GROUND LEASE
Date: February 12, 1999
Lessor: XXXXXXX XXXXX and XXXXXXX XXXXX, ("Lessor")
husband and wife, and XXXXX XXXXXXX
Lessee: SOUTH UMPQUA BANK ("Lessee")
a ____________________________
Lessor leases to Lessee, and Lessee leases from Lessor, the real
property (the "Premises") described on Exhibit A attached and incorporated in
this Lease by this reference consisting of approximately 21,669 gross square
feet. The foregoing demise is subject, however, to the encumbrances
described on Exhibit B attached and incorporated in this Lease by this
reference.
The Premises are leased for a term (the "Term") of twenty (20) years
(subject to two options to extend for ten (10) years each as set forth in
Section 23), commencing on the date of this Lease.
Lessor and Lessee agree as follows:
Section 1. Project Conditions
1.1 Lessee intends to construct a building (the "Building") and
related improvements on, under, and over the Premises. The Building and all
the related improvements are referred to in this Lease as the "Project." The
Project and any future alterations, additions, replacements, or modifications
to the Project during the Term of this Lease are referred to in this Lease as
the "Improvements." The preliminary plans and specifications for the Project
are attached as Exhibit C and incorporated in this Lease by this reference.
This Lease shall be conditioned on Lessee and Lessor determining that the
Project is feasible after completing a due-diligence investigation of the
condition of the Property and obtaining all necessary governmental approvals,
consultants reports, financing commitments, final plans and specifications,
design and construction contracts, and any other approvals, loan and lease
commitments, or contracts reasonably determined to be necessary by the Lessor
and the Lessee. Due diligence investigations shall be completed by not later
than March 1, 1999. If Lessee determines that the Project is not feasible,
Lessee shall notify Lessor in writing received by Lessor not later than 5:00
PM on March 2, 1999.
1.2 The foregoing condition shall be for the benefit of both parties
and must be satisfied or waived by both the parties on or before 5:00 p.m. on
March 1, 1999, or this Lease shall terminate and be of no further force and
effect. In such event neither party shall have any further liability under
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this Lease except for liability accrued before the date of termination.
Nevertheless, Lessee shall have the right to terminate this lease if Lessee
does not obtain consent from state and federal banking regulatory agencies
for this lease by March 15, 1999. Lessee shall use best efforts to obtain the
necessary consents. Lessee shall notify Lessor in writing immediately if it
elects to terminate because of the condition in this Section 1.2 and shall
provide to Lessor evidence that it did not, or in its reasonable judgment,
could not obtain consent.
1.3 Lessor shall cooperate with Lessee in all respects in connection
with satisfying the condition. Lessor shall execute such applications and
other instruments reasonably necessary to satisfying the condition, provided
that Lessor shall not be required to pay any application fees or incur any
other costs or liability in connection with satisfying the condition beyond
Lessor's fees for any professional advice Lessor desires. Lessor shall appear
as a witness in any legal or administrative proceedings to the extent
reasonably necessary to satisfy the condition.
1.4 Prior to or at the same time as Lessee engages in its
construction, Lessor shall construct the driveway on Lessor's adjacent land
to provide access from Commercial Street SE to the Premises. Lessor may, at
Lessor's election, undertake construction of all perimeter sidewalks, and
parking areas. In such event, Lessor shall notify Lessee and shall coordinate
all construction activities. All parking areas and sidewalks constructed by
Lessor using a competent contractor and at reasonable cost. All costs
incurred by Lessor in the construction on the Premises shall be paid for by
Lessee within thirty (30) days after billing therefore. The payment of the
construction costs shall be additional rent under this Lease.
Section 2. Construction of the Project
Lessee shall construct the Project (including all parking lots,
sidewalks, landscape areas, and buildings) in accordance with the final plans
and specifications approved by Lessor, which approval shall not be
unreasonably withheld or delayed. The work shall be performed in accordance
with all Legal Requirements and in a good and professional manner. For the
purposes of this Lease, the term Legal Requirements includes all present and
future laws, ordinances, orders, rules, regulations, and requirements of all
federal, state, and municipal governments, departments, commissions, boards,
and officers, foreseen or unforeseen, ordinary as well as extraordinary.
Lessor shall have the right to inspect the work at reasonable intervals
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subject to the supervision of Lessee and in a manner that will minimize any
interference with the work.
Lessee shall use its best efforts to submit plans for permits by not
later than April 1, 1999 and Lessee shall diligently pursue permits until
issuance. Lessee shall diligently pursue completion of construction from the
date of issuance of the permits and use best efforts to complete construction
not later than six (6) months following issuance of the permits.
Lessor agrees that it shall deliver the Premises with all existing
buildings demolished and debris removed. Lessor shall fill the existing
basement to native ground level or such other lower level as Lessee shall
direct and shall compact all fill in the basement area to a load bearing
capacity of 2,500 pounds per square foot. Lessor shall cooperate with Lessee
in the placement of the fill to allow construction contemplated by Lessee.
Lessor's financial obligation to meet the load bearing capacity shall not
exceed standard placement. Lessee shall pay any cost in excess of standard
placement to meet its particular needs.
Section 3. Minimum Rent
3.1 Lessee covenants and agrees to pay to Lessor, promptly when due,
without notice or demand and without deduction or setoff of any amount
whatsoever, $6,250 per month as Minimum Rent for the Premises from six months
following the date of this Lease. All Rent shall be paid in advance, on the
first day of each month during the Term. If the Minimum Rent is scheduled to
begin on a date other than the first day of a month, the first and last
month's rent shall be pro-rated. If the Minimum Rent payment is not received
by Lessor by the tenth day of any month, Lessee shall pay a late fee equal to
5% of the unpaid Minimum Rent. Lessor's imposition of the late fee shall not
affect Lessor's other remedies.
3.2 All amounts payable under Section 3.1 above, as well as all other
amounts payable by Lessee to Lessor under the terms of this Lease, shall be
paid at the office of Lessor set forth in Section 32, or at such other place
within the continental limits of the United States as Lessor shall from time
to time designate by notice to Lessee, in lawful money of the United States
which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment.
3.3 It is intended that the Minimum Rent provided for in this section
shall be an absolutely net return to Lessor throughout the Term, free of any
expense, charge, or other deduction whatsoever, including all claims,
demands, or setoffs of any nature whatsoever.
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3.4 Lessee shall also pay without notice, except as may be provided
in this Lease, and without abatement, deduction, or setoff, as additional
rent, all sums, impositions, costs, and other payments which Lessee in any of
the provisions of this Lease assumes or agrees to pay, and in the event of
any nonpayment, Lessor shall have (in addition to all other rights and
remedies) all the rights and remedies provided for in this Lease or by law in
the case of nonpayment of the Minimum Rent.
3.5 Lessee shall pay, as Additional Rent, its pro rata share of
Common Area Maintenance Charges imposed under any Reciprocal Easement
Agreement affecting the Premises.
3.6 The base rent provided in Section 3.1 shall be increased or
decreased in the month of January each year by a percentage equal to 100% of
the percentage change in the Consumer Price Index published by the United
States Bureau of Labor Statistics of the United States Department of Labor,
not to exceed 5% per year. Comparisons shall be made using the index entitled
U.S. City Average--All Items and Major Group Figures for All Urban Consumers
(1982-84 = 100), or the nearest comparable data on changes in the cost of
living if such index is no longer published. The change shall be determined
by comparison of the figure for January, 2000, with that of January of each
succeeding year. In no event, however, shall base rent be reduced below that
payable during the first year of this lease. The minimum rent shall be fixed
until January 1, 2001, when the first rent adjustment under this paragraph
shall occur.
Section 4. Use
4.1 Lessee shall use and occupy the premises continuously during the
Term for the operation of a first-class building and for such uses as are not
otherwise prohibited by the terms of this Lease or any Covenants, Conditions
or Restrictions now existing or hereafter made applicable to the Premises.
The Premises may not be used for any other purpose without the written
consent of Lessor, which consent shall not be unreasonably withheld. Lessee
shall maintain and operate the business during the entire Term with due
diligence and in a first-class manner. Neither Lessee nor the employees,
agents, concessionaires, licensees, or sublessees of Lessee shall solicit
business in the parking area or other common areas of the development, nor
shall Lessee distribute any handbills or other advertising matter on
automobiles parked in the parking area or in the other common areas. Lessor
shall have the right to approve any signs or displays Lessee may desire to
erect on or about the Premises that are visible from the exterior of the
Building. in order to ensure that Lessor may control the quality and
character of the presentation displayed by Lessee. Such approval may be
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withheld or revoked if Lessor reasonably and in good faith believes such
display or plan is unsatisfactory or inappropriate for the development.
