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EXHIBIT 10.20
LEASE AGREEMENT
THIS LEASE AGREEMENT, is made and entered into effective as of the 1st
day of March, 1997, by and between NOVATIONS PARTNERS, L.L.C., a Utah limited
liability company, as Lessor, and NOVATIONS GROUP, INC., a Utah corporation, as
Lessee.
ARTICLE 1. PREMISES. Lessor is the owner, or shall become the owner, of
real property described as follows: Unit Nos. _____________ of the _________,
located at 0000 Xxxxx 000 Xxxx, Xxxxx, Xxxx Xxxxxx, Xxxx 00000, hereinafter
referred to as the Leased Property. Leased Property shall also include all
modifications and additions thereto, hereafter located on the real property, to
the extent such improvements constitute the property of Lessor hereunder.
Lessor hereby leases to Lessee and Lessee hereby leases from Lessor the
Leased Property, which contains a total of approximately 21,000 square feet of
floor space. The parties agree that this Lease is subject to the effect of the
Declaration of Condominium of the ____________ (the "Declaration"), any
covenants, conditions, restrictions, easements, mortgages or deeds of trust,
ground leases, rights of way and any other matters or documents of record; the
effect of any zoning laws of the city, county and state where the Leased
Property is situated, and general and special taxes not delinquent. Lessee
agrees that Lessee, and all persons in possession or holding under Lessee, will
conform to and will not violate the terms of the Declaration or any covenants,
conditions or restrictions of record which may now or hereafter encumber the
Leased Property (the "Restrictions"); and this Lease is subordinate to the
Restrictions and any amendments or modifications thereto.
ARTICLE 2. PURPOSE. The Leased Property is to be used only for office
purposes and such other purposes as may be expressly permitted by the
Declaration, and for no other purpose without the prior written consent of
Lessor, which consent shall not be unreasonably withheld.
ARTICLE 3. TERM; OPTION. The term of this Lease shall be for a period
of five (5) consecutive full Lease Years, as the term Lease Year is hereinafter
defined, commencing on the Commencement Date, plus any option periods exercised
as provided below. The term "Lease Year" means a period of twelve (12) full
consecutive calendar months, beginning on the first day of the calendar month
coinciding with or immediately following the Commencement Date.
Provided that (i) Lessee has promptly paid all rent due hereunder, it
being agreed that Lessee shall be considered to have paid rent promptly if, in
any given Lease Year, no more than one monthly installment has been paid late
(that is, received by the Landlord after the fifth (5th) day of the month) and
during the Initial Term, the Lessee has paid all monthly installments of rent no
later than the twentieth (20th) day of the month; and (ii) Lessee is not in
default of any of the terms, covenants and conditions of this Lease at the time
the option provided herein is required to be exercised; then Lessee shall have
the right to extend the
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term of this Lease for one (1) additional option term of five (5) years, upon
the terms herein stated.
The option shall be exercised by Lessee giving Lessor written notice of
its intent to exercise the option at least 180 days prior to the expiration of
the Initial Term. If Lessee fails timely to exercise the option to extend, the
option shall be null and void and of no further force or effect. The option term
shall be governed by the same terms, covenants and conditions as the Initial
Term, with the exception of the length of the term, as referenced above, and the
rent. The minimum monthly rent during the option period shall be as set forth in
Article 5 below.
ARTICLE 4. COMMENCEMENT DATE. The Commencement Date shall be
March 1, 1997.
ARTICLE 5. RENT. Lessee shall pay to Lessor, as Minimum Rent for the
Leased Property during the term of this Lease, according to the schedule set
forth in Exhibit A. Rent shall be paid in advance on or before the first day of
each calendar month during the term hereof. Minimum Rent for any partial month
shall be prorated on a per diem basis.
Rent shall be paid to Lessor without deduction or offset, in lawful
money of the United States of America and shall be paid to Lessor at 0000 Xxxxx
000 Xxxx, Xxxxx 000, Xxxxx, Xxxx 00000, or to such other place as Lessor may
from time to time designate by written notice to Lessee. Any installment of
rent, other sum or any portion of such installment or other sum required under
this Lease to be paid by Lessee which has not been paid within five (5) days
after the due date thereof (withstanding postal delays) shall, whether or not
demand therefor is made or notice of default is given, bear interest at the rate
of one and one half percent (1-1/2%) per month from the due date thereof until
paid in full. In addition thereto, Lessor may charge a sum equal to five percent
(5%) of each unpaid amount as a service fee to compensate Lessor for the
additional time and expense necessitated in the handling of delinquent payments.
ARTICLE 6. NET LEASE; ADDITIONAL RENT. Except as expressly provided in
this Lease, it is the intent of both parties that the Minimum Rent specified
herein shall be absolutely net to Lessor throughout each Lease Year of the term
of this Lease, and that all costs, expenses, and obligations of every kind
relating to the Leased Property, or the repair, replacement or maintenance of
the Leased Property, which may arise or become due during the term hereof shall
be paid by Lessee and that Lessor shall be indemnified by Lessee against such
costs, expenses, and obligations. In addition to the other covenants and
obligations set forth in this Lease, Lessee specifically agrees to pay to
Lessor, as Additional Rent, the expenses and charges set forth below:
(i) All condominium fees, assessments, taxes, costs or similar
expenses assessed pursuant to the Declaration.
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(ii) Lessee shall pay any and all Taxes (as defined below)
levied against the Leased Property for any period occurring during the term of
this Lease.
(iii) Lessee shall pay the premiums for insurance required by
Article
16.
