LEASE

 

LEASE

 

 

BETWEEN

 

 

ABLE ENERGY, INC., Landlord

- and -

JOHN MCGINLEY or his designee, Tenant

 

 

Dated: July 14, 2008

 

TABLE OF CONTENTS

 

 

THIS LEASE, dated the 14th day of July, 2008, between ABLE ENERGY, INC., a corporation with offices at 198 Green Pond Road, Rockaway, New Jersey 07866 (hereinafter referred to as the "Landlord"); and NORTH JERSEY OIL, INC. or its designee, a with offices at 68 North Dell, Kenvil, New Jersey 07847 (hereinafter referred to as the "Tenant").

 

WITNESSETH:

ARTICLE I

Demise of Premises

Section 1.01. The Landlord, for and in consideration of the rents to be paid and of the covenants and agreements hereinafter contained to be kept and performed by the Tenant, hereby demises and leases unto the Tenant, and the Tenant hereby hires and takes from the Landlord, for the term and the rent, and upon the covenants and agreements hereinafter set forth, the Demised Premises as defined in Article IV consisting of certain structures described herein which are situated on that certain parcel of land located at 38 Diller Avenue, in the Town of Newton, County of Sussex, State of New Jersey (hereinafter referred to as the "Real Property") more particularly described on Exhibit A attached hereto.

ARTICLE II

Term of Lease

Section 2.01. The term of this Lease and the demise of the Demised Premises shall be for thirty (30) years beginning on the date of this Lease (the "Commencement Date") and ending on the last day of the calendar month that occurs thirty (30) years after the Commencement Date or on such earlier or later commencement or termination as hereinafter set forth (which term is hereinafter called the "Term").

ARTICLE III

Rent

Section 3.01. Basic rent for the Term ("Basic Rent") shall be in the sum of Five Hundred Thousand ($500,000.00) Dollars payable in advance as follows:

 

 

The Basic Rent shall be payable at the office of the Landlord, at the address above set forth, or as may otherwise be directed by notice from the Landlord to the Tenant.

 

Section 3.02. The Tenant shall, and will, during the Term well and truly pay, or cause to be paid, to the Landlord, the installments of Basic Rent as herein provided and all other sums that may become due and payable by the Tenant hereunder, at the time and in the manner herein provided, without counterclaim, offset or deduction; and all other sums due and payable by the Tenant hereunder may, at the Landlord's option, be deemed to be, and treated as, Additional Rent, and added to any Basic Rent due and payable by the Tenant hereunder, and, in the event of nonpayment of such other sums, the Landlord shall have all the rights and remedies herein provided for in the case of the nonpayment of Basic Rent and Additional Rent, or of a breach of any covenant to be performed by the Tenant.

 

Section 3.03. The Basic Rent payable by the Tenant pursuant to this Lease is intended to be net to the Landlord, and all other charges and expenses imposed upon the Demised Premises or incurred in connection with its use, occupancy, care, maintenance, operation and control, including but not limited to the charges and expenses payable pursuant to Articles VII and VIII of this Lease, shall be paid by the Tenant.

 

ARTICLE IV

The Demised Premises

Section 4.01.. The Demised Premises includes a framed structure, underground fuel storage tanks having a capacity of 191,100 gallons, and fuel racks (collectively the "Structures") previously erected thereon and the Real Property, which the Tenant acknowledges that it has inspected and is fully familiar with its condition and is leasing the same in an "AS IS" condition.

 

Section 4.02. The Demised Premises hereinabove described constitutes a self-contained unit and nothing in this Lease shall impose upon the Landlord any obligation to provide any services for the benefit of the Tenant, including but not limited to water, gas, electricity, heat, janitorial or garbage removal, unless and to the extent expressly provided for in this Lease.

