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Exhibit 10.02
TABLE OF CONTENTS
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the " Agreement ") is made and entered into on August 31, 2009 (the " Effective Date "), by and between Acacia Automotive, Inc., a Texas corporation (the " Buyer "), and Chattanooga Auto Auction Limited Liability Company, an Ohio limited liability company (the " Seller "). The Buyer and the Seller are referred to collectively herein as the " Parties ," and individually as a " Party ."
BACKGROUND INFORMATION
A. The Seller owns certain assets relating to the operation of an automobile auction business (the " Business ") operated from a facility located at 2120 Stein Drive, Chattanooga, Tennessee 37421 (the " Property ").
B. The Seller owns and desires to sell certain assets of the Business to the Buyer.
C. This Agreement contemplates a transaction in which the Buyer will purchase from the Seller, and the Seller will sell to the Buyer, certain assets on the terms and conditions contained herein.
PROVISIONS
NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows:
Certain terms used in this Agreement shall have the meanings set forth in Exhibit A . For ease of identification only, such terms are identified by initial capitals; provided, however, the inadvertent absence of such identifying characteristic shall be ignored in the construction of this Agreement.
On and subject to the terms and conditions of this Agreement, at the Closing, the Seller shall sell, convey, assign, transfer, and deliver to the Buyer’s wholly-owned subsidiary, Acacia Chattanooga Vehicle Auction, Inc., a Tennessee corporation (hereinafter " Acacia Chattanooga "), and the Buyer shall purchase, acquire, and accept delivery of, all right, title, and interest in and to Acacia Chattanooga, the following assets of the Business:
The assets to be acquired by the Buyer from the Seller shall only include the assets described in Section 2(a) above and shall exclude all other assets of the Seller, including, without limitation, Seller's cash, cash equivalents, deposits, accounts and notes receivable, any assets, books, records or data not used in the Business, or Seller's leasehold improvements.
The sale, conveyance, assignment, transfer, and delivery by the Seller of the Assets to the Buyer in accordance with Section 2(a) shall be effected at the Closing by the Seller's execution and delivery to the Buyer of a Bill of Sale and Assignment of Intangible Assets in the form of Exhibit B (the " Bill of Sale "). The Assets to be conveyed at Closing shall be substantially as listed in Section 2(a)(i) hereof as on the Effective Date of this Agreement, less normal wear and tear and depletion through Closing. The assignment of the License, to the extent assignable and to the extent not accomplished by the execution and delivery of the Bill of Sale, shall be accomplished by the execution at or following Closing of any reasonable necessary consent or assignment documents. The assignment of Seller's interest in the Trade Name, to the extent not accomplished by the execution and delivery of the Bill of Sale, shall be accomplished by the execution at or following Closing of any reasonable necessary consent or assignment documents.
At Closing, the Buyer shall pay to the Seller Five Thousand Dollars ($5,000) (the " Purchase Price "), payable by wire transfer of immediately available funds.
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Subject to Section 10, the closing of the transactions provided for in this Agreement (the " Closing ") shall occur on or before December 26, 2009, or such other date as may be agreed to by the Parties and shall take place at such location as is agreed upon by the Parties; provided, however, the Management Agreement shall become effective on or before August 31, 2009, in accordance with its terms. Except with respect to the Management Agreement, the Closing shall be deemed effective for all purposes as of 12:01 A.M. on December 26, 2009.
The Parties agree to allocate the Purchase Price (and all other capitalizable costs) among the Assets, the Trade Name and the License for all purposes (including financial accounting and tax purposes) in accordance with the allocation schedule attached hereto as Schedule 2(f) of the Disclosure Schedule.
The Seller represents and warrants to the Buyer that the statements contained in this Section 3 are correct and complete as of the Effective Date, except as set forth in the disclosure schedule delivered by the Seller to the Buyer on the date hereof and as may be updated as of the Closing (the " Disclosure Schedule "). The Seller will give prompt written notice to the Buyer of any development causing a breach of any of the representations and warranties in Section 3.
The Seller is a limited liability company duly organized, validly existing, and in full force and effect under the laws of the State of Ohio. The Seller has full entity power and authority necessary to own the Assets. The Seller is not in default under or in violation of any provision of its Articles of Organization or Operating Agreement, as amended.
The Seller has full power and authority (including full entity power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. Without limiting the generality of the foregoing, the managers of the Seller have duly authorized the execution, delivery, and performance of this Agreement by the Seller. This Agreement constitutes the valid and legally binding obligation of the Seller, enforceable in accordance with its terms and conditions.
Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Seller is subject or any provision of its Articles of Organization or Operating Agreement, as amended. The Seller does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement.
The Seller has good and transferable title to and unrestricted possession of, the Assets, free and clear of all Security Interests, except for the Security Interests listed in Section 3(d) of the Disclosure Schedule, which Security Interests shall be released at Closing. Except as expressly set forth in this Agreement, the Assets are being transferred to the Buyer "as-is" in their entirety. SELLER MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR THAT THE ASSETS SOLD HEREUNDER DO NOT INFRINGE UPON ANY INTELLECTUAL PROPERTY RIGHTS HELD BY THIRD PARTIES .
The Buyer represents and warrants to the Seller that the statements contained in this Section 4 are correct and complete as of the Effective Date and will be correct and complete as of the Closing (as though the Closing were substituted for the date of this Agreement throughout this Section 4).
The Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Texas.
The Buyer has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with its terms and conditions. The execution, delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by the Buyer.
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Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Buyer is subject or any provision of its Certificate of Incorporation or Bylaws, as amended. The Buyer does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement.
The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing:
Each of the Parties will use its commercially reasonable efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Section 8).
Immediately following execution of this Agreement and continuing through August 31, 2009, the Seller will allow the Buyer access, upon reasonable notice to the Seller, during normal business hours, to the Property and the facilities located thereon in order that the Buyer may have a full opportunity to conduct a reasonable investigation of such Property and facilities including, but not limited to, conducting a phase I environmental assessment. The Buyer shall bear all costs associated with the due diligence process described in this Section (the " Due Diligence Process "). As part of the Due Diligence Process, the Buyer shall not contact any of the Business' vendors, suppliers, distributors, or customers without the prior written consent of the Seller.
The Seller will cooperate with the Buyer in its efforts to hire employees of the Business as of the Closing. The Buyer shall interview each employee of the Business, but shall not be obligated to hire any employees. The Seller shall be responsible for all severance obligations (including obligations to provide health or retirement benefits), if any, related to the Seller’s employees that arise (i) as a result of Seller's actions on or before the Effective Date or (ii) as a result of the termination of employment in connection with Closing.
Prior to Closing, the Seller and Auction Venture Limited Liability Company (the " Landlord ") will terminate the Amended and Restated General Lease dated August 23, 2004 (the " Ground Lease ").
At Closing, Acacia Chattanooga and the Landlord will enter into a Lease Agreement (the " Lease ") for the premises currently occupied by the Seller, together with all improvements, in the form attached hereto as Exhibit C , which Lease shall include, without limitation, an exclusive option for Acacia Chattanooga to acquire the Property. The Buyer shall execute and deliver to Landlord a guaranty (the " Lease Guaranty ") in the form attached hereto as Exhibit D .
At Closing, the Seller will make available to the Buyer, for period not to exceed thirty-six (36) months following the Closing, a line of credit in an amount up to One Million Five Hundred Thousand Dollars ($1,500,000) (the " Credit Line "). At Closing, the Buyer and the Seller will enter into a Loan and Security Agreement, and the Buyer shall execute a Note, each in the form attached hereto as Exhibit E (collectively, the " Credit Line Documents "). The Buyer shall also execute such other documents as are reasonably necessary to document the Credit Line. The Credit Line Documents shall provide for an interest rate per annum equal to the greater of (i) six percent (6%) or (ii) the LIBOR Rate plus five hundred (500) basis points.
The Buyer and the Seller will enter into a non-competition agreement (the " Non-Competition Agreement ") in the form attached hereto as Exhibit F , which will prohibit the Seller from, directly or indirectly, engage in the Business within 150 miles of Chattanooga, Tennessee for a period of three (3) years commencing from the Closing. Notwithstanding the foregoing, the Non-Competition Agreement will not preclude the Seller or any of its affiliates or related entities from operating the Columbus Fair Auto Auction at its current location.
As of the Effective Date, the Buyer and the Seller shall enter into a management agreement (the " Management Agreement ") in the form attached hereto as Exhibit G , which shall provide for the operation of the Business by the Buyer for the period from the Effective Date to the Closing or the earlier termination of this Agreement.
All taxes and assessments, general and special, and all other impositions, ordinary and extraordinary, of every kind and nature whatsoever, which may be levied, assessed, charged or imposed for periods that extend from prior to Closing until after the Closing shall be prorated between the Parties as of the Closing.
