NET LEASE AGREEMENT
THIS LEASE, made and entered into effective as of the 8 day
of May, 2000, by and among AEI Real Estate Fund XV Limited
Partnership ("Fund XV"), AEI Real Estate Fund XVII Limited
Partnership ("Fund XVII"), AEI Income & Growth Fund XXII Limited
Partnership ("Fund XXII"), and AEI Net Lease Income & Growth Fund
XIX Limited Partnership ("Fund XIX"), whose principal business
address is 1300 Minnesota World Trade Center, 30 East Seventh
Street, St. Paul, Minnesota 55101 (hereinafter collectively
referred to as "Lessor"), and Razzoo's, Inc., a Texas corporation
(hereinafter referred to as "Lessee"), whose principal business
address is 15950 Dallas Parkway, Suite 785, Dallas, TX 75248.
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property located at Austin, Texas, and legally described in
Exhibit "A", which is attached hereto and incorporated herein by
reference; and
WHEREAS, Lessee will be constructing the building and
improvements (together the "Building") on the real property
described in Exhibit "A", which Building is described in the
plans and specifications heretofore submitted to Lessor; and
WHEREAS, Lessee desires to lease said real property and
Building (said real property and Building hereinafter
collectively referred to as the "Leased Premises"), from Lessor
upon the terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents (defined
below), terms, covenants, conditions, and agreements hereinafter
described to be paid, kept, and performed by Lessee, Lessor does
hereby grant, demise, lease, and let unto Lessee, and Lessee does
hereby take and hire from Lessor and does hereby covenant,
promise, and agree as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and takes
from Lessor, the Leased Premises subject to the conditions of
this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Fifteen (15)
consecutive "Lease Years", as hereinafter defined, commencing on
May 8, 2000 ("Occupancy Date"), plus the period between the date
hereof and the end of the month in which the First Amendment
hereto is executed as contemplated under the Development
Financing Agreement described in Article 34 hereof. This Lease
may be renewed and extended pursuant to the provisions hereof and
the Term shall be deemed to include any Renewal Term(s) (defined
below) so exercised.
(B) The first "Lease Year" of the Term shall be for a
period of twelve (l2) consecutive calendar months from the
Occupancy Date, plus the period between the date hereof and the
end of the month in which the First Amendment hereto is executed
as contemplated under the Development Financing Agreement
described in Article 34 hereof. Each Lease Year after the first
Lease Year shall be a successive period of twelve (l2) full
calendar months.
(C) The parties agree that once the Occupancy Date has been
established, or upon the request of either party, a short form or
memorandum of this Lease will be executed for recording purposes.
That short form or memorandum of this Lease will set forth the
actual occupancy and termination dates of the Term and optional
Renewal Terms, as defined in Article 28 hereof, and the existence
of any right of renewal or first option to purchase, and that
said right(s) shall terminate when the Lessee shall lose right to
possession or this Lease is terminated, whichever occurs first.
The provisions of this Lease shall control, however, in regard to
any omissions from such memorandum of lease or any provisions
hereof which may be in conflict with the memorandum of lease.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that the Building will be
constructed on the Leased Premises, and all other improvements to
the land, including the parking lot, approaches, and service
areas, will be constructed in all material respects by Lessee
substantially in accordance with the plot, plans, and
specifications heretofore submitted to Lessor.
(B) Lessee warrants that the Building and all other
improvements to the land contemplated will during and upon
completion of construction and at all times during Lessee's
occupancy of the Leased Premises shall comply with the laws,
ordinances, rules, and regulations of all state and local
governments.
(C) Lessee agrees to pay, if not already paid in full, for
all architectural fees and actual construction costs relating to
the Building and other related improvements on the Leased
Premises, in the past, present or future, which shall include,
but not be limited to, plans and specifications, general
construction, carpentry, electrical, plumbing, heating,
ventilating, air conditioning, decorating, equipment
installation, outside lighting, curbing, landscaping,
blacktopping, electrical sign hookup, conduit and wiring from
building, fencing, and parking curbs, builder's risk insurance
(naming Lessor, Lessee, and contractor as co-insured), and all
construction bonds for improvements made by or at the direction
of Lessee.
(D) Opening for business in the Leased Premises by Lessee
shall constitute an acceptance of the Leased Premises and an
acknowledgment by Lessee that the Leased Premises are in the
condition described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the part of the first Lease Year
until execution of the First Amendment hereto or adjusted as
contemplated under the Development Financing Agreement:
Lessee shall pay to Lessor an annual Base Rent of
$115,600.00, which amount shall be payable in advance on the
first day of each month in equal monthly installments of
$2,119.33 to Lessor Fund XV, $1,637.67 to Fund XVII, $1,252.33 to
Fund XIX, and $4,624 to Fund XXII. If the first day of the Lease
Term is not the first day of a calendar month, then the monthly
Rent payable for that partial month shall be a prorated portion
of the equal monthly installment of Base Rent.
(B) Annual Rent Payable beginning in the third full Lease Year
(after the execution of the First Amendment hereto as
contemplated under the Development Financing Agreement) and each
Lease Year thereafter:
In the third and each Lease Year thereafter, the annual Base
Rent due and payable shall increase by an amount equal to One
Percent (1%) of the Base Rent payable for the immediately prior
Lease Year.
(C) Percentage Rent
Commencing with the Fourth (4th) full Lease Year, and for
each subsequent Lease Year, Lessee shall also pay within 90 days
after the end of such Lease Year annually, as Percentage Rent, an
amount equal to Two percent (2.0%) of the amount, if any, by
which Gross Receipts (defined below) for such Lease Year exceed
the average of the Gross Receipts of the first three full Lease
Years (commencing as of the beginning of the first full month of
the first full Lease Year commencing at the date of the First
Amendment to Lease contemplated in Article 34 herein).
(D) Provision of Financial Statements.
Lessee shall also provide financial statements (certified as
true and correct by an appropriate officer of the Lessee) to
support Lessee's calculation of such Percentage Rent due, if any.
If Lessee shall fail to provide the financial statements as
required by Lessor for the purposes of calculating Percentage
Rent for a prior Lease Year, Lessor may make a good faith
estimate of the same and that estimate shall be binding on
Lessee. When the required financial statements are provided to
Lessor, Lessor shall adjust such estimated increases within a
reasonable time thereafter. However, until such adjustment has
been made, Lessee shall continue to be obligated to pay the
estimated Percentage Rent and Base Rent. If any required
financial statements reflect that the calculation or estimate of
Percentage Rent and/or Base Rent has been understated, Lessor
shall give notice of the understatement to Lessee. Within five
(5) days after Lessor gives such notice, Lessee shall pay the
correct Rent amounts and arrearage.
(E) Overdue Payments.
Lessee shall pay interest on all overdue payments of Rent or
other monetary amounts due hereunder at the rate of twelve
percent (12%) per annum or the highest rate allowed by law,
whichever is less, accruing from the expiration of the applicable
notice and cure period after the date such Rent or other monetary
amounts were properly due and payable.
(F) Gross Receipts.
"Gross Receipts" as used herein is hereby defined to mean
gross sales of Lessee, or any assignee or sublessee of Lessee,
and of all licensees, concessionaires, from all business
conducted upon or from the Leased Premises, whether such business
be conducted by Lessee or by licensees, concessionaires, or
tenants of Lessee and whether such sales be evidenced by check,
credit, charge account, exchange, or otherwise, and shall
include, but not be limited to, the amounts received from the
sale of goods, services, foods, etc., performed on or at the
Leased Premises, whether such orders be filled from the Leased
Premises or elsewhere, whether such sales be by means of food,
services, or other vending devices, in the Leased Premises.
Gross Receipts shall not include sales for which cash has been
refunded, or allowances made on food or services claimed to be
defective or unsatisfactory. Gross Receipts shall not include
promotional discounts whether coupons or otherwise, nor the value
or cost of meals provided to employees or meals provided to
others for promotional purposes from whom no payment is received.
Gross Receipts shall not include the amount of any sales, use, or
gross receipts tax imposed by any federal, state, municipal, or
governmental authority directly on sales and collected from
customers. No franchise or capital stock tax and no income or
similar tax based upon income or profits as such shall be
deducted from Gross Receipts in any event whatsoever.
Additionally, Gross Receipts shall not include (i) tips paid to
employees; (ii) bad debts charged off by Lessee, (iii) delivery
charges, if applicable, (iv) any penalties or charges imposed by
Lessee on its customers for returns of checks, (v) interest,
service or sales carrying charges, or other charges, however
denominated, paid by customers for extension of credit on sales
and where not included in the sales price, (vi) returns to
suppliers for credit, and (vii) sums and claims received in
settlement of claims for loss or damage to supplies.
(G) Audit Rights.
Proper annual and quarterly statements, as set forth in
Article 26, shall be prepared and certified by Lessee to Lessor
in conjunction with such Gross Receipts. Lessor may, at its
option, cause an audit to be made of Lessee's business affairs
and records relating to the Leased Premises for the period
covered by any such statements issued by Lessee; provided such
audit is conducted pursuant to the following terms and
conditions: (a) Lessor may audit only Lessee's non-consolidated
books and records, (b) such audit must be conducted by Lessor's
employees or an independent nationally recognized accounting firm
that is not being compensated by Lessor on a contingency fee
basis; (c) such audit must be commenced within six (6) months
after Lessee delivers to Lessor Lessee's annual accounting of
Gross Receipts and once commenced, such audit shall be completed
in a diligent and expeditious manner; (d) Lessor shall supply
Lessee with a copy of the result of the audit within thirty (30)
days after Lessor's receipt of same; (e) no audit shall be
conducted if Lessor has previously conducted an audit for the
same time period; (f) such audit shall be conducted during normal
business hours, at a mutually agreed upon time, at Lessee's main
accounting office; (g) such audit shall be at Lessor's sole cost
and expense and any costs or expenses incurred by Lessee in
providing Lessor with the information required to perform such
audit, including, but not limited to, copying costs and delivery
fees shall be paid by Lessor to Lessee upon demand; and, (h) any
information obtained by Lessor as a result of such audit shall be
held in strict confidence by Lessor and shall not be disseminated
further except to Lessor's accountants, attorneys and lenders.
