NET LEASE AGREEMENT
THIS LEASE, made and entered effective as of this 23
day of September, 2002, by and between AEI Income & Growth
Fund 24 LLC ("Fund 24"), whose corporate general partner is
AEI Fund Management XXI, Inc., whose address is 1300
Minnesota World Trade Center, 00 Xxxx Xxxxxxx Xxxxxx, Xx.
Xxxx, Xxxxxxxxx 00000 ("Lessor")(fax #000 000 0000), and
Kona Restaurant Group, Inc., a Delaware corporation, whose
address is 00000 Xxxxxxx 00 Xxxx, Xxxxx 0, Xxxxxxxxx, Xxxxx,
00000 ("Lessee") (fax # 000 000 0000);
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of
real property and improvements located at Littleton,
Colorado and legally described in Exhibit "A", which is
attached hereto and incorporated herein by reference; and
WHEREAS, Lessee as owner contracted for the
construction of the building and improvements (together the
"Building") on the real property described in Exhibit "A",
which Building is described in the plans and specifications
heretofore submitted to Lessor; and
WHEREAS, Lessee desires to lease said real property and
Building (said real property and Building hereinafter
referred to as the "Leased Premises"), from Lessor upon the
terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described
to be paid, kept, and performed by Lessee, Lessor does
hereby grant, demise, lease, and let unto Lessee, and Lessee
does hereby take and hire from Lessor and does hereby
covenant, promise, and agree as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and
takes from Lessor, the Leased Premises subject to the
conditions of this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Seventeen
(17) consecutive "Lease Years", as hereinafter defined,
commencing on the effective date first listed above
("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a
period of twelve (l2) consecutive calendar months from the
Occupancy Date. If the Occupancy Date shall be other than
the first day of a calendar month, the first "Lease Year"
shall be the period from the Occupancy Date to the end of
the calendar month of the Occupancy Date, plus the following
twelve (l2) calendar months. Each Lease Year after the
first Lease Year shall be a successive period of twelve (l2)
calendar months.
(C) The parties agree that once the Occupancy Date has
been established, upon the request of either party, a short
form or memorandum of this Lease will be executed for
recording purposes. That short form or memorandum of this
Lease will set forth the actual occupancy and termination
dates of the Term and optional Renewal Terms, as defined in
Article 28 hereof, and the existence of any option to
extend, and that said option shall terminate when the Lessee
shall lose right to possession or this Lease is terminated,
whichever occurs first.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that the Building has
been constructed on the Leased Premises, and all other
improvements to the land, including the parking lot,
approaches, and service areas, have been constructed in all
material respects by Lessee in accordance with the plot,
plans, and specifications heretofore submitted to Lessor.
(B) Lessee warrants that as of the date hereof, the
Building and all other improvements to the land do comply
with the laws, ordinances, rules, and regulations of all
state and local governments.
(C) Lessee agrees to pay, if not already paid in full,
for all architectural fees and actual construction costs, in
the past, present or future, which shall include, but not be
limited to, plans and specifications, general construction,
carpentry, electrical, plumbing, heating, ventilating, air
conditioning, decorating, equipment installation, outside
lighting, curbing, landscaping, blacktopping, electrical
sign hookup, conduit and wiring from building, fencing, and
parking curbs, builder's risk insurance (naming Lessor,
Lessee, and contractor as co-insured), and all construction
bonds for improvements made by or at the direction of
Lessee, to the extent incurred or authorized by Lessee.
(D) Opening for business in the Leased Premises by
Lessee shall constitute an acceptance of the Leased Premises
and an acknowledgment by Lessee that the premises are in the
condition described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first Lease Year:
Lessee shall pay to Lessor an annual Base Rent of
$78.405.20, which amount shall be payable in
advance on the first day of each month in equal
monthly installments of $6,533.77 to Fund 24. If
the first day of the Lease Term is not the first
day of a calendar month, then the monthly Rent
payable for that partial month shall be a prorated
portion of the equal monthly installment of Base
Rent.
(B) Annual Rent Payable beginning with the Second Lease
Year and each Lease Year thereafter shall increase
by an amount equal to One Percent (1%) of the Base
Rent payable for the immediately prior Lease Year.
Such increased Base Rent shall be payable in
advance of the first day of each month in equal
monthly installments.
(C) Overdue Payments.
Lessee shall pay interest on all overdue payments of
Rent or other monetary amounts due hereunder at the rate of
fifteen percent (15%) per annum or the highest rate allowed
by law, whichever is less, accruing beginning five days
after written notice to Lessee that Rent or other monetary
amounts properly due and payable were not paid.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal Terms,
if any, of this Lease, at its own cost and expense, procure
and maintain insurance which covers the Leased Premises and
improvements against fire, wind, and storm damage (including
flood insurance if the Leased Premises is in a federally
designated flood prone area) and such other risks (including
earthquake insurance, if the Leased Premises is located in a
federally designated earthquake zone or in an ISO high risk
earthquake zone) as may be included in the broadest form of
extended coverage insurance as may, from time to time, be
available in amounts sufficient to prevent Lessor or Lessee
from becoming a co-insurer within the terms of the
applicable policies. In any event, the insurance shall not
be less than one hundred percent (100%) of the then
insurable value. Additionally, replacement cost
endorsements, inflation guard endorsements, vandalism
endorsement, malicious mischief endorsement, waiver of
subrogation endorsement, waiver of co-insurance or agreed
amount endorsement (if available), and Building Ordinance
Compliance endorsement and Rent loss endorsements (for a
period of one year) must be obtained.
(B) Lessee agrees to place and maintain throughout the
Term or Renewal Terms, if any, of this Lease, at Lessee's
own expense, public liability insurance with respect to
Lessee's use and occupancy of said premises, including "Dram
Shop" or liquor liability insurance, if the same shall be or
become available in the State of Colorado and liquor is sold
on the Premises, with initial limits of at least $3,000,000
per occurrence/$5,000,000 general aggregate, or such
additional amounts as Lessor shall reasonably require from
time to time, upon Lessor's good faith determination that
the present insurance coverage is inadequate, such amounts
to be consistent with requirements of other Lessor's in
similar circumstances.
(C) Lessee agrees to notify Lessor in writing if Lessee
is unable to procure all or some part of the aforesaid
insurance. In the event Lessee fails to provide all
insurance required under this Lease, Lessor shall have the
right, but not the obligation, to procure such insurance on
Lessee's behalf. Lessee will then, within five (5) days
from receiving written notice, pay Lessor the amount of the
premiums due or paid, together with interest thereon at the
lesser of 12% per annum or the highest rate allowable by
law, which amount shall be considered Rent payable by Lessee
in addition to the Rent defined at Article 4 hereof.
(D) All policies of insurance provided for or
contemplated by this Article can be under Lessee's blanket
insurance coverage and shall name Lessor, Lessor's corporate
managing member and general partner, respectively, and
Xxxxxx X. Xxxxxxx, as the individual managing member and
general partner, respectively, of Lessor, and Lessee as
additional named insured, as their respective interests may
appear, and shall provide that the policies cannot be
canceled, terminated, changed, or modified without thirty
(30) days written notice to the parties. In addition, all
of such policies shall contain endorsements by the
respective insurance companies waiving all rights of
subrogation, if any, against Lessor. All insurance
companies providing coverages must be rated "A-" or better
by Best's Key Rating Guide (the most current edition), or
similar quality under a successor guide if Best's Key Rating
shall cease to be published. Lessee shall provide Lessor
with legible copies of any and all policies on or before the
Occupancy Date. No less than fifteen (15) business days
prior to expiration of such policies, Lessee shall provide
Lessor with legible copies of any and all renewal
Certificates of Insurance, if the terms of the Policies have
not changed, and copies of such policies if the same have
changed. Lessee agrees that it will not settle any property
insurance claims affecting the Leased Premises in excess of
$100,000 without Lessor's prior written consent, such
consent not to be unreasonably withheld or delayed. Lessor
shall consent, where Lessor's consent is required hereunder,
to any settlement of an insurance claim wherein Lessee shall
confirm in writing with evidence reasonably satisfactory to
Lessor that Lessee has sufficient funds available to
complete the rebuilding of the Premises.
