Exhibit 10.2
CANYON PORTAL MOTEL
280 N. HIGHWAY 89A
LEASE
SEDONA, ARIZONA
LANDLORD: CANYON PORTAL, L.L.C.
TENANT: ILX RESORTS INCORPORATED
PREMISES: CANYON PORTAL MOTEL; TRADING POST
SHOPS - SPACE 3; AND TRADING POST ADDITION
SHOPS - SPACES 9, 10 AND A PORTION OF SPACE 8
EFFECTIVE DATE: OCTOBER 1, 2000
TABLE OF CONTENTS
SECTION 1 - FUNDAMENTAL LEASE PROVISIONS AND DEFINITIONS......................1
SECTION 2 - PREMISES..........................................................2
SECTION 3 - GENERAL PROVISIONS................................................2
3.1 Option............................................................2
3.2 No Co-Tenancy Requirement.........................................2
3.3 Name Change.......................................................3
SECTION 4 - LEASE TERM........................................................3
4.1 Term..............................................................3
4.2 Holding Over......................................................3
4.3 Abandonment.......................................................3
4.4 Surrender of Premises.............................................3
SECTION 5 - RENT, SECURITY DEPOSIT AND PARKING................................3
5.1 Rent..............................................................3
5.2 Reserves for Furniture Fixtures & Equipment.......................5
5.3 Parking...........................................................6
5.4 Security Deposit..................................................6
5.5 Tenant Option to Terminate........................................6
SECTION 6 - NO COUNTERCLAIM OR ABATEMENT OF RENT..............................6
6.1 No Notice.........................................................6
6.2 No Conditional Payment............................................6
SECTION 7 - USE OF PREMISES...................................................7
7.1 Use...............................................................7
7.2 Prohibited Conduct................................................7
7.3 Prescribed Conduct................................................7
SECTION 8 - CONSTRUCTION OF IMPROVEMENTS......................................8
8.1 Construction by Tenant............................................8
8.2 Construction by Landlord..........................................8
8.3 Representations and Warranties of Landlord........................9
SECTION 9 - TENANT OBLIGATIONS...............................................10
9.1 Payment by Tenant................................................10
9.2 Payment by Landlord..............................................11
9.3 Proof of Payment.................................................11
9.4 Personal Property Taxes..........................................11
9.5 Premises Utilities...............................................11
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SECTION 10 - COMMON AREA MAINTENANCE..........................................11
10.1 Expenses.........................................................11
10.2 Common Area Expenses Estimates...................................13
SECTION 11 - MAINTENANCE AND REPAIRS BY TENANT................................13
11.1 Tenant's Obligation..............................................13
11.2 Prohibited Acts..................................................14
11.3 Rights of Landlord...............................................14
SECTION 12 - REPAIR BY LANDLORD...............................................14
12.1 Repair by Landlord...............................................14
12.2 Hazardous Materials..............................................15
SECTION 13 - LIENS............................................................16
13.1 No Liens.........................................................16
13.2 Tenant's Obligations.............................................16
13.3 Removal of Liens by Tenant.......................................16
13.4 Removal of Lien by Landlord......................................16
SECTION 14 - INSURANCE........................................................17
14.1 Project Insurance................................................17
14.2 Tenant's Property................................................17
14.3 Tenant's Operations..............................................17
14.4 Certificate of Insurance.........................................18
14.5 Insurance Companies..............................................18
14.6 Failure to Procure Insurance.....................................18
14.7 Repair of Tenant.................................................18
14.8 Repair by Landlord...............................................19
SECTION 15 - DAMAGE OR DESTRUCTION............................................19
15.1 Tenant Obligations...............................................19
15.2 Lease Termination................................................19
SECTION 16 - LANDLORD RESERVATION.............................................20
SECTION 17 - INDEMNIFICATION..................................................20
17.1 By Tenant........................................................20
17.2 By Landlord......................................................21
17.3 Waiver of Claims.................................................21
SECTION 18 - ASSIGNMENT AND SUBLETTING........................................21
18.1 Landlord Consent.................................................21
18.2 In Writing.......................................................22
18.3 Lease Transfer...................................................22
SECTION 19 - SUBJECT TO MASTER LEASE..........................................23
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SECTION 20 - DEFAULTS BY TENANT...............................................24
20.1 Event of Default.................................................24
20.2 Re-Enter of Premises.............................................25
20.3 Lease Termination................................................25
20.4 Reletting........................................................25
20.5 Survival of Liability............................................25
20.6 Cumulative Remedies..............................................26
20.7 Sublessee Defaults...............................................26
20.8 Cure Period......................................................27
20.9 Late Charges.....................................................27
SECTION 21 - CONDEMNATION.....................................................27
SECTION 22 - TENANT'S WAIVER OF STATUTORY RIGHTS..............................28
SECTION 23 - WAIVER OF PERFORMANCE............................................28
SECTION 24 - REMEDIES CUMULATIVE..............................................28
SECTION 25 - CONVEYANCE BY LANDLORD...........................................28
SECTION 26 - NO PERSONAL LIABILITY TO LANDLORD................................28
SECTION 27 - ATTORNEYS' FEES..................................................29
SECTION 28 - PROVISIONS SUBJECT TO APPLICABLE LAW.............................29
SECTION 29 - RIGHT TO CURE....................................................29
29.1 Right to Cure Tenant's Defaults..................................29
29.2 Right to Cure Landlord's Defaults................................29
SECTION 30 - NOTICES .........................................................30
SECTION 31 - SIGNS............................................................30
SECTION 32 - INSPECTION AND PRESENTING FOR SALE OR LEASE......................31
SECTION 33 - ESTOPPEL CERTIFICATE.............................................31
SECTION 34 - RECORDING........................................................31
SECTION 35 - SUBORDINATION AND NON-DISTURBANCE................................32
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SECTION 36 - MISCELLANEOUS....................................................32
36.1 Definition of Tenant.............................................32
36.2 Tenant...........................................................32
36.3 Gender and Number................................................32
36.4 Modifications and Waivers........................................32
36.5 Binding Effect...................................................32
36.6 Severability.....................................................33
36.7 Governing Law and Jurisdiction...................................33
36.8 Entire Agreement.................................................33
36.9 Time is of the Essence...........................................33
36.10 Brokers..........................................................33
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CANYON PORTAL, L.L.C.
LEASE
SECTION 1 - FUNDAMENT AL LEASE PROVISIONS AND DEFINITIONS.
Landlord: Canyon Portal, L.L.C., an Arizona limited liability company
Tenant: ILX Resorts Incorporated, an Arizona corporation
Trade Name: Canyon Portal Motel
Lease Term: Commencement Date: October 1, 2000
Termination Date: December 31, 2010 (or as extended
by Section 3.1 )
Premises: 1. The existing 20 room Canyon Portal Motel (i) including 12
older rooms to be renovated plus (ii) an additional 20 rooms
to be built by Landlord at its expense for a total of 40
rooms.
2. Trading Post lease space 3 with approximately 753 square
feet.
3. Trading Post Addition lease spaces (i) 9 and 10 with
approximately l,784 square feet; and (ii) a portion of lease
space 8 with approximately 688 square feet.
4. Non-exclusive use of the laundry facility located in the
basement of the North Retail Building to Canyon Portal.
5. Use of 45 parking spaces as described in Section 5.3 of this
Lease.
6. Use of the Project monument sign existing adjacent to
Highway 89A.
Minimum Annual Base Rental: The Minimum Annual Base Rent ("Rent") shall be as
set forth in Sections 5.1 (A), (B), (C) and (D) of
this Lease.
Address of Landlord: Canyon Portal, L.L.C.
P.O. Box 10239
Sedona, AZ 86339
Telephone: (520) 282-5387
Fax: (520) 282-5902
With a Copy to: Spector Law Offices, P.C.
6900 E. Camelback Road, Suite 640
Scottsdale, AZ 85251
Telephone: (480) 941-0221
Fax: (480) 990-9093
Address of Tenant: 2111 E. Highland, Suite 210
Phoenix, AZ 85016
Telephone: (602)957-2777
Fax: (602) 957-2290
The foregoing Fundamental Lease Provisions are an integral part of this
Lease, and each reference in the body of the Lease to any Fundamental Lease
Provision shall be construed to incorporate all of the terms set forth above
with respect to such Provisions.
SECTION 2 - PREMISES.
A site plan showing the boundaries of the Premises and its relative
location within a larger commercial development comprised of four elements
including the Trading Post Shops, Canyon Portal Shops, North Retail Building and
Canyon Portal Motel (the "Project") is attached hereto as Exhibit A. The
Premises are included in the Project for the purposes of this Lease. Tenant's
acceptance of the Premises and agreement to the terms of this Lease are not
conditioned upon any representation by Landlord of the number of square feet in
the Premises. Landlord has represented that it will, at Landlord's expense,
renovate 12 existing motel rooms, construct 20 new motel rooms and provide the
Trading Post lease spaces for use as a motel office pursuant to the terms set
forth in Section 8.
SECTION 3 - GENERAL PROVISIONS.
3.1 OPTION. The Lease Term will be automatically extended for one-year
periods after December 31, 2010 up to December 31, 2038, unless on or before
August 31st of any year after 2010 written notice is given by Tenant to Landlord
that it will not continue the Lease in full force and effect. In that case, the
Lease will terminate December 31st of the year such notice is given.
3.2 NO CO- TENANCY REQUIREMENT. Excluding the Premises, Landlord reserves
the right to effect such tenancies in the Project as Landlord, in the exercise
of its sole business judgment, shall determine to best promote the interest of
the Project. Subject to Section 7.1, Tenant is not relying on the fact, nor does
Landlord represent, that any specific tenant or kind of tenant or number of
tenants shall, during the term of this Lease, occupy any space in the Project.
3.3 NAME CHANGE. Landlord reserves the right to change the name of the
Project from time to time during the term of this Lease. Tenant reserves the
right to change the name of the Premises (motel) from time to time during the
term of this Lease.
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SECTION 4 - LEASE TERM.
4.1 TERM. The term of this Lease (herein called the "Lease Term" or the
"Term") is set forth in Section 1 as it may be extended by Section 3.1, unless
the Term is sooner terminated as provided in this Lease.
4.2 HOLDING OVER. If Tenant, upon expiration or termination of this Lease,
either by lapse of time or otherwise, remains in possession of the Premises with
Landlord's written consent, but without a new lease reduced to writing and duly
executed, Tenant shall be deemed to be occupying the Premises as a tenant from
month to month, subject to all covenants, conditions and provisions of this
Lease. If Tenant remains in possession without Landlord's written consent,
Tenant shall be deemed to be in wrongful hold over and shall be subject to all
the rights and remedies provided to Landlord under this Lease and by law,
including but not limited to forcible entry and detainer actions or other
eviction processes. During any hold over period, without a reasonable claim of
right by Tenant, the monthly Rent shall be one hundred fifty percent (150%) of
Tenant's monthly Rent payable during the last month of the Term of this Lease.
4.3 ABANDONMENT. If Tenant, prior to the expiration of this Lease,
relinquishes possession of the Premises without Landlord's written consent, such
relinquishment shall be deemed to be an abandonment of the Premises and an Event
of Default under this Lease.
4.4 SURRENDER OF PREMISES. Upon any termination of this Lease for any
reason, Tenant shall immediately surrender possession of the Premises to
Landlord in good and tenantable repair, reasonable wear and tear excepted, and
shall surrender all keys and all copies of such keys for the Premises to
Landlord at the place then fixed for the payment of Rent or other agreed upon
location.
SECTION 5 - RENT, SECURITY DEPOSIT AND PARKING.
5.1 RENT.
A. MOTEL RENT. Commencing October 1, 2000, there will only be 8 rooms
available at Canyon Portal Motel. The Rent will be $10,000.00 per month. At such
time as each of the additional 12 rooms have been properly renovated and made
available to Tenant, the Rent will be increased by $667.00 per month for each
room made available with such Rent payable commencing the first day of the month
after such room(s) are renovated and made available. Provided, however, when the
12th room is renovated and made available, the additional Rent shall be $663.00
per month so the total Rent for the 12 rooms is an additional $8,000.00 per
month. At such time as the full 40 rooms are available (estimated to be June 1,
2001), Landlord is in possession of a Certificate of Occupancy from the City of
Sedona and Landlord has substantially completed any punchlist items to the
reasonable satisfaction of Tenant (the Tenant shall be included in the punchlist
process), the Rent will be increased to $37,000.00 per month. This Rent will
remain in effect until December 31, 2005 and then will increase as set forth
below.