4.2 Lessee shall not use or occupy, or permit or suffer all or any
part of the Premises or the Improvements to be used or occupied (1) for any
unlawful or illegal business, use, or purpose, (2) in any such manner to
constitute a nuisance of any kind, or (3) for any purpose or in any way in
violation of the certificate of occupancy, or of any Legal Requirements,
including but not limited to Legal Requirements respecting Hazardous
Substances, (4) for any business, use, or purpose deemed disreputable, or (5)
for any purpose that would violate any lease entered into, now or in the
future, between Landlord and a third party which allows for exclusive rights
to use property adjacent to or contiguous with the Premises for a particular
use, provided however that Tenant may always use the Premises for a bank or
general office use. The term Hazardous Substance means any hazardous, toxic,
or dangerous substance, waste, or material that is the subject of
environmental protection Legal Requirements, including but not limited to the
items listed in the United States Department of Transportation Hazardous
Materials Table (49 CFR s172.101) or designated as hazardous substances by
the United States Environmental Protection Agency (40 CFR pt 302) . Lessee
acknowledges that the term Legal Requirements includes but is not limited to
all environmental protection laws such as the Comprehensive Environmental
Response, Compensation and Liability Act (42 USC s6901 et seq.), the Federal
Water Pollution Control Act (33 USC s6901 et seq.), the Federal Water
Pollution Control Act (33 USC s1257 et seq.), and the Clean Air Act (42 USC
s2001 et seq.) . Any dispute between Lessor and Lessee arising under the
provisions of clause (4) of the preceding sentence shall be submitted to
arbitration as provided in Section 33 below.
4.3 Lessee shall observe and comply with all conditions and
requirements necessary to preserve and extend any and all rights, licenses,
permits (including but not limited to zoning variances, special exceptions,
and nonconforming uses), privileges, franchises, and concessions that now
apply to the Premises or that have been granted to or contracted for by
Lessor or Lessee in connection with any existing or presently contemplated
use of the Premises or the Improvements.
4.4 Lessee shall not suffer or permit the Premises or the
Improvements or any portion to be used by the public, as such, without
restriction or in such manner as might reasonably tend to impair Lessor's
title to the Premises or Improvements or any portion, or in such manner as
might reasonably make possible a claim or claims of adverse usage, adverse
possession, or prescription by the public, as such, or of implied dedication,
of the Premises or Improvements or any portion. Lessee acknowledges that
Lessor does not consent, expressly or by implication, to the unrestricted use
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or possession of the whole or any portion of the Premises or Improvements by
the public, as such.
4.5 Lessor and Lessee agree that if and when any governmental or any
other public authority requires the execution and delivery of any instrument
to evidence or consummate the dedication of any street adjoining the Premises
and/or if and when any governmental or any other public authority or any
public utility company requires the execution and delivery of any rights of
way, easements, and grants in, over, and along any such streets or in, over,
under, or through the Premises (except any that may run under the
Improvements) for the purpose of providing water, gas, steam, electricity,
telephone, storm and sanitary sewer, or any other necessary or desirable
service or facility for the benefit of the Premises or the Improvements, then
both parties, without cost to either party, will execute, acknowledge, and
deliver any such instrument or document as may be required.
Section 5. Liens
5.1 Lessee shall have no power to do any act or to make any contract
that may create or be the foundation for any lien, mortgage, or other
encumbrance on the reversion or other estate of Lessor or on any interest of
Lessor in the Premises.
5.2 Lessee shall not suffer or permit any liens to attach to the
interest of Lessee in all or any part the Premises by reason of any work,
labor, services, or materials done for, or supplied to, or claimed to have
been done for or supplied to, Lessee or anyone occupying or holding an
interest in all or any part of the Improvements on the Premises through or
under Lessee. If any such lien shall at any time be filed against the
Premises, Lessee shall cause the same to be discharged within the earlier of
the time allowed by any of Lessor's mortgages, or within 60 days after the
date of filing the same, by either payment, deposit, or bond.
5.3 Nothing in this Lease shall be deemed to be, or be construed in any
way as constituting, the consent or request of Lessor, express or implied, by
inference or otherwise, to any person, firm, or corporation for the
performance of any labor or the furnishing of any materials for any
construction, rebuilding, alteration, or repair of or to the Premises or to
the Improvements, or as giving Lessee any right, power, or authority to
contract for or permit the rendering of any services or the furnishing of any
materials that might in any way give rise to the right to file any lien
against Lessor's interest in the Premises or against Lessor's interest, if
any, in the Improvements. Lessee is not intended to be an agent of Lessor for
the construction of Improvements on the Premises. Lessor shall have the right
to post and keep posted at all reasonable times on the Premises and on the
Improvements any notices that Lessor shall be required to post for the
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protection of Lessor and of the Premises and of the Improvements from any such
lien. The foregoing shall not be construed to diminish or vitiate any rights
of Lessee in this Lease to construct, alter, or add to the Improvements.
Section 6. Taxes and Other Charges
6.1 Lessee shall pay and discharge, or cause to be paid and
discharged, before any fine, penalty, interest, or cost may be added for
nonpayment, all real estate taxes, personal property taxes, privilege taxes,
excise taxes, business and occupation taxes, gross sales charges, assessments
(including, but not limited to, assessments for public improvements or
benefits) , and all other governmental impositions and charges of every kind
and nature whatsoever, whether or not now customary or within the
contemplation of the parties and regardless of whether the same shall be
extraordinary or ordinary, general, or special, unforeseen or foreseen, or
similar or dissimilar to any of the foregoing which, at any time during the
Term, shall be or become due and payable and which:
6.1.1 Shall be levied, assessed, or imposed against the Premises or
the Improvements or any interest of Lessor or Lessee under this Lease; or
6.1.2 Shall be or become liens against the Premises or the
Improvements or any interest of Lessor or Lessee under this Lease; or
6.1.3 Shall be levied, assessed, or imposed on or against Lessor by
reason of any actual or asserted engagement by Lessor or Lessee, directly or
indirectly, in any business, occupation, or other activity in connection with
the Premises or the Improvements; or
6.1.4 Shall be levied, assessed, or imposed on or in connection with
the ownership, leasing, operation, management, maintenance, repair,
rebuilding, use, or occupancy of the Premises or the Improvements;
under or by virtue of any present or future Legal Requirement, it being the
intention of the parties that, insofar as the same may lawfully be done,
Lessor shall be free from all such expenses and all such real estate taxes,
personal property taxes, privilege taxes, excise taxes, business and
occupation taxes, gross sales taxes, occupational license taxes, water
charges, sewer charges, assessments, and all other governmental impositions
and charges of every kind and nature whatsoever (all of such taxes, water
charges, sewer charges, assessments, and other governmental impositions and
charges that Lessee is obligated to pay being collectively called "Tax" or
"Taxes")
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6.2 Nothing contained in this Lease requires Lessee to pay any
franchise, estate, inheritance, succession, capital levy, or transfer tax of
Lessor, or any income, excess profits, or revenue tax, or any other tax,
assessment, charge, or levy on the Rent payable by Lessee under this Lease;
provided, however, that if at any time during the Term the methods of
taxation prevailing at the commencement of the Term are altered so that in
lieu of any Tax under this section there is levied, assessed, or imposed (1)
a tax, assessment, levy, imposition, or charge, wholly or partially as a
capital license fee measured by the Rent payable by Lessee under this Lease,
then all such taxes, assessments, levies, impositions, or charges or the part
so measured or based, shall be deemed to be included within the term Tax for
the purposes of this Lease, to the extent that such Tax would be payable if
the Premises were the only property of Lessor subject to such Tax, and Lessee
shall pay and discharge the same as provided in respect to the payment of
Taxes.
6.3 If by law any Tax is payable, or may at the option of the
taxpayer be paid, in installments, Lessee may, whether or not interest shall
accrue on the unpaid balance, pay the same, and any accrued interest on any
unpaid balance, in installments as each installment becomes due and payable,
but in any event before any fine, penalty, interest, or cost may be added for
nonpayment of any installment or interest.
6.4 Any Tax relating to a fiscal period of the taxing authority, a
part of which is within the Term and a part of which is before or after the
Term, whether or not such Tax shall be assessed, levied, imposed, or become a
lien on the Premises or the Improvements, or shall become payable, during the
Term, shall be apportioned and adjusted between Lessor and Lessee so that
Lessee shall pay only the portions that correspond with the portion of such
fiscal periods included within the Term. With respect to any Tax for public
improvements or benefits that by law is payable, or at the option of the
taxpayer may be paid, in installments, Lessor shall pay the installments that
become due and payable after the Term expires, and Lessee shall pay all such
installments which become due and payable at any time during the Term.
6.5 Lessee covenants to furnish to Lessor, within 30 days after the
last date when any Tax must be paid by Lessee as provided in this section,
official receipts, if such receipts are then available to Lessee, of the
appropriate taxing authority, or other proof satisfactory to Lessor,
evidencing payment.
6.6 Lessee shall have the right at Lessee's expense to contest or
review the amount or validity of any Tax or to seek a reduction in the
assessed valuation on which any Tax is based, by appropriate legal
proceedings. Lessee may defer payment of such contested Tax on condition,
however, that if such contested Tax is not paid beforehand and if such legal
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proceedings shall not operate to prevent the enforcement of the collection of
the Tax so contested and shall not prevent the sale of the Premises or the
Improvements to satisfy the same, then before instituting any such
proceedings Lessee shall furnish to Lessor and to any Permitted Leasehold
Mortgagee (as defined below), if so required by the terms of its mortgage, a
surety company bond, cash deposit, or other security reasonably satisfactory
to Lessor and any such Permitted Leasehold Mortgagee, as security for the
payment of such Tax, in an amount sufficient to pay such Tax, together with
all interest and penalties in connection with such Tax and all charges that
might be assessed against the Premises or the Improvements in the legal
proceedings. Upon termination of such legal proceedings or at any time when
Lessor or any such Permitted Leasehold Mortgagee shall determine the security
to be insufficient for the purpose, Lessee shall forthwith, on demand,
deliver to Lessor or such Permitted Leasehold Mortgagee additional security
as is sufficient and necessary for the purpose, and on failure of Lessee so
to do, the security originally deposited shall be applied to the payment,
removal, and discharge of the Tax and the interest and penalties in
connection with the Tax and the charges and costs accruing in such legal
proceedings and the balance, if any, shall be paid to Lessee provided that
there is then no uncured default under this Lease. In the event that such
security shall be insufficient for this purpose, Lessee shall forthwith pay
over to Lessor or to any such Permitted Leasehold Mortgagee an amount
sufficient, together with the security originally deposited, to pay the same.
