Exhibit 10.1

 

LEASE

 

DATED

 

August 9, 2019

 

by and between

 

IIP-PA 4 LLC, 

a Delaware limited liability company

 

and

 

PHARMACANN PENN PLANT LLC,

a Pennsylvania limited liability company

 

 

 

 

LEASE AGREEMENT

 

This Lease Agreement (this “Lease“), dated August 9, 2019 (the “Execution
Date”), is made between IIP-PA 4 LLC, a Delaware limited liability company
(“Landlord“), and PHARMACANN PENN PLANT LLC, a Pennsylvania limited liability
company (“Tenant“).

 

RECITALS

 

A.            WHEREAS, reference is made to that certain Purchase and Sale
Agreement and Joint Escrow Instructions dated August 5, 2019 (the “Purchase
Agreement”), pursuant to which Landlord agreed to purchase from Tenant the
property located at Lot No. 4, Scott Technology Park, Scott Township,
Pennsylvania, as more particularly described on Exhibit A attached hereto and
incorporated herein by reference (the “Property”);

 

B.             WHEREAS, concurrent with the execution of this Lease, Landlord
acquired the Property pursuant to the Purchase Agreement;

 

C.             WHEREAS, concurrent with the execution of this Lease, Landlord,
Tenant and IIP Operating Partnership, LP entered into a Development Agreement
for the development of certain industrial and greenhouse improvements on the
Property (the “Development Agreement”);

 

D.             WHEREAS, concurrent with the execution of this Lease, Landlord,
Tenant and MedMen Enterprises Inc., a British Columbia corporation (“MedMen”)
entered into a Multi-Party PA Agreement (the “Multi-Party PA Agreement”);

 

E.              WHEREAS, Landlord wishes to lease to Tenant, and Tenant desires
to lease from Landlord, the Premises (as defined below), pursuant to the terms
and conditions of this Lease, as detailed below; and

 

F.              WHEREAS, each of PharmaCann LLC; PharmaCann of New York, LLC;
PharmaCann DC LLC; PharmaCann Florida LLC; Sunbiz Acquisition, LLC; PharmaCann
Virginia LLC; PharmaCann New Jersey LLC; PharmaCannis Labs LLC; PharmaCann
Holdings LLC; PC 1200 East Mazon LLC; PC 16280 East Twombly LLC; PharmaCann Mass
LLC; Pharmacannis Massachusetts Inc.; PharmaCann Michigan LLC; 1313 Johnson LLC;
PCL Management LLC; PharmaCann Penn LLC; PharmaCann Ohio LLC; 4104 North
Columbus LLC; PC NJ 2 LLC; and Midwest Compassion Center Inc. (each a
“Guarantor”) is an affiliate of Tenant that is deriving a benefit from Landlord
and Tenant entering into this Lease, and has agreed to enter into a guaranty in
the form attached as Exhibit D hereto (the “Guaranty”), without which Landlord
would not agree to enter into this Lease.

 

AGREEMENT

 

NOW, THEREFORE, Landlord and Tenant, in consideration of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
agree as follows:

 

1.             Lease of Premises. Landlord hereby leases to Tenant, and Tenant
hereby leases from Landlord, the Property, together with the following (to the
extent now existing or hereafter constructed or installed on the Property)
improvements, including shafts, cable runs, mechanical spaces, rooftop areas,
landscaping, parking facilities, private drives and other improvements and
appurtenances related thereto (including any buildings located on the Property),
for use by Tenant in accordance with the Permitted Use (as defined below) and no
other uses (collectively, the “Premises”).

 

2.             Basic Lease Provisions. For convenience of the parties, certain
basic provisions of this Lease are set forth herein. The provisions set forth
herein are subject to the remaining terms and conditions of this Lease and are
to be interpreted in light of such remaining terms and conditions.

 

2.1.           The monthly Base Rent for the first twelve (12) months of the
Term of the Lease shall be equal to Two Hundred Sixty Thousand Dollars
($260,000.00) subject to subsequent adjustment under this Lease (as may be
adjusted, the “Monthly Base Rent Amount”).

 

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2.2.           “Security Deposit”: “Security Deposit”: Seven Hundred Eighty
Thousand Dollars ($780,000.00) which shall be funded as follows: (a)
Twenty-Eight Thousand Two Hundred Sixty Dollars ($28,260.00) to be paid upon
execution of this Agreement and (b) the remaining portion to be paid by Tenant
(using its own funds) in installments in accordance with this Section 2.2.
Within two (2) Business Days following the date that Landlord makes any
Construction Payment (as defined in the Development Agreement) to Tenant, Tenant
shall deliver to Landlord a proportionate amount of the remaining balance of the
Security Deposit as determined based upon the percentage derived from dividing
(a) the amount of the Construction Payment by (b) the maximum amount of the
Construction Contribution Amount (as defined in the Development Agreement),
until such time as the Security Deposit has been fully funded. As an example, if
the maximum Construction Contribution Amount is $25,058,000, and the amount of
the Construction Payment made to Tenant under the Development Agreement is equal
to $5,011,600 (i.e. 20% of $26,000,000), then Tenant shall be required to pay an
amount equal to $150,348 (i.e. $780,000 - $28,260 = $751,740 x 20% = $150,348)
within such two (2) Business Day time period, which amount shall be retained by
Landlord as part of the Security Deposit. Notwithstanding the foregoing (and
regardless of the amount of Construction Payments then requested to be funded by
Tenant), the full Security Deposit shall be funded by Tenant no later than the
date that is eighteen (18) months following the Execution Date.

 

2.3.           “Permitted Use”: Agricultural growth, propagation, processing and
dispensing of agricultural materials (including cannabis), industrial and office
space, in accordance with current zoning for the Premises and in conformity with
all Applicable Laws (as defined below). Permitted Use shall include the
cultivation, propagation and processing of cannabis plant parts and resins into
products, the storage of same for transport, operation of a registered cannabis
dispensary, and such other related use or uses permitted under Applicable Laws.
As used herein, the term “License” shall mean and refer to that certain license
issued by the applicable governmental agency with jurisdiction over the
Permitted Use under which Tenant is authorized to engage in the agricultural
growth, propagation, processing and/or dispensing of cannabis for medical-use
purposes.

 

2.4.          Address for Rent Payment:                                        
2.5.          Address for Notices to Landlord: IIP-PA 4 LLC     11440 West
Bernardo Court, Suite 220     San Diego, California 92127     Attn: General
Counsel         2.6.          Address for Notices and Invoices to Tenant:      
  PharmaCann Penn Plant LLC     c/o PharmaCann LLC     190 South LaSalle Street,
Suite 2950     Chicago, IL 60603     Attn: Accounts Payable  

 

  2.7.          The following Exhibits are attached hereto and incorporated
herein by reference:   Exhibit A Property Exhibit B Tenant’s Personal Property
Exhibit C Form of Estoppel Certificate Exhibit D Form of Guaranty Exhibit E
Tenant Work Insurance Requirements

 

2.8.            As used herein, “Prior Course of Dealing” shall mean the prior
practice or course of dealing on the projects undertaken by and between
affiliates of Landlord and Tenant which are located at 465 Hopping Brook Road,
Holliston, Massachusetts and 10767 Mill Dam Road, Buckeye Lake Village, Ohio.

 

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3.              Term and Extension Options.

 

3.1.           Term. The actual term of this Lease (as the same may be extended
or earlier terminated in accordance with this Lease, the “Term”) shall commence
on the Execution Date (also referred to herein as the “Commencement Date”) and
end on November 8, 2034, subject to extension or earlier termination of this
Lease as provided herein.

 

3.2.           Options to Extend Term. Tenant shall have two (2) options (each
an “Extension Option“) to extend the Term of this Lease for a period of five (5)
years each (each an “Extension Period“), on the same terms and conditions in
effect under this Lease immediately prior to the commencement of the Extension
Period, except that (a) Tenant shall have no further right to extend the Term of
this Lease after the second Extension Period, (b) the Base Rent payable during
the Extension Period shall be an amount equal to Base Rent in effect immediately
prior to the Extension Period, increased by two and one-half percent (2.5%) on
an annual basis. If Tenant exercises an Extension Option, such Extension Option
shall apply to the entire Premises (and no less than the entire Premises).
Tenant may exercise an Extension Option only by giving Landlord irrevocable and
unconditional written notice thereof (the “Extension Notice“) not later than
twelve (12) months prior to the commencement date of the Extension Period. Upon
delivery of the Extension Notice, Tenant shall be irrevocably bound to lease the
Premises for the Extension Period. Notwithstanding the foregoing, Tenant shall
not have the right to exercise an Extension Option (a) during the time
commencing from the date Landlord delivers to Tenant a written notice that
Tenant is in default under any provisions of this Lease and continuing until
Tenant has cured the specified default; (b) at any time after any Default
(provided, however, that, for purposes of this Section 3.2, Landlord shall not
be required to provide Tenant with notice of such Default) and continuing until
Tenant cures any such Default, if such Default is susceptible to being cured; or
(c) in the event that Tenant has defaulted in the performance of its obligations
under this Lease two (2) or more times during the twelve (12)-month period
immediately prior to the date that Tenant intends to exercise an Extension
Option, and such defaults were not cured within the applicable cure period. If
Tenant shall fail to timely exercise the Extension Option in accordance with the
provisions of this Section 3.2, then the Extension Option shall terminate, and
shall be null and void and of no further force and effect. If this Lease or
Tenant’s right to possession of the Premises shall terminate in any manner
whatsoever before Tenant shall exercise the Extension Option, or if Tenant shall
have assigned or transferred any interest in this Lease or sublet any part of
the Premises (except pursuant to a Permitted Transfer, as defined below), then
immediately upon such termination, assignment, transfer or sublease, the
Extension Option shall simultaneously terminate and become null and void. Time
is of the essence with regard to this Section 3.2.

 

3.3.           The Extension Options are conditioned upon each Guarantor
executing an amendment to such Guarantor’s Guaranty that explicitly extends such
Guarantor’s obligations so that each Guarantor guarantees Tenant’s Lease
obligations incurred pursuant to Tenant’s successful exercise of an Extension
Option.

 

4.              Possession.

 

4.1.           Possession. Tenant hereby acknowledges that it is familiar with
the condition thereof and accepts the Premises in its “as is” condition with all
faults, and Landlord makes no representation or warranty of any kind with
respect the Premises, and Landlord will have no obligation to improve, alter or
repair the Premises. It is understood and agreed that Landlord is not obligated
to install any equipment, or make any repairs, improvements or alterations to
the Premises. Tenant’s continued occupancy and possession of the Premises
following the Closing (as defined in the Purchase Agreement) shall conclusively
establish that the Premises, any improvements located on the Property and the
Project were at such time in good, sanitary and satisfactory condition and
repair. From and after the Commencement Date, Tenant may access and occupy
portions of the Property in preparation of the Permitted Use.

 

4.2.           NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, IT IS EXPRESSLY
UNDERSTOOD AND AGREED THAT LANDLORD IS LEASING THE PREMISES “AS IS” AND “WHERE
IS,” AND WITH ALL FAULTS, AND THAT LANDLORD IS MAKING NO REPRESENTATIONS AND
WARRANTIES WHETHER EXPRESS OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE, WITH
RESPECT TO THE QUALITY OR PHYSICAL CONDITION OF THE PREMISES, THE INCOME OR
EXPENSES FROM OR OF THE PREMISES, OR THE COMPLIANCE OF THE PREMISES WITH
APPLICABLE BUILDING OR FIRE CODES, ENVIRONMENTAL LAWS OR OTHER LAWS, RULES,
ORDERS OR REGULATIONS. WITHOUT LIMITING THE FOREGOING, IT IS UNDERSTOOD AND
AGREED THAT LANDLORD MAKES NO WARRANTY WITH RESPECT TO THE HABITABILITY,
SUITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. TENANT AGREES
THAT IT ASSUMES FULL RESPONSIBILITY FOR, AND THAT IT HAS PERFORMED EXAMINATIONS
AND INVESTIGATIONS OF THE PREMISES, INCLUDING SPECIFICALLY, WITHOUT LIMITATION,
EXAMINATIONS AND INVESTIGATIONS FOR THE PRESENCE OF ASBESTOS, PCBS AND OTHER
HAZARDOUS SUBSTANCES, MATERIALS AND WASTES (AS THOSE TERMS MAY BE DEFINED HEREIN
OR BY APPLICABLE FEDERAL OR STATE LAWS, RULES OR REGULATIONS) ON OR IN THE
PREMISES. WITHOUT LIMITING THE FOREGOING, TENANT IRREVOCABLY WAIVES ALL CLAIMS
AGAINST LANDLORD WITH RESPECT TO ANY ENVIRONMENTAL CONDITION, INCLUDING
CONTRIBUTION AND INDEMNITY CLAIMS, WHETHER STATUTORY OR OTHERWISE. TENANT
ASSUMES FULL RESPONSIBILITY FOR ALL COSTS AND EXPENSES REQUIRED TO CAUSE THE
PREMISES TO COMPLY WITH ALL APPLICABLE BUILDING AND FIRE CODES, MUNICIPAL
ORDINANCES, ENVIRONMENTAL LAWS AND OTHER LAWS, RULES, ORDERS, AND REGULATIONS.

 

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4.3.           Holding Over.

 

4.3.1.         If, with Landlord’s prior written consent, Tenant holds
possession of all or any part of the Premises after the Term, Tenant shall
become a tenant from month-to-month after the expiration or earlier termination
of the Term, and in such case Tenant shall continue to pay (a) Base Rent, as
adjusted in accordance with Section 5.2, (b) Additional Rent, and (c) any
amounts for which Tenant would otherwise be liable under this Lease if the Lease
were still in effect. Any such month-to-month tenancy shall be subject to every
other term, covenant and agreement contained herein.

 

4.3.2.         If Tenant retains possession of any portion of the Premises after
the Term without Landlord’s prior written consent, then (a) Tenant shall be a
tenant at sufferance subject to the terms and conditions of this Lease, except
that the monthly rent shall be equal to one hundred fifty percent (150%) of the
monthly Rent in effect during the last thirty (30) days of the Term, and (b)
Tenant shall be liable to Landlord for any and all damages suffered by Landlord
as a result of such holdover, including any lost rent or consequential, special
and indirect damages (in each case, regardless of whether such damages are
foreseeable).

 

4.3.3.         Acceptance by Landlord of Rent after the expiration or earlier
termination of the Term shall not result in an extension, renewal or
reinstatement of this Lease. The foregoing provisions of this Section 4.3 are in
addition to and do not affect Landlord’s right of reentry or any other rights of
Landlord hereunder or as otherwise provided by Applicable Laws. The provisions
of this Section 4.3 shall survive the expiration or earlier termination of this
Lease.

 

5.             Rent.

 

5.1.            Rent. Base Rent and Additional Rent (defined below) shall
together be denominated “Rent.” Rent shall be paid by ACH, wire transfer or
check (but in no event may Rent be payable in cash) to Landlord, without
abatement, deduction or offset (except as expressly provided in this Lease), in
lawful money of the United States of America to the address set forth in Section
2.4 or to such other person or at such other place as Landlord may from time
designate in writing. In the event the Term commences on a day other than the
first day of a calendar month or ends on a day other than the last day of a
calendar month, then the Rent for such fraction of a month shall be prorated for
such period on the basis of the number of days in the month and shall be paid at
the then-current rate for such fractional month.

 

5.2.           Base Rent.

 

5.2.1.         Initial Base Rent. Tenant shall pay to Landlord as initial Base
Rent for the Premises, commencing upon the Commencement Date, an amount equal to
the Monthly Base Rent Amount in equal monthly installments, subject to the
rental adjustments provided in this Section 5.2 (“Base Rent”), each in advance
on, or before, the first day of each and every calendar month during the Term;
provided that Base Rent shall be abated until November 9, 2019 (the “Base Rent
Abatement Period”). In the event that the Commencement Date occurs on a day
other than the first day of a calendar month, then monthly Base Rent payable on
or before the first day of the first month of the Base Rent Abatement Period
shall be a prorated amount based on the actual number of days in such calendar
month, based on a 360 day year, following the expiration of the Base Rent
Abatement Period. For purposes of clarity, Tenant shall be responsible for all
other Rent due pursuant to the terms of this Lease during the Base Rent
Abatement Period.

 

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5.2.2.         Annual Escalation. Base Rent payable under this Lease shall be
subject to an annual upward adjustment of two and one-half percent (2.5%) of the
then-current Base Rent. The first such adjustment shall become effective
commencing on the first annual anniversary of the Commencement Date, and
subsequent adjustments shall become effective on every successive annual
anniversary of the Commencement Date during the Term.

 

5.2.3.         Base Rent Adjustment. Notwithstanding the foregoing, in the event
that (i) there is a Disbursement Claim (as defined in the Development Agreement)
that is submitted to arbitration pursuant to Section 11 of the Development
Agreement, (ii) the Final Arbitration Decision (as defined in the Development
Agreement) mandates that Landlord pay any Required Arbitration Construction
Payments (as defined in the Development Agreement) to Tenant, and (iii) Tenant
provides Landlord with written notice and reasonable supporting evidence that
Tenant funded such Required Arbitration Construction Payments (the date of such
funding, is referred to herein as the “Funding Date”), then, in addition to the
remedies available to Tenant hereunder and in the Development Agreement, Base
Rent shall be adjusted as follows:

 

(a)the Monthly Base Rent Amount shall be reduced by the quotient of: (x) the
product of 12% multiplied by the Required Arbitration Construction Payments
actually funded by Tenant, which is then (y) divided by twelve (12); and from
and after the Funding Date, Tenant shall pay such adjusted Monthly Base Rent
Amount (as such amount may be further adjusted pursuant to Subsection 5.2.3(b),
below), subject to the provisions of Section 5.2.2 [for example, if Tenant funds
Required Arbitration Construction Payments equal to $100,000, then the Monthly
Base Rent Amount shall be reduced by $1,000 ($100,000 x .12 = $12,000 ÷ 12 =
$1,000)]; and

 

(b)in addition, Tenant shall receive a one-time credit against Rent payable
hereunder equal to the product of (i) the total reduction in Monthly Base Rent
Amount calculated in paragraph (a), above, multiplied by (ii) the number of
monthly Base Rent payments actually paid by Tenant prior to the Funding Date [if
Tenant funds the payments in the prior example after paying 5 Base Rent
installments at the original Monthly Base Rent Amount, then the one-time credit
would equal $5,000 ($1,000 x 5)] (if necessary, the one-time credit may be
applied to more than one installment of Rent until the credit has been fully
applied).

 

In the event that, following any adjustment to Base Rent as provided in
Subsection 5.2.3(a) above, Landlord reimburses Tenant in full for the Required
Arbitration Construction Payments previously funded by Tenant (the date of such
reimbursement is referred to herein as the “Reimbursement Date”), then from and
after the Reimbursement Date, the Monthly Base Rent Amount required to be paid
by Tenant shall revert to the original Monthly Base Rent Amount as provided in
Section 2.1 without adjustment pursuant to Subsection 5.2.3(a) (but subject to
any unapplied credit due to Tenant pursuant to Subsection 5.2.3(b) above), and
Tenant shall have no obligation to repay or return to Landlord the portion of
the original Monthly Base Rent Amount that Tenant was not required to pay based
upon the reduction to the Monthly Base Rent Amount that was calculated pursuant
to Section 5.2.3(a) above for the time period between the Funding Date and the
Reimbursement Date.

 

5.3.           Additional Rent. In addition to Base Rent, Tenant shall pay to
Landlord as additional rent (“Additional Rent”) at times hereinafter specified
in this Lease (a) amounts related to Operating Expenses and Taxes (each as
defined below), unless paid directly by Tenant to third parties to whom such
amounts are owed, and (b) the Property Management Fee (as defined below) and (c)
any other amounts that Tenant assumes or agrees to pay under the provisions of
this Lease that are owed to Landlord (whether or not such amounts are referred
to herein as Additional Rent), including any and all other sums that may become
due by reason of any default of Tenant or failure on Tenant’s part to comply
with the agreements, terms, covenants and conditions of this Lease to be
performed by Tenant.

