EX-10
Exhibit 10.24.2 Real Prop Lease Agmt Optn to Purch
EXHIBIT 10.24.2
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 3101 and
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and 2800 and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ in Bakersfield, California
(the "Leased Property"), which is being leased to and used by Nissan - BMW of
Bakersfield, Inc. 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 all of the business assets owned and used by
Nissan - BMW of Bakersfield, Inc. As a condition concurrent to that sale of
assets, the Lessor is agreeing to lease the Leased Property to Lessee.
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 both to the following
parcels of real property located in Bakersfield, California, 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: a parcel of approximately 4.02 acres which is commonly
identified as ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, a parcel of approximately 1.50 acres which
is commonly identified as ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; a parcel of approximately 1.26
acres which is commonly identified as ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ and a parcel of
approximately 1.04 acres which is commonly identified as ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
(b) "Lease Term" shall refer to the entire term of the lease,
including any extension elected by Lessee pursuant to Paragraph 3. "Lease
Month" shall refer to each of the successive one month periods during the
Lease Term which begin on the 1st day of a calendar month and end on the last
day of that month. "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 Nissan - BMW of Bakersfield, Inc. in
accordance with the terms of the Agreement for Purchase and Sale of Business
Assets which is attached hereto as Exhibit "B".
(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), Los
Angeles/Anaheim/Riverside Area, CPI-All Items ("standard reference base
period" (1982-84 = 100). "Base CPI Index Figure" shall refer to the index
number indicated for the month in which occurs the Initial Lease Date, and
the "CPI Index Figure" for any other 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.
seq.), the Hazardous Materials Transportation Act (49 USC 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 California or federal law.
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(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 (approximately
fifteen years) shall commence on the Initial Lease Date and shall terminate
on December 31, 2012, unless sooner terminated as provided in this Agreement.
(a) At any time during the 180 day period immediately
preceding December 31, 2012, Lessee shall have the right, if the lease has
not theretofore been terminated and if Lessee is not then in default with
respect to any material obligation under this Agreement, to notify Lessor in
writing that the term of the lease shall be extended for an additional five
(5) years, until December 31, 2017, in which case the term of the lease shall
be so extended.
(b) At any time during the 180 day period immediately
preceding December 31, 2017, Lessee shall have the right, if the lease has
not theretofore been terminated and if Lessee is not then in default with
respect to any material obligation under this Agreement, to notify Lessor in
writing that the term of the lease shall be extended for an additional five
(5) years, until December 31, 2022, in which case the term of the lease shall
be so extended.
(c) At any time during the 180 day period immediately
preceding December 31, 2022, Lessee shall have the right, if the lease has
not theretofore been terminated and if Lessee is not then in default with
respect to any material obligation under this Agreement, to notify Lessor in
writing that the term of the lease shall be extended for an additional five
(5) years, until December 31, 2027, in which case the term of the lease shall
be so extended.
(d) At any time during the 180 day period immediately
preceding December 31, 2027, Lessee shall have the right, if the lease has
not theretofore been terminated and if Lessee is not then in default with
respect to any material obligation under this Agreement, to notify Lessor in
writing that the term of the lease shall be extended for an additional five
(5) years, until December 31, 2032, in which case the term of the lease shall
be so.
(e) At any time during the 180 day period immediately
preceding December 31, 2032, Lessee shall have the right, if the lease has
not theretofore been terminated and if Lessee is not then in default with
respect to any material obligation under this Agreement, to notify Lessor in
writing that the term of the lease shall be extended for an additional five
(5) years, until December 31, 2037, in which case the term of the lease shall
be so extended.
4. Rental Payments Required.
(a) With respect to each Lease Month during the period
beginning with the Initial Lease Date and ending on December 31, 2002, Lessee
shall pay to Lessor a rental amount of Thirty-Six Thousand Five Hundred and
00/100 ($36,500.00) per month (hereinafter the "Base Rental Amount").
