease by Tenant in the absence of such termination or
repossession, less (ii) the net proceeds, if any, of any reletting effected for
the account of Tenant pursuant to Section 10.2(c), after deducting from such
proceeds all of Landlord's reasonable out-of-pocket expenses incurred in
connection with such reletting (including, without limitation, all repossession
costs, brokerage commissions, legal expenses, attorneys' fees, employees'
expenses, and expenses of preparation for such reletting). Tenant will pay such
current damages on the days on which the Basic Rent would have been payable
under this Lease in the absence of such termination or repossession, and
Landlord shall be entitled to recover the same from Tenant on each such day.
(f) At any time after such termination or
repossession by reason of the occurrence of any Event of Default, whether or not
Landlord shall have collected any current damages pursuant to Section 10.2(e),
Landlord shall be entitled to recover from Tenant, and Tenant will pay to
Landlord on demand, as and for liquidated and agreed final damages for Tenant's
default and in lieu of all current damages beyond the date of such demand (it
being agreed that it would be impracticable or extremely difficult to fix the
actual damages), an amount equal to the present value of all rent payable under
the Lease beyond the date of such demand over the then present value of the then
fair market rental for the Premises, at the date of such demand for what would
be the unexpired term of the Lease, which present value shall in each case be
determined by the application of a discount rate equal to the discount rate of
the Federal Reserve Bank of San Francisco at the time of the demand plus one
percent (1%). If any law shall be construed to limit the amount of such
liquidated final damages to less than the amount above agreed upon, Landlord
shall be entitled to the maximum amount allowable under such statute or rule of
law.
(g) Notwithstanding anything to the contrary stated
herein, if an Event of Default shall have happened and be continuing, whether or
not Tenant shall have abandoned the Premises, Landlord may elect to continue
this Lease in effect for so long as the Landlord does not terminate Tenant's
right to possession of the Premises and Landlord may enforce all of its rights
and remedies hereunder including, without limitation, the right to recover all
Basic Rent, Additional Rent and other sums payable hereunder as the same become
due.
10.3. Additional Rights of Landlord. No right or remedy herein
conferred upon or reserved to Landlord is intended to be exclusive of any other
right or remedy, and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute. The failure of Landlord to insist at
any time upon the strict performance of any covenant or agreement or to exercise
any option, right, power or remedy
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contained in this Lease shall not be construed as waiver or a relinquishment
thereof for the future. A receipt by Landlord of any Basic Rent, any Additional
Rent or any other sum payable hereunder with knowledge of the breach of any
covenant or agreement contained in this Lease shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless expressed in writing and signed by Landlord. In
addition to other remedies provided in this Lease, Landlord shall be entitled,
to the extent permitted by applicable law, to injunctive relief in case of the
violation, or attempted or threatened violation, of any of the covenants,
agreements, conditions or provisions of this Lease, or to a decree compelling
performance of any of the covenants, agreements, conditions or provisions of
this Lease, including but not limited to the provisions of this Lease setting
forth Tenant's operating covenant, or to any other remedy allowed to Landlord at
law or in equity.
10.4. Waivers by Tenant. To the extent permitted by applicable
law, Tenant hereby waives and surrenders for itself and all those claiming under
it, including creditors of all kinds, (i) any right or privilege which it or any
of them may have under any present or future construction, statute or rule of
law to redeem the Premises or to have a continuance of this Lease for the term
hereby demised after termination of Tenant's right of occupancy by order or
judgment of any court or by any legal process or writ, or under the terms of
this Lease or after the termination of the term of this Lease as herein
provided, and (ii) the benefits of any present or future constitution, statute
or rule of law which exempts property from liability for debt or for distress
for rent.
10.5. Attorneys' Fees. In the event of an Event of Default, if
an action shall be brought by Landlord for the enforcement of any right set
forth herein, Tenant shall be liable for all of the reasonable out-of-pocket
expenses incurred by Landlord in connection therewith, including without
limitation, attorneys' fees. However, should Tenant prevail in an action for
violation of quiet enjoyment under this Lease, then and only in such event shall
Landlord be liable for reasonable out-of-pocket expenses incurred by Tenant in
connection therewith, including attorneys' fees.
XI. MISCELLANEOUS.
11.1. Notices, Demands and Other Instruments. All notices,
demands, requests, consents, approvals and other instruments required or
permitted to be given pursuant to the terms of this Lease shall be in writing
and shall be deemed to have been properly given if (a) with respect to Tenant,
sent by registered or certified mail with a return receipt requested, postage
prepaid, or sent by facsimile, nationally recognized overnight express carrier
or delivered by hand, in each case addressed to Tenant at its notice address
first above set forth, and (b) with respect to Landlord, sent by registered or
certified mail with a return receipt request, postage prepaid, or sent by
facsimile, nationally recognized overnight express courier or delivered by hand
in each case, addressed to the Landlord at its address first above set forth
along with a copy to the Lender (if Tenant shall have been given Lender's
address). Landlord and Tenant shall each have the right from time to time to
specify as its address for purposes of this Lease any other address in the
United States of America upon giving fifteen (15) days written notice thereof,
similarly given, to the other party, except that any change of address to a post
office box shall not be effective unless a street address is also specified for
use in effectuating personal service. Notices shall be deemed communicated upon
the earlier of receipt, or seventy-two (72) hours from the time of mailing if
mailed as provided in this Section 11.1.
