STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
Exhibit 99.78
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)
1. | Basic Provisions (“Basic Provisions”). |
1.1 Parties. This Lease (“Lease”), dated for reference purposes only 10/1/18, is made by and between Neo Street Partners LLC and Lompoc TIC, LLC (“Lessor”) and CA Manufacturing Solutions LLC (“Lessee”), (collectively the “Parties,” or individually a “Party”).
1.2 Premises: That certain real property, including all improvements therein or to be provided by Lessor under the terms of this Lease, commonly known as (xxxxxx xxxxxxx, xxxx, xxxxx, xxx): 1637 and 0000 Xxxx Xxxxxxx Xxxxxx Xxxxxx, XX 00000 (“Premises”). The Premises are located in the County of Santa Xxxxxxx, and are generally described as (describe briefly the nature of the property and, if applicable, the “Project,” if the property is located within a Project): . (See also Paragraph 2)
1.3 Term: Five (5) years and 0 months (“Original Term”) commencing 10/1/18 (“Commencement Date”) and ending 9/30/23 (“Expiration Date”). (See also Paragraph 3)
1.4 Early Possession: If the Premises are available Lessee may have non-exclusive possession of the Premises commencing (“Early Possession Date”). (See also Paragraphs 3.2 and 3.3)
1.5 Base Rent: $23,418.02 per month (“Base Rent”), payable on the 30th day of each month commencing 9–30–18. (See also Paragraph 4)
x If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted. See Paragraph 53.
1.6 Base Rent and Other Monies Paid Upon Execution:
(a) | Base Rent: $23,333.00 for the period 10/1/2023 - 10/31/2023. |
(b) | Security Deposit: $23,333.00 (“Security Deposit”). (See also Paragraph 5) |
(c) | Association Fees: TBD for the period . |
(d) | Other: $4,715.00 for CAM- October 2018. |
(e) | Total Due Upon Execution of this Lease: $56,580.00. |
1.7 Agreed Use: . (See also Paragraph 6)
1.8 Insuring Party. Lessor is the “Insuring Party” unless otherwise stated herein. (See also Paragraph 8)
1.9 Real
Estate Brokers. (See also Paragraph 15 and 25)
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1.10 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by N/A (“Guarantor”). (See also Paragraph 37)
1.11 Attachments. Attached hereto are the following, all of which constitute a part of this Lease:
x | an Addendum consisting of Paragraphs 51 through 59 and Exhibit A thereto ; |
¨ | a plot plan depicting the Premises; |
¨ | a current set of the Rules and Regulations; |
¨ | a Work Letter; |
¨ | other (specify):_________. |
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2. | Premises. |
2.2 Condition.
Lessor shall deliver the Premises to Lessee broom clean and free of debris on the Commencement Data
or the Early Possession Date, whichever first occurs (“Start Date”), and, so long as the required service contracts
described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days following the Start Date, warrants that
the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”),
loading doors, sump pumps, if any, and all other such elements in the Premises, other than those constructed by Lessee, shall be in good
operating condition on said date, that the structural elements of the roof, bearing walls and foundation of any buildings on the Premises
(the “Building”) shall be free of material defects, and that the Premises do not contain hazardous levels of any mold or
fungi defined as toxic under applicable state or federal law. If a non-compliance with said warranty exists as of the Start Date, or
if one of such systems or elements should malfunction or fail within the appropriate warranty period, Lessor shall, as Lessor’s
sole obligation with respect to such matter, except as otherwise provided in this Lease, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such non-compliance, malfunction or failure, rectify same at Lessor’s
expense. The warranty periods shall be as follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to the remaining
systems and other elements of the Building. If Lessee does not give Lessor the required notice within the appropriate warranty period,
correction of any such non-compliance, malfunction or failure shall be the obligation of Lessee at Lessee’s sole cost and expense.
Lessor also warrants, that unless otherwise specified in writing, Lessor is unaware of (i) any recorded Notices of Default affecting
the Premise; (ii) any delinquent amounts due under any loan secured by the Premises; and (iii) any bankruptcy proceeding affecting
the Premises, in current “as-is” condition (see addendum paragraph 51).
2.3 Compliance.
Lessor warrants that to the best of its knowledge the improvements on the Premises comply with the building codes, applicable laws, covenants
or restrictions of record, regulations, and ordinances (“Applicable Requirements”) that were in effect at the time
that each improvement, or portion thereof, was constructed. Said warranty does not apply to the use to which Lessee will put the Premises,
modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Lessee’s use (see
Paragraph 49), or to any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE; Lessee
is responsible for determining whether or not the Applicable Requirements, and especially the zoning, are appropriate for Lessee’s
intended use, and acknowledges that past uses of the Premises may no longer be allowed. If the Premises do not comply with said warranty,
Lessor shall, except as otherwise provided, promptly after receipt of written notice from Lessee setting forth with specificity the nature
and extent of such non-compliance, rectify the same at Lessor’s expense. If Lessee does not give Lessor written notice of a non-compliance
with this warranty within 6 months following the Start Date, correction of that non-compliance shall be the obligation of Lessee at Lessee’s
sole cost and expense. If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction
of an addition to or an alteration of the Premises and/or Building, the remediation of any Hazardous Substance, or the reinforcement
or other physical modification of the Unit, Premises and/or Building (“Capital Expenditure”), Lessor and Lessee shall
allocate the cost of such work as follows:
(a) Subject
to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific and unique use of the Premises
by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof, provided, however, that
if such Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds 6 months’ Base Rent,
Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt of Lessee’s termination
notice that Lessor has elected to pay the difference between the actual cost thereof and an amount equal to 6 months’ Base Rent.
If Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires such Capital Expenditure and deliver
to Lessor written notice specifying a termination date at least 90 days thereafter. Such termination date shall, however, in no event
be earlier than the last day that Lessee could legally utilize the Premises without commencing such Capital Expenditure.
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(b) If
such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as, governmentally mandated
seismic modifications), then Lessor shall pay for such Capital Expenditure and Lessee shall only be obligated to pay, each month during
the remainder of the term of this Lease or any extension thereof, on the date that on which the Base Rent is due, an amount equal to
1/144th of the portion of such costs reasonably attributable to the Premises. Lessee shall pay Interest on the balance but may prepay
its obligation at any time. If, however, such Capital Expenditure is required during the last 2 years of this Lease or if Lessor
reasonably determines that it is not economically feasible to pay its share thereof, Lessor shall have the option to terminate this Lease
upon 90 days prior written notice to Lessee unless Lessee notifies Lessor, in writing, within 10 days after receipt of Lessor’s
termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest, from Rent until Lessor’s share
of such costs have been fully paid. If Lessee is unable to finance Lessor’s share, or if the balance of the Rent due and payable
for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate
this Lease upon 30 days written notice to Lessor.