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Within thirty (30) days following the Closing, the Seller shall change its name to CAA Liquidation, LLC or such other name so as not to utilize "Chattanooga Auto Auction" or any confusingly similar name. Seller shall provide to Buyer no later than March 12, 2010, audited financial statements for its fiscal years 2008 and 2009 as required by Item 9.01 of Form 8-K promulgated by the United States Securities and Exchange Commission, and Seller shall cooperate with Buyer’s independent accountant and internal accounting personnel to develop pro forma information pursuant to said requirements.
At Closing, the Buyer shall be required to take the following actions:
At Closing, the Seller or its Affiliates shall be required to take the following actions:
The obligation of the Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:
The Buyer may waive any condition specified in this Section 8(a) if it executes a writing so stating at or prior to the Closing.
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The obligation of the Seller to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions:
The Seller may waive any condition specified in this Section 8(b) if it executes a writing so stating at or prior to the Closing.
All of the representations and warranties of the Parties contained in this Agreement, and the rights to indemnity for any breach thereof, shall survive the Closing and continue in full force and effect for a period of six (6) months following Closing.
The Seller shall indemnify and defend the Buyer and its officers, directors, shareholders, employees, agents and Affiliates (collectively, the " Buyer Indemnified Parties ") against, and hold the Buyer Indemnified Parties harmless from, any and all Adverse Consequences incurred or suffered by any of them resulting from: (i) any breach of any representation or warranty of the Seller in this Agreement; (ii) any breach of any covenant or obligation of the Seller in this Agreement; and (iii) any third party claims asserted against the Buyer Indemnified Parties arising out of the ownership of the Assets or the operation of the Business by the Seller prior to the Effective Date. Any claim for indemnification against the Seller shall be brought within six (6) months following the Closing.
The Buyer shall indemnify and defend the Seller and its officers, managers, members, employees, agents and Affiliates (collectively, the " Seller Indemnified Parties ") against, and hold the Seller Indemnified Parties harmless from, any and all Adverse Consequences incurred or suffered by any of them resulting from: (i) any breach of any representation or warranty made by the Buyer in this Agreement; (ii) any breach of any covenant or obligation of the Buyer in this Agreement; and (iii) any third party claims asserted against the Seller Indemnified Parties arising out of the ownership of the Assets or the operation of the Business by the Buyer following the Closing.
As soon as is reasonably practicable after becoming aware of a claim for indemnification under this Agreement (including a claim or suit by a third party), the Indemnified Party shall promptly give written notice to the Indemnifying Party of such claim, which notice shall specify in reasonable detail the facts relating to the claim. The Indemnifying Party may, at its own expense, (i) participate in the defense of any claim, suit, action or proceeding and (ii) upon notice to the Indemnified Party at any time during the course of any such claim, suit, action or proceeding, assume the defense thereof, including selecting counsel for the matter; provided, however, that counsel selected by the Indemnifying Party is reasonably satisfactory to the Indemnified Party. If the Indemnifying Party assumes such defense, the Indemnified Party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party. Counsel selected by the Indemnifying Party shall have the lead role in any subsequent litigation. Whether or not the Indemnifying Party chooses to assume the defense of any such claim, suit, action or proceeding, all of the Parties hereto shall cooperate in the defense or prosecution thereof.
The foregoing indemnification provisions are the exclusive remedy for a breach of any representation, warranty, or covenant contained in this Agreement or otherwise relating to the transactions contemplated by this Agreement.
Certain of the Parties may terminate this Agreement as provided below:
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If any Party terminates this Agreement pursuant to Section 10(a), all rights and obligations of the Parties shall terminate without any Liability of any Party to any other Party (except for any Liability of any Party then in breach).
This Agreement, together with the attached exhibits and the Disclosure Schedule, constitute the entire understanding of the Parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions, undertakings, and agreements between the Parties. This Agreement may be amended or modified only by a writing executed by the Parties.
This Agreement and any of its rights, interests, and obligations hereunder may not be assigned or transferred in whole or in part by any Party. Any purported assignment without the express written consent of the other Party is void.
This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio (regardless of the laws that might be applicable under principles of conflicts of law) as to all matters, including, but not limited to, matters of validity, construction, effect, and performance. The Parties hereby consent to the exclusive jurisdiction of the courts of the State of Ohio in Franklin County, and the United States District Court for the Southern District of Ohio, Eastern Division, and waive any contention that any such court is an improper venue for enforcement of this Agreement.
Any waiver under this Agreement must be in writing. Any waiver of a particular default shall constitute a waiver of such default only and not of any other default by the non-waiving Party. Any waiver of a specific right or remedy under this Agreement shall constitute a waiver of such right or remedy only and not of any other right or remedy of the waiving Party.
The subject headings of the various sections of this Agreement are included for purposes of convenience only and shall not affect the construction or interpretation of any of its provisions.
This Agreement may be executed in one or more counterparts, including by facsimile, all of which shall be considered one and the same agreement, binding on all Parties, notwithstanding that all Parties are not signatories to the same counterpart.
Consistent with the terms and conditions hereof, each Party shall execute and deliver all instruments, certificates, and other documents and shall perform all other acts which any other Party may reasonably request in order to carry out this Agreement and the transactions contemplated hereby.
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Nothing herein expressed or implied is intended or shall be construed to confer upon or give any Person other than the Parties, and their permitted successors and assigns, any rights or remedies under or by reason of this Agreement. Notwithstanding the foregoing, the Parties acknowledge and agree that the Landlord is a third-party beneficiary of this Agreement.
The Parties agree that if any part, term, or provision of this Agreement shall be found illegal and unenforceable by any court of law, the remaining provisions shall be severable, valid, and enforceable in accordance with their terms.
Except as otherwise required by law including, without exception, Federal Securities laws, the Parties agree to keep the existence and content of this Agreement and the transactions contemplated herein confidential.
Notice from one Party to another relating to this Agreement shall be deemed effective if made in writing and delivered to the recipient's address or facsimile number set forth below by any of the following means: (i) hand delivery, (ii) registered or certified mail, postage prepaid, with return receipt requested, (iii) Fed Ex or like overnight courier service, or (iv) facsimile or other wire transmission with request for assurance of receipt in a manner typical with respect to communications of that type. Notice made in accordance with this Section shall be deemed delivered on receipt if delivered by hand or wire transmission, on the third business day after mailing if mailed by registered or certified mail, or the next business day after deposit with an overnight courier service if delivered for next day delivery. The Parties agree that electronic mail shall not constitute a permitted form of notice under this Section .
Any Party may, from time to time, by written notice to the other Party, designate a different address, which shall be substituted for the one specified above for such Party.
[ signatures appear on the following page ]
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IN WITNESS WHEREOF, the Parties have executed this Asset Purchase Agreement on the date first above written.
By executing below, the Landlord acknowledges and agrees to execute and deliver the Lease and to terminate the Ground Lease in accordance with this Agreement.
LANDLORD:
Auction Venture Limited Liability Company, an Ohio limited liability company
By: /s/ Keith Whann
Its: Vice President
Signature Page to Asset Purchase Agreement
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EXHIBIT A DEFINITIONS
" Acacia Chattanooga " has the meaning set forth in Section 2(a) of the Agreement.
" Adverse Consequences " means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, Security Interests, obligations, Taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys' fees and expenses.
" Affiliate " means, with respect to any Person, any other Person controlling, controlled by, or under common control with the first Person, or, with regard to a Person who is an individual, a member of such Person's family, whether by blood or marriage. As used in this definition, the term "control" means (a) with respect to any corporation or other entity having voting shares or the equivalent and elected directors, managers, or Persons performing similar functions, the ownership or power to vote more than 50% of shares or the equivalent having the power to vote in the election of such directors, managers, or Persons performing similar functions, and (b) with respect to any other entity, the ability to direct its business and affairs.
" Agreement " has the meaning set forth in the preface to the Agreement.
" Assets " has the meaning set forth in Section 2(a)(i) of the Agreement.
" Bill of Sale " has the meaning set forth in Section 2(c) of the Agreement.
" Business " has the meaning set forth in the background information of the Agreement.
" Buyer " has the meaning set forth in the preface of the Agreement.
" Buyer Indemnified Parties " has the meaning set forth in Section 9(b) of the Agreement.
" Closing " has the meaning set forth in Section 2(e) of the Agreement.
" Credit Line " has the meaning set forth in Section 5(f) of the Agreement.
" Credit Line Documents " has the meaning set forth in Section 5(f) of the Agreement.
" Data " has the meaning set forth in Section 2(a)(iii) of the Agreement.
" Disclosure Schedule " has the meaning set forth in Section 3 of the Agreement.
" Due Diligence Process " has the meaning set forth in Section 5(b) of the Agreement.
" Effective Date " has the meaning set forth in the preface of the Agreement.
