SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date to earliest event reported): July 9, 1998
SONIC AUTOMOTIVE, INC.
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(Exact name of registrant as Specified in Charter)
Delaware 1-13395 56-2010790
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(State or Other
Jurisdiction of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
5401 East Independence Boulevard
P.O. Box 18747
Charlotte, North Carolina 28026
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (704) 532-3320
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(Former Name or Former Address, if Changed Since Last Report)
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<PAGE>
ITEM 2. ACQUISITION OF DISPOSITION OF ASSETS
On July 9, 1998, Sonic Automotive, Inc. (the "Company") acquired
substantially all of the assets and assumed certain liabilities of Hatfield Jeep
Eagle, Inc., Hatfield Lincoln/Mercury, Inc., Trader Bud's Westside Dodge, Inc.,
Toyota West, Inc., and Hatfield Hyundai, Inc. (collectively, the "Hatfield
Dealerships") pursuant to an Asset Purchase Agreement dated as of February 4,
1998 (the "Hatfield Purchase Agreement") between the Company, as buyer, and the
Hatfield Dealerships, as sellers, and Bud C. Hatfield, Dan E. Hatfield and Dan
E. Hatfield, as trustee of The Bud C. Hatfield, Sr. Special Irrevocable Trust,
as shareholders of the sellers, as amended by Amendment No. 1 and Supplement to
Asset Purchase Agreement dated as of May 28, 1998 ("Amendment No. 1") by and
among the parties to the Hatfield Purchase Agreement, and by Amendment No. 2 and
Supplement to Asset Purchase Agreement dated as of July 8, 1998 ("Amendment No.
2") by and among the parties to the Hatfield Purchase Agreement (the "Hatfield
Acquisition"). The Hatfield Purchase Agreement, Amendment No. 1 and Amendment
No. 2 are attached to this report on Form 8-K as Exhibits 99.1, 99.2, and 99.3,
respectively. The acquisition of the assets of Toyota West, Inc. was closed in
escrow pending the approval of Toyota for the acquisition of this dealership.
The aggregate consideration for the Hatfield Acquisition was approximately
$48.6 million plus the assumption of certain liabilities of the sellers. The
total purchase price is subject to adjustment based on a final determination of
the value of the net current assets of the sellers. Of the total purchase price,
approximately $34.6 million was paid in cash obtained from operations of the
Company and the Company's Amended and Restated Credit Agreement dated December
15, 1997 with Ford Motor Credit Company, with the balance paid in 14,025 shares
of the Company's Class A Preferred Stock, par value $.10 per share, having a
liquidation preference of $1,000 per share. Approximately $7.3 million,
reflecting the cash portion of the Toyota West dealership, was paid into an
escrow account pending Toyota's approval for the acquisition of this franchise
by the Company. The amount of consideration paid by the Company for the Hatfield
Acquisition was determined through arms length negotiations with the sellers.
The Assets were used in the operations of six individual automobile
dealerships and a body shop located in Columbus, Ohio. Such operations consisted
of selling new and used cars and light trucks, selling replacement parts,
providing vehicle maintenance, warranty, paint, and repair services, and
arranging related financing and insurance. The Company intends to continue the
existing operations at each of the dealerships being acquired.
The Company has obtained consents to the Hatfield Acquisition from all of the
applicable manufacturers, except from Chrysler and Toyota. The Company expects
to obtain the consent of Chrysler in the near future. The Company also expects
to receive the consent of Toyota in the near future, at which point the escrow
of the Toyota West dealership will be released. There can be no assurance that
the consents of Chrysler and/or Toyota will be obtained. Any manufacturer who
does not consent to the Hatfield Acquisition may seek to terminate its franchise
agreement, although relevant state franchising laws impose limitations on a
manufacturer's ability to terminate a franchise.
For additional information concerning the transaction, reference is made to
the Hatfield Purchase Agreement and to Amendment No. 1 and Amendment No. 2,
copies of which are attached as exhibits hereto.
ITEM 5. OTHER EVENTS.
On July 9, 1998, the Company entered into, subject to the approval of the
Company's Board of Directors and the Company's independent directors, a
Strategic Alliance Agreement and Agreement for the Mutual Referral of
Acquisition Opportunities (the "Alliance Agreement") with an operating
partnership controlled by Mar Mar Realty Trust, a Maryland real estate
investment trust ("MMRT"). A copy of the Alliance Agreement is attached hereto
as Exhibit 99.7. MMRT owns the real estate associated with various automobile
dealerships, automotive aftermarket retailers and other automotive related
businesses and leases such property to the business operators located thereon.
O. Bruton Smith, the Company's Chairman and Chief Executive Officer, serves as
the chairman of MMRT's board of trustees and is presently its controlling
shareholder.
<PAGE>
Under the Alliance Agreement, the Company has agreed to refer real estate
acquisition opportunities that arise in connection with its dealership
acquisitions to MMRT. In exchange, MMRT has agreed to refer dealership
acquisition opportunities to the Company and to provide to the Company, at the
Company's cost, certain real estate development, maintenance, survey, and
inspection services. Pursuant to the Alliance Agreement, the Company has entered
into contracts to sell the real estate associated with Town and Country Toyota
and Fort Mill Ford, two of the Company's dealerships, for an aggregate purchase
price of $10.3 million. In addition, the Alliance Agreement provides for an
agreed form of lease (the "Sonic Form Lease") pursuant to which MMRT would lease
real estate to the Company should MMRT acquire real estate associated with any
of the Company's operations. Presently, the Company leases or intends to lease
from MMRT 18 parcels of land associated with 16 of its dealerships, including
the real estate associated with Town and Country Toyota and Fort Mill Ford which
the Company will lease back from MMRT pursuant to leases substantially similar
to the Sonic Form Lease. The aggregate initial annual base rent to be paid by
the Company for all 18 properties under the leases with MMRT is approximately
$6.4 million.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Incorporated by reference to
exhibit 99.2 to the Company's Form 8-K filed July 9, 1998 (the "July 9, 1998
Form 8-K").
(B) PRO FORMA FINANCIAL INFORMATION. Attached as an exhibit to this report on
Form 8-K are the following:
UNAUDITED PRO FORMA FINANCIAL STATEMENTS REFLECTING THE BUSINESS
COMBINATION OF SONIC AUTOMOTIVE, INC. AND HATFIELD DEALERSHIPS
Pro Forma Statement of Income for the Year Ended December 31, 1997
(Unaudited) and Notes thereto.
Pro Forma Statement of Income for the Three Months Ended March 31, 1998
(Unaudited) and Notes thereto.
Pro Forma Balance Sheet at March 31, 1998 (Unaudited) and Notes thereto.
(C) EXHIBITS
Exhibit Number Description
- -------------------- ----------------------------------------------
99.1* Asset Purchase Agreement dated as of
February 4, 1998 between Sonic Automotive,
Inc., as buyer, Hatfield Jeep Eagle, Inc.,
Hatfield Lincoln Mercury, Inc., Trader Bud's
Westside Dodge, Inc., Toyota West, Inc., and
Hatfield Hyundai, Inc. as sellers, and Bud
C. Hatfield, Dan E. Hatfield and Dan E.
Hatfield, as trustee of The Bud C. Hatfield,
Sr. Special Irrevocable Trust, as
shareholders of the sellers (incorporated by
reference to Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998 (the "March 31,
1998 Form 10-Q")).
99.2* Amendment No. 1 and Supplement to Asset
Purchase Agreement dated as of May 28, 1998
between Sonic Automotive, Inc., Hatfield
Jeep Eagle, Inc., Hatfield Lincoln Mercury,
Inc., Trader Bud's Westside Dodge, Inc.,
Toyota West, Inc., and Hatfield Hyundai,
Inc., Bud C. Hatfield, Dan E. Hatfield and
Dan E. Hatfield, as trustee of The Bud C.
Hatfield, Sr. Special Irrevocable Trust
(incorporated by reference to Exhibit 99.6
to the July 9, 1998 Form 8-K).
99.3 Amendment No. 2 and Supplement to Asset
Purchase Agreement dated as of July 8, 1998
between Sonic Automotive, Inc., Hatfield
Jeep Eagle, Inc., Hatfield Lincoln Mercury,
Inc., and Hatfield Hyundai, Inc., Bud C.
Hatfield, Dan E. Hatfield and Dan E.
Hatfield, as trustee of The Bud C. Hatfield,
Sr. Special Irrevocable Trust.
99.4* Combined Financial Statements of the Hatfield
Automotive Group as of December 31, 1996 and 1997 and
for each of the three years in the period ending
December 31, 1997 (Audited) and as of March 31, 1998
and for the three months then ended (Unaudited)
(incorporated by reference to Exhibit 99.2
to the July 9, 1998 Form 8-K).
99.5 Unaudited Pro Forma Financial Statements
Reflecting the Business Combination of Sonic
Automotive, Inc. and Hatfield Dealerships
for the year ended December 31, 1997 and as
of March 31, 1998 and for the three months
then ended.
99.6 Press Release dated July 9, 1998.
99.7 Strategic Alliance Agreement and Agreement
for the Mutual Referral of Acquisition
Opportunities dated July 9, 1998, between
Sonic Automotive, Inc. and Mar Mar Realty, L.P.
*Filed Previously
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SONIC AUTOMOTIVE, INC.
Date: July 9, 1998 By: /s/ Theodore M. Wright
-------------------------
Theodore M. Wright
Chief Financial
Officer, Vice
President-Finance,
Treasurer, Secretary
and Director
AMENDMENT NO. 2 AND SUPPLEMENT TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 AND SUPPLEMENT TO ASSET PURCHASE AGREEMENT(this
"Amendment No 2"), dated as of July 8, 1998, is made and entered into by and
among SONIC AUTOMOTIVE, INC., a Delaware corporation ("Buyer"), HATFIELD JEEP
EAGLE, INC., an Ohio corporation; HATFIELD LINCOLN MERCURY, INC., an Ohio
corporation; WESTSIDE DODGE, INC., an Ohio corporation, TOYOTA WEST, INC., an
Ohio corporation; and HATFIELD HYUNDAI, INC., an Ohio corporation (collectively,
the "Sellers" and each, individually, a "Seller"); and BUD C. HATFIELD, DAN E.
HATFIELD, and DAN E. HATFIELD, AS TRUSTEE OF THE BUD C. HATFIELD, SR. SPECIAL
IRREVOCABLE TRUST (collectively, the Shareholders").
W I T N E S S E T H:
WHEREAS, Buyer, Sellers and Shareholders have entered into that certain
Asset Purchase Agreement dated as of February 4, 1998, as amended by an
Amendment No. 1 and Supplement thereto dated as of May 28, 1998 (as so amended
the "Purchase Agreement"); and
WHEREAS, capitalized terms not otherwise defined herein shall have the
meaning assigned to such term in the Purchase Agreement.
WHEREAS, Buyer, Seller and Shareholders desire to further amend and
supplement the Purchase Agreement as hereinafter provided.
NOW, THEREFORE, the parties agree as follows:
1. GENERAL. The parties acknowledge that the Buyer has not received
approval from Toyota Motor Distributors, Inc. to be an authorized Toyota dealer
to operate the Purchased Assets to be purchased from Toyota West, Inc. ("TWI")
as set forth in the Purchase Agreement (the "Toyota Approval"). Accordingly, the
parties agree that the Closing shall occur July 8, 1998 and that all of the
Purchased Assets, other than the Assets of TWI required to be transferred under
the Purchase Agreement (the "TWI Assets"), shall be transferred to Buyer at the
Closing. The parties also agree that the Assumed Liabilities related to Toyota
(the "TWI Liabilities") will not be assumed at the closing on this date and that
the Dealership Lease related to the location where TWI conducts its business
(the "TWI Lease") will not be entered into at the closing on this date. The
parties further agree that:
a. TWI shall hold and operate the TWI Assets and pay and
perform the TWI Liabilities, and otherwise operate the TWI business, with the
advice and assistance of the Buyer in accordance with terms of a Consulting
Agreement between Buyer, as the consultant, and TWI dated of even date herewith
(the "Consulting Agreement").
1
<PAGE>
b. During the period beginning with the Closing and ending on
the date which is sixty (60) days from the date of the Closing (the "Toyota
Approval Deadline"), $7,300,000 of the Purchase Price (the "Escrowed Funds")
shall be deposited by the Buyer in cash with The Fifth Third Bank of Columbus
(the "Escrow Bank") in Columbus, Ohio, and held in escrow subject to withdrawal
only by joint instruction in writing from the Sellers' Agent and the President
of the Buyer, except as otherwise specifically contemplated by this Amendment
No. 2. All earnings on the Escrowed Funds shall be paid to TWI on a monthly
basis.
c. If, at any time prior to the Toyota Approval Deadline,
Buyer shall receive the Toyota Approval on terms satisfactory to the Buyer in
its sole discretion, the parties shall promptly complete the closing under the
Purchase Agreement, insofar as it relates to the TWI Assets, the TWI
Liabilities, and the TWI Lease. In such event the Sellers' Agent and the
President of the Buyer shall instruct the Escrow Bank to pay all amounts held by
it to TWI, and Buyer shall assume the TWI Liabilities and the parties shall
execute the TWI Lease, whereupon the Consulting Agreement shall terminate.
d. If Buyer does not receive the Toyota Approval on terms
satisfactory to the Buyer in its sole discretion on or before the Toyota
Approval Deadline, the following shall occur:
(i) The Escrow Agent shall automatically pay from the
Escrowed Funds: (A) to TWI, the sum of $3,000,000, plus all interest on the
Escrowed Funds; and (B) to the Buyer, the sum of $4,300,000.
(ii) The Consulting Agreement shall terminate.
(iii) During the period ending one year after the
Toyota Approval Deadline, TWI shall continue to operate its Toyota dealership
business in the ordinary course and consistent with past practices and will not
sell or otherwise dispose of any of the TWI Assets or the stock of TWI without
the prior written consent of the Buyer. If requested by the Buyer, TWI shall use
reasonable efforts to sell the TWI Assets to a third party. If TWI shall receive
an offer and executed purchase documents from a third party buyer within such
time period, upon the sale of such TWI Assets, TWI shall pay the excess of the
net sales proceeds (gross sales proceeds less all closing costs, including
brokerage, legal, accounting, appraisal and other professional fees incurred in
connection with the sale of the TWI business) in excess of $4,300,000 to Buyer.
(iv) If Buyer shall receive the Toyota Approval after
the Toyota Approval Deadline, but before the end of the period ending one year
after the Toyota Approval Deadline, and provided TWI has received the payment
described in subsection 1 (d)(i) above, TWI shall, upon the request of the
Buyer, transfer the TWI Assets to Buyer for a purchase price of $7,300,000, less
a credit to the Buyer of $3,000,000, in satisfaction of Sellers' obligations to
Buyer under the Purchase Agreement. In such event the Buyer shall assume the TWI
Liabilities and the parties shall enter into the TWI Lease.
2
<PAGE>
(v) If Buyer has not received the Toyota
Approval on or before the date which is one year following the Toyota Approval
Deadline, and TWI shall not have sold the TWI Assets to the Buyer or a third
party as set forth above, TWI shall be free to operate the TWI Assets in any
manner it desires free of any restrictions from Buyer of the Purchase agreement.
2. AMENDMENTS TO PURCHASE AGREEMENT. Notwithstanding any provisions of
the Purchase Agreement, the Buyer, Sellers and Shareholders hereby agree as
follows:
a. The purchase price allocation set forth in Part I of
Schedule 1.3 (d) to the Purchase Agreement shall be modified as set forth in the
revised Part I of Schedule 1.3(d) attached hereto.
b. At the Closing, the Buyer shall pay the Closing Payment,
together with interest on the entire Purchase Price at the Interest Rate from
and including July 1, 1998 through the Closing Date (the "Interest Amount"), as
follows:
(i) $27,225,000, plus the Interest Amount, shall be
paid to the Sellers (other than TWI) in the manner contemplated in the Purchase
Agreement; and
(ii) $7,300,000 shall be delivered to the Escrow
Bank.
c. Notwithstanding anything contained herein, in the Purchase
Agreement or and agreement contemplated by the Purchase Agreement (the
Transaction Documents") to the contrary, the operation of the TWI Assets by TWI
shall not be deemed to be a violation by the Sellers or Shareholders of any of
the Transaction Documents, provided, such that Sellers and Shareholders shall
not act in bad faith .
3. PURCHASE AGREEMENT CONFIRMED. Except as set forth in this Amendment
No. 2, the Purchase Agreement is hereby confirmed and shall remain in full force
and effect.
4. MISCELLANEOUS.
a. This Amendment No. 2 shall be construed and enforced
according to the laws of the State of Ohio and shall inure to the benefit of,
and be binding upon, the parties, their respective successors and assigns.
b.This Amendment No. 2 may be modified only by a writing
signed by all of the parties hereto, and no waiver hereunder shall be effective
unless in a writing signed by the party to be charged.
3
<PAGE>
c. This Amendment No. 2 may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
2 on the date first above written.
BUYER:
SONIC AUTOMOTIVE, INC., Delaware corporation
By:/s/ B. Scott Smith
__________________________________________
Its: President
________________________________________
SELLERS:
HATFIELD JEEP EAGLE, INC.,
an Ohio corporation
By: /s/ Dan E. Hatfield
_________________________________________
Its: President
________________________________________
HATFIELD LINCOLN MERCURY, INC.,
an Ohio corporation
By: /s/ Dan E. Hatfield
_________________________________________
Its: President
________________________________________
WESTSIDE DODGE, INC.,
an Ohio corporation
By: /s/ Bud C. Hatfield
_________________________________________
Its: President
________________________________________
4
<PAGE>
HATFIELD HYUNDAI, INC.,
an Ohio corporation
By: /s/ Dan E. Hatfield
_________________________________________
Its: President
________________________________________
TOYOTA WEST, INC.,
an Ohio corporation
By: /s/ Dan E. Hatfield
_________________________________________
Its: President
________________________________________
SHAREHOLDERS:
/s/ Bud C. Hatfield
____________________________________________
BUD C. HATFIELD, SR.
/s/ Dan E. Hatfield
____________________________________________
DAN E. HATFIELD
BUD C. HATFIELD, SR. SPECIAL
IRREVOCABLE TRUST
By: /s/ Dan E. Hatfield
_________________________________________
Dan E. Hatfield, as Trustee
5
Exhibit 99.5
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma consolidated statement of operations
for the year ended December 31, 1997 reflects the historical accounts of the
Company for that period, adjusted giving effect to the acquisitions of Lake
Norman Dodge, Inc. and Affiliated Companies, Ken Marks Ford, Inc., Dyer & Dyer,
Inc. and the Bowers Dealerships and Affiliated Companies in 1997 (the "1997
Acquisitions"), the acquisitions of Clearwater Dealerships and Affiliated
Companies effective January 1, 1998 (the "Clearwater Acquisition" and, together
with the 1997 Acquisitions, the "Completed Acquisitions"), and the Hatfield
Acquisition (collectively, the "Acquisitions"), as if such acquisitions had
occurred on the first day of the period presented. The following unaudited pro
forma consolidated statement of operations for the three months ended March 31,
1998 reflects the historical accounts of the Company for that period, adjusted
to give effect to the Hatfield Acquisition, as if such acquisition had occurred
on the first day of the period presented. The following unaudited pro forma
consolidated balance sheet as of March 31, 1998 reflects the historical accounts
of the Company as of that date as adjusted to give effect to the Hatfield
Acquisition as if such acquisition had occurred on March 31, 1998.