(E) Lessee shall defend, indemnify, and hold Lessor
harmless against any and all claims, damages, and lawsuits
arising after the Occupancy Date of this Lease and any
orders, decrees or judgments which may be entered therein,
brought for damages or alleged damages resulting from any
injury to person or property or from loss of life sustained
in or about the Leased Premises, unless such damage or
injury results from the intentional misconduct or the gross
negligence of Lessor and Lessee agrees to save Lessor
harmless from, and indemnify Lessor against, any and all
injury, loss, or damage, of whatever nature, to any person
or property caused by, or resulting from any act, omission,
or negligence of Lessee or any employee or agent of Lessee.
In addition, Lessee hereby releases Lessor from any and all
liability for any loss or damage caused by fire or any of
the extended coverage casualties, unless such fire or other
casualty shall be brought about by the intentional
misconduct or gross negligence of Lessor.
(F) Lessor hereby waives any and all rights that it may
have to recover from Lessee damages for any loss occurring
to the Leased Premises by reason of any act or omission of
Lessee; provided, however, that this waiver is limited to
those losses for which Lessor is compensated by insurers, if
the insurance required by this Lease is maintained. Lessee
hereby waives any and all right that it may have to recover
from Lessor damages for any loss occurring to the Leased
Premises by reason of any act or omission of Lessor;
provided, however, that this waiver is limited to those
losses for which Lessee is, or should be if the insurance
required herein is maintained, compensated by insurers.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay the charges
for all public utility services rendered or furnished to the
Leased Premises, including heat, water, gas, electricity,
sewer, sewage treatment facilities and the like, all
personal property taxes, real estate taxes, special
assessments, and municipal or government charges, general,
ordinary and extraordinary, of every kind and nature
whatsoever, which may be levied, imposed, or assessed
against the Leased Premises, or upon any improvements
thereon, at any time after the Occupancy Date of this Lease
and prior to the expiration of the term hereof, or any
Renewal Term, if exercised.
(B) Lessee shall pay all real estate taxes, assessments
for public improvements or benefits, and other governmental
impositions, duties, and charges of every kind and nature
whatsoever which shall or may, during the term of this
Lease, be charged, laid, levied, assessed, or imposed upon,
or become a lien or liens upon the Leased Premises or any
part thereof or upon the Rents payable hereunder (expressly
excluding general income taxes, inheritance taxes and estate
taxes imposed upon Lessor). Such payments shall be
considered as Rent paid by Lessee in addition to the Rent
defined at Article 4 hereof. If due to a change in the
method of taxation, a franchise tax or Rent tax (expressly
excluding general income taxes, inheritance taxes and estate
taxes imposed upon Lessor) shall be levied against Lessor in
substitution for or in lieu of any tax which would otherwise
constitute a real estate tax, such tax shall be deemed a
real estate tax for the purposes herein and shall be paid by
Lessee
(C) All real estate taxes, assessments for public
improvements or benefits, water rates and charges, sewer
rents, and other governmental impositions, duties, and
charges which shall become payable for the first and last
tax years of the term hereof shall be apportioned pro rata
between Lessor and Lessee in accordance with the respective
number of months during which each party shall be in
possession of the Leased Premises in said respective tax
years. For the purposes of this provision, all personal
property taxes, real estate taxes and special assessments
shall be deemed to have been assessed in the year that each
payment or any installment thereof is due.
(D) Lessee shall have the right to contest or review by
legal proceedings or in such other manner as may be legal
(which, if instituted, shall be conducted solely at Lessee's
own expense) any tax, assessment for public improvements or
benefits, or other governmental imposition aforementioned,
upon condition that, before instituting such proceeding
Lessee shall either (i) pay (under protest) such tax or
assessments for public improvements or benefits, or other
governmental imposition, duties and charges aforementioned,
or (ii) post with Lessor alternative security satisfactory
to Lessor, not to exceed 150% of the amount contested and
the potential penalties and interest thereon. All such
proceedings shall be begun as soon as reasonably possible
after the imposition or assessment of any contested items
and shall be prosecuted to final adjudication with
reasonable dispatch. In the event of any reduction,
cancellation, or discharge, Lessee shall pay the amount that
shall be finally levied or assessed against the Leased
Premises or adjudicated to be due and payable, and, if there
shall be any refund payable by the governmental authority
with respect thereto, if Lessee has paid the expenses of
Lessor, if any, in such proceeding, Lessee shall be entitled
to receive and retain the same, subject, however, to
apportionment as provided during the first and last years of
the term of this Lease.
(E) Lessor, within sixty (60) days after notice to
Lessee if Lessee fails to commence such proceedings, may,
but shall not be obligated to, contest or review by legal
proceedings, or in such other manner as may be legal, and at
Lessor's own expense, any tax, assessments for public
improvements and benefits, or other governmental imposition
aforementioned, which shall not be contested or reviewed, as
aforesaid, by Lessee, and unless Lessee shall promptly join
with Lessor in such contest or review, Lessor shall be
entitled to receive and retain any refund payable by the
governmental authority with respect thereto.
(F) Lessor shall not be required to join in any
proceeding referred to in this Article, unless in Lessee's
reasonable opinion, the provisions of any law, rule, or
regulation at the time in effect shall require that such a
proceeding be brought by and/or in the name of Lessor, in
which event Lessor shall upon written request, join in such
proceedings or permit the same to be brought in its name,
all at no cost or expense to Lessor.
ARTICLE 7. PROHIBITION ON ASSIGNMENTS AND SUBLETTING; TAKE-
BACK RIGHTS
(A) Except as otherwise expressly provided in this
Article, Lessee shall not, without obtaining the prior
written consent of Lessor, in each instance:
1. assign or otherwise transfer this Lease, or any
part of Lessee's right, title or interest
therein (except by devise or bequest upon the
death of a shareholder, but in such event, such
recipient shall be bound by the provisions of
this Article);
2. sublet all or any part of the Leased Premises
or allow all or any part of the Leased Premises
to be used or occupied by any other Persons
(herein defined as a Party other than Lessee,
be it a corporation, a partnership, an
individual or other entity); or
3. mortgage, pledge or otherwise encumber this
Lease, or the Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control of any class of
capital stock of any corporate Lessee or
sublessee, or the transfer voting control of
the total interest in any other person which is
a Lessee or sublessee, however accomplished,
whether in a single transaction or in a series
of related or unrelated transactions, shall be
deemed an assignment of this Lease, or of such
sublease, as the case may be (provided,
however, transfers by bequest or devise due to
the death of a shareholder shall not trigger
the application of these provisions, provided
Lessor is given notice of such transfer
immediately after the disposition of the
decedent's estate);
2. an agreement by any other Person, directly or
indirectly, to assume Lessee's obligations
under this Lease shall be deemed an assignment;
3. any Person to whom Lessee's interest under this
Lease passes by operation of law, or otherwise,
shall be bound by the provisions of this
Article;
4. each modification, amendment or extension or
any sublease to which Lessor has previously
consented shall be deemed a new sublease; and
5. Lessee shall present the signed consent to such
assignment and/or subletting from any
guarantors of this Lease, such consent to be in
form and substance satisfactory to Lessor.
