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EXHIBIT 10.5
LEASE AND PURCHASE AGREEMENT
Between
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(Lessor)
and
BANK OF SOUTHERN OREGON
(Lessee)
Hornecker, Cowling, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇ ▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
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LEASE AND PURCHASE AGREEMENT
THIS lease and purchase agreement, made and entered into this 3rd day
of December, 1998, by and between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, hereinafter called "Lessor",
and the Bank of Southern Oregon, an Oregon Corporation, hereinafter called
"Lessee".
W I T N E S S E T H
RECITALS:
A) Lessor is the owner of land with a building situated thereon at ▇▇▇
▇. ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, more particularly described in Exhibit "A",
hereinafter "Premises";
B) Lessee desires to lease said land and building and to utilize the
same in connection with the operation of a business;
C) Lessee desires to purchase the Premises on the terms as set forth
herein;
NOW, THEREFORE, in consideration of the promises and covenants herein,
Lessor hereby leases and agrees to sell to Lessee and Lessee hereby leases and
agrees to purchase from Lessor the Premises described in Exhibit "A" upon the
following terms and conditions:
1. TERM: This lease shall commence on March 1, 1999 and shall continue
thereafter for 36 months, terminating on February 28, 2002.
2. RENTS AND LESSEE PAYMENTS:
2.1 RENTAL: As rental for said property, Lessee promises and agrees to
pay to Lessor monthly in advance on the first day of each calendar month, the
sum of:
$4,040.00 per month for payments due March 1, 1999 to February
29, 2000;
$4,540 per month for payments due March 1, 2000 to February
28, 2001; and
$4,665 per month for payments due March 1, 2001 to February
28, 2002.
2.2 ADDITIONAL PAYMENTS: From October 15, 1998, to February 28, 1999,
(the delay period) in consideration for the present execution of the Agreement,
the Lessee agrees to pay to Lessor half of:
(a) an amount equal to all taxes relating to the Premises attributable
to the delay period;
(b) an amount equal to all insurance relating to the Premises deemed
reasonable by Lessor attributable to the delay period;
(c) an amount equal to all utility costs related to Premises during the
delay period; and
(d) an amount equal to interest incurred by Lessor on Lessor's existing
mortgage of the Premises attributable to the delay period. Payments shall be
made to Lessor within ten (10) days following Lessor's presentation of the above
amounts to Lessee.
3. ASSIGNMENT AND SUBLEASE: This lease may only be assigned,
transferred or sublet upon the express written consent of Lessor, which consent
may not be unreasonably withheld.
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4. IMPROVEMENTS, ALTERATIONS, MAINTENANCE AND REPAIRS:
4.1 DUTIES OF LESSOR: Lessor shall maintain and repair, as reasonably
needed, the roof and structural components of the exterior walls of the
Premises. Lessor shall not be responsible for any other maintenance, repairs or
alterations to the leased Premises or any improvements situated or constructed
thereon.
4.2 DUTIES OF LESSEE: Lessee shall be responsible for all other
building maintenance and repairs, including, but not limited to, plumbing,
heating, ventilation, and air-conditioning. Lessee shall also maintain and
repair as needed, the entirety of the Premises including all landscaping and
parking lot area.
4.3 IMPROVEMENTS: If Lessee desires to construct any improvements upon
the Premises, Lessee shall first obtain Lessor's consent, which consent will not
be unreasonably withheld. Upon the termination of the lease portion of the
Agreement, all such improvements, except for trade fixtures, portable buildings,
signage, lights and poles shall, at the option of the Lessor, become the
property of the Lessor, but shall be included in the purchase of the Premises by
the Lessee, as set forth in this Agreement.
5. USE OF PREMISES: Following commencement of the Term of the lease,
Lessee:
(a) may take possession and use the Premises for any lawful purpose;
and
(b) may erect and display its normal and customary signs as long as any
such signs comply with all applicable laws related thereto.
6. UTILITIES: All utilities shall be paid by Lessee.
7. TAXES: Lessee shall pay all real property taxes levied and assessed
against the Premises and in addition, Lessee shall pay all taxes on any
improvements situated, constructed and/or affixed upon the leased Premises and
any additions or alterations thereto, promptly as the same become due.
Lessor shall, at the expense of Lessee, make all reasonable efforts to
appeal the tax assessed value of the Premises in order to reduce the assessed
value to $375,000. The outcome of said effort by Lessor shall not remove or
relieve any duty of the Lessee herein contained. If, as a result of Lessor's
actions under this Section, the property tax assessment is reduced for a period
of time in which the Lessee has paid any portion of the higher assessed amount,
the Lessee shall be entitled to an offset for the difference, against any amount
then owing, or to be owed under this Agreement, to Lessor.