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Beginning January 1, 2006 through December 31, 2006 $40,000.00
January 1, 2007 through December 31, 2007 $40,500.00
January 1, 2008 through December 31, 2008 $41,000.00
January 1, 2009 through December 31, 2009 $41,500.00
January 1, 2010 through December 31, 2010 $42,000.00
B. MOTEL OFFICE RENT - LEASE SPACES 9 & 10. Commencing October 1, 2000, the
Rent for the Trading Post Addition lease spaces 9 and 10 will be $1,500.00 per
month through May 31, 2001. Commencing June 1, 2001 through December 31, 2005,
the Rent will be $3,500.00 per month. Commencing January 1, 2006 through
December 31, 2010, the Rent will be $3,750.00 per month.
C. MOTEL OFFICE RENT - TRADING POST LEASE SPACE 3. Commencing October 1,
2000, the Rent for the Trading Post lease Space 3 will be $3,573.85 per month
through December 31, 2000 and thereafter will be increased each January 1st by
increasing the prior year's monthly Rent pursuant to Section 5.1(E).
D. MOTEL OFFICE RENT - TRADING POST ADDITION SPACE 8. Commencing October 1,
2000, the Rent for the portion of Trading Post Addition lease Space 8 will be
$2,580.00 per month through December 31,2000 and thereafter will be increased
each January 1st by increasing the prior year's monthly Rent pursuant to Section
5.1(E).
E. The Rents provided for in this Section 5.1 shall each be subject to
adjustment as described herein commencing on (i) January 1, 2011 for the
Premises referred to in Section 5.1(A) and (B); and (ii) January 1, 2001 for the
Premises referred to in Section 5.1(C) and (D), and for each year thereafter
(each date an "Adjustment Date") as follows. The base for computing the
adjustment is the Consumers' Price Index for All Urban Consumers, United States
Cities Average published by the United States Department of Labor, Bureau of
Labor Statistics (the "Index"), which was in effect on September 1st of the
second Lease year (the calendar year) prior to any Adjustment Date ("Beginning
Index"). For example, the adjustment for Lease year 2011 would be based on the
Beginning Index for September 1, 2009. The Index published for September 1st of
each year previous to each Lease Year thereafter ("Extension Index") is to be
used in determining the amount of the adjustment. For example, the adjustment
for the year 2011 would be based on the Extension Index for September 1, 2010.
If the Extension Index has increased over the Beginning Index, the base monthly
Rent for the following year shall be set by multiplying the base monthly Rent
for the previous year, e.g., for the 12th Lease month, by a fraction, the
numerator of which is the Extension Index and the denominator of which is the
Beginning Index. However, the adjustment to the Rent shall be no less than three
percent (3%) compounded per annum of the base monthly Rent in the prior Lease
Year for the Premises. As an example, if (i) the Beginning Index on September 1,
2009 is 111.0; the Extension Index on September 1, 2010 is 115.0; and Motel Rent
under Section 5.1(A) for December, 2010 is $42,000, then the Motel Rent for each
month of calendar year 2011 will be $42,000 (x) 115.0 (%) 111 = $43,513.51 per
month.
If the Index is changed so that the base year differs from that in
effect when the Term commences, the Index shall be converted in accordance with
the conversion factor published by the United States Department of Labor, Bureau
4
of Labor Statistics. If the Index is discontinued or revised during the Term,
such other government index or computation with which it is replaced shall be
used in order to obtain substantially the same result as would be obtained if
the Index had not been discontinued or revised.
F. Tenant shall pay to Landlord the Rents set forth in Section 5.1 of
this Lease in twelve (12) equal monthly installments during each Lease Year, in
advance, on the first day of each calendar month. The Rental and Additional
Charges hereinafter provided for shall be paid in lawful money of the United
States to Landlord at its address or at such other place as Landlord may from
time to time designate in writing.
G. All rental amounts are "net" rent to Landlord. All Additional
Charges (all other charges to Tenant described in this Lease) shall be deemed
Rent whether or not expressly designated as such, and shall be paid in addition
to the Rent at the times and in the manner provided for in this Lease.
5.2 RESERVES FOR FURNITURE FIXTURES & EQUIPMENT. There will be reserved by
Tenant separate from the Rent the amount of $3,500.00 per month commencing
January 1, 2002. These funds can be co-mingled with other reserve funds on other
properties owned or managed by Tenant. Within 60 days after the end of each
calendar year, Tenant will send to Landlord a report of the reserve funds set
aside and the expenditures from the reserve funds for Canyon Portal showing the
balance of the reserve funds for Canyon Portal. The funds reserved shall be
spent by Tenant for Furniture, Fixtures & Equipment at the Premises so as to
maintain the Furniture, Fixtures & Equipment in good repair and condition. The
reserved funds may be spent at the reasonable discretion of Tenant. At the end
of the Lease Term, or any extension thereof, any reserve funds not expended will
be paid to Landlord.
5.3 PARKING. There will be reserved for Tenant 20 parking spaces that are
exclusively reserved on a 24 hour a day basis. An additional 25 spaces will be
labeled as "Reserved for Motel Parking Only after 4:00 p.m." All parking spaces
in front of the Motel Office (as reflected on Exhibit A) will be included in the
20 parking spaces reserved exclusively for Tenant.
5.4 SECURITY DEPOSIT. No Security Deposit is required under this Lease.
5.5 TENANT OPTION TO TERMINATE. If 40 rooms are not available for use (as
defined in Section 5.1(A) above) by Tenant on or before August 31, 2001, Tenant,
at its option, may: (i) Terminate this Lease by giving fifteen (15) days prior
written notice delivered to Landlord on or before August 31, 2001; or (ii)
Continue this Lease in full force and effect as to the (8) original rooms and
(12) renovated rooms, and at such time as all of the 20 new rooms are available
for use (defined for the purpose of this subparagraph (ii), only, as
substantially completed except for normal "punchlist" items), Landlord will
notify Tenant in writing, and Tenant shall have fifteen (15) days after the date
of receipt of such notice to accept such 20 new rooms in its sole and absolute
discretion, by written notice delivered to Landlord on or before the fifteenth
(15th) day of such period. If no such notice is delivered, the 20 new rooms
shall be deemed rejected.
5
If the new rooms are accepted by the Tenant, rent shall then commence on
such rooms upon the conditions described in Section 5.1(A) of this Lease.
If the new rooms are not accepted by Tenant: (iii) The rent for the 20
rooms retained by Tenant will be forty-five percent (45%) of the Rent schedule
in Section 5.1(A) beginning January 1, 2006, and $18,000 per month prior to that
time upon completion of the renovation of the 12 rooms as described in Section
5.1(A), and (iv) Landlord and Tenant will mutually work together so that
Landlord will be able to operate the 20 new rooms as a separate motel facility
at the Project.
SECTION 6 - NO COUNTERCLAIM OR ABATEMENT OF RENT.
6.1 NO NOTICE. Except as expressly provided herein, Rent and Additional
Charges and all other sums payable by Tenant shall be paid without notice,
demand, counterclaim, setoff, recoupment, deduction or defense of any kind or
nature and without abatement, suspension, deferment, diminution or reduction
except an offset will be allowed to Tenant if Landlord is in default to Tenant
on payments to Tenant on any loan made by Tenant to Landlord, including but not
limited to a loan of $100,000 made by Tenant, as Holder, to Landlord, as Maker,
contemporaneously with the effective date of this Lease.
6.2 NO CONDITIONAL PAYMENT. NO PAYMENT BY TENANT OR RECEIPT BY LANDLORD OF
A LESSER AMOUNT THAN THE TOTAL OF ALL SUMS DUE HEREUNDER SHALL BE DEEMED TO BE
OTHER THAN AN ACCOUNT OF THE EARLIEST STIPULATED RENT, NOR SHALL ANY ENDORSEMENT
OR STATEMENT ON ANY CHECK, OTHER PAYMENTS OR ANY ACCOMPANYING LETTER BE DEEMED
AS ACCORD AND/OR SATISFACTION AND LANDLORD MAY ACCEPT SUCH CASH AND/OR NEGOTIATE
SUCH CHECK OR PAYMENT WITHOUT PREJUDICE TO LANDLORD'S RIGHT TO RECOVER THE
BALANCE OF SUCH RENT OR PURSUE ANY OTHER REMEDY PROVIDED IN THIS LEASE OR
OTHERWISE, REGARDLESS OF WHETHER LANDLORD MAKES ANY NOTATION ON SUCH INSTRUMENT
OF PAYMENT OR OTHERWISE NOTIFIES TENANT THAT SUCH ACCEPTANCE, CASHING OR
NEGOTIATION OF SUCH PAYMENT IS WITHOUT PREJUDICE TO ANY OF LANDLORD'S RIGHTS.
TENANT SPECIFICALLY WAIVES THE PROVISIONS OF A.R.S. 47-1207.
SECTION 7 - USE OF PREMISES.
7.1 USE. Tenant shall not use or permit the Premises to be used in
violation of the laws, ordinances, regulations and requirements of the United
States, the State of Arizona, Coconino County, the City of Sedona or any
subdivision or department thereof or any other authority or agency having
jurisdiction over the Premises or the Project. Tenant acknowledges other tenants
at the Project may have certain exclusive uses, a list of which is attached
hereto as Exhibit B. Tenant shall not sell any items which are protected by
other tenants' exclusivity rights. Landlord shall not grant any rights to any
tenant which would compete with any material business operated by Tenant at the
Project.
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7.2 PROHIBITED CONDUCT. Except by prior written consent of Landlord, Tenant
shall not:
A. Use or operate any machinery that, in Landlord's opinion, is
harmful to the Premises or the Project or disturbing to other tenants in the
building of which the Premises is a part (except as is reasonably necessary for
alterations or repairs); use any loud speakers, televisions, stereos, radios or
other devices in a manner so as to be heard or seen outside the Premises; or
display merchandise on the exterior of the Premises either for sale or for
promotional purposes.
B. Do or suffer to be done any act, matter or thing objectionable to
the fire, casualty or liability insurance carriers whereby any insurance now in
force or hereafter to be placed on the Premises or the Project, or any part
thereof, shall become void or suspended, or whereby the same shall be rated as a
more hazardous risk than at the date when Tenant receives possession of the
Premises. In case of a breach of this covenant, in addition to all other
remedies of Landlord hereunder, Tenant agrees to pay to Landlord as additional
rent any and all increase or increases of premiums on insurance carried by
Landlord on the Premises or the Project.
C. Do or cause to be done any act, matter or thing in violation of any
federal, state, county or local law, statute, regulation, rule or ordinance.
7.3 PRESCRIBED CONDUCT. At all times throughout the Lease Term, Tenant
shall:
A. Comply with any and all requirements of any of the constituted
public authorities and with the terms of any state or federal statute or local
ordinance or regulation applicable to Tenant or its use, safety, cleanliness or
occupation of the Premises, and save Landlord harmless from penalties, fines,
costs, expenses or damages resulting from Tenant's failure to do so.
B. Give Landlord prompt written notice of any accident, fire, pest
infestation, or damage occurring on or to the Premises.
C. Load and unload goods at such times in the areas and through such
entrances as may be designated for "Delivery" by Landlord. Such trailers or
trucks shall not be permitted to remain parked overnight in any area of the
Project, whether loaded or unloaded. Designated fire lanes shall not be used for
the loading or unloading of merchandise, parking or standing of running vehicles
at any time. The unlawful use of such fire lanes may result in the towing of the
offending vehicle and subject the owner or user thereof to all applicable fines
established by the City of Sedona and/or Landlord.