 

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5.3.1.         Operating Expenses. Tenant will pay directly all Operating
Expenses of the Premises in a timely manner and prior to delinquency, unless
otherwise specified herein that Landlord shall pay directly such Operating
Expenses and receive reimbursement from Tenant. In the event that Tenant fails
to pay any Operating Expense within fifteen (15) days after written notice by
Landlord to Tenant, and without being under any obligation to do so and without
hereby waiving any default by Tenant, Landlord may pay any delinquent Operating
Expenses. Any Operating Expense paid by Landlord and any expenses reasonably
incurred by Landlord in connection with the payment of the delinquent Operating
Expense may be billed immediately to Tenant, or at Landlord’s option and upon
written notice to Tenant, may be deducted from the Security Deposit. “Operating
Expenses” means all costs and expenses incurred by Landlord with respect to the
ownership, maintenance and operation of the Premises including, but not limited
to: insurance, maintenance, repair and replacement of the foundation, roof,
walls, heating, ventilation, air conditioning, plumbing, electrical, mechanical,
utility and safety systems, paving and parking areas, roads and driveways;
maintenance of exterior areas such as gardening and landscaping, snow removal
and signage; maintenance and repair of roof membrane, flashings, gutters,
downspouts, roof drains, skylights and waterproofing; painting; lighting;
cleaning; refuse removal; security; utilities for, or the maintenance of,
outside areas; building personnel costs; personal property taxes; rentals or
lease payments paid by Landlord for rented or leased personal property used in
the operation or maintenance of the Premises; and fees for required licenses and
permits. Notwithstanding the foregoing, Landlord may not engage in any activity
(including paying any expenses) to the extent such activity is prohibited by
Applicable Law or that could reasonably be expected to endanger Tenant’s
maintenance of the License.

 

5.3.2.         Taxes. Tenant will promptly pay to Landlord upon Landlord’s
written request the amount of all Taxes levied and assessed for any such year
upon the Premises. “Taxes” means any and all real estate taxes, fees,
assessments and other charges of any kind or nature, whether general, special,
ordinary or extraordinary, that Landlord shall pay or accrue (without regard to
any different fiscal year used by such governmental authority) that are levied
in respect of the Premises, or in respect of any improvement, fixture, equipment
or other property of Landlord, real or personal, located at the Premises, or
used in connection with the operation of the Premises, and all fees, expenses,
and costs incurred by Landlord in investigating, protesting, contesting, or in
any way seeking to reduce or avoid increases in any assessments, levies, or the
tax rate pertaining to the Taxes. Taxes shall not include Landlord’s corporate
franchise taxes, estate taxes, inheritance taxes or federal or state income
taxes. Tenant shall have the right to protest Taxes, and, if successful, may
deduct the reasonable costs of such protest from Rent, and Landlord shall
cooperate (at no cost to Landlord) with any efforts by Tenant in connection
therewith.

 

5.3.3.         Estimated Costs. If and to the extent applicable, within sixty
(60) days after the Commencement Date, and within sixty (60) days after the
beginning of each calendar year, Landlord shall give Tenant a written estimate,
for such calendar year, of the cost of Taxes and Operating Expenses payable by
Landlord. Tenant shall pay such estimated amount to Landlord in equal monthly
installments, in advance. Within ninety (90) days after the end of each calendar
year, Landlord shall furnish to Tenant a statement showing in reasonable detail
the cost of Taxes and Operating Expenses paid or payable by Landlord, and any
other costs incurred by Landlord for the operation and maintenance of the
Premises during such year (the “Annual Statement”), and Tenant shall pay to
Landlord the cost incurred by Landlord in excess of the payments made by Tenant
within ten (10) days of receipt of such Annual Statement. In the event that the
payments made by Tenant to Landlord for the estimated Taxes and Operating
Expenses exceed the aggregate amount set forth in the Annual Statement, such
excess amount shall be credited by Landlord to the Rent or other charges next
due and owing, provided that, if the Term has expired, Landlord shall promptly
pay such amount to Tenant along with delivery of the Annual Statement.

 

5.3.4.         Property Management Fee. Tenant shall pay to Landlord on, or
before, the first day of each calendar month of the Term, as Additional Rent,
the Property Management Fee. The "Property Management Fee" shall equal one and
one-half percent (1.5%) of the then-current Base Rent due from Tenant. Tenant
shall pay the Property Management Fee with respect to the entire Term, including
any extensions thereof or any holdover periods, regardless of whether Tenant is
obligated to pay Base Rent or any other Rent with respect to any such period or
portion thereof.

 

5.3.5.         Absolute Net Lease. This Lease shall be deemed and construed to
be an “absolute net lease” and, except as herein expressly provided, the
Landlord shall receive all payments required to be made by Tenant, free from all
charges, assessments, impositions, expenses, deductions of any and every kind or
nature whatsoever. Tenant shall, at Tenant’s sole cost and expense, maintain the
landscaping and parking lot, and make all additional repairs and alterations as
required to maintain the Premises consistent with Tenant’s practices at other
facilities.

 

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5.4.           Security Deposit. On or before the Execution Date of this Lease,
Tenant shall deposit with Landlord the initial installment of the Security
Deposit as set forth in Section 2.2, which sum shall be held by Landlord as
security for the faithful performance by Tenant of all of the terms, covenants
and conditions of this Lease to be kept and performed by Tenant during the Term.
Interest shall accrue on the Security Deposit for the benefit of Tenant and
shall be paid to Tenant to the extent that Tenant is entitled to the return of
the Security Deposit as provided in this Lease. Landlord shall not be required
to maintain a separate account for the Security Deposit, but may intermingle it
with other funds of Landlord; provided however, Landlord shall keep the Security
Deposit in a federally insured, interest-bearing account for the benefit of
Tenant. If Tenant Defaults with respect to any provision of this Lease, then
without notice to Tenant, Landlord may (but shall not be required to), apply all
or any part of the Security Deposit for the payment of any Rent or any other sum
in Default. If any portion of the Security Deposit is so used or applied, then
Tenant shall, upon demand therefor, restore the Security Deposit to its original
amount. So long as no default has occurred and is continuing, the unapplied
portion of the Security Deposit shall be returned to Tenant, or, at Landlord’s
option, to the last assignee of Tenant’s interest hereunder, within sixty (60)
days following the expiration of the Term. Tenant hereby irrevocably waives and
relinquishes any and all rights, benefits, or protections, if any, Tenant now
has, or in the future may have under any provision of law which (a) establishes
the time frame by which a landlord must refund a security deposit under a lease,
or (b) provides that a landlord may claim from a security deposit only those
sums reasonably necessary to remedy defaults in the payment of rent, to repair
damage caused by a tenant, or to clean the subject premises. Tenant acknowledges
and agrees that (x) any statutory time frames for the return of a security
deposit are superseded by the express period identified in this Section 5.4, and
(y) rather than be so limited, Landlord may claim from the Security Deposit
(i) any and all sums expressly identified in this Section 5.4, and (ii) any
additional sums reasonably necessary to compensate Landlord for any and all
losses or damages caused by Tenant’s default of this Lease, including, but not
limited to, all damages or rent due upon termination of this Lease. In the event
of bankruptcy or other debtor-creditor proceedings against Tenant, the Security
Deposit shall be deemed to be applied first to the payment of Rent and other
charges due Landlord for all periods prior to the filing of such proceedings.

 

5.5.            No Discharge of Rent Obligations. Tenant’s obligation to pay
Rent shall not be discharged or otherwise affected by (a) any Applicable Laws
now or hereafter applicable to the Premises, (b) any other restriction on
Tenant’s use, (c) except as expressly provided herein, any casualty or taking or
(d) any other occurrence; and, except as expressly set forth herein, Tenant
waives all rights now or hereafter existing to terminate or cancel this Lease or
quit or surrender the Premises or any part thereof, or to assert any defense in
the nature of constructive eviction to any action seeking to recover rent.
Tenant’s obligation to pay Rent with respect to any period or obligations
arising, existing or pertaining to the period prior to the date of the
expiration or earlier termination of the Term or this Lease shall survive any
such expiration or earlier termination; provided, however, that nothing in this
sentence shall in any way affect Tenant’s obligations with respect to any other
period. Except as expressly provided in this Lease, Tenant, to the extent now or
hereafter permitted by Applicable Laws, waives all rights now or hereafter
conferred by statute or otherwise to quit, terminate or surrender this Lease or
to any diminution, abatement or reduction of Rent payable hereunder.

 

6.             Use.

 

6.1.           Use. Tenant shall use the Premises solely for the Permitted Use,
and shall not use the Premises, or permit or suffer the Premises to be used, for
any other purpose without Landlord’s prior written consent, which consent
Landlord may withhold in its sole and absolute discretion. Tenant shall comply,
and cause Tenant Parties to comply, with all Applicable Laws, zoning ordinances
and certificates of occupancy issued for the Premises or any portion thereof.
Tenant shall not commit, or allow Tenant Parties (as defined below) to commit,
any waste of the Premises. Except in connection with the Permitted Use, Tenant
shall not do, or permit Tenant Parties to do, anything on or about the Premises
that in any way increases the rate, or invalidates or prevents the procuring, of
any insurance protecting against loss or damage to any portion of the Premises
or its contents, or against liability for damage to property or injury to
persons in or about any portion of the Premises. For purposes hereof, the term
“Tenant Parties“ means Tenant’s agents, contractors, subcontractors, employees,
customers, licensees, invitees, assignees and subtenants, and the term
“Applicable Laws” means all federal (to the extent not in direct conflict with
applicable state, municipal or local cannabis licensing and program laws, rules
and regulations), state, municipal and local laws, codes, ordinances, rules and
regulations of governmental authorities, committees, associations, or other
regulatory committees, agencies or governing bodies having jurisdiction over the
Premises or any portion thereof, Landlord or Tenant, including both statutory
and common law, hazardous waste rules and regulations, and state cannabis
licensing and program laws, rules and regulations. Tenant may only place
equipment within the Premises with floor loading consistent with any building
located on the Property’s structural design unless Tenant obtains Landlord’s
prior written approval. Tenant may place such equipment only in a location
designed to carry the weight of such equipment.

 

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6.2.           Legal Compliance. Notwithstanding any other provision herein to
the contrary, Tenant shall be responsible for all improvements or alterations
required to be made and all liabilities, costs and expenses arising out of or in
connection with the compliance of the Premises with Applicable Laws including,
without limitation, the Americans with Disabilities Act, 42 U.S.C. § 12101, et
seq., and any state and local accessibility laws, codes, ordinances and rules
(collectively, and together with regulations promulgated pursuant thereto, the
“ADA”), and Tenant shall indemnify, save, defend (at Landlord’s option and with
counsel reasonably acceptable to Landlord) and hold the Landlord Indemnitees
harmless from and against any Claims arising out of any such failure of the
Premises to comply with Applicable Laws including, without limitation, the ADA.

 

6.3.           Indemnification. Tenant shall indemnify, save, defend (at
Landlord’s option and with counsel reasonably acceptable to Landlord) and hold
Landlord and its affiliates, lenders, employees, agents and contractors
(collectively, the “Landlord Indemnitees”) harmless from and against any and all
demands, claims, liabilities, losses, costs, expenses, criminal or civil
actions, forfeiture seizures, causes of action, damages, suits or judgments, and
all reasonable expenses (including reasonable attorneys’ fees, charges and
disbursements, regardless of whether the applicable demand, claim, action, cause
of action or suit is voluntarily withdrawn or dismissed) incurred in
investigating or resisting the same (collectively, “Claims”) of any kind or
nature that arise before, during or after the Term as a result of Tenant’s
breach of this Section 6.

 

6.4.           Right to Finance. Tenant shall have the right to obtain leasehold
or other financing to finance any improvements, fixtures, equipment, or
inventory at the Property that are owned by the Tenant (collectively, “Tenant
Collateral”). In connection with such financing, Landlord shall, and shall cause
its fee mortgagee to execute an agreement, the terms of which shall be
reasonably acceptable to Landlord, pursuant to which Landlord and Landlord’s
lender agree to subordinate or waive any and all security and lien rights in the
Tenant Collateral and grant Tenant’s lender the right to access the Property to
inspect, remove, protect, or otherwise exercise its rights with respect to the
Tenant Collateral.

 

6.5.           State and Local Cannabis Operator Approvals. Following the
Commencement Date, Tenant shall use commercially reasonable and diligent efforts
to pursue and obtain, as soon as reasonably practicable, and thereafter maintain
all permits, licenses, approvals and authorizations required by applicable laws
(except solely with respect to any federal law that directly conflicts with
state and local cannabis laws, regulations and ordinances) to cultivate and
process cannabis plant parts and resins into products and store the same for
transport, in accordance with such licenses and approvals (collectively, the
“State and Local Cannabis Operator Approvals”).

 

7.              Hazardous Materials.

 

7.1.           Tenant shall not cause or permit any Hazardous Materials (as
defined below) to be brought upon, kept or used in or about the Premises in
violation of Applicable Laws by Tenant or any Tenant Party. If (a) Tenant
breaches such obligation, (b) the presence of Hazardous Materials as a result of
such a breach results in contamination of the Premises, any portion thereof, or
any adjacent property, (c) contamination of the Premises otherwise occurs during
the Term or any extension or renewal hereof or holding over hereunder or (d)
contamination of the Premises occurs as a result of Hazardous Materials that are
placed on or under or are released into the Premises by a Tenant Party, then
Tenant shall indemnify, save, defend (at Landlord’s option and with counsel
reasonably acceptable to Landlord) and hold the Landlord Indemnitees harmless
from and against any and all Claims of any kind or nature, including (w)
diminution in value of the Premises or any portion thereof, (x) damages for the
loss or restriction on use of rentable or usable space or of any amenity of the
Premises, (y) damages arising from any adverse impact on marketing of space in
the Premises or any portion thereof and (z) sums paid in settlement of Claims
that arise before, during or after the Term as a result of such breach or
contamination. This indemnification by Tenant includes costs incurred in
connection with any investigation of site conditions or any clean-up, remedial,
removal or restoration work required by any governmental authority because of
Hazardous Materials present in the air, soil or groundwater above, on, under or
about the Premises. Without limiting the foregoing, if the presence of any
Hazardous Materials in, on, under or about the Premises, any portion thereof or
any adjacent property caused or permitted by any Tenant Party results in any
contamination of the Premises, any portion thereof or any adjacent property,
then Tenant shall promptly take all actions at its sole cost and expense as are
necessary to return the Premises, any portion thereof or any adjacent property
to its respective condition existing prior to the time of such contamination;
provided that Landlord’s written approval of such action shall first be
obtained, which approval Landlord shall not unreasonably withhold; and provided,
further, that it shall be reasonable for Landlord to withhold its consent if
such actions could have a material adverse long-term or short-term effect on the
Premises, any portion thereof or any adjacent property. Tenant’s obligations
under this Section shall not be limited by any limitation on the amount or type
of damages, compensation or benefits payable by or for Tenant under workers’
compensation acts, disability benefit acts, employee benefit acts or similar
legislation.

 

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7.2.            Landlord acknowledges that it is not the intent of this Section
7 to prohibit Tenant from operating its business for the Permitted Use, and, in
furtherance thereof (and notwithstanding the foregoing), Tenant may handle, use,
store, and dispose of products containing small quantities of Hazardous
Materials to the extent customary, required and necessary for the Permitted Use;
subject to the provisions of this Section 7. Tenant may operate its business
according to the custom of Tenant’s industry so long as the use or presence of
Hazardous Materials is strictly and properly monitored in accordance with
Applicable Laws. As a material inducement to Landlord to allow Tenant to use
Hazardous Materials in connection with its business, Tenant agrees to deliver to
Landlord the following, to the extent related to Tenant’s operation at the
Property (a) a list identifying each type of Hazardous Material to be present at
the Premises that is subject to regulation under any environmental Applicable
Laws in the form of a Tier II form pursuant to Section 312 of the Emergency
Planning and Community Right-to-Know Act of 1986 (or any successor statute) or
any other form reasonably requested by Landlord, (b) a list of any and all
approvals or permits from governmental authorities required in connection with
the presence of such Hazardous Material at the Premises and (c) correct and
complete copies of notices of violations of Applicable Laws related to Hazardous
Materials (collectively, “Hazardous Materials Documents”). Tenant shall deliver
to Landlord updated Hazardous Materials Documents, within fourteen (14) days
after receipt of a written request therefor from Landlord, not more often than
once per year, unless (m) there are any changes to the Hazardous Materials
Documents or (n) Tenant initiates any Alterations or changes its business, in
either case in a way that involves any material increase in the types or amounts
of Hazardous Materials. In the event that a review of the Hazardous Materials
Documents indicates non-compliance with this Lease or Applicable Laws, Tenant
shall, at its expense, diligently take steps to bring its storage and use of
Hazardous Materials into compliance. Notwithstanding anything in this Lease to
the contrary or Landlord’s review into Tenant’s Hazardous Materials Documents or
use or disposal of hazardous materials, however, Landlord shall not have and
expressly disclaims any liability related to Tenant’s or other tenants’ use or
disposal of Hazardous Materials, it being acknowledged by Tenant that Tenant is
best suited to evaluate the safety and efficacy of its Hazardous Materials usage
and procedures.

 

7.3.           Tenant represents and warrants to Landlord that Tenant is not nor
has it been, in connection with the use, disposal or storage of Hazardous
Materials, (a) subject to a material enforcement order issued by any
governmental authority or (b) required to take any remedial action.

 

7.4.           At any time, and from time to time, prior to the expiration of
the Term, Landlord shall have the right to conduct appropriate tests of the
Premises or any portion thereof to demonstrate that Hazardous Materials are
present or that contamination has occurred due to the acts or omissions of a
Tenant Party, the cost of which shall be an Operating Expense.

 

7.5.           If underground or other storage tanks storing Hazardous Materials
installed or utilized by Tenant are located on the Premises, or are hereafter
placed on the Premises by Tenant (or by any other party, if such storage tanks
are utilized by Tenant), then Tenant shall monitor the storage tanks, maintain
appropriate records, implement reporting procedures, properly close any
underground storage tanks, and take or cause to be taken all other steps
necessary or required under the Applicable Laws.

 

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7.6.           Tenant shall promptly report to Landlord any actual or suspected
presence of mold or water intrusion at the Premises.

 

7.7.           Tenant’s obligations under this Section 7 shall survive the
expiration or earlier termination of the Lease. During any period of time needed
by Tenant or Landlord after the termination of this Lease to complete the
removal from the Premises of any such Hazardous Materials, Tenant shall be
deemed a holdover tenant and subject to the provisions of Section 4.3.

 

7.8.           As used herein, the term “Hazardous Material” means any toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous substance, material or waste that is or becomes
regulated by Applicable Laws or any governmental authority.

