NET LEASE AGREEMENT
THIS LEASE, made and entered into effective as of this 18th
day of November, 1998, by and between AEI REAL ESTATE FUND XVIII
LIMITED PARTNERSHIP, a Minnesota limited partnership whose
corporate general partner is AEI Fund Management XVIII, Inc., a
Minnesota corporation, whose address is 1300 Minnesota World
Trade Center, 00 Xxxx Xxxxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000
("Lessor"), and Xxxxxx Xxxxxxxx, whose business address is 0000
Xxxxxx, XxXxxxx, Xx. 78504 Texas ("Lessee");
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at 00 Xxxxx Xxxxxxxxxx and Boca
Chica Boulevard, Brownsville, Texas and legally described in
Exhibit "A", which is attached hereto and incorporated herein by
reference; and
WHEREAS, Lessee desires to lease the real property and the
building and improvements (together the "Building") on the real
property described in Exhibit "A", (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 two Lease
Years plus the period from the effective date hereof through the
end of the month of November, commencing on the effective date
first listed above, ("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a period
ending November 30, 1999. The term "Lease Year" after the first
Lease Year shall be a successive period of twelve (l2) calendar
months.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that it is leasing the Leased
Premises (and any Personalty as set forth in Article 20 herein)
as is, where is, without any warranty whatsoever, and said leased
Personalty, and any and all other improvements to the land,
including the parking lot, approaches, and service areas, will be
maintained in accordance with, and if and when improved by or on
behalf of Lessee, will be constructed in all material respects by
Lessee in accordance with, applicable law, ordinance, or
regulation, and according to plans and specifications submitted
to Lessor for its prior reasonable approval, such approval not to
be unreasonably withheld or delayed, provided Lessee demonstrates
adequate security for the full and complete lien free payment of
construction costs in connection therewith. While otherwise also
set forth in this Lease, it is herein again acknowledged that any
structural improvements or HVAC added by Lessee shall become the
property of Lessor at the termination of this Lease.
(B) Lessee agrees to pay, if not already paid in full, for
all architectural fees and actual construction costs, to be
incurred in the 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.
Lessee agrees that no improvements shall commence on the
Leased Premises unless and until Lessee has demonstrated to
Lessor's reasonable satisfaction that Lessee has sufficient funds
available to complete and pay in full for any contemplated
improvements, and Lessor has received copies of all contracts for
the construction of such improvements, including any financing
thereof. In the payment for any such improvements, Lessor may
require that Lessee shall follow commercially reasonable escrow
disbursement procedures to protect Lessor's interest in the
Leased Premises from liens and encumbrances, and Lessor shall be
a third party beneficiary to such disbursement procedures.
(C) Opening for business in the Leased Premises by Lessee
shall constitute an acceptance of the Leased Premises and an
acknowledgment by Lessee that the Leased Premises and Personalty
are in the condition described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Lessee shall pay $100 per month for the first full month
of occupancy and $100 per month pro-rata for the partial month of
occupancy during the month of November. Thereafter for the
balance of the first Lease Year and for the entire Second Lease
Year, Lessee shall pay $3,100 per month on or before the first
day of each month.
(B) Overdue Payments.
Lessee shall pay interest on all overdue payments of Rent or
other monetary amounts due hereunder at the rate of the lesser of
eighteen percent (18%) per annum or the highest rate allowed by
law accruing from the date such Rent or other monetary amounts
were properly due and payable.
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 six months), and during the course
of construction of any improvements, builder's risk insurance in
commercially reasonable amounts, 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 Texas and liquor is sold on the Premises, with
initial limits of at least $2,000,000 per occurrence/$5,000,000
general aggregate, or such additional amounts as Lessor shall
reasonably require from time to time.
(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 three (3) days from receiving written notice, pay Lessor
the amount of the premiums due or paid, together with interest
thereon at the lessor of 18% 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 Lessors, AEI Fund Management XVIII, Inc., a Minnesota
corporation, and Xxxxxx X. Xxxxxxx, as the general partners 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 $10,000 without
Lessor's prior written consent, such consent not to be
unreasonably withheld or delayed. Lessor shall consent 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 its 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 its 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.
(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. 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, Rent tax, or income or profit tax
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 the first 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 pay (under
protest) such tax or assessments for public improvements or
benefits, or other governmental imposition, duties and charges
aforementioned, unless such payment would act as a bar to such
contest or interfere materially with the prosecution thereof and
in such event Lessee shall post with Lessor alternative security
satisfactory to Lessor. 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
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.