Lessee agrees to furnish to Lessor upon demand at any
time such information and assurances as Lessor may
reasonably request that neither Lessee, nor any previously
permitted sublessee, has violated the provisions of this
Article.
(C) If Lessee agrees to assign this Lease or to sublet
all or any portion of the Leased Premises, Lessee shall,
prior to the effective date thereof (the "Effective Date"),
deliver to Lessor copies of any such proposed agreement and
of all ancillary agreements with the proposed assignee or
sublessee, as applicable. If Lessor in its sole discretion
(except as otherwise specifically limited herein in
paragraph (E) below) shall not have consented to a proposed
sublease or assignment, and Lessee shall attempt to effect
such transfer without Lessor's consent or in spite of
Lessor's decision to not consent to such transfer, Lessor
shall then have all of the following rights, any of which
Lessor may exercise by written notice to Lessee given within
thirty (30) days after Lessor receives the aforementioned
documents:
1. with respect to a proposed assignment of this
Lease, the right to terminate this Lease on the
Effective Date as if it were the Expiration
Date of this Lease;
2. with respect to a proposed subletting of the
entire Leased Premises, the right to terminate
this Lease on the Effective Date as if it were
the Expiration Date; or
3. with respect to a proposed subletting of less
than the entire Leased Premises, the right to
terminate this Lease as to the portion of the
Leased Premises affected by such subletting on
the Effective Date, as if it were the
Expiration Date, in which case Lessee shall
promptly execute and deliver to Lessor an
appropriate modification of this Lease in form
satisfactory to Lessor in all respects.
4. with respect to a proposed subletting or
proposed assignment of this Lease, impose such
conditions upon Lessor's consent as Lessor
shall determine in its sole discretion.
(D) If Lessor exercises any of its options under Article
7(C) above, (and if Lessor shall impose conditions upon its
consent and Lessee shall fail to meet any conditions Lessor
may impose upon its consent), Lessor may then lease the
Leased Premises or any portion thereof to Lessee's proposed
assignee or sublessee, as the case may be, without liability
whatsoever to Lessee.
(E) Notwithstanding the provisions of this Article 7 above,
or any other provisions of this Lease to the contrary,
Lessee shall have the right to assign this Lease, or sublet
the Leased Premises or any portion thereof, without the
consent of, but with prior written notice to Lessor, to any
corporation (a) with which Lessee may merge or consolidate
(provided Lessee is the surviving entity and such
transaction does not involve directly or indirectly, along
with all other transfers, issuance's, or sales, a transfer,
issuance or sale of a majority of the voting stock of
Lessee), or (b) which is on the date hereof a parent or
which is a subsidiary of Lessee; provided, that said
assignee assumes, in full, the obligations of Lessee under
this Lease and Lessee and Guarantors remains primarily
liable under this Lease; and further, if the County or the
City where the Leased Premises are situate become a `dry'
county or city, Lessee may, without the consent of, but with
notice to Lessor, sublet the portion of the Leased Premises
relating to the bar area and the sale of alcohol to any
Colorado non-profit corporation or association of persons
wishing to organize a private club under appropriate
Colorado statutes and such corporation or association may
jointly occupy the Leased Premises under a sublease from
Lessee and Lessee may enter into a management agreement with
such corporation or association without further approval
from Lessor. In addition, notwithstanding the provisions of
this Article 7 above or any other provisions of this Lease
to the contrary, the following transfers or issuances of
shares of capital stock of Lessee shall not constitute an
assignment of this Lease or require the consent of Lessor
under this Article 7: (i) the issuance and sale of shares of
capital stock of Lessee in connection with a public offering
of such stock (provided such issuance and sale does not
involve the issuance, sale, or transfer of a majority of the
voting stock of Lessee); (ii) the transfer of outstanding
shares to a parent which is a parent on the date hereof or a
subsidiary of Lessee, provided such entity is or becomes a
guarantor of this Lease; (iii) the acquisition by Creed X.
Xxxx III or Xxxxxx X. Xxxxxxxx of additional shares of
capital stock from each other, from other shareholders, or
as a result of new issuances of capital stock of Lessee; or
(iv) the transfer of shares of capital stock by Creed X.
Xxxx or Xxxxxx X. Xxxxxxxx to family trusts, family
partnerships, or similar vehicles set up for either of their
benefit or for the benefit of any family member, or the
transfer by them of shares of capital stock to any
corporation, partnership, limited liability company, or
other entity.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Lessee covenants and agrees to keep and maintain in
good order, condition and repair the interior and exterior
of the Leased Premises during the term of the Lease, or any
renewal terms, and further agrees that Lessor shall be under
no obligation to make any repairs or perform any maintenance
to the Leased Premises. Lessee covenants and agrees that it
shall be responsible for all repairs, alterations,
replacements, or maintenance of, including but without
limitation to or of: The interior and exterior portions of
all doors; door checks and operators; windows; plate glass;
plumbing; water and sewage facilities; fixtures; electrical
equipment; interior walls; ceilings; signs; roof; structure;
interior building appliances and similar equipment; heating
and air conditioning equipment; and any equipment owned by
Lessor and leased to Lessee hereunder, as itemized on
Exhibit B attached hereto and incorporated herein by
reference; and further agrees to replace any of said
equipment when necessary. Lessee further agrees to be
responsible for, at its own expense, snow removal, lawn
maintenance, landscaping, maintenance of the parking lot
(including parking lines, seal coating, and blacktop
surfacing), and other similar items.
(B) If Lessee refuses or neglects to commence or
complete repairs promptly and adequately, Lessor may cause
such repairs to be made, but shall not be required to do so,
and Lessee shall pay the cost thereof to Lessor upon demand.
It is understood that Lessee shall pay all expenses and
maintenance and repair during the term of this Lease. If
Lessee is not then in default hereunder, Lessee shall have
the right to make repairs and improvements to the Leased
Premises without the consent of Lessor if such repairs and
improvements do not exceed One Hundred Thousand Dollars
($100,000.00), provided such repairs or improvements do not
affect the structural integrity of the Leased Premises. Any
repairs or improvements in excess of One Hundred Thousand
Dollars ($100,000.00) or affecting the structural integrity
of the Leased Premises may be done only with the prior
written consent of Lessor, such consent not to be
unreasonably withheld or delayed. All alterations and
additions to the Leased Premises shall be made in accordance
with all applicable laws and shall remain for the benefit of
Lessor. In the event of making such alterations as herein
provided, Lessee further agrees to indemnify and save
harmless Lessor from all expense, liens, claims or damages
to either persons or property or the Leased Premises which
may arise out of or result from the undertaking or making of
said repairs, improvements, alterations or additions, or
Lessee's failure to make said repairs, improvements,
alterations or additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances, rules,
orders, regulations and requirements of all federal, state,
city and local governments, and with all rules, orders and
regulations of the applicable Board of Fire Underwriters
which affect the use of the improvements. Lessee will
comply with all easements, restrictions, and covenants of
record against or affecting the Leased Premises and any
franchise agreements required for operation of the Leased
Premises in accordance with Article 14 hereof.
ARTICLE l0. SIGNS
Lessee shall have the right to install and maintain a
sign or signs advertising Lessee's business, provided that
the signs conform to law, and further provided that the sign
or signs conform specifically to the written requirements of
the appropriate governmental authorities.