(b) With respect to each Lease Month during the period
beginning on January 1, 2003 and ending December 31, 2007, Lessee shall pay
to Lessor a monthly rental amount equal to the greater of: (i) the Base
Rental Amount, or (ii) the lesser of: (A) one hundred and ten percent (110%)
of the monthly rental amount in effect for the month of December, 2002, or
(B) the amount determined by multiplying the monthly rental amount in effect
for the month of December, 2002 by a fraction, the denominator of which is
the Base CPI Index Figure, and the numerator of which is the CPI Index Figure
for the month of December, 2002.
(c) With respect to each Lease Month during the period
beginning on January 1, 2008 and ending December 31, 2012, Lessee shall pay
to Lessor a monthly rental amount equal to the greater of: (i) the monthly
rental amount in effect for the month of December, 2007, or (ii) the lesser
of: (A) one hundred and ten percent (110%) of the monthly rental amount in
effect for the month of December, 2007, or(B) the amount determined by
multiplying the monthly rental amount in effect for the month of December,
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2007 by a fraction, the denominator of which is the CPI Index Figure for the
month of December, 2002, and the numerator of which is the CPI Index Figure
for the month of December, 2007.
(d) With respect to each Lease Month during the period
beginning on January 1, 2013 and ending December 31, 2017, Lessee shall pay
to Lessor a monthly rental amount equal to the greater of: (i) the monthly
rental amount in effect for the month of December, 2012, or (ii) the lesser
of: (A) one hundred ten percent (110%) of the monthly rental amount in
effect for the month of December, 2012, or (B) the amount determined by
multiplying the monthly rental amount in effect for the month of December,
2007, and the numerator of which is the CPI Index Figure for the month of
December, 2012.
(e) With respect to each Lease Month during the period
beginning on January 1, 2018 and ending December 31, 2022, Lessee shall pay
to Lessor a monthly rental amount equal to the greater of: (i) the monthly
rental amount in effect for the month of December, 2017, or (ii) the lesser
of: (A) one hundred and ten percent (110%) of the monthly rental amount in
effect for the month of December, 2017; or (B) the amount determined by
multiplying the monthly rental amount in effect for the month of December,
2017 by a fraction, the denominator of which is the CPI Index Figure for the
month of December, 2012, and the numerator of which is the CPI Index Figure
for the month of December, 2017.
(f) With respect to each Lease Month during the period
beginning on January 1, 2023 and ending December 31, 2027, Lessee shall pay
to Lessor a monthly rental amount equal to the greater of: (i) the monthly
rental amount in effect for the month of December, 2022, or (ii) the lesser
of: (A) one hundred and ten percent (110%) of the monthly rental amount in
effect for the month of December, 2022, or (B) the amount determined by
multiplying the monthly rental amount in effect for the month of December,
2022 by a fraction, the denominator of which is the CPI Index Figure for the
month of December, 2017, and the numerator of which is the CPI Index Figure
for the month of December, 2022.
(g) With respect to each Lease Month during the period
beginning on January 1, 2028 and ending December 31, 2032, Lessee shall pay
to Lessor a monthly rental amount equal to the greater of: (i) the monthly
rental amount in effect for the month of December, 2027, or (ii) the lesser
of: (A) one hundred and ten percent (110%) of the monthly rental amount in
effect for the month of December, 2027, or (B) the amount determined by
multiplying the monthly rental amount in effect for the month of December,
2027 by a fraction, the denominator of which is the CPI Index Figure for the
month of December, 2022, and the numerator of which is the CPI Index Figure
for the month of December, 2027.
(h) With respect to each Lease Month during the period
beginning on January 1, 2033 and ending December 31, 2037, Lessee shall pay
to Lessor a monthly rental amount equal to the greater of: (i) the monthly
rental amount in effect for the month of December, 2032, or (ii) the lesser
of: (A) one hundred and ten percent (110%) of the monthly rental amount in
effect for the month of December, 2032, or (B) the amount determined by
multiplying the monthly rental amount in effect for the month of December,
2032 by a fraction, the denominator of which is the CPI Index Figure for the
month of December, 2027, and the numerator of which is the CPI Index Figure
for the month of December, 2032.