As used herein the term "non-consolidated" shall mean only such
of Lessee's books and records as reflect its sales solely at the
Leased Premises. Notwithstanding any provision of this Lease,
Lessor shall have no right under any circumstances or pursuant to
any provisions of this Lease to inspect or audit any of Lessee's
operations at any other location. Lessor shall not have the
right to audit Lessee's records more than once per Lease Year.
Once audited, a Lease Year may not again be audited.
Notwithstanding anything in the foregoing to the contrary, Lessee
shall have the right, to be exercised, if at all, within thirty
(30) days after Lessee's receipt of the audit report, to contest
such audit report, and in such case Lessor and Lessee shall work
together to resolve such differences (and Lessor's auditor's
report shall not be binding and conclusive upon Lessee until such
differences are resolved [if Lessee exercises such rights]).
Lessee shall maintain its books and records for at least three
years from the end of any Lease Year. If such audit shall
disclose a liability for Rent to the extent of three percent (3%)
or more in excess of the Rents theretofore computed and paid by
Lessee for such period, Lessee shall pay for the cost of any such
audit. Lessee shall also pay interest on the amount of such
liability at the lesser of the rate of twelve percent (12%) per
annum or the highest rate allowed by law accruing from the date
said liability would have been due and properly paid by Lessee
hereunder.
(H) If Lessee shall cease or suspend operation in violation
of this Lease, resulting in operation for less than a full Lease
Year, Gross Receipts for the partial Lease Year shall be
annualized for purposes of calculating Percentage Rent due and
payable for such partial Lease Year.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal Terms, if
any, of this Lease, at its own cost and expense, procure and
maintain insurance which covers the Leased Premises and
improvements against fire, wind, and storm damage (including
flood insurance if the Leased Premises is in a federally
designated flood prone area) and such other risks (including
earthquake insurance, if the Leased Premises is located in a
federally designated earthquake zone or in an ISO high risk
earthquake zone) as may be included in the broadest form of all
risk, extended coverage insurance as may, from time to time, be
available in amounts sufficient to prevent Lessor or Lessee from
becoming a co-insurer within the terms of the applicable
policies. In any event, the insurance shall not be less than one
hundred percent (100%) of the then insurable value, with such
commercially reasonable deductibles as Lessor may reasonably
require from time to time. Additionally, replacement cost
endorsements, vandalism endorsement, malicious mischief
endorsement, waiver of subrogation endorsement, waiver of co-
insurance or agreed amount endorsement (if available), and
Building Ordinance Compliance endorsement and Rent loss
endorsements (for a period of twelve months) must be obtained.
(B) Lessee agrees to place and maintain throughout the Term
or Renewal Terms, if any, of this Lease, at Lessee's own expense,
public liability insurance with respect to Lessee's use and
occupancy of said Leased Premises, including "Dram Shop" or
liquor liability insurance, if the same shall be or become
available in the State of Texas, with initial limits of at least
$2,000,000 per occurrence/$5,000,000 general aggregate (inclusive
of umbrella coverage), or such additional amounts as Lessor shall
reasonably require from time to time.
(C) Lessee agrees to notify Lessor in writing if Lessee is
unable to procure all or some part of the aforesaid insurance.
In the event Lessee fails to provide all insurance required under
this Lease, Lessor shall have the right, but not the obligation,
to procure such insurance on Lessee's behalf, following five (5)
business days written notice to Lessee of Lessor's intent to do
so (unless insurance then in place would during such period, or
already has, lapsed, in which case no notice need be given) and
Lessee may obtain such insurance during said five day period and
not then be in default hereunder. If Lessor shall obtain such
insurance, Lessee will then, within five (5) business days from
receiving written notice, pay Lessor the amount of the premiums
due or paid, together with interest thereon at the lesser of 12%
per annum or the highest rate allowable by law, which amount
shall be considered Rent payable by Lessee in addition to the
Rent payable pursuant to Article 4 hereof.
(D) All policies of insurance provided for or contemplated
by this Article may be satisfied under Lessee's blanket insurance
coverage. All policies required hereunder shall name Lessor,
Lessor's corporate general partners, and Lessor's individual
General Partner, Robert P. Johnson, and Lessee as additional
insured and loss payee, as their respective may appear, and shall
provide that the policies cannot be canceled, terminated,
changed, or modified without thirty (30) days written notice to
the parties. In addition, all of such policies shall be in place
on or before the Occupancy Date and contain endorsements by the
respective insurance companies waiving (to the extent allowed by
applicable law) all rights of subrogation, if any, against
Lessor. All insurance companies providing coverages must be
rated "A" or better by Best's Key Rating Guide (the most current
edition), or similar quality under a successor guide if Best's
Key Rating shall cease to be published. Lessee shall maintain
legible copies of any and all policies and endorsements required
herein, to be made available for Lessor's review and photocopy
upon Lessor's reasonable request from time to time. On the
Occupancy Date and no less than fifteen (15) business days prior
to expiration of such policies, Lessee shall provide Lessor with
legible copies of any and all renewal certificates of insurance
reflecting the above terms of the Policies (including
endorsements). Lessee agrees that it will not settle any
property insurance claims affecting the Leased Premises in excess
of $100,000 without Lessor's prior written consent, such consent
not to be unreasonably withheld or delayed. Lessor shall consent
to any settlement of an insurance claim wherein Lessee shall
confirm in writing with evidence reasonably satisfactory to
Lessor that Lessee has sufficient funds available to complete the
rebuilding of the Leased Premises.
(E) Lessee shall defend, indemnify, and hold Lessor
harmless against any and all claims, damages, and lawsuits
arising after the Occupancy Date of this Lease and any orders,
decrees or judgments which may be entered therein, brought for
damages or alleged damages resulting from any injury to person or
property or from loss of life sustained in or about the Leased
Premises, unless such damage or injury results from the
intentional misconduct or the gross negligence of Lessor and
Lessee agrees to save Lessor harmless from, and indemnify Lessor
against, any and all injury, loss, or damage, of whatever nature,
to any person or property caused by, or resulting from any act,
omission, or negligence of Lessee or any employee or agent of
Lessee acting in such capacity. In addition, Lessee hereby
releases Lessor from any and all liability for any loss or damage
caused by fire or any of the extended coverage casualties, unless
such fire or other casualty shall be brought about by the
intentional misconduct or gross negligence of Lessor. In the
event of any loss, damage, or injury caused by the joint
negligence or willful misconduct of Lessor and Lessee, they shall
be liable therefor in accordance with their respective degrees of
fault.
(F) Lessor hereby waives any and all rights that it may
have to recover from Lessee damages for any loss occurring to the
Leased Premises by reason of any act or omission of Lessee;
provided, however, that this waiver is limited to those losses
for which Lessor is compensated by its insurers, if the insurance
required by this Lease is maintained. Lessee hereby waives any
and all right that it may have to recover from Lessor damages for
any loss occurring to the Leased Premises by reason of any act or
omission of Lessor; provided, however, that this waiver is
limited to those losses for which Lessee is, or should be if the
insurance required herein is maintained, compensated by its
insurers.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay before delinquency
all charges for all public utility services rendered or furnished
to the Leased Premises, including heat, water, gas, electricity,
sewer, sewage treatment facilities and the like ("Utility
Charges");
(B) Lessee shall pay all personal property taxes attributable
to its personalty on the Leased Premises, all real estate taxes,
special assessments, and municipal or other governmental
impositions, duties, and charges, general, ordinary and
extraordinary, of every kind and nature whatsoever, which may be
levied, imposed, or assessed against the Leased Premises, or upon
any improvements thereon, at any time after the Occupancy Date of
this Lease for the period prior to the expiration of the Term
hereof, or any Renewal Term, if exercised, or which shall or may,
during the Term of this Lease, be charged, laid, levied,
assessed, or imposed upon, or become a lien or liens upon the
Leased Premises or any part thereof ("Taxes"). Such payments
shall be considered as Rent paid by Lessee in addition to the
Rent defined at Article 4 hereof. Nothing contained in this
Lease, however, shall be deemed or construed to include within
Taxes: (i) any transfer, documentary or stamp tax; (ii) any tax
upon the income, profits or business of Lessor (other than any
sales or other such tax that may be imposed on the Rent itself or
any additional rent); (iii) any personal property taxes, capital
levy, or franchise taxes which are imposed on any propertyOwned
by lessor other than the Leased Premises; or (iv) payroll taxes,
inheritance or estate taxesImposed on Lessor even though such
taxes may become a lien against the Leased Premises; provided,
however, if due to a change in the method of taxation, a
franchise tax, Rent tax, or income or profit tax shall be levied
against Lessor in substitution for or in lieu of any tax which
would otherwise constitute a real estate tax, such tax shall be
deemed a real estate tax for the purposes herein and shall be
paid by Lessee; otherwise Lessee shall not be liable for any such
tax levied against Lessor. Lessee shall make any payments of
Taxes on or before the later of (i) the due date thereof or (ii)
thirty (30) days after Lessor provides Lessee with a copy of the
tax bill therefor (if sent directly to Lessor by the taxing
authority). Lessor shall be responsible for any interest or
penalties caused by its delay in forwarding any tax bills to
Lessee. The Leased Premises shall be separately assessed and a
tax bill issued to Lessee separate from any other property if
permitted under applicable law. Lessor and Lessee shall
cooperate in providing to the taxing authority all necessary
documentation to request that such tax bill be issued directly to
Lessee.
(C) All Taxes which shall become payable for the first and last
tax years of the Term hereof shall be apportioned pro rata
between Lessor and Lessee in accordance with the respective
number of months during which each party shall be in
possession of the Leased Premises (or through the expiration
of the Term hereof, if longer) in said respective tax years.
Lessee shall pay within 60 days of the expiration of the
Term hereof Lessor's reasonable estimate of Lessee's pro-
rata share of real estate taxes for the last tax year of the
Term hereof, based upon the last available tax bill. Lessor
shall give Lessee notice of such estimated pro-rata real
estate taxes no later than 75 days prior to the end of the
Term hereof. Upon receipt of the actual statement of real
estate taxes for such prorated period, Lessor shall either
refund to Lessee any over payment of the pro-rata Lessee
obligation, or shall assess and Lessee shall pay promptly
upon notice any remaining portion of the Lessee's pro-rata
obligation for such real estate taxes.