(c) Notwithstanding
the above, the provisions concerning Capital Expenditures are intended to apply only to non .voluntary, unexpected, and new Applicable
Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change
in intensity of use, or modification to the Premises then, and in that event, Lessee shall either: (i) immediately cease such changed
use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure, or
(ii) complete such Capital Expenditure at its own expense. Lessee shall not, however, have any right to terminate this Lease.
2.5 Lessee
as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of no force or effect if immediately
prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary
corrective work.
3. | Term. |
4. | Rent. |
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5. Security
Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee’s faithful
performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may
use, apply or retain all or any portion of said Security Deposit for the payment of any amount already due Lessor, for Rents which
will be due in the future, and/ or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days
after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by
this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written
request from Lessor, deposit additional monies with Lessor so that the total amount of the Security Deposit shall at all times bear
the same proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should
the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee,
Lessor shall have the right to increase the Security Deposit to the extent necessary, in Lessor’s reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs
during this Lease and following such change the financial condition of Lessee is, in Lessor’s reasonable judgment,
significantly reduced, Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit
to be at a commercially reasonable level based on such change in financial condition. Lessor shall not be required to keep the
Security Deposit separate from its general accounts. Within 90 days after the expiration or termination of this Lease, Lessor shall
return that portion of the Security Deposit not used or applied by Lessor. Lessor shall upon written request provide Lessee with an
accounting showing how that portion of the Security Deposit that was not returned was applied. No part of the Security Deposit shall
be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. THE
SECURITY DEPOSIT SHALL NOT BE USED BY LESSEE IN LIEU OF PAYMENT OF THE LAST MONTH’S RENT.
6. | Use. |
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7. | Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations. |
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7.3 Utility Installations; Trade Fixtures; Alterations.
7.4 Ownership; Removal; Surrender; and Restoration.
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8. | Insurance; Indemnity. |
8.3 Property Insurance - Building, Improvements and Rental Value.
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8.4 Lessee’s Property; Business Interruption Insurance; Worker’s Compensation Insurance.
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9. | Damage or Destruction. |
(a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.
(b) “Premises Total Destruction” shall mean damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.
(c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.
(d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation.
(e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance, in, on, or under the Premises which requires restoration.
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9.6 Abatement of Rent; Lessee’s Remedies.
10. | Real Property Taxes. |
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11. Utilities and Services. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered or billed to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of all charges jointly metered or billed. There shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor’s reasonable control or in cooperation with governmental request or directions.
12. | Assignment and Subletting. |
12.1 Lessor’s Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease or in the Premises without Lessor’s prior written consent.
(b) Unless Lessee is a corporation and its stock is publicly traded on a national stock exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as it was represented at the time of the execution of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its consent. “Net Worth of Lessee” shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles.
(d) An assignment or subletting without consent shall, at Lessor’s option, be a Default curable after notice per Paragraph 13.1(d), or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days written notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent.
(e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.
(f) Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at the time consent is requested.
(g) Notwithstanding the foregoing, allowing a de minimis portion of the Premises, ie.20 square feet or less, to be used by a third party vendor in connection with the installation of a vending machine or payphone shall not constitute a subletting.
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12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor’s consent, no assignment or subletting shall: (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee.
(b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or Breach.
(c) Lessor’s consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting.
(d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor’s remedies against any other person or entity responsible therefor to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor’s determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee of $500 as consideration for Lessor’s considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 36)
(f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering into such sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in writing.
(g) Lessor’s consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing. (See Paragraph 39.2)
(a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Lessee’s obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor exceeds Lessee’s then outstanding obligations any such excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee’s obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary.
(b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.
(c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor.
(d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor’s prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.
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13. | Default; Breach; Remedies. |
(a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism.
(b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days following written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR’S RIGHTS, INCLUDING LESSOR’S RIGHT TO RECOVER POSSESSION OF THE PREMISES.
(c) The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste, act or acts constituting public or private nuisance, and/or an illegal activity on the Premises by Lessee, where such actions continue for a period of 3 business days following written notice to Lessee. In the event that Lessee commits waste, a nuisance or an illegal activity a second time then, the Lessor may elect to treat such conduct as a non-curable Breach rather than a Default.
(d) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate or financial statements, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Xxxxxxxxx 00, (xxxx) material safety data sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days following written notice to Lessee.
(e) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof, other than those described in subparagraphs 13.1(a), (b), (c) or (d), above, where such Default continues for a period of 30 days after written notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion.
(f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions.
(g) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false.
(h) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a Guarantor’s breach of its guaranty obligation on an anticipatory basis, and Lessee’s failure, within 60 days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease.
(a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessor to mitigate damages caused by Lessee’s Breach of this Lease shall not waive Lessor’s right to recover any damages to which Lessor is otherwise entitled. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute.
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(b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s interests, shall not constitute a termination of the Lessee’s right to possession.
(c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee’s right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee’s occupancy of the Premises.
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14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the Building, or more than 25% of that portion of the Premises not occupied by any building, is taken by Condemnation, Lessee may, at Lessee’s option, to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be entitled to any compensation paid by the condemnor for Lessee’s relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.
16. | Estoppel Certificates. |
(a) Each Party (as “Responding Party”) shall within 10 days after written notice from the other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current “Estoppel Certificate” form published BY AIR CRE, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party.
(b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i)the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and (iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party’s Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate. In addition, Lessee acknowledges that any failure on its part to provide such an Estoppel Certificate will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, should the Lessee fail to execute and/or deliver a requested Estoppel Certificate in a timely fashion the monthly Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater for remainder of the Lease. The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee’s failure to provide the Estoppel Certificate. Such increase in Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach with respect to the failure to provide the Estoppel Certificate nor prevent the exercise of any of the other rights and remedies granted hereunder.
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(c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall within 10 days after written notice from Lessor deliver to any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser, including but not limited to Lessee’s financial statements for the past 3 years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.
17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor, or its partners, members, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor’s partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction.
21. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the use, nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party.
24. | Waivers. |
(a) No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent.
(b) The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of monies or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.
(c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.
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25. | Disclosures Regarding The Nature of a Real Estate Agency Relationship. |
(a) When entering into a discussion with a real estate agent regarding a real estate transaction, a Lessor or Lessee should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Lessor and Lessee acknowledge being advised by the Brokers in this transaction, as follows:
(i) Lessor’s Agent. A Lessor’s agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lessor’s agent or subagent has the following affirmative obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agent’s duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.
(ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In these situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Lessor. An agent acting only for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the Lessor: (a) Diligent exercise of reasonable skills and care in performance of the agent’s duties. (b) A duty of honest and fair dealing and good faith, (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above.
(iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting directly or through one or more associate licenses, can legally be the agent of both the Lessor and the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the Lessee. In a dual agency situation, the agent has the following affirmative obligations to both the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Lessor or the Lessee, (b) Other duties to the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may not without the express permission of the respective Party, disclose to the other Party that the Lessor will accept rent in an amount less than that indicated in the listing or that the Lessee is willing to pay a higher rent than that offered. The above duties of the agent in a real estate transaction do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor and Lessee should carefully read all agreements to assure that they adequately express their understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.
(b) Brokers have no responsibility with respect to any default or breach hereof by either Party. The Parties agree that no lawsuit or other legal proceeding involving any breach of duty, error or omission relating to this Lease may be brought against Broker more than one year after the Start Date and that the liability (including court costs and attorneys’ fees), of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable to any gross negligence or willful misconduct of such Broker.
(c) Lessor and Lessee agree to identify to Brokers as “Confidential” any communication or information given Brokers that is considered by such Party to be confidential.
26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Holdover Base Rent shall be calculated on monthly basis. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.
27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.
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28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services and consultation).
32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect on Lessee’s use of the Premises. All such activities shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor’s prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.
34. Signs. Lessor may place on the Premises ordinary “For Sale” signs at anytime and ordinary “For Lease” signs during the last 6 months of the term hereof. Except for ordinary “for sublease” signs, Lessee shall not place any sign upon the Premises without Lessor’s prior written consent. All signs must comply with all Applicable Requirements.
35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor’s failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s election to have such event constitute the termination of such interest.
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36. Consents. All requests for consent shall be in writing. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’, attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor’s consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days following such request.
38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee’s part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.
39. Options. If Lessee is granted any Option, as defined below, then the following provisions shall apply.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default is cured, (ii) during the period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii) during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Option.
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(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of Paragraph 39.4(a).
(c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this Lease.
40. Multiple Buildings. If the Premises are a part of a group of buildings controlled by Lessor, Lessee agrees that it will abide by and conform to all reasonable rules and regulations which Lessor may make from time to time for the management, safety, and care of said properties, including the care and cleanliness of the grounds and including the parking, loading and unloading of vehicles, and to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessee also agrees to pay its fair share of common expenses incurred in connection with such rules and regulations.
41. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at anytime a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. A Party who does not initiate suit for the recovery of sums paid “under protest” within 6 months shall be deemed to have waived its right to protest such payment.
44. Authority; Multiple Parties; Execution.
(a) If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of such authority.
(b) If this Lease is executed by more than one person or entity as “Lessee”, each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named Lessees had executed such document.
(c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
45. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.
46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially change Lessee’s obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises.
49. Arbitration of Disputes. An Addendum requiring the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease ¨ is ¨ is not attached to this Lease.
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50. Accessibility; Americans with Disabilities Act.
(a) The Premises:
x have not undergone an inspection by a Certified Access Specialist (CASp). Note: A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.
¨ have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises met all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledges that it received a copy of the inspection report at least 48 hours prior to executing this Lease and agrees to keep such report confidential.
¨ have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises did not meet all applicable construction-related accessibility standards pursuant to California Civil Code §55.51 et seq. Lessee acknowledges that it received a copy of the inspection report at least 48 hours prior to executing this Lease and agrees to keep such report confidential except as necessary to complete repairs and corrections of violations of construction related accessibility standards.
In the event that the Premises have been issued an inspection report by a CASp the Lessor shall provide a copy of the disability access inspection certificate to Lessee within 7 days of the execution of this Lease.
(b) Since compliance with the Americans with Disabilities Act (ADA) and other state and local accessibility statutes are dependent upon Lessee’s specific use of the Premises, Lessor makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation. In the event that Lessee’s use of the Premises requires modifications or additions to the Premises in order to be in compliance with ADA or other accessibility statutes, Lessee agrees to make any such necessary modifications and/or additions at Lessee’s expense.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY AIR CRE OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.
WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED.
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The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.
Executed at: | Executed at: |
On: | On: | ||||||||||||||||||||
By LESSOR: | By LESSEE: | ||||||||||||||||||||
Neo Street Partners LLC and Lompoc TIC, LLC | CA Manufacturing Solutions LLC | ||||||||||||||||||||
By: SEE ATTACHED SIGNATURE PAGES | By: SEE ATTACHED SIGNATURE PAGES | ||||||||||||||||||||
Name Printed: | |||||||||||||||||||||
Name Printed: | Title: | ||||||||||||||||||||
Title: | Phone: | ||||||||||||||||||||
Phone: | Fax: | ||||||||||||||||||||
Fax: | Email: | ||||||||||||||||||||
Email: | |||||||||||||||||||||
By: | |||||||||||||||||||||
Name Printed: | |||||||||||||||||||||
Title: | |||||||||||||||||||||
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Fax: | |||||||||||||||||||||
Email: | |||||||||||||||||||||
Address: | Address: | ||||||||||||||||||||
Federal ID No.: | Federal ID No.: | ||||||||||||||||||||
AIR CRE. 000 Xxxxx Xxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, XX0 0000, Tel 000-000-0000, Email xxxxxxxxx@xxxxxx.xxx
NOTICE: No part of these works may be reproduced in any form without permission
in writing.
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SIGNATURE PAGE TO STANDARD INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE-NET
LOMPOC TIC LLC, | CA MANUFACTURING SOLUTIONS LLC, | |||
a California limited liability company | a California limited liability company | |||
By: MG Padaro Fund LLC, | ||||
By: | /s/ Xxxx X. Xxxxx, | a California limited liability company, | ||
Xxxx X. Xxxxx, | Managing Member | |||
Authorized Signatory | ||||
By: | /s/ Xxxx X. Xxxxx | |||
Xxxx X. Xxxxx | ||||
Authorized Signatory | ||||
Address for Notices: | Address for Notices: | |||
0000 Xxxx Xxxxx Xxxxxxxxx, Xxxxx 000 | 0000 Xxxx Xxxxx Xxxxxxxxx, Xxxxx 000 | |||
Xxxx Xxxxx, Xxxxxxxxxx 00000 | Xxxx Xxxxx, Xxxxxxxxxx 00000 | |||
NEO STREET PARTNERS, LLC, | ||||
a California limited liability company | ||||
By: | /s/ Xxxx X. Xxxxx | |||
Xxxx X. Xxxxx | ||||
Its: Authorized Signatory | ||||
Address for Notices: | ||||
0000 Xxxx Xxxxx Xxxxxxxxx, Xxxxx 000 | ||||
Xxxx Xxxxx, Xxxxxxxxxx 00000 | ||||
The following Addendum to Lease will amend and supplement the provisions of that certain Standard Industrial/Commercial Single Tenant Lease-Net (the “Lease Form”) by and between NEO STREET PARTNERS, LLC, a California limited liability company and LOMPOC TIC LLC, a California limited liability company, tenants in common (collectively, “Lessor”) and CA MANUFACTURING SOLUTIONS LLC, a California limited liability company (“Lessee”), dated October 1, 2018 (the “Lease Date”) and covering certain premises located at 1637 and 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000. Capitalized terms have the meaning ascribed in the Lease Form unless otherwise defined herein.