In addition, if an assessment for a public improvement is made against
the Premises, Lessor may bond the assessment or cause it to be paid in
installments, for the longest period of time permitted by the governing
authority, and Lessee shall pay such installment during the term of the lease as
if they were part of the real property taxes. Lessor may also pay any such
assessment in full, it being understood and agreed that if Lessor elects to pay
such assessment(s) in full, Lessee shall still be responsible for paying the
pro-rated annualized assessment payment that would have been due had Lessor not
chosen to pay said assessment in full.
Lessee's share of real property taxes and assessments for the years in
which this lease commences or terminates shall be prorated based upon the
portion of the tax year the lease is in effect.
8. LESSEE'S COVENANTS: Lessee covenants and agrees with Lessor as
follows:
(a) That it will, at its sole cost and expense, keep and maintain the
said leased Premises in a clean and sanitary condition.
(b) That it will keep the Premises free and clear of all liens and
encumbrances of every kind and nature.
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(c) That it will conform to all applicable laws and regulations of any
public authority affecting the Premises and the use, and correct at Lessee's own
expense any failure of compliance created through Lessee's fault or by reason of
Lessee's use and occupancy.
(d) That it will indemnify and save Lessor harmless of all liability of
every kind and nature occasioned by any act or omission on its part, or on the
part of its agents, servants, customers, subtenants and licensees in connection
with the use and occupancy of the leased Premises.
(e) That it will accept the Premises in its "as is" condition upon
occupancy.
(f) That it will refrain from any activity that would make it
impossible to insure the Premises against casualty.
(g) That it will refrain from any use that would be reasonably
offensive to owners or users of neighboring premises or that would tend to
create a nuisance or damage the reputation of the premises.
(h) That it will refrain from loading the electrical system or floors
beyond the point considered safe by a competent engineer or architect selected
by Lessor.
(i) That it will refrain from making any marks on or attaching any
sign, insignia, antenna, aerial, or other device to the exterior or interior
walls, windows, or roof of the Premises without the written consent of Lessor,
which consent will not be unreasonably withheld, except such signage as is
allowed in Section 5(b) of this Agreement.
(j) That it will not cause or permit any Hazardous Substance to be
spilled, leaked, disposed of, or otherwise released on or under the Premises.
Lessee may store such Hazardous Substances on the Premises only in quantities
necessary to satisfy Lessee's reasonably anticipated needs. Lessee shall comply
with all Environmental Laws and orders of any governmental authorities having
jurisdiction under any environmental law and shall obtain, keep in effect and
comply with all governmental permits and authorizations required by
environmental laws with respect to such Premises or Lessee's operations. Upon
the expiration or termination of this lease, Lessee shall remove all Hazardous
Substances from the Premises. The term "Environmental Law" shall mean any
federal, state, or local statute, regulation, or ordinance or any judicial or
other governmental order pertaining to the protection of health, safety or the
environment. The term "Hazardous Substance" shall mean any hazardous, toxic,
infectious or radioactive substance, waste, and material as defined or listed by
any Environmental Law and shall include, without limitation, petroleum oil and
its fractions.
(k) That it will keep the Premises in first-class repair, operating
condition, working order, and appearance.
9. DEFAULT OF LESSEE: If Lessee shall be in arrears in the payment of
rent or other required payment hereunder, or shall fail or neglect to perform
any of the other terms, covenants or conditions herein contained on its part to
be kept and performed, Lessor, after giving ten (10) days written notice
specifying the particular respects in which Lessee is in default, immediately or
at any time thereafter while such default or neglect continues, may exercise any
or all remedies provided by this Agreement.
9.1 REASONABLE TIME TO REPAIR: Lessee shall not be in default if,
within the above stated ten (10) day period, Lessee has commenced reasonable
repairs or compliance which cannot be reasonably completed within the ten (10)
day period and the default is entirely cured within a reasonable time.
9.2 REMEDIES OF LESSOR: The remedies set forth herein shall not be the
exclusive remedies in case of default, but Lessor shall have such other and
further rights and remedies as may be available, either in law or in equity.