11.2. Estoppel Certificates and Consents.
(a) Tenant will, from time to time, upon not less
than twenty (20) days prior written request by Landlord or by Lender, execute,
acknowledge and deliver a certificate certifying:
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(i) that this Lease is unmodified and in full effect (or setting forth any
modifications along with the statement that this Lease as modified is in full
effect ); (ii) that the Basic Rent and Additional Rent payable and the dates to
which the Basic Rent, Additional Rent and other sums payable hereunder have been
paid; (iii) that to the best knowledge of Tenant, Landlord is not in any default
of the Lease; (iv) the commencement and expiration dates of the Lease; (v) the
amount of any security or other deposits; (vi) that either Tenant is in
possession of the Premises or who is in possession; (vii) any concessions or
other rights that Tenant (including first refusal, option or other occupancy
claims) or Landlord may have; and (viii) such other matters as may reasonably be
required by the requesting party. Any such certificate may be relied upon by any
Lender, prospective purchaser, or prospective Lender of the Premises. Tenant
further agrees to reasonably cooperate with Lender and its affiliates in the
preparation of disclosure documents which may be issued in connection with a
secondary market transaction involving a sale or securitization of its loan.
(b) From time to time during the term of this Lease,
Landlord expects to secure financing of its interest in the Premises by
assigning Landlord's interest in this Lease and the sums payable hereunder. In
the event of any such assignment to the Lender, Tenant will, upon not less than
twenty (20) days prior written request by Landlord, execute, acknowledge and
deliver to Landlord a consent clearly indicating (i) that Tenant is to make
Basic Rent payments or portions thereof directly to Lender if required by
Lender, and (ii) consent to such assignment addressed to such Lender in a form
satisfactory to Lender; and Tenant will produce, at Tenant's expense, such
certificates and other documents as may be reasonably requested by the Lender.
Tenant acknowledges that, by execution hereof, it has agreed to make payments of
Basic Rent or portions thereof directly to Lender, without further notice or
direction if required by Lender, and Landlord consents to said payments by
Tenant to Lender.
11.3. Determination of Fair Market Rental Value. For a period
of at least thirty (30) days after Tenant's notice to Landlord of Tenant's
exercise of the option for the applicable Extended Term, Landlord and Tenant
shall attempt, diligently and in good faith, to agree upon fair market rental
value for purposes of setting Extended Term Basic Rent. If Landlord and Tenant
are unable to agree upon such amount, fair market rental value shall be
determined by an appraisal, which shall be performed by an appraiser selected by
Landlord within the later of (i) sixty (60) days after the first day of the
twelfth month before the end of the immediately preceding Term, or (ii) sixty
(60) days after notice to Landlord of Tenant's exercise of the option for the
applicable Extended Term and paid one half by Tenant and one half by Landlord.
Any appraiser selected by Landlord shall have qualifications that include a
minimum of five (5) years of experience in the appraisal of commercial real
estate in the state in which the Premises are located. Such appraiser shall be
disinterested, and shall be a member of a nationally recognized appraisal
association. Further, any such appraiser shall comply with any licensing law
then in effect for appraisers authorized to perform general appraisals within
such state. If there are then any existing Federal laws governing appraisers,
said appraiser shall be in compliance with the then applicable Federal laws for
appraisers performing appraisals of commercial real estate. In the event that
Tenant disputes the appraised fair market rental value determined by an
appraiser (hereinafter the "First Appraiser"), who performed an appraisal
pursuant to this Section 11.3, it shall so notify Landlord within fifteen (15)
days after receipt of such written determination by the First Appraiser, and the
disagreement shall be resolved as follows:
(a) Within five (5) days after the service of such
notice by Tenant to Landlord, Tenant shall designate a second appraiser (the
"Second Appraiser"), who shall appraise the fair market rental value of the
Premises. This Second Appraiser shall render its opinion of the fair market
rental value no later than thirty (30) days after the service of notice by
Tenant stated above. In the event
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that the higher of the two appraised fair market rental values rendered herein
is not more than ten percent (10%) greater than the lower of the two appraised
fair market rental values, then the mean between the two appraised values shall
be utilized to fix the appraised fair market rental value.
(b) In the event that the higher of the two appraised
fair rental values is more than ten percent (10%) higher than the lower of the
two appraised fair market rental values, then the First Appraiser and the Second
Appraiser will meet within fifteen (15) days after receipt of the Second
Appraisal by Tenant, to attempt to agree upon the appraised fair market rental
value. If the First Appraiser and Second Appraiser do not agree upon the
appraised fair rental value after such meeting, then they shall appoint a third
appraiser (the "Third Appraiser").
(c) If the First and Second Appraiser shall be unable
to agree upon the appointment of the Third Appraiser within fifteen (15) days
after receipt and acceptance of the Second Appraisal by Tenant, then the Third
Appraiser shall be selected by the Tenant and Landlord themselves. If Tenant and
Landlord cannot agree on the third appraiser, within a further period of five
(5) days, then either, on behalf of both, may, in accordance with applicable
court rules, apply to the superior court of the state in which the Premises are
located which has jurisdiction over the area in which the Premises is located,
for the selection of the Third Appraiser. The fees and costs of the Second
Appraiser will be borne by Tenant, and the fees and costs of the Third
Appraiser, will be divided equally between Tenant and Landlord. The cost of
application to the court shall be divided equally between Tenant and Landlord.