 

8.              Alterations.

 

8.1.          Tenant shall not make any alterations, additions or improvements
in or to the Premises or engage in any construction, demolition, reconstruction,
renovation or other work (whether major or minor) of any kind in, at or serving
the Premises (“Alterations”), without obtaining Landlord’s prior written
consent, except Tenant may make non-structural Alterations to the interior of
any building hereafter located on the Premises (excluding the roof) without such
consent, but upon at least five (5) days’ prior notice to Landlord (except with
respect to any Emergency Alteration, as defined below), provided that the cost
thereof does not exceed Two Hundred Thousand Dollars ($200,000.00) per
occurrence or an aggregate amount of Five Hundred Thousand Dollars ($500,000.00)
annually. Notwithstanding the foregoing, Tenant will not do anything that could
have a material adverse effect on any improvements located on the Property
(including any building hereafter located thereon) or any life safety systems,
without obtaining Landlord’s prior written consent. Furthermore, notwithstanding
the foregoing, in the event that a condition arises which Tenant reasonably
believes (a) will cause or result in imminent damage to property or imminent
bodily injury or death to any person(s); and/or (b) will have an imminent
material adverse effect on Tenant’s License and/or operations at the Property
(each, an “Emergency Condition”), unless, in either case, Tenant undertakes
certain Alterations (collectively, “Emergency Alterations”) to remedy such
Emergency Condition, Tenant shall not be required to provide Landlord with five
(5) days’ prior notice of, or obtain Landlord’s prior consent to, such Emergency
Alterations, provided that (i) such Emergency Alterations will not have a
material adverse effect on any improvements located on the Property (including
any building hereafter located thereon) or any life safety systems; (ii) Tenant
shall promptly notify Landlord (which notice may be telephonic) of such
Emergency Condition and the need for Emergency Alterations as soon as reasonably
practicable; (iii) any Emergency Alterations undertaken by Tenant without such
prior notice to or consent from Landlord are (A) limited to those Alterations
that are reasonably necessary or prudent to remedy or alleviate such Emergency
Condition, and (B) otherwise performed in accordance with the terms and
conditions of this Section. In the event that Landlord’s prior consent is
required for any Alterations, Landlord shall use its best efforts to respond to
a request for such consent as soon as reasonably practicable and in any event
within ten (10) Business Days of Landlord’s receipt of Tenant’s written request.
In the event Landlord fails to respond to Tenant’s request within such ten (10)
Business Day period, Landlord shall be deemed to have approved such request. All
alterations and improvements shall be properly permitted and installed at
Tenant’s sole cost, by a licensed contractor, in a good and workmanlike manner,
and in conformity with all Applicable Laws. Any Alterations that Tenant shall
desire to make and which require the consent of Landlord shall be presented to
Landlord in written form with detailed plans if required in order to obtain
governmental permits. Tenant shall: (a) acquire all applicable governmental
permits; (b) furnish Landlord with copies of both the permits and the plans and
specifications at least ten (10) business days before the commencement of the
work, and (c) comply with all conditions of said permits in a prompt and
expeditious manner. Any alterations shall be performed in a workmanlike manner
with good and sufficient materials. Upon completion of any Alterations, Tenant
shall promptly upon completion furnish Landlord with a reproducible copy of
as-built drawings and specifications for any Alterations. Any proposed
Alterations not objected to by Landlord within ten (10) business days after
receipt of notice of such Alterations and such other information as reasonably
requested by Landlord with respect to such Alterations, shall be deemed approved
by Landlord. Notwithstanding anything contained in this Lease to the contrary,
Landlord shall not unreasonably withhold its consent to any Alterations that
Tenant reasonably deems necessary in order for Tenant to maintain the License in
accordance with the Permitted Use and Applicable Law, even if building or other
permits are required to be issued for completion of such Alterations.

 

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8.2.           At least twenty (20) days prior to commencing any work relating
to any Alterations requiring the approval of Landlord that have been so
approved, Tenant shall notify Landlord in writing of the expected date of
commencement. Prior to commencement of any Alterations, Tenant shall deliver to
Landlord certificates of insurance evidencing Tenant’s compliance with the
insurance requirements set forth in Exhibit E of this Lease. Tenant shall pay,
when due, all claims for labor or materials furnished to or for Tenant for use
in improving the Premises. Tenant shall not permit any mechanics’ or
materialmen’s liens to be levied against the Premises arising out of work
performed, materials furnished, or obligations to have been performed on the
Premises by or at the request of Tenant. Tenant shall indemnify, save, defend
(at Landlord’s option and with counsel reasonably acceptable to Landlord) and
hold Landlord Indemnitees from and against any and all Claims of any kind or
nature that arise before, during or after the Term on account of claims of lien
of laborers or materialmen or others for work performed or materials or supplies
furnished for Tenant or its contractors, agents or employees. If Tenant fails to
discharge or undertake to defend against such liability, upon receipt of written
notice from Landlord of such failure, Tenant shall have fifteen (15) days (the
“Defense Cure Period”) to cure such failure by prosecuting such a defense. If
Tenant fails to do so within the Defense Cure Period, then Landlord may settle
the same and Tenant’s liability to Landlord shall be conclusively established by
such settlement provided that such settlement is entered into on commercially
reasonable terms and conditions, the amount of such liability to include both
the settlement consideration and the costs and expenses (including reasonable
attorneys’ fees) incurred by Landlord in effecting such settlement. In the event
any contractor, agent or employee notifies Tenant of its intent to file a
mechanics’ or materialmen’s lien against the Premises, Tenant shall immediately
notify Landlord of such intention to file a lien or a lawsuit with respect to
such lien.

 

8.3.           Tenant shall repair any damage to the Premises caused by Tenant’s
removal of any property from the Premises. During any such restoration period,
Tenant shall pay Rent to Landlord as provided herein as if such space were
otherwise occupied by Tenant. The provisions of this Section shall survive the
expiration or earlier termination of this Lease.

 

8.4.           The Premises plus any Alterations, attached equipment,
decorations, fixtures and trade fixtures; movable casework and related
appliances; and other additions and improvements attached to or built into the
Premises made by either of the parties (including all floor and wall coverings;
paneling; sinks and related plumbing fixtures; attached benches; production
equipment; walk-in refrigerators; ductwork; conduits; electrical panels and
circuits; attached machinery and equipment; and built-in furniture and cabinets,
in each case, together with all additions and accessories thereto), shall
(unless, prior to such construction or installation, Landlord elects otherwise
in writing) at all times remain the property of Landlord, shall remain in the
Premises and shall (unless, prior to construction or installation thereof,
Landlord elects otherwise in writing) be surrendered to Landlord upon the
expiration or earlier termination of this Lease. For the avoidance of doubt, the
items listed on Exhibit B attached hereto (which Exhibit B may be updated by
Tenant from and after the Commencement Date, subject to Landlord’s written
consent) constitute Tenant’s property (the “Tenant Property”) and shall be
removed by Tenant upon the expiration or earlier termination of the Lease.

 

8.5.           If Tenant shall fail to remove any of its property from the
Premises prior to the expiration of the Term, then Landlord may, at its option,
remove the same in any manner that Landlord shall choose and store such effects
without liability to Tenant for loss thereof or damage thereto, and Tenant shall
pay Landlord, upon demand, any costs and expenses incurred due to such removal
and storage or Landlord may, at its sole option and without notice to Tenant,
sell such property or any portion thereof at private sale and without legal
process for such price as Landlord may obtain and apply the proceeds of such
sale against any (a) amounts due by Tenant to Landlord under this Lease and (b)
any expenses incident to the removal, storage and sale of such personal
property.

 

8.6.           Tenant shall reimburse Landlord for all third-party costs
actually incurred by Landlord in connection with any Alterations, including
Landlord’s third-party costs for plan review, engineering review, coordination,
scheduling and supervision thereof.

 

8.7.           Tenant shall require its contractors and subcontractors
performing work on the Premises to name Landlord and its affiliates and any
lender as additional insureds on their respective insurance policies.

 

8.8.           Tenant shall be entitled to install, maintain (and replace, from
time to time) illuminated building signage at its sole cost and expense, subject
to approval by any applicable local authorities and conformance with all
Applicable Laws.

 

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9.             Odors and Fumes. Except for odors and fumes that are consistent
with the Prior Course of Dealing and which, in any event, are not otherwise a
violation of any Applicable Laws or CC&Rs, Tenant shall not cause or permit (or
conduct any activities that would cause) any release of any odors or fumes of
any kind from the Premises. Tenant shall, at Tenant’s sole cost and expense,
provide odor eliminators and other devices (such as filters, air cleaners,
scrubbers and whatever other equipment may in Landlord’s judgment be necessary
or appropriate from time to time) to abate any odors, fumes or other substances
in Tenant’s exhaust stream that emanate from Tenant’s Premises to a commercially
reasonable level consistent with the Permitted Use. Any work Tenant performs
under this Section shall constitute Alterations. Tenant’s responsibility to
remove, eliminate and abate odors, fumes and exhaust shall continue throughout
the Term.

 

10.           Repairs and Maintenance.

 

10.1.         Care of Premises. This Lease shall be deemed and construed to be
an “absolute net lease.” Tenant shall, at its sole cost and expense, keep the
Premises in a working, neat, clean, sanitary, safe condition and repair, and
shall keep the Premises free from trash. Tenant shall make all repairs or
replacements thereon or thereto, whether ordinary or extraordinary. Without
limiting the foregoing, Tenant’s obligations hereunder shall include the
maintenance, repair and replacement of the foundation, roof (including roof
membrane), walls and all other structural components of any building located on
the Property; all heating, ventilation, air conditioning, plumbing, electrical,
mechanical, utility and safety systems serving any building located on the
Property or Premises; the parking areas, roads and driveways located on the
Premises; maintenance of exterior areas such as gardening and landscaping; snow
removal and signage; maintenance and repair of flashings, gutters, downspouts,
roof drains, skylights and waterproofing; and painting. Landlord shall not be
required to furnish any services or facilities or to make any repairs,
replacements or alterations of any kind in or on the Premises. Tenant shall
receive all invoices and bills relative to the Premises and, except as otherwise
provided herein, shall pay for all expenses directly to the person or company
submitting a bill without first having to forward payment for the expenses to
Landlord. Tenant hereby expressly waives the right to make repairs at the
expense of Landlord as provided for in any Applicable Laws in effect at the time
of execution of this Lease, or in any other Applicable Laws that may hereafter
be enacted, and waives its rights under Applicable Laws relating to a landlord’s
duty to maintain its premises in a tenantable condition.

 

10.2.         Service Contracts and Invoices. Tenant shall, promptly upon
Landlord’s written request therefor, provide Landlord with copies of all service
contracts relating to the Tenant’s maintenance of the Premises and invoices
received from Tenant from such service providers.

 

10.3.         Action by Landlord if Tenant Fails to Maintain. If Tenant refuses
or neglects to repair or maintain (or commence and pursue the process of
repairing or maintaining) the Premises as required hereunder to the reasonable
satisfaction of Landlord, Landlord, at any time following ten (10) business days
from the date on which Landlord shall make written demand on Tenant to affect
such repair or maintenance, may, but shall not have the obligation to, make such
repair and/or maintenance (without liability to Tenant for any loss or damage
which may occur to Tenant’s merchandise, fixtures or other personal property, or
to Tenant’s business by reason thereof) and upon completion thereof, Tenant
shall pay to Landlord as Landlord Additional Rent Landlord’s costs for making
such repairs, plus interest at the Default Rate from the date of expenditure by
Landlord upon demand therefor. Moreover, Tenant’s failure to pay any of the
charges in connection with the performance of its maintenance and repair
obligations under this Lease will constitute a material default under the Lease.

 

10.4.         No Rent Abatement. There shall be no abatement of Rent and no
liability of Landlord by reason of any injury to or interference with Tenant’s
business arising from the making of any repairs, alterations or improvements in
or to any portion of the Premises, or in or to improvements, fixtures, equipment
and personal property therein, except that any such activity shall in all events
only be undertaken in accordance with this Lease and Applicable Laws.

 

10.5.         Right of Entry. Subject to Applicable Laws, Landlord and
Landlord’s agents shall have the right to enter upon the Premises or any portion
thereof for the purposes of performing any repairs or maintenance Landlord is
permitted to make pursuant to this Lease, and of ascertaining the condition of
the Premises or whether Tenant is observing and performing Tenant’s obligations
hereunder, all without unreasonable interference from Tenant or Tenant Parties.
Except for emergency maintenance or repairs, the right of entry contained in
this paragraph shall be exercisable during business hours with not less than 24
hours prior notice, and subject to Tenant’s authorized personnel accompanying
Landlord’s agents in all areas of the Premises.

 

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11.           Liens. Tenant shall keep the Premises free from any liens arising
out of work or services performed, materials furnished to or obligations
incurred by Tenant, or, in the alternative, Tenant may bond over any liens to
the reasonable satisfaction of Landlord. Tenant further covenants and agrees
that any mechanic’s or materialman’s lien filed against the Premises for work or
services claimed to have been done for, or materials claimed to have been
furnished to, or obligations incurred by Tenant shall be discharged or bonded by
Tenant within twenty (20) days after the filing thereof, at Tenant’s sole cost
and expense. Should Tenant fail to discharge or bond against any lien of the
nature described in this Section, Landlord may, at Landlord’s election, pay such
claim or otherwise provide security to eliminate the lien as a claim against
title, and Tenant shall immediately reimburse Landlord for the costs thereof as
Additional Rent. Tenant shall indemnify, save, defend (at Landlord’s option and
with counsel reasonably acceptable to Landlord) and hold the Landlord
Indemnitees harmless from and against any Claims arising from any such liens,
including any administrative, court or other legal proceedings related to such
liens. In the event that Tenant leases or finances the acquisition of office
equipment, furnishings or other personal property of a removable nature utilized
by Tenant in the operation of Tenant’s business, Tenant warrants that any
Uniform Commercial Code financing statement shall, upon its face or by exhibit
thereto, indicate that such financing statement is applicable only to removable
personal property of Tenant located within the Premises.

 

12.           CC&Rs. This Lease is subject to any recorded easements, covenants,
conditions and restrictions on the Property or Premises, as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time (the “CC&Rs”). Tenant shall, at its sole cost and expense, comply with the
CC&Rs, including any obligations of Landlord thereunder as the owner of the
Property, and Landlord shall cooperate (at no cost to Landlord) with any efforts
by Tenant in connection therewith. Tenant shall promptly notify Landlord of any
alleged defaults under the CC&Rs. For the avoidance of doubt and notwithstanding
any provision herein to the contrary, there shall be no abatement of Rent and no
liability of Landlord by reason of any injury to or interference with Tenant’s
business arising from the CC&Rs and/or the exercise of any rights or obligations
thereunder.

 

13.           Utilities and Services. Tenant shall make all arrangements for and
pay for all water, sewer, gas, heat, light, power, telephone service and any
other service or utility Tenant requires at the Premises. Landlord shall not be
liable for any failure or interruption of any utility service being furnished to
the Premises, and no such failure or interruption shall entitle Tenant to any
abatement or right to terminate this Lease. In the event that any utilities are
furnished by Landlord, Tenant shall pay to Landlord the cost thereof as an
Operating Expense.

 

14.           Estoppel Certificate. Tenant shall, within ten (10) business days
after receipt of written notice from Landlord, execute, acknowledge and deliver
a statement in writing substantially in the form attached to this Lease as
Exhibit C, or on any other form reasonably requested by a current or proposed
lender or encumbrancer or proposed purchaser, (a) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease as so modified is in full force
and effect) and the dates to which rental and other charges are paid in advance,
if any, (b) acknowledging that there are not, to Tenant’s knowledge, any uncured
defaults on the part of Landlord hereunder, or specifying such defaults if any
are claimed, and (c) setting forth such further information with respect to this
Lease or the Premises as may be reasonably requested thereon. Each Guarantor
shall, within ten (10) days after receipt of written notice from Landlord,
execute, acknowledge and deliver a statement in writing in the same form.
Tenant’s or any Guarantor’s failure to deliver any such statement within such
the prescribed time shall, at Landlord’s option, constitute a Default (as
defined below) under this Lease, and, in any event, shall be binding upon Tenant
or such Guarantor (as applicable) that the Lease and such Guaranty are in full
force and effect and without modification except as may be represented by
Landlord in any certificate prepared by Landlord and delivered to Tenant or such
Guarantor (as applicable) for execution.

 

15.           Assignment or Subletting.

 

15.1.           None of the following (each, a “Transfer”), either voluntarily
or by operation of Applicable Laws, shall be directly or indirectly performed
without Landlord’s prior written consent: (a) Tenant selling, hypothecating,
assigning, pledging, encumbering or otherwise transferring this Lease or
subletting the Premises or (b) a controlling interest in Tenant being sold,
assigned or otherwise transferred (other than as a result of shares in Tenant
being sold on a public stock exchange). For purposes of the preceding sentence,
“control” means (x) owning (directly or indirectly) more than fifty percent
(50%) of the stock or other equity interests of another person or (y)
possessing, directly or indirectly, the power to direct or cause the direction
of the management and policies of such person.

 

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15.2.         In the event Tenant desires to effect a Transfer, then, at least
thirty (30) but not more than ninety (90) days prior to the date when Tenant
desires the Transfer to be effective (the “Transfer Date”), Tenant shall provide
written notice to Landlord (the “Transfer Notice”) containing information
(including references) concerning the character of the proposed transferee,
assignee or sublessee; the proposed Transfer Date; the most recent
unconsolidated financial statements of Tenant and of the proposed transferee,
assignee or sublessee (“Required Financials”); any ownership or commercial
relationship between Tenant and the proposed transferee, assignee or sublessee;
and the consideration and all other material terms and conditions of the
proposed Transfer, all in such detail as Landlord shall reasonably require. In
no event shall Landlord be deemed to be unreasonable for declining to consent to
a Transfer to a transferee, assignee or sublessee of poor reputation, lacking
financial qualifications or seeking a change in the Permitted Use, or
jeopardizing directly or indirectly the status of Landlord or any of Landlord’s
affiliates as a Real Estate Investment Trust under the Internal Revenue Code of
1986, as amended from time to time.

 

15.3.         The following are conditions precedent to a Transfer or to
Landlord considering a request by Tenant to a Transfer:

 

15.3.1.      Tenant shall remain fully liable under this Lease, and each
Guarantor shall continue to remain fully liable under such Guarantor’s Guaranty,
including with respect to the Term after the Transfer Date. Tenant agrees that
it shall not be (and shall not be deemed to be) a guarantor or surety of this
Lease, however, and waives its right to claim that it is a guarantor or surety
or to raise in any legal proceeding any guarantor or surety defenses permitted
by this Lease or by Applicable Laws;

 

15.3.2.      Tenant shall reimburse Landlord for Landlord’s actual third-party
costs and expenses, including reasonable attorneys’ fees, charges and
disbursements incurred in connection with the review, processing and
documentation of such request, in an amount not to exceed Five Thousand Dollars
($5,000.00);

 

15.3.3.      If Tenant’s transfer of rights or sharing of the Premises provides
for the receipt by, on behalf of or on account of Tenant of any consideration of
any kind whatsoever (including a premium rental for a sublease or lump sum
payment for an assignment) in excess of the rental and other charges due to
Landlord under this Lease, Tenant shall be entitled to retain one hundred
percent (100%) of all of such excess;

 

15.3.4.      The proposed transferee, assignee or sublessee shall agree that, in
the event Landlord gives such proposed transferee, assignee or sublessee notice
that Tenant is in default under this Lease, such proposed transferee, assignee
or sublessee shall thereafter make all payments otherwise due Tenant directly to
Landlord, which payments shall be received by Landlord without any liability
being incurred by Landlord, except to credit such payment against those due by
Tenant under this Lease, and any such proposed transferee, assignee or sublessee
shall agree to attorn to Landlord or its successors and assigns should this
Lease be terminated for any reason; provided, however, that in no event shall
Landlord or its Lenders, successors or assigns be obligated to accept such
attornment;

 

15.3.5.      Tenant shall not then be in default hereunder in any respect;

 

15.3.6.      Such proposed transferee, assignee or sublessee’s use of the
Premises shall be the same as the Permitted Use, unless otherwise approved by
Landlord;

 

15.3.7.      Landlord shall not be bound by any provision of any agreement
pertaining to the Transfer, except for Landlord’s written consent to the same;

 

15.3.8.      Tenant shall pay all transfer and other taxes (including interest
and penalties) assessed or payable for any Transfer;

 

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15.3.9.      Landlord’s consent (or waiver of its rights) for any Transfer shall
not waive Landlord’s right to consent or refuse consent to any later Transfer;
and

 

15.3.10.   Tenant shall deliver to Landlord a list of Hazardous Materials (as
defined below), certified by the proposed transferee, assignee or sublessee to
be true and correct, that the proposed transferee, assignee or sublessee intends
to use or store in the Premises. Additionally, Tenant shall deliver to Landlord,
on or before the date any proposed transferee, assignee or sublessee takes
occupancy of the Premises, all of the items relating to Hazardous Materials of
such proposed transferee, assignee or sublessee as described in Section 7.

