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HomeMy WebLinkAboutItem 04 Property Purchase AGENDA ITEM SUMMARY Meeting Date: June 10, 2013 Meeting Type: Regular Session Department: CMO/FIN Staff Contact: John Tamulonis/ Bob Duey S P R I N G F I E L D E CO N OM I C Staff Phone No: 541-726-3656 DEVELOPMENT AGENCY Estimated Time: 10 Minutes ITEM TITLE: PROPERTY PURCHASE ACTION REQUESTED: Adopt/Not Adopt the following resolution: A RESOLUTION AUTHORIZING THE ACQUISITION OF 138 MAIN STREET, SPRINGFIELD, OREGON (MAP AND TAX NO. 17-03-35-32-04500) ISSUE STATEMENT: The adopted Downtown Design Plan proposes to locate a public plaza (See Attachment 2- Mill Plaza) on a one-half block that now has three buildings. In discussions with building owners on their plans, one property owner offered to sell his property, possibly becoming the first property of the Mill Plaza development in 7-10 years. The proposed parcel for purchase is at 138 Main Street (See Attachment 3- RLID Property Information & Map) including leases with the current tenants Northwest Martial Arts, LLC and IBS School of Cosmetology (Savoy, LLC). ATTACHMENTS: 1. Briefing Memo 2. Proposed Mill Plaza 3. RLID Property Information & Map 4. Appraisal 5. Environmental Report 6. Leases 7. Purchase & Sale Agreement 8. Resolution DISCUSSION/ FINANCIAL IMPACT: See Agency Briefing Memo Attachment 1 ATTACHMENT 1 Page 1 of 2 M E M O R A N D U M Springfield Economic Development Agency Date: 6/10/2013 AGENCY BRIEFING MEMORANDUM To: Gino Grimaldi From: John Tamulonis, Community Development Manager Bob Duey, Finance Director Subject: Potential Purchase of Plaza Site Property ISSUE: Approve/Not Approve the Resolution (Attachment 8) that authorizes the City Manager to complete the purchase for SEDA as described in the Purchase and Sale Agreement for the Downtown property at 138 Main Street offered for sale on the planned Mill Plaza site. COUNCIL GOALS/MANDATE: Financially Responsible and Stable Government Services BACKGROUND: The adopted Downtown Design Plan proposes to locate and develop a public plaza (See Attachment 2- Mill Plaza) on a one-half block that now has three buildings. During staff discussions that began in early 2011 with property/building owners on their plans for the three parcels identified for the Mill Plaza, one property owner offered to sell his property. This property could possibly become the first property of the Mill Plaza when redevelopment occurs in 7-10 years. The parcel proposed for purchase is at 138 Main Street (See Attachment 3- RLID information & Map) with the current tenants (see Attachment 6 Leases) Northwest Martial Arts and the IBS School of Cosmetology (Savoy LLC). DISCUSSION: The property has no on-site parking for the two-story, 11,185 square-foot cinder-block structure that covers essentially the entire lot. A Phase 1 Environmental report that EGR completed August 15, 2011 by indicates “…no evidence of recognized environmental conditions…” (See Attachment 5). Staff worked through the City Attorney’s Office and obtained an appraisal indicating a value of $669,000 as of June 2011 based on leases and recent improvements to the building façade, roof, interior and exterior finishes. (See Attachment 4). On March 18, 2013, several City staff toured the building and found the property was generally in very good condition, would likely need only routine maintenance, and unlikely to warrant any upgrades over a 7-10 year period. Property management for the building would be minimal through DPW but covered as a Downtown SEDA expense for the future Mill Plaza project. Extensive discussions with the property owner has SEDA obtaining income from the existing lease with Northwest Martial Arts as well as a new lease with the property owner’s business, IBS School of Cosmetology, with a 2-year commitment at the 138 Main Street site commencing upon sale of the property as proposed on July 2, 2013. These leases would bring in $3,900 monthly ($1900 NWMA and $2,000 IBS, plus cover electrical utilities for both lessees up to $580 per month, including provisions for possible increases in SUB rates). The property owner offers to sell the property for $700,000, including lease income from a three-year lease with one tenant (Northwest Martial Arts). The lease is currently for $1,900 monthly with an escalator clause each year until it expires in November 30, 2015. He would also enter into a two-year lease for IBS Cosmetology for $2,000 per month plus pay utilities of about $200/month and separate the heating systems for the two tenant spaces. Property taxes were $5,240 in 2012 and staff recommends ATTACHMENT 1 Page 2 of 2 in terms of difficulty, cost, and complexity, of the three targeted for h of uilding in the Downtown for two or more years; and es ctivities, and modest downtown s proposed to be done in cooperation with the City through use of CDBG funds. The approach is much like other urban renewal financing in that it is the conomic Dev’lp Contribution 250,000 City, payback from sale of Glenwood property revolving loan fund they be as paid within the two-year IBS lease in a counter offer to the property owner. The price is above the market value but remains within reasonable levels for several reasons: 1. The transaction is amicable and there is no eminent domain process involved which, if used, would likely involve rancor and substantially increased costs ending near to the proposed purchase price; 2. There is no relocation of current occupants of the building nor displacement of jobs; 3. Leases may be extended; 4. This is the major property, the public plaza, and once purchased would be under long-term public control; 5. The City’s initial commitment to one of the key projects for the adopted Downtown Urban Design Plan would be evident and provide confidence in subsequent public follow throug the Plan; 6. As structured, using tenants-with-leases occupying the building, the acquisition avoids a ‘zombie’ b 7. Current Downtown SEDA revenues do allow budgeting, for example, for ongoing activiti Downtown, basic staffing, minor parking plan implementation a lighting improvements. The financing of the purchase by SEDA i loans and the considered a longer-term investment with limited pay back in the early years, accelerated payback as downtown district becomes more stable and likely to not be fully repaid until the actual time that the plaza itself becomes a reality and the construction funding would include the final repayment of the property purchases. The current resources that are planned for this purchase are the following: CDBG Grant $ 50,000 Grant, no payback E Urban renewal400,000 Tax increment finan Purchase Price$700,000 cing over multiple years ill g,900 as. at no more than 15% os wou be necessary annually to maintain the uilding. The building’s condition is also deemed to be adequate that there are no major foreseeable available July 1, 013 and targeting July 2 for closing the transaction, including the property owner’s signing the he two-year lease with IBS would include IBS responsibility for of the loan. The leasable space in the building wenerate $3 month or $46,800 annually towards operation It is estimated thf these fundld b major repairs necessary prior to the time that decision would be made for moving ahead with the plaza project. The remaining funds could either be utilized to repay the revolving loan debt in addition to the tax increment financing or could be used to further other downtown projects within the district. It estimated that the balance of the outstanding revolving fund debt as of 6/30/14 will be $1M, leaving an additional $500K still available for operations and projects in the downtown district. RECOMMENDED ACTION: Staff recommends purchasing the property for $700,000 with the $50,000 CDBG funds 2 proposed lease for Savoy, LLC. T property taxes over during the term    Attachment 2       Detailed Property Report Site Address138 MAIN ST STE A Springfield, OR 97477-5300 Map & Taxlot#17-03-35-32-04500 SIC N/A Tax Account#0314623 a a Additional site address(es) are associated with this tax account Property Owner 1 MANOA LLC 388 W 7TH AVE EUGENE, OR 97401 Approx. taxlot acreage 0.18 Tax account acreage data not available Related Accts 5297666 5620518 5645755 Map & Taxlot # 17-03-35-32-04500 Improvements Photos & Sketches for Tax Account Site Address Information 138 MAIN ST STE A SPRINGFIELD, OR 97477-5300 House # 138 Suffix N/A Pre-directional N/A Street Name MAIN Street Type ST Unit type / # STE A Mail City SPRINGFIELD State OR Zip Code 97477 Zip + 4 5300 Create Date Sep 25, 1986 Update Date Jun 24, 2010 Land Use 6833 Barber & Beauty Schools USPS Carrier Route C001 Additional site address(es) attached to this tax account 138 MAIN ST STE B General Taxlot Characteristics Geographic Coordinates X4257681Y877350(State Plane X,Y) Latitude44.0465Longitude-123.0241 Taxlot Characteristics Incorporated City LimitsSPRINGFIELD Urban Growth BoundarySpringfield Year Annexed1885 Produced by CITY OF SPRINGFIELD, City Manager's Office on 3/15/2013 at 2:19PM using RLID (www.rlid.org)Page 1 of 5 Attachment 3, Page 1 of 5 Zoning Zoning Jurisdiction Springfield Springfield Parent ZoneMUCMIXED USE COMMERCIAL Land Use CodeDescription E Educational L Recreation General Land Use CodeDescription 6833Barber & Beauty Schools 7425Gymnasiums & Athletic Clubs Detailed Land Use Annexation #N/A Approximate Taxlot Acreage 0.18 Approx Taxlot Sq Footage7,841 2010 Census Tract3202 2010 Census Block Group3 Plan Designation Metro Plan Map Eugene NeighborhoodN/A Metro Area Nodal Dev Area Yes Downtown ND Historic Property NameN/A City Historic Landmark?No National