NET LEASE AGREEMENT
THIS LEASE, made and entered effective as of this 18th day
of April, 2000, by and between AEI Income & Growth Fund 23 LLC
("Fund 23"), whose corporate general partner is AEI Fund
Management XXI, Inc., whose address is 1300 Minnesota World Trade
Center, 00 Xxxx Xxxxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000
("Lessor")(fax #000 000 0000), and Kona Restaurant Group, Inc., a
Texas corporation, whose address is 0000 Xxxxx Xxxx, 000 Xxxxx,
Xxxxxx, Xxxxx 00000 ("Lessee") (fax # 000 000 0000);
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at Victoria, Texas and legally
described in Exhibit "A", which is attached hereto and
incorporated herein by reference; and
WHEREAS, Lessee as owner contracted for the construction of
the building and improvements (together the "Building") on the
real property described in Exhibit "A", which Building is
described in the plans and specifications heretofore submitted to
Lessor; and
WHEREAS, Lessee desires to lease said real property and
Building (said real property and Building hereinafter referred to
as the "Leased Premises"), from Lessor upon the terms and
conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described to be
paid, kept, and performed by Lessee, Lessor does hereby grant,
demise, lease, and let unto Lessee, and Lessee does hereby take
and hire from Lessor and does hereby covenant, promise, and agree
as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and takes
from Lessor, the Leased Premises subject to the conditions of
this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Seventeen (17)
consecutive "Lease Years", as hereinafter defined, commencing on
the effective date first listed above, ("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a period
of twelve (12) consecutive calendar months from the Occupancy
Date. If the Occupancy Date shall be other than the first day of
a calendar month, the first "Lease Year" shall be the period from
the Occupancy Date to the end of the calendar month of the
Occupancy Date, plus the following twelve (12) calendar months.
Each Lease Year after the first Lease Year shall be a successive
period of twelve (12) calendar months.
(C) The parties agree that once the Occupancy Date has been
established, upon the request of either party, a short form or
memorandum of this Lease will be executed for recording purposes.
That short form or memorandum of this Lease will set forth the
actual occupancy and termination dates of the Term and optional
Renewal Terms, as defined in Article 28 hereof, and the existence
of any option to extend, and that said option shall terminate
when the Lessee shall lose right to possession or this Lease is
terminated, whichever occurs first.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that the Building has been
constructed on the Leased Premises, and all other improvements to
the land, including the parking lot, approaches, and service
areas, have been constructed in all material respects by Lessee
in accordance with the plot, plans, and specifications heretofore
submitted to Lessor.
(B) Lessee warrants that as of the date hereof, the Building
and all other improvements to the land do comply with the laws,
ordinances, rules, and regulations of all state and local
governments.
(C) Lessee agrees to pay, if not already paid in full, for
all architectural fees and actual construction costs, in the
past, present or future, which shall include, but not be limited
to, plans and specifications, general construction, carpentry,
electrical, plumbing, heating, ventilating, air conditioning,
decorating, equipment installation, outside lighting, curbing,
landscaping, blacktopping, electrical sign hookup, conduit and
wiring from building, fencing, and parking curbs, builder's risk
insurance (naming Lessor, Lessee, and contractor as co-insured),
and all construction bonds for improvements made by or at the
direction of Lessee, to the extent incurred or authorized by
Lessee.
(D) Opening for business in the Leased Premises by Lessee
shall constitute an acceptance of the Leased Premises and an
acknowledgment by Lessee that the premises are in the condition
described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first
Lease Year: Lessee shall pay to Lessor an annual Base
Rent of $42,997.50, which amount shall be payable in
advance on the first day of each month in equal monthly
installments of $3,583.13 to Fund 23. If the first day
of the Lease Term is not the first day of a calendar
month, then the monthly Rent payable for that partial
month shall be a prorated portion of the equal monthly
installment of Base Rent.
(B) Annual Rent Payable beginning with
the Third Lease Year and the beginning of each fourth
Lease Year thereafter shall increase by an amount equal
to five Percent (5%) of the Base Rent payable for the
immediately prior Lease Year. Such increased Base Rent
shall be payable in advance of the first day of each
month in equal monthly installments.
(C) Overdue Payments.
Lessee shall pay interest on all overdue payments of Rent or
other monetary amounts due hereunder at the rate of fifteen
percent (15%) per annum or the highest rate allowed by law,
whichever is less, accruing beginning five days after written
notice to Lessee that Rent or other monetary amounts properly due
and payable were not paid.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal Terms, if
any, of this Lease, at its own cost and expense, procure and
maintain insurance which covers the Leased Premises and
improvements against fire, wind, and storm damage (including
flood insurance if the Leased Premises is in a federally
designated flood prone area) and such other risks (including
earthquake insurance, if the Leased Premises is located in a
federally designated earthquake zone or in an ISO high risk
earthquake zone) as may be included in the broadest form of
extended coverage insurance as may, from time to time, be
available in amounts sufficient to prevent Lessor or Lessee from
becoming a co-insurer within the terms of the applicable
policies. In any event, the insurance shall not be less than one
hundred percent (100%) of the then insurable value.
Additionally, replacement cost endorsements, inflation guard
endorsements, vandalism endorsement, malicious mischief
endorsement, waiver of subrogation endorsement, waiver of co-
insurance or agreed amount endorsement (if available), and
Building Ordinance Compliance endorsement and Rent loss
endorsements (for a period of one year) must be obtained.
(B) Lessee agrees to place and maintain throughout the Term
or Renewal Terms, if any, of this Lease, at Lessee's own expense,
public liability insurance with respect to Lessee's use and
occupancy of said premises, including "Dram Shop" or liquor
liability insurance, if the same shall be or become available in
the State of Texas and liquor is sold on the Premises, with
initial limits of at least $3,000,000 per occurrence/$5,000,000
general aggregate, or such additional amounts as Lessor shall
reasonably require from time to time, upon Lessor's good faith
determination that the present insurance coverage is inadequate,
such amounts to be consistent with requirements of other Lessor's
in similar circumstances.
(C) Lessee agrees to notify Lessor in writing if Lessee is
unable to procure all or some part of the aforesaid insurance.
In the event Lessee fails to provide all insurance required under
this Lease, Lessor shall have the right, but not the obligation,
to procure such insurance on Lessee's behalf. Lessee will then,
within five (5) days from receiving written notice, pay Lessor
the amount of the premiums due or paid, together with interest
thereon at the lesser of 12% per annum or the highest rate
allowable by law, which amount shall be considered Rent payable
by Lessee in addition to the Rent defined at Article 4 hereof.
(D) All policies of insurance provided for or contemplated by
this Article can be under Lessee's blanket insurance coverage and
shall name Lessor, Lessor's corporate managing member and Xxxxxx
X. Xxxxxxx, as the individual managing member of Lessor, and
Lessee as additional named insured, as their respective interests
may appear, and shall provide that the policies cannot be
canceled, terminated, changed, or modified without thirty (30)
days written notice to the parties. In addition, all of such
policies shall contain endorsements by the respective insurance
companies waiving all rights of subrogation, if any, against
Lessor. All insurance companies providing coverages must be
rated "A-" or better by Best's Key Rating Guide (the most current
edition), or similar quality under a successor guide if Best's
Key Rating shall cease to be published. Lessee shall provide
Lessor with legible copies of any and all policies on or before
the Occupancy Date. No less than fifteen (15) business days prior
to expiration of such policies, Lessee shall provide Lessor with
legible copies of any and all renewal Certificates of Insurance,
if the terms of the Policies have not changed, and copies of such
policies if the same have changed. Lessee agrees that it will
not settle any property insurance claims affecting the Leased
Premises in excess of $100,000 without Lessor's prior written
consent, such consent not to be unreasonably withheld or delayed.
Lessor shall consent, where Lessor's consent is required
hereunder, to any settlement of an insurance claim wherein Lessee
shall confirm in writing with evidence reasonably satisfactory to
Lessor that Lessee has sufficient funds available to complete the
rebuilding of the Premises.