 

15.4.         Any Transfer that is not in compliance with the provisions of this
Section or with respect to which Tenant does not fulfill its obligations
pursuant to this Section shall be void and shall, at the option of Landlord,
terminate this Lease.

 

15.5.         Notwithstanding any Transfer, Tenant shall remain fully and
primarily liable for the payment of all Rent and other sums due or to become due
hereunder, and for the full performance of all other terms, conditions and
covenants to be kept and performed by Tenant. The acceptance of Rent or any
other sum due hereunder, or the acceptance of performance of any other term,
covenant or condition thereof, from any person or entity other than Tenant shall
not be deemed a waiver of any of the provisions of this Lease or a consent to
any Transfer.

 

15.6.         Notwithstanding anything to the contrary contained herein, Tenant
may, at any time and from time to time, without the consent of Landlord, assign
this Lease or any interest hereunder to, or sublease or license the Premises or
any part thereof to (each of the following is referred to herein as a “Permitted
Transfer”): (a) any successor entity of Tenant resulting from a merger,
reorganization, or consolidation with Tenant (provided that such merger,
reorganization or consolidation is undertaken primarily for independent business
purposes, and not primarily for purposes of transferring this Lease or any
interest in the Premises); (b) any initial public offering by Tenant or any or
its affiliates, (c) any entity succeeding to all or substantially all of the
business and assets of Tenant (provided that such transaction is undertaken
primarily for independent business purposes, and not primarily for purposes of
transferring this Lease or any interest in the Premises); (d) any entity that,
as of the date of determination, is an Affiliate of Tenant; or (e) any entity
that, concurrently with such Transfer, is acquiring all or substantially all of
the business being conducted at the Premises by Tenant or its affiliates,
provided that (i) Tenant shall notify Landlord in writing at least twenty (20)
days prior to the effectiveness of such Permitted Transfer, (ii) Tenant shall
provide Landlord with evidence reasonably satisfactory to Landlord that the
Transfer qualifies as a Permitted Transfer and shall otherwise comply with the
requirements of this Lease regarding such Transfer, (iii) the transferee has a
net worth that is equal to or greater than the net worth of the transferring
Tenant, and (iv) Tenant and each Guarantor (in accordance with such Guarantor’s
Guaranty) shall remain fully liable for the payment of all Rent and other sums
due or to become due hereunder, and for the full performance of all other terms,
conditions and covenants to be kept and performed by Tenant.

 

15.7.         If Tenant sublets the Premises or any portion thereof, Tenant
hereby immediately and irrevocably assigns to Landlord, as security for Tenant’s
obligations under this Lease, all rent from any such subletting, and appoints
Landlord as assignee and attorney-in-fact for Tenant, and Landlord (or a
receiver for Tenant appointed on Landlord’s application) may collect such rent
and apply it toward Tenant’s obligations under this Lease; provided that, until
the occurrence of a Default (as defined below) by Tenant, Tenant shall have the
right to collect such rent.

 

16.           Indemnification and Exculpation.

 

16.1.         Tenant agrees to indemnify, save, defend (at Landlord’s option and
with counsel reasonably acceptable to Landlord) and hold the Landlord
Indemnitees harmless from and against any and all Claims of any kind or nature,
real or alleged, arising from (a) injury to or death of any person or damage to
any property occurring within or about the Premises arising directly or
indirectly out of the presence at or use or occupancy of the Premises or Project
by a Tenant Party, (b) an act or omission on the part of any Tenant Party, (c) a
breach or default by Tenant in the performance of any of its obligations
hereunder or (d) injury to or death of persons or damage to or loss of any
property, real or alleged, arising from the serving of any intoxicating
substances at the Premises or Project, except to the extent directly caused by
Landlord’s gross negligence or willful misconduct. Tenant’s obligations under
this Section shall not be affected, reduced or limited by any limitation on the
amount or type of damages, compensation or benefits payable by or for Tenant
under workers’ compensation acts, disability benefit acts, employee benefit acts
or similar legislation. Tenant’s obligations under this Section shall survive
the expiration or earlier termination of this Lease.

 

16

 

 

16.2.         Notwithstanding anything in this Lease to the contrary, Landlord
shall not be liable to Tenant for and Tenant assumes all risk of the following
(except to the extent directly caused by Landlord or Landlord’s agents): (a)
damage or losses caused by fire, electrical malfunction, gas explosion or water
damage of any type (including broken water lines, malfunctioning fire sprinkler
systems, roof leaks or stoppages of lines), and (b) damage to personal property
(in each case, regardless of whether such damages are foreseeable). Tenant
further waives any claim for injury to Tenant’s business or loss of income
relating to any such damage or destruction of personal property as described in
this Section. Notwithstanding anything in the foregoing or this Lease to the
contrary, neither Landlord nor Tenant shall be liable to the other for any form
of special, indirect, consequential, or punitive damages.

 

16.3.         Landlord shall not be liable for any damages arising from any act,
omission or neglect of any third party.

 

16.4.         The provisions of this Section shall survive the expiration or
earlier termination of this Lease.

 

17.           Insurance; Waiver of Subrogation.

 

17.1.         Landlord shall maintain a policy or policies of insurance
protecting Landlord against the following (all of which shall be payable by
Tenant as Operating Expenses):

 

17.1.1.      Fire and other perils normally included within the classification
of fire and extended coverage, together with insurance against vandalism and
malicious mischief, to the extent of the full replacement cost of the Premises,
including, at Landlord’s option, earthquake and flood coverage, exclusive of
trade fixtures, equipment and improvements insured by Tenant, with agreed value,
full replacement and other endorsements which Landlord may elect to maintain;

 

17.1.2.      Twenty-four (24) months of rental loss insurance and to the extent
of 100% of the gross rentals from the Premises;

 

17.1.3.      Comprehensive general liability insurance with a single limit of
not less than $2,000,000 for bodily injury or death and property damage with
respect to the Premises, a general aggregate not less than $2,000,000 for bodily
injury or death and property damage with respect to the Premises, and not less
than $4,000,000 of excess umbrella liability insurance; and

 

17.1.4.      At Landlord’s sole option, environmental liability or environmental
clean-up/remediation insurance in such amounts and with such deductibles and
other provisions as Landlord may determine in its sole and absolute discretion.

 

17.2.        Tenant shall, at its own cost and expense, procure and maintain
during the Term the following insurance for the benefit of Tenant and Landlord
(as their interests may appear) with insurers financially acceptable and
lawfully authorized to do business in the state where the Premises are located:

 

17.2.1.      Commercial General Liability insurance on a broad-based occurrence
coverage form, with coverages including but not limited to bodily injury
(including death), property damage (including loss of use resulting therefrom),
premises/operations, personal & advertising injury, and contractual liability
with limits of liability of not less than $1,000,000 for bodily injury and
property damage per occurrence, $5,000,000 general aggregate, which limits may
be met by use of excess and/or umbrella liability insurance provided that such
coverage is at least as broad as the primary coverages required herein.

 

17.2.2.      Commercial Automobile Liability insurance covering liability
arising from the use or operation of any auto, including those owned, hired or
otherwise operated or used by or on behalf of the Tenant. The coverage shall be
on a broad-based occurrence form with combined single limits of not less than
$1,000,000 per accident for bodily injury and property damage.

 

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17.2.3.      Commercial Property insurance covering property damage to the full
replacement cost value and business interruption. Covered property shall include
all tenant improvements in the Premises (to the extent not insured by Landlord)
and Tenant’s property including personal property, furniture, fixtures,
machinery, equipment, stock, inventory and improvements and betterments, which
may be owned by Tenant or Landlord and required to be insured hereunder, or
which may be leased, rented, borrowed or in the care custody or control of
Tenant, or Tenant’s agents, employees or subcontractors. Such insurance, with
respect only to all Alterations or other work performed on the Premises by
Tenant (collectively, “Tenant Work”), shall name Landlord and Landlord’s current
and future mortgagees as loss payees as their interests may appear. Such
insurance shall be written on an “all risk” of physical loss or damage basis
including the perils of fire, extended coverage, electrical injury, mechanical
breakdown, windstorm, vandalism, malicious mischief, sprinkler leakage, back-up
of sewers or drains, flood, earthquake, terrorism and such other risks Landlord
may from time to time designate, for the full replacement cost value of the
covered items with an agreed amount endorsement with no co-insurance. Business
interruption coverage shall have limits sufficient to cover Tenant’s lost
profits and necessary continuing expenses, including rents due Landlord under
the Lease. The minimum period of indemnity for business interruption coverage
shall be twelve (12) months plus twelve (12) months’ extended period of
indemnity.

 

17.2.4.      Workers’ Compensation insurance as is required by statute or law,
or as may be available on a voluntary basis and Employers’ Liability insurance
with limits of not less than the following: each accident, Five Hundred Thousand
Dollars ($500,000); disease, Five Hundred Thousand Dollars ($500,000); disease
(each employee), Five Hundred Thousand Dollars ($500,000).

 

17.2.5.      Pollution Legal Liability insurance is required if Tenant stores,
handles, generates or treats Hazardous Materials, as determined solely by
Landlord, on or about the Premises. Such coverage shall include bodily injury,
sickness, disease, death or mental anguish or shock sustained by any person;
property damage including physical injury to or destruction of tangible property
including the resulting loss of use thereof, clean-up costs, and the loss of use
of tangible property that has not been physically injured or destroyed; and
defense costs, charges and expenses incurred in the investigation, adjustment or
defense of claims for such compensatory damages. Coverage shall apply to both
sudden and non-sudden pollution conditions including the discharge, dispersal,
release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic
chemicals, liquids or gases, waste materials or other irritants, contaminants or
pollutants into or upon land, the atmosphere or any watercourse or body of
water. Claims-made coverage is permitted, provided the policy retroactive date
is continuously maintained prior to the commencement date of this Lease, and
coverage is continuously maintained during all periods in which Tenant occupies
the Premises. Coverage shall be maintained with limits of not less than
$1,000,000 per incident with a $2,000,000 policy aggregate and for a period of
two (2) years thereafter.

 

17.3.         During all construction by Tenant at the Premises, with respect to
tenant improvements being constructed (including any Alterations), Tenant shall
cause the insurance required in Exhibit E to be in place.

 

17.4.         The insurance required of Tenant by this Section shall be with
companies at all times having a current rating of not less than A- and financial
category rating of at least Class VII in “A.M. Best’s Insurance Guide” current
edition. Tenant shall obtain for Landlord from the insurance companies/broker or
cause the insurance companies/broker to furnish certificates of insurance
evidencing all coverages required herein to Landlord. Landlord reserves the
right to require complete, certified copies of all required insurance policies
including any endorsements. No such policy shall be cancelable or subject to
reduction of coverage or other modification or cancellation except after twenty
(20) days’ prior written notice to Landlord from Tenant or its insurers (except
in the event of non-payment of premium, in which case ten (10) days’ written
notice shall be given). All such policies shall be written as primary policies,
not contributing with and not in excess of the coverage that Landlord may carry.
Tenant’s required policies shall contain severability of interests clauses
stating that, except with respect to limits of insurance, coverage shall apply
separately to each insured or additional insured. Tenant shall, at least
twenty-five (25) days prior to the expiration of such policies, furnish Landlord
with renewal certificates of insurance or binders. Tenant agrees that if Tenant
does not take out and maintain such insurance, Landlord may (but shall not be
required to) procure such insurance on Tenant’s behalf and at its cost to be
paid by Tenant as Additional Rent. Commercial General Liability, Commercial
Automobile Liability, Umbrella Liability and Pollution Legal Liability insurance
as required above shall name Landlord, IIP Operating Partnership, LP and
Innovative Industrial Properties, Inc. and their respective officers, employees,
agents, general partners, members, subsidiaries, affiliates and Lenders
(“Landlord Parties”) as additional insureds as respects liability arising from
work or operations performed by or on behalf of Tenant, Tenant’s use or
occupancy of Premises, and ownership, maintenance or use of vehicles by or on
behalf of Tenant.

 

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17.5.         Tenant assumes the risk of damage to any fixtures, goods,
inventory, merchandise, equipment and leasehold improvements, and Landlord shall
not be liable for injury to Tenant’s business or any loss of income therefrom,
relative to such damage, all as more particularly set forth within this Lease.
Tenant shall, at Tenant’s sole cost and expense, carry such insurance as Tenant
desires for Tenant’s protection with respect to personal property of Tenant or
business interruption.

 

17.6.         Landlord and Tenant agree to waive (and Landlord and Tenant shall
exercise commercially reasonable efforts to cause their respective insurers to
hereby waive) any and all rights of recovery or subrogation against the parties
hereto with respect to any loss, damage, claims, suits or demands, howsoever
caused, that are covered, or should have been covered, by valid and collectible
insurance, including any deductibles or self-insurance maintained thereunder. If
necessary, each of Tenant and Landlord, as applicable, agrees to endorse the
required insurance policies to permit waivers of subrogation as required
hereunder and hold harmless and indemnify the parties hereto for any loss or
expense incurred as a result of a failure to obtain such waivers of subrogation
from insurers. Tenant, upon obtaining the policies of insurance required or
permitted under this Lease (or Landlord, in the event Landlord procures any
applicable insurance required under this Lease), shall give notice to its
insurance carriers that the foregoing waiver of subrogation is contained in this
Lease. If such policies shall not be obtainable with such waiver or shall be so
obtainable only at a premium over that chargeable without such waiver, then
Tenant or Landlord, as applicable, shall notify the other party of such
conditions.

 

17.7.         Landlord may require insurance policy limits required under this
Lease to be raised to conform with requirements of Landlord’s lender, if any.

 

17.8.         Any costs incurred by Landlord pursuant to this Section shall be
included as Operating Expenses payable by Tenant pursuant to this Lease.

 

17.9.         The provisions of this Section shall survive the expiration or
earlier termination of this Lease.

 

18.            Subordination and Attornment.

 

18.1.         This Lease shall be subject and subordinate to the lien of any
mortgage, deed of trust, or lease in which Landlord is tenant now or hereafter
in force against the Premises or any portion thereof and to all advances made or
hereafter to be made upon the security thereof without the necessity of the
execution and delivery of any further instruments on the part of Tenant to
effectuate such subordination.

 

18.2.         Notwithstanding the foregoing, Tenant shall execute and deliver
upon demand such further instrument or instruments evidencing such subordination
of this Lease to the lien of any such mortgage or mortgages or deeds of trust or
lease in which Landlord is tenant as may be required by Landlord. If any such
mortgagee, beneficiary or landlord under a lease wherein Landlord is tenant
(each, a “Mortgagee”) so elects, however, this Lease shall be deemed prior in
lien to any such lease, mortgage, or deed of trust upon or including the
Premises regardless of date and Tenant shall execute a statement in writing to
such effect at Landlord’s request.

 

18.3.         In the event any proceedings are brought for foreclosure, or in
the event of the exercise of the power of sale under any mortgage or deed of
trust made by Landlord covering the Premises, Tenant shall at the election of
the purchaser at such foreclosure or sale attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as Landlord under this Lease.

 

18.4.         Notwithstanding anything herein to the contrary, in no event shall
Landlord obtain financing or execute or enter into any agreement affecting the
Property if such action jeopardizes Tenant’s License or otherwise unreasonably
interferes with the Permitted Use in any material respect.

 

19

 

 

19.            Defaults and Remedies.

 

19.1.          Late payment by Tenant to Landlord of Rent and other sums due
shall cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which shall be extremely difficult and impracticable to ascertain.
Such costs include processing and accounting charges and late charges that may
be imposed on Landlord by the terms of any mortgage or trust deed covering the
Premises. Therefore, if any installment of Rent due from Tenant is not received
by Landlord within three (3) days after the date such payment is due, Tenant
shall pay to Landlord (a) an additional sum of ten percent (10%) of the overdue
Rent as a late charge plus (b) interest at an annual rate (the “Default Rate”)
equal to the lesser of (a) fifteen percent (15%) and (b) the highest rate
permitted by Applicable Laws. The parties agree that this late charge represents
a fair and reasonable estimate of the costs that Landlord shall incur by reason
of late payment by Tenant and shall be payable as Additional Rent to Landlord
due with the next installment of Rent. Landlord’s acceptance of any Additional
Rent (including a late charge or any other amount hereunder) shall not be deemed
an extension of the date that Rent is due or prevent Landlord from pursuing any
other rights or remedies under this Lease, at law or in equity.

 

19.2.         No payment by Tenant or receipt by Landlord of a lesser amount
than the Rent payment herein stipulated shall be deemed to be other than on
account of the Rent, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord’s right to recover the balance of such Rent or pursue any other remedy
provided in this Lease or in equity or at law.

 

19.3.         If Tenant fails to pay any sum of money required to be paid by it
hereunder or perform any other act on its part to be performed hereunder, in
each case within the applicable cure period (if any) described herein, then
Landlord may (but shall not be obligated to), without waiving or releasing
Tenant from any obligations of Tenant, make such payment or perform such act.
Notwithstanding the foregoing, in the event of an emergency, Landlord shall have
the right to enter the Premises and act in accordance with its rights as
provided elsewhere in this Lease. Tenant shall pay to Landlord as Additional
Rent all sums so paid or incurred by Landlord, together with interest at the
Default Rate, computed from the date such sums were paid or incurred.

 

19.4.         The occurrence of any one or more of the following events shall
constitute a “Default” hereunder by Tenant:

 

19.4.1.      Tenant abandons or vacates the Premises while failing to make
payments of Rent when due or providing for the on-going maintenance and repair
of the Premises as required pursuant to the terms of this Lease;

 

19.4.2.      Tenant fails to make any payment of Rent, as and when due, where
such failure shall continue for a period of five (5) days after written notice
thereof from Landlord to Tenant;

 

19.4.3.      Tenant fails to observe or perform any obligation or covenant
contained herein (other than those enumerated in this Section 19.4) after the
expiration of any applicable notice and cure period or if no such cure period is
specified, within thirty (30) days following Tenant’s receipt of written notice
from Landlord advising Tenant of such failure, but if such failure is curable
but cannot reasonably be cured during such thirty (30) day period, and if Tenant
has commenced such cure promptly and in any case within such thirty (30) day
period and thereafter has diligently pursued such cure to completion, then such
thirty (30) day period shall be extended to ninety (90) days;

 

19.4.4.      Tenant makes an assignment for the benefit of creditors, or a
receiver, trustee or custodian is appointed to or does take title, possession or
control of all or substantially all of Tenant’s or Guarantor’s assets;

 

19.4.5.      Tenant or any Guarantor files a voluntary petition under the United
States Bankruptcy Code or any successor statute (as the same may be amended from
time to time, the “Bankruptcy Code”) or an order for relief is entered against
Tenant or any Guarantor (as applicable) pursuant to a voluntary or involuntary
proceeding commenced under any chapter of the Bankruptcy Code;

 

19.4.6.      Any involuntary petition is filed against Tenant or any Guarantor
under any chapter of the Bankruptcy Code and is not dismissed within one hundred
twenty (120) days;

 

20

 

 

19.4.7.      A default exists under any Guaranty executed by a Guarantor in
favor of Landlord, after the expiration of any applicable notice and cure
periods;

 

19.4.8.      Tenant’s interest in this Lease is attached, executed upon or
otherwise judicially seized and such action is not released within one hundred
twenty (120) days of the action;

 

19.4.9.      A governmental authority seizes any part of the Property seeking
forfeiture, whether or not a judicial forfeiture proceeding has commenced;

 

19.4.10.   A final, appealable judgment having the effect of establishing that
Tenant’s operation violates Landlord’s contractual obligations pursuant to any
private covenants of record restricting the use of the Premises (including any
building or other improvements located thereon), provided such private covenant
was not created by Landlord after the Execution Date without Tenant’s consent
(provided, however, that such Default under this Section 19.4.10 shall not be
determined to have occurred until the exhaustion of any appeal from such
judgment, on the express conditions that Tenant (i) immediately ceases
operations at the Property following the issuance of the final, appealable
judgment; (ii) thereafter is diligently pursuing an appeal of the judgment; and
(iii) otherwise continues to comply with the terms and conditions of the Lease);
or

 

19.4.11.   An event occurs that results in any insurance carrier that provides
insurance coverage with respect to any aspect of the Project providing notice to
the Landlord of its intent to cancel such insurance coverage, and Landlord,
exercising commercially reasonable efforts, is not able to procure comparable
replacement insurance coverage that is reasonably acceptable to Landlord prior
to the actual cancellation date specified in the notice of the cancelling
insurance carrier; or

 

19.4.12.   The occurrence of a default by Tenant under the Development
Agreement, after the expiration of any applicable notice and cure periods.

