Document:

Exhibit
10.6

 

GENERAL
LEASE

 

For and in consideration of the
rental and of the covenants and agreements hereinafter set forth to be kept and
performed by the Tenant, Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the Premises herein described for the terms, at the rental
and subject to and upon all of the terms, covenants and agreements hereinafter
set forth.

ARTICLE 1. 
FUNDAMENTAL LEASE PROVISIONS

	
   

  	
   

  	
  Date:

  	
   

  	
  December
  29, 1997

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Landlord:

  	
   

  	
  ROBERT
  ARTHUR GOMES and ROBERT PAUL GOMES

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant:

  	
   

  	
  COPART
  OF CONNECTICUT, INC.,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Premises:

  	
   

  	
  Located
  in the Town of Brookhaven, County of Suffolk, State of New York, located at
  North side of Montauk Highway, more particularly described as follows:  the land (approx. 40 acres) and
  improvements, as more particularly described on the Exhibit “A” and “B”
  attached hereto and made a part hereof for all purposes.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lease Term:

  	
   

  	
  Fifteen
  (15) years, commencing January 1, 1999 and ending on December 31, 2014, with
  two (2) five (5) year options to extend term (Article 3).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Rent, Annual:

  	
   

  	
  First
  3 years: $456,000 ($38,000/mo.) (Article 4)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Security Deposit:

  	
   

  	
  $76,000
  (Article 5)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Use of Premises:

  	
   

  	
  Salvage
  and Non-Salvage Vehicle Storage and Auction

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notices:

  	
   

  	
  (Article
  18)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  To Landlord:

  	
   

  	
  1601
  Route 112

  
	
   

  	
   

  	
   

  	
   

  	
  Medford,
  NY  11763

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  To Tenant:

  	
   

  	
  5500
  E. Second Street, Benicia, California

  
	
   

  	
   

  	
   

  	
   

  	
  94510
  - Attention:  Paul A. Styer

  

 

References in this Article 1 to
the other Articles are for convenience and designate other Articles where
references to the particular Fundamental Lease Provisions appear.  Each reference in this Lease to any of the
Fundamental Lease Provisions contained in this Article 1 shall be construed to
incorporate all of the terms provided under each such Fundamental Lease
Provision.  In the event of any conflict
between a Fundamental Lease Provisions and the balance of the Lease, the latter
shall control.

 

 

 

ARTICLE 2.  PREMISES

Landlord hereby leases to Tenant
and Tenant hereby leases from Landlord, for the term, at the rent, and upon the
covenants and conditions hereinafter set forth, those certain Premises,  including the underlying realty and the
buildings and improvements thereon (hereinafter collectively the “Premises”).

ARTICLE 3. TERM

3.1           Term.  The
term of this Lease shall continue during the lease term specified in Article 1
hereof, unless sooner terminated as hereinafter provided in this Lease.  The commencement date set forth in Article 1
is an estimate, and the commencement date and term dates shall be adjusted to
reflect the date when Tenant may legally occupy the building and begin storing
vehicles on the Premises. The parties agree to execute an addendum to reflect
the actual commencement date of the Lease at the time Tenant may legally occupy
the building and begin storing vehicles on the Premises.

3.2           Option to Extend Term.  Tenant is given the option to extend the term on all the
provisions contained in this lease for two (2) five (5) year periods (“extended
term” and “second extended”) following expiration of the initial term, by
giving notice of exercise of the option (“option notice”) to Landlord at least
six (6) months before the expiration of the term or extended term, as the case
may be.  Provided that, if Tenant is in
material default on the date of giving the option notice, the option notice
shall be totally ineffective, or if Tenant is in material default on the date
the term or extended term is to commence, the extended term or second extended
term shall not commence and this lease shall expire at the end of the initial
term or extended term, as the case may be.

ARTICLE 4.  RENT

4.1           Monthly Rent. 
Tenant shall pay as rent for the Premises the amount specified in
Article 1 in twelve (12) equal monthly installments during each year in advance
on the first day of each calendar month, without deduction, offset, prior
notice or demand, in lawful money of the United States.

Upon execution hereof, Tenant
shall deposit with Landlord the sum of $76,000, representing prepayment of rent
for the first and approximate amount of the last month of the term of the
Lease.  Said deposit shall be refundable
in full, upon failure of any of Tenant’s conditions

 

 

precedent set forth in paragraph 18.22.

4.2           Periodic Cost-of-Living Adjustment.  The monthly rent provided for in paragraph
4.1 shall be subject to adjustment at the commencement of the 37th,
73rd, 109th, 145th, 181st, 216th,
253rd and 289th months of the term as follows:

The base for computing the
adjustment is the Consumer Price Index, All Urban Consumers N.Y., Northern N.J.
— Long Island, published by the United States Department of Labor, Bureau of
Labor Statistics (“Index”), which is in effect on the date of the commencement
of the term (“Beginning Index”).  The
index published most immediately preceding the adjustment date in question
(“Extension Index”) is to be used in determining the amount of the
adjustment.  If the Extension Index has
increased over the Beginning Index, the monthly rent for the extended term shall
be set by multiplying the minimum monthly rent set forth in paragraph 4.1 by a
fraction, the numerator of which is the Extension Index and the denominator of
which is the Beginning Index.  In no
case shall the monthly rent be less than the monthly rent for the previous term
of the Lease, nor greater than 106% of the monthly rent for the previous
term.  On adjustment of the minimum
monthly rent as provided in this Lease, the parties shall immediately execute
an amendment to this lease stating the new minimum monthly rent.

If the Index is changed so that
the base year differs from that in effect when the term commences, the Index
shall be converted in accordance with the conversion factor published by the
United States Department of Labor, Bureau of Labor Statistics.  If the Index is discontinued or revised
during the term, such other government index or computation with which it is
replaced shall be used in order to obtain substantially the same result as
would be obtained if the Index had not been discontinued or revised.

ARTICLE 5.  SECURITY
DEPOSIT

5.1.          Security Deposit. 
Tenant shall deposit with Landlord upon execution hereof $76,000 as
security for Tenant’s faithful performance of Tenant’s obligations
hereunder.  If Tenant fails to pay rent
or other charges due hereunder, or otherwise defaults with respect to any
provision of this Lease, Landlord may use, apply or retain all or any portion
of said deposit for the payment of any rent or other charge in default or for
the payment of any other sum to which Landlord may become obligated by reason
of Tenant’s default, or to compensate Landlord for any loss or damage which
Landlord may suffer thereby.  If
Landlord so uses or applies all or any portion of said deposit, Tenant shall
within ten (10) days after written demand therefor deposit cash with Landlord
in an

 

 

amount sufficient to restore said deposit to the full
amount hereinabove stated and Tenant’s failure to do so shall be a material
breach of this Lease.  Landlord shall be
required to keep said deposit in a segregated government insured interest
bearing account, and Tenant shall be entitled to interest earned on said
account (and shall be responsible for payment of any taxes due on said interest
income).  If Tenant performs all of
Tenant’s obligations hereunder, said deposit, or so much thereof as has not
theretofore been applied by Landlord, shall be returned, including any accrued
and undisbursed interest to Tenant (or, at Landlord’s option, to the last
assignee, if any, of Tenant’s interest hereunder) at the expiration of the term
hereof, and after Tenant has vacated the Premises.  No trust relationship is created herein between Landlord and
Tenant with respect to the security deposit.

ARTICLE 6.  TAXES

6.1.          Payment by Tenant. 
Tenant will pay, as and when the same shall become due, all taxes,
assessments, use, and occupancy taxes, and other charges by a public authority,
assessed, levied, charged or imposed upon the Premises. The Tenant shall
deliver to the Landlord a receipted tax bill from the municipal authorities
within fifteen (15) days of the due date for the payment of said taxes.  The taxes will commence in Suffolk County on
December 1st through November 30th.  The authorities allow taxes to be paid in
two (2) equal installments.  The first is
due no later than January 10th and the second installment by May 30th.  The Landlord will deliver a tax bill
immediately upon receipt from the municipal authorities from the Town so that
the Tenant may pay the taxes accordingly.

ARTICLE 7.  USE

7.1           Use.  The
Premises shall be used and occupied by Tenant only for the purposes set forth
in Article 1 hereof and for no other purposes whatsoever without obtaining the
prior written consent of Landlord. 
Except for customary quantities and types of Hazardous Materials
contained in office supplies, janitorial products, motor vehicle repair and
maintenance facilities, and motor vehicles present on the Premises as part of
the foregoing use, Tenant shall not use, store, dispose, or

 

 

transport Hazardous Materials in, on, under or about the
Premises, and nevertheless shall be responsible for clean-up or abatement of
any Hazardous Materials which Tenant causes to be released on the Premises in
violation of Environmental Laws.  As
used herein, the term “Hazardous Material(s)” shall mean any hazardous or toxic
substance, material, or waste which is regulated by any local governmental
authority, the state of New York, or the United States Government.  As used herein, the term “Environmental
Laws” shall mean all local, state, or federal laws, statutes, ordinances, rules
or regulations now or hereafter enacted, issued or promulgated by any
governmental authority which relate to any Hazardous Materials or the use,
handling, transportation, production, disposal, discharge, release, emission,
sale, or storage of, or the exposure of any person to, a Hazardous Material.

7.2           Landlord’s Representations.  Landlord represents that no underground
storage tanks are present on the Premises, and has no knowledge of any action,
proceeding, or claim pending or threatened involving the Premises concerning
any Hazardous Material or pursuant to any Environmental Law.  Notwithstanding the foregoing, in no event
shall Tenant’s acceptance of the Premises or duty to comply with all laws be
deemed an acceptance of Hazardous Materials present in, on or about the
Premises or the soil, surface water or groundwater thereof, as of the
commencement date, or acceptance of any responsibility or liability for such
Hazardous Materials.

7.3           Condition of Premises.  See Exhibit B, attached hereto, the terms of which are
incorporated herein by this reference.

7.4           Compliance with Law.  Tenant shall not use the Premises or permit anything to be done
in or about the Premises by its agents, invitees, or employees which will in
any way conflict with any law, statute, zoning restrictions, ordinance or
governmental rule or regulation or requirements or duly constituted public
authorities now in force or which may hereafter be in force

 

 

and with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted relating to or
affecting the condition, use or occupancy of the Premises.

The Premises are properly zoned
for Tenant to conduct its business.  If
the zoning should be changed to disallow Tenant’s use of the Premises through
no fault of Tenant, this Lease Agreement shall terminate upon the date that the
use becomes illegal.

7.5           Tenant’s Indemnity.  Tenant shall indemnify, defend with counsel reasonably acceptable
to Landlord, protect, and hold harmless Landlord, its employees, agents,
contractors, stockholders, officers, directors, successors, personal
representatives, and assigns (collectively the “Landlord Indemnities”) from and
against all claims, actions, suits, proceedings, judgments, losses, costs,
personal injuries, damages, liabilities, deficiencies, fines, penalties,
damages, attorneys’ fees, consultant’s fees, investigations, detoxification,
remediations, removals, and expenses of every type and nature (“Claims”), to
the extent caused by a release, disposal, discharge, or emission of Hazardous
Material in violation of Environmental Laws in, or on the Premises during the
term of this Lease which is the result of Tenant’s use and occupancy of the
Premises. The indemnity provisions in this paragraph 7.5 shall survive the
termination or expiration of the Lease.

7.6           Landlord’s Indemnity.  Landlord shall indemnify, defend with counsel reasonably
acceptable to Tenant, protect, and hold harmless Tenant, its employees, agents,
contractors, stockholders, officers, directors, successors, subtenants,
personal representatives, and assigns (collectively the “Tenant Indemnities”)
from and against all Claims, directly or indirectly arising out of or in
connection with any Hazardous Material present in, or on the Premises in
violation of Environmental Law, or the use of the Premises at or prior to the
commencement date hereof.  The indemnity
provisions of this paragraph 7.6 shall survive the termination or expiration of
this Lease.

7.7           Mutual Waiver. 
Landlord for itself and each Landlord Indemnitee hereby waives and 

 

 

releases all Claims against Tenant and each Tenant
Indemnitee, and all rights to join Tenant or any Tenant Indemnitee in any
litigation or proceeding, arising out of or in connection with any matter which
is the subject of Landlord’s indemnity obligations as set forth in paragraph
7.6; including, without limitation any Claim arising under CERCLA or any other
Environmental Law; and Tenant for itself and each Tenant Indemnitee hereby
waives and releases all Claims against Landlord and each Landlord Indemnitee,
and all rights to join Landlord or any Landlord Indemnitee in any litigation or
proceeding, arising out of or in connection with any matter which is the
subject of Tenant’s indemnity obligations as set forth in paragraph 7.5;
including, without limitation any Claim arising under CERCLA, or any other
Environmental Law.  In this regard,
Landlord for itself and each Landlord Indemnitee and Tenant for itself and each
Tenant Indemnitee also waive the benefits of all laws which provide that a
waiver of unknown claims is unenforceable or which would otherwise limit the
obligations, waivers or releases of the Landlord or Tenant as set forth in this
section.

7.8           Interference with Use.  If the Premises should become unsuitable for Tenant’s use as a
consequence of the presence of any Hazardous Material, which results from the
use, storage or disposal of such material prior to the commencement date
hereof, then Tenant shall be entitled to an abatement of rent to the extent of
the interference with Tenant’s use of the Premises occasioned thereby.  If such interference cannot be corrected or
the damage resulting therefrom repaired so that the Premises will be reasonably
suitable for Tenant’s intended use within 120 days following the occurrence of
such event, and if Tenant has been advised by a governmental notice to cease
its business operations on the Premises because of said hazardous condition,
then Tenant also shall be entitled to terminate this Lease by delivery of
written notice to Landlord at any time after occurrence of the event of
interfering with Tenant’s use.

 

 

ARTICLE 8.  REPAIRS
AND MAINTENANCE

8.1           Tenant’s Obligations.  Subject to the provisions of Article 15, Tenant, at its sole cost
and expense, shall keep the Premises and every part thereof in good order,
condition and repair, ordinary wear and tear excepted.  Landlord shall not have any responsibility
to maintain the Premises.

8.2           Surrender. 
Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises in the same condition as received, broom clean, ordinary
wear and tear, Hazardous Materials (other than those released or disposed of by
Tenant in violation of Environmental Laws), and damage by fire, earthquake, act
of God or the elements alone excepted.

ARTICLE 9.  UTILITIES

Tenant shall pay for all
utilities and services furnished to or used by Tenant, including, without
limitation, gas, electricity, water, telephone, sewage, air conditioning and
ventilation, garbage, janitorial and landscape maintenance.

ARTICLE 10.  LIENS

Tenant shall keep the Premises
and any building of which the Premises are a part free from any liens arising
out of work performed, materials furnished, or obligations incurred by Tenant
and shall indemnify, hold harmless and defend Landlord from any liens and
encumbrances arising out of any work performed or materials furnished by or at
the direction of Tenant.  In the event
that Tenant shall not, within thirty (30) days after Tenant is notified in
writing of the imposition of any such lien, cause such lien to be released of
record by payment or posting of a proper bond, Landlord shall have, in addition
to all other remedies provided herein and by law, the right, but not obligation,
to cause the same to be released by such means as it shall deem proper,

 

 

including payment of the claim giving rise to such
lien.  All such sums paid by Landlord
and all expenses incurred by it in connection therewith including attorney’s fees
and costs shall be payable to Landlord by Tenant on demand with interest at the
rate of 10% per annum.  Landlord shall
have the right at all times to post and keep posted on the Premises any notices
permitted or required by law, or which Landlord shall deem proper, for the
protection of Landlord and the Premises, and any other party having an interest
therein, from mechanics’ liens and materialmen’s liens, and Tenant shall give
to Landlord at least fifteen (15) business days prior written notice of the expected
date of commencement of any work relating to alterations or additions to the
Premises.

Any proposed alterations or
improvements of a material nature shall require the prior written consent of
Landlord, which shall not be unreasonably withheld.  Landlord’s failure to approve or disapprove any proposed
alterations or improvements within 10 business days of Landlord’s receipt of
plans and specifications therefore shall be deemed an approval of said
alterations or improvements.

ARTICLE 11. 
LANDLORD’S ACCESS

 Landlord shall have the right at reasonable times to enter the
Premises to inspect the same.  Landlord
may at any time during the last ninety (90) days of the term of this Lease
place on or about the Premises any ordinary “for lease” signs.  Tenant hereby waives any claim for abatement
of rent or for damages for any injury or inconvenience to or interference with
Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises,
and any other loss occasioned thereby.

ARTICLE 12. 
INDEMNITY, EXEMPTION OF LANDLORD FROM LIABILITY

12.1         Indemnity. 
Except as to Landlord’s negligent or willful acts or omissions, Tenant
shall indemnify and hold Landlord harmless from and against any and all claims
of liability

 

 

for any injury or damage to any person or property
arising from Tenant’s use of the Premises, or from the conduct of Tenant’s
business, or from any activity, work or thing done, permitted or suffered by
Tenant in or about the Premises or elsewhere, except that Landlord shall be
liable to Tenant for damage resulting from the negligent acts or omissions
and/or willful misconduct of Landlord or their authorized representatives.  Tenant shall further indemnify and hold
Landlord harmless from and against any and all claims arising from any breach
or default in the performance of any obligation on Tenant’s part to be
performed under this Lease, or arising from any negligence of Tenant or
Tenant’s agents, contractors or employees, and from and against all costs,
attorney’s fees, expenses and liabilities incurred in the defense of any such
action or proceeding brought thereon. 
In the event any action or proceeding is brought against Landlord by
reason of any such claim, Tenant upon notice from Landlord shall defend same at
Tenant’s expense.

12.2         Exemption of Landlord from Liability.  Landlord shall not be liable to Tenant for
any damage to Tenant or Tenant’s property or business from any cause, except
for damage arising out of the negligent or willful acts or omissions of
Landlord or their authorized representatives. 
Tenant waives all claims against Landlord for damage to person or
property arising for any reason, except that Landlord shall be liable to Tenant
for damage to Tenant resulting from the gross negligent acts, willful acts or
omissions of Landlord or their authorized representatives.

ARTICLE 13.  INSURANCE

13.1         Liability Insurance. 
Tenant shall at all times during the term hereof and at its own cost and
expense procure and continue in force Worker’s Compensation Insurance and
Public Liability and Property Damage Liability Insurance, and naming Landlord
as an additional insured in the liability contract and containing
cross-liability endorsements, against liability, injury or death of any person
and/or property damage in connection with or arising out of Tenant’s operation
and use

 

 

and occupancy of the Premises.  Such insurance shall be in an amount of not less than $2,000,000
single/combined liability limit for bodily injury and property damage limits of
not less than $2,000,000.  All insurance
required hereunder shall be with companies with a financial rating of at least
B+ status as rated in the most recent edition of Best’s Insurance Reports.  Tenant shall deliver to Landlord
certificates of insurance evidencing the existence and amounts of such
insurance with loss payable clauses to Landlord, provided that in the event
Tenant fails to procure and maintain such insurance, Landlord may (but shall
not be required to) procure same at Tenant’s expense after ten (10) days prior
written notice.  No such policy shall be
cancelable or subject to reduction of coverage except after ten (10) days prior
written notice to Landlord by the insurer. 
Tenant shall, within twenty (20) days prior to the expiration of such
policies, furnish Landlord with renewals or binders.  All such policies shall be written as primary policies, not
contributing with and not in excess of coverage which Landlord may carry.  Tenant shall have the right to provide such
insurance coverage pursuant to blanket policies obtained by Tenant provided
such blanket policies expressly afford coverage to the Premises and to Tenant
as required by this Lease.

13.2         Fire and Extended Coverage.

A.            Tenant shall procure and maintain at all times during the
term of this Lease a policy or policies of insurance covering loss or damage to
the building(s) located on the Premises (exclusive of Tenant’s trade fixtures,
personal property and equipment), in an amount of the full insurable value
providing protection against risk of physical loss subject to standard
exclusions; including, but not limited to flood and earthquake.  Such insurance shall provide for payment of
loss thereunder to Landlord or the holder of a first mortgage or deed of trust
on the Premises.

B.            Tenant shall at all times during the term hereof, and at
its cost and

 

 

expense, maintain in effect policies of insurance
covering (1) its fixtures and equipment located on the Premises, in an amount
not less than 80% of their actual cash value from time to time during the term
of this Lease, providing protection against risk of physical loss subject to
standard exclusions, including but not limited to, flood and earthquake.  The proceeds of such insurance, so long as
this Lease remains in effect, shall be used to repair or replace the fixtures
and equipment so insured.

13.3         Waiver of Subrogation.  The parties release each other, and their respective authorized
representatives, from any claims for damage to any person or to the Premises
and to the fixtures, personal property, Tenant’s improvements, and alterations
of either Landlord or Tenant in or on the Premises that are caused by or result
from risks insured against under any insurance policies carried by the parties
and in force at the time of any such damage.

Each party shall cause each
insurance policy obtained by it to provide that the insurance company waives
all right of recovery by way of subrogation against either party in connection
with any damage covered by any policy. 
Neither party shall be liable to the other for any damage caused by fire
or any of the risks insured against under any insurance policy required by this
Lease.  If any insurance policy cannot
be obtained with a waiver of subrogation, or is obtainable only by the payment
of an additional premium charge above that charged by insurance companies
issuing policies without waiver of subrogation, the party undertaking to obtain
the insurance shall notify the other party of this fact.  The other party shall have a period of ten
days after receiving that notice either to place the insurance with a company
that is satisfactory to the other party and that will carry the insurance with
a waiver of subrogation, or to agree to pay the additional premium if such a
policy is obtainable at additional cost. 
If the insurance cannot be obtained or the party in whose favor a waiver
of subrogation is desired refuses to pay the additional premium charged, the
other party is relieved of the obligation to obtain a waiver of subrogation
rights with respect to the

 

 

particular insurance involved.

ARTICLE 14.  DAMAGE OR
DESTRUCTION

14.1         Destruction. 
If, during the term, the Premises are totally or partially destroyed
from any cause, rendering the Premises totally or partially inaccessible or
unusable, Landlord shall restore the Premises to substantially the same
condition as they were in immediately before destruction, if (1) the
restoration can be made under existing law, (2) can be completed within 120
working days after the date of the destruction, and (3) there are sufficient
insurance proceeds available from the insurance set out in Section 13.2 above
to pay for the restoration, and (4) more than 6 months remains on the term,
with extensions, of the Lease.

If the restoration cannot be
made in the time stated in this paragraph, then within 15 days after the
parties determine that the restoration cannot be made in the time stated in
this paragraph, Tenant can terminate this lease immediately by giving notice to
Landlord.  If Tenant fails to terminate
this lease and if restoration is permitted under the existing laws, Landlord,
at its election, can either terminate this lease or restore the Premises within
a reasonable time and this lease shall continue in full force and effect.  If the existing laws do not permit the
restoration, either party can terminate this lease immediately by giving notice
to the other party.

14.2         Abatement of Rent. 
In case of destruction there shall be an abatement or reduction of rent
between the date of destruction and the date of completion of restoration,
based on the extent to which the destruction interferes with Tenant’s use of
the Premises.

ARTICLE 15. 
CONDEMNATION

In the event of a condemnation
or a transfer in lieu thereof, where more than 20% of the Premises (measured as
a percentage of the fair market value of the Premises) is taken, Tenant may,
upon written notice given within ninety (90) days after such taking or transfer
in lieu thereof,

 

 

terminate this Lease if Tenant reasonably determines
that the loss of that part of the Premises which is condemned will cause it to
be economically infeasible to use the Premises for the use permitted
hereunder.  If Tenant does not elect to
terminate this Lease, the Lease shall continue in full force and effect, except
that the monthly Rent shall be reduced in the proportion that Tenant’s use of
the Premises hereunder is materially, adversely affected by such taking.  Landlord shall be entitled to any
condemnation award, except as to any award or portion thereof which relates to
Tenant’s business or improvements to the Premises made at Tenant’s expense.

ARTICLE 16. 
ASSIGNMENT AND SUBLEASE

16.1         Landlord’s Consent Required.  Except as to insurance customers of Tenant,
Tenant shall not voluntarily or by operation of law assign this Lease, sublet
all or any part of the Premises, or otherwise transfer, mortgage, pledge,
hypothecate or encumber all or any part of Tenant’s interest in this Lease or
in the Premises or any part thereof, without Landlord’s prior written consent,
and any attempt to do so without such consent being first had and obtained
shall be wholly void and shall constitute a breach of this Lease.

16.2         Reasonable Consent. 
If Tenant complies with the following conditions, Landlord shall not
unreasonably withhold its consent to the assignment of the Lease or the
subletting of the Premises or any portion thereof.  Tenant shall submit in writing to Landlord (a) the name and legal
composition of the proposed Assignee or Sublessee; (b) the nature of the
proposed Assignee’s or Sublessee’s business to be carried on in the Premises;
(c) the terms and provisions of the proposed Assignment or Sublease; (d) such
reasonable financial information as Landlord may request concerning the
proposed Assignee or Sublessee. Landlord’s consent shall be conditioned upon
the credit worthiness and operating experience of the proposed assignee.

16.3         Consent not Release. 
In the event of any assignment of subletting, Tenant shall

 

 

nevertheless at all times remain fully responsible and
liable for payment of the rent and for compliance with all of its other
obligations under the terms, provisions and covenants of this Lease.  Upon the occurrence of an “event of default”
as defined below, if all or any part of the Premises are then assigned or sublet,
Landlord, in addition to any other remedies provided by this Lease or provided
by law, may, at its option, collect directly from the assignee or subtenant all
rents becoming due to Tenant by reason of the assignment or sublease.  Any collection directly by Landlord from the
assignee or subtenant shall not be construed to constitute a novation or a
release of Tenant from the further performance of its obligations under this
Lease and Tenant shall remain liable hereunder.