The unaudited pro forma consolidated financial data and accompanying
notes should be read in conjunction with the Consolidated Financial Statements
and related notes of the Company as included in its Annual Report on Form 10-K
dated March 31, 1998 and its Quarterly Report on Form 10-Q dated May 14, 1998,
the financial statements and related notes of the Bowers Dealerships and
Affiliated Companies, Lake Norman Dodge, Inc. and Affiliated Companies, Ken
Marks Ford, Inc. and Dyer and Dyer, Inc. as included in the Company's Prospectus
dated November 10, 1997, as well as the financial statements and related notes
of the Hatfield Automotive Group as included herein by exhibit 99.3 and as
incorporated by reference to exhibit 99.2 to the Company's Form 8-K dated July
9, 1998. The Company believes that the assumptions used in the following
statements provide a reasonable basis on which to present the unaudited pro
forma financial data. The unaudited pro forma consolidated financial data are
provided for informational purposes only and should not be construed to be
indicative of the Company's financial condition or results of operations had the
transactions described above been consummated on the dates assumed, and are not
intended to project the Company's financial condition on any future date or its
results of operations for any future period.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(in thousands except per share data)
<TABLE>
<CAPTION>
Completed Acquisitions
-----------------------------------------------------------------
Pro-Forma
Adjustments Pro-Forma
1997 for the for the
Acquisitions Clearwater Completed Completed
Actual (a) (b) Acquisition Acquisitions Acquisitions
----------------- ------------------------------------------------- ---------------
<S> <C>
Revenues:
Vehicle sales $ 467,858 $ 364,756 $ 108,812 $ - $ 941,426
Parts, service, and collision repair 57,537 42,164 10,500 110,201
Finance and insurance 10,606 7,723 2,587 346 (c) 21,262
----------------- ----------------------------------------- --------------
Total Revenues 536,001 414,643 121,899 346 1,072,889
Cost of Sales 471,253 360,794 105,786 (371) (d) 937,462
----------------- ----------------------------------------- ---------------
Gross Profit 64,748 53,849 16,113 717 135,427
Selling, general & administrative expenses 48,520 41,909 12,226 (4,093) (e) 99,745
1,183 (f)
Management bonus -
Depreciation and amortization 1,322 914 390 (179) (f) 3,725
(303) (g)
1,581 (h)
----------------- ----------------------------------------- --------------
Operating income 14,906 11,026 3,497 2,528 31,957
Interest expense, floorplan 8,007 4,722 779 (1,864) (i) 11,644
Interest expense, other 1,199 234 721 (690) (f) 5,394
3,949 (j)
267 (k)
(286) (l)
Other income 298 180 194 672
----------------- ----------------------------------------- --------------
Income (loss) before income
taxes and minority interest 5,998 6,250 2,191 1,152 15,591
Provision for income taxes 2,249 178 - 627 (m) 5,979
2,925 (n)
----------------- ----------------------------------------- --------------
Income (loss) before minority interest 3,749 6,072 2,191 (2,400) 9,612
Minority interest in
earnings of subsidiary 47 - - 47
----------------- ----------------------------------------- --------------
Net Income (Loss) $ 3,702 $ 6,072 $ 2,191 $ (2,400) $ 9,565
================= ========================================= ==============
Basic net income per share $ 0.53
=================
Weighted average shares outstanding 6,949
=================
Diluted net income per share (o) $ 0.53
=================
Weighted average shares outstanding (o) 6,949
=================
</TABLE>
<TABLE>
<CAPTION>
Hatfield Acquisition
--------------------------------------------
Pro-Forma
Adjustments
for the Pro-Forma
Hatfield Hatfield for the
Dealerships Acquisition Acquisitions
---------------------------------------- ---------------
<S> <C>
Revenues:
Vehicle sales $ 251,981 $ - $ 1,193,407
Parts, service, and collision repair 16,400 126,601
Finance and insurance 6,899 28,161
------------------------------------ ---------------
Total Revenues 275,280 - 1,348,169
Cost of Sales 243,370 1,180,832
------------------------------------ ---------------
Gross Profit 31,910 - 167,337
Selling, general & administrative expenses 21,153 104 (e) 121,002
Management bonus 7,121 (7,121) (e) -
Depreciation and amortization 221 4,865
(25) (g)
944 (h)
------------------------------------- ---------------
Operating income 3,415 6,098 41,470
Interest expense, floorplan 3,663 (414) (i) 15,523
630 (j)
Interest expense, other - 7,625
2,231 (j)
Other income 224 896
--------------------------------------- ---------------
Income (loss) before income
taxes and minority interest (24) 3,651 19,218
Provision for income taxes - 1,583 (m) 7,552
(10) (n)
--------------------------------------- ---------------
Income (loss) before minority interest (24) 2,078 11,666
Minority interest in
earnings of subsidiary - 47
--------------------------------------- ---------------
Net Income (Loss) $ (24) $ 2,078 $ 11,619
======================================= ===============
Basic net income per share $ 1.03
==============
Weighted average shares outstanding 11,250
==============
Diluted net income per share (o) $ 0.91
==============
Weighted average shares outstanding (o) 12,749
==============
(See accompanying notes to Unaudited Pro Forma Consolidated Statements of Operations)
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
(in thousands except per share data)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Hatfield Adjustments for for the
Actual (a) Dealerships the Acquisition the Acquisition
---------------- ---------------------------------- ----------------
<S> <C>
Revenues:
Vehicle sales $ 228,569 $ 57,661 $ - $ 286,230
Parts, service, and collision repair 28,965 4,255 - 33,220
Finance and insurance 6,247 1,747 - 7,994
------------ -------------------------------- ----------------
Total Revenues 263,781 63,663 - 327,444
Cost of Sales 228,600 56,297 - 284,897
------------ -------------------------------- ----------------
Gross Profit 35,181 7,366 - 42,547
Selling, general & administrative expenses 26,640 5,053 20 (e) 31,713
Management bonus - 1,700 (1,700) (e) -
Depreciation and amortization 815 67 (6) (g) 1,112
236 (h)
------------ -------------------------------- ----------------
Operating income 7,726 546 1,450 9,722
Interest expense, floorplan 3,235 556 (59) (i) 3,889
157 (j)
Interest expense, other 1,061 - 593 (j) 1,654
Other income 44 41 85
------------ -------------------------------- ----------------
Income before income taxes and minority interest 3,474 31 759 4,264
Provision for income taxes 1,338 - 335 (m) 1,699
13 (n)
------------ -------------------------------- ----------------
Income before minority interest 2,136 31 411 2,578
Minority interest in earnings of subsidiary - - - -
------------ -------------------------------- ----------------
Net Income $ 2,136 $ 31 $ 411 $ 2,578
============ ================================ ================
Basic net income per share $ 0.19 $ 0.23
============ ===============
Weighted average shares outstanding 11,250 11,250
============ ===============
Diluted net income per share (o) $ 0.19 $ 0.20
============ ===============
Weighted average shares outstanding (o) 11,374 12,843
============ ===============
(See accompanying notes to Unaudited Pro Forma Consolidated Statements of Operations)
</TABLE>
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
DECEMBER 31, 1997 AND MARCH 31, 1998
(a) The actual consolidated statement of operations data for the Company for
the year ended December 31, 1997 includes the results of operations of the
following dealerships and dealership groups acquired during the year ended
December 31, 1997 from their respective dates of acquisition:
DEALERSHIP ACQUIRED DATE OF
ACQUISITION
- --------------------------------------- ----------------------------
Fort Mill Chrysler-Plymouth-Dodge June 3, 1997
Lake Norman Dealerships September 1, 1997
Ken Marks Ford October 1, 1997
Williams Motors October 10, 1997
Dyer Volvo November 1, 1997
Bowers Dealerships November 1, 1997
The actual consolidated statement of operations data for the Company for
the three months ended March 31, 1998 includes the results of operations of
the Clearwater Dealerships and Affiliated Companies from January 1, 1998,
the date of the Clearwater Acquisition.
(b) Reflects the results of operations of the 1997 Acquisitions for the period
from January 1, 1997 to their respective dates of acquisition. Pro forma
adjustments have not been presented to include the results of (i) Fort Mill
Chrysler-Plymouth-Dodge for the period from January 1, 1997 to June 3,
1997, the date of the acquisition or (ii) Williams Motors for the
period from January 1, 1997 to October 10, 1997, the date of
acquisition, because management believes such results are not material.
(c) Reflects finance and insurance revenues generated by the 1997 Acquisitions
and the Clearwater Acquisition in the amounts of $252,000 and $94,000,
respectively, for the year ended December 31, 1997 that were paid directly
to the dealership owners or wholly-owned management companies and excluded
from revenue in the historical financial statements of the acquired
dealerships.
(d) Adjustment reflects the conversion from the LIFO Method of inventory
accounting to the FIFO Method of inventory accounting for the 1997
Acquisitions in the amount of $371,000 for the year ended December 31, 1997
to conform to the Company's method of accounting for vehicle inventories.
(e) Reflects the net decrease in selling, general, and administrative expenses
related to the net reduction in salaries, bonuses, and fringe benefits and
related expenses of owners and officers of the acquired dealerships who
have become or will become employees, consistent with reduced salaries
pursuant to employment agreements with the Company, or whose positions have
been or will be eliminated as part of the acquisitions.
(f) Reflects the increase in rent expense related to lease agreements entered
into with the sellers of certain dealerships acquired in the 1997
Acquisitions and the Clearwater Acquisition for such dealerships' real
property that were not acquired by the Company, and the decreases in
depreciation expense and interest expense related to mortgage indebtedness
encumbering such property of approximately $1.8 million bearing interest at
9% and $5.9 million bearing interest at rates from 9% to 9.5% associated
with the 1997 Acquisitions and the Clearwater Acquisition, respectively.
(g) Reflects the elimination of amortization expense related to goodwill that
arose in previous acquisitions in certain of the acquired dealerships from
the date of the acquisitions.
(h) Reflects the amortization over an assumed useful life of 40 years of
intangible assets, consisting primarily of goodwill, resulting from the
Acquisitions which were assumed to occur on January 1, 1997. In
accordance with the purchase agreement associated with the Clearwater
Acquisition, the Company will be required to make an additional payment,
not to exceed $1.8 million, equal to 50% of the combined 1998 pre-tax
earnings of the entities acquired. Amount includes amortization of the
additional goodwill associated with this contingent purchase price, which
has been estimated at approximately $1.7 million based on the estimated
1998 pre-tax earnings of the entities acquired. The amount of the
contingent purchase price, and the corresponding goodwill, may actually
be different from the amounts estimated here depending on the actual
combined 1998 pre-tax earnings of the entities acquired.
<PAGE>
(i) Reflects the net decrease in interest expense, floor plan, resulting from
the refinancing of the notes payable, floor plan arrangements of the
Company and the dealerships being acquired, under a standardized floor plan
credit facility with Ford Motor Credit which requires placement of acquired
dealerships floor plan financing with Ford Motor Credit (the "Floor Plan
Facility") as if such refinancing had occurred at the beginning of the
period presented. The average interest rate under the Floor Plan Facility
is approximately 7.6% compared to historical interest rates ranging from
8.1% to 9.5%.
(j) Reflects the increase in interest expense associated with borrowings made
under the Company's revolving credit facility with Ford Motor Credit
bearing interest at 8.5% of $33.4 million, $11.4 million and $26.2 million
used to finance the 1997 Acquisitions, the Clearwater Acquisition and the
Hatfield Acquisition, respectively, and borrowings made under the Company's
Floor Plan Facility bearing interest at 7.6% of approximately $8.3 million
used to finance the Hatfield Acquisition. Amount includes estimated
additional borrowings to be made under the Company's revolving facility
of approximately $1.7 million used to finance the estimated contingent
purchase price associated with the Clearwater Acquisition (see note (h)).
(k) In connection with the acquisition of the Bowers Dealerships, the Company
issued a promissory note to the former owner in the amount of $4.0 million
bearing interest at NationsBank's prime rate less 0.5%. This adjustment
reflects an increase in interest expense related to the promissory note
assuming a prime rate of 8.5% as if the note was issued at the beginning of
the period presented.
(l) Reflects the decrease in interest expense related to debt, other than
mortgage indebtedness, associated with the 1997 Acquisitions and the
Clearwater Acquisition of approximately $1.6 million bearing interest at
8.5% and $1.8 million bearing interest at rates ranging from 9% to 10%,
respectively, which has not been assumed.
(m) Reflects the net increase in provision for income taxes resulting from pro
forma adjustments above, computed using a combined statutory income tax
rate of approximately 39%.
(n) Certain of the acquired dealerships were not subject to federal and state
income taxes because they were either S corporations, partnerships, or
limited liability companies during the period indicated. Upon completion of
these acquisitions, these dealerships will be subject to federal and state
income tax as C corporations. This adjustment reflects the resulting
increase in the federal and state income tax provision as if these entities
had been taxable at the combined statutory income tax rate of approximately
39%.
(o) Pro forma diluted net income per share and weighted average shares
outstanding includes the dilutive effect of the issuance of 3,960 and
14,025 shares of the Company's Class A Preferred Stock in connection with
the Clearwater Acquisition and the Hatfield Acquisitions, respectively, and
warrants to purchase 44,391 shares of the Company's Class A Common Stock in
connection with the consummation of the 1997 Acquisitions.
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(in thousands)
<TABLE>
<CAPTION>
Pro Forma
Adjustments for Pro Forma
Hattfield the Hattfield for the
Actual Dealerships Acquisition the Acquisition
------ ----------- ------------ ---------------
<S> <C>
Assets
Current Assets: $ 23,391 $ 14,990 $ - (a)(b) $ 26,074
Marketable equity securities 247 12,307 (c)
Receivables 22,128 3,360 25,488
Inventories 150,819 34,395 185,214
Deferred income taxes 405 405
Due from affiliates 1,014 1,014
Other current assets 1,969 6,610 8,579
---------- --------- ---------- -------------
Total current assets 199,973 59,355 (12,307) 247,021
Property and equipment, net 19,973 1,003 20,799
Goodwill, net 86,072 977 39,406 (a) 125,478
(977)(d) 651
---------- --------- ---------- -------------
Total assets $ 306,492 $ 61,335 $ 26,122 $ 393,949
========== ========= ========== ==============
Liabilities and Stockholder's Equity
Current Liabilities:
Note payable-floor plan $ 128,152 $ 33,456 $ 8,283 (b) $ 169,891
Trade accounts payable 7,554 2,660 10,214
Accrued interest 1,445 1,445
Other accrued liabilities 12,893 1,132 14,025
Payable to affiliates 445 7,196 (7,196)(c) 445
Current maturities of long-term debt 584 584
---------- --------- ---------- -------------
Total current liabilities 151,073 44,444 1,087 196,604
Long-term debt 49,982 27,901 (b) 77,883
Payable to the Company's Chairman 5,500 5,500
Payable to affiliates 4,192 10,569 (10,569)(c) 4,192
Deferred income taxes 1,079 1,079
Income tax payable 4,822 4,822
Stockholders' equity
Common stock of combined companies 2,825 (2,825)(a)
Preferred Stock 3,366 14,025 (a) 17,391
Class A Common Stock 50 50
Class B Common Stock 63 63
Paid-in-capital 68,045 1,744 (1,744)(a) 68,045
Retained earnings 18,322 1,753 (6,234)(a) 18,322
5,458 (c)
(977)(d)
Unrealized loss on marketable
equity securities (2) - (2)
---------- --------- ---------- -------------
Total stockholders' equity 89,844 6,322 7,703 103,869
---------- --------- ---------- -------------
Total liabilities and
stockholders equity $ 306,492 $ 61,335 $ 26,122 393,949
========== ========= ========== =============
</TABLE>
(See accompanying notes to Unaudited Pro Forma Consolidated Balance Sheet)
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
MARCH 31, 1998
(a) Reflects the preliminary allocation of the purchase price of the Hatfield
Acquisition based on the estimated fair value of net assets acquired.
Amount also reflects the allocation of the estimated contingent purchase
price associated with the Clearwater Acquisition (see note (h) to the
Notes to Unaudited Consolidated Statement of Operations). Because
the carrying amount of the net assets acquired, which primarily
consist of accounts receivable, inventory, equipment, and floor plan
indebtedness, approximates their fair value, management believes the
application of purchase accounting will not result in a significant
adjustment to the carrying amount of those net assets. The amount of
goodwill and the corresponding amortization actually recorded may
ultimately be different from amounts estimated here, depending on the
actual fair value of tangible net assets acquired, changes in the
estimated fair value of the preferred stock issued as determined by an
independent appraisal which has not yet been finalized, and the actual
contingent purchase price associated with the Clearwater Acquisition. The
estimated purchase price allocation consists of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Hatfield Clearwater
Dealerships Acquisition Total
--------------- ------------ --------------
Estimated total consideration:
Cash $34,525 $1,659 $36,184
Preferred Stock 14,025 14,025
---------------- ------------ --------------
Total 48,550 1,659 50,209
Less: Estimated fair value of tangible
Net assets acquired 10,803 - 10,803
---------------- ------------ --------------
Excess of purchase price over fair value
Of net tangible assets acquired $37,747 $1,659 $39,406
================ ============ ==============
</TABLE>
(b) Reflects borrowings made under the Company's Floor Plan Facility at 7.6%
and the Company's revolving credit facility with Ford Motor Credit at 8.5%
used to finance the Hatfield Acquisition.
(c) Reflects the elimination of certain assets and liabilities, other than
goodwill, of the Hatfield Acquisition that will not be acquired.
(d) Reflects the elimination of goodwill that arose in previous acquisitions of
the Hatfield dealerships.
[SONIC AUTOMOTIVE INC LOGO]
FOR IMMEDIATE RELEASE
5401 East Independence Boulevard
Charlotte, North Carolina 28212
(704) 532-3320
Fax (704) 536-5116
Sonic Automotive, Inc. Announces Acquisition of Five Dealerships
CHARLOTTE, NC (July 9, 1998) - Sonic Automotive, Inc. (NYSE:SAH) announced today
that it has entered into definitive agreements to acquire the Higginbotham
Dealership Group with dealerships in Daytona Beach, Florida and New Smyrna
Beach, Florida; Casa Ford in Houston, Texas; and Economy Honda Cars in
Chattanooga, Tennessee. These dealerships have combined 1997 revenues of
approximately $220 million. Included in these transactions are Acura, Chevrolet,
Ford, Honda, Mercedes, Mercury and Oldsmobile franchises.
These transactions are valued at approximately $46 million. Convertible
Preferred Stock will be issued for approximately 33% of the purchase price and
the remainder will be payable in cash. Sonic Automotive will finance the cash
portion of the purchase price for these dealerships with proceeds from long-term
debt borrowings. The Higginbotham Dealership Group, Casa Ford and Economy Honda
Cars acquisitions are expected to close in the third quarter of 1998.
B. Scott Smith, the Company's President and Chief Operating Officer, stated
"Sonic continues to execute its disciplined acquisition strategy. We're entering
attractive new markets and building market share in our existing markets. We
have increased our brand diversity and expanded our luxury lines by adding
Mercedes and Acura to our brand portfolio."
HIGGINBOTHAM DEALERSHIP GROUP
The Higginbotham Dealership Group includes Higginbotham Chevrolet-Oldsmobile,
Inc.; Halifax Ford-Mercury, Inc.; and Higginbotham Automobiles, Inc.
(Mercedes-Acura) which includes Sonic's first Mercedes franchise.
Mr. Higginbotham will join Sonic Automotive as President of Retail Operations,
responsible for the day-to-day management and supervision of all Company-owned
dealerships. Mr. Higginbotham has been a dealer/operator for 22 years. Prior to
acquiring his first dealership, he spent 12 years with General Motors and left
General Motors as the Assistant National Distribution Manager.
Halifax Ford-Mercury and Higginbotham Automobiles (Mercedes) received the
highest CSI award from the respective manufacturers for the most recent fiscal
year. Dennis also brings additional acquisition integration experience. Over the
course of his career, Dennis has experience with many of the domestic and import
brands, including Chrysler, Ford, General Motors, Honda, Mercedes and Toyota.
"I am pleased to join Sonic Automotive," stated Mr. Higginbotham. "I believe
public auto retailers led by experienced dealership managers will be successful.
Sonic has the right strategy and experienced management to lead the auto
retailing sector."
<PAGE>
O. Bruton Smith, the Company's Chairman and Chief Executive Officer, stated "We
are thrilled to attract an excellent operator like Dennis to our organization.
Dennis Higginbotham's experience will support our acquisition growth and
operations. "
CASA FORD
Sonic Automotive's acquisition of Casa Ford will further expand its operations
in Houston, Texas. This acquisition will give Sonic broad geographic coverage of
the Houston area when combined with the presence of Lone Star Ford, one of
Sonic's original Ford dealerships.
Under the leadership of Mr. Al Paret, principal owner, Casa Ford developed a
successful "one price" or "no haggle" sales process in a highly competitive
market. Scott Smith stated, "We're excited about the opportunity to learn from
Al Paret, a strong operator with high CSI and consistent profitability. We're
particularly excited to learn about a successful application of one price
selling." Al Paret stated, "I'm looking forward to working with Sonic Automotive
and believe I can help Sonic improve its selling processes and profit margins."
ECONOMY HONDA CARS
The acquisition of Economy Honda gives Sonic a Honda franchise and will
strengthen its presence in the Chattanooga, Tennessee market. With this
acquisition, Sonic will increase its operations to eight dealerships with twelve
franchises in this southeastern market. "The Economy Honda transaction is a
perfect example of an "add-on" transaction to improve our market share and brand
diversity in an existing market," stated Scott Smith.
HATFIELD ACQUISITION
The Company completed its previously announced acquisition of the Hatfield
Automotive Group on July 9, 1998.
Upon completion of these acquisitions, Sonic Automotive will operate 36
dealerships representing 24 different brands and 13 collision repair centers.
Sonic Automotive's 1997 proforma revenues including closed and announced 1998
acquisitions will be approximately $1.8 billion.
Included herein are forward-looking statements, including statements with
respect to anticipated revenue growth. There are many factors which affect
management's views about future events and trends of the Company's business.
These factors involve risk and uncertainties that could cause actual results or
trends to differ materially from management's view, including without limitation
economic conditions, risks associated with acquisitions and the risk factors set
forth from time to time in the Company's filings with the Securities and
Exchange Commission.
Contact: Theodore M. Wright, Chief Financial Officer of Sonic Automotive, Inc.,
(704) 532-3347.
Todd Atenhan, Investor Relations of Sonic Automotive, Inc.,
(888) 766-4218.
STRATEGIC ALLIANCE AGREEMENT AND
AGREEMENT FOR THE MUTUAL REFERRAL OF ACQUISITION OPPORTUNITIES
This STRATEGIC ALLIANCE AGREEMENT AND AGREEMENT FOR THE MUTUAL REFERRAL
OF ACQUISITION OPPORTUNITIES (this "Agreement") dated as of July ____, 1998, is
entered into by and between MAR MAR REALTY, L.P., a Delaware limited partnership
("MMR") and SONIC AUTOMOTIVE, INC., a Delaware corporation ("SAI").