ARTICLE 11. SUBORDINATION
(A) Lessor reserves the right and privilege to subject
and subordinate this Lease at all times to the lien of any
mortgage or mortgages now or hereafter placed upon Lessor's
interest in the Leased Premises and on the land and
buildings of which said premises are a part, or upon any
buildings hereafter placed upon the land of which the Leased
Premises are a part, provided such mortgagee shall execute
its standard form, commercially reasonable subordination,
attornment and non-disturbance agreement, such form to be
consistent with other such forms used by commercial
mortgagees in the industry. Lessor also reserves the right
and privilege to subject and subordinate this Lease at all
times to any and all advances to be made under such
mortgages, and all renewals, modifications, extensions,
consolidations, and replacements thereof, provided such
mortgagee shall execute its standard form, commercially
reasonable subordination, attornment and non-disturbance
agreement, such form to be consistent with other such forms
used by commercial mortgagees in the industry.
(B) Lessee covenants and agrees to execute and deliver,
upon demand, such further commercially reasonable instrument
or instruments subordinating this Lease on the foregoing
basis to the lien of any such mortgage or mortgages as shall
be desired by Lessor and any proposed mortgagee or proposed
mortgagees, provided such mortgagee shall execute its
standard form, commercially reasonable subordination,
attornment and non-disturbance agreement, such form to be
consistent with other such forms used by commercial
mortgagees in the industry .
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by any
public authority under the power of eminent domain, or by
private purchase in lieu thereof, then this Lease shall
automatically terminate upon the date possession is
surrendered, and Rent shall be paid up to that day. If any
part of the Leased Premises shall be so taken as to render
the remainder thereof materially unusable in the opinion of
a licensed third party contractor or architect selected by
Lessee and approved by Lessor, for the purposes for which
the Leased Premises were leased, then Lessee shall have the
right to terminate this Lease on thirty (30) days notice to
the Lessor given within ninety (90) days after the date of
such taking. In the event that this Lease shall terminate
or be terminated, the Rent shall be paid up to the day that
possession was surrendered.
(B) If any part of the Leased Premises shall be so taken
such that it does not render the remainder thereof
materially unusable for the purposes for which the Leased
Premises were leased, in the opinion of a licensed third
party contractor or architect selected by Lessee and
approved by Lessor, then Lessee shall, with the use of all
of the condemnation proceeds (to be made available by
Lessor, immediately if such proceeds are less than $100,000,
or if in excess of $100,000, under a commercially reasonable
construction draw procedure in payment of invoices for work
performed submitted by Lessee or its contractors) but
otherwise at Lessee's own cost and expense, restore the
remaining portion of the Leased Premises to the extent
necessary to render it reasonably suitable for the purposes
for which it was leased. Provided, however, Lessee may
elect to replace the Leased Premises with a different
restaurant concept, subject to Lessor's prior written
approval, which approval shall not be unreasonably withheld
or delayed, and further that Lessee shall not be required
(unless Lessee so elects) to repair or restore the Leased
Premises if the Term or any Renewal Term shall expire within
two years of such partial taking. Lessee shall notify
Lessor of Lessee's election to not so restore or repair the
Leased Premises after such a partial taking within 60 days
of notice of such taking. If Lessee elects to not make such
repair or restoration, this Lease shall terminate upon
Lessor's receipt of Lessee's notice of termination.
Otherwise, if Lessee so elects or is required to repair or
restore the Leased Premises, Lessee shall make all repairs
to the building in which the Leased Premises is located to
the extent necessary to constitute the building a complete
architectural unit. Provided, however, that such work shall
not exceed the scope of the work required to be done by
Lessee in originally constructing such building unless
Lessee shall demonstrate to Lessor's reasonable satisfaction
the availability of funds to complete such work. Provided,
further, the cost thereof to Lessor shall not exceed the
proceeds of its condemnation award, all to be done without
any adjustments in Rent to be paid by Lessee, except as
follows: any condemnation proceeds remaining after the
completion of the repair or restoration of the Leased
Premises shall be paid to Lessor. This lease shall be deemed
amended to reflect the taking in the legal description of
the Leased Premises.
(C) All compensation awarded or paid upon such total or
partial taking of the Leased Premises shall belong to and be
the property of Lessor without any participation by Lessee,
whether such damages shall be awarded as compensation for
diminution in value to the leasehold or to the fee of the
premises herein leased. Nothing contained herein shall be
construed to preclude Lessee from prosecuting any claim
directly against the condemning authority in such
proceedings for: Loss of business; interruption of
business; moving expenses; damage to or loss of value or
cost of removal of inventory, trade fixtures, furniture, and
other personal property belonging to Lessee; provided,
however, that no such claim shall diminish or otherwise
adversely affect Lessor's award or the award of any fee
mortgagee.
ARTICLE l3. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and
examine the Leased Premises at any time during business
hours, after reasonable notice to Lessee, and Lessee agrees
to allow Lessor free access to the Leased Premises to show
the premises. Upon default by Lessee or at any time within
one hundred eighty (180) days of the expiration or
termination of the Lease, Lessee agrees to allow Lessor to
then place "For Sale" or "For Rent" signs on the Leased
Premises.
ARTICLE l4. EXCLUSIVE USE
After the Occupancy Date, Lessee expressly agrees and
warrants that the Leased Premises will be used exclusively
as a Xxxxxx Xxxxxx'x Country Italian Restaurant (or any
derivative of such name as Lessee may use) or, after
obtaining Lessor's prior written consent, such consent not
to be unreasonably withheld or delayed, other casual dining
sit-down restaurant. Lessee acknowledges and agrees that
any other use without the prior written consent of Lessor
will constitute a default under and a violation and breach
of this Lease. Lessee agrees: To open for business on the
first day in respect of which Rent is payable; to operate
all of the Leased Premises during the Term or Renewal Terms
during regular and customary hours for businesses similar to
the permitted exclusive use stated herein, unless prevented
from doing so by causes beyond Lessee's control; and to
conduct its business in a prudent and reputable manner.
ARTICLE l5. DESTRUCTION OF PREMISES
If, during the term of this Lease, the Leased Premises
are totally or partially destroyed by fire or other
elements, within a reasonable time (but in no event longer
than one hundred eighty (180) days and subject to the
provisions herein below), Lessee shall repair and restore
the improvements so damaged or destroyed as nearly as may be
practical to their condition immediately prior to such
casualty. All rents payable by Lessee shall be abated
during the period of repair and restoration to the extent
that Lessor shall be compensated by the proceeds of the rent
loss insurance required to be maintained by Lessee
hereunder.
Provided Lessee is not in default hereunder (and retains
according to the terms hereof the right to rebuild), then
with the Lessor's prior written consent (if the repairs will
exceed the amounts set forth in Article 8(B)), which consent
shall not be unreasonably withheld or delayed, Lessee shall
have the right to promptly and in good xxxxx xxxxxx and
adjust any claim under such insurance policies with the
insurance company or companies on the amounts to be paid
upon the loss. The insurance proceeds shall be used to
reimburse Lessee for the cost of rebuilding or restoration
of the Leased Premises. The Leased Premises shall be so
restored or rebuilt so as to be of at least equal value and
substantially the same character as prior to such damage or
destruction. Provided, however, Lessee may elect to replace
the Leased Premises with a different restaurant concept
subject to Lessor's prior written approval, which approval
shall not be unreasonably withheld or delayed. If the
insurance proceeds are less than One Hundred Thousand
Dollars ($1000,000), they shall be paid to Lessee for such
repair and restoration. If the insurance proceeds are
greater than or equal to One Hundred Thousand Dollars
($100,000), they shall be deposited by Lessee and Lessor
into a customary construction escrow at a nationally
recognized title insurance company, or at Lessee's option,
with Lessor ("Escrowee") and shall be made available from
time to time to Lessee for such repair and restoration.