Historical Register?No Service Providers Fire Protection Provider City ofSpringfield Ambulance Provider Springfield Dept of Fire & Life Safety Ambulance District EC Ambulance Service Area East/Central LTD Service Area? Yes LTD Ride Source? Yes Soil Water Cons. Dist/Zone UPPER WILLAMETTEE / 0 Emerald People's Utility DistrictN Environmental Data CodeDescription X Areas determined to be outside of 500-year flood. FEMA Flood Hazard Zone FIRM Map Number41039C1142 F Community Number415592 Post-FIRM Date09/27/1985 Panel Printed?Yes Soil Map Unit#Soil Type Description% of TaxlotAg Class 1Hydric 76MALABON-URBAN LAND COMPLEX99%1 No Soils Schools CodeName School District19 SPRINGFIELD Elementary School5059Two Rivers/Dos Rios Middle School549 Hamlin High School560 Springfield Political Districts Election Precinct2236 City Council WardSP2 City CouncilorHillary Wylie County Commissioner District2 (Springfield) County CommissionerSid Leiken EWEB CommissionerN/A LCC Board Zone3 State Representative District12 State RepresentativeJohn Lively State Senate District6 State SenatorLee Beyer Produced by CITY OF SPRINGFIELD, City Manager's Office on 3/15/2013 at 2:19PM using RLID (www.rlid.org)Page 2 of 5 Attachment 3, Page 2 of 5 Liens None Building Permits RLID does not contain any building permit data for this jurisdiction Land Use Applications RLID does not contain any landuse application data for this jurisdiction Petitions RLID does not contain any petition data for this jurisdiction Tax Statements (current and previous tax years) ACCOUNT#: 0314623 View tax statement(s) for: 2012 2011 Owner/Taxpayer OwnerAddressCity/State/Zip MANOA LLC388 W 7TH AVEEUGENE, OR 97401 Owners Party NameAddressCity/State/Zip MANOA LLC388 W 7TH AVEEUGENE, OR 97401 Taxpayer Data source: Lane County Assessment and Taxation Account Status StatusActive Account Current Tax Year Related Accts 5297666 5620518 5645755 Account Status none Remarksnone Special Assessment Program N/A Data source: Lane County Assessment and Taxation General Tax Account Information Tax Account Acreage data not available Fire Acres N/A Property Class 201 COMMERCIAL, IMPROVED Statistical Class 441 RETAIL, MULTI TENANT Neighborhood Code 81902 Category Land and Improvements Data source: Lane County Assessment and Taxation Township-Range-Section / Subdivision Data Produced by CITY OF SPRINGFIELD, City Manager's Office on 3/15/2013 at 2:19PM using RLID (www.rlid.org)Page 3 of 5 Attachment 3, Page 3 of 5 Subdivision Type N/ASubdivision Name N/ASubdivision Number N/A Phase N/ALot/Tract/Unit # TL 04500Recording Number N/A Data source: Lane County Assessment and Taxation Property Values & Taxes The values shown are the values certified in October unless a value change has been processed on the property. Value changes typically occur as a result of appeals, clerical errors and omitted property. The tax shown is the amount certified in October. This is the full amount of tax for the year indicated and does not include any discounts offered, payments made, interest owing or previous years owing. It also does not reflect any value changes. Real Market Value (RMV) Total Assessed Value Tax YearLandImprovementTotal 2012$80,923$486,681$567,604$305,668$5,240.04 2011$80,923$529,002$609,925$296,765$5,099.43 2010$79,063$455,830$534,893$277,273$4,768.43 2009$82,358$474,820$557,178$269,197$4,649.17 2008$79,960$460,990$540,950$261,356$4,571.93 2007$114,160$377,880$492,040$230,898$3,765.60 2006$84,560$303,970$388,530$209,006$3,411.69 2005$72,894$262,040$334,934$134,407$ 309.40 2004$61,775$222,070$283,845$130,492$2,167.63 2003$58,279$209,500$267,779$126,691$2,105.40 2002$56,038$201,440$257,478$123,001$1,923.55 2001$53,370$190,040$243,410$119,418$1,887.01 2000$53,370$190,040$243,410$115,940$1,841.42 1999$40,430$143,970$184,400$112,563$1,861.56 1998$38,870$145,420$184,290$109,284$1,809.63 1997$37,740$141,180$178,920$106,101$1,802.87 1996$35,940$121,710$157,650$157,650$2,457.78 1995$33,850$84,040$117,890$117,890$1,850.48 Current Year Assessed Value$305,668 Less Exemption Amount * N/A Taxable Value $305,668 * Frozen Assessed Value Data source: Lane County Assessment and Taxation Tax Code Area & Taxing Districts Tax Code Area (Levy Code) for current tax year 01999 Taxing Districts for TCA 01999 CITY OF SPRINGFIELD LANE COMMUNITY COLLEGE LANE COUNTY LANE EDUCATION SERVICE DISTRICT SPRINGFIELD ECONOMIC DEVELOPMENT AGENCY SPRINGFIELD SCHOOL DISTRICT 19 WILLAMALANE PARK & RECREATION DISTRICT Data source: Lane County Assessment and Taxation Sales & Ownership Changes Sale DateSale Price Doc #ImageAnalysis Code Multiple Accts? Grantor(s)Grantee(s) 03/22/2010$0OT233019 K YesMANOA LTDMANOA LLC 01/19/2007$499,0002007-4564 V NoARTHUR LOUIS NICHOLS JR INTER REVOC MANOA LTD 11/03/2000$02000-64112 6 NoNICHOLS ARTHUR L & SUSAN K ARTHUR LOUIS NICHOLS JR INTER REVOC 04/23/1993$120,0001993-25135 V data not available BROWN, ANNdata not available Produced by CITY OF SPRINGFIELD, City Manager's Office on 3/15/2013 at 2:19PM using RLID (www.rlid.org)Page 4 of 5 Attachment 3, Page 4 of 5 07/20/1992$90,7851992-40487 B data not available SMEJKAL, ROBERT A data not available Commercial Sales Data ImageSale Date 0314623.pdf 01/19/2007 Data source: Lane County Assessment and Taxation Produced by CITY OF SPRINGFIELD, City Manager's Office on 3/15/2013 at 2:19PM using RLID (www.rlid.org)Page 5 of 5 Attachment 3, Page 5 of 5 Attachment 3, Page 6 Attachment 4, Page 1 of 38 Attachment 4, Page 2 of 38 Attachment 4, Page 3 of 38 Attachment 4, Page 4 of 38 Attachment 4, Page 5 of 38 Attachment 4, Page 6 of 38 Attachment 4, Page 7 of 38 Attachment 4, Page 8 of 38 Attachment 4, Page 9 of 38 Attachment 4, Page 10 of 38 Attachment 4, Page 11 of 38 Attachment 4, Page 12 of 38 Attachment 4, Page 13 of 38 Attachment 4, Page 14 of 38 Attachment 4, Page 15 of 38 Attachment 4, Page 16 of 38 Attachment 4, Page 17 of 38 Attachment 4, Page 18 of 38 Attachment 4, Page 19 of 38 Attachment 4, Page 20 of 38 Attachment 4, Page 21 of 38 Attachment 4, Page 22 of 38 Attachment 4, Page 23 of 38 Attachment 4, Page 24 of 38 Attachment 4, Page 25 of 38 Attachment 4, Page 26 of 38 Attachment 4, Page 27 of 38 Attachment 4, Page 28 of 38 Attachment 4, Page 29 of 38 Attachment 4, Page 30 of 38 Attachment 4, Page 31 of 38 Attachment 4, Page 32 of 38 Attachment 4, Page 33 of 38 Attachment 4, Page 34 of 38 Attachment 4, Page 35 of 38 Attachment 4, Page 36 of 38 Attachment 4, Page 37 of 38 Attachment 4, Page 38 of 38 Attachment 5, Page 1 of 29 Attachment 5, Page 2 of 29 Attachment 5, Page 3 of 29 Attachment 5, Page 4 of 29 Attachment 5, Page 5 of 29 Attachment 5, Page 6 of 29 Attachment 5, Page 7 of 29 Attachment 5, Page 8 of 29 Attachment 5, Page 9 of 29 Attachment 5, Page 10 of 29 Attachment 5, Page 11 of 29 Attachment 5, Page 12 of 29 Attachment 5, Page 13 of 29 Attachment 5, Page 14 of 29 Attachment 5, Page 15 of 29 Attachment 5, Page 16 of 29 Attachment 5, Page 17 of 29 Attachment 5, Page 18 of 29 Attachment 5, Page 19 of 29 Attachment 5, Page 20 of 29 Attachment 5, Page 21 of 29 Attachment 5, Page 22 of 29 Attachment 5, Page 23 of 29 Attachment 5, Page 24 of 29 Attachment 5, Page 25 of 29 Attachment 5, Page 26 of 29 Attachment 5, Page 27 of 29 Attachment 5, Page 28 of 29 Attachment 5, Page 29 of 29 Attachment 6, Page 1 Attachment 6, Page 2 Attachment 6, Page 3 Attachment 6, Page 4 Attachment 6, Page 5 Attachment 6, Page 6 Attachment 6, Page 7 Attachment 6, Page 8 Attachment 6, Page 9 Attachment 6, Page 10 Attachment 6, Page 11 Attachment 6, Page 12 LEASE AGREEMENT THIS LEASE AGREEMENT, is made and entered into this July 2, 2013, by and between Springfield Economic Development Agency (SEDA) hereinafter referred to as the Lessor, and Savoy, Inc. dba IBS Beauty School hereinafter referred to as the Lessee. Darin Kobatake will sign as a personal guarantor for the Lessee. Consideration of the covenants, agreements and stipulations herein contained on the part of the Lessee to be paid, kept and faithfully performed, the Lessor does hereby lease, demise and let unto the said Lessee those certain premises, as is, situated in the City of Springfield, County of Lane and State of Oregon, at: 138 Main Street Suite B and further described as: See: Exhibit “A” upon the following TERMS and CONDITIONS: SECTION 1. OCCUPANCY 1.1 Original Term. The term of this lease shall commence on July 2, 2013, and continue through July 1, 2015. 1.2 Possession. Lessee’s rights to possession and obligations under this lease shall commence on July 2, 2013. 1.3 Renewal Option. Lessor and Lessee may renew or extend this lease by mutual agreement. 1.4 Lessor, or Lessor’s agent, shall have the right to place “For Lease”, “For Sale” or similar such signs on the subject leased property at any time within the last one hundred and twenty (120) days of the lease term. The location of such signs shall be at the sole discretion of the Lessor (see also 18.7). SECTION 2. RENT 2.1 Base Rent. Lessee shall pay to Lessor on the 1st day of each month in advance at such place as may be designated by the Lessor, as beginning base monthly rent the sum of $2,000 per month. 2.2 Late Payment Charges. If Lessee fails to pay, within TEN (10) days after the due date thereof, any rent, Lessor advance, or other charge payable by Lessee under this Lease, then Lessee shall be obligated to pay to Lessor (in addition to the overdue principal amount of the rent, advance, or other chare) a late payment charge of $100.00 with said late payment charge being compounded monthly, for each month or fraction of a month during which the overdue principal amount remains unpaid. Payment date shall be that date on which Lessor receives said payment. 