Ex-10
Exhibit 10.27.2 Real Property Lease
Agreement With Option to Purchase
EXHIBIT 10.27.2
REAL PROPERTY LEASE AGREEMENT WITH OPTION TO PURCHASE
THIS LEASE AGREEMENT is entered into by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(hereinafter referred to as "Lessor") and LITHIA REAL ESTATE, INC.
(hereinafter referred to as "Lessee").
RECITALS:
Lessor is the owner of parcels of real property of located at 600 and
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, and other adjacent parcels, which are
being leased to and used by Medford Nissan, Inc. dba "Medford Nissan BMW Kia"
in connection with the business of selling and servicing new and used motor
vehicles and selling parts and accessories for new and used motor vehicles.
By separate agreement, Lithia Motors, Inc. (or its nominee) is agreeing to
purchase substantially all of the business assets owned and used by Medford
Nissan, Inc. As a condition concurrent to that sale of assets, the Lessor is
agreeing to lease to Lessee all the parcels of real property presently being
used by Medford Nissan, Inc. in connection with its business operations.
NOW, THEREFORE, IN CONSIDERATION OF the mutual promises, covenants and
agreements set forth herein, and for other good and valuable consideration,
Lessor and Lessee agree as follows:
1. Definitions. As used in this Agreement, the following words or
phrases shall have the indicated meanings:
(a) "Leased Property" shall refer all of the following parcels
of real property located in Medford, Oregon, which properties are more fully
described on Exhibit "A" attached hereto, together with all buildings,
improvements and fixtures constructed and existing on those properties and
all easements, rights, privileges and appurtenances attaching to those
properties: the parcel which is commonly identified as ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, which parcel shall be referred to in this Agreement as "Parcel A";
the parcel which is commonly identified as ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, which
parcel shall be referred to in this Agreement as "Parcel B"; and a parcel of
approximately 0.66 acres which is located adjacent to the Nissan dealership
operated by Medford Nissan, Inc., which parcel shall be referred to in this
Agreement as "Parcel C". "Parcel AB" shall refer to a combination of Parcel
A and Parcel B.
(b) "Lease Term" shall refer to the entire term of the lease,
including any extension elected by Lessee pursuant to Paragraph 3. "Initial
Lease Date" shall refer to the first day of the Lease Term, and shall be that
certain date upon which Lessee closes the purchase of all business assets of
Medford Nissan, Inc. in accordance with the terms of the Agreement for
Purchase and Sale of Business Assets which is attached hereto as Exhibit
"B". "Lease Month" shall refer to each of the successive one month periods
during the Lease Term which begin on the same day of each calendar month as
the Initial Lease Date.
(c) "Base Rental Amount" shall have the meaning set forth in
Paragraph 4.
(d) "Index" shall refer to the following index published by the
Bureau of Labor Statistics of the United States Department of Labor:
Consumer Price Index, All Urban Consumers (CPI-U), U.S. City Average, All
items ("standard reference base period" 1982-84 = 100). The "CPI Index
Figure" for any month shall refer to the Index number for that month. If the
"Index" is no longer being published as of any date in the future, then the
"CPI Index Figure" for that date shall be the figure reported in the U.S.
Department of Labor's most recent comprehensive official index then in use
and most nearly answering the description of the Index (or, if the U.S.
Department of Labor is not then publishing any such similar index, shall be
determined under another comparable, authoritative, generally recognized
index to be selected by Lessor). If the Index is calculated from a base
different from the base 1982-84 = 100, then the figures to be used in
calculating any adjustment mandated under this Agreement first shall be
converted (if possible, under a formula supplied by the Bureau of Labor
Statistics of the U.S. Department of Labor) to account for that difference.
(e) "Hazardous Materials" shall refer to and include: (i) any
and all substances defined as "hazardous substances", "hazardous materials",
or "toxic substances" in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 USC Section 9601, et.
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seq.), the Hazardous Materials Transportation Act (49 USE Section 1801, et.
seq.), and the Resource Conservation and Recovery Act (42 USC Section 6901,
et. seq.); and (ii) any and all substances which now or in the future are
deemed to be pollutants, toxic materials or hazardous materials under any
other Oregon or federal law.
(f) "Date of this Agreement" shall mean the date when this
Agreement has been executed by both of the parties.
2. Lease. Lessor hereby leases the Leased Property to Lessee, and
Lessee leases the Leased Property from Lessor, subject to all of the terms
and conditions contained in this Agreement.
3. Term of Lease. The initial term of the lease shall be fifteen
years and shall commence on the Initial Lease Date. Lessee shall have the
option to extend the term of the lease for one (1) additional period of ten
(10) years (so that the maximum potential lease term shall be twenty-five
(25) years). If Lessee wishes to exercise its option to extend the lease
term for that additional ten year period, then Lessee shall be obligated to
provide to Lessor, not less than 60 days prior to the expiration of the
initial fifteen year lease term, a written notice of Lessee's intention to so
exercise its option to extend the lease term; any such written notice by
Lessee to Lessor shall automatically extend the lease term for the 10 year
period specified in the notice. If Lessee exercises its option to extend the
lease term as provided in the preceding sentence, and if Lessee wishes to
continue to lease the Leased Property from Lessor after the expiration of
that ten year option period, then during the last six months of that ten year
option period Lessor must negotiate in good faith with Lessee for an
extension of the Lease for an additional lease period of at least ten years
at a fair market value lease rate and under contract terms which are
reasonably consistent with the terms of this Agreement.
4. Rental Payments Required.
(a) Parcel AB.
(1) With respect to each Lease Month during the five year
period beginning with the Initial Lease Date, Lessee shall pay to Lessor an
aggregate rental amount with respect to Parcel AB of $14,500.00 per month.
(2) With respect to each Lease Month during the five year
period beginning on the fifth anniversary after the Initial Lease Date,
Lessee shall pay to Lessor an aggregate rental amount with respect to Parcel
AB of $16,300.00 per month.
(3) With respect to each Lease Month during the five year
period beginning on the tenth anniversary after the Initial Lease Date,
Lessee shall pay to Lessor an aggregate rental amount with respect to Parcel
AB equal to the lesser of: (i) $17,930.00 per month (i.e. 110% of the
$16,300.00 monthly rental amount during the preceding 5 year period), or (ii)
the product determined by multiplying the monthly rental amount during the
preceding 5 year period ($16,300.00) by a fraction, the denominator of which
is the CPI Index Figure for the first Lease Month of the preceding 5 year
period, and the numerator of which is the CPI Index Figure for the last Lease
Month of the preceding 5 year period.
(4) With respect to each Lease Month during each of the
two five year periods during the ten year option term, Lessee shall pay to
Lessor an aggregate rental amount with respect to Parcel AB equal to the
lesser of: (i) 110% of the monthly rental amount during the preceding 5 year
period, or (ii) the product determined by multiplying the monthly rental
amount during the preceding 5 year period by a fraction, the denominator of
which is the CPI Index Figure for the first Lease Month of the preceding 5
year period, and the numerator of which is the CPI Index Figure for the last
Lease Month of the preceding 5 year period.
(b) Parcel C.
(1) With respect to each Lease Month during the five year
period beginning with the Initial Lease Date, Lessee shall pay to Lessor a
rental amount with respect to Parcel C of $2,000.00 per month.