Such proceeds shall be disbursed in conformity with the
terms and conditions of a commercially reasonable
construction loan agreement. Lessee shall, in either
instance, deliver to Lessor or Escrowee (as the case may be)
satisfactory evidence of the estimated cost of completion
together with such architect's certificates, waivers of
lien, contractor's sworn statements and other evidence of
cost and of payments as the Lessor or Escrowee may
reasonably require and approve. If the estimated cost of
the work exceeds Twenty-Five Percent (25%) of the original
cost to Lessor to acquire its interest in the Lease Premises
from Lessee, all plans and specifications for such
rebuilding or restoration shall be subject to the reasonable
approval of Lessor.
Any insurance proceeds remaining with Escrowee after the
completion of the repair or restoration shall be paid to
Lessor.
If the proceeds from the insurance are insufficient,
after review of the bids for completion of such
improvements, or should become insufficient during the
course of construction, to pay for the total cost of repair
or restoration, Lessee shall, prior to commencement of work,
demonstrate to Escrowee and Lessor's reasonable
satisfaction, the availability of such funds necessary to
complete construction and Lessee shall deposit the same with
Escrowee for disbursement under the construction escrow
agreement. Provided, further, that should the Leased
Premises be damaged or destroyed to the extent of fifty
(50%) percent of its value or such that Lessee cannot carry
on business as a casual dining restaurant without (in
Lessor's reasonable opinion) being closed for more than
sixty (60) days (which duration of closure may be
established by Lessee by the affidavit of an independent
third party contractor as to the estimated time of repair)
during the last two years of the remaining term of this
Lease or any of the option terms of this Lease, if any
further options to renew remain, Lessee may elect within 30
days of such damage, to then exercise at least one (1)
option to renew this Lease so that the remaining term of the
Lease is not less than five (5) years in order to be
entitled to such insurance proceeds for restoration or
rebuilding. Absent such election, this Lease shall
terminate upon Lessor's receipt of the insurance proceeds in
the amount estimated to restore or rebuild the Leased
Premises.
ARTICLE l6. ACTS OF DEFAULT
(A) Each of the following shall be deemed a default by
Lessee and a breach of this Lease:
1. Failure to pay the Rent or any monetary
obligation herein reserved, or any part thereof
when the same shall be due and payable.
Interest and late charges for failure to pay
Rent when due shall accrue if Lessee shall fail
to make payment within five days after notice
to Lessee that Rent has not been paid. Lessee
shall be granted five days after written notice
to cure such failure to pay the Rent or any
other monetary obligation herein reserved.
2. Failure to do, observe, keep and perform any of
the other terms, covenants, conditions,
agreements and provisions in this Lease to be
done, observed, kept and performed by Lessee;
provided, however, that Lessee shall have
Thirty (30) days after written notice from
Lessor within which to cure such default, or
such longer time as may be reasonably necessary
if such default cannot reasonably be cured
within Thirty (30) days, if Lessee is
diligently pursuing a course of conduct that in
Lessor's reasonable opinion is capable of
curing such default, but in any event such
longer time shall not exceed 90 days after
written notice from Lessor of the default
hereunder.
3. The abandonment of the premises by Lessee, the
adjudication of Lessee as a bankrupt, the
making by Lessee of a general assignment for
the benefit of creditors, the taking by Lessee
of the benefit of any insolvency act or law,
the appointment of a permanent receiver or
trustee in bankruptcy for Lessee property, or
the appointment of a temporary receiver which
is not vacated or set aside within sixty (60)
days from the date of such appointment.
ARTICLE l7. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at any
time thereafter, Lessor may serve a written notice upon
Lessee that Lessor elects to terminate this Lease. This
Lease shall then terminate on the date so specified as if
that date had been originally fixed as the expiration date
of the term herein granted, provided, however, that Lessee
shall have continuing liability for future rents for the
remainder of the original term and any exercised renewal
term as set forth in Article 19, notwithstanding any earlier
termination of the Lease hereunder, preserving unto Lessor
the benefit of its bargained-for rental payments.
ARTICLE l8. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or
otherwise, or in the event of an uncured default hereunder
by Lessee, or in the event that the premises or any part
thereof, shall be abandoned by Lessee, then Lessor or its
agents, servants or representatives, may immediately or at
any time thereafter, re-enter and resume possession of the
premises or any part thereof, and remove all persons and
property therefrom, either by summary dispossess proceedings
or by a suitable action or proceeding at law, or by force or
otherwise without being liable for any damages therefor.
ARTICLE l9. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in this
Lease or should it take possession pursuant to legal
proceedings or pursuant to any notice provided for by law,
it may either (i) terminate this Lease or (ii) it may from
time to time, without terminating the contractual obligation
of Lessee to pay Rent under this Lease, make such
alterations and repairs as may be necessary to relet the
Leased Premises or any part thereof for such Term or Renewal
Terms, at such Rent or Rents, and upon such other terms and
conditions as Lessor in its sole discretion may deem
advisable. Termination of Lessee's right to possession by
Court Order shall be sufficient evidence of the termination
of Lessee's possessory rights under this Lease, and the
filing of such an Order shall be notice of the termination
of Lessee's Option to Purchase as set forth in any
Memorandum of Lease of record.
(B) Upon each such reletting, without termination of the
contractual obligation of Lessee to pay Rent under this
Lease, all rents received by Lessor from such reletting
shall be applied as follows:
1. First, to the payment of any indebtedness other than
Rent due hereunder from Lessee to Lessor;
2. . Second, to the payment of any costs and expenses
of such reletting, including brokerage fees and attorney's
fees and of costs of such alterations and repairs;
3. Third, to the payment of Rent and other
monetary obligations due and unpaid hereunder;
4. Finally, the residue, if any, shall be held by
Lessor and applied in payment of future Rent as
the same may become due and payable hereunder.
If such rents received from such reletting during any month
are 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 such Leased Premises
by Lessor shall be construed as an election on its part to
terminate Lessee's contractual obligations under this Lease
respecting the payment of rent and obligations for the costs
of repair and maintenance unless a written notice of such
intention be given to Lessee.
(C) Notwithstanding any such reletting without
termination, Lessor may at any time thereafter elect to
terminate this Lease for any breach.
(D) In addition to any other remedies Lessor may have
with this Article 19, Lessor may recover from Lessee all
damages it may incur by reason of any breach, including:
The cost of recovering and reletting the Leased Premises;
reasonable attorney's fees; and, the present value
(discounted at a rate of 10% per annum) of the excess of the
amount of Rent and charges equivalent to Rent reserved in
this Lease for the remainder of the Term over the then
reasonable rent value of the Leased Premises (or the actual
rents receivable by Lessor, if relet) for the remainder of
the Term, all of which amounts shall be immediately due and
payable from Lessee to Lessor in full. In the event that
the rent obtained from such alternative or substitute tenant
is more than the Rent which Lessee is obligated to pay under
this Lease, then such excess shall be paid to Lessor
provided that Lessor shall credit such excess against the
outstanding obligations of Lessee due pursuant hereto, if
any.
(E) It is the object and purpose of this Article 19 that
Lessor shall be kept whole and shall suffer no damage by way
of non-payment of Rent or by way of diminution in Rent.
Lessee waives and will waive all rights to trial by jury in
any summary proceedings or in any action brought to recover
Rent herein which may hereafter be instituted by Lessor
against Lessee in respect to the Leased Premises. Lessee
hereby waives any rights of re-entry it may have or any
rights of redemption or rights to redeem this Lease upon a
termination of this Lease.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and
building equipment used in connection with the operation of
the Leased Premises including, but not limited to, heating,
electrical wiring, lighting, ventilating, plumbing, air
conditioning systems, and the equipment owned by Lessor and
leased to Lessee hereunder as specifically set forth on
Exhibit B attached hereto and incorporated herein by
reference shall be the property of Lessor. All trade
fixtures and all other fixtures and articles of personal
property owned by Lessee shall remain the property of
Lessee.
