1
EXHIBIT 10.5
SOUTHERN ARIZONA BANK OF YUMA
LEASE AGREEMENT
THIS lease is made this _____ day of June, 1984, by and between HENRY
SCHECHERT, TRUSTEE of the SCHECHERT TRUST DATED MARCH 24, 1982, hereinafter
referred to as "Lessor", and SOUTHERN ARIZONA BANK OF YUMA, a State Banking
Corporation, hereinafter referred to as "Lessee".
RECITALS
1. Lessor is the sole owner of the premises described in Exhibit A
attached hereto and made a part hereof.
2. Lessee desires to lease said premises for conducting a banking
business.
3. The parties hereto desire to enter into a lease agreement defining
their rights, duties and liabilities relating to the premises.
IN CONSIDERATION of the mutual covenants contained herein, the parties
agree as follows:
SECTION ONE
SUBJECT AND PURPOSE
Lessee leases the building and the land located in Yuma County,
Arizona, and more specifically located at 11242 Foothill Boulevard, Yuma,
Arizona, containing approximately 1536 square feet. All of said property is more
fully identified and described in Exhibit A attached hereto. Said lease is to
the Lessee for the Lessee's use as a bank building.
2
SECTION TWO
COMMENCEMENT OF THE LEASE
The Lessee has requested approval from the Arizona Superintendent of
Banks to open a branch and conduct a banking business upon the leased premises.
This lease shall commence not later than sixty (60) days after such approval has
been received by the Lessee. The Lessee shall have the option to commence the
lease sooner than 60 days after receiving approval if all equipment and banking
fixtures can be obtained at an earlier date. In the event Lessee does not secure
approval of this lease from the regulatory authorities, this agreement shall be
of no further force and effect.
SECTION THREE
TERM AND RENT
Lessor demises and leases the above premises for a term of five (5)
years commencing on the commencement date as set forth above in SECTION TWO and
terminating five (5) years from date of commencement at the following rates:
(1) First year of lease: First six (6) months
at $487.50 = $ 2,925.00
Next three (3) months
at $975.00 = $ 2,925.00
Last three (3) months
at $487.50 = $ 1,462.50
----------
Total: $ 7,312.50
(2) Second through Fifth year of lease:
First nine (9) months
at $975.00 = $ 8,775.00
Last three (3) months
at $487.50 = 1,462.50
----------
Total: $10,237.50
2
3
Lessor reserves the right to annually increase the base rent commencing
during the second year of the lease in accordance with the increase in the
Consumer Price Index, Department of Labor; provided, however, the Lessor may not
increase the base rent more then eight (8%) percent per annum.
SECTION FOUR
ALTERATIONS; ADDITIONS AND IMPROVEMENTS
A. Subject to the limitation that no portion of the building on the
leased premises shall be demolished or removed by the Lessee without the prior
written consent of the Lessor, Lessee may at any time during the lease term and
subject to the conditions hereinafter set forth, and at its own expense, make
alterations, additions and improvements in and on the lease premises and
buildings. Alterations shall be performed in a workmanlike manner and shall not
weaken or impair the structural strength or lessen the value of the building on
the premises or change the purposes for which the building or any part thereof
may be used.
B. Conditions with respect to alterations, additions or improvements
are as follows:
1. Before the commencement of any work, all plans and specifications
shall be filed with and approved by all governmental departments and authorities
having jurisdiction, and all work shall be done in accordance with the
requirements of local regulations. The plans and specifications of any
alterations estimated to cost
3
4
$5,000.00 or more shall be submitted to the Lessor for prior written approval
prior to commencing work.
C. All alterations, additions and improvements on or in the leased
premises at the commencement of the term, and any that may be erected or
installed during the term, shall become a part of the leased premises and the
sole property of the Lessor.
SECTION FIVE
REPAIRS
The Lessee shall at all times during the lease, at its own cost and
expense, repair, replace and maintain in good, safe and substantial condition
all of the building and any improvements, additions or alterations thereto upon
the leased premises, and shall use all reasonable precaution to prevent waste,
damage or injury to the lease property.
SECTION SIX
TAXES
Lessor shall pay before the last day on which payment may be made
without penalty or interest, all real property taxes, assessments or other
governmental charges that shall or may during the lease term be imposed on or
arise in connection the leased premises or any part thereof.
SECTION SEVEN
UTILITIES
All applications and connections for necessary utility services upon
the leased premises shall be made in the name of the Lessee only and the Lessee
shall be solely liable for utility
4
5
charges as they become due, including those for water, gas, electricity and
telephone services. Lessor shall provide separate utility meters for Lessee's
building.
