EXHIBIT 10.3
COMMERCIAL LEASE AGREEMENT
THIS COMMERCIAL LEASE AGREEMENT ("Lease") is made and effective as of April 1,
2014, by and between HEADGATE II, LLC, a Colorado limited liability company
("Landlord") and, Strainwise, Inc., a Colorado corporation ("Tenant").
Landlord will be the owner of land and improvements commonly known and numbered
as 00000 Xxxx 00xx Xxxxxx, Xxxxxx, XX (the "Property") see attached "Exhibit A",
legal description. Landlord desires to lease to Tenant approximately 60,500
square feet (the "Leased Premises"), and Tenant desires to lease the Leased
Premises from Landlord for the term, at the rental and upon the covenants,
conditions and provisions herein set forth.
THEREFORE, in consideration of the mutual promises herein, contained and other
good and valuable consideration, it is agreed:
1. Term.
Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby
leases the same from Landlord, for the period beginning April 1, 2014 (the
Lease Commencement Date") and ending December 31, 2019 the "Initial Term").
Landlord to give Tenant possession on the first day of the Lease term. The
NNN portion shall be charged beginning May 1, 2014.
2. Rental.
Tenant shall pay to Landlord during the initial term rent ("Base Monthly
Rent") in the amount as outlined below:
April 1, 2014 to May 31, 2014 $15,000 per month*
June 1, 2014 to December 31, 2014 $176,458.33 per month ($35.00/SF)*
January 1, 2015 to December 31, 2015 $221,833.33 per month ($44.00/SF)
January 1, 2016 to December 31, 2016 $221,833.33 per month ($44.00/SF)
January 1, 2017 to December 31, 2017 $231,916.67 per month ($46.00/SF)
January 1, 2018 to December 31, 2018 $242,000.00 per month ($48.00/SF)
Januato 1, 2019 to December 31, 2019 $247,041.67 per month ($49.00/SF)
*Fifteen Thousand Dollars and 00/100 ($15,000.00) shall be the monthly rent
amount until the Leased Premises obtains its certificate of occupancy. Once
the Leased Premises obtains its certificate of occupancy then the monthly
rental rate shall be One Hundred Seventy Six Thousand Four Hundred Fifty
Eight Dollars and 33/100 ($176,458.33) per month. If the certificate of
occupancy is obtained in the middle of a month then the remainder of the
month's rent shall be prorated at the One Hundred Seventy Six Thousand Four
Hundred Fifty Eight Dollars and 33/100 ($176,458.33) rental rate.
Each monthly installment of rent shall be due in advance of the first day
of each calendar month during the lease term to Landlord c/o Headgate II,
LLC, 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 or at such other place designated
by written notice from Landlord or Tenant. The rental payment amount for
any partial calendar months included in the lease term shall be prorated on
a daily basis. Tenant shall also pay to Landlord, upon mutual execution of
this lease, a "Security Deposit" in the amount of One Hundred Fifty
Thousand dollars and 00/100 ($150,000.00) one third to be paid at the time
the Lease is executed, one third to be paid after the first harvest or by
October 1, 2014, one third by the second harvest or by December 1, 2014,
plus rent for the month of April in the amount of Fifteen Thousand Dollars
and 00/100 ($15,000.00) for a combined total of Sixty Five Thousand Dollars
and 00/100 ($65,000.00). The monthly rental income reflects the enormous
acquisition and improvement costs that Landlord paid for prior to the
commencement of the Lease. In the event that any monthly rental installment
is not received by Landlord on or before the third (3rd) business day of
the month for which the rent is due, Tenant shall pay to Landlord a late
payment charge equal to five percent (5%) of such past due amount to
compensate Landlord for additional processing and administrative charges
and inconvenience associated with such late payments. Any rent or other
amounts to be paid by Tenant which are not paid within three (3) business
days after the date due shall bear interest at the rate of fifteen percent
(15%) per annum from the due date until paid.
3. Non-Sufficient Funds.
Tenant shall be charged $200.00 for each check that is returned to Landlord
for lack of sufficient funds, in addition to any late fees or penalties
associated with the delay in payment.
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4. Option Addendum.
Tenant shall have the right to purchase the Premises from Landlord pursuant
to a separate Purchase Option Addendum 1 of even date herewith. All terms
and conditions of such Purchase Option Addendum are separate and apart from
the terms and conditions of this Lease, except for Tenant's right to
terminate this Lease upon the closing of the sale of the Premises to Tenant
pursuant thereto.
5. Early Access.
Tenant shall have access to the Property to begin its necessary
improvements on the date the lease is executed, as long as such access does
not interfere with current construction.
6. Use.
A. The Leased Premises shall be used for the lawful cultivation of
medical and recreational use of marijuana, the provision of caregiver
services, and recreational use as permitted by amendment 64 to the
Colorado Constitution and/or required under the laws of the State of
Colorado and the City and County of Denver, and for related general
office and warehouse purposes including the use and operation of a
dispensary. Tenant shall not use the Leased Premises for any use
prohibited by the State of Colorado, or the City and County of Denver.
The operation of any other business on the Leased Premises is
expressly prohibited. Tenant represents and warrants the following:
(i) that Tenant's sole purpose in cultivating or possessing marijuana
is to produce plants and usable marijuana for persons authorized by
the Colorado Department o f Public Health and Environment (the
"Agency") to dispense marijuana products as authorized by Section 14,
article XVIII of the State of Colorado ("Section 14") for personal use
to address existing debilitating medical conditions and for use as per
Amendment 64; (ii) that no marijuana shall be used in or near the
Property in plain view of (or in a place open to ) the general public
or in any way that endangers the health or well-being of any person;
and (iii) that neither Tenant nor any patient will violate any state
law regarding growth or distribution of marijuana in the course of
Tenant's business. Tenant shall take reasonable steps to maintain the
security of the Leased Premises against criminal activity associated
with the presence of cannabis at the Leased Premises. In the event
that Tenant's cultivation and distribution of marijuana at any time
becomes impermissible under Section 14, Tenant shall so notify
Landlord and shall immediately and properly dispose of all cannabis
plants and products on the Premises in any manner permitted by law.