"Taxes" shall mean and include all general and special taxes,
assessments, duties and levies, charged and levied upon or assessed by any
governmental authority against the Leased Property or any portion thereof, or
any leasehold improvements, fixtures, installations, additions, and equipment
whether owned by Lessor or Lessee. Taxes shall also include the reasonable cost
to Lessor in contesting the amount, validity, or the applicability of any Taxes
mentioned in this Article. Further included in the definition of Taxes herein
shall be general and special assessments, fees of every kind and nature,
commercial rental tax, levy, penalty or tax (other than inheritance or estate
taxes) imposed by any authority having the direct or indirect power to tax, as
against any legal or equitable interest of Lessor in the Leased Property or on
the act of entering into this Lease or as against Lessor's right to rent or
other income therefrom, or as against Lessor's business of leasing the Leased
Property, any tax, fee, or charge with respect to the possession, leasing,
transfer of interest, operation, management, maintenance, alteration, repair,
use, or occupancy by Lessee of the Leased Property, or any tax imposed in
substitution, partially or totally, for any tax previously included within the
definition of Taxes herein, or any additional tax, the nature of which may or
may not have been previously included within the definition of Taxes. Further,
if at any time during the term of this Lease the method of taxation or
assessment of real estate or the income therefrom prevailing at the time of
execution hereof shall be, or has been altered so as to cause the whole or any
part of the Taxes now or hereafter levied, assessed or imposed on real estate to
be levied, assessed or imposed upon Lessor, wholly or partially, as a capital
levy, business tax, permit or other charge, or on or measured by the rents
received therefrom, then such new or altered Taxes, regardless of their nature,
which are attributable to the Leased Property shall be deemed to be included
within the term "Taxes" for purposes of this Article 6, whether in substitution
for, or in addition to any other Taxes, save and except that such shall not be
deemed to include any enhancement of said tax attributable to other income of
Lessor. With respect to any general or special assessments which may be levied
upon or against the Leased Property, or which may be evidenced by improvement or
other bonds, or may be paid in annual or semi-annual installments, only the
amount of such installment, pro rated for any partial year, and statutory
interest, shall be included within the computation of Taxes for which Lessee is
responsible hereunder.
During the term hereof Lessee shall pay prior to delinquency all taxes
assessed against and levied upon fixtures, furnishings, equipment and all other
personal property of Lessee and when possible Lessee shall cause said fixtures,
furnishings and equipment to be assessed and billed separately from the property
of Lessor. If any of Lessee's personal property shall be assessed with the
Leased Property, Lessee shall pay to Lessor or directly to the taxing authority,
the Taxes attributable to Lessee's personal property.
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At the option of Lessor, Lessor shall estimate the Taxes, insurance,
assessments, and common area (and similar charges) required to be paid by Lessee
hereunder for the current calendar year (or other convenient period established
by Lessor) or portion thereof, and Lessee shall pay to Lessor at the same time
each payment of Minimum Rent is due, the amount of the estimate divided by the
total number of months included in the period covered by the estimate. Within
three months after the end of each calendar year (or other period), Lessor shall
render a statement to Lessee showing the difference between the Lessee's
obligations for such amounts and the amounts collected by Lessor from Lessee.
Lessee shall pay any shortage to Lessor within thirty (30) days after the date
of such statement. Correspondingly, Lessee shall receive a credit in the amount
of any overpayment, which credit may be applied by Lessee to subsequent payments
due under this Section, as long as Lessee is not in default for failure to pay
under this Lease. Lessee may audit Lessor's estimates and the expenses paid by
Lessor, at Lessee's expense. If the audit reveals that the amounts charged to
Lessee for actual expenses (as opposed to estimated expenses) exceeded actual
expenses by more than ten percent (10%), then Lessor shall reimburse Lessee for
the cost of the audit. If the Lessee has overpaid such expenses at the end of
the term of the Lease, Lessor shall reimburse Lessee the amount of such
overpayment.
Lessee shall cause all bills, statements and other documents related to
Taxes, insurance, assessments, and common area (and similar charges) to be sent
directly to Lessor. The size of the monthly payments required by this Section to
be made by Lessee shall be adjusted from time to time as may be necessary in
light of the total taxes, assessments and insurance premiums to which such
payments are related.
ARTICLE 7. USE OF LEASED PROPERTY. Lessee shall not use the Leased
Property or allow the Leased Property to be used for any improper, immoral, or
unlawful purpose, nor shall Lessee cause, maintain or permit any nuisance in, on
or about the Leased Property. Lessee shall not damage or deface or otherwise
commit or suffer to be committed any waste in, of or upon the Leased Property.
ARTICLE 8. COMPLIANCE WITH LAW. Lessee shall not use the Leased
Property or permit anything to be done in or about the Leased Property which
will in any way conflict with any law, statute, ordinance or government rule or
regulation now in force or which may hereafter be enacted or promulgated. Lessee
shall at its sole cost and expense promptly comply with all laws, statutes,
ordinances and governmental rules, regulations or requirements now in force or
which may hereafter be in force and with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted related to or
affecting the condition, use or occupancy of the Leased Property, including
making such repairs, replacements, additions, or modifications to the Leased
Property as may be required (whether or not such are in the nature of capital
improvements). To the extent that any such repairs, replacements, additions, or
modifications are the responsibility of the condominium association, then any
assessments pertaining thereto shall be paid by Lessee. The judgment of any
court of competent jurisdiction or the admission of Lessee in an action against
Lessee, whether Lessor be a party thereto or not, that Lessee has violated any
such law, statute,
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ordinance or governmental rule, regulation or requirement, shall be conclusive
of that fact as between Lessor and Lessee.
Lessee accepts the Leased Property subject to the Declaration and all
applicable zoning, municipal, county and state laws, ordinances, rules,
regulations, orders, restrictions of record, and requirements in effect during
the term or any part of the term hereof regulating the Leased Property.
For purposes hereof, "Hazardous Materials" shall mean any and all
flammable explosives, radioactive material, hazardous waste, toxic substance or
related material, including but not limited to, those materials and substances
defined as "hazardous substances", "hazardous materials", "hazardous wastes" or
"toxic substances" in the Environmental Laws. For purposes hereof,
"Environmental Laws" shall mean all local, state and federal laws, statues,
rules and regulations, in force from time to time during the term of this Lease,
pertaining to Hazardous Materials and other environmental matters, including but
not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 et seq.; the Hazardous Materials
Transportation Act, 39 U.S.C. Section 1801, et seq.; the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq.; the Federal Clean Water Act 33 U.S.C. Section 1251 et seq.; the
Clean Air Act 42 U.S.C. Section 7401 et seq.; the Xxxxxx-Cologne Water Quality
Act, including all amendments thereto, replacements thereof, and regulations
adopted and publications promulgated pursuant thereto.
