Exhibit 10.3
LEASE
AGREEMENT
THIS LEASE AGREEMENT
(this “Lease”) made
this 23rd day of December, 2005 (“Effective Date”),
(which is the date that this Lease is executed by the last of the
parties hereto), between FUREY HOLDINGS, LLC, an Ohio corporation,
with an address of 206 Carrollton Street, Malvern, Ohio 44644
(hereinafter referred to as “Lessor”), and CONSUMERS
NATIONAL BANK, having its principal place of business located at
614 East Lincoln Way, Minerva, Ohio 44657 (hereinafter referred to
as “Lessee”).
RECITALS
A. Lessor is the equitable owner of
land consisting of 11 acres, more or less (of which .8 acres is
allocated to this lease) located on State Routes 43 and 183 in the
Township of Brown, County of Carroll, State of Ohio, the perimeter
boundary of which is depicted on the site plan attached hereto as
Exhibit “A” (said land, including any buildings and
improvements situated thereon, now or in the future, shall be
collectively referred to herein as the “Demised
Premises”).
B. Lessee desires to lease from
Lessor and Lessor desires to lease to Lessee the Demised Premises
upon the terms, conditions, covenants, and agreements set forth
herein.
NOW , THEREFORE , in consideration of the
mutual covenants hereinafter set forth and the foregoing recitals
which are incorporated herein, the parties hereto, intending to be
legally bound hereby, covenant as follows:
ARTICLE I
DEMISE OF PREMISES;
WARRANTIES;
LEASE
CONTINGENCIES
Section 1.1 Demise
. Subject to
Section 1.3 hereof, as well as all other terms, conditions and
covenants hereinafter set forth, Lessor hereby leases and permits
the use to Lessee, and Lessee hereby leases from Lessor the Demised
Premises.
Section 1.2
Warranties . Lessor covenants and warrants to
Lessee:
(a) To the best of Lessor’s
knowledge, the Demised Premises are not subject to any lease,
sublease, dedication, easement, right of way, reservation,
covenant, condition, restriction, lien or encumbrance which might
prohibit or materially interfere with Lessee’s construction
of Lessee’s Improvements, as hereinafter described, and use
of the Demised Premises as a branch banking location, as
hereinafter defined;
(b) That all taxes, assessments or
impositions of any kind with respect to the Demised Premises,
except current taxes, have been paid in full;
(c) That Lessor has the power and
authority to execute this Lease;
(d) That no person or entity has any
option or other contractual right to purchase all or any portion of
the Demised Premises; and
(e) That the Demised Premises have
been maintained and are now in conformity with all acts,
regulations, ordinances, statutes and laws regarding environmental
matters.
Section 1.3
Contingencies . It
is specifically understood and agreed that this Lease is subject to
and contingent upon each of the following contingencies and
conditions (hereinafter individually “Contingency” and
collectively “Contingencies”), any and all of which may
be waived in whole, or in part, by Lessee, and to the extent a
Contingency is within the exclusive control of the Lessee, Lessee
agrees to use its best efforts to satisfy said Contingency. If any
of the following Contingencies have not been satisfied by Lessor or
Lessee (as applicable) or waived by Lessee within two hundred ten
(210) days after the Effective Date (the “Contingency
Period”), then, thereafter, either party may elect to
terminate this Lease by providing written notice of such
termination to the other party, provided, however, such election is
made within thirty (30) days of the expiration of the
Contingency Period. In the event of termination as aforesaid, there
shall be no further liability or obligations on part of either
party to the other under this Lease. The aforesaid Contingencies
are as follows:
(a) That Lessee, at Lessee’s
expense, obtain all applicable permits and approvals under the
zoning and building regulations, development ordinances,
subdivision ordinances, codes, statutes, laws and directive of the
Village of Malvern, County of Carroll, the State of Ohio, and all
other authorities having jurisdiction (hereinafter
“Governmental Approvals”), that will allow the Lessee
to obtain all of its permits to proceed with the development, use
and occupancy of the Demised Premises for a full service bank
branch.