(i) If the CPI Index Figure for the month of December in any
year identified in subparagraphs (b) through (h) is not available in time to
make the adjustment required under those subparagraphs, then Lessee agrees
that any deficiencies in rent resulting from the failure to make the
adjustment on a timely basis shall be paid by Lessor as soon as the
applicable CPI Index Figure is available to the parties.
(j) All amounts of monthly rent payable under this Agreement
shall be payable in advance on the first day of each calendar month, in
lawful money of the United States, and without notice, demand, offset or
deduction, at whatever address Lessor may specify in writing from time to
time.
(k) 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. This Lease is intended to be a
"triple net lease", and the rent received by lessor shall be net of all other
costs or expenses relating to ownership or operation of the Leased Property.
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(l) 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 five percent (5%) 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). 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 shall not be
entitled to an abatement of rent, and Lessee shall not be entitled to claim
constructive eviction or otherwise terminate the Lease. 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, supplemental taxes assessed
by reason of any change in ownership of the Leased Property, 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") as those taxes become due an payable, and before delinquency.
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 the property has been installed
by Lessee or Lessor. Lessee shall make all personal property tax payments
directly to the taxing authorities. 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 Leased Property is not subjected to any lien as a result of the
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. If Lessee shall fail to pay any such Taxes, Lessor shall have the
right to pay the same, in which case Lessee shall repay such amount to Lessor
with Lessee's next rent installment, together with interest at the maximum
legal rate and any penalties against Lessor as a result of the delinquent
payment.
7. Use Of Leased Property. During the initial 15 year term of the
Lease, Lessee must operate a Nissan and BMW franchise, or one or more other
new car franchises, from the Leased Property. Throughout the entire Lease
Term, 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 have the right to use the
Leased Property for any other reasonable purpose, without any requirement of
consent from Lessor.
(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. Lessee shall not conduct any fire sale,
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bankruptcy sale or going-out-of-business sale on the Leased Property without
the prior consent of Lessor, which consent shall not be withheld unreasonably.
(b) Lessee shall promptly comply with all statutes and 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. Notwithstanding
the two preceding sentences, Lessee shall have no obligation to take any
action to bring the Leased Property into compliance with the Americans with
Disabilities Act of 1990 unless specifically directed to do so by the
administrative agency having responsibility for enforcement of that Act.
(c) Lessee shall be permitted to display on or about the
Leased Property, or affix to any improvement located on the Leased Property,
any signs or advertisements or notices relating to any business interests of
Lithia Motors, Inc. or its affiliates. Any such signs, advertisements or
notices shall comply with all applicable governmental rules and regulations
relating thereto. Upon expiration or sooner termination of the Lease. Lessee
shall be obligated to remove all signs from the Leased Property and repair
any damage to the Leased Property resulting from the installation or removal
of those signs.
8. Repairs And Maintenance. Lessee shall be responsible for
maintaining the roof, foundation and bearing walls of the Leased Property.
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. 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. If Lessor determines that Lessee
is failing to make any repairs which are necessary to protect the Leased
Property from waste or damage, then Lessor shall be authorized to cause those
repairs to be made and to charge the cost of those repairs to Lessee as
additional rent. Lessee waives the provisions of California Civil Code
Sections 1941 and 1942.
9. Lessor's Responsibility For Prior Contamination By Hazardous
Substances
(a) Except as otherwise expressly disclosed in Exhibit "D" or
in the Phase One Environmental Report on the Leased Property being provided
to Lessee by Nissan - BMW of Bakersfield, Inc. (the "Phase One Report"),
Lessor represents and warrants to Lessee that: (i) no business activities of
Nissan - BMW of Bakersfield, Inc. prior to the Initial Lease Date shall have
produced any Hazardous Materials, the presence or use of which upon the
Leased Property would violate any federal, state, local or other governmental
law, regulation or order or would require reporting to any governmental
authority, and (ii) there are no in-ground hoists, underground gas tanks,
underground fuel tanks, or underground waste oil tanks located on the Leased
Property, and (iii) the Leased Property is otherwise free and clear of any
Hazardous Materials.