Lessee agrees that, during the term of this Lease, Lessee shall not be
in violation of any federal, state or local law, ordinance or regulation then
applicable to the Leased Property and relating to industrial hygiene, soil,
water, or environmental conditions on, under or about the Leased Property
including, but not limited to, the Environmental Laws. Lessee further agrees
that during the term of this Lease, there shall be no use, presence, disposal,
storage, generation, release, or threatened release of Hazardous Materials on,
from or under the Leased Property. Lessee agrees to indemnify, defend, protect
and hold harmless Lessor, its directors, officers, employees, partners, and
agents from and against any and all losses, claims, demands, actions, damages
(whether direct or consequential), penalties, liabilities, costs and expenses,
including all reasonable attorney's fees and legal expenses, arising out of any
violation or alleged violation of any of the laws or regulations referred to in
this Article, or breach of any of the provisions of this Article. The provisions
of this Article shall survive the termination or expiration of this Lease.
ARTICLE 9. ALTERATIONS. Lessee shall not make or permit to be made any
material alterations, additions or improvements to or of the Leased Property or
any part thereof without the written consent of Lessor, which consent shall not
be unreasonably withheld, and any alterations, additions or improvements to, or
on the Leased Property, except movable furniture and trade fixtures, shall at
once become a part of the realty and belong to Lessor. Lessee shall submit
working drawings for any such alterations, additions or improvements to Lessor
for Lessor's prior written approval. In the event Lessor consents
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to the making of any alterations, additions or improvements to the Leased
Property by Lessee, the same shall be made by Lessee at Lessee's sole cost and
expense and such work shall be performed in a workmanlike manner.
Lessee shall keep the Leased Property free from any liens arising out
of any work performed, materials furnished, or obligations incurred by Lessee.
In the event a mechanic's or other lien is filed against the Leased Property as
a result of a claim arising through the Lessee, Lessee shall, upon request by
Lessor, furnish to Lessor a surety bond satisfactory to Lessor in an amount
equal to at least one hundred fifty percent (150%) of the amount of the
contested lien, claim or demand, indemnifying Lessor against liability for the
same. Lessor may require Lessee to pay Lessor's attorneys' fees and costs in
participating in any action to foreclose such lien if Lessor shall decide it is
to its best interest to do so.
Lessee shall return the Leased Property to Lessor at the expiration or
earlier termination of this Lease in good and sanitary order, condition and
repair, free of rubble and debris, broom clean, reasonable wear and tear
excepted. Any deferred maintenance or other conditions other than normal wear
and tear shall be remedied at Lessee's sole cost and expense. All damage to the
Leased Property caused by the removal of trade fixtures and other personal
property that Lessee is permitted to remove under the terms of this Lease and/or
such restoration shall be repaired by Lessee at its sole cost and expense prior
to termination.
ARTICLE 10. REPAIRS; MAINTENANCE; REPLACEMENT. Except to the extent
such items are the responsibility of the Condominium Association under the
Declaration, Lessee shall, at all times during the term hereof, and at Lessee's
sole cost and expense, keep, maintain and repair the remainder of the Leased
Property in good, working, and sanitary order and condition, including, without
limitation, replacement of all broken or damaged glass, replacement of light
globes or tubes and doors, window casements, heating and air conditioning
systems, plumbing, pipes, electrical wiring conduit, interior partitions,
fixtures, leasehold improvements and alterations, walls (both exterior and
interior), and all structural components, floor slab and subgrade and
foundations and footings, pavement, sidewalks, walls, fences, curbs, bumpers,
landscaping, irrigations systems, striping and line painting, sweeping, removal
of snow, ice, trash, garbage and other refuse. Lessee shall pay all fees,
required licenses and permits relating to the Leased Property.
Except as stated in this Lease, Lessee accepts the Leased Property in
its "as-is" condition. Lessee agrees on the last day of the term or sooner
termination of this Lease to surrender the Leased Property in good and sanitary
order, condition and repair, and in compliance with Lessee's obligations to
repair, replace and maintain the Leased Property as set forth in this Lease.
Except as stated in this Lease, Lessee's obligations to repair and
maintain the Leased Property during the term hereof, and its obligations
respecting the condition of the Leased Property from time to time during the
term hereof and at the time the Leased Property are
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surrendered to Lessor, are absolute and unconditional, and Lessee agrees that
Lessor shall have no obligation to repair, replace, or maintain the Leased
Property regardless of the existence of latent defects or circumstances now
existing or hereafter arising.
ARTICLE 11. WASTE AND NUISANCE. (a) Lessee covenants that it: (i) will
keep the Leased Property and every part thereof in a clean, reasonably neat and
orderly condition; (ii) will in all respects and at all times fully comply with
all health and policy regulations; (iii) shall not overload the floors or permit
or allow any waste, abuse, deterioration or destructive use of the Leased
Property to occur.
(b) Lessee further covenants that it will (i) not cause or
permit any Hazardous Materials to be brought upon or used in or about the Leased
Property; (ii) immediately notify Lessor of any environmental concern raised by
a private party or governmental agency as it relates to the Leased Property; and
(iii) immediately notify Lessor of any Hazardous Material spill. In the event of
a violation hereof, Lessee shall immediately proceed, at Lessee's expense, to
remedy same. Failure of Lessee to commence clean up activities within five (5)
days after receipt of notice to so do shall be a default under this Lease.
Lessor shall, thereafter, have the right, but not the obligation, to remedy any
environmental violation upon the Leased Property and Lessee shall promptly
reimburse Lessor for all costs relating thereto. Lessor further retains the
right, in its sole, but reasonable discretion, to conduct any environmental
tests on the Leased Property should Lessor suspect a violation to exist upon the
Leased Property. Lessee shall and does agree to indemnify and hold Lessor
harmless from and against any and all damages, costs, expenses and liability
whatsoever, including, without limitation, attorneys' fees that Lessor may incur
because of Lessee's violation of, or the resulting enforcement of, any
Environmental Laws, which covenant shall survive the expiration or earlier
termination of this Lease.
ARTICLE 12. ABANDONMENT. Lessee shall not abandon the Leased Property
at any time prior to the expiration or earlier termination of the term hereof.