FOR GOOD AND VALUABLE CONSIDERATION, Lessor and Lessee agree that the Lease shall be amended and supplemented with additional provisions as follows:
51. Condition of Premises. The following is added after Section 2.2 of the Lease form.
As used herein “Applicable Requirements” means building codes and ordinances, covenants conditions and restrictions of record and all other applicable laws (subject to Section 58 hereof). Lessor makes no representation or warranty as to the size or condition of the Premises and any building systems located on the Premises, the suitability of the Premises and the electrical water and other facilities serving the Premises for the business of Lessee, the ability of Lessee to obtain any approvals required for the operation of its business on the Premises, compliance of the Premises with Applicable Requirements, or any other matter related to the Premises, all of which shall have been investigated by Lessee prior to executing this Lease.
52. Agreed Use. Section 6.1 of the Lease Form is hereby deleted in its entirety and is replaced with the following:
Section 6.1. Use. Lessee may use the Premises for the purposes of operating a cannabis manufacturing and/or processing facility and any ancillary storage or other use reasonably ancillary to such use (but not including human habitation), and for no other purposes, provided Lessee has obtained, or will, prior to commencing any such use obtain all approvals required under Applicable Requirements, as they may be amended from time to time including any approvals required by the local governmental authorities, including, without limitation, conditional use permits or other municipal approvals, including, without limitation, any Conditional Use Permit applicable to the Premises. It is acknowledged by Lessor and Lessee that the permitted use hereunder includes the storage, and processing of Cannabis (as defined in Section 58). Lessee shall not knowingly use or occupy or permit any of the Premises to be used or occupied, nor knowingly do or permit anything to be done in or on any of the Premises, in a manner which would (i) make void or voidable or cause any insurer to cancel any insurance required by this Lease, or make it difficult or impossible to obtain any such insurance at commercially reasonable rates, to the extent that such insurance is available at commercially reasonable rates considering the Permitted Use of the Premises, (iii) constitute a public or private nuisance or waste, or (iv) violate any Applicable Requirements (as defined below) subject, however, to Section 58 hereof.
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53. Base Rent and Operating Rent. The Base Rent shall be determined and adjusted in accordance with the following:
(a) Section 1.5 of the Lease form is hereby deleted and replaced with the following:
Section 1.5. Base Rent. Base Rent shall initially be $23,333.00 per month (as adjusted pursuant to the terms hereof, “Base Rent”). Base Rent shall be paid monthly on the first day of each month during the Term during each year. One month of Base Rent shall be payable concurrently with the execution of this Lease, to be credited against the Rent for the first month hereof. Lessee shall pay Basic Rent and all other sums payable to Lessor under this Lease to Lessor by wire transfer, in immediately available funds to an account to be designated by Lessor from time to time or at such other address or to such other person as Lessor from time to time may designate. Any rental payment made in respect of a period which is less than one month shall be prorated by multiplying the then applicable monthly Basic Rent by a fraction the numerator of which is the number of days in such month with respect to which rent is being paid and the denominator of which is the total number of days in such month. Lessee shall perform all of its obligations under this Lease at its sole cost and expense, and shall pay all Basic Rent, and other sums payable hereunder when due and payable, without notice or demand.
(b) Base Rent hereunder shall be adjusted during the term hereof in accordance with the following:
Chart of Base Rent | ||||||||
Monthly Rent/Rentable | ||||||||
Period | Square Foot | Monthly Basic Rent | ||||||
October 1, 2018- September 30, 2019 | $ | 1.07 | $ | 23,333.00 | ||||
October 1, 2019- September 30, 2020 | $ | 1.22 | $ | 26,667.00 | ||||
October 1, 2020- September 30, 2021 | $ | 1.22 | $ | 26,667.00 | ||||
October 1, 2021- September 30, 2022 | $ | 1.22 | $ | 26,667.00 | ||||
October 1, 2022- September 30, 2023 | $ | 1.22 | $ | 26,667.00 |
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(c) In addition to payment of Base Rent, Lessee will pay “Operating Rent” as follows: In Lease Years 3, 4 and 5, a sum equal to one and two percent (2.0%) of Gross Revenue earned in each such Lease Year (the “Revenue Percentage”). Operating Rent shall be calculated and paid on a quarterly basis and shall be payable in arrears each January 1, April 1, July 1 and October 1 of each Lease Year (each a “Payment Date”), with the first payment to be made January 1, 2022 covering the period from October 1, 2021 to December 31, 2021.
(i) Definition of Gross Revenue. “Gross Revenue” means the revenue received by Lessee from Lessee’s operations at the Premises (or the operations of any sublessee occupying the entire Premises for all or substantially all of the remaining term), including, without limitation goods or services sold in or from the Premises by Lessee, whether for cash or for credit, excluding, however, the following: (A) the sales price of all goods returned and accepted for full credit or the amount of the cash refund or allowance made thereon; (B) the sums and credits received in settlement of claims for loss or damage to goods stored at the Premises; (C) sales taxes, cannabis related taxes excise taxes, gross receipt taxes, and other taxes now or hereafter imposed upon the sale or value of goods or services, whether added separately to the selling price of the merchandise or services and collected from customers or included in the retail selling price; (D) Lessee’s accounts receivable, not to exceed two percent (2%) of Gross Revenue, which have been determined to be uncollectible for federal income tax purposes during the Lease Year, provided, however, that if such accounts are actually collected in a later Lease Year, the amount shall be included in the Gross Revenue for such later Lease Year; or (E) rents, subrents or other consideration received in connection with an assignment, sublease, license, concession or other transfer of any portion of the Premises. For avoidance of doubt, Gross Revenue shall in no event include the value of goods or services sold by any sublessee of the Premises, who is not affiliated with Lessee unless the sublease is of the entire Premises, and in the case of affiliates, such Gross Revenue will not be included unless such sublease is entered into in bad faith to avoid or reduce payment of Operating Rent hereunder.