(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, under or about the Leased Property or any improvements
located thereon, of any Hazardous Materials, or (ii) 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
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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) Within thirty (30) days after executing this Agreement, Lessor
shall provide to Lessee a Disclosure Statement, in the form of Exhibit "E"
attached hereto, 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 to
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 completing its inspection of
the Leased Property (but in no event later than the Initial Lease Date) 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.
(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
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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 $1,000,000 per accident or
occurrence on account of personal injury or death, and $1,000,000 per accident
or occurrence on account of damage to property, together with a blanket excess
liability policy in an amount of not less than $5,000,000. Such insurance also
shall include contractual liability coverage in a form satisfactory to Lessor.
In addition to the foregoing, Lessee shall obtain and maintain during the Lease
Term workers' compensation insurance as required by the laws of the State of
California. 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. Such
insurance shall be in an amount not less than the full replacement cost of the
improvements. All such insurance shall be for the benefit of Lessee and Lessor,
and any proceeds shall be equitably apportioned between them in accordance with
their respective interests in the Leased Property.
(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) Lessor hereby releases Lessee and Lessee'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 Lessor with
respect to the Leased Property, and Lessor waives all right of recovery against
Lessee and Lessee's agents and employees for such loss or damage. Lessor agrees
to: (i) notify Lessor's insurance carrier(s), at Lessor's sole cost, a written
waiver of all subrogation rights against Lessee and Lessee's agents and
employees.
(e) 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 California. Each insurance policy shall name Lessor and
his lienholder 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.
(f) Nothing in this Paragraph 12 shall limit in any way Lessee's
liability under this Lease or affect Lessee's indemnification obligations to
Lessor as set forth in Paragraph 16.
13. Destruction Of Improvements. Except as specifically provided in
this ▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ shall not be entitled to any abatement of rent 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.
(a) In the event of any damage or destruction to the improvements
located on the Leased Property which causes the fair market value of the
improvements located on the Leased Property to be reduced by twenty-five percent
(25%) or more, Lessee shall have the right to elect whether to terminate the
Lease or to cause Lessor to repair the damage.
7
(1) If Lessee elects to terminate this lease, Lessee shall so
notify Lessor by written notice delivered to Lessor within forty-five (45) days
after the date of the damage or destruction. If Lessee does not elect to
terminate this Lease as provided in the preceding sentence, then Lessor shall
have the option at any time within (sixty) 60 days after the date of the damage
or destruction to elect to terminate the Lease. If either Lessee or Lessor
terminates the Lease as provided in the two preceding sentences, then the
termination shall be effective as of the date of damage or destruction. In the
event of any termination of the Lease under this subparagraph, Lessee's right of
possession and obligation to pay rent in connection with the tenancy created
hereunder shall cease as of the date of termination, and Lessee shall be
entitled to reimbursement of any prepaid rent, security deposits or other
amounts paid by Lessee and attributable to the portion of the anticipated Lease
Term which is subsequent to the termination date.
(2) If neither Lessee nor Lessor elects to terminate this Lease
as provided in subparagraph 13(a)(1), then Lessor 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 the control of lessor. Lessee's obligation to pay rent shall be
abated during any period of time when the Leased Property is so damaged as to
not be usable by Lessee for Lessee's normal business purposes.
(b) In the event of any damage or destruction to the improvements
located on the Leased Property which causes the fair market value of the
improvements located on the Leased Property to be reduced by less than
twenty-five percent (25%), Lessor shall be obligated to restore the damaged
improvements 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 the control of
Lessor.
(c) Lessee waives the provisions of California Civil Code Sections
1932(2) and 1933(4).
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 (which ever 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 reaminder 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 for applying all condemnation proceeds received by Lessor to
make 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. Notwithstanding the preceding sentence, if
there is a partial taking of the Leased Property, and if the total cost of
making all necessary repairs or alterations to the Leased Property would
exceed the condemnation proceeds received by Lessor, then Lessor shall have
the right to terminate the Lease (effective as of the date of the partial
taking) unless Lessee agrees to bear the full amount of those excess costs
for repairing or altering the Leased Property. For purposes of the preceding
sentences of this Paragraph 14, the term "total taking" shall mean the taking
of such 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, and
the Lessee shall be responsible for making a reasonable determination as to
whether a taking is "total" or "partial". All compensation and damages
awarded for the taking of all or any portion of the Leased Property shall be
apportioned between Lessor and Lessee on the following basis: (i) Lessee
shall be entitled to receive a sum equal to the excess (if any) of the market
value of the Leased 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
Lessee's trade fixtures, removable personal property, loss of business and
good will, and relocation expenses, and (ii) Lessor shall be entitled to the
balance of the award.