In the event Lessee shall abandon or surrender the Leased Property or be
dispossessed by process of law or otherwise, any personal property belonging to
Lessee and left on the Leased Property beyond thirty (30) days shall be deemed
to have been abandoned.
ARTICLE 13. ASSIGNMENT AND SUBLETTING. Lessee shall not assign this
Lease or sublet the Leased Property or any part thereof to occupy or use the
Leased Property or any portion thereof without the prior written consent of
Lessor, which shall not be unreasonably withheld or delayed. Acceptance of rent
by Lessor shall not be deemed approval or acceptance of assignment or
subletting. Lessee shall remain liable for all terms and conditions of this
Lease at all times notwithstanding assignment or subletting. In the event Lessor
grants permission in writing for Lessee to sublet or assign, Lessee shall pay to
Lessor its reasonable costs and attorney's fees incurred in reviewing the
Lessee's request (which shall not be less than $300.00). Any assignment or
subletting by Lessee without Lessor's consent shall be a default by Lessee
hereunder.
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ARTICLE 14. PARKING AND LANDSCAPING. Except to the extent such items
are the responsibility of the Condominium Association under the Declaration,
Lessee shall, at its sole cost, maintain in good condition and repair all of the
pavement, parking, striping and line painting, exterior lights, irrigation
systems, shrubs, grass and landscaped areas on the Leased Property, and shall
repair, maintain and/or replace the pavement, parking area and landscaping as
may be reasonably necessary to keep it in good condition and repair, regardless
of whether the nature of such repairs may be in the nature of capital
expenditures.
ARTICLE 15. INDEMNIFICATION OF LESSOR. Lessee releases Lessor, and its
authorized representatives, from any claims for damage to any person, to the
Leased Property, or to the fixtures, personal property, Lessee's improvements
and alterations of either Lessor or Lessee, in or on the Leased Property,
including loss of income, that are caused by or result from risks insured or
required under the terms of this Lease to be insured against.
Lessee, as a material part of the consideration to be rendered to
Lessor, shall indemnify, defend, protect and hold harmless Lessor against all
actions, claims, demands, damages, liabilities, losses, penalties, or expenses
of any kind which may be brought or imposed upon Lessor or which Lessor may pay
or incur by reason of injury to person or property, from whatever cause, all or
in any way connected with the condition or use of the Leased Property prior to
or after the date hereof, or the improvements or personal property therein or
thereon, including without limitation any liability or injury to the person or
property of Lessee, its agents, officers, employees or invitees. Lessee agrees
to indemnify, defend and protect Lessor and hold it harmless from any and all
liability, loss, cost or obligation on account of, or arising out of, any such
injury or loss however occurring, including breach of the provisions of this
Lease, the negligence of the parties hereto and for any conditions or
occurrences arising prior to the date hereof. Nothing contained herein shall
obligate Lessee to indemnify Lessor against Lessor's gross negligence or willful
acts, for which Lessor shall indemnify Lessee.
In the event any action, suit or proceeding is brought against Lessor
by reason of such occurrence or condition, Lessee, upon Lessor's request will at
Lessee's expense resist and defend such action, suit or proceeding, or cause the
same to be resisted and defended by counsel designated either by Lessee or by
the insurer whose policy covers the occurrence and in either case approved by
Lessor. The obligations of Lessee under this Article arising by reason of any
occurrence taking place during the Lease term shall survive any termination of
this Lease.
Lessee, as a material part of the consideration to be rendered to
Lessor, hereby waives all claims against Lessor for damages to goods, wares,
merchandise and loss of business in, upon or about the Leased Property and for
injury to Lessee, its agents, employees, invitees or third persons in or about
the Leased Property from any cause arising at any time, including breach of the
provisions of this Lease and the negligence of the parties hereto, unless caused
by the gross negligence or willful acts of Lessor.
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Wherever in this Article the term Lessor or Lessee is used and such
party is to receive the benefit of a provision contained in this Article, such
term shall refer not only to that party but also to its officers, directors,
employees, partners and agents.
ARTICLE 16. INSURANCE. Except to the extent the following insurance
coverages and/or policies are obtained and maintained by the Condominium
Association under the Declaration:
(a) Lessor, at the expense of Lessee as provided herein, shall
secure comprehensive general liability insurance on the Leased Property on an
occurrence basis with a minimum limit of liability in an amount of One Million
Dollars ($1,000,000.00) per occurrence, Two Million Dollars ($2,000,000.00)
aggregate, or such other limits as Lessor may reasonably determine. Lessor (and,
at Lessor's option, the lender interested under any mortgage or similar
instrument then affecting the Leased Property) shall be solely responsible for
determining the amount of insurance and the specific endorsements to be
maintained.
(b) Lessor, at the expense of Lessee as provided herein, shall
procure insurance coverage insuring Lessor against loss of, or damage to, all
buildings and structures on the Leased Property by reason of fire or any other
casualties. Such insurance shall be underwritten by a responsible insurance
company qualified to do business in the State where the Leased Property is
located, shall be in the face amount equal to the full replacement cost of all
buildings and structures on the Leased Property, and shall include coverage for
loss of rents. Such insurance may cover loss or damage by fire, windstorm, hail,
acts of God, explosion, riot attending a strike, civil commotion, aircraft,
vehicles, smoke, and earthquake. Lessor (and, at Lessor's option, the lender
interested under any mortgage or similar instrument then affecting the Leased
Property) shall be solely responsible for determining the amount of fire and
extended coverage insurance and the specific endorsements to be maintained.
Lessor may also maintain boiler insurance on all heating boilers within the
Leased Property in such amounts as it determines. Lessor shall be named as an
insured on each such policy. The proceeds of such insurance in case of loss or
damage shall be paid to Lessor to be applied as determined by Lessor. In any
event, Tenant shall have no interest in or claim to any such proceeds.
(c) Lessee agrees during the entire term hereof, to keep in
full force and effect a policy of comprehensive general liability insurance with
respect to the Leased Property, the business operated by Lessee, and any
subtenants, concessionaires, or licensees of Lessee in the Leased Property, with
minimum limits of not less than $1,000,000 per occurrence, $2,000,000 in the
aggregate. The policy shall name Lessor, any person, firms, or corporations
designated by Lessor, and Lessee as insureds.