2.3 Security Deposit. To secure Lessee’s compliance with all terms of this lease, Lessee has paid Lessor the sum of $2,000.00 as a deposit. The deposit shall be a debt from Lessor to Lessee, refundable within THIRTY (30) days following expiration of the lease term or other termination not caused by Lessee’s default. Lessor shall have the right to offset against the deposit any sums owing from Lessee to Lessor and not paid when due, any damages caused by Lessee’s default, the cost of curing any default by Lessee should Lessor elect to do so, and the cost of performing any repair or cleanup that is Lessee’s responsibility under this lease. Offset against the deposit shall not be an exclusive remedy in any of the above cases, but may be invoked by Lessor, as its option in addition to any other remedy provided by law or this lease for Lessee’s nonperformance. Lessor shall give notice to lessee each time an offset is claimed against the deposit, and, unless the lease is terminated, Lessee shall within TEN (10) days following such notice deposit with Lessor a sum equal to the amount of the offset so that the total deposit amount, net of offset, shall remain constant throughout the lease term. 2.4 Utilities. Lessee shall be responsible for the utility charges for both Suite A and Suite B to the following extent: 1) in the event that the Lessee is occupying and using the space the utilities shall be capped at $580; and 2) in the event that the Lessee does not occupy the space the Lessee’s contribution to utilities shall be capped at $150 per month.. The caps in 1) and 2) would remain the same during the term of the lease until whenever SUB may make an increase to electric rates for the commercial uses and at each such occasion, the following month each cap shall be increased by the same percentage as the effective electrical rates are increased. SECTION 3. REPAIRS AND MAINTENANCE 3.1 Lessor’s Obligations. The following shall be the responsibility of the Lessor. (a) Repairs and maintenance of the roof and gutters, exterior walls (including painting), bearing walls, structural members, and foundations. Attachment 6, Page 13 (b) Repair of sidewalks, driveways, curbs, parking areas, and areas used in common by Lessee and Lessor or Lessees of other portions of the same building. (c) Repairs and maintenance of exterior water, sewage, gas and electrical services up to the point of entry to the leased premises. 3.2 Lessee’s Obligation. The following shall be the responsibility of the Lessee. (a) Maintenance, repair or replacement of interior walls, ceilings, floor covering, counters, cabinets, doors and windows and related hardware, light fixtures, switches, and electrical wiring and gas/water/sewer plumbing from the point of entry to the premises. (b) Any repairs necessitated by the negligence of Lessee, its agents, employees and invitees, except as provided in Paragraph 7.1 dealing with waivers of subrogation. (c) Any repairs or alterations required under Lessee’s obligation to comply with laws and regulations as set forth in Paragraph 4.2 (a) below. (d) All other repairs to the premises which Lessor is not required to make under Paragraph 3.1 above. (e) Compliance with all reasonable rules and regulations respecting the use of the Leased Premises issued by Lessor from time to time and communicated to Lessee in writing. (f) Not commit waste, not suffer or permit waste to be committed, and not cause or permit any nuisance on or in the Leased Premises. 3.3 Lessor’s Interference with Lessee. Any repairs, replacements, alterations, or other work performed on or around the leased premises by Lessor shall be done in such a way as to interfere as little as reasonably possible with the use of the premises by Lessee. Lessee shall have no right to an abatement of rent nor any claim against Lessor for any inconvenience or disturbance resulting from Lessor’s activities performed in conformance with the requirements of this provision. 3.4 Reimbursement for Repairs Assumed. If either party fails or refuses to make repairs which are required by this Section 3, the other party may make the repairs, and charge the actual costs of repairs to the first party. Such expenditures by Lessor shall be reimbursed by Lessee on demand, together with interest at the rate of TWELVE (12%) percent per annum from the date of expenditure by Lessor. Such expenditures by Lessee may be deducted from rent and other payments subsequently becoming due, or, at Lessee’s election directly from Lessor. Except in an emergency creating an immediate risk of personal injury or property damage, neither party may perform repairs which are the obligation of the other party, and charge the other party for the resulting expenses unless at least THIRTY (30) days before work is commenced, the defaulting party is given notice in writing outlining with reasonable particularity the repairs required, and such party fails within that time to initiate such repairs in good faith. 3.5 Inspection of Premises. Lessor shall have the right to inspect the premises at any reasonable time or times, during normal business hours and without undue interference to Lessee’s business operations, to determine the necessity of repairs. Whether or not such inspection is made, the duty of Lessor to make repairs shall not mature until a reasonable time after Lessor has received from Lessee notice in writing of the repairs that are required. SECTION 4. USE OF THE PREMISES 4.1 Permitted Use. The premises shall be used for a cosmetology school and related activities and for no other purpose without the written consent of Lessor. Lessor makes no representations as to the suitability of the premises for Lessees anticipated use(s), and Lessee acknowledges that Lessee has through its own due diligence determined suitability and, except as may be specially provided otherwise herein, hereby accepts the premises in the current “AS IS” condition. 4.2 Restrictions on Use. In connection with use of the premises Lessee shall: (a) Conform to all applicable laws and regulations of any public authority affecting the premises, and the use including any requirements of any governmental agency relating to the use, storage, or spillage of any hazardous waste or materials and correct at Lessee’s own expense and failure of compliance crated through Lessee’s fault or by reason of Lessee’s use, but Lessee shall not be required to make any structural changes to effect such compliance unless such changes are required Attachment 6, Page 14 because of Lessee’s specific use. Lessee shall indemnify and hold Lessor harmless from any and all liability, including Lessor’s reasonable attorney’s fees, which may incur by reason of any default or Lessee in compliance with this paragraph. (b) Refrain from any activity which would make it impossible to insure the premises against casualty, would increase the insurance rate, or would prevent Lessor from taking advantage of any ruling of the Oregon Insurance Rating Bureau or its successor allowing Lessor to obtain reduced premium rates for long-term fire insurance policies, unless Lessee pays the additional cost of the insurance. (c) Refrain from any use which would be reasonably offensive to other Lessees or owners or users of neighboring premises or which would tend to create a nuisance or damage the reputation of the premises. (d) Refrain from loading the floors beyond the point considered safe by a competent engineer or architect selected by Lessor. 4.3 SIGNS. Lessee is strictly forbidden from making any marks on or attaching any signs, antenna, aerial, or other device to the exterior or interior walls, windows, or roof of the premises without the prior written consent of Lessor. Should Lessor give consent for installation of any sign by Lessee, said consent would be subject to Lessor’s approval of the proposed sign placement, method of installation, design, size, color, wording and evidence of approval by the prevailing local governmental authority. The entire cost related to any approved sign, design, construction and installation shall be the sole obligation of the Lessee. Immediately upon termination of Lessee’s tenancy all signs previously installed by Lessee shall be removed by Lessee, at the Lessee’s expense, and the area where the sign was installed or attached to its original condition. SECTION 5. HAZARDOUS MATERIALS. Lessee shall not cause or permit any Hazardous Material (as defined in Section 5.3) to be brought upon, kept or used in or abut the Leased premises without the express prior written consent of Lessor (which Lessor shall not unreasonably withhold, provided that Lessee demonstrates to Lessor’s reasonable satisfaction that such Hazardous Material is necessary or useful to Lessee’s business, and that such Hazardous Material will be used, kept and stored in a manner that complies with all laws, rules, ordinances, and regulations relating to the storage and use of Hazardous Material). Lessor’s consent shall not be deemed to be a waiver by Lessor of is rights to indemnification by Lessee as stated in Section 5.1. If Lessee breaches the obligation stated herein, or if the presence of Hazardous Material on the Leased Premises caused or permitted by Lessee at any time after execution of this Agreement results in any contamination of the Leased Premises or any other private or public property, including, without limitation, sewers or streets, or if contamination of the Leased Premises by Hazardous Material otherwise occurs for which Lessee is legally liable to Lessor or to any third party for damages resulting there from, then: 5.1 Lessee shall indemnify, defend and hold Lessor harmless from and against any and all claims, judgments, damages, penalties, fines, costs, expenses, liabilities and losses (including, without limitation, diminution in value of the Leased Premises, damages for the loss or restriction on use of the Lased Premises, and sums paid in settlement of claims, attorneys’ fees, consultant fees and expert fees) that arise during or after the term of this Lease, as a result of or in connection with such contamination. The foregoing indemnification of Lessor by Lessee includes, without limitation, costs incurred in connection with any investigation of site conditions or any clean-up, remedial, removal or restoration work required or recommended by any federal, state or local governmental agency or political subdivision because of Hazardous Material present in the soil or groundwater on or under the Leased Premises or any public facility. 