Lessee shall not be entitled to interest on any money deposited pursuant to
this section.
6.7 Any contest as to the validity or amount of any Tax, or assessed
valuation on which such Tax was computed or based, whether before or after
payment, may be made by Lessee in the name of Lessor or of Lessee, or both,
as Lessee shall determine, and Lessor agrees that it will, at Lessee's
expense, cooperate with Lessee in any such contest to such extent as Lessee
may reasonably request, it being understood, however, that Lessor shall not
be subject to any liability for the payment of any costs or expenses in
connection with any proceeding brought by Lessee, and Lessee covenants to
indemnify and save Lessor harmless from any such costs or expenses. Lessee
shall be entitled to any refund of any such Tax and penalties or interest
that have been paid by Lessee or by Lessor and reimbursed to Lessor by Lessee.
6.8 The parties shall use reasonable efforts to see that all
communications from the governmental authorities respecting Taxes are sent
directly by such authorities to Lessor. Lessor shall forward any and all
communications to Lessee within 48 hours of Lessor's receipt. The
certificate, advice, receipt, or xxxx of the appropriate official designated
by law to make or issue the same or to receive payment of any Tax or
nonpayment of such Tax shall be prima facie evidence that such Tax is due and
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unpaid or has been paid at the time of the making or issuance of such
certificate, advice, receipt, or xxxx.
Section 7. Insurance
7.1 Lessee, at Lessee's sole cost and expense, shall maintain, for
the mutual benefit of Lessee, Lessor, and any Permitted Leasehold Mortgagee,
casualty insurance covering loss or damage by fire, and other risks as may be
embraced within all-risk insurance insuring the full replacement cost
(excluding foundation and excavation cost) of the Improvements. If all-risk
insurance becomes unavailable, then Lessee shall insure the Improvements with
such coverage as is customary from time to time for comparable first-class
buildings in the Salem, Oregon metropolitan area. The amount of such
insurance policy shall be increased from time to time as the full replacement
cost of the Improvements increases. Any dispute regarding insurance matters
shall be arbitrated by the parties.
In the event of any casualty damage to the Improvements, Lessor may
make proof of loss if Lessee fails to do so within 15 days of the casualty
and after 10 days' written notice from Lessor of its intent to do so. Unless
the casualty occurs within five years of the Expiration Date of this Lease,
Lessee shall promptly repair or replace the damaged and destroyed
Improvements in substantially the form on the date of the casualty or in a
manner reasonably satisfactory to Lessor. Lessee may use the Proceeds to pay
for the cost of repair, restoration or replacement of the Improvements. Any
proceeds not used for the repair, restoration, or replacement of the
Improvements shall be distributed on the same basis as any condemnation
proceeds pursuant to the provisions of Section 16.2 below. If the damage
occurs within five (5) years of the Expiration Date of this Lease, and the
cost of repairing such damage is more than 50% of the assessed real market
value of the Improvements, then Lessee shall have the option of terminating
this Lease. If the damage occurs within one (1) year of the Expiration Date
of this Lease, and the cost of repairing such damage is more than 25% of the
assessed real market value of the Improvements, then either party shall have
the option of terminating this Lease. In the event the Lease is so terminated
within five (5) years of the Expiration Date, Lessee shall then, at the
election of Lessor, promptly remove all debris and restore the Premises to
the condition in existence at the time of the initial letting, including
compaction necessary to meet the criteria specified in this Lease. All
Proceeds in excess of the amount required to pay the remaining balance, if
any, on the Permitted Leasehold Mortgages and to remove all debris may be
retained by the Lessor. Any dispute regarding the distribution of Proceeds
shall be arbitrated.
7.2 Lessee, at its expense, shall maintain at all times during the
Term of this Lease public liability insurance in respect of the Premises and
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the conduct or operation of its business, with Lessor as additional insured,
with $2,000,000 minimum combined single-limit coverage, or its equivalent.
All casualty insurance policies shall include contractual liability,
severability of interest, and cross-liability endorsements. When Lessee
conducts demolition or excavation work, the exclusions now customarily
referred to as the X, C, and U exclusions shall be deleted from Lessee's
liability insurance. Lessee shall deliver to Lessor and any additional named
insured such fully paid-for policies or certificates of insurance, in a form
satisfactory to Lessor, issued by the insurance company or its authorized
agent, at least 10 days before the Commencement Date. Lessee shall procure
and pay for renewals of such insurance from time to time before the
expiration, and Lessee shall deliver to Lessor and any additional named
insured such renewal policy or certificate at least 30 days before the
expiration of any existing policy. All insurance policies shall contain
provisions whereby (1) losses shall be payable despite the negligence of any
person having an insurable interest in the Improvements; (2) the Proceeds
will be paid in accordance with the terms of this Lease; and (3) the policies
cannot be canceled unless Lessor and any additional named insured are given
at least 20 days' prior written notice of such cancellation or modification.
7.3 All insurance policies shall be written as primary policies and
shall not be contributing with or be in excess of the coverage that either
Lessor or Lessee may carry. All such insurance policies shall be issued in
the name of Lessee, with Lessor and any Permitted Leasehold Mortgagee being
included in the insurance policy definition of who is an additional insured,
shall contain a standard mortgagee's clause in form satisfactory to the
Permitted Leasehold Mortgagees, and shall be primary to any insurance
available to Lessor.
7.4 All policies of insurance shall be issued by good, responsible
companies, reasonably acceptable to Lessor and any Permitted Leasehold
Mortgagee and that are qualified to do business in the State of Oregon.
Executed copies of such policies of insurance shall be delivered to any
Permitted Leasehold Mortgagee and certificates shall be delivered to Lessor
within 30 days after the Building is completed and thereafter within 30 days
before the expiration of the term of each such policy. As often as any such
policy shall expire or terminate, renewal or additional policies shall be
procured and maintained by Lessee in like manner and to like extent. All
policies of insurance must contain a provision that the company writing the
policy will give Lessor and any Permitted Leasehold Mortgagee 30 days'
written notice in advance of any cancellation, substantial change of
coverage, or the effective date of any reduction in amount of insurance.
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7.5 The obligations of Lessee to carry the insurance provided for may
be brought within the coverage of a so-called blanket policy or policies of
insurance; provided, however:
7.5.1 That the coverage afforded will not be reduced or diminished by
reason of the use of such blanket policy of insurance;
7.5.2 That the requirements set forth are otherwise satisfied; and
7.5.3 That, as to all insurance, Lessor and any Permitted Leasehold
Mortgagee shall be named as additional insured.
7.6 Lessor may from time to time, but not more frequently than once
every three years, require that the amount of public liability insurance to
be maintained by Lessee under Section 7.2 be increased so that the amount
adequately protects Lessor's interest based on amounts of coverage required
of comparable tenants in comparable buildings.
Section 8. Lessor's Right to Perform Lessee's Covenants
8.1 If Lessee at any time fails to pay any Tax in accordance with the
provisions of this Lease or fails to make any other payment or perform any
other act on its part to be made or performed, then Lessor, after 10 days'
notice to Lessee (or without notice in case of an emergency) and without
waiving or releasing Lessee from any obligation of Lessee contained in this
Lease or from any default by Lessee and without waiving Lessor's right to
take such action as may be permissible under this Lease as a result of such
default, may (but shall be under no obligation to)
8.1.1 Pay any Tax payable by Lessee pursuant to the provisions of this
Lease; or
8.1.2 Make any other payment or perform any other act on Lessee's part to
be made or performed as provided in this Lease, and may enter the Premises and
the Improvements for any such purpose, and take all such action, as may be
necessary.
8.2 All sums so paid by Lessor and all costs and expenses incurred by
Lessor, including reasonable attorney fees, in connection with the
performance of any such act, together with, if Lessee does not pay the same
within the 30-day period after notice from Lessor, interest from the date of
such payment or incurrence by Lessor of such cost and expense until paid, at
the annual rate of 12%, shall constitute Additional Rent payable by Lessee
under this Lease and shall be paid by Lessee to Lessor on demand.
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Section 9. Compliance with Legal Requirements
9.1 Throughout the Term, Lessee shall promptly comply with all Legal
Requirements that may apply to the Premises or to the use or manner of uses
of the Premises or the Improvements or the owners or users of the
Improvements, whether or not the Legal Requirements affect the interior or
exterior of the Improvements, necessitate structural changes or improvements,
or interfere with the use and enjoyment of the Premises or the Improvements,
and whether or not compliance with the Legal Requirements is required by
reason of any condition, event, or circumstance existing before or after the
Term commences. Lessee shall pay all costs of compliance with Legal
Requirements, but Lessee shall have the right to cease occupation or use of,
or to demolish or remove, all or any part of the Premises or the Improvements
in lieu of compliance with any Legal Requirement that may require
expenditures on behalf of Lessee for continued use or occupation of the
Premises.