D. Conduct its business in the Premises in all respects in a dignified
manner and in accordance with high standards of motel operation. Tenant will not
engage in any deceptive marketing or sales efforts that offend the customers of
the Project, its Tenants or in any way conduct its operations in a "discount
sale" manner.
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E. Comply with all reasonable rules and regulations of Landlord in
effect at the time of the execution of this Lease or at any time or times, and
from time to time, promulgated by Landlord which Landlord, in its reasonable
discretion, shall deem necessary in connection with the Premises or the Project.
SECTION 8 - CONSTRUCTION OF IMPROVEMENTS.
8.1 CONSTRUCTION BY TENANT. Tenant shall not make or cause to be made any
structural alterations, additions or improvements to the Premises, without first
obtaining Landlord's written approval, which shall not be unreasonably withheld.
Tenant shall present to Landlord plans and specifications for such work at the
time approval is sought. Landlord may condition its approval upon the
requirement that Tenant, or its contractor, secure and bear the cost of a labor
and materials payment bond for any single improvement costing in excess of
$100,000. All alterations, improvements, additions and fixtures made or
installed by Tenant shall remain upon the Premises at the expiration or earlier
termination of this Lease and shall become the property of Landlord.
8.2 CONSTRUCTION BY LANDLORD. Landlord shall, at its expense, construct 20
new motel rooms and renovate 12 existing motel rooms. The 20 new motel rooms
will be constructed pursuant to plans prepared by Don Woods Architect dated
July, 2000 and reflecting the following Index to Drawings. These Drawings are
incorporated herein by this reference.
A1 SITE PLAN
A2 DEMOLITION PLAN
A3 FLOOR PLAN/ARCHITECTURAL ELECTRIC
A4 BUILDING SITE PLAN-GROUND LEVEL
A5 BUILDING SITE PLAN-UPPER LEVEL/STAIR
A6 SUITE PLANS AND SCHEDULES
A6 EXTERIOR ELEVATIONS
A7 EXTERIOR ELEVATIONS AND DETAILS
A8 BUILDING SECTION/INTERIOR ELEVATIONS
C1 GENERAL NOTES/DETAILS
C2 GRADING AND DRAINAGE PLANS
S1.1 STRUCTURAL NOTES
S1.2 TYPICAL DETAILS
S2.1 FOUNDATION PLAN
S2.2 FLOOR FRAMING PLAN
S2.3 ROOF FRAMING PLAN
S3.1 FOUNDATION DETAILS
S4.1 FLOOR FRAMING DETAILS
S4.2 FRAMING DETAILS
S5.1 ROOF FRAMING DETAILS
MP1 MECHANICAL PLANS
MP2 PLUMBING PLAN
8
The renovation of the 12 motel rooms will be done pursuant to architectural
plans prepared by Don Woods Architect and dated August 16, 2000. Tenant
acknowledges receipt of the plans for both the construction of the 20 new rooms
and renovation of the 12 rooms. The construction and renovation will be done by
Landlord at its expense in substantial compliance with the above plans subject,
however, to modifications required by the City of Sedona in order to secure
building permits and also subject to removal of a walkway connecting the
buildings which blocks view corridors.
8.3 REPRESENTATIONS AND WARRANTIES OF LANDLORD. Landlord makes the
following representations and warranties:
A. This Lease has been duly authorized and executed by Landlord and
constitutes the valid and binding obligation of Landlord enforceable in
accordance with its terms. The execution and performance of this Lease by
Landlord does not conflict with or constitute a default under any agreement,
mortgage, lease or other instrument by which Landlord is or may be bound.
B. Landlord has no actual knowledge and has received no notice of any
pending or threatened claim, action, suit, proceeding or other litigation
affecting the Project, Premises or any portion thereof, or under any outstanding
contract, if any, to which Landlord is a party, in any court or before or by any
governmental authority having jurisdiction.
C. The Premises are free from liens of mechanics and materialmen.
D. To Landlord's actual knowledge, there exist no current material
violations of any federal, state, county or municipal laws, ordinances, building
codes, orders, regulations or requirements affecting any portion of the
Premises.
E. Landlord has no actual knowledge of any agreements, commitments or
understandings pursuant to which Landlord is required to dedicate any part of
the Premises or to grant any easement, water rights, rights-of-way, road or
license for ingress and egress or other use in respect to any part of the
Premises whether on account of the development of adjacent or nearby real
property or otherwise.
F. To Landlord's actual knowledge, it is not in material default or in
material breach of any written covenant, condition, restriction, right-of-way,
easement or other written agreement affecting the Premises.
G. Landlord has sufficient monies available through a loan with Owens
Mortgage Investment Fund ("Owens") to complete all construction required under
this Lease with completion to occur approximately June 1, 2001. Upon completion
of such construction, the 20 new rooms will be of no less quality than the 8
rooms completed in 1998 and all rooms will be furnished with furniture, fixtures
and equipment of no less quality than the furnishings in such 8 rooms. Attached
as Exhibit C is a line-item breakdown on the Owens loan which Landlord
represents is sufficient to complete and will be spent on the construction and
other expenditures reflected on Exhibit C.
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H. Landlord shall pay all monies due as rent to the Master Landlord to
keep in full force and effect the Master Lease referred to in Section 19 of this
Lease. In the event that Landlord defaults in the payment of any rent or
otherwise, under the Master Lease, Tenant shall have the option to take any
action, including making payments of rent directly to the Master Landlord, in
order to cure such default by Landlord as tenant under the Master Lease. If
Tenant, in order to cure such defaults, is required to expend funds in excess of
that owed by Tenant to Landlord for Rent, Tenant shall deduct such amounts from
the next amounts owing to Landlord under this Lease. In addition, Tenant shall
earn interest at 12% on advanced monies which are in excess of Tenant' s Rent
with the interest to be deducted from the next monies owed to Landlord by
Tenant.
SECTION 9 - TENANT OBLIGATIONS.
9.1 PAYMENT BY TENANT. Tenant shall pay and discharge punctually, as and
when the same shall become due and payable, each and every cost, expense and
obligation of every kind and nature, foreseen or unforseen, arising out of the
possession, operation, maintenance, alteration, repair, rebuilding, use or
occupancy of the Premises by Tenant. Tenant shall also pay and discharge
punctually, as and when the same shall become due and payable without penalty,
personal property, business, occupation and occupational license taxes, water,
sewer, electricity, telephone charges and fees and all sales and use taxes owed
to governmental entities arising out of the motel rental to its customers and
guests.
9.2 PAYMENT BY LANDLORD. Tenant shall not be required to pay or reimburse
Landlord for: (i) any local, state or federal capital levy, franchise tax,
revenue tax, income tax, or profits tax of Landlord unless and to the extent
such levy, tax or imposition is in lieu of or a substitute for any other levy,
tax or imposition now or later in existence upon or with respect to the Premises
which, if such other levy, tax or imposition were in effect, would be payable by
Tenant under the provisions hereof; (ii) any estate, inheritance, devolution,
succession or transfer tax which may be imposed upon or with respect to any
transfer (other than taxes in connection with a conveyance by Landlord to
Tenant) of Landlord's interest in the Premises; or (iii) any lien arising from
the unilateral acts or omissions of Landlord and unrelated to a default of
Tenant under this Lease.
9.3 PROOF OF PAYMENT. Tenant, upon Landlord's request, shall furnish to
Landlord within thirty (30) days thereafter proof of the payment of any
obligation to be paid by Tenant.
9.4 PERSONAL PROPERTY TAXES. Tenant shall be responsible for and shall pay
before delinquency all taxes levied or assessed against any personal property of
any kind owned or placed in, upon or about the Premises by Tenant. Tenant hereby
agrees to protect and hold harmless Landlord and the Premises from any liability
for Tenant' s share of any and all such taxes, assessments and charges together
with any interest, penalties or other charges thereby imposed, and from any sale
or other proceedings to enforce payment thereof, and to pay all such taxes,
assessments and charges before delinquency and before same become a lien.
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9.5 PREMISES UTILITIES. Tenant shall be responsible for any and shall pay
for all utilities used or consumed in or upon the Premises as and when the
charges shall become due and payable during the Term. Tenant shall make all
appropriate applications to local utility companies and pay all required
deposits. In no event shall Landlord be liable for any interruption or failure
in the supply of any utilities to the Premises.
SECTION 10 - COMMON AREA MAINTENANCE.
10.1 EXPENSES. For the Term hereof, Tenant shall pay to Landlord, as
Additional Rent, Tenant's "Proportionate Share" of: (i) all costs of operation
and maintenance of the Common Areas of the Project; (ii) all Common Area
utilities; (iii) all real estate and assessment taxes levied and assessed
against the Project; (iv) all insurance coverage upon the Project and its
operations; and (v) Landlord's management fee. Tenant's Proportionate Share
shall be payable in equal monthly installments at the same time Rent is payable
hereunder, without demand and without any deduction or set-off whatsoever.
Tenant's Proportionate Share shall be not less than the ratio that Tenant's
total floor area bears to the total floor area of all the retail and motel
buildings (as measured by Landlord) in the Project which are from time to time
completed as of the first day of each calendar quarter. For the period from
October 1, 2000 through May 31, 2001, the Tenant's Proportionate Share shall be
36.25%. For the period from approximately June 1, 2001 and thereafter, Tenant' s
Proportionate Share shall be 51.11 % (after completion of the 20 rooms). These
Common Area percentages are based on a square footage analysis by Landlord.
A. FOR PURPOSES OF THIS SECTION 10.1:
1. The cost of operation and maintenance of the common facilities
includes all expenditures incurred by or on behalf of Landlord in keeping and
maintaining the foundations, exterior walls, floors and roofs of the Common Area
of the Project, all repairs to and replacements of equipment associated with the
Project including, but not limited to, the cost of operating and maintaining the
common facilities, including without limitation, the cost of all of Landlord's
gardening and landscaping, the current portion of any assessments against the
Project for any purpose, repairs, preventive maintenance, repainting including
restriping of parking lot and access ways, updating and maintenance of directory
signs, rental of signs and equipment, lighting, sanitary control, cleaning,
sweeping, removal of ice, snow, trash, rubbish, garbage and other refuse,
depreciation over a period of not exceeding sixty (60) months of machinery,
equipment and other assets used in the operation and maintenance of the Project,
repair, maintenance or replacement of onsite water lines, sanitary sewer lines,
septic tanks, leach lines and evapotranspiration beds, storm water lines and
electrical lines and equipment serving the property, the cost of police,
security and traffic control services, reasonable reserves for anticipated
expenditures, the cost and maintenance and upkeep of the public restroom
facilities, and the cost of all personnel required to supervise, implement and
accomplish all of the foregoing, including but not limited to, on-site
management and maintenance personnel. Notwithstanding the above, the Common Area
costs shall be reimbursed by any insurance recoveries on Landlord's insurance
with respect to Common Area items or recovery by Landlord from any breach of
warranty by a contractor or subcontractor with respect to Common Area items. In
addition, the Manager shall charge and be paid an additional fee of ten percent
(10%) of the total of all Common Area Expenses, excluding real property taxes
and insurance, to cover supervision, administration and overhead of the Project.
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2. Real Estate Taxes include all taxes, assessments and other
governmental fees or charges, general and specific, ordinary and extraordinary,
of any kind and nature whatsoever, including but not limited to, assessments for
public improvements or benefits, which shall, during the Term hereof, be
assessed, levied, or imposed upon the Project or Landlord or become due or
payable.
3. Insurance coverage upon the Project and its operations
includes the cost of all Landlord's insurance relating to the common facilities
of the Project as a whole or the operations thereon, including, but not limited
to: casualty insurance, flood insurance, rent loss insurance, fire insurance and
extended coverage, on all buildings in the Project, as well as general liability
insurance, umbrella liability insurance, bodily injury, public liability,
property damage liability, automobile insurance, sign insurance and any other
insurance carried by the Landlord in coverage limits selected by the Landlord.
4. Landlord's Management Fee is comprised of compensation and
fees paid by Landlord to an independent management agent or broker for
management of the Project, or if Landlord manages the Project on its own behalf,
such fees shall be stipulated to be and computed as three percent (3%) of the
Rent received by Landlord from Tenant for the fiscal year in question for the
portions of the Premises referred to in Sections 5.1(C) and (D) with no
management fee due as to the portion of the Premises referred to in Section
5.1(A) and (B).