Tenant shall provide to Landlord copies of all public licenses
relating to Tenant's use of the Leased premises. Landlord shall have
the right to terminate this Lease upon thirty (30) day written notice
to Tenant, in the event that Tenant breaches any of the warranties or
covenants contained in this paragraph and Tenant fails to cure the
breach within the thirty (30) day period. Either Landlord or Tenant
shall have the right to terminate this Lease upon thirty (30) days'
written notice to the other party in the event that Tenant's use of
the Leased Premises becomes illegal due to any revocation or
modification of Section 14 or any other applicable State law, local
law or enforcement by the Federal government and Tenant shall be
released from any and all future obligations and liability under the
lease.
B. Tenant acknowledges that the Leased Premises have been modified for
the cultivation of living plants. Tenant shall be solely responsible
for any routine maintenance, alterations, replacements or repairs to
the Leased Premises or the building in which the Leased Premises are
located which may be necessary due to conditions associated with
Tenant's use of the Leased Premises (including without limitation
additional ventilation if necessary, treatment to control and
eliminate mold, and correction of any moisture-related conditions).
Specifically, Tenant at its expense shall (i) provide to Landlord
annually a written report from a qualified environmental contractor
regarding management of mold and water damage in the Leased Premises.
Upon review of the results from the environmental contractor, the
Landlord, at the Landlord's sole discretion, may require the Tenant to
remediate any mold issues or concerns, at Tenant's sole expense. The
Tenant hereby agrees to remediate, at the tenant's sole expense, any
mold concerns or issues should they develop.
C. Landlord warrants that the mechanical, plumbing, electrical, roof,
walls and structure are in good working order at time of the
certificate of occupancy.
D. Tenant shall not use the Leased Premises for the purposes of storing,
manufacturing or selling any explosives, flammables or other
inherently dangerous substances or chemicals, or any other hazardous
materials. Due to the nature of the business, and the current conflict
between State and federal Government laws governing said business, in
the event that the use becomes impermissible, tenant or Landlord may
terminate the lease with Thirty (30) days' written notice. It is both
parties intent to carry out all the terms of this document.
E. Tenant shall provide Landlord within five (5) business days of receipt
by Tenant of the following items;
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1. Any further Heating, Cooling and Ventilation upgrades that are
required to mitigate odor. Any further air-purification and
upgraded A/C that is required. Any new roof penetrations from
commencement of lease will need to be coordinated with Landlord
prior to commencement of work.
2. Signed lien waivers from any contractors/subcontractors for work
in progress.
3. Copies of liability insurance certificates for all vendors
(contractors) completing work in the Leased Premises.
4. Copies of associated Dispensary location(s) including Grow and
Dispensary Licenses.
5. Annual mold/humidity inspections are required following receipt
of a Certificate of Occupancy.
6. Annual compliance letter from the Marijuana Enforcement Division.
F. If any law, regulation, ordinance, zoning or any other controlling
factor changes in such a matter that growing marijuana at the Leased
Premises is no longer possible during the term of the lease, then both
parties shall have the right to terminate the lease upon final notice
from the controlling agency.
G. Equipment.
1. Tenant acknowledges that the Landlord has provided the following
equipment found in Exhibit B, for the Tenant's use in the
cultivation of marijuana and such equipment shall be in good
working order at time of transfer.
2. Tenant acknowledges that Exhibit B will be finalized and added to
the lease upon receipt of the certificate of occupancy for the
Leased Premises.
3. Tenant acknowledges that Tenant bears the exclusive
responsibility for the maintenance, upkeep and replacement of all
items provided in exhibit B, with the exception of the HVAC
units, Landlord shall pay the replacement cost of any failed HVAC
unit.
4. Tenant acknowledges that the Landlord at his option may complete
weekly inspections of the equipment, if Landlord notifies tenant
of any improper use of equipment Tenant will have thirty (30)
days to rectify the improper use.
5. Tenant acknowledges that Landlord at their discretion may monitor
the Leased Premises through the camera system that Landlord has
installed for Tenants benefit.
6. Tenant at the termination of the lease shall return all equipment
in the same condition that it was leased to the tenant, except
for normal wear and tear.
H. Indemnification.
1. Tenant shall indemnify and hold Landlord harmless against and
from liability and claims of any kind for loss or damage to
property of Tenant or any other person, for any civil,
administrative or criminal action taken against Landlord arising
from or out of, in any way, Tenant's use of the Leased Premises,
except for those caused by Landlord's negligence or willful
conduct, or for any injury to or death of any person, arising out
of: (1) Tenant's use and occupancy of the Premises, or any work,
activity or other things allowed or suffered by Tenant to be done
in, on or about the Premises; (2) any breach or default by Tenant
of any of Tenant's obligations under this Lease; or (3) any
negligent or tortious act or omission of Tenant, its agents,
employees, invitees or contractors. Tenant shall at Tenant's
expense, and by counsel satisfactory to Landlord, defend Landlord
in any action or proceeding arising from any such claim and shall
indemnify Landlord against all costs, attorneys' fees, expert
witness fees and any other expenses incurred in such action or
proceeding. As a material part of the consideration for
Landlord's execution of this Lease, Tenant hereby assumes all
risk of damage or injury to any person or property in, on or
about the Premises from any cause, excluding Landlord and agents
of Landlord. The provisions of this Section shall survive the
expiration or sooner termination of this Lease.