(E) Lessee shall defend, indemnify, and hold Lessor harmless
against any and all claims, damages, and lawsuits arising after
the Occupancy Date of this Lease and any orders, decrees or
judgments which may be entered therein, brought for damages or
alleged damages resulting from any injury to person or property
or from loss of life sustained in or about the Leased Premises,
unless such damage or injury results from the intentional
misconduct or the gross negligence of Lessor and Lessee agrees to
save Lessor harmless from, and indemnify Lessor against, any and
all injury, loss, or damage, of whatever nature, to any person or
property caused by, or resulting from any act, omission, or
negligence of Lessee or any employee or agent of Lessee. In
addition, Lessee hereby releases Lessor from any and all
liability for any loss or damage caused by fire or any of the
extended coverage casualties, unless such fire or other casualty
shall be brought about by the intentional misconduct or gross
negligence of Lessor.
(F) Lessor hereby waives any and all rights that it may have
to recover from Lessee damages for any loss occurring to the
Leased Premises by reason of any act or omission of Lessee;
provided, however, that this waiver is limited to those losses
for which Lessor is compensated by insurers, if the insurance
required by this Lease is maintained. Lessee hereby waives any
and all right that it may have to recover from Lessor damages for
any loss occurring to the Leased Premises by reason of any act or
omission of Lessor; provided, however, that this waiver is
limited to those losses for which Lessee is, or should be if the
insurance required herein is maintained, compensated by insurers.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay the charges for
all public utility services rendered or furnished to the Leased
Premises, including heat, water, gas, electricity, sewer, sewage
treatment facilities and the like, all personal property taxes,
real estate taxes, special assessments, and municipal or
government charges, general, ordinary and extraordinary, of every
kind and nature whatsoever, which may be levied, imposed, or
assessed against the Leased Premises, or upon any improvements
thereon, at any time after the Occupancy Date of this Lease and
prior to the expiration of the term hereof, or any Renewal Term,
if exercised.
(B) Lessee shall pay all real estate taxes, assessments for
public improvements or benefits, and other governmental
impositions, duties, and charges of every kind and nature
whatsoever which shall or may, during the term of this Lease, be
charged, laid, levied, assessed, or imposed upon, or become a
lien or liens upon the Leased Premises or any part thereof or
upon the Rents payable hereunder (expressly excluding general
income taxes, inheritance taxes and estate taxes imposed upon
Lessor). Such payments shall be considered as Rent paid by Lessee
in addition to the Rent defined at Article 4 hereof. If due to a
change in the method of taxation, a franchise tax or Rent tax.
(expressly excluding general income taxes, inheritance taxes and
estate taxes imposed upon Lessor) shall be levied against Lessor
in substitution for or in lieu of any tax which would otherwise
constitute a real estate tax, such tax shall be deemed a real
estate tax for the purposes herein and shall be paid by Lessee
(C) All real estate taxes, assessments for public
improvements or benefits, water rates and charges, sewer rents,
and other governmental impositions, duties, and charges which
shall become payable for the first and last tax years of the term
hereof shall be apportioned pro rata between Lessor and Lessee in
accordance with the respective number of months during which each
party shall be in possession of the Leased Premises in said
respective tax years. For the purposes of this provision, all
personal property taxes, real estate taxes and special
assessments shall be deemed to have been assessed in the year
that each payment or any installment thereof is due.
(D) Lessee shall have the right to contest or review by legal
proceedings or in such other manner as may be legal (which, if
instituted, shall be conducted solely at Lessee's own expense)
any tax, assessment for public improvements or benefits, or other
governmental imposition aforementioned, upon condition that,
before instituting such proceeding Lessee shall either (i) pay
(under protest) such tax or assessments for public improvements
or benefits, or other governmental imposition, duties and charges
aforementioned, or (ii) post with Lessor alternative security
satisfactory to Lessor, not to exceed 150% of the amount
contested and the potential penalties and interest thereon. All
such proceedings shall be begun as soon as reasonably possible
after the imposition or assessment of any contested items and
shall be prosecuted to final adjudication with reasonable
dispatch. In the event of any reduction, cancellation, or
discharge, Lessee shall pay the amount that shall be finally
levied or assessed against the Leased Premises or adjudicated to
be due and payable, and, if there shall be any refund payable by
the governmental authority with respect thereto, if Lessee has
paid the expenses of Lessor, if any, in such proceeding, Lessee
shall be entitled to receive and retain the same, subject,
however, to apportionment as provided during the first and last
years of the term of this Lease.
(E) Lessor, within sixty (60) days after notice to Lessee if
Lessee fails to commence such proceedings, may, but shall not be
obligated to, contest or review by legal proceedings, or in such
other manner as may be legal, and at Lessor's own expense, any
tax, assessments for public improvements and benefits, or other
governmental imposition aforementioned, which shall not be
contested or reviewed, as aforesaid, by Lessee, and unless Lessee
shall promptly join with Lessor in such contest or review, Lessor
shall be entitled to receive and retain any refund payable by the
governmental authority with respect thereto.
(F) Lessor shall not be required to join in any proceeding
referred to in this Article, unless in Lessee's reasonable
opinion, the provisions of any law, rule, or regulation at the
time in effect shall require that such a proceeding be brought by
and/or in the name of Lessor, in which event Lessor shall upon
written request, join in such proceedings or permit the same to
be brought in its name, all at no cost or expense to Lessor.
ARTICLE 7. PROHIBITION ON ASSIGNMENTS AND SUBLETTING; TAKE-BACK
RIGHTS
(A) Except as otherwise expressly provided in this Article,
Lessee shall not, without obtaining the prior written consent of
Lessor, in each instance:
1. assign or otherwise transfer
this Lease, or any part of Lessee's right, title or
interest therein (except by devise or bequest upon
the death of a shareholder, but in such event, such
recipient shall be bound by the provisions of this
Article);
2. sublet all or any part of the
Leased Premises or allow all or any part of the
Leased Premises to be used or occupied by any other
Persons (herein defined as a Party other than
Lessee, be it a corporation, a partnership, an
individual or other entity); or
3. mortgage, pledge or otherwise
encumber this Lease, or the Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control
of any class of capital stock of any corporate
Lessee or sublessee, or the transfer voting control
of the total interest in any other person which is a
Lessee or sublessee, however accomplished, whether
in a single transaction or in a series of related or
unrelated transactions, shall be deemed an
assignment of this Lease, or of such sublease, as
the case may be (provided, however, transfers by
bequest or devise due to the death of a shareholder
shall not trigger the application of these
provisions, provided Lessor is given notice of such
transfer immediately after the disposition of the
decedent's estate);
2. an agreement by any other
Person, directly or indirectly, to assume Lessee's
obligations under this Lease shall be deemed an
assignment;
3. any Person to whom Lessee's
interest under this Lease passes by operation of
law, or otherwise, shall be bound by the provisions
of this Article;
4. each modification, amendment or
extension or any sublease to which Lessor has
previously consented shall be deemed a new sublease;
and
5. Lessee shall present the signed
consent to such assignment and/or subletting from
any guarantors of this Lease, such consent to be in
form and substance satisfactory to Lessor.
Lessee agrees to furnish to Lessor upon demand at any time
such information and assurances as Lessor may reasonably request
that neither Lessee, nor any previously permitted sublessee, has
violated the provisions of this Article.
(C) If Lessee agrees to assign this Lease or to sublet all or
any portion of the Leased Premises, Lessee shall, prior to the
effective date thereof (the "Effective Date"), deliver to Lessor
copies of any such proposed agreement and of all ancillary
agreements with the proposed assignee or sublessee, as
applicable. If Lessor in its sole discretion (except as
otherwise specifically limited herein in paragraph (E) below)
shall not have consented to a proposed sublease or assignment,
and Lessee shall attempt to effect such transfer without Lessor's
consent or in spite of Lessor's decision to not consent to such
transfer, Lessor shall then have all of the following rights, any
of which Lessor may exercise by written notice to Lessee given
within thirty (30) days after Lessor receives the aforementioned
documents:
1. with respect to a proposed
assignment of this Lease, the right to terminate
this Lease on the Effective Date as if it were the
Expiration Date of this Lease;
2. with respect to a proposed
subletting of the entire Leased Premises, the right
to terminate this Lease on the Effective Date as if
it were the Expiration Date; or
3. with respect to a proposed
subletting of less than the entire Leased Premises,
the right to terminate this Lease as to the portion
of the Leased Premises affected by such subletting
on the Effective Date, as if it were the Expiration
Date, in which case Lessee shall promptly execute
and deliver to Lessor an appropriate modification of
this Lease in form satisfactory to Lessor in all
respects.