(ii) Gross Revenue Statement. On each Payment Date during the Term of the Lease for which a payment of Operating Rent is required to be made, Lessee shall submit to Lessor a statement indicating the amount of its Gross Revenue for the calendar quarter (a “Quarterly Statement”). If any Operating Rent is due for such period, Lessee shall accompany such Quarterly Statement with a payment of the Operating Rent due. In addition, within thirty (30) days after the end of each calendar year, Lessee shall submit to Lessor an income statement of Lessee, prepared in accordance with generally accepted accounting principles consistently applied, which shall be accompanied by a statement of annual Gross Revenue (collectively, the “Annual Statement”). Each Annual Statement and Quarterly Statement shall be certified as correct by the Chief Financial Officer or a Vice President of Lessee.
(iii) Maintenance of Records. Lessee shall maintain adequate records for a period of at least three (3) years after the close of each Lease Year for the purpose of allowing Lessor to verify the reported Gross Revenue. Lessor or its agents may, upon at least five (5) business days’ advance written notice, audit such records at Lessee’s main office during normal business hours. If such inspection or audit or Annual Statement discloses an underpayment of Operating Rent, Lessee shall pay to Lessor within thirty (30) days after receipt of written notice thereof (together with a copy of the audit report, if such underpayment arises from the results of an audit) the amount of the underpayment. In the event the required adjustment arises from an understatement of Gross Revenue in excess of three percent (3%), and additional Operating Rent is due, Lessee shall reimburse Lessor for Lessor’s reasonable expenses incurred in conducting such inspection or audit.
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(iv) Operating Covenant. Lessee will at all times during the term of this Lease operate the Premises as a fully stocked and equipped cannabis processing/manufacturing facility, subject only to temporary closure not to exceed thirty (30) days, as required for repairs and any casualty affecting the Premises, and will use reasonable efforts to maximize the amount of Operating Rent payable to Lessor hereunder
(v) Option Period Rent Reduction Notice. At any time, Lessor may provide a notice that Lessor has elected to reduce the Revenue Percentage and Base Rent hereunder, and upon the giving of such notice, the Rent will be reduced as specified therein as of the date specified in such notice (an “Option Period Rent Reduction Notice”). Such Option Period Rent Reduction Notice shall specify one of two contingencies: either (i) that for the purposes of calculating Operating Rent payable hereunder, the Revenue Percentage will be reduced as of the Effective Date specified in such Option Period Rent Reduction Notice to one percent (1%), or (ii) that Base Rent hereunder will be reduced to $6,400.00 per month and that for the purposes of calculating Operating Rent payable hereunder, the Revenue Percentage will be reduced as of the Effective Date specified in such Option Period Rent Reduction Notice to one half of one percent (0.5%). If the Revenue Percentage is revised pursuant the foregoing, calculations will be based on actual income during any relevant quarter attributable to periods before and after the effective date.
54. Compliance with Applicable Requirements. Notwithstanding Sections 2.2 and 6.3 of the Lease form, in the event that Lessee is require to make improvements to the Premises required to comply with Applicable Requirements that are not part of the Tenant Improvements, (“Compliance Improvements”) Lessee will be solely responsible to pay the cost of any Compliance Improvements up to $300,000.00 in the aggregate, provided if the aggregate cost of Compliance Improvements exceeds $300,000.00, the cost of such Compliance Improvements will be shared 50% by Lessor and 50% by Lessee.
55. Association Charges. Lessee will pay, within ten (10) business days after billing by Lessor, all amounts assessed against Owner by the West Central Avenue Association, or any other Owner, under that certain Declaration of Covenants, Conditions and Restrictions recorded October 13, 2004 as Instrument No. 2004-109112, of the Official of Santa Xxxxxxx County (the “Declaration”), or assessed under any successor or supplementary Declaration.
56. Tenant Improvements. Provided no Event of Default exists under this Lease, nor any other event that with the giving of notice or the passage of time would constitute an Event of Default, Lessor shall available to Lessee a tenant improvement allowance to be used for the improvement of the Premises in the amount not to exceed of Three Hundred Fifty Thousand Dollars ($350,000.00), on the terms provided in Exhibit A attached hereto and incorporated herein by this reference.
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57. Option to Extend the Term. Lessor grants to Lessee one (1) option (the “Extension Option”) to extend the term for a period of five (5) years. As used herein, “Extended Term” means the Term, as extended by the Extension Option. All the provisions of the Lease shall apply during the Extended Term except for the amount of the Basic Rent or any amount of tenant improvements installed in connection with Lessee’s initial occupancy. Without limiting the foregoing, Operating Rent shall continue to be payable in the amounts reserved in the Lease during the Extended Term. The Basic Rent for the first year of the Extended Term will be the Basic Rent applicable to the last year of the Term prior to the commencement of the Extended Term, multiplied by the CPI Factor. Basic Rent will be adjusted effective on October 1 of each Lease Year during the Extended Term by multiplying the Base Rent in effect at the for the prior Lease Year by the CPI Factor. The “CPI Factor” will be the quotient of the Ending Index over the Starting Index. The “Ending Index” will be the CPI in effect on the date of any adjustment and the “Starting Index” will be the CPI in effect in October of the year prior to the date of the Adjustment, but the CPI Factor shall not be less than one (1). The “CPI” is the Consumer Price Index (All Items) Xxx Xxxxxxx-Xxxx Xxxxx-Xxxxxxx, XX, 0000x000, published by the Bureau of Labor Statistics, or any successor thereto reasonably selected by Lessor. The Extension Option is further subject to the following terms and conditions:
(a) Lessee must deliver its irrevocable written notice of Lessee’s exercise of the Extension Option (“Exercise Notice”) to Lessor no less than six (6) months prior to the expiration of the Term. Time is of the essence with respect to the time period during which Lessee must deliver to Lessor its written notice of exercise and, therefore, if Lessee fails to give Lessor its irrevocable written notice of its exercise of the Extension Option within the time period provided above, then the Extension Option shall expire and be of no further force or effect.
(b) If Lessee is in default beyond any applicable grace or cure period under this Lease at the date of delivery of the Exercise Notice to Lessor, then the Exercise Notice shall be of no effect and this Lease shall expire at the end of the Term. If Lessee is in default under this Lease on the last day of the Term then Lessor may in its sole discretion elect to have Lessee’s exercise of the Extension Option be of no effect, in which case the Lease shall expire at the end of the Term.
(c) If Lessee delivers the Extension Option the Lease shall be extended on all the terms and conditions provided in the Lease and herein, including, without limitation, the annual increases for the Extended Term provided above.
(d) Lessee and Lessor shall enter into an amendment to the Lease to document the rent and during the Extended Term and the extension of the term pursuant thereto.