2. Landlord shall not be liable for injury or damage which may be
sustained by the person or property of Tenant, its employees,
invitees or customers, or any other person in or about the
Premises, caused by or resulting from fire, steam, electricity,
gas, water or rain which may leak or flow from or into any part
of the Premises, or from the breakage, leakage, obstruction or
other defects of pipes, sprinklers, wires, appliances, plumbing,
air conditioning or lighting fixtures, and the like whether such
damage or injury results from conditions arising upon the
Premises or upon other portions of the Building or from other
sources, unless caused by Landlords negligence or willful
conduct. Landlord shall not be liable for any damages arising
from any act or omission of any other tenant of the Building,
unless caused by Landlord's negligence or willful conduct.
7. Sublease and Assignment.
Tenant may not assign or sublease any interest in the Premises, nor effect
a change in the majority ownership of the Tenant (from the ownership
existing at the inception of this lease), nor assign, mortgage or pledge
this Lease, without the prior written consent of Landlord.
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8. Repairs.
During the Lease term, Tenant shall make, at Tenant's expense, all
necessary repairs to the Leased Premises. Repairs shall include such items
as routine repairs of floors, walls, ceilings, and other parts of the
Leased Premises damaged or worn through normal occupancy, subject to the
obligations of the parties otherwise set forth in this Lease. Repairs for
landscaping, parking lot and snow removal will be added to the NNN portion
of the lease.
9. Alterations and Improvements.
Landlord has provided the following improvements noted in Exhibit B. Tenant
shall be responsible for any additional work needed on the building with
Tenant's own resources. The following items if they are altered or improved
will be added to the NNN portion of the Lease, landscaping, parking lot
work, and any other repairs, not hereby contemplated that Landlord deems
necessary for the subject property that might come up over the course of
the lease.
If Tenant and Landlord agree to new capital projects at the Leased Premises
that result in additional usable square feet then Tenant and Landlord agree
to add this square footage to the overall Lease and reflect that in the
rent upon commencement of the work, beginning the following month.
Tenant may not make any improvements, alterations, additions or changes to
the Premises during the Lease Term without the consent of Landlord, which
consent may not be unreasonably withheld.
10. Property Taxes.
Landlord shall pay property taxes, to be reimbursed by Tenant monthly as to
its pro rata share as determined by the Landlord, all general real estate
taxes and installments of special assessments coming due during the Lease
term on the Leased Premises. Tenant shall pay all personal property taxes
with respect to Tenant's personal property, if any, on the Leased Premises.
11. Insurance.
A. Landlord shall maintain, at Tenant's expense to be reimbursed by
Tenant monthly, fire and extended coverage insurance on the
Property and Leased premises in such amounts as Landlord shall
deem appropriate. If the Leased Premises or any other part of the
Property is damaged by fire or other casualty resulting from any
act or negligence of Tenant or any of Tenant's agents, employees
or invitees, rent shall not diminished or abated while such
damages are under repair, and Tenant shall be responsible for the
costs of repair not covered by insurance. Tenant shall be
responsible, at its expense, for fire and extended coverage
insurance on all of its personal property, including removable
trade fixtures, located in the Leased Premises.
B. Tenant shall, at its own expense, maintain a policy or policies
of comprehensive general liability insurance with respect to the
activities of the Property with the premiums thereon fully paid
on or before due date, issued by and binding upon some insurance
company approved by Landlord, such insurance to afford minimum
protection of not less than $1,000,000 combined single limit
coverage of bodily injury, property damage or combination
thereof. Landlord shall be listed as an additional insured on
Tenant's policy or policies of comprehensive general liability
insurance, and Tenant shall provide Landlord with current
Certificates of Insurance evidencing Tenant's compliance with
this Paragraph. Tenant shall obtain the agreement of Tenant's
insurers to notify Landlord that a policy is due to expire at
least ten (10) days prior to such expiration. Landlord shall not
be required to maintain insurance against thefts within the
Leased Premises or the Property.
12. Utilities.
Tenant shall pay all charges for water, sewer, gas, electricity, telephone,
wastewater and other services and utilities used by Tenant on the Leased
Premises during the term of this Lease unless otherwise expressly agreed in
writing by Landlord. In the event that any utility or service provided to
the Leased Premises is not separately metered, Landlord shall pay the
amount due and separately invoice Tenant for Tenant's pro rata share of the
charges as determined by Landlord plus a two (2%) percent administration
fee. Tenant shall pay such amounts within fifteen (15) days of invoice.
Tenant acknowledges that the Leased Premises are designed to provide
standard office and warehouse use electrical facilities and standard office
and warehouse lighting. Tenant shall not use any equipment or devices that
utilize excessive electrical energy or which may, in Landlord's reasonable
opinion, overload the wiring or interfere with electrical services to other
tenants. Landlord shall charge a management fee of 3% of the total amount
paid for all NNN costs.
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13. Signs.
Tenant, at Tenant's sole expense, shall be allowed one sign on the window
areas of the Leased Premises, at locations selected by Tenant, which are
permitted by applicable zoning ordinances, private restrictions and receipt
of Landlords approval. Landlord may refuse consent to any proposed signage
that is in Landlord's opinion too large, deceptive, unattractive or
otherwise inconsistent with or inappropriate to the Leased Premises or use
of any other tenant. Landlord shall assist and cooperate with Tenant in
obtaining any necessary permission from governmental authorities or
adjoining owners and occupants for Tenant to place or construct the
foregoing signs. Tenant shall repair all damage to the Leased Premises
resulting from the removal of signs installed by Tenant.
14. Entry.
Landlord shall have the right to enter the Leased Premises upon reasonable
notice, to make inspections, equipment inspections, provide necessary
services, or show the unit to prospective buyers, mortgagees, tenants or
workers. However, Landlord does not assume any liability for the care or
supervision of the Premises. Landlord's entrance to the Leased Premises
shall comply with any ordinances, statutes or regulations that control the
entrance of people to a licensed OPC, MEC or MIP facility.