ARTICLE 17.  DEFAULT

17.1         Default.  The
occurrence of any of the following shall constitute a material default and
breach of this Lease by Tenant:

A.            Any failure by Tenant to pay rent or any other monetary
sums required to be paid hereunder, where such failure continues for three (3)
days after written notice thereof from Landlord to Tenant, but notice shall not
be required more than two (2) times per year.

B.            The abandonment or vacation of the Premises by Tenant.

C.            A failure by Tenant to observe and perform any other
provision of this Lease to be observed or performed by Tenant, where such
failure continues for thirty (30) days after written notice thereof by Landlord
to Tenant; provided, however, that if the nature of such default is such that
it cannot be reasonably cured within such thirty-day period, Tenant shall not
be deemed to be in default if Tenant shall within such period commence such
cure and thereafter diligently prosecute the same to completion.

D.            The making by Tenant of any general assignment or general

 

 

arrangement for the benefit of creditors; the filing by
or against Tenant of a petition to have Tenant adjudged bankrupt or of a
petition for reorganization or arrangement under any law relating to bankruptcy
(unless, in the case of a petition filed against Tenant the same is dismissed
within ninety (90) days); the appointment of a trustee or receiver to take
possession of substantially all of Tenant’s assets located at the Premises or
of Tenant’s interest in this Lease, where possession is not restored to Tenant
within forty-five (45) days; of the attachment, execution, or other judicial
seizure of substantially all of Tenant’s assets located at the Premises or of
Tenant’s interest in this Lease where such seizure is not discharged within
thirty (30) days.

17.2         Remedies.  In
the event of any such material default or breach by Tenant, Landlord may do the
following at any time thereafter without limiting Landlord in the exercise of
any right or remedy at law or in equity which Landlord may have by reason of
such default or breach:

A.            Maintain this Lease in full force and effect and recover
the rent and other monetary charges as they become due, without terminating
Tenant’s right to possession, irrespective of whether Tenant shall have
abandoned the Premises.  In the event
Landlord elects to not terminate the Lease, Landlord shall have the right to
attempt to relet the Premises at such rent and upon such conditions and for
such a term, and to do all acts necessary to maintain or preserve the Premises
as Landlord deems reasonable and necessary without being deemed to have elected
to terminate the Lease, including removal of all persons and property from the
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant.  In the event any such reletting occurs, this
Lease shall terminate automatically upon the new tenant taking possession of
the Premises; provided, however, Tenant shall remain liable to Landlord for the
present value of any lost rentals if the Premises are relet for a sum less than
the

 

 

rental provided for herein.  Notwithstanding that Landlord fails to elect to terminate this
Lease initially, Landlord at any time during the term of this Lease may elect
to terminate this Lease by virtue of such previous default of Tenant.

B.            Terminate Tenant’s right to possession by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord.  In such event Landlord shall be entitled to recover from Tenant
all damages incurred by Landlord by reason of Tenant’s default including
without limitation thereto the following: (1) the worth at the time of award of
any unpaid rent which had been earned at the time of such termination; plus (2)
the worth at the time of award of the amount by which the unpaid rent would
have been earned after termination until the time of award exceeds the amount
of such rental loss that is proved could have been reasonably avoided; plus (3)
the worth at the time of award of the amount by which the unpaid rent for the
balance of the term after the time of award exceeds the amount of such rental
loss that is proved could be reasonably avoided; plus (4) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant’s failure to perform his obligations under this Lease or which the
ordinary course of events would be likely to result therefrom; plus (5) at
Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable state law.  Upon any such re-entry Landlord shall have
the right to make any reasonable repairs, alterations or modifications to the
Premises which Landlord, in its sole discretion, deems reasonable and necessary.  As used in subparagraph (1) above, the
“worth at the time of award” is computed by allowing interest at the rate of
10% per annum from the date of default to the date of termination of the Lease,
including exercised extensions.  As used
in subparagraphs (2) and (3) above, the “worth at the time of award” is
computed by discounting such amount at the discount rate of the U.S. Federal
Reserve Bank at 

 

the
time of award plus 1%.  The term “rent”
as used in this Section 18 shall be deemed to be and to mean rent to be paid
pursuant to Article 4 and all other monetary sums required to be paid by Tenant
pursuant to the terms of this Lease.

17.3         Appointment of Receiver.  If Tenant is in default of this lease
Landlord shall have the right to have a receiver appointed to collect rent and
conduct Tenant’s business.  Neither the
filing of a petition for the appointment of a receiver nor the appointment
itself shall constitute an election by Landlord to terminate this lease.

17.4         Default by Landlord.  Landlord shall not be in default unless
Landlord fails to perform obligations required of Landlord within a reasonable
time, but in no event later than thirty (30) days after written notice by
Tenant to Landlord and to the holder of any first mortgage or deed of trust
covering the Premises whose name and address shall have been furnished to
Tenant in writing, specifying wherein Landlord has failed to perform such obligation;
provided, however, that if the nature of Landlord’s obligation is such that
more than thirty (30) days are required for performance, then Landlord shall
not be in default if Landlord commences performance within such thirty-day
period and thereafter diligently prosecutes the same to completion.

ARTICLE 18.  ADDITIONAL PROVISIONS

18.1         Subordination and Attornment.  Upon written request of Landlord or any
beneficiary, mortgagee, secured party, or other holder of any deed of trust,
mortgage or other written security device or agreement affecting the real
property underlying this Lease, or any lessor under any underlying lease
pursuant to which Landlord holds its interest in the real property
(collectively, “Lenders”), Tenant shall, in writing, subordinate its rights
under this Lease to the lien of any deed of trust, mortgage or other security
device or agreement affecting the real property, or to the interest of any
underlying lease under which Landlord holds its interest in the real property;

 

 

provided that, the Lender to
which this Lease shall be subordinated has previously executed or
contemporaneously executes a recognition and nondisturbance agreement which
provides that this Lease shall not be terminated so long as Tenant is not in
default under this Lease.  Further,
Tenant shall attorn to any successor-in-interest or Lender, and shall execute
any documents required to evidence such attornment, provided that such
successor-in-interest or Lender has previously assumed or contemporaneously
assumes, in writing, all obligations of the Landlord under this Lease.

18.2         Quiet Enjoyment.  Landlord covenants and agrees with Tenant
that upon Tenant paying rent and other monetary sums due under the Lease and
performing its covenants and conditions, Tenant shall and may peaceably and
quietly have, hold and enjoy the Premises for the term; subject, however, to
the terms of the Lease and of any of the aforesaid ground leases, mortgages or
deeds of trust described above.

18.3         Reserved.

18.4         Reserved.

18.5         Transfer of Landlord’s Interest.  In the event of sale or conveyance by
Landlord of Landlord’s interest in the Premises or the Building other than a
transfer for security purposes only, Landlord shall be relieved from and after
the date specified in such notice of transfer of all obligations and
liabilities accruing thereafter on the part of Landlord, provided that any
funds in the hands of Landlord at the time of transfer in which Tenant has an
interest shall be delivered to the successor of Landlord.  This Lease shall not be affected by any such
sale, and Tenant agrees to attorn to the purchaser or assignee provided all
Landlord’s obligations hereunder are assumed in writing by the transferee.

18.6         Captions, Attachments, Defined Terms.  The captions of the articles of this

 

 

Lease are for convenience only
and shall not be deemed to be relevant in resolving any question or
interpretation or construction of any section of this Lease.  Exhibits attached hereto and addendums and
schedules initialed by the parties are deemed by attachment to constitute part
of this Lease and are incorporated herein. 
The words “Landlord” and “Tenant”, as used herein, shall include the
plural as well as the singular.  Words
used in neuter gender include the masculine and feminine and words in the
masculine or feminine gender include the neuter.  If there be more than one Landlord or Tenant, the obligations
hereunder imposed upon Landlord or Tenant shall be joint and several.  If the Tenants are husband and wife, the
obligations shall extend individually to their sole and separate property as
well as to their community property. 
The term “landlord” shall mean only the owner or owners of the fee title
or a tenant’s interest in a ground lease of the Premises at the time in
question.  The obligations contained in
this Lease to be performed by Landlord shall be binding on Landlord’s
successors and assigns only during their respective periods of ownership.

18.7         Entire Agreement.  This instrument, along with any exhibits and
attachments hereto, constitutes the entire agreement between Landlord and
Tenant relative to the Premises, and this Agreement and the exhibits and
attachments may be altered, amended or revoked only by an instrument in writing
signed by both Landlord and Tenant. 
Landlord and Tenant agree hereby that all prior or contemporaneous oral
agreements between and among them and their agents and representatives relative
to the leasing of the Premises are merged in or revoked by this Agreement.

18.8         Severability.  If any term or provision of this Lease
shall, to any extent, be determined by a court of competent jurisdiction to be
invalid or unenforceable, the remainder of this Lease shall not be affected
thereby, and each term and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.

18.9         Costs of Suit.  If Tenant or Landlord shall bring any action
for any relief

 

 

against the other, declaratory
or otherwise, arising out of this Lease, including environmental claims,
including any suit by Landlord for the recovery of rent or possession of the
Premises, the losing party shall pay the successful party a reasonable sum for
attorney’s fees which shall be deemed to have accrued on the commencement of
such action and shall be paid whether or not such action is prosecuted to
judgment.  Should Landlord, without
fault on Landlord’s part, be made a party to any litigation instituted by
Tenant or by any third party against Tenant, or by or against any person
holding under or using the Premises by license of Tenant, or for the
foreclosure of any lien for labor or materials furnished to or for Tenant or
any such other person, or otherwise arising out of or resulting from any act or
transaction of Tenant or of any such other person, Tenant covenants to save and
hold Landlord harmless from any judgment rendered against Landlord or the
Premises or any part thereof, and all costs and expenses, including reasonable
attorney’s fees, incurred by Landlord in connection with such litigation.

18.10       Time, Joint and Several Liability.  Time is of the essence of this Lease and
each and every provision hereof, except as to the conditions relating to the
delivery of possession of the Premises to Tenant.  All the terms, covenants and conditions contained in this Lease
to be performed by either party if such party shall consist of more than one
person or organization shall be deemed to be joint and several, and all rights
and remedies of the parties shall be cumulative and non-exclusive of any other
remedy at law or in equity.

18.11       Binding Effect, Choice of Law.  The parties hereto agree that all the
provisions hereof are to be construed as both covenants and conditions as
though the words importing such covenants and conditions were used in each
separate paragraph hereof; subject to any provisions hereof restricting
assignment or subletting by Tenant and subject to section 18.5, all of the
provisions hereof shall bind and inure to the benefit of the parties and their
respective heirs,

 

 

successors and assigns.  This Lease shall be governed by the laws of
the State of New York.

18.12       Waiver.  No covenant, term or condition or the breach thereof shall be
deemed waived, except by written consent of the party against whom the waiver
is claimed, and any waiver or the breach of any covenant, term or condition
shall not be deemed to be a waiver of any preceding or succeeding breach of the
same or any other covenant, term or condition. 
Acceptance by Landlord of any performance by Tenant after the time the
same shall have become due shall not constitute a waiver by Landlord of the
breach or default of any covenant, term or condition unless otherwise expressly
agreed to by Landlord in writing.

18.13       Surrender of Premises.  The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation thereof, shall not work a merger and
shall, at the option of the Landlord, terminate all or any existing subleases
or subtenancies, or may, at the option of Landlord, operate as an assignment to
it of any or all such subleases or subtenancies.

18.14       Holding Over.  If Tenant remains in possession of all or any
part of the Premises after the expiration of the term, or any extended term,
hereof, with or without the express or implied consent of Landlord, such
tenancy shall be from month to month only and not a renewal hereof or an
extension for any further term, and in such case, rent equal to 125% of the
rent payable at expiration, and other monetary sums due hereunder shall be
payable in the amount and at the time specified in this Lease, and such
month-to-month tenancy shall be subject to every other term, covenant and
agreement contained herein.

18.15       Reserved.

18.16       Reasonable Consent.  Except as limited elsewhere in this Lease,
wherever in this Lease Landlord or Tenant is required to give its consent or
approval to any action on the part of the other, such consent or approval shall
not be unreasonably withheld.  In the
event of failure to

 

 

give any such consent, the
other party shall be entitled to specific performance at law and shall have
such other remedies as are reserved to it under this Lease, but in no event
shall Landlord or Tenant be responsible in monetary damages for failure to give
consent unless said consent is withheld maliciously or in bad faith.

18.17       Interest on Past Due Obligations.  Except as expressly herein provided, any
amount due to Landlord not paid when due shall bear interest at 10% per annum
from the due date.  Payment of such
interest shall excuse or cure any default by Tenant under this Lease.

18.18       Recording.  Tenant shall not record this Lease without
Landlord’s prior written consent, and such recordation shall, at the option of
the Landlord, constitute a non-curable default of Tenant hereunder.  Either party shall, upon request of the
other, execute, acknowledge and deliver to the other a short form memorandum of
this Lease for recording purposes.

18.19       Notices.  All notices or demands of any kind required or desired to be
given by Landlord or Tenant hereunder shall be in writing and shall be deemed
delivered 48 hours after depositing the notice or demand in the United States
mail, certified or registered, postage prepaid, addressed to the Landlord or
Tenant respectively at the addresses set forth in Article 1 of this Lease.

18.20       No Reservation.  Submission of this instrument for
examination or signature by Tenant does not constitute a reservation of or
option for lease; it is not effective as a lease or otherwise until execution
and delivery by both Landlord and Tenant.

18.21       Grant of Option to Tenant.  Landlord grants to Tenant the option to
purchase the Premises in accordance with the provisions of this lease, as long
as Tenant is not in material default at the time Tenant exercises the option.

A.            Option Period.  Tenant shall have the right to exercise the
option to purchase at any time during this Lease, provided Tenant is not in
material default.

 

 

B.            Method of Exercising Option.  Tenant shall exercise the option by giving
notice (“option notice”) to Landlord within the option period as set forth
herein.

C.            Purchase Price. The parties
shall have 60 days after Landlord receives the option notice in which to agree
on the purchase price.  If the parties
are unable to agree on the purchase price within that period, then within 30
days after the expiration of that period each party, at its respective cost and
by giving notice to the other party, shall appoint a qualified real estate
appraiser with at least five (5) years full-time commercial appraisal
experience in the area in which the Premises are located to appraise and set
the purchase price of the Premises.  If
a party does not appoint an appraiser within 10 days after the other party has
given notice of the name of its appraiser, the single appraiser appointed shall
be the sole appraiser and shall set the purchase price of the Premises.  If the two appraisers are appointed by the
parties as stated in this paragraph, they shall meet promptly and attempt to
set the purchase price of the Premises. 
If they are unable to agree on the purchase price within 30 days after
the second appraiser has been appointed, they shall attempt to select a third
appraiser  meeting the qualifications
state in this paragraph within 30 days after the last day the two appraisers
are given to set the purchase price.  If
they are unable to agree on the third appraiser, either of the parties to this
lease by giving 15 days’ notice to the other party can apply to the then
president of the county real estate board of the county in which the Premises
are located, or to the presiding judge of the superior court of that county,
for the selection of a third appraiser who meets the qualifications stated in
this paragraph.  Each of the parties
shall bear one half of the cost of appointing the third appraiser and of paying
the third appraiser’s fee.  The third
appraiser, however selected, shall be a person who has not previously acted in
any capacity for either party.

Within
60 days after the selection of the third appraiser, a majority of the
appraisers

 

 

shall set the purchase price
of the Premises.  If a majority of the
appraisers are unable to set the purchase price within the stipulated period of
time, the three appraisals shall be added together and their total divided by
three; the resulting quotient shall be the purchase price of the Premises.  If, however, the low appraisal and/or the
high appraisal are/is more than 20% lower and/or higher than the middle
appraisal, the low appraisal and/or the high appraisal shall be disregarded.  If only one appraisal is disregarded, the
remaining two appraisals shall be added together and their total divided by
two; the resulting quotient shall be the purchase price of the Premises.  If both the low appraisal and the high
appraisal are disregarded as statuted in this paragraph, the middle appraisal
shall be the purchase price of the Premises.

In
appraising the Premises as provided in this paragraph, the appraisers shall not
take into consideration the existence of this lease, and shall exclude the
value of improvements made to the Premises at Tenant’s expense.

After
the purchase price for the Premises has been set, the appraisers shall
immediately notify the parties.  If
Tenant objects to the purchase price that has been set, Tenant shall have the
right to elect not to purchase the Premises, as long as Tenant pays all the
costs in connection with the appraisal procedure that set the purchase
price.  Tenant’s election not to
purchase the Premises must be exercised within ten (10) days after receipt of
notice from the appraisers of the purchase price.  If Tenant does not exercise its election within the ten (10) day
period, Tenant shall purchase the Premises from Landlord as provided in this
paragraph.

D.            Method of Payment.  The purchase price shall be payable in cash
in lawful money of the United States to Landlord by Tenant at close of escrow.

E.             Title to Premises.  Landlord shall deliver to Tenant an executed
grant deed in recordable form conveying the Premises.  Title to the Premises shall be conveyed by

 

 

Landlord to Tenant free and
clear of all liens, encumbrances, and mortgages, but subject to any and all
restrictions, conditions, covenants, easements, mineral reservations or mineral
interest conveyances, and exceptions approved by Tenant, if any, relating to
the hereinabove described property, to the extent that they are still in force
and effect, as shown of record in the Real Property Records of Suffolk County
and taxes not yet due and payable and further subject to visible and apparent
easements, if any.

F.             Escrow.  The sale shall be consummated through an
escrow with a reliable escrow company (“escrowholder”), to be opened within ten
(10) days after the option notice has been given to Landlord.  The parties shall execute all documents
required by escrowholder as long as they are consistent with the provisions of
this paragraph.  Escrow shall close
within thirty (30) days after the purchase price has been established.  Escrow shall be deemed to be closed pursuant
to this paragraph on the date the grant deed is recorded.

G.            Title Insurance.  At the close of escrow, escrowholder must be
prepared to issue a CLTA Standard Coverage Policy of Title Insurance in the
amount of the purchase price insuring title to the Premises vested in Tenant,
subject only to the matters set forth in paragraph E above.

H.            Proration of Costs and Income.  Rent, insurance premiums (if the policy form
is acceptable to Tenant), interest, and ad valorem taxes for the year in which
the sale is closed shall be prorated as of close of escrow.  The unaccrued annual rental previously paid
by Tenant to Landlord for the year in which the sale is closed will be credited
to Tenant in the escrow.

I.              Closing Costs.  Transfer taxes and recording fees on the
deed shall be paid by Tenant.  The cost
of the title policy referred to in paragraph H shall be paid by Tenant.  Charges of escrow and all other closing
costs shall be paid by the party incurring same.

 

 

J.             Destruction of Building or Other
Improvements.  If the building or
other improvements that are part of the Premises are totally or partially
destroyed between the date Tenant exercises its option to purchase and the date
set for the close of escrow, Landlord shall restore the Premises pursuant to
Article 14.  However, if Landlord elects
to terminate this lease pursuant to that paragraph, Tenant’s right to purchase
the Premises shall terminate, unless Tenant notifies Landlord that Tenant will
purchase the Premises despite the destruction and without reduction in the
purchase price.  Tenant must notify
Landlord of its decision to purchase the Premises within fifteen (15) days
after Tenant receives notice of Landlord’s election to terminate this
lease.  If Tenant elects to purchase
irrespective of the destruction, Tenant shall be entitled to receive all
insurance proceeds resulting from the destruction.  If this lease does not terminate as a result of the destruction,
and Landlord restores the Premises, the time for close of escrow shall be
extended for a period of time equal to the period of time Landlord takes to
restore the Premises.

If the
Premises are totally or partially destroyed between the date Tenant exercises
the option to purchase and the date set for the close of escrow, or the
purchase price of the Premises, unless this lease terminates as a result of the
destruction pursuant to Article 14.  If
the lease terminates, this option shall also terminate, unless Tenant otherwise
agrees in writing to complete the purchase.

L.             Nonassignability of Option.  Tenant shall not assign its interest, or any
portion of its interest, in the option granted hereby without Landlord’s
consent.

M.           Close of Escrow-Termination.  On close of escrow this lease shall
terminate, and the parties shall be released from all liabilities and
obligations under this lease.

18.22       Tenant’s Conditions Precedent.  Tenant’s obligation to proceed under the
terms of this Lease is subject to the following conditions precedent:

 

 

1.                                       Completion by Landlord of the improvements to the Premises in
accordance with the conditions and in the time set forth in Exhibits B and C.

2.                                        Tenant obtaining all appropriate licenses for operation of its
business at the Premises.

3.                                       Tenant’s approval of the environmental condition of the Premises,
including the report(s) from Environmental Risk Limited regarding the Premises.

4.                                       Execution by Landlord’s lender of the Security Holder’s Consent.

 

IN
WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date
first above written.

	
  LANDLORD

  	
   

  	
  TENANT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COPART OF CONNECITCUT, INC.

  
	
   

  	
   

  	
   

  
	
  /s/
  Robert Arthur Gomes

  	
   

  	
  By

  	
  /s/
  Paul A. Styer

  
	
  Robert Arthur Gomes

  	
   

  	
   

  	
  Paul A. Styer, Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Robert Paul Gomes

  	
   

  	
   

  	
   

  	
   

  
	
  Robert
  Paul Gomes

  	
   

  	
   

  	
   

  	
   

  

 

 

SECURITY
HOLDER’S CONSENT

The undersigned Beneficiaries are the holders of a
mortgage loan (the “Loan”) to Landlord in the original amount of ________________
Dollars ($_________) which is secured by a first mortgage (the “Security
Instrument”) covering the Premises.

 

In the event of foreclosure of the Security Instrument,
or upon a sale of the Premises pursuant to the Trustee’s power of sale contained
therein, or upon a transfer of the Premises by deed in lieu of foreclosure,
then so long as Tenant is not in default under any of the terms, covenants, or
conditions of this Lease after the giving of any required notice or lapse of
any applicable cure period, this Lease shall continue in full force and effect
as a direct lease between the succeeding owner of the Property and Tenant, upon
and subject to all of the terms, covenants and conditions of this Lease for the
balance of the term of this Lease.  Tenant
hereby agrees to attorn to and accept any such successor owner as Landlord
under this Lease, and to be bound by and perform all of the obligations imposed
by this Lease on Tenant, and Beneficiaries or any such successor owner of the
Property will not disturb the possession of Tenant, and will be bound by all of
the obligations imposed by this Lease upon the Landlord hereunder.

	
   

  	
   

  	
   

  
	
  Beneficiaries

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  date

  

 

 

EXHIBIT B

 

SPECIFICATIONS

 

Brookhaven, Long Island Building (12/29/97
Revision)

 

 

1.               Masonry Block/Metal Building
Construction

A.           14,400 sq. ft. total — per
drawing attached

B.             Construction/landscaping to
comply with local building codes

C.             Office space, heating and
air conditioning per code, suspended ceilings (9’).  Laminated counter tops, tenant’s colors, in lobby, lunchroom,
bath vanities, gold room, conference room.

D.            Shop space,
heating/lighting, electrical to be 220, 2 phase.

2.               Finish Details

A.           Sheet rock, tape, texture,
paint (2 coats), interior doors to be solid core.

B.             Cabinetry in baths,
lunchroom, gold room, conference room, under lobby counter, as reasonably
agreed by owner and tenant.

C.             Ceramic floor tile in lobby,
lunchroom, and bathrooms.  Carpet
(26-oz. nylon) throughout balance office.

D.            Pre-wired for telephone
lines.

3.               Yard Details

A.           Minimum of 36 acres of
customer parking and vehicle storage area.

B.             Front parking chain link
fencing, to include 2 gates, (one power).

C.             Storage area to be graded to
drain water, base compacted (to 95%), and covered with minimum 4” crush
aggregate.  Any retention ponds to be
located on the site shall be for retention of water on subject property only
and shall be designed to minimize surface area required.

D.            Minimum 50,000 sq. ft. of
paved parking/loading/driveway area. 
Asphalt to be minimum 4” thickness, supported with base to allow heavy
trucks and loaders.

4.               Site Plan Approval, Use and
Building Permits, Completion

A.           Landlord
agrees to proceed with due diligence to obtain site plan approval, and to
obtain a use permit and approved building plans pursuant to the above
referenced specifications.

 

 

Tenant
agrees to cooperate with Landlord in this process.

B.             Landlord
anticipates filing for site plan approval with Town of Brookhaven in January,
1998, and obtaining use and building permit approval from Town of Brookhaven by
June, 1998.  Landlord agrees to use best
efforts to obtain these approvals as quickly as possible.  In the event that Landlord is unable to
obtain use and building permits on or before October 1, 1998, despite due
diligence and use of best efforts, then either Landlord or Tenant may elect to
cancel this Lease, upon written notice to the other party after October 1,
1998.

C.             Landlord
agrees to complete construction of the building and site improvements (so that
Tenant may legally occupy the Premises and begin vehicle storage) within nine
(9) months from the date of receipt of the building permit.  Except that, the completion date shall be
extended for any day of delay caused by any of the following:

i)                       Adverse
weather conditions that result in an unsafe working environment or which make
it impossible for any work to continue as determined by Derek Schleede, Ocean
Rich Distributors, 1681 Montauke Hwy, Bellport, NY  11713, phone number (516) 286-3190.

ii)                         A
work stoppage caused by a union labor dispute, unless such dispute was the
result of some act or omission of the Landlord;

iii)                      An
Act of God;

iv)                     War;

v)                        Or
any causes beyond Landlord’s control.

No other causes of
delayed completion shall relieve the Landlord from the obligation to complete
the work as provided herein.