5.2 Lessee shall promptly take any and all actions, at its sole cost and expense, as are necessary or appropriate to return the Leased Premises or other private or public facilities to the condition existing prior to the introduction of any Hazardous Material to the Leased Premises; provided that Lessor’s approval of such actions shall first be obtained, which approval shall not be unreasonably withheld if such actions would not potentially have any material adverse effect on the Leased Premises or other private or public facilities. All contractors, laboratories and engineering firms (hereinafter “Consultants”) chosen by Lessee to undertake any remedial action that may be necessary or appropriate on or abut the Lased Premises or other private or public facilities shall be approved by Lessor prior to their employment by Lessee, which approval will not be unreasonably withheld. Consultants shall be licensed and bonded in accordance with all Attachment 6, Page 15 applicable laws. Duplicate copies of all reports and findings made by Consultants with regard to the condition of the Lased Premises or other private or public facilities shall be delivered to Lessor concurrently with their delivery to Lessee. Lessee shall have the work done by the Consultants at Lessee’s sole risk and shall indemnify and hold Lessor and Lessor’s agents and employees harmless from and against any and all loss, costs, liability, damage and expense relating to or arising from any damage or injury to Lessee, the Consultants, or the agents of either of them, for any third party liability incurred by any of them, an for any claim by Lessor, or Lessor’s agents or employees by reason of any such work conducted by Consultants. 5.3 As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material or waste that is or becomes regulated by any local governmental authority, the State or Oregon, or the United States Government. The term “Hazardous Material” includes, without limitation, any material or substance which is designated as a hazardous substance pursuant to the Water Pollution Control Act (33 USC Section 1317); or defined as hazardous waste pursuant to the Resource Conservation and Recovery Act (42 USC Section 6901 et seq.); or defined as a hazardous substance pursuant to the Comprehensive environmental Response, Compensation and Liability Act of 1980, as amended (42 USC Section 9601 et seq.); or defined as hazardous material pursuant to Article 90 of the Uniform Fire Code, as adopted by the City or County in which the subject property is located and, as amended from time to time. SECTION 6. ALTERATIONS 6.1 Alterations Prohibited. Lessee shall make no improvements or alterations to the leased premises of any kind without first obtaining Lessor’s written consent. 6.2 Alterations Required. The improvements delineated on the work sheet, if any attached hereto and made part of this lease shall be performed by the party designated and within the time stated on the work sheet. 6.3 Ownership of Alterations. All improvements and alterations performed on the leased premises by either Lessor or Lessee shall be the property of the Lessor when installed unless the applicable Lessor’s consent specifically provides otherwise. SECTION 7. INSURANCE 7.1 Insurance Required. Lessor shall be responsible for insuring the premises, and Lessee for insuring its personal property and trade fixtures located on the premises. Neither party shall be liable to the other for any loss or damage caused by water damage, sprinkler leakage, or any of the risks covered by a standard fire insurance policy with an extended coverage endorsement, and there shall be no subrogated claim by one party’s insurance carrier against the other arising out of any such loss. 7.2 Liability Insurance. Before taking possession of the premises, Lessee shall procure and thereafter during the term of the lease shall continue to carry the following insurance at Lessee’s costs; Public liability an property damage insurance in a responsible company with limits of not less than $2,000,000 dollars of injury to one person, $3,000,000 dollars for injury to two or more persons, and $100,000 dollars for damage to property. Such insurance shall cover all risks arising directly or indirectly out of Lessee’s activities on or any condition of the leased premises whether or not related to an occurrence caused or contributed to by Lessor’s negligence, shall protect Lessee against the claims of Lessor on account of the obligations assumed by Lessee under Paragraph 7.1, and shall protect Lessor and Lessee against claims of third persons. Certificates evidencing such insurance, and bearing endorsements requiring TEN (10) days’ written notice to Lessor prior to any change or cancellation shall be furnished to Lessor prior to Lessee’s occupancy of the property. Attachment 6, Page 16 SECTION 8. UTILITIES AND SERVICES 8.1 Utilities and Services Charges. Utilities and services shall be paid by: Utility & Services Lessor Lessee Remarks Telephone () (X) Electric Services () (X) If there is 1 meter, Lessee to pay share of bill (**) Natural Gas Services () (X) If there is 1 meter, Lessee to pay share of bill (**) Municipal Water Services () (X) If there is 1 meter, Lessee to pay share of bill (**) Sewer Services () (X) If there is 1 meter, Lessee to pay share of bill (**) Refuse Collection () (X) Interior Janitorial Services () (X) Storm Water Charges () (X) Landscape Care & Maintenance () () n/a Other () () (**) Lessee to pay share of bill will be split based upon the square footage of Lessee’s space. Unless the other tenant is using a large amount of utilities based on their type of business. In that case the bill shall be adjusted accordingly. 8.2 Telephone Service. Lessee hereby takes possession of said leased premises with telephone service in “as-is” condition. Lessee acknowledges inspection of telephone service and accepts service as adequate. SECTION 9. TAXES 9.1 Personal Property Taxes. Lessee shall pay all property taxes assessed against Lessee’s inventory, equipment, appliances and other personal property located on the subject leased premises. 9.2 Real Property Taxes. Lessee shall pay all real property taxes assessed against Lessor’s real property. SECTION 10. DAMAGE AND DESTRUCTION 10.1 Partial Damage. If the leased premises are partly damaged, and Paragraph 10.2 below does not apply, the property shall be repaired by Lessor at Lessor’s expense. Repairs shall be accomplished with all reasonable dispatch subject to interruptions and delays from labor disputes, and matters beyond the control of Lessor, and shall be performed in accordance with the provisions of Paragraph 3.3 above. 10.2 Destruction. If the leased premises are destroyed or damaged such that the cost of repair exceeds FIFTY (50%) percent of the value of the structure before the damage, either party may elect to terminate the lease as of the date of the damage or destruction by notice given to the other in writing not more than FORTY-FIVE (45) days following the date of damage. In such event all rights and obligations of the parties shall cease as of the date of termination, and Lessee shall be entitled to any prepaid amounts previously paid by Lessee, and attributable to the anticipated term. If nether party elects to terminate, Lessor shall proceed to restore the leased premises to substantially the same form as prior to the damage or destruction. Work shall be commenced as soon as reasonably possible, and thereafter shall proceed without interruption except for work stoppages on account of labor disputes, and matters beyond the control of the Lessor. 10.3 Rent Abatement. Rent shall be abated during the repair of any damage to the extent the premises are un-lease able, except that there shall be no rent abatement where the damage occurred as the result of the fault of Lessee, their agents, employees or invitees. 