4. with respect to a proposed
subletting or proposed assignment of this Lease,
impose such conditions upon Lessor's consent as
Lessor shall determine in its sole discretion.
If Lessor exercises any of its options under Article
7(C) above, (and if Lessor shall impose conditions upon
its consent and Lessee shall fail to meet any conditions
Lessor may impose upon its consent), Lessor may then
lease the Leased Premises or any portion thereof to
Lessee's proposed assignee or sublessee, as the case may
be, without liability whatsoever to Lessee.
Notwithstanding the provisions of this Article 7
above, or any other provisions of this Lease to the
contrary, Lessee shall have the right to assign this
Lease, or sublet the Leased Premises or any portion
thereof, without the consent of, but with prior written
notice to Lessor, to any corporation (a) with which
Lessee may merge or consolidate (provided Lessee is the
surviving entity and such transaction does not involve
directly or indirectly, along with all other transfers,
issuance's, or sales, a transfer, issuance or sale of a
majority of the voting stock of Lessee), or (b) which is
on the date hereof a parent or which is a subsidiary of
Lessee; provided, that said assignee assumes, in full,
the obligations of Lessee under this Lease and Lessee
and Guarantors remains primarily liable under this
Lease; and further, if the County or the City where the
Leased Premises are situate become a `dry' county or
city, Lessee may, without the consent of, but with
notice to Lessor, sublet the portion of the Leased
Premises relating to the bar area and the sale of
alcohol to any Texas non-profit corporation or
association of persons wishing to organize a private
club under appropriate Texas statutes and such
corporation or association may jointly occupy the Leased
Premises under a sublease from Lessee and Lessee may
enter into a management agreement with such corporation
or association without further approval from Lessor. In
addition, notwithstanding the provisions of this Article
7 above or any other provisions of this Lease to the
contrary, the following transfers or issuances of shares
of capital stock of Lessee shall not constitute an
assignment of this Lease or require the consent of
Lessor under this Article 7: (i) the issuance and sale
of shares of capital stock of Lessee in connection with
a public offering of such stock (provided such issuance
and sale does not involve the issuance, sale, or
transfer of a majority of the voting stock of Lessee);
(ii) the transfer of outstanding shares to a parent
which is a parent on the date hereof or a subsidiary of
Lessee, provided such entity is or becomes a guarantor
of this Lease; (iii) the acquisition by Creed X. Xxxx
III or Xxxxxx X. Xxxxxxxx of additional shares of
capital stock from each other, from other shareholders,
or as a result of new issuances of capital stock of
Lessee; or (iv) the transfer of shares of capital stock
by Creed X. Xxxx or Xxxxxx X. Xxxxxxxx to family trusts,
family partnerships, or similar vehicles set up for
either of their benefit or for the benefit of any family
member, or the transfer by them of shares of capital
stock to any corporation, partnership, limited liability
company, or other entity in which they individually, or
in the aggregate, own at least a majority of the
ownership interests, and provided such entities become
guarantors of this Lease under terms identical to those
terms under which Creed X. Xxxx III or Xxxxxx X.
Xxxxxxxx are guarantors, if applicable under then
existing guarantees.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Lessee covenants and agrees to keep and maintain in good
order, condition and repair the interior and exterior of the
Leased Premises during the term of the Lease, or any renewal
terms, and further agrees that Lessor shall be under no
obligation to make any repairs or perform any maintenance to the
Leased Premises. Lessee covenants and agrees that it shall be
responsible for all repairs, alterations, replacements, or
maintenance of, including but without limitation to or of: The
interior and exterior portions of all doors; door checks and
operators; windows; plate glass; plumbing; water and sewage
facilities; fixtures; electrical equipment; interior walls;
ceilings; signs; roof; structure; interior building appliances
and similar equipment; heating and air conditioning equipment;
and any equipment owned by Lessor and leased to Lessee hereunder,
as itemized on Exhibit B attached hereto and incorporated herein
by reference; and further agrees to replace any of said equipment
when necessary. Lessee further agrees to be responsible for, at
its own expense, snow removal, lawn maintenance, landscaping,
maintenance of the parking lot (including parking lines, seal
coating, and blacktop surfacing), and other similar items.
(B) If Lessee refuses or neglects to commence or complete
repairs promptly and adequately, Lessor may cause such repairs to
be made, but shall not be required to do so, and Lessee shall pay
the cost thereof to Lessor upon demand. It is understood that
Lessee shall pay all expenses and maintenance and repair during
the term of this Lease. If Lessee is not then in default
hereunder, Lessee shall have the right to make repairs and
improvements to the Leased Premises without the consent of Lessor
if such repairs and improvements do not exceed One Hundred
Thousand Dollars ($100,000.00), provided such repairs or
improvements do not affect the structural integrity of the Leased
Premises. Any repairs or improvements in excess of One Hundred
Thousand Dollars ($100,000.00) or affecting the structural
integrity of the Leased Premises may be done only with the prior
written consent of Lessor, such consent not to be unreasonably
withheld or delayed. All alterations and additions to the Leased
Premises shall be made in accordance with all applicable laws and
shall remain for the benefit of Lessor. In the event of making
such alterations as herein provided, Lessee further agrees to
indemnify and save harmless Lessor from all expense, liens,
claims or damages to either persons or property or the Leased
Premises which may arise out of or result from the undertaking or
making of said repairs, improvements, alterations or additions,
or Lessee's failure to make said repairs, improvements,
alterations or additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances, rules,
orders, regulations and requirements of all federal, state, city
and local governments, and with all rules, orders and
regulations of the applicable Board of Fire Underwriters which
affect the use of the improvements. Lessee will comply with all
easements, restrictions, and covenants of record against or
affecting the Leased Premises and any franchise agreements
required for operation of the Leased Premises in accordance with
Article 14 hereof.
ARTICLE l0. SIGNS
Lessee shall have the right to install and maintain a sign or
signs advertising Lessee's business, provided that the signs
conform to law, and further provided that the sign or signs
conform specifically to the written requirements of the
appropriate governmental authorities.
ARTICLE 11. SUBORDINATION
(A) Lessor reserves the right and privilege to subject and
subordinate this Lease at all times to the lien of any mortgage
or mortgages now or hereafter placed upon Lessor's interest in
the Leased Premises and on the land and buildings of which said
premises are a part, or upon any buildings hereafter placed upon
the land of which the Leased Premises are a part, provided such
mortgagee shall execute its standard form, commercially
reasonable subordination, attornment and non-disturbance
agreement, such form to be consistent with other such forms used
by commercial mortgagees in the industry. Lessor also reserves
the right and privilege to subject and subordinate this Lease at
all times to any and all advances to be made under such
mortgages, and all renewals, modifications, extensions,
consolidations, and replacements thereof, provided such mortgagee
shall execute its standard form, commercially reasonable
subordination, attornment and non-disturbance agreement, such
form to be consistent with other such forms used by commercial
mortgagees in the industry.
(B) Lessee covenants and agrees to execute and deliver, upon
demand, such further commercially reasonable instrument or
instruments subordinating this Lease on the foregoing basis to
the lien of any such mortgage or mortgages as shall be desired by
Lessor and any proposed mortgagee or proposed mortgagees,
provided such mortgagee shall execute its standard form,
commercially reasonable subordination, attornment and non-
disturbance agreement, such form to be consistent with other such
forms used by commercial mortgagees in the industry .