15. Parking.
During the term of this Lease, Tenant shall have the non-exclusive use in
common with Landlord, other occupants of the property, their guests and
invitees, of the non-reserved common automobile parking areas, driveways,
and footways, subject to rules and regulations for the use thereof as
prescribed from time to time by Landlord. Landlord reserves the right to
designate parking areas within the Property or in reasonable proximity
thereto, for Tenant and Tenant's agents and employees. Tenant shall provide
Landlord with a list of all license numbers for the cars owned by Tenant,
its agents and employees.
16. Building Rules.
Tenant will comply with the rules of the Property adopted and altered by
Landlord from time to time and will cause all of its agents, employees,
invitees and visitors to do so; all changes to such rules will be sent by
Landlord to Tenant in writing. The initial rules for the Property are
attached hereto as Exhibit C and incorporated herein for all purposes.
17. Damage and Destruction.
If the Leased Premises or any part thereof or any appurtenance thereto is
so damaged by fire, casualty or structural defects that the same cannot be
used for Tenant's purposes, and Tenant, its agents or employees are not the
cause of the damage, then Tenant shall have the right within ninety (90)
days following damage to elect by notice to Landlord to terminate this
Lease as of the date of such damage. In the event of minor damage to any
part of the Leased Premises, and if such damage does not render the Leased
Premises unusable for Tenant's purposes in Landlords sole determination,
Landlord shall promptly repair such damage at the cost of the Landlord. In
making the repairs called for in this paragraph, Landlord shall not be
liable for any delays resulting from strikes, governmental restrictions,
inability to obtain necessary materials or labor or other matters which are
beyond the reasonable control of Landlord. Except as provided in
subparagraph 9 above, tenant shall be relieved from paying rent and other
charges during any portion of the Lease term that the Leased Premises are
inoperable or unfit for occupancy, or use, in whole or in part, for
Tenant's purposes. Rentals and other charges paid in advance for any such
periods shall be credited on the next ensuing payments, if any, but if no
further payments are to be made, any such advance payments shall be
refunded to tenant. The provisions of this paragraph extend not only to the
matters aforesaid, but also to any occurrence which is beyond Tenant's
reasonable control and which renders the Leased Premises, or any
appurtenance thereto, inoperable or unfit for occupancy or use, in whole or
in part, for Tenant's purposes.
18. Default.
A. If default shall at any time be made by Tenant in the payment of
rent when due to Landlord as herein provided, and if said default
shall continue for three (3) business days after written notice
thereof shall have been given to Tenant by Landlord, or if
default shall be made in any of the other covenants or conditions
to be kept, observed and performed by Tenant, and such default
shall continue for thirty (30) days after notice thereof in
writing to Tenant by Landlord without correction thereof then
having been commenced and thereafter diligently prosecuted by
applicable governing bodies, Landlord may declare the term of
this Lease ended and terminated by giving Tenant written notice
of such intention, and if possession of the Leased Premises is
not surrendered, Landlord may reenter said premises. Landlord
shall have, in addition to the remedy above provided, any other
right or remedy available to Landlord on account of any Tenant
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default, either in law or equity. As additional collateral, in
the event of default by Tenant, Tenant agrees to convey to
Landlord all leases and licenses used by Tenant in the operation
of all business run on Premises. Landlord shall use reasonable
efforts to mitigate its damages. In any action arising from this
Lease, the prevailing party shall be entitled to recover its
reasonable attorney fees and other costs of suit including
appeals.
B. Landlord shall have the right to terminate the Lease if:
1. Tenant, or any other owner, partner, or party holding an
ownership interest in Tenant has their/its business
operating license, permit or authorization to engage in the
Use (defined in Paragraph 6) revoked or not renewed, for any
reason;
2. If Tenant is unable to obtain licenses for the Leased
Premises within three months from the certificate of
occupancy;
3. Tenant's patients, customers, employees or invitees ingest
any of its product(s), in any form, in any manner, in, on or
about the Leased Premises or the Property;
4. Tenant fails to take pro-active measures to dissuade people
from loitering in, on or about the Leased Premises or the
Property;
5. In the event the Leased Premises is the target for two (2)
burglary attempts in any twelve (12) month period, Tenant
shall within thirty (30) calendar days of the 2nd burglary,
hire a night watchman and/or take other appropriate measures
to reduce the risk of burglary. In the event Tenant fails to
take such measures as described above, or Tenant has taken
such measures and the Leased Premises are the target of more
than two (2) burglary attempts in any succeeding twelve (12)
month period, Landlord shall have the right to terminate the
Lease;
6. Tenant hereby acknowledges the special and sensitive nature
of the Use contemplated herein (defined in Paragraph 4) and
the potential for detrimental consequences to the other on
the Property. In the event any more than one detrimental
consequence in the Building has occurred, Landlord, shall
notify Tenant in writing of such detrimental consequences
and if Tenant has not implemented reasonable actions to
fully address the situation within forty-five (45) calendar
days of such notice, Landlord shall have the right to
terminate the Lease;
7. Landlord is unable to properly insure the Building due to
the Use of the Leased Premises (defined in Paragraph 4) at a
rate or premium acceptable to Landlord in Landlord's sole
and absolute discretion and Tenant is not able to find
equivalent insurance coverage through another insurance
carrier that is similarly rated to Landlord's insurance
company at a rate or premium acceptable to Landlord; or
Tenant is not willing to pay to Landlord as Additional Rent
the additional insurance premium over and above the rate or
premium that is acceptable to Landlord. In such event,
Tenant shall be relieved any further liability under the
Lease.
19. Quiet Possession.
Landlord covenants and warrants that upon performance by Tenant of its
obligations hereunder, Landlord will keep and maintain Tenant in exclusive,
quiet, peaceable and undisturbed and uninterrupted possession including
nuisance related to odor of the Leased Premises during the term of this
Lease. Tenant shall agree to the same terms of Quiet Possession.