(2) With respect to each Lease Month during the five year
period beginning on the fifth anniversary after the Initial Lease Date,
Lessee shall pay to Lessor a rental amount with respect to Parcel C of
$2,200.00 per month.
(3) With respect to each Lease Month during the five year
period beginning on the tenth anniversary after the Initial Lease Date,
Lessee shall pay to Lessor a rental amount with respect to Parcel C equal to
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the lesser of: (i) $2,420.00 per month (i.e. 110% of the $2,200.00 monthly
rental amount during the preceding 5 year period), or (ii) the product
determined by multiplying the monthly rental amount during the preceding 5
year period ($2,200.00) by a fraction, the denominator of which is the CPI
Index Figure for the first Lease Month of the preceding 5 year period, and
the numerator of which is the CPI Index Figure for the last Lease Month of
the preceding 5 year period.
(4) With respect to each Lease Month during each of the
two five year period during the ten year option term, Lessee shall pay to
Lessor a rental amount with respect to Parcel C equal to the lesser of: (i)
110% of the monthly rental amount during the preceding 5 year period, or (ii)
the product determined by multiplying the monthly rental amount during the
preceding 5 year period by a fraction, the denominator of which is the CPI
Index Figure for the first Lease Month of the preceding 5 year period, and
the numerator of which is the CPI Index Figure for the last Lease Month of
the preceding 5 year period.
(c) If the CPI Index Figure for the last Lease Month of the
preceding 5 year period is not available in time to make the adjustment
required under subparagraphs (a)(3), (a)(4), (b)(3) or (b)(4), the Lessee
agrees that any deficiencies in rent resulting from the failure to make the
adjustment on a timely basis shall be paid to Lessor by Lessee as soon as the
applicable CPI Index Figure is available to the parties.
(d) All amounts of monthly rent payable under this Agreement
shall be payable in advance on the first day of each Lease Month, at whatever
address Lessor may specify in writing from time to time. All amounts of
monthly rent payable under this Agreement shall be payable in lawful money of
the United States and without notice, demand, offset or deduction.
(e) Lessee agrees that all amounts which Lessee is required to
pay under this Agreement (including but not limited to taxes, utility costs,
insurance premiums and maintenance expenses) shall be payable as additional
rent, and shall be paid promptly when due.
(f) If Lessee fails to pay any installment of rent (including
but not limited to taxes, utility costs, insurance premiums and maintenance
expenses) within ten (10) days after the date when due, Lessee shall pay to
Lessor a late fee equal to two percent (2%) of the past-due amount. The
amount payable by Lessee to Lessor under the preceding sentence shall be
treated for all purposes under this Lease as additional rent. The provisions
of this subparagraph shall not limit Lessor's right to treat any late payment
as an event of default as provided in Paragraph 21.
5. Utilities. Lessee shall be responsible for and shall pay the
cost of all water, electricity, natural gas, heating oil, telephone service,
refuse collection, sewage and other utilities and services provided to the
Leased Property, or used on or in connection with the Leased Property, during
the Lease Term. Lessor shall not be liable to Lessee in the event of any
interruption in the supply of any utility or service to the Leased Property
(other than an interruption caused by the Lessor), and Lessee shall not be
entitled to any abatement of rent in the event of any interruption in the
supply of any utility or service to the Leased Property (other than an
interruption caused by the Lessor). Lessee agrees that it shall not install
any equipment which will exceed or overload the capacity of the existing
utility facilities supplying the Leased Property. If any equipment installed
by Lessee shall require additional utility facilities, those additional
facilities shall be installed at Lessee's expense in accordance with plans
and specifications approved in advance and in writing by Lessor (with Lessor
having the right to refuse to consent to any installation which Lessor
reasonably believes might adversely effect the value of the Leased Property).
6. Taxes on Real and Personal Property. Lessee shall pay all real
property taxes, general and special assessments, and other taxes and charges
which are levied on or assessed during the Lease Term against the Leased
Property or improvements located on the Leased Property (all of which taxes,
assessments and charges shall hereinafter be referred to as the "Real Estate
Taxes"). Lessee also shall pay all personal property taxes and other taxes
and charges which are levied on or assessed against leasehold improvements,
fixtures, equipment, furniture, inventories, merchandise and any other
personal property installed or located on the Leased Property during the
Lease Term (all of which taxes, assessments and charges shall hereinafter be
referred to as the "Personal Property Taxes"), as those taxes become due and
payable, and before delinquency, and regardless of whether such levy or
assessment is made against Lessee or against Lessor, and regardless of
whether the property has been installed by Lessee or by Lessor. Lessee shall
make all personal property tax payments directly to the taxing authorities.
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If any Real Estate Tax or Personal Property Tax is permitted by a taxing
authority to be paid in installments, Lessee may elect to do so as long as
each installment (together with any interest charged) is paid before it
becomes delinquent, and provided that Lessee only shall be obligated to pay
those installments due and payable during the Lease Term. Lessee may contest
in good faith the validity or amount of any Real Estate Tax or Personal
Property Tax in accordance with the procedures established by applicable
statute or administrative rule, as long as the Lease Property is not
subjected to any lien as a result of the contest, and Lessee shall be
entitled to all benefits derived during the Lease Term from any such
contest. Lessee shall furnish to Lessor receipts or other proof of payment
of all Real Estate Taxes or Personal Property Taxes payable by Lessee
hereunder, within ten (10) days after Lessor's written request for such proof.
7. Use of Leased Property. Lessee shall have the right to use the
Leased Property for the purpose of operating a facility for the sale and
servicing of new and used motor vehicles and motor vehicle parts. Lessee
shall not allow the Leased Property to be used for any other purpose without
first obtaining the written consent of Lessor, which consent shall not be
withheld unreasonably. For purposes of the preceding sentence, if Lessee
notifies Lessor in writing of Lessee's intention to make a particular use of
the Leased Property, and if Lessor does not, within ten days after delivery
of that notice from Lessee, notify Lessee in writing of Lessor's reasonable
objections to that use, then Lessor shall for all purposes be conclusively
deemed to have consented to that use.
(a) Lessee shall not use, or permit any other person or entity
to use, the Leased Property in any manner which would create or tend to
create waste or a nuisance or would be unreasonably offensive to owners or
users of neighboring premises. Lessee shall refrain from any activity which
would make it impossible for Lessee to insure against loss or damage to the
Leased Property or against personal injury or property damage. Lessee shall
not overload the floors of the improvements located upon the Leased Property
so as to cause any undue or serious stress or strain upon the improvements
located upon the Leased Property.
(b) Lessee shall promptly comply with all statutes, laws,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
licenses, directives and requirements of all federal, state, county,
municipal and other governments, commissions, boards, courts, authorities,
officials and companies or associations insuring the premises, which now or
at any time hereafter may be applicable to the Leased Property or any part
thereof, or to any use of or condition of the Leased Property or any part
thereof. Lessee shall remedy at Lessee's expense any failure of compliance
created through Lessee's fault or by reason of Lessee's use.