ARTICLE V

Use/Governmental Approvals

Section 5.01. The Demised Premises may be used as a fuel terminal for storage and distribution of diesel and home heating fuel products. Notwithstanding anything to the contrary, the Landlord makes no representation that the Demised Premises may be used for those purposes set forth in this Section 5.01. The Tenant shall not use or permit to be used the Demised Premises or any part thereof for any purpose other than the use described in the first sentence of this Section. Tenant acknowledges that the Real Property and Demised Premises are not, and have not, for a period of more than three years been used as a fuel terminal or for any other purpose.

 

Section 5.02. Tenant, at its sole cost and expense, shall be responsible for obtaining any and all certificates and/or permits sanctioning Tenant's use from any governmental agencies having jurisdiction over the Demised Premises ("Governmental Agencies"), including by way of example, but not limitation, a Certificate of Occupancy for the Demised Premises. Following the Commencement Date, the Tenant shall promptly file applications with all applicable Governmental Agencies and diligently and continuously pursue the Approvals. Landlord shall provide Tenant with copies at Landlord's expense of all documents filed or utilized by Landlord to date in attempting to secure government approvals and shall cooperate as reasonably necessary with Tenant or Tenant's counsel to secure for Tenant government approvals and waive any claim to privilege such that Tenant may consult with Landlord's attorneys and engineers with regard to Landlord's pursuit of government approvals. Tenant shall provide Landlord with copies of all such applications and all correspondence between Tenant and the Governmental Agencies relating to the Approvals. If, despite its best efforts, Tenant does not obtain the Approvals, then either party may terminate this lease on written notice to the other served on the sooner to occur of (a) the date Tenant is advised in writing by any Governmental Agency that the Approvals cannot be obtained; or (b) the last day of the sixth (6 ^th ) consecutive calendar month following the month in which the Commencement Date occurs, TIME BEING OF THE ESSENCE with respect thereto. In the event of such termination, the sole obligations of Landlord shall be (i) to repay to Tenant the Two Hundred Fifty Thousand and 00/100 ($250,000.00) Dollar payment of Basic Rent described in Section 3.01(a) above with interest at eight (8%) percent per annum in twelve equal consecutive monthly installments beginning on the tenth (10 ^th ) day following the date of termination; and (b) to return the Note to Tenant. In the event that Landlord fails to make any such monthly installment payment and fails to cure such default within 15 days of notice of such default, Tenant shall have (i) the right to place a lien on the Real Property for the amount of the Basic Rent of $250,000 not repaid to Tenant and (ii) the option to purchase the Real Property for the sum of $500,000 less any amount of the $250,000 Basic Rent payment made by Tenant to Landlord not repaid by Landlord. The procedures set forth in Section 25.01 of this Lease shall be followed with respect to such option. Tenant upon such termination must surrender the Demised Premises and is responsible for all damages or other claims to the Demised Premises and Real Property, other than regular wear and tear customary within industry standards, occurring during Tenant's possession of the Demised premises which amount may be setoff against the $250,00 payment to be made by Landlord to Tenant hereinabove set forth. See, Section 14.02.

ARTICLE VI

Quiet Enjoyment

Section 6.01. Except as set forth in Section 5.02 above, the Landlord covenants that if, and so long as, the Tenant pays the Basic Rent, and any Additional Rent as herein provided, and performs the covenants hereof, the Landlord shall do nothing to affect the Tenant's right to peaceably and quietly have, hold and enjoy the Demised Premises for the Term herein mentioned, subject to the provisions of this Lease and to any mortgage or deed of trust to which this Lease shall be subordinate.

ARTICLE VII

Additional Rent, Taxes, Assessments,

Water Rates, Charges, Etc.