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by any
public authority under the power of eminent domain, or by private
purchase in lieu thereof, then this Lease shall automatically
terminate upon the date possession is surrendered, and Rent shall
be paid up to that day. If any part of the Leased Premises shall
be so taken as to render the remainder thereof materially
unusable in the opinion of a licensed third party contractor or
architect selected by Lessee and approved by Lessor, for the
purposes for which the Leased Premises were leased, then Lessee
shall have the right to terminate this Lease on thirty (30) days
notice to the Lessor given within ninety (90) days after the date
of such taking. In the event that this Lease shall terminate or
be terminated, the Rent shall be paid up to the day that
possession was surrendered.
(B) If any part of the Leased Premises shall be so taken such
that it does not render the remainder thereof materially unusable
for the purposes for which the Leased Premises were leased, in
the opinion of a licensed third party contractor or architect
selected by Lessee and approved by Lessor, then Lessee shall,
with the use of all of the condemnation proceeds (to be made
available by Lessor, immediately if such proceeds are less than
$100,000, or if in excess of $100,000, under a commercially
reasonable construction draw procedure in payment of invoices for
work performed submitted by Lessee or its contractors) but
otherwise at Lessee's own cost and expense, restore the remaining
portion of the Leased Premises to the extent necessary to render
it reasonably suitable for the purposes for which it was leased.
Provided, however, Lessee may elect to replace the Leased
Premises with a different restaurant concept, subject to Lessor's
prior written approval, which approval shall not be unreasonably
withheld or delayed, and further that Lessee shall not be
required (unless Lessee so elects) to repair or restore the
Leased Premises if the Term or any Renewal Term shall expire
within two years of such partial taking. Lessee shall notify
Lessor of Lessee's election to not so restore or repair the
Leased Premises after such a partial taking within 60 days of
notice of such taking. If Lessee elects to not make such repair
or restoration, this Lease shall terminate upon Lessor's receipt
of Lessee's notice of termination. Otherwise, if Lessee so
elects or is required to repair or restore the Leased Premises,
Lessee shall make all repairs to the building in which the Leased
Premises is located to the extent necessary to constitute the
building a complete architectural unit. Provided, however, that
such work shall not exceed the scope of the work required to be
done by Lessee in originally constructing such building unless
Lessee shall demonstrate to Lessor's reasonable satisfaction the
availability of funds to complete such work. Provided, further,
the cost thereof to Lessor shall not exceed the proceeds of its
condemnation award, all to be done without any adjustments in
Rent to be paid by Lessee, except as follows: any condemnation
proceeds remaining after the completion of the repair or
restoration of the Leased Premises shall be paid to Lessor. This
lease shall be deemed amended to reflect the taking in the legal
description of the Leased Premises.
(C) All compensation awarded or paid upon such total or
partial taking of the Leased Premises shall belong to and be the
property of Lessor without any participation by Lessee, whether
such damages shall be awarded as compensation for diminution in
value to the leasehold or to the fee of the premises herein
leased. Nothing contained herein shall be construed to preclude
Lessee from prosecuting any claim directly against the condemning
authority in such proceedings for: Loss of business;
interruption of business; moving expenses; damage to or loss of
value or cost of removal of inventory, trade fixtures, furniture,
and other personal property belonging to Lessee; provided,
however, that no such claim shall diminish or otherwise adversely
affect Lessor's award or the award of any fee mortgagee.
ARTICLE l3. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and examine
the Leased Premises at any time during business hours, after
reasonable notice to Lessee, and Lessee agrees to allow Lessor
free access to the Leased Premises to show the premises. Upon
default by Lessee or at any time within one hundred eighty (180)
days of the expiration or termination of the Lease, Lessee agrees
to allow Lessor to then place "For Sale" or "For Rent" signs on
the Leased Premises.
ARTICLE l4. EXCLUSIVE USE
(A) After the Occupancy Date, Lessee expressly agrees and
warrants that the Leased Premises will be used exclusively as a
Xxxxxx Xxxxxx'x Country Italian Restaurant (or any derivative of
such name as Lessee may use) or, after obtaining Lessor's prior
written consent, such consent not to be unreasonably withheld or
delayed, other casual dining sit-down restaurant. Lessee
acknowledges and agrees that any other use without the prior
written consent of Lessor will constitute a default under and a
violation and breach of this Lease. Lessee agrees: To open for
business on the first day in respect of which Rent is payable; to
operate all of the Leased Premises during the Term or Renewal
Terms during regular and customary hours for businesses similar
to the permitted exclusive use stated herein, unless prevented
from doing so by causes beyond Lessee's control; and to conduct
its business in a prudent and reputable manner.
ARTICLE l5. DESTRUCTION OF PREMISES
If, during the term of this Lease, the Leased Premises are
totally or partially destroyed by fire or other elements, within
a reasonable time (but in no event longer than one hundred eighty
(180) days and subject to the provisions herein below), Lessee
shall repair and restore the improvements so damaged or destroyed
as nearly as may be practical to their condition immediately
prior to such casualty. All rents payable by Lessee shall be
abated during the period of repair and restoration to the extent
that Lessor shall be compensated by the proceeds of the rent loss
insurance required to be maintained by Lessee hereunder.
Provided Lessee is not in default hereunder (and retains
according to the terms hereof the right to rebuild), then with
the Lessor's prior written consent (if the repairs will exceed
the amounts set forth in Article 8(B)), which consent shall not
be unreasonably withheld or delayed, Lessee shall have the right
to promptly and in good xxxxx xxxxxx and adjust any claim under
such insurance policies with the insurance company or companies
on the amounts to be paid upon the loss. The insurance proceeds
shall be used to reimburse Lessee for the cost of rebuilding or
restoration of the Leased Premises. The Leased Premises shall be
so restored or rebuilt so as to be of at least equal value and
substantially the same character as prior to such damage or
destruction. Provided, however, Lessee may elect to replace the
Leased Premises with a different restaurant concept subject to
Lessor's prior written approval, which approval shall not be
unreasonably withheld or delayed. If the insurance proceeds are
less than One Hundred Thousand Dollars ($1000,000), they shall be
paid to Lessee for such repair and restoration. If the insurance
proceeds are greater than or equal to One Hundred Thousand
Dollars ($100,000), they shall be deposited by Lessee and Lessor
into a customary construction escrow at a nationally recognized
title insurance company, or at Lessee's option, with Lessor
("Escrowee") and shall be made available from time to time to
Lessee for such repair and restoration. Such proceeds shall be
disbursed in conformity with the terms and conditions of a
commercially reasonable construction loan agreement. Lessee
shall, in either instance, deliver to Lessor or Escrowee (as the
case may be) satisfactory evidence of the estimated cost of
completion together with such architect's certificates, waivers
of lien, contractor's sworn statements and other evidence of cost
and of payments as the Lessor or Escrowee may reasonably require
and approve. If the estimated cost of the work exceeds Twenty-
Five Percent (25%) of the original cost to Lessor to acquire its
interest in the Lease Premises from Lessee, all plans and
specifications for such rebuilding or restoration shall be
subject to the reasonable approval of Lessor.
Any insurance proceeds remaining with Escrowee after the
completion of the repair or restoration shall be paid to Lessor.
If the proceeds from the insurance are insufficient, after
review of the bids for completion of such improvements, or should
become insufficient during the course of construction, to pay for
the total cost of repair or restoration, Lessee shall, prior to
commencement of work, demonstrate to Escrowee and Lessor's
reasonable satisfaction, the availability of such funds necessary
to complete construction and Lessee shall deposit the same with
Escrowee for disbursement under the construction escrow
agreement. Provided, further, that should the Leased Premises be
damaged or destroyed to the extent of fifty (50%) percent of its
value or such that Lessee cannot carry on business as a casual
dining restaurant without (in Lessor's reasonable opinion) being
closed for more than sixty (60) days (which duration of closure
may be established by Lessee by the affidavit of an independent
third party contractor as to the estimated time of repair) during
the last two years of the remaining term of this Lease or any of
the option terms of this Lease, if any further options to renew
remain, Lessee may elect within 30 days of such damage, to then
exercise at least one (1) option to renew this Lease so that the
remaining term of the Lease is not less than five (5) years in
order to be entitled to such insurance proceeds for restoration
or rebuilding. Absent such election, this Lease shall terminate
upon Lessor's receipt of the insurance proceeds in the amount
estimated to restore or rebuild the Leased Premises.