" Ground Lease " has the meaning set forth in Section 5(d) of the Agreement.
" Indemnified Party " means the Person entitled to, or claiming a right to, indemnification under Section 9(d) of the Agreement.
" Indemnifying Party " means the Person claimed by the Indemnified Person to be obligated to provide indemnification under Section 9(d) of the Agreement.
" Landlord " has the meaning set forth in Section 5(d) of the Agreement.
" Lease " has the meaning set forth in Section 5(e) of the Agreement.
" Lease Guaranty " has the meaning set forth in Section 5(e) of the Agreement.
" Liability " means any liability or obligation of whatever kind or nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.
" LIBOR Rate " means the rate per annum equal to the London Interbank Offered Rate for one (1) month interbank interest settlements, based upon information which appears on page LIBOR01, captioned British Bankers Assoc. Interest Settlement Rates, of Reuters America Network, a service of Reuters America Inc. (or such other page that may replace that page on that service for the purpose of displaying such rates; or, if such service ceases to be available, such other reasonably comparable money rate service as the Buyer may select).
" License " has the meaning set forth in Section 2(a)(iv) of the Agreement.
" Management Agreement " has the meaning set forth in Section 5(h) of the Agreement.
" Non-Competition Agreement " has the meaning set forth in Section 5(g) of the Agreement.
A-1
" Party " and " Parties " have the meanings set forth in the preface of the Agreement.
" Person " means an individual, a proprietorship, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or any other business enterprise or any governmental entity (or any department, agency or political subdivision thereof).
" Property " has the meaning set forth in the background information of the Agreement.
" Purchase Price " has the meaning set forth in Section 2(d) of the Agreement.
" Security Interests " means any mortgage, pledge, lien, encumbrance, charge, hypothecation, claim, restriction on use, or other security interest of any kind, or any rights of others, however evidenced or created (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of any agreement to give any financing statement under the lien notice records or other similar legislation of any jurisdiction).
" Seller " has the meaning set forth in the preface of the Agreement.
" Seller Indemnified Parties " has the meaning set forth in Section 9(c) of the Agreement.
" Trade Name " has the meaning set forth in Section 2(a)(ii) of the Agreement.
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EXHIBIT B
BILL OF SALE AND ASSIGNMENT OF INTANGIBLE ASSETS
Chattanooga Auto Auction Limited Liability Company, an Ohio limited liability company (the " Seller "), does hereby sell, transfer, assign and convey unto Acacia Chattanooga Vehicle Auction, Inc., a Tennessee corporation and wholly-owned subsidiary of Acacia Automotive, Inc., a Texas corporation (the " Buyer "), the Assets, Seller's interest in the Trade Name and, to the extent assignable, the License, each as defined in a certain Asset Purchase Agreement entered into by and between the Buyer and the Seller dated August 31, 2009 (the " Agreement "), in consideration of payment by the Buyer of the Purchase Price (as defined in the Agreement), the receipt and sufficiency of which the Seller does hereby acknowledge.
The terms of the Agreement, including, but not limited to, the Seller's representations, warranties, covenants, agreements and indemnities relating to the Assets, are incorporated herein by this reference.
The Seller hereby covenants that the Seller will do such further acts and execute and deliver all such transfers, assignments, conveyances, powers of attorney, and assurances requested by the Buyer, from time to time, for better conveying and confirming unto the Buyer the entire right, title and interest of the Seller in the Assets, the License and Seller's interest in the Trade Name hereby sold, transferred, assigned and conveyed to the Buyer.
It is understood that the Seller, contemporaneously with the execution and delivery of this Bill of Sale and Assignment of Intangible Assets, may be further executing other instruments of transfer, the purpose of which is to supplement, facilitate, or otherwise implement the transfers intended hereby.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Bill of Sale and Assignment of Intangible Assets effective the _____ day of ________, 2009.
SELLER:
CHATTANOOGA AUTO AUCTION LIMITED LIABILITY COMPANY, an Ohio limited liability company
By: ___________________________
Its: ___________________________
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EXHIBIT C
LEASE
[see attached]
C-1
LEASE
LEASE TABLE OF CONTENTS
Exhibit A - Legal Description Exhibit B - Site Plan
i
LEASE
THIS LEASE (" Lease") is made this 26th day of December, 2009, by and between Auction Venture Limited Liability Company, an Ohio limited liability company (hereinafter sometimes referred to as " Landlord"), with offices at c/o Alexis Ann Jacobs, 4700 Groveport Road, Obetz, Ohio 43207 and Acacia Chattanooga Vehicle Auction, Inc., with offices at 2120 Stein Drive, Chattanooga, Tennessee (hereinafter sometimes referred to as "Tenant") a Tennessee corporation and wholly-owned subsidiary of Acacia Automotive, Inc., a Texas corporation, with offices at 2806 SE 29th Street, Ocala, Florida 34471, who hereby mutually covenant and agree as follows:
Landlord, for and in consideration of the rents herein reserved and of the covenants and agreements herein contained on the part of Tenant to be performed, hereby leases to Tenant, and Tenant hereby lets from Landlord, the real property comprising approximately 56 acres, more or less, located in the City of Chattanooga, County of Hamilton and State of Tennessee (the " Real Property"), as legally described on Exhibit "A" , attached hereto and made a part hereof. The Real Property, together with all buildings and improvements thereon including but not limited to the test track, all paving, asphalt, concrete, gravel or other ground cover, fencing and the following improvements: (i) administration/office building, (ii) auction arena, (iii) mechanical shop and (iv) vehicle registration pavilion (collectively the " Leased Premises"), which are commonly known as 2120 Stein Drive, Chattanooga, Tennessee. The Leased Premises are depicted on the site plan attached hereto as Exhibit "B" and made a part hereof (the " Site Plan"). This lease is entered into in connection with a transaction in which the Tenant has acquired from Chattanooga Auto Auction Limited Liability Company certain assets.
The term of this Lease shall commence on December 26, 2009 (hereinafter sometimes referred to as " Commencement Date") and shall end on December 31, 2019, unless earlier terminated or extended as herein set forth.
So long as Tenant is not in default hereunder beyond any applicable notice and cure period, Tenant shall have the one time option, exercisable by Tenant anytime prior to December 31, 2012, to purchase the Leased Premises ("Purchase Option") by sending written notice thereof to Landlord. The purchase price shall be equal to the greater of: (i) Five Million Dollars ($5,000,000.00), or (ii) the appraised value of the Leased Premises as an auto auction facility as established by a current commercial appraisal reasonably suitable to both parties at the time Tenant exercises such Purchase Option. If Tenant fails to exercise the Purchase Option within the option period described above, then Tenant's Purchaser Option shall terminate unless Landlord, its sole discretion, grants Tenant an extension to the Purchase Option. In the event Tenant exercises such Purchase Option, the parties shall use commercially reasonable efforts to close the purchase and sale of the Leased Premises within ninety (90) days after Tenant exercises its Purchase Option. From the date Tenant exercises the Purchase Option until the date of closing, the parties shall operate according to the terms and conditions set forth herein. In the event Tenant timely exercises the Purchase Option and is not in default thereunder, but the transaction does not close within the ninety (90) day period referenced above, this Lease, shall continue under the terms and conditions set forth herein until the expiration of the term. Immediately upon the closing of the sale of the Real Property to Tenant, this Lease shall terminate and both parties shall be released from any and all liabilities thereafter accruing.
These basic lease provisions are intended for convenience only, and any conflict between these provisions and the body of the Lease shall be resolved in favor of the body of the Lease.
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Steven L. Sample, CEO Acacia Chattanooga Vehicle Auction, Inc. 2120 Stein Drive Chattanooga, TN 37421
With a copy to:
Robert A. Forrester, Esquire 1215 Executive Dr W # 102 Richardson, TX 75081
Auction Venture Limited Liability Company c/o Alexis Ann Jacobs 4700 Groveport Road Obetz, Ohio 43207
with a copy to:
Jay R. Dingledy Schottenstein, Zox & Dunn Co., LPA 250 West Street Columbus, Ohio 43215
The Leased Premises shall be used and occupied only for the Purpose set forth in Section 1.04(a) hereof, except that no such use shall (a) violate any certificate of occupancy or law, ordinance or other governmental regulation in effect from time to time affecting the Leased Premises or the use thereof, including all recorded instruments of record, (b) cause injury to the improvements, (c) cause the value or usefulness of the Real Estate or Leased Premises to diminish, (d) constitute a public or private nuisance or waste, (e) authorize Tenant to use, treat, store or dispose of hazardous or toxic materials on the Real Estate except when done so in compliance with all Environmental Laws and in the ordinary course of reconditioning and similar services currently performed on the premises, or (f) render the insurance on the Leased Premises void or the insurance risk more hazardous, provided, however, that if Tenant's use of the Leased Premises does make the insurance risk more hazardous then, without prejudice to any other remedy of Landlord for such breach, Tenant shall pay to Landlord, on demand, the amount by which Landlord's insurance premiums are increased as a result of such use, which payment shall be in addition to the payment by Tenant for premiums as provided in Section 6.3 hereof. Tenant shall not use or occupy the Leased Premises contrary to any statute, rule, order, ordinance, requirement or regulation applicable thereto. Tenant shall not be obligated to continuously operate from the Leased Premises provided that Tenant performs any and all of its obligations set forth hereunder including but not limited to Tenant's payment of rent and its maintenance of the Leased Premises as required hereunder.
