Exhibit 10.35
SUBLEASE AGREEMENT
This Sublease Agreement (this "Sublease") is made May 14, 1999, between
Xxxxxxxx Properties LLC ("Sublessor") and Lithia Real Estate, Inc. (Sublessee").
RECITALS
A. On February 3, 1978, J. Xxxxxxx Xxxxxx, as tenant and successor in
interest to Xxxx Xxxxxx, Inc., entered into that certain lease (the "Xxxxx
Lease") with Xxxxx X. Xxxxx and Xxxxxx X. Xxxxx, as landlords (the "Xxxxx
Lessors"), for the demise of certain premises more particularly described in the
Xxxxx Lease and more commonly referred to as 00 Xxxx Xxxxxxxx. Xxxxxxxxx,
Xxxxxxxx (the "Xxxxx Premises"). On March 23, 1994, Monaco Finance, Inc., as
tenant, entered into that certain lease (the "Xxxxxx Lease") with J. Xxxxxxx
Xxxxxx, as landlord (the "Xxxxxx Lessor ), for the demise certain premises more
particularly described in the Xxxxxx Lease and including both the Xxxxx Premises
and certain premises more commonly referred to as 0000 Xxxxx Xxxxxxxx,
Xxxxxxxxx, Xxxxxxxx. Xx February 29, 1996, Xxxxxxxx Properties LLC, as tenant
and as successor in interest to W. Xxxxxxx Xxxxxxxx, entered into that certain
lease (the "Prime Lease") with Monaco Finance, Inc. (the "Prime Lessor") for the
demise of certain premises more particularly described in the Prime Lease and
including both the property commonly referred to as 00 Xxxx Xxxxxxxx, Xxxxxxxxx,
Xxxxxxxx and the property commonly referred to as 0000 Xxxxx Xxxxxxxx,
Xxxxxxxxx, Xxxxxxxx (the "Premises").
B. Pursuant to the terms of that certain lease (the "Xxxxx Auto Lease")
dated January 29, 1999, by and between Xxxxxxxx Properties LLC, as landlord and
successor in interest to W. Xxxxxxx Xxxxxxxx, and Xxxxx Auto Leasing, Inc., as
tenant, Xxxxx Auto Leasing, Inc. leased a portion of the Premises more
particularly described in the Xxxxx Auto Lease (the "Xxxxx Auto Premises").
C. Sublessor desires to sublease to Sublessee and Sublessee desires to
sublease form Sublessor certain premises more particularly described below.
AGREEMENT
1. Sublease. Sublessor subleases to Sublessee, and Sublessee accepts and
agrees to sublease, all of Sublessor's rights, title and interest as tenant
(except as otherwise may be excluded below) in and to the Prime Lease for the
Sublease Premises (defined below). The Prime Lease is incorporated herein, and
except as expressly excluded or limited by this Sublease, the provisions of the
Prime Lease will be the provisions of this Sublease and will govern the
occupancy of the Sublease Premises by Sublessee, the rights, privileges, duties
and obligations of Sublessee and the rights and privileges of Sublessor. For the
purposes of this Sublease, the following defined terms of the Prime Lease will
have the following meanings: "Tenant" means the Sublessee; "Landlord" means the
Prime Lessor with respect to obligations and duties of the landlord, and both
Prime Lessor and the Sublessor with respect to the rights and privileges of the
landlord; "Rent: means the
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rent set forth in Paragraph 4 below and all other sums to be paid by the tenant
under the Prime Lease (other than minimum base rental payable under Section 6 of
the Prime Lease) or by Sublessee under this Sublease; and, "Term" means the Term
set forth in this Sublease. However, Sublessee acknowledges that Sublessor is
not agreeing to perform any of the obligations or covenants of Prime Lessor, as
both parties acknowledge that these are retained by Prime Lessor and will
continue to be performed by Prime Lessor.