8
(a) 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.
(b) 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 have the right to make
alterations, 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 Property without the written
consent of Lessor (which approval 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,
then Lessor shall for all purposes be conclusively deemed to have consented
to all of those Alterations to which lessor has not so objected. No
Alterations shall be made to the Leased Property unless and until all
required permits have been obtained, and all Alterations shall comply with
all applicable governmental regulations. Any Alterations (excluding Lessee's
trade fixtures, furniture and equipment and any signs placed by Lessee on the
Leased Property) shall remain on and be surrendered with the leased Property
upon the expiration or earlier termination of the Lease Term, except that
Lessor can elect, within 30 days before expiration of the Lease Term (or
within five days after any earlier termination of the Lease Term) to require
Lessee to remove any Alterations which Lessee has made to the Leased
Property. Lessee shall be obligated to repair any damage to the Leased
Property caused by Lessee's removal of its trade fixtures, furniture,
equipment and signs.
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 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 (other than the grossly negligent or
intentional acts of Lessor, its agents, employees, licensees and 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 Lessee's equipment and property (and shall repair any damage
caused by that removal), and shall surrender the Leased Property in good
condition. 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.
9
18. Good Title. Lessor warrants that it has good right to leased 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. The
sale of greater than 50% of the stock of Lessee (or of Lithia Motors, Inc. or
any subsidiary of Lithia Motors, Inc. to whom this Lease is assigned under the
first sentence of this Paragraph 19) shall constitute an assignment of this
Lease subject to the provisions of this Paragraph 19. 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. If, during the Lease Term, Lessee shall receive from any
sublessee of all or a portion of the Leased Property an amount which exceeds the
regular monthly rental amount as determined under Paragraph 4, then Lessee
shall, in addition to the payment of that regular monthly rental amount, pay to
Lessor 50% of such excess received for each remaining month of the Lease Term,
less any amounts which Lessee shall incur in collecting such rentals (including,
without limitation, attorney's fees).
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 the "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 pay or cause to be paid the full amount of any rent or
other charge specified in this Agreement, within three (3) days after the date
when due, subject to the notice requirement set forth in subparagraph 21(b);
(ii) the insolvency of Lessee, an assignment by Lessee for the benefit of
creditors, the filing by Lessee of a voluntary petition of bankruptcy, an
adjudication that Lessee is bankrupt, the appointment of a receiver for the
properties of Lessee, the filing of an involuntary petition of bankruptcy and
the failure of Lessee to secure dismissal of the petition within thirty (30)
days after filing, or the attachment of or levying of execution upon Lessee's
leasehold interest and the failure of Lessee to secure discharge of the
attachment or release of the levy or execution within ten (10) days; (iii) any
abandonment of the Leased Property by Lessee (which shall include any absence of
Lessee from the Leased Property for a period of five (5) or more continuous
days); or (iv) 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 remedies; if the default is of such a nature that it cannot be
completely remedies within the 30-day period, this 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) In the event of any default by Lessee, then Lessor shall have the
right either to terminate Lessee's right to possession of the Leased Property,
by giving notice of termination to Lessee, and thereby terminate this Lease, or
to have this Lease continue in full force and effect with Lessee at all times
having the right to possession of the Leased Property.