Beginning with the Commencement Date and on each first day of the month thereafter, Tenant shall pay, without demand, annual rent as set forth in Section 1.04(b) hereof payable monthly in advance in installments as set forth in Section 1.04(b). Monthly installments of annual rent shall be paid to Landlord at the Landlord's Address. Landlord shall have the right to change the Landlord's Address by giving written notice thereof to Tenant. All monthly installments of annual rent shall be made without notice or demand and without any deduction, set off, discount or abatement whatsoever, in lawful money of the United States.
Each and every installment of rent and each and every payment of other charges hereunder which shall not be paid within five (5) days after Tenant's receipt of notice that the same is due shall be subject to an automatic five percent (5%) late fee. Additionally, all sums not paid within thirty (30) days of the due date thereof shall bear interest at a rate per annum equal to four percent (4%) in excess of the announced prime rate of interest of JPMorgan Chase Bank, N.A., in effect on the due date of such installment(s), from the date when the same is payable under the terms of this Lease until the same shall be paid; provided that payment of such late fees and interest shall not excuse default in the payment of rent or other sums due hereunder. All such amounts shall be due and payable without notice or demand.
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Tenant shall also pay to Landlord as additional rent all Impositions (defined in Section 5.01), and all other amounts required to be paid by Tenant to Landlord hereunder. The amounts payable pursuant to the preceding sentence shall be paid to Landlord at the place specified for the payment of monthly installments of annual rent, unless Landlord notifies Tenant in writing of a different address therefor. For purposes hereof "annual rent" and "additional rent" shall be collectively referred to as "rent" throughout the terms and conditions of this Lease.
Tenant shall pay to Landlord as additional rent for the Leased Premises all taxes and assessments, general and special, water rates and all other impositions, ordinary and extraordinary, of every kind and nature whatsoever, which may be levied, assessed, charged or imposed during the term of the Lease upon the Real Estate, the Leased Premises or any part thereof or upon any improvements at any time situated thereon, including, without limitation, any assessment (collectively the " Impositions"), provided, however, that such Impositions shall be prorated between Landlord and Tenant as of the end date of the Lease term for the last year of the Lease term (on the basis of Landlord's reasonable estimate thereof). Impositions shall also include fees and costs incurred by Landlord during the Lease term for the purpose of contesting or protesting tax assessments or rates. Landlord may take the benefit of the provisions of any statute or ordinance permitting any assessment to be paid over a period of years, in which event Tenant shall be obligated to pay only those installments applicable to the term of this Lease and any extensions thereof. All such Impositions shall be paid by Tenant to Landlord within ten (10) days after Landlord bills Tenant therefor or, at Landlord's election, in monthly installments in amounts estimated by Landlord. Landlord may adjust the amount of the monthly installments at any time and from time to time by notice to Tenant. Landlord shall furnish to Tenant a statement showing in reasonable detail the actual Impositions incurred during such accounting year. To the extent such costs are greater than the sums paid by Tenant for such year, the difference shall be billed to and paid by Tenant within thirty (30) days after Tenant's receipt of said bill. Any shortfall shall be credited against future installments of rent. Tenant's estimated monthly Impositions may be adjusted by written notice from Landlord. All of such Impositions described in this Section 5 that relate to periods prior to the Commencement Date shall be prorated and such prorated portions shall be allocated to the Landlord.
If at any time during the term of this Lease the method of taxation prevailing at the commencement of the term hereof shall be altered so that any new tax, assessment, levy, imposition, or charge, or any part thereof, shall be measured by or be based in whole or in part upon the Lease, or the Leased Premises, or the Real Estate, or the rent, additional rent or other income therefrom and shall be imposed upon Landlord, then all such taxes, assessments, levies, impositions or charges, or the part thereof, to the extent that they are so measured or based, shall be deemed to be included within the term " Impositions" for the purpose hereof, to the extent that such Impositions would be payable if the Leased Premises were the only property of Landlord subject to such Impositions, and Tenant shall pay such Impositions as so defined. There shall be excluded from Impositions all federal income taxes, state and local net income taxes, federal excess profit taxes, franchise, capital stock and federal or state estate or inheritance taxes of Landlord.
Tenant further covenants and agrees to pay promptly when due all taxes assessed against Tenant's fixtures, furnishings, equipment and stock-in trade placed in or on the Leased Premises during the term of this Lease.
The parties desire, to the extent permitted by law, to allocate certain risks of personal injury, bodily injury or property damage, and risks of loss of real or personal property by reason of fire, explosion or other casualty, and to provide for the responsibility for insuring those risks. It is the intent of the parties that, to the extent any event is required by the terms hereof to be covered by insurance, any loss, cost, damage or expense, including, without limitation, the expense of defense against claims or suits, be covered by insurance, without regard to the fault of Tenant, its officers, employees or agents (" Tenant Protected Parties"), and without regard to the fault of Landlord, its members, officers, directors, employees and agents (" Landlord Protected Parties"). As between Landlord Protected Parties and Tenant Protected Parties, such risks are allocated as follows:
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All of the aforesaid insurance shall be in responsible companies licensed to do business in the State of Tennessee. The cost of deductible and retained losses shall be part of the additional rent charges hereunder. As to Tenant's insurance, the insurer and the form, substance and amount (where not stated above) shall be satisfactory from time to time to Landlord and any mortgagee of Landlord, and shall unconditionally provide that it is not subject to cancellation or non-renewal except after at least thirty (30) days prior written notice to Landlord and any mortgagee of Landlord. Originals of Tenant's insurance policies (or certificates thereof satisfactory to Landlord), together with satisfactory evidence of payment of the premiums thereon, shall be deposited with Landlord at the Commencement Date and renewals thereof not less than thirty (30) days prior to the end of the term of such coverage. Landlord shall have the right, from time to time, to increase the occurrence limits and/or policy limits of Landlord and/or Tenant hereunder, as Landlord may reasonably determine. The insurance which Tenant is required to carry hereunder may be covered through the use of a blanket insurance policy with other locations of Tenant's business operations provided that the use of such blanket insurance policy does not diminish the protections afforded to Landlord or any mortgagee of the Leased Premises.
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Tenant shall pay to Landlord, as additional rent for the Leased Premises, the premiums for any and all property, business income and liability insurance (with all endorsements) paid annually by Landlord with respect to the Leased Premises. Such premiums shall be paid by Tenant to Landlord within ten (10) days after Landlord bills Tenant therefor, or at Landlord's election, in monthly installments in amounts estimated by Landlord. Landlord may adjust the amount of the monthly installments at any time and from time to time by notice to Tenant. Tenant's insurance costs shall be computed by Landlord within ninety (90) days after the end of each accounting year (which Landlord may change from time to time). Landlord shall furnish to Tenant a statement showing in reasonable detail the actual insurance costs incurred during such accounting year. To the extent such costs are greater than the sums paid by Tenant for such year, the difference shall be billed to and paid by Tenant within thirty (30) days after Tenant's receipt of said bill. Any shortfall shall be credited against future installments of rent. Tenant's estimated monthly insurance costs may be adjusted by written notice from Landlord.
Landlord and Tenant, and all parties claiming under each of them, mutually release and discharge each other from all claims and liabilities arising from or caused by any casualty or hazard covered or required hereunder to be covered by insurance coverage required to be maintained by the terms of this Lease on the Leased Premises or the Real Estate in connection with activities conducted thereon or therewith, and waive any right of subrogation which might otherwise exist in or accrue to any person on account thereof. All policies of insurance required to be maintained by the parties hereunder shall contain waiver of subrogation provisions in accordance with the foregoing so long as the same are available.
Tenant hereby disclaims, and releases Landlord and Landlord's Protected Parties from any and all liability, whether in contract or tort (including strict liability and negligence), for any loss, damage, or injury of any nature whatsoever sustained by Tenant and Tenant's Protected Parties, during the term of this Lease, including but not limited to loss, damage or injury to the property of Tenant that may be located or stored in the building. The parties hereby agree that under no circumstances shall Landlord be liable for indirect, consequential, special, or exemplary damages, whether in contract or tort (including strict liability and negligence), such as, but not limited to, loss of revenue or anticipated profits or other damage related to the leasing of the Leased Premises under this Lease.