8. Repairs and Maintenance. Lessor shall be responsible for
maintaining the roof, foundation and bearing walls of the Leased Property,
except that Lessee shall be responsible for keeping the roof free of foreign
objects, papers, debris, obstructions, standing water, snow and ice. Lessee
shall maintain in safe, workable and neat condition (free and clear of
foreign objects, papers, debris, obstructions, standing water, snow and ice),
all other elements and aspects of the Leased Property, including but not
limited to the lights, windows, plate glass, plumbing fixtures, electrical
fixtures, heating and air conditioning systems, doors, door frames, door
closures, floor coverings, showcases and fixtures, walls, floors, landscaping
and parking surfaces. Except as provided in the first sentence of this
Paragraph 8, Lessor shall have no responsibility to perform any repairs or
maintenance with respect to the Leased Property or any structures or
improvements located thereon. Lessor and its authorized agents shall have
the right to inspect the Leased Property during regular working hours upon
reasonable written notice to Lessee to determine whether Lessee is complying
with its obligations under this Agreement.
9. Lessor's Responsibility for Prior Contamination by Hazardous
Substances
(a) Except as otherwise expressly disclosed in Exhibit "C",
Lessor represents and warrants to Lessee that: (i) the Leased Property has
not at any time prior to the Date of this Agreement been used for the
generation, manufacture, storing, treatment, disposal or release of any
Hazardous Material other than those Hazardous Materials customarily used in
the operation of an automobile dealership, and (ii) at all times prior to the
Initial Lease Date, Lessor and all of Lessor's predecessors in title, and all
lessees, tenants, employees, agents, sublessees, franchisees, licensees,
permitees, contractors, vendees and customers of Lessor and/or Lessor's
predecessors in title, and all other persons permitted by Lessor and/or
Lessor's predecessors in title to have access to the Leased Property, 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 Paragraph 9
as the "Laws"), and (iii) the Leased Property shall not, as of the Initial
Lease Date, be contaminated by the presence on, under or about the Leased
Property of any Hazardous Material, and (iv) as of the Initial Lease Date no
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other parcel of real property (including but not limited to properties
adjacent to or in the immediate vicinity of the Leased Property) is or at any
time in the future will be contaminated by the presence on, under or about
that parcel of any Hazardous Material which was released to, on, under, about
or from the Leased Property prior to the Initial Lease Date.
(b) Lessor agrees to indemnify, defend, protect and hold
harmless Lessee and each of Lessee's members, partners, stockholders (if
any), employees, agents, successors and assigns (collectively referred to for
the remainder of this Paragraph 9 as "Lessee"), 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 Initial
Lease Date, in, on or about the Leased Property or any improvements located
thereon, of any Hazardous Materials, or (ii) the use, sale, storage,
transportation, disposal, release, threatened release, discharge or
generation, prior to the Initial Lease Date, of Hazardous Materials to, in,
on, under, about or from the Leased Property or any improvements located
thereon, or (iii) any breach of the warranties made by Lessor in subparagraph
9(a). Lessor's obligations under this subparagraph 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 Leased 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 subparagraph 9(b), Lessor shall have no
obligation to indemnify, defend, protect and/or hold harmless Lessee with
respect to any release, spill, leak or discharge of Hazardous Materials on
the Leased Property which occurs solely after the Initial Lease Date.
(c) Notwithstanding any other provision of this Agreement or
any contrary provision of law, the obligations of Lessor pursuant to this
Paragraph 9 shall remain in full force and effect after any closing of the
purchase of the Leased Property by Lessee 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 Lessor is liable hereunder shall have been
accomplished.
(d) For purposes of this Paragraph 9, any act or omission,
prior to the Initial Lease Date, of or by any one or more employees, agents,
assignees, sublessees, franchisees, licensees, permitees, customers, vendees,
contractors, successors-in-interest or other persons permitted by Lessor or
any of Lessor's predecessors in title to have access to the Leased Property
or acting for or on behalf of Lessor or any of Lessor's predecessors in title
(whether or not the actions of such persons are negligent, intentional,
willful or unlawful) shall be strictly attributable to Lessor.
(e) If any claim, demand, action or proceeding is brought
against Lessee which is or may be subject to Lessor's obligation to indemnify
Lessee as set forth under this ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇ shall provide to Lessor
immediate notice of that claim, demand, action or proceeding, and Lessor
thereafter shall defend Lessee at Lessor's expense using attorneys and other
counsel selected by Lessor and reasonably acceptable to Lessee.
10. Limited Warranties by Lessor. Except as provided in this
Paragraph 10 and in Paragraphs 9, 18 and 26, Lessor makes no warranty, either
express or implied, as to the condition, merchantability or fitness of the
Leased Property, or the suitability of the Leased Property for Lessee's
purposes or needs. Lessee agrees that neither Lessor nor any agent of Lessor
has made any representations or warranties as to any of the following: (i)
the suitability of the Leased Property for the conduct of Lessee's business,
or (ii) the expenses of operation of the Leased Property or any improvements
located thereon.
(a) Prior to November 1, 1997, Lessor shall provide to Lessee a
Disclosure Statement, disclosing any and all defects with respect to the
Leased Property which are known to Lessor. Except as provided in the
preceding sentence, Lessee is entering into this Agreement in reliance upon
Lessee's own business judgment, after a full opportunity to inspect the
Leased Property, and after careful consultation with Lessee's own advisors,
accountants and attorneys, and not in reliance upon any statements,
representations or warranties made to Lessor other than as set forth in this
Agreement. Prior the Initial Lease Date, Lessee shall inspect the Leased
Property and become thoroughly acquainted with the condition of the Leased
Property. Lessee shall have the right, at any time within 30 days after
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completing its inspection of the Leased Property (but in no event later than
November 10, 1997) to notify Lessor in writing that Lessee is reasonably
dissatisfied with the results of its inspection and to terminate all further
obligations of Lessee under this Agreement. If Lessee does not so notify
Lessor as provided in the preceding sentence, then Lessee agrees to take and
accept the Leased Property "AS IS". The taking of possession of the Leased
Property by Lessee shall be a conclusive acknowledgment by Lessee that the
Leased Property is in good and satisfactory condition as of the date when
possession is taken. Lessor shall not be required to make any alterations or
improvements of any kind to the Leased Property. The preceding sentences of
this subparagraph 10(a) shall not apply to any issues relating to the
contamination of the Leased Property by Hazardous Materials, and all such
issues shall be subject to the provisions of Paragraph 9 rather than the
provisions of this subparagraph 10(a).
(b) Lessor warrants to Lessee that all mechanical equipment
affixed to the Leased Property shall be in good working condition on the
Initial Lease Date, and that the Leased Property will be in the same
condition on the initial Lease Date as on the Date of this Agreement
(ordinary wear and tear excepted).
11. No Liens. Lessee shall not allow the Leased Property to be
subjected to any mortgage or other lien as security for a loan or other
obligation of Lessee, without first obtaining the express written consent of
Lessor. Lessee shall keep the Leased Property free and clear of all personal
property tax liens and encumbrances. Lessee shall pay as due all claims for
labor or work done on, and for services rendered or material furnished to,
the Leased Property, and Lessee shall keep the Leased Property free from any
mechanic's, ▇▇▇▇▇▇▇'▇ or materials lien of any kind. If Lessee receives
notice of the filing of any claim or lien against the Leased Property or the
commencement of any action which might affect the title to the Leased
Property, Lessee shall give prompt written notice thereof to Lessor.