D.            The
Landlord and Tenant agree that in the event Landlord has not substantially
completed construction of the building and site improvements so that Tenant may
legally occupy the Premises and begin vehicle storage in the time period set
forth in 4.C., above, Tenant may, upon 10 days written notice to Landlord, (a)
accept the Premises in their as-is condition at the expiration of the time
period set forth in 4.C., above, with the Lease commencing on such date and/or
(b) assume responsibility and control over the completion of the project.  In such event, Tenant shall act in a
reasonable and diligent manner to complete the project as quickly as possible,
at which time this Lease shall commence. 
Tenant shall be authorized to expend only such funds as are reasonably
necessary to complete construction in

 

accordance
with plans and specifications approved by Landlord and Tenant.  Any such funds expended by Tenant shall be
subject to reimbursement by Landlord within 15 days of Landlord’s receipt of a
statement detailing such expenses, accompanied by paid invoices.  In the event Landlord fails to reimburse
Tenant in a timely manner, such sum shall be a credit toward rent under the
Lease or under the option to purchase set forth in the Lease.

5.               Lease
Pre-Paid Rent and Security Deposit

A.           Upon
execution of this Lease, Tenant shall deposit with Landlord the sum of
$152,000, representing $76,000 in pre-paid rent, and $76,000 as a security deposit
(hereinafter collectively “the Deposits”). 
As an exception to Article 5 of this Lease, Tenant consents to
Landlord’s use of the Deposits to defray Landlord’s costs associated with
negotiation of this Lease and planning and development of the Premises.  Within 60 days of commencement of the Lease,
Landlord shall comply with Article 5 of this Lease.  Concurrent with Landlord’s compliance with Article 5 of this
Lease, Tenant shall cause to be released its security interest in the Premises.

B.             Until
Landlord complies with Article 5, Landlord shall grant Tenant a security
interest in the form of a first deed of trust recorded against Landlord’s
ownership interest in an approximately 32 acre portion of the Premises.  The security interest shall secure repayment
of $152,000, plus interest at the rate of 8% per annum, in the event Landlord
is unable to deliver the Premises to Tenant. 
Interest shall accrue and shall be a credit toward Tenant’s first lease
payment after the commencement of this Lease.

C.             The
first deed of trust in favor of Tenant shall provide that the Landlord may
subordinate the interest to a lender providing acquisition/construction
financing for the acquisition of and construction of improvements on the
Premises.  The amount of said financing
to which Tenant’s deed of trust shall be subordinated shall not exceed 90% of
the value of the Premises land and improvements to be constructed.

6.               The
terms of the correspondence dated October 28, 1997, and December 19, 1997, and
attached hereto as Exhibit C, are incorporated herein by the reference.

 

 

EXHIBIT C

 

 

OTHER
SPECIFICATIONS

 

 

[MEMORANDUM OF COPART CORPORATION HEADQUARTERS]

 

	
  To:

  	
  Lawrence J. Holt

  
	
   

  	
   

  
	
  From:

  	
  Paul A. Styer

  
	
   

  	
  Senior Vice President

  
	
   

  	
  General Counsel

  
	
   

  	
   

  
	
  Date:

  	
  December 19, 1997

  
	
   

  	
   

  
	
  Re:

  	
  Brookhaven Property Lease

  
	
   

  	
  Zoning and Use Issues

  

 

Dear Larry,

I
am in receipt of your fax dated 12/17/97, which includes correspondence dated
March 27 and April 2, 1997 from the town of Brookhaven to Robert
Gomes. I have been previously provided a copy of the April 2
correspondence and have raised the following concerns already:

	
  1.

  	
   

  	
  Although the cover letter
  says that an “salvage” auction is a permitted use, the covenants and
  restrictions prohibit storage of “junk” motor vehicles on the subject premises.
  What is the practical difference between “salvage” and “junk” motor vehicles?

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  The covenants and
  restrictions indicate that 30% of the site shall remain natural vegetation
  and there shall be a 100-ft. front buffer. Copart anticipated obtaining 40
  useable acres for the office, storage and parking areas. We do not expect
  that 30% of our lease site will be in natural vegetation.

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  We have previously
  discussed the issue of draining fluids and washing vehicles on the subject
  premises. The cover letter indicates that the operations are subject to
  environmental and health approval. The covenants and restrictions further
  indicate that washing and cleaning shall only take place in a designated
  location to be approved in the Town of Brookhaven at the time of site plan
  review. A small percentage of vehicles sold at Copart auctions are washed
  prior to sale. The washing involves rinsing with water and use of a
  biodegradable soap. Exteriors only are washed. Washing and cleaning of
  vehicles must be approved by the Town in the sale area set forth on the fax received by you from Willis Johnson. We
  understand that it is up to the Town to approve the location.

  

 

 

[MEMORANDUM OF COPART CORPORATION HEADQUARTERS]

 

	
  October 28, 1997

  
	
   

  
	
  Lawrence J. Holt,
  Esq.

  
	
  Cedar,
  Strauss & Holt, P.C.

  
	
  Attorneys at Law

  
	
  910 Middle Country Road

  
	
  P.O. Box 2100

  
	
  Selden, NY 11784-0614

  
	
   

  
	
  Re:

  	
  Long Island Salvage
  Vehicle Auction Facility Lease

  

 

Dear Larry:

This letter will confirm that I am sending five (5)
execution copies of the enclosed lease to Robert Paul Gomes in Pittsburgh,
Pennsylvania. In understand that Robert Paul Gomes will forward the documents
to Robert Gomes for signature and that thereafter, the documents will be
returned to me for signature by Copart of Connecticut, Inc.

While the documents are circulating for signature,
I will arrange for a wire transfer of $152,000 to your client trust account.
Please provide me with written wire transfer instructions. Additionally, you
have indicated that you will forward to me a copy of the title report for the
thirty-two (32) acres, which will confirm that Robert Paul Gomes and Robert
Gomes are the owners of the subject property.

As we discussed, I will forward the signed leases
for you to hold in escrow until such time as Mr. Gomes has a signed
contract for the adjoining real property. You also let me know that the site
plan for the new salvage pool will reflect a site configuration as set forth in
the May 24, 1997 site plan. We have also agreed that you will provide an
accounting for use of the $152,000 on a monthly basis, without the necessity of
disclosing any fees payable to you or Cedar, Strauss & Holt. I
assure you that our intention regarding this matter is not to unnecessarily
burden you, but only to provide Copart with a confirmation that the funds are
being used for the negotiation of this transaction and development of the
subject property. Based on the dealings that you and I have had in negotiating
this transaction, I do not anticipate any difficulty in you and I being
comfortable on this accounting arrangement.

The final issue which must be completed prior to
distribution of any funds is the recordation of a first deed of trust or
mortgage in favor of Copart of Connecticut, Inc. regarding security for
the $152,000.

 

 

Please contact me if there are any other issues
which I have failed to discuss in this letter. Otherwise I look forward to
working with you on finalization of the last remaining details. Thank you once
again for all of your work in getting to this point.

 

Very truly yours,

 

/s/ Paul A. Styer

 

Paul A. Styer

Senior Vice President

General Counsel

PAS/sm

	
  cc:

  	
  Robert
  Paul Gomes w/5 execution copies

  
	
   

  	
  Willis J.
  Johnson, Chief Executive Officer

  
	
   

  	
  Steven
  Powers, Regional Manager

  
	
   

  	
  Michael
  Ferrigno, General Manager

  

 

 

 

REVISED FIRST ADDENDUM TO GENERAL LEASE

 

 

                This
First Addendum to General Lease is made to that certain General Lease dated
December 29, 1997, between Robert Arthur Gomes and Robert Paul Gomes, Landlord,
and Copart of Connecticut, Inc., Tenant, for the therein described Premises
located in the Town of Brookhaven, New York, and is effective as of the date of
the General Lease.

 

1.01.        Landlord and Tenant
agree to amend Article 3.1 Term as follows:

 

3.1  Term.  The term of this Lease shall continue during
the lease term specified in Article 1 hereof, unless sooner terminated as
hereinafter provided in the Lease.  The
commencement date set forth in Article 1 is an estimate, and the commencement
date and term dates shall be adjusted to reflect the date which is the earlier
of (i) the date when Tenant occupies the building described herein and begins
storing vehicles on the Premises, or (ii) the date when Landlord and Tenant
agree that the Premises improvements being constructed by Landlord are
sufficiently completed so that Tenant may occupy the Premises and effectively
operate its business.  Landlord and
Tenant acknowledge that this date will most likely occur before Landlord has
obtained a Certificate of Occupancy for the building from the Town of
Brookhaven.

 

                In the event that
Landlord has not obtained a Certificate of Occupancy for the building on the
Premises from the Town of Brookhaven on or before the commencement date,
Landlord covenants to obtain said Certificate of Occupancy on or before the earlier
of six (6) months after the commencement date, or January 1, 2000.  Landlord agrees that if they fail to obtain
the Certificate of Occupancy in a timely manner (with time being of the
essence), Tenant may elect to either:

 

a)              Cause the completion/satisfaction of any and all
construction/conditions necessary to obtain a Certificate of Occupancy from the
Town of Brookhaven, and deduct the reasonable costs and expenses thereof from
the rent; or

 

b)             only after employing all diligent, reasonable and good
faith efforts to obtain the Certificate of Occupancy, declare the General Lease
cancelled, after which Tenant shall have up to ninety (90) days to vacate the
Premises, and shall be entitled to a full refund of any and all security
deposits and/or pre-paid rent.

 

Landlord agrees to indemnify, defend and hold Tenant
harmless of and from any and all liability arising out of any governmental
actions threatened or commenced as a result of Tenant’s occupancy of the
Premises without a Certificate of Occupancy, 

 

 

 

 

including reasonable attorneys fees incurred in defense of an action to
fine and/or compel the vacating of the Premises.

 

1.02.        Paragraph 5 of
Exhibit B Specifications is hereby amended to reflect that Tenant shall deposit
with Landlord the sum of $76,000, representing the General Lease security
deposit.  The references in Paragraph 5
of Exhibit B Specifications to $152,000 are amended to indicate the sum of
$76,000.  Landlord shall be entitled to
use the $76,000 deposit for payment of professional fees (legal, architectural,
engineering) related to negotiation of the General Lease and development of the
Premises, subject to compliance with the terms and conditions set forth in
Paragraph 5 of Exhibit B Specifications.

 

                All other terms
and provisions of the General Lease shall remain in full force and effect.

 

                IN WITNESS
WHEREOF, Landlord and Tenant have executed this First Addendum to General Lease
as of the date first above written.

 

 

	
  LANDLORD

  	
   

  	
  TENANT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COPART OF CONNECTICUT, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Robert Arthur Gomes

  	
   

  	
  By

  	
  /s/ Paul A. Styer

  
	
  Robert Arthur Gomes

  	
   

  	
   

  	
  Paul A. Styer, Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Robert Paul Gomes

  	
   

  	
   

  	
   

  
	
  Robert Paul Gomes

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

 

 

 

 

REVISED SECOND ADDENDUM
TO GENERAL LEASE

 

This Second Addendum to General
Lease is made to that General Lease dated December 29, 1997 between Robert
Arthur Gomes and Robert Paul Gomes, Landlord, and Copart of Connecticut, Inc.,
Tenant, for therein described premises located in the Town of Brookhaven, New
York, and is effective as of April 21, 1999.

 

1.             Paragraph 18.21(A) is hereby amended to provide that
Tenant shall have the right to exercise the option to purchase the Premises at
any time after the 5th anniversary of the commencement date of the
Lease, provided Tenant is not in material default.

 

2.             Paragraph 18.22(2) & 18.22(3) are hereby deemed
deleted, as of this effective date, on the basis of their fulfillment.

 

3.             Exhibit “A”, the legal description contained in the
original General Lease, is hereby amended by deleting the Exhibit “A” annexed
to the original General Lease dated December 29, 1997, and in its place and
stead, inserting the following, see Schedule “B” and Schedule “C” annexed
hereto and made a part hereof.

 

4.             Exhibit “B” to the General Lease is hereby amended to
the extent that Item 4(B) and Item 6 are deleted.

 

5.             Paragraph 18.22(4) is hereby superceded by the agreement
of the parties to execute and deliver the Non-Disturbance Attornment and
Subordination Agreement annexed hereto as Exhibit “1”.

 

6.             Lease Right of First Refusal.  Tenant shall have the right, during the term
of this Lease or any extension thereof, to lease twenty (20) acres (in 10 acre
increments) contiguous to the Premises designated on Schedules “D” and “E” if
Landlord receives from a third party an acceptable bona fide offer to lease all
or a portion thereof.  Landlord shall
provide Tenant with a Notice of Lease setting forth the exact and complete
terms of the lease proposed by the third party.  For a period of thirty (30) days after receipt by Tenant of the
Notice of Lease, Tenant shall have the right to give written notice to Landlord
of Tenant’s exercise of its right to lease that portion of the real property
described in Schedule “D” and/or “E” described in the Notice of Lease on the
same terms, price and conditions set forth in the Notice of Lease.  If Tenant does not give Landlord such
written notice within said 30-day period, it shall be conclusively presumed
that Tenant has elected not to exercise its right hereunder, and Landlord may
lease that portion of the real property described in the Notice of Lease.  If Tenant gives Landlord notice within said
period and then fails to complete the lease on the same terms, price and
conditions set forth in the Notice of Lease, Tenant shall be liable to Landlord
for all damages to Landlord proximately caused by Tenant’s failure to lease the
Premises, and Tenant’s rights under this paragraph shall be extinguished
forever.

 

7.             Option to Lease Expansion Property.  Provided Tenant is not then in default under
this General Lease, and provided that Landlord has not leased the real property
described in Schedule “D” and “E”, or as to any portion thereof that Landlord
has not leased, Tenant shall have the option to lease first the real property
described in Schedule “D”, and thereafter the real property described in
Schedule “E”, at the rate of $700 per acre per month, upon 30 days written
notice to Landlord.

 

                Prior to and/or after exercise by Tenant of one or
both options to lease additional property, Landlord agrees to cooperate fully
with Tenant in obtaining all necessary approvals for use and development of the
property from all applicable governmental agencies, including signing
applications or other necessary documentation. 
Landlord shall not be required to expend any 

 

 

money in cooperating with Tenant in obtaining
said approvals.  Tenant shall be
responsible for all costs associated with obtaining approvals for use and costs
associated with development of the real property for which the option is
exercised.  Tenant’s obligation to pay
rent for the option property shall commence 45 days after receipt of all
appropriate governmental approvals for Tenant’s site plan for the option
property (including obtaining permits for grading, drainage and fence
construction, if required) to expand its existing use of the Premises.  Until such time as Tenant receives all
appropriate governmental approvals to expand its existing use of the Premises,
Landlord may provide Tenant with a Notice of Lease as described in Paragraph 6,
above.  In such case, if Tenant has not
received all appropriate governmental approvals or exercised its right to lease
the real property described in the Notice of Lease within 30 days after
receiving the Notice of Lease, Tenant’s option shall be cancelled as to that
real property described in the Notice of Lease.

 

                For example, assume Tenant provides Landlord with
notice of exercise of its option to lease the property described in Schedule
“D” on April 1, 2000.  Additionally,
assume that Tenant obtains all appropriate governmental approvals on July 1,
2000.  Rent will be due and payable from
Tenant to Landlord for the option property commencing September 14, 2000.  However, if Tenant were to obtain all
appropriate governmental approvals on April 15, 2000, rent will be due and payable
commencing June 1, 2000.

 

                Lease of option property shall be on the same terms
and conditions as provided in this General Lease, except as to the additional
rent per acre, and shall run until the end of the then current General Lease
term together with any time extension options properly exercised.  The additional rent shall be subject to all
of the CPI adjustments set forth in the General Lease (whether Tenant
has exercised its lease expansion option(s) at the time the CPI adjustment(s)
occur), and the option to purchase granted to Tenant shall extent to the
option property for which the option is exercised.

 

                Landlord and Tenant agree to execute an addendum
reflecting the dates for commencement of the lease for the option property, and
the date for commencement of Tenant’s obligation to pay additional rent, which
shall be the date which is 45 days after receipt of all appropriate
governmental approvals for Tenant to expand its existing use of the Premises.

 

8.             It is acknowledged, between the parties, that a closing
is imminent, whereby the 31 acres parcel presently owned by the landlord will
be conveyed to Long Island Auto Realty, LLC, and the adjoining approximately 58
acre parcel to the west presently owned by Asco Land Company will be acquired
by the aforesaid Long Island Auto Realty, LLC, all simultaneous with a mortgage
to be executed by Long Island Auto Realty, LLC in favor of State Bank of Long
Island.  Accordingly, concurrent with
the purchase of the two parcels by Long Island Auto Realty, LLC, the Landlord
shall execute and serve upon the Tenant an Assignment pursuant to the terms of
Paragraph 18.5 if the General Lease, in the form of the specimen attached
hereto as Schedule 2.

 

 

	
   

  	
   

  	
  Copart of Connecticut, Inc

  
	
   

  	
   

  	
   

  
	
  /s/ Robert A. Gomes

  	
   

  	
  /s/ Paul A. Styer

  
	
  Robert A. Gomes

  	
   

  	
  By:  Paul A. Styer, Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Long Island Realty, LLC

  
	
   

  	
   

  	
   

  
	
  /s/ Robert P. Gomes

  	
   

  	
  /s/ Robert A. Gomes

  
	
  Robert P. Gomes

  	
   

  	
  By:  Robert A. Gomes

  
	
   

  	
   

  	
   

  

 

 

THIRD ADDENDUM TO GENERAL LEASE

 

 

This
Third Addendum to General Lease is dated December 28, 1999, is made to that
General Lease dated December 27, 1997 between Long Island Auto Realty LLC,
Landlord by assignment from Robert A. Gomes and Robert P. Gomes, and Copart of
Connecticut, Inc., Tenant for therein described premises located in the town of
Brookhaven, New York.  Said original
General Lease has been previously amended by the Revised First Addendum to
General Lease, and Revised Second Addendum to General Lease, copies of which
are attached hereto as Exhibits “A” and “B”, respectively.

 

1.               The commencement date of the Lease shall be December 29, 1999.

 

2.               Tenant shall pay the sum of $76,000 to Landlord upon execution hereof,
which sum represents payment of rent for the month of January 2000 ($38,000),
and payment of $38,000 to be applied to the last month’s rent payment under the
Lease, and the sum of $3,677, representing the pro-rated rent due for December,
1999.  Tenant’s next payment of rent
shall be due February 1, 2000.

 

3.               Landlord acknowledges responsibility to complete the following items:

a.                                       Finish rock in yard and roll out.

b.                                      Installation of handicapped parking signs.

c.                                       Installation of handicapped sink fixture in outside-access bathroom.

d.                                      Complete parking lot striping.

 

4.               Tenant acknowledges responsibility to complete the following items:

a.                                       Front gate and gate operator (Tenant entitled to $5,000 credit from
Landlord)

b.                                      Installation of Knox boxes for emergency entrance.

c.                                       Installation of fire alarm system, if required for final C.O. (Tenant
entitled to $4,470 credit from Landlord, if installation required for final
C.O.).

 

Tenant agrees that the Landlord’s indemnification
obligations contained in the Revised First Addendum to General Lease (attached
hereto as Exhibit “A”) shall not apply in the event that Tenant fails to
complete any of the above items in this Paragraph 4 in accordance with all
applicable laws, regulations and other requirements of any government or
quasi-governmental authority including, without limitation, the Town of
Brookhaven.

 

5.               Except for items set forth in 3 above, Tenant has inspected the facility
and accepts same as in full compliance with the specifications of construction
set forth in the lease.

 

 

6.               The parties agree to cooperate in good faith and to identify and resolve
any outstanding issues involving change orders and any additional moneys owned
to Landlord for work completed at Tenant’s request within thirty (30) days.

 

IN
WITNESS WHEREOF, Landlord and Tenant have executed this Third Addendum to
General Lease effective as of the date first above written.

 

	
   

  	
  LONG ISLAND AUTO REALTY LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Robert A. Gomes

  	
   

  
	
   

  	
   

  	
  Robert A. Gomes

  	
   

  
	
   

  	
   

  	
  Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  COPART OF CONNECTICUT, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Paul A. Styer

  	
   

  
	
   

  	
   

  	
  Paul A. Styer, Secretary

  	
   

  

 

 

 

 

FOURTH ADDENDUM TO GENERAL LEASE

 

 

This
Fourth Addendum to General Lease is dated January 8, 2001, is made to that
General Lease dated December 27, 1997 between Long Island Auto Realty LLC,
Landlord by assignment from Robert A. Gomes and Robert P. Gomes, and Copart of
Connecticut, Inc., Tenant for therein described premises located in the town of
Brookhaven, New York.  Said original
General Lease has been previously amended by the Revised First Addendum to
General Lease, and Revised Second Addendum to General Lease (Second Addendum),
and a Third Addendum to General Lease.

 

By this
Fourth Addendum, the parties hereby agree as follows:

 

1.               Paragraphs 6 and 7 of the Second Addendum are deemed amended to the
following extent: the premises described in Schedule E and otherwise referred
to as the second option property and are hereby removed and otherwise deleted
from the terms of the lease.  The
premises described in Schedule D shall henceforth become the second option
property.  In the place and stead of the
premises described as Schedule D, the premises described in the within Schedule
1 hereto shall be the first option property.

 

2.               The Tenant hereby exercises its first option pursuant to paragraph 7 of
the Second Addendum.  As just above
stated, this option applies to the premises described in the annexed Schedule
1.

 

3.               The substitution of the premises described in Schedule 1 hereto in the
place and stead of the premises described in Schedule E of the Second Addendum
and the exercise of the option by Tenant to lease the premises described in
Schedule 1 hereto is subject to the following terms and conditions.  First, Landlord shall be responsible for
securing the abandonment of the paper roads and lot lines and for the payment
of any costs or fees in connection with that process.  The parties agree to jointly process any and all applications for
site plan approval necessary to join the first option property with the
property presently leased by the Tenant. 
As indicated in paragraph 7 of the Second Addendum, Tenant shall pay all
other expenses in connection with the process, except those that relate to the
road and lot line abandonment.  Second,
the Landlord will obtain and furnish a non-disturbance agreement executed by
The Bank of Long Island, in substantially the same form and content as the
present and previous agreements, with respect to this option property.

 

4.               The parties agree that the acreage of the parcel described as Schedule 1
shall be computed by a surveyor or an engineer, and shall include the road
abandonment property.  Rent shall be
payable according to the amount of acreage computed at the per acre rate set
forth in paragraph 7 of the Second Addendum. 
The amount of acreage so computed shall be in full satisfaction of the
first option to lease ten acres.

 

 

5.               Rent for the first option property will not commence until the later of :

 

45 days
after receipt of all appropriate governmental approvals for Tenants site plan
for the first option property (including obtaining permits for grading,
drainage and fence construction, if such permits are required) to expand its
existing use of the Premises; or

 

Landlord
securing the abandonment of the paper roads and lot lines.

 

IN
WITNESS WHEREOF, Landlord and Tenant have executed this Fourth Addendum to
General Lease effective as of the date first above written.

 

	
   

  	
  LONG ISLAND AUTO REALTY LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Robert A. Gomes

  	
   

  
	
   

  	
   

  	
  Robert A. Gomes

  	
   

  
	
   

  	
   

  	
  Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  COPART OF CONNECTICUT, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Paul A. Styer

  	
   

  
	
   

  	
   

  	
  Paul A. Styer, Secretary

  	
   

  

 

 

 

 

FIFTH ADDENDUM TO GENERAL LEASE

 

 

This
Fifth Addendum to General Lease is dated January 19, 2002, is made to that
General Lease dated December 27, 1997 between Long Island Auto Realty LLC,
Landlord by assignment from Robert A. Gomes and Robert P. Gomes, and Copart of
Connecticut, Inc., Tenant for therein described Property located in the town of
Brookhaven, New York.  Said original
General Lease has been previously amended by the Revised First Addendum to
General Lease, and Revised Second Addendum to General Lease (Second Addendum),
a Third Addendum to General Lease, and a Fourth Addendum to General Lease.

 

By this
Fifth Addendum, the parties hereby agree as follows:

 

1.               The Property is amended to include the real property depicted on Exhibit
A, attached hereto and incorporated herein by this reference (Additional
Property).

 

2.               The rent commencement date for the Additional Property is January 19,
2002.

 

3.               Tenant shall pay additional rent of $16,100 per month for the Additional
Property.

 

4.               The term for the Lease on the Additional Property shall run concurrent
with the term of the General Lease, including options and renewals as provided
in the General Lease.

 

5.               Tenant shall have the option to purchase the Additional Property on the
same terms and conditions as set forth in the General Lease for the leased
Property.

 

IN
WITNESS WHEREOF, Landlord and Tenant have executed this Fifth Addendum to
General Lease effective as of the date first above written.

 

	
   

  	
  LONG ISLAND AUTO REALTY LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Robert A. Gomes

  	
   

  
	
   

  	
   

  	
  Robert A. Gomes

  	
   

  
	
   

  	
   

  	
  Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  COPART OF CONNECTICUT, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Paul A. Styer

  	
   

  
	
   

  	
   

  	
  Paul A. Styer, SecretaryExhibit
10.7

Lease Amendment

Copart, Inc. - Wickland Oil Company Lease

2701 Waterfront Road, Martinez, CA

 

This amendment (the “Lease Amendment”) is to that certain “Standard
Industrial/Commercial Single-Tenant Lease - Net” (the “Standard Lease”) dated
as of December 23, 1998, by and between Wickland Oil Martinez L.P., a
California limited partnership, as “Lessor”, and Copart Inc., a California
corporation, as “Lessee”, as modified by that certain “Addendum I, Standard
Industrial/Commercial Single-Tenant Lease - Net” (the “Addendum I”) also dated
December 23, 1998, by and between Wickland Oil Martinez L.P., as “Lessor”, and
Copart, Inc., as “Lessee”.  The Standard
Lease as modified by Addendum I shall hereafter be referred to as the “Modified
Lease”.

 

If any portion of the Modified Lease should conflict with the terms of
this Lease Amendment, the terms of this Lease Amendment shall control.  Defined terms not otherwise defined in this
Lease Amendment shall have the meanings ascribed to such terms in the Modified
Lease.  All references to the “Lease” in
the Modified Lease or this Lease Amendment shall mean the Modified Lease as
further modified by this Lease Amendment.

