EX-10
Exhibit 10.23.3 Commercial Lease Agreement
EXHIBIT 10.23.3
COMMERCIAL LEASE AGREEMENT
THIS COMMERICAL LEASE AGREEMENT ("Lease") dated the 1st day of October,
1997 (the "Commencement Date"), is entered into by and between ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, husband and wife, of the County of Washoe,
State of Nevada (collectively referred to herein as "Landlord"), and LITHIA
REAL ESTATE, INC., an Oregon corporation qualified to do business in the
State of Nevada ("Tenant").
Section 1. Real Property and Improvement
1.1 Lease of Property. Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, that certain 1.78 acre parcel of real property
located at ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇, and more particularly
described in Exhibit A attached hereto and made a part hereof (the "Real
Property"), which Real Property contains an automotive sales and service
facility comprising approximately ________ sq. ft. (the "Premises"). The
Real Property and the Premises are sometimes collectively referred to herein
as the "Property."
1.2 Purchase of Assets. The parties acknowledge that, concurrently
herewith, Tenant's affiliate is acquiring from Landlord certain assets used
by Landlord in connection with the operation of its business on the Premises
pursuant to the terms of that certain Agreement for purchase and Sale of
Business Assets, dated July 8, 1997 ("Asset Purchase Agreement"), between
Landlord (and Landlord's affiliate) and Tenant's affiliate. Capitalized
terms not specifically defined herein shall have the meanings set forth in
the Asset Purchase Agreement. This commencement of this Lease is conditioned
upon the closing of the Asset Purchase Agreement, and this Lease shall have
no effect unless and until the Asset Purchase Agreement is closed.
Section 2. Term
2.1 Initial Term. The initial term of this Lease (the "Initial
Term") is five (5) full years, unless terminated earlier or extended pursuant
to the provisions of this Lease. If the Commencement Date of this Lease is
other than the first (1st) day of a calendar month, then the Initial Term
shall be adjusted to include the initial partial month and the five (5) full
years beginning on the first day of the subsequent calendar month.
2.2 Renewal Option. Tenant shall have options to renew this Lease
(the "Renewal Options") for nine (9) successive periods of five (5) years
each (the "Renewal Terms"), for a total Lease term of fifty (50) years (plus
the partial month provided for in Section 2.1 above) if all Renewal Options
are exercised by Tenant.
2.3 Renewal Option Period. Tenant shall have the right to exercise
each Renewal Option granted hereunder at any time during the period (the
"Renewal Option Period") beginning on the Commencement Date and ending six
(6) months prior to the first day of that relevant Renewal Term.
2.4 Delivery of Notice. The Renewal Option may be exercised and is
effective only if (i) Landlord receives from Tenant written notice of the
exercise of the Renewal Option prior to the expiration of the applicable
Renewal Option Period, and (ii) Tenant is not in material default under the
terms of the Lease either on the date of the exercise of the Renewal Option
or on the date of the commencement of the Renewal Term. If Landlord wishes
to assert that Tenant's written notice of exercise of a Renewal Option is
ineffective on the grounds that Tenant is in material default under the terms
of the Lease, then Landlord shall be obligated to so notify Tenant in
writing, and Tenant thereafter shall have either 10 days (in case of a
default in payment) or 30 days (in case of any other form of default) within
which to cure the default; if Tenant so cures the default within said 10 day
or 30 day period, then notwithstanding the preceding sentence, Tenant's
exercise of the Renewal Option shall be effective as of the date when
originally exercised.
2.5 Terms on Conditions on Renewal. The terms and conditions set
forth in this Lease shall constitute the lease terms and conditions during
each Renewal Term, and the adjustments in the Base Rent set forth in Section
3.3 below shall apply, except that no additional renewals beyond the ninth
(9th) Renewal Term provided in Section 2.2 above shall be permitted, unless
agreed to in a writing by Landlord.
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Section 3. Rent
Tenant shall pay to Landlord, as rent for the Property, the following
amounts, determined and payable in the manner and at the times set forth
below:
3.1 Security Deposit. Initially, no security deposit shall be
required of Tenant. However, should Tenant commit a material default under
the terms of this Lease, Landlord shall then have the right to require Tenant
to pay to Landlord a security deposit equal to two (2) months' rent. If a
security deposit is paid, Landlord may use all or any part of the security
deposit for the payment of any loss or damage occasioned by Tenant's
default. If any portion of the security deposit is so used, Tenant shall,
upon receipt of notice from Landlord, deposit cash with Landlord in an amount
sufficient to restore the security deposit to its original amount. No
interest shall be paid on the security deposit, and Landlord shall not be
required to keep it separate from Landlord's general funds. Upon full and
timely performance of Tenant's obligations under this Lease, the security
deposit (or remaining balance thereof) shall be returned to Tenant at the
expiration of the Initial Term or Renewal Term (as applicable) and after
Tenant has vacated the Property. If Landlord sells the Property, the
security deposit shall be transferred to Landlord's successor, in which event
Tenant agrees that Landlord shall thereafter be released from all liability
with respect thereto. In the event Tenant exercises its option to purchase
the Property as provided in Exhibit C hereto (see Section 22.1 of this
Lease), the security deposit shall be applied to the purchase price of the
Property.
3.2 Rent. Tenant shall pay to Landlord, as annual rent, without
abatement or off-set unless expressly allowed by this Lease, the amount of
$192,000 ("Base Rent"), payable in twelve (12) equal monthly installments of
$16,000 each. Each monthly installment of Base Rent shall be payable in
advance on the first (1st) day of each calendar month beginning on the
Commencement Date. If the Commencement Date of this Lease is other than the
first (1st) day of a calendar month, Base Rent for the first (1st) month
shall be pro rated on a per diem basis for the remaining days of that month.
All rent shall be in lawful money of the United States of America. Each
monthly payment of Basic Rent is due on the first (1st) calendar day of each
month during the Lease term without the requirement of any notice or other
reminder from Landlord to Tenant.
3.3 Rent Escalation. The Base Rent shall be increased for each
Renewal Term in accordance with the provisions of Exhibit B attached hereto
and made a part hereof.
3.4 Additional Rent. All amounts in addition to Base Rent which,
pursuant to this Lease are to be paid by Tenant to or on behalf of Landlord,
shall be considered "additional rent" for all purposes under this Lease.
3.5 Place of Payment. Unless and until otherwise directed by
Landlord in writing, or except as otherwise specifically provided in this
Lease, Tenant shall deliver all notices and pay all rent to the order of
Landlord at the address and in the manner set forth in Section 20 hereof.
3.6 Late Fee. If a monthly Base Rent payment is not received by
Landlord by the tenth (10th) calendar day of the month, Tenant shall be
charged a late fee of $25.00 per day (but not to exceed $750.00) per monthly
payment) retroactive to the first (1st) day of the month for each separate
monthly Base Rent payment that is late. Late fees shall be additional rent
due with the monthly Base Rent payment. Tenant agrees that the late fee:
(i) is a reasonable estimate of the costs that Landlord would incur by reason
of a late payment, and (ii) is in addition to all other rights of Landlord
and shall not prevent Landlord from exercising any other right or remedy
available to Landlord by reason of Tenant's failure to pay rent when due.
3.7 Interest on Past Due Amounts. All rent or other payments
becoming due under this Lease and all amounts expended by Landlord for the
account of Tenant shall bear interest at the rate of one percent (1%) per
month (annual percentage rate of 12%) compounded monthly, or the highest rate
permitted by law, whichever is less. Interest shall be calculated from the
due date or the date of expense, whichever is earlier, until paid.
3.8 Application of Payments. Payments made by Tenant to Landlord
shall firs be applied to late fees, if any, then to additional rent, if any,
then to any other amounts due from Tenant to Landlord, if any, and last to
Base Rent, as adjusted.
3.9 Net Lease. The parties intend that this shall be a net Lease and
that all rent payable by Tenant to Landlord hereunder shall be net of all
costs and expenses relating to the Property, and that all such costs and
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expenses paid or incurred during the term of this Lease, including but not
limited to taxes, insurance, utilities, repairs and maintenance, shall be
paid by Tenant, unless otherwise expressly provided in this Lease.
Section 4. Use of the Property
4.1 Permitted Use. Initially, the sole permitted use of the Property
under this Lease shall be the operation of an automotive sales and service
dealership (the "Permitted Use"). Any different use of the Property by
Tenant shall require the prior written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed.