20. Condemnation.
If any legally, constituted authority condemns the Property or such part
thereof which shall make the Leased Premises unsuitable for leasing, this
Lease shall cease when the public authority takes possession, and Landlord
and Tenant shall account for rental as of that date. Such termination shall
be without prejudice to the rights of either party to recover compensation
from the condemning authority for any loss or damage caused by the
condemnation. Neither party shall have any rights in or to any award made
to the other by the condemning authority.
21. Subordination.
Tenant accepts this Lease subject and subordinate to any mortgage, deed of
trust or other lien presently existing or hereafter arising upon the Leased
Premises, or upon the property and to any renewals, refinancing and
extensions thereof. Tenant agrees upon demand to execute such further
instruments confirming such subordination of this Lease or attorning to the
holder of any such liens as Landlord may request. In the event that Tenant
should fail to execute any instrument of subordination herein required to
be executed by Tenant promptly as requested, Tenant hereby irrevocably
constitutes Landlord as its attorney-in-fact to execute such instrument in
Tenant's name, place and stead, it being agreed that such power is one
coupled with an interest. Tenant agrees that it will from time to time upon
request by Landlord execute and deliver to such persons as Landlord shall
request a statement certifying that this Lease is unmodified and in full
force and effect (or if there have been modifications, that the same is in
full force and effect as so modified), stating the dates to which rent and
other charges payable under this Lease have been paid, stating that
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Landlord is not in default hereunder (or if Tenant alleges a default
stating the nature of such alleged default) and further stating such other
matters as Landlord shall reasonably require.
22. Security Deposit.
The Security Deposit shall be One Hundred Fifty Thousand Dollars and 00/100
($150,000.00) one third to be paid at the time the Lease is executed, the
second third to be paid after the first harvest or by October 1, 2014, the
final third by the second harvest or by December 1, 2014. The Security
Deposit shall be held by Landlord without liability for interest and as
security for the performance by Tenant of Tenant's covenants and
obligations under this Lease, it being expressly understood that the
Security Deposit shall not be considered an advance payment of rental or a
measure of Landlord's damages in case of default by Tenant. Unless
otherwise provided by mandatory non-waivable law or regulation, Landlord
may commingle the Security Deposit with Landlord's other funds. Landlord
may, from time to time, without prejudice to any other remedy, use the
Security Deposit to the extent necessary to make good any arrearages of
rent or to satisfy any other covenant or obligation of Tenant hereunder.
Following any such application of the Security Deposit, Tenant shall pay to
Landlord on demand the amount so applied in order to restore the Security
Deposit to its original amount. If Tenant is not in default at the
termination of this Lease, the balance of the Security Deposit remaining
after any such application shall be returned by Landlord to Tenant within
sixty (60) days from the expiration of the Lease Term. If Landlord
transfers its interest in the Premises during the term of this Lease,
Landlord may assign the Security Deposit to the transferee and thereafter
shall have no further liability for the return of such Security Deposits.
23. Holding Over.
If Tenant holds over or occupies the Premises beyond the Lease Term (it
being agreed there shall be no such holding over or occupancy without
Landlord's prior written consent), Tenant shall pay Landlord for each day
of such holding over a sum equal to two (2) times the Base Monthly Rent of
the last year of the Lease prorated for the number of days of such holding
over, plus a prorate portion of all other amounts which Tenant would have
been required to pay hereunder had this Lease been in effect. If Tenant
holds over with or without Landlord's written consent Tenant shall occupy
the Leased Premises on a tenancy from month to month and otherwise all
other terms and provisions of this Lease shall be applicable to such
period.
24. Notices.
Any notice required or permitted under this Lease shall be deemed
sufficiently given or served if sent by United States certified mail,
return receipt requested, addressed to Landlord at:
Headgate II, LLC Strainwise, Inc. a Colorado corporation
000 Xxxxxxx Xxxxxx 0000Xxxxxxxxxxxx st. suite #300
Denver, CO 80206 Xxxxxxxx, XX 00000
And addressed to Tenant at the address located above. Landlord and Tenant
shall each have the right from time to time to change the place notice is
to be given under this paragraph by written notice thereof to the other
party.
25. Option to Renew Lease.
Tenant shall have the option at the end of the original Lease term to renew
the lease for an additional five years at a lease rate mutually agreed upon
by the Tenant and Landlord, if Tenant and Landlord are unable to agree on a
lease rate then the lease rate shall be equal to fifty two dollars ($52.00)
per square foot per year.
26. Brokers.
Tenant represents that Tenant has not otherwise engaged in any activity
which could form the basis for a claim of real estate commission, brokerage
fee, finder's fee or other similar charge, in connection with this Lease.
Tenant shall indemnify and hold Landlord harmless from any cost, expense or
liability (including costs of suit and reasonable attorneys' fees) for any
compensation, commission or fees claimed by any real estate broker or agent
in connection with this Lease or its negotiation by reason of any alleged
act of Tenant.
27. Waiver.
No waiver of any default of Landlord or Tenant hereunder shall be implied
from any omission to take any action on account of such default if such
default persists or is repeated, and no express waiver shall affect any
default other than the default specified in the express waiver and that
7
only for the time and to the extent therein stated. One or more waivers by
Landlord or Tenant shall not be construed as a waiver of a subsequent
breach of the same covenant, term or condition.
28. Memorandum of Lease.
Neither this Lease nor any memorandum or short form of this Lease shall be
recorded by either party; this includes but is not limited to the Option to
Purchase and any other documents associated with the lease or Option to
Purchase prior to the sale of the property.
29. Headings.
The headings used in this Lease are for convenience of the parties only and
shall not be considered in interpreting the meaning of any provision of
this lease.
30. Successors.
The provisions of this Lease shall extend to and be binding upon Landlord
and Tenant and their respective legal representatives, successors and
assigns.
31. Consent.
Except as otherwise set forth herein, Landlord shall not unreasonably
withhold or delay its consent with respect to any matter for which
Landlord's consent is required or desirable under this Lease.