(i) If Lessor elects to have this Lease continue in full force
and effect, Lessee shall remain liable to perform all of its obligations under
this Lease, and Lessor may enforce all of Lessor's rights and remedies,
including the right to recover rent when it falls due, specifically intending to
mean that Lessor has the remedy described in Section 1951.4 of the California
Civil Code, as such section reads as of the date of this Lease. If Lessee
abandons the Leased Property or fails to maintain and protect the same as herein
provided, Lessor shall have the right (A) to do all things necessary or
appropriate to maintain, preserve and protect the Leased Property, including,
10
without limitation, the installation of keepers or guards or the appointment of
a receiver, and (B) to relet the Leased Property as the agent of Lessee and for
Lessee's account and to do all things appropriate for such reletting. In the
event of such reletting, rent received by Lessor shall be credited to Lessee's
account. None of the foregoing acts shall be deemed to terminate Lessee's right
of possession, and Lessee agrees to reimburse Lessor on demand for all amounts
reasonably expended by Lessor in connection with the foregoing acts, together
with interest on all amounts expended by Lessor from time to time at the maximum
legal rate. Notwithstanding any such election to have this Lease remain in full
force and effect, Lessor may at any time thereafter elect to terminate Lessee's
right to possession of the Leased Property and thereby terminate this Lease for
any previous breach or default hereunder by Lessee which remains uncured or for
any subsequent breach of default.
(ii) If Lessor gives notice of election to terminate Lessee's
possession of the Leased Property, Lessor shall be entitled to recover from
Lessee the amounts specified in paragraphs (a)(1), (a)(2), and (a)(4) of Section
1951.2 of the California Civil Code, as such section reads as of the date of
this Lease, together with interest on said amounts at the maximum legal rate
from the dates they were due, computed as of the date the award, together with
the worth at the time of the award of the amount by which the unpaid rent for
the balance of the Lease Term after the time of the award exceeds the amount of
such rental loss for the same period that Lessee proves should be reasonably
avoided, in accordance with paragraph (a)(3) of Section 1951.2 of the California
Civil Code.
(iii) No right or remedy herein conferred upon or reserved to
Lessor is intended to be exclusive of any other right or remedy herein or by
law, provided that each shall be cumulative and in addition to every other right
or remedy given herein, or now or hereafter existing at law or in equity or by
statute.
(iv) In addition to the above remedies upon default, upon 10
days' prior written notice to Lessee by Lessor, Lessor may cure any default by
Lessee and, if necessary, may enter upon the Leased Property for such purpose,
and in such event the cost thereof with interest shall be deemed additional rent
payable by Lessee to Lessor and shall become immediately due and payable.
(v) In the event of any default by Lessor under this Lease,
Lessee may ▇▇▇ for damages or injunctive or other equitable relief, but Lessee
hereby waives and relinquishes any right which Lessee may have to terminate this
Lease or to withhold, reduce or offset any rent or other payment payable by
Lessee under this Lease, on account of Lessor's default.
(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 three (3) business days from the date of mailing that
notice in which to pay the delinquent amount and prevent a default hereunder.
22. Time of Essence. Time is of the essence in the performance of all
obligations of Lessor and/or Lessee under this Agreement.
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
11
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, willful 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. Lessor's Option To Purchase. At any time during the Option
Period (as defined in subparagraph 25(a)), Lessee shall have the option to
purchase the Leased Property from Lessor, under the terms and conditions set
forth in this Paragraph 26.
(a) Definitions. For purposes of this Paragraph 26, "Closing"
shall refer to the consummation of the purchase and sale of the Leased
Property pursuant to this Paragraph 26, and "Closing Date" shall refer to the
actual date of Closing. "Option Period" shall mean and refer to the period
beginning on the Initial Lease Date and ending on December 31, 2002.
(b) Option may be Exercised Only during Option Period. Lessee
shall have no right to exercise the purchase option granted under this
Paragraph 26 after the last day of the Option Period. 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
of the Leased Property at any time during the period beginning six (6) months
and ending nine (9) months 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 the right
and option to purchase the Leased Property from Lessor pursuant to this
▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ shall be required to deliver to Lessor a written notice
specifying: (i) Lessee's desire to exercise its right and option to purchase
the Leased Property pursuant to this Paragraph 26, and (ii) the proposed
closing date for the purchase (which closing date shall be not less than 6
months and not more than 9 months after the date of the written notice
exercising the option). Lessee shall be deemed to have exercised the option
to purchase 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 the Leased Property from Lessor as
provided in this Paragraph 26, and if the purchase and sale of the Leased
Property subsequently closes in accordance with this Paragraph 26, then
Lessee shall be obligated to pay rent with respect to the Leased Property
through the date of closing of the purchase and sale.