In the event of the failure, refusal or inability of any appraiser to act, a new
appraiser shall be appointed in its stead, which appointment shall be made in
the same manner as provided herein; e.g., if the Second Appraiser must be
replaced, then Tenant will have the right to designate its replacement. In the
event that a Third Appraiser is selected in the manner aforesaid, it shall
perform an appraisal of the fair market rental value of the Premises in
accordance with the terms of this Section 11.3 within thirty (30) days after its
appointment. In the event that the appraised fair market rental value rendered
by the Third Appraiser is higher than the lower appraised fair market rental
value, but lower than the higher appraised fair market rental value, as rendered
by the First Appraiser and the Second Appraiser, then the appraised fair market
rental value rendered by the Third Appraiser shall become the appraised value.
In the event that the appraised value rendered by the Third Appraiser is lower
than the lower appraised value or higher than the higher appraised fair rental
value, as rendered by the First Appraiser and Second Appraiser, than an
Appraisal Panel shall be convened.
The "Appraisal Panel," consisting of the First, Second and Third Appraiser,
shall convene within fifteen (15) days after submission of a written appraisal
to Landlord and Tenant by the Third Appraiser (which Third Appraisal does not
resolve the appraised fair market value question in accordance with this Section
11.3). The purpose of the formation of the Appraisal Panel will be to attempt to
reach a decision by two members of the Appraisal Panel on the appraised fair
rental value. A decision joined in by any two of the appraisers of the Appraisal
Panel shall be the decision of the Appraisal Panel, and shall be binding upon
the parties hereto following written notice thereof, which notice shall state
the appraised fair rental value of the Premises. If no two members of the
Appraisal Panel can concur in a decision of the appraised fair rental value
within fifteen (15) days after the submission of the appraisal by the Third
Appraiser to the parties, then the parties shall go to a neutral mediator for
mediation. If the parties are unable to agree upon a fair rental value through
mediation, the matter will be submitted to binding arbitration under the rules
of the American Arbitration Association.
(d) Each appraiser shall be instructed to take into
account the credit worthiness of Tenant and Guarantor (including the extent to
which Basic Rent and Additional Rent under this Lease shall have been paid on
the date due) and to assume that the provisions of this Lease (excluding the
Basic Rent provision but including the cross default provision, the absolute
triple net
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nature of this Lease and the limitation of liability of Landlord) would govern
for a five (5) year term, that the Premises may be used for any lawful
commercial use (regardless of their actual use), that, as set forth in the
Recitals to this Lease, the Premises being leased (and the fair market rent
applicable thereto) includes the Land and the Improvements. Tenant shall have
the right to change the use of the Premises to another lawful commercial use
during any Extended Term, subject to the prior written approval of Landlord,
which shall not be unreasonably withheld or delayed.
11.4. No Merger. There shall be no merger of this Lease or the
leasehold estate hereby created with the fee estate in the Premises or any part
thereof by reason of the same person acquiring or holding, directly or
indirectly, this Lease or the leasehold estate hereby created or any interest in
this Lease or in such leasehold estate as well as the fee estate in the Premises
or any portion thereof.
11.5. Surrender. Upon the termination of this Lease, Tenant
shall peaceably surrender the Premises to Landlord in the same condition in
which they were received from Landlord at the commencement of this Lease, except
as altered as permitted or required by this Lease (and except for normal wear
and tear provided that Tenant shall have fully complied with its obligations
under Section 5.1 of this Lease). Tenant shall pay, on or before the Termination
Date, all costs and expenses relating to the Premises or its maintenance or
operation which accrued during the Lease Term. Tenant shall remove from the
Premises prior to or within a reasonable time after such termination (not to
exceed thirty (30) days) all its personal property that is capable of removal
without causing damage to the Premises, and, at Tenant's expense, shall at such
times of removal, repair any damage caused by such removal. Property not so
removed shall become the property of Landlord. Landlord may thereafter cause
such property to be removed and disposition of and the cost of repairing any
damage caused by such removal shall be borne by Tenant. Any holding over by
Tenant of the Premises after the expiration or earlier termination of the term
of this Lease or any extensions thereof, with the consent of Landlord, shall
operate and be construed as a tenancy from month to month only, at one hundred
twenty-five (125%) of the Basic Rent reserved herein and upon the same terms and
conditions as contained in this Lease. Notwithstanding the foregoing, any
holding over without Landlord's consent shall entitle Landlord, in addition to
collecting Basic Rent at a rate of one hundred twenty-five percent (125%)
thereof, to exercise all rights and remedies provided by law or in equity.
11.6. Separability. Each and every covenant and agreement
contained in this Lease is separate and independent, and the breach of any
thereof by Landlord other than the covenant of quiet enjoyment in Section 1.4,
shall not discharge or relieve Tenant from any obligation hereunder. If any term
or provision of this Lease or the application thereof to any person or
circumstances or at any time to any extent be invalid and unenforceable, the
remainder of this Lease, or the application of such term or provision to persons
or circumstances or at any time other than those to which it is invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and shall be enforced to the extent permitted by law.