(D) Lessee shall have the right to contest or review by legal
proceedings or in such other manner as may be legal (which,
if instituted, shall be conducted solely at Lessee's own
expense) any tax, assessment for public improvements or
benefits, or other governmental imposition aforementioned,
upon condition that, before instituting such proceeding
Lessee shall pay (under protest) such tax or assessments for
public improvements or benefits, or other governmental
imposition, duties and charges aforementioned, unless such
payment would act as a bar to such contest or interfere
materially with the prosecution thereof and in such event
Lessee shall post with Lessor alternative security
reasonably satisfactory to Lessor. All such proceedings
shall be begun as soon as reasonably possible after the
imposition or assessment of any contested items and shall
be prosecuted to final adjudication with reasonable
dispatch. In the event of any reduction, cancellation, or
discharge, Lessee shall pay the amount that shall be finally
levied or assessed against the Leased Premises or
adjudicated to be due and payable, and, if there shall be
any refund payable by the governmental authority with
respect thereto, if Lessee has paid the expense of Lessor in
such proceedings, Lessee shall be entitled to receive and
retain the refund, subject, however, to apportionment as
provided during the first and last years of the Term of this
Lease. If any general or special assessment is assessed
against the Leased Premises, Lessor shall elect to pay the
assessment in installments over the longest period of time
allowed by applicable law, and only those installments (or
partial installments) attributable to the Term of this Lease
shall be considered in determining Lessee's tax liability
for such assessment.
(E) Lessor, within sixty (60) days after notice to Lessee if
Lessee fails to commence such proceedings, may, but shall
not be obligated to, contest or review by legal proceedings,
or in such other manner as may be legal, and at Lessor's own
expense, any tax, assessments for public improvements and
benefits, or other governmental imposition aforementioned,
which shall not be contested or reviewed, as aforesaid, by
Lessee, and unless Lessee shall promptly join with Lessor in
such contest or review, Lessor shall be entitled to receive
and retain any refund payable by the governmental authority
with respect thereto.
(F) Lessor shall not be required to join in any proceeding
referred to in this Article, unless in Lessee's reasonable
opinion, the provisions of any law, rule, or regulation at
the time in effect shall require that such a proceeding be
brought by and/or in the name of Lessor, in which event
Lessor shall upon written request, join in such proceedings
or permit the same to be brought in its name, all at no cost
or expense to Lessor.
(G) In the event Lessee fails to pay such taxes, within thirty
(30) days after Lessor notifies Lessee in writing that Lessor has
paid such amount, Lessee shall also pay to Lessor, as additional
Rent, the amount of any sales tax, franchise tax, excise tax, on
Rents imposed by the State where the Leased Premises are located.
At Lessor's option, Lessee shall deposit with Lessor on the first
day of each and every month during the Term hereof, an amount
equal to one-twelfth (1/12) of any estimated sales tax payable to
the State in which the property is situated for Rent received by
Lessor hereunder ("Deposit"). From time to time out of such
Deposit Lessor will pay the sales tax to the State in which the
property is situated as required by law. In the event the
Deposit on hand shall not be sufficient to pay said tax when the
same shall become due from time to time, or the prior payments
shall be less than the current estimated monthly amounts, then
Lessee shall pay to Lessor on demand any amount necessary to make
up the deficiency. The excess of any such Deposit shall be
credited to subsequent payments to be made for such items. If a
default or an event of default shall occur under the terms of
this Lease, Lessor may, at its option, without being required so
to do, apply any Deposit on hand to cure such default, in such
order and manner as Lessor may elect.
(H) Lessor shall provide Lessee with a copy of any increased tax
assessment within thirty (30) days of its receipt. Lessee
shall have the right to contest any assessment or the
validity of any tax, provided that Lessee shall indemnify,
defend and hold Lessor and the Leased Premises harmless from
any cost, expense, liability, lien or damage arising out of
such contest.
ARTICLE 7. PROHIBITION ON ASSIGNMENTS AND SUBLETTING; TAKE-BACK
RIGHTS
(A) Except as otherwise expressly provided in this Article,
Lessee shall not:
1. assign or otherwise transfer this Lease, or any part of
Lessee's right, title or interest therein, except in the event
the Lease is assigned by Lessee to a successor publicly held
entity in the event of a public offering of Lessee's capital
stock or to any other entity controlled by or under common
control with Lessee or such successor of Lessee, provided Lessee
shall not be released from liability hereunder and Lessee and
Guarantor shall confirm in writing their continuing liability
hereunder; or
2. sublet all or any part of the Leased Premises or allow all
or any part of the Leased Premises to be used or occupied by any
other Persons (herein defined as a Party other than Lessee,
whether a corporation, a partnership, an individual, or other
entity); or
3. mortgage, pledge or otherwise encumber this Lease, or the
Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control of any class of capital stock
of any corporate Lessee or sublessee, or the transfer of voting
control of the total interest in any other person which is a
Lessee or sublessee, however accomplished, whether in a single
transaction or in a series of related or unrelated transactions,
shall be deemed an assignment of this Lease, or of such sublease,
as the case may be;
2. an agreement by any other Person, directly or indirectly, to
assume Lessee's obligations under this Lease shall be deemed an
assignment;
3. any Person to whom Lessee's interest under this Lease passes
by operation of law, or otherwise, shall be bound by the
provisions of this Article;
4. each material modification, amendment or extension of any
sublease to which Lessor has previously consented shall be deemed
a new sublease;
Lessee agrees to furnish to Lessor, within five (5) business days
following demand at any time, such information and assurances as
Lessor may reasonably request that neither Lessee, nor any
previously permitted sublessee or assignee, has violated the
provisions of this Article.
(C) Except as permitted under Section (A)(1) above, if Lessee
agrees to assign this Lease or to sublet all or any portion of
the Leased Premises, Lessee shall, prior to the effective date
thereof (the "Effective Date"), deliver to Lessor executed
counterparts of any such agreement and of all ancillary
agreements with the proposed assignee or sublessee, as
applicable. If Lessee shall fail to comply with the terms
hereof, and shall have surrendered possession of the Leased
Premises in violation of its duty of prior notice and failed to
obtain Lessor's prior consent (if and where required herein),
and, if in such event, Lessor in its sole discretion (except as
otherwise specifically limited herein) shall not consent to a
proposed sublease or assignment, Lessor shall then have all of
the following rights (in addition to any rights Lessor may
possess occasioned by Lessee's default hereunder), any of which
Lessor may exercise by written notice to Lessee given within
thirty (30) days after Lessor receives the aforementioned
documents or becomes aware of Lessee's failure to comply with the
terms hereof:
1. with respect to a proposed assignment of this Lease, the
right to terminate this Lease on the Effective Date as if it were
the Expiration Date of this Lease;
2. with respect to a proposed subletting of the entire Leased
Premises, the right to terminate this Lease on the Effective Date
as if it were the Expiration Date; or
3. with respect to a proposed subletting of less than the
entire Leased Premises, the right to terminate this Lease as to
the portion of the Leased Premises affected by such subletting on
the Effective Date, as if it were the Expiration Date, in which
case Lessee shall promptly execute and deliver to Lessor an
appropriate modification of this Lease in form satisfactory to
Lessor in all respects.
4. with respect to a proposed subletting or proposed assignment
of this Lease, impose such conditions upon Lessor's consent as
Lessor shall determine in its sole discretion.
(D) If Lessor exercises any of its options under Article 7(C)
above, (or if Lessor shall impose conditions upon its consent and
Lessee shall fail to meet any conditions Lessor may impose upon
its consent), Lessor may then lease the Leased Premises or any
portion thereof to Lessee's proposed assignee or sublessee, as
the case may be, without liability whatsoever to Lessee.
(E) Notwithstanding anything above to the contrary, Lessor
agrees to consent to any assignment or sublease of all or any
portion of the Lessee's interests herein, provided Lessee passes
the Lessee Net Worth Test as defined below and Lessor is given
prior written notice of Lessee's intent to enter into such
sublease or assignment, accompanied by a copy of such sublease or
assignment, and the consents of Lessee and any guarantor of this
Lease (such consent to be in form and substance satisfactory to
Lessor) to such assignment or sublet, affirming their continuing
liability hereunder. Such proposed assignnee shall pass the
Lessee Net Worth Test if (a) the net worth of the proposed
assignee or sublessee (determined in accordance with GAAP) at the
time of such proposed assignment or sublet equals or exceeds the
net worth, similarly determined, for Lessee as of the effective
date of this Lease or at the time of such proposed assignment,
whichever is greater, or (b) such proposed assignee or sublessee
has at least 5 similar type restaurants under management and has
had such restaurants operating profitably for at least 5 years
prior to the date of such proposed assignment or sublease hereof.
(F) Separately, Lessor agrees that its consent to any other
proposed assignment or sublet shall not be unreasonably withheld
or delayed, provided Lessor is given prior written notice of
Lessee's intent to enter into such sublease or assignment,
accompanied by a copy of such sublease or assignment, and the
consents of Lessee and Guarantor (such consent to be in form and
substance satisfactory to Lessor) to such assignment or sublet,
affirming their continuing liability hereunder, and the proposed
assignee or sublessee meets Lessor's then current standards
("Tenant Standards") for new tenants in leasing agreements for
similar properties entered into by Lessor, such standards to
include but not be limited to such tenant's creditworthiness,
business experience, and reputation, consistently applied.
Lessee shall provide Lessor with reasonable evidence of such
proposed assignee's or sublessee's creditworthiness, business
experience, and reputation. If Lessor shall reasonably determine
that such proposed assignee or sublessee does not meet Lessor's
then current Tenant Standards, Lessor may withhold its consent to
such proposed assignment or sublet in Lessor's sole and absolute
discretion.
(G) Notwithstanding anything above to the contrary, Lessee's
interest herein shall not be assignable in any manner in
accordance with the terms hereof unless and until the termination
of the Development Financing Agreement as set forth in Article 35
hereof.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Subject to the provisions of Articles 12 and 15 hereof,
Lessee covenants and agrees to keep and maintain in good order,
condition and repair the interior and exterior of the Leased
Premises during the Term of the Lease, or any Renewal Terms, and
further agrees that Lessor shall be under no obligation to make
any repairs or perform any maintenance to the Leased Premises.