10.4 Damage Late in Term. If damage or destruction to which Paragraph 10.2 would apply occurs within ONE (1) year prior to the end of the then current lease term, Lessee may elect to terminate the lease by notice in writhing to Lessor given within THIRTY (30) days after the date of the damage. SECTION 11 EMINENT DOMAIN 11.1 Partial Taking. If a portion of the leased premises is condemned, and Paragraph does not apply, the lease shall continue on the following terms: (a) Lessor shall be entitled to all of the proceeds of condemnation, and Lessee shall have no claim against Lessor as result of the condemnation. Attachment 6, Page 17 (b) Lessor shall proceed as soon as reasonably possible to make such repairs and alterations to the premises as are necessary to restore the remaining premises to a condition as comparable as reasonably practicable to that existing at the time of the condemnation. (c) After the date on which title meets in the condemning authority or an earlier date on which alterations or repairs are commenced by Lessor to restore the balance of the property in anticipating of taking, the rent shall be reduced in proportion to the reduction in value of the leased premises as an economic unit on account of the partial taking. If the parties are unable to agree upon the amount of the reduction of rent, the amount shall be determined by arbitration in the manner as is provided in section 20. (d) If a portion of Lessor’s property not included in the leased premises is taken, and severance damages are awarded on account of the leased premises, or an awarded is made for detriment to the leased premises as a result of activity by a public body not involving a physical taking of any portion of the premises, this shall be regarded as a partial condemnation to which subparagraphs 11.1 (a) and (c) apply, and the rent shall be reduced to the extent of reduction in rental value of the premises as though a portion had been physically taken. 11.2 Total Taking. If a condemning authority takes all of the leased premises or a portion sufficient to render the remaining premises reasonably unsuitable for the use which Lessee was then making of the premises, the lease shall terminate as of the date the title vests in the condemning authorities. Such termination shall have the same effect as termination under Paragraph 11.1 (a) above. Lessor shall be entitled to all of the proceeds of the condemnation, and Lessee shall have no claim against Lessor as a result of the condemnation. 11.3 Sale in Lieu of Condemnation. Sale of all or part of the leased premises to a purchaser with the power of eminent domain in the face of a threat or probability of the exercises of the power shall be treated for the purposes of this Section 11 as a taking by condemnation. SECTION 12 LIABILITY AND INDEMNITY 12.1 Liens. (a) Except with respect to activities for which Lessor is responsible, Lessee shall pay as due all claims for work done on and fore services rendered or material furnished to the leased premises, and shall keep the premises free from any liens, If Lessee fails to pay any such claims or to discharge any lien, Lessor may do so, and collect the cost as additional rent. Any amount so added shall bear interest at the rate of TWELVE (12%) percent per annum from the date expended by Lessor, and shall be payable on demand. Such action by Lessor shall not constitute a waiver of any right or remedy which Lessor may have on account of Lessee’s default. (b) Lessee may withhold payment of any claim in connection with a good-faith dispute over the obligation to pay, as long as Lessor’s property interests are not jeopardized. If a lien is filed as a result of nonpayment, Lessee shall, within TEN (10) days deposit with Lessor cash or sufficient corporate surety bond or other security satisfactory to Lessor in an amount sufficient to discharge the lien, plus any costs, attorney’s fees, and other charges that could accrue as a result of a foreclosure or sale under the lien. 12.2 Indemnification. Lessee shall indemnify and defend Lessor from any claim, loss, or liability arising out of or related to any activity of Lessee on the leased premises or any condition of the leased premises in the possession or under the control of Lessee. Lessor shall have no liability to Lessee for any loss or damage caused by third parties or by any condition of the premises, except to the extent such claim, loss or liability is caused by Lessor’s negligence or breach of duty under this Lease Agreement. Attachment 6, Page 18 SECTION 13. QUIET ENJOYMENT; MORTGAGE PRIORITY 13.1 Lessor’s Warranty. Lessor warrants that it is the owner of the leased premises, and has the right to lease them. Lessor will defend Lessee’s right to quite enjoyment of the leased premises from the lawful claims of all persons during the lease term. 13.2 Mortgage Priority. This lease is and shall be prior to any mortgage or deed of trust (“Encumbrance”) recorded after the date of this lease and affecting the premises. However, if any lender holding such an Encumbrance requires that this lease be subordinate to the Encumbrance, then Lessee agrees that the lease shall be subordinate to the Encumbrance if the holder thereof agrees in writing with Lessee that so long as Lessee performs its obligations under this lease no foreclosure, deed given in lieu of foreclosure, or sale, pursuant to the terms of the Encumbrance, or other steps or procedures taken under the Encumbrance shall affect Lessee’s rights under this lease. If the foregoing condition is met, Lessee shall execute the written agreement, and any other documents required by the holder of the Encumbrance to accomplish the purposes of this paragraph. If the premises are sold as a result of foreclosure of any Encumbrance thereon or otherwise transferred by Lessor or any successor, Lessee shall return to the purchaser or transferee. 13.3 Estoppel Certificate. Either party will within TWENTY (20) days after notice from the other, execute and deliver to the other party a certificate stating whether or not this lease has been modified, and is in full force and effect, and specifying any modifications or alleged breaches by the other party. The Certificate shall also state the amount of monthly base rent, the dates to which rent has been in advance and the amount of any security deposit or prepaid rent. Failure to deliver the certificate within the specified time shall be conclusive upon the party of whom the certificate was requested, that the lease is in full force and effect, and has not been modified except as may be represented by the party requesting the certificate. SECTION 14. ASSIGNMENT AND SUBLEASE No part of the leased property may be assigned, mortgaged, or subleased, nor may a right of use of any portion of the property be conferred on any third person by other means, without the prior written consent of Lessor. This provision shall apply to all transfers by operation of law. If Lessee is a corporation, this provision shall apply to any sale of a controlling interest in the stock of the corporation. No consent in one instance shall prevent the provision from applying to a subsequent instance. Lessor shall consent to a transaction covered by this provision when withholding such consent would be unreasonable in the circumstance. In determining whether to consent to assignment, Lessor may consider the following factors: financial ability of assignee, business experience of assignee, and credit worthiness of assignee. However, Lessor agrees not to unreasonably withhold such consent. SECTION 15. DEFAULT THE FOLLWING SHALL BE EVENTS OF DEFAULT; 15.1 Default in Rent. Failure of Lessee to pay any rent or other charge within TEN (10) days after it is due. 15.2 Default in Other Covenants. Failure of Lessee to comply with any terms or condition, to fulfill any obligation of the lease (other than the payment of rent or other charges) within TWENTY (20) days after written notice by Lessor specifying the nature of the default with reasonable particularity. If the default is of such a nature that it cannot be completely remedied within the TWENTY (20) day period, this provision shall be complied with if Lessee begins correction of the default within the TWENTY (20) day period, and thereafter proceeds with reasonable diligence, and in good faith to effect the remedy as soon as practicable. 15.3 Insolvency. Insolvency of Lessee; an assignment by Lessee for the benefit of creditors; the filing by Lessee of a voluntary petition in bankruptcy; an adjudication that Lessee is bankrupt or the appointment of a receiver of the properties of Lessee; the filing of any involuntary petition or bankruptcy, and failure or Lessee to secure a dismissal of the petition within THIRTY (30) days after filing; attachment of or the levying of execution of the leasehold interest, and failure of Lessee to secure discharge of the attachment or release of the levy of execution within TEN (10) days. If the Lessee consists of two or more individuals or business entities, the events of default specified in this Paragraph 15.3 shall apply to each individual or business entities, unless within Attachment 6, Page 19 TEN (10) days after an event of default occurs, the remaining individuals produce evidence satisfactory to Lessor that they have unconditionally acquired the interest of the one causing the default. If the lease has been assigned, the events of default so specified shall apply only with respect to the one then exercising the rights of Lessee under the lease. 15.4 Abandonment. Failure of Lessee for TEN (10) days or more to occupy the property for one or more of the purposes permitted under this lease unless such failure is excused under other provisions of this lease shall be an abandonment of the property. SECTION 16. REMEDIES ON DEFAULT 16.1 Termination. In the event of a default the lease may be terminated at the option of the Lessor by notice in writing to Lessee. If the lease is not terminated by election of Lessor or otherwise, Lessor shall be entitled to recover damages from Lessee for the default. If the lease is terminated, Lessee’s liability to Lessor for damages shall survive the termination and Lessor may re-enter, take possession of the premises, and remove any persons or property by legal action or by self- help with the use of reasonable force, and without liability for damage. 