10.2 COMMON AREA EXPENSES ESTIMATES. At the beginning of each calendar
year, Landlord shall have the right to prospectively estimate the total amount
of Common Area Expenses anticipated for such year, based on Landlord's
experience and the latest available tax information, and Landlord shall
thereafter notify Tenant of the portion of estimated Common Area Expenses which
Tenant shall be expected to pay each month. Within ninety (90) days following
the end of the applicable calendar year, Landlord shall furnish Tenant a
statement ("Statement") setting forth the amount of the actual Common Area
Expenses for such year, showing in adequate detail the manner in which Tenant's
portion of Common Area Expenses has been computed and the payments made by
Tenant for Common Area Expenses during such year. If the amount collected by
Landlord from Tenant for estimated Common Area Expenses exceeds the actual
amount of Common Area Expenses for such year, Landlord shall refund the excess
within thirty (30) days or shall apply any credit to the next Common Area
Expense payment to be made by Tenant. If Tenant' s payments of estimated Common
Area Expenses are less than the total amount of actual Common Area Expenses for
such year, Tenant shall pay the deficiency within thirty (30) days from receipt
of the Statement.
SECTION 11 - MAINTENANCE AND REPAIRS BY TENANT.
11.1 TENANT'S OBLIGATION. Tenant shall keep and maintain in good order,
condition and repair, reasonable wear and tear excepted (including any such
replacement, periodic painting and restoration as is required for that purpose),
the Premises and every part thereof and any and all appurtenances thereto
wherever located, including but not limited to, the exterior and interior
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portion of all doors, door checks, door locks, windows, plate glass, store
front, all plumbing and sewage facilities within the Premises, all alterations,
improvements and installations made by Tenant and any repairs required to be
made due to burglary or other illegal entry into the Premises. Tenant shall
maintain and bear the expense of the light fixtures and bulbs, air-conditioning
units and filters, heating units or furnace, janitorial services, interior pest
control, and the like.
11.2 PROHIBITED ACTS. Tenant shall not cause or permit accumulation of any
debris or extraneous matter on the roof of the Premises and will be responsible
for any damage caused thereto by any acts of Tenant, its agents, servants,
employees or contractors. Tenant shall place any rubbish, broken down boxes,
trash or other excess matter only in such containers as are authorized from time
to time by Landlord; keep the Premises (including all exterior surfaces and both
sides of all glass) clean, orderly, sanitary and free from objectionable odors
and from insects, vermin, and other pests; and keep the outside areas and
sidewalks immediately adjoining the Premises clean and free from empty boxes,
trash of any kind, ice and any other obstructions or safety hazards.
11.3 RIGHTS OF LANDLORD. If Tenant refuses or fails to commence and
complete repairs or maintenance required herein promptly and adequately,
Landlord may, but shall not be required to, make and complete the repairs or
perform the maintenance. The cost of such repairs or maintenance shall be paid
immediately by Tenant to Landlord as additional Rent upon demand.
SECTION 12 - REPAIR BY LANDLORD.
12.1 REPAIR BY LANDLORD. Landlord shall keep and maintain in good repair
the foundation, exterior walls, floors and roof of the building in which the
Premises are located (but the same shall be included in the cost of operations
and maintenance of the common facilities as defined in Section 10), exclusive of
doors, door frames, door checks, door locks, windows and window frames located
in exterior building walls. Landlord shall not, however, be required to make any
such repairs when such repairs are the result of misuse or neglect by Tenant,
its agents, employees, invitees, licensees or contractors, except to the extent
covered by Project insurance. Any repairs required to be made by reason of such
Tenant misuse or neglect shall be the responsibility of Tenant, the above
provisions to the contrary notwithstanding, except to the extent covered by
Project insurance. Except as provided herein, Landlord shall have no obligation
to alter or modify the Premises, or any part thereof, or to repair and maintain
any plumbing, heating, electrical, air-conditioning or other mechanical
installation in the Premises. Under no circumstances shall Landlord be obligated
to repair, replace or maintain any plate glass or door or window glass no matter
what the cause, except to the extent covered by Project insurance.
12.2 HAZARDOUS MATERIALS. Exclusive of Hazardous Materials normally
associated with Tenant's permitted use, if any, Tenant covenants and agrees not
to use, generate, release, manage, treat, manufacture, store, or dispose of, on,
under or about, or transport to or from (any of the foregoing hereinafter a
"Use") the Premises any Hazardous Materials (other than "De Minimis" amounts (as
defined below)). Tenant further covenants and agrees to pay all costs and
13
expenses associated with enforcement, removal, remedial or other governmental or
regulatory actions, agreements or order threatened, instituted or completed
pursuant to any Hazardous Materials Laws, and all audits, tests, investigations,
cleanup, reports and other such items incurred in connection with any efforts to
complete, satisfy or resolve any matters, issues or concerns, whether
governmental or otherwise, arising out of or in any way related to the Use of
Hazardous Materials in any amount by Tenant, its employees, agents, invitees,
subtenants, licensees, assignees or contractors. For purposes of this Lease (i)
the term "Hazardous Materials" shall include but not be limited to asbestos,
urea formaldehyde, polychlorinated biphenyls, automotive and petroleum products
and byproducts (including, without limitation, gasoline, diesel and other fuels,
new, used and recycled oil, grease, brake fluid, antifreeze, and other
automotive fluids installed in or recovered from service vehicles or otherwise,
and any other fuel additive, derivative, lubricant or byproduct generated,
stored or used in Tenant's business operation or otherwise occurring),
pesticides, radioactive materials, hazardous wastes, toxic substances and any
other related or dangerous toxic or hazardous chemical, material or substance
defined as hazardous or regulated or as a pollutant or contaminant in, or the
use of or exposure to which is prohibited, limited, governed or regulated by,
any Hazardous Materials Laws; (ii) the term "De Minimis" amounts shall mean,
with respect to any given level of Hazardous Materials, that such level or
quantity of Hazardous Materials in any form or combination of forms (a) does not
constitute a violation of any Hazardous Materials Laws; and (b) is customarily
employed in, or associated with, similar retail or motel projects in Coconino
County, Arizona; and (iii) the term "Hazardous Materials Laws" shall mean any
federal, state, county, municipal, local or other statute, law, ordinance or
regulation now or hereafter enacted which may relate or legislate the protection
of human health or the environment, including but not limited to the
Comprehensive Environment Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601, ET SEQ.; the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, ET SEQ.; the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, ET SEQ.; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251, ET SEQ.; the Toxic Substances Control Act of 1976, 15 U.S.C.
Section 2601, ET SEQ.; Ariz. Rev. Stat. Ann. Title 49 (The "Arizona
Environmental Quality Act of 1986"); and any rules, regulations or guidelines
adopted or promulgated pursuant to any of the foregoing as they may be adopted,
amended or replaced from time to time.
SECTION 13 - LIENS.
13.1 NO LIENS. Tenant shall have no authority to do any act or make any
contract which may create or be the basis for any lien, mortgage or other
encumbrance upon any interest of Landlord in the Premises or which would cause
any document to be recorded against the Premises or the Project. Should Tenant
cause any construction, alterations, rebuildings, restorations, replacements,
changes, additions, improvements or repairs to be made on the Premises, or cause
any labor to be performed or material to be furnished thereon, therein or
thereto, neither Landlord nor the Premises shall under any circumstances be
liable for the payment of any expense incurred or for the value of any work done
or material furnished, and Tenant shall be solely and wholly responsible to
contractors, laborers and materialmen for performing such labor and furnishing
such material. Tenant shall have the right to subject its Tenant's leasehold
interest to a lien that is limited solely to Tenant's leasehold estate.
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13.2 TENANT'S OBLIGATIONS. Any alterations or improvements made by Tenant
to the Premises must be paid for by Tenant when such alterations or improvements
are made. Nothing in this Lease shall be construed to authorize Tenant, or any
person dealing with or under Tenant, to charge the Rents of the Premises, or the
property and buildings of which the Premises form a part, or the interest of
Landlord in the state of the Premises, with a mechanics' lien or encumbrance of
any kind, and under no circumstances shall Tenant be construed to be the agent,
employee or representative of the Landlord in the making of any such
improvements or alterations to the Premises.
13.3 REMOVAL OF LIENS BY TENANT. If, because of any act or omission (or
alleged act or omission) of Tenant, any mechanic's, materialman's, or other
lien, charge or order for the payment of money shall be filed or recorded
against the Premises or against Landlord (whether or not such lien, charge or
order is valid or enforceable as such), Tenant shall, at its own expense, either
cause the same to be discharged of record pursuant to A.R.S. ss.33-1004 or
otherwise cause such discharge, within thirty (30) days after Tenant shall have
received notice of the filing thereof, or Tenant may, within such period,
furnish to Landlord a bond satisfactory to Landlord against such lien, charge or
order, in which case Tenant shall have the right in good faith to contest the
validity or amount thereof.
13.4 REMOVAL OF LIEN BY LANDLORD. If, because of any act or omission (or
alleged act or omission) of Landlord, any mechanic's, materialman's, or other
lien, charge or order for the payment of money shall be filed or recorded
against the Premises or against Tenant (whether or not such lien, charge or
order is valid or enforceable as such), Landlord shall, at its own expense,
either cause the same to be discharged of record pursuant to A.R.S. ss.33-1004,
or otherwise cause such discharge, within thirty (30) days after Landlord shall
have received notice of the filing thereof, or Landlord may, within such period,
furnish to Tenant a bond satisfactory to Tenant against such lien, charge or
order, in which case Landlord shall have the right in good faith to contest the
validity or amount thereof.
SECTION 14 - INSURANCE.
14.1 PROJECT INSURANCE. Landlord bears the risk of and shall insure as a
Common Area Expense as practical or as required by Landlord's Lender, the
operation of the Project as a whole or the common areas thereof. Such insurance
shall include, but is not limited to, general liability and umbrella excess
liability (with coverage of at least $3,000,000), bodily injury, public
liability, property damage liability, fire and extended coverage in amounts not
less than eighty percent (80%) of the replacement cost of the Project, sign
insurance and the like in coverage limits selected by Landlord. Tenant shall pay
to Landlord its "Proportionate Share" of such insurance as provided in Section
10 above.
14.2 TENANT'S PROPERTY. Tenant agrees that all property owned by it in, on,
or about the Premises shall be at the sole risk and hazard of the Tenant, except
for matters covered by Project insurance and subject to the provisions of
Paragraph 17.2 of this Lease. Subject to the provisions of Paragraph 17.2 of
this Lease, Landlord shall not be liable or responsible for any loss or damage
to Tenant, or anyone claiming under or through Tenant, or otherwise, whether
caused by or resulting from a peril required to be insured hereunder, or from
water, gas leakage, plumbing, electricity or electrical apparatus, pipe or
15
apparatus of any kind, the elements or other similar or dissimilar causes, and
whether or not originating in the Premises or elsewhere. Tenant shall require
all policies of risk insurance carried by it on its property in the Premises to
contain or be endorsed with the provision in and by which the insurer designated
therein shall waive its right of subrogation against Landlord.
14.3 TENANT'S OPERATIONS. Except as may be provided otherwise in this
Lease, all operations conducted by Tenant shall be at Tenant's sole risk. In
addition, Tenant shall procure insurance for its operations as follows:
A. Tenant shall keep in force at its own expense public liability
insurance and comprehensive general liability insurance, including contractual
liability insurance sufficient to cover all phases and aspects of the operation
and conduct of its business, with minimum limits of $2,000,000.00 on account of
bodily injuries to or death of one person and $3,000,000.00 on account of bodily
injuries to or death of more than one person as a result of anyone accident or
disaster, and $2,000,000.00 as a result of damage to property. Such dollar
amounts shall be adjusted each five-year period by a cost of living index
factor.
B. Tenant shall keep and maintain in force during the Term hereof,
plate glass insurance upon windows and doors in the Premises as required by this
Lease unless Landlord maintains such insurance on behalf of all Tenants and
treats it as a Common Area Expense.
