"Chris Blackburn Attempts to Capture
AJ's Leasing Model in a Bottle"

February 28, 2026

RE: Letter of Intent — First Floor Lease (Spaces 105 & 109)
5669 Commercial Street SE, Salem, Oregon 97306

Dear Dr. Johnson and Shadya,

Clutch Industries, with NewCo TBA ("Tenant"), is pleased to submit this Letter of Intent to formalize and expand upon our discussions regarding the entire first-floor lease at 5669 Commercial Street SE, encompassing both Future Lease Spaces 105 and 109. We understand the current terms contemplate a base rent of $18.00/SF/YR (NNN) with a $50.00/SF Tenant Improvement allowance.

We would like to propose a modification that provides you with substantially greater income, longer-term tenancy, and increased property value — in exchange for an increased TI allowance.

Proposed Lease Terms

Tenant	Clutch Industries, with NewCo TBA — Salem, Oregon. 26+ commercial properties, 1,000,000+ rentable square feet across the Willamette Valley.
Landlord	Dr. Cole Johnson / Shadya Jones — DRAGONFIST LLC
Premises	Entire first floor, 5669 Commercial Street SE, Salem, OR 97306. Spaces 105 and 109 per BOMA calculations. Approximately 6,025 rentable square feet (full first-floor take).
Intended Use	"The Edit" — 40 private beauty suites for licensed cosmetology professionals (hair designers, barbers, estheticians, nail technicians, and related beauty/wellness professionals).
Lease Term	Ten (10) years initial term, with two (2) five-year extension options at Tenant's election. Total potential term: 20 years.
Commencement	The earlier of (a) the date Tenant opens for business, or (b) 120 days following Landlord's delivery of premises with completed Tenant Improvements.
Base Rent	$18.00/SF/YR (NNN), as currently agreed. Annual: $108,450 ($9,037.50/month).
Existing TI	$50.00/SF ($301,250 total) — as currently agreed and already included in the $18.00/SF base rent.
Additional TI	$75.00/SF additional ($451,875 total), bringing total TI allowance to $125.00/SF ($753,125). The additional $451,875 is amortized over the 10-year initial lease term at $7.50/SF/YR ($45,188/year, $3,765.62/month), added to Tenant's rent obligation.
Total Effective Rent	$25.50/SF/YR ($18.00 base + $7.50 additional TI amortization). Annual: $153,638 ($12,803.12/month). TI amortization ceases at end of initial 10-year term. Extension periods revert to base rent plus accumulated escalations.
Annual Escalation	3.0% annual increase on total effective rent, commencing Year 2.
Lease Type	Single Net (NNN). Tenant responsible for pro-rata share of property taxes, insurance, and common area maintenance.
Rent Abatement	90-day rent abatement during TI construction and initial lease-up. TI amortization begins upon lease commencement (post-abatement).
Signage	Tenant shall have the right to install building-mounted and monument signage for "The Edit" on the first-floor façade and shared site monument sign, subject to city approval.
Parking	Non-exclusive use of on-site parking. Minimum 30 spaces designated for first-floor tenant use during business hours.
Subletting	Tenant may sublease individual suites to licensed beauty professionals without prior Landlord consent. Master lease assignment requires Landlord approval (not unreasonably withheld).
Improvements	All tenant improvements become property of Landlord and remain with the building upon lease expiration or termination. Includes 40 private suites with plumbing, electrical, HVAC zoning, reception, laundry, and common areas.

"Why Us Spending Your Money on TI's Seems Like a Bad Idea…
But on Paper It Proves Just the Opposite"

Or: how you invest $451,875 and get back $814,368 in property value plus $1.76 million in rent

We know. On the surface, "Hey, can you spend an extra $451,875 on our build-out?" is not exactly a sentence that inspires confidence. But stick with us through the next two tables and we think you'll see why this is actually the best thing that's happened to your first floor since the concrete dried.

You've already agreed to $50/SF in TI at $18.00/SF base rent. We're asking for an additional $75/SF — and paying every single dollar of it back through amortized rent over 10 years. Here's the side-by-side:

	Current Terms	This Proposal
TI Allowance	$50/SF ($301,250)	$125/SF ($753,125)
Base Rent	$18.00/SF/YR	$18.00/SF/YR (unchanged)
Additional TI Amortization	$0	+$7.50/SF/YR
Total Effective Rent	$18.00/SF/YR	$25.50/SF/YR
Annual Rent	$108,450	$153,638
Lease Term	Standard (TBD)	10 Years + 2×5yr Extensions
Annual Escalation	TBD	3.0%
Year 5 Annual Rent	$108,450*	$172,920
Year 10 Annual Rent	$108,450*	$200,462
10-Year Total Rent	$1,084,500*	$1,761,282
TI Recaptured?	N/A	100% — Fully paid by Year 10
Improvements Ownership	Landlord	Landlord (40-suite build-out)

* Current terms shown without escalation for conservative comparison.