(B) Lessee shall furnish and pay for any and all
equipment, furniture, trade fixtures, and signs, except for
such items, if any, described in Article 20(A) above, as
owned by Lessor.
(C) At the end of the term of this Lease, the property
described at Article 20(B) above, after written notice to
Lessor given at least ten (10) days prior thereto, may be
removed from the Leased Premises by Lessee regardless of
whether or not such property is attached to the Leased
Premises so as to constitute a "fixture" within the meaning
of the law; however, all damages and repairs to the Leased
Premises which may be caused by the removal of such property
shall be paid for by Lessee.
ARTICLE 2l. LIENS
Lessee shall not do or cause anything to be done whereby
the Leased Premises may be encumbered by any mechanic's or
other liens. Whenever and as often as any mechanic's or
other lien is filed against said Leased Premises purporting
to be for labor or materials furnished or to be furnished to
Lessee, Lessee shall remove the lien of record by payment or
by bonding with a surety company authorized to do business
in the state in which the property is located, within twenty
(20) days from the date of the filing of said mechanic's or
other lien and delivery of notice thereof to Lessee of
Lessee's obligation under this Lease. Should Lessee fail to
take the foregoing steps within said twenty (20) day period,
Lessor shall have the right, among other things, to pay said
lien without inquiring into the validity thereof, and Lessee
shall forthwith reimburse Lessor for the total expense
incurred by it in discharging said lien as additional Rent
hereunder.
ARTICLE 22. NO WAIVER BY LESSOR EXCEPT IN WRITING
No agreement to accept a surrender of the Leased
Premises or termination of this Lease shall be valid unless
in writing signed by Lessor. The delivery of keys to any
employee of Lessor or Lessor's agents shall not operate as a
termination of the Lease or a surrender of the premises.
The failure of Lessor to seek redress for violation of any
rule or regulation, shall not prevent a subsequent act,
which would have originally constituted a violation, from
having all the force and effect of an original violation.
Neither payment by Lessee or receipt by Lessor of a lesser
amount than the Rent herein stipulated shall be deemed to be
other than on account of the earliest stipulated Rent. Nor
shall any endorsement or statement on any check nor any
letter accompanying any check or payment as Rent be deemed
an accord and satisfaction. Lessor may accept such check or
payment without prejudice to Lessor's right to recover the
balance of such Rent or pursue any other remedy provided in
this Lease. This Lease contains the entire agreement
between the parties, and any executory agreement hereafter
made shall be ineffective to change it, modify it or
discharge it, in whole or in part, unless such executory
agreement is in writing and signed by the party against whom
enforcement of the change, modification or discharge is
sought.
ARTICLE 24. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set
forth in Article 4 and all other sums herein reserved as
Rent and upon the due performance of all the terms,
covenants, conditions and agreements herein contained on
Lessee's part to be kept and performed, shall have, hold and
enjoy the Leased Premises free from molestation, eviction,
or disturbance by Lessor, or by any other person or persons
lawfully claiming the same, and that Lessor has good right
to make this Lease for the full term granted, including
renewal periods.
ARTICLE 24. BREACH - PAYMENT OF COSTS AND ATTORNEYS' FEES
Each party agrees to pay and discharge all reasonable
costs, and actual attorneys' fees, including but not limited
to attorney's fees incurred at the trial level and in any
appellate or bankruptcy proceeding, and expenses that shall
be incurred by the prevailing party in enforcing the
covenants, conditions and terms of this Lease or defending
against an alleged breach, including the costs of reletting.
Such costs, attorney's fees, and expenses if incurred by
Lessor shall be considered as Rent as due and owing in
addition to any Rent defined in Article 4 hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not
less than ten (l0) days prior request by the other party,
execute, acknowledge and deliver to the requesting party a
statement in writing, executed by an executive officer of
such party, certifying that: (a) this Lease is unmodified
(or if modified then disclosure of such modification shall
be made); (b) this Lease is in full force and effect; (c)
the date to which the Rent and other charges have been paid;
and (d) to the knowledge of the signer of such certificate
that the other party is not in default in the performance of
any covenant, agreement or condition contained in this
Lease, or if a default does exist, specifying each such
default of which the signer may have knowledge. It is
intended that any such statement delivered pursuant to this
Article may be relied upon by any prospective purchaser or
mortgagee of the Leased Premises or any assignee of such
mortgagee or a purchaser of the leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the term of this Lease, Lessee will, within one
hundred twenty (120) days after the end of Lessee's fiscal
year, furnish Lessor with Lessee's financial statements (in
SEC Form 10-K, if available). The financial statements
shall be prepared in conformity with generally accepted
accounting principles (GAAP) and shall be certified as true
and correct by the chief financial officer or other
authorized officer of Lessee. Lessee shall also provide
Lessor with financial statements for the Leased Premises
within 120 days after the end of each Lease Year. The
financial statements for the Leased Premises do not need to
be prepared by an independent certified public accountant,
but shall be certified as true and correct by the chief
financial officer or other authorized officer of Lessee.
Additionally, during the term of the Lease, Lessee will
within forty-five (45) days from the end of each quarter of
each fiscal year, furnish Lessor with Lessee's financial
statements (in SEC Form 10-Q if available) and financial
statements of the Leased Premises for such quarter. Lessor
shall have the right to require such financial statements
for the Lessee and the Leased Premises on a monthly basis
after the occurrence of a default in any Lease Year.
Provided, however, if Lessee shall not commit a default for
twelve consecutive months, Lessor's right to require such
monthly financial statements shall terminate until Lessee
shall again commit a default in any given Lease Year. Said
quarterly (or monthly, if required by Lessor) financial
statements do not need to be prepared by an independent
certified public accountant, but shall be certified as true
and correct by the chief financial officer or other
authorized officer of Lessee. The financial statements
shall conform to GAAP, and include a balance sheet and
related statements of operations, statement of cash flows,
statement of changes in shareholder's equity, and related
notes to financial statements, if any.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to make reasonable
modifications of this Lease requested by any Mortgagee of
record from time to time provided such modifications are not
substantial and do not increase any of the Rents or
materially modify any of the elements of this Lease.
ARTICLE 28. OPTION TO RENEW
If this Lease is not previously canceled or terminated
and if Lessee is not then in default, then Lessee shall have
the option to renew this Lease upon the same conditions and
covenants contained in this Lease for Three (3) consecutive
periods of Five (5) years each (singularly "Renewal Term").
Rent during each Lease Year of any Renewal Term shall
increase by 1% of the Rent payable for the preceding Lease
year.
The first Renewal Term will commence on the day
following the date the original Term expires and successive
Renewal Terms will commence on the day of following the last
day of the then expiring Renewal Term. Lessee must give one
hundred twenty (l20) days written notice to Lessor of its
intent to exercise this option prior to the expiration of
the original Term of this Lease or any Renewal Term, as the
case may be.
ARTICLE 29. MISCELLANEOUS PROVISIONS
(A) All notices, consents, approvals, or other instruments
required or permitted to be given by either party pursuant
to this Lease shall be in writing and given by (i) hand
delivery, (ii) facsimile, (iii) express overnight delivery
service or (iv) certified or registered mail, return receipt
requested, and shall be deemed to have been delivered upon
(a) receipt, if hand delivered, (b) confirmed transmission,
if delivered by facsimile, (c) the next business day, if
delivered by express overnight delivery service, or (d) the
third business day following the day of deposit of such
notice with the United State Postal Service, if sent by
certified or registered mail, return receipt requested.
Notices shall be provided to the parties and addresses (or
facsimile numbers, as applicable) specified on the first
page hereof.