12. Insurance
(a) Lessee shall maintain and shall pay all premiums with
respect to insurance protecting Lessor and Lessee as the named insureds
against loss or liabilities arising from personal injury or death or damage
to property caused by any accident or occurrence in connection with the use,
operation or condition of the Leased Property, with limits of not less than
$500,000 per accident or occurrence on account of personal injury or death,
and $500,000 per accident or occurrence on account of damage to property,
together with a blanket excess liability policy in an amount of not less than
$1,000,000. Any proceeds of the insurance referred to in this subparagraph
shall be applied towards extinguishment or satisfaction of the liabilities
with respect to which those insurance proceeds are paid.
(b) Lessee shall maintain and pay for all premiums for
insurance against loss or damage to the improvements located on the Leased
Property by fire, lightning, vandalism, malicious mischief, sprinkler
leakage, breakage of plate glass, or other perils or casualties, with an all
risk endorsement. All such insurance shall be for the benefit of Lessee
only, and any proceeds shall be paid solely to Lessee.
(c) Lessee hereby releases Lessor and Lessor's agents and
employees from responsibility and liability for loss or damage occurring to,
or in connection with the use of, the Leased Property, if and to the extent
that said loss or damage is covered under any insurance policy maintained by
Lessee with respect to the Leased Property, and Lessee waives all right of
recovery against Lessor and Lessor's agents and employees for such loss or
damage. Lessee agrees to: (i) notify Lessee's insurance carrier(s) of the
release and waiver set forth in the preceding sentence, and (ii) obtain from
Lessee's insurance carrier(s), at Lessee's sole cost, a written waiver of all
subrogation rights against Lessor and Lessor's agents and employees.
(d) All insurance required to be carried by Lessee under
subparagraph 12(a) shall be issued by responsible insurance companies,
qualified to do business in the state of Oregon. Each insurance policy shall
name Lessor as an additional insured. No insurance policy shall be subject
to cancellation or modification except after ten (10) days prior written
notice to Lessor. At least ten (10) days prior to the expiration of any
insurance policy, Lessee shall obtain renewals or binders for the issuance of
one or more replacement insurance policies.
13. Destruction of Improvements. In the event of any damage or
destruction to the improvements located on the Leased Property during the
Lease Term, Lessee shall proceed to restore the improvements located on the
Leased Property to substantially the same form and condition as prior to the
damage or destruction, so as to provide Lessee with usable space equivalent
in quantity and in character to the space available prior to the damage or
destruction. Repairs shall be accomplished with all reasonable dispatch,
subject to interruptions and delays from labor disputes and matters beyond
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the control of Lessee. Lessee's obligation to pay rent shall not be abated
on account of any damage to or destruction of improvements on the Leased
Property, and no other obligations of Lessee shall be altered or terminated
as a result of such damage or destruction.
14. Eminent Domain. If, during the Lease Term, there shall be a
total taking of the Leased Property by any public authority under the power
of eminent domain, then the leasehold estate of Lessee in and to the Leased
Property shall cease and terminate as of the date when the condemning
authority takes possession of or title to (whichever occurs first) all or any
portion of the Leased Property. If, during the Lease Term, there shall be a
partial taking of the Leased Property by any public authority under the power
of eminent domain, then the leasehold estate of Lessee in and to the portion
of the Leased Property so taken shall terminate on the date when the
condemning authority takes possession of or title to (whichever occurs first)
that portion, but Lessee's leasehold estate shall continue in full force and
effect as to the remainder of the Leased Property; in such event, the monthly
rent payable by Lessee for the balance of the Lease Term shall be equitably
abated by Lessor (based on the ratio between the value of the portion taken
and the value of the Leased Property prior to the taking), and Lessor shall
be responsible (at Lessor's sole cost and expense) for making all necessary
repairs or alterations to the improvements located on the Leased Property in
order to continue using the Leased Property for the purposes permitted to
Lessee. For purposes of the two preceding sentences, the term "total taking"
shall mean the taking of so much of the Leased Property that the remainder of
the Leased Property is not suitable to conduct the business which Lessee
intends to conduct on the Leased Property, and the term "partial taking"
shall mean the taking of a portion of the Leased Property which does not
constitute a total taking.
(a) All compensation and damages awarded for the taking of all
or any portion of the Leased Property shall be equitably apportioned between
Lessor and Lessee as their business interests may then appear. For purposes
of the preceding sentence, if there is a total taking of the Leased Property,
and if the total amount of the compensation and damage award for that taking
exceeds the total option price for the Leased Property as specified in
subparagraph 26(e), then that excess shall be divided equally between Lessor
and Lessee. Notwithstanding the two preceding sentences, if Lessee exercises
its option to purchase all of the Leased Property pursuant to subparagraph
26(c) prior to the effective date of a partial taking or total taking of the
Leased Property, then all compensation and damages awarded for that taking
shall be apportioned solely to Lessee.
(b) Sale of all or part of the Leased Property to a purchaser
with power of eminent domain, in the face of the threat or probability of the
exercise of the power of eminent domain, shall be treated for purposes of
this Agreement as a taking by condemnation, with the effective date of
condemnation being the date of closing of that sale.
(c) Lessee shall have the right, at its sole cost and expense,
to assert a separate claim in any condemnation proceedings for the value of
Lessee's leasehold interest. Whenever notice of a taking of all or any
portion of the Leased Property is received by either party, that party shall
notify the other party thereof, and Lessor and Lessee thereafter shall
jointly negotiate with the taking authority as to the value of their
respective interests in the Leased Property or the improvements located
thereon to the end of being fairly compensated therefor.
15. Alterations. Lessee shall not make any improvements, changes,
modifications, utility installations and other alterations (hereinafter
referred to in the aggregate as "Alterations") in, on or to all or any
portion of the Leased without first obtaining the written consent of Lessor
(which consent may not be withheld unreasonably). If Lessee notifies Lessor
in writing of Lessee's intention to make particular Alterations to the Leased
Property, and if Lessor does not, within ten days after delivery of that
notice from Lessee, notify Lessee in writing of Lessor's reasonable
objections to all or any portion of those Alterations, the Lessor shall for
all purposes be conclusively deemed to have consented to all of those
Alterations to which Lessor has not so objected.
16. Indemnification Against Damage or Injury. Lessee hereby releases
Lessor from, agrees that Lessor shall not be liable for, and agrees to
defend, indemnify and hold Lessor harmless from and against, any and all
uninsured losses, claims, causes of action, damages, liabilities (including,
without limitation, strict or absolute liability in tort or imposed by
statute), charges, costs, or expenses (including, without limitation,
reasonable counsel fees), incurred in connection with or arising out of any
loss or damage to property or injury or death to a person or persons, that
may be occasioned by any cause whatsoever pertaining to the Leased Property
during the Lease Term, or arising by reason of or in connection with the
occupation or use of the Leased Property or any person's presence on or about
the Leased Property during the Lease Term (other than the grossly negligent
or intentional acts of Lessor, its agents, employees, licensees and
7
invitees). The defense and indemnities provided in this paragraph 16 shall
apply whether or not the loss, claim, cause of action, damage, liability,
charge, cost or expense is based upon the breach of a statutory duty or
obligation or any theory or rule of comparative liability, subject to any
specific prohibition relating to the scope of indemnities imposed by
statutory law (and except to the extent that Lessor shall be liable as
provided above). If any action or proceeding is brought against Lessor which
is or may be subject to Lessee's obligation to indemnify Lessor as set forth
under this ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ shall, upon notice from Lessor, defend that
claim at Lessee's expense using attorneys and other counsel satisfactory to
Lessor. Any loss, liability, damage, claim, or cause of action arising by
reason of contamination of the Leased Property by a hazardous substance shall
be subject to the indemnification provisions of Paragraph 23, and shall not
be subject to the indemnification provisions of this Paragraph 16.