11.7. Merger, Consolidation or Sale of Assets. It shall be a
condition precedent to the merger of Tenant into another corporation, to the
consolidation of Tenant with one or more other corporations and to the sale or
other disposition of all or substantially all the assets of Tenant to one or
more other entities that the surviving entity or transferee of assets, as the
case may be, shall deliver to Landlord and to Lender an acknowledged instrument
in recordable form assuming all obligations, covenants and responsibilities of
Tenant hereunder and under any instrument executed by Tenant consenting to the
assignment of Landlord's interest in this Lease to the Lender as security for
indebtedness. Tenant covenants that it will not merge or consolidate or sell or
otherwise dispose of all or substantially all of its assets unless such an
instrument shall have been so delivered and unless the entity with which it
intends
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to merge, consolidate, sell or otherwise transfer its assets to has a credit
rating at least equal to Tenant's then current credit rating.
11.8. Savings Clause. No provision contained in this Lease
which purports to obligate Tenant to pay any amount of interest or any fees,
costs or expenses which are in excess of the maximum permitted by applicable
law, shall be effective to the extent that it calls for payment of any interest
or other sums in excess of such maximum.
11.9. Binding Effect; Limitation of Liability. All of the
covenants, conditions and obligations contained in this Lease shall be binding
upon and inure to the benefit of the respective successors and assigns of
Landlord and Tenant to the same extent as if each successor and assign were in
each case named, except that a successor and assign of Landlord shall only be
bound as to covenants, conditions and obligations arising after the transfer.
Notwithstanding anything to the contrary set forth in this Lease, if Landlord
shall fail to perform any covenant, term or condition of this Lease upon
Landlord's part to be performed, and if as a consequence of such default Tenant
shall recover a judgment against Landlord, such judgment shall be satisfied only
out of the proceeds of sale received upon execution of such judgment and levy
thereon against the right, title and interest of Landlord in the Premises, and
Landlord shall not be personally liable therefor; provided, however, that in the
event of a transfer of the Premises, and in the event such liability relates to
a period prior to such transfer, such limitation of liability shall not apply to
owner of the Premises during such period (the "Prior Owner") unless the
transferee of the Premises has assumed liability with respect to such period;
provided, further, however, that the liability of the Prior Owner shall in any
event be limited to the amount of proceeds actually received by the Prior Owner
in connection with its transfer of the Premises, net of all costs incurred in
connection with such transfer, and such liability of the Prior Owner shall in no
event continue for a period longer than one (1) year after the transfer by the
Prior Owner of the Premises.
11.10. Table of Contents and Headings. The table of contents
and headings used in this Lease are for convenience of reference only and shall
not to any extent have the effect of modifying, amending or changing the
provisions of this Lease.
11.11. Governing Law. This Lease shall be governed by and
interpreted under the laws of the state in which the Premises is located, but
not including such state's conflict of laws rules.
11.12. Certain Definitions.
(a) The term "Imposition" means:
(i) All real estate taxes imposed by
governmental authorities of any kind;
(ii) All other taxes and any payments in
lieu thereof, assessments (including assessments for benefits from public works
or improvements, whether or not begun or completed prior to the commencement of
the term of this Lease and whether or not to be completed within said term),
levies, fees, water and sewer rents and charges, and all other governmental
charges of every kind, general and special, ordinary and extraordinary, whether
or not the same shall have been within the express contemplation of the parties
hereto, together with any interest and penalties thereon, which are, with
respect to the Lease Term or any period prior to the Lease Term, imposed or
levied upon or assessed against: (A) the Premises or any part thereof; (B) any
Basic Rent, any Additional Rent reserved or payable hereunder; and/or (C) this
Lease or the leasehold estate created hereby or which arise in respect of the
operation, possession, occupancy or use of the Premises.
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(iii) Any gross receipts or similar taxes
imposed or levied upon, assessed against or measured by the Basic Rent,
Additional Rent or any other sums payable by Tenant hereunder or levied upon or
assessed against the Premises with respect to the Lease Term or any period prior
to the Lease Term;
(iv) All sales and use taxes which may be
levied or assessed against or payable by Landlord and Tenant on account of the
acquisition, leasing or use of the Premises or any portion thereof including but
not limited to any taxes levied on the rental payable hereunder with respect to
the Lease Term or any period prior to the Lease Term; and
(v) All charges for water, gas, light,
heat, telephone, electricity, power and other utilities and communications
services rendered or used on or about the Premises during the Lease Term or any
period prior to the Lease Term.
(b) The term "Landlord" means the owner, for the time
being, of the rights of the lessor under this Lease, and its successors and
assigns, and upon any assignment or transfer of such rights, except an
assignment or transfer made as security for an obligation, the assignor or
transferor shall be relieved of all future duties and obligations under this
Lease, provided the assignee or transferee assumes in writing in recordable form
all such future duties and obligations of Landlord and such written assumption
is delivered to or otherwise benefits Tenant.
(c) The term "Lease" means this Lease as amended and
modified from time to time together with any memorandum or short form of lease
entered into for the purpose of recording.