9.2 Lessee shall have the right, after prior written notice to
Lessor, to contest by appropriate legal proceedings, diligently conducted in
good faith, in the name of Lessee or Lessor or both, without cost or expense
to Lessor, the validity or application of any Legal Requirement subject to
the following:
9.2.1 If, by the terms of any Legal Requirement, compliance may legally
be delayed pending the prosecution of any such proceeding without the
incurrence of any lien, charge, or liability of any kind against all or any
part of the Premises or the Improvements and without subjecting Lessee or
Lessor to any liability, civil or criminal, for failure to comply, Lessee may
delay compliance until the final determination of such proceeding; or
9.2.2 If any lien, charge, or civil liability would be incurred by reason
of any such delay, Lessee nevertheless may contest the matter and delay
compliance, provided that such delay would not subject Lessor to criminal
liability or fine, and Lessee
9.2.2.1 Furnishes to Lessor security, reasonably satisfactory to
Lessor, against any loss or injury by reason of such contest or delay, and
9.2.2.2 Prosecutes the contest with due diligence.
9.3 Lessor shall execute and deliver any appropriate papers that may
be necessary or proper to permit Lessee to contest the validity or
application of any Legal Requirement, provided all the requirements of this
section have been satisfied by Lessee and Lessor will incur no cost.
Page 13
9.4 Notwithstanding any other provision in this Lease, Lessee shall
have no obligation to remediate or otherwise cause the removal of any
Hazardous Substance existing on the Premises on the date of this Lease. If
such Hazardous Substance is found, Lessee shall immediately notify Lessor who
shall, at Lessor's election, either pay all costs associated with remediation
or removal of the Hazardous Substance, or, alternatively, terminate this
Lease and pay to Lessee the value of its improvements as determined through
appraisal. If the cost of remediation is less than or equal to $100,000.00,
and if Lessor elects to terminate this Lease, Lessee may elect to continue
the lease in effect and shall then be entitled to pay all costs associated
with the remediation or removal of the Hazardous Substance, not to exceed
$100,000, and may offset the costs so incurred against the rent, except that
in no case may more than 40% of the minimum monthly rent be offset in any
calendar month.
Section 10. Repairs and Maintenance
Lessee shall maintain, repair, and replace the Premises and the
Improvements as necessary to keep them in good order, condition, and repair
throughout the entire Term. Lessee's obligations shall extend to both
structural and nonstructural items and to all maintenance, repair, and
replacement work, including but not limited to unforseen and extraordinary
items. Lessor shall maintain the common areas of the development in good
order, condition, and repair throughout the entire Term. All aspects of
maintaining the parking area, including but not limited to landscaping,
cleaning, and lighting shall be governed by a Reciprocal Easement Agreement
recorded in the deed records of Xxxxxx County, Oregon and related to the
Premises.
Section 11. Alterations, Additions, and New Improvements
The term Modifications means any demolition, improvement, alteration,
change, or addition, of, in, or to all or any part of the Premises or the
Improvements. The term Minor Modifications shall mean any Modifications
costing less than $75,000, and the term Major Modifications shall mean any
and all Modifications other than Minor Modifications. Multiple Modifications
occurring within a period of 365 days shall be deemed a single Modification
for the purposes of applying the provisions contained in this section. At any
time during the Term and at Lessee's own cost and expense, Lessee may make or
permit to be made any Minor Modifications, provided there is no existing and
unremedied default on the part of Lessee, of which Lessee has received notice
of default, under any of the terms, covenants, and conditions of this Lease.
Major Modifications shall require the prior consent of the Lessor. All
salvage material in connection with any Modification that Lessee is permitted
to make shall belong to Lessee. Not withstanding any other provision of this
Section, no modification of the improvements on the Premises shall occur
Page 14
without Lessor's prior written consent which would (i) alter the exterior of
the building, or (ii) alter the footprint of the building on the ground or
(iii) require the elimination of any parking area. Landlord's consent to a
Major Modification shall not be unreasonably withheld, delayed or conditioned.
Section 12. Title to Improvements
Title to Improvements shall be and remain in Lessee until the
expiration of the Term, unless this Lease is terminated sooner as provided.
Upon such expiration or sooner termination, title to the Improvements shall
automatically pass to, vest in, arid belong to Lessor without further action
on the part of either party and without cost or charge to Lessor. During the
Term, Lessee shall be entitled for all taxation purposes to claim cost
recovery deductions and the like on the Improvements.
Section 13. No Waste
Lessee shall not do or suffer any waste or damage, disfigurement, or
injury to the Premises or the Improvements. Demolition of all or any part of
the Improvements done in accordance with the requirements of Section 11 above
shall not be considered prohibited by the terms of this section.
Section 14. Inspection and Access
14.1 Lessee shall permit Lessor, any Permitted Leasehold Mortgagee,
or the authorized representative of any of them to enter the Premises arid
the Improvements at all reasonable times, and after reasonable notice, during
usual business hours for the purposes of inspecting the same and making any
repairs or performing any work that Lessee has neglected or refused to make
in accordance with the terms, covenants, and conditions of this Lease.
Nothing in this Lease shall imply any duty or obligation on the part of
Lessor to do any such work or to make any Improvements of any kind whatsoever
to the Premises (including, but not limited to, repairs and other restoration
work made necessary due to any fire, other casualty, or partial condemnation,
irrespective of the sufficiency or availability of any fire or other
insurance proceeds, or any award in condemnation, which may be payable) The
performance of any work by Lessor shall not constitute a waiver of Lessee's
default in failing to perform the same.
14.2 During the progress of any work on the Premises or the
Improvements performed by Lessor pursuant to the provisions in this section,
Lessor may keep and store on the Premises all necessary materials, tools,
supplies, and equipment. Lessor shall not be liable for inconvenience,
annoyance, disturbance, loss of business, or other damage of Lessee or any
user by reason of making such repairs or performing any such work, or on
account of bringing materials, tools, supplies, and equipment onto the
Premises or into the Improvements during the course of the work and the
obligations of Lessee under this Lease shall not be affected by the work.
Page 15
14.3 Lessor shall have the right to enter on the Premises and the
Improvements at all reasonable times during usual business hours for the
purpose of showing the same to prospective purchasers of Lessor's interest
and, at any time within two years before the Term expires, for the purpose of
showing the same to prospective Lessees.
14.4 Except in the event of emergency repairs, all entry to the
Premises by Lessor shall require at least 24 hours' advance notice to Lessee.
In the event of any emergency repairs, Lessor shall use reasonable efforts to
give Lessee the earliest possible notice of the same.
14.5 If Lessor constructs or causes to be constructed any
Improvements adjacent to the Premises for Lessor's benefit, Lessee shall
afford to the person or persons constructing the Improvements the right to
enter on the Premises for the purpose of doing such work as such person or
persons shall consider to be necessary to preserve any of the walls or
structures of the Improvements on the Premises from injury or damage and to
support the same by proper foundations.
Lessee shall not, by reason of any such work, have any claim against
Lessor for damages or indemnity or for suspension, diminution, abatement, or
reduction of Rent under this Lease.
Section 15. Lessor's Exculpation and Indemnity
15.1 Lessee is and shall be in exclusive control of the Premises and
of the Improvements, and Lessor shall not in any event whatsoever be liable
for any injury or damage to any property or to any person happening on, in,
or about the Premises or the Improvements or any injury or damage to the
Premises or the Improvements or to any property, whether belonging to Lessee
or to any other person, caused by any fire, breakage, leakage, defect, or bad
condition in any part or portion of the Premises or of the Improvements, or
from steam, gas, electricity, water, rain, or snow that may leak into, issue,
or flow from any part of the Premises or the Improvements from the drains,
pipes, or plumbing work of the same, or from the street, subsurface, or any
place or quarter, or due to the use, misuse, or abuse of all or any of the
Improvements or from any kind of injury that may arise from any other cause
whatsoever on the Premises or in or on the Improvements, including defects in
construction of the Improvements, latent or otherwise.
15.2 Lessee shall indemnify and hold Lessor harmless against and from
all liabilities, obligations, damages, penalties, claims, costs, charges, and
expenses, including reasonable architect and attorney fees, that may be
imposed on or incurred by or asserted against Lessor by reason of any of the
following occurrences during the Term:
Page 16
15.2.1 Any work or thing done in, on, or about all or any part of
the Premises or the Improvements by Lessee or any party other than Lessor;
15.2.2 Any use, nonuse, possession, occupation, condition,
operation, maintenance, or management of all or any part of the Premises or
the Improvements or any adjacent alley, sidewalk, curb, vault, passageway, or
space;
15.2.3 Any negligence on the part of Lessee or any of its agents,
contractors, servants, employees, sublessees, licensees, or invitees;
15.2.4 Any accident, injury, or damage to any person or property
occurring in, on, or about the Premises or the Improvements; or
15.2.5 Any failure on the part of Lessee to perform or comply
with any of the covenants, agreements, terms, provisions, conditions, or
limitations contained in this Lease on its part to be performed or complied
with.