(G) Within thirty (30) days after Lessor notifies Lessee in
writing that Lessor has paid such amount, Lessee shall also pay
to Lessor, as additional Rent, the amount of any sales tax,
franchise tax, excise tax, and tax or fees charged foreign
limited partnerships or their general partners as a requisite for
doing business in the state where the Leased Premises are
located, arising out of or relating to the income derived from
this Lease. At Lessor's option, Lessee shall deposit with Lessor
on the first day of each and every month during the term hereof,
an amount equal to one-twelfth (1/12) of any estimated sales tax
payable to the State in which the property is situated for Rent
received by Lessor hereunder ("Deposit"). From time to time out
of such Deposit Lessor will pay the sales tax to the State in
which the property is situated as required by law. In the event
the Deposit on hand shall not be sufficient to pay said tax when
the same shall become due from time to time, or the prior
payments shall be less than the current estimated monthly
amounts, then Lessee shall pay to Lessor on demand any amount
necessary to make up the deficiency. The excess of any such
Deposit 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 such
default, in such order and manner as Lessor may elect. Lessee
shall also pay to Lessor, as additional Rent, the amount of any
sales, use, or other tax imposed on or measured by any Rent paid
hereunder. Such sales, use, or other tax shall be paid by Lessee
to Lessor at the same time as payment of any installment of Base
Rent is made.
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;
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;
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
executed counterparts of any such 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) shall not consent to a
proposed sublease or assignment, 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.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Initially, Lessor agrees to replace any glass broken
prior to the start of the Lease Term, and to obliterate any
graffiti on the exterior walls of the Leased Premises.
Thereafter, 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, if any, attached hereto and
incorporated herein by reference; and further agrees to replace
any of said equipment when necessary, and said replacements shall
become the property of Lessor. 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 Ten Thousand
Dollars ($10,000.00), provided such repairs or improvements do
not affect the structural integrity of the Leased Premises. Any
repairs or improvements in excess of Ten Thousand Dollars
($10,000.00) 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 ll. 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. 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.
(B) Lessee covenants and agrees to execute and deliver, upon
demand, such further 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.
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 approved by Lessor, for the purposes for which the
Leased Premises were leased, then Lessor and Lessee shall each
have the right to terminate this Lease on thirty (30) days notice
to the other 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 materially interfere with the business of
Lessee, then Lessee shall, with the use of the condemnation
proceeds to be made available by Lessor, 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.
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. 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; 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
(A) After the Occupancy Date, Lessee expressly agrees and
warrants that the Leased Premises will be used exclusively as a
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 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 or due to permitted periods of remodel or
repair; and to conduct its business in a first class and
reputable manner in order to maximize sales and Rents payable to
Lessor.
(B) If the Leased Premises are not operated as a casual
dining sit-down restaurant, or remain closed for fourteen (14)
consecutive days, then Lessee shall be in default hereunder and
Lessor may, at its option, cancel this Lease by giving written
notice to Lessee or exercise any other right or remedy that
Lessor may have; provided, however, that reasonable closings
shall be permitted for replacement of trade fixtures or during
periods of remodel or repair after destruction.
(C) In the event this Lease is terminated or canceled
pursuant to this Article, Lessee shall remain liable for the
payment of all Rents due to Lessor under this Lease for the full
remaining term in accordance with the applicable terms and
provisions of this Lease Agreement, offset by Rent generated
under a lease agreement with any new tenant. Provided, however,
that Lessor shall have no affirmative duty to mitigate Lessee's
liability hereunder.
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) with the
Lessor's prior written consent, 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. If the insurance proceeds are less than Ten
Thousand Dollars ($10,000), they shall be paid to Lessee for such
repair and restoration. If the insurance proceeds are greater
than or equal to Ten Thousand Dollars ($10,000), 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 Ten Percent (10%) 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.
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 from the first date such Rent was due and
payable.
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 twenty (20) 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 twenty (20) 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
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.
(B) Upon each such reletting, without termination of the
contractual obligation of Lessee to pay Rent under this Lease,
all Rents received by Lessor 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
8% 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, doors, heating,
electrical wiring, lighting, ventilating, plumbing, walk-in
refrigerators/coolers, walk-in freezers, air conditioning
systems, and the Personalty or 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).
Provided Lessee is not in default hereunder, Lessor will agree
that its interest in the personal property of Lessee will be
subordinated to financing which may exist or which Lessee may
cause to exist in the future on that same personal property.