4.2 Limitations on Use. Except with the prior written consent of
Landlord (which consent shall not be unreasonably withheld, conditioned or
delayed), no industrial, manufacturing or processing activity (except as is
usual and incidental to the Permitted Use) shall be conducted on the
Premises. Tenant shall not: (i) use the Property in any manner that would
constitute waste nor shall Tenant allow the same to be committed thereon;
(ii) abuse walls, ceilings, partitions, floors, wood, stone, iron work,
landscaping or other parts of the Property; (iii) use plumbing, fire control,
fire sprinkler, electrical, security, telecommunications, heating, cooling,
ventilation, elevator or other Property services, systems or facilities for
any purpose other than that for which it was constructed; (iv) make or permit
any noise or odor objectionable to the public emit from the Property; (v)
create, maintain or permit a nuisance in or about the Property; (vi) permit
or do anything that is contrary to any statutes, ordinances, rules,
regulations and laws of any federal, state, or local governmental body or
agency; (vii) permit or do anything that is contrary to any applicable rules
and regulations of the National Fire Protection Association, the applicable
Fire Rating Bureau and any similar bodies; or (viii) permit or do anything
that is contrary to any covenant, condition or restriction contained in this
Lease.
4.3 Hazardous Material Use. Tenant shall not cause or permit any
Hazardous Material to be brought upon, kept, or used in or about the Premises
or Real Property by Tenant, its agents, employees, contractors, customers,
clients, guests or invitees, except as incidental to Tenant's Permitted Use
of the Property. Tenant shall comply with all applicable laws and
regulations regulating the use, reporting, storage, and disposal of Hazardous
Material.
4.4 Hazardous Material Definition. As used in this Lease, the term
"Hazardous Material" means any hazardous or toxic substance, material or
waste which is or becomes regulated by any federal, state or local
governmental authority or political subdivision. The term "Hazardous
Material" includes, without limitation, any material or substance that is (i)
defined as a "hazardous substance" under applicable federal, state or local
law, (ii) petroleum, (iii) asbestos, (iv) polychlorinated biphenyl ("PCB"),
(v) designated as a "hazardous substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. S 1321), (vi) defined as a
"hazardous waste" pursuant to Section 1004 of the Solid Waste Disposal Act
(42 U.S.C. S6908), (vii) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. S9601), (viii) defined as a "regulated substance"
pursuant to Section 9001 of the Solid Waste Disposal Act (Regulation of
Underground Storage Tanks), 42 U.S.C. S6991, (ix) considered a "hazardous
chemical substance and mixture" pursuant to Section 6 of the Toxic Substance
Control Act (15 U.S.C. S2605), or (x) defined as a "pesticide" pursuant to
Section 2 of the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
S136).
4.5 Disposal of Refuse. Tenant shall store all trash and garbage
within the Leased Property or in an area designated as appropriate therefor
by Landlord. Tenant shall arrange for and bear the expense of prompt and
regular removal of trash and garbage from the Leased Property.
4.6 Approvals, Permits and Easements. During the term of this Lease,
Tenant shall have the right to apply for and obtain any approvals, permits or
licenses from any governmental entity required for the use of the Premises as
contemplated herein and, in connection therewith, Landlord agrees to
cooperate, provided that all costs and expenses therefor shall be the sole
obligation of Tenant.
4.7 Security Services.
(a) Limited Landlord Responsibility. Tenant acknowledges and
agrees that, except as specifically provided in this Section 4.7(a), Landlord
has no responsibility for security at the Property, and is not responsible
for providing armed or unarmed guards or watchmen, monitoring systems,
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security systems, fences, gates or any other security or security systems.
Landlord's sole responsibility for security for the Premises is to provide a
means to securely lock all doors to the Premises, and to provide lockable
entry doors to the Premises using a key lock system. If Tenant wished to
rekey the Premises, then the cost of such rekeying shall be paid by Tenant
and a copy of the new keys shall be provided to the Landlord.
(b) Tenant Obligations. Tenant is responsible for providing
all security except key locks provided by Landlord. Tenant shall provide and
maintain Security Services for the Property that are appropriate for Tenant's
use. The term "Security Services" includes, but is not limited to, any
watchmen, locks, fences, alarms, doors, or other services, devices,
procedures, barriers or other measures for the purpose of protecting,
safeguarding, defending, or policing persons or property from any theft,
vandalism or other loss or damage. Tenant may use or install fences, locks,
alarms, doors or other devices to provide Security Services, and the
installation of any Security Services shall be (i) consistent with the
overall design and use of the Premises and Real Property, and (ii) subject to
the terms of this Lease regarding "alterations, improvements and additions"
in Section 5 below.
Section 5. Improvements by Tenant. Tenant shall not make any alteration,
improvement or addition to the Property without the prior written consent of
Landlord which consent may not be unreasonably withheld, conditioned or
delayed. All alterations, improvements, and additions: (i) shall be
performed at the sole cost and expense of Tenant in compliance with all laws
and regulations of any federal, state, or local governmental body, and (ii)
shall become and remain the property of Landlord. In contracting for any
alterations, improvements or additions, Tenant shall not act as agent of
Landlord.
Section 6. Quiet Enjoyment. Landlord agrees that Tenant, upon paying the
rent and performing the terms of this Lease, may quietly have, hold and enjoy
the Property during the term hereof.
Section 7. Taxes and Assessments.
7.1 Payment of Taxes and Assessments. During the term of this Lease,
Tenant shall pay when due and before delinquency all ad valorem real property
taxes levied and assessed against the value of the Real Property and
improvements thereon, and all personal property taxes levied and assessed
against Tenant's trade fixtures and equipment and other personal property
placed upon, or owned by Tenant in, on or about the Premises or the Real
Property.
7.2 Right to Contest. Tenant, at Tenant's expense, shall have the
right to contest the amount or validity of all or any part of the ad valorem
real property taxes and assessments required to be paid by Tenant hereunder;
provided, however, that Tenant shall indemnify Landlord against any loss or
liability by reason of such contest. Notwithstanding such a contest, all
taxes otherwise due and payable to Landlord by Tenant shall be paid upon
demand, but any refund thereof by any taxing authority shall be the property
of Tenant.
7.3 New Taxes. Tenant shall reimburse to Landlord promptly upon
demand any and all taxes and other charges payable by Landlord to any
governmental entity (other than net income, estate and inheritance taxes)
whether or not now customarily paid or within the contemplation of the
parties hereto, by reason of or measured by the rent payable under this
Lease, or allocable to or measured by the area or value of the Premises
and/or Real Property, or upon the use and occupancy by Tenant of the Premises
and/or Real Property, or levied for services rendered by or on behalf of any
public, quasi-public or governmental entity.
Section 8. Maintenance of Property; Utilities
8.1 Routine Maintenance and Repair. Tenant shall, at its sole cost
and expense, at all times be responsible for routine repairs and maintenance
of the Property as shall be necessary to maintain the Property in the
condition not less than the condition of the Property existing as of the
Commencement Date, normal wear and tear excepted.
8.2 Structural and Systems Maintenance. In addition to routine
repairs and maintenance as provided in Section 8.1 above, Tenant shall be
responsible for paying for the structural and systems maintenance of the
Property and, in connection therewith, shall (i) make the repairs and
replacements necessary to maintain the structural integrity of the Premises,
including repairs and maintenance of the foundations and load-bearing walls,
(ii) repair and maintain in good working order the roof, paved parking areas,
and the heating, ventilating, air conditioning, plumbing, and electrical
systems, and (iii) maintain the light ballasts.
8.3 Tenant's Liability for Repairs and Maintenance. Notwithstanding
any other provisions of this Lease, Tenant shall be liable for and shall
promptly repair all damage to the Premises or Real Property caused by Tenant
or Tenant's partners, officers, directors, employees, invitees, guests,
customers, clients or licensees, regardless whether the damage is caused by
the negligence of Tenant or such other persons. All repairs made by Tenant
shall be at least equal to the original work in class and quality. If Tenant
fails to so maintain or repair, (i) Landlord (or its agents) may, but is not
required to, enter the Premises at any reasonable time to perform maintenance
or make repairs, and (ii) Tenant shall pay to Landlord the cost of the
maintenance or repairs performed by Landlord as additional rent due with the
next monthly Base Rent payment.
8.4 Utilities. Tenant shall pay for all heat, air conditioning,
water, light, power and/or other utility service, including garbage and trash
removal and sewage disposal, including all hookup fees or charges in
connection therewith, used by Tenant in or about the Premises and Real
Property during the term of this Lease. Tenant shall not be liable for any
interruption or failure in the supply of any utility or service to the
Property.
Section 9. Insurance
9.1 Tenant's Obligations. Tenant shall purchase and keep in force
the following types of insurance in the amounts specified and in the form
hereafter provided:
(a) Fire and Extended Coverage. A policy or policies of fire
and extended coverage insurance covering the Real Property and the Premises,
in an amount not less than ninety percent (90%) of the full replacement cost
(exclusive of the cost of excavations, foundations and roofing), against any
peril within the classification "fire and extended coverage" or, at
Landlord's election, "all-risk coverage." In addition, Tenant shall purchase
and keep in force rent insurance insuring Landlord against loss of rent
during the period of repair or replacement of all or any portion of the
Premises in the event of loss or damage. The insurance provided for in this
Section 9.1(a) may be brought within the coverage of a blanket policy or
policies of insurance carried and maintained by Tenant.