(d) The term "Lender" means the holder of a mortgage
or deed of trust ("Mortgage") or other security agreement encumbering Landlord's
interest in the Premises and its successors and assigns. The documents,
including but not limited to the Mortgage, evidencing and securing any loan
encumbering Landlord's interest in the Premises are herein called "Loan
Documents".
(e) The term "Termination Date" means the date on
which this Lease terminates in accordance with its terms, and shall be any
business day and not a Saturday, Sunday or legal holiday.
11.13. Exhibits. The exhibits to this Lease are hereby
incorporated by reference herein and made a part hereof. The Guaranty (the
"Guaranty") attached hereto as Exhibit B is being executed and delivered on the
Commencement Date, and such execution and delivery, at the election of Landlord,
shall be a condition to the effectiveness of this Lease.
11.14. Integration. This Lease, the exhibits hereto and the
memorandum, if any, hereof, constitute the entire agreement between the parties
hereto with regard to the subject matter hereof, and supersede any prior
understandings, agreements or negotiations. This Lease may not be amended or
modified except by a writing executed by Tenant and Landlord, with the consent
of any Lender.
11.15. Lease Memorandum. Each of Landlord and Tenant shall
execute, acknowledge and deliver to the other a written memorandum of this Lease
("Memorandum") to be recorded in the appropriate land records of the
jurisdiction in which the Premises is located, in order to give public notice
and protect the validity of this Lease. In the event of any discrepancy between
the provisions of the recorded Memorandum and the provisions of this Lease, the
provisions of this Lease shall prevail.
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11.16. Subordination to Landlord Financing.
(a) (i) Subject to the provisions of Section
11.16(a)(ii) below, Tenant agrees that this Lease shall at all times be subject
and subordinate to the lien of any Mortgage, and Tenant agrees, upon demand,
without cost, to execute instruments as may be reasonably required to further
effectuate or confirm such subordination.
(ii) Tenant's agreement to subordinate set
forth in Section 11.16(a)(ii) above is conditioned upon the Lender agreeing
that: Tenant's tenancy and Tenant's rights under this Lease shall not be
disturbed, terminated or otherwise adversely affected, nor shall this Lease be
affected, by any default under any Mortgage, and in the event of a foreclosure
or other enforcement of any Mortgage, or sale in lieu thereof, the purchaser at
such foreclosure sale shall be bound to Tenant for the Term of this Lease, the
rights of Tenant under this Lease shall expressly survive, and this Lease shall
in all respects continue in full force and effect so long as there is no Event
of Default; provided, however, that such purchaser shall not:
(A) be liable for any prior act or
omission of Landlord;
(B) be subject to any defense,
counterclaim, set-off or offset which Tenant may then have against
Landlord;
(C) be bound by any payment of rent
that Tenant may have made to Landlord more than thirty (30) days before
the date such rent was first due and payable under this Lease with
respect to any period after the date of attornment other than, and only
to the extent that, this Lease expressly required such a prepayment;
(D) be bound by any obligation to
make any payment to Tenant which was required to be made prior to the
time such successor landlord succeeded to Landlord's interest; or
(E) be bound by any obligation to
perform any work or to make improvements to the Premises.
(b) Notwithstanding the provisions of Section
11.16(a), the holder of any Mortgage to which this Lease is subject and
subordinate shall have the right, at its sole option, at any time, to
subordinate and subject the Mortgage, in whole or in part, to this Lease by
recording a unilateral declaration to such effect.
(c) At any time prior to the expiration of the Term,
Tenant agrees, at the election and upon demand of any owner of the Leased
Premises, or of a Lender who has granted non-disturbance to Tenant pursuant to
Section 11.16(a) above, to attorn, from time to time, to any such owner or
lender, upon the terms and conditions of this Lease, for the remainder of the
Term. The provisions of this Section 11.16(c) shall inure to the benefit of any
such owner or Lender, shall apply notwithstanding that, as a matter of law, this
Lease may terminate upon the foreclosure of the Mortgage, shall be
self-operative upon any such demand, and no further instrument shall be required
to give effect to said provisions.
(d) Each of Tenant, Landlord and Lender, however,
upon written demand of the other, hereby agrees to execute, from time to time,
instruments in confirmation of the foregoing
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provisions of Sections 11.16(a) and 11.16(c), in the form customarily used by
such Lender to the extent consistent with the requirements of such Sections,
acknowledging such subordination, non-disturbance and attornment as are provided
in such Sections and setting forth the terms and conditions of its tenancy.
11.17 Waiver of Statutory Liens. Landlord hereby forever
waives and releases any and all liens, security interests and rights of Landlord
created, granted or imposed by statute, law or regulation ("Statutory Liens")
on, in or to any tangible personal property of Tenant located at any time at the
Premises (the "Tenant Personalty"). Landlord acknowledges and agrees that Tenant
may convey the Tenant Personalty, including granting security interests in the
Tenant Personalty, from time to time free and clear of all Statutory Liens.
Landlord shall, upon written demand of Tenant from time to time, execute and
deliver to Tenant such documents as may reasonably be required to evidence and
confirm Landlord's waiver of the Statutory Liens.