12
(d) Lessor's Obligation to Sell. If Lessee exercises the
option to purchase 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 of the Leased Property as provided in this
Paragraph 26, then Lessor shall be obligated to sell and deliver to Lessee
good and marketable title to 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. If Lessee exercises the option
to purchase the Leased Property pursuant to this Paragraph 26, the price for
the Leased Property shall be Four Million Eight Hundred Thousand And 00/100
Dollars ($4,800,000.00). The $4,800,000.00 purchase price 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, California, 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 "C". 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 Closing, Lessor shall
furnish to Lessee, at Lessor's expense, a C.L.T.A. policy of title insurance
(or an A.L.T.A. policy of title insurance if Lessee is willing to pay the
excess of the cost of an A.L.T.A. policy over the cost of a C.L.T.A. policy)
in the full amount of the purchase price ($4,800,000.00), showing title to
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 the Leased
Property pursuant to this Paragraph 26, then Lessor 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 4(b) through 4(h) relating to a CPI indexed increase in the
rental amount 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 entire Lease Term shall be the Base Rental Amount. If, subsequent to the
date of Closing, Lessor is able to cure any title defects and provide good
and marketable title to the Leased Property as provided in this subparagraph
(f), then the provisions of the preceding sentence shall be void and of no
effect from and after the date when said defect(s) is/are cured.
(g) Closing Escrow. If Lessee elects to purchase the Leased
Property pursuant to this Paragraph 26, the parties agree to establish a
closing escrow account at Capital City Escrow, Inc., in Sacramento,
California (the "Closing Escrow Agent"). Lessee shall pay for the insurance
premiums and documentary transfer taxes, and Lessee and Lessor each shall pay
one-half (1/2) of all other closing costs and 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 the Leased Property
pursuant to this Paragraph 26, then:
(1) The parties agree to close the purchase and sale
hereunder at the offices of the Closing Escrow Agent, or at such other
location as shall be selected by mutual agreement of the parties.
(2) Actual possession of the Leased Property, and all
risk of loss, damage or destruction with respect to all or any portion of the
Leased Property, is passing to Lessee under the terms of this Lease.
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(3) At Closing, Lessor shall deliver to Lessee a grant
deed which conveys 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 Leased Property shall be the
responsibility of Lessee.
(5) If Closing does not take place on or before the Final
Closing Date because of Lessor's failure or refusal to convey to Lessee good
title to 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 purchase of the Leased
Property pursuant to this Paragraph 26 to Lithia Motors, Inc. or 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 S1445, and to transfer those sums to the
Internal Revenue Service in accordance with the provisions of IRC S1445. Lessor
also shall furnish to Lessee a duly completed and executed Form 590 in
compliance with California Revenue and Taxation Code SS18805 and 26131.
(8) Each party shall pay its own attorney fees incurred in
connection with the Closing of the purchase and sale of the Leased Property.
(9) Lessee will cooperate with Lessor (at no cost to Lessor)
in enabling Lessor to complete a tax-free exchange of the Leased Property under
IRC Section 1031.
(10) Any material default under this Lease must be cured by
Lessee prior to Closing.
(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 the Leased Property in accordance with Paragraph 26.
27. Lessee's Right To Terminate Obligation to Lease. Lessee shall have the
right, at any time prior to the Initial Lease Date, 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. All
inspections performed by Lessee pursuant to this Paragraph 27 shall be subject
to Lessee's indemnification obligations to Lessor as set forth in Paragraph 16,
and Lessee shall return the Leased Property to its original condition upon the
completion of any tests or inspections performed pursuant to this Paragraph 27.