16.2 Reletting. Following re-entry or abandonment, Lessor may relet the premises, and in that connection may make any suitable alterations or refurbish the premises, or both, or change the character or use of the premises, but Lessor shall not be required to relet for any use or purpose other than that specified in the lease or which Lessor may reasonably consider injurious to the premises, or to any Lessee which Lessor may reasonably consider objectionable. Lessor may relet all or part of the premises, alone or in conjunction with other properties, for a term longer or shorter than the term of this lease, upon any reasonable terms and conditions, including the granting of some rent-free occupancy or other rent concession. 16.3 Damages. In the event of termination on default, Lessor shall be entitled to recover immediately, with waiting until the due date of any future rent or until the date fixed for expiration of the lease term, the following amounts as damages: (a) The loss of reasonable rental value from the date of default until a new Lessee has been, or with the exercise of reasonable efforts could have been secured. (b) The reasonable costs of re-entry and reletting, including without limitation the cost of any clean up, refurbishing, removal of Lessee’s property and fixtures, or any other expense occasioned by Lessee’s failure to quit the premises upon termination, and to leave them in the required conditioning, any remodeling costs, attorney’s fees, court costs, Agent commissions, and advertising costs. (c) Any excess of the value of the rent and all of Lessee’s other obligations under this lease over the reasonable expected return from the premises for the period commencing on the earlier of the date of trial or the date the premises are relet and continuing through the end of the term. The present value of future amounts will be computed using a discount rate equal to the prime loan rate of major Oregon banks in effect on the date of trial. 16.4 Rights to Sue More Than Once. Lessor may sue periodically to recover damages during the period corresponding to the remainder of the lease term, and no action for damages shall bar a later action for damages subsequently accruing. 16.5 Remedies Cumulative. The foregoing remedies shall be in addition to, and shall not exclude any other remedy available to Lessor under applicable law. SECTION 17. SURRENDER AT EXPIRATION 17.1 Condition of Premises. Upon expiration of the lease term or earlier termination on account of default, Lessee shall deliver all keys to Lessor, and surrender the leased premises in good order and repair, reasonable wear and tear excepted, and broom clean. Alterations constructed by Lessee with permission from Lessor shall not be removed or restored to original condition, unless the terms of permission for the alteration so require. Lessee’s obligation sunder this paragraph shall be subordinate to the provisions of Section 10 related to destruction. 17.2 Fixtures. (a) All fixtures, improvements or additions placed upon the leased premises during the lease term, other than Lessee’s trade fixtures, shall, at Lessor’s option, become the property of Lessor. If Lessor so elects, Lessee shall remove any or all fixtures which Attachment 6, Page 20 would otherwise remain the property of Lessor, and shall repair any physical damage resulting from the removal. If Lessee fails to remove such fixtures, Lessor may do so, and charge the cost to Lessee, with interest at the rate of TWELVE (12%) percent per annum, from the date of expenditure. (b) Prior to expiration or termination of the lease term, Lessee shall remove all furnishings, furniture, and trade fixtures which remain its property, and all rights of Lessee with respect to it shall cease, or, by notice in writing given to Lessee within TWENTY (20) days after removal was required, Lessor may elect to hold Lessee to its obligation or removal. If Lessor elects to require Lessee to remove, Lessor may effect a removal, and place the property in public storage for Lessee’s account. Lessee shall be liable to Lessor for the cost of removal, transportation, to storage, and storage costs, plus interest at the rate of TWELVE (12%) percent per annum, on all such expenses from the date of expenditure by Lessor. 17.3 Holdover. (a) If Lessee does not vacate the leased premises at the time required, Lessor shall have the option to treat Lessee as a Lessee from month-to-month, subject to all of the provisions of this lease except the provisions for renewal. Failure of Lessee to remove fixtures, furniture, furnishing or trade fixtures which under this lease shall constitute a failure to vacate to which this paragraph shall apply if the property not removed will substantially interfere with occupancy of the premises by another Lessee or with occupancy by Lessor for any purpose, including preparation for a new Lessee. Lessee’s monthly rent shall automatically increase to an amount equal to 150% of the last month’s rental rate during the specified lease term, for any holdover period. (b) If a month-to-month tenancy results from a holdover by Lessee under this Paragraph 17.3, the tenancy shall be terminable at the end of any monthly rental period on written notice from Lessor, given not less than TEN (10) days prior to the termination date which shall be specified in the notice. Lessee waives any notice which would otherwise be provided by law with respect to a month-to-month tenancy. SECTION 18. MISCELLANEOUS 18.1.1 Non-waiver. Waiver by either party of strict performance of any provision of this lease shall not be a waiver of or prejudice the party’s right to require strict performance of the same provision in the future or of any other provision. 18.2 Attorney Fees. If suit or action is instituted in connection with any controversy arising out of this lease, the prevailing party shall be entitled to recover, in addition to costs such sum as the court may adjudge reasonable as attorney’s fees, including fees on appeal. 18.3 Notices. Any notice required or permitted under this lease shall be given when actually delivered or FORTY-EIGHT (48) hours after deposited in United States mail as certified mail addressed to the address first given in this lease or to such other address as may be specified from time to time by either of the parties in writing. 18.4 Succession. Subject to the above-stated limitations on transfer of Lessee’s interest, this lease shall be binding upon and inure to the benefit of the parties, their respective successors, and assigns. 18.5 Lessor’s Right to Cure Defaults. If Lessee fails to perform any obligation under this lease, Lessor shall have the option to do so after THIRTY (30) days’ written notice to Lessee. All of Lessor’s expenditures to correct the default shall be reimbursed by Lessee on demand, with interest at the rate of TWELVE (12%) percent per annum from the due date until paid. 18.6 Recordation. This lease shall not be recorded without the prior written consent of the Lessor. 18.7 Entry for Inspection. Lessor, or Lessor’s agent, shall have the right to enter the premises, during normal business hours, in a manner that does not interfere with Lessee’s business or Lessee’s customers, to determine Lessee’s compliance with this lease, to make necessary repairs to the building or to the premises, or to show the premises to any prospective Lessee or purchase, and, in addition, shall have the right, at any time during the last four months of the term of this lease, to place and maintain upon the premises notices for leasing or selling the premises. Attachment 6, Page 21 18.8 Interest on Rent or Other Charges. Any rent or other payment required of Lessee by this lease shall, if not paid within TEN (10) days after it is due, bear interest at the rate of TWELVE (12%) percent per annum from the due date until paid. 18.9 Proration of Rent. In the event of commencement or termination of this lease at a time other than the beginning or end of one of the specified rental periods, then the rent shall be prorated as of the date of commencement or termination, and in the event of termination for reasons other than default, all prepaid rent shall be refunded to Lessee or paid on its account. 18.10 Counterparts: This Agreement may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument. SECTION 19. OTHER AGREEMENTS BETWEEN LESSEE AND LESSOR This Agreement shall supersede any and all agreements made by the Lessee with regards to the property that is the subject of this Agreement as detailed in Exhibit A including, but not limited to, a Lease Agreement dated September 4, 2006 by Art Nichols Louis Trust, as lessor, the Lessee, as lessee, and the Personal Guarantors, as personal guarantors. SECTION 20. PAYMENTS All payments shall be made to Finance Director, City of Springfield, 225 Fifth Street, Springfield, Oregon 97477. SECTION 21. TRANFER OF INTEREST BY LESSOR Lessor may sell, exchange, assign, transfer, convey, contribute, distribute or otherwise dispose of all or any part of its interest in the premise or this Lease. THIS IS A LEGALLY BINDING AGREEMENT. IF NOT UNDERSTOOD BY ANY PARTIES HERETO, THEY SHOULD SEEK COMPETENT LEGAL AND/OR ACCOUNTING ADVICE PRIOR TO SIGNING. LESSOR Springfield Economic Development Agency (SEDA) City Manager’s Office City of Springfield 225Fifth Street Springfield, OR 97477 Tel: 541-726-3700 / Fax: 541-726-2363 Signature: ___________________________ By: [ ] Title: [ ] LESSEE Savoy Inc., dba IBS Beauty School 138 Main Street Springfield, OR 97477 Tel: 541-242-1444 / Fax: 541-242-8030 Signature: ___________________________ By: Darin Kobatake Title: President Attachment 6, Page 22 PERSONAL GUARANTOR Darin Kobatake 388 West 7th Ave Eugene, Oregon 97401 Signature: ___________________________ By: Darin Kobatake Title: Guarantor Attachment 6, Page 23 Exhibit “A” Exhibit to a Intent to Lease dated [ ] between [ ], Lessor and Savoy Inc., Lessee for the Easterly entrance areas [ ] +/- square feet of 138 Main Street, Springfield, Oregon. Attachment 6, Page 24 PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT (“Agreement”) is made as of the date of the last signature below by and between the Manoa, LLC (“Seller”) and the Springfield Economic Development Association, an urban renewal district of the City of Springfield (“Purchaser”). RECITALS A. Seller owns certain real property commonly known as 138 Main Street, Springfield, Lane County, Oregon (aka Map Identification and Tax Lot No. 17-03-35-32- 04500) more particularly described and set forth in Exhibit A attached hereto and incorporated herein by reference. B. Purchaser desires to acquire all the Property together with improvements, reservations, exceptions and easements more particularly described and set forth in Exhibit B from Seller. Seller is willing to sell and convey all of the Property in Exhibit A to Purchaser subject to the terms of this Agreement. C. The real property consists of one commercial building that is divided into two suites. There is currently a tenant in Suite A and Seller will execute a lease agreement with Purchaser for Suite B. The lease agreements for each of the suites are set forth in Exhibits C and D attached hereto and incorporated herein by reference. D. Purchaser has established the downtown area of Springfield as an Urban Renewal District for the purpose of stimulating economic development and growth in the downtown Springfield. The real property subject to this agreement is located within the Urban Renewal Plan Area and, as such, Purchaser desires to buy the real property more particularly described in Exhibit A upon the terms and conditions herein in order to stimulate economic growth. E. There are substantive provisions in this Agreement which are placed there for the purpose of effecting positive economic development. In the absence of these conditions effecting positive economic development, Purchaser would not be interested in this sale. Seller understands the critical importance that Purchaser has placed upon these substantive conditions to effect positive economic development and in consideration for Purchaser entering into this Purchase and Sale Agreement agrees to be bound by said conditions. AGREEMENT 1. Purchase and Sale of the Property. Seller agrees to sell the Property more particularly described and set forth in Exhibit A including all improvements thereon to PURCHASE AND SALE AGREEMENT (MANOA, LLC) – ATTACHMENT 7, Page 1 Purchaser, and Purchaser agrees to purchase said Property from Seller, on the terms and conditions set forth in this Agreement. 2. Leases. Seller discloses and Purchaser accepts that the property is conveyed subject to an existing Ground Lease between Manoa, LLC as Lessor and Northwest Training Center, LLC as Lessee for a three year term starting on November 1, 2012, with the option to extend in accordance with its terms for one additional extension term of three years. There will also be a Ground Lease between Purchaser acting as Lessor and Seller acting as Lessee for a three year term starting in July 2, 2013 with an option to extend in accordance with the terms of the lease agreement. A copy of both Leases is attached hereto and incorporated herein by reference as Exhibits C and D respectively. 3. Purchase Price. The total purchase price for the Property is Seven Hundred Thousand Dollars ($700,000.00). 4. Payment of Purchase Price. The purchase price must be paid to Lessor in cash at closing as specified in paragraph 13 of this agreement. 5. Purchaser’s Conditions. 5.1 Purchaser will provide a Preliminary Title Report with supporting documentation for all Exceptions except the Glenwood Urban Renewal Plan, which may be obtained at City Hall. Purchaser’s obligation to purchase the Property is contingent on Purchaser’s approval of the exceptions listed on the Preliminary Title Report and Warranty Deed incorporated into the Deed as set forth in Exhibit B. Within 14 days after the execution of this Agreement, Purchaser shall approve or object to the listed exceptions in the Preliminary Title Report and shall approve the new reservations, easements, documents and exceptions. Upon approval of the exceptions, the exceptions shall be considered “Permitted Exceptions.” If Purchaser objects to any listed exceptions, Seller shall attempt to remove or modify said exception. In no event, however, shall Seller be obligated to remove any exception, other than monetary liens, provided that such liens can be satisfied by the Purchase Price. If Seller cannot or will not remove an exception on the Preliminary Title Report, Seller will notify Purchaser and Purchaser shall have 7 business days to either waive its objection, in which case such exception becomes a Permitted Exception, or terminate this Agreement. 5.2 Seller to deliver, within seven (7) days after Execution Date of the Purchase and Sale Agreement, any and all Seller’s Documents pertaining to the ownership, operation and maintenance of the property to the extent now in existence and to the extent are within Seller’s possession and control including environmental reports, building inspections/reports, geo technical reports, an ALTA survey, operating records for the property for the last two years 5.3 Purchase is contingent upon SEDA Board approval of the sale of the Property to Purchaser before the Closing Date. PURCHASE AND SALE AGREEMENT (MANOA, LLC) – ATTACHMENT 7, Page 2 6. Seller’s Conditions. 6.1 Purchaser approves the Deed with Reservations and Easement Documents, as set forth in paragraph 5 of this Agreement and the attached Exhibit B. 6.2 Purchase is contingent upon SEDA Board approval of the sale of the Property to Purchaser before the Closing Date. 6.3 Seller’s obligation to sell the Property is contingent on the willingness of Evergreen Land Title Company (“Title Company”) to issue to Purchaser at Closing, and without charges in excess of its standard fees, its ALTA owners’ standard coverage policy of title insurance, with Seller named as an additional insured, in the amount of the Purchase Price and showing title to the Property vested in Purchaser subject only to the Permitted Exceptions. 7. Title Insurance. Purchaser and Seller shall share equally the cost of escrow, closing and recording fees. Seller shall obtain, at Seller's sole cost, and shall deliver to Purchaser at Closing an ALTA standard owner's policy of title insurance for the Property. 8. Possession. Purchaser shall be entitled to possession of the Property upon Closing. 9. Property Included. No personal property is included in the sale of the Property. 10. Seller’s Representations. In addition to any express agreements of the Seller contained in this agreement, the following constitute representations and warranties of the Seller to the Purchaser. Seller’s “knowledge” means, for the purposes of this Section 15, the actual knowledge of Darin Kobatake. 10.1 Seller has the legal power, right, and authority to enter into this Agreement and the instruments referred to here and to consummate the transactions contemplated here; all requisite action has been taken by Seller in connection with entering into this Agreement; the person executing this Agreement and the instruments referred to here on behalf of Seller has the legal power, right, and actual authority to bind the Seller to the terms and conditions of this Agreement. 10.2 To the best of Seller’s knowledge, except as disclosed to the Purchaser in writing: there is no litigation, claim, or arbitration, pending or threatened, with regard to the Property; Seller has not received any notices of violation or advisory action by regulatory agencies regarding environmental control matters or permit compliance with respect to the Property; Seller has not transferred hazardous waste from the Property to another location that is not in compliance with applicable environmental laws, regulations, or permit requirements; no other person has transferred hazardous waste from the Property to another location that is not in compliance with applicable environmental laws, regulations, or permit requirements; there are no proceedings, governmental administrative actions, or judicial proceedings pending or contemplated under any federal, state, or local laws regulating the discharge of hazardous or toxic PURCHASE AND SALE AGREEMENT (MANOA, LLC) – ATTACHMENT 7, Page 3 materials or substances into the environment; Seller has not, during its ownership of the Property, stored, produced, or disposed of any hazardous substance, including asbestos, on the Property. 10.3 Seller has not entered into any other contracts for the sale of the Property, nor do there exist any rights of first refusal or options to purchase the Property. Seller has not sold, transferred, conveyed, or entered into any agreement regarding Aair rights@ or other development rights or restrictions relating to the Property. 11. Condition of the Property. Purchaser will acquire the property both above surface and below surface in the condition existing at the time of closing AS IS will all defects, if any. 12. Closing. 12.1 Closing Date. Closing will take place and delivery of all items to be made at the Closing under the terms of this Agreement at the offices of Evergreen Land Title Company at 1651 Centennial Blvd., Springfield, Oregon, on July 2, 2013 (the “Closing Date”). If the Closing Date has not occurred by July 2, 2013, then either party may terminate this Agreement by written notice to the other party. 