At all times during the term hereof, Lessee shall keep in force at its
sole cost and expense, fire and extended coverage insurance, and against
sprinkler leakage or malfunction and water damage and against vandalism and
malicious mischief, on Lessee's trade fixtures, furnishings, equipment and other
personal property located or brought upon the Leased
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Property in full replacement value thereof. Lessee shall also obtain broad form
boiler and machinery insurance on all air-conditioning equipment, boilers and
other pressure vessels or systems, whether fired or unfired, which are installed
by Lessee or which serve the Leased Property, except to the extent such items
are covered under insurance secured by Lessor. Such boiler and machinery
insurance shall cover the replacement value of such items. During the Lease
term, the proceeds from any such policy or policies of insurance shall be used
for the repair or replacement of the property so insured.
The foregoing insurance required to be procured by Lessee shall be
issued by an insurance company approved by Lessor and a copy of the policy or a
certificate of insurance shall be delivered to Lessor.
(d) Each party shall cause each insurance policy obtained by
it to provide that the insurance company waives all rights of recovery by way of
subrogation against either party in connection with any damage covered by such
policy. Neither party shall be liable to the other for any damage caused by fire
or any other risks insured against under any property insurance policy carried
under the terms of this Lease.
(e) Any mortgage lender interested in any part of the Leased
Property may, at Lessor's option, be afforded coverage under any policy required
to be secured by Lessee hereunder, by use of a mortgagee's endorsement to the
policy concerned.
(f) No use shall be made or permitted to be made on the Leased
Property, nor acts done, which will increase the existing rate of insurance upon
the Leased Property or cause the cancellation of any insurance policy or any
part thereof as a result of such use or acts, nor shall Lessee sell, or permit
to be kept, used or sold, in or about the Leased Property, any article which may
be prohibited by the standard form of fire insurance policies. Lessee shall, at
its sole cost and expense, comply with any and all requirements pertaining to
the Leased Property, of any insurance organization or company, necessary for the
maintenance of reasonable property damage and public liability insurance,
covering the Leased Property.
ARTICLE 17. UTILITIES; JANITORIAL SERVICE. (a) Lessee shall be solely
responsible for, and shall promptly pay before delinquency, all charges for use
or consumption of heat, sewer, water, gas, electricity, telephone or any other
utility services supplied to Lessee or to the Leased Property during the term
hereof.
(b) Unless caused by Lessor's gross negligence or willful act,
Lessor shall not be liable in the event of any interruption in the supply of any
utility service to the Leased Property. Lessee agrees that it will not install
any equipment which will exceed or overload the capacity of any utility
facilities and that if any equipment installed by Lessee shall require
additional utility facilities, the same shall be installed at Lessee's expense
in accordance with plans and specifications first approved in writing by Lessor.
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(c) Lessee shall provide at its sole expense regular
janitorial service for the Leased Property, which shall include at least
ordinary dusting and cleaning, emptying of waste baskets and vacuuming. In
addition, Lessee shall provide an adequate sized dumpster for the storage of
refuse. Lessee shall arrange for the removal of such refuse and periodic
cleaning of such dumpster and the areas immediately adjacent thereto.
ARTICLE 18. ENTRY AND INSPECTION. Lessee shall permit Lessor and its
agents to enter into and upon the Leased Property at all reasonable times and
upon reasonable notice for the purpose of inspecting the same or for the purpose
of placing upon the property in which the Leased Property are located any usual
or ordinary signs advertising the availability of the property for sale or lease
prior to the expiration of this Lease. Lessor or its agents may, during normal
business hours, enter upon said Leased Property and exhibit same to prospective
lessees.
ARTICLE 19. DEFAULT. In the event of any failure of Lessee to pay any
rental or other sum due hereunder within five (5) days after the same shall be
due, or any failure to perform any other of the terms, conditions or covenants
of this Lease to be observed or performed by Lessee for more than thirty (30)
days after written notice of such default shall have been given to Lessee (or,
if such failure cannot reasonably be cured within such thirty (30) days, if
Lessee fails to commence the cure within thirty (30) days or thereafter fails to
diligently prosecute such cure to completion), or if Lessee or any guarantor of
the Lease shall become bankrupt or insolvent or file any debtor proceedings or
take or have taken against Lessee or any guarantor of this Lease in any court
pursuant to any statute either of the United States or of any state a petition
in bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee of all or a portion of Lessee's or any such guarantor's
property, or if Lessee or any such guarantor makes an assignment for the benefit
of creditors or petitions for or enters into an arrangement, or if Lessee shall
abandon said Leased Property or suffer this Lease to be taken under any writ of
execution, Lessor, besides other rights or remedies it may have, shall have the
immediate right of re-entry and may remove all persons and property from the
Leased Property and such property may be removed and stored in a public
warehouse or elsewhere at the cost of and for the account of Lessee, all without
service of notice or resort to legal process and without being deemed guilty of
trespass or becoming liable for any loss or damage which may be occasioned
thereby.
Should Lessor elect to re-enter, as herein provided, or should it take
possession pursuant to legal proceedings or pursuant to any notice provided for
by law, it may either terminate this Lease or it may from time to time without
terminating this Lease, make such alterations and repairs as may be necessary in
order to relet the Leased Property and relet said Leased Property or any part
thereof for such term or terms (which may be for a term extending beyond the
term of this Lease) and at such rental or rentals and upon such other terms and
conditions as Lessor in its sole discretion may deem advisable, upon such
reletting, all rentals received by Lessor from such reletting shall be applied,
first, to the payment of any indebtedness other than rent due hereunder from
Lessee to Lessor, second, to
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the payment of any costs and expenses of such alterations, repairs, and
reletting (including commissions), third, to the payment of rent due and unpaid
hereunder, and the residue, if any, shall be held by Lessor and applied toward
payment of future rent as the same may become due and payable hereunder. If such
rentals received from such reletting during any month be less than that to be
paid during that month by Lessee hereunder, Lessee shall pay any such deficiency
to Lessor. Such deficiency shall be calculated and paid monthly. No such
re-entry or taking possession of the Leased Property by Lessor shall be
construed as an election on its part to terminate this Lease unless a written
notice of such intention be given to Lessee or unless the termination thereof be
decreed by a court of competent jurisdiction. Notwithstanding any such reletting
without termination, in addition to any other remedies it may have, it may
recover from Lessee all damages it may incur by reason of such breach, including
the worth at the time of such termination of the excess, if any, of the present
value of the rent and charges equivalent to rent reserved in this Lease for the
remainder of the stated term (using a discount rate of 10.0%) over the present
value of the then reasonable rental value of the Leased Property for the
remainder of the stated term (using a discount rate of 10.0%), all of which
amounts shall be immediately due and payable from Lessee to Lessor. To give
effect to the remedies provided herein, Lessee expressly waives the benefit of
any statutory or common law that limits or delays the Lessor's ability to
recover damages for future rents and agrees that such rents may be accelerated
for purposes of determining Lessee's liability and Lessor's damages.