WHEREAS, MMR is engaged in, among other things, the business of
acquiring, developing, owning and leasing real estate ("Real Properties")
associated with franchised motor vehicle dealerships; and
WHEREAS, SAI is engaged in, among other things, the business of
acquiring and operating franchised motor vehicle dealerships, including their
tangible and intangible assets ("Dealerships"); and
WHEREAS, MMR presently does not intend to operate Dealerships; and
WHEREAS, SAI presently does not intend generally to own Real
Properties; and
WHEREAS, MMR and SAI wish to enter into a strategic alliance to their
mutual benefit and create procedures regarding the referral of acquisition
opportunities for Real Properties to MMR by SAI and the referral of acquisition
opportunities for Dealerships to SAI by MMR; and
WHEREAS, SAI is the owner of certain Real Properties and of various
options to purchase Real Properties as set forth on Exhibit A hereto which SAI
is willing to transfer to MMR or Chartown Realty, a North Carolina General
Partnership (Chartown) by separate documents; and
WHEREAS, MMR is desirous of entering into a Contract to Purchase such
Real Properties as are owned by SAI and is desirous of accepting an assignment
of such options.
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. RECITALS AND EXHIBITS. The recitals above and Exhibits A and B
hereto are incorporated herein by reference.
SECTION 2. REFERRALS OF DEALERSHIP ACQUISITION OPPORTUNITIES. MMR hereby agrees
to refer, in accordance with Section 4 hereof, to SAI any Dealership acquisition
opportunity of which MMR becomes aware in connection with the acquisition of
Real Properties by MMR. Nothing in this Agreement shall cause or require MMR to
make such a referral if such referral would cause MMR to violate any agreement
with or duty to third parties, law, regulation or court order or would, in the
reasonable judgment of MMR, adversely affect its ability to consummate the
acquisition of any particular Real Property. Nothing in this Agreement shall be
construed to obligate SAI to act upon such referral.
SECTION 3. REFERRALS OF REAL PROPERTY ACQUISITION OPPORTUNITIES. SAI hereby
agrees to refer, in accordance with Section 4 hereof, to MMR any Real Property
Acquisition opportunity of which SAI becomes aware in connection with the
acquisition of Dealerships by SAI. Nothing in this Agreement shall cause or
require SAI to make such a referral if such referral would cause SAI to violate
any agreement with or duty to third parties, law, regulations or court order or
would, in the reasonable judgment of SAI, adversely affect its ability to
consummate the acquisition of any particular Dealership. SAI shall not be
obligated to refer any Real Property which it determines to acquire itself.
Nothing in this Agreement shall be construed to obligate MMR or to act upon such
referral.
SECTION 4. REFERRAL PROCEDURES; NOTICES. In making any referral as contemplated
by this Agreement, the party making the referral shall provide to the other
party such information regarding the referral opportunity as the referring
party, in its sole and unrestricted judgment, determines to provide.
Notices and referrals contemplated by this Agreement may be made in writing or
orally and shall be sent as follows (or to such other addresses as the parties
hereto shall have identified in writing to their counterparty):
if to MMR, to:
James A Mezzanotte
Executive Vice President
Mar Mar Realty Trust
Independence Office Park
Building 2, Suite 111
6407 Idlewild Road
Charlotte, NC 28212
Telephone: (704) 566-4081
Facsimile: (704) 566-6031
if to SAI, to:
Theodore M. Wright
Chief Financial Officer
Sonic Automotive, Inc.
5401 East Independence Boulevard
P. O. Box 18747
Charlotte, NC 28212
Telephone: (704) 532-3347
Facsimile: (704) 532-3312
5 SECTION 5. ADDITIONAL UNDERTAKINGS.
5.1) Additional Undertakings of MMR. As additional consideration
for the undertakings of Sonic hereunder MMR agrees that during the term of
this agreement it will provide or make available to Sonic services as Sonic
shall reasonably request from time to time. Such items shall include,
without limitation, the following:
1.) Real Estate Development
a.)MMR will assist Sonic in identifying sites for
additional dealership locations, replacement
locations, body shop locations and any other
dealership related real estate needs that Sonic
may have from time to time.
b.)Once a location has been identified and a
purchase price agreed to, MMR will use its best
efforts to acquire such property either in its
own name or Sonic's name. As part of the
acquisition of sites MMR will assists in
obtaining all zoning changes that may be
necessary for the appropriate use of the
property.
c.)Once a location has been acquired and it has
been determined that MMR will be the owner of the
property, MMR will work with Sonic to identify,
have designed, and construct a facility on the
property provided all cost and lease items have
been agreed to.
2.) Maintenance
MMR will assist and advise Sonic with respect to
maintenance items on property that Sonic is leasing
from MMR and which sonic is responsible for paying
for. Such assistance and advice will include
identifying providers of service and repairs,
providers of facility improvements and general
maintenance providers.
3.) Inspection Service
In conjunction with Sonic's acquisition of new
dealerships, and without regard to whether MMR is
purchasing the real estate, MMR will arrange for
property inspections and environmental reports for
Sonic's account.
5.2) Additional Undertakings of SAI. As additional consideration
for the undertakings of MMR hereunder Sonic agrees that the
form of lease to be used with MMR for all subsequent real
estate acquisitions which has Sonic or an affiliate of Sonic
as a tenant, is attached hereto as Exhibit B.
5.3) Mutual Undertakings. Both parties agree to communicate to the
other such opportunities, as may become available from time to
time, for the joint purchase of services or purchase of
services from the same vendor when to do so will result in
volume discounts or other similar savings. Sonic agrees that
MMR may pass such volume discounts on to lessees other than
Sonic or its affiliates, and MMR agrees to use commercially
reasonable efforts to convince its lessees other than Sonic or
its affiliates to add to the volume in an effort to increase
the amount of such discounts.
SECTION 6. NO AGENCY RELATIONSHIP. Nothing in this Agreement shall be construed
as creating any agency relationship among the parties hereto. Each party hereto
specifically denies the right and authority of their counterparty and such
counterparty's officers, directors, affiliates, agents and attorneys to
negotiate any acquisition opportunity on their behalf. Each party hereto
acknowledges its entire responsibility to pursue, negotiate and otherwise
consummate any acquisition opportunity referred by their counterparty. This
Agreement does not create or entitle any party hereto to fees or other
remuneration for the provision of referrals contemplated hereby.
SECTION 7. HEADINGS. The paragraph headings are inserted for convenience only
and are in no way intended to describe, interpret, define or limit the scope
or content of this Agreement or any provision hereof.
SECTION 8. CONSTRUCTION. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. Any disputes regarding the interpretation of any portion of this
Agreement shall not be presumptively construed against the drafting party.
SECTION 9. REMEDIES. Both parties hereto may enforce the rights and obligations
hereunder via any remedy available to them at law or equity, including, without
limitation, the remedy of injunctive relief compelling specific performance of
this Agreement. All rights, powers and privileges conferred hereunder upon the
parties hereto shall be cumulative. All such rights, powers and remedies may be
exercised separately or at once, and no exercise of any right, power or remedy
shall be construed to be an election of remedies or shall preclude the future
exercise of any or all other rights, powers and remedies granted hereunder or
available at law or in equity, except as expressly provided herein.
SECTION 10. NO WAIVER. Neither the failure of either party to exercise any power
given such party hereunder nor to insist upon strict compliance with its
obligations hereunder, nor any custom or practice of the parties at variance
with the terms hereof shall constitute a waiver of either party's right to
demand exact compliance with the terms hereof.
SECTION 11. APPLICABLE LAW. With respect to any particular Property, this
Agreement shall be construed and interpreted in accordance with the laws of the
state in which the Property is located, notwithstanding conflicts of laws or
choice of laws principles to the contrary, and otherwise, the Agreement shall be
governed by the laws of the State of North Carolina, notwithstanding conflicts
of laws or choice of laws principles to the contrary.
SECTION 12. INVALIDITY. If any provision of this Agreement shall be declared
invalid or unenforceable, the remainder of this Agreement shall continue in
full force and effect.
SECTION 13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
successors and assigns.
SECTION 14. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts.
IN WITNESS HEREOF, MMR and SAI have caused this Agreement to be
executed and delivered as of the date first written above.
MAR MAR REALTY, L.P.
BY: MAR MAR REALTY TRUST
By: ____________________________
Benjamin F. Bracy, President
SONIC AUTOMOTIVE, INC.
By: ___________________________
Name: ___________________________
Title: ___________________________
<PAGE>
EXHIBIT A
SCHEDULE OF REAL PROPERTY
1. The real property leased to Town and Country Ford, Inc. and located
at 5401 East Independence Boulevard in Charlotte, North Carolina which is
presently operated as Town and Country Ford
2. The real property located at 5324 East Independence Boulevard in
Charlotte, North Carolina to be utilized as a car wash and detailing shop for
Town and Country Ford.
3. The real property leased to Lone Star Ford, Inc. and located at
8477 North Freeway in Houston, Texas which is presently operated as Lone
Star Ford.
4. The real property leased to Frontier Oldsmobile-Cadillac, Inc.
located at 2501 Roosevelt Boulevard West in Monroe, North Carolina which is
presently operated as Frontier Oldsmobile-Cadillac.
5. The real property located at 2752 Laurens Road in Greenville,
South Carolina which is presently operated as Century BMW.
6. The real property located at 2550 Reidville Road (S.C.
Highway 296) in Spartanburg, South Carolina which is presently operated as
Century BMW.
7. The real property located at 2424 Laurens Road in Greenville,
South Carolina which is presently operated as Heritage Lincoln Mercury.
8. The real property leased to Sonic Automotive-1400 Automall Drive,
Columbus, Inc. located at 1400 Automall Drive in Columbus, Ohio which is
presently operated as Hatfield Hyundai-Subaru-Isuzu.
9. The real property leased to Sonic Automotive-1495 Automall Drive,
Columbus, Inc. located at 1495 Automall Drive in Columbus, Ohio which is
presently operated as Hatfield Lincoln Mercury.
10. The real property leased to Sonic Automotive-1500 Automall Drive,
Columbus, Inc. located at 1500 Automall Drive in Columbus, Ohio which is
presently operated as Toyota West.
11. The real property leased to Sonic Automotive-3700 West Broad
Street, Columbus, Inc. located at 3700 West Broad Street in Columbus, Ohio which
is presently operated as Trader Bud's Westside Chysler Plymouth and Hatfield
Kia.
12. The real property leased to Sonic Automotive-4000 West Broad
Street, Columbus, Inc. located at 4000 West Broad Street in Columbus, Ohio which
is presently operated as Volkswagon West and Jeep/Eagle West.
EXHIBIT B
FORM OF LEASE
[Attached.]
<PAGE>
SECTION 15. TERM. The term of this Agreement shall be for a period of
one (1) year from the date hereof. Thereafter this Agreement shall automatically
be renewed for successive one (1) year terms unless either party shall give the
other written notice of intent not to renew at least thirty (30) days prior to
the expiration of the then existing term.
4 (a)
<PAGE>
LEASE AGREEMENT
BY AND BETWEEN
MAR MAR REALTY LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP
AND
DATED
Sonic Lease Agreement
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page #
------
<S> <C>
1. PREMISES..........................................................................................................1
2. CONDITION OF PREMISES.............................................................................................1
3. TERM..............................................................................................................1
(a) Initial Term...............................................................................................1
(b) Renewal Term...............................................................................................2
4. RENT..............................................................................................................2
(a) Base Rent..................................................................................................2
(b) Adjustment of Base Rent....................................................................................2
(c) Payment of Base Rent.......................................................................................2
(d) Draft Withdrawal of Rent...................................................................................2
(e) Late Charge; Interest......................................................................................3
(f) Payment without Abatement..................................................................................3
5. HOLDING OVER......................................................................................................3
6. USE OF LEASED PREMISES; COMPLIANCE WITH LAWS......................................................................3
(a) Permitted Use..............................................................................................3
(b) Continuous Operations......................................................................................3
(c) Laws.......................................................................................................3
7. TENANT'S COVENANT TO REPAIR.......................................................................................4
8. LANDLORD'S OBLIGATION.............................................................................................4
9. SURRENDER.........................................................................................................4
10. ALTERATIONS.......................................................................................................4
(a) Prohibition................................................................................................4
(b) Permitted Renovations......................................................................................4
(c) Conditions.................................................................................................4
(d) Additions, Expansions and Structural Alterations...........................................................5
11. UTILITIES AND OTHER SERVICES......................................................................................5
12. PERFORMANCE OF LANDLORD OF TENANT'S OBLIGATIONS...................................................................6
(a) Landlord's Self Help.......................................................................................6
(b) Landlord's Inspections.....................................................................................6
13. ENTRY.............................................................................................................6
14. ASSIGNMENT AND SUBLETTING.........................................................................................6
(a) Transfers Prohibited Without Consent.......................................................................6
(b) Change of Control Prohibited Without Consent...............................................................6
(c) Adequate Assurances........................................................................................7
(d) Subleases, Concessions and Licenses........................................................................7
15. TAXES AND ASSESSMENTS.............................................................................................7
16. CASUALTY..........................................................................................................7
(a) Restoration and Repair.....................................................................................7
(b) Escrow of Insurance Proceeds...............................................................................8
(c) Uninsured Losses...........................................................................................8
17. INSURANCE.........................................................................................................8
- ---------------------------------------------------------------------------------------------------------------------------
Sonic Lease Agreement Table of Contents Property Name
<PAGE>
(a) Insurance by Tenant........................................................................................8
(i) Hazard Insurance.....................................................................................8
(ii) Liability Insurance..................................................................................8
(iii) Worker's Compensation and Employer's Liability Insurance.............................................8
(iv) Builder's Risk Insurance.............................................................................8
(v) Other Insurance......................................................................................8
(vi) Landlord as Additional Insured.......................................................................9
(vii) Insurance Escrows....................................................................................9
(b) Carriers and Features......................................................................................9
(c) Failure to Procure Insurance...............................................................................9
(d) Waiver of Subrogation......................................................................................9
18. ENVIRONMENTAL MATTERS.............................................................................................9
(a) Tenant's Covenant..........................................................................................9
(b) Clean Up..................................................................................................10
(c) Indemnification...........................................................................................10
19. COSTS AND ATTORNEYS' FEES........................................................................................10
20. DEFAULT; REMEDIES................................................................................................10
(a) Default...................................................................................................10
(b) Remedies..................................................................................................11
21. EMINENT DOMAIN...................................................................................................13
(a) Complete Taking...........................................................................................13
(b) Partial Taking............................................................................................13
(c) Award.....................................................................................................13
(d) Notices; Assignments......................................................................................13
22. LIABILITY OF LANDLORD............................................................................................13
23. INDEMNIFICATION OF LANDLORD......................................................................................14
24. NOTICE OF CLAIM OR SUIT..........................................................................................14
25. LIENS, GENERALLY.................................................................................................14
26. MECHANICS LIENS..................................................................................................14
27. CONTEST OF LIENS.................................................................................................15
28. NOTICES OF COMMENCEMENT OF CONSTRUCTION..........................................................................15
29. LIMITATION ON LIABILITY OF LANDLORD..............................................................................15
30. FRANCHISE OF LICENSE AGREEMENTS..................................................................................15
31. NET LEASE........................................................................................................15
32. REPRESENTATIONS, WARRANTIES AND SPECIAL COVENANTS................................................................16
33. NOTICES..........................................................................................................16
34. NO WAIVER........................................................................................................16
35. QUIET ENJOYMENT..................................................................................................16
36. SUBORDINATION....................................................................................................16
37. BROKERS..........................................................................................................17
38. INVALIDITY.......................................................................................................17
39. COUNTERPARTS.....................................................................................................17
40. MEMORANDUM OF LEASE..............................................................................................17
41. CUMULATIVE.......................................................................................................17
42. GOVERNING LAW....................................................................................................17
43. SUCCESSORS AND ASSIGNS, RELATIONSHIP.............................................................................17
44. ENTIRE AGREEMENT.................................................................................................17
45. SURVIVAL.........................................................................................................17
46. ESTOPPEL CERTIFICATES............................................................................................17
47. TIME.............................................................................................................17
48. CAPTIONS AND HEADINGS............................................................................................17
49. WAIVER OF JURY TRIAL.............................................................................................18
50. SIGNAGE..........................................................................................................18
51. GUARANTY.........................................................................................................18
52. PRE-EXISTING CONDITIONS..........................................................................................18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS:
<S> <C>
EXHIBIT A.................................................................................................LEGAL DESCRIPTION
EXHIBIT B...............................................................................................MEMORANDUM OF LEASE
EXHIBIT A TO MEMORANDUM OF LEASE.......................................................LEGAL DESCRIPTION OF PREMISES
EXHIBIT C...........................................................................................INVENTORY OF PERSONALTY
EXHIBIT D.......................................................................................TENANT ESTOPPEL CERTIFICATE
EXHIBIT E.................................................................REPRESENTATIONS, WARRANTIES AND SPECIAL COVENANTS
EXHIBIT E1..............................................................................................MATERIAL AGREEMENTS
EXHIBIT F....................................................................................................LEASE GUARANTY
SCHEDULES:
SCHEDULE 14D.......................................................SUBLEASES, CONCESSIONS, AGREEMENTS OR LICENSE AGREEMENTS
</TABLE>
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
<S> <C>
Accessibility Laws ....................................................................................................6(c)
Affiliate ..................................................................................................Exhibit E(1)(c)
Annual Financial Statements ...............................................................................Exhibit E(10)(b)
Bank ..................................................................................................................4(c)
Base Month .........................................................................................................4(b)(i)
Base Rent .............................................................................................................4(a)
Beneficiary ......................................................................................................Exhibit D
Business ...................................................................................................Exhibit E(1)(a)
CERCLA ...............................................................................................................18(a)
Certificate ......................................................................................................Exhibit D
Change of Control ....................................................................................................14(b)
Code ......................................................................................................Exhibit E(14)(a)
Commencement Date .....................................................................................................3(a)
Company ...................................................................................................Exhibit E(14)(c)
Cure Period .....................................................................................................20(a)(iii)
ERISA Affiliate ............................................................................................Exhibit E(8)(e)
ERISA ......................................................................................................Exhibit E(8)(e)
Events of Default ....................................................................................................20(a)
Five Year Adjustment Date .........................................................................................4(b)(ii)
Franchise ......................................................................................................20(a)(viii)
GAAP ......................................................................................................Exhibit E(10)(b)
Guarantor ...............................................................................................................51
Guaranty ................................................................................................................51
Hazardous Material ...................................................................................................18(a)
Improvements .............................................................................................................1
Initial Term ..........................................................................................................3(a)
Inspection Report ....................................................................................................12(b)
Intellectual Property .........................................................................................Exhibit E(4)
Land .....................................................................................................................1
Landlord .........................................................................................................Exhibit B
Lease ............................................................................................................Exhibit B
Lease Term ............................................................................................................3(b)
Leased Premises .........................................................................................Exhibit D Recitals
Liabilities ..........................................................................................................16(c)
Major Casualty .......................................................................................................16(a)
Material Adverse Change .......................................................................................Exhibit E(3)
Material Agreements ...........................................................................................Exhibit E(2)
Memorandum .......................................................................................................Exhibit B
Minor Casualty .......................................................................................................16(a)
Net Worth ....................................................................................................Exhibit E(13)
Notice of Commencement ..................................................................................................28
- ---------------------------------------------------------------------------------------------------------------------------
Sonic Lease Agreement Index of Defined Terms -1 Property Name
<PAGE>
Permitted Use .........................................................................................................6(a)
Person .....................................................................................................Exhibit E(1)(c)
Personalty ...............................................................................................................1
Pre-Existing Conditions .................................................................................................52
Premises .................................................................................................................1
Price Index ........................................................................................................4(b)(i)
Price Index for the Base Month .....................................................................................4(b)(i)
RCRA .................................................................................................................18(a)
Reasonable Attorney's Fees .................................................................................Exhibit F(9)(e)
REIT ......................................................................................................Exhibit E(14)(c)
Renewal Term(s) .......................................................................................................3(b)
Rent ..................................................................................................................4(c)
Rent Collection Account ...............................................................................................4(c)
Tenant Benefit Plan ........................................................................................Exhibit E(8)(e)
Tenant ...........................................................................................................Exhibit B
Term ..................................................................................................................3(b)
Title IV Plan ..............................................................................................Exhibit E(8)(e)
- ---------------------------------------------------------------------------------------------------------------------------
Sonic Lease Agreement Index of Defined Terms -2 Property Name
</TABLE>
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT ("LEASE") is made this ___day of ____________, 199_ by
and between MAR MAR REALTY LIMITED PARTNERSHIP, a Delaware limited partnership
("LANDLORD") and ___________________, a _______________[corporation/partnership]
(TENANT").
In consideration of the mutual promises and agreements herein contained,
the parties agree as follows:
1. Premises. Landlord shall lease to Tenant, and Tenant shall lease from
Landlord, subject to the conditions hereinafter expressed: (a) the real property
located in __________County, ___________ more particularly described on EXHIBIT
A hereto (the "LAND"), upon which exists certain improvements in the nature of
an automobile dealership, together with related paved parking and appurtenant
improvements and any replacements thereof (together the "IMPROVEMENTS"); and (b)
certain furniture, fixtures, equipment, furnishings and other personal property
and any replacements thereof used or utilized in connection with the ownership
and operation of the Improvements as more particularly described on EXHIBIT C
hereto (collectively the "PERSONALTY"). As used herein, the Land, Improvements
and Personalty are collectively referred to as the "PREMISES".