(e) The Extension Option is personal to Lessee and may not assigned in connection with any assignment under this Lease and will not inure in favor of any subtenant.
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58. Licensed Broker Disclosure. Xxxx Xxxxx and Xxxxxxx Xxxxxxxxx are brokers licensed in the state of California and are acting as principals in this transaction.
59. Cannabis Specific Provisions.
(a) Lessor’s Representations and Warranties. Lessor represents and warrants that:
(i) No portion of the Premises is located on any lands owned directly or indirectly by the United States of America nor is any portion of the Premises subject to any federal land grants from the United States of America.
(ii) No school is located within 600 feet of the Premises.
The foregoing representations and warranties are material inducements to Lessee to enter into this Lease and if any are false in any material respect, Lessee may terminate the Lease by written notice to Lessor.
(i) The seizure by any Governmental Authority seeking forfeiture of the Premises, whether or not the court proceeding has actually commenced.
(ii) The entry of a final, non-appealable judgment that deems or determines that Lessee’s use constitutes a public or private nuisance.
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(iii) Lessee’s permanent inability to comply with all required permits, business licenses and governmental approvals.
(iv) A change in the laws or enforcement policies of the city in which the Premises is located, which prohibits or bans the Permitted Use.
(v) Any change in any law or enforcement policy or a change in practices by any law enforcement agency, whether it be State of California or Federal, relating to Cannabis Laws which has the effect of prohibiting or banning the Permitted Use.
(i) Lessee shall, at its sole cost and expense, obtain all necessary permits and licenses to operate its business at the Premises and shall comply with all applicable laws, including, without limitation, all local law and ordinances (including local zoning ordinances), state law and ordinances and federal laws and regulations relating to the operation of its business (to the extent such federal laws and ordinances are not inconsistent with state and local laws allowing Lessee to use the Premises for the Permitted Use) and shall renew said permits and licenses as required. The foregoing duty to comply encompasses all applicable laws that may become effective before and during the Term, as same may be extended, regardless of the cost of such compliance. Notwithstanding the foregoing, Lessor acknowledges that the activities on the Premises do not comply with the Controlled Substances Act (21 U.S.C. § 801 et. seq.) (“CSA”), and failure to comply with such law shall not be a default under this Lease, so long as no Federal action is brought seeking to enforce the provisions of the CSA. Lessee warrants that as of the date hereof, it knows of no current or pending enforcement actions under the CSA against the Lessee or the Premises.
(ii) In the event that Lessor becomes aware of any facts or circumstances which reasonably lead it to believe Lessee is in violation of any of Lessee’s covenants, warranties and representations, Lessor shall be entitled, after notice and any cure period in accordance with this Lease to declare an Event of Default and pursue all its remedies at law and equity.
(i) The granting of said approvals, licenses and permits to Lessee that this Lease and related provisions are subject to. Furthermore, no representation by Lessor or its agents have been made as to the suitability of the Premises for the Permitted Use by Lessee that are not set forth in this Lease and Lessee has been and is currently relying upon its own independent research, investigations and information.
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(ii) Lessee’s business use and any related liability of said use of the Premises, including, but not limited to any safety or security issues, or any violation of the requirements of any governmental agencies.
(iii) Any governmental agency taking or commencing any notice or action to take the Premises or Property under any forfeiture law or statute.
(iv) The occurrence of an Early Termination Event(s).
(i) “Cannabis” means all parts of the plant Cannabis sativa linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds or resin. “Cannabis” also means the separated resin, whether crude or purified, obtained from cannabis. “Cannabis” also means marijuana as defined by Section 11018 of the Health and Safety Code as enacted by Chapter 1407 of the Statutes of 1972. “Cannabis” also include all products derived from, either directly or indirectly, the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, including but not limited to cigarettes and vaporizing or “vaping” products containing Cannabis and goods containing Cannabis produced for human consumption and which are commonly referred to as edibles.
(ii) “Cannabis Law” means any Applicable Law relating to Cannabis, whether medical or adult use (a/k/a recreational), including without limitation, all laws and regulations to the planting, growing, cultivation of Cannabis, the operation of any business relating to the sale and/or distribution of Cannabis related products as all licensing and permitting laws and regulations relating thereto, as may be in effect at the time of Lease execution.
(iii) “Federal Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, or any agency, authority, instrumentality, regulatory body, court, central bank or other entity within the federal government of the United States exercising executive, legislative judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
(iv) “State Governmental Authority” means the government of the State of California or of any political subdivision thereof or any other state in the United States of America, whether state or local, and any agency, authority, instrumentality, regulatory body, court, exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, including but not limited to, the California Bureau of Medical Cannabis Regulation (a/k/a the California Bureau of Marijuana Control) and/or any successor agency, the California Department of Consumer Affairs, the California Department of Food and Agriculture and the California Department of Public Health.
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed as of the date first above written.
LOMPOC TIC LLC, | CA MANUFACTURING SOLUTIONS LLC, | |||
a California limited liability company | a California limited liability company | |||
By: MG Padaro Fund LLC, | ||||
By: | /s/ Xxxx X. Xxxxx, | a California limited liability company, | ||
Xxxx X. Xxxxx, | Managing Member | |||
Authorized Signatory | ||||
By: | /s/ Xxxx X.Xxxxx | |||
Xxxx X.Xxxxx | ||||
Authorized Signatory | ||||
NEO STREET PARTNERS, LLC, | ||||
a California limited liability company | ||||
By: | /s/ Xxxx X. Xxxxx | |||
Xxxx X. Xxxxx | ||||
Its: Authorized Signatory | ||||
Lease Agreement Signature Page
EXHIBIT A
WORK AGREEMENT
The following Work Agreement is executed pursuant to that certain Standard Industrial/Commercial Single Lease- Net (the “Lease Form”) by and between NEO STREET PARTNERS, LLC, a California limited liability company and LOMPOC TIC LLC, a California limited liability company (collectively, “Lessor”) and CA MANUFACTURING SOLUTIONS LLC, a California limited liability company (“Lessee”), dated October 1, 2018 (the “Lease Date”) and covering certain premises located at 1637 and 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, and will govern the construction of certain improvements by Lessee to the Premises. Capitalized terms have the meaning ascribed in the Lease Form unless otherwise defined herein.
1. TENANT IMPROVEMENT ALLOWANCE.
(a) Lessee shall be entitled to a tenant improvement allowance (the “Tenant Improvement Allowance”) in an amount up to Three Hundred Fifty Thousand Dollars ($350,000.00), which Tenant Improvement Allowance shall be used for the costs relating to the construction of Lessee’s improvements which are permanently affixed to the Premises (the “Tenant Improvements”). A preliminary description of the improvements intended to be constructed at the Premises is attached hereto as Schedule I. In no event shall Lessor be obligated to make disbursements pursuant to this Exhibit in a total amount which exceeds the Tenant Improvement Allowance.