 

The Modified Lease is hereby amended as follows:

 

1.             Paragraph 1.1 of
the Modified Lease is amended to define “Lessor” as “Wickland Oil Company, a
California corporation”.  Lessee
acknowledges that Wickland Oil Martinez L.P. has previously transferred and
assigned the Premises and its interest in the Modified Lease to Wickland Oil
Company.

 

2.             Paragraph 1.2 of
the Modified Lease is amended to read in its entirety as follows:

 

“Premises:  That certain real property, including all
improvements thereon or to be otherwise provided by Lessor under the terms of
this Lease, and commonly known as 2701 Waterfront Road, located in the City of
Martinez, County of Contra Costa, State of California, and more particularly
depicted on Exhibit “One” attached to this Lease Amendment (“Premises”).  Exhibit “A” attached to the Standard Lease
is deleted in its entirety.  The term
“Premises” includes all off-site improvements and equipment connecting the
Premises to utilities except to the extent said improvements and equipment are
or will be owned by the utility providers to which they are connected.”

 

3.             Paragraph 1.3 of
the Modified Lease is amended to read in its entirety as follows:

 

“Term:  Twenty (20) years and zero months (“Original
Term”) commencing on January 1, 2001 (“Commencement Date”), and ending on
December 31, 2020 (“Expiration Date”).”

 

 

4.             The first sentence
of Paragraph 1.5 of the Modified Lease is amended to read in its entirety as
follows:

 

“Base Rent:  $65,000 per month (initial “Base Rent”)
payable in advance in U.S. currency on the first (1st) day of each calendar
month commencing on March 1, 2001. 
(See also Paragraph 4)”.  Lessee
and Lessor acknowledge that rent for the first two months of the Original Term
was $54,886.00 per month, and acknowledge that Lessee has already paid said
rent.

 

5.             Paragraph 1.6 of
the Modified Lease is deleted in its entirety.

 

6.             Paragraph 1.12 of
the Modified Lease is amended to read in its entirety as follows:

 

“Addenda, Exhibits
and Amendments.  This Lease
consists of the Modified Lease as amended by the Lease Amendment.”

 

7.             Paragraph 2.2 is
amended to read in its entirety as follows:

 

“Condition.  Lessor delivered the Premises to Lessee as
of January 1, 2001 (the “Start Date”), and Lessee accepted the Premises as of
that date.  The Parties acknowledge and
agree that the Lessor Improvements were substantially completed as of that
date.  Lessee’s acceptance of the
Premises in no way waives or releases Lessor’s obligation hereunder to complete
the Lessor Improvements as soon as reasonably possible by finishing and/or
rectifying the “punch list” items identified on Exhibit “Two” to the Lease
Amendment.  Lessee shall provide Lessor
with reasonable access to the Premises to so complete the Lessor
Improvements.  Lessee’s acceptance of
the Premises is no way detracts from or alters Lessor’s warranties and
representations as contained in Paragraph 56 of the Lease”

 

8.             The first sentence
of Paragraph 2.3 of the Modified Lease is amended to read in its entirety as
follows:

 

“Compliance.  Lessor warrants that the completed Lessor
Improvements shall comply with all applicable laws, covenants or restrictions
of record, building codes, regulations, ordinances and governmental permits and
entitlements (“Applicable Requirements”) in effect on the Start Date.”

 

9.             The current
Lessor’s address is:

 

Wickland Oil Company

3610 American River Drive Suite 140

Sacramento, California 95864

 

P.O. Box 13648

Sacramento, California 95853

 

2

 

10.           The
introductory sentence of Addendum I is amended to read in its entirety as
follows:

 

“This Addendum I to the Standard Industrial/Commercial
Single-Tenant Lease - Net (the “Addendum I”) is attached to, made a part of,
and incorporated into that certain Standard Industrial/Commercial Single-Tenant
Lease - Net (the “Standard Lease”) dated December 23, 1998, by and between
Wickland Oil Company, a California corporation, as Lessor (“Lessor”), and
Copart, Inc., a California corporation, as Lessee (“Lessee”), covering the
Premises identified in Paragraph 1.2 of the Lease.”

 

11.           Paragraph
50(A) of the Modified Lease is deleted in its entirety.

 

12.           Lessor
and Lessee each acknowledge and agree that all other conditions precedent
contained in Paragraph 50 were timely satisfied or waived by the Parties.  Lessee and Lessor each agree that all Lease
termination requirements and options to cancel the Lease contained in Paragraph
50 have lapsed, and that the Lease remains in full force and effect.  The Parties mutually acknowledge and confirm
that the Selby I Lease is completely null and void and that neither Lessor nor
Lessor’s predecessor in interest has any remaining obligation whatsoever (under
the Lease or otherwise) to execute the Selby II Lease.

 

13.           Paragraph
51 of the Modified Lease is amended to read in its entirety as follows:

 

“Commencement Date.  The Commencement Date of the Original Term
is January 1, 2001.”

 

14.           Subparagraph
52(A) of the Modified Lease is amended to read in its entirety as follows:

 

“Initial Base Rent.  As specified in Paragraph 1.5 of this Lease,
the initial Base Rent for the Premises shall be $65,000 per month.  The Base Rent shall be subject to adjustment
as specified in Subparagraphs 52(B) and 52(C) set forth below.”

 

15.           Subparagraph
52(B) of the Modified Lease is amended to read in its entirety as follows:

 

“CPI Adjustment.  For purposes of this Subparagraph 52(B),
each twenty-four month period of the Lease Term (the Original Term as extended
by any duly exercised Lease Extension Options) commencing on the Commencement
Date shall constitute an “Adjustment Period.” 
Except as provided otherwise in Subparagraph 52(C), commencing on the
first day of the twenty-fifth (25th) month of the Lease Term and every
twenty-four months thereafter (each an “Adjustment Date”), the Base Rent in
effect immediately prior to each such Adjustment Date shall be increased by (i)
the percentage increase, if any, shown by the CPI (as defined below) most
recently published in the 12th

 

3

 

24th month of such Adjustment Period; plus (ii) the percentage
increase, if any, shown by the CPI most recently published at the 1st month of
the Adjustment Period as compared to the CPI most recently published at the
12th month of the Adjustment Period. 
Provided, however, in no event shall Base Rent decrease at each
Adjustment Date below Base Rent then in effect or increase at each Adjustment
Date more than three percent (3%) per year, based on the comparisons made at
(i) and (ii) above.

 

The term “CPI” shall mean the Consumer Price Index in the column for
“All Items” in the table entitled “Consumer Price Index for All Urban
Consumers:  U.S. City Average, (1982-84
= 100),” published by the Bureau of Labor Statistics of the United States
Department of Labor.  If the Bureau of
Labor Statistics changes the base period (now 1982-84 = 100), or the
composition of CPI, the new index numbers shall be substituted for the old
index numbers in making the above computations.  If the CPI is discontinued, the parties shall accept comparable
statistics on the purchasing power of the consumer dollar, as published at the
time of such discontinuation, by a responsible financial periodical of
recognized authority, to be chosen by Lessor and reasonably accepted by
Lessee.”

 

16.           A
Subparagraph 52(C) is added to the Lease reading as follows:

 

“Fair Market Rental
Adjustment.  In addition to
the CPI Adjustments required by Subparagraph 52(B) of the Lease, a “Fair Market
Rental Adjustment” shall be made to the Base Rent effective at the beginning of
years 11 and 16 of the Original Term, and the first day of any duly exercised
Lease Extension Option (each such date hereafter referred to as a “Fair Market
Rental Adjustment Date”).  In the event
that the Lease requires a CPI Adjustment and a Fair Market Rental Adjustment on
the same date, only the Fair Market Rental Adjustment required by this
Subparagraph 52(C) shall be made.

 

For purposes of this Subparagraph 52(C), “Fair Market Rental” shall be
determined in accordance with generally accepted appraisal principles and shall
be the market rent payable at the time for comparable properties with similar
acreage, Lessor Improvements (excluding the Building and Lessee Improvements)
and zoning, considering both the location of the Premises and Lessee’s use
thereof.

 

Commencing on or about the date one year prior to a Fair Market Rental
Adjustment Date, the Lessor and Lessee will attempt to determine by agreement
the Fair Market Rental which will take effect on said Fair Market Rental
Adjustment Date.  If the parties are
unable to agree upon such a Fair Market Rental within sixty (60) days, each
party will, within thirty (30) days thereafter at a meeting duly noticed in
writing by Lessor, exchange each other’s written estimate of monthly Fair
Market Rental.  If the higher of the two
(2) estimates does not exceed the lower of the two (2) estimates by more than
ten percent (10%) of the lower estimate, the Fair Market Rental for the
Premises which will take effect on the Fair Market Rental Adjustment Date shall
be ninety percent (90%) of the average of the two estimates.  If the higher estimate exceeds the lower
estimate by more than ten percent (10%), each party shall, within ten (10) days
after the date of exchange of each other’s estimate of the Fair Market Rental,
designate an independent

 

4

 

exchange of each other’s estimate of Fair Market Rental, designate an
independent appraiser who is a member of the American Institute of Real Estate
Appraisers (MAI) with at least five (5) years’ experience in
commercial/industrial appraisals in the San Francisco Bay Area.  The two (2) MAI appraisers so selected shall
select a third MAI appraiser with similar qualifications who shall be an
impartial person, unrelated or unaffiliated with Lessor, Lessee and the other
appraisers.  The third appraiser shall
then determine the Fair Market Rental for the Premises, and his determination
shall be binding on both Parties.  If
one Party fails to designate an appraiser as provided for above, then the other
Party’s appraiser shall make his determination of Fair Market Rental which
shall be binding on both Parties.  If a
third appraiser can not be agreed upon, either Party to this Lease can, by
giving ten (10) days’ prior notice to the other Party, file a petition with the
American Arbitration Association solely for the purpose of selecting a third
appraiser who meets the qualifications set forth in this Subparagraph
52(C).  Each Party shall compensate the
appraiser designated by it and any compensation payable to the third appraiser
(and the American Arbitration Association, if utilized) shall be shared equally
by Lessor and Lessee.”

 

17.           Lessor and Lessee
agree as follows with respect to Paragraph 53 of the Modified Lease:

 

(a)           Except
for the “punch list” items set forth on Exhibit Two to the Lease Amendment, the
“Site Work Preparation” required by Subparagraph 53(A) and the “Site
Improvements” required by Subparagraph 53(B) have been completed and accepted
by Lessor.  All items identified on
Exhibit Two shall be completed by Lessor in conformity with Paragraph 2.2 of
the Lease.  Lessor acknowledges that
significant changes to the Drainage Plan occurred during the construction
process, and that said changes were approved by Lessor and Lessee.

 

(b)           Subparagraph
53(D) of the Modified Lease is deleted in its entirety.

 

18.           With respect to
Subparagraph 54(B) of the Modified Lease, Lessor acknowledges and agrees that
all the conditions precedent to Lessee’s construction of the Lessee
Improvements have been satisfied or waived.

 

19.           Paragraph 55 of the
Modified Lease is deleted in its entirety, and the Perimeter Fence
reimbursement specified therein is hereby waived by Lessee.

 

20.           The current
Paragraph 59 of the Modified Lease is deleted and replaced with a new Paragraph
59 reading in its entirety as follows:

 

“Extension Options.  Lessee may, at Lessee’s option, extend the
Original Term of this Lease for three (3) additional periods of five (5) years
each (the “Lease Extension Options”), subject to all the provisions of this
Lease, including but not limited to the provisions for Base Rent adjustment
contained in Subparagraphs 52(B) and 52(C). 
Failure to exercise a Lease Extension Option shall nullify all
subsequent Lease Extension

 

5

 

Options.  Irrevocable notice of Lessee’s exercise of a
Lease Extension Option must be in writing and delivered to Lessor by Lessee by
a date not more than eighteen (18) months and not less than twelve (12) months
before the date upon which the Lease Extension Option being exercised is
scheduled to commence.”

 

21.           The Parties acknowledge that the lot
line adjustment referenced in Paragraph 62 of the Modified Lease has occurred
and that Wickland Oil Company is the record owner of the Retained Parcel.

 

21.           Photocopies of the final recorded
CC&Rs and Shore Easements referenced in Paragraph 63 of the Modified Lease
are attached to this Lease Amendment as Exhibit “Three”.

 

22.           With respect to Paragraph 65 of the
Modified Lease, Lessee hereby confirms and acknowledges that Lessee has
surrendered all rights to the real property located in Crockett, California
which had been leased by Wickland Oil Company to Lessee pursuant to the terms
of the Selby I Lease.

 

23.           A Paragraph 66 is added to the Lease
reading as follows:

 

“Miscellaneous
Matters.  Lessor and Lessee
each acknowledge approval of the memorandum dated July 20, 2000 from John
Margowski to Mike Carson and Paul Styer allocating and confirming
responsibility for certain items relating to the Premises.  A copy of said memorandum is attached as
Exhibit “Four” to this Lease Amendment.

 

Within two
weeks after this Lease Amendment has been executed by Lessee and Lessor, Lessee
shall, pursuant to Paragraph 50(C) and as orally agreed upon on June 1, 2000,
remit to Lessor the sum of $550,000 as compensation for Lessee’s negotiated
share of excess costs incurred by Lessor in constructing the Lessor
Improvements.  In addition, Lessor and
Lessee acknowledge and agree that the cost of complying with Condition No. XVIII
(K) of City of Martinez Conditional Use Permit No. 99-05 (the “Skateboard Park
Condition) shall be shared evenly by Lessor and Lessee.  All payments to the City of Martinez
pursuant to the Skateboard Park Condition shall be made by Lessor.  Lessee shall reimburse Lessor for fifty
percent (50%) of each said payment within two weeks after Lessor has made said
payment to the City of Martinez and thereafter delivered an invoice for the
reimbursement amount to Lessee.

 

Lessor shall
be solely responsible for fulfilling the following commitments made during the
permitting process for the Copart auto auction facility:

 

(i)            Wetland
easement and fee simple dedication commitments made to the East Bay Regional
Parks District.

 

(ii)           Mitigation
fee commitment in the amount of $15,000 made to the East Bay Regional Parks
District.

 

6

 

(iii)          Mitigation
fee commitment in the amount of $20,000 made to the U.S. Fish and Wildlife
Department.

 

Except as specifically amended herein, the provisions of the Modified
Lease shall remain in full force and effect.

 

	
   

  	
  Lessor:

  
	
   

  	
   

  
	
  Date:  Feb
  26, 2001

  	
  Wickland Oil Company,

  a California Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel E. Hall

  	
   

  
	
   

  	
  Its:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lessee:

  
	
   

  	
   

  
	
  Date:  Feb
  28, 2001

  	
  Copart, Inc.,

  a California Corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul A. Styer

  	
   

  
	
   

  	
  Its:

  	
  Secretary

  

 

7

 

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

 

STANDARD
INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE – NET

 

(DO
NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

 

1.                                      Basic
Provisions (“Basic Provisions”).

 

1.1.          Parties:  This Lease (“Lease”),
dated for reference purposes only, December 23, 1998, is made by and between
Wickland Oil Martinez, L.P. a California limited partnership (“Lessor”) and Copart Inc., a California
corporation

 

(“Lessee”),
(collectively
the “Parties,” or individually a “Party”).

 

1.2           Premises:  That certain real property, including all
Improvements therein or to be provided by Lessor under the terms of this Lease,
and commonly known as address to follow, located in the County of Contra
Contra, State of California, and generally described as (describe briefly the
nature of the property and, if applicable, the “Project”, if the property is located within a Project) approx.
forty (40) acres of industrial land located in the City of Martinez,
California, generally depicted on Exhibit “A” to the Addendum (“Premises”).  (See also Paragraph 2)

 

1.3           Term:  Ten (10) years and zero months (“Original Term”) commencing on or about
July 1, 2000 (“Commencement Date”)
see Addendum, and ending Ten (10) Years thereafter (“Expiration Date”). 
(See also Paragraph 3)

 

1.4           Early Possession:  n/a (“Early
Possession Date”).  (See also
Paragraphs 3.2 and 3.3)

 

1.5           Base Rent:  $54,886.00 per month (“Base Rent”), payable on the first (1st)
day of each month commencing upon substantial completion of Lessor’s
Improvements and satisfaction of the conditions set forth in the Addendum.  (See also Paragraph 4)

ý  If this box is checked, there are provisions
in this Lease for the Base Rent to be adjusted.

 

1.6           Base Rent Paid Upon
Commencement:  $ 54,886.00 as
Base Rent for the period which commences upon substantial completion of
Lessor’s Improvements and satisfaction of the conditions set forth in the
Addendum

 

1.7           Security Deposit:  $54,886.00 (“Security
Deposit”).  (See also
Paragraph 5)

 

1.8           Agreed Use:  storage, distribution and auction of
vehicles, including damaged vehicles 
(See also Paragraph 6)

 

1.9           Insuring Party:  Lessee is the “Insuring Party” unless otherwise stated herein.  (See also Paragraph 8)

 

1.10         Real Estate Brokers:  (See also Paragraph 15)

 

(a) Representation:  The
following real estate brokers (collectively, the “Brokers”) and brokerage relationships exist in this
transaction (check applicable boxes):

o                                                         represents
Lessor exclusively (“Lessor’s Broker”);

o                                                         represents
Lessee exclusively (“Lessee’s Broker”);
or

ý  Colliers International represents both
Lessor and Lessee (“Dual Agency”).

 

(b) Payment to Brokers: Within five (5) days of Lessee’s occupancy of the Premises, Lessor shall
pay to the Broker the fee agreed to in their separate written agreement.

 

1.12         Addenda and Exhibits.  Attached hereto is an Addendum or Addenda
consisting of Paragraphs 50 through 65 and Exhibits A – E all of which
constitute a part of this Lease.

 

2.                                      Premises.

 

2.1           Letting.  Lessor hereby leases to Lessee, and Lessee
hereby leases from Lessor, the Premises, for the term, at the rental, and upon
all of the terms, covenants and conditions set forth in this Lease.  Unless otherwise provided herein, any
statement of size set forth in this Lease, or that may have been used in
calculating rental, is an approximation which the Parties agree is reasonable
and the rental based thereon is not subject to revision whether or not the
actual size is more or less.

 

2.2           Condition.  Lessor shall deliver the Premises
to Lessee free of debris on the Commencement Date (“Start Date”).  If a
non-compliance with said warranty exists as of the Start Date, Lessor shall, as
Lessor’s sole obligation with respect to such matter, except as otherwise
provided in this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
rectify same at Lessor’s expense.

 

2.3           Compliance.  Lessor warrants that the Lessor Improvements
on the Premises (see Addendum)
comply with all applicable laws, covenants or restrictions of record, building
codes, regulations and ordinances (“Applicable
Requirements”) in effect on the Start Date.  Said warranty does not apply to the use to
which Lessee will put the Premises or to any Alterations or Utility
Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee.  If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor’s expense.  If the Applicable Requirements are hereafter
changed (as opposed to being in existence at the Start Date, which is addressed
in Paragraph 6.2(e) below) so as to require during the term of this Lease the construction
of an addition to or an alteration of Lessor Improvements or the Building, (“Capital Expenditure”), Lessor and Lessee
shall allocate the cost of such work as follows:

 

	
  Initials

  	
   /s/ DEH/PAS

  

 

8

 

Lessee shall be fully responsible for the
cost thereof provided, however that if such Capital Expenditure is required
during the last two (2) years of this Lease ??? the cost thereof exceeds six
(6) months’ Base Rent Lessee may instead terminate this Lease unless Lessor
notifies Lessee, in writing, within ten (10) days after receipt of Lessee’s
termination notice that Lessor has elected to pay the difference between the
actual cost thereof and the amount equal to six (6) months’ Base Rent.  If Lessee elects termination, Lessee shall
immediately cease the use of the Premises which requires such Capital
Expenditure and deliver to Lessor written notice specifying a termination date
at least ninety (90) days thereafter. 
Such termination date shall, however, in no event be earlier than the
last day that Lessee could legally utilize the Premises without commencing such
Capital Expenditure.

 

(c) Notwithstanding the above,
the provisions concerning Capital Expenditures are intended to apply only to
non-voluntary, unexpected, and now Applicable Requirements.  If the Capital Expenditures are instead
triggered by Lessee as a result of an actual or proposed change in use, change
in intensity of use, or modification to the Premises then, and in that event,
Lessee shall be fully responsible for the cost thereof, and Lessee shall not
have any right to terminate this Lease.

 

2.4           Acknowledgements.  Lessee acknowledges that: (a) it has
been advised by Lessor and/or Brokers to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical, HVAC
and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements), and their suitability for Lessee’s intended use;
(b) Lessee has made such investigation as it deems necessary with reference
to such matters and assumes all responsibility therefor as the same relate to
its occupancy of the Premises; and (c) neither Lessor, Lessor’s agents,
nor any Broker has made any oral or written representations or warranties with
respect to said matters other than as set forth in this Lease.  In addition, Lessor acknowledges that:
(a) Broker has made no representations, promises or warranties concerning
Lessee’s ability to honor the Lease or suitability to occupy the Premises; and
(b) it is Lessor’s sole responsibility to investigate the financial
capability and/or suitability of all proposed tenants.

 

2.5           Lessee as Prior
Owner/Occupant.  The
warranties made by Lessor in Paragraph 2 shall be of no force or effect if
immediately prior to the Start Date Lessee was the owner or occupant of the
Premises.  In such event, Lessee shall
be responsible for any necessary corrective work.

 

3.                                      Term.  See
Addendum

 

3.1           Term.  The Commencement Date, Expiration Date and
Original Term of this Lease are as specified in Paragraph 1.3.

 

3.4           Lease Compliance.  Lessor shall not be required to tender
possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of insurance (Paragraph 8.5).  Pending delivery of such evidence, Lessee shall be required to
perform all of its obligations under this Lease from and after the Start Date,
including the payment of Rent, notwithstanding Lessor’s election to withhold
possession pending receipt of such evidence of insurance.  Further, if Lessee is required to perform
any other conditions prior to or concurrent with the Start Date, the Start Date
shall occur but Lessor may elect to withhold possession until such conditions
are satisfied.

 

4.                                      Rent.  See
Addendum

 

4.1           Rent Defined.  All monetary obligations of Lessee to Lessor
under the terms of this Lease (except for the Security Deposit) are deemed to
be rent (“Rent”).

 

4.2           Payment.  Lessee shall cause payment of Rent to be
received by Lessor in lawful money of the United States, without offset or
deduction (except as specifically permitted in this Lease), on or before the
day on which it is due.  Rent for any
period during the term hereof which is for less than one (1) full calendar
month shall be prorated based upon the actual number of days of said
month.  Payment of Rent shall be made to
Lessor at its address stated herein or to such other persons or place as Lessor
may from time to time designate in writing. 
Acceptance of a payment which is less than the amount then due shall not
be a waiver of Lessor’s rights to the balance of such Rent, regardless of
Lessor’s endorsement of any check so stating.

 

5.                                      Security
Deposit.  Lessee shall deposit with
Lessor upon execution hereof the Security Deposit as security for Lessee’s
faithful performance of its obligations under this Lease.  If Lessee fails to pay Rent, or otherwise
Defaults under this Lease, Lessor may use, apply or retain all or any portion
of said Security Deposit for the payment of any amount due Lessor or to
reimburse or compensate Lessor for any liability, expense, loss or damage which
Lessor may suffer or incur by reason thereof. 
If Lessor uses or applies all or any portion of said Security Deposit,
Lessee shall within ten (10) days after written request therefor deposit monies
with Lessor sufficient to restore said Security Deposit to the full amount
required by this Lease.  If the Base
Rent increases during the term of this Lease, Lessee shall, upon written
request from Lessor, deposit additional monies with Lessor so that the total
amount of the Security Deposit shall at all times bear the same proportion to
the increased Base Rent as the initial Security Deposit bore to the initial
Base Rent.  Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase
the Security Deposit to the extent necessary, in Lessor’s reasonable judgment,
to account for any increased wear and tear that the Premises may suffer as a
result thereof.  If a change in control
of Lessee occurs during this Lease and following such change the financial
condition of Lessee is, in Lessor’s reasonable judgment, significantly reduced,
Lessee shall deposit such additional monies with Lessor as shall be sufficient
to cause the Security Deposit to be at a commercially reasonable level based on
said change in financial condition. 
Lessor shall not be required to keep the Security Deposit separate from
its general accounts.  Within fourteen
(14) days after the expiration or termination of this Lease, if Lessor elects
to apply the Security Deposit only to unpaid Rent, and otherwise within thirty
(30) days after the Premises have been vacated pursuant to Paragraph 7.4(c)
below, Lessor shall return that portion of the Security Deposit not used or
applied by Lessor.  No part of the
Security Deposit shall be considered to be held in trust, to bear interest or
to be prepayment for any monies to be paid by Lessee under this Lease.

 

6.                                      Use.

 

6.1           Use.  Lessee shall use and occupy the Premises
only for the Agreed Use, and for no other purpose.  Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
owners and/or occupants of, or causes damage to neighboring properties.

 

6.2           Hazardous Substances.

 

(a) Reportable Uses Require Consent.  The term “Hazardous Substance” as
used in this Lease shall mean any product, substance, or waste whose presence,
use, manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either:
(i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any
governmental authority, or (iii) a basis for potential liability of Lessor
to any governmental agency or third party under any applicable statute or
common law theory.  Hazardous Substances
shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or
crude oil or any products, by-products or fractions thereof.  Lessee shall not engage in any activity in
or on the Premises which constitutes a Reportable Use of Hazardous Substances
without the express prior written consent of Lessor and timely compliance (at
Lessee’s expense) with all Applicable Requirements.  “Reportable Use” shall
mean (i) the Installation or use of any above or below ground storage

 

	
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9

 

tank, (ii) the generation, possession,
storage, us?? transportation, or disposal of a Hazardous Substance that
requires a permit from, or with respect to which a report, notice, registration
or business plan is required ?? filed with, any governmental authority, and/or
(iii) the ?? at the Premises of a Hazardous Substance with respect to which any
Applicable Requirements requires that a notice be given to persons entering or
occupying the Premises or neighboring properties.  Notwithstanding the foregoing, Lessee may use any ordinary and
customary materials reasonably required to be used in the normal course of the
Agreed Use, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. 
In addition, Lessor may condition its consent to any Reportable Use upon
receiving such additional assurances as Lessor reasonably deems necessary to
protect itself, the public, the Premises and/or the environment against damage,
contamination, injury and/or liability, including, but not limited to, the
installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the
Security Deposit.