12.2 Taxes. The Property is currently exempt from real property taxes and other assessments, so there will be no prorations as of the Closing Date. 12.3 Seller’s Closing Documents. At or before Closing, Seller shall deposit into escrow the duly executed and acknowledged deed with reservations of rights and easements in a form substantially similar to attached Exhibit E. 12.4 Lease Agreement. Purchaser and Seller shall execute lease agreement attached hereto as Exhibit D at closing. 13. Brokerage. Seller and Purchaser each represent and warrant to each other that it did not employ any broker or finder to arrange or bring about this transaction and that there are no claims or rights for brokerage commissions or finders fees in connection with the transactions contemplated by this Agreement. 14. Notices. All notices and communications in connection with this Agreement must be given in writing and shall be served on the Parties at the following address: PURCHASER: City of Springfield Gino Grimaldi, City Manager 225 5th Street Springfield, OR 97477 SELLER: Manoa, LLC Darin Kobatake, President 138 Main Street, Ste B Springfield, OR 97477 PURCHASE AND SALE AGREEMENT (MANOA, LLC) – ATTACHMENT 7, Page 4 Any such notices may be sent by: a) a nationally recognized overnight courier, in which case notice will be deemed effective upon receipt of such notice, or b) facsimile transmission, in which case notice will be deemed delivered upon electronic verification that transmission to recipient was completed. Either party may, by written notice, designate a different address for purposes of this Agreement. 15. Entire Agreement. This Agreement, including all exhibits hereto, sets forth the entire understanding of the Parties with respect to the purchase and sale of the Property. There are no restrictions, promises, representations, warranties, covenants, or undertakings other than those expressly set forth or referred to in this Agreement. This Agreement supersedes all prior negotiations, discussions, agreement and understandings of the Parties. This Agreement may not be modified or amended except by a written amendment executed by both Parties. 16. Amendments. Any modifications, changes, additions or deletions to this Agreement must first be approved by and between Seller and Purchaser, in writing. 17. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Agreement. 18. Counterparts. This Agreement may be executed in one or more counterparts all of which must be considered one and the same Agreement. This Agreement is effective only when one or more counterparts have been signed and delivered by each of the Parties. 19. Preliminary Title Report. All easements, restrictions and reservations of record appearing in the Preliminary Title Report shall survive this sale and remain in full force and effect unless the Purchaser has objected to them and Seller has been able to have them removed. 20. Closing. All covenants and promises contained herein which do not, or have not, occurred before the payment of the purchase price and delivery of the warranty deed and easements shall survive the closing and payment of the purchase price and delivery of the warranty deed and easements shall be fully enforceable thereafter in accordance with their terms. 21. Assignment. Purchaser shall have the right, after giving written notice to Seller, to assign Purchaser’s rights and obligations under this Agreement to any person or entity, as long as: 1) the assignee expressly assumes the obligations of Purchaser; 2) the assignee demonstrates to Seller=s reasonable satisfaction that it has the financial ability to perform; and 3) the assignee’s development and use of the property shall be PURCHASE AND SALE AGREEMENT (MANOA, LLC) – ATTACHMENT 7, Page 5 PURCHASE AND SALE AGREEMENT (MANOA, LLC) – ATTACHMENT 7, Page 6 as a medical clinic. Purchaser shall be released from all liability under this Agreement upon completion of the assignment in compliance with this Section 28. THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS THAT, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE AND THAT LIMIT LAWSUITS AGAINST FARMING OR FOREST PRACTICES, AS DEFINED IN ORS 30.930, IN ALL ZONES. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON TRANSFERRING FEE TITLE SHOULD INQUIRE ABOUT THE PERSON’S RIGHTS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY THAT THE UNIT OF LAND BEING TRANSFERRED IS A LAWFULLY ESTABLISHED LOT OR PARCEL, AS DEFINED IN ORS 92.010 OR 215.010, TO VERIFY THE APPROVED USES OF THE LOT OR PARCEL, TO VERIFY THE EXISTENCE OF FIRE PROTECTION FOR STRUCTURES AND TO INQUIRE ABOUT THE RIGHTS OF NEIGHBORING PROPERTY OWNERS, IF ANY, UNDER ORS 195.300, 195.301 AND 195.305 TO 195.336 AND SECTIONS 5 TO 11, CHAPTER 424, OREGON LAWS 2007, SECTIONS 2 TO 9 AND 17, CHAPTER 855, OREGON LAWS 2009, AND SECTIONS 2 TO 7, CHAPTER 8, OREGON LAWS 2010. PURCHASER SELLER: Springfield Economic Development Manoa, LLC Agency, an urban renewal district of the City of Springfield By: By: Gino Grimaldi, City Manager Darin Kobatake, President Date: Date: _______________________________ EXHIBITS: A – Legal Description of the Property B – Title Report C – Lease for Northwest Training D – Lease for IBS Beauty School E – Form of Statutory Warranty Deed with Reservation of Exceptions, Easements and Rights of Way EXHIBIT A Description of Property owned by Seller Lot 8, Block 4, EXTENDED MAP OF SPRINGFIELD, as platted and recorded in Book I, Page 1, Lane County Oregon Deed Records, in Lane County, Oregon. ALSO that portion of the alley vacated by ordinance recorded June 21, 1972, Reception No. 4697, Lane County official Records, described as follows: Beginning at the Northwest corner of Lot 8, Block 4, EXTENDED MAP OF SPRINGFIELD, as platted and recorded April 5, 1972, in Book I, Page 1, Lane County Oregon Deed Records; thence North 89° 58’ East 66.0 feet to the Northeast corner of Lot 8; thence North 0° 16’ East 0.6 feet; thence North 89° 20’ West 66.0 feet; thence South 0° 16’ West 1.4 feet to the point of beginning, in Springfield, Lane County, Oregon. EXHIBIT B Title Report EXHIBIT C Existing Lease for Northwest Training Center EXHIBIT D Existing Lease for Savoy, Inc. dba IBS Beauty School EXHIBIT D Warranty Deed Attachment 8, Page 1 of 2 SPRINGFIELD ECONOMIC DEVELOPMENT AGENCY, AN URBAN RENEWAL AGENCY OF THE CITY OF SPRINGFIELD RESOLUTION NO. ______ A RESOLUTION AUTHORIZING THE ACQUISITION OF 138 MAIN STREET, SPRINGFIELD, OREGON (MAP AND TAX NO. 17-03-35-32-04500) WHEREAS, the City Council adopted the Downtown Urban Renewal Plan on November 26, 2007; and WHEREAS, the goals in the Plan encourage projects which promote public and private improvement, improve streets, streetscapes, parks and open spaces and improvements which create civic gathering places and develop downtown Springfield as a gateway to the City and can serve as catalyst projects for additional economic development in downtown; and WHEREAS, specific projects may include pedestrian amenities, downtown public art showcases, park recreation, pedestrian and other public improvements; and WHEREAS, the Springfield Economic Development Agency (SEDA) has reviewed the Crandall Arambula plan which encourages the development of Mill Plaza as a gateway to downtown Springfield; and WHEREAS, the Downtown Urban Renewal Plan provides a specific procedure for the acquisition of property; and WHEREAS, the property located at 138 Main Street is available for purchase and SEDA is interested in acquiring the property for the purposes described above or otherwise authorize the plan through a voluntary arms-length transaction; and WHEREAS, the purchase price for the property located at 138 Main Street is Seven Hundred Thousand Dollars ($700,000.00); and WHEREAS, the property located at 138 Main Street consists of one commercial building divided into 2 suites and the transaction will include assuming the existing Ground Lease in one of the suites and the Seller executing a multi-year lease for the remaining suite; and WHEREAS, SEDA has available sufficient funds to acquire the parcels based upon its ability to borrow these funds from the City of Springfield pursuant to a preexisting agreement between the City and SEDA providing a line of credit for these purposes. This agreement was initially authorized November 29, 2005, extended through the year 2008-2009 on July 18, 2008, and again on July 21, 2008 and extended again on November 1, 2011; and WHEREAS, the purpose of this Resolution is to authorize SEDA staff, upon successful resolution of the transaction for the property, to acquire the 138 Main Street, Springfield, Oregon property. NOW, THEREFORE, be it resolved that the Springfield Economic Development Agency proceed to acquire the property located at 138 Main Street, Springfield, Oregon. 1. Upon successful negotiation for the voluntary arms-length acquisition of 138 Main Street, we hereby authorize acquisition of the property. 2. The City Manager of Springfield is authorized to execute all documents necessary to complete the transaction and enter into a loan with the City of Springfield pursuant to the existing line of credit. Adopted by the Springfield Economic Development Agency, an urban renewal agency of the City of Springfield, Oregon, by a vote of ____ for and ____ against, this ________ day of ___________, 2013. ________________________________ Chair Springfield Economic Development Agency ATTEST: __________________________________ Secretary Springfield Economic Development Agency N:\City\EconDev\Main Street, 138\Resolution.docx Attachment 8, Page 2 of 2