(b) Disbursement of the Tenant Improvement Allowance.
(i) Tenant Improvement Allowance Items. The Tenant Improvement Allowance shall be disbursed by Lessor only for the following items and costs (collectively the “Tenant Improvement Allowance Items”): plan check, permit and license fees relating to construction of the Tenant Improvements, and the cost of design and construction of the Tenant Improvements.
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(ii) Disbursement of Tenant Improvement Allowance. During the construction of the Tenant Improvements, Lessor shall make monthly disbursements of the Tenant Improvement Allowance for Tenant Improvement Allowance Items for the benefit of Lessee and shall authorize the release of monies for the benefit of Lessee as follows.
(1) Monthly Disbursements. On or before the occurrence of a uniform date designated by Lessor (the “Submittal Date”) for each calendar month during the construction of the Tenant Improvements, Lessee shall deliver to Lessor: (A) a request for payment of the “Contractor” (as hereinafter defined) approved by Lessee, in substantially the form of AIA Document G702, showing the schedule, by trade, of percentage of completion of the Tenant Improvements in the Premises, detailing the portion of the work completed and the portion not completed, and demonstrating that the relationship between the cost of the work completed and the costs of the work to be completed complies with the terms of the “Construction Budget” (as hereinafter defined); (B) invoices from all of “Tenant’s Agents” (as hereinafter defined) for labor rendered and materials delivered to the Premises evidencing costs for Tenant Improvement Allowance Items at least in the amount requested (together with amounts previously disbursed by Lessor from the Tenant Improvement Allowance); (C) executed mechanic’s lien releases from all of Tenant’s Agents which shall comply with the appropriate provisions, as reasonably determined by Lessor, of California Civil Code Section 8132, together with executed unconditional mechanic’s lien releases from all of Tenant’s Agents with respect to prior requests for payment theretofore paid by Lessor (to the extent not previously delivered to Lessor by Lessee) which shall comply with the appropriate provisions, as reasonably determined by Lessor, of California Civil Code Section 8134; and (D) all other information reasonably requested by Lessor, including any certification requested by Lessor’s construction lender. Lessee’s request for payment shall be deemed Lessee’s acceptance and approval of the work furnished and/or the materials supplied as set forth in Lessee’s payment request. On or before the date occurring twenty (20) days after the Submittal date, and assuming Lessor receives all of the information described in items (A) through (D) above, Lessor shall deliver a check to Lessee in payment of the lesser of: (1) so requested by Lessee, as set forth in clause (A) above, and (2) the balance of any remaining available portion of the Tenant Improvement Allowance, provided that Lessor does not dispute any request for payment based on non-compliance of any work with the “Approved Working Drawings” (as hereinafter defined), or due to any substandard work, or for any other reason. Lessor’s payment of such amounts shall not be deemed Lessor’s approval or acceptance of the work furnished or materials supplied as set forth in Lessee’s payment request.
(2) Completion. Upon completion of construction of the Premises, provided that Lessee shall deliver to Lessor (A) properly executed mechanics lien releases in compliance with both California Civil Code Section 8138, and invoices from all of “Tenant’s Agents” (as hereinafter defined) for labor rendered and materials delivered to the Premises evidencing costs for Tenant Improvement Allowance Items at least in the amount requested (together with amounts previously disbursed by Lessor from the Tenant Improvement Allowance), (B) copies of signed-off permits evidencing governmental approval of the completion of the Tenant Improvements, (C) a copy of a recorded Notice of Completion, recorded in the office of the Recorder of the County where the Premises is located in accordance with Section 8182 of the Civil Code of the State of California or any successor statute, provided that if Lessee fails to record a Notice of Completion, Lessor may execute and file the same on behalf of Lessee as Lessee’s agent for such purpose, at Lessee’s sole cost and expense, (D) as built drawings for the Premises with the completed Tenant Improvements and a copy of all warranties, guaranties, and operating manuals and information relating to the improvements, equipment, and systems in the Premises, and (E) a certification of the Contractor for the benefit of Lessor certifying that the construction of the Tenant Improvements has been substantially completed.
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(3) Other Terms. Lessor shall only be obligated to make disbursements from the Tenant Improvement Allowance to the extent costs are incurred by Lessee for Tenant Improvement Allowance Items. Lessee shall not be entitled to the use of (as a credit against Rent or otherwise) any portion of the Tenant Improvement Allowance which is not used in payment of Tenant Improvement Allowance Items.
(4) Time of Performance. Lessee shall have until nine (9) months following the date of the Lease to request disbursement of the Allowance (the “Deadline Date”). If Lessee has not requested disbursement of the Allowance on or before the Deadline Date, Lessor shall have no further obligation to disburse the Allowance.
(a) Selection of Architect/Construction Drawings. Lessee shall retain an architect/space planner (the “Architect”) approved by Lessor, which approval shall not be unreasonably withheld, to prepare the Construction Drawings. Lessee shall retain engineering consultants (the “Engineers”) approved by Lessor, which approval shall not be unreasonably withheld, to prepare all plans and engineering working drawings relating to building systems in connection with the Tenant Improvements. The plans and drawings to be prepared by Architect and the Engineers hereunder shall be known collectively as the “Construction Drawings”. Lessor’s review of the Construction Drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply Lessor’s review of the same, or obligate Lessor to review the same, for quality, design, compliance with Applicable Law or other like matters.
(b) Working Drawings. Lessee shall promptly cause the Architect and the Engineers to complete the architectural and engineering drawings for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings in a form which is complete to allow subcontractors to bid on the work and to obtain all applicable permits (collectively, the “Final Working Drawings”) and shall submit the same to Lessor’s approval. Lessee shall supply Lessor with four (4) copies signed by Lessee of such Final Working Drawings. Lessor shall advise Lessee within twenty (20) days after Lessor’s receipt of the Final Working Drawings for the Premises if the same is unsatisfactory or incomplete in any respect. If Lessee is so advised, Lessee shall immediately revise the Final Working Drawings in accordance with such review and any disapproval of Lessor in connection therewith.
(c) Approved Working Drawings. The Final Working Drawings shall be approved by Lessor (the “Approved Working Drawings”) prior to the commencement of construction of the Premises by Lessee. After approval by Lessor of the Final Working Drawings, Lessee may submit the same to the City where the Premises is located for all applicable building permits. Lessee hereby agrees that neither Lessor nor Lessor’s consultant shall be responsible for obtaining any building permit or certificate of occupancy for the Premises and that obtaining the same shall be Lessee’s responsibility; provided, however, that Lessor shall cooperate with Lessee in executing permit applications and performing other ministerial acts reasonably necessary to enable Lessee to obtain any such permit or certificate of occupancy. No changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Lessor, which consent shall not be unreasonably withheld.