17. Surrender Upon Termination. Upon expiration of the Lease Term,
or upon earlier termination of the lease for any reason, Lessee promptly and
peaceably shall remove any of the Lessee's equipment and property, and shall
surrender the Leased Property in good condition (including the restoration of
any damage caused by the removal of Lessee's equipment and property),
Depreciation and wear and tear from ordinary use permitted under this
Agreement need not be restored by Lessee. All repairs for which Lessee is
responsible shall be completed prior to the surrender of the Leased
Property. If Lessee remains in occupancy of the Leased Property after
termination of the Lease Term, then Lessor shall have the option to treat
Lessee as a tenant from month-to-month, subject to all of the provisions of
this Agreement except the provisions for rental amounts, term, and renewal,
and in that event Lessee shall be obligated to pay monthly rent to Lessor at
a rate equal to the monthly rental amount in effect as of the last month of
the Lease Term. Acceptance by Lessor of rent subsequent to termination of
the Lease Term shall not result in a renewal of the lease and shall not
constitute a waiver of Lessor's right to re-enter the Leased Property, remove
Lessee or exercise any other rights available to Lessor under this Agreement
or provided by law. If Lessee fails to surrender the Leased Property in
accordance herewith upon termination of the Lease Term, Lessee shall
indemnify and hold Lessor harmless from all losses and liabilities, including
but not limited to any claims made by any succeeding tenant, which result
from or are based upon Lessee's failure to so surrender the Leased Property.
18. Good Title. Lessor warrants that it has good right to lease the
Leased Property and will defend Lessee's right to quiet enjoyment of the
Leased Property against the lawful claims of all persons during the Lease
Term.
19. Limitation on Assignment or Sublease by Lessee. Lessee shall
have the right to assign all of its rights and obligations under this
Agreement to Lithia Motors, Inc. or any subsidiary of Lithia Motors, Inc.
Except as provided in the preceding sentence, Lessee shall not voluntarily or
by operation of law assign this Lease or sublease any portion of the Leased
Property, or enter into any license agreement, franchise agreement, or
concession agreement with respect to the Leased Property, or mortgage,
hypothecate or otherwise encumber all or any portion of Lessee's interest in
this Agreement or in the Leased Property, or in any other manner permit the
occupation of or shared possession of all or any portion of the Leased
Property, without obtaining in each instance the written consent of Lessor,
which consent may not be unreasonably withheld by Lessor. Consent by Lessor
in any one instance shall not constitute a waiver or consent to any
subsequent instance. Unless otherwise agreed by Lessor, the consent by
Lessor to any assignment, sublease, or encumbrance shall not relieve or
otherwise affect the continuing primary liability of Lessee under this
Agreement, and Lessee shall not be released from performing any of the terms,
covenants and conditions of this Agreement.
20. Landlord's Lien. Lessee hereby grants to Lessor a lien upon the
improvements, trade fixtures and furnishings of Lessee to secure full and
faithful performance of all of the terms of this Agreement.
21. Lessee's Default. The following shall be "events of default"
under this Agreement, and the terms "event of default" or "default" shall
mean, whenever used in this Agreement, any one or more of the following
events: (i) the failure by Lessee to payor cause to be paid the full amount
of any rent or other charge specified in this Agreement, within ten (10) days
after the date when due, subject to the notice requirement set forth in
subparagraph 21(b); (ii) the failure by Lessee to comply with any term or
condition, or fulfill any obligation of this Agreement (other than the
payment of rent or other charge) within thirty (30) days after written notice
by Lessor specifying the nature of the default with reasonable particularity
and requesting that the default be remedied; if the default is of such a
nature that it cannot be completely remedied within the 30-day period, this
8
provision shall be complied with if Lessee begins correction of the default
within the thirty-day period and thereafter proceeds with reasonable
diligence and good faith to affect the remedy as soon as possible.
(a) Whenever any event of default shall have occurred, Lessor
shall have the following rights and remedies (and no other rights or
remedies):
(1) The right to declare, by written notice to Lessee,
that all unpaid and delinquent installments of rent, and all other unpaid and
delinquent charges and payments due under this Agreement shall be immediately
due and payable, whereupon those amounts shall become immediately due any
payable.
(2) The right to terminate the lease and all rights of
Lessee under this Agreement, by giving written notice of termination to
Lessee. In the event of such termination, Lessor shall have the right to
reenter and take possession of the Leased Property and remove all persons and
property therefrom by summary proceedings or otherwise, and to recover from
Lessee: (i) any unpaid rent earned at the time of termination, plus (ii) the
fair market value of the amount by which the unpaid rent which would have
been earned after termination and prior to the end of the Lease Term exceeds
the amount of rent which Lessee proves can reasonably be earned by Lessor
during that time.
(3) To the extent permitted by law, the right to
terminate Lessee's possessory interest in the Leased Property, without
terminating Lessee's lease, in which case Lessor shall have the right to
enter and take possession of the Leased Property and to remove and exclude
Lessee from possession of the Leased Property and to use its best efforts to
lease the Leased Property to another person for the account of Lessee; any
such entry and other actions shall not operate as a waiver or satisfaction,
in whole or in part, of any claim or demand arising out of or connected with
any breach or default by Lessee of its obligations under this Agreement. If
Lessor re-enters the Leased Property but does not elect to terminate Lessee's
leasehold interest, then Lessor may from time to time, without terminating
Lessee's lease, either recover from Lessee all rentals as they become due, or
relet the Leased Property or any portion thereof for such term or terms and
at such rental or rentals and upon such other terms and conditions as Lessor
in its sole discretion may deem advisable. Lessee shall be obligated to
immediately reimburse to Lessor the amount of all costs which Lessor incurs
in reletting the Leased Property. Any rentals so received by Lessor from
such reletting to a third party shall be applied as follows: first, to the
payment of any costs which Lessor shall have incurred in reletting the Leased
Property for which Lessor shall not have received reimbursement from Lessee;
next to the rent due and unpaid by Lessee hereunder through the date of that
third party payment; next to the payment of reimbursement to Lessor for any
other costs, expenses or losses incurred by Lessor which are proximately
caused by Lessee's default; and next, to the payment of any future rent as
the same may become due and payable hereunder. If the portion of the rental
amount received from reletting which is applied to the payment of rent
hereunder is less than the monthly rent payable by Lessee, then Lessee
promptly shall pay the deficiency to Lessor
(4) In the event of any re-entry of the Leased Property
pursuant to subparagraph (2) or (3), Lessor may make any suitable alterations
or changes in the character or use of the Leased Property, provided that
Lessor shall not be required to relet the Leased Property for any use or
purpose other than that specified in this Agreement or for any use or purpose
which Lessor may reasonably consider injurious to the Leased Property.