Lessor's remedies shall include, but are in no way limited to:
(a) Lessor may lawfully terminate the tenancy and enter upon said
Premises and expel Lessee, and those claiming under Lessee, and remove Lessee's
effects without being guilty in any manner of trespass or conversion; and
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(b) Lessor may lawfully terminate the tenancy and at the sole
discretion of the Lessor:
(b)(1) declare the purchase and sale obligations of this
Agreement null and void, relieving Lessor of his obligation to sell to Lessee
and relieving Lessee of its obligation to purchase the Premises, or
(b)(2) accelerate the purchase and sale obligations of this
Agreement and deem the date for purchase for the purposes of Section 23(c), to
be the date of default.
(c) The foregoing remedies are not Lessor's exclusive remedies, but
Lessor shall have such other and different remedies as it might otherwise have
either at law or in equity.
10. DEFAULT BY LESSOR: In the event Lessor shall default in the terms
of this lease, Lessee shall have any and all rights and remedies as may be
available to it, either in law or in equity.
11. QUIET ENJOYMENT: Lessee, upon performing the covenants and
observing the terms and conditions of this Agreement, shall have the peaceful
enjoyment of the Premises without hindrance or disturbance by Lessor or any
person claiming through or under Lessor, or any other person having or claiming
paramount title except that Lessor shall have the further right to enter upon
the Premises at any time to determine Lessee's compliance with this lease.
12. HOLDOVER: If Lessee does not vacate the Premises at the time
required, Lessor shall have the option to treat Lessee as a tenant from month to
month, subject to all of the provisions of this Lease except the provision of
Term, or to eject Lessee from the Premises and recover damages caused by
wrongful holdover. Failure of Lessee to remove fixtures, furniture, furnishings,
or trade fixtures that Lessee is required to remove under this Agreement shall
constitute a failure to vacate to which this Section shall apply if the property
not removed will substantially interfere with occupancy of the Premises by
another tenant or with occupancy by Lessor for any purpose, including
preparation for a new tenant.
If a month-to-month tenancy results from a holdover by Lessee under
this Section 11, the tenancy shall be terminable at the end of any monthly
rental period on written notice from Lessor given not less than ten (10) days
prior to the termination date which shall be specified in the notice. Lessee
waives any notice that would otherwise be provided by law with respect to a
month-to-month tenancy.
13. EMINENT DOMAIN:
13.1 PARTIAL TAKING: If a portion of the Premises is condemned and
Section 13.2 does not apply, the lease shall continue on the following terms:
(a) Lessor shall be entitled to all of the proceeds of condemnation,
and Lessee shall have no claim against Lessor as a result of the condemnation.
(b) Lessor shall proceed as soon as reasonably possible to make such
repairs and alterations to the Premises as are necessary to restore the
remaining Premises to a condition as comparable as reasonably practicable to
that existing at the time of the condemnation.
(c) After the date on which title vests in the condemning authority or
an earlier date on which alterations or repairs are commenced by Lessor to
restore the balance of the Premises in anticipation of taking, the rent shall be
reduced in proportion to the reduction in value of the Premises as an economic
unit on account of the partial taking.
(d) If a portion of Lessor's property not included in the Premises is
taken, and severance damages are awarded on account of the Premises, or an award
is made for detriment to the Premises as a result of activity by a public body
not involving a physical taking of any portion of the Premises, this shall be
regarded as a partial
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condemnation to which Sections 13.1 and 13.3 apply, and the rent shall be
reduced to the extent of reduction in rental value of the Premises as though a
portion had been physically taken.
13.2 TOTAL TAKING: If a condemning authority takes all of the Premises
or a portion sufficient to render the remaining premises reasonably unsuitable
for the use that Lessee was then making of the Premises, the lease shall
terminate and Lessee shall purchase the Premises pursuant to this Agreement as
of the date the title vests in the condemning authorities. Lessor shall be
entitled to all of the proceeds of condemnation, and Lessee shall have no claim
against Lessor as a result of the condemnation.
13.3 SALE IN LIEU OF CONDEMNATION: Sale of all or part of the Premises
to a purchaser with the power of eminent domain in the face of a threat or
probability of the exercise of the power shall be treated for the purposes of
this Section 13 as a taking by condemnation. Any sale as contemplated in this
Section 13.3 shall require the consent of Lessee, such consent shall not be
unreasonably withheld.
14. NONWAIVER: Waiver by either party of strict performance of any
provision of this lease shall not be a waiver of or prejudice the party's right
to require strict performance of the same provision in the future or of any
other provision.