(b) That Lessor obtains highway
occupancy approval(s) for access to the Demised Premises in the
location as substantially depicted on the attached Exhibit
“A” and any off-site traffic improvements required by
such approvals are financially acceptable to Lessee;
(c) That Lessor confirm that all
public, quasi-public or private utilities for water, sewer,
telephone, gas, and electric are available (as to capacity and
availability) to the Demised Premises and that any extension or
relocation of utilities that may be required are financially
acceptable to Lessee.
Section 1.4 Cooperation
with Lessee . Lessor
agrees to promptly execute and deliver to Lessee applications and
permits which are required by the appropriate jurisdiction to be
signed or issued in the name of the fee owner of the Demised
Premises, such as, without limitation and by way of example only,
subdivision applications and plats and highway occupancy permits.
Lessee represents and warrants that it will keep all information
and/or reports and/or documents obtained from Lessor or its agents,
or related to or in connection with the Demised Premises strictly
confidential and will not disclose any such information to any
person or entity (except for Lessee’s attorneys, consultants
and advisors who need to know such information for the purpose of
providing advice to Lessee with respect to this Lease), without the
prior written consent of Lessor.
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Section 1.5 Entry Upon
Property . During the
Contingency Period, Lessor hereby grants to Lessee the right to
enter upon the Demised Premises, during normal business hours or at
such other reasonable times, for the purpose of making surveys,
drilling for soil tests, doing engineering or structural studies,
and for any other reasonable purpose to determine the suitability
of the Demised Premises for the construction and operation of
Improvements, as that term is defined in Section 2.1 hereof.
Lessee agrees to indemnify and hold Lessor free and harmless from
any and all costs or liability incurred by reason of Lessee
entering upon the Demised Premises for the aforesaid purposes. If
the Initial Term does not commence because the events described in
Section 3.1(a) and (b) hereof do not occur, Lessee shall
restore, to the extent reasonably practicable, the Demised Premises
to substantially the same condition that existed prior to said
studies if, and to the extent of, any damage caused by
Lessee’s testing.
ARTICLE II
CONSTRUCTION OF
IMPROVEMENTS
Section 2.1
Construction . Lessor shall construct upon the Demised Premises
a building, together with related improvements for the
Lessee’s proposed use as a full service bank branch with
adjacent parking, and signage, all in accordance with the plans and
specifications of Lessee (hereinafter referred to collectively as
“Improvements”).
ARTICLE III
TERM AND RENEWAL
TERM
Section 3.1 Initial
Term . The initial
term of the Lease (“Initial Term”) shall be for a
period of ten (10) years, commencing on the Lease Commencement
Date. The “Lease Commencement Date” is defined as the
first to occur of the following events: (a) the date upon
which Lessee completes construction of Improvements on the Demised
Premises; or (b) upon Lessee’s occupancy of the Demised
Premises. Promptly upon the occurrence of either of the foregoing
events, Lessee shall provide Lessor written notice confirming the
occurrence of such event and acknowledging the Lease Commencement
Date.
Section 3.2 Renewal
Term . Lessor hereby
grants to Lessee the right to annually renew this Lease for one
(1) year terms (each a “Renewal Term” and
collectively, the “Renewal Terms”). The Renewal Term
will be automatically renewed unless Lessee gives notice of
termination as set forth in Section 3.3 below. The terms and
conditions for each Renewal Term shall be the same as for the
Initial Term hereof, however the initial monthly rental payment for
the first one (1) year Renewal Term shall be the rental
payment then in effect upon completion of the Initial Term, as
adjusted pursuant to the procedure described in
Section 4.1.
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Section 3.3
Termination . The
Lessee has the right to terminate the Lease by giving written
notice to the Lessor ninety (90) days prior to the expiration
of the Initial Term or ninety (90) days prior to the
expiration of any subsequent Renewal Term.
Section 3.4 Memorandum of
Lease . This Lease
Agreement will not be recorded, but rather a Memorandum of Lease
may be recorded, at the option of Lessor or Lessee. If recorded by
Lessee, Lessee shall pay any realty transfer taxes that may be due
as a result of the recordation of any Memorandum of Lease covering
this Lease Agreement.