 

(b) Duty to Inform Lessor.  If
Lessee knows, or has reasonable cause to believe, that a Hazardous Substance
has come to be located in, on, under or about the Premises, other than as
previously consented to by Lessor, Lessee shall immediately give written notice
of such fact to Lessor, and provide Lessor with a copy of any report, notice,
claim or other documentation which it has concerning the presence of such
Hazardous Substance.

 

(c) Lessee Remediation. 
Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under, or about the Premises (including through the
plumbing or sanitary sewer system) and shall promptly, at Lessee’s expense,
take all investigatory and/or remedial action reasonably recommended, whether
or not formally ordered or required, for the cleanup of any contamination of,
and for the maintenance, security and/or monitoring of the Premises or
neighboring properties, that was caused or materially contributed to by Lessee,
or pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.

 

(d) Lessee Indemnification. 
Lessee shall indemnify, defend and hold Lessor, its agents, employees,
lenders and ground lessor, if any, harmless from and against any and all loss
of rents and/or damages, liabilities, judgments, claims, expenses, penalties,
and attorneys’ and consultants’ fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee, its agents or employee in
violation of the Applicable Requirements, (provided, however, that Lessee shall
have no liability under this Lease with respect to underground migration of any
Hazardous Substance under the Premises from adjacent properties).  Lessee’s obligations shall include, but not
be limited to, the effects of any contamination or injury to person, property
or the environment created or suffered by Lessee, and the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease.  No termination, cancellation or
release agreement entered into by Lessor and Lessee shall release Lessee from
its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.

 

(e) Lessor Indemnification. 
Lessor and its successors and assigns shall indemnify, defend, reimburse
and hold Lessee, its employees and lenders, harmless from and against any and
all environmental damages, including the cost of remediation, which existed as
a result of Hazardous Substances on the Premises prior to the Start Date or
which are caused by the negligence or willful misconduct of Lessor, its agents
or employees.  Lessor’s obligations, as
and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.

 

(f) Investigations and Remediations.  Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having
jurisdiction with respect to the existence of Hazardous Substances on the Premises
prior to the Start Date, unless such remediation measure is required as a
result of Lessee’s use (including “Alterations”, as defined in Paragraph 7.3(a)
below) of the Premises, in which event Lessee shall be responsible for such
payment.  Lessee shall cooperate fully
in any such activities at the request of Lessor, including allowing Lessor and
Lessor’s agents to have reasonable access to the Premises at reasonable times
in order to carry out Lessor’s investigative and remedial responsibilities.

 

(g) Lessor Termination Option. 
If a Hazardous Substance Condition occurs during the term of this Lease,
where such condition renders all or substantially all of the Premises
untenantable, unless Lessee is
legally responsible therefor (in which case Lessee shall make the investigation
and remediation thereof required by the Applicable Requirements and this Lease
shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate
and remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to
remediate such condition exceeds Five Million Dollars ($5,000,000),  give written notice to Lessee, within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition, of Lessor’s desire to terminate this Lease as of
the date sixty (60) days following the date of such notice.  In the event Lessor elects to give a
termination notice, Lessee may, within ten (10) days thereafter, give written
notice to Lessor of Lessee’s commitment to pay the amount by which the cost of
the remediation of such Hazardous Substance Condition exceeds Five Million
Dollars ($5,000,000).  Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within thirty
(30) days following such commitment.  In
such event, this Lease shall continue in full force and effect, and Lessor
shall proceed to make such remediation as soon as reasonably possible after the
required funds are available.  If Lessee
does not give such notice and provide the required funds or assurance thereof
within the time provided, this Lease shall terminate as of the date specified
in Lessor’s notice of termination.  In
the event that Lessor terminates this Lease pursuant to the terms of this
paragraph, or in the event that a governmental agency or authority orders the
premises vacated longer than ninety (90) days, as a result of an unabated
Hazardous Substance Condition, Lessor shall reimburse Lessee for the
unamortized cost of Lessee improvements placed upon the Premises.

 

6.3           Lessee’s Compliance with
Applicable Requirements. 
Except as otherwise provided in this Lease, Lessee shall, at Lessee’s
sole expense, fully, diligently and in a timely manner, materially comply with
all Applicable Requirements, the requirements of any applicable fire insurance
underwriter or rating bureau, and the recommendations of Lessor’s engineers
and/or consultants which relate in any manner to the Premises, without regard
to whether said requirements are now in effect or become effective after the
Start Date.  Lessee shall, within ten
(10) days after receipt of Lessor’s written request, provide Lessor with copies
of all permits and other documents, and other information evidencing Lessee’s
compliance with any Applicable Requirements specified by Lessor, and shall
immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving the failure of Lessee
or the Premises to comply with any Applicable Requirements.

 

6.4           Inspection; Compliance.  Lessor and Lessor’s “Lender” (as defined in
Paragraph 30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times,
for the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. 
The cost of any such inspections shall be paid by Lessor, unless a
violation of Applicable Requirements, or a contamination is found to exist or
be imminent, or the inspection is requested or ordered by a governmental
authority.  In such case, Lessee shall
upon request reimburse Lessor for the cost of such inspections, so long as such
inspection is reasonably related to the violation or contamination.

 

7.                                      Maintenance;
Repairs, Utility Installations; Trade Fixtures and Alterations.

 

7.1           Lessee’s Obligations.

 

(a) In General.  Subject to
the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s
Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage
or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense,
keep the Premises, Utility Installations, and Alterations in good order,
condition and repair.  (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee’s use, any prior use, the
elements or the age of such portion of the Premises), including, but not
limited to, all equipment or facilities, such as plumbing, heating,
ventilating, air-conditioning, electrical, lighting facilities, boilers,
pressure vessels, fire protection system, fixtures, walls (interior and
exterior), foundations, ceilings, roofs, floors, windows, doors, plate glass,
skylights, landscaping, driveways, parking lots, fences, retaining walls,
signs, sidewalks and parkways located in, on, or adjacent to the Premises.  Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance
practices.  Lessee’s obligations shall
include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order,
condition and state of repair.  Lessee shall,
during the term of this Lease, keep the exterior appearance of the Building in
a first-class condition consistent with the exterior appearance of other
similar facilities of comparable age and size in the vicinity, including, when
necessary, the exterior repainting of the Building.

 

	
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10

 

7.2                                 Lessor’s Obligations.  Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance); 9 (Damage or Destruction) and 14 (Condemnation),
it is intended by the Parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises, or the equipment
therein, all of which obligations are intended to be that of the Lessee.  It is the intention of the Parties that the
terms of this Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises, and they expressly waive the benefit of
any statute now or hereafter in effect to the extent it is inconsistent with
the terms of this Lease.

 

7.3                                 Utility Installations; Trade Fixtures; Alterations.

 

(a) Definitions;  Consent
Required.  The term “Utility Installations” refers to all floor
and window coverings, air lines, power panels, electrical distribution,
security and fire protection systems, communication systems, lighting fixtures,
HVAC equipment, plumbing, and fencing in or on the Premises.  The term “Trade
Fixtures” shall mean Lessee’s machinery and equipment that can be
removed without doing material damage to the Premises.  The term “Alterations”
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion.  “Lessee
Owned Alterations and/or Utility Installations” are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). 
Lessee shall not make any Alterations or Utility Installations to the
Premises without Lessor’s prior written consent.  Lessee may, however, make non-structural Utility Installations to
the interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof or any existing walls, and
the cumulative cost thereof during this Lease as extended does not exceed
$50,000 in the aggregate or $10,000 in any one year.

 

(b) Consent.  Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans.  Consent shall be
deemed conditioned upon Lessee’s: 
(i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance
with all conditions of said permits and other Applicable Requirements in a
prompt and expeditious manner.  Any
Alterations or Utility Installations shall be performed in a workmanlike manner
with good and sufficient materials. 
Lessee shall promptly upon completion furnish Lessor with as-built plans
and specifications.

 

(c) Indemnification.  Lessee
shall pay, when due, all claims for labor or materials furnished or alleged to
have been furnished to or for Lessee at or for use on the Premises, which
claims are or may be secured by any mechanic’s or materialmen’s lien against
the Premises or any interest therein. 
Lessee shall give Lessor not less than ten (10) days’ notice prior to
the commencement of any work in, on or about the Premises, and Lessor shall
have the right to post notices of non-responsibility.  If Lessee shall contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement
thereof.  If Lessor shall require,
Lessee shall furnish a surety bond in an amount equal to one and one-half times
the amount of such contested lien, claim or demand, indemnifying Lessor against
liability for the same.  If Lessor
elects to participate in any such action, Lessee shall pay Lessor’s attorneys’
fees and costs.

 

7.4                                 Ownership; Removal; Surrender; and Restoration.

 

(a) Ownership.  All
Alterations and Utility Installations made by Lessee shall be the property of
Lessee, but considered a part of the Premises. 
Lessor may, at any time, elect in writing to be the owner of all or any
specified part of the Lessee Owned Alterations and Utility Installations.  All Lessee Owned Alterations and Utility
Installations shall, at the expiration or termination of this Lease, become the
property of Lessor and be surrendered by Lessee with the Premises.

 

(c) Surrender/Restoration.  Lessee
shall surrender the Premises by the Expiration Date or any earlier termination
date, with all of the improvements, parts and surfaces thereof broom clean and
free of debris, and in good operating order, condition and state of repair, ordinary
wear and tear excepted.  “Ordinary wear
and tear” shall not include any damage or deterioration that would have been
prevented by good maintenance practice. 
Lessee shall repair any damage occasioned by the installation,
maintenance or removal of Trade Fixtures, Lessee Owned Alterations and/or
Utility Installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or groundwater contaminated by Lessee.  Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. 
The failure by Lessee to timely vacate the Premises pursuant to this
Paragraph 7.4(c) without the express written consent of Lessor shall constitute
a holdover under the provisions of Paragraph 26 below.

 

8.                                      Insurance;
Indemnity.

 

8.1                                 Payment For Insurance.  Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per
occurrence.  Premiums for policy periods
commencing prior to or extending beyond the Lease term shall be prorated to
correspond to the Lease term.  Payment
shall be made by Lessee to Lessor within ten (10) days following receipt of an
invoice.

 

8.2                                 Liability Insurance.

 

(a) Carried by Lessee.  Lessee
shall obtain and keep in force a Commercial General Liability Policy of
Insurance protecting Lessee and Lessor against claims for bodily injury,
personal injury and property damage based upon or arising out of the ownership,
use, occupancy or maintenance of the Premises and all areas appurtenant
thereto.  Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$2,000,000 per occurrence with an “Additional
Insured-Managers or Lessors of Premises Endorsement”.  The Policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an ‘insured
contract’ for the performance of Lessee’s indemnity obligations under this
Lease.  The limits of said insurance
shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder.  All insurance carried by
Lessee shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.

 

8.3                                 Property Insurance - Building, Improvements and Rental
Value.

 

(a) Building and Improvements. 
The Insuring Party shall obtain and keep in force a policy or policies
in the name of Lessor, with loss payable to Lessor, any groundlessor, and to
any Lender(s) insuring loss or damage to the Premises.  The amount of such insurance shall be equal
to the full replacement cost of the Premises, as the same shall exist from time
to time, or the amount required by any Lenders, but in no event more than the
commercially reasonable and available Insurable value thereof.  If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations, Trade Fixtures, and
Lessee’s personal property shall be insured by Lessee under Paragraph 8.4
rather than by Lessor.  If the coverage
is available and commercially appropriate, such policy or policies shall insure
against all risks of direct physical loss or damage (except the perils of flood
and/or earthquake unless required by a Lender), including coverage for debris
removal and the enforcement of any Applicable Requirements requiring the
upgrading, demolition, reconstruction or replacement of any portion of the
Premises as the result of a covered loss. 
Said policy or policies shall also contain an agreed valuation provision
in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a
factor of not less than the adjusted U.S. Department of Labor Consumer Price
Index for All Urban Consumers for the city nearest to where the Premises are
located.  If such insurance coverage has
a deductible clause, the deductible amount shall not exceed $1,000 per
occurrence, and Lessee shall be liable for such deductible amount in the event
of an Insured Loss.

 

	
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11

 

8.4                                 Lessee’s Property/Business Interruption Insurance.

 

(a) Property Damage. Lessor shall obtain and maintain insurance
coverage on all ??????oe’s personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. 
Such insurance shall be full replacement cost coverage with a deductible
of not to exceed $1,000 per occurrence. 
The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property, Trade Fixtures and Lessee Owned Alterations
and Utility Installations.  Lessee shall
provide Lessor with written evidence that such insurance is in force.

 

(c) No Representation of Adequate Coverage.  Lessor makes no representation that the
limits or forms of coverage of insurance specified herein are adequate to cover
Lessee’s property, business operations or obligations under this Lease.

 

8.5                                 Insurance
Policies.  Insurance required herein
shall be by companies duly licensed or admitted to transact business in the
state where the Premises are located, and maintaining during the policy term a
“General Policyholders Rating” of at least B+, V, as set forth in the most
current issue of “Best’s Insurance Guide”, or such other rating as may be
required by a Lender.  Lessee shall not
do or permit to be done anything which invalidates the required insurance
policies.  Lessee shall, prior to the
Start Date, deliver to Lessor certified copies of policies of such insurance or
certificates evidencing the existence and amounts of the required
insurance.  No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor.  Lessee shall,
at least thirty (30) days prior to the expiration of such policies, furnish
Lessor with evidence of renewals or “insurance binders” evidencing renewal
thereof, or Lessor may order such insurance and charge the cost thereof to
Lessee, which amount shall be payable by Lessee to Lessor upon demand.  Such policies shall be for a term of at
least one year, or the length of the remaining term of this Lease, whichever is
less.  If either Party shall fail to
procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.

 

8.6                                 Waiver of Subrogation.  Without affecting any other rights or remedies, Lessee
and Lessor each hereby release and relieve the other, and waive their entire
right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured
against herein.  The effect of such
releases and waivers is not limited by the amount of insurance carried or
required, or by any deductibles applicable hereto.  The Parties agree to have their respective property damage
insurance carriers waive any right to subrogation that such companies may have
against Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

 

8.7                                 Indemnity. 
Except for Lessor’s negligence or willful misconduct, Lessee shall
indemnify, protect, defend and hold harmless the Premises, Lessor and its
agents, Lessor’s master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys’ and consultants’ fees, expenses and/or liabilities
arising out of, involving, or in connection with, the use and/or occupancy of
the Premises by Lessee.  If any action
or proceeding is brought against Lessor by reason of any of the foregoing
matters, Lessee shall upon notice defend the same at Lessee’s expense by
counsel reasonably satisfactory to Lessor and Lessor shall cooperate with
Lessee in such defense.  Lessor need not
have first paid any such claim in order to be defended or indemnified.

 

8.8                                 Exemption of Lessor from Liability.  Lessor shall not be liable for injury or
damage to the person or goods, wares, merchandise or other property of Lessee,
Lessee’s employees, contractors, invitees, customers, or any other person in or
about the Premises, whether such damage or injury is caused by or results from
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, HVAC or lighting fixtures, or from any other cause, whether the said
injury or damage results from conditions arising upon the Premises or upon
other portions of the Building of which the Premises are a part, or from other
sources or places.  Lessor shall not be
liable for any damages arising from any act or neglect of any other tenant of
Lessor.  Notwithstanding Lessor’s
negligence or breach of this Lease, Lessor shall under no circumstances be
liable for injury to Lessee’s business or for any loss of income or profit
therefrom.

 

9.                                      Damage
or Destruction.

 

9.1                                 Definitions.

 

(a) “Premises Partial Damage” shall mean damage or destruction to
the improvements on the Premises, other than the Lessee constructed building
and Lessee Owned Alterations and Utility Installations, which can reasonably be
repaired in six (6) months or less from the date of the damage or
destruction.  Lessor shall notify Lessee
in writing within thirty (30) days from the date of the damage or destruction
as to whether or not the damage is Partial or Total.

 

(b) “Premises Total Destruction” shall mean damage or destruction
to the Premises, other than the Lessee constructed building and Lessee Owned
Alterations and Utility Installations and Trade Fixtures, which cannot
reasonably be repaired in six (6) months or less from the date of the damage or
destruction.  Lessor shall notify Lessee
in writing within thirty (30) days from the date of the damage or destruction
as to whether or not the damage is Partial or Total.

 

(c) “Insured Loss” shall mean damage or destruction to Improvement
on the Premises, other than Lessee Owned Alterations and Utility Installations
and Trade Fixtures, which was caused by an event required to be covered by the
Insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.

 

(d) “Replacement Cost” shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.

 

(e) “Hazardous Substance Condition” shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

 

9.2                                 Partial Damage - Insured Loss.  If a Premises Partial Damage that
is an Insured Loss occurs, then Lessor shall, at Lessor’s expense, repair such
damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable Insurance proceeds available to Lessee on a reasonable basis for
that purpose.  Notwithstanding the
foregoing, if the required Insurance was not in force or the insurance proceeds
are not sufficient to effect such repair, the Insuring Party shall promptly
contribute the shortage in proceeds (except as to the deductible which is
Lessee’s responsibility) as and when required to complete said repairs.  In the event, however, such shortage) was due
to the fact that, by reason of the unique nature of the Improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor.  If Lessor receives
said funds or adequate assurance thereof within said ten (10) day period, the
party responsible for making the repairs shall complete them as soon as
reasonable possible and this Lease shall remain in full force and effect.  If such funds or assurance are not received,
Lessor shall make such restoration and repair as is commercially reasonably
with Lessee  paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect,
Lessee shall not be entitled to reimbursement of any funds contributed by
Lessee to repair any such damage or destruction.  Premises Partial Damage due to flood or earthquake shall be
subject to Paragraph 9.3, notwithstanding that there may be some Insurance
coverage, but the net proceeds of any such insurance shall be made available
for the repairs if made by either Party.

 

9.3                                 Partial Damage - Uninsured Loss.  If a Premises Partial Damage that
is not an Insured Loss occurs, Lessor shall repair such damage as soon as
reasonably possible at lessee’s  expense,
in which event this Lease shall continue in full force and effect.  Lessee shall provide Lessor with said funds
or satisfactory assurance thereof within thirty (30) days after notice of the
uninsured loss.  In such event this
Lease shall continue in full force and effect, and Lessor shall proceed to make
such repairs as soon as reasonably possible after the required funds are
available.  If Lessee does not make the
funds available, this Lease shall
terminate as of the expiration of the thirty (30) day period.

 

9.4                                 Total Destruction. 
Notwithstanding any other provision hereof, if a Premises
Total Destruction occurs, at the sole option of Lessee,  this Lease shall terminate sixty (60) days
following such Destruction.  If the
damage or destruction was caused by the negligence or willful misconduct of
Lessee,  Lessor shall have the
right to recover Lessor’s damages from Lessee, except as provided in Paragraph
8.6.

 

9.5                                 Damage Near End of Term.  If at any time during the last six (6) months of this
Lease there is damage for which the cost to repair exceeds one (1) month’s Base
Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective
sixty (60) days following the date of occurrence of such damage by giving a
written termination notice to Lessee within thirty (30) days after the date of
occurrence of such damage. 
Notwithstanding the foregoing, if Lessee at that time has an exercisable
option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by, (a) exercising such option and (b)

 

	
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12

 

providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of
(i) the date which is ten days after Lessee’s receipt of Lessor’s written
??ce purporting to terminate this Lease, or (ii) the day ???? the date upon
which such option expires.  If Lessee
duly exercises such option during such period and provides Lessor with funds
(or adequate assurance thereof) to cover any shortage in Insurance proceeds,
Lessor shall, at Lessor’s commercially reasonable expense, repair such damage
as soon as reasonably possible and this Lease shall continue in full force and
effect.  If Lessee fails to exercise
such option and provide such funds or assurance during such period, then this
Lease shall terminate on the date specified in the termination notice and
Lessee’s option shall be extinguished.

 

9.6           Abatement of Rent; Lessee’s Remedies.

 

(a) Abatement.  In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee’s use of the Premises is
impaired.  All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no
liability for any such damage, destruction, remediation, repair or restoration
except as provided herein.

 

(b) Remedies.  If Lessor shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful
way, such repair or restoration within ninety (90) days after such obligation
shall accrue.  Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice, of Lessee’s
election to terminate this Lease on a date not less than sixty (60) days
following the giving of such notice.  If
Lessee gives such notice and such repair or restoration is not commenced within
thirty (30) days thereafter, this Lease shall terminate as of the date
specified in said notice.  If the repair
or restoration is commenced within said thirty (30) days, this Lease shall
continue in full force and effect.  “Commence” shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.

 

9.7           Termination - Advance Payments.  Upon termination of this Lease pursuant to
Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor.  Lessor shall, in addition,
return to Lessee so much of Lessee’s Security Deposit as has not been, or is
not then required to be, used by Lessor.

 

9.8           Walve Statutes.  Lessor and Lessee agree that the terms of this Lease shall govern
the effect of any damage to or destruction of the Premises with respect to the
termination of this Lease and hereby waive the provisions of any present or
future statute to the extent inconsistent herewith.

 

10.          Real
Property Taxes.

 

10.1         Definition of “Real Property Taxes.”  As used herein, the term “Real Property Taxes” shall include any
form of assessment; real estate, general, special, ordinary or extraordinary,
or rental levy or tax (other than inheritance, personal income or estate
taxes); Improvement bond; and/or license fee imposed upon or levied against any
legal or equitable Interest of Lessor in the Premises, Lessor’s right to other
income therefrom, and/or Lessor’s business of leasing, by any authority having
the direct or indirect power to tax and where the funds are generated with
reference to the Building address and where the proceeds so generated are to be
applied by the city, county or other local taxing authority of a jurisdiction
within which the Premises are located. 
The term “Real Property Taxes”
shall also include any tax, fee, levy, assessment or charge, or any increase
therein, imposed by reason of events occurring during the term of this Lease,
including but not limited to, a change in the ownership of the Premises.

 

10.2

 

(a) Payment of
Taxes.  Lessee shall pay the
Real Property Taxes applicable to the Premises during the term of this
Lease.  Subject to Paragraph 10.2(b),
all such payments shall be made at least ten (10) days prior to any delinquency
data.  Lessee shall promptly furnish
Lessor with satisfactory evidence that such taxes have been paid.  If any such taxes shall cover any period of
time prior to or after the expiration or termination of this Lease, Lessee’s
share of such taxes shall be prorated to cover only that portion of the tax
bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any overpayment. 
If Lessee shall fail to pay any required Real Property Taxes, Lessor
shall have the right to pay the same, and Lessee shall reimburse Lessor therefor
upon demand.

 

(b) Advance Payment.  In the event Lessee incurs a late charge on
any Rent payment, Lessor may, at Lessor’s option, estimate the current Real
Property Taxes, and require that such taxes be paid in advance to Lessor by
Lessee, either; (i) in a lump sum amount equal to the Installment due, at least
twenty (20) days prior to the applicable delinquency date, or (ii) monthly in
advance with the payment of the Base Rent. 
If Lessor elects to require payment monthly in advance, the monthly
payment shall be an amount equal to the amount of the estimated installment of
taxes divided by the number of months remaining before the month in which said
installment becomes delinquent.  When
the actual amount of the applicable tax bill is known, the amount of such equal
monthly advance payments shall be adjusted as required to provide the funds
needed to pay the applicable taxes.  If
the amount collected by Lessor is insufficient to pay such Real Property Taxes
when due, Lessee shall pay Lessor, upon demand, such additional sums as are
necessary to pay such obligations.  All
monies paid to Lessor under this Paragraph may be intermingled with other
monies of Lessor and shall not bear interest. 
In the event of a Breach by Lessee in the performance of its obligations
under this Lease, then any balance of funds paid to Lessor under the provisions
of this Paragraph may, at the option of Lessor, be treated as an additional
Security Deposit.

 

10.3         Joint Assessment.  If the Premises are not separately assessed, Lessee’s liability
shall be an equitable proportion of the Real Property Taxes for all of the land
and improvements included within the tax parcel assessed, such proportion to be
conclusively determined by Lessor from the respective valuations assigned in
the assessor’s work sheets or such other information as may be reasonably
available.

 

10.4         Personal Property Taxes.  Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee.  When possible, Lessee shall
cause such property to be assessed and billed separately from the real property
of Lessor.  If any of Lessee’s said
personal property shall be assessed with Lessor’s real property, Lessee shall
pay Lessor the taxes attributable to Lessee’s property within ten (10) days
after receipt of a written statement.

 

11.          Utilities.  Lessee shall pay for all water, gas, heat,
light, power, telephone, trash disposal and other utilities and services
supplied to the Premises, together with any taxes thereon.  If any such services are not separately
metered to Lessee, Lessee shall pay a reasonable proportion, to be determined
by Lessor, of all charges jointly metered.

 

12.          Assignment
and Subletting.

 

12.1         Lessor’s Consent Required.

 

(a) Lessee shall not voluntarily or by operation of
law assign, transfer, mortgage or encumber (collectively, “assign or assignment”) or sublet all or
any part of Lessee’s interest in this Lease or in the Premises without Lessor’s
prior written consent.  Notwithstanding
the above, Lessor hereby expressly consents to Lessee subletting portions of
the Premises to customers that supply Lessee with vehicles for sale at
auction.  Lessee shall provide Lessor with
copies of any and all subleases entered into by Lessee.

 

(e) Lessee’s remedy for any breach of Paragraph 12.1
by Lessor shall be limited to compensatory damages and/or injunctive relief.