Lessee covenants and agrees that it shall be responsible for all
repairs, alterations, replacements, or maintenance of, including
but without limitation to or of: The interior and exterior
portions of all doors; door checks and operators; windows; plate
glass; plumbing; water and sewage facilities; fixtures;
electrical equipment; interior walls; ceilings; signs; roof;
structure; interior building appliances and similar equipment;
heating and air conditioning equipment; and any equipment owned
by Lessor and leased to Lessee hereunder, as itemized on Exhibit
B attached hereto (if any) and incorporated herein by reference;
and further agrees to replace any of said equipment when
necessary. Lessee further agrees to be responsible for, at its
own expense, snow removal, lawn maintenance, landscaping,
maintenance of the parking lot (including parking lines, seal
coating, and blacktop surfacing), and other similar items.
(B) If Lessee refuses or neglects to commence or complete
repairs promptly and adequately, after prior written notice as
required under Article 16(B) (except in cases of emergency to
prevent waste or preserve the safety and integrity of the Leased
Premises, in which case no notice need be given), Lessor may
cause such repairs to be made, but shall not be required to do
so, and Lessee shall pay the cost thereof to Lessor within five
(5) business days following demand. It is understood that Lessee
shall pay all expenses and maintenance and repair during the Term
of this Lease. If Lessee is not then in default hereunder,
Lessee shall have the right to make repairs and improvements to
the Leased Premises without the consent of Lessor if such repairs
and improvements do not exceed One Hundred Thousand Dollars
($100,000.00), provided such repairs or improvements do not
affect the structural integrity of the Leased Premises. Any
repairs or improvements in excess of One Hundred Thousand Dollars
($100,000.00) or affecting the structural integrity of the Leased
Premises may be done only with the prior written consent of
Lessor, such consent not to be unreasonably withheld or delayed.
All alterations and additions to the Leased Premises shall be
made in accordance with all applicable laws and shall remain for
the benefit of Lessor, except for Lessee's moveable trade
fixtures. In the event of making such alterations as herein
provided, Lessee further agrees to indemnify and save harmless
Lessor from all expense, liens, claims or damages to either
persons or property or the Leased Premises which may arise out of
or result from the undertaking or making of said repairs,
improvements, alterations or additions, or Lessee's failure to
make said repairs, improvements, alterations or additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances, rules,
orders, regulations and requirements of all federal, state, city
and local governments, and with all rules, orders and
regulations of the applicable Board of Fire Underwriters which
affect the use of the improvements. Lessee will comply with all
easements, restrictions, and covenants of record against or
affecting the Leased Premises and any franchise or license
agreements required for operation of the Leased Premises in
accordance with Article 14 hereof.
ARTICLE 10. SIGNS
Lessee shall have the right to install and maintain on the
Building and elsewhere on the Leased Premises a sign or signs
advertising Lessee's business (including, without limitation,
pylon and/or monument signs), provided that the signs conform to
law, and further provided that the sign or signs conform
specifically to the written requirements of the appropriate
governmental authorities.
ARTICLE 11. SUBORDINATION
(A) Lessor reserves the right and privilege to subject and
subordinate this Lease at all times to the lien of any mortgage
or mortgages now or hereafter placed upon Lessor's interest in
the Leased Premises and on the land and buildings of which said
Leased Premises are a part, or upon any buildings hereafter
placed upon the land of which the Leased Premises are a part,
provided such mortgagee shall execute its standard form,
commercially reasonable subordination, attornment and non-
disturbance agreement, which shall provide, inter alia, that
Lessee shall remain in possession of the Leased Premises and be
afforded all the rights granted to Lessee hereunder provided
Lessee is not in default hereunder. Lessor also reserves the
right and privilege to subject and subordinate this Lease at all
times to any and all advances to be made under such mortgages,
and all renewals, modifications, extensions, consolidations, and
replacements thereof, provided such mortgagee shall execute its
standard form, commercially reasonable subordination, attornment
and non-disturbance agreement, which shall provide, inter alia,
that Lessee shall remain in possession of the Leased Premises and
be afforded all the rights granted to Lessee hereunder provided
Lessee is not in default hereunder.
(B) Lessee covenants and agrees to execute and deliver, upon
demand, such further instrument or instruments subordinating this
Lease on the foregoing basis to the lien of any such mortgage or
mortgages as shall be desired by Lessor and any proposed
mortgagee or proposed mortgagees, provided such mortgagee shall
execute its standard form, commercially reasonable subordination,
attornment and non-disturbance agreement. If Lessor defaults in
making payment under any mortgage or deed of trust encumbering
all or any part of the Leased Premises, or if Lessor is in breach
or in default of any such mortgage or deed of trust in any
respect, and the holder thereof shall have declared a default
thereunder, Lessee shall have the right, but not the duty, after
written notice to Lessor, to make all payments of Rent and other
charges thereafter becoming due under this Lease to the mortgagee
or beneficiary thereunder in lieu of Lessor, and payments so made
shall discharge the obligation of Lessee hereunder with respect
to such payments.
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by any public
authority under the power of eminent domain, or by private
purchase in lieu thereof, then this Lease shall automatically
terminate upon the date possession is surrendered, and Rent shall
be paid up to that day. If any part of the Leased Premises shall
be so taken as to render the remainder thereof materially
unusable in the opinion of a licensed third party arbitrator
reasonably approved by Lessor and Lessee, for the purposes for
which the Leased Premises were leased, then Lessor and Lessee
shall each have the right to terminate this Lease on thirty (30)
days notice to the other given within ninety (90) days after the
date of such taking. In the event that this Lease shall
terminate or be terminated, the Rent shall, if and as necessary,
be paid up to the day that possession was surrendered.
(B) If any part of the Leased Premises shall be so taken such
that it does not materially interfere with the business of
Lessee, then Lessee shall, with the use of the condemnation
proceeds to be made available by Lessor, but otherwise at
Lessee's own cost and expense, restore the remaining portion of
the Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was leased.
Lessee shall make all repairs to the building on the Leased
Premises to the extent necessary to constitute the building a
complete architectural unit. Provided, however, that such work
shall not exceed the scope of the work required to be done by
Lessee in originally constructing such building unless Lessee
shall demonstrate to Lessor's reasonable satisfaction the
availability of funds to complete such work. Provided, further,
the cost thereof to Lessor shall not exceed the proceeds of its
condemnation award, all to be done without any adjustments in
Rent to be paid by Lessee. This lease shall be deemed amended to
reflect the taking in the legal description of the Leased
Premises.
(C) Termination of this Lease because of condemnation shall be
without prejudice to the rights of either Lessor or Lessee to
recover from the condemning authority compensation and damages
for the injury or loss sustained by them as a result of the
taking. All compensation awarded or paid upon such total or
partial taking of the Leased Premises shall belong to and be the
property of Lessor without any participation by Lessee, whether
such damages shall be awarded as compensation for diminution in
value to the leasehold or to the fee of the premises herein
leased. Nothing contained herein shall be construed to preclude
Lessee from prosecuting any claim directly against the condemning
authority in such proceedings for: Loss of business; damage to
or loss of value or cost of removal of inventory, trade fixtures,
furniture, and other personal property belonging to Lessee;
provided, however, that no such claim shall diminish or otherwise
adversely affect Lessor's award or the award of any fee
mortgagee.
ARTICLE 13. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and examine
the Leased Premises at any time during Lessee's normal business
hours, after reasonable notice to Lessee, and Lessee agrees to
allow Lessor free access to the Leased Premises to show the
Leased Premises to any prospective purchaser or mortgagee. If
requested by Lessee, such entry by Lessor shall be under the
supervision of Lessee. Lessor shall not interfere with or create
a hazard to Lessee's normal business operations during such
entry. Upon default by Lessee (after the expiration of any
applicable notice and cure periods provided for herein) or at any
time within ninety (90) days of the expiration or termination of
the Lease, Lessee agrees to allow Lessor to then place "For Sale"
or "For Rent" signs on the Leased Premises. Lessor and Lessor's
representatives shall at all times while upon or about the Leased
Premises observe and comply with Lessee's reasonable health and
safety rules, regulations, policies and procedures. Lessor
agrees to indemnify and hold Lessee, its successors, assigns,
agents and employees from and against any liability, claims,
demands, cause of action, suits and other litigation or
judgements of every kind and character, including injury to or
death of any person or persons, or trespass to, or damage to, or
loss or destruction of, any property, whether real or personal,
to the extent resulting from the negligence or willful misconduct
or Lessor or Lessor's representatives while upon or about the
Leased Premises.
ARTICLE 14. EXCLUSIVE USE
After the Occupancy Date, Lessee expressly agrees and
warrants that the Leased Premises will be used exclusively as a
Razzoo's Restaurant or any other casual dining sit-down
restaurant. In any other such case, after obtaining Lessor's
prior written consent, such consent not to be unreasonably
withheld or delayed, Lessee may conduct any lawful business from
the Leased Premises. Lessee acknowledges and agrees that any
other use without the prior written consent of Lessor will
constitute a default under and a violation and breach of this
Lease. If Lessee should cease business operations at the Leased
Premises, Lessee shall continue to abide by all terms of this
Lease and shall continue to pay Base Rent according the to the
terms hereof (including scheduled rental increases in Article 4
and any renewal term(s)), and shall continue to pay annually the
same amount of annual percentage rent that may have been payable,
if any, for the last full Lease Year of operation prior to such
cessation of business operations at the Leased Premises.
ARTICLE 15. DESTRUCTION OF PREMISES
If, during the Term of this Lease, the Leased Premises are
totally or partially destroyed by fire or other elements, within
a reasonable time (but in no event longer than one hundred eighty
(180) days after such damage or destruction and subject to the
provisions herein below), Lessee shall repair and restore the
improvements so damaged or destroyed as nearly as may be
practical to their condition immediately prior to such casualty.
All rents payable by Lessee shall be abated during the period of
repair and restoration to the extent that Lessor shall be
compensated by the proceeds of the rent loss insurance required
to be maintained by Lessee hereunder.