(C) At the end of the term of this Lease, the Lessee's
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 23. 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 BY LESSEE - PAYMENT OF LESSOR'S COSTS AND
ATTORNEYS' FEES
Lessee agrees to pay and discharge all reasonable costs, and
actual attorneys' fees and expenses that shall be incurred by
Lessor in enforcing the covenants, conditions and terms of this
Lease or defending against an alleged breach, including the costs
of reletting. Such costs, attorneys' fees, and expenses 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 ninety (90)
days after the end of Lessee's fiscal year, furnish its financial
statements of the Lessee. The financial statements shall be
certified as true and correct by the CFO or CEO of Lessee, at the
Lessee's expense, and shall be prepared in conformity with
generally accepted accounting principles. Additionally, during
the term of the Lease, Lessee will within fifteen (15) days from
the end of each quarter of each fiscal year, furnish Lessor with
operating statements of the Leased Premises for such quarter.
Lessor shall have the right to require such operating statements
on a monthly basis. Said quarterly (or monthly, if requested by
Lessor) 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 of Lessee. The financial
statements shall include a balance sheet and related statements
of income, changes in cash funds, changes in capital, and related
notes to financial statements. Lessee shall provide Lessor with
copies of its annual tax returns when the same are filed during
the term of this Lease.
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 substantially modify any of the
business elements of this Lease.
ARTICLE 28. MISCELLANEOUS PROVISIONS
(A) All written notices shall be given to Lessor by certified
mail. Notices to either party shall be addressed to the person
and address given on the first page hereof. Lessor and Lessee
may, from time to time, change these addresses by notifying each
other of this change in writing. Notices of overdue Rent may be
sent to Lessee by regular, special delivery, or nationally
recognized overnight mail.
(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.
(C) This Lease shall be governed by and construed under the
laws of the State of Texas.
(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 200% from
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, Lessor shall have the
right to charge Lessee a late charge of $250.00 per month for
unpaid Rent for each month that any amount of Rent installment
remains unpaid. Said late charge shall commence after such
installment is due and continue until said installment, interest
and all accrued late charges are paid in full.
(H) Any part of the Leased Premises 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. 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, to the extent permitted by Lessee's franchisor.
ARTICLE 29. 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 30. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor, its
successors and assigns, (i) that it will not use or permit the
Leased Premises to be used, whether directly or through
contractors, agents or tenants, 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 there have been no investigations or
reports involving Lessee by any governmental authority which in
any way pertain to Hazardous Materials (iii) that the operation
of the Leased Premises will not violate any federal, state or
local law, regulation, ordinance or requirement governing
Hazardous Materials; (iv) 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 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 the highest rate of interest
allowed by law 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 31. ESCROWS
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 and 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. 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 32. NET LEASE
Notwithstanding anything contained herein to the contrary 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 33. OPTION TO RENEW
If this Lease is not previously canceled or terminated and if
Lessee has materially complied with and performed all of the
covenants and conditions in this Lease after applicable cure
periods and is not currently 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 Two (2) years each (singularly "Renewal Term"). Rent
during the Renewal Term shall increase as follows: Lease Years
Three and Four shall be at the monthly Rent of $3,300 per month,
Lease Years Five and Six shall be at the monthly Rent of $3,500
per month, and Lease Years Seven and Eight shall be at the
monthly Rent of $3,710 per month.
The first Renewal Term will commence on the day following the
date the original Term expires and successive Renewal Terms would
commence on the day following the last day of the then expiring
Renewal Term. Lessee must give ninety (90) 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 34. RIGHT OF FIRST REFUSAL
Lessor, for itself, its successors and assigns, hereby gives
and grants to Lessee a right of first refusal (the "Right of
First Refusal") to purchase the Leased Premises, subject to the
following terms and conditions:
(A) DURATION OF RIGHT OF FIRST REFUSAL. The Right of First
Refusal and all rights and privileges of Lessee hereunder shall
be in force at the beginning of this Lease until the expiration
of Lessee's right to possession.