 

12.2         Terms and Conditions Applicable to Assignment and
Subletting.

 

(a) Regardless of Lessor’s consent, any assignment or
subletting shall not:  (i) be
effective without the express written assumption by such assignee or sublessee
of the obligations of Lessee under this Lease; 
(ii) release Lessee of any obligations hereunder; or  (iii) alter the primary liability of
Lessee for the payment of Rent or for the performance of any other obligations
to be performed by Lessee.

 

(b) Lessor may accept Rent or performance of Lessee’s
obligations from any person other than Lessee pending approval or disapproval
of an assignment.  Neither a delay in
the approval or disapproval of such assignment nor the acceptance of Rent or
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Lessor’s right to exercise its remedies for Lesso? ??fault or Breach.

 

(c) Lessor’s consent to any as????ment or subletting
shall not constitute a consent to any subsequent assignment or subletting.

 

(d) In the event of any Default or Breach by Lessee,
Lessor may proceed directly against Lessee, any Guarantors or anyone else
responsible for the performance of Lessee’s obligations under this Lease,
including any assignee or sublessee, without first exhausting Lessor’s remedies
against any other person or entity responsible therefore to Lessor, or any
security held by Lessor.

 

(e) Each request for consent to an assignment or
subletting shall be in writing, accompanied by information relevant to Lessor’s
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not
limited to the intended use and/or required modification of the Premises, if
any, Lessee agrees to provide Lessor with such other or additional information
and/or documentation as may be reasonably requested.  This provision is inapplicable as to subleases with Lessee’s
vehicle supplying customers, as set forth in Sec. 12.1 (a).

 

(f) Any assignee of, or sublessee under, this Lease
shall, by reason of accepting such assignment or entering into such sublease,
be deemed to have assumed and agreed to conform and comply with each and every
term, covenant, condition and obligation herein to be observed or performed by
Lessee during the term of said assignment or sublease, other than such
obligations as are contrary to or inconsistent with provisions of an assignment
or sublease to which Lessor has specifically consented to in writing.

 

12.3         Additional Terms and
Conditions Applicable to Subletting.  The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

 

(a) Lessee hereby assigns and transfers to Lessor all
of Lessee’s interest in all Rent payable on any sublease, and Lessor may
collect such Rent and apply same toward Lessee’s obligations under this Lease;
provided, however, that until a Breach shall occur in the performance of
Lessee’s obligations, Lessee may collect said Rent.  Lessor shall not, by reason of the foregoing or any assignment of
such sublease, nor by reason of the collection of Rent, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee’s
obligations to such sublessee.  Lessee
hereby irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of
Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to
become due under the sublease. 
Sublessee shall rely upon any such notice from Lessor and shall pay all
Rents to Lessor without any obligation or right to inquire as to whether such
Breach exists, notwithstanding any claim from Lessee to the contrary.

 

(b) In the event of a Breach of Lessee, Lessor may, at
its option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.

 

(c) Any matter requiring the consent of the sublessor
under a sublease shall also require the consent of Lessor.

 

(d) No sublessee shall further assign or sublet all or
any part of the Premises without Lessor’s prior written consent.

 

(e) Lessor shall deliver a copy of any notice of
Default or Breach by Lessee to the sublessee, who shall have the right to cure
the Default of Lessee within the grace period, if any, specified in such
notice.  The sublessee shall have a
right of reimbursement and offset from the against Lessee for any such Defaults
cured by the sublessee.

 

13.          Default;
Breach; Remedies.

 

13.1         Default; Breach. 
A “Default”  is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or rules under
this Lease.  A “Breach”  is defined as the
occurrence of one or more of the following Defaults, and the failure of Lessee
to cure such Default within any applicable grace period:

 

(a) The abandonment of the
Premises; or the vacating of the Premises without providing a commercially
reasonable level of security, or where the coverage of the property insurance
described in Paragraph 8.3 is jeopardized as a result thereof, or without
providing reasonable assurances to minimize potential vandalism.

 

(b) The failure of Lessee to
make any payment of Rent or any Security Deposit required to be made by Lessee
hereunder, whether to Lessor or to a third party, when due, to provide
reasonable evidence of insurance or surety bond, or to fulfill any obligation
under this Lease which endangers or threatens life or property, where such
failure continues for a period of three (3) business days following written
notice to Lessee.

 

(c) The failure by Lessee to
provide (i) reasonable written evidence of compliance with Applicable
Requirements, (iii) the rescission of an unauthorized assignment or subletting,
(iv) a Tenancy Statement, (v) a requested subordination, (vi) evidence
concerning any guaranty and/or Guarantor, (vii) any document requested under
Paragraph 42 (easements), or (viii) any other documentation or information
which Lessor may reasonably require of Lessee under the terms of this Lease,
where any such failure continues for a period thirty (30) days following
written notice to Lessee.

 

(d) A Default by Lessee as
to the terms, covenants, conditions or provisions of this Lease, other than
those described in subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice; provided,
however, that if the nature of Lessee’s Default is such that more than thirty
(30) days are reasonably required for its cure, then it shall not be deemed to
be a Breach if Lessee commences such cure within said thirty (30) day period
and thereafter diligently prosecutes such cure to completion.

 

(e) The occurrence of any of
the following events:  (i) the making of
any general arrangement or assignment for the benefit of creditors; (ii)
becoming a “debtor” as defined in 11 U.S.C. § 101 or any successor statute thereto (unless,
in the case of a petition filed against Lessee, the same is dismissed within
sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee’s assets located at the Premises or
of Lessee’s interest in this Lease, where possession is not restored to Lessee
within thirty (30) days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee’s assets located at the Premises or of
Lessee’s interest in this Lease, where such seizure is not discharged within
thirty (30) days; provided, however, in the event that any provision of this
subparagraph 13.1 (e) is contrary to any applicable law, such provision shall
be of no force or effect, and not affect the validity of the remaining
provisions.

 

(f) The discovery that any
financial statement of Lessee or of any Guarantor given to Lessor was
materially false.

 

13.2         Remedies.  If Lessee
fails to perform any of its affirmative duties or obligations, within ten (10)
days after written notice (or in case of an emergency, without notice), Lessor
may, at its option, perform such duly or obligation on Lessee’s behalf,
including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals.  The costs and expenses of any such performance
by Lessor shall be due and payable by Lessee upon receipt of invoice
therefor.  If any check given to Lessor
by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at
its option, may require all future payments to be made by Lessee to be by
cashier’s check.  In the event of a
Breach, Lessor may, with or without further notice or demand, and without
limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach:

 

(a)  Terminate Lessee’s right to possession of
the Premises by any lawful means, in which case this Lease shall terminate and
Lessee shall immediately surrender possession to Lessor.  In such event Lessor shall be entitled to
recover from Lessee: (i) the unpaid Rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor
for all the detriment proximately caused by the Lessee’s failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting including necessary
renovation and alteration of the Premises, reasonable attorneys’ fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease.  The worth at the time of award of the amount referred to in
provision (iii) of the immediately preceding sentence shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of the
District within which the Premises are located at the time of award plus one
percent (1%).  Efforts by Lessor to
mitigate damages caused by Lessee’s Breach of this Lease shall not waive
Lessor’s right to recover damages under Paragraph 12.  If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding any unpaid Rent and damages as are recoverable therein, or Lessor
may reserve the right to recover all or any part thereof in a separate
suit.  If a notice and grace period
required under Paragraph 13.1 was not previously given, a notice to pay rent or
quit, or to perform or quit given to Lessee under the unlawful detainer statute
shall also constitute the notice required by Paragraph 13.1.  In such case, the applicable grace period
required by Paragraph 13.1 and the unlawful detainer statute shall run
concurrently, and the failure of Lessee to cure the Default within the greater
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14

 

detainer and a Breach of this Lease entitling
Lessor?? the remedies provided for in the this Lease and/or by said statute.

 

(b)  Continue the Lease and Le????’s right to
possession and recover the Rent as it becomes due, in which event Lessee may
sublet or assign, subject only to reasonable limitations.  Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor’s interest, shall
not constitute a termination of the Lessee’s right to possession.

 

(c)  Pursue any other remedy now or hereafter
available under the laws or judicial decisions of the state wherein the
Premises are located.  The expiration or
termination of this Lease and/or the termination of Lessee’s right to
possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee’s occupancy of the Premises.

 

13.3         Inducement Recapture. 
Any agreement for
free or abated rent or other charges, or for the giving or paying by Lessor to
or for Lessee of any cash or other bonus, inducement or consideration for
Lessee’s entering into this Lease, all of which concessions are hereinafter
referred to as “Inducement Provision,”  shall
be deemed conditioned upon Lessee’s full and faithful performance of all of the
terms, covenants and conditions of this Lease. 
Upon Breach of this Lease by Lessee, any such Inducement Provision shall
automatically be deemed deleted from this Lease and of no further force or
effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an Inducement Provision
shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. 
The acceptance by Lessor of Rent or the cure of the Breach which
initiated the operation of this paragraph shall not be deemed a waiver by
Lessor of the provisions of this paragraph unless specifically so stated in
writing by Lessor at the time of such acceptance.

 

13.4         Late Charges. 
Lessee hereby acknowledges that late payment by Lessee of Rent will
cause Lessor to incur costs not contemplated by this Lease, the exact amount of
which will be extremely difficult to ascertain.  Such costs include, but are not limited to, processing and
accounting charges, and late charges which may be Imposed upon Lessor by any Lender.  Accordingly, if any Rent shall not be
received by Lessor within ten (10) days after such amount shall be due, then,
without any requirement for notice to Lessee, Lessee shall pay to Lessor a
one-time late charge equal to five percent (5%) of each such overdue amount.  The Parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Lessor will incur
by reason of such late payment. 
Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee’s Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted
hereunder.  In the event that a late
charge is payable hereunder, whether or not collected, for three (3)
consecutive installments of Base Rent, then notwithstanding any provision of
this Lease to the contrary, Base Rent shall, at Lessor’s option, become due and
payable quarterly in advance.

 

13.5         Interest.  Any
monetary payment due Lessor hereunder, other than late charges, not received by
Lessor, when due as to scheduled payments (such as Base Rent) or within thirty
(30) days following the date on which it was for non-scheduled payment, shall
bear interest from the date when due, as to scheduled payments, or the
thirty-first (31st) day after it was due as to non-scheduled payments.  The interest (“Interest”) charged shall be equal to the prime rate reported
in the Wall Street Journal as published closest prior to the date when due plus
two percent (2%), but shall not exceed the maximum rate allowed by law.  Interest is payable in addition to the
potential late charge provided for in Paragraph 13.4.

 

13.6         Breach by Lessor.

 

(a)  Notice of
Breach.  Lessor shall not be
deemed breach of this Lease unless Lessor falls within a reasonable time to
perform an obligation required to be performed by Lessor.  For purposes of this Paragraph, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and any Lender whose name and address shall have been furnished lessee in
writing for such purpose, of written notice specifying wherein such obligation
of Lessor has not been performed; provided, however, that if the nature of
Lessor’s obligation is such that more than thirty (30) days are reasonably
required for its performance, then Lessor shall not be in breach if performance
is commenced within such thirty (30) day period and thereafter diligently
pursued to completion.

 

(b)  Performance
by Lessee on Behalf of Lessor. 
In the event that neither Lessor nor Lender cures said breach within
thirty (30) days after receipt of said notice, or if having commenced said cure
they do not diligently pursue it to completion, then Lessee may elect to cure
said breach at Lessee’s expense and offset from Rent an amount equal to the
greater of one month’s Base Rent or the Security Deposit, and to pay an excess
of such expense under protest, reserving Lessee’s right to reimbursement from
Lessor.  Lessee shall document the cost
of said cure and supply said documentation to Lessor.

 

14.          Condemnation.  If the Premises or any portion thereof are taken under the power
of eminent domain or sold under the threat of the exercise of said power
(collectively “Condemnation”),
this Lease shall terminate as to the part taken as of the date the condemning
authority takes title or possession, whichever first occurs.  If more than ten percent (10%) of any
building portion of the Premises, or more than twenty-five percent (25%) of the
land area portion of the Premises not occupied by any building, is taken by
Condemnation, Lessee may, at Lessee’s option, to be exercised in writing within
ten (10) days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, with ten (10) days after the
condemning authority shall have taken possession) terminate this Lease as of
the date the condemning authority takes such possession.  If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in proportion to the reduction in utility of the Premises caused by
such Condemnation.  Condemnation awards
and/or payments shall be the property of Lessor, whether such award shall be
made as compensation for diminution in value of the leasehold, the value of the
part taken, or for severance damages; provided, however, that Lessee shall be
entitled to any compensation for Lessee’s relocation expenses, loss of business
goodwill and/or Trade Fixtures, without regard to whether or not this Lease is
terminated pursuant to the provisions of this Paragraph.  All Alterations and Utility Installations
made to the Premises by Lessee, for purposes of Condemnation only, shall be
considered the property of the Lessee and Lessee shall be entitled to any and
all compensation which is payable therefor. 
In the event that this Lease is not terminated by reason of the
Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

 

15.          Brokers’
Fee.  Reference Separate Broker’s Agreement

 

15.2         Assumption of Obligations.  Any
buyer or transferee of Lessor’s interest in this Lease shall be deemed to have
assumed Lessor’s obligation hereunder. 
Each Broker shall be a third party beneficiary of the provisions of
Paragraphs 1.10, 15, 22 and 31.  If
Lessor fails to pay to a Broker any amounts due as and for commissions
pertaining to this Lease when due, then such amounts shall accrue
interest.  In addition, if Lessor fails
to pay any amounts to Lessee’s Broker when due, Lessee’s Broker may send
written notice to Lessor and Lessee of such failure and if Lessor fails to pay
such amounts with ten (10) days after said notice, Lessee shall pay said monies
to its Broker and offset such amounts against Rent.  In addition, Lessee’s Broker shall be deemed to be a third party
beneficiary of any commission agreement entered into by and/or between Lessor
and Lessor’s Broker.

 

15.3         Representations and Indemnities of Broker
Relationships.  Lessee and Lessor each represent and warrant
to the other that it has had no dealings with any person, firm, broker or
finder (other than the Brokers, if any) in connection with this Lease, and that
no one other than said named Brokars is entitled to any commission or finder’s
fee in connection herewith.  Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, Including any costs,
expenses, and/or attorney’s fees reasonably incurred with respect thereto.

 

16.          Estoppel
Certificates.

 

(a)  Each party
(as “Responding Party”) shall within ten (10) days after
written notice from the other Party (the “Requesting
Party”) execute
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current “Estoppel
Certificate” form published by the American industrial Real Estate
Association, plus such additional information, confirmation and/or statements
as may be reasonably requested by the Requesting Party.

 

(b)  If the
Responding Party shall fail to execute or deliver the Estoppel Certificate
within such ten day period, the Requesting Party may execute an Estoppel
Certificate stating that: (i) the Lease is in full force and effect without
modification except as may be represented by the Requesting Party, (ii) there
are no uncured defaults in the Requesting Party’s performance, and (iii) if Lessor
is the Requesting Party, not more than one month’s Rent has been paid in
advance, Prospective purchasers and encumbrancers may rely upon the Requesting
Party’s Estoppel Certificate, and the Responding Party shall be estopped from
denying the truth of the facts contained in said Certificate.

 

(c)  If Lessor
desires to finance, refinance, or sell the Premises, or any part thereof,
Lessee and all Guarantors shall deliver to any potential lender or purchaser
designated by Lessor such financial statements as may be reasonably required by
such lender or purchaser, including, but not limited to, Lessee’s financial
statements for the past three (3) years. 
All such financial statements shall be received by Lessor and such lender
or purchaser in confidence and shall be used only for the purposes herein set
forth.

 

17.          Definition of Lessor.  The term “Lessor” as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or, if this
is a sublease, of the Lessee’s interest in the prior lease.  In the event of a transfer of Lessor’s title
or interest in the Premises or this Lease, Lessor shall deliver to

 

	
  Initials

  	
   /s/ DEH/PAS

  

 

15

 

the transferee or assignee (in cash or by credit) any unused Security
Deposit held by Lessor.  Except as
provided in Paragraph 15, upon such transfer or assignment and delivery of the
Security Deposit as aforesaid ??? prior Lessor shall be relieved of all
liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. 
Subject to the foregoing, the obligations and/or covenants in this Lease
to be performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined.  Notwithstanding the above, and
subject to the provisions of Paragraph 20 below, the original Lessor under this
Lease, and all subsequent holders of the Lessor’s interest in this Lease shall
remain liable and responsible with regard to the potential duties and
liabilities of Lessor pertaining to Hazardous Substances as outlined in
Paragraph 6 above.

 

18.          Severability.  The invalidity of any provision of this
Lease, as determined by a court of competent jurisdiction, shall in no way
affect the validity of any other provision hereof.

 

19.          Days.  Unless otherwise specifically indicated to
the contrary, the word “days” as used in this Lease shall mean and refer to
calendar days.

 

20.          Limitation
on Liability.  Subject
to the provisions of Paragraph 17 above, the obligations of Lessor under this
Lease shall not constitute personal obligations of Lessor, the individual
partners of Lessor or its or their individual partners, directors, officers or
shareholders, and Lessee shall look to the Premises, and to no other assets of
Lessor, for the satisfaction of any liability of Lessor with respect to this
Lease, and shall not seek recourse against the individual partners of Lessor,
or its or their individual partners, directors, officers or shareholders, or
any of their personal assets for such satisfaction.

 

21.          Time
of Essence.  Time is
of the essence with respect to the performance of all obligations to be
performed or observed by the Parties under this Lease.

 

22.          No
Prior or Other Agreements; Broker Disclaimer.  This Lease contains all agreements between
the Parties with respect to any matter mentioned herein, and no other prior or
contemporaneous agreement or understanding shall be effective.  Lessor and Lessee each represents and
warrants to the Brokers that it has made, and is relying solely upon, its own
investigation as to the nature, quality, character and financial responsibility
of the other Party to this Lease and as to the nature, quality and character of
the Premises.  Brokers have no responsibility
with respect thereto or with respect to any default or breach hereof by either
Party.  The liability (including court
costs and Attorneys’ fees), of any Broker with respect to negotiation,
execution, delivery or performance by either Lessor or Lessee under this Lease
or any amendment or modification hereto shall be limited to an amount up to the
fee received by such Broker pursuant to this Lease; provided, however, that the
foregoing limitation on each Broker’s liability shall not be applicable to any
gross negligence or willful misconduct of such Broker.

 

23.          Notices.

 

23.1         Notice Requirements.  All notices required or permitted
by this Lease shall be in writing and may be delivered in person (by land or by
courier) or may be sent by regular, certified or registered mail or U.S. Postal
Service Express Mail, with postage prepaid, or by facsimile transmission, and
shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23.  The addresses noted
adjacent to a Party’s signature on this Lease shall be that Party’s address for
delivery or mailing of notices.  Either
Party may be written notice to the other specify a different address for
notice.  A copy of all notices to Lessor
shall be concurrently transmitted to such party or parties at such addresses as
Lessor may from time to time hereafter designate in writing.

 

23.2         Date of Notice.  Any notice sent by registered or certified
mail, return receipt requested, shall be deemed given on the date of delivery
shown on the receipt card, or if no delivery date is shown, the postmark
thereon.  If sent by regular mail the
notice shall be deemed given forty-eight (48) hours after the same is addressed
as required herein and mailed with postage prepaid.  Notices delivered by United States Express Mail or overnight
courier that guarantee next day delivery shall be deemed given twenty-four (24)
hours after delivery of the same to the Postal Service or courier.  Notices transmitted by facsimile
transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or
mail.  If notice is received on a
Saturday, Sunday or legal holiday, it shall be deemed received on the next
business day.

 

24.          Waivers.  No waiver by Lessor of the Default or Breach
of any term, covenant or condition hereof by Lessee, shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent Default
or Breach by Lessee of the same or of any other term, covenant or condition
hereof.  Lessor’s consent to, or approval
of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s
consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of
this Lease requiring such consent.  The
acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by
Lessee.  Any payment by Lessee may be
accepted by Lessor on account of monies or damages due Lessor, notwithstanding
any qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.

 

25.          Recording.  Either Lessor or Lessee shall, upon request
of the other, execute acknowledge and deliver to the other a short form
memorandum of this Lease for recording purposes.  The Party requesting recordation shall be responsible for payment
of any fees applicable thereto.

 

26.          No
Right To Holdover.  Lessee
has no right to retain possession of the Premises or any part thereof beyond
the expiration or termination of this Lease. 
In the event that Lessee holds over, then the Base Rent shall be
increased to one hundred twenty five percent (125%) of the Base Rent applicable
during the month immediately preceding the expiration or termination.  Nothing contained herein shall be construed
as consent by Lessor to any holding over by Lessee.

 

27.          Cumulative
Remedies.  No remedy
or election hereunder shall be deemed exclusive but shall, wherever possible,
be cumulative with all other remedies at law or in equity.

 

28.          Covenants
and Conditions; Construction of Agreement.  All provisions of this Lease to be observed
or performed by Lessee are both covenants and conditions.  In construing this Lease, all heading and
titles are for the convenience of the Parties only and shall not be considered
a part of this Lease.  Whenever required
by the context, the singular shall include the plural and vice versa.  This Lease shall not be construed as if
prepared by one of the Parties, but rather according to its fair meaning as a
whole, as if both the Parties had prepared it.

 

29.          Binding
Effect; Choice of Law. 
This Lease shall be binding upon the parties, their personal
representatives, successors and assigns and be governed by the laws of the
State in which the Premises are located. 
Any litigation between the Parties hereto concerning this Lease shall be
initiated in the country in which the Premises are located.

 

30.          Subordination;
Attornment; Non-Disturbance.

 

30.1         Subordination.  This Lease and any Option granted hereby shall be subject and
subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, “Security Device”), now or hereafter placed upon the Premises,
to any and all advances made on the security thereof, and to all renewals,
modifications, and extensions thereof. 
However, Lessor hereby warrants and represents that no Security Devices
encumber the Premises as of the execution date of this Agreement.  Lessee agrees that the holders of any such
Security Devices (in this Lease together referred to as “Lessor’s Lender”)
shall have no liability or obligation to perform any of the obligations of Lessor
under this Lease unless and until they take title to the Premises after
foreclosure.  Any Lender may elect to
have this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this
Lease and such Options shall be deemed prior to such Security Device,
notwithstanding the relative dates of the documentation or recordation thereof.

 

30.2         Attornment.  Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall
not:  (i) be liable for any act or
omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (ii) be subject to any offsets or defenses which
Lessee might have against any prior lessor; or (iii) be bound by prepayment of
more than one (1) month’s rent.

 

30.3         Non-Disturbance.  With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination of this Lease shall be subject
to receiving a commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement” from the Lender
which Non-Disturbance Agreement provides that Lessee’s possession of the
Premises, and this Lease, including any options to extend the term hereof, will
not be disturbed so long as Lessee is not in Breach hereof and attorns to the
record owner of the Premises.  With
respect to Security Devices entered into by Lessor prior to the execution of
this Lease, Lessor hereby represents and warrants that no such Security Devices
exist as of the execution date of this Agreement.

 

30.4         Self-Executing.  The agreements contained in this Paragraph 30 shall be effective
without the execution of any further documents; provided, however, that upon
written request from Lessor or a Lender in connection with a sale, financing or
refinancing of the Premises, Lessee and Lessor shall execute such further
writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

 

31.          Attorneys’ Fees. 
If any Party or Broker brings an action or proceeding involving the
Premises to enforce the terms hereof or to declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding, action, or
appeal thereon, shall be entitled to reasonable attorney’s’ fees.  Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not such action or proceeding is
pursued to decision or judgment.  The
term, “Prevailing Party” shall
include, without limitation, a Party or Broker who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense.  The attorneys’ fees
award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all attorneys’ fees reasonably
incurred.  In addition, Lessor shall be
entitled to attorneys’ fees, costs

 

	
  Initials

  	
   /s/ DEH/PAS

  

 

16

 

and expenses incurred in the preparation and service of notices of
Default and consultations in connection therewith, whether or not a legal
action is subsequently commenced in connection with such Default or ??? Breach.

 

32.          Lessor’s
Access; Showing Premises; Repairs. 
Lessor and Lessor’s agents shall have the right to enter the Premises at
any time, in the case of an emergency, and otherwise at reasonable times for
the purpose of showing the same to prospective purchasers, lenders, or lessees,
and making such alterations, repairs, improvements or additions to the Premises
as Lessor may deem necessary.  All such
activities shall be without abatement of rent or liability to Lessee.  Lessor may at any time place on the Premises
any ordinary “For Sale” signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary “For Lease”
signs.  Lessee may at any time place on
or about the Premises any ordinary “For
Sublease” sign.

 

34.          Signs.   See Addendum.

 

35.          Termination;
Merger.  Unless specifically
stated otherwise in writing by Lessor, the voluntary or other surrender of this
Lease by Lessee, the mutual termination or cancellation hereof, or a
termination hereof by Lessor for Breach by Lessee, shall automatically
terminate any sublease or lesser estate in the Premises; provided, however,
that Lessor may elect to continue any one or all existing subtenancies.  Lessor’s failure within ten (10) days
following any such event to elect to the contrary by written notice to the
holder of any such lesser Interest, shall constitute Lessor’s election to have
such event constitute the termination of such interest.

 

36.          Consents.  Except as otherwise provided herein,
wherever in this Lease the consent of a Party is required to an act by or for
the other Party, such consent shall not be unreasonably withheld or
delayed.  Lessor’s actual reasonable
costs and expenses (including, but not limited to, architects’, attorneys’,
engineers’ and other consultants’ fees) incurred in the consideration of, or
response to, a request by Lessee for any Lessor consent, including, but not
limited to, consents to an assignment, a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and
supporting documentation therefor. 
Lessor’s consent to any act, assignment or subletting shall not
constitute an acknowledgement that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent.  The
failure to specify herein any particular condition to Lessor’s consent shall
not preclude the imposition by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the particular matter
for which consent is being given.  In
the event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the determining
party shall furnish its reasons in writing and in reasonable detail within ten
(10) business days following such request.