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) Lessee shall have obtained from Nissan Motor Corporation in USA
and BMW of North American, Inc. prior to the Initial Lease Date, exclusive
franchises to sell new Nissan and BMW vehicles in Bakersfield, California (as
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evidenced by the issuance to Lessee of appropriate Dealership Sales and Service
Agreements, and the approval of Lessee as the publicly owned Dealer-Operator of
the franchises); and
(b) Lessee 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 Lessee of franchises to
sell new Nissan and BMW vehicles in Bakersfield, California; and
(c) The purchase of business assets of Nissan - BMW of Bakersfield,
Inc. by Lessee shall be closed on or before the Initial Lease Date; 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 Initial Lease Date;
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. Attornment And Subordination.
(a) Lessee shall execute, without further consideration, any and all
instruments desired by Lessor (or Lessor's mortgagee) subordinating this
Agreement in the manner requested by Lessor to the lien of any mortgage and/or
deed of trust or other encumbrance which may now or hereafter affect the Leased
Property, together with all renewals, modifications, consolidations,
replacements or extensions thereof; provided, however, that any lienor or
encumbrancer relying on such subordination of such additional agreements will
covenant with Lessee that Lessee's leasehold interests hereunder shall remain in
full force and effect, and that Lessee shall not be disturbed in the event of
sale, foreclosure or other action so long as Lessee is not in default hereunder.
Lessor is irrevocably appointed and authorized as agent and attorney-in-fact of
Lessee to execute all subordination instruments in the event Lessee fails to
execute said instruments within fifteen (15) days after notice from Lessor
demanding the execution thereof.
(b) If Lessor's interest is transferred to and owned by any lender as
a result of a foreclosure or other proceeding brought by the lender in lieu of
or pursuant to a foreclosure or in any other manner, and if the lender thereby
succeeds to the interest of Lessor hereunder, then Lessee shall be bound to the
lender under all of the terms, covenants and conditions hereof for the balance
of the remaining Lease Term, with the same force and effect as if the lender was
the original Lessor hereunder. Lessee hereby attorns to any such lender, with
the attornment to be effective and self-operative immediately upon the lender
succeeding to the interest of Lessor, and without the necessity of the execution
of any further instrument. If a lender shall succeed to the interest of Lessor,
the lender shall not be liable for any act or omission of Lessor, and shall not
be subject to any offsets or defenses which Lessee might assert against Lessor.
30. Estoppel Certificates. Within ten (10) days after request by Lessor,
Lessee shall execute and deliver to Lessor and estoppel certificate in such form
as Lessor may reasonably request, or as a prospective purchaser or encumbrancer
of the Leased Property may reasonably request, relating to the then current
status of the Lease and stating any claims, offsets or defenses asserted by
Lessee with respect to the Lease. Any such estoppel certificate may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Leased Property. If Lessee fails to deliver a requested estoppel certificate
within ten (10) days after Lessor's written request therefor, then Lessee shall
be deemed conclusively to have agreed that: (i) this Agreement is in full force
and effect, without modification except as may be represented by Lessor, (ii)
there are no uncured defaults in Lessor's performance under this Agreement,
(iii) not more than one monthly installment of the rental due under this
Agreement has been paid in advance, and (iv) any terms or conditions of an
estoppel certificate required by a prospective purchaser or encumbrances of the
Leased Property are satisfied and agreed to by Lessee. Any failure by Lessee to
deliver an estoppel statement (showing any exceptions to any of the statements
of fact required thereby) shall be material breach of this Agreement.
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31. Corporate Authority. Lessee's board of directors and shareholders have
authorized the execution and delivery of this Agreement to Lessor and the
carrying out of its provisions. This Agreement will not conflict with Seller's
bylaws.
32. Miscellaneous.
(a) No Waiver of Performance. The failure of 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 any one 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. Subject to the provisions of Paragraph
19, 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 California. Any legal
proceedings relating to this Agreement shall be filed in the appropriate court
in ▇▇▇▇ County, California, and the parties hereby irrevocably submit to the
jurisdiction of the Municipal or Superior Court of ▇▇▇▇ County, California.
(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
appellate courts.
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, California, 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/ Lithia
Authorized Agent
Date 10-2-97
LESSOR: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Date 10-2-97
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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.]
DISCLOSURE STATEMENT
Lessor hereby notifies Lessee that the Leased Property has the following
defects, which constitute all of the Leased Property defects which are known
to Lessor.
1.
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