 

19.5.         Notices given under this Section shall specify the alleged default
and shall demand that Tenant perform the provisions of this Lease or pay the
Rent that is in arrears, as the case may be, within the applicable period of
time, or quit the Premises. No such notice shall be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such notice.

 

19.6.         In the event of a Default by Tenant, and at any time thereafter,
with or without notice or demand and without limiting Landlord in the exercise
of any right or remedy that Landlord may have under Applicable Laws or this
Lease, Landlord has the right to do any or all of the following:

 

19.6.1.      Halt any Alterations and order Tenant’s contractors to stop work or
halt any work being performed pursuant to the terms of this Lease or the
Development Agreement;

 

19.6.2.      Terminate Tenant’s right to possession of the Premises by written
notice to Tenant or by any lawful means, in which case Tenant shall immediately
surrender possession of the Premises to Landlord. In such event, Landlord shall
have the immediate right to re-enter and remove all persons and property
(subject to Applicable Laws and excluding any Tenant Collateral), and such
property may be removed and stored elsewhere at the cost and for the account of
Tenant, all without service of notice or resort to legal process and without
being deemed guilty of trespass or becoming liable for any loss or damage; and

 

19.6.3.      Terminate this Lease, in which event Tenant shall immediately
surrender possession of the Premises to Landlord. In such event, Landlord shall
have the immediate right to re-enter and remove all persons and property, and
such property may be removed and stored elsewhere at the cost and for the
account of Tenant, all without service of notice or resort to legal process and
without being deemed guilty of trespass or becoming liable for any loss or
damage. In the event that Landlord shall elect to so terminate this Lease, then
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant’s default, including:

 

21

 

 

19.6.3.1. The sum of: (i) the worth at the time of award (computed by allowing
interest at the Default Rate) of any unpaid Rent that had accrued at the time of
such termination; plus (ii) the worth at the time of award of the amount by
which the unpaid Rent that would have accrued during the period commencing with
termination of the Lease and ending at the time of award exceeds that portion of
the loss of Landlord’s rental income from the Premises that Tenant proves to
Landlord’s reasonable satisfaction could have been reasonably avoided; plus;
(iii) the worth at the time of award of the amount by which the unpaid Rent for
the balance of the Term after the time of award exceeds that portion of the loss
of Landlord’s rental income from the Premises that Tenant proves to Landlord’s
reasonable satisfaction could have been reasonably avoided; plus (iv) any other
amount necessary to compensate Landlord for all the detriment caused by Tenant’s
failure to perform its obligations under this Lease or that in the ordinary
course of things would be likely to result therefrom, including the cost of
restoring the Premises to the condition required under the terms of this Lease,
including any rent payments not otherwise chargeable to Tenant (e.g., during any
“free” rent period or rent holiday); plus (v) at Landlord’s election, such other
amounts in addition to or in lieu of the foregoing as may be permitted from time
to time by Applicable Laws; or

 

19.6.3.2. At Landlord’s election, as minimum liquidated damages in addition to
any (i) amounts paid or payable to Landlord pursuant to Section 19.6.3.1.(i)
prior to such election and (ii) costs of restoring the Premises to the condition
required under the terms of this Lease, an amount (the “Election Amount”) equal
to either (A) the positive difference (if any, and measured at the time of such
termination) between (1) the then-present value of the total Rent and other
benefits that would have accrued to Landlord under this Lease for the remainder
of the Term if Tenant had fully complied with the Lease minus (2) the
then-present cash rental value of the Premises as determined by Landlord for
what would be the then-unexpired Term if the Lease remained in effect, computed
using the discount rate of the Federal Reserve Bank of San Francisco at the time
of the award plus one (1) percentage point (the “Discount Rate”) or (B) twelve
(12) months (or such lesser number of months as may then be remaining in the
Term) of Base Rent and Additional Rent at the rate last payable by Tenant
pursuant to this Lease, in either case as Landlord specifies in such election.
Landlord and Tenant agree that the Election Amount represents a reasonable
forecast of the minimum damages expected to occur in the event of a breach,
taking into account the uncertainty, time and cost of determining elements
relevant to actual damages, such as fair market rent, time and costs that may be
required to re-lease the Premises, and other factors; and that the Election
Amount is not a penalty, provided the foregoing liquidated damages are not
intended to permit Landlord to recover duplicative damages.

 

19.7.         In addition to any other remedies available to Landlord at law or
in equity and under this Lease, Landlord may continue this Lease in effect after
Tenant’s Default or abandonment and recover Rent as it becomes due. In addition,
Landlord shall not be liable in any way whatsoever for its failure or refusal to
relet the Premises. For purposes of this Section, the following acts by Landlord
will not constitute the termination of Tenant’s right to possession of the
Premises: Acts of maintenance or preservation or efforts to relet the Premises,
including alterations, remodeling, redecorating, repairs, replacements or
painting as Landlord shall consider advisable for the purpose of reletting the
Premises or any part thereof; or the appointment of a receiver upon the
initiative of Landlord to protect Landlord’s interest under this Lease or in the
Premises.

 

19.8.         Notwithstanding the foregoing, in the event of a Default by
Tenant, Landlord may elect at any time to terminate this Lease and to recover
damages to which Landlord is entitled.

 

19.9.         If Landlord does not elect to terminate this Lease as provided in
this Section 19, then Landlord may, from time to time, recover all Rent as it
becomes due under this Lease. At any time thereafter, Landlord may elect to
terminate this Lease and to recover damages to which Landlord is entitled.

 

19.10.       All of Landlord’s rights, options and remedies hereunder shall be
construed and held to be nonexclusive and cumulative. Notwithstanding any
provision of this Lease to the contrary, in no event shall Landlord be required
to mitigate its damages with respect to any default by Tenant, except as
required by Applicable Laws. Any such obligation imposed by Applicable Laws upon
Landlord to relet the Premises after any termination of this Lease shall be
subject to the reasonable requirements of Landlord to lease to high quality
tenants on such terms as Landlord may from time to time deem appropriate in its
discretion. Landlord shall not be obligated to relet the Premises to any party
(a) unacceptable to a Lender, (b) that requires Landlord to make improvements to
or re-demise the Premises, (c) that desires to change the Permitted Use, (e)
that desires to lease the Premises for more or less than the remaining Term or
(e) to whom Landlord or an affiliate of Landlord may desire to lease other
available space in the Project or at another property owned by Landlord or an
affiliate of Landlord.

 

19.11.      To the extent permitted by Applicable Laws, Tenant waives any and
all rights of redemption granted by or under any present or future Applicable
Laws if Tenant is evicted or dispossessed for any cause, or if Landlord obtains
possession of the Premises due to Tenant’s default hereunder or otherwise.

 

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19.12.       Landlord shall not be in default or liable for damages under this
Lease unless Landlord fails to perform obligations required of Landlord within a
reasonable time. In no event shall Tenant have the right to terminate or cancel
this Lease or to withhold or abate rent or to set off any Claims against Rent as
a result of any default or breach by Landlord of any of its covenants,
obligations, representations, warranties or promises hereunder, except as may
otherwise be expressly set forth in this Lease. Notwithstanding anything to the
contrary set forth in this Lease, in the event that (a) a Notice of Demand is
filed with the AAA in connection with a Disbursement Claim (as such terms are
defined in the Development Agreement), (b) the Final Arbitration Decision (as
defined in the Development Agreement) requires Landlord to pay any Required
Arbitration Construction Payments or any other monetary damages to Tenant, and
(c) Landlord fails to pay such monetary damages to Tenant within thirty (30)
days of the issuance of such decision, then Tenant shall be entitled to offset
any payments of Rent due under this Lease required to be made by Tenant under
from Tenant under this Lease until such time as Tenant has been reimbursed in
full for the unpaid amount of such award. To the extent Tenant funds any
Required Arbitration Construction Payments (as defined in the Development
Agreement), then, in addition to the foregoing, Base Rent shall be adjusted as
provided for in Section 5.2.3, above.

 

19.13.       In the event of any default by Landlord, Tenant shall give notice
by registered or certified mail to any (a) beneficiary of a deed of trust or (b)
mortgagee under a mortgage covering the Premises or any portion thereof and to
any landlord of any lease of land upon or within which the Premises are located,
and shall offer such beneficiary, mortgagee or landlord a reasonable opportunity
to cure the default, including time to obtain possession of the Premises by
power of sale or a judicial action if such should prove necessary to effect a
cure; provided that Landlord shall furnish to Tenant in writing, upon written
request by Tenant, the names and addresses of all such persons who are to
receive such notices.

 

20.           Damage or Destruction.

 

20.1.         Tenant’s Obligation to Rebuild.  If the Premises are damaged or
destroyed, Tenant shall immediately provide notice thereof to Landlord, and
shall promptly thereafter deliver to Landlord Tenant’s good faith estimate of
the time it will take to repair and rebuild the Premises (the “Estimated Time
For Repair”). Subject to the other provisions of this Section 20, Tenant shall
promptly and diligently repair and rebuild the Premises in accordance Section
20 unless Landlord or Tenant terminates this Lease in accordance with Section
20.2.

 

20.2.         Termination.

 

20.2.1.      Landlord’s Right to Terminate.

 

20.2.1.1. Landlord shall have the right to terminate this Lease following damage
to or destruction of all or a substantial portion of the Premises if any of the
following occurs (each, a “Termination Condition”): (i) insurance proceeds,
together with additional amounts Tenant agrees to contribute under this Section
20, are not confirmed to be available to Landlord, within 90 days following the
date of damage, to pay 100% of the cost to fully repair the damaged Premises,
excluding the deductible for which Tenant shall also be responsible for paying
as an Operating Expense; (ii) based upon the Estimated Time For Repair, the
Premises cannot, with reasonable diligence, be fully repaired by Tenant within
eighteen (18) months after the date of the damage or destruction; (iii) the
Premises cannot be safely repaired because of the presence of hazardous factors,
including, but not limited to, earthquake faults, chemical waste and other
similar dangers; (iv) subject to the terms and conditions
of Section 20.2.1.1. hereof, all or a substantial portion of the Premises are
destroyed or damaged during the last 24 months of the Term; or (v) Tenant is in
Default at the time of such damage or destruction past any period of notice and
cure as elsewhere provided in this Lease. For purposes of this Section 20.2, a
“substantial portion” of the Premises shall be deemed to be damaged or destroyed
if the Premises is rendered unsuitable for the continued use and occupancy of
Tenant’s business substantially in the same manner conducted prior to the event
causing the damage or destruction.

 

20.2.1.2. If all or a substantial portion of the Premises are destroyed or
damaged within the last twenty-four (24) months of the initial Term, or within
the last twenty-four (24) months of the first Extension Period under this Lease,
and Landlord desires to terminate this Lease under Section 20.2.1.1. hereof,
Landlord shall deliver a Termination Notice to Tenant pursuant to Section 20.2.3
below and Tenant shall have a period of thirty (30) days after receipt of
the Termination Notice (“Tenant’s Early Option Period”) to exercise its option
to extend the initial Term or the first Extension Period, as applicable, by
providing Landlord with written notice of Tenant’s exercise of its option prior
to the expiration of Tenant’s Early Option Period. If Tenant exercises its
option rights under the immediately preceding sentence, the Termination Notice
shall be deemed rescinded and Tenant shall proceed to repair and rebuild the
Premises in accordance with the other provisions of this Section 20. If Tenant
fails to deliver such written notice to Landlord prior to the end of Tenant’s
Early Option Period, then Tenant shall be deemed to have waived its option to
extend the Term, and the last day of Tenant’s Early Option Period shall be
deemed to be the date of the occurrence of the Termination Condition
under Section 20.2.1.1.

 

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20.2.2.      Tenant’s Right to Terminate. Tenant shall have the right to
terminate this Lease following damage to or destruction of all or a substantial
portion of the Premises if the Premises are destroyed or damaged during the last
twelve (12) months of the Term, which termination shall be deemed to constitute
a Termination Condition.

 

20.2.3.      Exercise of Termination Right. If a party elects to terminate this
Lease and has the right to so terminate, such party will give the other party
written notice of its election to terminate (“Termination Notice”) within thirty
(30) days after the occurrence of the applicable Termination Condition, and this
Lease will terminate fifteen (15) days after the receiving party’s receipt of
such Termination Notice, except in the case of a termination by Landlord
under Section 20.2.1.1, in which case this Lease will terminate fifteen
(15) days after expiration of the Tenant Early Option Period if Tenant timely
fails to exercise timely Tenant’s option to extend the Term. If this Lease is
terminated pursuant to Section 20.2, Landlord shall, subject to the rights of
its lender(s), be entitled to receive and retain all the insurance proceeds
resulting from such damage, including rental loss insurance, except for those
proceeds payable under policies obtained by Tenant which specifically insure
Tenant’s personal property, trade fixtures and machinery.

 

20.3.         Tenant’s Obligation to Repair. If Tenant is required to repair or
rebuild any damage or destruction of the Premises under Section 20.1, then
Tenant shall (a) submit its plans to repair such damage and reconstruct the
Premises to Landlord for review and approval, which approval shall not be
unreasonably withheld; (b) diligently repair and rebuild the Premises in the
same or better condition and with the same or better quality of materials as the
condition of the Premises as of the Commencement Date, and in a manner that is
consistent with the plans and specifications approved by Landlord; (c) obtain
all permits and governmental approvals necessary to repair or reconstruct the
Premises (which permits shall not contain any conditions that are materially
more restrictive than the permits in existence on the date hereof); (d) cause
all work to be performed only by qualified contractors that are reasonably
approved by Landlord; (e) allow Landlord and its consultants and agents to enter
the Premises at all reasonable times to inspect the Premises and Tenant’s
ongoing work and cooperate reasonably in good faith with their effort to ensure
that the work is proceeding in a manner that is consistent with this Lease;
(f) comply with all applicable laws and permits in connection with the
performance of such work; (g) timely pay all of its consultants, suppliers and
other contractors in connection with the performance of such work; (h) notify
Landlord if Tenant receives any notice of any default or any violation of any
applicable law or any permit or similar notice in connection with such work;
(i) deliver as-built plans for the Premises within thirty (30) days after the
completion of such repair and restoration; (j) ensure that Landlord has fee
simple title to the Premises during such work without any claim by any
contractor or other party; (k) maintain such insurance as Landlord may
reasonably require (including insurance in the nature of builders’ risk
insurance) and (l) comply with such other conditions as Landlord may reasonably
require. In addition, Tenant shall, at its expense, replace or fully repair all
of Tenant’s personal property and any alterations installed by Tenant existing
at the time of such damage or destruction. To the fullest extent permitted by
law, Tenant shall indemnify, protect, defend and hold Landlord (and its
employees and agents) harmless from and against any and all claims, costs,
expenses, suits, judgments, actions, investigations, proceedings and liabilities
arising out of or in connection with Tenant’s obligations under this Section 20,
including, without limitation, any acts, omissions or negligence in the making
or performance of any such repairs or replacements. In the event Tenant does not
repair and rebuild the Premises pursuant to this Section 20, Tenant shall be in
breach, and Landlord shall have the right to retain all casualty insurance
proceeds and condemnation proceeds.

 

20.4.         Application of Insurance Proceeds for Repair and
Rebuilding. Landlord shall cause the insurance proceeds (the “Insurance
Proceeds”) on account of such damage or destruction to be held by Landlord and
disbursed as follows:

 

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20.4.1.      Minor Restorations. If (i) the estimated cost of restoration is
less than One Million Dollars ($1,000,000.00), (ii) prior to commencement of
restoration, no Default or event which, with the passage of time, would give
rise to a Default shall exist and no mechanics’ or materialmen’s liens shall
have been filed and remain undischarged, (iii) the architects, contracts,
contractors, plans and specifications for the restoration shall have been
approved by Landlord (which approval shall not be unreasonably withheld or
delayed), (iv) Landlord shall be provided with reasonable assurance against
mechanics’ liens, accrued or incurred, as Landlord or its lenders may reasonably
require and such other documents and instruments as Landlord or its lenders may
reasonably require, and (v) Tenant shall have procured acceptable performance
and payment bonds reasonably acceptable to Landlord in an amount and form, and
from a surety, reasonably acceptable to Landlord, and naming Landlord as an
additional obligee; then Landlord shall make available that portion of the
Insurance Proceeds to Tenant for application to pay the costs of restoration
incurred by Tenant and Tenant shall promptly complete such restoration.

 

20.4.2.      Other Than Minor Restorations. If the estimated cost of restoration
is equal to or exceeds One Million Dollars ($1,000,000.00), and if Tenant
provides evidence satisfactory to Landlord that sufficient funds are available
to restore the Premises, Landlord shall make disbursements from the available
Insurance Proceeds from time to time in an amount not exceeding the cost of the
work completed since the date covered by the last disbursement, upon receipt of
(i) satisfactory evidence, including architect’s certificates, of the stage of
completion, of the estimated cost of completion and of performance of the work
to date in a good and workmanlike manner in accordance with the contracts, plans
and specifications, (ii) reasonable assurance against mechanics’ or
materialmen’s liens, accrued or incurred, as Landlord or its lenders may
reasonably require, (iii) contractors’ and subcontractors’ sworn statements,
(iv) a satisfactory bring-to-date of title insurance, (v) performance and
payment bonds reasonably acceptable to Landlord in an amount and form, and from
a surety, reasonably acceptable to Landlord, and naming Landlord as an
additional obligee, (vi) such other documents and instruments as Landlord or its
lenders may reasonably require, and (vii) other evidence of cost and payment so
that Landlord can verify that the amounts disbursed from time to time are
represented by work that is completed, in place and free and clear of mechanics’
lien claims.

 

20.4.3.      Requests for Disbursements. Requests for disbursement shall be made
no more frequently than monthly and shall be accompanied by a certificate of
Tenant describing in detail the work for which payment is requested, stating the
cost incurred in connection therewith and stating that Tenant has not previously
received payment for such work; the certificate to be delivered by Tenant upon
completion of the work shall, in addition, state that the work has been
completed and complies with the applicable requirements of this Lease. Landlord
may retain 10% of each requisition until the restoration is fully completed. In
addition, Landlord may withhold from amounts otherwise to be paid to Tenant, any
amount that is necessary in Landlord’s reasonable judgment to protect Landlord
from any potential loss due to work that is improperly performed or claims by
Tenant’s contractors and consultants.

 

20.4.4.      Costs in Excess of Insurance Proceeds. In addition, prior to
commencement of restoration and at any time during restoration, if the estimated
cost of restoration, as determined by the evaluation of an independent engineer
acceptable to Landlord and Tenant, exceeds the amount of the Insurance Proceeds,
Tenant will provide evidence satisfactory to Landlord that the amount of such
excess will be available to restore the Premises. Any Insurance Proceeds
remaining upon completion of restoration shall be refunded to Tenant up to the
amount of Tenant’s payments pursuant to the immediately preceding sentence. If
no such refund is required, any sum of Insurance Proceeds remaining upon
completion of restoration shall be paid to Landlord. In the event Landlord and
Tenant cannot agree on an independent engineer, an independent engineer
designated by Tenant and an independent engineer designated by Landlord shall
within five (5) business days select an independent engineer licensed to
practice in Pennsylvania who shall resolve such dispute within ten (10) business
days after being retained by Landlord. All fees, costs and expenses of such
third engineer so selected shall be shared equally by Landlord and Tenant.