(b) Public Liability and Property Damage. A policy or policies
of comprehensive general liability insurance with broad form general
liability endorsement or equivalent, with limits of not less than $1,000,000
per person and $1,000,000 per occurrence of bodily injury and property damage
combined. The policy or policies shall also insure against liability arising
out of the use, occupancy or maintenance of the Premises and the Real
Property. Said policy or policies shall designate Landlord as an additional
insured and shall specifically insure the performance by Tenant of the
indemnity agreement(s) contained in Section 16.5 of this Lease.
(c) Tenant's Leasehold Improvements and Personal Property.
Insurance covering all the items comprising Tenant's leasehold improvements,
trade fixtures, equipment and personal property from time-to-time, in, on or
upon the Real Property and the Premises in an amount not less than ninety
percent (90%) of their full replacement cost from time-to-time, providing
protection against any peril included within the classification "fire and
extended coverage," together with insurance against sprinkler damage,
vandalism and malicious mischief and earthquakes. Any policy proceeds shall
be used for the repair or replacement of the property damaged or destroyed.
Landlord shall have no obligation to provide any insurance with respect to
the Real Property or the Premises. Except as provided herein, each of
Landlord and Tenant (i) is not obligated to obtain, (ii) is not obligated to
be named in, (iii) shall have no right to any proceeds of, and (iv) waives
all claims on, insurance purchased by or for the benefit of the other party.
9.2 Policy Form. All policies required to be provided by Tenant
shall be issued in the names of Landlord and Tenant and evidence thereof
shall be delivered to Landlord within ten (10) days after the Commencement
Date of this Lease and thereafter within thirty (30) days prior to the
expiration of the term of each policy. All policies shall be with an insurer
with a Best's rating of B+ or higher, and shall contain a provision hat the
insurer shall give Landlord twenty (20) days notice in writing in advance of
any cancellation or lapse or the effective date of any reduction in the
amounts of the insurance. All public liability, property damage and other
casualty policies required to be provided by Tenant shall be written as
primary policies, not contributing with and not in excess of coverage which
Landlord may carry.
9.3 Adjustment of Coverage. Not more frequently than every five (5)
years during the term of this Lease if, in the opinion of Landlord based on
industry and local standards and Tenant's use of the Premises, the amount of
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public liability and property damage insurance required to be provided by
Tenant is at that time not adequate, Tenant shall increase the insurance
coverage as reasonably determined by Landlord to be adequate.
9.5 Waiver of Subrogation. To the extent permitted by their
respective insurers, Landlord and Tenant (and each person claiming an
interest in the Property through Landlord or Tenant, including all subtenants
of Tenant) release and waive their entire right of recovery against the other
for direct, incidental or consequential or other loss or damage arising out
of, or incident to, the perils covered by insurance carried by each party,
whether due to the negligence of Landlord or Tenant. If necessary, all
insurance policies shall be endorsed to evidence this waiver.
9.6 Failure to Insure. If Tenant shall fail to purchase and keep in
force the insurance required by this Lease, (i) Tenant shall be in default
hereunder, shall be deemed to be self-insured and shall bear all risk of loss
or damage, and (ii) Landlord may, but shall not be required to, purchase and
keep in force the required insurance, or any portion thereof, in which event
Tenant shall reimburse Landlord the full amount of Landlord's cost with
respect thereto within five (5) days after written demand therefor is
delivered to Tenant.
Section 10. Damage or Destruction
10.1 Termination or Repair. If all or any portion of the Premises or
Real Property are damaged or destroyed by fire or other casualty, Landlord
shall deliver to Tenant written notice within thirty (30) days of the damage
or destruction stating whether the Premises and Real Property can be restored
within one hundred and eighty (180) days of the damage or destruction.
Landlord shall have no obligation to expend more in repairing, restoring or
rebuilding than the proceeds of insurance available for such purposes. If,
in Landlord's reasonable judgment, the insurance settlement, permit and
construction work for repairing and rebuilding the damaged or destroyed
portion of the Premises or Real Property can be completed within the 180-day
period with the available insurance proceeds, Landlord shall promptly proceed
to repair or rebuild the damaged or destroyed portion of the Premises or Real
Property. If, in Landlord's reasonable judgment, the insurance settlement,
permit and construction work for repairing and rebuilding the damaged or
destroyed portion of the Premises or Real Property cannot be completed within
the 180-day period with the available insurance proceeds, either Landlord or
Tenant may terminate this Lease upon thirty (30) days' written notice to the
other party.
10.2 Abatement or Apportionment of Rent. If the Lease is not
terminated, and if the damage or destruction to the Premises or Real Property
is not caused by the act or failure to act of Tenant, its partners, officers,
employees, agents, guests, customers, clients or invitees, then a just
portion of the rent shall ▇▇▇▇▇ as of the date of the damage or destruction
until the Premises and Real Property are repaired or rebuilt. If the Lease
is terminated, the rent shall be apportioned as of the date of the damage or
destruction.
10.3 Alterations, Improvements and Additions. With respect to any
damage or destruction of Tenant's alterations, improvements or additions made
to the Premises, (i) this Section 10 shall be inapplicable, (ii) no abatement
of rent shall occur, and (iii) Landlord shall not be obligated to repair or
rebuild Tenant's alterations, improvements, or additions.
Section 11. Condemnation. If all of the Premises and/or Real Property are
taken or condemned by any authority for any use or purposes, this Lease shall
terminate upon, and the rent shall be apportioned as of, the date when actual
possession of the Premises and/or Real Property is required for the condemned
use or purpose. If less than all of the Premises are taken or condemned by
any authority for any use of purpose, then (i) if the remainder of the
Property is not reasonably sufficient for Tenant's business purposes, then
either Landlord or Tenant may terminate this Lease upon thirty (30) days'
written notice of termination, or (ii) the parties may continue the Lease and
a just portion of the rent will ▇▇▇▇▇ as of the date when actual possession
of condemned portion of the Premises and/or Real Property is required for the
condemned use or purpose. All compensation and damages awarded for the
taking of all or any portion of the Property shall be apportioned between
Landlord and Tenant on the following basis: (i) if awarded separately and
not as part of the general award to landlord, Tenant shall be entitled to
receive a sum equal to the excess (if any) of the rental market value of the
Property for the remainder of the Lease term over the present value (as of
the date of taking) of the rent which is then payable for the remainder of
the Lease term, plus compensation for the loss of Tenant's trade fixtures,
removable personal property, loss of business and good will, and relocation
expenses, and (ii) Landlord shall be entitled to the balance of the award.
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Section 12. Landlord's Entry on Property
12.1 Right of Entry. Landlord, and Landlord's authorized
representatives, shall have the right to enter the Property at all reasonable
times during normal business hours for any of the following purposes:
(a) To determine whether the Property is in good condition and
whether Tenant is complying with this Lease;
(b) To serve, post and keep posted any notice required or
allowed under the provisions of this Lease;
(c) To show the Property to prospective brokers, agents, buyers
or tenants at any time during the term of this Lease.
12.2 No Liability. Landlord shall not be liable in any manner for any
inconvenience, disturbance, loss of business, nuisance or other damage
arising out of Landlord's entry on the Property as set forth herein;
provided, however, Landlord shall conduct its activities on the Property as
allowed herein in a manner that will cause the least possible inconvenience,
annoyance or disturbance to Tenant.
Section 13. Covenant Against Liens
13.1 Liens Prohibited. Tenant agrees not to suffer or permit any lien
(including, but not limited to, tax liens and liens of mechanics or
materialmen) to be placed against the Premises or Real Property. If a lien
is placed against the Premises or Real Property that is directly or
indirectly related to an act or failure to act of Tenant, Tenant agrees to
pay off and remove such lien within five (5) days of receipt by Tenant of
notice of the lien, regardless whether Tenant contests the validity of the
lien. Tenant has no authority or power to cause or permit any lien or other
encumbrance created by act of Tenant, operation of laws, or otherwise to
attach to or be placed upon Landlord's title or interest in the Premises or
Real Property. Any lien or encumbrance shall attach only to Tenant's
leasehold interest in the Property.
13.3 Failure to Pay Lien. If Tenant shall default in the paying of a
prohibited lien and a suit to foreclose the same is filed, and if Tenant has
not given Landlord acceptable security to protect Landlord against any loss,
damage and expense with respect to such lien, Landlord may, but shall not be
required to, pay the lien and any related costs, and the amount so paid,
together with reasonable attorney's fees incurred in connection therewith,
shall be immediately paid by Tenant to Landlord together with interest
thereon at the rate provided in Section 3.7 hereof.