SECTION EIGHT
INSURANCE
A. During the term of the lease, and for any further time that the
Lessee shall hold the leased premises, the Lessee shall obtain and maintain at
its expense the following types and amounts of insurance.
Personal injury and property damage insurance. Insurance against
liability for bodily injury and property damage and machinery insurance all to
be in amounts and in forms of insurance policies as may from time to time be
required by the Lessor shall be provided by the Lessee.
B. All insurance provided by the Lessee as required by this section
shall be carried in favor of the Lessor and the Lessee as their respective
interests appear. All insurance shall be written with responsible companies that
the Lessor or mortgage holder shall approve and the policies shall be held by
the Lessor or, when appropriate, by the holder of any mortgage in which case
copies of the policies or certificates of insurance shall be delivered by the
Lessee to the Lessor. All policies shall require 20 days notice by registered
mail to the Lessor of any cancellation or change affecting any interest of the
Lessor.
5
6
SECTION NINE
The Lessee shall indemnify the Lessor against all expenses, liabilities
and claims of every kind, including reasonable attorneys fees by or on behalf of
any person or entity arising out of either:
1. A failure by the Lessee to perform any of the terms or conditions
of this lease.
2. Any injury or damage happening on or about the leased premises
occupied by Lessee.
3. Failure to comply with any law or governmental authority.
4. Any mechanic's lien or security interest filed against the leased
premises or equipment or materials for alterations of buildings or improvements
thereon arising by reason of Lessee's acts.
SECTION TEN
DEFAULT OR BREACH
Each of the following events shall constitute a default or breach of
this lease by the Lessee:
1. If the Lessee or any successor or assignee of the Lessee while in
possession shall file a petition in bankruptcy or insolvency or for
reorganization under any Bankruptcy Act or shall voluntarily take advantage of
any such Act by answer or otherwise, or shall make an assignment for the benefit
of creditors.
6
7
2. If the Lessee shall fail to pay Lessor any rent or additional rent
when the same shall become due and shall not make payment within ten days after
notice thereof by the Lessor.
3. If the Lessee shall fail to perform or comply with any of the
conditions of this lease and if the nonperformance shall continue for a period
of 30 days after notice thereof by the Lessor to the Lessee or if the
performance cannot be reasonably had within the 30-day period, the Lessee shall
not have in good faith commenced with performance within the 30-day period and
shall not diligently proceed to the completion of the performance.
4. If the Lessee shall vacate or abandon the leased premises.
5. If the Lessee fails to take possession of the leased premises on the
term commencement date or as provided for in SECTION THREE.
SECTION ELEVEN
EFFECT OF DEFAULT
In the event of any default hereunder as set forth in SECTION TEN the
rights of the Lessor shall be as follows:
1. The Lessor shall have the right to cancel and terminate this lease
as well as all of the right, title and interest of the Lessee hereunder by
giving to the Lessee not less than 30 days notice of the cancellation or
termination. On expiration of the time fixed in the notices, this lease, and the
right, title and interest of the Lessee hereunder, shall terminate in the same
manner and with the same force and effect, except as to Lessee's
7
8
liability, as if the date fixed in the notice of cancellation and termination
were the end of the term herein originally determined.
2. The Lessor may elect, but shall not be obligated, to make any
payment required of the Lessee herein or to comply with any agreement, term or
condition required hereby to be performed by the Lessee, and Lessor shall have
the right to enter the leased premises for the purpose of correcting or
remedying any such default, and to remain until the default has been corrected
or remedied, but any expenditure for the correction by the Lessor shall not be
deemed to waive or release the default of the Lessee or the right of the Lessor
to take any action as may be otherwise permissible hereunder in case of any
default.
3. Subject only to paragraph 5 hereunder, on termination the Lessor may
recover from the Lessee all damages approximately resulting from the breach,
including the cost of the recovery of the premises and the worth of the balance
of this lease over the reasonable rental value of the premises for the remainder
of the lease term, which sum shall be immediately due Lessor from Lessee.
4. In addition to Lessee's liability to the Lessor for breach of the
lease, the Lessee shall be responsible for, all expenses for reletting, for the
alterations and repairs made, and for the difference between the rent received
by the Lessor under the new lease agreement and the rent installments that were
due for the same period of this lease.