2. Condition of Premises. Tenant acknowledges and agrees that the Premises
are and shall be leased by Landlord to Tenant in its present "as-is" condition,
subject to all liens, encumbrances and restrictions affecting the Premises.
Landlord makes absolutely no representations or warranties whatsoever with
respect to the Premises or the condition thereof, either to its fitness for use,
condition, purpose or otherwise as to the quality or material or workmanship
therein, latent or patent, it being agreed that all such risks are to be borne
by Tenant.. Tenant acknowledges that Landlord has not investigated and does not
warrant or represent to Tenant that the Premises are fit for the purposes
intended by Tenant or for any other purposes whatsoever. Tenant acknowledges and
agrees that the Premises are to be leased to Tenant in their existing condition,
i.e., "as-is", as of the Commencement Date and at all times thereafter. Tenant
acknowledges that Tenant shall be solely responsible for any and all actions,
repairs, permits, approvals and costs required for the rehabilitation,
renovation, use, occupancy and operation of the Premises in accordance with
applicable governmental requirements, including, without limitation, all
governmental charges and fees, if any, which may be due or payable to applicable
authorities. By leasing the Premises, Tenant warrants and represents to Landlord
that Tenant has examined and approved all things concerning the Premises which
Tenant deems material to Tenant's leasing and use of the Premises. Tenant
further acknowledges and agrees that: (a) neither Landlord nor any agent of
Landlord has made any representation or warranty, express or implied, concerning
the Premises or which have induced Tenant to execute this Lease except as
contained in this Lease; and (b) any other representations and warranties are
expressly disclaimed by Landlord.
3. Term.
(a) Initial Term. This Lease shall be for a _________(_____) year period
beginning ____________ , 199__ (the "COMMENCEMENT DATE"), and ending at midnight
______________, 20__, unless modified or earlier terminated pursuant to the
terms hereof (the "INITIAL TERM"). Landlord may terminate this Lease by written
notice to Tenant given on or before _____________ if the closing of Landlord's
purchase of the Premises does not occur by such date. Landlord agrees to use
commercially reasonable efforts to consummate Landlord's purchase of the
Premises on or before the Commencement Date, and Tenant agrees to use
commercially reasonable efforts to consummate Tenant's purchase of the business
operating on the Premises, if applicable. If Tenant fails to purchase the
business operating on the premises, Landlord shall not be obligated to purchase
the Premises. Likewise, if Landlord fails to purchase the Premises, Tenant shall
not be obligated to purchase the business operating on the premises.
<PAGE>
(b) Renewal Term. Provided Tenant is not in default hereunder, at the
expiration of the Initial Term, Tenant shall have the option to renew this Lease
for two (2) additional five (5) year periods (the "RENEWAL TERM(S)"). Each
Renewal Term shall automatically commence as of the end of the Initial Term or
the initial Renewal Term, as applicable, unless Tenant gives Landlord written
notice of termination not less than one hundred eighty (180) days prior to the
expiration of the Initial Term or the expiration of the initial Renewal Term, as
applicable. As used herein, the Term, the Initial Term and the Renewal Term(s),
if exercised, shall be referred to hereinafter collectively as the "TERM" or
"LEASE TERM".
4. Rent.
(a) "BASE RENT" for the first year of the Initial Term shall be
_____________ AND NO/100 DOLLARS ($____________) per year.
(b) Adjustment of Base Rent.
(i) Definitions: For the purpose of calculating the cost of
living adjustments, the following definitions shall apply: (A) the term
"BASE MONTH shall mean the calendar month which is five years prior to the
applicable Five year Adjustment Date; (B) the term "PRICE INDEX" shall mean
the "Consumer Price Index-United States City Average All Urban Consumers"
published by the Bureau of Labor Statistics of the United States Department
of Labor (1982-84 = 100), or, in the event such index is discontinued or no
longer readily available, any renamed local index covering the metropolitan
area in which the Premises are located or any other successor or substitute
index appropriately adjusted; and (C) the term "PRICE INDEX FOR THE BASE
MONTH" shall mean the Price Index for the Base Month.
(ii) Effective as of: (A) the fifth (5th) anniversary of the
Commencement Date; and (B) each five year anniversary date thereafter
throughout the Term (each, a "FIVE YEAR ADJUSTMENT DATE"), there shall be
made a cost of living adjustment of the annual Base Rent payable hereunder.
Each five year adjustment shall be calculated by multiplying the Base Rent
for the prior lease year by the percentage difference between the Price
Index for the month preceding the applicable Five Year Adjustment Date and
the Price Index for the Base Month; provided that in no event shall the
cost of living adjustment on any Five Year Adjustment Date be a downward
adjustment or be an upward adjustment of less than one percent (1%) per
annum or greater than three percent (3%) per annum. If the Price Index for
the month preceding the applicable Five Year Adjustment Date is not
available as of any Five Year Adjustment Date, then the cost of living
adjustment shall be calculated using the most current available Price
Index. In no event shall any adjustment made pursuant to this PARAGRAPH 4,
or any decrease in the Price Index, ever result in a decrease in the annual
Base Rent payable hereunder to below the then current Base Rent.
(c) Payment of Base Rent. Tenant shall pay one-twelfth of the Base Rent
monthly, in advance, on the first (1st) day of each calendar month during the
Lease Term without notice, demand or setoff. The Base Rent for any partial month
shall be paid in advance and prorated daily from such date to the first (1st)
day of the next calendar month. The first (1st) payment of Base Rent shall be
due and payable on or before the execution of this Lease. All Rent shall be made
by direct deposit by Tenant of immediately available funds into a checking
account established with a bank, savings bank or other depository institution
designated by Landlord ("BANK") and controlled exclusively by Landlord entitled
"Rent Collection Account" (or such other name as may be designated by Landlord)
("RENT COLLECTION ACCOUNT"). Landlord (or, at Landlord's option, Landlord's
agent, if any), or such officers or other agents as may be designated by
Landlord, shall be the sole signatory on the Rent Collection Account. All
interest accrued in the Rent Collection Account shall belong to Landlord and
shall not be credited to Tenant. No funds in the Rent Collection Account shall
be subject to withdrawal by or for the benefit of Tenant. "RENT" shall mean and
include all Base Rent, additional rent and other sums due hereunder.
(d) Draft Withdrawal of Rent. Instead of requiring Tenant to pay Rent in
the manner set forth in PARAGRAPH 4(C) above, Landlord may require Tenant,
within thirty (30) days after notice to Tenant, to execute and deliver to
Landlord any documents or authorizations required by Landlord to give effect to
an automated debiting system, whereby any or all payments of Base Rent by Tenant
shall be debited monthly from such account as Tenant shall designate from time
to time, and such amounts shall be credited to Landlord's bank account as
Landlord shall designate from time to time. Tenant shall maintain sufficient
funds in Tenant's account to cover all such payments. Tenant shall promptly pay
all service fees and other charges connected therewith, including, without
limitation, any charges resulting from insufficient funds in Tenant's bank
account or any charges imposed on Landlord. Tenant shall remain responsible to
Landlord for all payments of Rent, even if Tenant's bank account is
insufficiently debited in any given month. Such insufficient amounts shall be
immediately due and payable to Landlord without notice or demand.
(e) Late Charge; Interest. If Tenant fails to make any payment of Rent or
any other sums or amounts to be paid by Tenant hereunder on or before the date
such payment is due and payable and such amount remains unpaid for a period of
five (5) days thereafter, or such longer time as required by the law of the
state in which the premises is located, Tenant shall pay to Landlord an
administrative late charge of five percent (5%) of the amount of such payment or
such lesser amount then allowable under the laws of the State in which the
Premises is located. In addition if such amount remains past due for more than
thirty (30) days following its due date, such past due payment shall bear
interest at the lesser of twelve percent (12%) or the maximum interest rate then
allowable under the laws of the State in which the Premises is located from the
date such payment became due to the date of payment thereof by Tenant. Such late
charge and interest shall constitute additional rent and shall be due and
payable with the next installment of Rent due hereunder.
(f) Payment without Abatement. No abatement, diminution or reduction of
Rent shall be allowed to Tenant or any person claiming under Tenant, under any
circumstances or for any reason whatsoever.
5. Holding Over. If Tenant or any other person or party shall remain in
possession of the Premises or any part thereof following the expiration of the
Term or earlier termination of this Lease without an agreement in writing
between Landlord and Tenant with respect thereto, the person or party remaining
in possession shall be deemed to be a tenant at sufferance, and during any such
holdover, the Rent payable under this Lease by such tenant at sufferance shall
be one hundred fifty percent (150%) of the rate or rates in effect immediately
prior to the expiration of the Term or earlier termination of this Lease. In no
event, however, shall such holding over be deemed or construed to be or
constitute a renewal or extension of this Lease.
6. Use of Leased Premises; Compliance With Laws.
(a) Permitted Use. Tenant shall use the Premises for an automobile
dealership and related uses ("PERMITTED USE") and for no other purpose. Tenant's
use of the Premises shall, subject to the right of diligent contest, comply with
all laws, ordinances, orders, regulations or zoning classifications of any
lawful governmental authority, agency or other public or private regulatory
authority (including insurance underwriters or rating bureaus) having
jurisdiction over the Premises. Tenant, shall make or cause to be made all
alterations, additions and improvements requiring expenditures as are required
to be made under any applicable laws, ordinances, rules or regulations, now or
hereinafter adopted or enacted provided all such alterations, additions and
improvements are made in accordance with PARAGRAPH 10 hereof. Tenant shall not
perform any act or follow any practice relating to the Premises which shall
constitute a nuisance and shall conduct any Permitted Use on the Premises in an
efficient and professional manner. Subject to the terms and provisions of this
Lease, Tenant shall have the right to control the automobile dealership business
being conducted at the Premises.
(b) Continuous Operations. During the Term, Tenant shall keep the Premises
and the Business open to the public and continuously operating for the Permitted
Use during normal business hours standard for the industry of which the Business
is a part or, in the event that the Tenant does not continuously operate on the
Premises, shall conduct periodic tests, which shall occur at least monthly, of
mechanical and other systems located on the Premises and take all steps
necessary to comply with its maintenance and repair obligations hereunder.
(c) Laws. Notwithstanding the generality of the foregoing, Tenant shall, at
its sole expense, maintain the Premises in full compliance with all applicable
federal, state or municipal laws, ordinances, rules and regulations currently in
existence or hereafter enacted or rendered governing accessibility for the
disabled or handicapped, including, but not limited to, any applicable
provisions of The Architectural Barriers Act of 1968, The Rehabilitation Act of
1973, The Fair Housing Act of 1988, The Americans With Disabilities Act, the
accessibility code(s), if any, of the State in which the Premises are located,
and all regulations and guidelines promulgated under any or all of the
foregoing, as the same may be amended from time to time (collectively the
"ACCESSIBILITY LAWS"). In the event that Tenant disputes the applicability of an
Accessibility Law to the Premises, Tenant may take reasonable steps to contest
the applicability of such Accessibility Laws, so long as Tenant provides
Landlord with reasonable assurances that its interest in the Premises is not in
any way jeopardized by such contest.
7. Tenant's Covenant to Repair. Tenant shall, at all times during the Term
and at its sole cost and expense, put, keep, replace and maintain the Premises
(including, without limitation, the Improvements and the Personalty) in good
repair and in good, safe and substantial order and condition, shall make all
repairs and replacements thereto, both inside and outside, structural and
non-structural, ordinary and extraordinary, howsoever the necessity or
desirability for repairs and replacements may occur, and whether or not
necessitated by wear, tear, obsolescence or defects, latent or otherwise, and
shall use all reasonable precautions to prevent waste, damage or injury. Tenant
shall also at its own cost and expense install, maintain and replace all
landscaping, signs, sidewalks, roadways, driveways and parking areas within the
Premises in good repair and in good, safe and substantial order and condition
and free from dirt, standing water, rubbish and other obstructions or obstacles.
8. Landlord's Obligation. Landlord shall not be required to make any
alterations, reconstructions, replacements, changes, additions, improvements or
repairs of any kind or nature whatsoever to the Premises or any portion thereof
(including, without limitation, any portion of the Improvements or any
Personalty) at any time during the Term.
9. Surrender. Tenant shall on the last day of the Lease Term, or upon the
sooner termination of this Lease, peaceably and quietly surrender the Premises
to Landlord, in as good condition as they were when received, ordinary wear and
tear excepted, and free of all liens and encumbrances.
10. Alterations.
(a) Prohibition. Except as hereinafter expressly provided in this
PARAGRAPH 10, no portion of the Premises shall be demolished, removed or altered
by Tenant in any manner whatsoever without the prior written consent and
approval of Landlord, which may not be unreasonably withheld or delayed.
Notwithstanding the foregoing, however, Tenant shall be entitled and obligated
to undertake all alterations to the Premises required by any applicable law or
ordinance including, without limitation, any alterations required by any
Accessibility Laws, and, in such event, Tenant shall comply with the provisions
of PARAGRAPH 10(C) below. The foregoing notwithstanding, if the existing
Premises is "grandfathered" such that alterations which would normally be
required to comply with law are not required with respect to the Premises,
Tenant shall not be entitled to alter the otherwise "grandfathered" structure
without Landlord's prior written consent, which shall not be unreasonably
withheld or delayed.
(b) Permitted Renovations. Landlord acknowledges that various minor,
non-structural alterations may be undertaken by Tenant from time to time without
the approval of Landlord. Tenant shall be entitled to perform all such work on
or about the Improvements; provided, however, that the conditions in PARAGRAPH
10(C) below shall be met.
(c) Conditions. The following conditions shall be met by Tenant for any
alterations to the Premises permitted under PARAGRAPHS 10(A) and 10(B):
(i) Before the commencement of any such work, plans and
specifications therefor or a detailed itemization including costs thereof
shall be furnished to Landlord for its review and approval. Landlord's
approval of Tenant's plans shall create no responsibility or liability on
the part of Landlord for their completeness, design, sufficiency or
compliance with all laws, rates, and regulations of governmental agencies
or authorities.
(ii) If the cost of such work will exceed FIFTY THOUSAND AND
NO/100 DOLLARS ($50,000.00), then Tenant shall deposit in Landlord's name,
in an escrow account at the Bank or other financial institution designated
by Landlord, the anticipated cost of such work, as certified by Tenant's
contractor, who shall be approved by Landlord, or, in the alternative,
shall provide Landlord with other reasonable assurances that such work will
be performed and paid for in a lien-free fashion, such as demonstrating to
landlord the strength of Tenant's financial condition or by demonstrating
to landlord that a lender has committed to loan Tenant construction funds
for the proposed alterations.. Such proceeds shall be disbursed
periodically by Landlord upon certification of Tenant's contractor that
such amounts are the amounts paid or payable for such work. Tenant shall,
at the time of establishment of such escrow account and from time to time
thereafter until said work shall have been completed and paid for, furnish
Landlord with adequate evidence that at all times the undisbursed portion
of the escrowed funds, together with any funds made available by Tenant, is
sufficient to pay for the work in its entirety. Tenant shall obtain, and
make available to Landlord, receipted bills and, upon completion of the
work, full and final waivers of lien.
(iii) Before the commencement of any such work, Tenant shall
obtain any required approvals from all governmental departments or
authorities having or claiming jurisdiction of or over the Premises, and
from any public utility companies having an interest therein. In any such
work, Tenant shall comply with all applicable laws, ordinances,
requirements, orders, directions, rules and regulations of the federal,
state, county and municipal governments and of all other governmental
authorities having or claiming jurisdiction of or over the Premises and of
all their respective departments, bureaus and offices, and with the
requirements and regulations, if any, of such public utilities, of the
insurance underwriting board or insurance inspection bureau having or
claiming jurisdiction, or any other body exercising similar functions, and
of all insurance companies then writing policies covering the Premises or
any part thereof.
(iv) Tenant represents and warrants to Landlord that all such
construction work will be performed in a good and workmanlike manner and in
accordance with the terms, provisions and conditions of this Lease and all
governmental requirements.
(v) Landlord shall have the right to inspect any such
construction work at all times during normal working hours and to maintain
at the Premises for that purpose (at its own expense) such inspector(s) as
it may deem necessary so long as such inspections do not interfere with
Tenant's work (but Landlord shall not thereby assume any responsibility for
the proper performance of the work in accordance with the terms of this
Lease, nor any liability arising from the improper performance thereof).
(vi) All such work shall be performed at Tenant's cost and
expense and free of any expense to Landlord and free of any liens on
Landlord's fee simple interest on or Tenant's leasehold interest in the
Premises.
(vii) Upon substantial completion of any such work Tenant
shall procure a certificate of occupancy, if applicable, from the
appropriate governmental authorities verifying the substantial completion
thereof.
(viii) Tenant shall, indemnify and save and hold Landlord
harmless from and against and reimburse Landlord for any and all loss,
damage, cost and expense (including, without limitation, reasonable
attorneys' fees) incurred by or asserted against Landlord which are
occasioned by or result, directly or indirectly, from any construction or
renovation activities conducted upon the Premises; whether or not the same
is caused by or the fault of Tenant or any contractor, subcontractor,
laborer, supplier, materialman or any other third party.
(d) Additions, Expansions and Structural Alterations. Except as expressly
permitted in PARAGRAPH 10(A) OR 10(B) above, nothing in this Lease shall be
deemed to authorize Tenant to construct and erect any additions to or expansions
of the Improvements, or perform any alterations of a structural nature
whatsoever; it being understood that Tenant may do so only with the prior
written consent and approval of Landlord, which consent and approval may not be
unreasonably withheld or delayed by Landlord.
11. Utilities and Other Services. Tenant shall be liable for and shall pay
directly all charges, fees and amounts (together with any applicable penalties,
late charges, taxes or assessments thereon) when due for water, gas,
electricity, air conditioning, heat, septic, sewer, refuse collection, telephone
and any other utility charges or similar items in connection with the use or
occupancy of the Premises. Landlord shall not be responsible or liable in any
way whatsoever for the quality, quantity, impairment, interruption, stoppage, or
other interference with any utility service, including, without limitation,
water, air conditioning, heat, gas, electric current for light and power,
telephone, or any other utility service provided to or serving the Premises or
any damage or injury caused thereby. No such interruption, termination or
cessation of utility services shall relieve Tenant of its duties and obligations
pursuant to this Lease, including, without limitation, its obligation to pay all
Rent as and when the same shall be due hereunder.
<PAGE>
12. Performance by Landlord of Tenant's Obligations.
(a) Landlord's Self Help. If Tenant shall default in the performance of any
term, provision, covenant or condition on its part to be performed hereunder and
such default shall continue beyond any notice or cure period recited herein,
Landlord may, after notice to Tenant and a reasonable time to perform after such
notice (or without notice if, in Landlord's reasonable opinion, an emergency
exists) perform the same for the account and at the expense of Tenant. If, at
any time and by reason of such default, Landlord is compelled to pay, or
reasonably elects to pay, any sum of money or do any reasonable act which will
require the payment of any sum of money, or is compelled to incur any expense in
the enforcement of its rights hereunder or otherwise, such sum or sums, together
with interest thereon at the highest rate allowed under the laws of the State
where the Premises is located, shall be deemed additional rent hereunder and
shall be repaid to Landlord by Tenant promptly when billed therefor, and
Landlord shall have all the same rights and remedies in respect thereof as
Landlord has in respect of the rents herein reserved.
(b) Landlord's Inspections. Landlord, its agents or representatives shall
have the right, but not the obligation, to enter upon the Premises to perform
annual inspections of the Premises to confirm that Tenant is performing all of
Tenant's obligations under this Lease, including but not limited to, Tenant's
obligations under PARAGRAPH 7 and that Tenant has not violated any of its
covenants under this Lease, including, but not limited to the covenants under
PARAGRAPH 12. Upon completion of such inspection, Landlord may deliver to Tenant
a written report ("INSPECTION REPORT") outlining certain defaults, if any, in
Tenant's obligations hereunder. Within ten (10) days of Tenant's receipt of such
Inspection Report, Tenant shall either: (i) object to Landlord in writing as to
any portion of the Inspection Report, specifically describing such objection; or
(ii) begin to perform any and all required work outlined in the Inspection
Report which Tenant has not objected to, and diligently complete such work. If
Tenant objects to any item in the Inspection Report, then within ten (10) days
of Landlord's receipt of Tenant's objection notice, both Landlord and Tenant
shall select a third party licensed engineer mutually satisfactory to Landlord
and Tenant or if a single engineer cannot be agreed upon, then Landlord and
Tenant shall each, at their own cost, select a licensed engineer and the two
chosen engineers shall select a third licensed engineer, the cost of the third
engineer being paid equally by Landlord and Tenant. The engineer(s) shall
determine, by majority vote, if the work outlined in the Inspection Report
should be performed by Tenant. Such determination shall be final and binding on
Landlord and Tenant.
13. Entry. Landlord, any mortgagee for the Premises and their agents or
representatives may enter the Premises at reasonable times during normal
business hours upon twenty-four (24) hours prior written notice (except during
emergencies, in which case Landlord shall endeavor to give such notice as
Landlord deems reasonable under the circumstances or as provided for inspections
under PARAGRAPHS 10 and 12) for the purpose of inspecting the Premises, or
performing any work which Landlord elects to undertake by reason of Tenant's
default under the terms of this Lease. Landlord shall use reasonable efforts not
to disturb Tenant as a result of any such entry by Landlord, its agents or
representatives.