Section 14. Default
14.1 Default by Tenant. Tenant shall be in default under this Lease
if any of the following shall occur (any one or more of the following herein
constituting an "Event of Default"):
(a) Tenant fails to pay when due any monthly rent or other
payment required to be paid by Tenant under this Lease within ten (10) days
of its due date; provided, however, that before declaring any default in the
making of any payment required under this Lease, Landlord shall provide to
Tenant a written notice specifying that there has been a default in the
making of a required payment, and Tenant shall have three (3) business days
after receipt of that notice within which to pay the delinquent amount and
prevent a default hereunder, or
(b) Tenant shall default in the observance or performance of
any of Tenant's other covenants hereunder (other than the covenant to pay
rent or any other sum herein specified to be paid by Tenant) and such default
shall not have been cured within thirty (30) days after Landlord shall have
given to Tenant written notice specifying such default; provided, however,
that if the default complained of shall be of such a nature that the same
cannot be completely remedied or cured with such 30-day period, then such
default shall not be a default against Tenant for the purposes of this
paragraph so long as Tenant shall have promptly commenced curing such default
and shall proceed with all due diligence and in good faith to remedy the
default complained of; or
(c) Tenant shall have (i) file a voluntary petition in
bankruptcy, or (ii) be adjudicated bankrupt or insolvent, or (ii) have a
receiver or trustee appointed for all or substantially all of its business or
7
assets on the ground of Tenant's insolvency, or (iv) suffer an order to be
entered approving a petition filed against Tenant seeking reorganization of
Tenant under the federal bankruptcy laws or any other applicable law or
statute of the United States or any state thereof, or (v) Tenant shall make a
general assignment or general arrangement for the benefit of its creditors,
or (vi) bankruptcy proceedings shall have been instituted against Tenant
which are not withdrawn or dismissed with sixty (60) days after the
institution of said proceedings; or
(d) Tenant shall remove or attempt to remove, with the prior
authorization of Landlord, any of Tenant's fixtures, equipment, appliances or
personal property from the Premises for any reason other than the normal and
usual operation of Tenant's business; or
(e) Tenant shall abandon the Premises.
14.2 Remedies of Landlord. In the event that Tenant commits, or
allows to occur, an Event of Default, Landlord shall have the following
remedies:
(a) Legal and Equitable Remedies. Landlord shall have all
remedies available at law or in equity.
(b) Termination. Landlord shall have the immediate right, but
not the obligation, to terminate Tenant's right of possession of the Property
and/or, at Landlord's election, this Lease and all rights of Tenant
hereunder, by giving Tenant written notice of Landlord's election to
terminate. In the event that Landlord shall elect to so terminate this
Lease, said election by Landlord shall, without being so expressly stated, be
deemed an election by Landlord to accelerate all future rents payable under
this Lease for the Initial Term or then-applicable Renewal Term to be
immediately due and payable, if such acceleration shall be required to permit
Landlord to enforce any of the rights and remedies hereafter provided. In
the event of such termination (and acceleration), Tenant agrees to pay to
Landlord and Landlord shall have the right to recover from Tenant the
following:
(i) The worth at the time of award of any unpaid rent
which has been earned at the time of such termination; plus
(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 Tenant proves could have been
reasonably avoided; plus
(iii) The worth at the time of award of the amount by which
the unpaid rent for the balance of the Initial Term or Renewal Term (as
applicable) after the time of award exceeds the amount of such rental loss
that Tenant proves could be reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for
all detriment, expense, loss or damage, including, but not limited to, all
costs and expenses to re-lease or sublet the Property, including the cost of
alterations and remodeling required by a new tenant, attorneys' fees and real
estate commissions paid or payable for this Lease or to re-lease or sublet
the Property, proximately caused by Tenant's failure to perform its
obligations under this Lease; plus
(v) Any other amount necessary to compensate Landlord for
all other detriment, expense, loss or damage proximately caused by Tenant's
failure to perform its obligations under this Lease (including, without
limitation, the payment of taxes, insurance, and operating costs to the
extent provided by this Lease); plus
(vi) Any other amounts owed to Landlord by Tenant,
including, without limitation, any sums of money or damages provided in
Sections 15.3, 15.4 or 21 of this Lease.
As used in this Section 14.2(b), the term "rent" shall be deemed to be and to
mean the monthly Basic Rent and all other sums required to be paid by Tenant
pursuant to the terms of this Lease. As used in paragraphs (i), (ii) and
(iii) of this Section, the "worth at the time of award" is computed by
allowing interest or discounting, as the case may be, at the rate equal to
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award. All rental amounts received from any re-letting of the Property
during the balance of the then-applicable term of this Lease (had termination
not occurred) shall be the property of Landlord, and Tenant shall have no
8
right or claim to such rental amounts. The rental amounts received by
Landlord prior to the time of the award of damages as provided above shall
constitute rental loss avoided by Landlord.
(c) Advances. In the event of Tenant's breach hereof, Landlord may
remedy the breach for the account and at the expense of Tenant. If Landlord
at any time, by reason of such breach, is compelled to pay, or elects to pay,
any moneys or do any act which will require the payment of any moneys, or is
compelled to incur any expense, including reasonable attorneys' fees and
costs, in instituting or prosecuting any action or proceeding to enforce
Landlord's rights under this Lease, the moneys so paid by Landlord, with
interest from the date of payment, shall be additional rent and shall be due
from Tenant to Landlord as provided in Section 3 hereof.
14.3 Re-Entry on Termination. In the event of the termination of
Tenant's right of possession and/or this Lease by Landlord hereunder,
Landlord shall have the right to re-enter the Property and remove therefrom
all persons and property.
14.4 Re-Entry on Non-Termination. In addition to the other rights of
Landlord herein provided, Landlord shall have the right without terminating
this Lease, to re-enter and retake possession of the Property and collect
rents from any subtenants and/or sublet in the name of Landlord or Tenant the
whole or any part of the Property for the account of Tenant, upon any terms
or conditions determined by Landlord. In the event of such subleasing,
Landlord shall have the right to collect any rent which may become payable
under any sublease, and apply the same first to the payment of expenses
incurred by Landlord in dispossessing the Tenant and in subletting the
Property, including attorneys' fees, real estate commissions and repairs and,
thereafter, to the payment of the rent herein required to be paid by Tenant,
in fulfillment of Tenant's covenants hereunder, and Tenant shall be liable to
Landlord for the rent herein require to be paid, less any amount actually
received by Landlord from a sublease and, after payment of expenses incurred,
applied on account of the rent due hereunder. In the event of such election,
Landlord shall not be deemed to have terminated this Lease by taking
possession of the Property unless notice of termination, in writing, has been
given by Landlord to Tenant.
14.5 Right of Entry-Lien for Performance. In addition to any other
rights of Landlord as provided in this Section 14, upon the default of
Tenant, Landlord shall have the right to enter the Property, change the locks
on doors to the Premises and exclude Tenant therefrom and, in addition, take
and retain possession of any property on the Premises or Real Property owned
by or in the possession of Tenant as and for security for Tenant's
performance. Tenant hereby grants to Landlord a lien under applicable Nevada
law on all of said property, which lien shall secure the future performance
by Tenant of this Lease. No property subject to said lien shall be removed
by Tenant from the Property so long as Tenant is in default of any monetary
obligation under this Lease. No action taken by Landlord in connection with
the enforcement of its rights as provided in this Section 14 shall constitute
a trespass or conversion except as to persons holding prior security
interests in said property, and Tenant shall indemnify, save and hold
Landlord harmless from and against any such claim or demand on account
thereof.
14.6 Enforcement. In the event of a default by Tenant under this
Lease, Landlord may at any time, and from time-to-time, without terminating
this Lease, enforce all of its rights and remedies under this Lease, or
allowed by law or equity, including the right to recover all rent as it
becomes due. The enforcement by Landlord of any rights or remedies provided
in this Section 14, or allowed by law or equity, shall not constitute the
election by Landlord to terminate this Lease unless such election is in a
writing signed by Landlord (or Landlord's authorized agent) and delivered to
Tenant.
14.7 Security Deposits. If Landlord terminates this Lease because of
the default of Tenant as provided in this Section 14, or if Landlord
exercises its right of possession under Section 14.4 above, without
terminating this Lease, then Tenant shall immediately transfer to the Owner
all security deposits previously paid to Tenant by subtenants having a right
to occupy the Property at the date of said termination.
14.8 Additional Security. As additional security for Tenant's
performance of this Lease, Tenant hereby assigns and sets over to Landlord,
as security for the performance of Tenant's obligations under this Lease, all
subleases entered into by Tenant with respect to the Property, and all rents
due or to become due under said subleases, subject to the right of Tenant by
license granted to Tenant by Landlord, to collect and retain said rents, so
long as Tenant is not in default under this Lease.