Section 7.01. The Tenant shall pay, before any interest or penalties accrue thereon, all Real Estate Taxes, as hereinafter defined, and all Operating Costs, including by way of example but not limitation, all electricity charges, domestic water charges, gas and electricity charges, fire sprinkler standby charges, sewer rates and charges, and all other governmental charges imposed during the Term on the Real Property and Structures of which the Demised Premises are a part, parking lot repairs, parking lot maintenance and lighting, landscaping and snow removal, and all other charges relating to the maintenance and repair of the parking lot. Tenant shall pay such Operating Costs directly to the entity or authority assessing such charges. In the event Tenant pays such charges directly to the assessing authority or provider, as the case may be, then upon request, Tenant shall exhibit to the Landlord receipted bills or other proof of payment. There shall be apportioned any tax or charge relating to the fiscal years in which the Term of this Lease commences and terminates. In the event Landlord directs Tenant to pay any charges directly to an assessing authority or providing entity and Tenant fails to pay any of the foregoing items in a timely manner, then Landlord shall have the right but not the obligation to pay such amounts and charge Tenant, as Additional Rent, all sums expended by Landlord. Tenant shall be entitled to a refund from Landlord on a prorated basis for any Operating Costs paid by Tenant directly to the entity or authority assessing such charges if the Lease is terminated pursuant to any of the provisions of this Lease and such Operating Costs, or portion thereof, paid by Tenant were for any period of time after such termination. Tenant's obligations under this Lease to pay Operating Costs or public improvement assessments shall cease upon termination of the Lease and Tenant shall have no further responsibility of obligation to pay same.

 

 

Section 7.02. The Tenant shall not be required to pay any estate, inheritance, devolution, succession, transfer, legacy or gift tax charged against the Landlord or the estate or interest of the Landlord in the Demised Premises or upon the right of any person to succeed to the same or any part thereof by inheritance, succession, transfer or gift, nor any capital stock tax or corporate franchise tax incurred by the Landlord, nor any income tax upon or against the income of the Landlord (including any rental income derived by the Landlord from the Demised Premises but this exclusion shall not be applicable to a gross receipts or rental tax which shall be considered a Real Estate Tax).

 

Section 7.03. The Tenant shall pay all assessments that may be imposed upon the Real Property by reason of any specific public improvement (including but not limited to assessments for street openings, grading, paving and sewer installations and improvements) except that if by law such special assessment is payable, or may, at the option of the taxpayer, be paid, in installments, the Tenant may, whether or not interest accrues on the unpaid balance thereof, pay the same and any accrued interest on any unpaid balance thereof in installments as each installment becomes due and payable, but in any event before any penalty or cost may be added thereto for nonpayment of any installment or interest. Any such benefit, assessment or installment thereof relating to a fiscal period in which the Term of this Lease begins or ends shall be apportioned.

ARTICLE VIII

Section 8.01. The Tenant shall, during the Term of this Lease, cause the Structures to be insured for the benefit of the Landlord, and any and all mortgagees of the Landlord and for the Tenant, as its interest may appear, "All Risk" or "Special Forms" property insurance against damage or loss by fire, malicious mischief, sprinkler leakage and such other hazards and perils as now or hereafter may be included in a standard "extended coverage" endorsement from time to time including boiler insurance and with a vandalism and malicious mischief endorsement, in an amount not less than the full replacement value of identical Structures (excluding Tenant improvements and alterations) constructed in accordance with all requirements, rules and regulations, which may be applicable at the time of any loss or damage, of all governmental agencies having jurisdiction over the Structures and construction of such Structures and improvements. Such policies shall be issued by insurance companies licensed to do business in New Jersey. Any deductible shall be deemed self insurance by the Tenant, to the extent of one hundred (100%) percent of the amount thereof.