32. Right of First Refusal
If Landlord receives a written off to purchase the Leased Premises from a
third party, Tenant shall have the right of first refusal to purchase the
Leased Premises. Upon written notice of the offer from the third party by
Landlord, Tenant shall have one week to notify Landlord of intent to match
the third party's offer.
33. Final Agreement.
This Agreement terminates and supersedes all prior understandings or
agreements on the subject matter hereof. This Agreement may be modified
only by a further writing that is duly executed by both parties.
34. Governing Law.
This Agreement shall be governed, construed and interpreted by, through and
under the Laws of the State of Colorado.
35. Severability.
If any portion of this Lease shall be held to be invalid or unenforceable
for any reason, the remaining provisions shall continue to be valid and
enforceable. If a court finds that any provision of this Lease is invalid
or unenforceable, but that by limiting such provision, it would become
valid and enforceable, then such provision shall be deemed to be written,
construed, and enforced as so limited.
36. Conflict.
In the event of any conflict between the terms contained in this Lease and
the terms of any Exhibit attached hereto, the terms of this Lease shall
control.
37. Landlord Not a Partner.
Nothing herein contained shall be deemed, held or construed as creating
Landlord as a partner, agent, associate of, or in a joint venture with
Tenant in the conduct of the business, nor as rendering Landlord liable for
any debts, liabilities or obligations incurred by Tenant in the conduct of
said business, it being expressly understood and agreed that the
relationship between the parties hereto is and shall at all times remain
that of Landlord and Tenant.
8
IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year
first above written.
LANDLORD: TENANT:
HEADGATE II, LLC Strainwise, Inc.
a Colorado limited liability a Colorado corporation
By: Singletree Financial Partners, LLC By: Xxxxx Xxxxxxxx and Xxxx Xxxxxxxx,
a Colorado limited liability company
Managing Member of HEADGATE II, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxx Xxxxxxxx
--------------------------------- ---------------------------------
Xxxxxxx Xxxxxx Xxxxxxxx President Strainwise, Inc.
Managing Member of Singletree
Financial Partners, LLC
By:/s/ Xxxxxxxxxxx X. Xxxxxxxx By:/s/ Xxxxx Xxxxxxxx
--------------------------------- ---------------------------------
Xxxxxxxxxxx Xxxxx Shopneck Chief Executive Officer Strainwise,
Managing Member of Singletree Inc.
Financial Partners, LLC
9
EXHIBIT A
"Legal Description"
The West 359 Feet of Xxx 0, Xxxxx 0, Xxxxxxxxx Xx. 00, Xxxxxx the South 8.5 Feet
thereof,
City and County of Denver, State of Colorado.
10
EXHIBIT B
Will insert inventory list at time of C/O.
11
EXHIBIT C
"Property Rules and Regulations"
The following rules and regulations shall apply to the Property and the Leased
Premises associated therewith, and the appurtenances thereto:
1. Sidewalks, doorways, vestibules, halls, stairways, and other similar areas
shall not be obstructed by tenants or used by any tenant for purposes other
than ingress and egress to and from their respective leased premises and
for going from one to another part of the Property.
2. Plumbing, fixtures and appliances shall be used only for the purposes for
which designed, and no sweepings, rubbish, rags or other unsuitable
material shall be thrown or deposited therein. Damage resulting to any such
fixtures or appliances from misuse by a tenant or its agents, employees or
invitees, shall be paid by such tenant.
3. No signs, advertisements or notices shall be painted or affixed on or to
any windows or doors or other part of the Property without the prior
written consent of Landlord.
4. Landlord shall provide all door locks in each tenant's leased premises, at
the cost of such tenant, and no tenant shall place any additional door
locks in its Leased Premises without Landlord's prior written consent.
Landlord shall furnish to each tenant a reasonable number of keys to such
tenant's leased premises, at such tenant's cost, and no tenant shall make a
duplicate thereof.
5. No birds or animals shall be brought into or kept in, on or about any
tenant's leased premises except for seeing-eye dogs to assist with a
handicap individual. No portion of any tenant's leased premises shall at
any time be used or occupied as sleeping or lodging quarters.
6. Tenant shall not make or permit any vibration or improper, objectionable or
unpleasant noises or odors in the Property or otherwise interfere in any
way with other tenants or persons having business with them.
7. No heavy machinery of any kind shall be operated by any tenant on its
leased area without Landlord's prior written consent, nor shall any tenant
use or keep in the Property any flammable or explosive fluid or substance.
8. Landlord will not be responsible for lost or stolen personal property,
money or jewelry from tenant's leased premises or public or common areas
regardless of whether such loss occurs when the area is locked against
entry or not.
9. All vehicles are to be currently licensed, parked for business purposes
having to do with Tenant's business operated in the Premises, parked within
designated parking spaces, one vehicle to each space. No vehicle shall be
parked as a "billboard" vehicle in the parking lot. Any vehicle parked
improperly may be towed away. Tenant, Tenant's agents, employees, vendors
and customers who do not operate or park their vehicles as required shall
subject the vehicle to being towed at the expense of the owner or driver.
Tenant shall indemnify, hold and save harmless Landlord of any liability
arising from the towing or booting of any vehicles belonging to a Tenant
Party.
12
Exhibit D
"Guarantee of Lease"
Landlord: Headgate, LLC, a Colorado limited liability company
Tenant: Strainwise, Inc., a Colorado incorporated company
Lease: that certain Lease Agreement between Landlord and Tenant Dated
March 10, 2014.
Guarantor(s): Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx
Date: March 10, 2014
Tenant wishes to enter into the Lease with Landlord. Landlord is unwilling to
enter into the Lease unless Guarantor assures Landlord of the full performance
of Tenant's obligations under the Lease. Guarantor is willing to do so.