2. Rights and Duties. Sublessee agrees to perform and observe each and
every covenant, duty and obligation of the Sublessor, as tenant, under the Prime
Lease with respect to the Sublease Premises (except as may be expressly excluded
or limited by this Sublease). Sublessee acknowledges that the Sublessor will be
deemed to be substituted for the Prime Lessor under the Lease with respect to
the rights of the Prime Lessor, and the Sublessor will be entitled to exercise
all of the rights and privileges of the Prime Lessor as set forth in the Prime
Lease (except as may be modified by this Sublease). By way of illustration and
not by way of limitation, the Sublessor will be entitled to exercise any remedy
provided to the Prime Lessor under the Prime Lease in the event the Sublessee
breaches any condition, provision or covenant of this Sublease or the Prime
Lease. All consents under the Prime Lease required to be obtained by Sublessee
as tenant under the Prime Lease must be first obtained from the Prime Lessor and
the Sublessor, and all standards of and conditions to obtaining such consent
form Prime Lessor will also apply to the consent to be obtained from Sublessor.
All covenants of the tenant under the Prime Lease will be deemed to run for the
benefit of both Prime Lessor and Sublessor as if expressly set forth therein for
all purposes under this Sublease and the Prime Lease.
3. Sublease Premises. The premises subleased to Sublessee consists of the
Premises, however, excluding therefrom the Xxxxx Auto Premises, and is more
commonly identified as 0000 Xxxxx Xxxxxxxx, Xxxxxxxxx, Xxxxxxxx and 00 Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx (the "Sublease Premises").
4. Term. The sublease term commences on May 14, 1999, and expires one day
before the expiration of the Prime Lease. Sublessor hereby grants Sublessee the
right to exercise any renewal options expressly set forth in the Prime Lease,
and Sublessor hereby appoints Sublessee as its attorney-in-fact for the sole
purpose of giving any exercise notice(s) under the Prime Lease on behalf of
Sublessor in order to exercise any renewal option(s) thereunder.
5. Rent. In consideration of this Sublease, Sublessee will pay to
Sublessor (a) base rent in the amount of $150,000.00 per year, payable in twelve
equal monthly installments of $12,500.00, and (b) additional rent equal to any
other amounts to be paid by the tenant under the Prime Lease or to be paid by
Sublessee under this Sublease. Payments will be paid in advance without notice,
set off or deduction on the first day of each month during the term. The monthly
installment of rent for any partial month will be prorated by the number of days
in such month.
6. Use. The Sublease Premises may be used only for the operation of an
automobile dealership. servicing facilities and related uses. and for no other
purpose without Sublessor's consent, which may be withheld in Sublessor's sole
and absolute discretion.
7. Notices. Any notice or demand from Sublessor to Sublessee or from
Sublessee to
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Sublessor will be in writing and will be deemed duly served if mailed by
registered or certified mail, return receipt requested, or by overnight courier,
addressed to the address of each party set forth herein, or to such other
address as either party will have last designated by notice in writing to the
other parry. The foregoing notwithstanding, Sublessor may give a notice to pay
or quit pursuant to state law and any notices under the forcible entry and
detainer laws by posting the same on the Sublease Premises in accordance with
state law, with a courtesy copy thereof sent to Sublessee in accordance with
this paragraph, provided that the failure of Sublessee to receive such courtesy
copy so sent by Sublessor will not affect Sublessor's eviction process.
Sublessee's Address for notices. The Sublease Premises
With a courtesy copy to Lithia Real Estate, Inc.
000 X. Xxxxxxx Xx.
Xxxxxxx, Xxxxxx 00000
Sublessor's Address for notices: W. Xxxxxxx Xxxxxxxx
Xxxxxxxx Properties LLC
0000 X. Xxxxxx
Xxxxxx, Xxxxxxxx 00000
8. Prime Lease. This Sublease is subject and subordinate to the Prime
Lease. It is also subject and subordinate to any agreement to which the Prime
Lease is subject and subordinate Sublessee represents and warrants to Sublessor
that it has read the Prime Lease.
9. Prime Lessor's Duties. If the Prime Lessor fails to perform under the
Prime Lease. Sublessee must send Sublessor written notice detailing the default
and non-performance by Prime Lessor. Sublessor will then promptly notify the
Prime Lessor and demand that the Prime Lease agreements be carried out by the
Prime Lessor, and Sublessor agrees to use commercially reasonable efforts to and
agrees to cooperate with Sublessee to enforce the Prime Lease at the sole cost
and expense of Sublessee, subject to any reimbursement to Sublessee from the
Prime Lessor as may be provided in the Prime Lease. Notwithstanding the
foregoing. nothing in this Sublease grants Sublessee the right to (a) declare a
default of Prime Lessor under the Prime Lease. (b) terminate the Prime Lease, or
(c) modify the Prime Lease or waive any rights of Sublessor thereunder.