Impact on Property Valuation

Here's where the math gets fun. A long-term NNN lease with escalations to a creditworthy multi-property operator doesn't just generate more rent — it compresses your cap rate, which multiplies the value increase:

Scenario	Cap Rate	First Floor Value
Current terms: $18/SF, standard lease	7.0%	$1,549,286
This proposal: $25.50/SF, 10yr NNN	6.5%	$2,363,654
VALUE INCREASE		+$814,368

So yes — you spend $451,875 on TI's and your property value goes up $814,368. That's $1.80 of value for every $1.00 invested. We get every dollar back through amortized rent. The 40-suite build-out stays with your building forever. And you go from vacant shell to $1.76 million in contractual rent.

We know it sounds too good to be true. But lightning bugs are real, and so is this math.

The Full Breakdown

1. $45,188 more annual rent ($153,638 vs. $108,450) — a 42% increase in first-floor income, starting Day 1.
2. 100% TI recapture. Every dollar of the additional $451,875 is paid back over 10 years through the $7.50/SF amortization.
3. $1.76 million in total contractual rent over 10 years (vs. $1.08M under current terms). That's $676,782 in additional rent.
4. 10-year NNN commitment with two 5-year extensions from a 26-property, 1M+ SF operating company.
5. 40-suite professional build-out that permanently improves your building — plumbing, electrical, HVAC, finished spaces. If we ever vacate, the space is more leasable than raw shell.
6. Full first-floor take. Both Spaces 105 and 109 leased to a single creditworthy tenant. No multi-tenant management or vacancy risk.
7. Complementary co-tenancy with JFO Orthodontics upstairs. Beauty professionals and orthodontic patients share demographics. More foot traffic for everyone.
8. +$814,368 in property value at a 6.5% cap rate — $1.80 of value for every $1.00 of additional TI invested.

10-Year Rent Schedule

Year	Base Rent/SF	+ TI Amort/SF	Total/SF	Annual Rent	Cumulative
1	$18.00	$7.50	$25.50	$153,638	$153,638
2	$18.54	$7.73	$26.27	$158,247	$311,884
3	$19.10	$7.96	$27.05	$162,994	$474,878
4	$19.67	$8.20	$27.86	$167,884	$642,762
5	$20.26	$8.44	$28.70	$172,920	$815,682
6	$20.87	$8.69	$29.56	$178,108	$993,790
7	$21.49	$8.96	$30.45	$183,451	$1,177,242
8	$22.14	$9.22	$31.36	$188,955	$1,366,196
9	$22.81	$9.50	$32.30	$194,623	$1,560,820
10	$23.47	$9.78	$33.27	$200,462	$1,761,282
11+	$24.19+	$0.00	$24.19+	$145,748+	TI fully paid

Extension periods (Years 11-20): TI amortization drops off. Rent reverts to base ($24.19/SF in Year 11) plus continued 3% annual escalations. All improvements remain with the building at no additional cost to Landlord.

Non-Binding

This Letter of Intent is non-binding and is intended to set forth the principal terms upon which a definitive lease agreement would be negotiated. Neither party shall have any binding obligations unless and until a mutually acceptable lease agreement is fully executed. This LOI shall expire 30 days from the date above unless accepted or extended in writing.

About the Tenant

Clutch Industries, with NewCo TBA — Clutch Industries is a Salem-based commercial real estate development and property management company. We own and operate 26+ commercial properties totaling over 1,000,000 square feet across Salem, Eugene, and Sisters, Oregon. Our portfolio includes retail, office, industrial, and residential properties with an extensive development pipeline.

"The Edit" is our private beauty suite concept for licensed cosmetology professionals. This location serves as our pilot facility, with plans to scale to 100 locations nationally. The salon suite model generates $32-65/SF in effective rent — 2-3x standard retail — through high-demand, sticky micro-tenancies with strong NOI margins.

www.clutchindustries.com  |  www.clutchpropertymanagement.com