14.4 CERTIFICATE OF INSURANCE. Tenant shall provide annually to Landlord a
Certificate of Insurance listing Landlord as an additional named insured under
the Tenant's policies of insurance required by this Lease. Landlord shall
provide annually to Tenant a Certificate of Insurance listing Tenant as an
additional named insured under the Landlord's policies of insurance required by
this Lease.
14.5 INSURANCE COMPANIES. The policies affording the insurance required by
this Lease shall be with companies (rated A-[minus] VII or better, A. M. Best's
Key Rating Guide) authorized to do business in the State of Arizona and shall be
in a form reasonably satisfactory to Landlord, shall provide replacement cost
coverage, shall name Landlord as an additional insured, and shall provide for
payment of loss thereunder to Landlord and Tenant as their interests may appear.
The policies or certificates evidencing such insurance shall be delivered to
Landlord on or before the Commencement Date and renewals thereof shall be
delivered to Landlord at least thirty (30) days prior to the expiration dates of
the respective policies. Alternatively, the insurance required by this Section
14 may be provided under a blanket policy to the Tenant's existing insurance
policy.
14.6 FAILURE TO PROCURE INSURANCE. In the event either Tenant or Landlord
shall fail to procure insurance required of Tenant under this Lease or fail to
maintain the same in force continuously during the Term, or any extension
thereof, the other party shall be entitled to procure such insurance and such
party shall, upon demand, immediately be reimbursed by the defaulting party for
such premium expense, failing which, the non-defaulting party may declare the
other party in default under this Lease.
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14.7 REPAIR OF TENANT. In the event of loss under any such policy or
policies, required to be provided by Tenant, Tenant shall promptly proceed with
the repair and restoration of the damaged or destroyed improvements in
accordance with Section 15 of this Lease. The insurance proceeds, if less than
$100,000.00, shall be paid to Tenant for application to such repair, restoration
or remediation, so long as (a) Tenant is not then in default under this Lease,
and (b) Tenant expressly covenants in writing with Landlord to expend such funds
for the repair, restoration or remediation of the Premises and the improvements
therein, and to furnish Landlord with documentation evidencing such expenditure
of funds for work and improvements incorporated in the Premises within thirty
(30) days following completion of such repair, restoration or remediation. If
the insurance proceeds exceed $100,000.00, the same shall be paid to and held in
trust by the Landlord pursuant to Section 15 of this Lease. All insurance
proceeds described in this Section 14.7 shall be paid upon architects'
certificates and contractors', subcontractors' and materialmen's waivers of lien
for the cost and expense of repair, restoration or remediation of the damage. If
at any time such insurance proceeds shall be insufficient to pay fully the cost
of completion of such repair, restoration or remediation, Tenant shall upon
demand of Landlord pay a sufficient portion of such cost so that it shall appear
to the reasonable satisfaction of Landlord that the amount of insurance money in
the hands of Tenant or Landlord, as applicable, shall at all times be sufficient
to pay for the completion of the repairs, restoration or remediation free and
clear of all liens. Upon the completion of the repairs, restoration or
remediation, free and clear of all liens, any surplus of insurance monies shall
be paid to Tenant, provided that Tenant is not then in default hereunder. In the
event that this Lease shall have been terminated for any material default of
Tenant under any of the terms and provisions contained in this Lease, all
proceeds of insurance in the hands of Tenant or Landlord and all claims against
insurers shall be and become the absolute property of Landlord.
14.8 REPAIR BY LANDLORD. If all or any part of the Premises are damaged by
fire or other catastrophe covered by any insurance policy carried by Landlord,
Landlord shall repair or replace the damaged part of the Premises to its
condition immediately prior to the occurrence. The repair or replacement shall
be commenced and completed within a reasonable time after the occurrence.
Landlord's liability with respect to the obligation to repair or replace shall
be limited to the extent of the proceeds of any insurance policy carried by
Landlord, which policy shall have minimum limits required by this Lease.
SECTION 15 - DAMAGE OR DESTRUCTION.
15.1 TENANT OBLIGATIONS. In the event of damage to or destruction of any of
the improvements on the Premises by fire or other casualty, Tenant shall give
Landlord immediate notice thereof and shall, at Tenant's own expense and whether
or not the insurance proceeds are sufficient for the purpose, promptly commence
and thereafter diligently pursue completion of the repair, restoration or
rebuilding of the same so that upon completion of such repairs, restoration or
rebuilding, the value and rental value of the improvements shall be
substantially equal to the value and rental value thereof immediately prior to
the occurrence of such fire or other casualty. Tenant hereby expressly waives
any statutory right to terminate this Lease in the event of damage or
destruction of the Premises or all or any portion of the buildings or
improvements thereon.
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15.2 LEASE TERMINATION. Notwithstanding anything to the contrary contained
herein, if the Premises should be rendered untenantable by fire or other
casualty during the last two (2) years of the Term to the extent of fifty
percent (50%) or more of the replacement cost of the Premises, Tenant shall have
the option to terminate this Lease by notice to Landlord within sixty (60) days
after the occurrence of such damage or destruction. Upon termination, this Lease
and the Term hereof shall cease and come to an end as of the effective date of
such notice (which shall be not less than thirty (30) nor more than ninety (90)
days after the notice and shall be specified in the notice). Any unearned Rent
or other charges shall be apportioned as of the effective date and Tenant shall
assign to Landlord all of its rights to the insurance proceeds arising out of
damage or destruction to the improvements and shall pay Landlord (when the
information is ascertained) the difference between the value of the property
damaged or destroyed, prior to the damage or destruction, and the amount, if
any, of the insurance proceeds.
SECTION 16 - LANDLORD RESERVATION.
Landlord expressly reserves the right to enter upon the Premises for the
purpose of installing, using, maintaining, renewing and replacing such overhead
or underground water, gas, sewer, and other pipe lines, and telephone, electric
and power lines, cables and conduits as Landlord may deem desirable in
connection with the development or use of the Project. Landlord shall use its
good faith efforts to minimize any interruption to the tenants of the Project
during the work contemplated by this Section. Landlord will reduce Tenant's Rent
in proportion to any material interference with Tenant's business which occurs
as a consequence of the use of any such easement.
SECTION 17 - INDEMNIFICATION.
17.1 By Tenant. Excepting any responsibility allocated to Landlord by
reason of its negligence or by the terms of this Lease (excluding from this
exception, however, any responsibility allocated to Landlord by reason of its
failure to enforce the terms of this Lease against Tenant), Tenant shall
indemnify, defend and hold Landlord harmless for, from and against all
liabilities, obligations, claims, suits, damages, penalties, causes of action,
costs and expenses (including without limitation, reasonable attorneys' fees and
expenses) imposed upon or asserted against Landlord by reason of the acts or
omissions of Tenant, its agents, employees, contractors, suppliers, licensees,
invitees and guests and/or the occurrence of any of the following during the
Term except for conditions existing at the commencement of the Lease Term, or
conditions or events caused during the Lease Term by Landlord, its contractors,
employees, agents or invitees: (i) any use, nonuse or condition of the Premises
or any part thereof; (ii) any accident, injury to or death of persons (including
workmen) or loss of or damage to property occurring on or about the Premises or
any part thereof; (iii) any failure on the part of Tenant to perform or comply
with any of the provisions of this Lease; (iv) by or at the direction of Tenant,
performance of any labor or services or the furnishings of any materials or
other property in respect of the Premises or any part thereof (excluding any
such matters performed or furnished by or at the request of Landlord and
unrelated to a default of Tenant under this Lease); or (v) any failure on the
part of Tenant to clean up and/or dispose of any Hazardous Materials, as
described in Section 12.2 above, in accordance with the requirements of this
Lease and applicable law. In the event Landlord should be made a defendant in
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any action, suit or proceeding brought by reason of any such occurrence for
which Tenant is primarily responsible and except to the extent Landlord's
insurance is also applicable, Tenant shall, at its own expense, resist and
defend such action, suit or proceeding or cause the same to be resisted and
defended by legal counsel designated by Tenant but reasonably approved by
Landlord. If any such action, suit or proceeding should result in a final
judgment against Landlord, Tenant shall promptly satisfy and discharge such
judgment or shall cause such judgment to be promptly satisfied and discharged.
The obligations of Tenant under this Section 17 arising by reason of any such
occurrence taking place while this Lease is in effect shall survive the
termination of this Lease.
17.2 BY LANDLORD. Landlord shall save, defend, hold harmless and indemnify
Tenant for, from and against all liabilities, obligations, claims, suits,
damages, penalties, causes of action, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) imposed upon or asserted
against Tenant by reason of the negligence or wrongful act of Landlord or its
agents, contractors, servants or employees.
17.3 WAIVER OF CLAIMS. Except to the extent of (i) coverage by Landlord's
insurance; (ii) any warranty by Landlord herein; or (iii) warranties or
liabilities on the part of Landlord or its contractors responsible for
construction or remodeling of the Premises, Landlord and its agents,
contractors, servants or employees and shall not be liable for, and Tenant
hereby releases all claims for, damage to persons and property sustained by
Tenant or any person claiming through Tenant resulting from any theft, fire,
accident, occurrence or condition in, on or about the Premises or building of
which they are a part, including, but not limited to, such claims for damage
resulting from (i) any defect in or failure of plumbing, heating or
air-conditioning equipment, electric wiring or installation thereof, water
pipes, stairs, railings or walks; (ii) any equipment or appurtenances needing
repair; (iii) the bursting, leaking or running of any tank, wash stand, water
closet, waste pipe, drain or any other pipe or tank in or about the Premises;
(iv) the backing up of any sewer pipe or down spout; (v) the escape of steam or
hot water; (vi) water, snow or ice being upon or coming through the roof or any
other place upon or near the Premises or otherwise; (vii) the falling of any
fixture, plaster or stucco; and (viii) broken glass. Landlord hereby assigns to
Tenant a non-exclusive right to the benefits and enforcement of all warranties
by contractors, subcontractors and suppliers arising out of the work by Landlord
in the construction or renovation of the Premises.
SECTION 18 - ASSIGNMENT AND SUBLETTING.
18.1 LANDLORD CONSENT. Tenant shall not transfer or assign this Lease, or
any interest in this Lease, or sublet the Premises or any portion thereof
without first obtaining the written consent of Landlord, which consent shall not
be unreasonably withheld subject to performance of the terms and conditions of
this Section 18. Consent shall be given if the transfer is to an affiliate or
subsidiary of Tenant as long as Tenant is not released from post-transfer
obligations under the Lease. Any attempted transfer, assignment or subletting,
including any involuntary transfers or assignments by operation of law, without
such consent shall be void and confer no rights upon any third person, and at
the option of Landlord, shall cause a termination of this Lease, in which event
such third person shall occupy the Premises as a tenant at sufferance. The
acceptance of any Rent payments by Landlord from any such alleged assignee shall
not constitute approval of the assignment or subletting of this Lease by
Landlord. No transfer, assignment or subletting shall relieve Tenant of its
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liability for the full performance of all of the provisions, agreements,
covenants and conditions of this Lease. A consent by Landlord to one transfer,
assignment or subletting shall not operate as a waiver of this Section as to any
future transfer, assignment or subletting, and this Section 18 shall apply to
any transferee, assignee or subtenant.
18.2 IN WRITING. Each transfer, assignment, and subletting to which there
has been consent shall be by an instrument in writing in a form reasonably
satisfactory to Landlord, and shall be executed by the transferor, assignor or
sublessor; and the transferee, assignee, or sublessee shall agree in writing for
the benefit of Landlord to assume, to be bound by, and to perform the
provisions, covenants and conditions of this Lease to be done, kept and
performed by Tenant. One executed copy of such written instrument shall be
delivered to Landlord. A consent to any transfer, assignment or subletting shall
not constitute waiver or discharge of the provisions of this paragraph with
respect to a subsequent transfer, assignment or subletting. The acceptance of
Rent from any other person shall not be deemed to be a waiver of any of the
provisions of this Lease or a consent to the transfer, assignment or subletting
of the Premises.