In the event the Leased Premises are damaged by fire, explosion or other casualty, Tenant shall commence the repair, restoration or rebuilding thereof within sixty (60) days after such damage and shall complete such restoration, repair or rebuilding within one hundred fifty (150) days after the commencement thereof. If the casualty or the repair, restoration or rebuilding caused thereby shall render the Leased Premises untenantable, in whole or in part, rent shall not be abated during the period of untenantability and Tenant shall continue to pay all rent due hereunder; provided, however, that Tenant shall not be required to pay rent hereunder to the extent that Landlord receives insurance on the Leased Premises in accordance with Section 6.03(a) above.
If the whole of the Leased Premises shall be taken or condemned for a public or quasi-public use or purpose by a competent authority, or if such a portion of the Leased Premises shall be so taken that as a result thereof the balance cannot be used for the same purpose and with substantially the same utility to Tenant as immediately prior to such taking, then in either of such events, the Lease term shall terminate upon delivery of possession to the condemning authority, and any award, compensation or damages (hereinafter sometimes called the " Award") shall be paid to and be the sole property of Landlord whether the Award shall be made as compensation for diminution of the value of the leasehold estate or the fee of the Real Estate or otherwise and Tenant hereby assigns to Landlord all of Tenant's right, title and interest in and to any and all of the Award. Tenant shall continue to pay rent and other charges hereunder until the Lease term is terminated and any Impositions and premiums prepaid by Tenant, or which accrue prior to the termination, shall be adjusted between the parties.
If only a part of the Leased Premises shall be so taken or condemned, but the Lease is not terminated pursuant to Section 8.01 hereof, Tenant shall repair and restore the Leased Premises and all improvements thereon, to the extent reasonably practicable. If any portion of the building shall be so taken or condemned in a material or substantial way, Tenant may terminate this Lease by giving written notice thereof to Landlord within sixty (60) days after such taking. In any such event, the Award shall be paid to and be the sole property of Landlord.
If the whole or a part of the Leased Premises shall be taken or condemned for a public or quasi-public use or purpose by a competent authority, but only on a temporary basis, then in such event this Lease shall continue in full force and effect, without any abatement of rent whatsoever, but the Award paid on account of such temporary taking shall be paid to Tenant in full satisfaction of all claims of Tenant on account thereof.
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Tenant shall not allow or permit any transfer of this Lease, or any interest hereunder, by operation of law, or convey, mortgage, pledge, or encumber this Lease or any interest therein.
Tenant shall not do any act which shall in any way encumber the title of Landlord in and to the Leased Premises or the Real Estate, nor shall the interest or estate of Landlord in the Leased Premises or the Real Estate be in any way subject to any claim by way of lien or encumbrance, whether by operation of law or by virtue of any express or implied contract by Tenant. Any claim to, or lien upon, the Leased Premises or the Real Estate arising from any act or omission of Tenant shall accrue only against the leasehold estate of Tenant and shall be subject and subordinate to the paramount title and rights of Landlord in and to the Leased Premises and the Real Estate.
Tenant shall not permit the Leased Premises or the Real Estate to become subject to any mechanics', laborers' or materialmen's lien on account of labor or material furnished to Tenant or claimed to have been furnished to Tenant in connection with work of any character performed or claimed to have been performed on the Leased Premises by, or at the direction or sufferance of Tenant; provided, however, that Tenant shall have the right to contest, in good faith and with reasonable diligence, the validity of any such lien or claimed lien if Tenant shall give to Landlord such security as may be deemed satisfactory to Landlord to assure payment thereof and to prevent any sale, foreclosure, or forfeiture of the Leased Premises or the Real Estate by reason of nonpayment thereof; provided further, that on final determination of the lien or claim for lien, Tenant shall immediately pay any judgment rendered, with all proper costs and charges, and shall have the lien released and any judgment satisfied. Tenant hereby agrees to indemnify and hold Landlord harmless for any liability, cost, damage and expense occasioned by any mechanic's lien filed against the Leased Premises or the Real Estate on account of labor or material furnished to Tenant or claimed to have been furnished to Tenant in connection with the Leased Premises or the Real Estate.
Tenant shall be responsible for all costs and expenses associated with all utility services to the Leased Premises. Landlord shall not be liable for the quality or quantity of or interference involving any such utilities. During the term hereof, whether the Leased Premises are occupied or unoccupied, Tenant agrees to maintain heat sufficient to heat all buildings on the Leased Premises so as to avert any damage to such buildings on account of cold weather.
Subject to the waivers set forth in Section 6.06, Tenant will protect, indemnify and save harmless Landlord and Landlord Protected Parties (as defined in Section 6.01) from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and expenses (including without limitation, reasonable attorneys' fees and expenses) imposed upon or incurred by or asserted against Landlord by reason of (i) any failure on the part of Tenant to perform or comply with any of the terms of this Lease; and (ii) performance of any labor or services or the furnishing of any materials or other property in respect of the Leased Premises or any part thereof. In case any action, suit or proceeding is brought against Landlord by reason of any occurrence described in this Article XIII, Tenant will, at Tenant's expense, by counsel approved by Landlord, resist and defend such action, suit or proceeding, or cause the same to be resisted and defended. The obligations of the parties under this Article XIII shall survive the expiration or earlier termination of this Lease.
Without limiting any other rights reserved or available to Landlord under this Lease, at law or in equity, Landlord, on behalf of itself and Agent reserves the following rights to be exercised at Landlord's election:
Landlord may enter upon the Leased Premises for any and all of said purposes and may exercise any and all of the foregoing rights hereby reserved, during normal business hours unless an emergency exists, without being deemed guilty of any eviction or disturbance of Tenant's use or possession of the Leased Premises, and without being liable in any manner to Tenant.
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So long as Tenant is not in default under the covenants and agreements of this Lease, Tenant's quiet and peaceable enjoyment of the Leased Premises shall not be disturbed or interfered with by Landlord or by any person claiming by, through or under Landlord.
Upon the termination of this Lease, whether by forfeiture, lapse of time or otherwise, or upon termination of Tenant's right to possession of the Leased Premises, Tenant will at once surrender and deliver up the Leased Premises, together with all improvements thereon, to Landlord, in good condition and repair, reasonable wear and tear and loss by fire or other casualty excepted; conditions existing because of Tenant's failure to perform maintenance, repairs or replacements as required herein, or because of Tenant's particular use of the Leased Premises (even if permitted pursuant to Section 1.04(a) hereof), or because of Tenant's failure to have in force a maintenance contract as required by Section 9.01(b) hereof, shall not be deemed " reasonable wear and tear." Tenant shall deliver to Landlord all keys to all doors therein. As used herein, the term " improvements" shall include, without limitation, all plumbing, lighting, electrical, heating, cooling and ventilating fixtures and equipment, and all Alterations (as said term is defined in Section 9.02 hereof) whether or not permitted under said Section 9.02. All alterations, including the Alterations, improvements and additions, temporary or permanent, made in or upon the Leased Premises by Tenant, or made by Landlord on Tenant's behalf, shall become Landlord's property immediately upon installation thereof and shall remain upon the Leased Premises on any such termination without compensation, allowance or credit to Tenant; provided, however, that Landlord shall have the right to require Tenant to remove any alterations and to restore the Leased Premises to their condition prior to the making of any such alterations, repairing any damage occasioned by such removal and restoration. Said right shall be exercised by Landlord giving written notice thereof to Tenant on or before ten (10) days after any such termination. If Landlord requires removal of any alterations and Tenant does not make such removal in accordance with this Section at the time of such termination, or within thirty (30) days after such request, whichever is later, Landlord may remove the same (and repair any damage occasioned thereby), and dispose thereof or, at its election, deliver the same to any other place of business of Tenant or warehouse the same. Tenant shall pay the costs of such removal, repair, delivery and warehousing to Landlord on demand.
Upon the termination of this Lease by lapse of time, Tenant shall remove Tenant's articles of personal property incident to Tenant's business (" Trade Fixtures"); provided, however, that Tenant shall repair any damage to the Leased Premises which may result from such removal, and shall restore the Leased Premises to the same condition as prior to the installation thereof. If Tenant does not remove Tenant's Trade Fixtures from the Leased Premises prior to the expiration or earlier termination of the Lease Term, Landlord, may, at its option, remove the same (and repair any damage occasioned thereby) and dispose thereof or deliver the same to any other place of business of Tenant or warehouse the same, and Tenant shall pay the cost of such removal, repair, delivery and warehousing to Landlord on demand, or Landlord may treat such Trade Fixtures as having been conveyed to Landlord with this Lease as a bill of sale, without further payment or credit by Landlord to Tenant.