 

38.          Quiet
Possession.  Subject
to payment by Lessee of the Rent and performance of all of the covenants,
conditions and provisions on Lessee’s part to be observed and performed under
this Lease, Lessee shall have quiet possession and quiet enjoyment of the
Premises during the term hereof.

 

39.          Options.

 

39.1         Definition.  “Option” shall mean:
(a) the right to extend the term of or renew this Lease or to extend or renew
any lease that Lessee has on other property of Lessor; (b) the right of first
refusal or first offer to lease either the Premises or other property of
Lessor; (c) the right to purchase or the right of first refusal to purchase the
Premises or other property of Lessor.

 

39.2         Options Personal To Original Lessee.  Each Option granted to Lessee in this Lease
is personal to the original Lessee, and cannot be assigned or exercised by
anyone other than said original Lessee and only while the original Lessee is in
full possession of the Premises and, if requested by Lessor, with Lessee
certifying that Lessee has no intention of thereafter assigning or subletting.

 

39.3         Multiple Options.  In the event that Lessee has any multiple Options to extend or
renew this Lease, a later Option cannot be exercised unless the prior Options
have been validity exercised.

 

39.4         Effect of Default on Options.

 

(a)  Lessee
shall have no right to exercise an Option: 
(i) during the period commencing with the giving of any notice of Default
and continuing until said Default is cured, (ii) during the period of time any
Rent is unpaid (without regard to whether notice thereof is given Lessee),
(iii) during the time Lessee is in Breach of this Lease, or (iv) in the event
that Lessee has been given three (3) or more notices of separate Default,
whether or not the Defaults are cured, during the twelve (12) month period
immediately preceding the exercise of the Option.

 

(b)  The period
of time within which an Option may be exercised shall not be extended or
enlarged by reason of Lessee’s inability to exercise an Option because of the
provisions of Paragraph 39.4 (a).

 

(c)  An Option
shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option, if, after such exercise and prior to the
commencement of the extended term, (i) Lessee fails to pay Rent for a period of
thirty (30) days after such Rent becomes due (without any necessity of Lessor
to give notice thereof), (ii) Lessor gives to Lessee three (3) or more notices
of separate Default during any twelve (12) month period, whether or not the
Defaults are cured, or (iii) if Lessee commits a Breach of this Lease.

 

41.          Security
Measures.  Lessee
hereby acknowledges that the rental payable to Lessor hereunder does not
include the cost of guard service or other security measures, and that Lessor
shall have no obligation whatsoever to provide same.  Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of
third parties.

 

42.          Reservations.  Lessor reserves to itself the right, from
time to time, to grant, without the consent or joinder of Lessee, such
easements, rights and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights,
dedications, maps and restrictions do not unreasonably interfere with the use
of the Premises by Lessee.  Lessee
agrees to sign any documents reasonably requested by Lessor to effectuate any
such easement rights, dedication, map or restrictions.

 

43.          Performance
Under Protest.  If at
any time a dispute shall arise as to any amount or sum of money to be paid by
one Party to the other under the provisions hereof, the Party against whom the
obligation to pay the money is asserted shall have the right to make payment
“under protest” and such payment shall not be regarded as a voluntary payment
and there shall survive the right on the part of said Party to institute suit for
recovery of each sum.  If it shall be
adjudged that there was no legal obligation on the part of said Party to pay
such sum or any part thereof, said Party shall be entitled to recover such sum
or so much thereof as it was not legally required to pay.

 

44.          Authority.  If either Party hereto is a corporation,
trust, limited liability company, partnership, or similar entity, each
individual executing this Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
its behalf.  Each Party shall, within
thirty (30) days after request, deliver to the other Party satisfactory
evidence of such authority.

 

45.          Conflict.  Any conflict between the printed provisions
of this Lease and the typewritten or handwritten provisions shall be controlled
by the typewritten or handwritten provisions.

 

46.          Offer.  Preparation of this Lease by either Party or
their agent and submission of same to the other Party shall not be deemed an
offer to lease to the other Party.  This
Lease is not intended to be binding until executed and delivered by all parties
hereto.

 

47.          Amendments.  This lease may be modified only in writing,
signed by the Parties in interest at the time of the modification.  As long as they do not materially change
Lessee’s obligations hereunder, Lessee agrees to make such reasonable
non-monetary modifications to this Lease as may be reasonably required by a
Lender in connection with the obtaining of normal financing or refinancing of
the Premises.

 

48.          Multiple
Parties.  If more than
one person or entity is named herein as either Lessor or Lessee, such multiple
Parties shall have joint and several responsibility to comply with the terms of
this Lease.

 

49.          Mediation
and Arbitration of Disputes. 
An Addendum requiring the Meditation and/or the Arbitration of all
disputes between the Parties and/or Brokers arising out of this Lease o
is  ý
is not attached to this Lease.

 

	
  Initials

  	
   /s/ DEH/PAS

  

 

17

 

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH
TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW
THEIR ???RMED AND VOLUNTARY CONSENT THERETO ??? PARTIES HEREBY AGREE THAT, AT
THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.

 

ATTENTION:  NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
TO WHICH IT RELATES.  THE PARTIES ARE
URGED TO:

 

1.  SEEK ADVICE OF COUNSEL AS TO
THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

 

2.  RETAIN APPROPRIATE CONSULTANTS
TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES.  SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE
LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE
PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING
SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.

 

WARNING:  IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA,
CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS
OF THE STATE IN WHICH THE PREMISES IS LOCATED.

 

The parties hereto have executed this Lease at the place and on the
dates specified above their respective signatures.

 

	
  Executed at:

  	
  Benicia, CA

  	
   

  	
  Executed at:

  	
  Benicia, CA

  
	
  on:

  	
  12/23/98

  	
   

  	
  on:

  	
  12/23/98

  
	
  By LESSOR:

  	
   

  	
  By LESSEE:

  
	
  Wickland Oil Martinez, L.P., A California limited
  partnership

  	
   

  	
  Copart Inc., a California corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Daniel E. Hall

  	
   

  	
  By:

  	
  /s/ Paul A. Styer

  
	
   

  	
   

  	
   

  
	
  Name Printed:

  	
  Daniel E. Hall

  	
   

  	
  Name Printed: Paul A. Styer

  
	
  Title:

  	
  Vice Pres.

  	
   

  	
  Title: General Counsel

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name Printed:

  	
   

  	
  Name Printed:

  
	
  Title:

  	
   

  	
  Title:

  
	
  Address:

  	
  P.O. Box 13648 - 3640 American River

  Dr., Sacramento, CA 95864

  	
   

  	
  Address: 

  	
  5500 East Second St., 2nd Floor

  Benicia, CA 94510

  
	
  Telephone:  (916)  978 - 2400

  	
   

  	
  Telephone:  (707)  748 - 5000

  
	
  Facsimile:  (916)  978 - 2410

  	
   

  	
  Facsimile:  (707)   748 -
  5099

  
	
  Federal ID No.

  	
   

  	
  Federal ID No.

  
													

 

NOTE:           These forms are often
modified to meet the changing requirements of law and industry needs.  Always write or call to make sure you are
utilizing the most current form: 
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So, Flower Street,
Suite 600, Los Angeles, California 90017. (213) 687-8777. Fax No. (213)
687-8616

 

18

 

Addendum I

Standard Industrial/Commercial Single-Tenant Lease - Net

 

This Addendum I to the Standard
Industrial/Commercial Single-Tenant Lease - Net (the “Addendum I”)
is attached to, made a part of, and incorporated into that certain Standard Industrial/Commercial Single-Tenant Lease-Net
(the “Lease”) dated December 23, 1998, by and between Wickland Oil Martinez, L.P., a California Limited
Partnership as Lessor (“Lessor”) and Copart, Inc., a California Corporation as Lessee (“Lessee”)
covering the Premises consisting of approximately forty (40) acres of real
property located in the City of Martinez,
County of Contra Costa, State of California, and more generally depicted on
Exhibit “A” to the Lease.

 

If any portion of the Lease
should conflict with the terms of this Addendum I, the terms of this Addendum I
shall control.

 

Defined terms not otherwise
defined in this Addendum I shall have the meanings ascribed to such terms in
the Standard Lease.

 

All references to the
“Lease” in the Lease or in this Addendum I shall mean the Lease as modified by
this Addendum I.

 

Additional Provisions:

 

50.                               Conditions Precedent to
Lease.  Lessor’s obligation to lease the Premises to
Lessee shall be conditioned upon completion of the following to Lessor’s
satisfaction:

 

A.                                    Survey.  A
mutually acceptable survey (“Survey”) of the Premises will be completed by
Lessor and the exact square footage of the Premises will be determined.  Once the Survey is completed the legal
description of the Premises shall be attached as part of Exhibit A and
be made a part of the Lease.

 

B.                                    Permits. 
Lessor shall take commercially reasonable efforts to obtain all permits,
approvals, consents and entitlements (“Permits”) required by all governmental
authorities having jurisdiction to permit Lessee’s Agreed Use as described in
Paragraph 1.8 of the Lease.  Lessee
shall cooperate with Lessor in executing necessary documents, attending
hearings with local governmental authorities and the like.  All conditions to Permits must be mutually
acceptable to Lessor and Lessee; provided, however, that neither Lessor nor
Lessee shall unreasonably disapprove of any Permit condition.  In addition to other reasonable bases,
Lessee agrees that Lessor shall be deemed to be reasonable in withholding its
consent to a Permit condition which requires Lessor to install substantial
offsite improvements.  If, during the
Permit process, Lessor requests in writing that Lessee approve of any proposed
Permit condition, Lessee shall, within five (5) working days of Lessee’s
receipt of the request, deliver to Lessor a written approval or disapproval,
which also contains, in the event of a disapproval, the reasons for such
action.  Attached hereto as Exhibit E
hereto are conditions contained in a use permit recently issued by Contra Costa
County for a use similar to the Agreed Use. 
Lessee hereby approves the conditions contained in the attached use
permit, and confirms that similar conditions are acceptable for inclusion in
the Permits.

 

C.                                    Agreement On Payment of
Excess Costs.  Lessor shall be satisfied that the cost of
Lessor’s Improvements (as defined below) plus the cost of any improvements to
the Premises required as conditions to the Permits shall not exceed Sixty-Two
Thousand Five Hundred Dollars ($62,500.00) per acre multiplied by the exact
useable acreage of the Premises as reflected by the Survey (“Allowance”).  For purposes of determining the useable
acreage of the Premises, any acreage in excess of one (1) acre required for a
storm water retention pond (“Retention Pond”) shall be excluded.  In the event such costs exceed the
Allowance, then the parties agree to meet and attempt to negotiate an equitable
sharing of the portion of the costs which exceed the

 

19

 

Allowance.  Either party shall have the right, but not
the obligation, to pay such excess costs in whole or in part.  In the event the parties fail to agree on
payment of the excess costs, either party may terminate the Lease as provided
below.  For purposes of this provision,
“Lessor’s costs” shall mean all hard and soft costs of constructing the
improvements, but excluding costs associated with permit processing or studies
required for permit processing.

 

D.                                    Building Permit. 
Lessee shall have obtained all Permits necessary to complete Lessee’s
Improvements (as defined below).

 

E.                                      Taxes, Levies and
Assessments.  Lessee shall have reviewed and approved
information provided by Lessor on real property taxes, bonds, assessments and
levies affecting the Premises.

 

If
the above conditions precedent have not been satisfied to Lessor’s and Lessee’s
satisfaction by October 1, 2000, this Lease shall at the option of either
Lessor or Lessee be canceled upon written notice to the other party, and all
funds and deposits made by Lessee to Lessor shall be returned to Lessee.

 

If
prior to October 1, 2000, despite Lessor’s good faith and commercially
reasonable efforts, the parties are unable to obtain the Permits with mutually
acceptable conditions, or the parties believe that one or more of the other
conditions precedent set forth above cannot be satisfied, Lessor and Lessee
shall terminate this Lease.  In such
event, Wickland Oil Company as Lessor and Lessee will execute a new Lease and
Addendum (“Selby II Lease”) for certain real property located in the City of
Crocket, California and pursue obtaining Permits for such property pursuant to
the Lease.  The form of the Selby II
Lease is attached as Exhibit C to that certain Lease and Addendum
executed by Wickland Oil Company as Lessor dated 12/23, 1998 (“Selby I Lease”).

 

51.                               Commencement Date.  The
Lease Term shall commence upon satisfaction of the conditions set forth in
Paragraph 50 and upon substantial completion of Lessor’s Improvements as
described in Paragraph 53 below.  Lessor
anticipates that Lessor will substantially complete Lessor’s Improvements
within one hundred twenty (120) days from the date the Permits are
obtained.  Upon substantial completion
of Lessor’s Improvements, the parties agree to execute an amendment to this
Lease confirming the actual Commencement Date.

 

52.                               Rent.

 

A.                                    Initial Base Rent.  The
initial Base Rent for the Premises shall be $0.0315 per Useable Square Foot or
$54,886.00 per month based on a 40-acre useable parcel.  If the acreage of the Premises changes based
on the Survey, the initial monthly Base Rent shall be adjusted accordingly
based on the rental rate of $0.0315 per Useable Square Foot per month.  For purposes of determining the useable
square footage of the Premises, any square footage in excess of one (1) acre
required for the Retention Pond shall be excluded.  In the event the square footage of the Premises is adjusted,
Lessor and Lessee agree to execute an amendment to this Lease confirming the
initial Base Rent.

 

B.                                    CPI
Adjustment.

 

(i) For purposes of this provision, each twenty-four
month period of the Lease Term commencing on the Commencement Date shall
constitute an “Adjustment Period.” 
Commencing with the monthly installment of Base Rent due on the
twenty-fifth (25th) month of the Lease Term and every twenty-four (24) months
thereafter (each an “Adjustment Date”), the Base Rent in effect immediately
prior to each such Adjustment Date shall be increased by (i) the percentage
increase, if any, shown by the CPI (as defined below) most recently published
at the 12th month of the Adjustment Period as compared to the CPI
most recently published at the 24th month of such Adjustment Period;
plus (ii) the percentage increase, if any, shown by the CPI

 

20

 

most recently published at
the 1st month of such Adjustment Period as compared to the CPI most
recently published at the 12th month of the Adjustment Period.  Provided, however, in no event shall Base
Rent decrease at each Adjustment Date below Base Rent then in effect or
increase at each Adjustment Date more than three percent (3%) per year, based
on the comparisons made at (i) and (ii) above.

 

(ii) “CPI” shall mean the
Consumer Price Index in the column for “All Items” in the table entitled
“Consumer Price Index for All Urban Consumers: 
U.S. City Average, (1982-84=100),” published by the Bureau of Labor
Statistics of the Unites States Department of Labor.  If the Bureau of Labor Statistics changes the base period (now
1982-84=100), or the composition of the CPI, the new index numbers shall be
substituted for the old index numbers in making the above computations.  If the CPI is discontinued, the parties
shall accept comparable statistics on the purchasing power of the consumer
dollar, as published at the time of such discontinuation, by a responsible financial
periodical of recognized authority, to be chosen by Lessor and reasonably
accepted by Lessee.

 

53.                               Lessor’s
Improvements.

 

Subject
to Paragraph 50.C. above, Lessor at Lessor’s sole cost shall complete the
following improvements to the Premises prior to Lessee’s occupancy and the
Commencement Date (collectively, “Lessor’s Improvements”):

 

A.                                    Site Work Preparation.  The
site is to be filled if necessary, graded and compacted to 95% to the extent
that it is reasonably possible, per the Drainage Plan attached as Exhibit B.

 

B.                                    Site Improvements.

 

(i)                           The site (±40 acres) is to be improved with 6 inches of
3/8-inch to 1/2-inch rock. The rock is to be placed in two 3-inch lifts
compacted to ±95%.

 

(ii)                        Asphalt - 4 inches of asphalt shall be placed and compacted in two
2-inch lifts covering 10 acres.

 

(iii)                     Drainage - Lessor will install drainage on the site through sheet
drainage, pursuant to the Drainage Plan agreed upon by the parties and attached
as Exhibit B hereto.

 

(iv)                    Utilities - The site will be separately metered with adequate city
water, firewater (if required by local authorities) and sewer service.  Minimum power service of 600 amps @ 277/480
volts will be provided to the Premises with phone/data service to the
site.  City water, firewater, sewer
service and phone/data service shall all be stubbed and brought to the Premises
at a mutually acceptable location.

 

(v)                       Landscaping - Lessor will install such landscaping at the Premises as
required by the Permits, pursuant to a mutually acceptable landscaping plan,
and Lessee shall maintain the landscaping pursuant to Paragraph 7.1 of the
Lease.

 

C.                                    Fees. 
Lessor at Lessor’s cost shall obtain and pay for all fees and
assessments required by applicable governmental authorities necessary for
Lessee’s use (excluding any fees or assessments such as building permit fees
associated with Lessee’s construction of the Building described in Paragraph 54
below, which shall be Lessee’s responsibility).

 

D.                                    Substantial Completion. 
Lessor’s Improvements shall be deemed substantially complete when (i)
Lessor’s general contractor certifies to Lessor and Lessee that the work is
complete pursuant to this provision; (ii) representatives of the appropriate

 

21

 

governmental
authorities have inspected and approved Lessor’s Improvements; and (iii) Lessor
has  obtained a certificate of
completion or similar written evidence from appropriate governmental
authorities that the improvements are complete.

 

E.                                      Lessee Access. 
Lessor agrees to cooperate with Lessee in facilitating Lessee’s
development of the Premises during the time frame when Lessor is completing
Lessor’s Improvements.  Lessor agrees
that Lessee may have reasonable access to the Premises prior to the
Commencement Date while Lessor is completing Lessor’s Improvements in order to
commence construction of Lessee’s Improvements (described in Paragraph 54
below), on the following conditions:

 

(i)
Lessee and Lessee’s employees, agents and contractors will work
in harmony with and not interfere with Lessor and its employees, agents and
contractors in performing Lessor’s Improvements;

 

(ii)
Such entry by and occupancy of the Premises by Lessee and Lessee’s agents,
employees and contractors shall be subject to all the terms and conditions of
the Lease and this Addendum, excluding the covenant to pay rent; and

 

(iii)
At Lessor’s request, Lessee shall provide Lessor evidence of all insurance
required under the Lease and this Addendum. 

 

54.                               Lessee Improvements:

 

A.                                    Lessee’s Building - Lessee at Lessee’s cost shall construct an
approximately 10,000 square foot metal structure (“the Building”) at a mutually
acceptable location on the Premises and shall install a solid (nontransparent),
metal fence (at least six (6) feet in height) around the perimeter of the
Premises (“Perimeter Fence”).  Together,
the Building and the Perimeter Fence constitute “Lessee’s Improvements.”  Lessee shall be responsible for taking all
utilities stubbed at the site into the Building.

 

B.                                    Conditions to Lessee’s Construction. 
Prior to constructing Lessee’s Improvements, Lessee shall:

 

(i)                                     Deliver to Lessor for Lessor’s approval two
(2) sets of preliminary construction plans and specifications prepared by an
architect or engineer, sufficient to enable potential contractors and
subcontractors to make reasonably accurate bid estimates Lessor shall review
and either approve or disapprove such preliminary plans and specifications
within ten (10) days of receipt.  Lessor
shall not unreasonably disapprove preliminary plans and specifications.  Lessee shall not deliver working drawings to
any governmental body for a building permit until preliminary plans are
approved as required by this Paragraph 54.B

 

(ii)                                  Prepare final working plans and
specifications conforming to preliminary plans previously approved by Lessor,
submit them to the appropriate governmental agencies for approval, and deliver
to Lessor one complete set as approved by the governmental agencies.

 

(iii)                               Notify Lessor of Lessee’s intention to
commence work not less than ten (10) calendar days before commencement of any
such work or delivery of any materials. 
Lessor reserves the right at any time and from time to time to maintain
on the Premises such notices as may be necessary to protect Lessor against
liability for all subcontractors’, mechanics’ and materialmen’s liens and
claims.

 

22

 

(iv)                              Deliver to Lessor certificates of insurance
evidencing coverage for “builder’s risk” insuring against all insurable risks in
an amount equal to the estimated costs of construction
of Lessee’s Improvements, evidence of workers’ compensation insurance covering
all persons employed in connection with the work and with respect to whom death
or bodily injury claims could be asserted against Lessor or the Premises, and
evidence that Lessee has paid or caused to be paid all premiums for the
coverage described above in this Paragraph 54.B(iv) and any increase in
premiums on insurance provided for in Article 8 of the Lease, sufficient to
ensure maintenance of all insurance described above during the anticipated
course of the work. Furthermore, insurance coverage required by the foregoing
sentence shall comply in all applicable respects with the requirements of
Article 8 of the Lease.  Lessee shall
maintain, keep in force and pay all premiums required to maintain and keep in
force all insurance described above at all times during which such work is in
progress.

 

C.                                    Completion of Work. 
Construction of Lessee’s Improvements shall be performed in a good and workmanlike manner, shall substantially comply with plans and specifications
submitted to Lessor as required by the Lease, and shall comply with all
applicable government permits, laws, ordinances and regulations.  Immediately upon completion of Lessee’s
Improvements, Lessee shall file or cause to be filed a notice of completion.

 

D.                                    Ownership of Improvements. 
Lessee’s Improvements shall be owned by Lessee during the Term of this
Lease but shall remain a part of the Premises and shall be surrendered
therewith at the end of the Term hereof or sooner termination of this Lease, at
which time they shall become the property of Lessor without the payment of any
consideration therefor.

 

E.                                      Liens.

 

(i)    Lessee shall not suffer or permit to be
enforced against the Premises, or any part thereof, or Lessee’s Improvements
thereon, any mechanics’, materialmen’s, contractors’ or subcontractors’ liens
arising from or any claim for damages growing out of the work of any
construction, repair, restoration, replacement or improvement, or any other
claim or demand howsoever the same may arise, but Lessee shall pay or cause to
be paid all of such liens, claims or demands before any action is brought to
enforce the same against the Premises. 
Lessee agrees to indemnify, defend and hold Lessor and the Premises free
and harmless from all liability for any and all such liens, claims and demands,
together with reasonable attorneys’ fees and all costs and expenses in
connection therewith.  The foregoing
notwithstanding, if Lessee shall in good faith contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense, defend itself
and Lessor against the same and shall pay and satisfy any adverse judgment that
may be rendered thereon before the enforcement thereof against the Lessee or
the Premises, upon the condition that if Lessor shall require, Lessee shall
furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to
such contested lien, claim or demand indemnifying Lessor against liability for
the same, and holding the Premises free from the effect of such lien or claim
or, if Lessor shall request, Lessee shall procure and record the bond provided
for in California Civil Code section 3143, or any comparable statute hereafter enacted,
providing for a bond freeing the Premises from the effect of such lien or claim
or action thereon.

 

(ii)    If Lessee does not cause to be recorded
the bond described in California Civil Code section 3143 or otherwise protect
the Premises under any alternative or successor statute, Lessor shall have the
right, but not the duty, to pay or otherwise discharge the claim or lien or
both.  Lessee shall reimburse Lessor for
all sums paid by Lessor under this Paragraph, together with all Lessor’s
reasonable attorneys’ fees and costs, plus interest on those sums, fees and
costs at the lesser of ten percent

 

23

 

(10%)
per annum or the highest rate permitted by law from the date of payment until
the date of reimbursement.

 

55.                               Lessor’s Allowance.  Upon
installation of the Perimeter Fence in compliance with Paragraph 54, Lessor
shall reimburse Lessee up to One Hundred Thousand Dollars ($100,000.00) for
Lessee’s cost to acquire and install the Perimeter Fence.  Lessee shall provide Lessor invoices
evidencing such cost for payment by Lessor.

 

56.                               Representations Regarding
Improvements.  Lessor and Lessee acknowledge that the
specifications for Lessor’s Improvements have been provided by Lessee with the
understanding that the site improvements completed to such specifications
create a system adequate to handle the loads and uses dictated by Lessee’s
Agreed Use (the “System”).  Lessor
represents that Lessor’s Improvements will comply with Lessee’s specifications
for the System, but Lessor does not represent or warrant that the System is
adequate for Lessee’s Agreed Use. 
Lessor shall be responsible for structural maintenance and repair of
Lessor’s Improvements if such maintenance or repair is due to a defect in
Lessor’s construction of Lessor’s Improvements.  However, Lessee shall be responsible for any maintenance or
repair required due to the inadequacy of the System to support Lessee’s Agreed
Use, or due to normal wear and tear.

 

57.                               Common Road Maintenance. 
Lessor and Lessee acknowledge and agree that Lessee will share use of
the main access road (“Wickland access road”) into the Premises with the
adjoining property owner.  Lessee agrees
to cooperate with the adjacent owner in using the Wickland access road, and not
unreasonably interfere with such owner’s continued use of the road.  Lessee shall use the Wickland access road
for ingress and egress and shall not allow vehicles to park or otherwise stop
on the road.  Lessee shall not use the
Wickland access road for loading or unloading vehicles or as a staging area for
transporting vehicles.  Lessor
acknowledges that Lessee’s use of the Wickland access road in compliance with
this provision and the Lease will not unreasonably interfere with the adjoining
property owner’s use.  Subject to the
rights of the parties under the Shore Easements described at Paragraph 62(b)
below, Lessor agrees not to allow any current or future user of the Wickland
access road to unreasonably interfere with Lessee’s use of the road during the Lease
Term.  Lessee shall be responsible for
reimbursing Lessor for Fifty percent (50%) of all costs incurred to maintain,
protect and repair in its current condition that portion of such road used by
Lessee to enter the Premises (as depicted on the survey listed on Exhibit D
referenced below) as necessary to prevent deterioration or as otherwise
required by any applicable governmental authorities.  Lessee shall reimburse Lessor for such costs and expenses within
ten (10) days following Lessor’s delivery of a written statement therefor.  The foregoing notwithstanding, Lessee shall
pay one hundred percent (100%) of all costs and expenses for any capital
improvements to the Wickland access road as a result of any increased traffic
on the road caused by Lessee’s use or development of the Premises or if
required by applicable governmental authorities as a condition of issuance of
any Permits related to Lessee’s use or development of the Premises.