18.3 LEASE TRANSFER.
A. Tenant shall pay to Landlord a Lease Transfer Fee (as defined in
Section 18.3(8) below) upon the occurrence of any of the following events: (i)
Tenant sells, transfers or assigns (directly, by operation of law or otherwise)
its interest in the Lease or in the business being conducted at the Premises to
any other person or legal entity; (ii) a sale, transfer or assignment (directly,
by operation of law or otherwise) of all or any portion of the ownership of
stock or ownership interest in the present Tenant entity or any successor entity
(except as allowed by Section 18.1 ) including but not limited to any sale,
transfer or assignment by merger, recapitalization, reorganization, or
restructure except this subsection shall not apply to any publicly traded
company; or (iii) Tenant enters into a sublease, license, use or occupancy
agreement with any other person or entity for the leased Premises (items in
sub-paragraphs i, ii, and iii are collectively referred to as a "Transfer").
This Lease Transfer Fee is specifically negotiated to compensate Landlord for a
Transfer of Premises that Tenant acknowledges is in short supply in Uptown
Sedona, Arizona. Should Tenant, for any reason, reacquire the leased premises
after any sale, sublease or transfer, there will be no "transfer fee" to Tenant
upon the reacquisition of the Premises. However, any subsequent action by Tenant
that meets the requirements of items (i), (ii), or (iii) above, shall subject
Tenant to a new Transfer Fee. The offer of Landlord to enter into this Lease is
specifically contingent upon Tenant agreeing to pay the Lease Transfer Fee. Any
failure of Tenant to pay a Lease Transfer Fee entitles Landlord immediately, and
without notice, to terminate this Lease. The Lease Transfer Fee is not in
substitution of other provisions of this Lease concerning assignment and
subletting, which are in full force and effect.
B. A Lease Transfer Fee shall be paid by Tenant to Landlord in cash
upon the date of the Transfer in an amount of Two Thousand Dollars ($2,000.00)
with such amount to be increased by a cost of living adjustment. This provision
is not applicable to any Transfer to or from an affiliate or subsidiary of
Tenant.
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C. As a condition of approval of a Transfer after December 31, 2010 to
any entity that is not in the timeshare business, Landlord shall enter into a
Lease amendment with the assignee increasing the Rent to the then-market rental
for the Premises, as reasonably determined by Landlord and assignee.
D. Landlord shall be entitled to review in detail the motel
experience, the intended use on the Premises, financial capability and tourist
marketing experience of any assignee to determine if such proposed assignee is
suitable as a tenant in the Project. Tenant acknowledges that Landlord has no
obligation to consent to Transfers and that Landlord, after a review of proposed
assignee, may reject, based on reasonable judgment, such assignee as not
suitable for the Project. This provision is not applicable to a Transfer to an
affiliate or subsidiary of Tenant.
SECTION 19 - SUBJECT TO MASTER LEASE.
Tenant acknowledges that this Lease is subordinate to a Master Lease of the
Project among CARLA LEPORI CONIGLIO, Trustee of the CARLA LEPORI CONIGLIO LIVING
TRUST and Trustee of the MARIANA PACINI TRUST, as amended, dated January 28,
1983, CARLA LEPORI CONIGLIO, ROBERT A. PACINI, DORIS GREENE, DORIS PACINI
GREENE, Trustee of the DORIS PACINI GREENE REVOCABLE LIVING TRUST, dated August
17, 1994, CARA M. CONIGLIO, LISA P. KAUFMANN, PHILIP M. CONIGLIO, JR., and
ATHERTON VENTURES, a California general partnership, collectively as Landlord,
and CANYON PORTAL, L.L.C., an Arizona limited liability company as Tenant. The
Master Lease is recorded in Coconino County at Docket 1362, Page 162. A copy of
the Master Lease and the related collection agreement at Pioneer Title has been
provided to Tenant which shall keep the terms and conditions of the Master Lease
confidential from other tenants of Landlord at the Project.
SECTION 20 - DEFAULTS BY TENANT.
20.1 EVENT OF DEFAULT. Each of the following occurrences shall be an Event
of Default hereunder:
A. If Tenant fails to pay any Rent when due and such failure continues
for ten (10) days after written notice following the payment due date or the
date the bill is received by Tenant from Landlord, whichever is later.
B. If Tenant fails to pay any monies due Landlord for Additional
Charges or for any other sums due under this Lease or any other agreement
between Landlord and Tenant ("Other Payments") within ten (10) days after
written notice to Tenant that Tenant is in default of such payment. Such Other
Payments shall be due within ten (10) days after Landlord sends its invoice to
Tenant unless otherwise provided in this Lease.
C. Except as otherwise provided in Section 20.8 of this Lease, if
Tenant defaults or breaches any of the other (non-monetary) covenants,
agreements, conditions or undertakings herein to be kept, observed and performed
by Tenant and such default continues for twenty (20) days after notice thereof
in writing to Tenant.
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D. If Tenant files any petition under any chapter or section of the
Federal Bankruptcy Code or any similar law, state or federal, whether now or
hereafter existing, or shall file an answer admitting insolvency or inability to
pay its debts.
E. If Tenant fails to obtain a stay of any involuntary proceedings
under any chapter or section of the Federal Bankruptcy Code within sixty (60)
days after the institution thereof.
F. If a trustee or receiver is appointed for Tenant or for a major
portion of its property or for any portion of the Premises and such appointment
is not vacated and dismissed within sixty (60) days thereafter and in any event
prior to any action adverse to the interest of Tenant or Landlord having been
taken by such trustee or receiver.
G. If any court takes jurisdiction of a major portion of the property
of Tenant or any part of the Premises in any involuntary proceeding for
dissolution, liquidation or winding up of Tenant and such jurisdiction is not
relinquished or vacated within sixty (60) days.
H. If Tenant makes an assignment for the benefit of its creditors.
I. If Tenant fails to occupy and operate the business in the Premises
for ten (10) consecutive days, unless operation is impracticable for reasons
beyond control of Tenant.
20.2 RE-ENTER OF PREMISES. Upon the occurrence of any such Event(s) of
Default and at any time thereafter, Landlord shall have the right, at its
election, to re-enter the Premises, or any part thereof, either with or without
process of law, and to expel, remove and evict Tenant and all persons occupying
or upon the same under Tenant, using such force as may be lawful and necessary
in so doing, and to possess the Premises and enjoy the same as in their former
estate and to take full possession of and control over the Premises and the
buildings and improvements thereon and to have, hold and enjoy the same and to
receive all rental income of and from the same. No reentry by Landlord shall be
deemed an acceptance of a surrender of this Lease, nor shall it absolve or
discharge Tenant from any liability under this Lease. Upon such reentry, all
rights of Tenant to occupy or possess the Premises shall cease and terminate.
20.3 LEASE TERMINATION. Upon the occurrence of any such Event(s) of Default
and at any time thereafter, Landlord shall have the right, at its election, with
or without re-entry as provided in Section 20.2, to give written notice to
Tenant stating that this Lease shall terminate on the date specified by such
notice, and upon the date specified in such notice this Lease and the Term
hereby demised and all rights of Tenant hereunder shall terminate. Upon such
termination, Tenant shall quit and peacefully surrender to Landlord the Premises
and the buildings and improvements then situated thereon.
20.4 RELETTING. At any time and from time to time after such re-entry,
Landlord may relet the Premises and the buildings and improvements thereon, or
any part thereof, in the name of Landlord or otherwise, for such term or terms
(which may be greater or less than the period which would otherwise have
constituted the balance of the Term of this Lease), and on such conditions
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(which may include concessions or free rental) as Landlord, in its reasonable
discretion, may determine and may collect and receive the rental therefore.
However, in no event shall Landlord be under any obligation to relet the
Premises and the buildings and improvements thereon, or any part thereof, and
Landlord shall in no way be responsible or liable for any failure to relet or
for any failure to collect any rental due upon any such reletting. Even though
it may relet the Premises, Landlord shall have the right thereafter to terminate
this Lease and all of the rights of Tenant in or to the Premises. Nothing
contained in the foregoing shall be deemed a waiver or relinquishment by Tenant
of any duty imposed by law on Landlord to mitigate its damages.
20.5 SURVIVAL OF LIABILITY. Unless Landlord shall have notified Tenant in
writing that it has elected to terminate this Lease, no such re-entry or action
in lawful detainer or otherwise to obtain possession of the Premises shall
relieve Tenant of its liability and obligations under this Lease; and all such
liability and obligations shall survive any such reentry. In the event of any
such reentry, whether or not the Premises and the buildings and improvements
thereon, or any part thereof, shall have been relet, Tenant shall pay to
Landlord the entire rental and all other charges required to be paid by Tenant
up to the time of such reentry of this Lease, and thereafter Tenant, until the
end of what would have been the Term of this Lease in the absence of such
reentry, shall be liable to Landlord, and shall pay to Landlord, as damages for
Tenant's default:
A. The amount of Rent and Additional Charges which would be payable
under this Lease by Tenant if this Lease were still in effect, less
B. The net proceeds of any reletting, after deducting all of
Landlord's expenses in connection with such reletting, including without
limitation all repossession costs, brokerage commissions, legal expenses,
attorneys' fees, alteration costs and expenses of preparation for such
reletting.
Tenant shall be liable for and pay such damages to Landlord on a
monthly basis on the first day of each month and Landlord shall be entitled to
recover from Tenant monthly as the same shall arise. The excess, if any, in any
month or months, of the net proceeds described in this subparagraph (B) actually
received by Landlord over the Rental and Additional Charges described in
subparagraph (A) above shall belong to Landlord, provided that such excess shall
be credited and applied against Tenant's future obligations arising under this
Section 20.5 as the same become due and payable by Tenant hereunder, and that
Tenant shall remain liable for future deficiencies, as applicable.
Notwithstanding any such reentry without termination, Landlord may at any time
thereafter, by written notice to Tenant, elect to terminate this Lease for
Tenant's previous breach.
20.6 CUMULATIVE REMEDIES. Each right and remedy of Landlord or Tenant
provided for in this Lease shall be cumulative and in addition to every other
right or remedy provided for in this Lease or now or hereafter existing at law
or in equity or by statute or otherwise; and the exercise or beginning of the
exercise by Landlord or Tenant of anyone or more of such rights or remedies
shall not preclude the simultaneous or later exercise by Landlord or Tenant of
any or all other rights or remedies provided for in this Lease now or hereafter
existing at law or in equity or by statute or otherwise.
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20.7 SUBLESSEE DEFAULTS. Any violation of any covenant or provision of this
Lease, whether by act or omission, by any sublessee or any other persons
occupying any portion of the Premises under the rights of Tenant shall be deemed
a violation of such provision by Tenant and a default under this Lease. Any such
violation shall not be deemed to be a default hereunder if and so long as Tenant
in good faith and at its own expense takes and diligently pursues any and all
steps it is entitled to take and which steps if completed will cure said
default.
20.8 CURE PERIOD. Notwithstanding any other provision of this Section,
Landlord agrees that if the default complained of, other than for the payment of
monies, is of such a nature that the same cannot be cured within the twenty (20)
day period for curing as specified in the written notice relating thereto, then
such default shall be deemed to be cured if Tenant within such period of twenty
(20) days shall have commenced thereof and shall continue thereafter with all
due diligence to effect such cure and does so complete the same with the use of
such diligence as aforesaid.
20.9 LATE CHARGES. A late charge of Three Hundred Dollars ($300.00) shall
be assessed to any payment required to be made by Tenant to Landlord under the
terms of this Lease not received by Landlord within ten (10) days after its due
date (regardless of whether Tenant has been given notice of such failure of
payment). If Tenant tenders to Landlord a check that is returned marked "NSF" or
its equivalent, Tenant shall pay Landlord a charge in the amount of Two Hundred
Dollars ($200.00). Tenant's failure to pay any such late charge within ten (10)
days after Landlord's written demand therefor shall constitute an Event of
Default hereunder. In addition to the payments set forth in the preceding two
sentences, Tenant shall pay Landlord interest at the rate of eighteen percent
(18%) per annum from the date any payment is due until the date such payment is
actually received by Landlord.
SECTION 21 - CONDEMNATION.