Tenant shall have no right to occupy the Leased Premises or any portion thereof after the expiration of the Lease or after termination of the Lease or of Tenant's right to possession pursuant to Section 19.02 hereof. In the event Tenant or any party claiming by, through or under Tenant holds over, Landlord may exercise any and all remedies available to it at law or in equity to recover possession of the Leased Premises, and for damages. For each and every month or partial month that Tenant or any party claiming by, through or under Tenant remains in occupancy of all or any portion of the Leased Premises after the expiration of the Lease or after termination of the Lease or Tenant's right to possession, Tenant shall pay, as minimum damages and not as a penalty, monthly rental at a rate equal to double the rate of rent and other charges payable by Tenant hereunder immediately prior to the expiration or other termination of the Lease or of Tenant's right to possession. The acceptance by Landlord of any lesser sum shall be construed as a payment on account and not in satisfaction of damages for such holding over. If the holding over occurs at the expiration of the Lease term, or by reason of a termination by mutual agreement of the parties, Landlord may, as an alternative remedy, elect that such holding over shall constitute a renewal of this Lease for one (1) year at a rental equal to two hundred percent (200%) of the rate of rent payable hereunder immediately prior to the expiration of the Lease, and upon all of the other covenants and agreements contained in this Lease.
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As used in this Lease, the phrase " Environmental Condition" shall mean: (a) any adverse condition relating to surface water, ground water, drinking water supply, land, surface or subsurface strata or the ambient air, and includes, without limitation, air, land and water pollutants, noise, vibration, light and odors, or (b) any condition which may result in a claim of liability under the Comprehensive Environment Response Compensation and Liability Act, as amended (" CERCLA"), or the Resource Conservation and Recovery Act (" RCRA"), or any claim of violation of the Clean Air Act, the Clean Water Act, the Toxic Substance Control Act (" TOSCA"), or any claim of liability or of violation under any federal statute hereafter enacted dealing with the protection of the environment or with the health and safety of employees or members of the general public, or under any rule, regulation, permit or plan under any of the foregoing, or under any law, rule or regulation now or hereafter promulgated by the state in which the Leased Premises are located, or any political subdivision thereof, relating to such matters (collectively " Environmental Laws").
Tenant shall, at all times during the Lease term, comply with all Environmental Laws applicable to the Leased Premises and shall not, in the use and occupancy of the Leased Premises, cause or contribute to, or permit or suffer any other party to cause or contribute to any Environmental Condition on or about the Leased Premises. Tenant shall not, however, be responsible for environmental conditions existing prior to Tenant's possession of the Leased Premises except for Tenant's acts or omissions that worsen, in any way, said conditions. Without limiting the generality of the foregoing, Tenant shall not, without the prior written consent of Landlord, receive, keep, maintain or use on or about Leased Premises any substance as to which a filing with a local emergency planning committee, the State Emergency Response Commission or the fire department having jurisdiction over the Leased Premises is required pursuant to § 311 and/or §312 of the Comprehensive Environmental Response, Compensation or Liability Act of 1980, as amended by the Superfund Amendment and Reauthorization Act of 1986 (" SARA") (which latter Act includes the Emergency Planning and Community Right-To-Know Act of 1986); in the event Tenant makes a filing pursuant to SARA or maintains substances as to which a filing would be required, Tenant shall simultaneously deliver copies thereof to Agent, or notify Agent in writing of the presence of those substances.
Tenant shall protect, indemnify and save harmless Landlord, and all of its members, directors, officers, employees and agents from and against all liabilities, obligations, claims damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) of whatever kind or nature, contingent or otherwise, known or unknown, incurred or imposed, based upon any Environmental Laws or resulting from any Environmental Condition on or about the Leased Premises which occurs due to the acts or omissions of Tenant , Tenant's occupancy of the Leased Premises or is contributed to by Tenant. In case any action, suit or proceeding is brought against any of the parties indemnified herein by reason of any occurrence described in this Section 18.03, Tenant will, at Tenant's expense, by counsel approved by Landlord, resist and defend such action, suit or proceeding, or cause the same to be resisted and defended. The obligations of Tenant under this Section 18.03 shall survive the expiration or earlier termination of this Lease, and Tenant shall, notwithstanding a termination of this Lease, continue to pay rent for the Leased Premises in the same amount paid during the last year of the term hereof until such time as all remediation work required to cure such matter has been completed.
Landlord may conduct tests and routine audits on or about the Leased Premises for the purpose of determining the presence of any Environmental Condition. If such tests and/or audits indicate the presence of an Environmental Condition on or about the Leased Premises which occurs due to the acts or omissions of Tenant, the occupancy of the Leased Premises by Tenant or is contributed to by Tenant, Tenant shall, in addition to its other obligations hereunder, reimburse Landlord for the cost of conducting such tests. Without limiting Tenant's liability under Section 18.03 hereof, in the event of any such Environmental Condition, Tenant shall promptly and at its sole cost and expense, take any and all steps necessary to remedy the same, complying with all provisions of applicable law and with Section 9.02(b) hereof. If Tenant fails to promptly remedy same, then Tenant shall deposit with Landlord an amount sufficient to cause the remediation of same, based upon Landlord's reasonable estimate of the cost thereof, and upon completion of such work by Landlord, Tenant shall pay to Landlord any shortfall promptly after Landlord bills Tenant therefor, or Landlord shall promptly refund to Tenant any excess deposit, as the case may be.
Tenant agrees that any one or more of the following events shall be considered events of default as said term is used herein:
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Upon the occurrence of any one or more of such events of default, Landlord may at its election terminate this Lease or terminate Tenant's right to possession only, without terminating the Lease. Upon termination of the Lease, or upon any termination of Tenant's right to possession without termination of the Lease, Tenant shall surrender possession and vacate the Leased Premises immediately, and deliver possession thereof to Landlord, and hereby grants to Landlord the full and free right, without demand or notice of any kind to Tenant except as hereinabove expressly provided for, to enter into and upon the Leased Premises in such event with or without process of law and to repossess the Leased Premises by force, self-help or otherwise without process of law as Landlord's former estate and to expel or remove Tenant and any other who may be occupying or within the Leased Premises without being deemed in any manner guilty of trespass, eviction, or forcible entry or detainer, without incurring any liability for any damages resulting therefrom and without relinquishing Landlord's rights to rent or any other right given to Landlord hereunder or by operation of law. Upon termination of the Lease, Landlord shall be entitled to recover as damages all rent and other sums due and payable by Tenant on the date of termination, plus (a) an amount equal to the value of the rent and other sums provided herein to be paid by Tenant for the residue of the stated term hereof, less the fair rental value of the Leased Premises for the residue of the stated term (taking into account the time and expenses necessary to obtain a replacement tenant or tenants, including expenses hereinafter described relating to recovery of the Leased Premises, preparation for reletting and for reletting itself), and (b) the cost of performing any other covenants to be performed by Tenant. If Landlord elects to terminate Tenant's right to possession only without terminating the Lease, Landlord may, at Landlord's option, enter into the Leased Premises, remove Tenant's signs and other evidences of tenancy, and take and hold possession thereof as hereinabove provided, without such entry and possession terminating the Lease or releasing Tenant, in whole or in part, from Tenant's obligations to pay the rent hereunder for the full term or from any other of its obligations under this Lease. Landlord may relet all or any part of the Leased Premises for such rent and upon such terms as shall be satisfactory to Landlord (including the right to relet the Leased Premises for a term greater or lesser than that remaining under the Lease term, and the right to relet the Leased Premises as a part of a larger area, and the right to change the character or use made of the Leased Premises). For the purpose of such reletting, Landlord may make any repairs, changes, alterations or additions in or to the Leased Premises that may be necessary or convenient. If Landlord does not relet the Leased Premises, Tenant shall pay to Landlord on demand damages equal to the amount of the rent, and other sums provided herein to be paid by Tenant for the remainder of the Lease term. If the Leased Premises are relet and a sufficient sum shall not be realized from such reletting after paying all of the expenses of such decorations, repairs, changes, alterations, additions, the expenses of such reletting and the collection of the rent accruing therefrom (including, but not by way of limitation, attorneys' fees and brokers' commissions), to satisfy the rent and other charges herein provided to be paid for the remainder of the Lease term, Tenant shall pay to Landlord on demand any deficiency and Tenant agrees that Landlord shall have no obligation to use reasonable efforts to mitigate its damages arising out of Tenant's default. If Tenant shall default under Section 19.01(i) and if such default cannot with due diligence be cured within said period of thirty (30) days after notice in writing shall have been given to Tenant, and if Tenant promptly commences to eliminate such default, and vigorously pursues such cure to completion thereafter, then Landlord shall not have the right to declare said term ended by reason of such default or to repossess without terminating the Lease so long as Tenant is proceeding diligently and with reasonable dispatch to take all steps and do all work required to cure such default, and does so cure such default, provided, however, that the curing of any default in such manner shall not be construed to limit or restrict the right of Landlord to declare the said term ended or to repossess without terminating the Lease, and to enforce all of its rights and remedies hereunder for any other default not timely cured.