14. Assignment and Subletting.
(a) Transfers Prohibited Without Consent. Tenant shall not, without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed, in each instance, sell, assign or otherwise transfer this
Lease, or Tenant's interest in the Premises, in whole or in part, or any rights
or interest which Tenant may have under this Lease, or sublet the Premises, or
any part thereof, or grant or permit any lien or encumbrance on or security
interest in Tenant's interest in this Lease. When given, the consent of Landlord
to an assignment, transfer, subletting or encumbrance shall in no event be
construed to relieve Tenant or such assignee or subtenant from the obligation of
obtaining the express consent in writing of Landlord to any further assignment,
transfer, subletting or encumbrance. Any assignment, transfer, sublease or
encumbrance in violation of this Article shall be voidable at Landlord's option.
Notwithstanding the foregoing, Tenant may assign or sublet the Premises to any
affiliate of Guarantor (hereinafter defined) without first obtaining the consent
of Landlord, so long as the Guaranty contemplated by Paragraph 51 hereof shall
remain in full force and effect.
(b) Change of Control Prohibited Without Consent. Tenant shall not, without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed, in each instance, engage in or permit to occur a Change of
Control. "CHANGE OF CONTROL" shall be deemed an assignment hereunder. Change of
Control of Tenant shall mean: (i) the issuance or sale by Tenant or the sale by
any shareholder, stockholder, member, partner or owner of equity interests of
Tenant of a controlling interest in Tenant (which shall mean the effective
voting control of Tenant); (ii) the sale, conveyance or other transfer of all or
substantially all of the assets of Tenant (whether by operation of law or
otherwise); or (iii) any transaction, or series of transactions, pursuant to
which Tenant is merged with or consolidated into another entity and Tenant is
not the surviving entity.
(c) Adequate Assurances. Without limiting any of the foregoing provisions
of this PARAGRAPH 14, if, pursuant to the U.S. Bankruptcy Code, as the same may
be amended from time to time, Tenant is permitted to assign or otherwise
transfer its rights and obligations under this Lease in disregard of the
restrictions contained in this PARAGRAPH 14, the assignee agrees to provide
adequate assurance to Landlord: (i) of the continued use of the Premises solely
in accordance with the Permitted Use thereof and in compliance with all other
terms of this Lease; (ii) of the continuous operation of the business in the
Premises in strict accordance with the requirements of PARAGRAPH 6 hereof; and
(iii) of such other matters as Landlord may reasonably require at the time of
such assumption or assignment Such assignee shall expressly assume this Lease by
an agreement in recordable form.
(d) Subleases, Concessions and Licenses. Tenant may continue any subleases,
concession agreements or license agreements at the Premises which were in
effect, with Landlord's written approval, immediately prior to the Commencement
Date and as identified on SCHEDULE 14(D) hereto. Further, Landlord shall not
unreasonably withhold its consent to any future sublease, concession agreement
or license agreement proposed to be entered into in replacement of any such
currently existing sublease, concession agreement or license agreement.
15. Taxes and Assessments. Throughout the Term, Tenant shall bear, pay and
discharge all taxes, assessments and other governmental impositions and charges
of every kind and nature whatsoever, extraordinary as well as ordinary, and each
and every installment thereof which shall or may during the Term hereof be
assessed or imposed upon, or arise in connection with, the use, occupancy or
possession of the Premises or any part thereof, including, without limitation,
ad valorem real and personal property taxes, and all taxes assessed or imposed
in lieu of or in addition to any of the foregoing by virtue of all present or
future laws, ordinances, rules or regulations of federal, state, county and
municipal governments and of all other governmental authorities which relate to
the use, occupancy or possession of the Premises, but specifically excluding any
income or capital gains taxes. Unless specifically waived by Landlord, Tenant
shall maintain a separate trust account at the Bank for Landlord's benefit in
which it shall make monthly deposits of one-twelfth of the estimated yearly
requirement for taxes and assessments together with such additional deposits as
may be reasonably required by Landlord to ensure that sufficient funds will be
available to pay all such taxes, assessments and impositions as and when they
become due. Tenant shall provide Landlord as of the first day of each calendar
month during the Term, a detailed accounting from the Bank, together with
Tenant's estimate of the applicable tax and assessment requirements (including
due dates) delivered to Landlord on or before the fifteenth (15th) day of the
applicable calendar month. Upon request of Landlord, Tenant shall promptly
furnish to Landlord satisfactory evidence of the payment of any tax, assessment,
imposition or charge required to be paid by Tenant pursuant to the foregoing.
16. Casualty.
(a) Restoration and Repair. In the event that during the Initial Term the
Improvements and/or Personalty shall be destroyed or damaged in whole or in part
by fire or any cause whatsoever and less than eighty percent (80%) of the value
of the Improvements and/or Personalty are damaged or destroyed or in the event
that less than sixty percent (60%) of the value of the Improvements and/or
Personalty are damaged or destroyed during any Renewal Term (in either case, a
"MINOR CASUALTY"), Tenant shall give Landlord immediate notice thereof and shall
repair, reconstruct or replace the Improvements and/or Personalty, or the
portion thereof so destroyed or damaged (whichever is reasonably required), at
least to the extent of the value and character thereof existing immediately
prior to such occurrence. All work shall be started as soon as practicable and
completed at Tenant's sole cost and expense. Tenant shall, however, immediately
take such action as is necessary to assure that the Premises (or any portion
thereof) does not constitute a nuisance or otherwise presents a health or safety
hazard. Tenant shall continue to pay all Rent and additional charges due
hereunder without abatement. If during the Initial Term greater than eighty
percent (80%) of the value of the Improvements and/or Personalty are damaged or
destroyed, or if during any Renewal Term more than sixty percent (60%) of the
value of the Improvements and/or Personalty are damaged or destroyed (a "MAJOR
CASUALTY"), then Tenant may, at its option, elect to (i) terminate this Lease
and assign all insurance proceeds for such damage and destruction to Landlord;
or (ii) treat the Major Casualty as if it were a Minor Casualty and take all
steps required for Minor Casualties herein. Notwithstanding the foregoing, in
the event that a period of two (2) years or less remains on the Term of this
Lease and the Tenant has not given Landlord notice of its intent to renew the
Lease for a Renewal Term, Landlord may elect to terminate the Lease upon the
occurrence of a Major Casualty, and Tenant shall assign all insurance proceeds
for such damage or destruction to Landlord.
(b) Escrow of Insurance Proceeds. In the event of a casualty resulting in
an insurance loss payment for the Improvements and/or Personalty in an amount
greater than ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00), the proceeds
of all insurance policies maintained by Tenant plus the amount of any deductible
shall be deposited in Landlord's and Tenant's name in an escrow account at the
Bank or another financial institution designated by Landlord, and shall be used
by Tenant (subject to SUBPARAGRAPH (A) above) for the repair, reconstruction or
restoration of the Improvements and/or Personalty. Such proceeds shall be
disbursed periodically by Escrow Agent upon certification of the architect or
engineer having supervision of the work that such amounts are the amounts paid
or payable for the repair, reconstruction or restoration. Tenant shall, at the
time of establishment of such escrow account and from time to time thereafter
until said work shall have been completed and paid for, furnish Landlord with
adequate evidence that at all times the undisbursed portion of the escrowed
funds, together with any funds made available by Tenant, is sufficient to pay
for the repair, reconstruction or restoration in its entirety. If a casualty
results in a loss payment for the Improvements and/or Personalty in an amount
equal to or less than the amount stated above, then the proceeds shall be paid
to Tenant, and shall be applied by Tenant (subject to SUBPARAGRAPH (A) above)
toward the repair, reconstruction and restoration of the Premises in its
entirety. Tenant shall obtain, and make available to Landlord, receipted bills
and, upon completion of the work, full and final waivers of lien.
(c) Uninsured Losses. Nothing contained herein shall relieve Tenant of its
obligations under this PARAGRAPH 16 even if the destruction or damage is not
covered, either in whole or in part, by insurance.
17. Insurance.
(a) Insurance By Tenant. Throughout the Term, Tenant shall, at its sole
cost and expense, maintain in full force and effect the following types and
amounts of insurance coverage:
(i) Hazard Insurance. Tenant shall keep the Improvements and
Personalty, including all permitted alterations, changes, additions and
replacements thereof and thereto, insured against loss or damage caused by:
(A) fire, and other hazards and perils generally included under extended
coverage, including flood and earthquake; (B) sprinkler leakage; (C)
vandalism and malicious mischief; (D) boiler and machinery; and (E) other
perils commonly covered by "All Risk" insurance, all in an amount which
reasonably assures there will be sufficient proceeds to replace the
Improvements and Personalty in the event of a loss against which such
insurance is issued but in no event less than 100% of the full replacement
value thereof (exclusive of foundations). All insurance required hereunder,
and all other insurance maintained by Tenant on the Improvements and
Personalty in excess of or in addition to that required hereunder, shall be
carried in favor of Landlord and Tenant, as their respective interests may
appear.
(ii) Liability Insurance. Tenant shall provide and keep in full
force and effect a policy of broad form comprehensive general public
liability and property damage insurance providing coverage against
liability for personal injury, death and property damage having limits of
not less than Five Million Dollars ($5,000,000) per occurrence, and Five
Million Dollars ($5,000,000) aggregate.
(iii) Worker's Compensation and Employer's Liability Insurance.
Tenant shall provide and keep in full force and effect workers'
compensation insurance, in a form prescribed by the laws of the State in
which the Premises is located, and employers' liability insurance with
limits of not less than Five Million Dollars ($5,000,000).
(iv) Builder's Risk Insurance. Tenant shall, prior to the
commencement of and during the construction of any construction,
restoration, renovation or alteration to the Premises, provide and keep in
full force and effect builders' risk insurance in accordance with the
requirements of this PARAGRAPH 17.
(v) Other Insurance. In addition, Tenant shall, at Landlord's
request, provide and keep in full force and effect such other insurance for
such risks and in such amounts as may from time to time be commonly insured
against in the case of business operations similar to those contemplated by
this Lease to be conducted by Tenant on the Premises.
(vi) Landlord as Additional Insured. Any and all insurance
maintained by Tenant as required by this Lease, or in excess of or in
addition to that required hereunder, shall name Landlord and any mortgagee
requested by Landlord as an additional insured(s), and shall use its best
efforts to provide a waiver of subrogation from its insurance carrier.
(vii) Insurance Escrows. Tenant shall maintain a separate trust
account at the Bank for Landlord's benefit in which it shall make monthly
deposits of one-twelfth of the estimated yearly premium for those insurance
coverages for which Landlord notifies Tenant it must escrow, together with
such additional deposits as may be reasonably required by Landlord to
ensure that sufficient funds will be available to pay all such premiums as
and when they become due. Tenant shall provide Landlord as of the first day
of each calendar month during the Term, a detailed accounting from the
Bank, together with Tenant's estimate of the applicable insurance premiums
(including due dates) delivered to Landlord on or before the fifteenth
(15th) day of the applicable calendar month. Upon request of Landlord,
Tenant shall promptly furnish to Landlord satisfactory evidence of the
payment of any insurance premium required to be paid by Tenant pursuant to
the foregoing.
(b) Carriers and Features. All insurance policies required to be carried by
Tenant as provided in this PARAGRAPH 17 shall be issued by insurance companies
approved by Landlord and authorized and licensed to do business in the State in
which the Premises is located with a Best's Insurance Rating of not less than
"A-" or a Best's Financial Category of not less than "VIII" or as otherwise
required by Landlord, with reasonable deductibles, taking into account Tenant's
and Guarantor's financial condition and the risk being insured. Landlord shall
have the right from time to time to require Tenant to increase the amount and/or
type of coverage to be maintained under this Lease. All such policies shall be
for periods of not less than one year and Tenant shall renew the same at least
thirty (30) days prior to the expiration thereof. All such policies shall
require not less than thirty (30) days written notice to Landlord prior to any
cancellation thereof or any change reducing coverage thereunder. Notwithstanding
the foregoing, Tenant may elect to self-insure or obtain blanket insurance for
each of the foregoing required types of insurance, so long as it obtains the
prior written consent of the Landlord, which consent shall not be unreasonably
withheld or delayed.
Tenant shall pay the premiums for all insurance policies which Tenant is
obligated to carry under this Article and, at least twenty (20) days prior to
the date any such insurance must be in effect, deliver to Landlord a copy of the
policy or policies, or a certificate or certificates thereof, along with
evidence that the premiums therefor have been paid for at least the next ensuing
quarter-annual period.
(c) Failure to Procure Insurance. If Tenant fails to procure insurance
required under this Article or fails to maintain the same in full force and
effect continuously during the Term, Landlord shall be entitled to procure the
same and Tenant shall immediately reimburse Landlord for such premium expense as
additional rent.
(d) Waiver of Subrogation. If any property owned by Tenant and located in
the Premises shall be stolen, damaged or destroyed by an insured peril, Landlord
shall not have any liability to Tenant, nor to any insurer of Tenant, for or in
respect of such theft, damage or destruction, and Tenant shall use its best
efforts to require all policies of insurance carried by it on its property in
the Premises to contain or be endorsed with a provision by which the insurer
designated therein shall waive its right of subrogation against Landlord.
18. Environmental Matters.
(a) Tenant's Covenant. Throughout the Term of this Lease, Tenant covenants
that it shall not cause, permit or allow any chemical substances, asbestos,
asbestos containing materials, oil, gasoline, other petroleum products or
by-products, formaldehyde, polychlorinated biphenals (PCB's), lead or lead dust,
fuel storage tanks, natural or synthetic gas products or any toxic,
carcinogenic, radioactive, dangerous or hazardous material, substance, chemical,
waste, contamination or pollutant the generation, use, maintenance, storage or
removal of which is regulated, prohibited or penalized under the Resources
Conservation Recovery Act ("RCRA"), 42 U.S.C. Section 6901, et seq; the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. Section 9601, et seq; and any other federal, state or local laws
pertaining to so-called "hazardous substances" or "hazardous materials"
(collectively, the "HAZARDOUS MATERIALS") to be placed, stored, dumped,
dispensed, released, discharged, deposited, used, transported , located or
generated on any portion of the Premises; provided, however, that commercially
reasonable quantities of such substances may be used or stored by Tenant on the
Premises on the condition that such quantities and the use thereof are permitted
by and in compliance with, or are exempt from applicable governmental
regulations.
(b) Clean Up. Subject to the provisions of PARAGRAPH 52 hereof, Tenant
shall immediately clean up any Hazardous Materials found on or within any
portion of the Premises, and shall remediate the Premises, to comply with any
and all laws, ordinances, rules or regulations regarding Hazardous Materials and
clean-up thereof, and to pay for all clean-up and remediation costs at no cost
to Landlord.
(c) Indemnification. Subject to the provisions of PARAGRAPH 52 hereof,
Tenant shall indemnify, release and hold Landlord its successors, assigns,
officers, directors, shareholders and employees, harmless from and against all
Liabilities, suffered by, incurred by or assessed against such parties, their
agents or other representatives, whether incurred as a result of legal action
taken by any governmental entity or agency, taken by any private claimant, or
taken by Landlord, before or after the expiration of the Term as a result of the
presence, disturbance, discharge, release, removal or clean-up of any Hazardous
Materials upon or under, on or off site, associated with, generated on or
flowing or originating from the Premises. The term "LIABILITIES" as used in this
PARAGRAPH 18 is hereby defined as any and all liabilities, expenses, demands,
damages, punitive or exemplary damages, consequential damages, costs, cleanup
costs, response costs, losses, causes of action, claims for relief, attorneys
and other legal fees, other professional fees, penalties, fines, assessments and
charges.
19. Costs and Attorneys' Fees. If either party shall bring an action to
recover any sum due hereunder, or for any breach hereunder, and shall obtain a
judgment or decree in its favor, the court may award to such prevailing party
its reasonable costs and reasonable attorneys' fees, specifically including
reasonable attorneys' fees incurred in connection with any appeals (whether or
not taxable or assessable as such by law). Landlord shall also be entitled to
recover from Tenant Landlord's reasonable attorneys' fees and costs incurred in
any bankruptcy action filed by or against Tenant, including, without limitation,
those incurred in seeking relief from the automatic stay, in dealing with the
assumption or rejection of this Lease, in any adversary proceeding, and in the
preparation and filing of any proof of claim.
20. Default; Remedies.
(a) Default. Upon the occurrence of any one or more of the following
events (the "EVENTS OF DEFAULT"), Landlord shall have the right to exercise any
rights or remedies available in this Lease, at law or in equity. Events of
Default shall be:
(i) Tenant's failure to pay when due any regularly scheduled
payment of Rent, or any other sum of money payable hereunder (whether as
additional rent or otherwise) and such failure is not cured within ten (10)
days after receipt of written notice thereof from Landlord, (but Landlord
shall be obligated to tender notice of such default only once in any given
twelve (12) month period, and thereafter it shall be an Event of Default
any time a required payment is not received within ten (10) days of the
date such sum was due if Landlord has given notice of default relating to
Tenant's failure to pay any regularly scheduled payment of Rent in the
Preceding twelve (12) month period);
(ii) Tenant's failure to pay when due any other payment of
Rent, or any other sum of money payable hereunder (whether as additional
rent or otherwise) and such failure is not cured within thirty (30) days
after receipt of written notice thereof from Landlord;
(iii) Tenant's failure to perform any other of the terms,
covenants or conditions contained in this Lease if not remedied within
thirty (30) days after receipt of written notice thereof, or, if such
default cannot reasonably be remedied within such period, Tenant does not
within thirty (30) days after written notice thereof commence such act or
acts as shall be necessary to remedy the default and shall not thereafter
diligently complete such act or acts within a reasonable time, provided,
however, in no event shall such "CURE PERIOD" extend beyond one hundred
twenty (120) days after written notice thereof;
(iv) if Tenant becomes bankrupt or insolvent, or files any
debtor proceedings, or files pursuant to any statute a petition in
bankruptcy or insolvency or for reorganization, or files a petition for the
appointment of a receiver or trustee for all or substantially all of its
assets, and such petition or appointment shall not have been set aside
within sixty (60) days from the date of such petition or appointment, or if
any of the foregoing are filed against Tenant, or if Tenant makes an
assignment for the benefit of creditors or shall admit in writing its
inability to pay its debts generally as they become due, or if Tenant's
interest in this Lease is attached, seized or made subject to any other
judicial seizure and such seizure or attachment is not discharged within
sixty (60) days;
(v) Tenant's failure to provide insurance coverage (or allows
such coverage to be canceled or lapse) pursuant to its obligation hereunder;
(vi) if Tenant is liquidated or dissolved, or begins
proceedings toward such liquidation or dissolution, or, in any manner,
permits the sale or divestiture of substantially all of its assets;
(vii) if a Change of Control occurs or the estate or interest
of Tenant in the Premises or any part thereof is voluntarily or
involuntarily transferred, assigned, conveyed, levied upon or attached in
any proceeding, unless Tenant is contesting such lien or attachment in good
faith in accordance with PARAGRAPH 27 hereof;
(viii) if there has been a notice of default under or a
termination or relinquishment of the franchise or license pursuant to which
Tenant or an Affiliate conducts business on or from the Premises
("FRANCHISE"), provided that such event shall not constitute an Event of
Default if (i) no other Event of Default enumerated in this PARAGRAPH 20
shall occur and be continuing, and (ii) at a date no later than the period
allowed to Tenant pursuant to the Franchise to cure such default,
termination or relinquishment, Tenant or an Affiliate has cured such
default thereunder so that there is no default, termination or
relinquishment of the Franchise, or Tenant has entered into a written new
or amended Franchise for operation of motor vehicle retail or motor vehicle
related businesses at the Premises with a substitute franchisor or licensor
acceptable to Landlord on terms and conditions acceptable to Landlord,
which acceptance shall not be unreasonably withheld or delayed;
(ix) Tenant's failure to provide Landlord immediate notice of
Tenant's receipt of notice of (A) a default or potential default by Tenant
under the Franchise, or (B) the Franchiser's intent to terminate, suspend
or not renew the Franchise;
(x) if Tenant or any of its Affiliates defaults under any
other lease with Landlord or an Affiliate of Landlord, unless such default
is premised upon a default, suspension or termination of any Franchise
agreement.
Remedies. If any of the Events of Default hereinabove specified shall occur
and be continuing, Landlord shall have and may exercise any one or more of the
following rights and remedies:
(i) Landlord may, by written notice thereof to Tenant,
terminate this Lease and, peaceably or pursuant to appropriate legal
proceedings, re-enter, retake and resume possession of the Premises for
Landlord's own account and, for Tenant's breach of and default under this
Lease, recover immediately from Tenant any and all Rent and other sums and
damages due or in existence at the time of such termination, including,
without limitation: (A) all Rent and other sums, charges, payments, costs
and expenses agreed and/or required to be paid by Tenant to Landlord
hereunder; (B) all reasonable costs and expenses of Landlord in connection
with the recovery of possession of the Premises, including reasonable
attorneys' fees and court costs; and (C) all costs and expenses of Landlord
in connection with any reletting or attempted reletting of the Premises or
any part or parts thereof, including, without limitation, brokerage fees,
attorneys' fees and the cost of any alterations or repairs which may be
reasonably required to so relet the Premises, or any part or parts thereof.
(ii) Landlord may, by written notice thereof to Tenant,
terminate Tenant's option to renew this Lease for any or all of the Renewal
Terms.