Provided Lessee is not in default hereunder (and retains
according to the terms hereof the right to rebuild) with the
Lessor's prior written consent, which consent shall not be
unreasonably withheld or delayed, Lessee shall have the right to
promptly and in good faith settle and adjust any claim under such
insurance policies with the insurance company or companies on the
amounts to be paid upon the loss. The insurance proceeds shall
be used to reimburse Lessee for the cost of rebuilding or
restoration of the Leased Premises. Risk that the insurance
company shall be insolvent or shall refuse to make insurance
proceeds available shall be with Lessee. The Leased Premises
shall be so restored or rebuilt so as to be of at least equal
value and substantially the same character as prior to such
damage or destruction. If the insurance proceeds are less than
One Hundred Thousand Dollars ($100,000), they shall be paid to
Lessee for such repair and restoration. If the insurance proceeds
are greater than or equal to One Hundred Thousand Dollars
($100,000), they shall be deposited by Lessee and Lessor into a
customary construction escrow at a nationally recognized title
insurance company, or at Lessee's option, with Lessor
("Escrowee") and shall be made available from time to time to
Lessee for such repair and restoration. Such proceeds shall be
disbursed in conformity with the terms and conditions of a
commercially reasonable construction loan agreement. Lessee
shall, in either instance, deliver to Lessor or Escrowee (as the
case may be) satisfactory evidence of the estimated cost of
completion together with such architect's certificates, waivers
of lien, contractor's sworn statements and other evidence of cost
and of payments as the Lessor or Escrowee may reasonably require
and approve. If the estimated cost of the work exceeds One
Hundred Thousand Dollars ($100,000), all plans and specifications
for such rebuilding or restoration shall be subject to the
reasonable approval of Lessor.
Any insurance proceeds remaining with Escrowee after the
completion of the repair or restoration shall be paid to Lessor.
If the proceeds from the insurance are insufficient, after
review of the bids for completion of such improvements, or should
become insufficient during the course of construction, to pay for
the total cost of repair or restoration, Lessee shall, prior to
commencement of work, demonstrate to Escrowee and Lessor's
reasonable satisfaction, the availability of such funds necessary
to complete construction and Lessee shall deposit the same with
Escrowee for disbursement under the construction escrow
agreement.
Provided, further, that should the Leased Premises be
damaged or destroyed to the extent of fifty (50%) percent of its
value or such that Lessee cannot carry on business as a casual
dining restaurant without (in the opinion of a licensed third
party architect reasonably approved by Lessor and Lessee) being
closed for more than sixty (60) days (which duration of closure
may be established by Lessee by the affidavit of the approved
independent third party architect as to the estimated time of
repair) during the last three (3) years of the remaining Term of
this Lease or any of the option terms of this Lease, if any
further options to renew remain, Lessee may elect within 30 days
of such damage, to then exercise at least one (1) option to renew
this Lease so that the remaining Term of the Lease is not less
than five (5) years in order to be entitled to such insurance
proceeds for restoration or rebuilding. Absent such election,
this Lease shall terminate upon Lessor's receipt of insurance
proceeds (and the deductible thereunder) payable under policies
maintained pursuant to this Lease.
ARTICLE 16. ACTS OF DEFAULT
Each of the following shall be deemed a default by Lessee
and a breach of this Lease:
(A) Failure to pay the Rent or any monetary obligation
herein reserved, or any part thereof when the same
shall be due and payable, provided, however,
Lessee shall have five (5) business days after
written notice from Lessor within which to cure
the failure to pay the Rent or any monetary
obligation herein reserved.
(B) Failure to do, observe, keep and perform any of
the other terms, covenants, conditions, agreements
and provisions in this Lease to be done, observed,
kept and performed by Lessee; provided, however,
that Lessee shall have Thirty (30) days after
written notice from Lessor within which to cure
such default, or such longer time as may be
reasonably necessary if such default cannot
reasonably be cured within Thirty (30) days, if
Lessee is diligently pursuing a course of conduct
that in Lessor's reasonable opinion is capable of
curing such default, but in any event such longer
time shall not exceed 120 days after written
notice from Lessor of the default hereunder.
(C) The abandonment of the Leased Premises by Lessee,
the adjudication of Lessee as a bankrupt, the
making by Lessee of a general assignment for the
benefit of creditors, the taking by Lessee of the
benefit of any insolvency act or law, the
appointment of a permanent receiver or trustee in
bankruptcy for Lessee property, or the appointment
of a temporary receiver which is not vacated or
set aside within sixty (60) days from the date of
such appointment; provided, however, that the
foregoing shall not constitute events of default
so long as Lessee continues to otherwise satisfy
its obligations (including but not limited to the
payment of Rent) hereunder.
ARTICLE 17. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at any
time thereafter, Lessor may serve a written notice upon Lessee
that Lessor elects to terminate this Lease. This Lease shall
then terminate on the date so specified as if that date had been
originally fixed as the expiration date of the term herein
granted, provided, however, that Lessee shall have continuing
liability for future rents for the remainder of the original Term
and any exercised Renewal Term as set forth in Article 19,
notwithstanding any earlier termination of the Lease hereunder
(except where Lessee has exercised a right to terminate where
granted herein), preserving unto Lessor the benefit of its
bargained-for rental payments.
ARTICLE 18. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or otherwise, or
in the event of an uncured default hereunder by Lessee, or in the
event that the Leased Premises or any part thereof, shall be
abandoned by Lessee and Rent shall not be paid or other
obligations (including but not limited to repair and maintenance
obligations) of Lessee hereunder shall not be met, then Lessor or
its agents, servants or representatives, may immediately or at
any time thereafter, re-enter and resume possession of the Leased
Premises or any part thereof, and remove all persons and property
therefrom, either by summary dispossess proceedings or by a
suitable action or proceeding at law, or by force or otherwise
without being liable for any damages therefor, except for damages
resulting from Lessor's negligence or willful misconduct.
Notwithstanding anything above to the contrary, if Lessee is
still in possession of the Leased Premises, Lessor agrees to use
such legal proceedings (summary or otherwise) prescribed by law
to regain possession of the Leased Premises.
ARTICLE 19. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in this
Lease or should it take possession pursuant to legal proceedings
or pursuant to any notice provided for by law, Lessor shall
undertake commercially reasonable efforts to mitigate Lessee's
continuing liability hereunder as such efforts may be prescribed
by law or statute (which shall include listing the Leased
Premises with a licensed commercial real estate broker and
securing the property against waste, but shall not otherwise
include the expenditure of Lessor's funds, unless the same be
required by law or statute and cannot be waived as provided for
herein), and in addition, Lessor may either (i) terminate this
Lease or (ii) it may from time to time, without terminating the
contractual obligation of Lessee to pay Rent under this Lease,
make such alterations and repairs as may be necessary to relet
the Leased Premises or any part thereof for the remainder of the
original Term or any exercised Renewal Terms, at such Rent or
Rents, and upon such other terms and conditions as Lessor in its
sole discretion may deem advisable. Termination of Lessee's
right to possession by Court Order shall be sufficient evidence
of the termination of Lessee's possessory rights under this
Lease, and the filing of such an Order shall be notice of the
termination of Lessee's renewal rights as set forth in any
Memorandum of Lease of record.
(B) Upon each such reletting, without termination of the
contractual obligation of Lessee to pay Rent under this Lease,
all Rents received by Lessor shall be applied as follows:
1. First, to the payment of any indebtedness other
than Rent due hereunder from Lessee to Lessor;
2. Second, to the payment of any costs and expenses
of such reletting, including brokerage fees and
attorney's fees and of costs of such alterations
and repairs;
3. Third, to the payment of Rent and other monetary
obligations due and unpaid hereunder;
4. Finally, the residue, if any, shall be held by
Lessor and applied in payment of future Rent as
the same may become due and payable hereunder.
If such Rents received from such reletting during any month are
less than that to be paid during that month by Lessee hereunder,
Lessee shall pay any such deficiency to Lessor. Such deficiency
shall be calculated and paid monthly. No such re-entry or taking
possession of such Leased Premises by Lessor shall be construed
as an election on its part to terminate Lessee's contractual
obligations under this Lease respecting the payment of rent and
obligations for the costs of repair and maintenance unless a
written notice of such intention be given to Lessee.
(C) Notwithstanding any such reletting without termination,
Lessor may at any time thereafter elect to terminate this Lease
for any uncured breach.
(D) In addition to any other remedies Lessor may have with
this Article 19, Lessor may recover from Lessee all damages it
may incur by reason of any uncured breach, including: The cost
of recovering and reletting the Leased Premises; reasonable
attorney's fees; and, the present value (discounted at a rate of
8% per annum) of the excess of the amount of Rent and charges
equivalent to Rent reserved in this Lease for the remainder of
the Term over the then reasonable Rent value of the Leased
Premises (or the actual Rents receivable by Lessor, if relet),
(the Lessee bearing the burden of proof to demonstrate the amount
of rental loss for the same period, that through reasonable
efforts to mitigate damages, could have been avoided) for the
remainder of the Term, all of which amounts shall be immediately
due and payable from Lessee to Lessor in full. In the event that
the Rent obtained from such alternative or substitute tenant is
more than the Rent which Lessee is obligated to pay under this
Lease, then such excess shall be paid to Lessor provided that
Lessor shall credit such excess against the outstanding
obligations of Lessee due pursuant hereto, if any.
(E) It is the object and purpose of this Article 19 that
Lessor shall be kept whole and shall suffer no damage by way of
non-payment of Rent or by way of diminution in Rent. Lessee
waives and will waive all rights to trial by jury in any summary
proceedings or in any action brought to recover Rent herein which
may hereafter be instituted by Lessor against Lessee in respect
to the Leased Premises. Lessee hereby waives any rights of re-
entry it may have or any rights of redemption or rights to redeem
this Lease upon a termination of this Lease.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and building
equipment used in connection with the operation of the Leased
Premises including, but not limited to, heating, electrical
wiring, lighting, ventilating, plumbing, walk-in
refrigerators/coolers, walk-in freezers, air conditioning
systems, and the equipment owned by Lessor and leased to Lessee
hereunder as specifically set forth on Exhibit B attached hereto,
if any, and incorporated herein by reference shall be the
property of Lessor. All other trade fixtures and all other
articles of personal property owned by Lessee shall remain the
property of Lessee.
(B) Lessee shall furnish and pay for any and all equipment,
furniture, trade fixtures, and signs, except for such items, if
any, described in Article 20(A) above, as owned by Lessor.
Lessee agrees that Lessor shall have a lien on all Lessee's
equipment, furniture, trade fixtures, furnishings, and signs as
security for the performance of and compliance with this Lease,
subject to the rights of any bona fide third party's security
interest in such property. Provided Lessee is not in default
hereunder, Lessor will agree that its interest in the personal
property of Lessee will be subordinated to financing which may
exist or which Lessee may cause to exist in the future on that
same personal property.