No remedy herein or otherwise conferred upon or reserved to Landlord shall be considered to exclude or suspend any other remedy but the same shall be cumulative and shall be in addition to every other remedy given hereunder, or now or hereafter existing at law or in equity or by statute, and every power and remedy given by this Lease to Landlord may be exercised from time to time and so often as occasion may arise or as may be deemed expedient.
No delay or omission of Landlord to exercise any right or power arising from any default shall impair any such right or power to be construed to be a waiver of any such default or any acquiescence therein. No waiver of any breach of any of the covenants of this Lease shall be construed, taken or held to be a waiver of any other breach, or as a waiver, acquiescence in or consent to any further or succeeding breach of the same covenant. The acceptance by Landlord of any payment of rent or other charges hereunder after the termination by Landlord of this Lease or of Tenant's right to possession hereunder shall not, in the absence of agreement in writing to the contrary to Landlord, be deemed to restore this Lease or Tenant's right to possession hereunder, as the case may be, but shall be construed as a payment on account, and not in satisfaction of damages due from Tenant to Landlord.
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20.01 Treatment of Security Deposit.
To secure the faithful performance by Tenant of all the terms, covenants and conditions in this Lease set forth and contained on the part of the Tenant to be fulfilled, kept, observed and performed, including, but without limiting the generality of the foregoing, such terms, covenants and conditions in this Lease which become applicable upon the expiration or termination of the same or upon termination of Tenant's right to possession pursuant to Section 19.02 of the Lease, Tenant or its Parent shall deposit with the Landlord, pursuant to Section 20.02, the Security Deposit described in Section 1.04(e) on the understanding: (a) that the Security Deposit or any portion thereof not previously applied, or from time to time such other portions thereof, may be applied to the curing of any default that may then exist, without prejudice to any other remedy or remedies which Landlord may have on account thereof, and upon such application Tenant shall pay Landlord on demand the amount so applied which shall be added to the Security Deposit so the same may be restored to its original amount; (b) that should the Leased Premises be conveyed by Landlord, the Security Deposit or any portion thereof not previously applied may be turned over to Landlord's grantee, and if the same be turned over as aforesaid, Tenant hereby releases Landlord from any and all liability with respect to the Security Deposit and/or its application or return, and Tenant agrees to look to such grantee for such application or return; (c) that Landlord or its successor shall not be obligated to hold said Security Deposit as a separate fund, but on the contrary may commingle the same with its other funds; (d) that if Tenant shall faithfully fulfill, keep, perform and observe all of the covenants, conditions and agreements in this Lease set forth and contained on the part of Tenant to be fulfilled, kept, performed and observed, the sum deposited or the part or portion thereof not previously applied shall be returned to Tenant without interest no later than thirty (30) days after the expiration of the term of this Lease or any renewal or extension thereof, provided Tenant has vacated the Leased Premises and surrendered possession thereof to Landlord at the expiration of said term or any extension or renewal thereof as provided herein; (e) in the event that Landlord terminates the Lease or Tenant's right to possession pursuant to the terms and/or provisions of this Lease, Landlord may apply the Security Deposit against all damages suffered to the date of such termination and/or may retain the Security Deposit to apply against such damages as may be suffered or shall accrue thereafter by reason of Tenant's default; and (f) in the event any bankruptcy, insolvency, reorganization or other credit-debtor proceedings shall be instituted by or against Tenant, or its successors or assigns, the Security Deposit shall be deemed to be applied first to the payment of any rents and/or other charges due Landlord for all periods prior to the institution of such proceedings, and the balance, if any, of the Security Deposit may be retained or paid to Landlord towards Landlord's damages on account of such default.
20.02 Accumulation of Security Deposit.
Tenant hereby acknowledges and agrees that it is responsible for the payment of the Security Deposit in the amount of Sixty Thousand Dollars ($60,000) to the Landlord. Tenant's parent, Acacia Automotive, Inc. ("Parent"), and Chattanooga Auto Auction Limited Liability Company ("CAA") are parties to that certain Management Agreement dated August 31, 2009 (the "Management Agreement"). Under the Management Agreement, the Parent is entitled to receive a Fee (as defined in the Management Agreement) and has agreed that CAA may contribute the first Sixty Thousands Dollars ($60,000) of the Fee to Landlord on behalf of Tenant as payment of the Security Deposit under this Lease. If the amount contributed on behalf of Tenant from the Fee is less than Sixty Thousand Dollars ($60,000), then the Tenant shall pay the difference to the Landlord by contributing fifty percent (50%) of its Monthly EBITDA (as defined below) to the Landlord each month until the full amount of the Security Deposit has been received by the Landlord. Commencing with March 2010, the payments of fifty percent (50%) of Tenant's Monthly EBITDA shall be made within fifteen (15) days following the end of each calendar month during the term of this Lease until the Security Deposit has been paid in full. For purposes of this Lease, "Monthly EBITDA" means earnings from operations of the Tenant before interest, income taxes, depreciation and amortization (as depreciation and amortization are deducted in determining earnings from operations), without regard to nonrecurring or out of the ordinary gains and losses for the relevant fiscal month, as determined according to generally accepted accounting principles consistently applied.
Tenant shall furnish to Landlord, within ten (10) days after written request therefor from Landlord, a copy of the then most recent audited and certified financial statement of Tenant. In addition to the foregoing, Tenant shall furnish to Landlord, within ten (10) days after written request therefor from Landlord, a copy of the then most recent unaudited interim financial statement of Tenant for an accounting period of less than one year. It is mutually agreed that Landlord may deliver a copy of such statements to any mortgagee or prospective mortgagee of Landlord, or any prospective purchaser of the Real Estate, but otherwise Landlord shall treat such statements and information contained therein as confidential.
Landlord and Tenant shall, at any time and from time to time upon not less than ten (10) days' prior written request from the other, execute, acknowledge and deliver to the requesting party, in form reasonably satisfactory to the requesting party, a written statement certifying (if true) that Tenant has accepted the Leased Premises, that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), that the other party is not in default hereunder, the date to which the rental and other charges have been paid in advance, if any, whether Tenant has any rights of setoff or self-help under this Lease, and such other accurate certifications as may reasonably be required by the requesting party or its mortgagee, agreeing to give copies to any mortgagee of all notices required under this Lease and agreeing to afford the requesting party's mortgagee a reasonable opportunity to cure any default. It is intended that any such statement delivered pursuant to this subsection may be relied upon by any prospective purchaser or mortgagee of the Leased Premises or Real Estate and their respective successors and assigns.
Landlord may, but shall not be obligated to, cure any default by Tenant (specifically including, but not by way of limitation, Tenant's failure to obtain insurance, make repairs, or satisfy lien claims); and whenever Landlord so elects, all costs and expenses paid by Landlord in curing such default, including without limitation reasonable attorneys' fees, shall be so much additional rent due on the next rent date after such payment together with interest (except in the case of said attorneys' fees) at a rate per annum equal to four percent (4%) in excess of the announced base rate of interest of JPMorgan Chase Bank N.A. in effect on the date of such advance, from the date of the advance to the date of repayment by Tenant to Landlord .
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This document contains the entire agreement between the parties hereto with respect to the subject matter hereof. None of the covenants, terms or conditions of this Lease, to be kept and performed by either party, shall in any manner be altered, waived, modified, changed or abandoned except by a written instrument, duly signed and delivered by both parties hereto.
Whenever under this Lease provisions are made for notice of any kind to Landlord, it shall be deemed sufficient notice and sufficient service thereof if such notice to Landlord is in writing, addressed to Landlord at the addresses set forth in Section 1.04(e), or at such address as Landlord may notify Tenant in writing, and deposited in the United States mail by certified mail, return receipt requested, with postage prepaid or Federal Express, Express Mail or such other expedited mail service as normally results in overnight delivery. Notice to Tenant shall be sent in like manner to the address designated in Section 1.04(d). All notices shall be effective upon receipt, refusal of receipt or when the same is returned as undeliverable. Either party may change the place for service of notice by notice to the other party.
This Lease shall not be recorded, but the parties agree, at the request of either of them, to execute a Short Form Lease for recording, containing the names of the parties, the legal description and the term of the Lease.
Time is of the essence of this Lease, and all provisions herein relating thereto shall be strictly construed.
Nothing contained herein shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership, or of joint venture, by the parties hereto, it being understood and agreed that no provision contained in this Lease or any acts of the parties hereto shall be deemed to create any relationship other than the relationship of Landlord and Tenant.
The captions of this Lease are for convenience only and are not to be construed as part of this Lease and shall not be construed as defining or limiting in any way the scope or intent of the provisions hereof.
If any term or provision of this Lease shall to any extent be held invalid or unenforceable, the remaining terms and provisions of this Lease shall not be affected thereby, but each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.