11.18 Interest Rate. Any amount due from either party to the
other under this Lease which is not paid within five (5) days after such amount
was due (including, without limitation, amounts due as reimbursement for costs
incurred in performing obligations of such party hereunder upon its failure to
so perform) shall bear interest at the prime (or reference) rate plus four
percent (4%) of Bank of America NA ("Interest Rate") from the date due until
paid, unless otherwise specifically provided herein, but the payment of such
interest shall not excuse or cure any default by Tenant under this Lease.
[THE FOLLOWING SECTION IS TO BE INCLUDED ONLY IN THE LEASE
FOR THE 19TH STREET SITE IN PHOENIX, ARIZONA:
11.19. SIGNS. THE PREMISES SHALL INCLUDE THE BILLBOARD LOCATED
ON THE LAND. TENANT SHALL COMPLY WITH ALL OF ITS OBLIGATIONS PURSUANT TO THAT
CERTAIN SIGN LEASE AGREEMENT #02-1028 DATED DECEMBER 15, 1996, AS ASSIGNED BY
ASSIGNMENT DATED APRIL 14, 1997, AS SUCH SIGN LEASE AGREEMENT MAY BE AMENDED,
AND ALL DOCUMENTS RELATED THERETO (COLLECTIVELY, THE "SIGN LEASE") AND, PROVIDED
THAT THERE IS NO EVENT OF DEFAULT UNDER THIS LEASE, SHALL HAVE THE RIGHT TO
RECEIVE ALL REVENUES THEREFROM. PROVIDED THAT THERE IS NO EVENT OF DEFAULT UNDER
THIS LEASE, IF THE SIGN LEASE TERMINATES, TENANT SHALL ALSO HAVE THE RIGHT TO
SUBLEASE OR LICENSE SUCH BILLBOARD TO THIRD PARTIES FOR ADVERTISING PURPOSES AND
THE RIGHT TO RECEIVE ALL REVENUES THEREFROM. ANY SUCH SUBLEASE OR LICENSE SHALL
BE SUBJECT AND SUBORDINATE TO THIS LEASE. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, THE PROVISIONS OF SECTION 5.1 OF THIS LEASE (MAINTENANCE AND REPAIR)
AND THE PROVISIONS OF SECTION 4.2 OF THIS LEASE (COMPLIANCE WITH LAWS) SHALL BE
APPLICABLE TO SUCH BILLBOARD AND ANY SIGNS INSTALLED THEREON.]
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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first above set forth.
"LANDLORD"
__________________________________________
a ___________________________________
By: _________________________________
Title: _________________________________
"TENANT"
UGLY DUCKLING CAR SALES, INC.,
an Arizona corporation
By: _________________________________
Title: _________________________________
By: _________________________________
Title: _________________________________
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EXHIBIT "K"
LEASE GUARANTY
71
GUARANTY
THIS GUARANTY, dated as of ________, 1998, (together with all
amendments and supplements hereto, referred to as this "Guaranty"), is from UGLY
DUCKLING CORPORATION, a corporation organized and existing under the laws of
Delaware (herein, together with its successors and assigns, including, without
limitation, any entity succeeding thereto by merger, consolidation or
acquisition of its assets substantially as an entirety, referred to as
"Guarantor"), to _______, a _________ (herein, together with its successors and
assigns, referred to as "Lessor").
WHEREAS, Ugly Duckling Car Sales, Inc., an Arizona corporation herein,
together with any entity succeeding thereto by merger, consolidation or
acquisition of its assets substantially as an entirety, referred to as
"Lessee"), a subsidiary [describe relationship] of Guarantor, leased from Lessor
and Lessor has leased to Lessee a certain parcel of real property together with
the building and improvements located thereon, and as described in Exhibit A
attached hereto (the "Premises") pursuant to a Lease dated as of even date
herewith, between Lessor and Lessee (the "Lease") (capitalized terms not defined
herein shall have the meanings given in the Lease); and
WHEREAS, the execution and delivery of this Guaranty by Guarantor is an
inducement to Lessor to enter into the Lease and Lessor has advised Guarantor
that it is not willing to enter into the Lease unless this Guaranty is executed
and delivered (the Lease and the other documents executed and delivered at or
prior to the closing by Lessee, other documents related to the Lease made by
Lessee to or with Lessor and all modifications and amendments to the foregoing,
made by Lessee to or with Lessor being, collectively, the "Lease Documents");
NOW, THEREFORE, in consideration of the premises, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor agrees with Lessor as follows:
1. Guarantor unconditionally and irrevocably guarantees (i) the payment
and performance by Lessee of all its obligations, covenants, agreements, terms
and conditions under the Lease Documents and (ii) the prompt payment of all sums
which may become payable by Lessee pursuant to any of the Lease Documents in
full when due in accordance with the provisions thereof. This Guaranty is
irrevocable, unconditional and absolute. If for any reason any sums shall not be
paid by Lessee promptly when due (after any notice required by the Lease
Documents and prior to the expiration of any applicable period of grace provided
for in the Lease Documents), or any such agreement, covenant, term or condition
is not performed or observed by Lessee in accordance with the Lease Documents,
Guarantor promptly, after notice thereof, will pay the same to the person
entitled thereto pursuant to the provisions of any such Lease Document and will
promptly perform and observe the same or cause the same promptly to be performed
or observed, in any case regardless of (a) any defenses or rights of setoff or
counterclaims which Lessee or Guarantor may have or assert, (b) whether Lessor
shall have taken any steps to enforce any rights against Lessee or any other
remedy thereunder as a result of the default of Lessee thereunder and (c) any
other condition, contingency, thing or matter whatsoever. Guarantor also agrees
to pay to Lessor such further reasonable and actual amounts as shall be
sufficient to cover the cost and expense actually incurred in collecting such
sums, or any part thereof, or of otherwise enforcing this
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Guaranty, including without limitation, in any case, reasonable attorneys' fees
and disbursements.