 

 

Section 8.02. The Tenant shall provide and keep in force, during the Term of this Lease, for the benefit of the Landlord, naming the Landlord as an "insured" under said policies, commercial general liability insurance policy in standard form, insuring the Landlord with respect to ownership, maintenance and use against liability for personal injury, bodily injury, broad form property damage, operations hazard, owner's protective coverage, blanket contractual liability, products and completed operations liability in or upon the Demised Premises during the Term of this Lease. Said policies shall be written by insurance companies licensed to do business in the State of New Jersey rated A-XII by A.M. Best Company, Oldwick, New Jersey, and shall cover the entire Demised Premises as well as any sidewalk in front of the same, and shall be in the minimum amount of Two Million and 00/100 ($2,000,000.00) Dollars for each occurrence and shall contain provision for thirty (30) days' written notice by registered mail to the Landlord of any change, reduction in coverage, or cancellation or other termination of said policy. The said policies shall also contain an endorsement protecting the Landlord for water damage and sprinkler damage liability with respect to property other than the Landlord's. The Tenant shall name the Landlord (and at Landlord's election, Landlord's managing agent and/or mortgagee[s]) as an additional insured on its commercial general liability insurance policy. Tenant shall provide at all times current certificates of insurance demonstrating compliance with the provisions of this Section and evidence of such coverage. In no event shall the Landlord be permitted to require an increase in the aforesaid amount during the term of this Lease in excess of three (3%) percent per year for each year Tenant is in possession of the Premises unless required to do so by governmental agency or authority or Tenant and Landlord shall mutually agree to a change in the intended use of the Premises. In such event, the increase as agreed to by the parties shall be reasonable under the circumstances considering the character and location of the structures and Tenant's changed use of the Demised Premises.

 

Tenant represents, said representation being specifically designed to induce the Landlord to execute this Lease, that Tenant shall insure its business against interruption and its improvements, alterations, personal property and fixtures and any other items which Tenant may bring to the Demised Premises or which may be under Tenant's care, custody and control which may be subject to any claim for damages or destruction, which property value shall never exceed the amount of insurance which Tenant is required to carry pursuant to this Lease. If at any time the value of the personal property, fixtures or other goods located at the Demised Premises shall exceed said amount, Tenant covenants to so notify Landlord and at the same time increase the amount of insurance required to be carried pursuant to this Section 8.02 to an amount sufficient to cover the aforesaid. Should Tenant fail to do so, or fail to maintain insurance coverage adequate to cover the aforesaid, then Tenant shall be in default hereunder and shall be deemed to have breached its covenants as set forth herein.

 

 

Section 8.03. The Tenant shall provide and keep in force, during the Term of this Lease, for the benefit of the Landlord and ground lessor, if any, machinery insurance if applicable. The Landlord shall be named as an additional insured and loss payee under the policy, with respect to real property. Upon failure at any time on the part of the Tenant to procure any or all of the policies of insurance as provided in this Article, or to pay the premiums therefor, the Landlord shall be at liberty from time to time as often as such failure shall occur, to procure such insurance and pay the premiums therefor as herein provided in case of fire insurance, and all and any sums paid for such insurance by the Landlord together with interest thereon from date of payment shall be and become and are hereby declared to be Additional Rent under this Lease, forthwith due and payable, and shall be collectible accordingly.

 

Section 8.04. Intentionally omitted.

 

Section 8.05. Each such insurance policy carried by Tenant insuring the Demised Premises, its business against interruption, and its fixtures and contents against loss by fire, water and causes covered by standard extended coverage or all risks endorsement insurance, shall be written in a manner so as to provide that the insurance company waives all right of recovery by way of subrogation against Landlord in connection with any loss or damage covered by such policies except, however, criminal acts. Landlord shall not be liable to the Tenant and Tenant, except for loss caused by the negligence of Landlord or Landlord's agents, officers, managers or employees, hereby waives any claims against Landlord for any loss or damage caused by fire, water or any of the risks enumerated in standard extended coverage insurance, all risks or special forms endorsement insurance, provided such insurance was obtainable at the time of such loss or damage.