(iii) Landlord may, pursuant to any prior notice required by
law, and without terminating this Lease, peaceably or pursuant to
appropriate legal proceedings, re-enter, retake and resume possession of
the Premises for the account of Tenant, make such alterations of and
repairs to the Premises as may be reasonably necessary in order to relet
the same or any part or parts thereof and relet or attempt to relet the
Premises or any part or parts thereof for such term or terms (which may be
for a term or terms extending beyond the Term), at such Rent and upon such
other terms and provisions as Landlord, in its reasonable discretion may
deem advisable. In the event that Landlord retakes and resumes possession
of the Premises, it shall use reasonable efforts to mitigate any damages it
suffered by virtue of Tenant's default. Upon any such reletting, all rents
received by Landlord from such reletting shall be applied: (A) first, to
the payment of all costs and expenses of recovering possession of the
Premises; (B) second, to the payment of any costs and expenses of such
reletting, including brokerage fees, attorneys' fees and the cost of any
alterations and repairs reasonably required for such reletting; (C) third,
to the payment of any indebtedness, other than Rent, due hereunder from
Tenant to Landlord, and to satisfy any liens encumbering Tenant's leasehold
interest; (D) fourth, to the payment of all Rent and other sums due and
unpaid hereunder; and (E) fifth, the residue, if any, shall be held by
Landlord and applied in payment of future Rent as the same may become due
and payable hereunder. If the rents received from such reletting during any
period shall be less than that required to be paid during that period by
Tenant hereunder, then Tenant shall promptly pay any such deficiency to
Landlord and failing the prompt payment thereof by Tenant to Landlord,
Landlord shall immediately be entitled to institute legal proceedings for
the recovery and collection of the same. Such deficiency shall be
calculated and paid at the time each payment of Rent shall otherwise become
due under this Lease, or, at the option of Landlord, immediately. Landlord
shall, in addition, be immediately entitled to sue for and otherwise
recover from Tenant any other damages occasioned by or resulting from any
abandonment of the Premises or other breach of or default under this Lease
other than a default in the payment of Rent. No such re-entry, retaking or
resumption of possession of the Premises by Landlord for the account of
Tenant shall be construed as an election on the part of Landlord to
terminate this Lease unless a written notice of such intention shall be
given to Tenant or unless the termination of this Lease be decreed by a
court of competent jurisdiction. Notwithstanding any such re-entry and
reletting or attempted reletting of the Premises or any part or parts
thereof for the account of Tenant without termination, Landlord may at any
time thereafter, upon written notice to Tenant, elect to terminate this
Lease or pursue any other remedy available to Landlord for Tenant's
previous breach of or default under this Lease.
(iv) Landlord may, without re-entering, retaking or resuming
possession of the Premises, sue for all Rent and all other sums, charges,
payments, costs and expenses due from Tenant to Landlord hereunder either:
(A) as they become due under this Lease, taking into account that Tenant's
right and option to pay the Rent hereunder on a monthly basis in any
particular Lease Year is conditioned upon the absence of a default on
Tenant's part in the performance of its obligations under this Lease; or
(B) at Landlord's option, accelerate the maturity and due date of the whole
or any part of the Rent for the entire then-remaining unexpired balance of
the Term (reduced to its present value, applying an interest rate of
__________ percent ( %), as well as all other sums, charges, payments,
costs and expenses required to be paid by Tenant to Landlord hereunder,
including, without limitation, damages for breach or default of Tenant's
obligations hereunder in existence at the time of such acceleration, such
that all sums due and payable under this Lease shall, following such
acceleration, be treated as being and, in fact, be due and payable in
advance as of the date of such acceleration. Landlord may then proceed to
recover and collect all such unpaid Rent and other sums so sued for from
Tenant by distress, levy, execution or otherwise.
(v) Landlord may require Tenant to immediately transfer to
Landlord all amounts held by Tenant in the trust account established
pursuant to PARAGRAPH 15 above and, thereafter, to deposit on the first day
of each month together with and in addition to the regular installment of
Rent, an amount equal to one-twelfth (1/12) of the yearly taxes and
assessments as estimated by Landlord to be sufficient to enable Landlord to
pay, at least thirty (30) days before they become delinquent, all taxes,
assessments, and other similar charges and insurance premiums against the
Premises or any part thereof. Such added payments shall not be, nor be
deemed to be, trust funds, but may be commingled with the general funds of
Landlord, and no interest shall be payable with respect thereto. Upon
demand of Landlord, Tenant shall deliver to Landlord such additional moneys
as are necessary to make up any deficiencies in the amounts necessary to
enable Landlord to pay such taxes, assessments and similar charges and
insurance premiums.
In addition to the remedies hereinabove specified and enumerated,
Landlord shall have and may exercise the right to invoke any other remedies
allowed at law or in equity as if the remedies of re-entry, unlawful detainer
proceedings and other remedies were not herein provided. Accordingly, the
mention in this Lease of any particular remedy shall not preclude Landlord from
having or exercising any other remedy at law or in equity.
<PAGE>
Nothing herein contained shall be construed as precluding Landlord from
having or exercising such lawful remedies as may be and become necessary in
order to preserve Landlord's right or the interest of Landlord in the Premises
and in this Lease, even before the expiration of any notice periods provided for
in this Lease, if under the particular circumstances then existing the allowance
of such notice periods will prejudice or will endanger the rights and estate of
Landlord in this Lease and in the Premises.
21. Eminent Domain.
(a) Complete Taking. If the whole of the Premises shall be taken for any
public or quasi-public use under any statute or by right of eminent domain, or
by private purchase in lieu thereof, then this Lease shall automatically
terminate as of the date that title shall be taken.
(b) Partial Taking. If any part of the Premises shall be so taken, such
that the Premises may still be used for its intended purposes, this Lease shall
not terminate or be terminated and Tenant shall restore the remaining portion of
the Premises to the extent necessary to render it reasonably suitable for the
purposes for which it was leased and make all repairs to any building damaged by
such taking to the extent necessary to constitute such building a complete
architectural unit. If after such partial taking, Landlord and Tenant shall
determine in their reasonable discretion that the Premises cannot be used for
their intended purposes, then the term of this Lease shall end on the effective
date of such taking. If after such partial taking, this Lease shall not so
terminate, then the rent to be paid by Landlord after such taking shall be
equitably adjusted as Landlord and Tenant shall then agree. Any disagreement
between Landlord and Tenant regarding the foregoing matters shall be determined
by arbitration in accordance with the Commercial Rules of the American
Arbitration Association.
(c) Award. All awards and other compensation made to Tenant in any taking
by eminent domain or recovery for inverse condemnation, either permanent or
temporary, of all or any part of the Premises or any easement or any
appurtenance thereto, including severance and consequential damages and change
in grade of any street, are hereby assigned to Landlord, and Tenant hereby
irrevocably appoints Landlord as its attorney-in-fact, coupled with an interest,
and authorizes, directs and empowers such attorney, at the option of said
attorney, on behalf of Tenant, its successors and assigns, to adjust or
compromise the claim for any such award and alone to collect and receive the
proceeds thereof, to give proper receipts and acquittances therefor and, after
deducting any expenses of collection and subject to the conditions and
limitations set forth below, to hold such proceeds without any allowance of
interest and make the same available for restoration or rebuilding the
improvements which are part of the Premises. Such proceeds shall be paid to and
held and disbursed by an escrow agent in the manner and under the conditions
provided in paragraph 12 above. If the proceeds are made available by Landlord
to reimburse Tenant for the cost of restoration or rebuilding, any surplus which
may remain out of any award after payment of such cost of restoration or
rebuilding shall be the sole property of Landlord.
(d) Notices; Assignments. Each of Landlord and Tenant further covenants and
agrees to give the other immediate notice of the actual or threatened
commencement of any proceedings under eminent domain and to deliver to the other
copies of any and all papers served in connection with any such proceedings.
Tenant shall make, execute and deliver to Landlord, at any time or times, upon
request, free, clear and discharged of any encumbrance of any kind whatsoever,
any and all further assignments and/or other instruments deemed necessary by
Landlord for the purpose of validly and sufficiently assigning all such awards
and other compensation heretofore or hereafter made to Landlord (including the
assignment of any award from the United States government at any time after the
allowance of the claim therefor, the ascertainment of the amount thereof and the
issuance of the warrant for payment thereof).
22. Liability of Landlord. Landlord shall not be liable to Tenant, its
employees, agents, contractors, business invitees, licensees, customers,
clients, family members or guests for any damage, injury, loss, compensation or
claim, including, but not limited to, claims for the interruption of or loss to
Tenant's business, based on, arising out of or resulting from any cause
whatsoever, except in the event of its clear failure to comply with its
obligations hereunder, including, but not limited to: (a) repairs to any portion
of the Premises; (b) interruption in Tenant's use of the Premises; (c) any
accident or damage resulting from the use or operation (by Landlord, Tenant or
any other person or persons) of any equipment within the Premises, including
without limitation, heating, cooling, electrical or plumbing equipment or
apparatus; (d) the termination of this Lease by reason of the condemnation or
destruction of the Premises in accordance with the provisions of this Lease; (e)
any fire, robbery, theft, mysterious disappearance or other casualty; (f) the
actions of any other person or persons; and
<PAGE>
(g) any leakage or seepage in or from any part or portion of the Premises,
whether from water, rain or other precipitation that may leak into, or flow
from, any part of the Premises, or from drains, pipes or plumbing fixtures in
the Improvements. Any goods, property or personal effects stored or placed by
Tenant or its employees in or about the Premises shall be at the sole risk of
Tenant.
23. Indemnification of Landlord. In addition to any other indemnification
obligations in this Lease, Tenant shall defend, indemnify and save and hold
Landlord harmless from and against any and all liabilities, obligations, losses,
damages, injunctions, suits, actions, fines, penalties, claims, demands, costs
and expenses of every kind or nature, including reasonable attorneys' fees and
expenses and court costs and actual or consequential damages, incurred by,
imposed upon or asserted against Landlord, its officers, trustees, employees,
shareholders, agents or Affiliates, arising directly or indirectly from or out
of: (a) any breach, violation or nonperformance by Tenant or any person claiming
under Tenant, or the employees, agents, contractors, invitees or visitors of
Tenant of any of the terms, provisions, representations, warranties, covenants
or conditions of this Lease on Tenant's part to be performed or any law,
ordinance or governmental requirement of any kind; (b) any use, condition,
operation or occupancy of the Premises during the Term hereof; (c) any acts,
omissions or negligence of Tenant, in, on, or about the Premises during the Term
hereof; (d) any accident, injury, death or damage to the person, property or
business of Tenant, its employees, agents, contractors, invitees, visitors or
any other person which shall happen at, in or upon the Premises, however
occurring during the Term hereof; (e) any matter or thing growing out of the
condition, occupation, maintenance, alteration, repair, use or operation by any
person of the Premises, or any part thereof, or the operation of the business
contemplated by this Lease to be conducted thereon, thereat, therein, or
therefrom which occurs during the Term hereof; (f) any failure of Tenant to
comply with any laws, ordinances, requirements, orders, directions, rules or
regulations of any governmental authority, including, without limitation, the
Accessibility Laws; (g) any contamination of the Premises, or the ground waters
thereof, arising on or after the date Tenant takes possession of the Premises
and occasioned by the use, transportation, storage, spillage or discharge
thereon, therein or therefrom of any toxic or hazardous chemicals, compounds,
materials or substances or any violation of the covenants of PARAGRAPH 18 above;
(h) any discharge of toxic or hazardous sewage or waste materials from the
Premises into any septic facility or sanitary sewer system serving the Premises
arising on or after the date Tenant takes possession of the Premises; (i) any
brokers or agents fees and commissions incurred during or with respect to the
Term hereof; or (j) any other act or omission of Tenant, its employees, agents,
invitees, customers, licensees or contractors which occurs during the Term
hereof.
Tenant's indemnity obligations under this PARAGRAPH 23 and elsewhere in
this Lease arising prior to the termination or assignment of this Lease shall
survive any such termination or assignment.
24. Notice of Claim or Suit. Tenant shall promptly notify Landlord of any
claim, action, proceeding or suit instituted or threatened against Tenant or
Landlord which relates to the Premises of which Tenant receives notice or of
which Tenant acquires knowledge. If Landlord is made a party to any action for
damages or other relief against which Tenant has indemnified Landlord, as
aforesaid, then Tenant shall defend Landlord, pay all costs and shall provide
effective counsel to Landlord in such litigation with counsel reasonably
satisfactory to Landlord and shall pay any and all judgments or sums due
pursuant to any settlement agreement which is mutually satisfactory to Landlord
and Tenant.
25. Liens, Generally. Tenant shall not create or cause to be imposed,
claimed or filed upon the Premises, or any portion thereof, or upon the interest
of Landlord therein, any lien, charge or encumbrance whatsoever. If, because of
any act or omission of Tenant, any such lien, charge or encumbrance shall be
imposed, claimed or filed, Tenant shall, at its sole cost and expense, cause the
same to be fully paid and satisfied or otherwise discharged of record (by
bonding or otherwise) and Tenant shall indemnify and save and hold Landlord
harmless from and against any and all costs, liabilities, suits, penalties,
claims and demands whatsoever, and from and against any and all attorneys' fees,
at both trial and all appellate levels, resulting or on account thereof and
therefrom. If Tenant shall fail to comply with the foregoing provisions of this
PARAGRAPH 25, then Landlord shall have the option of paying, satisfying or
otherwise discharging (by bonding or otherwise) such lien, charge or encumbrance
and Tenant shall reimburse Landlord, upon demand and as additional rent, for all
sums so paid and for all costs and expenses incurred by Landlord in connection
therewith, together with interest thereon, until paid.
26. Mechanics Liens. Landlord's interest in the Premises shall not be
subjected to liens of any nature by reason of Tenant's construction, alteration,
renovation, repair, restoration, replacement or reconstruction of any
<PAGE>
improvements on or in the Premises, or by reason of any other act or omission of
Tenant (or of any person claiming by, through or under Tenant) including, but
not limited to, mechanics' and materialmen's liens. All persons dealing with
Tenant are hereby placed on notice that such persons shall not look to Landlord
or to Landlord's credit or assets (including Landlord's interest in the
Premises) for payment or satisfaction of any obligations incurred in connection
with the construction, alteration, renovation, repair, restoration, replacement
or reconstruction thereof by or on behalf of Tenant. Tenant has no power, right
or authority to subject Landlord's interest in the Premises to any mechanics or
materialmen's lien or claim of lien. If a lien, a claim of lien or an order for
the payment of money shall be imposed against the Premises on account of work
performed, or alleged to have been performed, for or on behalf of Tenant, Tenant
shall, within thirty (30) days after written notice of the imposition of such
lien, claim or order, cause the Premises to be released therefrom by the payment
of the obligation secured thereby or furnish a bond or by any other method
prescribed or permitted by law. If a lien is released, Tenant shall thereupon
furnish Landlord with a written instrument of release in form for recording or
filing in the appropriate office of land records of the County in which the
Premises is located, and otherwise sufficient to establish the release as a
matter of record.
27. Contest of Liens. Tenant may, at its option, contest the validity of
any lien or claim of lien if Tenant shall have first posted an appropriate and
sufficient bond in favor of the claimant or paid the appropriate sum into court,
if permitted by law, and thereby obtained the release of the Premises from such
lien. If judgment is obtained by the claimant under any lien, Tenant shall pay
the same immediately after such judgment shall have become final and the time
for appeal therefrom has expired without appeal having been taken. Tenant shall,
at its own expense, defend the interests of Tenant and Landlord in any and all
such suits; provided, however, that Landlord may, at its election, engage its
own counsel and assert its own defenses, in which event Tenant shall cooperate
with Landlord and make available to Landlord all information and data which
Landlord deems necessary or desirable for such defense.
28. Notices of Commencement of Construction. If required by the laws of the
State in which the Premises are located or in the event permitted by the laws of
the State in which the Premises are located and Landlord so requests upon Tenant
giving notice to Landlord of its intended construction, and in the event that
Tenant reasonably contemplates construction of any work on the Premises will
cost, in the aggregate, Fifty Thousand Dollars ($50,000.00) or more, prior to
commencement by Tenant of any work on the Premises which shall have been
previously permitted by Landlord as provided in this Lease, Tenant shall record
or file a notice of the commencement of such work (the "NOTICE OF COMMENCEMENT")
in the land records of the County in which the Premises are located, identifying
Tenant as the party for whom such work is being performed, stating such other
matters as may be required by law and requiring the service of copies of all
notices, liens or claims of lien upon Landlord. Any such Notice of Commencement
shall clearly reflect that the interest of Tenant in the Premises is that of a
leasehold estate and shall also clearly reflect that the interest of Landlord as
the fee simple owner of the Premises shall not be subject to mechanics or
materialmen's liens on account of the work which is the subject of such Notice
of Commencement. A copy of any such Notice of Commencement shall be furnished to
and approved by Landlord and its attorneys prior to the recording or filing
thereof, as aforesaid.
29. Limitation on Liability of Landlord. If Tenant is awarded a money
judgment against Landlord, then Tenant's sole recourse for satisfaction of such
judgment shall be limited to execution against the Premises and any other
premises leased by Landlord to an Affiliate of Tenant. In no event shall any
stockholder, shareholder, partner, employee, officer or beneficiary of Landlord
be personally liable for the obligations of Landlord hereunder.
30. Franchise and License Agreements. Tenant shall keep and maintain in
full force during the Term all Franchise agreements, management agreements,
service and maintenance contracts, equipment leases and other contracts or
agreements reasonably necessary to the operation of the Premises for its
Permitted Use. Tenant shall, at its sole cost and expense, pay all franchise
fees, license fees, management fees or other expenses of any kind or nature
whatsoever in connection with its operation of the Premises for its Permitted
Use.
31. "Net" Lease. Landlord and Tenant acknowledge and agree that this Lease
shall be and constitute what is generally referred to as a "triple net" or
"absolute net" lease, such that Tenant shall be obligated hereunder to pay all
costs and expenses incurred with respect to, and associated with, the Premises
and the business operated
<PAGE>
thereon and therein, including, without limitation, all taxes and assessments,
utility charges, insurance costs, maintenance costs and repair and
restoration expenses (all as more particularly herein provided).
32. Representations, Warranties and Special Covenants. The Representations,
Warranties and Special Covenants attached hereto as EXHIBIT E are incorporated
herein by this reference.
33. Notices. All notices, approvals, requests, consents and other
communications given pursuant to this Lease shall be in writing and shall be
deemed to have been duly given (i) when actually received if (a) either (x) hand
delivered, (y) sent by facsimile transmission (in which event proof of delivery
shall be by telephone) (and a duplicate of such notice in (x) or (y) or such
notice shall be deposited in a regularly maintained receptacle for the deposit
of United States mail, sent by registered or certified mail, postage and charges
prepaid); (ii) two (2) days after the same was deposited in a regularly
maintained receptacle for the deposit of United States mail, sent by registered
or certified mail, postage and charges prepaid; or (iii) the next business day
if sent via a national overnight delivery service, addressed as follows or at
such other address as either party may specify from time to time by notice to
the other party at least five (5) days prior notice of the changed address:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
TO TENANT: With a copy to:
Mr. Charles B. Lee, Jr.
Parker, Poe, Adams & Bernstein L.L.P.
2500 Charlotte Plaza
Charlotte, North Carolina 28244
Telephone: (704) 335-9001
Telefax: (704) 334-4706
- ----------------------------------------------------------------
Attention:
- ----------------------------------------------------------------
Telephone:
- ----------------------------------------------------------------
Telefax:
- -------------------------------------------------------------------------------------------------------------------------------
TO LANDLORD: With a copy to:
MarMar Realty Limited Partnership Alan G. Dexter
6407 Idlewild Road, Building 2, Suite 111 Parker, Poe, Adams & Bernstein L.L. P.
Charlotte, North Carolina 28212 2500 Charlotte Plaza
Charlotte, North Carolina 28244
- ----------------------------------------------------------------Telephone: (704) 335-9042
Attention: Jim Mezzanotte Telefax: (704) 334-4706
- ----------------------------------------------------------------
Telephone: (704) 566-4081
- ----------------------------------------------------------------
Telefax: (704) 566-6031
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
34. No Waiver. No course of dealing between Landlord and Tenant, or any
delay or omission of Landlord or Tenant to insist upon a strict performance of
any term or condition of this Lease shall be deemed a waiver of any right or
remedy that such party may have, and shall not be deemed a waiver of any
subsequent breach of such term or condition.
35. Quiet Enjoyment. Landlord covenants that Tenant, upon paying the Rent
and observing and keeping the covenants, agreements and stipulations of this
Lease on its part to be kept, shall lawfully, peaceably and quietly hold, occupy
and enjoy the Premises during the Term without hindrance, ejection or
molestation. Landlord covenants and warrants that it is lawfully seized of the
Premises and has good, right and lawful authority to enter into this Lease for
the full term aforesaid, that the Premises are free and clear of all
encumbrances that would prevent Landlord from having such right and authority
and that Landlord will put Tenant in actual possession of the Premises on the
Commencement Date.