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3. CONSTRUCTION OF THE TENANT IMPROVEMENTS.
(a) Lessee’s Selection of Contractors.
(i) The Contractor. Lessee shall retain a licensed general contractor (the “Contractor”), as contractor for the construction of the Tenant Improvements, by a process of competitive bidding among not less than three (3) qualified, licensed general contractors reasonably approved by Lessor and reasonably experienced in the performance of work comparable to the work of the Tenant Improvements in buildings comparable to the Building, or otherwise reasonably approved by Lessor.
(ii) Tenant’s Agents. All subcontractors, laborers, material, men, and suppliers used by Lessee (such subcontractors, laborers, materialmen, and suppliers, and the Contractor to be known collectively as “Tenant’s Agents”) must be approved in writing by Lessor, which approval shall not be unreasonably withheld or delayed; provided that, in any event, Lessee must contract with Lessor’s base building subcontractors for any mechanical, electrical, plumbing, structural, life safety, HVAC or other integrated utility system work in the Premises. At Lessor’s option, Tenant’s Agents shall all be union labor in compliance with the applicable master labor agreements.
(b) Construction of Tenant Improvements by Tenant’s Agents.
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(ii) Tenant’s Agents.
(1) Lessor’s General Conditions for Tenant’s Agents and Tenant Improvement Work. Lessee’s and Tenant’s Agent’s construction of the Tenant Improvements shall construct the Tenant Improvements in strict accordance with the Approved Working Drawings.
(2) Indemnity. Lessee’s indemnity of Lessor as set forth in the Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Lessee or Tenant’s Agents, or anyone directly or indirectly employed by any of them, or in connection with Lessee’s non-payment of any amount arising out of the Tenant Improvements and/or Lessee’s disapproval of all or any portion of any request for payment. Such indemnity by Lessee, as set forth in the Lease, shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to Lessor’s performance of any ministerial acts reasonably necessary (i) to permit Lessee to complete the Tenant Improvements, and (ii) to enable Lessee to obtain any building permit or certificate of occupancy for the Premises.
(3) Requirements of Tenant’s Agents. Each of Tenant’s Agents shall guarantee to Lessee and for the benefit of Lessor that the portion of the Tenant Improvements for which it is responsible shall be free from any defects in workmanship and materials for a period of not less than one (1) year from the date of completion thereof. Each of Tenant’s Agents shall be responsible for the replacement or repair, without additional charge, of all work done or furnished in accordance with its contract that shall become defective within one (1) year after the later to occur of (i) completion of the work performed by such contractor or subcontractors and (ii) the Commencement Date. The correction of such work shall include, without additional charge, all additional expenses and damages incurred in connection with such removal or replacement of all or any part of the Tenant Improvements, and/or the Building and/or common areas that may be damaged or disturbed thereby. All such warranties or guarantees as to materials or workmanship of or with respect to the Tenant Improvements shall be contained in the Contract or subcontract and shall be written such that such guarantees or warranties shall inure to the benefit of both Lessor and Lessee, as their respective interests may appear, and can be directly enforced by either. Lessee covenants to give to Lessor any assignment or other assurances which may be necessary to effect such right of direct enforcement.
(4) Insurance Requirements.
(A) General Coverages. All of Tenant’s Agents shall carry worker’s compensation insurance covering all of their respective employees, and shall also carry public liability insurance, including property damage, all with limits, in form and with companies as are required to be carried by Lessee as set forth in the Lease, and the policies therefor shall insure Lessor and Lessee, as their interests may appear, as well as the Contractor and subcontractors.
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(B) Special Coverages. Lessee shall carry “Builder’s All Risk” insurance in an amount approved by Lessor covering the construction of the Tenant Improvements and such other insurance as Lessor may reasonably require, it being understood and agreed that the Tenant Improvements shall be insured by Lessor pursuant to the Lease immediately upon completion thereof. Such insurance shall be in amounts and shall include such extended coverage endorsements as may be reasonably required by Lessor.
(C) General Terms. Certificates for all insurance carried pursuant to this Section 4(b)(ii)(4) shall be delivered to Lessor before the commencement of construction of the Tenant Improvements and before the Contractor’s equipment is moved onto the site. All such policies of insurance must contain a provision that the company writing said policy will give Lessor at least thirty (30) days prior written notice of any cancellation or lapse of the effective date or any reduction in the amounts of such insurance.
(iv) Inspection by Lessor. Lessor shall have the right to inspect the Tenant Improvements at all times, provided however, that Lessor’s failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of Lessor’s rights hereunder nor shall Lessor’s inspection of the Tenant Improvements constitute Lessor’s approval of the same. Should Lessor disapprove any portion of the Tenant Improvements, Lessor shall notify Lessee in writing of such disapproval and shall specify the items disapproved. Any defects or deviations in, and/or disapproved by Lessor of, the Tenant Improvements shall be rectified by Lessee at no expense to Lessor, provided however, that in the event Lessor determines that a defect or deviation exists or disapproves of any matter in connection with any portion of the Tenant Improvements and such defect, deviation or matter might adversely affect the mechanical, electrical, plumbing, heating, ventilating and air conditioning or life-safety systems of the Building, the structure or exterior appearance of the Building Lessor may, take such action as Lessor deems necessary, at Lessee’s expense and without incurring any liability on Lessor’s part, to correct any such defect, deviation and/or matter, including, without limitation, causing the cessation of performance of the construction of the Tenant Improvements until such time as the defect, deviation and/or matter is corrected to Lessor’s satisfaction.
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4. SUBSTANTIAL COMPLETION. Definition of Substantial Completion of the Tenant Improvements. For purposes of this Lease, the “Substantial Completion of the Tenant Improvements” shall mean completion of construction of the Tenant Improvements in the Premises pursuant to the Approved Working Drawings with the exception of any punch list items, any furniture, fixtures, work stations, built-in furniture or equipment (even if the same requires installation or electrification by Tenant’s Agents), and any tenant improvement finish items and materials which are selected by Lessee but which are not available within a reasonable time (given the anticipated date of the Lease Commencement Date), and Lessee’s receipt of any governmentally-required permits and/or approvals to allow occupancy of the Premises (provided that Lessee shall use reasonable efforts and diligence in good faith to obtain such permits and/or approvals as soon as reasonably possible).
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Schedule I
Description of Improvements
Power upgrades and other improvements are required to operate a cannabis processing facility in the Premises.
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Schedule II
Construction Budget
Power Upgrades | $150,000.00 |
Other Improvements | $200,000.00 |
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