9
14.9 Mitigation. Nothing herein contained shall relieve Landlord from
the obligation to make reasonable efforts to mitigate the loss or damage
occasioned by a default of Tenant, provided that said obligation to mitigate
shall not relieve Tenant of the burden of proof as required in this Section
14 or otherwise affect the rights and remedies available to landlord in the
event of a default by Tenant as provided in this Section or otherwise allowed
by law or equity.
14.10 Default by Landlord. Landlord shall be in default under this
Lease if Landlord fails to perform or observe any covenant, agreement or
condition which Landlord is required to perform or observe and the failure
shall not be cured within thirty (30) days after delivery of written notice
to Landlord by Tenant of the failure.
14.11 Remedies of Tenant. In the event of Landlord's default as set
forth in Section 14.3, Tenant shall have all rights provided at law or in
equity, except Tenant expressly waives any right to the abatement or
withholding of rent payable to Landlord under this Lease. Tenant's
obligation to pay rent is independent of all other rights, and Tenant may not
withhold rent payments to Landlord or pay rent to other parties or into any
escrow or holding account because of the default or alleged default of
Landlord.
Section 15. Termination
15.1 Events of Termination. This Lease shall terminate upon the
occurrence of one or more of the following events: (i) by mutual agreement
of Landlord and Tenant; (ii) by Landlord pursuant to this Lease; (iii) by
Tenant pursuant to this Lease; (iv) upon lapse of the Initial Term or any
Renewal Term without Tenant exercising its Renewal Option related thereto; or
(v) by reason of Sections 10 or 11 relating to destruction or condemnation of
the Property.
15.2 Surrender of Possession. Upon termination of this Lease, Tenant
will immediately surrender possession of the Property to Landlord. If
possession is not immediately surrendered, Landlord may re-enter and
repossess the Property and remove all persons or property using such force as
may be necessary without being deemed guilty of, or liable for, any trespass,
forcible entry, detainer, breach of the peace, or damage to persons or
property.
15.3 Condition of Property Upon Termination or Abandonment. Tenant,
upon termination or abandonment of this Lease or termination of Tenant's
right of possession, agrees as follows:
(a) Remove Alterations. Tenant shall not remove any
alterations, improvements or additions made to the Property be Tenant or
others without the prior written consent of Landlord, which consent shall not
be unreasonably withheld. Tenant shall immediately remove, in a good and
workmanlike manner (i) all personal property of Tenant, and (ii) the
alterations, improvements and additions made to the Property by Tenant as
Landlord may request in writing to be removed. All damage occasioned by the
removal shall be promptly repaired by Tenant in a good and workmanlike
manner. If Tenant fails to remove any property, Landlord may (i) accept the
title to the property without credit or compensation to Tenant, or (ii)
remove and store the property, at Tenant's expense, in any reasonable manner
that Landlord may choose.
(b) Restore Premises. Tenant shall restore the Property to the
condition existing on the Commencement Date, with the exception of (i)
ordinary wear and tear, and (ii) alterations, improvements and additions
which Landlord has not directed to Tenant in writing to remove. If Tenant
fails to properly restore the Property, Landlord, at Tenant's expense, may
restore the Property in any reasonable manner that Landlord may choose.
15.4 Holding Over. Should Tenant continue to occupy the Property, or
any part thereof, after the expiration or earlier termination of this Lease,
whether with or against the consent of Landlord, such tenancy shall be from
month to month. In the event of such a holding over, the obligations of
Tenant shall be the same as were in effect at the date of said expiration or
termination and the monthly rent to be paid by Tenant to Landlord shall be
equal to one hundred twenty-five percent (125%) of the monthly rent in force
and effect for the last month of the term expired or terminated.
Section 16. Claims and Disputes
16.1 Rights and Remedies Cumulative. Except as expressly provided in
this Lease, each party's rights and remedies described in this Lease are
cumulative and not alternative remedies.
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16.2 Nonwaiver of Remedies. A waiver of any condition stated in this
Lease shall not be implied by the neglect of a party to enforce any remedy
available by reason of the failure to observe or perform the condition. A
waiver by a party shall not affect any condition other than the one specified
in the waiver and a waiver shall waive a specified condition only for the
time and in the manner specifically stated in the waiver. The acceptance by
Landlord of rent or other money from Tenant after termination of the Lease,
after termination of Tenant's right of possession, after the occurrence of a
default, or after institution of any remedy by Landlord shall not alter,
diminish, affect or waive the Lease termination, termination of possession,
default or remedy.
16.3 Waiver of Notice. Except as provided in Section 14.1(a), Tenant
expressly waives the services of any demand for payment of rent or for
possession.
16.4 Waiver of Claims. Exclusive of direct damages caused by the
negligence or willful misconduct of Landlord, Landlord and Landlord's
partners, directors, officers, agents, servants and employees shall not be
liable for any direct or consequential damages (including damages claimed for
actual or construction eviction) either to the person or property sustained
by Tenant or Tenant's partners, officers, directors, employees, invitees,
guests, customers, clients or licensees due to (i) any part of the Premises
or Real Property not being in repair, or (ii) the happening of any incident
on the Premises or Real Property. This waiver shall include, but not be
limited to, damage caused by cold, heat, water, snow, frost, sewage, gas, or
the malfunction of any plumbing, fire control, fire detection, fire
sprinkler, electrical, electronic, computer, security, telecommunication,
heating, cooling or ventilation systems, facilities or installations on the
Premises or Real Property.
16.5 Indemnification. To the extent caused by an act or failure to
act of Tenant or Tenant's partners, officers, employees, invitees, guests,
customers, clients or licensees, and regardless whether the act or failure to
act is negligent, Tenant shall defend, indemnify and hold harmless Landlord
and Landlord's partners, officers, directors, agents and employees from any
liabilities, damages and expenses (including attorneys' fees and costs)
arising out of or relating to (i) the Premises or Real Property, or (ii)
Tenant's use or occupancy of the Property.
16.6 Hazardous Material Indemnification. Tenant shall indemnify,
defend and hold Landlord harmless from any and all claims, judgments,
damages, penalties, fines, costs, liabilities or losses (including, without
limitation, diminution in value of the Premises or Real Property, damages for
the loss or restriction on use of rentable or useable space or any amenity of
the Premises or Real Property, damages arising from any adverse impact on
marketing of space, and sums paid in settlement of claims, attorneys' fees,
consultant fees and expert fees) which arise during or after the Term as a
result of Tenant's breach of the obligations stated in this Lease regarding
Hazardous Material. This indemnification of Landlord by Tenant includes,
without limitation, costs incurred in connection with any investigation of
site conditions or any cleanup, remedial, removal, or restoration work
required by any federal, state, or local governmental agency or political
subdivision because of Hazardous Material introduced during the Lease term
into the soil or ground water on or under the Premises or Real Property.
Without limiting the preceding, if the presence of any Hazardous Material on
the Premises or Property caused or permitted by Tenant results in any
contamination of the Premises or Real Property, Tenant shall promptly take
all actions at Tenant's sole expense as are necessary to return the Premises
or Property to the condition existing prior to the introduction of any
Hazardous Material to the Premises or Real Property.
(a) Notwithstanding any other provision of this Agreement or
any contrary provision of law, the obligations of Tenant pursuant to this
Section 16.6 shall remain in full force and effect until the expiration of
the latest period stated in any applicable statute of limitations during
which a claim, cause of action or prosecution relating to the matters
described herein may be brought, and until payment in full or satisfaction of
any and all losses, claims, causes of action, damages, liabilities, charges,
costs and expenses for which Tenant is liable hereunder shall have been
accomplished.
(b) If any claim, demand, action or proceeding is brought
against Landlord which is or may be subject to Tenant's obligation to
indemnify Landlord as set forth under this Section 16.6 Landlord shall
provide to Tenant immediate notice of that claim, demand, action or
proceeding, and Tenant thereafter shall defend Landlord at Tenant's expense
using attorneys and other counsel selected by Tenant and reasonably
acceptable to Landlord.
16.7 Effect of Landlord Insurance on Tenant Obligations. From time to
time and without obligation to do so, Landlord may purchase insurance against
damage or liability arising out of or related to the Premises or Real
11
Property. The purchase or failure to purchase insurance shall not release or
waive the obligations of Tenant set forth in this Lease. Tenant waives all
claims on insurance purchased by Landlord.
16.8 Disputes. This Lease shall be governed by the laws of the State
of Nevada, without regard to conflicts of laws principles. The Nevada courts
have exclusive jurisdiction and Washoe County is the proper venue.
16.9 Landlord's Responsibility For Prior Contamination By Hazardous
Substances.