36. Subordination, Non-Disturbance and Attornment. In the event that
Landlord elects, in its sole discretion, to place any form of financing on the
Premises, Tenant agrees to promptly enter into, execute and deliver to the
requesting party a commercially reasonable subordination, non-disturbance and
attornment agreement with any such lender, which shall acknowledge that this
Lease, Tenant's interest hereunder and Tenant's leasehold interest in and to the
Premises are junior, inferior, subordinate and subject in right, title,
interest, lien, encumbrance, priority and all other respects to any such
mortgage (which term when used anywhere in this Lease includes deeds of trust
and other security instruments and interests) or mortgages now or hereafter in
force and effect upon or encumbering Landlord's interest in the Premises, or any
portion thereof, and to all collateral assignments by Landlord to any third
party or parties of any of Landlord's rights under this Lease or the rents,
issues and profits thereof or therefrom as security for any liability or
indebtedness, direct, indirect or contingent, of Landlord to such third party or
parties, and to all future modifications, extensions, renewals, consolidations
and replacements of, and all amendments and supplements to any such mortgage,
mortgages or assignments. If, within fifteen (15) days following Tenant's
receipt of a written request by Landlord or the holder or proposed holder of any
such mortgage, mortgages or assignments, Tenant shall fail or refuse or shall
have not executed any such subordination, non-disturbance and attornment
agreement, Tenant shall be in breach and default of its obligation to do so and
of this Lease and Landlord shall be entitled thereupon to exercise any and all
remedies available to Landlord pursuant to this Lease or otherwise provided by
law.
37. Brokers. Landlord and Tenant represent and warrant to the other that
neither of them have engaged or contracted with any person, firm or entity to
serve or act as a broker, agent or finder for the purpose of leasing the
Premises, and that no broker's or real estate or other similar commissions or
fees are or shall be due in respect of the transaction contemplated by this
Lease. Landlord and Tenant each shall indemnify, defend and save harmless the
other from and against any cost and expense, including reasonable attorney's
fees, incurred by the other as a result of the untruth of any of the foregoing
representations made by it.
38. Invalidity. If any provision of this Lease shall be declared invalid or
unenforceable, the remainder of this Lease shall continue in full force and
effect.
39. Counterparts. This Lease may be executed in two (2) or more
counterparts, which taken together shall be deemed one (1) original.
40. Memorandum of Lease. The parties hereto agree not to record this Lease.
The parties agree to execute and to record in the appropriate local registry a
Memorandum of this Lease in the form attached as EXHIBIT B.
41. Cumulative. All rights and remedies of Landlord and Tenant herein shall
be cumulative and none shall be exclusive of any other or of any rights and
remedies allowed by law.
42. Governing Law. This Lease shall be governed by, construed, and enforced
in accordance with the laws of the state in which the Premises is located.
43. Successors and Assigns, Relationship. The covenants, terms, conditions,
provisions, and undertakings in this Lease shall extend to and be binding upon
the permitted successors, and assigns of the respective parties hereto, and
shall be construed as covenants running with the land. This Lease creates and
evidences a lease between Landlord and Tenant, and not a partnership, joint
venture, or other type of ownership inconsistent with a lease, and neither
Landlord nor Tenant shall make any representation to the contrary.
44. Entire Agreement. This Lease, together with any exhibits attached
hereto, contains the entire agreement and understanding between the parties.
There are no oral understandings, terms, or conditions, and neither party has
relied upon any representation, express or implied, not contained in this Lease.
All prior understandings, terms, or conditions are deemed merged in this Lease.
This Lease cannot be changed or supplemented orally, but may be modified or
amended only by a written instrument executed by the parties. Any disputes
regarding the interpretation of any portion of this Lease shall not be
presumptively construed against the drafting party.
45. Survival. Tenant's indemnity obligations herein, including, without
limitation, those set forth in PARAGRAPH 18 shall survive termination of this
Lease.
46. Estoppel Certificates. Tenant shall from time to time, within fifteen
(15) days after request by Landlord and without charge, give a Tenant Estoppel
Certificate in the form attached hereto as EXHIBIT D and containing such other
matters as may be reasonably requested by Landlord to any person, firm or
corporation specified by Landlord. If Tenant does not return the Tenant Estoppel
Certificate within such fifteen-day period, Tenant shall be deemed to have
consented to the information contained therein as if Tenant had executed such
Tenant Estoppel Certificate and returned it to Landlord.
47. Time. Time is of the essence in every particular of this Lease,
including, without limitation, obligations for the payment of money.
48. Captions and Headings. The captions and headings in this Lease have
been inserted herein only as a matter of convenience and for reference and in no
way define, limit or describe the scope or intent of, or otherwise affect, the
provisions of this Lease.
<PAGE>
49. Waiver of Jury Trial. TO THE EXTENT ALLOWED BY APPLICABLE LAW, TENANT
AND LANDLORD HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT
EITHER OF THEM OR THEIR HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS OR ASSIGNS
MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS LEASE OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO LANDLORD'S ACCEPTING THIS LEASE.
50. Signage. Tenant shall have the right to install signs containing
Tenant's trade name and such other identification signs on the Premises as are
permitted by applicable governmental laws and regulations. Tenant shall obtain
all governmental permits, licenses and approvals necessary to erect such signs,
and shall maintain such signs in good condition and repair. Tenant shall not
remove any identification signs without first obtaining Landlord's written
consent, which shall not be unreasonably withheld or delayed.
51. Guaranty. At the time of Tenant's execution of this Lease, Tenant shall
obtain the execution of the guaranty agreement in the form of EXHIBIT F attached
hereto ("GUARANTY") by the Guarantor named therein ("GUARANTOR"). As a condition
to Tenant's exercise of a Renewal Term and accompanying Tenant's notice of such
exercise, Tenant shall deliver to Landlord a reaffirmation of the Guaranty
executed by Guarantor.
52. Pre-Existing Conditions. Notwithstanding anything to the contrary
contained herein, with respect to any condition on the Premises which was
created prior to the Term hereof which is or has been rendered unlawful or no
longer in compliance with any applicable law or regulation, including, but not
limited to, the discovery of Hazardous Materials on the Premises which were not
caused by the Tenant's use or occupancy of the Premises or the requirement of
any governmental entity to make alterations or repairs to the Premises which are
not necessitated by Tenant's use or occupancy of the Premises ("PRE-EXISTING
CONDITIONS"), Landlord agrees to use commercially reasonable efforts to have the
condition remedied or payment for such condition paid by the party who created
such condition or any other third party who might reasonably be deemed liable
for such condition. In the event that Landlord is unable to seek recovery from
any such third party after reasonable efforts to do so, Landlord shall notify
Tenant of the condition and the costs associated with remediation or correction
thereof or of any liability it has incurred thereby. Within ten (10) days
following receipt of notice thereof, Tenant shall notify Landlord of its intent
to (i) correct or remediate the condition within a reasonable time thereafter or
(ii) request that Landlord remediate or correct the condition, in which case
Tenant's Base Rent hereunder shall increase by the product of such amount,
multiplied by ____________percent ( %) annually throughout the remainder of the
Term or until Landlord has been compensated in full for such costs, whichever
comes first. In the event that Tenant agrees to correct or remediate the
Pre-Existing Condition and fails to do within a reasonable time thereafter,
Landlord shall give the Tenant written notice of its failure to comply. If the
condition is not fully corrected or remediated within thirty (30) days
thereafter, Landlord may commence to correct or remediate the Pre-Existing
Condition and raise Tenant's Base Rent hereunder in the manner set forth above.
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto executed this Lease the day
and year first above written.
LANDLORD:
MAR MAR REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership (SEAL)
By: MAR MAR REALTY TRUST,
Its General Partner
<TABLE>
<CAPTION>
ATTEST:
<S> <C>
By: By:
----------------------------------------------------- ----------------------------------------------------
Its: Its:
----------------------------------------------------- ----------------------------------------------------
TENANT:
ATTEST:
By: By:
----------------------------------------------------- ----------------------------------------------------
Its: Its:
----------------------------------------------------- ----------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
TO
LEASE AGREEMENT
LEGAL DESCRIPTION
<PAGE>
EXHIBIT B
TO
LEASE AGREEMENT
Prepared by: Parker, Poe, Adams & Bernstein L.L.P.
Return to: 2500 Charlotte Plaza, Charlotte, NC 28244 (AGD)
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE (this "MEMORANDUM") dated as of the _____ day of
_________, 19___ is entered into by and between MAR MAR REALTY LIMITED
PARTNERSHIP, a Delaware limited partnership (the "LANDLORD") with an address of
6407 Idlewild Road, Building 2, Suite 111, Charlotte, North Carolina 28212
and______________________ , a _________________(the "TENANT") with an address of
_____________________________________________.
W I T N E S S E T H THAT:
Landlord has leased to Tenant, and Tenant has leased from Landlord, upon
and subject to the covenants and agreements set forth in that certain Lease
Agreement dated _________, 199___ (the "LEASE"), by and between Landlord and
Tenant, certain premises (the "PREMISES") located in the County of
______________, and State of , more particularly described on EXHIBIT "A"
attached hereto and made a part hereof.
Landlord and Tenant record this Memorandum in lieu of recording the Lease
itself for the purpose of placing the public on notice of inquiry as to the
specific provisions, terms, covenants and conditions of the Lease, the
provisions thereof material to this Memorandum being incorporated herein, made a
part hereof by reference and available from either party hereto at their
above-stated respective addresses.
Without limitation, the Lease contains the following covenants and
agreements between Landlord and Tenant, to-wit:
1. Term. The Lease provides for an initial term ("INITIAL TERM") of _______
(______) years commencing ___________________, 199___ and ending at midnight,
unless modified or earlier terminated pursuant to the terms of the Lease.
2. Renewal. Provided Tenant is not in default, at the expiration of the
Initial Term and at the expiration of the first Renewal Term (if exercised),
Tenant shall have the option at each such expiration to renew this Lease for an
additional five (5) year period (the "RENEWAL TERM(S)"). Each of the two Renewal
Terms shall automatically commence as of the end of the Initial Term or the
first Renewal Term, as applicable, unless Tenant gives Landlord written notice
of termination not less than sixty (60) days prior to the expiration of the
Initial Term or the first Renewal Term, as applicable.
Nothing herein contained is intended to or does change, modify or affect
any of the terms or provisions of the Lease or the rights, duties, obligations,
easements and covenants running with the land created thereby, all of which
remain in full force and effect.
This Memorandum is binding on and shall inure to the benefit of the parties
and their respective heirs, executors, personal representatives, successors and
assigns and shall be appurtenant to and shall run with the land.
<PAGE>
WITNESS the hands of the undersigned as of the date and year first written
above.
[LOCAL ATTESTATION, SEALING, WITNESSING AND ACKNOWLEDGMENT MUST BE PROVIDED]
LANDLORD:
MAR MAR REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership (SEAL)
By: MAR MAR REALTY TRUST,
its General Partner
By:
---------------------------------
Its:
---------------------------------
TENANT:
By:
---------------------------------
Its:
---------------------------------
<PAGE>
EXHIBIT A
TO
MEMORANDUM OF LEASE
LEGAL DESCRIPTION OF PREMISES
<PAGE>
EXHIBIT C
TO
LEASE AGREEMENT
INVENTORY OF PERSONALTY
<PAGE>
EXHIBIT D
TO
LEASE AGREEMENT
TENANT ESTOPPEL CERTIFICATE
THIS TENANT ESTOPPEL CERTIFICATE ("CERTIFICATE") is given this _______ day
of ______________,199__ by ___________________("TENANT") in favor of
____________________, a _____________________ with principal office and place of
business at ________________________________ ("BENEFICIARY").
RECITALS:
A. Pursuant to the terms and conditions of that certain Lease Agreement
("LEASE") dated ____________ MAR MAR REALTY LIMITED PARTNERSHIP ("LANDLORD")
leased to Tenant certain real property in ___________County ____________,
("LEASED PREMISES"), which Leased Premises are more particularly described in
the Lease.
B. Pursuant to the terms and conditions of the Lease, Beneficiary has
requested that Tenant execute and deliver this Certificate with respect to the
Lease.
NOW, THEREFORE, in consideration of the above premises, Tenant hereby makes
the following statements for the benefit of the Assignee:
1. The copy of the Lease attached hereto and made a part hereof as EXHIBIT
A is a true, correct and complete copy of the Lease, which Lease is in full
force and effect as of the date hereof, and has not been modified or amended.
2. The Lease sets forth the entire agreement between Landlord and Tenant
relating to the leasing of the Leased Premises, and there are no other
agreements, written or oral, relating to the leasing of the Leased Premises.
3. There exists no uncured or outstanding defaults or events of default
under the Lease, or events which, with the passage of time, and the giving of
notice, or both, would be a default or event of default under the Lease.
4. No notice of termination has been given by Landlord or Tenant with
respect to the Lease.
5. All payments due Landlord under the Lease through and including the date
hereof have been made, including the monthly installment of Base Rent (as
defined in the Lease) for the period of ______________________ to
___________________ in the amount of ___________________ AND NO/100 DOLLARS
($________________________).
6. As of the date hereof, the annual Base Rent under the Lease is
____________________________________ AND NO/100 DOLLARS ($______________).
7. There are no disputes between Landlord and Tenant with respect to any
Rent due under the Lease or with respect to any provision of the Lease.
8. Notwithstanding any provisions of the Lease which allow Landlord to
assign the Lease without Tenant's consent, Tenant hereby consents to the
[collateral] assignment of the Lease by Landlord to Beneficiary, and agrees that
no terms and conditions of the Lease shall be altered, amended or changed as a
result of such assignment.
9. Tenant hereby agrees that from and after the date hereof duplicate
copies of all written notices which Tenant is required to deliver to Landlord
under the Lease with respect to defaults, events of default or failure to
perform by Landlord under the Lease, shall be delivered to Beneficiary at the
following address:
<PAGE>
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10. Tenant represents and warrants that (a) [if applicable] all conditions
and requirements to be undertaken by Landlord under the Lease with respect to
the construction of a __________________ on the Leased Premises have been
completed, (b) [if applicable] all improvements constructed on the Leased
Premises have been approved and accepted by Tenant, (c) all utility sources and
utility companies which service the Leased Premises have been approved and
accepted by Tenant and utility service is available to the Leased Premises, (d)
Tenant is in occupancy of the Leased Premises pursuant to the Lease, (e) the
parking spaces provided at the Leased Premises are acceptable and in compliance
with the terms of the Lease, and (f) Tenant has no offsets, counterclaims or
defenses with respect to its obligations under the Lease.
11. Tenant understands and acknowledges that Beneficiary is relying upon
the representations set forth in this Certificate, and may rely thereon in
connection with the [collateral] assignment of the Lease to Beneficiary.
IN TESTIMONY WHEREOF, witness the signature of Tenant as of the day and
year first set forth above.
LANDLORD:
MAR MAR REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership (SEAL)
By: MAR MAR REALTY TRUST,
its General Partner
<TABLE>
<CAPTION>
ATTEST:
<S> <C>
By: By:
----------------------------------------------------- ----------------------------------------------------
Its: Its:
----------------------------------------------------- ----------------------------------------------------
TENANT:
ATTEST:
By: By:
----------------------------------------------------- ----------------------------------------------------
Its: Its:
----------------------------------------------------- ----------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT E
TO
LEASE AGREEMENT
REPRESENTATIONS, WARRANTIES AND SPECIAL COVENANTS
Tenant hereby represents, warrants and covenants to Landlord as follows.
Unless specifically otherwise set forth, the following representations or
warranties are made as of the date hereof but are not intended to be continuing
warranties or representations.
1. Organization and Qualification.
(a) Tenant is and will continue to be a [_______________] corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation or organization, with all power and authority, corporate or
otherwise, necessary to: (i) enter into and perform this Lease; and (ii) own and
lease its assets and properties, and conduct its business, as it is now being
conducted or proposed to be conducted ("BUSINESS"). In the event that the
Tenant's state of incorporation is not the state in which the Premises is
located, Tenant is and will continue to be a duly qualified as a foreign
corporation or other entity, as the case may be, to conduct its Business and own
and lease its assets and properties, and is in good standing, in the state in
which the Premises is located, and is duly qualified and licensed under all
laws, regulations, ordinances or orders of public or governmental authorities,
or otherwise to carry on its Business and own or lease its assets and properties
in the state in which the Premises is located. Complete and correct copies of
Tenant's charter, as in effect on the date hereof, and Tenant's by-laws, also as
in effect on the date hereof, have been delivered to Landlord.
(b) Each Affiliate that conducts operations or business on or from
the Premises, whether now or at any time in the future, is and will continue to
be duly organized, validly existing and in good standing under the laws of its
organization, with all power and authority, corporate or otherwise, necessary to
own and lease its assets and properties, and conduct its business, as it is now
being conducted or proposed to be conducted. In the event that any such
Affiliate's state of incorporation is not the state in which the Premises is
located, each such Affiliate is and will continue to be duly qualified as a
foreign corporation or other entity, as the case may be, to do business and own
and lease its assets and properties, and is in good standing, in the state in
which the Premises is located, and is duly qualified and licensed under all
laws, regulations, ordinances or orders or public or governmental authorities or
otherwise to carry on its business and own or lease its assets and properties in
the state in which the Premises is located.
(c) The representations and warranties set forth in this
PARAGRAPH 1 are continuing representations and warranties which shall remain in
effect for the entire Term of this Lease.
"AFFILIATE" means with respect to any Person, (i) any Person that holds
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of voting securities or other
voting interests representing at least five percent (5%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least five percent (5%) of the outstanding equity securities or
interests in a Person, or (ii) any other Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with such Person.
A "PERSON" shall mean and include natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, Indian tribes or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
2. Material Agreements. As of the date hereof, Tenant has previously
furnished to Landlord correct and complete copies of (including all exhibits,
schedules and amendments thereto) each agreement listed in EXHIBIT E-1, each as
in effect on the date hereof (the "MATERIAL AGREEMENTS").
3. Changes in Condition. As of the date hereof, since the date of the
latest Annual Financial Statements, no Material Adverse Change has occurred
between such date and the date hereof, and neither Tenant nor any Affiliate has
entered into any material transaction outside the ordinary course of its or
their operations or business, including the Business, except the matters
contemplated by this Lease.
<PAGE>
"MATERIAL ADVERSE CHANGE" since a particular specified date, which may be
specified from the circumstances existing immediately prior to the happening of
a specified event or occurrence, or, if no date or event is specified, with
reference to the most recent Annual Financial Statements delivered pursuant to
this Lease, means a material adverse change in the operations, Business, assets,
properties, Franchises, financial condition, income or prospects of Tenant or
the operations, business, assets, properties, Franchises, financial condition,
income or prospects of any Affiliate, whether or not such event or occurrence is
an Event of Default. Nothing that would otherwise be a breach of any
representation, warranty, covenant or obligation contained in this EXHIBIT E by
any Affiliate shall be a breach of this Lease, unless such breach constitutes or
causes a material adverse effect on the Business.
4. Franchises, Licenses, etc. Tenant owns, or has a sufficient interest in,
all Franchises, trademarks, trademark rights, trade names, trade name rights,
copyrights, licenses, permits, authorizations and other rights as are necessary
for the conduct of Tenant's Business as now conducted or proposed to be
conducted by Tenant, as well as rights under any agreement under which Tenant
has access to confidential information used by Tenant in Tenants' Business
(collectively, the "INTELLECTUAL PROPERTY"). All Intellectual Property is in
full force and effect in all material respects, and Tenant is in substantial
compliance with the foregoing without any conflict with the valid rights of
others, which has resulted, or could be reasonably likely to result in any
Material Adverse Change. Tenant has not violated, or received any communication
that by conducting its Business, it would violate any Franchise, patent,
trademark, service mark, trade name, copyright, trade secret, proprietary right
or process of any other Person, nor is Tenant aware of any such violations. No
event has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such Franchise or other right or
affect the rights of Tenant so as to result in or reasonably be likely to result
in any Material Adverse Change. There is no litigation or other proceeding or
dispute or, to the knowledge of Tenant, threat thereof with respect to the
validity or, where applicable, the extension or renewal, of any of the foregoing
which has resulted, or could result, in any Material Adverse Change.
5. Litigation. No litigation, at law or in equity, or any proceeding before
any court, board or other governmental or administrative agency or any
arbitrator or other forum of alternative dispute resolution is pending or, to
the knowledge of Tenant, threatened which involves any risk of any final
judgment, order or liability which, after giving effect to any applicable
insurance, has resulted, or could result, in any Material Adverse Change or
which seeks to enjoin the execution and consummation of this Lease and the
performance of Tenant's obligations hereunder. No judgment, decree or order of
any court, board or other governmental or administrative agency or any
arbitrator has been issued against or binds Tenant, which has resulted, or could
result, in any Material Adverse Change.
6. Authorization and Enforceability. Tenant has taken all corporate or
other action required to execute, deliver and perform this Lease. This Lease
constitutes the legal, valid and binding obligation of Tenant and is enforceable
against Tenant in accordance with its terms.
7. No Legal Obstacle to Lease. Neither the execution and delivery of this
Lease nor the performance of any obligation hereunder has constituted or
resulted in or will constitute or result in:
(a) any breach, violation of, conflict with, default under or
termination of any agreement, contract, mortgage, instrument, deed or lease to
which Tenant or any Affiliate is a party or by which it or they are bound;
(b) the violation of or conflict with any law, statute, ordinance,
judgment, decree, order, rule or regulation applicable to Tenant, any Affiliate,
any Improvements, Personalty or the Premises; or
(c) any violation of or conflict with Tenant's or any Affiliate's
charter or by-laws or other organizational documents, as the case may be.