This Lease shall be construed and enforced in accordance with the laws of the state where the Leased Premises are located.
All of the covenants, agreements, conditions, and undertakings contained in this Lease shall extend and inure to and be binding upon the heirs, executors, administrators, successors and assigns of the respective parties hereto, the same as if they were in every case specifically named, and wherever in this Lease reference is made to either of the parties hereto, it shall be held to include and apply to, wherever applicable, the heirs, executors, administrators, successors and assigns of such party. Nothing herein contained shall be construed to grant or confer upon any person or persons, firm, corporation or governmental authority, other than the parties hereto, their heirs, executors, administrators, successors and assigns, any right, claim or privilege by virtue of any covenant, agreement, condition or undertaking in this Lease contained.
Tenant warrants that it has had no dealings with any broker or agent in connection with this Lease other than Broker(s), whose commission Landlord covenants and agrees to pay in the amount agreed to by Landlord. Tenant covenants to pay, hold harmless, indemnify and defend Landlord from and against any and all costs, expenses or liability for any compensation, commissions and charges claimed by any broker or agent other than Broker(s) with respect to this Lease or the negotiation thereof.
The term " Landlord" as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the owner or owners at the time in question of the fee of the Real Estate, and in the event of any transfer or transfers of the title to such fee, Landlord herein named (and in case of any subsequent transfer or conveyances, the then grantor) shall be automatically freed and relieved, from and after the date of such transfer or conveyance, of all liability as respects the performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed; provided that any funds in the hands of such Landlord or the then grantor at the time of such transfer, in which Tenant has an interest, shall be turned over to the grantee, and any amount then due and payable to Tenant by Landlord or the then grantor under any provisions of this Lease shall be paid to Tenant.
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If any mortgagee or committed financier of Landlord should require, as a condition precedent to the closing of any loan or the disbursal of any money under any loan, that this Lease be amended or supplemented in any manner (other than in the description of the Leased Premises, the term, the purpose or the rent or other changes hereunder, or in any other regard as will substantially or materially affect the rights of Tenant under this Lease), Landlord shall give written notice thereof to Tenant, which notice shall be accompanied by a Lease Supplement Agreement embodying such amendments and supplements. Tenant shall, within ten (10) days after the effective date of Landlord's notice, either consent to such amendments and supplements (which consent shall not be unreasonably withheld) and execute the tendered Lease Supplement Agreement, or deliver to Landlord a written statement of its reason or reasons for refusing to so consent and execute. Failure of Tenant to respond within said ten (10) day period shall be a default under this Lease without further notice. If Landlord and Tenant are then unable to agree on a Lease Supplement Agreement satisfactory to each of them and to the lender within thirty (30) days after delivery of Tenant's written statement, Landlord shall have the right to terminate this Lease within sixty (60) days after the end of said thirty (30) day period.
Tenant may install Tenant specific signage inside the existing sign frames or install completely new signage at the Leased Premises provided all such signage is installed in accordance with all applicable laws, rules, regulations and codes.
Landlord shall not be deemed in default with respect to any of the terms, covenants and conditions of this Lease on Landlord's part to be performed, if Landlord's failure to timely perform same is due in whole or in part to any strike, lockout, labor trouble (whether legal or illegal), civil disorder, failure of power, restrictive governmental laws and regulations, riots, insurrections, war, shortages, accidents, casualties, acts of God, acts caused directly by Tenant or Tenant's agents, employees and invitees, or any other cause beyond the reasonable control of Landlord.
Tenant agrees to pay on demand Landlord's expenses, including reasonable attorneys' fees, expenses and administrative hearing and court costs incurred either directly or indirectly in enforcing any obligation of Tenant under this Lease, in curing any default by Tenant as provided in Section 19.02 hereof or in connection with appearing, defending or otherwise participating in any action or proceeding arising from the filing, imposition, contesting, discharging or satisfaction of any lien or claim for lien, in defending or otherwise participating in any legal proceedings initiated by or on behalf of Tenant wherein Landlord is not adjudicated to be in default under this Lease, or in connection with any investigation or review of any conditions or documents in the event Tenant requests Landlord's agreement, approval or consent to any action of Tenant which may be desired by Tenant or required of Tenant hereunder.
The submission of this document for examination and negotiation does not constitute an offer to lease, or a reservation of, or option for, the Leased Premises and this document shall become effective and binding only upon the execution and delivery hereof by Landlord and by Tenant. All negotiations, considerations, representations and understandings between Landlord and Tenant are incorporated herein.
If Tenant is a corporation, partnership, association or any other entity, Tenant shall furnish to Landlord, within ten (10) days after written request therefor from Landlord, certified resolutions of Tenant's directors or other governing person or body authorizing execution and delivery of this Lease and performance by Tenant of its obligations hereunder, and evidencing that the person who physically executed the Lease on behalf of Tenant was duly authorized to do so.
It is expressly understood and agreed that nothing in this Lease contained shall be construed as creating any liability whatsoever against Landlord personally, its members, officers, directors, shareholders or partners, and in particular without limiting the generality of the foregoing, there shall be no personal liability to pay any indebtedness accruing hereunder or to perform any covenant, either express or implied, herein contained, or to keep, preserve or sequester any property of Landlord, and that all personal liability of Landlord of every sort, if any, is hereby expressly waived by Tenant, to the extent permitted by law, and by every person now or hereafter claiming any right or security hereunder; and that so far as the parties hereto are concerned, the owner of any indebtedness or liability accruing hereunder shall look solely to the Leased Premises for the payment thereof.
If the Tenant obtains a money judgment against Landlord, any of its officers, directors, shareholders, partners, or their successors or assigns under any provisions of or with respect to this Lease or on account of any matter, condition or circumstance arising out of the relationship of the parties under this Lease, Tenant's occupancy of the building or Landlord's ownership of the Leased Premises, Tenant shall be entitled to have execution upon any such final, unappealable judgment only upon Landlord's fee simple or leasehold estate in the Leased Premises (whichever is applicable) and not out of any other assets of Landlord, or any of its members, officers, directors, shareholders or partners, or their successor or assigns; and Landlord shall be entitled to have any such judgment so qualified as to constitute a lien only on said fee simple or leasehold estate.
Tenant agrees to remove all refuse from the Premises in a timely, clean and sanitary manner. Tenant shall provide refuse collection containers, in the exact location of which shall be subject to Landlord's prior approval. To accommodate Tenant's refuse, Tenant shall contract with a licensed/insured refuse collection contractor to timely remove refuse therefrom. Tenant shall routinely clean up around the container.
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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the day and year first above written.
Auction Venture Limited Liability Company, an Ohio limited liability company
Print Name: _______________________________
Acacia Chattanooga Vehicle Auction, Inc. a Tennessee corporation
Steven L. Sample
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EXHIBIT D
LEASE GUARANTY
[see attached]
D-1
GUARANTY OF LEASE
FOR VALUE RECEIVED, and in consideration of, and as an inducement for the execution and delivery of that certain lease (the " Lease ") for the premises commonly known as 2120 Stein Drive, Hamilton County, Chattanooga, Tennessee (the " Leased Premises ") by and between Auction Venture Limited Liability Company, an Ohio limited liability company (" Landlord ") and Acacia Chattanooga Vehicle Auction, Inc., a Tennessee corporation (" Tenant "), the undersigned, Acacia Automotive, Inc., a Texas corporation (" Guarantor "), hereby guarantees to Landlord, the full and prompt payment of rent, and any and all other sums and charges payable by Tenant, under said Lease, and further hereby guarantees the full and timely performance and observance of all the covenants, terms, conditions and agreements therein provided to be performed and observed by Tenant, all of such obligations of payment and performance being hereinafter collectively called the " Obligations "; and Guarantor hereby covenants and agrees to and with Landlord that if default shall at any time be made by Tenant in the payment or the performance and observance of any of the Obligations, Guarantor will forthwith pay such Obligation to Landlord, and any arrears thereof, and will forthwith faithfully perform and fulfill all Obligations and will forthwith pay to Landlord all damages that may arise in consequence of any default by Tenant, under the Lease, including without limitation, all reasonable attorneys' fees, disbursements incurred by Landlord or caused by any such default and/or by the enforcement of this Guaranty.
This Guaranty is an absolute and unconditional guaranty of payment and of performance. It shall be enforceable against Guarantor without the necessity of any suit or proceedings on Landlord's part of any kind or nature whatsoever against Tenant and without the necessity of any notice of non-payment, non-performance or non-observance or of any notice of acceptance of this Guaranty or of any other notice or demand to which Guarantor might otherwise be entitled, all of which Guarantor hereby expressly waives; and Guarantor hereby expressly agrees that the validity of this Guaranty and the obligations of Guarantor hereunder shall not be terminated, affected, diminished 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 Lan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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