 

20.5.         Abatement of Rent. In the event of repair, reconstruction and
restoration as provided in this Section, all Rent to be paid by Tenant under
this Lease shall be abated proportionately based on the extent to which Tenant’s
use of the Premises is impaired during the period of such repair, reconstruction
or restoration, unless Landlord provides Tenant with other space during the
period of repair, reconstruction and restoration that, in Tenant’s reasonable
opinion, is suitable for the temporary conduct of the Tenant’s business in
accordance with Applicable Law; provided, however, that the amount of such
abatement shall be reduced by the amount of Rent that is received by Tenant as
part of the business interruption or loss of rental income with respect to the
Premises from the proceeds of business interruption or loss of rental income
insurance. Tenant shall not otherwise be entitled to any compensation or damages
from Landlord for loss of the use of the Premises, damage to Tenant’s personal
property or any inconvenience occasioned by such damage, repair or restoration. 

 

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20.6.         Replacement Cost. The determination in good faith by Landlord of
the estimated cost of repair of any damage, of the replacement cost, or of the
time period required for repair shall be conclusive for purposes of
this Section 20.

 

20.7.         This Section 20 sets forth the terms and conditions upon which
this Lease may terminate in the event of any damage or destruction. Accordingly,
the parties hereby waive the provisions of any Applicable Laws (and any
successor statutes) permitting the parties to terminate this Lease as a result
of any damage or destruction.

 

21.           Eminent Domain.

 

21.1.         In the event (a) the whole of the Premises or (b) such part
thereof as shall substantially interfere with Tenant’s use and occupancy of the
Premises for the Permitted Use shall be taken for any public or quasi-public
purpose by any lawful power or authority by exercise of the right of
appropriation, condemnation or eminent domain, or sold to prevent such taking,
Tenant or Landlord may terminate this Lease effective as of the date possession
is required to be surrendered to such authority, except with regard to (y) items
occurring prior to the taking and (z) provisions of this Lease that, by their
express terms, survive the expiration or earlier termination hereof.

 

21.2.          In the event of a partial taking of the Premises for any public
or quasi-public purpose by any lawful power or authority by exercise of right of
appropriation, condemnation, or eminent domain, or sold to prevent such taking,
then, without regard to whether any portion of the Premises occupied by Tenant
was so taken, Landlord may elect to terminate this Lease (except with regard to
(a) items occurring prior to the taking and (b) provisions of this Lease that,
by their express terms, survive the expiration or earlier termination hereof) as
of such taking if such taking is, in Landlord’s sole opinion, of a material
nature such as to make it uneconomical to continue use of the unappropriated
portion for the Permitted Use.

 

21.3.         Tenant shall be entitled to any award that is specifically awarded
as compensation for (a) the taking of Tenant’s personal property or trade
fixtures that were purchased or installed at Tenant’s expense, including without
limitation, any crops or inventory at the Property and (b) the costs of Tenant
moving to a new location. Except as set forth in the previous sentence, any
award for such taking shall be the property of Landlord.

 

21.4.         If, upon any taking of the nature described in this Section, this
Lease continues in effect, then Landlord shall promptly proceed to restore the
Premises to substantially their same condition prior to such partial taking. To
the extent such restoration is infeasible, as determined by Landlord in its sole
and absolute discretion, the Rent shall be decreased proportionately to reflect
the loss of any portion of the Premises no longer available to Tenant.

 

21.5.         This Section 21 sets forth the terms and conditions upon which
this Lease may terminate in the event of any damage or destruction. Accordingly,
the parties hereby waive the provisions of any Applicable Laws (and any
successor statutes) permitting the parties to terminate this Lease as a result
of any damage or destruction.

 

22.            Surrender. At least thirty (30) days prior to Tenant’s surrender
of possession of any part of the Premises, Tenant shall provide Landlord with a
facility decommissioning and Hazardous Materials closure plan for the Premises
(“Exit Survey”) prepared by an independent third party state-certified
professional with appropriate expertise, which Exit Survey must be reasonably
acceptable to Landlord. In addition, at least ten (10) days prior to Tenant’s
surrender of possession of any part of the Premises, Tenant shall (a) provide
Landlord with written evidence of all appropriate governmental releases obtained
by Tenant in accordance with Applicable Laws, including laws pertaining to the
surrender of the Premises, and (b) conduct a site inspection with Landlord. In
addition, Tenant agrees to remain responsible after the surrender of the
Premises for the remediation of any recognized environmental conditions set
forth in the Exit Survey and comply with any recommendations set forth in the
Exit Survey. Tenant’s obligations under this Section shall survive the
expiration or earlier termination of the Lease. The provisions of this Section
shall survive the termination or expiration of this Lease, and no surrender of
possession of any part of the Premises shall release Tenant from any of its
obligations hereunder, unless such surrender is accepted in writing by Landlord.

 

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23.           Bankruptcy. In the event a debtor, trustee or debtor in possession
under the Bankruptcy Code, or another person with similar rights, duties and
powers under any other Applicable Laws, proposes to cure any default under this
Lease or to assume or assign this Lease and is obliged to provide adequate
assurance to Landlord that (a) a default shall be cured, (b) Landlord shall be
compensated for its damages arising from any breach of this Lease and (c) future
performance of Tenant’s obligations under this Lease shall occur, then such
adequate assurances shall include any or all of the following, as designated by
Landlord in its sole and absolute discretion: (w) those acts specified in the
Bankruptcy Code or other Applicable Laws as included within the meaning of
“adequate assurance,” even if this Lease does not concern a facility described
in such Applicable Laws; (x) a prompt cash payment to compensate Landlord for
any monetary defaults or actual damages arising directly from a breach of this
Lease; (y) a cash deposit in an amount at least equal to the then-current amount
of the Security Deposit; or (z) the assumption or assignment of all of Tenant’s
interest and obligations under this Lease.

 

24.           Brokers. Each of Landlord and Tenant represents and warrants that
it has had no dealings with any real estate broker or agent in connection with
the negotiation of this Lease and that it knows of no real estate broker or
agent that is or might be entitled to a commission in connection with this
Lease. Tenant agrees to indemnify, save, defend (at Landlord’s option and with
counsel reasonably acceptable to Landlord) and hold the Landlord Indemnitees
harmless from any and all cost or liability for compensation claimed by any
broker or agent employed or engaged by Tenant or claiming to have been employed
or engaged by Tenant. Landlord agrees to indemnify, save, defend (at Tenant’s
option and with counsel reasonably acceptable to Tenant) and hold the Tenant and
its affiliates, lenders, employees, agents and contractors harmless from any and
all cost or liability for compensation claimed by any broker or agent employed
or engaged by Landlord or claiming to have been employed or engaged by Landlord.
The provisions of this Section shall survive the expiration or termination of
this Lease.

 

25.           Definition of Landlord. With regard to obligations imposed upon
Landlord pursuant to this Lease, the term “Landlord,” as used in this Lease,
shall refer only to Landlord or Landlord’s then-current successor-in-interest.
In the event of any transfer, assignment or conveyance of Landlord’s interest in
this Lease or in Landlord’s fee title to or leasehold interest in the Property,
as applicable, Landlord herein named (and in case of any subsequent transfers or
conveyances, the subsequent Landlord) shall be automatically freed and relieved,
from and after the date of such transfer, assignment or conveyance, from all
liability for the performance of any covenants or obligations contained in this
Lease thereafter to be performed by Landlord and, without further agreement, the
transferee, assignee or conveyee of Landlord’s in this Lease or in Landlord’s
fee title to or leasehold interest in the Property, as applicable, shall be
deemed to have assumed and agreed to observe and perform any and all covenants
and obligations of Landlord hereunder during the tenure of its interest in the
Lease or the Property. Landlord or any subsequent Landlord may transfer its
interest in the Premises or this Lease without Tenant’s consent.

 

26.           Limitation of Landlord’s Liability. If Landlord is in default
under this Lease and, as a consequence, Tenant recovers a monetary judgment
against Landlord, the judgment shall be satisfied only out of (a) the proceeds
of sale received on execution of the judgment and levy against the right, title
and interest of Landlord in the Premises, (b) rent or other income from such
real property receivable by Landlord or (c) the consideration received by
Landlord from the sale, financing, refinancing or other disposition of all or
any part of Landlord’s right, title or interest in the Premises. Neither
Landlord nor any of its affiliates, nor any of their respective partners,
shareholders, directors, officers, employees, members or agents shall be
personally liable for Landlord’s obligations or any deficiency under this Lease.
No partner, shareholder, director, officer, employee, member or agent of
Landlord or any of its affiliates shall be sued or named as a party in any suit
or action. No partner, shareholder, director, officer, employee, member or agent
of Landlord or any of its affiliates shall be required to answer or otherwise
plead to any service of process, and no judgment shall be taken or writ of
execution levied against any partner, shareholder, director, officer, employee,
member or agent of Landlord or any of its affiliates. Each of the covenants and
agreements of this Section 26 shall be applicable to any covenant or agreement
either expressly contained in this Lease or imposed by Applicable Laws and shall
survive the expiration or earlier termination of this Lease.

 

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27.                Control by Landlord. Landlord reserves full control over the
Premises to the extent not inconsistent with Tenant’s enjoyment of the same as
provided by this Lease; provided, however, that such rights shall be exercised
in a way that does not materially adversely affect Tenant’s beneficial use and
occupancy of the Premises, including the Permitted Use and Tenant’s access to
the Premises. Tenant shall, at Landlord’s request, promptly execute such further
documents as may be reasonably appropriate to assist Landlord in the performance
of its obligations hereunder; provided that Tenant need not execute any document
that creates additional liability for Tenant or that deprives Tenant of the
quiet enjoyment and use of the Premises as provided for in this Lease. Landlord
may, upon not less than twenty-four (24) hours’ prior notice (which may be oral
or by email to the office manager or other Tenant-designated individual at the
Premises; but provided that no time restrictions shall apply or advance notice
be required if an emergency necessitates immediate entry), enter the Premises to
(u) inspect the same and to determine whether Tenant is in compliance with its
obligations hereunder, (v) supply any service Landlord is required to provide
hereunder, (w) post notices of nonresponsibility and (x) show the Premises to
prospective tenants during the final year of the Term and current and
prospective purchasers and lenders at any time (in all situations provided that
Landlord’s personnel are accompanied by Tenants’ authorized personnel). In no
event shall Tenant’s Rent abate as a result of Landlord’s activities pursuant to
this Section 27; provided, however, that all such activities shall be conducted
in such a manner so as to cause as little interference to Tenant as is
reasonably possible, and any access by Landlord shall be in accordance with
Applicable Law and shall be subject to any security procedures established by
Tenant from time to time. If an emergency necessitates immediate access to the
Premises, Landlord may use whatever force is necessary to enter the Premises,
and any such entry to the Premises shall not constitute a forcible or unlawful
entry to the Premises, a detainer of the Premises, or an eviction of Tenant from
the Premises or any portion thereof.

 

28.                 Joint and Several Obligations. If more than one person or
entity executes this Lease as Tenant, then (a) each of them is jointly and
severally liable for the keeping, observing and performing of all of the terms,
covenants, conditions, provisions and agreements of this Lease to be kept,
observed or performed by Tenant, and such terms, covenants, conditions,
provisions and agreements shall be binding with the same force and effect upon
each and all of the persons executing this Lease as Tenant; and (b) the term
“Tenant,” as used in this Lease, shall mean and include each of them, jointly
and severally. The act of, notice from/to, refund to, or signature of any one or
more of them with respect to the tenancy under this Lease, including any
renewal, extension, expiration, termination or modification of this Lease, shall
be binding upon each and all of the persons executing this Lease as Tenant with
the same force and effect as if each and all of them had so acted, so given or
received such notice or refund, or so signed.

 

29.                Representations. Each of Tenant and Landlord guarantees,
warrants and represents that (a) such party is duly incorporated or otherwise
established or formed and validly existing under the laws of its state of
incorporation, establishment or formation, (b) such party is duly qualified to
do business in the state in which the Property is located, (c) such party has
full corporate, partnership, trust, association or other appropriate power and
authority to enter into this Lease and to perform its obligations hereunder, (d)
each person (and all of the persons if more than one signs) signing this Lease
on behalf of such party is duly and validly authorized to do so and (e) neither
(i) the execution, delivery or performance of this Lease nor (ii) the
consummation of the transactions contemplated hereby will violate or conflict
with any provision of documents or instruments under which such party is
constituted or to which such party is a party. In addition, Tenant guarantees,
warrants and represents that none of (x) it, (y) its affiliates or partners nor
(z) to the best of its knowledge, its members, shareholders or other equity
owners or any of their respective employees, officers, directors,
representatives or agents is a person or entity with whom U.S. persons or
entities are restricted from doing business under regulations of the Office of
Foreign Asset Control (“OFAC”) of the Department of the Treasury (including
those named on OFAC’s Specially Designated and Blocked Persons List) or under
any statute, executive order (including the September 24, 2001, Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism) or other similar governmental action.

 

30.                 Confidentiality. Each of Landlord and Tenant shall keep the
terms and conditions of this Lease confidential and shall not (a) disclose to
any third party any terms or conditions of this Lease or any other Lease-related
document (including subleases, assignments, work letters, construction
contracts, letters of credit, subordination agreements, non-disturbance
agreements, brokerage agreements or estoppels) or (b) provide to any third party
an original or copy of this Lease (or any Lease-related document).
Notwithstanding the foregoing, confidential information under this Section may
be released by Landlord or Tenant under the following circumstances: (x) if
required by Applicable Laws or in any judicial proceeding; provided that the
releasing party has given the other party reasonable notice of such requirement,
if feasible, (y) to a party’s (and its affiliate’s) employees, partners,
attorneys, investors, lenders, accountants, brokers, prospective purchasers, and
other bona fide consultants or advisers; provided such third parties agree to be
bound by this Section or (z) to bona fide prospective assignees or subtenants of
this Lease; provided they agree in writing to be bound by this Section.

 

28

 

 

31.                 Notices. Except as otherwise stated in this Lease, any
notice, consent, demand, invoice, statement or other communication required or
permitted to be given hereunder shall be in writing and shall be given by (a)
personal delivery, (b) overnight delivery with a reputable international
overnight delivery service, such as FedEx, or (c) facsimile or email
transmission, so long as such transmission is followed within one (1) business
day by delivery utilizing one of the methods described in Subsection 31(a) or
(b). Any such notice, consent, demand, invoice, statement or other communication
shall be deemed delivered (x) upon receipt, if given in accordance with
Subsection 31(a); (y) one (1) business day after deposit with a reputable
international overnight delivery service, if given if given in accordance with
Subsection 31(b); or (z) upon transmission, if given in accordance with
Subsection 31(c). Except as otherwise stated in this Lease, any notice, consent,
demand, invoice, statement or other communication required or permitted to be
given pursuant to this Lease shall be addressed to Tenant at the Premises, or to
Landlord or Tenant at the addresses shown in Section 2. Either party may, by
notice to the other given pursuant to this Section, specify additional or
different addresses for notice purposes.

 

32.                 Release; Put Right.

 

32.1.                       If at any time during the first four (4) years of
the Lease Term the Tenant is required or decides to divest, relinquish, sell,
assign or otherwise directly or indirectly transfer the government
approvals/licenses required to operate its business pursuant to the Permitted
Use (the “License Transfer”), the Landlord agrees to release Tenant and all
Guarantors from any obligations with respect to this Lease and the Property
(including, without limitation, all guarantees executed in connection with the
Lease), and such new license owner/transferee (the “License Transferee”) will
replace Tenant and all Guarantors as the sole guarantor under this Lease. Tenant
will deliver written notice of any License Transfer (the “Transfer Notice”) at
least thirty (30) days prior to the closing of the License Transfer, which
notice will provide the identity of the License Transferee. Within fifteen (15)
days following the Transfer Notice, Landlord may elect to put the Property (as
such term is defined in the Purchase Agreement) to Tenant (or its designee) for
a purchase price equal to the then-current fair market value of the Property (as
determined by a nationally recognized M.A.I. appraiser reasonably acceptable to
both Landlord and Tenant), which in no event shall be less than the Minimum
Price (as defined below). As used herein, the “Minimum Price” shall mean and
equal the remainder of (A) the quotient of (i) the total Base Rent payable
during the calendar year in which the License Transfer notice is delivered,
divided by (ii) Nine and Seventy-Five One Hundredths Percent (9.75%); LESS (B)
any unfunded Construction Contribution Amount (as defined in the Development
Agreement).

 

32.2.                       Landlord and Tenant agree to cooperate and
coordinate in connection with (a) such release, including the execution of
releases for the Tenant and all Guarantors, and, (b) if the Landlord exercises
its put right, such sale, including execution of a Purchase and Sale Agreement
on commercially reasonable terms (the “PSA”) and all documents required under
the PSA (and otherwise required to effectuate and close the transaction
contemplated under the PSA), and commercially reasonable efforts to cause and
facilitate the closing to occur pursuant to the PSA. The releases described
above and any closing under the PSA shall occur simultaneously with the closing
of the License Transfer.

 

32.3.                       Upon the earlier to occur of (a) the effective date
of the License Transfer or (b) the expiration of the four-year period referenced
in Section 32.1 without the delivery of a Transfer Notice, then the provisions
of this Section 32 shall terminate.

 

33.                Guaranties. In the event that any entity becomes an affiliate
of Tenant after the Execution Date which entity conducts business in cannabis
industry (each, a “New Guarantor”), Tenant shall promptly cause such New
Guarantor to execute a Guaranty in the form attached hereto as Exhibit D and
deliver such executed Guaranty to Landlord. Any failure by Tenant to provide
such Guaranty within thirty (30) days following the formation of such New
Guarantor shall be deemed a material default under this Lease. The obligations
of each Guarantor shall be joint and several and Tenant shall cause each
Guarantor to execute and deliver such further documentation as may be reasonably
required to confirm such Guarantor’s full and unconditional guaranty of Tenant’s
obligations under this Lease. For purposes of this Section 33, an “entity
affiliated with Tenant” shall mean any entity (a) that is a subsidiary of
PharmaCann LLC, an Illinois limited liability company (“PharmaCann LLC”), or (b)
that PharmaCann LLC holds an equity interest in, directly or indirectly;
provided that, Landlord shall be entitled to seek recourse only against the
interests of Tenant or PharmaCann LLC in any such New Guarantor, and the form of
Guaranty shall be conformed accordingly for any such New Guarantor.
Notwithstanding anything in this Lease or the applicable Guaranty to the
contrary, Landlord agrees to execute a commercially reasonable form of
subordination agreement that subordinates Landlord’s rights under a Guaranty to
an institutional lender’s or third party financing source’s rights with respect
to a contemplated financing by the applicable Guarantor, provided that the
following conditions are satisfied: 1) the subordination of the Guaranty is a
requirement of the lender or other third party financing source to provide the
financing to the Guarantor; and 2) at the time of Landlord’s execution of such
subordination agreement, (a) neither Tenant nor any Guarantor is then in default
of its obligations under the Lease or any Guaranty; and (b) neither Tenant nor
any Guarantor has defaulted on its obligations under either the Lease or any
Guaranty more than two (2) times during the immediately prior six (6) month
period.

 

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34.                Miscellaneous.