15. INSURANCE:
15.1 LIABILITY INSURANCE: Before going into possession of the Premises,
Lessee shall procure and thereafter during the term of the lease shall continue
to carry commercial general liability coverage in an amount of not less than
$1,000,000 minimum combined single limit. Such insurance shall cover all risks
arising directly or indirectly out of Lessee's activities on or any condition of
the Premises whether or not related to an occurrence caused or contributed to by
Lessor's negligence. Such insurance shall name Lessor as an additional insured.
Certificates evidencing such insurance and bearing endorsements requiring ten
(10) days written notice to Lessor prior to any change or cancellation shall be
furnished to Lessor prior to Lessee's occupancy of the Premises.
15.2 FIRE INSURANCE: Lessee shall keep the Premises insured at Lessee's
expense against fire and other risks covered by a standard fire insurance policy
to the full insurable value thereof with an endorsement for extended coverage
naming Lessor as loss payee. Neither party shall be liable to the other (or to
the other's successors or assigns) for any loss or damage caused by fire or any
of the risks enumerated in a standard fire insurance policy with an extended
coverage endorsement, and in the event of insured loss, neither party's
insurance company shall have a subrogated claim against the other. This waiver
shall be valid only if the insurance policy in question expressly permits waiver
of subrogation or if the insurance company agrees in writing that such a waiver
will not affect coverage under the policies. Each party agrees to use best
efforts to obtain such an agreement from its insurer if the policy does not
expressly permit a waiver of subrogation.
16. LIENS: Lessee agrees that at all times during the term of this
lease it will pay as due all claims for work done on and for services rendered
or material furnished to the Premises, and shall keep the Premises free from any
liens. If Lessee fails to pay any such claims or to discharge any lien, Lessor
may do so and collect the cost as additional rent. Any amount so added shall
bear interest at the rate of 9% per annum from the date expended by Lessor and
shall be payable on demand. Such action by Lessor shall not constitute a waiver
of any right or remedy which Lessor may have on account of Lessee's default.
Lessee may withhold payment of any claim in connection with a good-faith dispute
over the obligation to pay, as long as Lessor's property interests are not
jeopardized. If a lien is filed as a result of nonpayment, Lessee shall, within
ten (10) days after knowledge of the filing, secure the discharge of the lien or
deposit with Lessor cash or sufficient corporate surety bond or other surety
satisfactory to Lessor in an amount sufficient to discharge the lien plus any
costs, attorney fees, and other charges that could accrue as a result of a
foreclosure or sale under the lien.
17. CONDITIONS PRECEDENT: This lease is conditioned upon the following
terms:
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(a) Lessee receiving information affecting the Premises;
(b) Lessee's review and approval of the status of the title to the
Premises, including restrictive covenants;
(c) Lessee's inspection and approval of the Premises;
(d) State of Oregon and FDIC approval for Lessee to open a branch bank
at the Premises;
Within thirty (30) days of the execution of this Agreement, (within
sixty (60) days for Section 17(d)) Lessee shall notify Lessor of the
satisfaction, waiver, or failure of the above conditions. Lessee shall make all
reasonable efforts to satisfy the above conditions and failure to do so shall be
deemed a waiver of said condition. Nothing in this Section shall relieve or
reduce Lessee's duties pursuant to Section 2.2 of this Agreement.
18. MISCELLANEOUS:
18.1 SUCCESSORS AND ASSIGNS: All of the covenants, agreements,
conditions and terms contained in this Agreement shall be binding upon and inure
to the benefit of the heirs, executors, administrators, successors and assigns
respectively of Lessor and Lessee. This paragraph shall not be construed as a
consent by Lessor to the assignment of this lease, or any interest in the leased
Premises.
18.2 GOVERNING LAW: The parties agree that this Agreement shall be
construed and governed in accordance with the laws of the State of Oregon.
18.3 SEVERABILITY: In case any one or more of the provisions contained
in this Agreement for any reason is held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
19. ENTIRE AGREEMENT: This Agreement contains the entire Agreement
between the parties and, except as otherwise provided, can be changed, modified,
amended, or terminated only by an instrument in writing executed by the parties.
It is mutually acknowledged and agreed by Lessor and Lessee that there are no
verbal agreements, representations, warranties, or other understandings
affecting this Agreement.
20. TIME OF ESSENCE: Time is of the essence of this Agreement and a
failure to enforce any of the terms and provisions hereof by either party shall
not constitute a waiver of the right to insist upon strict compliance with such
terms and conditions in the future.