Lessor may relet all or a portion of the Leased Property, either alone or
together with other properties, for a term longer or shorter than the term of
this Agreement, and upon any reasonable terms and conditions.
(b) Before declaring any default in the making of any payment
required under this Agreement, Lessor shall provide to Lessee, by United
States certified mail and ordinary first class mail addressed to Lessee, a
written notice specifying that there has been a default in the making of a
required payment, and Lessee shall have ten (10) days from the date of
mailing of that notice in which to pay the delinquent amount and prevent a
default hereunder. Notwithstanding the preceding sentence, Lessor shall not
be obligated to provide written notice of any delinquent payment if Lessor
has given to Lessee written notice of two prior delinquent payments at any
time during the then immediately preceding 365 day period; in that event
Lessor shall not be required to provide any notice to Lessee before declaring
a default arising out of Lessee's failure to make any payment required under
this Agreement, but no default shall be declared until ten (10) days after
that payment is due.
22. Time of Essence. Time is of the essence in the performance of
all obligations of Lessor and/or Lessee under this Agreement.
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23. Lessee's Responsibility for Contamination by Hazardous Substances.
(a) Lessee shall at all times during the Lease Term use, sell,
store, transport, dispose of and treat Hazardous Materials (as defined in
Paragraph 1(e) of this Agreement) in strict accordance with all applicable
federal, state and local laws and regulations (collectively referred to in
this Paragraph 23 as the "Laws"). If, during the Lease Term and prior to
completion by Lessee of the obligations imposed under Paragraph 17, there
occurs upon the Leased Property any release, spill, leak or discharge of
hazardous materials which is in violation of any of the Laws and is caused by
any activity or activities of Lessee on or with respect to the Leased
Property, then Lessee shall be obligated to cause and complete the repair,
cleanup, detoxification and/or decontamination of the Leased Property (or any
improvements thereon) and the preparation and implementation of any closure,
remedial action or other required plan or plans in connection therewith, all
as required by the Laws.
(b) Lessee shall indemnify, defend, protect and hold harmless
Lessor and each of Lessor's partners, employees, agents, successors and
assigns (collectively referred to in this Paragraph 23 as "Lessor"), 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 the use, sale, storage,
transportation, disposal, release, threatened release, discharge or
generation of Hazardous Materials to, in, on, under, about or from the Leased
Property or any improvements located thereon during the Lease Term. Lessee's
obligations under this subparagraph 23(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 Leased 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.
(c) Notwithstanding any other provision of this Agreement, the
obligations of Lessee pursuant to this Paragraph 23 shall remain in full
force and effect after the termination of the Lease Term 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 Lessee is liable hereunder
shall have been accomplished.
(d) For purposes of subparagraph 23(a), any acts or omissions
of or by any one or more employees, agents, assignees, sublessees,
franchisees, licensees, permitees, customers, contractors,
successors-in-interest or other persons permitted by Lessee to have access to
the property (other than Lessor or Lessor's agents) or acting for or on
behalf of Lessee (whether or not the actions of such persons are negligent,
intentional, wilful or unlawful) shall be strictly attributable to Lessee.
(e) If any claim, demand, action or proceeding is brought
against Lessor which is or may be subject to Lessee's obligation to indemnify
Lessor as set forth under this Paragraph 23, Lessor shall provide to Lessee
immediate notice of that claim, demand, action or proceeding, and Lessee
thereafter shall defend Lessor at Lessee's expense using attorneys and other
counsel selected by Lessee and reasonably acceptable to Lessor.
24. Expenses. Each of the parties shall pay its own expenses
incidental to the preparation and consummation of this Agreement, including
but not limited to the attorney fees and expenses.
25. Notices. Any notice required or permitted under this Agreement
shall be deemed to have been duly given when actually delivered or when
deposited in the United States mail, certified and return receipt requested,
postage prepaid, addressed to such addresses as may be specified from time to
time by the parties in writing.
26. Lessee's Option to Purchase Leased Property. At any time during
the Option Period (as defined in subparagraph 26(a)), Lessee shall have the
option to purchase the Leased Property from Lessor, under the terms and
conditions set forth in this Paragraph 26.
10
(a) Definitions. For purposes of this Paragraph 26, "Option
Period" shall refer to the fifteen year period beginning on the Initial Lease
Date. "Closing" shall refer to the consummation of the purchase and sale of
Parcel AB and/or Parcel C pursuant to this Paragraph 26. "Closing Date"
shall refer to the actual date of Closing.
(b) Option may be Exercised Only during Period. Lessee shall
have no right to exercise the purchase option granted under this paragraph 26
after the last day of the Option Period (i.e. on or after the sixteen
anniversary after the Initial Lease Date). If Lessee exercises the purchase
option granted under this Paragraph 26 on or before the last day of the
Option Period, then Lessee shall have the right to close the purchase at any
time during the period beginning 90 days and ending 120 days after the date
of the notice exercising the option (even if that closing does not occur
during the Option Period).
(c) Notice of Exercise. If Lessee wishes to exercise its
option to purchase all or any portion of the Leased Property (i.e. Parcel AB
or Parcel C or both Parcels) from Lessor pursuant to this ▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇ shall be required to deliver to Lessor a written notice specifying:
(i) Lessee's desire to exercise the option, and (ii) the portion of the
Leased Property to be purchased (i.e. Parcel AB or Parcel C or both Parcels),
and (iii) the proposed closing date for the purchase (which closing date
shall be not less than 90 days and not more than 120 days after the date of
the written notice exercising the option). Lessee shall be deemed to have
exercised the option to purchase the designated portion of the Leased
Property pursuant to this Paragraph 26 when the written notice referred to in
the preceding sentence is delivered to Lessor. If Lessee exercises the
option to purchase all or a portion of the Leased Property from Lessor as
provided in this Paragraph 26, and if that purchase and sale subsequently
closes in accordance with this Paragraph 26, then Lessee shall be obligated
to pay rent with respect to the purchased portion of the Leased Property
though the date of closing of the purchase and sale. Lessee shall have the
option to purchase only Parcel AB or Parcel C (without any obligation to
purchase the other portion), and also shall have the option to purchase the
separate Parcels AB C at different times during the Option Period and in any
order.
(d) Lessor's Obligation to Sell. If Lessee exercises the
option to purchase all or a portion of the Leased Property from Lessor as
provided in this Paragraph 26, and if Lessee tenders to Lessor (on or before
the proposed closing date) full payment for the purchased portion of the
Leased Property, then Lessor shall be obligated to sell and deliver to Lessee
good and marketable title to the purchased portion of the Leased Property,
free and clear of all liens and encumbrances not accepted by Lessee as
provided in subparagraph 26(f).
(e) Purchase Price and Payment.
(1) If Lessee exercises the option to purchase Parcel AB
pursuant to this Paragraph 26, the price for Parcel AB shall be determined as
follows:
(i) If the option is exercised during the first two
years following the Initial Lease Date, then the aggregate price for Parcel
AB shall be $1,950,000.00.
(ii) If the option is exercised during the third,
fourth or fifth years following the Initial Lease Date, then the aggregate
price for Parcel AB shall be $2,040,000.00.
(iii) If the Option is exercised during the sixth,
seventh or eighth years following the Initial Lease Date, then the aggregate
price for Parcel AB shall be $2,130,000.00.