(B) The terms, conditions and covenants contained in this
Lease and any riders and plans attached hereto shall
bind and inure to the benefit of Lessor and Lessee and
their respective successors, heirs, legal
representatives, and assigns.
(B) This Lease shall be governed by and construed under the
laws of the State where the Leased Premises are situate.
(D) In the event that any provision of this Lease shall be
held invalid or unenforceable, no other provisions of
this Lease shall be affected by such holding, and all
of the remaining provisions of this Lease shall
continue in full force and effect pursuant to the
terms hereof.
(E) The Article captions are inserted only for convenience
and reference, and are not intended, in any way, to
define, limit, describe the scope, intent, and
language of this Lease or its provisions.
(F) In the event Lessee remains in possession of the
premises herein leased after the expiration of this
Lease and without the execution of a new lease, it
shall be deemed to be occupying said premises as a
tenant from month-to-month, subject to all the
conditions, provisions, and obligations of this Lease
insofar as the same can be applicable to a
month-to-month tenancy except that the monthly
installment of Rent shall be increased 150% of the
amount due on the last month prior to such expiration.
(G) If any installment of Rent (whether lump sum, monthly
installments, or any other monetary amounts required
by this Lease to be paid by Lessee and deemed to
constitute Rent hereunder) shall not be paid when due
and shall remain unpaid for five days after written
notice to Lessee, or financial statements required to
be delivered hereunder by Lessee remain undelivered
when due for five days after written notice to Lessee,
Lessor shall have the right to charge Lessee a late
charge of $250.00 per month for each month (or portion
thereof) that any amount of Rent installment remains
unpaid or such financial statements remain
undelivered.
(H) Any part of the Leased Premises (excluding the
Building) may be conveyed by Lessor for private or
public non-exclusive easement purposes at any time,
provided such easement does not interfere with the
business of Lessee and provided Lessor has delivered
to Lessee written notification, together with a
description of the location and reason for such
easement, at least 30 days prior to such conveyance.
In such event Lessor shall, at its own cost and
expense, restore the remaining portion of the Leased
Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was
leased, all to be done without adjustments in Rent to
be paid by Lessee. All proceeds from any conveyance
of an easement shall belong solely to Lessor.
(I) For the purpose of this Lease, the term "Rent" shall
be defined as Rent under Article 4, and any other
monetary amounts required by this Lease to be paid by
Lessee.
(J) Lessee agrees to cooperate with Lessor to allow Lessor
to obtain and use at Lessor's expense promotional
photographs of the Leased Premises.
ARTICLE 30. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained
herein it is the intent of the parties that the rights and
remedies contained herein shall not be exclusive but rather
shall be cumulative along with all of the rights and
remedies of the parties which they may have at law or
equity.
ARTICLE 31. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor, its
successors and assigns, (i) that (except for items normally
used by Lessee in the course of restaurant operations and in
such case, such items are used and stored in accordance with
applicable law or regulation) it has not used or permitted
and will not use or permit the Leased Premises to be used,
whether directly or through contractors, agents or tenants,
and to the best of Lessee's knowledge and except as
disclosed to Lessor in writing, the Leased Premises has not
at any time been used for the generating, transporting,
treating, storage, manufacture, emission of, or disposal of
any dangerous, toxic or hazardous pollutants, chemicals,
wastes or substances as defined in the Federal Comprehensive
Environmental Response Compensation and Liability Act of
1980 ("CERCLA"), the Federal Resource Conservation and
Recovery Act of 1976 ("RCRA"), or any other federal, state
or local environmental laws, statutes, regulations,
requirements and ordinances ("Hazardous Materials"); (ii)
that to the best of Lessee's knowledge, there have been no
investigations or reports involving Lessee, or the Leased
Premises by any governmental authority which in any way
pertain to Hazardous Materials (iii) that to the best of
Lessee's knowledge the operation of the Leased Premises has
not violated and is not currently violating any federal,
state or local law, regulation, ordinance or requirement
governing Hazardous Materials; (iv) that to the best of
Lessee's knowledge the Leased Premises is not listed in the
United States Environmental Protection Agency's National
Priorities List of Hazardous Waste Sites nor any other list,
schedule, log, inventory or record of Hazardous Materials or
hazardous waste sites, whether maintained by the United
States Government or any state or local agency; and (v) that
the Leased Premises will not contain any formaldehyde, urea
or asbestos, except as may have been disclosed in writing to
Lessor by Lessee at the time of execution and delivery of
this Lease. Lessee agrees to indemnify and reimburse
Lessor, its successors and assigns, for:
(a) any breach of these representations and warranties, and
(b) any loss, damage, expense or cost arising out of or
incurred by Lessor which is the result of a breach of,
misstatement of or misrepresentation of the above
covenants, representations and warranties, and
(c) any and all liability of any kind whatsoever which
Lessor may, for any cause and at any time, sustain or
incur by reason of Hazardous Materials discovered on
the Leased Premises during the term hereof or placed
or released on the Leased Premises by Lessee;
together with all attorneys' fees, costs and disbursements
incurred in connection with the defense of any action
against Lessor arising out of the above. These covenants,
representations and warranties shall be deemed continuing
covenants, representations and warranties for the benefit of
Lessor, and any successors and assigns of Lessor and shall
survive expiration or sooner termination of this Lease. The
amount of all such indemnified loss, damage, expense or
cost, shall bear interest thereon at twelve percent (12%)
per annum and shall become immediately due and payable in
full on demand of Lessor, its successors and assigns.
Lessee shall not be responsible for any liabilities under
this Article if the liability results from activities of
Lessor or any agent, employee, or contractor of Lessor.
ARTICLE 32. ESCROWS
Upon the occurrence of a third default in any twelve
month period by Lessee, or upon the request of Lessor's
mortgagee, if any, Lessee shall deposit with Lessor on the
first day of each and every month, an amount equal to
one-twelfth (1/12th) of the estimated annual real estate
taxes, assessments and insurance ("Charges") due on the
Leased Premises, or such higher amounts reasonably
determined by Lessor as necessary to accumulate such amounts
to enable Lessor to pay all charges due and owing at least
thirty (30) days prior to the date such amounts are due and
payable. If Lessee is depositing into such escrow as a
result of its third default in any given twelve month
period, and Lessee shall not commit a default for a period
of 24 months from the commencement of such escrowing, such
escrow shall be discontinued unless renewed according to the
terms hereof for the occurrence of a third default in any
twelve month period, or upon the request of Lessor's
mortgagee.
From time to time out of such deposits Lessor will, upon
the presentation to Lessor by Lessee of the bills therefor,
pay the Charges or will upon presentation of receipted bills
therefor, reimburse Lessee for such payments made by Lessee.
In the event the deposits on hand shall not be sufficient to
pay all of the estimated Charges when the same shall become
due from time to time or the prior payments shall be less
than the currently estimated monthly amounts, then Lessee
shall pay to Lessor on demand any amount necessary to make
up the deficiency. The excess of any such deposits shall be
credited to subsequent payments to be made for such items.
If a default or an event of default shall occur under the
terms of this Lease, Lessor may, at its option, without
being required so to do, apply any Deposit on hand to cure
the default, in such order and manner as Lessor may elect.
ARTICLE 33. NET LEASE
It is the intent of the parties hereto that this Lease
shall be a net lease and that the Rent defined pursuant to
Article 4 should be a net Rent paid to Lessor. Any and all
other expenses including but not limited to, maintenance,
repair, insurance, taxes, and assessments, shall be paid by
Lessee.