21. LITIGATION EXPENSE: In the event of litigation between the parties
concerning any of the terms or provisions of this lease and purchase or any of
the rights or remedies of the parties hereunder, the prevailing party in such
litigation shall be entitled to recover from the other party such amount as the
court may determine reasonable as attorneys' fees in such suit or action at
trial or any appeal therefrom.
22. NOTICES: Any notice required or given hereunder shall be sufficient
if delivered either personally to the parties or sent by United States mail to:
Lessor at: Lessee at:
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or at such other address as the parties may hereafter specify in writing.
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23. TERMS OF PURCHASE: Lessee shall purchase the real property
described on Exhibit "A" attached hereto, under the following terms and
conditions:
(a) Lessee shall be obligated to purchase all of the property described
in Exhibit "A", and Lessor shall be obligated to sell the property to Lessee,
for the price and in the manner herein set forth.
(b) Lessee shall purchase the Premises no earlier than March 1, 2001
and no later than March 1, 2002.
(c) Lessee shall provide written notification to Lessor of the date,
subject to the above terms, it chooses to purchase the Premises.
(d) The purchase price for the real property described in Exhibit "A"
shall be the sum of:
(d)(1) $550,000 payable in U.S. currency at the time of
closing, less
(d)(2) any amount paid to Lessor pursuant to Section 13
(Eminent Domain) of this Agreement, with any negative sum remitted to Lessee.
(e) Upon Lessee's notification to Lessor, the transaction shall close
at ▇▇▇▇▇▇▇ Title Co. within sixty (60) days or at such other time as may be
mutually agreed upon by the parties in writing. Both parties further agree that:
(e)(1) The real property and improvements, if any, will be
sold "AS IS" and free and clear of all liens and encumbrances which affect
marketability of title, except for easements, declarations, covenants, and
restrictions of record as of the effective date of this Agreement.
(e)(2) All lease payments shall be prorated between the
parties as of the closing date.
(e)(3) Lessor will, within fifteen (15) days of Lessee's
notice of purchase, provide Lessee with a preliminary owner's title report and
at closing shall provide Lessee with a purchaser's policy of title insurance in
the amount of $550,000.00.
(e)(4) The closing escrow charges shall be shared equally by
the parties. All recording fees shall be paid by Lessee, however, Lessor shall
pay the basic rate portion of title insurance.
(e)(5) This sale and purchase agreement may only be assigned
or transferred by Lessee upon Lessor giving his consent in writing, which
consent may not be unreasonably withheld. Lessor may transfer or assign its
rights herein.
(e)(6) At closing, Lessee shall deliver to Lessor the total
purchase price. Also at closing, Lessor shall deliver to Lessee its standard
warranty deed to the Premises, as described in Exhibit "A".
(e)(7) Parties agree to execute such escrow instructions
reasonably required to complete this transaction.
(f) Lessee agrees to reasonably assist Lessor, at no expense or
liability to Lessee, in a 1031 exchange or similar "like-kind" transaction if so
desired by Lessor.
THIS INSTRUMENT WILL NOT ALLOW THE USE OF THE REAL PROPERTY DESCRIBED
IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. THE
PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION
DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND
REGULATIONS, WHICH, IN
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FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE
AND WHICH LIMIT LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS
30.930 IN ALL ZONES. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, PERSON
ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR
COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE
PROTECTION FOR STRUCTURES.
IN WITNESS WHEREOF, the parties hereto have executed this agreement the
day and year first above written.
LESSOR LESSEE:
BANK OF SOUTHERN OREGON
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- ------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇, President/CE0
STATE OF OREGON )
) ss
County of ▇▇▇▇▇▇▇ )
On this 30 day of November, 1998, personally appeared before me ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, and acknowledged said instrument to be his voluntary act and deed.
/s/ Notary
------------------------------
Notary Public for Oregon
STATE OF OREGON )
) ss
County of ▇▇▇▇▇▇▇ )
On this 3rd day of December, 1998, personally appeared before me ▇▇▇▇
▇. ▇▇▇▇▇▇, President and CEO of Bank of Southern Oregon, and acknowledged said
instrument to be his voluntary act and deed.
/s/ Notary
------------------------------
Notary Public for Oregon
My Commission Expires:
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EXHIBIT A
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Legal Description
The land referred to herein is situated in the Town of Central Point, County of
▇▇▇▇▇▇▇, State of Oregon, and is more particularly described as follows:
▇▇▇▇ ▇, ▇, ▇, ▇, ▇, ▇, ▇ and 8, Block 2 of the Original Town (now City)
of Central Point, ▇▇▇▇▇▇▇ County, Oregon.