(a) Except as otherwise expressly disclosed in Exhibit D,
Landlord represents and warrants to Tenant that to the best of
Landlord's actual knowledge: (i) at all times prior to the commencement
of the Lease, Landlord and all of Landlord's predecessors in title, and
all lessees, tenants, employees, agents, sublessees, franchisees,
licensees, permitees, contractors, vendees and customers of Landlord
and/or Landlord's predecessors in title, and all other persons
permitted by Landlord and/or Landlord's predecessors in title to have
access to the Property, shall have used, stored, transported, disposed
of and treated Hazardous Materials in strict accordance with all
applicable federal, state and local laws and regulations (collectively
referred to for the remainder of this Section 16.9 as the "Laws"), and
(ii) the Property shall not, as of the commencement of the Lease, be
contaminated by the Presence on, under or about the Property of any
Hazardous Material.
(b) Landlord agrees to indemnify, defend, protect and hold
harmless Tenant and each of Tenant's members, partners, stockholders (if
any), employees, agents, successors and assigns (collectively referred to for
the remainder of this Section 16.9 as "Tenant"), from and against any and all
criminal and civil claims and causes of action (including but not limited to
claims resulting from, or causes of action incurred in connection with, the
death of or injury to any person or damage to any property), liabilities
(including but not limited to liabilities arising by reason of actions taken
by any governmental agency), penalties, forfeitures, prosecutions, losses and
expenses (including reasonable attorney fees) which directly or indirectly
arise from or are caused by either: (i) the presence, prior to the
commencement of the Lease, in, on, under or about the Real Property or the
Premises, of any Hazardous Materials, or (ii) any breach of the warranties
made by landlord in Section 16.9(a). Landlord's obligations under this
Section 16.9(b) shall include, but not be limited to, the obligation to bear
the expense of any and all costs, whether foreseeable or unforeseeable, of
any necessary (as required by the Laws) repair, cleanup, detoxification or
decontamination of all or any portion of the Property (or any improvements
located thereon), and the preparation and implementation of any closure,
remedial action or other required plan or plans in connection therewith.
Notwithstanding the preceding provisions of this Section 16.9(b), Landlord
shall have no obligation to indemnify, defend, protect and/or hold harmless
Tenant with respect to any release, spill, leak or discharge of Hazardous
Materials on the Property which occurs solely after the commencement of the
Lease.
(c) Notwithstanding any other provision of this Agreement or
any contrary provision of law, the obligations of Landlord pursuant to this
Section 16.9 shall remain in full force and effect after any closing of the
purchase of the Property by Tenant and until the expiration of the latest
period stated in any applicable statute of limitations during which a claim,
cause of action or prosecution relating to the matters described herein may
be brought, and until payment in full or satisfaction of any and all losses,
claims, causes of action, damages, liabilities, charges, costs and expenses
for which Landlord is liable hereunder shall have been accomplished.
(d) For purposes of this Section 16.9, any act or omission,
prior to the commencement of the Lease, of or by any one or more employees,
agents, assignees, sublessees, franchisees, licensee, permitees, customers,
vendees, contractors, successors-in-interest or other persons permitted by
Landlord or any of Landlord's predecessors in title to have access to the
Property or acting for or on behalf of Landlord or any of Landlord's
predecessors in title (whether or not the actions of such persons are
negligent, intentional, willful of unlawful) shall be strictly attributable
to Landlord.
(e) If any claim, demand, action or proceeding is brought
against Tenant which is or may be subject to Landlord's obligation to
indemnify Tenant as set forth under this Section 16.9, Tenant shall provide
12
to Landlord immediate notice of that claim, demand, action or proceeding, and
Landlord thereafter shall defend Tenant at Landlord's expense using attorneys
and other counsel selected by Landlord and reasonably acceptable to Tenant.
Section 17. Assignment and Subletting
17.1 Restrictions on Assignment and Subletting. Except as expressly
provided in Section 17.2 below, Tenant shall not transfer, assign, sublet,
enter into license or concession agreements, change ownership or hypothecate
this Lease or Tenant's interest in and to the Property (hereafter "transfer")
without first obtaining the written consent of Landlord, which consent may
not be unreasonably withheld, conditioned or delayed. Any transfer of this
Lease, the leasehold estate created hereby, or the Property or any portion
thereof, either voluntarily or involuntarily, whether by operation of law or
otherwise, without the prior written consent of Landlord, shall be null and
void and shall, at the option of Landlord, constitute a material default
under this Lease. Tenant agrees to reimburse Landlord's reasonable
attorney's fees and other necessary costs incurred in connection with the
processing and documentation of any such requested transfer of this Lease or
Tenant's interest in and to the Property. The transfer of a majority of the
issued and outstanding capital stock of Tenant, however, accomplished, shall
be deemed an assignment of this Lease.
17.2 Permitted Assigns. Notwithstanding the provisions of Section
17.1 above, Tenant may assign this Lease to an Affiliate. For purposes
hereof, an "Affiliate" shall mean, with respect to Tenant, any other
corporation which directly or indirectly, through one or more intermediaries
controls or is controlled by or under common control with Tenant; and the
term "control" (including the terms "controlling", "controlled by" and "under
common control with") means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
corporation, whether through the ownership of voting securities or otherwise.
17.3 Consent to Modifications. The assignment of this Lease by Tenant
with the consent of Landlord shall, without being specifically so stated or
agreed, constitute the express agreement by Tenant that subsequent
modifications of this Lease by Landlord and the assignee shall not (i)
require the prior consent or approval of Tenant (assignor), or (ii) release
or relieve Tenant (assignor) from liability hereunder; provided, however,
that if such modifications increase the rent or other obligations of Tenant
hereunder, Tenant's (assignor's) liability shall be limited to the terms of
this Lease as the same existed on the date of assignment.
Section 18. Waiver. The waiver by landlord of any breach of any term,
covenant or condition of this Lease shall not be deemed to be a waiver of any
past, present or future breach of the same or any other term, covenant or
condition of this Lease. The acceptance of rent by Landlord hereunder shall
not be construed to be a waiver of any term of this Lease. No payment by
Tenant of a lesser amount than shall be due according to the terms of this
Lease shall be deemed or construed to be other than a part payment on account
of the most recent rent due, nor shall any endorsement or statement on any
check or letter accompanying any payment be deemed to create an accord and
satisfaction.
Section 19. Relationship of Parties
19.1 Relationship of Parties. Nothing contained in this Lease shall
be construed as creating the relationship of principal or agent, partnership
or joint venture between Landlord and Tenant. Neither the method of
computation of rent nor any other provision of this Lease, nor any act of the
parties, shall be deemed to create any relationship other than that of
Landlord and Tenant.
19.2 Designation of Representative. Each party shall designate, in
writing, one representative to coordinate and implement the party's
obligations hereunder and to accept responsibility for that party's
compliance with this Lease. The representative shall have full authority to
represent the party. Initially, the person signing this Lease for the party
shall be the party's representative. If the representative is changed, then
the party shall notify the other party in writing and the other party shall
not be charged with knowledge of that change until receipt of that written
notice.
Section 20 Notices. Any notice or demand given under the terms of this
Lease shall be in writing and shall be deemed to be delivered on the date of
delivery if delivered in person or by facsimile, or on the date of receipt if
delivered by U.S. Mail or express courier. Proof of delivery shall be by
13
affidavit of personal delivery, machine-generated confirmation of facsimile
transmission, or return receipt issued by the U.S. Postal Service or by
express courier. Until changed by notice in writing, notices, demands and
communications shall be addressed as follows:
LANDLORD: TENANT:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Lithia Real Estate, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with copy to:
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, LLP ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Either party shall have the right to change its above address by notice in
writing delivered to the other party in accordance with the provisions of
this Section 20.
Section 21. Attorney Fees and Costs
21.1 General Default. If either party shall default in the payment to
the other party of any sum of money specified in this Lease to be paid, or if
either party shall default with respect to any other obligations in this
Lease, all attorneys' fees incurred by the other party shall be paid by the
defaulting party, and if said sum is collected or the default is cured before
the commencement of a suit thereon, as a part of curing said default,
reasonable attorneys' fees incurred by the other party shall be added to the
balance due and payable or, in the case of a non-monetary default, shall be
reimbursed to the other party upon demand.
21.2 Litigation. In the event either party to this Lease shall
interpret or enforce any of the provisions hereof by any action at law or in
equity, the non-prevailing party to such litigation agrees to pay to the
prevailing party all costs and expenses, including reasonable attorneys',
accountants' and appraisers' fees incurred therein by the prevailing party,
including all such costs and expenses incurred with respect to an appeal and
such may be included in the judgment entered in such action.
Section 22. Miscellaneous
22.1 Option to Purchase Property. Tenant shall have the option to
purchase the Property on the terms and conditions set forth on Exhibit C
attached hereto and made a part hereof.