Section 3.5 Lease
Year . During the
Term of this Lease, a lease year shall mean a period of twelve
(12) consecutive months, except that the first lease year
shall begin on the Lease Commencement Date and shall end the
following calendar year on the last day of that calendar month
preceding the month of the Lease Commencement Date.
Section 3.6
Use . The Lessee
shall have the right to use the Demised Premises and each and every
part thereof for any lawful purpose relating directly or indirectly
to any business in which the Lessee is now or in the future engaged
(provided any necessary government approvals or authorizations
shall have been obtained by Lessee).
Section 3.7 Purchase
Right of First Refusal . If at any time during the term of this Lease,
the Renewal Term, or any tenancy after either, Lessor receives from
a ready, willing and able purchaser an acceptable bona fide offer
to purchase, or makes a bona fide offer to purchase, or makes a
bona fide offer to sell to such a purchaser, the Demised Premises
or any part thereof or any property which includes all or part of
the Demised Premises, Lessor shall give Lessee notice, specifying
the name and address of the purchaser and the price and terms of
the offer, accompanied by Lessor’s affidavit that the
proposed sale is in good faith. Lessee shall thereupon have the
prior option to purchase the Demised Premises or the part thereof
or the entire property covered by such offer, at the price and on
the terms of the offer, which option Lessee may exercise by giving
Lessor notice within thirty (30) days after Lessee’s
receipt of Lessee’s notice of the offer. In the event Lessee
fails to affirmatively exercise its right of first refusal during
said thirty (30) day period, Lessee shall be deemed to have
waived its right of first refusal. In the event that any of the
terms or conditions of the offer are changed after Lessee waives
its rights hereunder, Lessor shall give notice of all such changes
to Lessee and Lessee shall have an additional fifteen
(15) days to exercise its right of first refusal hereunder.
Lessee’s failure at any time to exercise its option under
this Section 3.7 shall not affect this Lease or the
continuance of Lessee’s rights and options under this Section
or any other Section hereof.
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ARTICLE IV
RENT
Section 4.1 Rent During
Initial Term and Renewal Term . The base rent commencing on the Lease
Commencement Date and continuing through the fifth anniversary of
the Lease Commencement Date shall be one percent (1%) of the
total Project Cost (the “Rent”) to be paid by Lessee to
Lessor monthly. The total Project Cost for purposes of Rent
computed under this item shall be defined to include all of
Lessor’s costs associated with architectural design, site
development, permits and construction of the bank branch building
and adjacent parking to be located on the Demised Premises. Prior
to the Lease Commencement Date, the Lessor shall provide Lessee
with a certificate itemizing the costs and fees that comprise the
total Project Cost. Rent to be paid by Lessee to Lessor shall be
adjusted at the beginning of year six in accordance with the change
in the CPI-U (as such term is defined below) from the Lease
Commencement Date to the end of year five. For purposes of this
Lease, “CPI-U” shall mean the United States Consumers
Price Index All Urban Consumers (CPI-U) U.S. City average all
items, calculated on the same month each year beginning with the
initial month of Lease inception. The monthly rental payment for
the first one (1) year renewal term will be adjusted in
accordance with the change in CPI-U from the start of year six to
the end of year ten. For each succeeding renewal year, the monthly
rental payment will be adjusted annually based on the prior
year’s change in CPI-U. Notwithstanding anything else in this
Section 4.1, Lessee shall be provided with at least thirty
(30) days written notice of any Rent increase prior to it
becoming effective.
Section 4.2 Rent Payment
Dates . Lessee shall
make all payments of rent under this Lease in advance on the first
day of each calendar month during the term of this Lease, and at a
prorated rate for fractions of a month, based on the number of days
in such month, if the Lease Commencement Date or the termination
date falls on a day other than the first day of the month. Lessee
shall make all payments of rent to Furey Holdings, LLC at the
address shown on the first page of this Lease, or to such other
address as the Lessor may direct in writing to Lessee.
ARTICLE V
INDEMNIFICATION AND
INSURANCE
Section 5.1
Indemnification . During the Initial Term of this Lease and any
Renewal Term,