5. Notwithstanding any other provisions of this Lease Agreement, in the
event that said Lessee is closed or taken over by
8
9
the banking authority of the State of Arizona, at the option of the receiver or
other legal representative of the Lessee, the maximum claim of the Lessor for
damages or indemnity for injury resulting from the rejection or abandonment of
the unexpired lease shall in no event be in an amount exceeding the rent
reserved by the lease, without acceleration, for the six (6) months next
succeeding the date of the surrender of the premises to the Lessor, or the date
of reentry of the Lessor, whichever first occurs, whether before or after the
closing of the Lessee, plus an amount equal to the unpaid rent accrued, without
acceleration, up to such date. The provisions of this clause may not be
modified, amended or rescinded by said Lessor or said Lessee without the prior
written approval of the Superintendent of Banks of the State of Arizona, and the
Federal Deposit Insurance Corporation.
SECTION TWELVE
DESTRUCTION OF PREMISES
In the event that the premises shall be damaged or destroyed by fire or
other casualty not occasioned by act or default of the Lessee, the Lessor shall
have 90 days in which to repair or replace the premises with an equitable
abatement of the rents in proportion to the use and benefits to which the Lessee
is deprived until the repairs or replacements are completed. In the event
repairs are not performed to the Lessee's satisfaction within 90 days, the
Lessee may contract for the necessary repairs and adjust the rent on the basis
of the cost of the repairs to the Lessee. If the premises are destroyed or
damaged to such an extent so as to be rendered
9
10
untenable, or the Lessor's failure to repair or replace such as provided for
above, the Lessee shall have the option to terminate this lease by giving 30
days written notice thereof to the Lessor.
SECTION THIRTEEN
NOTICES
All notices to be given with respect to this lease shall be in writing.
Each notice shall be sent by registered or certified mail, postage prepaid, and
return receipt requested, to the party to be notified at the address set forth
herein or at such other address as either party may from time to time designate
in writing.
Each notice shall be deemed to have been given at the time it shall be
deposited in the United States mails in the manner prescribed herein. Nothing
contained herein shall be construed to preclude personal service of any notice
in the manner prescribed for personal service of a summons or other legal
process.
SECTION FOURTEEN
OPTION TO RENEW
Lessor grants to the Lessee an option to renew this lease for an
additional five (5) year term commencing at the expiration of this lease. To
exercise this option, the Lessee must give the Lessor written notice of
intention to do so at least 90 days before the initial lease expires. All terms
and conditions of said lessee shall continue during the extended 5-year term
except this paragraph.
10
11
SECTION FIFTEEN
APPLICABLE LAW
This lease contains the entire agreement between the parties and cannot
be changed or terminated except by written instrument subsequently executed by
the parties hereto. The lease and the terms and conditions hereof apply to and
are binding upon the heirs, legal representatives, successors and assigns of
both parties.
This agreement shall be governed by and construed in accordance with
the laws of the State of Arizona.
SECTION SIXTEEN
TIME
TIME IS OF THE ESSENCE in all provisions of this lease.
IN WITNESS WHEREOF, the parties have executed this lease at Yuma,
Arizona, on the day and year first above written.
LESSOR: LESSEE:
SCHECHERT TRUST U/D 3/24/82 SOUTHERN ARIZONA BANK OF YUMA
By By
------------------------ ----------------------------
Henry Schechert, Trustee Chairman, Board of Directors
ATTEST:
By
----------------------------
Secretary
11
12
STATE OF ARIZONA )
) ss.
County of Yuma )
The foregoing instrument was acknowledged before me this 27th
day of June, 1984, by HENRY SCHECHERT, TRUSTEE of the SCHECHERT TRUST
DATED MARCH 24, 1982.
My Commission Expires:
- ----------------------------- ----------------------------
Notary Public
STATE OF ARIZONA )
) ss.
County of Yuma )
The foregoing instrument was acknowledged before me this 27th day of
June, 1984, by STEPHEN P. SHADLE and Chairman of the Board of Directors and
Secretary respectively of SOUTHERN ARIZONA BANK OF YUMA.
My Commission Expires:
- ----------------------------- ----------------------------
Notary Public
12
13
EXHIBIT A
Lots C1, C2 and C3, FOOTHILLS SUBDIVISION #10, according to the records
of the Yuma County Recorder, Yuma County, Arizona, in Book 6 of Plats,
page 42. More specifically described as Suites 23, 24 and 25 of the
building known as Foothill Plaza.