(C) At the end of the Term of this Lease, the property
described at Article 20(B) above, after written notice to Lessor
given at least ten (10) business days prior to any proposed
removal, may be removed from the Leased Premises by Lessee
regardless of whether or not such property is attached to the
Leased Premises so as to constitute a "fixture" within the
meaning of the law; however, all damages and repairs to the
Leased Premises which may be caused by the removal of such
property shall be paid for by Lessee.
ARTICLE 21. LIENS
Lessee shall not do or cause anything to be done whereby the
Leased Premises may be encumbered by any mechanic's or other
liens. Whenever and as often as any mechanic's or other lien is
filed against said Leased Premises purporting to be for labor or
materials furnished or to be furnished to Lessee, Lessee shall
remove the lien of record by payment or by bonding with a surety
company authorized to do business in the state in which the
property is located, within forty-five (45) days from the date of
the filing of said mechanic's or other lien and delivery of
notice thereof to Lessee. Should Lessee fail to take the
foregoing steps within said forty-five (45) day period (or in any
event, prior to the expiration of the time within which Lessee
may bond over such lien to remove it as a lien upon the Leased
Premises), Lessor shall have the right, among other things, to
pay said lien without inquiring into the validity thereof, and
Lessee shall forthwith reimburse Lessor for the total expense
incurred by it in discharging said lien as additional Rent
hereunder.
ARTICLE 22. NO WAIVER EXCEPT IN WRITING
No agreement to accept a surrender of the Leased Premises or
termination of this Lease shall be valid unless in writing signed
by Lessor. The delivery of keys to any employee of Lessor or
Lessor's agents shall not operate as a termination of the Lease
or a surrender of the Leased Premises. The failure of Lessor to
seek redress for violation of any rule or regulation, shall not
prevent a subsequent act, which would have originally constituted
a violation, from having all the force and effect of an original
violation. Neither payment by Lessee or receipt by Lessor of a
lesser amount than the Rent herein stipulated shall be deemed to
be other than on account of the earliest stipulated Rent. Nor
shall any endorsement or statement on any check nor any letter
accompanying any check or payment as Rent be deemed an accord and
satisfaction. Lessor may accept such check or payment without
prejudice to Lessor's right to recover the balance of such Rent
or pursue any other remedy provided in this Lease. This Lease
contains the entire agreement between the parties, and any
executory agreement hereafter made shall be ineffective to change
it, modify it or discharge it, in whole or in part, unless such
executory agreement is in writing and signed by the party against
whom enforcement of the change, modification or discharge is
sought. The failure of Lessee to insist upon prompt and strict
performance of any of the terms, conditions or undertakings of
this Lease, or to exercise any right herein conferred, in any one
or more instances, shall not be construed as a waiver of the same
or any other term, condition, undertaking, right or option.
ARTICLE 23. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set forth
in Article 4 and all other sums herein reserved as Rent and upon
the due performance of all the terms, covenants, conditions and
agreements herein contained on Lessee's part to be kept and
performed, so long as Lessee is not in default hereof beyond any
applicable notice and cure periods, Lessee shall have, hold and
enjoy the Leased Premises free from molestation, eviction, or
disturbance by Lessor, or by any other person or persons lawfully
claiming the same, and that Lessor has good right to make this
Lease for the full Term granted, including renewal periods.
ARTICLE 24. BREACH - PAYMENT OF COSTS AND ATTORNEYS' FEES
Each party agrees to pay and discharge all reasonable costs,
and actual attorneys' fees, including but not limited to
attorney's fees incurred at the trial level and in any appellate
or bankruptcy proceeding, and expenses that shall be incurred by
the prevailing party in enforcing the covenants, conditions and
terms of this Lease or defending against an alleged breach,
including the costs of reletting. Such costs, attorneys fees,
and expenses if incurred by Lessor shall be considered as Rent as
due and owing in addition to any Rent defined in Article 4
hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not less
than ten (10) business days prior request by the other party,
execute, acknowledge and deliver to the requesting party a
statement in writing, executed by an executive officer of such
party, certifying that: (a) this Lease is unmodified (or if
modified then disclosure of such modification shall be made); (b)
this Lease is in full force and effect; (c) the date to which the
Rent and other charges have been paid; and (d) to the knowledge
of the signer of such certificate that the other party is not in
default in the performance of any covenant, agreement or
condition contained in this Lease, or if a default does exist,
specifying each such default of which the signer may have
knowledge. It is intended that any such statement delivered
pursuant to this Article may be relied upon by any prospective
purchaser or mortgagee of the Leased Premises or any assignee of
such mortgagee or a purchaser of the leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the Term of this Lease, Lessee will, within one
hundred twenty (120) days after the end of Lessee's fiscal year,
furnish Lessor with Lessee's financial statements (in SEC Form 10-
K, if available). The financial statements shall be audited, at
the Lessee's expense, by a nationally recognized independent
certified public accounting firm reasonably acceptable to Lessor
and shall be prepared in conformity with generally accepted
accounting principles (GAAP). Lessee shall also provide Lessor
with financial statements for the Leased Premises within 90 days
after the end of each Lease Year. The financial statements for
the Leased Premises do not need to be prepared by an independent
certified public accountant, but shall be certified as true and
correct by the chief financial officer or other authorized
officer of Lessee. Additionally, during the Term of the Lease,
Lessee will within forty-five (45) days from the end of each
quarter of each fiscal year, furnish Lessor with Lessee's
financial statements (in SEC Form 10-Q if available) and
financial statements of the Leased Premises for such quarter.
Lessor shall have the right to require such financial statements
for the Lessee and the Leased Premises on a monthly basis after
the occurrence of a default in any Lease Year. Provided,
however, if Lessee shall not commit a default for twelve
consecutive months, Lessor's right to require such monthly
financial statements shall terminate until Lessee shall again
commit a default in any given Lease Year. Said quarterly (or
monthly, if required by Lessor) financial statements do not need
to be prepared by an independent certified public accountant, but
shall be certified as true and correct by the chief financial
officer or other authorized officer of Lessee. The financial
statements shall conform to GAAP, and include a balance sheet and
related statements of operations, statement of cash flows,
statement of changes in shareholder's equity, and related notes
to financial statements, if any.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to make reasonable modifications of
this Lease requested by any Mortgagee of record from time to
time, provided such modifications are not substantial and do not
increase any of the Rents or obligations of Lessee under this
Lease or substantially modify any of the business elements of
this Lease.
ARTICLE 28. OPTION TO RENEW
If this Lease is not previously canceled or terminated and
so long as Lessee is not in default hereof beyond any applicable
notice and cure periods, then Lessee shall have the option to
renew this Lease upon the same conditions and covenants contained
in this Lease for Two (2) consecutive periods of Five (5) years
each (singularly "Renewal Term"). Rent during the Renewal Term
shall increase each Lease Year by One Percent (1%) of the Rent
payable for the preceding Lease Year.
If exercised by Lessee, the first Renewal Term will commence
on the day following the date the original Term expires and
successive Renewal Terms, if exercised by Lessee, shall commence
on the day following the last day of the then expiring Renewal
Term. Except as otherwise provided in Article 15 hereof, Lessee
must give ninety (90) days written notice to Lessor of its intent
to exercise this option prior to the expiration of the original
Term of this Lease or any Renewal Term, as the case may be.
ARTICLE 29. MISCELLANEOUS PROVISIONS
(A) All written notices shall be given to Lessor or Lessee
by certified mail or nationally recognized overnight mail.
Notices to either party shall be addressed to the person and
address given on the first page hereof. Lessor and Lessee may,
from time to time, change these addresses by notifying each other
of this change in writing. Notices of overdue Rent may be sent
to Lessee by regular, special delivery, or nationally recognized
overnight mail.
(B) The terms, conditions and covenants contained in this
Lease and any riders and plans attached hereto shall bind and
inure to the benefit of Lessor and Lessee and their respective
successors, heirs, legal representatives, and assigns.
(C) This Lease shall be governed by and construed under the
laws of the State where the Leased Premises are situate.
(D) In the event that any provision of this Lease shall be
held invalid or unenforceable, no other provisions of this Lease
shall be affected by such holding, and all of the remaining
provisions of this Lease shall continue in full force and effect
pursuant to the terms hereof.
(E) The Article captions are inserted only for convenience
and reference, and are not intended, in any way, to define,
limit, describe the scope, intent, and language of this Lease or
its provisions.
(F) In the event Lessee remains in possession of the Leased
Premises herein leased after the expiration of this Lease and
without the execution of a new lease and without Lessor's written
permission, Lessee shall be deemed to be occupying said Leased
Premises as a tenant from month-to-month, subject to all the
conditions, provisions, and obligations of this Lease insofar as
the same can be applicable to a month-to-month tenancy except
that the monthly installment of Rent shall be One Hundred Fifty
percent (150%) the amount due on the last month prior to such
expiration.
(G) If any installment of Rent (whether lump sum, monthly
installments, or any other monetary amounts required by this
Lease to be paid by Lessee and deemed to constitute Rent
hereunder) shall not be paid when due, or a third non-monetary
default in any given twelve month period shall remain uncured
after the expiration of any applicable cure period, Lessor shall
have the right to charge Lessee a late charge of $250.00 per
month for each month that any amount of Rent installment remains
unpaid or non-monetary default shall go uncured after the first
such occurrence in any 12 month period. Said late charge shall
commence after such installment is due or non-monetary default
goes uncured after the expiration of any applicable cure period
and continue until said installment, interest and all accrued
late charges are paid in full or such non-monetary default is
cured.
(H) Any part of the Leased Premises may be conveyed by
Lessor for private or public non-exclusive easement purposes at
any time, provided Lessor obtains Lessee's prior written consent,
not to be unreasonably withheld or delayed. Such consent shall
not be deemed to be unreasonably withheld in the event the
proposed easement shall interfere with Lessee's access,
visibility, or business operations. In such event Lessor shall,
at its own cost and expense, restore the remaining portion of the
Leased Premises to the extent necessary to render it reasonably
suitable for the purposes for which it was leased, all to be done
without adjustments in Rent to be paid by Lessee. All proceeds
from any conveyance of an easement shall belong solely to Lessor.