2. The obligations, covenants, agreements and duties of Guarantor under
this Guaranty shall in no way be affected or impaired by reason of the happening
from time to time of any of the following, although without notice to or the
further consent of Guarantor:
(a) the extension, in whole or in part, of the time for
payment by Lessee or Guarantor of any sums owing or payable under any
of the Lease Documents (provided, however, that if any such extension
is expressly granted by Lessor, then Guarantor shall be entitled to the
benefit of such extension);
(b) any release of liability of Lessee;
(c) any assignment or reassignment of the Lease or subletting
of the Premises or any part thereof (but not with respect to any period
beyond the Lease Term and any Extended Term if such additional period
was agreed to by Lessor and an assignee [and not Lessee] unless
Guarantor consented to such additional period);
(d) the modification or amendment of any of the obligations of
Lessee under the Lease Documents, whether the same be in the form of a
new agreement or the modification or amendment of an existing Document
(any of the foregoing being a "Modification"), or of Guarantor under
this Guaranty;
(e) the doing or the omission of any of the acts (including,
without limitation, the giving of any consent referred to therein)
referred to in the Lease Documents or this Guaranty;
(f) any failure, omission or delay on the part of Lessor to
enforce, assert or exercise any right, power or remedy conferred on or
available to Lessor in or by any of the Lease Documents or this
Guaranty, or any action on the part of Lessor granting indulgence or
extension in any form whatsoever (except to the extent, if any, that
such indulgence shall have been expressly granted by Lessor);
(g) the voluntary or involuntary liquidation, dissolution,
sale of all or substantially all of the assets, marshalling of assets
and liabilities, receivership, conservatorship, custodianship,
insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other
similar proceeding affecting Lessee or Guarantor or any of their
assets;
(h) the inability of Lessor or Lessee, respectively, to
enforce any provision of the Lease Documents or this Guaranty, for any
reason;
(i) any change in the relationship between Lessee and
Guarantor or any termination of such relationship;
(j) the inability of Lessee to perform, or, to the extent
permitted by applicable law, the release of Lessee or Guarantor from
the performance of any obligation, agreement, covenant, term or
condition of Lessee under any of the Lease Documents by reason of any
law, regulation or decree, now or hereafter in effect; or
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(k) any action or inaction by Lessor which results in any
impairment or destruction of any subrogation rights of Guarantor or any
rights of Guarantor to proceed against Lessee for reimbursement.
3. In the event of the rejection or disaffirmance of the Lease by
Lessee or Lessee's receiver pursuant to any law affecting creditor's rights,
Guarantor will, and does hereby (without the necessity of any further agreement
or act) assume all obligations and liabilities of Lessee under or arising out of
the Lease, to the same extent as if Guarantor had been originally named the
lessee under the Lease, and there had been no such rejection or disaffirmance;
Guarantor will confirm such assumption in writing at the request of Lessor, upon
or after such rejection or disaffirmance. Guarantor, upon such assumption, shall
have all rights of Lessee under the Lease and shall be entitled to a new lease
on all of the terms and conditions of the Lease with respect to the unexpired
portion of the Lease (to the extent permitted by law). Guarantor will execute
and deliver such documents as Lessor may from time to time reasonably require to
evidence such assumption, to confirm this Guaranty and to certify that Guarantor
is not in default hereunder.
4. Notice of acceptance of this Guaranty and notice of any obligations
or liabilities contracted or incurred by Lessee under any of the Lease Documents
are hereby waived by Guarantor.
5. This Guaranty shall be construed in accordance with the laws of the
state in which the Premises are located.
6. This Guaranty may not be modified or amended except by written
agreement duly executed by Guarantor with the consent in writing of Lessor and
any Lender.
7. [Guarantor is a company required to file certain reports with the
Securities and Exchange Commission ("SEC"). Guarantor will deliver to Lessor
within 30 days of filing with the SEC (other than on a confidential basis) or
otherwise making public, copies of all financial statements, 8-K, 10-K and 10-Q
reports, and notices and proxy statements sent by Guarantor to its
stockholders.]
8. Guarantor waives any right it may have (a) to require Lessor to
proceed against Lessee or against any other party [(PURSUANT TO A.R.S. SEC.
12.1641 ET. SEQ. OR OTHERWISE)] or (b) to require Lessor to pursue any remedy
within the power of the Lessor and Guarantor agrees that all of Guarantor's
obligations under this Guaranty are independent of the obligations of Lessee
under the Lease Documents or under any other instrument or agreement, and that a
separate action may be brought against Guarantor whether or not an action is
commenced against Lessee under any thereof. [GUARANTOR ALSO WAIVES RULE 17(f) OF
THE ARIZONA RULES OF CIVIL PROCEDURE.]