 

34.1.           To induce Landlord to enter into this Lease, Tenant agrees that
it shall, (a) within sixty (60) days after the end of Tenant’s financial year,
furnish Landlord with a certified copy of Tenant’s audited year-end
unconsolidated financial statements for the previous year and shall cause each
Guarantor to furnish Landlord with a certified copy of their respective audited
year-end unconsolidated financial statements for the previous year; (b) as soon
as produced after the end of each of the Tenant’s fiscal first, second and third
quarters, and in any event within a reasonable time period before Landlord is
required to make any filings to the SEC requiring such information, furnish
Landlord with a certified copy of Tenant’s unaudited financial statements for
the quarter; and (c) provide copies to Landlord of any budgets, forecasts and
investor materials. Tenant represents and warrants that all financial
statements, records and information furnished by Tenant to Landlord in
connection with this Lease are true, correct and complete in all respects and
that all financial statements, records and information furnished by each
Guarantor to Landlord in connection with this Lease are true, correct and
complete in all respects. The provisions of this Section shall not apply to
Tenant or any Guarantor (as applicable) during any time period that Tenant or
such Guarantor is a corporation whose shares are traded on any nationally
recognized stock exchange. In addition, Tenant and each Guarantor agrees to
timely provide financial statements to the Landlord to the extent that such
financial statements are required to be included in filings made by Landlord or
Landlord’s affiliates with the U.S. Securities and Exchange Commission (the
“SEC”), which may include consolidated balance sheets, statements of operations,
statements of cash flows and statements of stockholders equity, and related
footnotes, prepared in accordance with U.S. generally accepted accounting
principles or International Financial Reporting Standards (provided that such
method of accounting is acceptable to the SEC and satisfies the Landlord’s and
its affiliates’ obligations with respect to required filings with the SEC) and
reviewed (in the case of quarterly financial statements) or audited (in the case
of annual financial statements) by Tenant’s or Guarantor’s independent auditors
(within the requirements of Regulation S-X under the rules and regulations of
the SEC, as interpreted by the staff of the SEC), as reasonably requested by the
Landlord. Notwithstanding the foregoing, in the event that Tenant’s financials
are consolidated with Tenant’s parent company, PharmaCann LLC, Tenant may
deliver the financial statements of its parent company in accordance with this
Section in satisfaction of Tenant’s requirements hereunder.

 

34.2.           The terms of this Lease, the Development Agreement and the
Multi-Party PA Agreement are intended by the parties as a final, complete and
exclusive expression of their agreement with respect to the terms that are
included herein, and may not be contradicted or supplemented by evidence of any
other prior or contemporaneous agreement.

 

34.3.           Either party may record a memorandum of this Lease.

 

34.4.           Landlord and Tenant have each participated in the drafting and
negotiation of this Lease, and the language in all parts of this Lease shall be
in all cases construed as a whole according to its fair meaning and not strictly
for or against either Landlord or Tenant.

 

34.5.           Except as otherwise expressly set forth in this Lease, each
party shall pay its own costs and expenses incurred in connection with this
Lease and such party’s performance under this Lease; provided that, if either
party commences an action, proceeding, demand, claim, action, cause of action or
suit against the other party arising out of or in connection with this Lease,
then the substantially prevailing party shall be reimbursed by the other party
for all reasonable costs and expenses, including reasonable attorneys’ fees and
expenses, incurred by the substantially prevailing party in such action,
proceeding, demand, claim, action, cause of action or suit, and in any appeal in
connection therewith (regardless of whether the applicable action, proceeding,
demand, claim, action, cause of action, suit or appeal is voluntarily withdrawn
or dismissed).

 

30

 

 

34.6.           Time is of the essence with respect to the performance of every
provision of this Lease.

 

34.7.           Each provision of this Lease performable by Tenant shall be
deemed both a covenant and a condition.

 

34.8.           Notwithstanding anything to the contrary contained in this
Lease, Tenant’s obligations under this Lease are independent and shall not be
conditioned upon performance by Landlord.

 

34.9.           Whenever consent or approval of either party is required, that
party shall not unreasonably withhold, condition or delay such consent or
approval, except as may be expressly set forth to the contrary.

 

34.10.        Any provision of this Lease that shall prove to be invalid, void
or illegal shall in no way affect, impair or invalidate any other provision
hereof, and all other provisions of this Lease shall remain in full force and
effect and shall be interpreted as if the invalid, void or illegal provision did
not exist.

 

34.11.        Each of the covenants, conditions and agreements herein contained
shall inure to the benefit of and shall apply to and be binding upon the parties
hereto and their respective heirs; legatees; devisees; executors;
administrators; and permitted successors and assigns. This Lease is for the sole
benefit of the parties and their respective heirs, legatees, devisees,
executors, administrators and permitted successors and assigns, and nothing in
this Lease shall give or be construed to give any other person or entity any
legal or equitable rights. Nothing in this Section shall in any way alter the
provisions of this Lease restricting assignment or subletting.

 

34.12.        This Lease shall be governed by, construed and enforced in
accordance with the laws of the state in which the Premises are located, without
regard to such state’s conflict of law principles.

 

34.13.        Landlord covenants that Tenant, upon paying the Rent and
performing its obligations contained in this Lease, may peacefully and quietly
have, hold and enjoy the Premises, free from any claim by Landlord or persons
claiming under Landlord, but subject to all of the terms and provisions hereof,
provisions of Applicable Laws and rights of record to which this Lease is or may
become subordinate. This covenant is in lieu of any other quiet enjoyment
covenant, either express or implied.

 

34.14.        Each of Tenant and Landlord guarantees, warrants and represents to
the other party that the individual or individuals signing this Lease have the
power, authority and legal capacity to sign this Lease on behalf of and to bind
all entities, corporations, partnerships, limited liability companies, joint
venturers or other organizations and entities on whose behalf such individual or
individuals have signed.

 

34.15.        This Lease may be executed in one or more counterparts, each of
which, when taken together, shall constitute one and the same document.

 

34.16.        No provision of this Lease may be modified, amended or
supplemented except by an agreement in writing signed by Landlord and Tenant.

 

34.17.        No waiver of any term, covenant or condition of this Lease shall
be binding upon Landlord unless executed in writing by Landlord. The waiver by
Landlord of any breach or default of any term, covenant or condition contained
in this Lease shall not be deemed to be a waiver of any preceding or subsequent
breach or default of such term, covenant or condition or any other term,
covenant or condition of this Lease.

 

34.18.        To the extent permitted by Applicable Laws, the parties waive
trial by jury in any action, proceeding or counterclaim brought by the other
party hereto related to matters arising out of or in any way connected with this
Lease; the relationship between Landlord and Tenant; Tenant’s use or occupancy
of the Premises; or any claim of injury or damage related to this Lease or the
Premises.

 

31

 

 

34.19.        This Lease shall be governed by and construed in accordance with
the laws of the State of Pennsylvania, United States of America, without regard
to principles of conflicts of laws. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH
PARTY HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE
LAW OF ANY OTHER JURISDICTION GOVERNS THIS LEASE. EACH PARTY IRREVOCABLY
CONSENTS TO THE JURISDICTION OF THE STATE COURTS SITUATED IN OR HAVING
JURISDICTION OVER SCOTT TOWNSHIP, PENNSYLVANIA IN ANY ACTION THAT MAY BE BROUGHT
FOR THE ENFORCEMENT OF THIS LEASE (WITH THE EXPRESS AGREEMENT THAT NO ACTION MAY
BE BROUGHT IN FEDERAL COURT RELATING IN ANY WAY TO THIS LEASE).

 

34.20.        Landlord agrees to reasonably cooperate with Tenant (at no cost to
Landlord) regarding any governmental approvals or consents required in
connection with any work to be performed, constructed or installed by Tenant
pursuant to this Lease, and in connection with Tenant’s continued use of the
Property in accordance with the Lease.

 

[The remainder of this page is intentionally left blank. Signature page
follows.]

 

32

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Lease on the day
and year first above written.

 

LANDLORD:       IIP-PA 4 LLC,   a Delaware limited liability company          
By: /s/ Brian Wolfe   Name:    Brian Wolfe   Title: Vice President, General
Counsel and Secretary               TENANT:       PHARMACANN PENN PLANT LLC,   a
Pennsylvania limited liability company           By: /s/ Brett Novey   Name:
Brett Novey   Title: Authorized Signatory  

 

33

 

 

EXHIBIT A

PROPERTY

 

ALL that certain piece or parcel of land situate in the Township of Scott,
County of Lackawanna, and Commonwealth of Pennsylvania bounded and described as
follows to wit:

 

BEING Lot 4 as shown on plan entitled "LOT LINE CHANGE WITHIN SCOTT TECHNOLOGY
PARK PHASE II/ LOTS- #4 AND #11 PROPOSED LOT LINES" recorded in Map Book 6A,
Page 9481, being more particularly described as follows, to-wit:

 

BEGINNING at a found 5/8" rebar on the southwesterly right-of-way line of Life
Science Drive marking a common corner of Lot 4 and Lot 3, described as per a
survey performed by Engineering Surveying Consultants & Design Inc., on November
7, 2018;

 

THENCE along said common line of the above mentioned Lot 4 and Lot 3 South
44'58'01" West six hundred two and seventy-nine hundredths (602.79') feet to a
found 5/8" iron pin at the Intersection of a stone row;

 

THENCE along lands now or formerly of Virginia Wetherbee (DB 487 PG 751) and
John J. Wasko (DB 1553 PG 666) North 48'40'54" West eleven hundred seventy-one
and five tenths (1171.50') feet to a point, passing a set 5/8" rebar at eight
hundred eighty-six and fifteen hundredths (886.15') feet;

 

THENCE along lands now or formerly of John J. Wasko (DB 1553 PG 666) and Lisa
Tizzoni (Instr.# 2006-34752) North 41'31'06" West six hundred sixty-nine and
sixty-six hundredths (669.66') feet to the corner of Lot 11 as shown on the
above referenced plan;

 

THENCE along said Lot 11 and Lands now or formerly of Baldoni Investment Group,
LLC (Instr.# 2015-12077) South 48'52'06" East eleven hundred forty-one and
ninety-seven hundredths (1141.97') feet to a found 5/8" rebar on the
southwesterly right of way line of Life Science Drive, passing a set 5/8" rebar
at two hundred thirty-four and thirty-five hundredths (234.35') feet and a found
5/8" rebar at seven hundred twenty-four and thirteen hundredths (724.13') feet;

 

THENCE along said right of way line South 41'01'05" West two and eighteen
hundredths (2.18') feet to a point of curvature;

 

THENCE continuing along said right of way line, along a curve to the left having
a radius of seventy (70') feet and an arc length of one hundred five and
twenty-seven hundredths feet (Chord: South 01'57'02 East 95.63') feet to the
point of BEGINNING.

 

CONTAINING 18.287 acres, of land being the same, more or less. BEING ALL of Lot
4 as shown on the above referenced plan;

 

BEING PART of lands conveyed to Pharmacann Penn Plant LLC by Scranton Lackawanna
Industrial Building Company by deed dated December 10, 2018, effective December
12, 2018 recorded December 14, 2018 as Instrument No. 201820014 in the Office of
the Recorder of Deeds in Lackawanna County, Pennsylvania;

 

BEING PART of PIN Number 071.04-010-004.03

 

 

 

 

EXHIBIT B

 

TENANT’S PERSONAL PROPERTY

 

None.

 

 

 

 

EXHIBIT C

FORM OF TENANT ESTOPPEL CERTIFICATE

 

To:          [IIP LANDLORD ENTITY]

11440 West Bernardo Court, Suite 220

San Diego, California 92127

Attention: General Counsel

 

Re:          [PREMISES ADDRESS] (the “Premises”) at Lot No. 4, Scott Technology
Park, Scott Township, Pennsylvania (the “Property”)

 

The undersigned tenant (“Tenant”) hereby certifies to you as follows:

 

1.                   Tenant is a tenant at the Property under a lease (the
“Lease”) for the Premises dated as of [_______], 20[__]. The Lease has not been
cancelled, modified, assigned, extended or amended [except as follows:
[_______]], and there are no other agreements, written or oral, affecting or
relating to Tenant’s lease of the Premises or any other space at the Property.
The lease term expires on [_______], 20[__].

 

2.                   Tenant took possession of the Premises, currently
consisting of [_______] square feet, on [_______], 20[__], and commenced to pay
rent on [_______], 20[__]. Tenant has full possession of the Premises, has not
assigned the Lease or sublet any part of the Premises, and does not hold the
Premises under an assignment or sublease[, except as follows: [_______]].

 

3.                   All base rent, rent escalations and additional rent under
the Lease have been paid through [_______], 20[__]. There is no prepaid rent[,
except $[_______]][, and the amount of security deposit is $[_______] [in
cash][OR][in the form of a letter of credit]]. Tenant currently has no right to
any future rent abatement under the Lease.

 

4.                   Base rent is currently payable in the amount of $[_______]
per month.

 

5.                   All work to be performed for Tenant under the Lease has
been performed as required under the Lease and has been accepted by Tenant[,
except [_______]], and all allowances to be paid to Tenant, including allowances
for tenant improvements, moving expenses or other items, have been paid.

 

6.                   The Lease is in full force and effect. To the best of
Tenant’s knowledge, neither Landlord nor Tenant is currently in default of its
obligations under the Lease and no event has occurred that, with the giving of
notice or the passage of time, could become a default under the Lease. To the
best of Tenant’s knowledge, Tenant has no claims against the landlord or offsets
or defenses against rent, and there are no disputes with the landlord. Tenant
has received no notice of prior sale, transfer, assignment, hypothecation or
pledge of the Lease or of the rents payable thereunder[, except [_______]].

 

7.                   Tenant has no rights or options to purchase the Property,
except as provided in the Lease.

 

8.                   To Tenant’s knowledge, no hazardous wastes have been
generated, treated, stored or disposed of by or on behalf of Tenant in, on or
around the Premises in violation of any environmental laws.

 

9.                   The undersigned has executed this Estoppel Certificate with
the knowledge and understanding that [INSERT NAME OF LANDLORD, PURCHASER OR
LENDER, AS APPROPRIATE] or its assignee is [acquiring the Property/making a loan
secured by the Property] in reliance on this certificate and that the
undersigned shall be bound by this certificate. The statements contained herein
may be relied upon by [INSERT NAME OF PURCHASER OR LENDER, AS APPROPRIATE],
[LANDLORD], IIP Operating Partnership, LP, Innovative Industrial Properties,
Inc., and any [other] mortgagee of the Property and their respective successors
and assigns.

 

[Signature page follows]

 

 

 

 

Any capitalized terms not defined herein shall have the respective meanings
given in the Lease.

 

Dated this [____] day of [_______], 20[__].

 

 

[_______],

a [_______]

 

 

By:     Name:        Title:    

 

 

 

 

EXHIBIT D

 

FORM OF GUARANTY OF LEASE

 

This Guaranty of Lease (“Guaranty”) is executed effective on the ____ day of
[_______], 2019, by [_______], a [_______] (“Guarantor”), whose address for
notices is [________________], in favor of IIP- PA 4 LLC, a Delaware limited
liability company (“Landlord”), whose address for notices is 11440 West Bernardo
Court, Suite 220, San Diego, California 92127, Attn: General Counsel.

 

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Guarantor covenants and agrees as follows:

 

1.                   Recitals. This Guaranty is made with reference to the
following recitals of facts which constitute a material part of this Guaranty:

 

(a)                 Landlord, as Landlord, and PharmaCann Penn Plant LLC, a
Pennsylvania limited liability company, as Tenant (“Tenant”), entered into that
certain Lease dated as of [_____], 2019 (the “Lease”), with respect to the
property located at Lot No. 4, Scott Technology Park, Scott Township,
Pennsylvania, as more particularly described in the Lease (the “Leased
Premises”).

 

(b)                Guarantor is [DESCRIBE RELATIONSHIP OF GUARANTOR TO TENANT]
and is therefore receiving a substantial benefit for executing this Guaranty.

 

(c)                 Landlord would not have entered into the Lease with Tenant
without having received the Guaranty executed by Guarantor as an inducement to
Landlord.

 

(d)                By this Guaranty, Guarantor intends to absolutely,
unconditionally and irrevocably guarantee the full, timely, and complete (i)
payment of all rent and other sums required to be paid by Tenant under the Lease
and any other indebtedness of Tenant, (ii) performance of all other terms,
covenants, conditions and obligations of Tenant arising out of the Lease
(including, without limitation, reasonable attorneys’ fees and disbursements and
all litigation costs and expenses incurred or payable by Landlord or for which
Landlord may be responsible or liable, or caused by any such uncured default),
and (iii) payment of any and all expenses (including reasonable attorneys’ fees
and expenses and litigation expenses) incurred by Landlord in enforcing any of
the rights under the Lease or this Guaranty within five (5) days after
Landlord’s demand thereafter (collectively, the “Guaranteed Obligations”).

 

2.                   Guaranty. From and after the Execution Date (as such term
is defined under the Lease), Guarantor absolutely, unconditionally and
irrevocably guarantees, as principal obligor and not merely as surety, to
Landlord, the full, timely and unconditional payment and performance, of the
Guaranteed Obligations strictly in accordance with the terms of the Lease, as
such Guaranteed Obligations may be modified, amended, extended or renewed from
time to time. This is a Guaranty of payment and performance and not merely of
collection. Guarantor agrees that Guarantor is primarily liable for and
responsible for the payment and performance of the Guaranteed Obligations.
Guarantor shall be bound by all of the provisions, terms, conditions,
restrictions and limitations contained in the Lease which are to be observed or
performed by Tenant, the same as if Guarantor was named therein as Tenant with
joint and several liability with Tenant, and any remedies that Landlord has
under the Lease against Tenant shall apply to Guarantor as well. If Tenant
defaults in any Guaranteed Obligation under the Lease, Guarantor shall in lawful
money of the United States, pay to Landlord on demand the amount due and owing
under the Lease. Guarantor waives any rights to notices of acceptance,
modifications, amendment, extension or breach of the Lease. If Guarantor is a
natural person, it is expressly agreed that this guaranty shall survive the
death of such guarantor and shall continue in effect. The obligations of
Guarantor under this Guaranty are independent of the obligations of Tenant or
any other guarantor. Guarantor acknowledges that this Guaranty and Guarantor’s
obligations and liabilities under this Guaranty are and shall at all times
continue to be absolute and unconditional in all respects and shall be the
separate and independent undertaking of Guarantor without regard to the
genuineness, validity, legality or enforceability of the Lease, and shall at all
times be valid and enforceable irrespective of any other agreements or
circumstances of any nature whatsoever which might otherwise constitute a
defense to this Guaranty and the obligations and liabilities of Guarantor under
this Guaranty or the obligations or liabilities of any other person or entity
(including, without limitation, Tenant) relating to this Guaranty or the
obligations or liabilities of Guarantor hereunder or otherwise with respect to
the Lease or to Tenant. Guarantor hereby absolutely, unconditionally and
irrevocably waives any and all rights it may have to assert any defense, set-off
(except to the extent expressly provided for under the Lease), counterclaim or
cross-claim of any nature whatsoever with respect to this Guaranty or the
obligations or liabilities of Guarantor under this Guaranty or the obligations
or liabilities of any other person or entity (including, without limitation,
Tenant) relating to this Guaranty or the obligations or liabilities of Guarantor
under this Guaranty or otherwise with respect to the Lease, in any action or
proceeding brought by the holder hereof to enforce the obligations or
liabilities of Guarantor under this Guaranty. This Guaranty sets forth the
entire agreement and understanding of Landlord and Guarantor, and Guarantor
acknowledges that no oral or other agreements, understandings, representations
or warranties exist with respect to this Guaranty or with respect to the
obligations or liabilities of Guarantor under this Guaranty. The obligations of
Guarantor under this Guaranty shall be continuing and irrevocable (a) during any
period of time when the liability of Tenant under the Lease continues, and (b)
until all of the Guaranteed Obligations have been fully discharged by payment,
performance or compliance. If at any time all or any part of any payment
received by Landlord from Tenant or Guarantor or any other person under or with
respect to the Lease or this Guaranty has been refunded or rescinded pursuant to
any court order, or declared to be fraudulent or preferential, or are set aside
or otherwise are required to be repaid to Tenant, its estate, trustee, receiver
or any other party, including as a result of the insolvency, bankruptcy or
reorganization of Tenant or any other party (an “Invalidated Payment”), then
Guarantor’s obligations under the Guaranty shall, to the extent of such
Invalidated Payment be reinstated and deemed to have continued in existence as
of the date that the original payment occurred. This Guaranty shall not be
affected or limited in any manner by whether Tenant may be liable, with respect
to the Guaranteed Obligations individually, jointly with other primarily, or
secondarily.