15.3 In case any action or proceeding is brought against Lessor by
reason of any such claim, Lessee upon written notice from Lessor shall, at
Lessee's expense, resist or defend such action or proceeding by counsel
approved by Lessor in writing, which approval shall not be unreasonably
withheld. Lessor shall not make any claim against Lessee with respect to any
of such risks as to which Lessee has furnished Lessor with insurance policies
or certificates of insurance evidencing coverage of such risks unless and
until the insurer fails or refuses to defend and/or pay all or any part of a
third-party claim.
Section 16. Condemnation
16.1 If all the Premises and the Improvements are taken or condemned,
by right of eminent domain or by purchase in lieu of condemnation, or if such
portion of the Premises or the Improvements shall be so taken or condemned
that the portion remaining is not sufficient and suitable, in Lessee's sole
judgment (subject, however, to any rights of any Permitted Leasehold
Mortgagee) , to permit the restoration of the Improvements following such
taking or condemnation, then this Lease and the Term, at Lessee's option,
shall cease and terminate as of the date on which the condemning authority
takes possession (any taking or condemnation of the land described in this
section being called a "Total Taking"), and the Minimum Rent and Additional
Rent shall be apportioned and paid to the date of such total taking.
Page 17
16.2 If this Lease expires and terminates as a result of a Total
Taking, the rights and interests of the parties shall be determined as
follows:
16.2.1 The total award or awards for the Total Taking shall be
apportioned and paid in the following order of priority:
16.2.1.1 Lessor shall have the right to and shall be entitled to
receive directly from the condemning authority, in its entirety and not
subject to any trust, that portion of the award, which is defined and
referred to as the "Land Award," and neither Lessee nor any Permitted
Leasehold Mortgagee shall be entitled to receive any part of the Land Award.
The term Land Award shall mean that portion of the award in condemnation or
change of grade proceedings that represents the fair market value of the
Premises, considered as vacant, unimproved but encumbered by this Lease, the
consequential damage to any part of the Premises that may not be taken, the
diminution of the assemblage or plottage value of the Premises not so taken
and all other elements and factors of damage to the Premises; but in all
events such damage or valuation shall take into consideration that the
Premises is encumbered by this Lease;
16.2.1.2 Lessee shall have the right to and shall be entitled to
receive directly from the condemning authority, subject, however, to the
rights of the Permitted Leasehold Mortgagees, that portion of the award
referred to as the "Leasehold Award." The term Leasehold Award shall mean
that portion of the award in condemnation proceedings that represents the
fair market value of Lessee's interest in the Improvements and the fair
market value of Lessee's leasehold estate as so taken and, provided this
Lease is not terminated as a result of such condemnation or taking, the
consequential damages to any part of the Improvements.
16.2.1.3 It is the intent of the parties that the Land Award and
Leasehold Award will equal the total amount of the awards respecting a total
taking.
16.2.2 If the court or such other lawful authority as may be
authorized to fix and determine the awards fails to fix and determine,
separately and apart, the Land Award and the Leasehold Award, such awards
shall be determined and fixed by written agreement mutually entered into by
and among Lessor, Lessee, and First Leasehold Mortgagee, if any, and if an
agreement is not reached within 20 days after the judgment or decree is
entered in the proceedings, the controversy shall be resolved in the same
court as the condemnation action is brought, in such proceedings as may be
appropriate for adjudicating the controversy; and
Page 18
16.2.3 If the condemning authority refuses or otherwise fails to
deduct from the Leasehold Award any Rent or other money due from Lessee to
Lessor and to pay same directly to Lessor, then Lessee and the First
Leasehold Mortgagee, if any, shall execute and deliver to Lessor a written
and acknowledged assignment of such amount payable out of such Leasehold
Award, and if, nevertheless, the full amount of the Leasehold Award is paid
to Lessee or the First Leasehold Mortgagee, if any, the recipient shall hold
in trust for Lessor and pay over to Lessor forthwith on the receipt of the
award the amount or amounts so due.
16.3 If, during the Term, there is a taking or condemnation of the
Premises or the Improvements that is not a total taking and not a temporary
taking of the kind described below, or in the event of the change in the
grade of the streets or avenues on which the Premises abuts, this Lease and
the Term shall not cease or terminate but shall remain in full force and
effect with respect to the portion of the Premises and of the Improvements
not taken or condemned (any taking or condemnation or change of grade of the
kind described in this Section being referred to as a "Partial Taking") , and
in such event:
16.3.1 The total award or awards for the taking shall be
apportioned and paid in the following order of priority:
16.3.1.1 Lessor shall have the right to and shall be entitled to
receive directly from the condemning authority, in its entirety and not
subject to any trust, that portion of the award that equals the Land Award,
and neither Lessee nor any Permitted Leasehold Mortgagee shall be entitled to
receive any part of the award; and
16.3.1.2 If at the time of such taking there is a First Leasehold
Mortgage held by a Lending Institution, then such Lending Institution, or, if
there is no such First Leasehold Mortgage, then Lessee, shall have the right
to and shall be entitled to receive directly from the condemning authority
the balance of the award, to be applied by the recipient as it shall deem
appropriate.
16.4 In the event of a taking of all or a part of the Premises or the
Improvements for temporary use, this Lease shall continue without change, as
between Lessor and Lessee, and Lessee shall be entitled to the entire award
made for such use; provided that Lessee shall be entitled to file and
prosecute any claim against the condemner for damages and to recover the
same, for any negligent use, waste, or injury to the Premises or the
Improvements throughout the balance of the then-current Term. The amount of
damages so recovered shall belong to Lessee.
16.5 In the event of any dispute between Lessee and Lessor with
respect to any issue of fact arising out of a taking mentioned in this
Page 19
section, such dispute shall be resolved by the same court in which the
condemnation action is brought, in such proceedings as may be appropriate for
the adjudicating the dispute.
Section 17. Assignment and Subletting
17.1 Until the Project is substantially completed, Lessee shall not
sell, assign, or in any other manner transfer this Lease or any interest in
this Lease or the estate of Lessee under this Lease without the prior consent
of Lessor, which consent shall not be unreasonably withheld or delayed. After
the Project is completed, there shall be no restriction on Lessee's right to
sell, assign, or in any manner transfer this Lease or any interest in this
Lease or the estate of Lessee or rent, sublet, sublease, or underlet the
Premises or the Improvements, except as set forth below.
17.2 Lessee shall have the right to sublet portions of the
Improvements at any time and from time to time, but only for a term or terms
that shall expire before the expiration of the Term, and provided that each
such sublease shall be in writing and shall be subject and subordinate to the
rights of Lessor under this Lease. The use of the subtenant shall be subject
to the approval of Landlord as required in Section 4.
17.3 When this Lease terminates, Lessor shall recognize and not
disturb the quiet enjoyment of any sublessee if (1) the sublease is then free
from default; (2) the sublease is in all material respects in the form of
sublease approved by Lessor; and (3) the sublessee executes the attornment
agreement described below in this section. As a condition of Lessor's
nondisturbance of the sublessee, it shall deliver to Lessor an attornment
agreement confirming that the sublessee will attorn to Lessor and recognize
it as the sublessee's Lessor under the terms of the sublease. Upon such
attornment and satisfaction of the other nondisturbance requirements set
forth above, the sublease shall continue in full force and effect as a direct
lease between the sublessee and Lessor on all the terms, conditions, and
covenants as are set forth in the sublease except that Lessor shall not (1)
be liable for any previous act or omission of the sublessor; (2) be subject
to any offset, deficiency, or defense that shall have accrued to the
sublessee against the sublessor; (3) be bound by any previous prepayment of
more than one month's rent unless such modification or prepayment shall have
been expressly approved in writing by Lessor; or (4) be liable for commencing
or completing any construction or any contribution toward construction or
installation of any improvements on the Premises required under the sublease,
or any expansion or rehabilitation of existing improvements on the Premises,
or for restoring improvements following any casualty not required to be
Page 20
insured under this Lease, or for the costs of any restoration in excess of
the proceeds recovered under any insurance required to be carried under this
Lease. On request, Lessor shall confirm in a separate written agreement with
any qualified sublessee the nondisturbance obligation of Lessor as set forth
in this section.
Section 18. Representations of Lessor
Lessor represents to Lessee as follows:
18.1 Lessor has no notice of any liens to be assessed against the
Premises.
18.2 To the best knowledge of Lessor, there is no violation of any
Legal Requirements related to the Premises that will be existing on the date
Lessee's construction begins.
18.3 The execution, delivery, and performance of this Lease by Lessor
will not result in any breach of, or constitute any default under, or result
in the imposition of, any lien or encumbrance on the Premises under any
agreement or other instrument to which Lessor is a party or by which Lessor
is bound.
18.4 To the best of Lessors knowledge, there are no legal actions,
suits or other legal or administrative proceedings (except a currently
pending lot line adjustment previously disclosed to Lessee) , including
condemnation cases, pending or threatened against the Premises, and Lessor is
not aware of any fact that might result in any such action, suit, or other
proceeding.
18.5 Lessor has no information or knowledge of any action by adjacent
landowners, or natural or artificial condition on the Premises that would
limit, or impede the Lessee's project.