Accordingly, in order to induce the Landlord to enter into the Lease, and for
good and valuable consideration, the receipt and adequacy of which are
acknowledged by Guarantor:
1. Guarantor unconditionally guarantees to Landlord, and the successors
and assigns of Landlord, Tenant's full and punctual performance of its
obligations under the Lease, including without limitation the payment
of rent and other charges due under the Lease. Guarantor waives notice
of any breach or default by Tenant under the Lease. If Tenant defaults
in the performance of any of its obligations under the Lease, Upon
Landlord's demand, Guarantor will perform Tenant's obligations under
the Lease.
2. Any act of Landlord, or the successors or assigns of Landlord,
consisting of a waiver of any of the terms or conditions of the Lease,
or the giving of any consent to any matter related to or thing
relating the Lease, or the granting of any indulgences or extensions
of time to Tenant, may be done without notice to Guarantor and without
affecting the obligations of Guarantor under this Guaranty.
3. The obligations for Guarantor under this Guaranty will not be affected
by Landlord's receipt, application, or release of security given or
the performance of Tenant's obligations under the Lease, nor by any
modification of the Lease, including without limitation the
alteration, enlargement, or change of the Premises described in the
Lease, except that in case of any such modification, the liability of
the Guarantor will be deemed modified in accordance with the terms of
any such modification.
4. The liability of Guarantor under this Guaranty will not be affected
by:
a. The release or discharge of Tenant from its obligations under the
Lease any creditors', receivership, bankruptcy, or other
proceedings, or the commencement or pendency of any such
proceedings;
b. The impairment, limitation, or modification of the liability of
Tenant or the estate of Tenant in bankruptcy, or of any remedy
for the enforcement of Tenant's liability under the Lease,
resulting from the operation of any present or future bankruptcy
code or other statute, or from the decision in any court;
c. The rejection or disaffirmance of the Lease in any such
proceedings;
d. The assignment or transfer of the Lease or sublease of all or
part of the Premises described in the Lease by Tenant unless
Landlord consents to release guarantor from this Guaranty of
Lease in writing in connection therewith;
e. And disability or other defense of Tenant; or
f. The cessation from any cause whatsoever of the liability of
Tenant under the Lease other as provided in the Lease,
particularly in Paragraphs 6A and 6C of the Lease.
5. Until all of Tenant's obligations under the Lease are fully performed,
Guarantor:
a. Waives any right of subrogation against Tenant by reason of any
payments or acts of performance by Guarantor, in compliance with
the obligations of Guarantor under this Guaranty;
b. Waives any other right that Guarantor may have against Tenant by
reason of any one or more payments or acts in compliance with the
obligations of Guarantor under this Guaranty; and
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c. Subordinates any liability or indebtedness of Tenant held by
Guarantor to the obligations of Tenant to Landlord under the
Lease.
6. This Guaranty will apply to the Lease, any extension or renewal of the
Lease, and any holdover term following the term of the Lease, or any such
extension or renewal.
7. This Guaranty may not be changed, modified, discharged, or terminated
orally or in any manner other than by an agreement in writing signed by
Guarantor and Landlord.
8. Guarantor is primarily obligated under the Lease. Landlord may, at its
option, proceed against Guarantor without proceeding against Tenant or
anyone else obligated under the Lease or against any security for any of
Tenant's or Guarantor's obligations.
9. Guarantor will pay on demand the reasonable attorneys' fees and costs
uncured by Landlord, or its successors and assigns, in connection with the
enforcement of this Guaranty.
10. Guarantor irrevocably appoints Tenant as its agent for service of process
related to this Guaranty.
11. The guarantee of the lease is joint and several to each Guarantor.
Guarantor has executed this Guaranty as of the date stated above.
GUARANTOR(s):
/s/ Xxxxx Xxxxxxxx, individually
/s/ Xxxx Xxxxxxxx, individually
14
PURCHASE OPTION ADDENDUM 1
This Purchase Option Addendum ("Option Addendum") is made and entered into
effective March 10, 2014 by and between Headgate II, LLC, a Colorado limited
liability company (the "Seller") and Strainwise, Inc., a Colorado corporation
(the "Buyer").
WHEREAS, Seller and Buyer are parties to a Commercial Lease Agreement dated
March 10, 2014, whereby Seller, as Landlord, agreed to lease certain real
property commonly known as 00000 Xxxx 00xx Xxxxxx, Xxxxxx, Xxxxxxxx (hereinafter
called the "PremisPersonNamees") to Buyer, as Tenant (the "Lease Agreement").
WHEREAS, Buyer desires to acquire a revocable option to purchase the Premises
from Seller and Seller has agreed to grant such revocable option to purchase the
Premises to Buyer (the "Option").
NOW, THEREFORE, for and in consideration of the covenants and obligations
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller hereby grants to Buyer an
exclusive revocable option to purchase the Premises, subject to the terms and
conditions set forth herein as follows.
1. OPTION PERIODS. The first Option Period granted herein shall commence sixty
(60) days and end fifteen (15) days prior to the end of the third year of the
Lease. If the Option is not exercised within the required time frame of the
third year of the Lease, Tenant shall have the opportunity to exercise the
second Option Period beginning sixty (60) days and ending fifteen days before
the end of the fourth year of the Lease. If the Option is not executed within
the required time frame of fourth year of the Lease, Tenant will have the
opportunity to exercise the third Option Period beginning sixty (60) days and
ending fifteen (15) days before the end of fifth year of the Lease. Buyer may
exercise the Option only during Option Periods as set forth herein, and only
during the dates set forth above, provided however, that Buyer is not then in
default under the Lease Agreement.
2. OPTION CONSIDERATION. As consideration for Seller granting Buyer the Option,
Buyer has paid Seller the non-refundable (except as set forth in paragraph 3
below) sum of Ten and No/100ths Dollars ($10.00) and other good and valuable
consideration, the receipt of which is hereby acknowledged by Seller.