In an effort to enhance Lessee's operations in the Leased
Premises, Lessee may, from time to time, desire to allow a third
party to encumber the Leased Premises with an easement,
restrictive covenant or other title exception, or have an
existing restriction or other title exception modified. Lessor
covenants with Lessee that, upon written request by Lessee for
Lessor's cooperation and/or action (e.g., execution of any such
instrument) in connection with such matters, Lessor shall
promptly accommodate such request, so long as such request is
reasonable and will not unduly adversely affect Lessor's ability
to lease, sell or finance the Leased Premises. In such event
Lessee shall, at its own cost and expense, restore the remaining
portion of the Leased Premises to the extent necessary to render
it reasonably suitable for the purposes for which it was leased,
all to be done without adjustments in Rent to be paid by Lessee.
(I) For the purpose of this Lease, the term "Rent" shall be
defined as Base Rent and Percentage Rent under Article 4, and any
other monetary amounts required by this Lease to be paid by
Lessee.
(J) Lessee agrees to cooperate with Lessor to allow Lessor
to obtain and use at Lessor's expense promotional photographs of
the Leased Premises, to the extent permitted by Lessee's
franchisor or licensor.
ARTICLE 30. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained herein
it is the intent of the parties that the rights and remedies
contained herein shall not be exclusive but rather shall be
cumulative along with all of the rights and remedies of the
parties which they may have at law or equity. In the event of a
breach by Lessor, Lessee shall be entitled to all remedies at law
or equity, to be cumulatively enforced.
ARTICLE 31. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor, its
successors and assigns, (i) that it has not used or permitted and
will not use or permit the Leased Premises to be used in
violation of any federal, state or municipal law, decision,
statute, rule, ordinance or regulation currently in existence or
hereafter enacted or rendered, and then only to the extent
necessary to the operation of the Leased Premises as a
restaurant, whether directly or through contractors, agents or
tenants, and to the best of Lessee's knowledge and except as
disclosed to Lessor in writing, the Leased Premises has not at
any time been used for the generating, transporting, treating,
storage, manufacture, emission of, or disposal of any dangerous,
toxic or hazardous pollutants, chemicals, wastes or substances as
defined in the Federal Comprehensive Environmental Response
Compensation and Liability Act of 1980 ("CERCLA"), the Federal
Resource Conservation and Recovery Act of 1976 ("RCRA"), or any
other federal, state or local environmental laws, statutes,
regulations, requirements and ordinances ("Hazardous Materials");
(ii) that to the best of Lessee's knowledge there have been no
investigations or reports involving Lessee, or the Leased
Premises by any governmental authority which in any way pertain
to Hazardous Materials (iii) that to the best of Lessee's
knowledge the operation of the Leased Premises has not violated
and is not currently violating any federal, state or local law,
regulation, ordinance or requirement governing Hazardous
Materials; (iv) that to the best of Lessee's knowledge the Leased
Premises is not listed in the United States Environmental
Protection Agency's National Priorities List of Hazardous Waste
Sites nor any other list, schedule, log, inventory or record of
Hazardous Materials or hazardous waste sites, whether maintained
by the United States Government or any state or local agency; and
(v) that the Leased Premises will not contain any formaldehyde,
urea or asbestos, except as may have been disclosed in writing to
Lessor by Lessee at the time of execution and delivery of this
Lease. Lessee agrees to indemnify and reimburse Lessor, its
successors and assigns, for:
(a) any breach of these representations and warranties, and
(b) any loss, damage, expense or cost arising out of or
incurred by Lessor which is the result of a breach of,
misstatement of or misrepresentation of the above
covenants, representations and warranties, and
(c) any and all liability of any kind whatsoever which
Lessor may, for any cause and at any time, sustain or
incur by reason of Hazardous Materials discovered on
the Leased Premises during the Term hereof or placed or
released on the Leased Premises by Lessee;
together with all attorneys' fees, costs and disbursements
incurred in connection with the defense of any action against
Lessor arising out of the above. These covenants,
representations and warranties shall be deemed continuing
covenants, representations and warranties for the benefit of
Lessor, and any successors and assigns of Lessor and shall
survive expiration or sooner termination of this Lease. The
amount of all such indemnified loss, damage, expense or cost,
shall bear interest thereon at the lesser of 15% or the highest
rate of interest allowed by law and shall become immediately due
and payable in full on demand of Lessor, its successors and
assigns.
Notwithstanding any other provision of this Lease, Lessor shall
and hereby does agree to indemnify, protect, defend and hold
harmless Lessee, and its partners, directors, officers,
employees, shareholders, agents, contractors, and each of their
respective successors and assigns, from and against any and all
costs, claims, judgments, damages, penalties, fines, taxes,
costs, liabilities, losses and expenses arising at any time
during or after the term of this Lease as a result of or in
connection with (a) the presence of any Hazardous Materials on
the Leased Premises as the direct result of Lessor's activities
on or in the Leased Premises; (b) any contamination by Lessor, or
by its employees, agents, invitees, customers, licensees or
contractors, of the Leased Premises, or the groundwaters thereof,
and occasioned by the use, transportation, storage, spillage or
discharge thereon, therein or therefrom of any toxic or hazardous
chemicals, compounds, materials or substances, by Lessor, or by
its employees, agents, invitees, customers, licensees or
contractors; or (c) any discharge of toxic or hazardous sewage or
waste materials from the Leased Premises into any septic facility
or sanitary sewer system serving the Leased Premises, by Lessor
or by its employees, agents, invitees, customers, licensees or
contractors.
ARTICLE 32. ESCROWS
Upon the occurrence of a third default in any twelve month
period by Lessee, or upon the request of Lessor's mortgagee, if
any, Lessee shall deposit with Lessor on the first day of each
and every month, an amount equal to one-twelfth (1/12th) of the
estimated annual real estate taxes, assessments and insurance (if
the insurance is to be purchased by Lessor) ("Charges") due on
the Leased Premises, or such higher amounts reasonably determined
by Lessor as necessary to accumulate such amounts to enable
Lessor to pay all charges due and owing at least thirty (30) days
prior to the date such amounts are due and payable. If Lessee is
depositing into such escrow as a result of its third default in
any given twelve month period, and Lessee shall not commit a
default for a period of 24 months from the commencement of such
escrowing, such escrow shall be discontinued unless renewed
according to the terms hereof for the occurrence of a third
default in any twelve month period, or upon the request of
Lessor's mortgagee.
From time to time out of such deposits Lessor will, upon the
presentation to Lessor by Lessee of the bills therefor, pay the
Charges or at Lessee's option, will upon presentation of
receipted bills therefor, reimburse Lessee for such payments made
by Lessee. In the event the deposits on hand shall not be
sufficient to pay all of the estimated Charges when the same
shall become due from time to time or the prior payments shall be
less than the currently estimated monthly amounts, then Lessee
shall pay to Lessor on demand any amount necessary to make up the
deficiency. The excess of any such deposits shall be credited to
subsequent payments to be made for such items. If a default or
an event of default shall occur under the terms of this Lease,
Lessor may, at its option, without being required so to do, apply
any Deposit on hand to cure the default, in such order and manner
as Lessor may elect.
ARTICLE 33. NET LEASE
Notwithstanding anything contained herein to the contrary it
is the intent of the parties hereto that this Lease shall be a
net lease and that the Rent defined pursuant to Article 4 should
be a net Rent paid to Lessor. Any and all other expenses
including but not limited to, maintenance, repair, insurance,
taxes, and assessments, shall be paid by Lessee.
ARTICLE 34. DEVELOPMENT FINANCING AGREEMENT
The parties hereto hereby acknowledge that the terms hereof
are subject to and shall in the event of conflicts be controlled
by that certain Development Financing Agreement of even date
herewith (the "Development Financing Agreement"), until such
Agreement is terminated in accordance with its terms.
ARTICLE 35. RIGHT TO PURCHASE
Lessor, for itself, its successors and assigns, hereby gives and
grants to Lessee a right of first refusal (the "Right of First
Refusal") to purchase the Leased Premises, subject to the
following terms and conditions:
(A) DURATION OF RIGHT OF FIRST REFUSAL. The Right of First
Refusal and all rights and privileges of Lessee hereunder shall
be in force for the Term of this Lease until the expiration of
Lessee's right to possession.
(B) MANNER OF EXERCISING RIGHT OF FIRST REFUSAL. If Lessor
("Selling Lessor") shall desire to sell all or any portion of its
interest in the Leased Premises (subject to the terms of this
Lease), Selling Lessor shall give Lessee written notice of
Selling Lessor's intention to sell Selling Lessor's interest
(partial or whole) in the Leased Premises. Such notice
("Lessor's Notice") shall give Selling Lessor's name and address
and state a price at which Selling Lessor intends to sell and
will sell a specified portion or all of its interest in the fee
simple to the Leased Premises. If Lessee shall fail to exercise
its Right of First Refusal as set forth herein, the terms of
Article 35(E) shall apply. For twenty (20) business days
following the giving of such notice, Lessee shall have the option
to purchase such portion of the fee interest of the Selling
Lessor as set forth in Lessor's Notice at the price in cash
stated in the Lessor's Notice. A written notice in substantially
the following form, addressed to Selling Lessor and signed by
Lessee and given, in accordance with the provisions of Article
29(A) hereof, within the period for exercising the Right of First
Refusal, submitted with a bank cashier's check or money order
payable to the order of Selling Lessor in the amount of $5,000.00
(the "Earnest Money") shall be an effective exercise of Lessee's
Right of First Refusal, to wit:
(date)
"We hereby exercise the Right of First Refusal to purchase such
portion of the fee interest of the Selling Lessor (as set forth
in Lessor's Notice) in the property commonly known as Razzoo's,
Austin, Texas, pursuant to the Right of First Refusal contained
in that certain Net Lease Agreement between us pertaining to said
Leased Premises."
(C) TERMS OF SALE IF RIGHT OF FIRST REFUSAL EXERCISED.
Upon Lessee's exercise of the Right of First Refusal in
accordance with the provisions of subparagraph (B) hereof,
Selling Lessor shall be obligated to sell and convey by
recordable general warranty deed, good and indefeasible title to
its interest in the Leased Premises (or such portion thereof as
set forth in Lessor's Notice) subject only to the matters
affecting title which were of record at the time Selling Lessor
came into title to the Leased Premises and those matters which
Lessee created, suffered or permitted to accrue during the Term
hereof (except any mortgages, liens or other monetary
encumbrances created by Lessor, which in all events Selling
Lessor shall be required to have released of record), and Lessee
shall be obligated to purchase such Lessor's interest upon the
following terms and conditions:
(i) PRICE. The price "Purchase Price" at which
Selling Lessor shall sell and Lessee shall purchase the
Leased Premises shall be the price stated in Lessor's
Notice.