If title to all or any portion of the Premises is taken by a public or
quasi-public authority under any statute or by right of eminent domain of any
governmental body, whether such loss or damage results from condemnation of part
or all of the Premises, Tenant shall not be entitled to participate or receive
any part of the damages or award except where the same shall provide for
Tenant's moving or other reimbursable expenses, the portion thereof allocated to
the taking of Tenant's trade fixtures, equipment and personal property or to a
loss of business by Tenant. Should any power of eminent domain be exercised
after Tenant is in possession, such exercise shall not void or impair this Lease
unless the amount of the Premises so taken substantially and materially impairs
the usefulness of the Premises for the purposes for which they are leased in
which case, either party may cancel this Lease by notice to the other within
sixty (60) days after such possession. Should only a portion of the Premises be
taken and the Premises continue to be reasonably suitable for Tenant's use, the
Rent shall be reduced from the date of such possession in direct proportion to
the reduction in the square footage of the Premises.
SECTION 22 - TENANT'S WAIVER OF STATUTORY RIGHTS.
In the event of any termination of the Term (or any repossession of the
Premises), Tenant so far as permitted by law, waives (i) any notice of re-entry
or of the institution of legal proceedings to that end; and (ii) the benefits of
any laws now or hereafter in force exempting property from liability for Rent or
for debt.
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SECTION 23 - WAIVER OF PERFORMANCE.
No failure by Landlord or Tenant to insist upon the strict performance of
any term or condition hereof or to exercise any right, power or remedy
consequent upon a breach thereof and no submission by Tenant or acceptance by
Landlord of full or partial Rent during the continuance of any such breach shall
constitute a waiver of any such breach or of any such term. No waiver of any
breach shall affect or alter this Lease (which shall continue in full force and
effect), or the respective rights of Landlord or Tenant with respect to any
other then-existing or subsequent breach.
SECTION 24 - REMEDIES CUMULATIVE.
Each right, power and remedy provided for in this Lease now or hereafter
existing at law, in equity or otherwise shall be cumulative and concurrent and
shall be in addition to every other right, power or remedy provided for in this
Lease now or hereafter existing at law, in equity or otherwise; and the exercise
or beginning of the exercise of anyone or more of the rights, powers or remedies
provided for in this Lease shall not preclude the simultaneous or later exercise
of any or all such other rights, powers or remedies.
SECTION 25 - CONVEYANCE BY LANDLORD.
In the event Landlord or any successor Landlord shall conveyor otherwise
dispose of the Premises, it shall thereupon be released from all liabilities and
obligations imposed upon Landlord under this Lease (except those accruing prior
to such conveyance or other disposition) and such liabilities and obligations
shall be binding solely on the then owner of the Premises. This release shall
not be applicable to any monies owed by Landlord to Tenant under any loans made
by Tenant to Landlord.
SECTION 26 - NO PERSONAL LIABILITY TO LANDLORD.
Tenant shall look solely to Landlord's interest in the Project for the
satisfaction of any judgment or decree requiring the payment of money by
Landlord based upon any default under this Lease, and no other property or
assets of Landlord, or any partner or member of, or shareholder in, Landlord,
shall be subject to levy, execution or other enforcement procedures for
satisfaction of any such judgment or decree.
SECTION 27 - ATTORNEYS' FEES.
In the event Landlord brings an action to enforce its rights under this
Lease or to bring suit for possession of the Premises, for the recovery of any
sum due hereunder, or for any other relief against Tenant, declaratory or
otherwise, arising out of a breach of any term of this Lease, or in the event
Tenant should bring any action for any relief against Landlord, declaratory or
25
otherwise, arising out of this Lease, the prevailing party shall be entitled to
receive from the other party reasonable attorneys' fees and reasonable costs and
expenses, which shall be deemed to have accrued due to the commencement of such
action, such sums to be determined by the court sitting without a jury.
SECTION 28 - PROVISIONS SUBJECT TO APPLICABLE LAW.
All rights, powers and remedies provided herein shall be exercised only to
the extent that the exercise thereof shall not violate any applicable law and
are intended to be limited to the extent necessary so that they shall not render
this Lease invalid or unenforceable under any applicable law. If any term of
this Lease shall be held to be invalid, illegal or unenforceable, the validity
of the other terms of this Lease shall in no way be affected thereby.
SECTION 29 - RIGHT TO CURE.
29.1 RIGHT TO CURE TENANT'S DEFAULTS. In the event Tenant shall breach any
term, covenant or provision of this Lease, Landlord may at any time, without
notice, cure such breach for the account and at the expense of Tenant. If
Landlord at any time, by reason of such breach, is compelled to payor elects to
pay any sum of money or to do any act that will require the payment of any sum
of money, or is compelled to incur any expense, including reasonable attorneys'
fees, incurred in instituting, prosecuting or defending any actions or
proceedings to enforce Landlord's rights under this Lease or otherwise, the sum
or sums so paid by Landlord, with all interest, costs and damages, shall be
deemed to be Additional Charges and shall be paid by Tenant to Landlord on the
first day of the month following the incurring of such expenses of the payment
of such sums and shall include interest at the rate of eighteen percent (18%)
per annum from the date Landlord makes a payment until Tenant pays such
Additional Charges in full.
29.2 RIGHT TO CURE LANDLORD'S DEFAULTS. In the event Landlord shall breach
any term, covenant or provision of this Lease, Tenant may at any time, without
notice, cure such breach for the account and at the expense of Landlord. If
Tenant at any time, by reason of such breach, is compelled to payor elects to
pay any sum of money or to do any act that will require the payment of any sum
of money, or is compelled to incur any expense, including reasonable attorneys'
fees, incurred in instituting, prosecuting or defending any actions or
proceedings to enforce Landlord's rights under this Lease or otherwise, the sum
or sums so paid by Tenant, with all interest, costs and damages, shall be paid
by Landlord to Tenant on the first day of the month following the incurring of
such expenses of the payment of such sums and shall include interest at the rate
of eighteen percent (18%) per annum from the date Landlord makes a payment until
Landlord pays such additional charges in full.
SECTION 30 - NOTICES.
Any notice to be given by Landlord or Tenant shall be given in writing and
delivered in person or by overnight mail service to Landlord or Tenant,
forwarded by certified or registered mail, postage prepaid, or sent via
facsimile transmission, to the address indicated in the Fundamental Lease
Provisions, unless the party giving any such notice has been notified, in
writing, of a change of address. Any such notice shall be deemed effective (a)
upon receipt or refusal to accept delivery, if personally delivered; (b) on the
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next business day following delivery by the overnight courier; (c) in the case
of certified mailing, on the date of actual delivery as shown by the addressee's
receipt; or (d) in the case of facsimile transmission, upon receipt (a written
confirmation of successful transmission from the transmitting facsimile machine
being prima facie evidence of such receipt). Burden of proof of delivery is upon
the sender.
SECTION 31 - SIGNS.
A. Tenant shall not place, alter, exhibit, inscribe, paint or affix any
sign, awning, canopy, advertisement, notice or other lettering on any part of
the Premises, or of the building of which the Premises is a part, unless such
signs comply with applicable ordinances or other governmental restrictions and
rules.
B. The Master Landlord, referenced in Section 19, is the owner of the real
property situated adjacent to the Project which real property extends to Oak
Creek and is approximately 3.5 acres ("Master Landlord Adjacent Property").
Ingress and egress to and from Highway 89A to the Master Landlord Adjacent
Property is to and from Sinagua Plaza Drive. The Master Landlord Adjacent
Property does not front Highway 89A. At such time as the Master Landlord
Adjacent Property is developed, Tenant agrees that Landlord, at its expenses,
will prepare an overall signage plan for a combination of the Master Landlord
Adjacent Property and the Project real property. The goal of such signage plan
is that the development on the Master Landlord Adjacent Property will have
signage on Highway 89A. Tenant agrees to cooperate in good faith with Landlord
and Master Landlord in developing the signage plan, which shall be subject to
Tenant's approval, which will not be unreasonably withheld. It is contemplated
by the Landlord and Tenant that the City of Sedona may require changes from the
existing signage, including the Project monument sign and such changes will be
made by Landlord at its expense. In any event, Tenant shall continue to have use
of a Project monument sign along Highway 89A, but such use may be shared with
signage for the development on the Master Landlord Adjacent Property.
SECTION 32 - INSPECTION AND PRESENTING FOR SALE OR LEASE.
Upon not less than two (2) business days notice to Tenant, Landlord may
inspect the Premises so that Landlord or its lender or the Master Landlord can
determine that the Premises is being maintained in good repair and condition.
Landlord hereby reserves the right during usual business hours to enter the
Premises and to show the same for purposes of sale, lease or mortgage, and
during the last six (6) months of the term of this Lease, or the extension
thereof, to exhibit the same to any prospective tenant, and to display
appropriate signage during the six (6) month period for such sale or lease which
signage does not unreasonably interfere with Tenant's business. Prospective
purchasers or tenants authorized by Landlord may inspect the Premises during
reasonable hours at any time.
SECTION 33 - ESTOPPEL CERTIFICATE.
Tenant will execute, acknowledge and deliver to Landlord, within five (5)
business days following request therefor, a certificate certifying (a) that this
Lease is unmodified and in full force (or, if there have been modifications,
that the Lease is in full force and effect, as modified, and stating the
27
modifications); (b) the dates, if any, to which Rent, Additional Charges and
other sums payable hereunder have been paid; (c) that no notice has been
received by Tenant of any default which has not been cured, except as to
defaults specified in such certificate; and (d) subject to Section 35 below,
this Lease is and shall be subordinate to any existing or future deed of trust,
mortgage or security agreement placed upon the Premises or the Project by the
Landlord or owner of the Property. Any claim of Tenant in contradiction of any
of the foregoing matters must be set forth with specificity in the certificate.
Any such certificate may be relied upon by any prospective purchaser or
encumbrancer of the Premises or any part thereof. Tenant's failure to deliver
such certificate within the time permitted hereby shall be conclusive upon
Tenant that this Lease is in full force and effect, except to the extent any
modification has been represented by Landlord, and there are no uncured defaults
in Landlord's performance, and that not more than one month's Rent has been paid
in advance. In addition, at Landlord's option, after notice to Tenant and
expiration of applicable grace period under this Lease, such failure of Tenant
to deliver such certificate shall constitute an Event of Default. Tenant
acknowledges and agrees that the promise to issue such statements pursuant
hereto are a material consideration inducing Landlord to enter into this Lease
and that the breach of such promise shall be deemed a material breach of this
Lease.
SECTION 34 - RECORDING.
This Lease may not be recorded by any means, without the express written
consent of Landlord and Tenant. However, a Memorandum of Lease in the form
attached as Exhibit D shall be executed and recorded.
SECTION 35 - SUBORDINATION AND NON-DISTURBANCE.
This Lease is hereby declared to be subject and subordinate to the lien of
any present or future encumbrance or encumbrances upon the Premises or the
Project, irrespective of the time of execution or the time of recording of any
such encumbrance or encumbrances. Landlord shall obtain for Tenant a
non-disturbance agreement in recordable form from (i) any lender which has a
lien on the Premises, now or in the future; and (ii) the landlord (Coniglio
family) to the Landlord under the Master Lease referenced in Section 19. This
subordination is subject to the right of Tenant upon a foreclosure or other
action taken under any mortgage by the holders thereof to have this Lease and
the rights of Tenant hereunder not be disturbed but to continue in full force
and effect so long as Tenant shall not be in default hereunder. The word
"encumbrance" as used herein includes mortgages, deeds of trust or other similar
instruments, and modifications, extensions, renewals and replacements thereof,
and any and all advances thereunder. Tenant may record such subordination and
non- disturbance agreement.
SECTION 36 - MISCELLANEOUS.
36.1 DEFINITION OF TENANT. The Term "Tenant" shall include legal
representatives, successors and permitted assigns. All covenants herein shall be
made binding upon Tenant and construed to be equally applicable to and binding
upon its agents, employees and others claiming the right to be in the Premises
or in the building or in the building through, under or above Tenant.