 

 

 

 

3.                   No Impairment of Guaranteed Obligations. Guarantor further
agrees that Guarantor’s liability for the Guaranteed Obligations shall in no way
be released, discharged, impaired or affected or subject to any counterclaim,
setoff or deduction by (a) any waiver, consent, extension, indulgence,
compromise, release, departure from or other action or inaction of Landlord
under or in respect of the Lease or this Guaranty, or any obligation or
liability of Tenant, or any exercise or non-exercise of any right, remedy, power
or privilege under or in respect to the Lease or this Guaranty, (b) any change
in the time, manner or place of payment or performance of the Guaranteed
Obligations, (c) the acceptance by Landlord of any additional security or any
increase, substitution or change therein, (d) the release by Landlord of any
security or any withdrawal thereof or decrease therein, (e) any assignment of
the Lease or any subletting of all or any portion of the Leased Premises (with
or without Landlord’s consent), (f) any holdover by Tenant beyond the term of
the Lease (g) any termination of the Lease, (h) any release or discharge of
Tenant in any bankruptcy, receivership or other similar proceedings, (i) the
impairment, limitation or modification of the liability of Tenant or the estate
of Tenant in bankruptcy or of any remedy for the enforcement of Tenant’s
liability under the Lease resulting from the operation of any present or future
provisions of any bankruptcy code or other statute or from the decision in any
court, or the rejection or disaffirmance of the Lease in any such proceedings,
(j) any merger, consolidation, reorganization or similar transaction involving
Tenant, even if Tenant ceases to exist as a result of such transaction, (k) the
change in the corporate relationship between Tenant and Guarantor or any
termination of such relationship, (l) any change in the direct or indirect
ownership of all or any part of the shares in Tenant, or (m) to the extent
permitted under applicable law, any other occurrence or circumstance whatsoever,
whether similar or dissimilar to the foregoing, which might otherwise constitute
a legal or equitable defense or discharge of the liabilities of Guarantor or
which might otherwise limit recourse against Guarantor. Guarantor further
understands and agrees that Landlord may at any time enter into agreements with
Tenant to amend and modify the Lease, and may waive or release any provision or
provisions of the Lease, and, with reference to such instruments, may make and
enter into any such agreement or agreements as Landlord and Tenant may deem
proper and desirable, without in any manner impairing or affecting this Guaranty
or any of Landlord’s rights hereunder or Guarantor’s obligations hereunder,
unless otherwise agreed in writing thereunder or under the Lease.

 

4.                   Remedies.

 

a)            If Tenant defaults with respect to the Guaranteed Obligations, and
if Guarantor does not fulfill Tenant’s obligations within thirty (30) days
following its receipt of written notice of such default from Landlord, Landlord
may at its election proceed immediately against Guarantor, Tenant, or any
combination of Tenant, Guarantor, and/or any other guarantor. It is not
necessary for Landlord, in order to enforce payment and performance by Guarantor
under this Guaranty, first or contemporaneously to institute suit or exhaust
remedies against Tenant or other liable for any of the Guaranteed Obligations or
to enforce rights against any collateral securing any of it. Guarantor hereby
waives any right to require Landlord to join Tenant in any action brought
hereunder or to commence any action against or obtain any judgment against
Tenant or to pursue any other remedy or enforce any other right. If any portion
of the Guaranteed Obligations terminates and Landlord continues to have any
rights that it may enforce against Tenant under the Lease after such
termination, then Landlord may at its election enforce such rights against
Guarantor. Unless and until all Guaranteed Obligations have been fully
satisfied, Guarantor shall not be released from its obligations under this
Guaranty irrespective of: (i) the exercise (or failure to exercise) by Landlord
of any of Landlord’s rights or remedies (including, without limitation,
compromise or adjustment of the Guaranteed Obligations or any part thereof); or
(ii) any release by Landlord in favor of Tenant regarding the fulfillment by
Tenant of any obligation under the Lease.

 

 

 

 

b)           Notwithstanding anything in the foregoing to the contrary,
Guarantor hereby covenants and agrees to and with Landlord that Guarantor may be
joined in any action by or against Tenant in connection with the Lease.
Guarantor also agrees that, in any jurisdiction, it will be conclusively bound
by the judgment in any such action by or against Tenant (wherever brought) as if
Guarantor were a party to such action even though Guarantor is not joined as a
party in such action.

 

5.                   Waivers. With the exception of the defense of prior
payment, performance or compliance by Tenant or Guarantor of or with the
Guaranteed Obligations which Guarantor is called upon to pay or perform, or the
defense that Landlord’s claim against Guarantor is barred by the applicable
statute of limitations, Guarantor hereby waives and releases all defenses of the
law of guaranty or suretyship to the extent permitted by law.

 

6.                   Rights Cumulative. All rights, powers and remedies of
Landlord under this Guaranty shall be cumulative and in addition to all rights,
powers and remedies given to Landlord by law.

 

7.                   Representations and Warranties. Guarantor hereby represents
and warrants that (a) Landlord has made no representation to Guarantor as to the
creditworthiness or financial condition of Tenant; (b) Guarantor has full power
to execute, deliver and carry out the terms and provisions of this Guaranty and
has taken all necessary action to authorize the execution, delivery and
performance of this Guaranty; (c) Guarantor’s execution and delivery of, and the
performance of its obligations under, this Guaranty does not conflict with or
violate any of Guarantor’s organizational documents, or any contract, agreement
or decree which Guarantor is a party to or which is binding on Guarantor; (d)
the individual executing this Guaranty on behalf of Guarantor has the authority
to bind Guarantor to the terms and conditions of this Guaranty; (e) Guarantor
has been represented by counsel of its choice in connection with this Guaranty;
(f) this Guaranty when executed and delivered shall constitute the legal, valid
and binding obligations of Guarantor enforceable against Guarantor in accordance
with its terms; and (g) there is no action, suit, or proceeding pending or, to
the knowledge of Guarantor, threatened against Guarantor before or by any
governmental authority which questions the validity or enforceability of, or
Guarantor’s ability to perform under, this Guaranty.

 

8.                   Subordination. In the event of Tenant’s insolvency or the
disposition of the assets of Tenant, through bankruptcy, by an assignment for
the benefit of creditors, by voluntary liquidation, or otherwise, the assets of
Tenant applicable to the payment of all claims of Landlord and/or Guarantor
shall be paid to Landlord and shall be first applied by Landlord to the
Guaranteed Obligations. Any indebtedness of Tenant now or hereafter held by
Guarantor, whether as original creditor or assignee or by way of subrogation,
restitution, reimbursement, indemnification or otherwise, is hereby subordinated
in right of payment to the Guaranteed Obligations. So long as an uncured event
of default exists under the Lease, (a) at Landlord’s written request, Guarantor
shall cause Tenant to pay to Landlord all or any part of any funds invested in
or loaned to Tenant by Guarantor which Guarantor is entitled to withdraw or
collect and (b) any such indebtedness or other amount collected or received by
Guarantor shall be held in trust for Landlord and shall forthwith be paid over
to Landlord to be credited and applied against the Guaranteed Obligations.
Subject to the foregoing, Guarantor shall be entitled to receive from Landlord
any amounts that are, from time to time, due to Guarantor in the ordinary course
of business. Until all of Tenant’s obligations under the Lease are fully
performed, Guarantor shall have no right of subrogation against Tenant by reason
of any payments, acts or performance by Guarantor under this Guaranty.

 

9.                   Governing Law. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Pennsylvania, United
States of America, without regard to principles of conflicts of laws. TO THE
FULLEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS GUARANTY. EACH PARTY IRREVOCABLY CONSENTS TO THE JURISDICTION OF
THE STATE COURTS SITUATED IN OR HAVING JURISDICTION OVER SCOTT TOWNSHIP,
PENNSYLVANIA IN ANY ACTION THAT MAY BE BROUGHT FOR THE ENFORCEMENT OF THIS
GUARANTY (WITH THE EXPRESS AGREEMENT THAT NO ACTION MAY BE BROUGHT IN FEDERAL
COURT RELATING IN ANY WAY TO THIS GUARANTY OR THE LEASE).

 

 

 

 

10.                Attorneys’ Fees. In the event any litigation or other
proceeding (“Proceeding”) is initiated by any party against any other party to
enforce this Guaranty, the prevailing party in such Proceeding shall be entitled
to recover from the unsuccessful party all costs, expenses, and actual
reasonable attorneys’ fees relating to or arising out of such Proceeding.

 

11.                Modification. This Guaranty may be modified only by a
contract in writing executed by Guarantor and Landlord.

 

12.                Invalidity. If any provision of the Guaranty shall be invalid
or unenforceable, the remainder of this Guaranty shall not be affected by such
invalidity or unenforceability. In the event, and to the extent, that this
Guaranty shall be held ineffective or unenforceable by any court of competent
jurisdiction, then Guarantor shall be deemed to be a tenant under the Lease with
the same force and effect as if Guarantor were expressly named as a co-tenant
therein with joint and several liability.

 

13.                Successors and Assigns. Unless otherwise agreed in writing or
under the Lease, this Guaranty shall be binding upon and shall inure to the
benefit of the successors-in-interest and assigns of each party to this
Guaranty.

 

14.                Notices. Any notice, consent, demand, invoice, statement or
other communication required or permitted to be given hereunder shall be in
writing and shall be given by (a) personal delivery, (b) overnight delivery with
a reputable international overnight delivery service, such as FedEx, or (c)
facsimile or email transmission, so long as such transmission is followed within
one (1) business day by delivery utilizing one of the methods described in
subsections (a) or (b). Any such notice, consent, demand, invoice, statement or
other communication shall be deemed delivered (x) upon receipt, if given in
accordance with subsection (a); (y) one business (1) day after deposit with a
reputable international overnight delivery service, if given if given in
accordance with subsection (b); or (z) upon transmission, if given in accordance
with subsection (c). Except as otherwise stated in this Guaranty, any notice,
consent, demand, invoice, statement or other communication required or permitted
to be given pursuant to this Guaranty shall be addressed to Guarantor or
Landlord at the address set forth above in the introductory paragraph of this
Guaranty. Either party may, by notice to the other given pursuant to this
Section, specify additional or different addresses for notice purposes.

 

15.                Waiver. Any waiver of a breach or default under this Guaranty
must be in a writing that is duly executed by Landlord and shall not be a waiver
of any other default concerning the same or any other provision of this
Guaranty. No delay or omission in the exercise of any right or remedy shall
impair such right or remedy or be construed as a waiver.

 

16.                Withholding. Unless otherwise agreed in the Lease, any and
all payments by Guarantor to Landlord under this Guaranty shall be made free and
clear of and without deduction for any and all present or future taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar charges,
and all liabilities with respect thereto (collectively, “Taxes”). If Guarantor
shall be required by any applicable laws to deduct any Taxes from or in respect
of any sum payable under this Guaranty to Landlord: (a) the sum payable shall be
increased as necessary so that after making all required deductions, the
Landlord receives an amount equal to the sum it would have received had no such
deductions been made; (b) Guarantor shall make such deductions; and (c)
Guarantor shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable laws.

 

17.                Financial Condition of Tenant. Landlord shall have no
obligation to disclose or discuss with Guarantor Landlord’s assessment of the
financial condition of Tenant. Guarantor has adequate means to obtain
information from Tenant on a continuing basis concerning the financial condition
of Tenant and its ability to perform its Guaranteed Obligations, and Guarantor
assumes responsibility for being and keeping informed of Tenant’s financial
condition and of all circumstances bearing upon the risk of Tenant’s failure to
perform the Guaranteed Obligations.

 

 

 

 

18.                Bankruptcy. So long as the Guaranteed Obligations remain
outstanding, Guarantor shall not, without Landlord’s prior written consent,
commence or join with any other person in commencing any bankruptcy or similar
proceeding of or against Tenant. Guarantor’s obligations hereunder shall not be
reduced, limited, impaired, discharged, deferred, suspended or terminated by any
bankruptcy or similar proceeding (voluntary or involuntary) involving Tenant or
by any defense that Tenant may have by reason of an order, decree or decision of
any court or administrative body resulting from any such proceeding. To the
fullest extent permitted by law, Guarantor will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of
creditors or similar person to pay to Landlord or allow the claim of Landlord in
respect of any interest, fees, costs, expenses or other Guaranteed Obligations
accruing or arising after the date on which such case or proceeding is
commenced.

 

19.                Conveyance or Transfer. Without Landlord’s written consent,
Guarantor shall not convey, sell, lease or transfer any of its properties or
assets to any person or entity to the extent that such conveyance, sale, lease
or transfer could have a material adverse effect on Guarantor’s ability to
fulfill any of the Guaranteed Obligations.

 

20.                [NOTE: ONLY WHERE GUARANTOR IS NOT A DIRECT OR INDIRECT
PARENT OF TENANT: [Limitation on Obligations Guaranteed.

 

(a)       Notwithstanding any other provision hereof, the right of recovery
against Guarantor under Section 2 shall not exceed $1.00 less than the lowest
amount that would render Guarantor’s obligations under Section 2 void or
voidable under applicable law, including, without limitation, the Uniform
Fraudulent Conveyance Act, Uniform Fraudulent Transfer Act or any similar
foreign, federal or state law to the extent applicable to the guaranty set forth
herein and the obligations of Guarantor hereunder. To effectuate the foregoing,
the Guaranteed Obligations in respect of the guarantee set forth in Section 2 at
any time shall be limited to the maximum amount as would result in the
Guaranteed Obligations with respect thereto not constituting a fraudulent
transfer or conveyance after giving full effect to the liability under such
guarantee set forth in Section 2 and its related contribution rights, but before
taking into account any liabilities under any other guarantee by Guarantor. For
purposes of the foregoing, all guarantees of Guarantor other than the guarantee
under Section 2 will be deemed to be enforceable and payable after the guaranty
under Section 2. To the fullest extent permitted by applicable law, this Section
shall be for the benefit solely of creditors and representatives of creditors of
Guarantor and not for the benefit of Guarantor or the holders of any equity
interest in Guarantor.

 

(b)       Guarantor agrees that obligations may at any time and from time to
time be incurred or permitted in an amount exceeding the maximum liability of
Guarantor under Section 2 without impairing the guarantee contained in Section 2
or affecting Landlord’s rights and remedies hereunder.]]

 

21.                Financials. To induce Landlord to enter into the Lease,
Guarantor shall, within ninety (90) days after the end of Guarantor’s financial
year, furnish Landlord with a certified copy of Guarantor’s year-end
unconsolidated financial statements for the previous year, audited by a
nationally recognized accounting firm. If audited financial statements are not
otherwise prepared, then Guarantor may satisfy the requirement to provide
audited financial statements by providing in lieu thereof unaudited financial
statements prepared in accordance with GAAP and certified by the chief financial
officer of Guarantor as correct and complete copies of such financial
statements, fairly presenting Guarantor’s financial condition as of the time set
forth therein and having been prepared in accordance with GAAP. Guarantor also
acknowledges and agrees to comply with the financial reporting requirements set
forth in Section 33.1 of the Lease.

 

22.                Joint and Several Liability. Guarantor’s liability under this
Guaranty shall be joint and several with any and all other Guarantors in
accordance with the terms and conditions of the Lease.

 

[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

 

 

 

IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be signed by its
respective officer thereunto duly authorized, all as of the date first written
above.

 

GUARANTOR

 

[_______],

a [_______]

 

 

By:     Name:        Title:    

 

 

 

 

EXHIBIT E

 

TENANT WORK INSURANCE SCHEDULE

 

Tenant shall be responsible for requiring all of Tenant contractors doing
construction or renovation work to purchase and maintain such insurance as shall
protect it from the claims set forth below which may arise out of or result from
any Tenant Work whether such Tenant Work is completed by Tenant or by any Tenant
contractors or by any person directly or indirectly employed by Tenant or any
Tenant contractors, or by any person for whose acts Tenant or any Tenant
contractors may be liable:

 

1.Claims under workers’ compensation, disability benefit and other similar
employee benefit acts which are applicable to the Tenant Work to be performed.

 

2.Claims for damages because of bodily injury, occupational sickness or disease,
or death of employees under any applicable employer’s liability law.

 

3.Claims for damages because of bodily injury, or death of any person other than
Tenant’s or any Tenant contractors’ employees.

 

4.Claims for damages insured by usual personal injury liability coverage which
are sustained (a) by any person as a result of an offense directly or indirectly
related to the employment of such person by Tenant or any Tenant contractors or
(b) by any other person.

 

5.Claims for damages, other than to the Tenant Work itself, because of injury to
or destruction of tangible property, including loss of use therefrom.

 

6.Claims for damages because of bodily injury or death of any person or property
damage arising out of the ownership, maintenance or use of any motor vehicle.

 

Tenant contractors’ Commercial General Liability Insurance shall include
premises/operations (including explosion, collapse and underground coverage if
such Tenant Work involves any underground work), elevators, independent
contractors, products and completed operations, and blanket contractual
liability on all written contracts, all including broad form property damage
coverage.

 

Tenant contractors’ Commercial General, Automobile, Employers and Umbrella
Liability Insurance shall be written for not less than limits of liability as
follows:

 

a.       Commercial General Liability:

Bodily Injury and Property Damage

 

Commercially reasonable amounts, but in any event no less than $1,000,000 per
occurrence and $2,000,000 general aggregate, with $2,000,000 products and
completed operations aggregate.

 

b.       Commercial Automobile Liability:

Bodily Injury and Property Damage

 

$1,000,000 per accident

c.       Employer’s Liability:

Each Accident

Disease – Policy Limit

Disease – Each Employee

 

 

$500,000

$500,000

$500,000

d.       Umbrella Liability:

Bodily Injury and Property Damage

Commercially reasonable amounts (excess of coverages a, b and c above), but in
any event no less than $3,000,000 per occurrence / aggregate.

 

 

 

 

 

All subcontractors for Tenant contractors shall carry the same coverages and
limits as specified above, unless different limits are reasonably approved by
Landlord. The foregoing policies shall contain a provision that coverages
afforded under the policies shall not be canceled or not renewed until at least
thirty (30) days’ prior written notice has been given to the Landlord.
Certificates of insurance including required endorsements showing such coverages
to be in force shall be filed with Landlord prior to the commencement of any
Tenant Work and prior to each renewal. Coverage for completed operations must be
maintained for the lesser of ten (10) years and the applicable statue of repose
following completion of the Tenant Work, and certificates evidencing this
coverage must be provided to Landlord. The minimum A.M. Best’s rating of each
insurer shall be A- VII. Landlord and its mortgagees shall be named as an
additional insureds under Tenant contractors’ Commercial General Liability,
Commercial Automobile Liability and Umbrella Liability Insurance policies as
respects liability arising from work or operations performed, or ownership,
maintenance or use of autos, by or on behalf of such contractors. Each
contractor and its insurers shall provide waivers of subrogation with respect to
any claims covered or that should have been covered by valid and collectible
insurance, including any deductibles or self-insurance maintained thereunder.

 

If any contractor’s work involves the handling or removal of asbestos (as
determined by Landlord in its sole and absolute discretion), such contractor
shall also carry Pollution Legal Liability insurance. Such coverage shall
include bodily injury, sickness, disease, death or mental anguish or shock
sustained by any person; property damage, including physical injury to or
destruction of tangible property (including the resulting loss of use thereof),
clean-up costs and the loss of use of tangible property that has not been
physically injured or destroyed; and defense costs, charges and expenses
incurred in the investigation, adjustment or defense of claims for such damages.
Coverage shall apply to both sudden and non-sudden pollution conditions
including the discharge, dispersal, release or escape of smoke, vapors, soot,
fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or
other irritants, contaminants or pollutants into or upon land, the atmosphere or
any watercourse or body of water. Claims-made coverage is permitted, provided
the policy retroactive date is continuously maintained prior to the Commencement
Date, and coverage is continuously maintained during all periods in which Tenant
occupies the Premises. Coverage shall be maintained with limits of not less than
$1,000,000 per incident with a $2,000,000 policy aggregate.