(ii) CLOSING. Closing shall be sixty (60) days after
the expiration of the twenty days within which Lessee
may exercise its Right of First Refusal, unless the
parties mutually agree otherwise. The Purchase Price
less credit for the Earnest Money and any other credits
to which Lessee is entitled hereunder shall be tendered
in cash or other certified funds by Lessee at Closing.
(iii) EVIDENCE OF TITLE. Not less than ten (10)
days after Lessee exercises its rights hereunder,
Selling Lessor shall obtain a commitment for an ALTA
owner's policy of title insurance dated within thirty
(30) days of the closing date, issued by a nationally
recognized title insurance company selected by Selling
Lessor (the "Title Company") in the amount of the
Purchase Price determined pursuant to subparagraph
(C)(i) above, naming Lessee as the proposed insured,
and covering the fee simple title to the Leased
Premises, and showing Selling Lessor vested with good
title to portion of the Leased Premises being sold,
subject only to the matters affecting title which were
of record at the time Selling Lessor came into title to
the Leased Premises and those matters which Lessee
created, suffered or permitted to accrue during the
Term hereof (except any mortgages, liens or other
monetary encumbrances created by Lessor, which in all
events Selling Lessor shall be required to have
released of record). Such title commitment shall be
conclusive evidence of good title. If Lessee shall
make objection to the marketability of title, Selling
Lessor shall have no obligation to make title
marketable, but in lieu thereof, may withdraw Lessor's
notice of intent to market the Leased Premises.
(iv) PRORATIONS. Selling Lessor shall pay the cost of
the aforesaid title policy and any and all state and
municipal taxes imposed by law on the transfer of the
title to the Leased Premises, or the transaction
pursuant to which such transfer occurs. Water, sewer
and other utility charges, if any, which are not
metered, driveway permit charges, if any, general real
estate taxes, and other similar items, shall be
adjusted ratably as of the Closing, except to the
extent otherwise settled between the parties pursuant
to other provisions of this Lease. A prorated portion
of the Rent prepaid by Lessee for the month of closing
shall be credited toward the Purchase Price and Lessee
shall be given a credit for rent prepaid for any period
after the month in which the Closing occurs.
Otherwise, Lessee shall not receive a credit against
the Purchase Price for Rent paid hereunder.
(v) ESCROW CLOSING. At the election of Selling Lessor
or Lessee upon notice to the other party not less than
five (5) days prior to the Closing, this sale shall be
closed through an escrow with the Title Company, in
accordance with the general provisions of the usual
form of Deed and Money Escrow Agreement then in use by
said company, with such special provisions inserted in
the escrow agreement as may be required to conform with
this agreement. Upon the creation of such an escrow,
anything herein to the contrary notwithstanding, paying
of the purchase price and delivery of the deed shall be
made through the escrow. The cost of the escrow shall
be divided equally between the Selling Lessor and
Lessee. If for any reason other than Lessee's default,
the transaction fails to close, the Earnest Money shall
be returned to Lessee forthwith.
(vi) REMEDIES ON DEFAULT. If Lessee defaults under the
provisions of this subparagraph 35(C), Selling Lessor
shall have the right to annul the provisions of this
paragraph 35 by giving Lessee notice of such election,
provided that Selling Lessor has first notified Lessee
of such default and Lessee has failed to cure the same
within ten (10) days after such notice. Upon Selling
Lessor's notice of annulment in accordance herewith,
the Earnest Money shall be forfeited and paid to
Selling Lessor as liquidated damages, which shall be
Selling Lessor's sole and exclusive remedy. If Selling
Lessor defaults under the provisions of this
subparagraph 35(C) and fails to cure such default
within ten (10) days after being notified of the same
by Lessee, then in such event, (i) the Earnest Money at
Lessee's election and immediately upon its demand shall
be returned to Lessee, which return shall not, however,
in any way release or absolve Selling Lessor from its
obligations hereunder and (ii) Lessee shall be entitled
to all remedies (both legal and equitable) the law
(both statutory and decisional) of the state in which
the Leased Premises are situated provides without first
having to tender the balance of the purchase price as a
condition precedent thereof and without having to make
any election of such remedies.
(D) EFFECT OF RIGHT OF FIRST REFUSAL ON LEASE. If the
Right of First Refusal is exercised by Lessee and is exercisable
in Lessor's Notice as to the entire fee simple, this Lease shall
continue in full force and effect until the Closing hereinabove
specified. If the Right of First Refusal is exercised only as to
all of an undivided portion of the fee simple to the Leased
Premises, the Lease shall remain in full force and effect without
merger or termination of this Lease because of such purchase. If
for any reason such Closing fails to occur, this Lease shall
continue in full force and effect, except that if the provisions
of this paragraph 35 are annulled by Selling Lessor, in
accordance with subparagraph 35(C)(vi), by reason of a default by
Lessee, this Lease shall continue but without the provisions of
this paragraph 35 being a part hereof.
(E) If Lessee fails to exercise its Right of First Refusal,
Selling Lessor shall be free to sell all or any portion of its
interest in the Leased Premises for six months following the
expiration of the twenty days within which Lessee may exercise
its Right of First Refusal, provided that the Selling Lessor
giving such Lessor's Notice shall sell its interest (or a portion
thereof) for a price equal to or greater than the price (or the
pro-rata portion thereof if a portion of the Selling Lessor's
interest in the Leased Premises is sold) set forth in Lessor's
Notice. This Right of First Refusal shall survive any sale of
the Leased Premises and shall apply to any subsequent sale or
potential sale by Lessor or its successors and assigns.
ARTICLE 36. PARKING
Lessee and its employees, customers and other invitees shall
have the exclusive use of all driveways and parking spaces within
the Leased Premises in accordance with all matters of public
record as of the Occupancy Date or subsequently approved in
writing by Lessee.
ARTICLE 37. VISIBILITY AND ACCESS
Lessor agrees that, except as set forth in the following
sentence, during the Term, it will not construct or consent to
the construction of any building, sign, tower or other structure
or improvement, or plant any tree or other growing plant, or make
any other change whatsoever in or on the Leased Premises, or add
or change any restrictions or other rights, encumbrances (other
than a mortgage and related loan documents in connection with
Lessor's financing of the Leased Premises, with all obligations
set forth in such mortgage and related loan documents being
Lessor's only and not being assumed or otherwise passed through
to Lessee) or appurtenances relating to the Leased Premises. In
the event that Lessor violates the terms of this Article 37 and
fails to cure such violation within thirty (30) days (or such
longer period, not to exceed ninety [90] days, in the event such
violation cannot be cured within the aforementioned 30-day period
and Lessor commences such cure within the 30-day period and
thereafter diligently pursues the same to completion) after its
receipt of Lessee's written notice of such violation, in addition
to all other available rights and remedies at law or in equity,
including, without limitation, the right of Lessee to remove such
item(s) at Lessor's cost, Lessee, at its option, may terminate
this Lease upon written notice to the Lessor.
ARTICLE 38. FORCE MAJEURE
Lessor and Lessee shall be excused for the period of any
delay in performance of any obligations hereunder when prevented
from doing so by the wrongful or negligent acts or omissions of
the other party or by causes beyond either party's control, which
shall include all labor disputes, civil disturbance, war,
war-like operations, invasions, rebellion, hostilities, military
or usurped power, sabotage, governmental regulations or controls,
fires or other casualty, inability to obtain any material or
service or acts of God. Notwithstanding the foregoing, nothing
contained in this Article 38 shall excuse either party from
paying in a timely fashion any payments due under the terms of
this Lease.
ARTICLE 39. BROKERS
Lessee and Lessor represent and warrant to each other that
such party has not had any dealings with any realtor, broker or
agent in connection with this Lease or the negotiation hereof,
and each party agrees to defend, indemnify and hold the other
party harmless from any cost, expense or liability, including
reasonable attorney's fees, for any breach of this
representation.
ARTICLE 40. LESSOR'S SUBORDINATION
Within thirty (30) days after request from Lessee, Lessor
shall execute a lien waiver required by Lessee's lender in
connection with the installation in the Leased Premises of
Lessee's personal property or trade fixtures pursuant to which
Lessor waives any rights (contractual, statutory or otherwise) it
may have with respect to such personal property or trade
fixtures.
ARTICLE 41. COUNTERPART EXECUTION
This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
ARTICLE 42. LESSOR COMMUNICATIONS
Until further written notice from Lessor: all notices,
deliveries, and communications between Lessor and Lessee shall be
delivered by Lessee to Fund XXII, on behalf of all entities
comprising Lessor; Fund XXII shall communicate in the name of all
three entities with Lessee and Lessee shall not be required to
respond to, and shall not be bound by, any notice, delivery, or
communication delivered by either of the other two entities
comprising Lessor even if either of such entities purports to be
communicating as Lessor.
IN WITNESS WHEREOF, Lessor and Lessee have respectively
signed and sealed this Lease as of the day and year first above
written.
LESSEE: Razzoo's, Inc.
By: /s/ D Fricke
Its: Director of Finance & Acctng
LESSOR:
AEI Real Estate Fund XV Limited Partnership
By: AEI Fund Management 86-A, Inc.
By:/s/ Robert P Johnson
Robert P. Johnson, President
AEI Real Estate Fund XVII Limited Partnership
By: AEI Fund Management XVII, Inc.
By: /s/ Robert P Johnson
Robert P. Johnson, President
AEI Net Lease Income & Growth Fund XIX Limited Partnership
By: AEI Fund Management XIX, Inc.
By:/s/ Robert P Johnson
Robert P. Johnson, President
AEI Income & Growth Fund XXII Limited Partnership
By: AEI Fund Management XXI, Inc.
By: /s/ Robert P Johnson
Robert P. Johnson, President
Exhibit A
Lot 4, Alegre Park, Travis County, Texas, according to the map of
plat thereof, recorded under Document No. 199900294 of the
Official Public Records of Travis County, Texas.