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36.2 TENANT. If more than one individual, firm, or corporation shall join
as Tenant, singular context shall be construed to be plural wherever necessary
and the covenants of Tenant shall be the joint and several obligations of each
party signing as Tenant and when the parties signing as Tenant are partners, it
shall be the obligation of the firm and of the individual members thereof.
36.3 GENDER AND NUMBER. Whenever from the context it appears appropriate,
each item stated in the singular shall include the plural and vice versa and the
masculine, feminine, or neuter form shall included the masculine, feminine and
neuter forms.
36.4 MODIFICATIONS AND WAIVERS. No change, modification, or waiver of any
provision of this Lease shall be valid or binding unless it is in writing dated
after the date hereof and signed by the parties intended to be bound. No waiver
of any breach, term, or condition of this Lease by either party shall constitute
a subsequent waiver of the same or any other breach, term, or condition.
36.5 BINDING EFFECT. This Lease shall be binding upon and shall inure to
the benefit of the parties and their respective heirs, personal representatives,
successors and assigns. This provision shall not be deemed to grant Tenant any
right to assign this Lease or sublet the Premises or any part thereof other than
as provided in this Lease.
36.6 SEVERABILITY. To the fullest extent possible each provision of this
agreement shall be interpreted in such fashion as to be effective and valid
under applicable law. If any provision of this Lease is declared void or
unenforceable with respect to particular circumstances, such provision shall
remain in full force and effect in all other circumstances. If any provision of
this Lease is declared void or unenforceable, such provision shall be deemed
severed from this Lease, which shall otherwise remain in full force and effect.
36.7 GOVERNING LAW AND JURISDICTION. Except where preempted by the laws of
the United States or the rules or regulations of any agency or instrumentality
thereof, this Lease is to be interpreted, construed and governed by the laws of
the State of Arizona. The parties irrevocably and unconditionally submit to the
exclusive jurisdiction of the Superior Court of the State of Arizona for the
County of Coconino in connection with any legal action or proceeding arising out
of or relating to this Lease and the parties waive any objection relating to the
basis for personal or in rem jurisdiction or to venue which it may now or
hereafter have in any such suit, action or proceeding.
36.8 ENTIRE AGREEMENT. This instrument constitutes the sole and only
agreement between Landlord and Tenant respecting the Premises, the leasing of
the Premises to the Tenant, or the Lease term herein specified, and correctly
sets forth the obligations of the Landlord and Tenant to each other as of its
date. Any agreements or representations by the Landlord to the Tenant not
expressly set forth in this instrument are void and unenforceable. All prior
agreements and understanding of the parties with respect to such subject matter
are hereby superseded. No representations, promises, agreements, or
understandings contained in this Lease regarding the subject matter hereof shall
be of any force or effect unless in writing, executed by the party to be bound,
29
and dated on or subsequent to the date hereof. Captions and headings are for
convenience only and shall not alter any provision or be used in the
interpretation of this Lease.
36.9 TIME IS OF THE ESSENCE. Time is of the essence of this Lease and each
and every provision hereof. Any extension of time granted for the performance of
any duty under this Lease shall not be considered an extension of time for the
performance of any other duty under this Lease.
36.10 BROKERS. Each party represents and warrants to the other party that
it has not entered into any agreement with, nor otherwise had any dealings with,
any broker or agent in connection or execution of this Lease which could form
the basis of any claim by any such broker or agent for a brokerage fee or
commission, finder's fee, or any other compensation of any kind or nature
against the other in connection with this Leasehold.
LANDLORD: TENANT:
CANYON PORTAL, L.L.C., ILX RESORTS INCORPORATED,
an Arizona limited liability company an Arizona corporation
By: Canyon Portal Properties, Inc.
Its: Managing Member /s/ JOSEPH P. MARTORI
-----------------------------------
By: Joseph P. Martori
/s/ TOM VAN SICKLE Its: Chairman of the Board
------------------------------------ Date: September 26, 2000
By: Tom Van Sickle
Its: President
Date: September 25, 2000
By: HIDC Investments, L.L.C.,
an Arizona limited liability company
Its: Member
/s/ JACK GECHMAN
------------------------------------
By: Jack Gechman
Its: Manager
Date:
-------------------------------
/s/ AL SPECTOR
- -----------------------------------------
By: Al Spector
Its: Member
Date: September 26, 2000
30
LIST OF EXHIBITS
A. Premises - Cross Hatched Area
B. Exclusive Use of Tenants at Project
C. Owens Loan Breakdown
D. Memorandum of Lease
Exhibit A
This page contains the preliminary architectual rendering of the site plan for
the Canyon Portal Properties in Sedona, Arizona.
EXHIBIT B
CANYON PORTAL, L.L.C.
TENANT EXCLUSIVES
TRADING POST SHOPS
TENANT EXCLUSIVE
- ------ ---------
Rocky's No Exclusives
Red Rock Jeep Tours No Exclusives
Bronco Jewelry No Exclusives
Burkhalter's No Exclusives
Naja No Exclusives
CANYON PORTAL SHOPS
TENANT EXCLUSIVE
- ------ ---------
Pink Jeeps No Exclusives
Wendeli's Exclusive in the Canyon Portal Shops Complex
(the approximate 5,000 square foot building) for
a delicatessen, bakery, photo processing and
equipment, and for Landlord approved souvenirs,
gifts and tee shirts. Landlord has taken the
position that because Tenant never has sold any
of the above items or engaged in these
businesses, Tenant has waived this exclusive,
but in any event, it applies only to the one
building.
TCBY Exclusive in the Canyon Portal Shops Complex for
the sale of yogurt or ice cream
Bear Facts No Exclusives
Bronco Jewelry No Exclusives
Rocky Mountain Chocolate Exclusive right to sell assorted chocolates
(bulk and packaged), fudge, and caramel apples.
Sunterra RMI (the Sunterra tenant entity) has the
exclusive rights to market timeshare properties
from its lease location, and the "hawking" of
goods and services and the marketing of
timeshare properties.
NORTH RETAIL BUILDING
TENANT EXCLUSIVE
- ------ ---------
Red Canyon Gallery Tenant has an exclusive in the North Retail
Building for the sale of fine arts, bronze
sculpture, oils, watercolors, pastels,
hand-blown glass, manmade metal furniture,
silver and gold designer jewelry with the
exception that other tenants may sell such items
as long as the floor space devoted to such items
does not exceed 20% of the total of that
tenant's premises.
Sedona Turquoise Trading Tenant has an exclusive for the North Retail
Building to sell authentic Indian-made sand
paintings, moccasins and Indian pottery. In
addition, Tenant has an exclusive to sell
authentic Indian-made turquoise jewelry with the
exception that other tenants may sell such
turquoise jewelry as long as the floor space
devoted to such sales does not exceed 20% of
such tenant's premises.
Nicrin (Rocky's Shirt Shop) No Exclusives
Canyon Breeze Restaurant Exclusive on a restaurant and lounge facility at
the Canyon Portal Project.
EXHIBIT C
Loan No: 50544/Phase II
Submitted by: Canyon Portal, L.L.C.
Draw Request No. 1 Prepared for
Owens Financial Group
WORK COMPLETED
-----------------------
FROM BALANCE
PREVIOUS TOTAL TO
ITEM SCHEDULED APPLICATION TO DATE % FINISH
NO. DESCRIPTION OF WORK VALUE (D+E) THIS PERIOD (D+E) (F/C) (C-F)
--- ------------------- ----- ----- ----------- ----- ----- -----
1 CONSTRUCTION - TRITON - 20 NEW ROOMS $1,047,739.00 $0.00 $ 23,651.00 $ 23,651.00 2.26% $1,024,088.00
2 CONSTRUCTION - NELSON - REHAB 12 ROOMS $ 204,898.00 $0.00 $ 15,000.00 $ 15,000.00 7.32% $ 189,898.00
3 ARCHITECTURAL & ENGINEERING $ 30,000.00 $0.00 $ 26,481.00 $ 26,481.00 88.27% $ 3,519.00
4 CITY OF SEDONA PERMITS & FEES $ 78,600.00 $0.00 $ 68,600.00 $ 68,600.00 87.28% $ 10,000.00
5 CITY OF SEDONA PARKING AGREEMENT $ 216,000.00 $0.00 $108,000.00 $108,000.00 50.00% $ 108,000.00
6 TELEPHONE SYSTEM & FURNITURE $ 185,000.00 $0.00 $ 0.00 $ 0.00 0.00% $ 185,000.00
7 OWENS FEES & COSTS $ 95,000.00 $0.00 $ 0.00 $ 0.00 0.00% $ 95,000.00
14 MISCELLANEOUS & CONTINGENCY $ 42,763.00 $0.00 $ 0.00 $ 0.00 0.00% $ 42,763.00
------------- ----- ----------- ----------- ------ -------------
$1,900,000.00 $0.00 $241,732.00 $241,732.00 12.72% $1,658,268.00
------------- ----- ----------- ----------- ----- -------------
Canyon Portal, L.L.C.
By:
---------------------------
Al Spector, Agent
09/21/00
EXHIBIT D
When Recorded Return to:
Al Spector, Esq.
Spector Law Offices, P.C.
6900 E. Camelback Road, Suite 640
Scottsdale, AZ 85251
MEMORANDUM OF LEASE
This Memorandum of Lease is entered into this 26th day of September, 2000
between CANYON PORTAL, L.L.C., an Arizona limited liability company ("Landlord")
and ILX RESORTS INCORPORATED, an Arizona corporation ("Tenant").
Landlord and Tenant hereby give notice to the public that Landlord has
granted (and hereby grants) to Tenant a Lease on the motel located on real
property more particularly described on Exhibit A, attached hereto and
incorporated herein by this reference.
The term of this Lease shall commence on the first day of October, 2000 and
will terminate on December 31, 2010, unless extended pursuant to the terms of
the Lease which extensions, if all are exercised, can extend to December 31,
2038. The Lease described in this Memorandum was granted by Landlord to Tenant
in a Lease of even date herewith, the terms of which are incorporated herein by
this reference. Further information concerning the Lease may be obtained from
Tenant at the following address:
Al Spector, Esq.
SPECTOR LAW OFFICES, P.C.
6900 E. Camelback Road, Suite 640
Scottsdale, AZ 85251
Phone: (480) 941-0221
Fax: (480) 990-9093
or
Mr. Joseph P. Martori
ILX RESORTS INCORPORATED
2111 E. Highland, Suite 210
Phoenix, AZ 85016
Phone: (602) 957-2777
Fax: (602) 957-2290
TENANT: LANDLORD:
ILX RESORTS, INCORPORATED CANYON PORTAL, L.L.C., an
an Arizona corporation Arizona limited liability company
By: Canyon Portal Properties, Inc.
Its: Managing Member
/s/ Joseph P. Martori
- -----------------------------------
By: Joseph P. Martori /s/ Tom Van Sickle
Its: Chairman of the Board ----------------------------------------
By: Tom Van Sickle
Its: President
By: HIDC Investments, L.L.C.,
an Arizona limited liability company
Its: Member
-----------------------------------
By: Jack Gechman
Its: Manager
----------------------------------------
By: Al Spector
Its: Member
STATE OF ARIZONA )
) ss:
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this ______ day of
September, 2000 by Joseph P. Martori, the Chairman of the Board of ILX Resorts
Incorporated, an Arizona corporation.
----------------------------------------
Notary Public
STATE OF ARIZONA )
) ss:
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this ______ day of
September, 2000 by Tom Van Sickle, the President of Canyon Portal Properties,
Inc., an Arizona corporation which is the Managing Member of Canyon Portal,
L.L.C., an Arizona limited liability company.
----------------------------------------
Notary Public
STATE OF ARIZONA )
) ss:
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this ______ day of
September, 2000 by Jack Gechman, the Manager of HIDC Investments, L.L.C., an
Arizona limited liability company, which is a Member of Canyon Portal, L.L.C.,
an Arizona limited liability company.
----------------------------------------
Notary Public
STATE OF ARIZONA )
) ss:
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this ______ day of
September, 2000 by Al Spector, who is a Member of Canyon Portal, L.L.C., an
Arizona limited liability company.
----------------------------------------
Notary Public