In the event of default, all Lessee's fixtures, furniture, equipment,
improvements, additions, alterations and other personal property shall remain on
the subject Leased Property and in that event and continuing during the length
of said default, Lessor shall have the right, after the expiration of any
applicable cure period, to take the exclusive possession of the same and to use
the same, rent or charge free, until all defaults are cured, or, at its option,
at any time during the term of this Lease, to require Lessee to forthwith remove
the same, and Lessee hereby waives all rights to notice and all common law and
statutory claims and causes of actions which it may have against Lessor
subsequent to such date as regards to storage, distribution, damage, loss of use
and ownership of the personal property affected by the terms of this Article.
Lessee acknowledges Lessor's need to relet the Leased Property upon termination
of this Lease or repossession of the Leased Property and understands that the
forfeitures and waivers provided herein are necessary to said reletting and to
prevent Lessor incurring a loss for inability to deliver the Leased Property to
a prospective lessee.
The remedies given to Lessor in this section shall be in addition and
supplemental to all other rights or remedies which Lessor may have under the
laws then in force.
ARTICLE 20. DESTRUCTION. (a) To the extent applicable, the Declaration
shall govern the repair or reconstruction of any of the Leased Property that may
be damaged or destroyed by fire or other casualty or cause. To the extent of
Lessor's rights as a unit owner, Lessor shall cause the Lease Property to be
repaired or reconstructed to a condition which is substantially similar to the
condition in existence prior to such casualty.
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(b) Notwithstanding the foregoing, however, if the Leased
Property is damaged to the extent of thirty-three and one-third percent
(33-1/3%) or more of its then replacement value, or if the repair of the Leased
Property would require more than one hundred twenty (120) days, Lessor may
terminate this Lease upon written notice given to Lessee within thirty (30) days
following such casualty or loss.
(c) Unless this Lease is terminated, Lessee shall, at its
expense, repair the fixtures and improvements installed by it within the Leased
Property and repair or replace any of Lessee's furniture, equipment or other
personal property damaged by such casualty or event.
(d) If any building or structure on the Leased Property shall
be damaged or destroyed by fire or other casualty or cause, Minimum Rent shall
xxxxx proportionately as to the portion of the Leased Property rendered
untenantable; but only upon the condition that insurance covers Lessor's loss of
rents for such period.
ARTICLE 21. EMINENT DOMAIN. If all or more than 33-1/3% of the Leased
Property shall be taken or appropriated by any public or quasi-public authority
under the power of eminent domain, or transfer in lieu thereof, either party
hereto shall have the right, at its option, to terminate this Lease as of the
date title vests in the condemning entity. Lessor shall be entitled to any
award, or other payment made in connection with such condemnation. Lessee,
however, shall have the right to pursue a claim in any condemnation proceeding
against the condemning authority (but not against Lessor) for compensation for
any resulting damages to Lessee's business, trade fixtures and personal property
(but not for any diminution or loss of Lessee's leasehold estate). If a part of
the Leased Property shall be so taken or appropriated and this Lease is not
thereafter terminated, the rental thereafter to be paid shall be reduced in the
proportion that the area of the Leased Property so taken bears to the entire
Leased Property. Notwithstanding the foregoing, however, before Lessee may
terminate this Lease by reason of a taking or appropriation as described above,
such taking or appropriation shall be of such an extent and nature as to
substantially handicap, impede or impair Lessee's use of the Leased Property for
a period in excess of ninety (90) days.
ARTICLE 22. MORTGAGE REQUIREMENTS. This Lease and all rights of Lessee
under this Lease are hereby subordinate hereunder to any lien of any mortgage or
mortgages or lien or other security interest resulting from any other method of
financing or refinancing, now or hereafter in force against the Leased Property.
The provisions of this Article notwithstanding, so long as Lessee is not in
default hereunder, this Lease shall remain in full force and effect for the full
term hereof and shall not be terminated as a result of any foreclosure or sale
or transfer in lieu of such proceedings pursuant to a mortgage or other
instrument to which Lessee has subordinated its rights pursuant hereto.
In the event of the sale or assignment of Lessor's interest in the
Leased Property, or in the event of any proceeding brought for the foreclosure
of, or in the event of exercise of
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the power of sale under any mortgage or other security instrument made by Lessor
covering the Leased Property, Lessee shall attorn to the assignee or purchaser
and recognize such purchaser as Lessor under this Lease.
Lessee agrees to give any mortgagees (as defined below), by registered
mail, a copy of any notice of default served by Lessee upon Lessor, provided
that prior to such notice, Lessee has been notified, in writing (by way of a
Notice of Assignment of Rents and Leases or otherwise) of the addresses of any
such mortgagees. Lessee further agrees that if Lessor shall have failed to cure
such default within the time set forth in this Lease, then any such mortgagees
shall have an additional thirty (30) days within which to cure such default or
if such default cannot be cured within that time, then such additional time as
may be necessary, if within such thirty (30) days, any such mortgagee has
commenced and is diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure proceedings, if
necessary to effect such cure), in which event this Lease shall not be
terminated. "Mortgagee" shall mean the holder of any mortgage, the beneficiary
under any deed of trust or the holder of any other security interest which
encumbers the Leased Property.