ARTICLE l6. ACTS OF DEFAULT
(A) Each of the following shall be deemed a default by Lessee
and a breach of this Lease:
1. Failure to pay the Rent or any
monetary obligation herein reserved, or any part
thereof when the same shall be due and payable.
Interest and late charges for failure to pay Rent
when due shall accrue if Lessee shall fail to make
payment within five days after notice to Lessee that
Rent has not been paid. Lessee shall be granted
five days after written notice to cure such failure
to pay the Rent or any other monetary obligation
herein reserved.
2. Failure to do, observe, keep
and perform any of the other terms, covenants,
conditions, agreements and provisions in this Lease
to be done, observed, kept and performed by Lessee;
provided, however, that Lessee shall have Thirty
(30) days after written notice from Lessor within
which to cure such default, or such longer time as
may be reasonably necessary if such default cannot
reasonably be cured within Thirty (30) days, if
Lessee is diligently pursuing a course of conduct
that in Lessor's reasonable opinion is capable of
curing such default, but in any event such longer
time shall not exceed 90 days after written notice
from Lessor of the default hereunder.
3. The abandonment of the premises
by Lessee, the adjudication of Lessee as a bankrupt,
the making by Lessee of a general assignment for the
benefit of creditors, the taking by Lessee of the
benefit of any insolvency act or law, the
appointment of a permanent receiver or trustee in
bankruptcy for Lessee property, or the appointment
of a temporary receiver which is not vacated or set
aside within sixty (60) days from the date of such
appointment.
ARTICLE l7. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at any time
thereafter, Lessor may serve a written notice upon Lessee that
Lessor elects to terminate this Lease. This Lease shall then
terminate on the date so specified as if that date had been
originally fixed as the expiration date of the term herein
granted, provided, however, that Lessee shall have continuing
liability for future rents for the remainder of the original term
and any exercised renewal term as set forth in Article 19,
notwithstanding any earlier termination of the Lease hereunder,
preserving unto Lessor the benefit of its bargained-for rental
payments.
ARTICLE l8. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or otherwise, or
in the event of an uncured default hereunder by Lessee, or in the
event that the premises or any part thereof, shall be abandoned
by Lessee, then Lessor or its agents, servants or
representatives, may immediately or at any time thereafter, re-
enter and resume possession of the premises or any part thereof,
and remove all persons and property therefrom, either by summary
dispossess proceedings or by a suitable action or proceeding at
law, or by force or otherwise without being liable for any
damages therefor.
ARTICLE l9. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in this Lease
or should it take possession pursuant to legal proceedings or
pursuant to any notice provided for by law, it may either (i)
terminate this Lease or (ii) it may from time to time, without
terminating the contractual obligation of Lessee to pay Rent
under this Lease, make such alterations and repairs as may be
necessary to relet the Leased Premises or any part thereof for
such Term or Renewal Terms, at such Rent or Rents, and upon such
other terms and conditions as Lessor in its sole discretion may
deem advisable. Termination of Lessee's right to possession by
Court Order shall be sufficient evidence of the termination of
Lessee's possessory rights under this Lease, and the filing of
such an Order shall be notice of the termination of Lessee's
Option to Purchase as set forth in any Memorandum of Lease of
record.
(B) Upon each such reletting, without termination of the
contractual obligation of Lessee to pay Rent under this Lease,
all rents received by Lessor from such reletting shall be applied
as follows:
1. First, to the payment of any
indebtedness other than Rent due hereunder from
Lessee to Lessor;
2. Second, to the payment of any
costs and expenses of such reletting, including
brokerage fees and attorney's fees and of costs of
such alterations and repairs;
3. Third, to the payment of Rent
and other monetary obligations due and unpaid
hereunder;
4. Finally, the residue, if any,
shall be held by Lessor and applied in payment of
future Rent as the same may become due and payable
hereunder.
If such rents received from such reletting during any month are
less than that to be paid during that month by Lessee hereunder,
Lessee shall pay any such deficiency to Lessor. Such deficiency
shall be calculated and paid monthly. No such re-entry or taking
possession of such Leased Premises by Lessor shall be construed
as an election on its part to terminate Lessee's contractual
obligations under this Lease respecting the payment of rent and
obligations for the costs of repair and maintenance unless a
written notice of such intention be given to Lessee.
(C) Notwithstanding any such reletting without termination,
Lessor may at any time thereafter elect to terminate this Lease
for any breach.
(D) In addition to any other remedies Lessor may have with
this Article 19, Lessor may recover from Lessee all damages it
may incur by reason of any breach, including: The cost of
recovering and reletting the Leased Premises; reasonable
attorney's fees; and, the present value (discounted at a rate of
10% per annum) of the excess of the amount of Rent and charges
equivalent to Rent reserved in this Lease for the remainder of
the Term over the then reasonable rent value of the Leased
Premises (or the actual rents receivable by Lessor, if relet) for
the remainder of the Term, all of which amounts shall be
immediately due and payable from Lessee to Lessor in full. In
the event that the rent obtained from such alternative or
substitute tenant is more than the Rent which Lessee is obligated
to pay under this Lease, then such excess shall be paid to Lessor
provided that Lessor shall credit such excess against the
outstanding obligations of Lessee due pursuant hereto, if any.
(E) It is the object and purpose of this Article 19 that
Lessor shall be kept whole and shall suffer no damage by way of
non-payment of Rent or by way of diminution in Rent. Lessee
waives and will waive all rights to trial by jury in any summary
proceedings or in any action brought to recover Rent herein which
may hereafter be instituted by Lessor against Lessee in respect
to the Leased Premises. Lessee hereby waives any rights of re-
entry it may have or any rights of redemption or rights to redeem
this Lease upon a termination of this Lease.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and building
equipment used in connection with the operation of the Leased
Premises including, but not limited to, heating, electrical
wiring, lighting, ventilating, plumbing, air conditioning
systems, and the equipment owned by Lessor and leased to Lessee
hereunder as specifically set forth on Exhibit B attached hereto
and incorporated herein by reference shall be the property of
Lessor. All trade fixtures and all other fixtures and articles
of personal property owned by Lessee shall remain the property of
Lessee.
(B) Lessee shall furnish and pay for any and all equipment,
furniture, trade fixtures, and signs, except for such items, if
any, described in Article 20(A) above, as owned by Lessor.
(C) At the end of the term of this Lease, the property
described at Article 20(B) above, after written notice to Lessor
given at least ten (10) days prior thereto, may be removed from
the Leased Premises by Lessee regardless of whether or not such
property is attached to the Leased Premises so as to constitute a
"fixture" within the meaning of the law; however, all damages and
repairs to the Leased Premises which may be caused by the removal
of such property shall be paid for by Lessee.
ARTICLE 2l. LIENS
Lessee shall not do or cause anything to be done whereby the
Leased Premises may be encumbered by any mechanic's or other
liens. Whenever and as often as any mechanic's or other lien is
filed against said Leased Premises purporting to be for labor or
materials furnished or to be furnished to Lessee, Lessee shall
remove the lien of record by payment or by bonding with a surety
company authorized to do business in the state in which the
property is located, within twenty (20) days from the date of the
filing of said mechanic's or other lien and delivery of notice
thereof to Lessee of Lessee's obligation under this Lease.
Should Lessee fail to take the foregoing steps within said twenty
(20) day period, Lessor shall have the right, among other things,
to pay said lien without inquiring into the validity thereof, and
Lessee shall forthwith reimburse Lessor for the total expense
incurred by it in discharging said lien as additional Rent
hereunder.