22.2 Estoppel Certificate. Either party shall, at any time upon not
less than ten (10) days prior written notice from the other party (the
"requesting party"), execute, acknowledge and deliver to the other party a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification
and certifying that this Lease, as so modified, is in full force and effect)
and the date to which the rent and other charges are paid in advance, (ii)
acknowledging that there are not, to the other party's knowledge, any uncured
defaults on the part of the requesting party hereunder, or specifying such
defaults if they are claimed, and (iii) containing any other certifications,
acknowledgments and representations as may be reasonably requested by the
requesting party or the party for whose benefit such estoppel certificate is
requested by the requesting party or the party for whose benefit such
estoppel certificate is requested. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrances of the Property or
Tenant's leasehold estate therein. A party's failure to deliver such
statement within said time shall be conclusive upon the said party (i) that
this Lease is in full force and effect, without modification except as may be
represented by the requesting party, (ii) that there are no uncured defaults
in the requesting party's performance, (iii) that not more than an amount
equal to one (1) month's rent has been paid in advance, and (iv) that such
additional certifications, acknowledgments and representations as are
requested under clause (iii) of the preceding sentence are valid, true and
correct as shall be represented by the requesting party. If Landlord desires
to finance or refinance the Property, Tenant hereby agrees to deliver to any
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lender designated by Landlord such financial statements of Tenant as may be
reasonably required by such lender, and all such financial statements shall
be received by Landlord in confidence and shall be used only for the purpose
herein set forth.
22.3 Transfer of Landlord's Interest. In the event of a sale or
conveyance by Landlord of the Property, other than a transfer for security
purposes only, Landlord shall be relieved from all obligations and
liabilities accruing thereafter on the part of Landlord (with the exception
of the obligations imposed on Landlord under Section 16.9, which shall be
continuing), 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
obligations hereunder are assumed in writing by Landlord successor,
including, without limitation, the obligation of Landlord to sell the
Property to Tenant in the event Tenant exercises its option to purchase as
set forth in Exhibit C hereto.
23.4 Severability. If any term or provision of this Lease shall 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 be enforceable to
the fullest extent permitted by law; and it is the intention of the parties
that if any provision of this Lease is capable of two construction, one of
which would render the provision void and the other of which would render the
provision valid, then the provision shall be interpreted to have the meaning
which renders it valid.
23.5 Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, court orders, acts of God, inability to obtain
labor and materials or reasonable substitutes therefor, governmental
restrictions, governmental regulations, government controls, enemy or hostile
government action, civil commotion, fire or other casualty and other causes
beyond the reasonable control of the party obligated to perform shall excuse
the performance by such party for a period equal to any such prevention,
delay or stoppage, provided that this Section 23.5 shall not be applicable to
the obligations imposed with regard to rent and other charges to be paid by
Tenant pursuant to this Lease.
23.6 Construction. All parties hereto have either (i) been
represented by separate legal counsel or (ii) have had the opportunity to be
so represented. Thus, in all cases, the language herein shall be construed
simply and in accordance with its fair meaning and not strictly for or
against a party, regardless of which party prepared or caused the preparation
of this Lease.
23.7 Deleted by agreement of the parties.
23.8 Succession. This Lease and all obligations contained herein
shall be binding upon and shall inure to the benefit of the respective heirs,
personal representatives, successors and assigns of the parties hereto;
provided, however, that any assignment of this Lease or any part hereof shall
be subject to the provisions of Section 17, above.
23.9 Recording. Landlord shall, promptly upon request by Tenant,
execute a memorandum of lease which may be recorded by Tenant in Washoe
County, Nevada.
23.10 General. The words "Landlord" and "Tenant" as used herein, shall
include the plural as well as the singular. Words used in the neuter gender
include the masculine and feminine, and words in the masculine or feminine
gender include the neuter. If there be more than one Tenant, the obligations
hereunder imposed upon Landlord and Tenant shall be joint and several. The
term "Landlord" shall mean only the owner or owners at the time in question
of the fee title to the Property (except for purposes of Section 16.9, which
applies to those persons initially executing this Lease as Landlord). With
the exception of the obligations imposed under Section 16.9 (which shall
continue to be binding on the persons initially executing this Lease as
Landlord), the obligations contained in this Lease to be performed by
Landlord shall be binding only during Landlord's respective period of
ownership.
23.11 Section Headings. The Section headings titles and captions used
in this Lease are for convenience only and are not part of this Lease.
23.12 Entire Agreement. This Lease, including the Exhibits attached
hereto, and the Asset Purchase Agreement between Landlord (and Landlord's
affiliate) and Tenant's affiliate of even date herewith, contain the entire
agreement between the parties as of this date concerning the subject matter
15
hereof and supersede any and all prior agreements, oral or written, between
the parties concerning the subject matter hereof. The execution hereof has
not been induced by either party, or any agent of either party, by
representations, promises or undertakings not expressed herein or in the
Asset Purchase Agreement and, further, there are no collateral agreements,
stipulations, covenants, promises, inducements or undertakings whatsoever
between the respective parties concerning the subject matter of this Lease or
the Property which are not expressly contained herein or in the Asset
Purchase Agreement.
23.13 Time is of the Essence. Time is of the essence with respect to
the obligations to be performed under this Lease.
IN WITNESS WHEREOF the parties have hereunto executed this Commercial Lease
Agreement
the day and year first above written.
LANDLORD: ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TENANT: LITHIA MOTORS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
Print Name:
Title:
16
Exhibit A
DESCRIPTION OF REAL PROPERTY
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Exhibit B
RENT ESCALATION PROVISIONS
On the first (1st) day of the first Renewal Term, and on the first (1st) day
of each Renewal Term thereafter (hereafter "Rent Adjustment Date"), the
annual Base Rent to be paid by Tenant to Landlord under the Lease shall be
adjusted as follows:
The Base Rent, as adjusted, shall be equal to the greater of (i)
the Base Rent (as previously adjusted, if any) in the month prior
to the applicable Rent Adjustment Date, or (ii) the Base Rent (as
previously adjusted, if any) plus the CPI Adjustment. For
purposes of this Exhibit B, "CPI" refers to the Consumer Price
Index for All Urban Consumers, U.S. City Average. All items,
compiled by the Bureau of Labor Statistics, United States
Department of Labor, using the index for January, 1988 as a base
of 100. In the event the CPI is replaced or revised, a
comparable or replacement index shall be based upon or adjusted
to January 1988 base of 100. The "CPI Adjustment" is computed
using the following formula:
New period Base Rent, as adjusted = Prior period Base Rent +
(Percentage of CPI Increase x prior period Base Rent)
The "Percentage of CPI Increase" shall be determined by the
following formula:
Current CPI -- Prior Period CPI
Prior Period CPI
The Initial Term and each Renewal Term of the Lease is five (5)
years. The Prior Period CPI shall be the CPI for the first
calendar month of the Initial Term or prior Renewal Term, as
applicable. The Current CPI shall be the CPI for the last
calendar month immediately preceding the Rent Adjustment Date.
The maximum adjustment in the Base Rent at each time of
adjustment (i.e. over each five year Renewal Term) shall be ten
percent (10%).
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Exhibit C
OPTION TO PURCHASE PROPERTY
IN CONSIDERATION of the agreement by Tenant to lease from Landlord the
Property covered by the foregoing Lease, and for other good and valuable
consideration, THE PARTIES AGREE AS FOLLOWS:
1. Option to Purchase. Landlord hereby grants to Tenant an
irrevocable exclusive option (the "Option") to purchase the Property pursuant
to the terms set forth in this Exhibit C. The Option shall commence on the
Commencement Date of the Lease and shall terminate when the term of the Lease
terminates pursuant to its terms, either upon the expiration of the Initial
Term or any Renewal Term, as applicable (the "Option Period").
2. Exercise of Option. At any time during the Option Period, and
provided that this Option is in full force and effect, and provided further
that Tenant is not in default under the Lease, Tenant may elect to exercise
the Option to purchase the Property by delivering to Landlord a written
notice to that effect (the "Notice of Purchase").
3. Purchase Price. If Tenant exercises the Option herein granted
during the Initial Term of the Lease, the purchase price for the Property
shall be the sum of $1,850,000. If Tenant exercises the Option herein
granted during any Renewal Term of the Lease, the purchase price of the
Property shall be the fair market value of the Property, as determined by an
MAI appraisal, conducted by a state-certified appraiser acceptable to
Landlord and Tenant, the cost of which shall be borne equally by Landlord and
Tenant. The full purchase price for the Property shall be paid by Tenant to
Landlord in cash at the closing of the purchase.