10. Assignment or Subletting. Any assignment or subletting will be subject
to the terms and conditions of the Prime Lease, and if no consent is required by
Prime Lessor under the terms of the Prime Lease, then the following provision
will control the agreement between Sublessor and Sublessee regarding any
assignment of this Sublease or subletting of the Sublease Premises:
Sublessee may assign this Sublease or sublet all or any portion of
the Sublease Premises to any entity that is owned at least seventy-five
percent (75%) by Lithia Motors, Inc. without the prior written consent of,
but with prior notice to, Sublessor. Sublessee may so assign or sublet to
any other party only with the prior written consent of Sublessor. which
consent shall not be unreasonably withheld or delayed if the proposed
assignment or subletting is in connection with
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the sale of the business located on the Sublease Premises, or otherwise
may be withheld in Sublessor's sole and absolute discretion in all other
circumstances, and provided further that: (1) such consent to any
assignment or subletting shall not relieve Sublessee from its obligations
as primary obligor (and not as surety or guarantor) for the payment of all
rental due hereunder, and for the full and faithful observance and
performance of the covenants, terms and conditions herein contained; (2)
the proposed subtenant or assignee is engaged in a business and the
Sublease Premises will be used in a manner which is in keeping with the
use provisions contained herein: (3) the proposed subtenant or assignee is
a reputable party of reasonable financial worth in light of the
responsibilities involved, and Sublessee shall have provided Sublessor
with reasonable proof thereof: and (4) Sublessee is not in default
hereunder at the time it makes its request. Any dissolution. merger.
consolidation or other reorganization of Sublessee, or the sale or
transfer of a controlling percentage of the corporate stock of Sublessee.
shall constitute and be deemed an assignment for purposes of this
Paragraph. Consent by Sublessor to an assignment or subletting shall not
be construed to relieve Sublessee from obtaining the consent of Sublessor
to any' further assignment or subletting, nor shall the collection of rent
by Sublessor from any assignee, subtenant or other occupant be deemed a
waiver of this covenant or an acceptance of the assignee or subtenant as
Sublessee or a release of Sublessee from the covenants in this Sublease on
Sublessee's part to be performed Sublessee and any assignee or subtenant
shall be jointly and severally liable for the obligations of this
Sublease. Sublessee shall not permit any part of the Sublease Premises to
be used or occupied by any persons other than Sublessee and the employees
of Sublessee, nor shall Sublessee permit any part of the Sublease Premises
to be used or occupied by any licensee or concessionaire, or permit any
persons to be upon the Sublease Premises other than Sublessee. and
employees, customers and others having lawful business with Sublessee.
11. Amendments to Prime Lease. Sublessor agrees that it will not amend the
Prime Lease in any- manner without first obtaining the prior written consent of
Sublessee, which will not be unreasonably withheld if such amendment does not
materially adversely affect Sublessee.
12. No Authority. Except as otherwise expressly set forth herein,
Sublessee has no authority to contact or make any agreement with the Prime
Lessor regarding the Sublease Premises or the Prime Lease. Sublessee will
immediately send to Sublessor a copy of any written notice from Sublessee to
Prime Lessor.
13. Changes. This Sublease can be modified only by an agreement in writing
signed by .the Sublessor and the Sublessee
14. Counterparts. This Sublease may be signed in two or more counterparts,
all of which when taken together will constitute one original agreement.
15. Additional Provisions.
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A. Sublessor covenants that it holds a valid leasehold estate for
the Sublease Premises and has the full right to make this Sublease. Sublessor
further warrants to Sublessee that the Prime Lease is in full force and effect,
that Sublessor is not in default in the payment of rent under the Prime Lease
and has received no written notice from Prime Lessor of any default by Sublessor
under the Prime Lease, and that there have been no amendments thereto other than
have been provided to Sublessee.