ARTICLE 22. NO WAIVER BY LESSOR EXCEPT IN WRITING
No agreement to accept a surrender of the Leased Premises or
termination of this Lease shall be valid unless in writing signed
by Lessor. The delivery of keys to any employee of Lessor or
Lessor's agents shall not operate as a termination of the Lease
or a surrender of the premises. The failure of Lessor to seek
redress for violation of any rule or regulation, shall not
prevent a subsequent act, which would have originally constituted
a violation, from having all the force and effect of an original
violation. Neither payment by Lessee or receipt by Lessor of a
lesser amount than the Rent herein stipulated shall be deemed to
be other than on account of the earliest stipulated Rent. Nor
shall any endorsement or statement on any check nor any letter
accompanying any check or payment as Rent be deemed an accord and
satisfaction. Lessor may accept such check or payment without
prejudice to Lessor's right to recover the balance of such Rent
or pursue any other remedy provided in this Lease. This Lease
contains the entire agreement between the parties, and any
executory agreement hereafter made shall be ineffective to change
it, modify it or discharge it, in whole or in part, unless such
executory agreement is in writing and signed by the party against
whom enforcement of the change, modification or discharge is
sought.
ARTICLE 23. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set forth
in Article 4 and all other sums herein reserved as Rent and upon
the due performance of all the terms, covenants, conditions and
agreements herein contained on Lessee's part to be kept and
performed, shall have, hold and enjoy the Leased Premises free
from molestation, eviction, or disturbance by Lessor, or by any
other person or persons lawfully claiming the same, and that
Lessor has good right to make this Lease for the full term
granted, including renewal periods.
ARTICLE 24. BREACH - PAYMENT OF COSTS AND ATTORNEYS' FEES
Each party agrees to pay and discharge all reasonable costs,
and actual attorneys' fees, including but not limited to
attorney's fees incurred at the trial level and in any appellate
or bankruptcy proceeding, and expenses that shall be incurred by
the prevailing party in enforcing the covenants, conditions and
terms of this Lease or defending against an alleged breach,
including the costs of reletting. Such costs, attorneys fees,
and expenses if incurred by Lessor shall be considered as Rent as
due and owing in addition to any Rent defined in Article 4
hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not less
than ten (10) days prior request by the other party, execute,
acknowledge and deliver to the requesting party a statement in
writing, executed by an executive officer of such party,
certifying that: (a) this Lease is unmodified (or if modified
then disclosure of such modification shall be made); (b) this
Lease is in full force and effect; (c) the date to which the Rent
and other charges have been paid; and (d) to the knowledge of the
signer of such certificate that the other party is not in default
in the performance of any covenant, agreement or condition
contained in this Lease, or if a default does exist, specifying
each such default of which the signer may have knowledge. It is
intended that any such statement delivered pursuant to this
Article may be relied upon by any prospective purchaser or
mortgagee of the Leased Premises or any assignee of such
mortgagee or a purchaser of the leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the term of this Lease, Lessee will, within one
hundred twenty (120) days after the end of Lessee's fiscal
year, furnish Lessor with Lessee's financial statements (in
SEC Form 10-K, if available). The financial statements
shall be prepared in conformity with generally accepted
accounting principles (GAAP) and shall be certified as true
and correct by the chief financial officer or other
authorized officer of Lessee. Lessee shall also provide
Lessor with financial statements for the Leased Premises
within 120 days after the end of each Lease Year. The
financial statements for the Leased Premises do not need to
be prepared by an independent certified public accountant,
but shall be certified as true and correct by the chief
financial officer or other authorized officer of Lessee.
Additionally, during the term of the Lease, Lessee will
within forty-five (45) days from the end of each quarter of
each fiscal year, furnish Lessor with Lessee's financial
statements (in SEC Form 10-Q if available)and financial
statements of the Leased Premises for such quarter. Lessor
shall have the right to require such financial statements
for the Lessee and the Leased Premises on a monthly basis
after the occurrence of a default in any Lease Year.
Provided, however, if Lessee shall not commit a default for
twelve consecutive months, Lessor's right to require such
monthly financial statements shall terminate until Lessee
shall again commit a default in any given Lease Year. Said
quarterly (or monthly, if required by Lessor) financial
statements do not need to be prepared by an independent
certified public accountant, but shall be certified as true
and correct by the chief financial officer or other
authorized officer of Lessee. The financial statements
shall conform to GAAP, and include a balance sheet and
related statements of operations, statement of cash flows,
statement of changes in shareholder's equity, and related
notes to financial statements, if any.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to make reasonable modifications
of this Lease requested by any Mortgagee of record from time
to time provided such modifications are not substantial and
do not increase any of the Rents or materially modify any of
the elements of this Lease.
ARTICLE 28. OPTION TO RENEW
If this Lease is not previously canceled or terminated and
if Lessee is not then in default, then Lessee shall have the
option to renew this Lease upon the same conditions and
covenants contained in this Lease for Three (3) consecutive
periods of Five (5) years each (singularly "Renewal Term").
Rent during each of the three year period of any Renewal
Term shall increase by 5% of the Rent payable for the
preceding three year period.
The first Renewal Term will commence on the day following
the date the original Term expires and successive Renewal
Terms will commence on the day of following the last day of
the then expiring Renewal Term. Lessee must give one
hundred twenty (120) days written notice to Lessor of its
intent to exercise this option prior to the expiration of
the original Term of this Lease or any Renewal Term, as the
case may be.
ARTICLE 29. MISCELLANEOUS PROVISIONS
(A) All notices, consents, approvals, or other
instruments required or permitted to be given by either
party pursuant to this Lease shall be in writing and given
by (i) hand delivery, (ii) facsimile, (iii) express
overnight delivery service or (iv) certified or registered
mail, return receipt requested, and shall be deemed to have
been delivered upon (a) receipt, if hand delivered, (b)
confirmed transmission, if delivered by facsimile, (c) the
next business day, if delivered by express overnight
delivery service, or (d) the third business day following
the day of deposit of such notice with the United State
Postal Service, if sent by certified or registered mail,
return receipt requested. Notices shall be provided to the
parties and addresses (or facsimile numbers, as applicable)
specified on the first page hereof.
(B) The terms, conditions and covenants contained in
this Lease and any riders and plans attached hereto shall
bind and inure to the benefit of Lessor and Lessee and
their respective successors, heirs, legal representatives,
and assigns.
(B) This Lease shall be governed by and construed
under the laws of the State where the Leased Premises
are situate.
(D) In the event that any provision of this Lease
shall be held invalid or unenforceable, no other provisions
of this Lease shall be affected by such holding, and all of
the remaining provisions of this Lease shall continue in
full force and effect pursuant to the terms hereof.
(E) The Article captions are inserted only for
convenience and reference, and are not intended, in any
way, to define, limit, describe the scope, intent, and
language of this Lease or its provisions.
(F) In the event Lessee remains in possession of the
premises herein leased after the expiration of this Lease
and without the execution of a new lease, it shall be
deemed to be occupying said premises as a tenant from
month-to-month, subject to all the conditions, provisions,
and obligations of this Lease insofar as the same can be
applicable to a month-to-month tenancy except that the
monthly installment of Rent shall be increased 150% of the
amount due on the last month prior to such expiration.
(G) If any installment of Rent (whether lump sum,
monthly installments, or any other monetary amounts
required by this Lease to be paid by Lessee and deemed to
constitute Rent hereunder) shall not be paid when due and
shall remain unpaid for five days after written notice to
Lessee, or financial statements required to be delivered
hereunder by Lessee remain undelivered when due for five
days after written notice to Lessee, Lessor shall have the
right to charge Lessee a late charge of $250.00 per month
for each month (or portion thereof) that any amount of Rent
installment remains unpaid or such financial statements
remain undelivered.
(H) Any part of the Leased Premises (excluding the
Building) may be conveyed by Lessor for private or public
non-exclusive easement purposes at any time, provided such
easement does not interfere with the business of Lessee and
provided Lessor has delivered to Lessee written
notification, together with a description of the location
and reason for such easement, at least 30 days prior to
such conveyance. In such event Lessor shall, at its own
cost and expense, restore the remaining portion of the
Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was
leased, all to be done without adjustments in Rent to be
paid by Lessee. All proceeds from any conveyance of an
easement shall belong solely to Lessor.