13
14
THE FOOTHILLS PLAZA
11242 S FOOTHILLS BLVD
YUMA AZ 85367
RENT SCHEDULE
1996
UNIT 21-25 TENANT Southern Arizona Bank of Yuma
RENT TAX 2.4% TRASH TOTAL DUE
JANUARY 1,895.00 45.48 25.00 $1,965.48
FEBRUARY 1,895.00 45.48 25.00 $1,965.48
MARCH 1,895.00 45.48 25.00 $1,965.48
APRIL 1,895.00 45.48 25.00 $1,965.48
MARCH 1,895.00 45.48 25.00 $1,965.48
APRIL 1,895.00 45.48 25.00 $1,965.48
MAY 1,895.00 45.48 25.00 $1,965.48
JUNE 1,895.00 45.48 25.00 $1,965.48
JULY 947.50 22.74 25.00 $ 995.24
AUGUST 947.50 22.74 25.00 $ 995.24
SEPTEMBER 947.50 22.74 25.00 $ 995.24
OCTOBER 1,895.00 45.48 25.00 $1,965.48
NOVEMBER 1,895.00 45.48 25.00 $1,965.48
DECEMBER 1,895.00 45.48 25.00 $1,965.48
NOTE: *Any rent increase is 8%.
*Sales tax is increased due to County tax approved by voters for the
new jail.
*Please contact Diann with any questions at 342-1238.
14
15
ADDENDUM TO LEASE AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of May, 1996, by and
between HENRY SCHECHERT, TRUSTEE of the SCHECHERT TRUST dated March 24, 1982,
hereinafter referred to as "LESSOR", and SOUTHERN ARIZONA BANK OF YUMA, an
Arizona Banking Corporation, its successors and assigns, hereinafter referred to
as "LESSEE".
RECITALS.
1. The parties hereto have entered into a Lease Agreement dated June
26, 1984, and amended in an Addendum to Lease Agreement dated May, 1991, copies
of which are attached hereto as Exhibit "1", collectively referred to as the
"Lease".
2. The parties desire to enter into a new agreement modifying and
supplementing the provisions of the Lease.
3. The demised premises are located at 11242 Foothills Blvd., Suites
21, 22, 23, 24 and 25, Yuma, Arizona.
In consideration of the mutual covenants contained herein, the parties
agree as follows:
1. The Lease shall be for a term of five years commencing on May 1,
1996 and terminating on May 1, 2001.
2. LESSEE agrees to pay rent for the demised premises as follows:
October through June - $1,895.00 per month
July through September - $947.50 per month
LESSOR reserves the right to annually increase the base rent commencing
during the second year of this Lease term in accordance
15
16
with the increase in the Consumer Price Index, Department of Labor; provided,
however, that the LESSOR may not increase the base rent more than eight percent
(8%) per annum. A 1996 rent schedule is attached hereto as Exhibit "2".
3. LESSOR grants to the LESSEE an option to renew this Lease for an
additional five (5) year term commencing at the expiration of this Addendum to
Lease. To exercise this option, the LESSEE must give the LESSOR written notice
of intention to do so at least ninety (90) days before the initial five year
term expires. All terms and conditions of said Lease shall continue during the
extended five year term, except this paragraph.
4. LESSEE shall have the right at its own expense, from time to time
during the lease term, to improve or alter the demised premises upon LESSOR's
written consent. LESSOR shall not unreasonably withhold its consent.
5. During the term and/or any extension of the term of this lease,
LESSOR agrees that it will not permit any other lessee, tenant or occupant to
engage in a business of the same type as the LESSEE'S business at 11242
Foothills Blvd., Yuma, Arizona, whether or not later sold or transferred.
6. All provisions of the Lease are incorporated herein and are hereby
modified or supplemented to conform herewith, but in all other respects are to
be and shall continue in full force.
16
17
IN WITNESS WHEREOF, the parties have executed this Addendum to Lease at
Yuma, Arizona on the day and year first above written.
SCHECHERT TRUST U/D 3/24/82
By
---------------------------
Henry Schechert, Trustee
LESSOR
SOUTHERN ARIZONA BANK OF YUMA
By
---------------------------
Its
--------------------------
LESSEE
ATTEST:
- --------------------------
Secretary
STATE OF ARIZONA )
) ss.
County of Yuma )
The foregoing instrument was acknowledged before me this _____________
day of _________________, 1996, by HENRY SCHECHERT, Trustee of the SCHECHERT
TRUST dated March 24, 1982.
-----------------------------
Notary Public
My Commission Expires:
- --------------------------
17
18
STATE OF ARIZONA )
) ss.
County of Yuma )
The foregoing instrument was acknowledged before me this __________ day
of __________________, 1996, by JOHN E. BYRD and DONALD S. OLSEN, respectively,
of SOUTHERN ARIZONA BANK OF YUMA.