ARTICLE 23. RULES, REGULATIONS AND RESTRICTIVE COVENANTS. Lessee shall
faithfully observe and comply with any rules, regulations and/or restrictive
covenants applicable to the Leased Property.
ARTICLE 24. HOLDING OVER. If Lessee holds possession of the Leased
Property after the term of this Lease with Lessor's consent, and Lessor accepts
rent in the amounts hereinafter provided, Lessee shall become a lessee from
month-to-month upon terms equal to the then existing terms hereunder, except
that the Minimum Rent shall be the then existing Minimum Rent then payable
hereunder at the end of the term (on a monthly basis) multiplied by one hundred
twenty-five percent (125%). Minimum Rent and Additional Rent shall be paid in
advance on or before the first day of each month and Lessee shall continue in
possession until such tenancy shall be terminated by Lessor or until Lessee
shall have given to Lessor a written notice at least thirty (30) days prior to
the date of termination of such tenancy of its intention to terminate such
tenancy.
ARTICLE 25. NOTICES. All notices and demands which may or are required
to be given by either party to the other hereunder shall be sent by overnight
courier or United States certified or registered mail, postage prepaid,
addressed to:
LESSOR LESSEE
Novations Partners, L.L.C. Novations Group, Inc.
Attn: Xxxxxx Xxxxxxx Attn: Xxxxxx Xxxxxxx
0000 Xxxxx 000 Xxxx 5314 North 000 Xxxx
Xxxxx 000 Xxxxx 000
Xxxxx, Xxxx 00000 Xxxxx, Xxxx 00000
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Tel: 000-000-0000 Tel: 000-000-0000
Fax: 000-000-0000 Fax: 000-000-0000
ARTICLE 26. LESSOR'S RIGHT TO CURE DEFAULTS. All covenants and
agreements to be performed by Lessee under any of the terms of this Lease shall
be at its sole cost and expense and, except as otherwise specifically provided
herein, without any abatement of rent. If Lessee shall fail to pay any sum of
money, other than rent, required to be paid by it hereunder or shall fail to
perform any other act on its part to be performed hereunder, shall fail to cure
any such default within the applicable cure period, and such failure shall
continue for five (5) days after Lessee has received notice thereof by Lessor,
Lessor may, but shall not be obligated to do so, and without waiving any rights
of Lessor or releasing Lessee from any obligations of Lessee hereunder, make
such payment or perform such other act. All sums to be paid by Lessor and all
necessary incidental costs together with interest thereon at the rate of one and
one-half percent (1-1/2%) per month from the date of such payment by Lessor in
connection with the performance of any such act by Lessor shall be considered
additional rent hereunder and, except as otherwise in this Lease expressly
provided, shall be payable to Lessor on demand or, at the option of Lessor, in
such installments as Lessor may elect and may be added to any rent then due or
thereafter becoming due under this Lease.
ARTICLE 27. FORCE MAJEURE. Lessor shall not be responsible or liable
for any delay in the observance or performance of any term or condition of this
Lease to be observed or performed by Lessor to the extent such delay results
from action of governmental authorities, civil commotions, strikes, fires, acts
of God, whether or not similar to the matters herein specifically enumerated and
any such delay shall extend by like time any period of performance by Lessor and
shall not be deemed a breach of or failure to perform this Lease or any
provision hereof.
ARTICLE 28. TRANSFER OF LESSOR'S INTEREST. In the event Lessor
transfers its interest in the Leased Property (other than a transfer for
security purposes), Lessor shall be relieved of all obligations accruing
hereunder after the effective date of such transfer, provided that such
obligations have been expressly assumed in writing by the transferee.
ARTICLE 29. QUIET ENJOYMENT. Lessor covenants that so long as Lessee
performs all of its obligations hereunder it shall peacefully and quietly have,
hold and enjoy the Leased Property for the term hereof.
ARTICLE 30. SIGNS. Lessee shall have the right to use such signs as
Lessor could as the owner of the Leased Property. Lessee shall comply with all
applicable governmental regulations and other restrictions in the placement of
signs or advertisements on or in the Leased Property. The cost of installation
and regular maintenance of any signs shall be at the sole expense of Lessee. At
the termination of this Lease, or any extensions thereof,
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Lessee shall remove such signs as are requested to be removed by Lessor, and all
damage caused by such removal shall be repaired at Lessee's expense.
ARTICLE 31. SURRENDER OF LEASE. The voluntary or other surrender of
this Lease by Lessee, or a mutual cancellation thereof, shall not work as a
merger, and shall, at the option of Lessor, terminate all or any existing
subleases or subtenancies, or may, at the option of Lessor, operate as an
assignment to it of any or all such subleases or subtenancies.
ARTICLE 32. LESSOR'S EXCULPATION. In the event of default, breach or
violation by Lessor (which term includes Lessor's members, partners,
co-ventures, co-lessees, officers, directors, employees, agents, or
representatives) of any Lessor's obligations under this Lease, Lessor's
liability to Lessee shall be limited to its ownership interest in the Leased
Property, or the proceeds of a public sale of such interest pursuant to a
foreclosure against Lessor. Lessor may, at its option, and among its other
alternatives, relieve itself of all liability under this Lease by conveying the
Leased Property to Lessee. Notwithstanding any such conveyance, Lessee's
leasehold and ownership interest shall not merge. Lessor (as defined in this
Article) shall not be personally liable for any deficiency beyond its interest
in the Leased Property.
ARTICLE 33. ATTORNEYS' FEES. In any action or proceeding brought by
either party to enforce or interpret this Lease or any provision hereof, the
prevailing party shall be entitled to recover its reasonable attorney fees and
costs incurred therein. Further, Lessee hereby agrees to pay, as additional
rent, all reasonable attorney's fees and disbursements, and all other court
costs or expenses of legal proceedings or other legal services which Lessor may
incur or pay out by reason of, or in connection with:
(a) any appearance by Lessor (or any officer, partner, or
employee of Lessor) as a witness or otherwise in any action or proceeding
whatsoever involving or affecting Lessee or this Lease (provided, however, that
this clause shall not apply to actions between Lessor and Lessee, which are
governed by the first sentence of this Article);
(b) any assignment, sublease, or leasehold mortgage proposed
or granted by Lessee (whether or not permitted under this Lease), and all
negotiations with respect thereto; and
(c) any alteration of the Leased Property by Lessee or at the
request of Lessee, and all negotiations with respect thereto.