 

58.                               Right of First Refusal.  If
Lessor desires to sell the Premises during the Term of the Lease or receives
from a third party a bona fide offer acceptable to Lessor during the Term of
the Lease to purchase the Premises, Lessee shall have a prior right to purchase
such Premises on the terms offered by the third party.  Lessor shall give Lessee notice of such
offer, together with a copy thereof, and Lessee shall have fifteen (15) days
from receipt of said notice to enter into an agreement to acquire such interest
at the terms of such offer and to close escrow for such acquisition within
sixty (60) days of such agreement to acquire. 
If Lessee fails to exercise such right of first refusal within the
fifteen (15) day period or fails to close escrow within the subsequent sixty
(60) day period, Lessor shall have one hundred eighty (180) days thereafter to
sell the Premises to such third party (or any other party on similar terms)
without resubmitting such offer to Lessee; provided, however, that any such
sale shall be subject to this Lease and Lessee’s leasehold interest shall remain
intact following the transfer of title to the Premises; provided further,
Lessee shall attorn to any purchaser of the Premises as Lessor hereunder as
long as the new owner does not disturb Lessee’s quiet enjoyment of the Premises
in compliance with the Lease.  This
Right of First Refusal shall be inapplicable to

 

24

 

any
transfers to affiliates of Lessor or transfers through merger, consolidation or
reorganization of Lessor.  For purposes
of this provision, “affiliates” shall mean entities controlled by or under
common control of Lessor.  The foregoing
Right of First Refusal shall apply only during the initial Lease Term, and
shall not apply during any Option Term (as defined below).

 

59.          Options to
Renew.

 

A.                                    Option.  Upon
notice to Lessor received not more than eighteen (18) months but not less than
twelve (12) months prior to the Expiration Date, Lessee shall have one (1)
option (“Option”) to renew this Lease for a five (5) year term (“Option Term”)
under the same terms and conditions of the Lease, except Base Rent.  Rent shall be at the then “Fair Market
Rental,” as defined below.

 

B.                                    Fair Market Value.  For
the purposes of this Paragraph 59, ‘‘Fair Market Rental” shall be rent paid for
comparable properties with similar premises and Lessor Improvements (excluding
the Building and Lessee Improvements), uses consistent with the zoning of the
Premises, located in and around Martinez, California.  The rent paid for such comparable properties shall be determined
by the agreement of the parties within sixty (60) days after Lessee gives
notice to Lessor of its exercise of the Option.  If the parties are unable to agree upon such rent during the
sixty (60) day period, each party shall, within thirty (30) days thereafter,
simultaneously exchange each other’s written estimate of rent on a per square
foot per year basis.  If one party fails
to make the simultaneous exchange of the written estimates of rent, then the
estimate made by the other party shall be deemed to be the Fair Market
Rental.  If the higher of the two (2)
estimates does not exceed the lower of the two (2) estimates by more than ten
percent (10%) of the lower estimate, the Fair Market Rental for the Premises
during the Option Term shall be ninety percent (90%) of the average of the two
estimates.  If the higher estimate
exceeds the lower estimate by more than ten percent (10%), each party shall,
within ten (10) days after the date of exchange of each other’s estimate of
Fair Market Rental, designate an independent appraiser who is a member of the
American Institute of Real Estate Appraisers (MAI) with at least five (5)
years’ experience in commercial/industrial appraisals in the San Francisco Bay
Area.  The two (2) MAI appraisers so
selected shall select a third MAI appraiser with similar qualifications who
shall be an impartial person, unrelated or unaffiliated with, Lessor, Lessee,
and the other appraisers.  The third
appraiser shall then determine the Fair Market Rental for the Premises, and his
determination shall be binding on both parties.  If one party fails to designate an appraiser as provided for
above, then the other party’s appraiser shall make his determination for Fair
Market Rental which shall be binding on both parties.  Each party shall compensate the appraiser designated by it and
any compensation payable to the third appraiser shall be paid equally by Lessor
and Lessee.

 

C.                                    Agreement to Negotiate. 
During the second (2nd) year of the Option Term Lessor and Lessee agree
to meet, and use good faith efforts to attempt to negotiate a Lease extension
for an additional five (5) year period beyond expiration of the Option Term.

 

60.                               Force Majeure. 
Lessor shall incur no liability to Lessee with respect to, and shall not
be responsible for any failure to perform, any of Lessor’s obligations under
the Lease if such failure is caused by any reason beyond the control of Lessor
including, but not limited to, strike, labor trouble, governmental rule,
regulations, ordinance, status or interpretation, or by fire, flood,
earthquake, civil commotion, or failure or disruption of utility services.  The amount of time for Lessor to perform any
of Lessor’s obligations shall be extended by the amount of time Lessor is delayed
in performing such obligation by reason of any force majeure occurrence whether
similar to or different from the foregoing types of occurrences.

 

61.                               Signage. 
Subject to approval of applicable governmental authorities and Lessor’s
reasonable approval, Lessee may install signage on the Premises.

 

25

 

62.                               Acknowledgment Regarding
Ownership.  Lessor recently has conveyed (i)
approximately seventy (70) acres of property of which the Premises are a part
(“Retained Parcel”), and (ii) certain other adjacent property (“Buyer’s
Parcel”) to Shore Terminals, LLC, a Delaware LLC (“Buyer”).  Buyer and Lessor have agreed that Seller
will complete a lot line adjustment whereby the Retained Parcel will be
separated out from Buyer’s Parcel and reconveyed to Lessor.  Pursuant to an Agreement for Grant and
Reservation of Easements between Lessor and Buyer dated October 30, 1998,
Lessor has the right to Lease the Premises to third parties without Buyer’s
consent during the time period between the closing of the sale to Buyer and the
completion of the lot line adjustment.

 

63.                               Acknowledgment of CC&R’s
and Conditions of Record.

 

A.                                   As part of the conveyance of the Retained
Parcel and Buyer’s Parcel to Buyer as described in Paragraph 62, Buyer executed
and recorded against the Retained Parcel, including the Premises, a Declaration
of Covenants, Conditions and Restrictions for the Martinez Terminal dated as of
October 30, 1998, in substantially the form attached as Exhibit C hereto
(“CC&R’s”).  Lessor represents that upon
Lessee and Lessor obtaining all necessary Permits, Lessee’s Agreed Use in
compliance with all conditions to such Permits and all other Applicable
Requirements will not violate the CC&R’s. 
Lessee agrees to comply with the CC&R’s and all other conditions,
covenants and easements of record against the Premises, whether such
conditions, covenants and easements are recorded prior to the Commencement Date
or during the Lease Term, as long as, to the extent that such covenants,
conditions or easements are recorded after the Commencement Date, they do not
materially interfere with Lessee’s use of the Premises.

 

B.                                     As part of the conveyance of the Retained
Parcel and Buyer’s Parcel to Buyer, Lessor has recorded against the Retained
Parcel and Buyer’s Parcel certain easements more particularly described on Exhibit
D to this Lease (the “Shore Easements”). 
Lessee has been provided copies of the Shore Easements and acknowledges
that:  (i) its leasehold interest is
subject to the Shore Easements; and, (ii) The Shore Easements do not interfere
with Lessee’s use or occupancy of the Premises.

 

64.                               No Leasehold Encumbrances. 
Lessee shall not record any documents against the Premises or encumber
the Premises during the Lease term or any Option Term without first obtaining
Lessor’s consent, which may be withheld in Lessor’s sole discretion.

 

26

 

65.                               Termination. 
Prior to the Commencement Date, and as a condition to Lessor’s delivery
of possession of the Premises to Lessee, Lessee shall surrender all rights to
the real property located in Crockett, California, leased by Wickland Oil
Company to Lessee pursuant to the terms of the Selby I Lease.

 

	
   

  	
   

  	
  Lessor:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date: 12/23/98

  	
   

  	
  Wickland
  Oil Martinez, L.P.,

  a California Limited Partnership

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Daniel E. Hall

  	
   

  	
   

  
	
   

  	
   

  	
  Its: 

  	
  Vice-President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lessee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date: 12/23/98

  	
   

  	
  Copart, Inc.,

  a California Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Paul A. Styer

  	
   

  	
   

  
	
   

  	
   

  	
  Its: 

  	
  Secretary

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  

 

27

 

EXHIBIT A

 

MARTINEZ INDUSTRIAL LAND

 

DRAWING OF PROPERTY

 

28

 

EXHIBIT
B

 

DRAINAGE
PLAN

 

Map of Martinez

 

29

 

EXHIBIT
C

 

CC&R’s

 

30

 

RECORDING REQUESTED BY:

AND WHEN RECORDED MAIL TO:

 

Brobeck, Phleger &  Harrison LLP

550 South Hope Street, Suite
2100

Los Angeles, California
9007-2630

Attention:  Jerry Walsh, Esq.

 

 

(Space
Above Line For Recorder’s
Use Only)

 

 

DECLARATION OF COVENANTS,
CONDITIONS AND RESTRICTIONS

FOR THE MARTINEZ TERMINAL

 

THIS DECLARATION OF COVENANTS, CONDITIONS
AND RESTRICTIONS (this “Declaration”) dated as of October 30, 1998, is made
by SHORE TERMINALS LLC, a Delaware
limited liability company (“Declarant”) with reference to the following
Recitals:

 

R  E  C  I  T  A  L
S

 

A.                                   Declarant is
the present fee title owner of certain real property (the “Property”) located
in the City of Martinez, Contra Costa County, State of California, and more
particularly described in Exhibit A
attached hereto.

 

B.                                     Declarant
intends to convey a portion of the Property (the “Restricted Property”) to
Wickland Oil Martinez, L.P., a California limited partnership (“WOM”)
pursuant to that certain Purchase and Sale Agreement, dated August 7, 1998 (as
amended, collectively, the “Purchase Agreement”) between WOM and Declarant.

 

C.                                     Pursuant to the
Purchase Agreement, Declarant desires to subject the Property to the covenants,
conditions, restrictions and reservations set forth in this Declaration to
insure that the Restricted Property is developed, used and maintained in a
manner which is consistent with this Declaration for the benefit of the
Terminal Property.

 

ARTICLE I.

DEFINITIONS

 

Unless the context requires otherwise, the terms defined in
this Article I shall, for all
purposes of this Declaration, have the meaning herein specified.

 

“Affiliate” shall mean any and all subsidiaries of
Declarant, partnerships or corporations of which Declarant owns or controls
fifty percent (50%) or more of the stock, partnership interests or voting
rights or for which there are substantially the same management and
key employees as Declarant.

 

31

 

“Declarant”
shall mean Shore Terminals LLC, a Delaware limited liability company, and its
successors in interest and assignees that expressly assume in writing the
obligations of Declarant under this Declaration.

 

“Declaration”
shall mean this Declaration of Covenants, Conditions and Restrictions, as
amended from time to time.

 

“Effective
Date” shall mean the date of recordation of this Declaration.

 

“Improvements”
shall mean and include, but not be limited to buildings, parking areas, loading
areas, fences, walls, hedges, landscaping, plantings, poles, signs and any
other structures or improvements of any type or kind located on the Property or
any portion thereof and any replacements, additions, repairs or alterations
thereto of any kind whatsoever.

 

‘‘Leases”
shall mean any leases encumbering the Property or any portion thereof, and any
and all assignments, addenda, amendments, exhibits, modifications and subleases
thereof or thereto, and consents to assignments thereto.

 

“Lessee”
shall mean each lessee, sublessee, licensee, concessionaire or other occupant
(except for any Owner as defined below) in possession of any portion of the
Property.

 

“Owner”
shall mean each and every owner of the Property or any portion thereof or
interest therein during the term of this Declaration, including Declarant and
WOM.

 

“Permitted
Use” shall mean light or heavy industrial uses permitted under zoning laws
existing as of the date of this Declaration or as dedicated open space.

 

“Prohibited
Purposes” shall mean the operation or development of a petroleum or hydrocarbon
product tank farm storage terminal.

 

“Property”
is defined in Recital A above.

 

“Regulations”
shall mean all present and future applicable laws, statutes, codes, ordinances,
rules, regulations, limitations, restrictions, orders, judgments or other requirements
of any governmental or quasi-governmental authority having jurisdiction over
the Property, Restricted
Property, Improvements or Owner.

 

“Restricted
Property” is defined in Paragraph 3.1
below.

 

“Term”
is defined in Paragraph 2.3 below.

 

“Terminal
Property” shall mean all portions of the Property except for the Restricted
Property. 

 

“WOM”
shall mean Wickland Oil Martinez, L.P., a California limited partnership, its
successors and assigns.

 

32

 

ARTICLE
II.

PROPERTY
SUBJECT TO THIS DECLARATION

 

2.1                               General Declaration. 
Declarant hereby covenants, agrees and declares that the Property is and
shall be, conveyed, hypothecated, encumbered, leased, occupied, built upon or
otherwise used, improved or transferred in whole or in part subject to this
Declaration.  All of the covenants,
restrictions and equitable servitudes contained in this Declaration are
declared and agreed to be in furtherance of a plan for the use, maintenance and
development of the Property and are established for such purposes.  All of the covenants, conditions and
equitable servitudes contained in this Declaration shall run with the Property
for all purposes and shall be binding upon Owner and Declarant and their
successors and assigns and shall inure to the benefit of Owner and Declarant
and their successor and assigns and the Terminal Property.

 

2.2                               Binding on Lessees. 
Owner shall require all Lessees under any Leases entered into after the
Effective Date to comply with this Declaration.  Therefore, a copy of this Declaration shall either be attached as
an exhibit to any such Leases executed after the Effective Date or shall be
delivered to the Lessees thereunder.

 

2.3                               Term.  The
term of this Declaration shall commence upon the Effective Date and shall
continue and remain in full force and effect at all times with respect to the
Property and each part thereof, until ninety-nine (99) years after the
Effective Date (the “Term”).

 

ARTICLE III.

REGULATION OF OPERATIONS AND USES

 

3.1                               Permitted Uses. 
During the first fifteen (15) years of the Term of this Declaration, the
Restricted Property, as more particularly described on Exhibit B attached hereto, shall be used
solely for the Permitted Use and no other use shall be permitted during the first
fifteen (15) years of the Term of this Declaration without the prior written
approval of Declarant, which approval may be withheld in Declarant’s sole and
absolute discretion.

 

3.2                               Prohibited Uses.  Neither Owner nor any other person or entity shall use the
Restricted Property or any portion thereof, for any of the Prohibited Purposes
during the Term of this Declaration.

 

ARTICLE IV.

MAINTENANCE AND REPAIR

 

4.1                               General. 
Owner shall at all times maintain or cause the maintenance of the
Restricted Property in good condition and repair and in compliance with all
Regulations.

 

ARTICLE
V.

EVENTS
OF DEFAULT AND REMEDIES

 

5.1                               Events of Default.  It
shall be an event of default (“Event of Default”) under this Declaration if
Owner fails to observe and perform any provision of this Declaration to be
observed or performed by Owner if such failure continues for fifteen (15) days
after written notice thereof by Declarant.

 

33

 

5.2                               Remedies.  In addition to any other remedies provided
by law or equity, Declarant may enforce the obligations under this Declaration
if an Event of Default by any Owner under this Declaration has occurred,
Declarant may commence and maintain a suit against any Owner for damages,
declaratory or injunctive relief, specific performance or any other legal or
equitable relief permitted under applicable law.

 

ARTICLE
VI.

MISCELLANEOUS

 

6.1                               Interpretation.  This Declaration shall be construed in
accordance with and governed by the laws of the State of California.  If any provision of this Declaration or
application thereof to any person or circumstances shall to any extent be
invalid, the remainder of this Declaration shall not be affected and each
provision of this Declaration shall be valid and enforced to the fullest extent
permitted by law.  Exhibits A and B attached hereto are
incorporated by reference herein. This Declaration can only be modified by a
writing executed by Declarant.  No
waiver of any Event of Default or any covenant, condition or restriction
imposed by this Declaration shall be implied from any omission by Declarant to
take action on account of such Event of Default if such Event of Default
persists or is repeated.

 

6.2                               Attorneys’
Fees.  If any legal action,
arbitration or other proceeding is commenced to enforce or interpret any
provision of this Declaration, the prevailing party shall be entitled to an
award of its actual attorney’s fees and expenses, whether or not such action is
pursued to judgment.  The phrase
“prevailing party” shall include a party who receives substantially the relief
desired whether by dismissal, summary judgment or otherwise.

 

6.3                               Notices.
All notices and requests given under this Declaration shall be in writing and
shall be served either personally, by FedEx or by registered or certified mail,
return receipt requested. Notices shall be deemed received at the earlier of
actual receipt or three (3) days following deposit in the U.S. Mail, postage prepaid.  Notices shall be directed to the following
addresses:

 

	
  Declarant:

  	
   

  	
  Shore Terminals LLC

  2801 Waterfront Road

  Martinez, California 94553

  Attention: Richard (Beau) Shore

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  Shore Terminals LLC

  c/o Onyx Holdings, Inc.

  Northwest Bank Tower

  2550 Middle Road, Suite 603

  Bettendorf, Iowa 52772

  Attention: David L. Widener

  
	
   

  	
   

  	
   

  
	
  Owner:

  	
   

  	
  Wickland Oil Martinez, L.P.

  3640 American River Drive

  Sacramento, California 95864

  Attention: Roy L. Wickland

  

 

34

 

Declarant may change its address for notice by giving written notice in
accordance with this Section.

 

6.4                               Constructive
Notice and Acceptance. Every person or other entity who now or
hereafter owns or acquires any right, title or interest in or to any portion of
the Property, including the
Restricted Property, subject to this Declaration is and shall be conclusively
deemed to have consented and agreed to every covenant, condition and
restriction contained herein, whether or not any reference to this Declaration
is contained in the instrument by which such person or entity acquired an
interest in the Property.

 

6.5                               No
Third Party Beneficiaries. This Declaration shall be binding upon and
inure to the benefit of Declarant and its successors and assigns. Except for
the foregoing, this Declaration is not intended and shall not be deemed or
construed to create any rights in any third parties (including, without
limitation, any Lessees of future Leases or any successors and assigns of
Declarant that are not also Affiliates).

 

IN
WITNESS WHEREOF, Declarant has caused its duly authorized
representatives to execute this Declaration as of this 30th day of October,
1998.

 

	
   

  	
  SHORE TERMINALS LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard S. Shore, Jr.

  	
   

  
	
   

  	
   

  	
  Richard S. Shore, Jr.

  

 

35

 

EXHIBIT
A

 

(Legal
Description of the Property)

 

DRAWING
OF LEASED PROPERTY

 

 

Exhibit
A

 

36

 

EXHIBIT
B

 

DRAWING
OF DRAINAGE PLAN

 

Exhibit
B

 

37

 

CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT

 

	
  State of California

  County of

  	
   

  	
  — OPTIONAL SECTION —

  CAPACITY CLAIMED BY

  SIGNER

  
	
   

  	
   

  	
   

  
	
  On

  	
   

  	
  , before me,

  	
   

  	
   

  	
   

  	
  Though statute does not
  require the Notary to fill in the data below, doing so may prove invaluable
  to persons relying on the document.

  
	
   

  	
  DATE

  	
   

  	
  Name and Title of the Officer - e.g., “JANE DOE NOTARY PUBLIC”

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  personally appeared
  Richard (Beau) Shore,

  	
   

  	
   

  	
  o
  INDIVIDUAL

  
	
   

  	
  Name(s) of Signer(s)

  	
   

  	
  ý
  CORPORATE OFFICER(S)

  
	
  o
  personally known to me – OR o proved to me on the basis of satisfactory
  evidence

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  TITLE(S)

  
	
   

  	
   

  	
   

  	
   

  
	
  to be the person(s) whose
  name(s) is/are subscribed to the within instrument and acknowledged to me
  that he/she/they executed the same in his/her/their authorized capacity(ies),
  and that by his/her/their signature(s) on the instrument the person(s), or
  the entity upon behalf of which the person(s) acted, executed the instrument.

  	
   

  	
   

  	
   

  
	
  o
  PARTNER(S)

  	
  o
  LIMITED

  
	
   

  	
  o
  GENERAL

  
	
  o
  ATTORNEY-IN-FACT

  
	
   

  	
   

  	
  o
  TRUSTEE(S)

  
	
   

  	
  WITNESS my hand and
  official seal.

  	
   

  	
  o
  GUARDIAN/CONSERVATOR

  
	
   

  	
   

  	
   

  	
  o
  OTHER:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SIGNATURE OF NOTARY

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SIGNER IS

  REPRESENTING

  NAME OF PERSON(S) OR ENTITY(IES)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  OPTIONAL SECTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THIS CERTIFICATE MUST BE
  ATTACHED TO THE DOCUMENT DESCRIBED AT RIGHT:

  	
   

  	
  Title or Type of Document

  
	
   

  	
   

  	
  Number of
  Pages                           Date
  of Document

  
	
   

  	
   

  	
   

  
	
  Though the data requested
  here is not required by law, it could prevent fraudulent reattachment of this
  form.

  	
   

  	
  Signer(s) Other Than Named
  Above

  	
   

  
																				

 

 

38

 

EXHIBIT
D

 

SHORE
EASEMENTS

 

MARTINEZ
TERMINAL

 

I.                                         Easements

 

1.                                       Agreement
for Grant and Reservation of Easements (Martinez Terminal), dated October 30,
1998, between Shore Terminals LLC, a Delaware limited liability company
(“Grantor”), and Wickland Oil Martinez, L.P., a California limited partnership
(“Grantee”), as recorded in the Official Records of Contra Costa County,
California, on November 2,1998, as Document No. 98-0273349-00.

 

2.                                       Agreement
for Grant of Easement (Martinez Terminal Natural Gas Pipeline Easement), dated
October 30, 1998, between Grantor and Grantee, as recorded in the Official
Records of Contra Costa County, California, on November 2, 1998, as Document
No. 98-0273350-00.

 

II.                                     Survey

 

1.                                       ALTA/ACSM
Survey - Martinez Terminal for Wickland Oil, dated September 1998, prepared by
David Evans and Associates, Inc. (Page 4, only).

 

39

 

EXHIBIT
E

 

PERMIT
CONDITIONS

 

40

 

Archaeology

 

4.                                       Should
archaeological materials be uncovered during grading, trenching or other
on-site excavation(s), earthwork within 30 yards of these materials shall be
stopped until a professional archaeologist who is certified by the Society of
Professional Archaeology (SOPA) has had an opportunity to evaluate the
significance of the find and suggest appropriate mitigation(s), if deemed
necessary.

 

5.                                       The
applicant shall submit grading plans for review and approval of the Community
Development Department prior to issuance of grading permits.

 

Landscaping

 

6.                                       Prior
to Phase Two construction period, a landscaping and irrigation plan for all
areas shown on the plan shall be submitted for review and approval of the
Zoning Administrator at least 30 days prior to issuance of building permits. A
cost estimate shall be submitted with the landscaping program plan. Landscaping
shall conform to the County Water Conservation Landscape Ordinance 82-26 and
shall be installed prior to or approval of final building permit.

 

The plan shall be prepared by a licensed landscape
architect and shall be certified to be in compliance with the County Water
Conservation Ordinance.

 

7.                                       If
occupancy is requested prior to the installation of the landscape and
irrigation improvements, then either: (1) a cash deposit; (2) a bond; or (3) a
letter of credit, shall be delivered to the County for 125 percent of the
estimated cost of the uncompleted portion of the landscape and irrigation improvements.
If compliance is not achieved after six months of occupancy as determined by
the County Zoning Administrator, the County shall contract for the completion
of the landscaping and irrigation improvements to be paid for by the held sum.
The County shall return the unused portion within one year of receipt or at the
completion of all work.

 

Signs

 

8.                                       All
signs shall be subject to the review and approval of the Zoning Administrator.
No other outside displays are permitted.

 

41

 

Phase II

 

•                                          Applicant
shall inspect each vehicle upon delivery to the site. Prior to storage on-site,
any compromised system containing fluids shall be drained and fluids disposed
of properly.

 

•                                          Fluid
removal shall be permitted on-site within a permanent facility located on the
project site.

 

•                                          The
facility where fluid removal will take place shall have a concrete floor and be
covered to prevent exposure to precipitation. The area where this work will
take place shall be sloped to drain to the sanitary sewer system or other
acceptable filtering facility.

 

•                                          Vehicles
with damaged that have the potential for exposure of pollutants to
precipitation shall be stored in a covered area or shall be covered to prevent
exposure to  precipitation during
the period from October 1 to April 15 or during any significant storm event
after April 5.

 

•                                          Bulk
vehicle fluid storage areas shall have a concrete floor, be covered and a
containment berm provided around storage containers. Any drainage required for
storage areas shall be discharged to the sanitary sewer system or other
acceptable filtering facility.

 

•                                          Stencil
all storm drain inlets with “No Dumping, Drains to Delta” using thermoplastic
tape. Incorporate ongoing employee training programs on the potential to
pollute storm water and the property handling of hazardous materials.

 

Fees:

 

31.                                 Applicant
shall comply with the requirements of the Bridge/Thoroughfare Fee ordinance for
the Bay Point Area of Benefit and the Eastern Contra Costa Subregional Transportation
Mitigation Fee Area of Benefit as adopted by the Board of Supervisors for Phase
I of the project. A building permit hold shall be placed on this parcel for the
construction of any improvements related to Phase II of this project as approved
with this application.  The building
permit hold shall be released after review of the Phase II improvements by the
Public Works. Transportation Engineering Division and a determination made as
to the appropriate area of benefit fee schedule for the proposed project.

 

42

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