Section 19. Default; Remedies
19.1 The occurrence of any one or more of the following events of
default constitutes a breach of this Lease by Lessee:
19.1.1 If Lessee defaults in the payment of Rent due and payable
by Lessee, and such default continues for 10 days after Lessor has given
Lessee a notice specifying the same; or
19.1.2 If Lessee, whether by action or inaction, is in default of
any of its obligations under this Lease (other than a default in the payment
of Rent by Lessee) and such default continues and is not remedied within 60
days after Lessor has given Lessee a notice specifying the same, or, in the
case of a default that can be cured but not within a period of 60 days, if
Lessee has not (1) commenced curing such default within such 60-day period;
(2) notified Lessor of Lessee's intention to cure the default; or (3)
continuously and diligently completed the cure of the default.
Page 21
19.2 During any 12-month period, Lessee shall be entitled to only two
notices pursuant to Section 19.1.1. Thereafter, nonpayment of rent within ten
(10) days after the due date shall be an event of default without further
notice to Lessee.
19.3 Upon the occurrence of an event of default, Lessor may exercise
any one or more of the remedies set forth in this section or any other remedy
available under applicable law or contained in this Lease:
19.3.1 Lessor or Lessor's agents and employees may immediately or
at any time thereafter reenter the Premises either by summary eviction
proceedings or by any suitable action or proceeding at law, or by force or
otherwise, without being liable to indictment, prosecution, or damages, and
may repossess the same, and may remove any person from the Premises, to the
end that Lessor may have, hold, and enjoy the Premises.
19.3.2 Lessor may relet the whole or any part of the Premises
from time to time, either in the name of Lessor or otherwise, to such
Lessees, for such terms ending before, on, or after the expiration date of
the Lease Term, at such rentals and on such other conditions (including
concessions and free rent) as Lessor may determine to be appropriate. To the
extent allowed under Oregon law, Lessor shall have no obligation to relet all
or any part of the Premises and shall not be liable for refusal to relet the
Premises, or, in the event of such reletting, for refusal or failure to
collect any rent due on such reletting; and any action of Lessor shall not
operate to relieve Lessee of any liability under this Lease or otherwise
affect such liability. Lessor at its option may make such physical changes to
the Premises as Lessor, in its sole discretion, considers advisable and
necessary in connection with any such reletting or proposed reletting,
without relieving Lessee of any liability under this Lease or otherwise
affecting Lessee's liability.
19.3.3 Whether or not Lessor retakes possession or relets the
Premises, Lessor has the right to recover its damages, including without
limitation all lost rentals, all legal expenses, all costs incurred by Lessor
in restoring the Premises or otherwise preparing the Premises for reletting,
and all costs incurred by Lessor in reletting the Premises.
19.3.4 To the extent permitted under Oregon law, Lessor may xxx
periodically for damages as they accrue without barring a later action for
further damages. Lessor may in one action recover accrued damages plus
damages attributable to the remaining Lease Term equal to the difference
between the Rent reserved in this Lease for the balance of the Lease Term
after the time of award, and the fair rental value of the Premises for the
same period, discounted at the time of award at a reasonable rate not to
exceed 10% per annum. If Lessor has relet the Premises for the period that
otherwise would have constituted all or part of the unexpired portion of the
Term, the amount of rent reserved on such reletting shall be deemed, prima
facie, to be the fair and reasonable rental value for the part or the whole
of the Premises so relet during the term of the reletting.
19.4 No failure by Lessor to insist on the strict performance of any
agreement, term, covenant, or condition of this Lease or to exercise any
right or remedy consequent upon a breach, and no acceptance of full or
partial Rent during the continuance of any such breach, constitutes a waiver
of any such breach or of such agreement, term, covenant, or condition. No
agreement, term, covenant, or condition to be performed or complied with by
Page 22
Lessee, and no breach by Lessee, shall be waived, altered, or modified except
by a written instrument executed by Lessor. No waiver of any breach shall
affect or alter this Lease, but each and every agreement, term, covenant, and
condition of this Lease shall continue in full force and effect with respect
to any other then-existing or subsequent breach.
19.5 Each right and remedy provided for in this Lease shall be
cumulative and shall be in addition to every other right or remedy provided
for in this Lease or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by Lessor
or Lessee of any one or more of the rights or remedies provided for in this
Lease or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by the party
in question of any or all other rights or remedies provided for in this Lease
or now or hereafter existing at law or in equity or by statute or otherwise.
Section 20. No Abatement of Rent
20.1 Except as otherwise specifically provided in this Lease, no
abatement, refund, diminution, or reduction of Rent or other compensation
shall be claimed by or allowed to Lessee, or any person claiming under it,
under any circumstances, whether for inconvenience, discomfort, interruption
of business, or otherwise, arising from work on Improvements, by virtue or
because of Legal Requirements, or the occurrence of any matters referred to
in Sections 7 (casualty damage) and 16 (condemnation) of this Lease, or for
any other reason, cause, or occurrence.
20.2 Unless caused by Lessor, if any adjoining Building or structure
encroaches on the Premises, no claim, demand, or objection of any kind shall
be made by Lessee against Lessor by reason of such encroachments; no claim
for abatement of Rent due under this Lease shall be made by reason of such
encroachments or acts of, or in connection with, removal of the
Page 23
encroachments. The rights, liabilities, and obligations of the parties shall
be the same as if there were no encroachments. In any related legal
proceedings, the Premises may properly and without prejudice be described
according to the description previously used without reference to any such
encroachments. Lessor agrees to cooperate with Lessee in any proceedings
sought by Lessee to remove such encroachments, provided such cooperation does
not cause Lessor to incur any expense.
Section 21. Transfer of Interest by Lessor
Lessor may sell, exchange, assign, transfer, convey, contribute,
distribute, or otherwise dispose of all or any part of its interest (called
"Lessor's Interest") in the Premises or this Lease (including but not limited
to Lessor's reversion) . Upon any transfer of the Lessor's interest, the new
owner of the Lessor's interest shall be deemed for all purposes the Lessor
and the existing Lessor shall be released from all liability under this Lease
except liability for any default of the Lease existing on the date of
assignment.
Section 22. Tenant's Abandonment of the Premises
If Lessee shall abandon the Premises for a period in excess of 180
days, Lessor shall have the Option to purchase Lessee's Improvements on the
Premises. The Improvements shall be purchased at a price determined by
appraisal as set forth herein. Lessor shall notify Lessee of its election to
purchase the Premises in writing at any time after the 180 day period and
before Lessee is subject to a binding contract to sell the improvements to
others. If the parties are unable to agree on a price and go through the
appraisal process, Lessor may decline to close the sale, in which event the
Lessor shall pay the entire costs of the appraisal. Closing shall occur
within 60 days after Lessor's notice of exercise of its option. Lessee's
obligations under this Lease shall terminate at closing. Lessee shall provide
to Lessor a preliminary title report to show the condition of the title to
the Improvements at least thirty (30) days prior to the date set for closing.
At closing, Lessee shall provide to Lessor a special warranty deed which
shall warrant the real property and Improvements free of all claims or
encumbrances except those existing on the date of this Lease and those
claimed by, through or under the Lessor.
Section 23. Option to Extend Lease
The Term may be extended, at the option of Lessee, for two additional
periods of ten (10) years each. Each option shall be exercised by Lessee
giving written notice to Lessor not more than 24 months nor less than 12
months before the initial Term expires. Such extended Term shall be on the
same terms, covenants, and conditions as provided in this Lease for the
initial Term, except the Minimum Rent. Minimum Rent for the renewal terms
Page 24
shall be determined by appraisal of the real property (less improvements
constructed by Lessee under this Lease). The Minimum Rent shall equal the
appraised value of the real property with an annual capitalization rate of
11.5%, provided however, the monthly Minimum Rent shall not be less than the
monthly Minimum Rent for the Premises for the month immediately prior the
commencement of the renewal term. Minimum Rent during the renewal term shall
be adjusted as provided in Section 3.5, above. Payment of all additional
charges required to be made by Lessee as provided in this Lease for the
initial Term shall continue to be made during the extended Term.
Section 24. Lessor's Right to Encumber
Lessor, during the Term, may encumber, mortgage, pledge, or otherwise
hypothecate its fee simple interest in the Premises.
Section 25. Nonmerger
There shall be no merger of this Lease, or of the leasehold estate
created by this Lease, with the fee estate in the Premises by reason of the
fact that this Lease, the leasehold estate created by this Lease, or any
interest in this Lease or in any such leasehold estate, may be held, directly
or indirectly, by or for the account of any person who shall own the fee
estate in the Premises or any interest in such fee estate, and no such merger
shall occur unless and until all persons at the time having an interest in
the fee estate in the Premises and all persons (including all Permitted
Leasehold Mortgagees) having an interest in this Lease, or in the leasehold
estate created by this Lease, shall join in a written instrument effecting
such merger and shall duly record the same.
Section 26. Quiet Enjoyment
Lessee, on paying the Rent and observing and keeping all covenants,
agreements, and conditions of this Lease on its part to be kept, shall
quietly have and enjoy the Premises during the Term without hindrance or
molestation by anyone claiming by, through, or under Lessor as such, subject,
however, to the exceptions, reservations, and conditions of this Lease.