Lessee's obligations under this Article shall survive the expiration or
any other termination of this Lease. This Article is intended to supplement (and
not to limit) other provisions of this Lease pertaining to indemnities and/or
attorney's fees.
Should it be necessary for Lessor to employ legal counsel to enforce
any of the provisions of this Lease, Lessee agrees to pay, as additional rent,
all reasonable attorney's
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fees and court costs reasonably incurred thereby, whether or not Lessor
commences any legal action or proceeding.
ARTICLE 34. ESTOPPEL CERTIFICATES AND FINANCING. Lessee agrees at any
time and from time to time upon not less than ten (10) days prior request by
Lessor, to execute, acknowledge and deliver to Lessor a written certificate in
recordable form certifying (if true), as of the date of such certificate: (1)
the beginning and termination dates hereof; (2) that this Lease is in full force
and effect and has not been assigned, modified, supplemented or amended (except
by such writings as shall be stated); (3) stating that all conditions under this
Lease to be performed by either party have been satisfied (or stating which
conditions remain unsatisfied); (4) stating that there are no defenses or
offsets against the enforcement of this Lease by the Lessor, or stating those
claimed by Lessee; (5) verifying the amount of advance rental, if any paid by
Lessee; (6) stating the date to which rental has been paid; and (7) setting
forth such other factual information pertaining to the terms of the Lease as
Lessor may reasonably request. Lessor, Lessor's mortgage lenders and any
purchasers of all or a portion of the Leased Property shall be entitled to rely
upon such certificate. Should Lessee fail timely to comply with this Article,
Lessor shall have the right to execute such certificate as attorney in fact for
Lessee and such certificate and the representations contained therein shall be
fully binding on Lessee as though duly executed by Lessee.
ARTICLE 35. SUCCESSORS AND ASSIGNS. The covenants and conditions herein
contained shall, subject to the provisions as to assignment, apply to and bind
the heirs successors, executors, administrators and assigns of all of the
parties hereto; and all of the parties shall be jointly and severally liable
hereunder.
ARTICLE 36. TIME. Time is of the essence of this Lease with respect to
each and every Article, Section and Subsection hereof.
ARTICLE 37. MISCELLANEOUS. Subject to any limitations on assignment set
forth herein, all of the terms and provisions of this Lease shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto.
The waiver by Lessor of any term, covenant or condition herein
contained shall not be deemed to be a waiver of the same or any other term,
covenant or condition or any subsequent breach of the same of any other term,
covenant or condition herein contained. The subsequent acceptance of rent
hereunder by Lessor shall not constitute a waiver of any preceding breach by
Lessee of any term, covenant or condition of this Lease, other than the failure
of Lessee to pay the particular rent so accepted, regardless of Lessor's
knowledge of such preceding breach at the time of acceptance of such rent.
This Lease shall be governed by and construed in accordance with law of
Utah.
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The invalidity or enforceability of any provision hereof shall not
affect or impair any other provision hereof.
The term "Lessor" as used herein shall include the agents, officers and
employees thereof. If there is more than one Lessee, the obligations of Lessee
hereunder shall be joint and several.
Paragraph heading ins this Lease are for convenience only and shall not
define or limit the scope or intent of any provision hereof.
Lessee shall not record this Lease or a Memorandum thereof without the
written consent of Lessor. Lessor may file this Lease for record with the
Recorder of the County in which the Leased Property is located.
Any consent required or permitted herein of Lessor or Lessee, as the
case may be, shall not be unreasonably withheld or delayed.
ARTICLE 38. ENTIRE AGREEMENT. This Lease and the Exhibits and addenda
if any, attached hereto constitute the entire agreement between the parties. All
Exhibits and addenda mentioned in this Lease are incorporated herein by
reference. No subsequent amendment to this Lease shall be binding upon Lessor or
Lessee unless reduced to writing and signed by the party to be charged
therewith. Submission of this Lease for examination does not constitute an
option for the Leased Property and becomes effective as a Lease only upon
execution and delivery thereof by Lessor to Lessee. If any provision contained
in an Exhibit or addendum is inconsistent with a provision in the body of this
Lease, the provision contained in said Exhibit or addendum shall control. It is
hereby agreed that this Lease contains no restrictive covenants binding on other
lessees or exclusive use provisions in favor of Lessee. There are no
representations or promises by either party to the other except as are
specifically set forth herein. This Lease supersedes and revokes all previous
conversations, negotiations, arrangements, letters of intent, writings,
brochures, understandings, and information conveyed, whether oral or in writing,
between the parties hereto or their respective representatives or any agents of
any of them.
ARTICLE 39. AUTHORITY OF SIGNATORIES. Each person executing this Lease
individually and personally represents and warrants that he is duly authorized
to execute and deliver the same on behalf of the entity for which he is signing
(whether it be a corporation, general or limited partnership or otherwise) and
that this Lease is binding upon said entity in accordance with its terms.
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IN WITNESS WHEREOF, Lessor and Lessee executed this Lease as of the
date first above written.
LESSOR
NOVATIONS PARTNERS, L.L.C., a Utah
limited liability company
By its Manager:
NOVATIONS GROUP, INC., a Utah
corporation
By /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Its Managing Director
-------------------------------------
LESSEE
NOVATIONS GROUP, INC., a Utah corporation
By /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Its Managing Director
-----------------------------------
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EXHIBIT A
RENT SCHEDULE
Minimum Rent: Lease Year: Annual Rent Monthly Rent
1 $300,000.00 $25,000.00
2 $309,000.00 $25,750.00
3 $318,270.00 $26,522.50
4 $327,818.10 $27,318.18
5 $337,652.64 $28,137.72
Option term:
6 $337,652.64 $28,137.72
7 $347,782.22 $28,981.85
8 $358,215.69 $29,851.31
9 $368,962.16 $30,746.85
10 $380,031.02 $31,669.25
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