(B) MANNER OF EXERCISING RIGHT OF FIRST REFUSAL. If Lessor
("Selling Lessor") shall desire to sell all or any portion of its
interest in the Leased Premises (subject to the terms of this
Lease), Selling Lessor shall give Lessee written notice of
Selling Lessor's intention to sell Selling Lessor's interest
(partial or whole) in the Leased Premises. Such notice
("Lessor's Notice") shall give Selling Lessor's name and address
and state a price at which Selling Lessor intends to sell and
will sell a specified portion or all of its interest in the fee
simple to the Leased Premises. If Lessee shall fail to exercise
its Right of First Refusal as set forth herein, the terms of
Article 34(E) shall apply. For twenty (20) business days
following the giving of such notice, Lessee shall have the option
to purchase such portion of the fee interest of the Selling
Lessor as set forth in Lessor's Notice at the price in cash
stated in the Lessor's Notice. A written notice in substantially
the following form, addressed to Selling Lessor and signed by
Lessee and given, in accordance with the provisions of Article
28(A) hereof, within the period for exercising the Right of First
Refusal, submitted with a bank cashier's check or money order
payable to the order of Selling Lessor in the amount of $5,000.00
(the "Xxxxxxx Money") shall be an effective exercise of Lessee's
Right of First Refusal, to wit:
(date)
"We hereby exercise the Right of First Refusal to purchase such
portion of the fee interest of the Selling Lessor (as set forth
in Lessor's Notice) in the property commonly known as 00 Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxx, Xxxxx, 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 RIGHT OF FIRST REFUSAL EXERCISED. Upon
Lessee's exercise of the Right of First Refusal in accordance
with the provisions of subparagraph (B) hereof, Selling Lessor
shall be obligated to sell and convey by recordable general
warranty deed, good and indefeasible title to its interest in the
Leased Premises (or such portion thereof as set forth in Lessor's
Notice) subject only to the matters affecting title which were of
record at the time Selling 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 such Lessor's interest upon the following
terms and conditions:
(i) PRICE. The price "Purchase Price" at which Selling
Lessor shall sell and Lessee shall purchase the Leased Premises
shall be the price stated in Lessor's Notice.
(ii) CLOSING. Closing shall be sixty (60) days after the
expiration of the twenty days within which Lessee may exercise
its Right of First Refusal, unless the parties mutually agree
otherwise. The Purchase Price less credit for the Xxxxxxx Money
and any other credits to which Lessee is entitled hereunder 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, Selling Lessor 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 Selling 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 Selling Lessor vested with good title to
portion of the Leased Premises being sold, subject only to the
matters affecting title which were of record at the time Selling
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. If Lessee shall make objection to the
marketability of title, Selling Lessor shall have no obligation
to make title marketable, but may withdraw Lessor's notice of
intent to market the Premises.
(iv) PRORATIONS. Selling 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. A
prorated portion of the Rent prepaid by Lessee for the month of
closing shall be credited toward the Purchase Price and Lessee
shall be given a credit for rent prepaid for any period after the
month in which the Closing occurs. Otherwise, Lessee shall not
receive a credit against the Purchase Price for Rent paid
hereunder.
(v) ESCROW CLOSING. At the election of Selling 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 in 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 Selling 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), Selling Lessor shall have
the right to annul the provisions of this paragraph 34 by giving
Lessee notice of such election, provided that Selling Lessor has
first notified Lessee of such default and Lessee has failed to
cure the same within ten (10) days after such notice. Upon
Selling Lessor's notice of annulment in accordance herewith, the
Xxxxxxx Money shall be forfeited and paid to Selling Lessor as
liquidated damages, which shall be Selling Lessor's sole and
exclusive remedy. If Selling 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 Selling 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 is 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 RIGHT OF FIRST REFUSAL ON LEASE. If the Right
of First Refusal is exercised by Lessee and is exercisable in
Lessor's Notice as to the entire fee simple, this Lease shall
continue in full force and effect until the Closing hereinabove
specified. If the Right of First Refusal is exercised only as to
all of an undivided portion of the fee simple to the Leased
Premises, the Lease shall remain in full force and effect without
merger or termination of this Lease because of such purchase. 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 Selling 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 Right of First Refusal,
Selling 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 Right of First Refusal, provided that the Selling Lessor
giving such Lessor's Notice shall sell its interest (or a portion
thereof) for a price equal to or greater than the price (or the
pro-rata portion thereof if a portion of the Selling Lessor's
interest in the Leased Premises is sold) 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 successors and assigns.
ARTICLE 35. OPTION TO PURCHASE
Lessor, for itself, its successors and assigns, hereby gives
and grants to Lessee the exclusive and irrevocable option (the
"Option") to purchase the Leased Premises, subject to the
following terms and conditions:
(A) DURATION OF OPTION. Provided Lessee shall not be in
default hereunder, the Option and all rights and privileges of
Lessee hereunder shall be in force for the period commencing at
the beginning of the First Lease Year and continuing until the
last day of the Fifth Lease Year (if the Lease shall be renewed
and full force and effect.)
(B) MANNER OF EXERCISING OPTION. 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 $5,000.00 (the "Xxxxxxx
Money") shall be an effective exercise of the Option, to wit:
(date)
"We hereby exercise the Option to purchase the property commonly
known as 00 Xxxxx Xxxxxxxxxx, Xxxxxxxxxxx, Xxxxx, pursuant to the
option to purchase 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, if
closed during Lease Year One, $500,000, if within Lease Year Two,
$525,000, if within Lease Year Three, $555,000, if within Lease
Year Four, $575,000, if within Lease Year Five $605,000.