Section 27. Surrender
27.1 Except as otherwise provided, Lessee, on the last day of the
Term, shall surrender and deliver up the Premises and all Improvements to the
possession and use of Lessor without fraud or delay, free and clear of all
lettings and occupancies other than subleases then terminable at the option
of Lessor or subleases to which Lessor shall have specifically consented, and
free and clear of all liens and encumbrances other than those, if any,
presently existing or created or suffered by Lessor, without any payment or
allowance whatever by Lessor on account of any Improvements on the Premises.
Page 25
27.2 When furnished by or at the expense of Lessee or any sublessee,
furniture, fixtures, and equipment may be removed by Lessee at or before this
Lease terminates, provided, however, that the removal will not injure the
Premises or the Improvements or necessitate changes in or repairs to the
same. Lessee shall pay or cause to be paid to Lessor the cost of repairing
any damage arising from such removal and restoration of the Premises and/or
the Improvements to their condition before such removal.
27.3 Any personal property of Lessee or any sublessee that shall
remain on the Premises after the termination of this Lease and the removal of
Lessee or such sublessee from the Premises may, at the option of Lessor, be
deemed to have been abandoned by Lessee or such sublessee and may either be
retained by Lessor as its property or be disposed of, without accountability,
in such manner as Lessor may see fit, or if Lessor gives written notice to
Lessee to such effect, such property shall be removed by Lessee at Lessee's
sole cost and expense. If this Lease terminates early for any reason other
than the default of Lessee then, anything to the contrary notwithstanding,
Lessee or any sublessee shall have a reasonable time thereafter to remove its
personal property.
27.4 Lessor shall not be responsible for any loss or damage occurring
to any property owned by Lessee or any sublessee.
27.5 The provisions of this section shall survive any termination of
this Lease.
Section 28. Invalidity of Particular Provisions
If any term or provision of this Lease or the application of the Lease
to any person or circumstances is, to any extent, invalid or unenforceable,
the remainder of this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected, and each term and provision of this
Lease shall be valid and be enforced to the fullest extent permitted by law.
Section 29. No Representations
Lessee acknowledges that it has examined the Premises and that no
representations as to the condition of the Premises have been made by Lessor
or any agent or person acting for Lessor (except as expressly provided in
this Lease) . Before any construction commences on the Premises, Lessee shall
conduct tests of the subsurface and soil conditions to ascertain the
suitability of the Premises for the contemplated Project and shall furnish
such fill and take such other steps as may be required before the
commencement of construction. Lessor shall have no liability because of, or
as a result of, the existence of any subsurface or soil condition, either on
the Premises or on adjacent land, that might affect Lessee's construction.
Page 26
Section 30. Estoppel Certificate
Either party, within 10 days after a request from time to time made by
the other party and without charge, shall give a certification in writing to
any person, firm, or corporation reasonably specified by the requesting party
stating (1) that this Lease is then in full force and effect and unmodified,
or if modified, stating the modifications; (2) that Lessee is not in default
in the payment of Rent to Lessor, or if in default, stating such default; (3)
that as far as the maker of the certificate knows, neither party is in
default in the performance or observance of any other covenant or condition
to be performed or observed under this Lease, or if either party is in
default, stating such default; (4) that as far as the maker (if Lessor) of
the certificate knows, no event has occurred that authorized, or with the
lapse of time will authorize, Lessee to terminate this Lease, or if such
event has occurred, stating such event; (5) that as far as the maker of the
certificate knows, neither party has any offsets, counterclaims, or defenses,
or, if so, stating them; (6) the dates to which Rent have been paid; and (7)
any other matters that may be reasonably requested by the requesting party.
Section 31. Force Majeure
If the performance by either of the parties of their respective
obligations under this Lease (excluding monetary obligations) is delayed or
prevented in whole or in part by any Legal Requirement (and not attributable
to an act or omission of the party), or by any acts of God, fire or other
casualty, floods, storms, explosions, accidents, epidemics, war, civil
disorders, strikes or other labor difficulties, shortage or failure of supply
of materials, labor, fuel, power, equipment, supplies or transportation, or
by any other cause not reasonably within the party's control, whether or not
specifically mentioned, the party shall be excused, discharged, and released
of performance to the extent such performance or obligation (excluding any
monetary obligation) is so limited or prevented by such occurrence without
liability of any kind.
Section 32. Notices
32.1 Any notice required or permitted by the terms of this Lease
shall be deemed given if delivered personally to an officer of the party to
be notified or sent by United States registered or certified mail, postage
prepaid, return-receipt requested, and addressed as follows:
If to Lessor: with copy to:
Xxx Xxxxxx, P.C. Xxxxxx Xxxxx, P.C.
% Certified Property Attn: Xxxxxx Xxxxx
Management 000 Xxxxx Xx. XX, Xxxxx 000
P.O. Box 269 P.O. Box 4591
Xxxxx, XX 00000 Xxxxx, XX 00000
Page 27
If to Lessee: with copy to:
South Umpqua Bank Xxxx Xxxxxx
Attn: President Arnold, Gallagher, Saydack, et al
000 X.X. Xxxx Xxxxxx 000 Xxxxxxxxxx Xx., Xxxxx 000
X.X. Xxx 0000 X.X. Xxx 0000
Xxxxxxxx, XX 00000 Xxxxxx, XX 00000
or such other addresses as may be designated by either party by written
notice to the other. Except as otherwise provided in this Lease, every
notice, demand, request, or other communication shall be deemed to have been
given or served on actual receipt.
32.2 A copy of each notice from Lessor to Lessee shall be
contemporaneously delivered to each Permitted Leasehold Mortgagee which shall
have previously delivered to Lessor, by registered or certified mail, return
receipt requested, addressed as provided above in this section, its name and
the mailing address to which communications under this section are to be
delivered. Notice to Lessee shall not be effective until a duplicate notice
is received by each Permitted Leasehold Mortgagee that is entitled to notice.
32.3 Lessee shall immediately send to Lessor, in the manner
prescribed above for giving notice, copies of all notices given by it to any
Permitted Leasehold Mortgagee or received by it from such Permitted Leasehold
Mortgagee, and copies of all notices that it receives with respect to the
Premises or Improvements from any government authorities, fire regulatory
agencies, and similarly constituted bodies, and copies of its responses to
such notices.
32.4 Notwithstanding anything in this section to the contrary, any
notice mailed to the last designated address of any person or party to which
a notice may be or is required to be delivered pursuant to this Lease or this
section shall not be deemed ineffective if actual delivery cannot be made due
to a change of address of the person or party to which the notice is directed
or the failure or refusal of such person or party to accept delivery of the
notice.
Section 33. Arbitration and Appraisal
33.1 In any case in which it is provided by the terms of this Lease
that any matter shall be determined by arbitration or appraisal, such
arbitration or appraisal shall be conducted in the manner specified in this
section.
33.2 The party desiring such arbitration or appraisal shall give
written notice to that effect to the other party and shall in such notice
appoint a disinterested person of recognized competence in the field involved
as arbitrator or appraiser on its behalf. Within 15 days thereafter, the
other party may by written notice to the original party appoint a second
Page 28
disinterested person of recognized competence in such field as arbitrator or
appraiser on its behalf. The arbitrators thus appointed shall appoint a third
disinterested person of recognized competence in such field, and the three
arbitrators shall, as promptly as possible, determine such matter, provided,
however, that
33.2.1 If the second arbitrator or appraiser is not appointed
pursuant to the above procedure, then the first arbitrator or appraiser shall
proceed to determine such matter; and
33.2.2 If the two arbitrators or appraisers appointed by the
parties are unable to agree, within 15 days after the second arbitrator or
appraiser is appointed, on the appointment of a third arbitrator or
appraiser, they shall give written notice of such failure to agree to the
parties and, if the parties fail to agree on the selection of the third
arbitrator or appraiser within 15 days after the arbitrators or appraisers
appointed by the parties give notice, then within 10 days thereafter either
of the parties on written notice to the other party may request such
appointment by the presiding judge of the Circuit Court of the County of the
State of Oregon in which the Premises are located, or to any other court
having jurisdiction and exercising functions similar to those now exercised
by the court.
33.3 Lessor and Lessee shall each be entitled to present evidence and
argument to the arbitrators. The determination of the majority of the
arbitrators or appraisers, or of the sole arbitrator or appraiser, as the
case may be, shall be conclusive on the parties, and judgment on the same may
be entered in any court having jurisdiction over the parties. The arbitrators
or appraisers or the sole arbitrator or appraiser, as the case may be, shall
give written notice to the parties stating the arbitration determination, and
shall furnish to each party a signed copy of such determination. Arbitration
proceedings shall be conducted pursuant to ORS 33.210-33.340 and the rules of
the American Arbitration Association, except as provided otherwise. If any
such dispute involves a determination of value or of a fixed amount of money
and if a majority of the arbitrators do not agree, then, instead of such
arbitration, either party shall be entitled to seek a judicial determination
of the matter in issue in a court of competent jurisdiction.
33.4 Each party shall pay the fees and expenses of the arbitrator or
appraiser appointed by such party and one-half of the fees and expenses of
the third arbitrator or appraiser, if any.
33.5 Anything contained in this Lease to the contrary
notwithstanding, whenever Lessee is required to make any payment or to
perform any act or thing at a specified time or within a specified time limit
under the provisions of this Lease, and any such payment or performance is
Page 29
subject to arbitration under this section, such time or time limit, as the
case may be, shall be extended by the period consumed by the institution,
conduct, and prosecution to final conclusion of any arbitration or appraisal
concerning or relating to such payment or performance.