9. All notices, demands, requests, consents, approvals and other
instruments required or permitted to be given pursuant to the terms of this
Guaranty shall be in writing and shall be deemed to have been properly given if
(a) with respect to Guarantor, sent by registered or certified mail with a
return receipt requested, postage prepaid, or sent by facsimile, nationally
recognized overnight express carrier or delivered by hand, in each case
addressed to Guarantor at its notice address set forth below, and (b) with
respect to Lessor, sent by registered or certified mail with a return receipt
request, postage prepaid, or sent by facsimile, nationally recognized overnight
express courier or delivered by hand in each case, addressed to the Lessor at
its address set forth below along with a copy to the Lender (if Guarantor shall
have been given Lender's address). Lessor and Guarantor shall each have the
right from
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time to time to specify as its address for purposes of this Guaranty any other
address in the United States of America upon giving fifteen (15) days written
notice thereof, similarly given, to the other party, except that any change of
address to a post office box shall not be effective unless a street address is
also specified for use in effectuating personal service. Notices shall be deemed
communicated upon the earlier of receipt, or seventy-two (72) hours from the
time of mailing if mailed as provided in this Section 9.
Notices shall be addressed as follows:
If to Lessor: __________________________
c/o Imperial Credit Mortgage Investment Corporation
11601 Wilshire Boulevard, Suite 2080
Los Angeles, California 90025
Attention: Mr. James M. Flagg
If to Guarantor: Ugly Duckling Corporation
Attention: General Counsel
2525 East Camelback Road, Suite 1150
Phoenix, Arizona 85016
10. Guarantor hereby consents to, and no further consent by Guarantor
shall be required for, (i) any assignment of rights of Lessor hereunder, in
whole or in part, either as collateral security for obligations of Lessor
secured by a lien on the Premises or in connection with the sale of the Premises
or any interest therein or (ii) any assignment of the rights of Lessor under the
Lease. Lessor will give notice to Guarantor of any such assignment, but a
failure to do so will not result in any liability on Lessor, affect in any
manner the enforceability of this Guaranty, the rights and remedies of Lessor
hereunder or the obligations of Guarantor hereunder.
11. In case any one or more of the provisions hereof or of the Lease
Documents shall be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof and this Guaranty shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
12. Guarantor shall not, directly or indirectly, without the express
prior written consent of Lessor, which may be withheld by Lessor in its sole and
absolute discretion, (i) merge into or consolidate with any other corporation,
partnership or any other entity ("Person") or permit any other Person to merge
into or consolidate with Guarantor; (ii) sell, lease, transfer, abandon or
otherwise dispose of all or substantially all of Guarantor's properties or
assets; or (iii) sell or offer for sale any shares of capital stock or any
securities convertible into, or any rights to acquire, shares of capital stock,
unless in each case, of each of (i), (ii) or (iii) above, Guarantor' s ability
to perform all of its obligations under this Guaranty (in Lessor's opinion) will
not be impaired after giving effect to such transaction. Within 10 days
following the merger of Guarantor into another corporation, or the consolidation
of Guarantor with one or more other corporations or the sale or other
disposition of all or substantially all the assets of Guarantor to one or more
other entities, the surviving entity or transferee of assets, as the case may
be, shall deliver to Lessor an acknowledged instrument in recordable form
assuming all obligations, covenants and responsibilities of Guarantor hereunder
and under this Guaranty.
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13. Lessor will accept performance by Guarantor of any of the
obligations guaranteed under the Lease Documents as if such performance had been
made by Lessee; provided, however, that the foregoing shall not be deemed to be
an agreement by Lessor to allow access to the Premises in order to cure any
default, it being acknowledged that any such right of access shall be obtained
by Guarantor pursuant to a separate agreement with Lessee (and Lessor agrees to
recognize any such rights of access which are so granted, provided that Lessor
shall have received appropriate written notice thereof).
14. This Guaranty shall be binding upon, and inure to the benefit of
and be enforceable by, the Guarantor, the Lessor, the Lessee, any Lender, and
their respective successors and assigns.
15. Guarantor further agrees that, to the extent that the Lessee or
Guarantor makes a payment or payments to the Lessor, which payment or payments
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to the Lessee or the
Guarantor or their respective estate trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or equitable laws, then to
the extent of such payment or repayment, this Guaranty and the advances or part
thereof which have been paid, reduced or satisfied shall be reinstated and
continued in full force and effect as of the date such initial payment
reduction, or satisfaction occurred.
16. Guarantor's rights (direct or indirect) of subrogation,
contribution, reimbursement, indemnification or other right of payment or
recovery from any person or entity (including, without limitation, the Lessee)
for any payments made by the Guarantor hereunder, are hereby subordinated to the
rights of Lessor, and Guarantor hereby subordinates, absolutely and
unconditionally, any such right of subrogation, contribution, reimbursement,
indemnification and other rights of recovery which it may hereafter acquire. In
no event shall Guarantor exercise any such right of subrogation, contribution,
reimbursement, indemnification or other right of recovery, now existing or
hereafter acquired, unless and until Lessee shall have complied with all of its
obligations under the Lease Documents and the Term of the Lease shall have
expired.
Ugly Duckling Corporation,
a Delaware corporation
By: ____________________________
Title: ____________________________
By: ____________________________
Title: ____________________________
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