ARTICLE 34. RIGHT OF FIRST REFUSAL
Lessor, for itself, its successors and assigns, hereby
gives and grants to Lessee a right of first refusal (the
"Option") to purchase the Leased Premises, subject to the
following terms and conditions:
(A) DURATION OF OPTION. The Option and all rights and
privileges of Lessee hereunder shall be in force for the
term of this Lease until the expiration of Lessee's right to
possession.
(B) MANNER OF EXERCISING OPTION. If Lessor shall desire to
sell the Leased Premises (subject to the terms of this
Lease), Lessor shall give Lessee written notice of Lessor's
intention to sell Lessor's interest in the Leased Premises.
Such notice ("Lessor's Notice") shall state a price at which
(or greater) Lessor intends to sell all or a portion of its
interest. For twenty (20) business days following the
giving of such notice, Lessee shall have the option to
purchase the Lessor's interest at the price in cash stated
in the Lessor's Notice. A written notice in substantially
the following form, addressed to Lessor and signed by Lessee
and given, in accordance with the provisions of Article
29(A) hereof, within the period for exercising the Option,
submitted with a bank cashier's check or money order payable
to the order of Lessor in the amount of $25,000.00 (the
"Xxxxxxx Money") shall be an effective exercise of Lessee's
Option, to wit:
(date)
"We hereby exercise the Option to purchase the property
commonly known as Carino's, Littleton, Colorado, pursuant to
the Right of First Refusal contained in that certain Net
Lease Agreement between us pertaining to said premises."
(C) TERMS OF SALE IF OPTION EXERCISED. Upon Lessee's
exercise of the Option in accordance with the provisions of
subparagraph (B) hereof, Lessor shall be obligated to sell
and convey by recordable warranty deed, good and marketable
title to the Leased Premises subject only to the matters
affecting title which were of record at the time Lessor came
into title to the Leased Premises and those matters which
Lessee created, suffered or permitted to accrue during the
term hereof, and Lessee shall be obligated to purchase the
Premises upon the following terms and conditions:
(i) PRICE. The price "Purchase Price" at which Lessor
shall sell and Lessee shall purchase the Leased
Premises shall be the price stated in Lessor's Notice.
(ii) CLOSING. Closing shall be thirty (30) days after the
expiration of the twenty (20) days within which Lessee
may exercise its Option, unless the parties mutually
agree otherwise. The Purchase Price less credit for
the Xxxxxxx Money shall be tendered in cash or other
certified funds by Lessee at Closing.
(iii) EVIDENCE OF TITLE. Not less than ten (10) days
prior to closing, Lessee shall obtain a commitment for
an TLTA owner's policy of title insurance dated within
thirty (30) days of the closing date, issued by a
nationally recognized title insurance company selected
by Lessor (the "Title Company") in the amount of the
Purchase Price determined pursuant to subparagraph
(C)(i) above, naming Lessee as the proposed insured,
and covering the fee simple title to the Leased
Premises, and showing Lessor vested with good title to
the Leased Premises subject only to the matters
affecting title which were of record at the time
Lessor came into title to the Leased Premises and
those matters which Lessee created, suffered or
permitted to accrue during the term hereof. Such
title commitment shall be conclusive evidence of good
title.
(IV) PRORATIONS. Lessor shall pay the cost of the aforesaid
title policy and any and all state and municipal taxes
imposed by law on the transfer of the title to the Leased
Premises, or the transaction pursuant to which such transfer
occurs. Water, sewer and other utility charges, if any,
which are not metered, driveway permit charges, if any,
general real estate taxes, and other similar items, shall be
adjusted ratably as of the Closing, except to the extent
otherwise settled between the parties pursuant to other
provisions of this Lease. No portion of the Base Rent paid
by Lessee shall be credited toward the Purchase Price but
Lessee shall be given a credit for rent prepaid for any
period after the Closing.
(V) ESCROW CLOSING. At the election of Lessor or Lessee
upon notice to the other party not less than five (5) days
prior to the Closing, this sale shall be closed through an
escrow with the Title Company, in accordance with the
general provisions of the usual form of Deed and Money
Escrow Agreement then is use by said company, with such
special provisions inserted in the escrow agreement as may
be required to conform with this agreement. Upon the
creation of such an escrow, anything herein to the contrary
notwithstanding, paying of the purchase price and delivery
of the deed shall be made through the escrow. The cost of
the escrow shall be divided equally between the Lessor and
Lessee. If for any reason other than Lessee's default, the
transaction fails to close, the Xxxxxxx Money shall be
returned to Lessee forthwith.
(vi) REMEDIES ON DEFAULT. If Lessee defaults under the
provisions of this subparagraph 34(C), Lessor shall
have the right to annul the provisions of this
paragraph 34 by giving Lessee notice of such election,
provided that Lessor has first notified Lessee of such
default and Lessee has failed to cure the same within
ten (10) days after such notice. Upon Lessor's notice
of annulment in accordance herewith, the Xxxxxxx Money
shall be forfeited and paid to Lessor as liquidated
damages, which shall be Lessor's sole and exclusive
remedy. If Lessor defaults under the provisions of
this subparagraph 34(C) and fails to cure such default
within ten (10) days after being notified of the same
by Lessee, then in such event, (i) the Xxxxxxx Money
at Lessee's election and immediately upon its demand
shall be returned to Lessee, which return shall not,
however, in any way release or absolve Lessor from its
obligations hereunder and (ii) Lessee shall be
entitled to all remedies (both legal and equitable)
the law (both statutory and decisional) of the state
in which the Leased Premises are situated provides
without first having to tender the balance of the
purchase price as a condition precedent thereof and
without having to make any election of such remedies.
(D) EFFECT OF OPTION ON LEASE. If the Option is exercised,
this Lease shall continue in full force and effect until the
Closing hereinabove specified. If for any reason such
Closing fails to occur, this Lease shall continue in full
force and effect, except that if the provisions of this
paragraph 34 are annulled by Lessor, in accordance with
subparagraph 34(C)(vi), by reason of a default by Lessee,
this Lease shall continue but without the provisions of this
paragraph 34 being a part hereof.
(E) If Lessee fails to exercise its Option, Lessor shall be
free to sell all or any portion of its interest in the
Leased Premises for six months following the expiration of
the twenty days within which Lessee may exercise its Option,
provided that Lessor shall sell its interest or any portion
thereof for a price (pro-rata for a partial interest) equal
to or greater than the price set forth in Lessor's Notice.
This Right of First Refusal shall survive any sale of the
Leased Premises and shall apply to any subsequent sale or
potential sale by Lessor or its assigns.
ARTICLE 35. DEVELOPMENT FINANCING AGREEMENT
The parties hereto hereby acknowledge that the terms hereof
are subject to and shall in the event of conflicts be
controlled by that certain Development Financing Agreement
of even date herewith (the "Development Financing
Agreement"), until such Agreement is terminated in
accordance with its terms.
IN WITNESS WHEREOF, Lessor and Lessee have respectively
signed and sealed this Lease as of the day and year first
above written.
LESSEE: KONA RESTAURANT GROUP, INC.
By:/s/ Xxxxxx X Xxxxxxxx
Xxxxxx X Xxxxxxxx [Print Name of Signatory]
Its: CEO & President
LESSOR:
AEI INCOME & GROWTH FUND 24 LLC
By: AEI Fund Management XXI, Inc.
By: /s/ Xxxxxx X Xxxxxxx
Xxxxxx X. Xxxxxxx, President
EXHIBIT "A"
LEGAL DESCRIPTION
Xxx 0X, Xxxxx 0, Xxxxxx Xxxxx Filing No. 4 Exemption 5,
according to the Plat thereof recorded July 30, 2002 at
Reception Xx. X0000000, Xxxxxx xx Xxxxxxxxx, Xxxxx xx
Xxxxxxxx.