(ii)CLOSING. Closing shall be thirty (30) days after the
Option is exercised, 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 ALTA owner's
policy of title insurance dated within thirty (30) days of the
closing date, issued by a nationally recognized title insurance
company of Lessor's choice (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 35 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 35(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 35 are
annulled by Lessor, in accordance with subparagraph 35(C)(vi), by
reason of a default by Lessee, this Lease shall continue but
without the provisions of this paragraph 35 being a part hereof.
ARTICLE 36 SECURITY DEPOSIT
Lessee shall deliver to Lessor and maintain a Security Deposit
in the amount of $12,500, which AEI may commingle with its own
funds and AEI shall be entitled to any interest earned upon such
Security Deposit, if any interest is earned upon such deposit.
If the Security Deposit is placed upon interest, the risk of loss
shall be borne by Lessor.
Lessor, or its then managing agent, shall have the right to
draw down an amount up to the face amount of the Security Deposit
if such amount is due to Lessor under the terms and conditions of
this lease, and remains unpaid after expiration of any applicable
cure period, if any.
In the event of a transfer of Lessor's interest in the Leased
Premises, Lessor shall have the right to transfer the Security
Deposit to the transferee and thereupon the Lessor shall, without
any further agreement between the parties, be released by Lessee
from all liability therefor, and it is agreed that the provisions
hereof shall apply to every transfer or assignment of said
Security Deposit to a new Lessor.
Lessor may draw down upon the Security Deposit in whole or in
part. Should Lessor, due to a default under this Lease,
including but not limited to this Article, draw down upon the
Security Deposit, Lessor shall apply the same to cure any
defaults of Lessee under this Lease. After any application of
said funds by Lessor, Lessee shall be obligated to immediately
either increase the amount of funds so held by Lessor to the
amount immediately prior to such application of funds, or be in
default under this Lease. Lessor may co-mingle any funds held by
it with any other funds of Lessor. Any cash funds held by Lessor
shall be released to Lessee, if not then default hereunder, upon
termination of the term of this Lease.
IN WITNESS WHEREOF, Lessor and Lessee have respectively signed
and sealed this Lease effective as of the day and year first
above written.
LESSEE: /s/ Xxxxxx Xxxxxxxx
By:
Its:
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - LESSOR'S SIGNATURE
ON FOLLOWING PAGE
LESSOR: AEI REAL ESTATE FUND XVIII LIMITED
PARTNERSHIP, a Minnesota limited
partnership
By: AEI FUND MANAGEMENT XVIII, INC.,
a Minnesota corporation
By: /s/ Xxxxxx X Xxxxxxx
Xxxxxx X. Xxxxxxx, President
EXHIBIT "A"
BEGINNING at the Northwest corner of Xxx 0, Xxxxx 00, Xxxxxxx
Xxxxxxxx Addition, said point being on the South line of
abandoned Midalgo Street, said point being on the East line of an
ally, for the Southwest corner of this tract;
THENCE along the South line of abandoned Xxxxxxx Xxxxxx, Xxxxx 00
degrees 28 minutes East, 238.23 feet to a point on the West right
of way line of U.S. Highway 77 and 83 Expressway for the
Southeast corner of this tract;
THENCE along the said West right xx xxx xxxx, Xxxxx 0 degree 11
minutes West, 120.80 feet to a point;
THENCE North 58 degrees 48 minutes West, 58.5 feet to a point for
corner;
THENCE North 4 degrees 29 minutes East, 13.55 feet to North line
of Lot 28;
THENCE along the North line of Xxx 00, Xxxxx 00 and the North
line extended, North 85 degrees 28 minutes West, 148.3 feet to
the present East right of way line of Palm Boulevard for the
Northwest corner of this tract;
THENCE along the present East right of way line of Palm
Boulevard, along a curve to the left with a radius of 103.77
feet, along the distance of 85.80 feet to a point on the West
line of Xxx 00, Xxxxx 00, Xxx Xxxxxx Properties Subdivision, said
point being on the East line of an alley for a corner;
THENCE along the East line of said alley, along the West line and
the West line extended of Xxx 00, Xxxxx 00, Xxxxx 0 degrees 30
minutes East, 83.76 feet to the PLACE OF BEGINNING;
CONTAINING 0.795 acre (34,641 square feet), more or less.
Exhibit B
Walk-In Coolers and Freezers on the Leased Premises as of the
date hereof.
(2) Ventilation Hoods with Fire Systems