(iv) If the option is exercised during the ninth,
tenth or eleventh years following the Initial Lease Date, then the aggregate
price for Parcel AB shall be $2,200,000.00.
(v) If the option is exercised during the twelfth,
thirteenth or fourteenth years following the Initial Lease Date, then the
aggregate price for Parcel AB shall be $2,310,000.00.
(vi) If the option is exercised during the fifteenth
year following the Initial Lease Date, then the aggregate price for Parcel AB
shall be $2,400,000.00.
(2) If Lessee exercises the option to purchase Parcel C
pursuant to this Paragraph 26, the price for Parcel C shall be determined as
follows:
(i) If the option is exercised during the first two
years following the Initial Lease Date, then the price for Parcel C shall be
$250,000.00.
11
(ii) If the option is exercised during the third,
fourth or fifth years following the Initial Lease Date, then the price for
Parcel C shall be $260,000.00.
(iii) If the option is exercised during the sixth,
seventh or eighth years following the Initial Lease Date, then the price for
Parcel C shall be $270,000.00.
(iv) If the option is exercised during the ninth,
tenth or eleventh years following the Initial Lease Date, then the price for
Parcel C shall be $280,000.00.
(v) If the option is exercised during the twelfth,
thirteenth or fourteenth years following the Initial Lease Date; then the
price for Parcel C shall be $290,000.00.
(vi) If the option is exercised during the fifteenth
year following the Initial Lease Date, then the price for Parcel C shall be
$300,000.00.
(3) The purchase price for any portion of the Leased
Property shall be payable by Lessee at the closing of the purchase by
cashier's check drawn against a bank of Lessee's choice having offices
located in ▇▇▇▇▇▇▇ County, Oregon, or by any other method acceptable to
Lessor.
(f) Title Report. Promptly after the Date of this Agreement,
Lessor shall furnish to Lessee a preliminary title report with respect to the
Leased Property. A copy of that preliminary title report shall be attached
to this Agreement as Exhibit "D". Lessee shall have ten (10) days after
receipt of the preliminary title report within which to examine that report
and notify Lessor of any objection(s) to any one or more of the exceptions
set forth on the preliminary title report. If Lessee does not notify Lessor
in writing, within that ten (10) day period, of Lessee's disapproval of any
one or more of the exceptions set forth on the preliminary title report, then
that exception (or those exceptions) shall be deemed to have been accepted
and approved by Lessee. If Lessee provides written notification to Lessor,
within that ten (10) day period, of Lessee's disapproval of any exception set
forth in the preliminary title report, then Lessor shall be obligated to
remove the disapproved exception prior to closing. At the closing of any
portion of the Leased Property, Lessor shall furnish to Lessee, at Lessor's
expense, an A.L.T.A. policy of title insurance in the full amount of the
purchase price, showing title to the conveyed portion of the Leased Property
to be good and marketable, subject only to the usual endorsements and
exceptions contained in such policies and the specific additional exceptions
accepted by Lessee as provided in the preceding sentences of this
subparagraph (f).
(1) If Lessee does not elect to purchase all or any
portion of the Leased Property pursuant to this Paragraph 26, then Lessee
shall be obligated to pay all title insurance cancellation fees.
(2) If Lessor is unable at Closing to provide good and
marketable title to the Leased Property as provided in this subparagraph (f),
then (in addition to any and all other remedies which may be available to
Lessee at law or in equity by reason of that breach) the provisions of
subparagraphs (a)(3), (a)(4), (b)(3) and (b)(4) of Paragraph 4 relating to a
CPI indexed increase in any subsequent rental amounts payable under this
Agreement shall be void and of no effect, and the monthly rent payable by
Lessee for each and every month throughout the remainder of the Lease Term
shall be the monthly rental amount then in effect.
(g) Closing Escrow. If Lessee elects to purchase all or a
portion of the Leased Property pursuant to this Paragraph 26, the parties
agree to establish a closing escrow account at ▇▇▇▇▇▇▇ County Title Division,
Continental Lawyers Title Company, of Medford, Oregon (the "Closing Escrow
Agent"). Lessee and Lessor each shall pay one-half (1/2) of the closing
escrow fees. Lessee and Lessor agree to execute whatever reasonable escrow
instructions may be required by Closing Escrow Agent in connection with the
consummation of the purchase of the Leased Property pursuant to this
Paragraph 26. In the event of any conflict between those escrow instructions
and this Agreement, the terms of this Agreement shall prevail, and nothing
contained in the escrow instructions shall be deemed to change or modify the
terms, provisions or conditions of this Agreement unless the parties
expressly so state in writing.
(h) Closing. If Lessee elects to purchase all or a portion of
the Leased Property pursuant to this Paragraph 26, then:
(1) The parties agree to close the transaction at the
offices of the Closing Escrow Agent, or at such other location as shall be
selected by agreement of the parties.
12
(2) Possession of the purchased portion of the Leased
Property, and all risk of loss, damage or destruction with respect to the
purchased portion of the Leased Property, shall pass from Lessor to Lessee at
Closing.
(3) At Closing, Lessor shall deliver to Lessee a
statutory warranty deed which conveys the purchased portion of the Leased
Property free and clear of all encumbrances, except those encumbrances
identified in the preliminary title report which have been accepted and
approved by Lessee pursuant to subparagraph 26(f), fully executed by Lessor
and naming Lessee as the grantee.
(4) Real property taxes, personal property taxes,
operating expenses, rental income, prepaid rents and deposits, and other
income and expenses with respect to the purchased portion of the Leased
Property shall be prorated as of the date of Closing.
(5) If Closing does not take place on a timely basis
because of Lessor's failure or refusal to convey to Lessee good title to the
purchased portion of the Leased Property, then Lessee shall be entitled to:
(i) the remedy specified in subparagraph 26(f)(2), and (ii) any and all other
rights and remedies for that breach which may be provided at law or in equity.
(6) Lessee shall have the right at Closing to convey and
assign its rights and obligations with respect to the purchased portion of
the Leased Property to Lithia Motors, Inc. or to any subsidiary of Lithia
Motors, Inc.
(7) Prior to Closing, Lessor shall furnish to Lessee any
and all documentation required under Section 1445 of the Internal Code,
including but not limited to a "Certificate of Non-Foreign Status". If
Lessor fails to furnish Lessee a Certificate of Non-Foreign Status, Lessee
shall be authorized to withhold and deduct from the purchase price any and
all amounts which are required to be withheld under IRC S 1445, and to
transfer those sums to the Internal Revenue Service in accordance with the
provisions of IRC S 1445.
(8) Each party shall pay its own attorney fees incurred
in connection with the Closing of the transaction.
(9) Lessee will cooperate with Lessor (at no cost to
Lessor) in enabling Lessor to complete a tax-free exchange of the purchased
portion of the Leased Property under IRC Section 1031.
(i) No Brokerage Commissions. Lessee and Lessor each warrants
to the other party that no brokerage commissions will be payable in
connection with the purchase and sale of any portion of the Leased Property
in accordance with this Paragraph 26.