 

Notwithstanding any provision in this section to the contrary, Landlord acknowledges that it is Landlord's intent to purchase fuel from Tenant and/or execute a throughput agreement with Tenant and in doing so Landlord or its officers, managers, agents or employees may be on the Demised Premises; accordingly, Landlord shall be solely responsible for any and all resulting damages of any kind caused by the negligence or recklessness of Landlord or its officers, managers, agents or employees on the Demised Premises. Landlord further agrees to defend, indemnify and hold harmless Tenant from any such claims, penalties, suits, liabilities, fines, damages, losses, fees, costs, and expenses which may be imposed by such negligent or reckless conduct of Landlord or its officers, managers, agents or employees.

 

Section 8.06. The Tenant shall also furnish insurance for such other hazards and in such amounts as the Landlord may reasonably require and as at the time are commonly insured against with respect to Structures similar in character, general location and use and occupancy to the Demised Premises in relative amounts normally carried with respect thereto. The Landlord reserves the right at any time and from time to time to require that the limits for any of the insurance required pursuant to Article VIII be increased to limits as at the time are reasonable with respect to Tenant's use and to Structures similar in character, general location and use and occupancy to the Demised Premises.

 

 

Section 8.07. Tenant is and shall be in exclusive control and possession of the Demised Premises as provided herein, and Landlord shall not be liable to Tenant for any loss suffered by Tenant under any circumstances, including, but not limited to (i) that arising from the negligence of Landlord, its agents, servants, invitees, contractors or subcontractors, or from defects, errors or omissions in the construction or design of the Demised Premises including the structural and nonstructural portions thereof; or (ii) loss of or injury to Tenant or to Tenant's property or that for which Tenant is legally liable from any cause whatsoever, including but not limited to theft or burglary; or (iii) that which results from or is incidental to the furnishing of or failure to furnish or the interruption in connection with the furnishing of any service which Landlord is obligated to furnish pursuant to this Lease; or (iv) that which results from any inspection, repair, alteration or addition or the failure thereof undertaken or failed to be undertaken by Landlord; or (v) any interruption to Tenant's business, however occurring.

 

The aforesaid exculpatory Section is to induce the Landlord, in its judgment, to avoid or minimize covering risks which are better quantified and covered by Tenant either through insurance (or self-insurance or combinations thereof if specifically permitted pursuant to this Lease), thereby avoiding the need to increase the rent charged Tenant to compensate the Landlord for the additional costs in obtaining said coverage or reserving against such losses.

 

Tenant shall indemnify, defend and save Landlord harmless against and from all liabilities, claims, suits, fines, penalties, damages, losses, fees, costs and expenses (including reasonable attorneys' fees) which may be imposed upon, incurred by or asserted against Landlord by reason of:

 

The provisions of this Section shall survive the expiration or earlier termination of the Lease.

Section 8.08. Any policies required to be furnished by Tenant pursuant to this Article VIII will unequivocally provide an undertaking by the insurers to notify Landlord and the mortgagees or ground lessors of Landlord in writing not less than thirty (30) days prior to any material change, reduction in coverage, cancellation, or other termination thereof.

ARTICLE IX

Repairs

Section 9.01. The Tenant shall keep the Demised Premises in good condition and repair, and shall redecorate, paint and renovate the Demised Premises as may be necessary to keep them in good condition and repair and good appearance. The Tenant shall keep the Demised Premises and all parts thereof in a clean and sanitary condition and free from trash, inflammable material and other objectionable matter. Tenant shall, at its sole cost and expense, throughout the Term of this Lease, as extended or renewed, maintain a dumpster for depositing its trash and refuse. Under no circumstances will Tenant store any trash or refuse outside the Structures except in such dumpster. The Tenant shall comply with all of the requirements and recommendations as announced from time to time by the engineering department or any other similar enforcement department of the fire insurance company insuring the Demised Premises or any agencies or departments of the Town of Newton including by way of example but not limitation the health or fire department. The Tenant shall keep the sidewalks, parking lot and roadways forming part of the Demised Premises clean and free of obstructions, snow and ice. Except as hereinafter in this Lease set forth, throughout the Term of this Lease, the Tenant, at its sole cost and expense, will take good care of the Demised Premises including by way of example but not limitation, the tanks, racks, roof, boiler, heating systems, plumbing systems, electrical system and sprinkler, gas fired unit heaters, rooftop heating, ventilating and air conditioning ("HVAC") units, overhead doors, overhead door openers, exhaust fans, ventilating fans, plumbing fixtures, lights, outlets, electrical panels, exit lights, emergency lights, exterior lighting, fences, landscaping, tree trimming and weed removal, and the sidewalks and curbs adjoining the Demised Premises and will keep the same in good order and condition and