No approval, authorization or other action by, or declaration to or filing
with, any governmental or administrative authority or any other Person is
required to be obtained or made by Tenant in connection with the execution,
delivery and performance of this Lease.
<PAGE>
8. Certain Business Representations:
(a) Labor Relations. As of the date hereof, no dispute or controversy
between Tenant or any Affiliate and its or their employees has resulted in, or
is reasonably likely to result in, any Material Adverse Change, and neither
Tenant nor any Affiliate anticipates that its relationships with its unions or
employees will result, or are reasonably likely to result, in any Material
Adverse Change. Tenant and each Affiliate is in compliance in all material
respects with all federal and state laws relating to employees and labor
relations, including, but not limited to, laws relating to health and safety in
the workplace, non-discrimination in employment and the payment of wages.
(b) Antitrust. Tenant and each Affiliate is in compliance in all
material respects with all federal and state antitrust laws relating to Tenant's
Business and the subsidiaries' businesses and the geographic concentration
thereof.
(c) Consumer Protection. Neither Tenant nor any Affiliate is in
violation of any rule, regulation, order, or interpretation of any rule,
regulation or order of the Federal Trade Commission (including the Federal
Truth-in-Lending Act, Regulation Z and the official staff commentary thereto) or
other federal, state or local public or governmental authority or agency, with
which the failure to comply, in the aggregate, has resulted in, could result in,
a Material Adverse Change.
(d) Future Expenditures. Neither Tenant nor any Affiliate,
anticipates that further expenditures, if any, by Tenant or any Affiliate needed
to meet the provisions of any federal, state or foreign governmental statutes,
orders, rules or regulation could result in any Material Adverse Change.
(e) Benefit Liabilities. Neither Tenant nor any ERISA Affiliate
maintains, contributes to, or is obligated to contribute to, nor has Tenant or
any ERISA Affiliate maintained, contributed to, been obligated to contribute to,
or had any direct, indirect, or contingent liability with respect to, any Title
IV Plan. Tenant and each ERISA Affiliate have timely made all contributions
required to be made with respect to each of their Tenant Benefit Plans. Each
Tenant Benefit Plan has been maintained in compliance with its terms and with
applicable laws (including specifically the Code and the Employee Income
Security Act of 1974) ("ERISA"). Neither Tenant nor any ERISA Affiliate has
incurred any obligation in connection with the termination or withdrawal from
any Tenant Benefit Plan. Contributions made by Tenant or its ERISA Affiliates,
as the case may be, to any Tenant Benefit Plan have been accounted for, and the
liabilities associated therewith are disclosed, in Tenant's or its ERISA
Affiliates', as the case may be, financial statements for the fiscal year ending
before the date as of which this representation is given. The present value of
the accrued benefit liabilities (whether or not vested) under each Tenant
Benefit Plan, determined as of the end of Tenant's or its ERISA Affiliates', as
the case may be, most recently ended fiscal year on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets of such Tenant Benefit Plan allocable to such benefit liabilities.
"TENANT BENEFIT PLAN" means any plan, fund, or other similar program described
in Section 3(2) of ERISA and established or maintained or with respect to which
Tenant and/or any ERISA Affiliate has an obligation to contribute for the
benefit of its employees (or for which Tenant could be directly or contingently
liable). "TITLE IV PLAN" means an "employee benefit plan" (as defined in Section
3(3) of ERISA) that is subject to Title IV of ERISA and is or has been
established or maintained, by Tenant or any ERISA Affiliate, or to which
contributions are, have been, or should have been made. "ERISA AFFILIATE" means
any trade or business, whether or not incorporated, that, together with Tenant,
is or has been under common control, within the meaning of Section 414(b), (c),
(m), or (o) of the Code or Section 4001 of ERISA.
9. Certain Financial Covenants. Tenant is in compliance in all material
respects with all financial covenants required to be maintained pursuant to any
Franchise or other agreement pursuant to which Tenant operates its business,
except in such respects as shall not result in any franchisor under any
Franchise or operating agreement to which Tenant is a party taking any action
that could result in a Material Adverse Change.
10. Financial Statements.
(a) Tenant, at Tenant's cost, shall furnish to Landlord or any
Mortgagee within thirty (30) days of the end of each fiscal quarter: (i)
unaudited financial statements; or (ii) if Tenant's financial statements are
required by the Securities and Exchange Commission to be separately stated
(i.e., where the rent of Tenant is material to the operations of Landlord),
unaudited financial statements reviewed by Tenant's independent public
accountants, which shall include a profit and loss statement showing the results
of operations at the Premises for the preceding fiscal quarter, with income and
expense detail. Each report shall include a year-to-date cumulative report. If
Landlord requests, Tenant shall provide reviewed financial statements for such
fiscal quarter; provided, however, such review (except as provided for in clause
(ii)), shall be at Landlord's expense.
<PAGE>
(b) For each fiscal year, Tenant shall deliver to Landlord within
forty-five (45) days of the end of such fiscal year financial statements
prepared in accordance with generally accepted accounting principles ("GAAP")
and audited by an independent accounting firm approved by Landlord, in its
reasonable discretion (the "ANNUAL FINANCIAL STATEMENTS").
(c) The representations and warranties set forth in this PARAGRAPH
10 are continuing representations and warranties which shall remain in effect
for the entire Term of this Lease.
11. Disclosure. This Lease does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make any
statement contained herein not misleading in light of the circumstances under
which it was made. To Tenant's knowledge, there is no event, fact or occurrence
that has resulted, or in the future (so far as Tenant can reasonably foresee)
could result, in any Material Adverse Change, except to the extent that present
or future general and sector-specific economic conditions may result in a
Material Adverse Change.
12. Covenant Not To Acquire. Tenant covenants that, during the Term, Tenant
and its controlling shareholders or their Affiliates will not acquire, directly
or indirectly, more than 9.8% of the outstanding Common Shares or beneficial
interest of Mar Mar Realty Trust. Tenant covenants that it will divest itself of
such shares of Mar Mar Realty Trust as may be necessary to satisfy the
limitation of this PARAGRAPH. The representations and warranties set forth in
this PARAGRAPH 12 are continuing representations and warranties which shall
remain in effect for the entire Term of this Lease.
13. Net Worth Covenant. Tenant covenants that: (a) on the date hereof,
Tenant has a Net Worth in an amount that is at least equal to the Rent payable
under PARAGRAPH 4 for the entire first year of the Term, divided by two; and (b)
throughout the Term, Tenant shall maintain a Net Worth in an amount that is at
least equal to the Rent payable for the entire year following the year in which
such Net Worth is being determined, divided by two (or in the case of the final
year of a Term, at least equal to the Rent payable for that year, divided by
two). For purposes of this PARAGRAPH 14, "NET WORTH" shall mean the excess of
Tenant's assets over Tenant's liabilities, with the composition of such assets
and liabilities being determined in accordance with GAAP; provided, however,
that the fair market value of Tenant's assets shall be used in lieu of the book
value of Tenant's assets and the following shall be excluded from Tenant's
assets: (i) unamortized goodwill, organizational expenses, research and
development expenses; trademarks, trade names, copyrights, patents, patent
applications and other similar intangibles; (ii) all deferred charges that are
not required to be capitalized in accordance with GAAP or unamortized debt
discounts and expenses; (iii) treasury stock; (iv) securities that are not
readily marketable; (v) this Lease or any other lease between Landlord and
Tenant; and (vi) any items not included in clauses (i) through (v) above that
are treated as intangibles in conformity with GAAP. As a consequence, only those
assets recognized as assets under GAAP shall count in making such determination
of Net Worth, and any such recognized asset shall count only to the extent of
its fair market value as of the date of such determination. Tenant shall,
promptly upon the request of Landlord, furnish such information to Landlord as
Landlord reasonably determines to be necessary or appropriate to evidence that
such Net Worth exists, including, but not limited to, financial statements,
appraisals and certifications by Tenant of its Net Worth. The representations
and warranties set forth in this PARAGRAPH 13 are continuing representations and
warranties which shall remain in effect for the entire Term of this Lease.
14. REIT Limitations.
(a) Anything contained herein to the contrary notwithstanding, Tenant
shall not: (i) sublet the Premises or assign this Lease on any basis such that
the Rent or other amounts to be paid by the sublessee or assignee thereunder
would be based, in whole or in part, on the income or profits derived by the
business activities of the sublessee or assignee or derived by any other Person
from the Premises; (ii) sublet the Premises or assign this Lease to any Person
that, under Section 856(d)(2)(B) of the Internal Revenue Code of 1986, as
amended (the "CODE"), Landlord or its general partner owns, directly or
indirectly (actually or by applying constructive ownership rules set forth in
Section 856(d)(5) of the Code), a ten percent (10%) or greater interest
(including in the case of any person which is a corporation, stock of such
person possessing ten percent (10%) or more of the total combined voting power
of all classes of stock entitled to vote, or ten percent (10%) or more of the
total number of shares of all classes of stock of such person; or in the case of
any person which is not a corporation, an interest of ten percent (10%) or more
in the assets or net profits of such person); or (iii) sublet the Premises or
assign this Lease in any other manner or otherwise derive any income which could
cause any portion of the amounts received by Landlord pursuant hereto or any
sublease to fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or which could cause any other income received by
Landlord to fail to qualify as income described in Section 856(c)(2) or (c)(3)
of the Code. The requirements of this PARAGRAPH 14 shall likewise apply to any
further assignment or subleasing by any subtenant.
<PAGE>
(b) Anything contained herein to the contrary notwithstanding: (i)
Tenant does not, and shall not at any time during the Term own, directly or
indirectly (actually or by applying constructive ownership rules set forth in
Section 856(d)(5) of the Code) ten percent (10%) or more in value of the shares
of the Company or unless expressly waived by the Board of Trustees of the
Company, a ten percent (10%) or greater interest in Landlord; (ii) Tenant shall
not in the event of any actual or imminent default engage in any transaction
that would prevent Landlord from treating the Premises as "foreclosure property"
(within the meaning of Section 856(e) of the Code); (iii) Tenant is not and will
not be a "tax-exempt entity" (within the meaning of Section 168(h)(2) of the
Code), and no person holding an interest in Tenant is or will be a person that
causes all or any portion of the Premises to be treated as "tax-exempt use
property" (within the meaning of Section 168(h)(1) of the Code); and (iv) Tenant
shall at all times treat this Lease as a true lease for Federal income tax
purposes.
(c) Tenant acknowledges that Mar Mar Realty Trust, the general
partner of Landlord (the "COMPANY"), intends to elect to be taxed as a real
estate investment trust (a "REIT") under the Code. Tenant hereby agrees to
modifications of this Lease which do not materially adversely affect Tenant's
rights and liabilities if such modifications are required to retain or clarify
the Company's status as a REIT.
(d) The representations and warranties set forth in this PARAGRAPH
14 are continuing representations and warranties which shall remain in effect
for the entire Term of this Lease.
15. Notice of Tenant Defaults. Tenant shall obtain an agreement of Tenant's
Franchisor to provide to Landlord within two (2) business days of Tenant's
receipt thereof copies any written notices received by Tenant (or provide to
Landlord written reports by Tenant of any verbal notices communicated to Tenant)
alleging default by Tenant under any Franchise agreement. The representations
and warranties set forth in this PARAGRAPH 15 are continuing representations and
warranties which shall remain in effect for the entire Term of this Lease.
<PAGE>
EXHIBIT E-1
TO
LEASE AGREEMENT
MATERIAL AGREEMENTS
<PAGE>
EXHIBIT F
TO
LEASE AGREEMENT
LEASE GUARANTY
THIS LEASE GUARANTY (the "GUARANTY") is made this ___ day of __________,
199__ by SONIC AUTOMOTIVE, INC. a Delaware corporation ("GUARANTOR") in favor of
MAR MAR REALTY LIMITED PARTNERSHIP, a Delaware limited partnership
[corporation/partnership] ("LANDLORD").
WHEREAS:
A. __________________, a _________________[corporation/partnership]
("TENANT") and Landlord executed that certain lease, dated ____________, 199___
(the "LEASE"), the terms and conditions of which Lease are hereby incorporated
by reference, for certain premises located at _______________ in the City of
___________, ___________ County, _____________ (the "PREMISES").
B. Landlord under the Lease requires as a condition to its execution of the
Lease that Guarantor guarantee the performance and obligations of Tenant under
the Lease. Guarantor desires to have Landlord and Tenant enter into the Lease
and therefore desires to guaranty Tenant's performance under the Lease as
hereinafter provided.
NOW, THEREFORE, in consideration of, and as an inducement for the granting,
execution and delivery of the Lease, and in further consideration of the sum of
One Dollar ($1.00) and other good and valuable consideration paid by Landlord,
the receipt and sufficiency of which is hereby acknowledged, Guarantor hereby
covenants as follows:
1. GUARANTY. Guarantor absolutely and unconditionally guarantees to
Landlord the full, faithful and prompt: (i) payment of any and all Rent payable
by Tenant under the Lease, and (ii) performance and observance of all the
covenants, terms, conditions and agreements of the Lease to be performed and
observed by Tenant. Guarantor does hereby become surety to Landlord for and with
respect to all of the aforesaid obligations of Tenant under the Lease.
2. COVENANTS. If Tenant defaults in the payment of any Rent payable by
Tenant under the Lease or in the performance of any of the covenants, terms,
conditions or agreements contained in the Lease, Guarantor will immediately: (i)
pay such Rent to Landlord and any arrears thereof; (ii) faithfully perform and
fulfill all of such covenants, terms, conditions and agreements; and (iii) pay
to Landlord all damages, costs and expenses that may arise in consequence of any
default by Tenant under the Lease (including, without limitation, all Reasonable
Attorneys' Fees (as defined hereafter) incurred by Landlord or caused by any
such default and/or by the enforcement of this Guaranty). This Guaranty is a
primary, absolute, continuing and unconditional guaranty of payment and of
performance. Guarantor's liability hereunder is direct and may be enforced
without Landlord being required to resort to any other right, remedy or
security. The validity of this Guaranty and the obligations of Guarantor
hereunder shall not be terminated, affected or impaired by reason of the
assertion or the failure to assert by Landlord against Tenant of any of the
rights or remedies reserved to Landlord pursuant to the provisions of the Lease.
3. NON-RELEASE. This Guaranty shall remain in full force and effect without
regard to, and shall not be released, discharged or in any way impaired by: (a)
any amendment or modification of, or supplement to, or extension or renewal
(pursuant to an option granted, holding over, or otherwise) of, the Lease
(whether material or otherwise) or any assignment or transfer thereof, all of
which Guarantor hereby consents to; (b) any exercise or non-exercise of any
right, power, remedy or privilege under or in respect of the Lease or this
Guaranty or any waiver, consent or approval by Landlord with respect to any of
the covenants, terms, conditions or agreements contained in the Lease or any
indulgences, forbearance or extensions of time for performance or observance
allowed to Tenant from time to time and for any length of time; (c) the
voluntary or involuntary liquidation or dissolution of Tenant, the sale of
substantially all of the assets of Tenant, the marshaling of assets on
liabilities, receiverships, conservatorship, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganizations, arrangement, composition or
readjustment of, or other similar proceeding affecting Tenant or any of Tenant's
assets; (d) any limitation on the liability or obligation of Tenant under the
Lease or its estate in bankruptcy or of any remedy for the enforcement thereof,
resulting from the operation of any present or future provision of the National
Bankruptcy Act or other statute or from the decision of any court; or (e) any
extension, forbearance or leniency extended by Landlord to Tenant shall
discharge Guarantor.
<PAGE>
4. REJECTION OF LEASE. This Guaranty of Lease will continue unchanged by
any bankruptcy, reorganization or insolvency of Tenant or any successor or
assignee thereof, or by a disaffirmance or abandonment by a trustee of Tenant.
If the Lease is rejected or disaffirmed by Tenant or Tenant's trustee in
bankruptcy pursuant to any bankruptcy law or any other law affecting creditor's
rights, then Guarantor shall, and does hereby (without the necessity of any
further agreement or act) assume all obligations and liabilities of Tenant under
the Lease to the same extent as if: (a) Guarantor were originally named Tenant
under the Lease; and (b) there had been no such rejection or disaffirmance.
Guarantor shall, upon Landlord's request, promptly confirm in writing such
assumption. No limitation on the liability of Tenant under the Lease which may
now or hereafter be imposed by any federal, state or other statute, law or
regulation applicable to such proceedings shall in any way limit the obligation
of Guarantor hereunder, which obligation is co-extensive with Tenant's liability
set forth within the Lease without regard to any such statutory or legal
limitation.
5. WAIVER OF NOTICE. Guarantor has been advised of and hereby waives the
following rights: (a) presentment, demand for payment, and protest of
non-performance under the Lease; (b) notice of any kind, including but not
limited to notice of acceptance, notice of default and/or notice of any
obligations or liabilities contracted or incurred by Tenant; (c) any right to
require Landlord to enforce its rights and remedies against Tenant under the
Lease or otherwise; (d) any right to require Landlord to proceed against any
security held from Tenant or any other penalty; and (e) any and all right of
subrogation.
6. JOINT AND SEVERAL LIABILITY. Guarantor's liability shall be primary and
joint and several with that of Tenant, notwithstanding the fact that Guarantor
has had no prior notice of any default or of any forbearance or extension.
Landlord may proceed against Guarantor under this Guaranty without initiating or
exhausting any legal remedy against Tenant and may proceed against Tenant and
Guarantor separately or concurrently. This is a guaranty of payment and not of
collection.
7. ASSIGNMENT BY LANDLORD. Landlord may, without notice, assign this
Guaranty of Lease in whole or in part and no assignment or transfer of the Lease
shall operate to extinguish or diminish the liability of the Guarantor
hereunder.
8. TENANT'S AFFILIATES. Landlord may enter into leases with Affiliates of
Tenant. As an inducement to Landlord entering into leases with Tenant's
Affiliates, Guarantor, Tenant and Tenant's Affiliates shall not receive or
collect any payments, dividends, disbursements, distributions, contributions or
any other sums from Tenant or Tenant's Affiliates at any time after an Event of
Default has occurred under this Lease or any other lease between Landlord and:
(i) Tenant; (ii) any Affiliate of Tenant; (iii) Guarantor; or (iv) any Affiliate
of Guarantor.
9. MISCELLANEOUS.
(a) No Waiver. All of Landlord's rights and remedies under the Lease
and under this Guaranty are intended to be distinct, separate and cumulative and
no such right and remedy therein or herein mentioned is intended to be in
exclusion of or a waiver of any of the others.
(b) Authority. Guarantor represents and warrants to Landlord that:
(i) the execution and delivery of this Guaranty has been duly authorized by the
Board of Directors of Guarantor and constitutes Guarantor's valid and legally
binding agreement in accordance with its terms; (ii) the making of this Guaranty
does not require any vote or consent of shareholders of Guarantor; and (iii)
Tenant is an indirect, wholly owned subsidiary of Guarantor. Guarantor hereby
acknowledges and agrees that the Lease to Tenant is a direct material benefit to
Guarantor, and that Landlord would not enter into the Lease without the benefit
of this Guaranty.
(c) Successors and Assigns. This Guaranty shall be legally binding
upon Guarantor and its successors and assigns and shall inure to the benefit of
Landlord and its successors and assigns.
(d) Governing Law. This Guaranty shall be governed by the laws of
the State of __________________________ .
<PAGE>
(e) Reasonable Attorney's Fees. As used herein, the term "REASONABLE
ATTORNEY'S FEES" shall mean reasonable attorney's fees actually incurred (based
on the actual number of hours worked by outside legal counsel and paralegals
multiplied by their usual and customary hourly rates then in effect) and actual
out-of-pocket legal expenses.
(f) Invalidity. The invalidity or unenforceability of any term herein
shall not affect the validity or enforceability of any other term.
(g) Waiver of Jury Trial. TO THE EXTENT ALLOWED BY APPLICABLE LAW,
GUARANTOR AND LANDLORD HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE
RIGHT EITHER OF THEM OR THEIR HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS OR
ASSIGNS MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS GUARANTY OR ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION
IS A MATERIAL INDUCEMENT TO LANDLORD'S ACCEPTING THIS GUARANTY.
(h) Terms. All capitalized terms used herein shall have the meaning
designated to them in the Lease unless otherwise set forth herein.
(SIGNATURE PAGE FOLLOWS)
<PAGE>
IN WITNESS WHEREOF, Guarantor, intending to be legally bound hereby, has
caused this Guaranty to be executed, sealed and delivered this _____day of
________________, 199____.
[LOCAL ATTESTATION, SEALING, WITNESSING AND ACKNOWLEDGMENT MUST BE PROVIDED]
GUARANTOR:
SONIC AUTOMOTIVE, INC.
<TABLE>
<CAPTION>
ATTEST:
<S> <C>
BY: BY:
----------------------------------------------------- -----------------------------------------------------
ITS: ITS:
----------------------------------------------------- -----------------------------------------------------
[CORPORATE SEAL] ADDRESS:
5401 E. Independence Blvd.
Charlotte, NC 28212
Attention: Theodore M. Wright
Chief Financial Officer
Accepted this _____ day of __________________199___
LANDLORD:
MAR MAR REALTY LIMITED PARTNERSHIP
BY:
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TITLE:
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</TABLE>
<PAGE>
SCHEDULE 14D
TO
LEASE AGREEMENT
SUBLEASES, CONCESSIONS, AGREEMENTS OR LICENSE AGREEMENTS