27. Lessee's Right to Terminate Obligation to Lease. Lessee shall
have the right, at any time prior to November 10, 1997, to rescind Lessee's
obligation to lease the Leased Property under this Agreement if Lessee is
dissatisfied for any reason with either of the following matters: (i) any
studies or tests concerning the presence or possible presence on the Leased
Property of Hazardous Materials, and Lessee's determination as to the
possible financial impact on Lessee of any Hazardous Materials which are
present on the Leased Property; or (ii) the results of any examinations or
inspections completed by Lessee with respect to the Leased Property. Lessee
shall be responsible for the cost of all Hazardous Materials tests, reports,
surveys, studies, inspections and examinations conducted by Lessee pursuant
to this Paragraph 27. Lessor shall cooperate with Lessee in allowing Lessee
and Lessee's agents to fully inspect and examine the Leased Property for the
presence of Hazardous Materials. Notwithstanding Lessee's right to inspect
the Leased Property for the presence of Hazardous Materials pursuant to this
▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ is relying on, and Lessor agrees that Lessee has the
right to rely on, the representations, warranties and agreements made by
Lessor in Paragraph 9.
28. Additional Conditions Precedent to Lessee's Obligations. In
addition of all other conditions to Lessee's obligation to close which are
set forth in this Agreement, the obligation of Lessee to lease the Leased
Property from Lessor pursuant to this Agreement is subject to the
fulfillment, prior to the Initial Lease Date, of each of the following
conditions, each of which is for the benefit of Lessee and may be waived by
Lessee:
(a) Lithia Motors, Inc. shall have obtained from Nissan Motor
Corporation in USA and BMW of North America, Inc. prior to the Initial Lease
Date, exclusive franchises to sell new Nissan and BMW vehicles in Medford,
13
Oregon (as evidenced by the issuance to Lithia Motors, Inc. of appropriate
Dealership Sales and Service Agreements, and the approval of Lithia Motors,
Inc. as the publicly owned Dealer-Operator of the franchises); and
(b) Lithia Motors, Inc. shall be reasonably satisfied with any
facility improvement requirements which are imposed by Nissan Motor
Corporation in USA and BMW of North America, Inc. in connection with the
issuance to Lithia Motors, Inc. of franchises to sell new Nissan and BMW
vehicles in Medford, Oregon; and
(c) The purchase of the business assets of Medford Nissan, Inc.
by Lithia Motors, Inc. shall be closed on or before the Initial Lease Date;
and if not so closed for any reason, Lessor shall have no obligation to
conclude this Lease with Lessee, even if this condition is waived by Lessee;
and
(d) Lessee shall be reasonably satisfied that there have been
no material changes in the condition of the Leased Property between the Date
of this Agreement and the Initial Lease Date; and
(e) Lessee shall be reasonably satisfied that all of Lessor's
agreements, representations and warranties set forth in this Agreement shall
be true, correct, complete and not misleading as of the date of Closing;
provided, however, that Lessee's decision to close this transaction shall not
excuse or release Lessor from liability to Lessee for any representation or
warranty which is subsequently determined to be incorrect, incomplete or
misleading.
29. Miscellaneous.
(a) No Waiver of Performance. The failure by any party at any
time to require performance of any provision hereof shall in no way affect
that party's right to enforce the same provision or any other provision at
any subsequent time. The consent or approval of either party to any act by
the other party of a nature requiring consent or approval should not be
deemed to waive or render unnecessary the consent to or approval of any
subsequent similar act. All rights and remedies provided under this
Agreement are cumulative to one another and to all other rights and remedies
under applicable law or in equity, and no exercise of anyone right or remedy
shall in any manner operate to prejudice or impair any other right or remedy
provided at law or in equity.
(b) Entire Agreement. This Agreement sets forth the entire,
final and complete agreement of the parties, and supersedes, replaces and
integrates all of the prior written and oral agreements of the parties. Any
modifications, amendments or supplements to this Agreement shall be executed
in writing and signed by all of the parties. Multiple copies of this
Agreement may be executed by the parties, each of which shall be deemed to be
an original when signed by all of the parties. The captions set forth in
this Agreement are for reference purposes only, and shall not be considered
in construing the meaning of the terms and conditions of this Agreement.
This Agreement shall be binding upon, and shall inure to the benefit of, the
respective successors, representatives and assigns of the parties. The
documents identified or referenced in this Agreement are all of the
agreements respecting the proposed sale or transfer, and there are no other
oral or written side agreements affecting the transaction. True copies of
all documents identified or referenced in this Agreement are attached hereto.
(c) Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the state of Oregon.
Any legal proceedings relating to this Agreement shall be filed in the
appropriate court in ▇▇▇▇▇▇▇ County, Oregon, and the parties hereby
irrevocably submit to the jurisdiction of the Circuit Court of ▇▇▇▇▇▇▇
County, Oregon.
(d) Severability. If any provision of this Agreement shall be
determined to be void by any court of competent jurisdiction, then that
determination shall not affect any other provisions of this Agreement, and
all such other provisions shall remain in full force and effect. It is the
intention of the parties that if any provision of this Agreement is capable
of two constructions, only one of which would render the provision valid,
then the provision shall have the meaning which renders it valid.
(e) Attorney Fees in Event of Dispute. If action is instituted
to enforce any term of this Agreement, the prevailing party shall recover
from the losing party reasonable attorney fees incurred in that action as set
by the trial court, and in the event of an appeal, as set by the appellate
courts.
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30. Memorandum to be Recorded. Simultaneously with the execution of
this Agreement the parties shall execute a Memorandum evidencing the
execution of this Agreement for purposes of recordation in ▇▇▇▇▇▇▇ County,
Oregon, which Memorandum shall be recordable by Lessee on or after the
Initial Lease Date.
IN WITNESS WHEREOF, each of the parties has executed this Agreement on
the respective dates indicated below.
LESSEE:
LITHIA REAL ESTATE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 9-26-97
Authorized Agent ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
LESSOR:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 10-14-97
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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EXHIBIT "A" TO REAL PROPERTY LEASE AGREEMENT WITH OPTION TO PURCHASE
Between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as "Lessor", and
LITHIA REAL ESTATE, INC., as Lessee
LEGAL DESCRIPTION OF REAL PROPERTY
[See ___ page(s) attached hereto.]
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EXHIBIT "B" TO REAL PROPERTY LEASE AGREEMENT WITH OPTION TO PURCHASE
Between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as "Lessor", and
LITHIA REAL ESTATE, INC., as Lessee
COPY OF AGREEMENT FOR PURCHASE AND SALE OF BUSINESS ASSETS
[See ___ page(s) attached hereto.]
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EXHIBIT "C" TO REAL PROPERTY LEASE AGREEMENT WITH OPTION TO PURCHASE
Between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as "Lessor", and
LITHIA REAL ESTATE, INC., as Lessee
DOCUMENTS RELATING TO CONTAMINATION OF BUSINESS REAL PROPERTY
[See ___ page(s) attached hereto.]
1. Phase 1 Environmental Report
2. Disclosure Statement
3. Any and all other documents which are necessary in order for
Lessor to satisfy the disclosure requirements of Paragraph 9 of the Lease
Agreement
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EXHIBIT "D" TO REAL PROPERTY LEASE AGREEMENT WITH OPTION TO PURCHASE
Between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as "Lessor", and
LITHIA REAL ESTATE, INC., as Lessee
COPY OF PRELIMINARY TITLE REPORT
[See ___ page(s) attached hereto.]
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