Section 34. Costs and Attorney Fees
If either party brings an action to recover any sum due or for any
breach and obtains a judgment or decree in its favor, the court may award to
such prevailing party its reasonable costs and reasonable attorney fees,
specifically including reasonable attorney fees incurred in connection with
any appeals (whether or not taxable as such by law).
Section 35. Entire Agreement
This Lease 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 Lessee and Lessor that there are no
verbal agreements, representations, warranties, or other understandings
affecting this Lease.
Section 36. Applicable Law
This Lease shall be governed by, and construed in accordance with, the
laws of the state of Oregon.
Section 37. Interest on Rent Arrearages
All arrearages in the payment of Rent that Lessee fails to pay within
the 30-day period after notice from Lessor shall bear interest from the date
due until paid, at the rate defined in Section 8.2 above.
Section 38. Brokerage
Lessor and Lessee represent to each other that they have not employed
any brokers in negotiating and consummating the transaction set forth in this
Lease, but have negotiated directly with each other.
Section 39. Covenants to Bind and Benefit Parties
The covenants and agreements contained in this Lease shall bind and
inure to the benefit of Lessor, its successors and assigns, and Lessee, its
successors and assigns.
Section 40. Captions and Table of Contents
40.1 The captions of this Lease are for convenience and reference
only, and in no way define, limit, or describe the scope or intent of this
Lease or in any way affect this Lease.
Page 30
40.2 The table of contents preceding this Lease but under the same
cover is for the purpose of convenience and reference only, and is not to be
deemed or construed in any way as part of this Lease, nor as supplemental or
amendatory.
Section 41. Definition of Lessor
The term Lessor as used in this Lease means only the owner for the
time being of the Premises, so that in the event of a sale, transfer,
conveyance, or other termination of Lessor's interest in the Premises, Lessor
shall be and is entirely freed and relieved of all liability of Lessor
thereafter accruing, and in such event Lessor shall remit any funds held by
Lessor, in which Lessee has an interest, to the successor owner of the
Premises. Lessor shall remain liable for any such money not so remitted. It
shall be deemed and construed without further agreement between the parties
or their successors in interest, or between the parties and such successor
owner of the Premises, that such successor owner has assumed and agreed to
carry out any and all agreements, covenants, and obligations of Lessor
thereafter accruing.
Section 42. Recordation of Lease
Lessee may elect that a copy of this Lease or a memorandum, executed
and acknowledged by both parties, be recorded in the public records of Xxxxxx
County, Oregon. Lessee shall pay the recording costs.
Section 43. Covenants, Conditions and Restrictions
Lessee takes leases the property subject to certain Covenants,
Conditions and Restrictions which provide, among other things, for the common
use of certain driveways, sidewalks, landscape area and parking facility. As
of the date of this lease, the parties are still negotiating over certain
minor points in the Covenants, Conditions and Restrictions. In the event the
Covenants, Conditions and Restrictions are not recorded prior to the date of
this Ground Lease, Lessee agrees on demand to subordinate its interest in the
property to the provisions of the recorded Covenants, Conditions and
Restrictions.
Section 44. Statutory Warning
"THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS
INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE
SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE
Page 31
PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT
TO VERIFY APPROVED USES."
IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease to be
executed by their duly authorized officers.
Lessor: Lessee:
SOUTH UMPQUA BANK
/s/ Xxxxxxx Xxxxx by POA By: /s/ Xxxxx Xxx, its Vice
---------------------------------- ---------------------------------
President/Retail Banking
/s/ Xxxxxxx Xxxxx by POA
----------------------------------
/s/ Xxxxx Xxxxxxx
----------------------------------
Page 32
FIRST ADDENDUM TO GROUND LEASE
BETWEEN: Xxxxxxx Xxxxx and Xxxxxxx Xxxxx,
husband and wife, and Xxxxx Xxxxxxx ("Lessor")
AND: South Umpqua Bank ("Lessee")
an Oregon banking corporation
000 XX Xxxx Xxxxxx
Xxxxxxxx, XX 00000
EFFECTIVE
DATE: February 12, 1999.
1. Section 1.2 is hereby deleted in its entirety and the following language
substituted in its place:
"The foregoing condition shall be for the benefit of both parties and
must be satisfied or waived by both the parties on or before 5:00 p.m.
on March 1, 1999, or this Lease shall terminate and be of no further
force and effect. In such event neither party shall have any further
liability under this Lease except for liability accrued before the date
of termination.
In addition, it is a condition of this Lease that Lessee secure
approval from state and federal banking regulatory agencies to locate a
branch on the Premises. Lessee represents that it has already applied
for such approval and covenants that it will use its best efforts to
obtain the same. Lessee shall keep Lessor informed as to the status of
its applications for approval and will promptly notify Lessor when such
approval is obtained. If approval has not been secured by April 1, 1999,
either party may terminate this Lease unless it reasonably appears that
approval will be obtained by April 30, 1999, in which event the parties
shall extend the date for satisfaction of this condition to the earlier
of: (i) the date on which Lessee receives notice of such approval, or
(ii) April 30, 1999. If Lessee elects to terminate this Lease because of
the failure to satisfy the condition in this Section 1.2, it shall
provide to Lessor evidence that it did not, or, its reasonable judgment,
could not obtain the necessary regulatory approval."
2. The last paragraph of Section 2 is hereby deleted in its entirety and
the following language substituted in its place:
"Lessor shall deliver the Premises with all existing buildings
demolished and debris removed. Lessor shall prepare the site and fill
the existing basement to native ground level or such other lower level
as Lessee shall direct in accordance with the specifications attached
hereto as Exhibit A and by this reference incorporated herein. Lessee
Page 1
shall reimburse Lessor for the cost of such basement fill to the extent
it is greater than would be the cost of standard placement of fill with
a load-bearing capacity of 2,500 pounds per square foot. The parties
estimate that Lessee's reimbursement obligation will be approximately
$1,000.00."
3. Except as provided in Sections 1 and 2 above, the Lease is unchanged.
LESSOR: LESSEE:
Xxxxxxx Xxxxx and Xxxxxxx Xxxxx, South Umpqua Bank
husband and wife, and Xxxxx Xxxxxxx
By: Xxxxx Xxx, Sr. VP/Retail
Banking -------------------------------
Sr. VP / Retail Banking
s/s Xxxxxxx Xxxxx by POA
----------------------------------
s/s Xxxxxxx Xxxxx by POA
----------------------------------
s/s Xxxxx Xxxxxxx by POA
----------------------------------
Page 2
EXHIBIT A TO FIRST ADDENDUM
FOUNDATIONS
1. Preparation - Prior to filling basement, the Contractor shall remove all
decomposable materials. Exposed soils, if any, shall be scarified to a
depth of at least 6 inches and then be brought to the proper moisture
content and compacted to 95% Standard Xxxxxxx density.
2. Filling - The Contractor shall clean, free draining fill material within
the basement, as more fully described subsequently. Prior to backfill,
the basement structure shall be penetrated to provide for escape of free
water. The structural fill shall be as further described below, properly
moisture conditioned and compacted:
a. Structural fill shall be non-expansive material, free of organic
material and with a maximum aggregate size smaller than 2 1/2" and
at least 75% smaller than 3/4". On site materials are not
suitable, except as described in paragraph 3.
b. Structural fill shall be compacted to 95% relative density per
ASTM D- 1557 at optimum moisture content.
c. Basement fill shall be topped with a minimum thickness of 4 inches
of 3/4" minus road base, moisture conditioned to within 2% of
optimum moisture content and compacted to at least 95% of Standard
Xxxxxxx density.
3. Alternate Fill - Clean soil fill may be used, subject to weather
conditions being suitable for placement and compaction and conformance
with the following:
a. Prior to placement, representative soil samples shall be
appropriately prepared and tested for density per ASTM D-1557.
After compaction to 95% relative density per ASTM D-1557,
consolidation tests shall be performed on a representative sample.
The material shall be deemed suitable if maximum consolidation
under 2,500 psf load does not exceed 1/4" total for the depth of
fill.
b. Structural fill shall be non-expansive material, free of organic
material and with a maximum aggregate size smaller than 2 1/2" and
at least 75% smaller than 3/4". Maximum portion passing the #200
sieve shall be 25%.
c. Basement fill shall be topped with a minimum thickness of 4 inches
of 3/4" minus road base, moisture conditioned to within 2% of
optimum moisture content and compacted to at least 95% of Standard
Xxxxxxx density.
SITE PREPARATION
1. Prior to placing site fills, the Contractor shall remove all
construction rubble, trash, debris, decomposable materials and other
non-soil components and shall scarify exposed surface to a depth of at
least 6 inches. After scarification, surface shall be brought to within
1% of optimum moisture content and compacted to the density specified
below. Asphaltic, concrete and other surfaces and any ancillary
structures shall be constructed in accordance with civil and
architectural plans.
2. Fill material shall be free of trash and rock over 6" in diameter. All
structural fill shall be moisture conditioned to within 1% of optimum
moisture content and compacted to at least 95% Standard Xxxxxxx density.
3. Fills within basement area outside of building footprint, but within
parking or other surfaced area, shall be constructed as described in
Foundations section.
Page 3