B. Sublessor hereby covenants that it will pay to Prime Lessor, as
and when due, all rents and other amounts required to be paid pursuant to the
terms of the Prime Lease, and Sublessor will not do any act, nor fail to do any
act, which would cause the Prime Lease to become in default. Sublessor hereby
agrees to protect. defend, and hold harmless Sublessee from and against any
loss, liability, or claim arising out of Sublessor's breach of the Prime Lease.
except for any such breach arising out of Sublessee's failure to perform its
obligations hereunder. Sublessee hereby covenants that it will not do any act,
nor fail to do any act, which would cause the Prime Lease to become in default
Sublessee hereby agrees to protect. defend, and hold harmless Sublessor from and
against any loss, liability, or claim arising out of Sublessee's breach of the
Prime Lease, except for any such breach arising out of Sublessor's failure to
perform its obligations hereunder
C. Sublessor agrees to immediately forward to Sublessee a copy of
any written notices received by Sublessor from Prime Lessor. In the event that
Sublessor fails to make any payments when due under the Prime Lease, or is
otherwise in default thereunder. Sublessee may. but is not obligated to. make
such payments on behalf of Sublessor, or take such other action as may be
necessary, in Sublessee's estimation to cure such default, or to prevent the
Prime Lease from being terminated. All amounts paid by' Sublessee to Prime
Lessor to cure Sublessor's default and all costs of taking such actions on
behalf of Sublessor. together with any interest or penalty required to be paid
in connection therewith, shall be payable on demand by Sublessor to Sublessee.
and if not so paid by' Sublessor. may be applied by' Sublessee to reduce
subsequent rent payments owed to Sublessor under this Sublease Notwithstanding
the foregoing. the covenants of Sublessor and Sublessee are deemed independent
covenants of the parties.
16. Condition Precedent. This Sublease, if consented to by Prime Lessor
and Xxxxxx Lessor in writing, will be effective as of May 14, 1999. If Prime
Lessor and Xxxxxx Lessor do not give their consent to this Sublease on or before
August 12, 1999, this Sublease will be ineffective and void.
SUBLESSEE SUBLESSOR:
LITHIA REAL ESTATE, INC. XXXXXXXX PROPERTIES LLC
By: /s/ By: /s/
-------------------------------- -------------------------------------
Its: Vice President Its: Member
Acquisitions
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GUARANTY
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in consideration for, and as an inducement to
Sublessor to make the foregoing Sublease with Sublessee, the undersigned
absolutely and unconditionally guarantees, to Sublessor and its successors, the
full payment and performance and observation of all of the terms, covenants,
conditions, provisions and agreements therein provided to be performed or
observed by Sublessee, without requiring any notice of nonpayment,
non-performance or non-observance, or proof, or notice, or demand, all of which
the undersigned expressly waives. The undersigned expressly agrees that the
validity of this guaranty and the obligations of the undersigned as guarantor
hereunder will in no way be terminated, affected or impaired by reason of the
assertion by Sublessor against Sublessee of any of the rights or remedies
reserved to Sublessor pursuant to the provisions of the Sublease. Sublessor may
grant extensions of time and other indulgences and may modify, amend and waive
any of the terms, covenants, conditions, provisions or agreements of the
Sublease, and discharge or release any party or parties to the Sublease, all
without notice to the undersigned and without in any way impairing, releasing or
affecting the liability or obligation of the undersigned. The undersigned agrees
that Sublessor may proceed directly against the undersigned without taking any
action under the Sublease and without exhausting Sublessor's remedies against
Sublessee; and no discharge of Sublessee in bankruptcy or in any other
insolvency proceedings will in any way or to any extent discharge or release the
undersigned from y liability or obligation under this guaranty. The undersigned
further covenants and agrees that this guaranty will remain and continue in full
force and effect as to any renewal, modification or extension of the Sublease,
and that no subletting and no assignment of the Sublease, with or without
Sublessor's consent, will release or discharge the undersigned. As a further
inducement to Sublessor to make the Sublease and in consideration of the
Sublease, Sublessor and the undersigned covenant and agree that in any action or
proceeding brought by either Sublessor or the undersigned against the other on
any matter whatsoever arising out of, under, or by virtue of any of the terms,
covenants, conditions, provisions or agreements of the Sublease or of this
guaranty, Sublessor and the undersigned will and do hereby waive trial by jury.
In the event Sublessor or the undersigned institute any action or proceeding
against the other relating to this guaranty, the unsuccessful party in such
action or proceeding shall reimburse the successful party for reasonably
attorneys' fees and other costs and expenses incurred therein by the successful
party. All rights under this guaranty will inure to the benefit of any
successors or assigns of Sublessor.
Dated as of the 14th day of May, 1999.
GUARANTOR:
LITHIA MOTORS, INC.
By: /s/
-------------------------------------
Vice President, Acquisitions
Address:
000 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxx 00000
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