3. NOTICE TO EXERCISE OPTION. To validly exercise the Option, Buyer shall
deliver to Seller a signed copy of the Contract to Buy and Sell Real Estate
(Commercial), in the form attached hereto as Exhibit A (the "Purchase
Agreement") during the required time frame. The Purchase Agreement shall set
forth a proposed closing date, which shall be no later than sixty (60) days
after the date of the Purchase Contract, and shall set forth the terms and
conditions of closing and shall otherwise govern the purchase and sale of the
real property. Buyer agrees that closing costs in their entirety, including any
points, fees, and other charges required by the third-party lender, shall be the
sole responsibility of Buyer. The only expense related to closing costs
apportioned to Seller shall be the pro-rated share of the ad valorem taxes due
15
at the time of closing, for which Seller is solely responsible. The Option shall
only be exercised by strict compliance with the terms of this Option Addendum.
The doctrine of "substantial performance" shall not apply, in any manner, to the
exercise of the Option.
4. PURCHASE PRICE. If Lessee desires to submit an offer during the option
period, said offer shall be accompanied by an appraisal from an appraiser with
the highest commercial accreditation and with experience in appraising grow
facilities. If said offer is not acceptable to seller, then seller shall have
the right to procure another appraisal from an appraiser with the highest
commercial accreditation and with experience in appraising grow facilities
within a reasonable time from the offer, at seller's cost. If both appraisals
are within 5% of each other, then the purchase price shall be split evenly
between the two amounts. If the appraisals are more than 5% apart, then both
parties shall agree on a third appraiser to produce a third appraisal. Lessee
shall pay the cost of the third appraisal. The average of the higher two
appraisals shall be the purchase price. All appraisals shall be done under
commonly recognized appraisal standards including reaching value by a
combination of income, replacement and comparable sales approach. Purchaser,
besides paying the purchase price shall pay all closing costs, including
transfer taxes, title, and any additional closing costs except for real property
tax proration.
5. EXCLUSIVITY OF OPTION. This Option Addendum and the Option are exclusive and
non-assignable and exist solely for the benefit of the Buyer. Should Buyer
attempt to assign, convey, delegate, or transfer the Option without Seller's
express written consent, the Option shall be deemed null and void.
Notwithstanding the foregoing, this Option Addendum and the Option shall be
binding on, and shall inure to the benefit of each parties' respective heirs.
6. LEASE CONTINGENCY. This Option Addendum and Buyer's right to exercise the
Option hereunder, are expressly conditioned upon Buyer's continued compliance
with the terms and conditions of the Lease Agreement. Any breach of the Lease
Agreement by Buyer, as tenant, shall automatically and immediately void and
terminate the Option.
7. FAILURE TO EXERCISE. In the event the Option, prior to a valid exercise
thereof by Buyer, is revoked, terminated or declared void pursuant to the terms
and conditions of this Option Addendum, or in the event Buyer validly exercises
such Option but fails to close on the Premises, Buyer shall not have any claim
to all or any portion of the Option Consideration set forth above. Furthermore,
Buyer expressly acknowledges and agrees that all monthly rent payments under and
pursuant to the Lease Agreement do not constitute and shall not be construed as
an option fee and shall not, in any event, be refundable to Buyer.
8. FINANCING AVAILABILITY. SELLER MAKES NO REPRESENTATIONS OR WARRANTIES AS TO
THE AVAILABILITY OF FINANCING REGARDING THE OPTION. BUYER IS SOLELY RESPONSIBLE
FOR OBTAINING PROPER FINANCING IN ORDER TO EXERCISE THE OPTION.
9. WAIVER OF WARRANTY. Buyer is acquiring and accepting the Premises on an "AS
IS" "WHERE IS" physical basis, "WITH ALL FAULTS," without representation or
warranty, express or implied, with regard to physical condition, including
without limitation, any latent or patent defects, conditions of soils or
16
groundwater, existence or nonexistence of hazardous materials, quality of
construction, workmanship, merchantability or fitness for any particular purpose
as to the physical measurements or useable space thereof.
10. RECORDING OF AGREEMENT. Buyer shall not record this Option in the public
records of any public or county office without the express written consent of
Seller.
11. GOVERNING LAW AND VENUE. This Option Addendum shall be governed, construed
and interpreted by, through and under the laws of the State of Colorado. The
parties further agree that the venue for any and all disputes related to this
Option to Purchase shall be the City and County of Denver, despite the fact that
the Premises is not located therein.
12. ENTIRE AGREEMENT; MODIFICATION. Despite Buyer's prior occupancy of the
Premises pursuant to the Lease Agreement, this Option Addendum, together with
the Purchase Agreement attached hereto, set forth the entire agreement and
understanding between the parties relating to Buyer's option to purchase the
subject real property. To the extent otherwise applicable, the doctrine of
equitable conversion shall not apply with respect to Buyer's occupancy of the
Premises pursuant to the Lease Agreement, or the revocable Option granted
hereunder. No modification of or amendment to this Option Addendum, nor any
waiver of any rights under this Option Addendum, will be effective unless in
writing, signed by both parties hereto.
SELLER: BUYER:
HEADGATE II, LLC Strainwise, Inc.
a Colorado limited liability company a Colorado corporation
By: Singletree Financial Partners, LLC By: Xxxxx Xxxxxxxx and Xxxx Xxxxxxxx,
a Colorado limited liability company
Managing Member of
HEADGATE II, LLC
By:/s/ Xxxxxxx X. Xxxxxxxx By:/s/ Xxxx Xxxxxxxx
------------------------------- -------------------------------
Xxxxxxx Xxxxxx Xxxxxxxx President Strainwise, Inc.
Managing Member of Singletree
Financial Partners, LLC
By:/s/ Xxxxxxxxxx X. Xxxxxxxx By:/s/ Xxxxx Xxxxxxxx
------------------------------- -------------------------------
Xxxxxxxxxxx Xxxxx Shopneck Chief Executive Officer Strainwise,
Managing Member of Singletree Inc.
Financial Partners, LLC
17