make all necessary repairs thereto, interior and exterior, ordinary and extraordinary, foreseen and unforeseen. Tenant shall return the Demised Premises at the end of the Term in the same condition they were in at the commencement, subject to reasonable wear and tear. In addition, the Tenant shall replace, at the Tenant's expense, all window and glass in and on the Demised Premises which may become broken after the date of Tenant's occupancy. All repairs made by Tenant shall be equal in quality and class to the original work. The Tenant shall quit and surrender the Demised Premises at the end of the Term in "broom-clean condition" and in as good condition as the reasonable use thereof will permit. When used in this Article, the term "repairs" shall mean those ordinary and extraordinary and shall include all necessary replacements and renewals.

In case the Tenant shall fail or neglect at any time to make any of the repairs or replacements hereinabove agreed to be made by it and shall continue such failure or neglect after fourteen (14) days' notice in writing thereof from the Landlord, unless the critical nature of the repair requires immediate attention in which event the repair or replacement shall be made within twenty-four (24) hours after such written notice, then the Landlord or its agents, at the option of the Landlord, may enter the Demised Premises and make such repairs or replacements at the cost and expense of the Tenant and in case of the Tenant's failure to pay therefor, the same cost and expense shall be deemed Additional Rent and be due and payable as such, or the Landlord may, at its option, terminate this Lease or pursue any of its other remedies hereunder.

 

Notwithstanding any provision in this section to the contrary, Landlord acknowledges that it is Landlord's intent to purchase fuel from Tenant and/or execute a throughput agreement with Tenant and in doing so Landlord or its officers, managers, agents or employees may be on the Demised premises; accordingly, Landlord shall be solely responsible for any and all repairs as may be reasonably necessary caused by the negligence or recklessness of Landlord or its officers, managers, agents or employees on the Demised Premises.

 

Section 9.02. The Tenant shall not, without the prior written consent of the Landlord, which shall not be unreasonably withheld, make any alterations, additions or improvements with respect to the Demised Premises.

 

If so requested by the Landlord, the Tenant will remove all improvements made by it under this Lease prior to the expiration of the Term and leave the Demised Premises in such condition as it was at the commencement of the Term of this Lease, reasonable wear and tear excepted. In the event the Tenant so fails to remove such improvements, the Landlord may do so and collect from the Tenant, as Additional Rent, its costs and expense of doing so. All erections, alterations, additions and improvements, whether temporary or permanent in character, which may be made upon or to the Demised Premises either by the Landlord or the Tenant, except furniture or movable trade fixtures installed at the expense of the Tenant, shall be the property of the Landlord and shall remain upon and be surrendered with the Demised Premises as a part thereof at the termination of this Lease, without compensation to the Tenant. All furniture, movable trade fixtures and personalty of the Tenant remaining in the Demised Premises after the expiration of the Term shall be deemed abandoned and may be removed by Landlord who may collect from the Tenant, as Additional Rent, its costs and expenses of so removing.

 

 

Section 9.03. The Landlord may, as a condition to granting its consent to any alteration, addition or improvement referred to in Section 9.02 above, require the following:

 

ARTICLE X

Casualty

Section 10.01. If the Demised Premises or the Structures is damaged or destroyed by fire, explos