------------------------------
Notary Public
My Commission Expires:
- --------------------------
18
19
ADDENDUM TO LEASE AGREEMENT
This Agreement, made and entered into this ____________ day of May,
1991, by and between HENRY SCHECHERT, TRUSTEE of the SCHECHERT TRUST dated March
24, 1982, hereinafter referred to as "LESSOR", and SOUTHERN ARIZONA BANK OF
YUMA, an Arizona Banking Corporation, hereinafter referred to as "LESSEE".
RECITALS
1. The parties hereto have entered into a Lease dated June 26, 1984, a
copy of which is attached hereto as Exhibit "1".
2. The parties desire to enter into a new agreement modifying and
supplementing the provisions of the Lease.
3. In consideration of the mutual covenants contained herein, the
parties agree as follows:
The Lease dated June 27, 1984, between LESSOR and LESSEE for the
premises located at 11242 Foothill Blvd., Yuma, Arizona, shall be modified
effective May 1, 1991, as follows:
1. The description of the demised premises contained in
Exhibit "A" of the Lease shall be amended to include two additional
units, Suites 21 and 22. An amended description of the premises is
described in Exhibit "2" attached hereto.
2. In addition to the amount of rent agreed to in the Lease,
the LESSEE agrees to pay rent for the additional two units, Suites 21
and 22, as follows:
October through June - $325.00 per unit
July through September - $162.50 per unit
19
20
The LESSOR reserves the right to annually increase the base rent
commencing during the second year of the Lease in accordance with the increase
in the Consumer Price Index, Department of Labor; provided, however, that the
LESSOR may not increase the base rent more than eight (8%) percent per annum.
3. The LESSOR demises and leases the entire premises as described in
Exhibit "2", including both the original units and the additional two units, for
a term of five (5) years commencing on the 1st day of May, 1991 and terminating
five (5) years from the date of the commencement.
4. LESSOR grants to the LESSEE an option to renew this Lease for an
additional five (5) year term commencing at the expiration of this Addendum to
Lease. To exercise this option, the LESSEE must give the LESSOR written notice
of intention to do so at least ninety (90) days before the initial five (5) year
term expires. All terms and conditions of said Lease shall continue during the
extended five (5) year term, except this paragraph.
5. LESSEE shall have the right at its own expense, from time to time
during the lease term, to improve or alter the demised premises in the following
manner:
1. Installation of safe deposit boxes;
2. Installation of a drive-in teller facility;
3. Installation of an automatic teller machine.
LESSEE covenants that any such improvements and alterations shall be
made in a workman like manner and in compliance with all applicable
federal, state, and municipal laws and regulations. LESSEE shall be
permitted, upon termination of
20
21
this Lease, to remove any building or other improvement erected or made
by it, which improvement is banking equipment or an improvement
uniquely related to a banking facility, provided, however, that it
repair any damage to the premises caused by such removal; provided that
any such building or improvement that shall not have been removed by
LESSEE, upon expiration or sooner termination of this lease, shall be
deemed abandoned by LESSEE and shall thereupon become the absolute
property of the LESSOR without compensation to LESSEE. The LESSOR
hereby gives its consent and approval for the above listed improvements
to the demised premises described in Exhibit "2".
4. All provisions of the Lease are incorporated herein and are hereby
modified or supplemented to conform herewith, but in all other respects are to
be and shall continue in full force.
IN WITNESS WHEREOF, the parties have executed this Addendum to Lease at
Yuma, Arizona, on the day and year first above written.
LESSOR: LESSEE:
SCHECHERT TRUST U/D 3/24/82 SOUTHERN ARIZONA BANK OF YUMA
By By
------------------------- ---------------------------
Henry Schechert, Trustee Chairman,
Board of Directors
ATTEST:
-----------------------------
Secretary
21
22
STATE OF ARIZONA )
) ss.
County of Yuma )
The foregoing instrument was acknowledged before me this __________ day
of _______________, 1991, by HENRY SCHECHERT, Trustee of the SCHECHERT TRUST
dated March 24, 1982.
-----------------------------
Notary Public
My Commission Expires:
- ----------------------
STATE OF ARIZONA )
) ss.
County of Yuma )
The foregoing instrument was acknowledged before me this __________ day
of _______________, 1991, by ___________________, and _________________________,
Chairman of the Board of Directors and Secretary respectively of SOUTHERN
ARIZONA BANK OF YUMA.
----------------------------
Notary Public
My Commission Expires:
- ----------------------
22
23
EXHIBIT A
Lots C1, C2 and C3, FOOTHILLS SUBDIVISION #10, according to the records
of the Yuma County Recorder, Yuma County, Arizona, in Book of Plats, page 42.
More specifically described as Suites 21, 22, 23, 24, and 25 of the building
known as Foothill Plaza.
23