4. Right of First Refusal. Notwithstanding anything to the contrary
in this Exhibit C, if Landlord receives a bona fide offer to purchase the
Property from an unaffiliated third party during the Option Period, Landlord
shall give written notice to Tenant of such offer ("Offer Notice"), which
such Offer Notice shall include (i) a description of the offer, (ii) the
identity of the real party in interest making the offer, (iii) the proposed
purchase price for the Property, and (iv) the other terms and conditions of
the offer. Tenant shall have thirty (30) days from receipt of such Offer
Notice from Landlord to exercise its Option to purchase the Property by
delivering to Landlord a Notice of Purchase in accordance with the provisions
of Paragraph 2 above. The purchase price of the Property in such event shall
be the lesser of the purchase price set forth in the offer or the amount
payable by Tenant pursuant to the provisions of Paragraph 3 above (e.g.
$1,850,000 during the Initial Term of the Lease, and fair market value during
any Renewal Term).
5. Commitment for Title Insurance. Within ten (10) business days
after Tenant delivers to Landlord a Notice of Purchase pursuant to Paragraph
2 or 4 above, Landlord shall obtain, at Landlord's cost and expense, and
deliver to Tenant a current commitment for title insurance ("Commitment")
issued by a title company selected by Landlord doing business in Washoe
County, Nevada (the "Title Company"). Such Commitment shall evidence that
the Property is free and clear of all liens, encumbrances or exceptions,
excepting current general taxes, assessments, easements of record, covenants
and restrictions of record, zoning regulations, and such other exceptions to
title as are usual and normal on property of the type and in the vicinity of
the Property and which have been specifically approved by Tenant in writing.
Said Commitment may also evidence an encumbrance or encumbrances which shall
be paid in full by Landlord at the closing of the purchase.
6. Condition of Property. The parties acknowledge that Tenant,
having been in possession of the property pursuant to the Lease, is fully
familiar with and knowledgeable of the physical condition of the land and
improvements comprising the Property and shall purchase the same in an "AS
IS" condition, with all faults and without representation or warranty of any
kind from Landlord concerning condition, suitability or otherwise.
7. Closing of the Purchase.
(a) The closing of the purchase by Tenant shall occur not
earlier than six (6) months nor more than nine (9) months after the date of
the Notice of Purchase as provided in Paragraph 2 or 4 above.
(b) At the closing, which shall be conducted by the Title
Company issuing the Commitment described in Paragraph 5 above, Landlord shall
deliver a good and sufficient, executed and acknowledged Limited Warranty
Deed in favor of Tenant, and Tenant shall deliver to the Title Company as
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escrow/closing agent the purchase price, plus all rent and other amounts
payable to Tenant. Each party shall pay one-half (1/2) of the fee charged by
the Title Company for closing the transaction.
(c) Real estate taxes and assessments for the then current year
shall be paid by Tenant (as required under the Lease) and Landlord shall
purchase and provide to Tenant a Standard Coverage Owner's Policy of Title
Insurance (the "Title Policy"), which shall be in an amount equal to the
purchase price, insuring Tenant's title to the Property, subject only usual
printed exceptions, and the exceptions to title as set forth in the
Commitment (excluding any encumbrance which is to be paid by Landlord at
closing), which exceptions have been specifically approved by Tenant in
writing, and any encumbrance or other exception caused by or attributable to
Tenant. In the event the Title Policy as provided by this Paragraph 7(c)
cannot, following the closing, be issued by the Title Company in the form
herein required, this Option and any subsequent agreement between Landlord
and Tenant obligating Landlord to sell and Tenant to Purchase the Property
shall be null and void, Landlord shall be released from the obligation to
sell, and Tenant shall be released from the obligation to purchase and pay
for the Property. In such event, the Lease shall continue in full force and
effect for the remainder of its term; provided, however, that in that event
the provisions of Section 3.3 and Exhibit B of the Lease relating to CPI
indexed increases in the rental amount payable under the Lease thereafter
shall be void and of no effect, and the monthly rent payable by Tenant for
each and every month throughout the remainder of the Lease term shall be the
Base Rent in effect at the time of exercise by Tenant of its option to
purchase the Property.
(d) If the transaction fails to close because of the default of
a party, in addition to any other remedies at law or in equity available to
the other party, the defaulting party shall reimburse the other party for all
costs and expenses incurred by the other party in connection with the
transaction, including, but not limited to, reasonable attorneys' fees,
appraisal fees and Title Company charges, and the Lease shall continue in
full force and effect for the remainder of its term, if any.
8. Termination of Option. The Option shall terminate and be of no
further force or effect upon the occurrence of the following:
(a) The termination of the Lease between Landlord and Tenant,
as described above, for any reason, including, but not limited to, the
default of Tenant thereunder, prior to the exercise of the Option.
(b) The failure of Tenant to deliver to Landlord the Notice of
Purchase during the Option Period as provided in Paragraph 2 above or within
the time period described in Paragraph 4 above.
Upon such termination, the Option shall end and the rights and obligations of
the parties hereunder shall terminate and be of no further force and effect.
In the event the Option terminates as provided herein, the privilege to
purchase the Property shall no longer be available to Tenant and Landlord
shall have no obligation to sell or convey the Property to Tenant.
9. Notices. Any notice required to be given hereunder shall be in
writing and shall be mailed or delivered in the manner provided in Section 20
of the Lease.
10. Assignment. Tenant shall not have the right to assign the Option
or any interest herein, without the prior written consent of Landlord, which
consent by not be unreasonably withheld. In no event, however, shall any
rights hereunder be assigned by Tenant, unless the same are assigned in
connection with the assignment of the Lease, the assignment of which Lease
must also be approved by Landlord in accordance with the terms of the Lease.
Notwithstanding any other provision of this paragraph to the contrary, Tenant
may transfer and assign the Option to an "Affiliate" (as defined in the
Lease) without Landlord's prior consent; provided, that such transfer and
assignment is made in connection with the assignment of the Lease to the same
Affiliate.
11. Time. Time is of the essence of the Option granted by Landlord
to Tenant hereunder.
12. Certificate of Non-Foreign Status. Landlord is not a foreign
person, nonresident alien, foreign corporation, foreign partnership, foreign
trust or foreign estate, as those terms are defined in the Internal Revenue
Code of 1986, as amended (the "Code") and the Income Tax Regulations
promulgated thereunder. At the close of escrow, Landlord shall deliver to
20
Tenant a certificate of non-foreign status in a form satisfactory to Tenant
("Non-Foreign Certification"). In the event Landlord shall not deliver such
Non-Foreign Certification to Tenant at the close of escrow, Tenant may
withhold 10% of the purchase price and pay such withholding to the Internal
Revenue Service pursuant to Section 1445 of the Code.
13. Escrow. On or before the date of the closing (as above
provided), the parties shall deposit the funds and documents hereafter
described into escrow:
(a) Landlord. Landlord shall deposit the following:
(i) The duly executed and acknowledged Landlord's limited
warranty deed;
(ii) The Non-Foreign Certification duly executed by
Landlord under penalty of perjury;
(iii) Evidence reasonably satisfactory to Tenant that all
necessary action on the part of Landlord has been taken with respect to the
execution and delivery of the limited warranty deed and the other ancillary
documents and instruments so that all of said documents are or will be
validly executed and delivered and will be binding on Landlord; and
(iv) Such other instruments and/or documents as may be
required to effect the agreement herein made.
(b) Tenant. Tenant shall deposit the following:
(i) The purchase price of the Property;
(ii) Additional cash in the amount necessary to pay all
amounts due and payable under the Lease and Tenant's share of the closing
costs and pro-rations, as above set fort; and
(iii) Such other instruments and/or documents as may be
required to effect the agreement herein made.
14. Close of Escrow. When the Title Company is in a position to
issue the Title Policy and all documents and funds have been deposited with
the Title Company as escrow holder, the Title Company shall immediately close
the escrow as provided for hereafter. The failure of Landlord or Tenant to
be in a position to close the escrow by the time for closing shall constitute
a default hereunder.
The Title Company as escrow holder and closing agent shall close
the escrow as follows:
(a) Record Landlord's Limited Warranty Deed with instructions
for the Washoe County Recorder to deliver such Deed to Tenant;
(b) Pay the purchase price to be paid at the close of escrow,
plus any amounts due and payable under the Lease, to Landlord (reduced by any
amount paid to release all monetary encumbrances on the Property and by
Landlord's share of the closing costs);
(c) Deliver the Title Policy to Tenant;
(d) Deliver the Non-Foreign Certification to Tenant; and
(e) Forward to Landlord and Tenant, in duplicate, a separate
accounting of all funds received and disbursed for each party and copies of
all executed and recorded or filed documents deposited into escrow, with such
recording and file data endorsed thereon.
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Exhibit D
ENVIRONMENTAL MATTERS
See the matters discussed in that certain Phase I Environmental Site
Assessment, dated as of August 1997, prepared by SEA Incorporated, relating
to ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇ 033-316-03), in the City of Sparks, Nevada
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