(I) For the purpose of this Lease, the term "Rent"
shall be defined as Rent under Article 4, and any other
monetary amounts required by this Lease to be paid by
Lessee.
(J) Lessee agrees to cooperate with Lessor to allow
Lessor to obtain and use at Lessor's expense promotional
photographs of the Leased Premises.
ARTICLE 30. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained herein
it is the intent of the parties that the rights and
remedies contained herein shall not be exclusive but rather
shall be cumulative along with all of the rights and
remedies of the parties which they may have at law or
equity.
ARTICLE 31. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor,
its successors and assigns, (i) that (except for items
normally used by Lessee in the course of restaurant
operations and in such case, such items are used and stored
in accordance with applicable law or regulation) it has not
used or permitted and will not use or permit the Leased
Premises to be used, whether directly or through
contractors, agents or tenants, and to the best of Lessee's
knowledge and except as disclosed to Lessor in writing, the
Leased Premises has not at any time been used for the
generating, transporting, treating, storage, manufacture,
emission of, or disposal of any dangerous, toxic or
hazardous pollutants, chemicals, wastes or substances as
defined in the Federal Comprehensive Environmental Response
Compensation and Liability Act of 1980 ("CERCLA"), the
Federal Resource Conservation and Recovery Act of 1976
("RCRA"), or any other federal, state or local environmental
laws, statutes, regulations, requirements and ordinances
("Hazardous Materials"); (ii) that to the best of Lessee's
knowledge, there have been no investigations or reports
involving Lessee, or the Leased Premises by any governmental
authority which in any way pertain to Hazardous Materials
(iii) that to the best of Lessee's knowledge the operation
of the Leased Premises has not violated and is not currently
violating any federal, state or local law, regulation,
ordinance or requirement governing Hazardous Materials; (iv)
that to the best of Lessee's knowledge the Leased Premises
is not listed in the United States Environmental Protection
Agency's National Priorities List of Hazardous Waste Sites
nor any other list, schedule, log, inventory or record of
Hazardous Materials or hazardous waste sites, whether
maintained by the United States Government or any state or
local agency; and (v) that the Leased Premises will not
contain any formaldehyde, urea or asbestos, except as may
have been disclosed in writing to Lessor by Lessee at the
time of execution and delivery of this Lease. Lessee agrees
to indemnify and reimburse Lessor, its successors and
assigns, for:
(a) any breach of these representations and
warranties, and
(b) any loss, damage, expense or cost arising out of
or incurred by Lessor which is the result of a breach
of, misstatement of or misrepresentation of the above
covenants, representations and warranties, and
(c) any and all liability of any kind whatsoever which
Lessor may, for any cause and at any time, sustain or
incur by reason of Hazardous Materials discovered on
the Leased Premises during the term hereof or placed
or released on the Leased Premises by Lessee;
together with all attorneys' fees, costs and disbursements
incurred in connection with the defense of any action
against Lessor arising out of the above. These covenants,
representations and warranties shall be deemed continuing
covenants, representations and warranties for the benefit of
Lessor, and any successors and assigns of Lessor and shall
survive expiration or sooner termination of this Lease. The
amount of all such indemnified loss, damage, expense or
cost, shall bear interest thereon at twelve percent (12%)
per annum and shall become immediately due and payable in
full on demand of Lessor, its successors and assigns.
Lessee shall not be responsible for any liabilities under
this Article if the liability results from activities of
Lessor or any agent, employee, or contractor of Lessor.
ARTICLE 32. ESCROWS
Upon the occurrence of a third default in any twelve
month period by Lessee, or upon the request of Lessor's
Mortgagee, if any, Lessee shall deposit with Lessor on the
first day of each and every month, an amount equal to
one-twelfth (1/12th) of the estimated annual real estate
taxes, assessments and insurance ("Charges") due on the
Leased Premises, or such higher amounts reasonably
determined by Lessor as necessary to accumulate such amounts
to enable Lessor to pay all charges due and owing at least
thirty (30) days prior to the date such amounts are due and
payable. If Lessee is depositing into such escrow as a
result of its third default in any given twelve month
period, and Lessee shall not commit a default for a period
of 24 months from the commencement of such escrowing, such
escrow shall be discontinued unless renewed according to the
terms hereof for the occurrence of a third default in any
twelve month period, or upon the request of Lessor's
mortgagee.
From time to time out of such deposits Lessor will, upon the
presentation to Lessor by Lessee of the bills therefor, pay
the Charges or will upon presentation of receipted bills
therefor, reimburse Lessee for such payments made by Lessee.
In the event the deposits on hand shall not be sufficient to
pay all of the estimated Charges when the same shall become
due from time to time or the prior payments shall be less
than the currently estimated monthly amounts, then Lessee
shall pay to Lessor on demand any amount necessary to make
up the deficiency. The excess of any such deposits shall be
credited to subsequent payments to be made for such items.
If a default or an event of default shall occur under the
terms of this Lease, Lessor may, at its option, without
being required so to do, apply any Deposit on hand to cure
the default, in such order and manner as Lessor may elect.
ARTICLE 33. NET LEASE
It is the intent of the parties hereto that this Lease
shall be a net lease and that the Rent defined pursuant to
Article 4 should be a net Rent paid to Lessor. Any and all
other expenses including but not limited to, maintenance,
repair, insurance, taxes, and assessments, shall be paid by
Lessee.
ARTICLE 34. RIGHT OF FIRST REFUSAL
Lessor, for itself, its successors and assigns, hereby
gives and grants to Lessee a right of first refusal (the
"Option") to purchase the Leased Premises, subject to the
following terms and conditions:
(A) DURATION OF OPTION. The Option and all rights and
privileges of Lessee hereunder shall be in force for the
term of this Lease until the expiration of Lessee's right to
possession.
(B) MANNER OF EXERCISING OPTION. If Lessor shall
desire to sell the Leased Premises (subject to the terms of
this Lease), Lessor shall give Lessee written notice of
Lessor's intention to sell Lessor's interest in the Leased
Premises. Such notice ("Lessor's Notice") shall state a
price at which (or greater) Lessor intends to sell all or a
portion of its interest. For twenty (20) business days
following the giving of such notice, Lessee shall have the
option to purchase the Lessor's interest at the price in
cash stated in the Lessor's Notice. A written notice in
substantially the following form, addressed to Lessor and
signed by Lessee and given, in accordance with the
provisions of Article 29(A) hereof, within the period for
exercising the Option, submitted with a bank cashier's check
or money order payable to the order of Lessor in the amount
of $25,000.00 (the "Xxxxxxx Money") shall be an effective
exercise of Lessee's Option, to wit:
(date)
"We hereby exercise the Option to purchase the property
commonly known as __________________, pursuant to the Right
of First Refusal contained in that certain Net Lease
Agreement between us pertaining to said premises.
(C) TERMS OF SALE IF OPTION EXERCISED. Upon Lessee's
exercise of the Option in accordance with the provisions of
subparagraph (B) hereof, Lessor shall be obligated to sell
and convey by recordable warranty deed, good and marketable
title to the Leased Premises subject only to the matters
affecting title which were of record at the time Lessor came
into title to the Leased Premises and those matters which
Lessee created, suffered or permitted to accrue during the
term hereof, and Lessee shall be obligated to purchase the
Premises upon the following terms and conditions:
(i) PRICE. The price "Purchase Price" at which Lessor
shall sell and Lessee shall purchase the Leased
Premises shall be the price stated in Lessor's Notice.
(ii)CLOSING. Closing shall be thirty (30) days after
the expiration of the twenty days within which Lessee
may exercise its Option, unless the parties mutually
agree otherwise. The Purchase Price less credit for
the Xxxxxxx Money shall be tendered in cash or other
certified funds by Lessee at Closing.
(iii) EVIDENCE OF TITLE. Not less
than ten (10) days prior to closing, Lessee shall
obtain a commitment for an ALTA owner's policy of
title insurance dated within thirty (30) days of the
closing date, issued by a nationally recognized title
insurance company selected by Lessor (the "Title
Company") in the amount of the Purchase Price
determined pursuant to subparagraph (C)(i) above,
naming Lessee as the proposed insured, and covering
the fee simple title to the Leased Premises, and
showing Lessor vested with good title to the Leased
Premises subject only to the matters affecting title
which were of record at the time Lessor came into
title to the Leased Premises and those matters which
Lessee created, suffered or permitted to accrue during
the term hereof. Such title commitment shall be
conclusive evidence of good title.
(i) PRORATIONS. Lessor shall pay the cost of the aforesaid
title policy and any and all state and municipal taxes
imposed by law on the transfer of the title to the Leased
Premises, or the transaction pursuant to which such transfer
occurs. Water, sewer and other utility charges, if any,
which are not metered, driveway permit charges, if any,
general real estate taxes, and other similar items, shall be
adjusted ratably as of the Closing, except to the extent
otherwise settled between the parties pursuant to other
provisions of this Lease. No portion of the Base Rent paid
by Lessee shall be credited toward the Purchase Price but
Lessee shall be given a credit for rent prepaid for any
period after the Closing.
(v) ESCROW CLOSING. At the election of Lessor or
Lessee upon notice to the other party not less than
five (5) days prior to the Closing, this sale shall be
closed through an escrow with the Title Company, in
accordance with the general provisions of the usual
form of Deed and Money Escrow Agreement then is use by
said company, with such special provisions inserted in
the escrow agreement as may be required to conform
with this agreement. Upon the creation of such an
escrow, anything herein to the contrary
notwithstanding, paying of the purchase price and
delivery of the deed shall be made through the escrow.
The cost of the escrow shall be divided equally
between the Lessor and Lessee. If for any reason
other than Lessee's default, the transaction fails to
close, the Xxxxxxx Money shall be returned to Lessee
forthwith.
(vi)REMEDIES ON DEFAULT. If Lessee defaults under the
provisions of this subparagraph 34(C), Lessor shall
have the right to annul the provisions of this
paragraph 34 by giving Lessee notice of such election,
provided that Lessor has first notified Lessee of such
default and Lessee has failed to cure the same within
ten (10) days after such notice. Upon Lessor's notice
of annulment in accordance herewith, the Xxxxxxx Money
shall be forfeited and paid to Lessor as liquidated
damages, which shall be Lessor's sole and exclusive
remedy. If Lessor defaults under the provisions of
this subparagraph 34(C) and fails to cure such default
within ten (10) days after being notified of the same
by Lessee, then in such event, (i) the Xxxxxxx Money
at Lessee's election and immediately upon its demand
shall be returned to Lessee, which return shall not,
however, in any way release or absolve Lessor from its
obligations hereunder and (ii) Lessee shall be
entitled to all remedies (both legal and equitable)
the law (both statutory and decisional) of the state
in which the Leased Premises are situated provides
without first having to tender the balance of the
purchase price as a condition precedent thereof and
without having to make any election of such remedies.
(D) EFFECT OF OPTION ON LEASE. If the Option is
exercised, this Lease shall continue in full force and
effect until the Closing hereinabove specified. If for any
reason such Closing fails to occur, this Lease shall
continue in full force and effect, except that if the
provisions of this paragraph 34 are annulled by Lessor, in
accordance with subparagraph 34(C)(vi), by reason of a
default by Lessee, this Lease shall continue but without the
provisions of this paragraph 34 being a part hereof.
(E) If Lessee fails to exercise its Option, Lessor
shall be free to sell all or any portion of its interest in
the Leased Premises for six months following the expiration
of the twenty days within which Lessee may exercise its
Option, provided that Lessor shall sell its interest or any
portion thereof for a price (pro-rata for a partial
interest) equal to or greater than the price set forth in
Lessor's Notice. This Right of First Refusal shall survive
any sale of the Leased Premises and shall apply to any
subsequent sale or potential sale by Lessor or its assigns.
IN WITNESS WHEREOF, Lessor and Lessee have respectively
signed and sealed this Lease as of the day and year first
above written.
LESSEE: KONA RESTAURANT GROUP, INC.
By /s/ Xxxxxx X Xxxxxxxx
Its:President
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - LESSOR'S
SIGNATURE ON FOLLOWING PAGE
LESSOR: AEI INCOME & GROWTH FUND 23 LLC
By: AEI FUND MANAGEMENT XXI, INC., a
Minnesota corporation
By: /s/ Xxxxxx X Xxxxxxx
Xxxxxx X. Xxxxxxx, President
EXHIBIT A
1.6310 ACRE
(71,046 Square Feet)
XXX XXXXX XX XXXXX
XXX XXXXXX XX XXXXXXXX
BEING a 1.6310 acre tract of land situated Farm Xxx 0, Xxxxx
0, Xxxxx 0, Xxxx Xxxxx Xxxx in the Original Four League
Grant to the Town of Victoria, Victoria County, Texas and
being a portion of that certain tract of land described as
8.759 acres as conveyed from Xxxxxx Xxxx York to Xxxxxxxx
Xxxx and Trust Company, as Trustee, by instrument dated
November 10, 1992, and recorded inVolume 0035, Page 477 of
the Official Records of Victoria County, Texas, said 1.6310
acre tract of land being more fully described by metes and
bounds as follows:
COMMENCING at a 5/8 inch diameter iron rebar found for
corner in the east right-of-way line of U.S. Xxxxxxx Xx. 00
(also known as X. Xxxxxxx Street), said iron rebar marks the
southwest corner of Xxx 0, Xxxxx 0. xx Xxxxxx Xxxxxx
Subdivision No. 1, as addition to the City of Victoria,
Victoria County, Texas, according to the established map and
plat of said addition recorded in Volume 7, Page 85D of the
Map and Plat Records of said County;
THENCE, South 18 deg. 13' 29" West, along said right-of-way
line, a distance of 221.86 feet to a 5/8 inch diameter iron
rebar found marking the beginning of a curve to the left;
THENCE, ins a southwesterly direction along said curve to
the left and continuing along said right-of-way line
(internal angle = 2 deg. 18' 40", radius =3169.85 feet,
chord bears S 16 deg 30' 57" W, a distance of 152.03 feet)
for an arc distance of 152.04 feet to a 5/8 inch diameter
iron rebar found for the POINT OF BEGINNING of the herein
described tract;
THENCE, South 71 deg 47' 38" East, a distance of 223.07 feet
to a 5/8 inch diameter iron rebar found marking the
northeast corner of the herein described tract;
THENCE, South 15 deg. 44' 31" West, a distance of 284.42
feet to a 5/8 inch diameter iron rebar found marking the
southeast corner of the herein described tract in the north
line of that certain tract of land described as 2.10 acres
as conveyed from Myrtle York to CNB Properties by instrument
recorded in Volume 1040, Page 484 of the Deed Records of
said County;
THENCE, South 85 deg. 01' 17" West, along the north line of
said 2.10 acre tract, a distance of 216.11 feet to a
concrete monument found marking the southwest corner of the
herein described tract, in the aforesaid curving east right-
of-way line of U.S. Highway No. 77, same being the northwest
corner of said 2.10 acre tract;
THENCE, in a northeasterly direction along said curving
right-of-way line (internal angle 5 deg. 38' 32", radius =
3769.47 ffet, chord bears N 12 deg. 32' 21" E, a distance of
371.05 feet) for an arc distance of 371.20 feet to the POINT
OF BEGINNING, CONTAINING, within these metes and bounds
1.6310 acre (71,046 square feet) of land, more or less.
TOGETHER WITH certain rights, benefits, and easements
created by that certain Declaration of Easements,
Restrictions, and Related Agreements of even recording date
with the Special Warranty Deed from Triton Commerical
Properties, Ltd to AEI Net Lease Income & Growth Fund XIX
Limited Partnership, AEI Real Estate Fund XV Limited
Partnership, and AEI Real Estate Fund XVII Limited
Partnership.
