Exhibit 10.72

 

 

[ex10-72img.jpg] AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET

 

(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1.     Basic Provisions (“Basic Provisions”).

1.1      Parties: This lease (“Lease”). dated for reference purposes only.
December 3. 2015. Is made by and between SFC Leasing, LP. a California limited
partnership (“Lessor”) and Serenity Wellness Growers. LLC. a Nevada limited
liability company (“Lessee”). (collectively the “Parties” or individually a
“Party”).

1.2      Premises: That certain read property. Including all Improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 203 E. Mayflower Avenue. North Los Vegas. Nevada 89030 located in the
County of Clerk and generally described as (describe briefly the nature of the
property and. if applicable, the “Project”, if the property is located within a
Project) an approximate 22.000 square foot Industrial building situated on an
+/- 1,40 acre parcel, further described as Clark County Assessor’s Parcel Number
139-15-615- 026 (see Exhibit ‘A” & “B”l (“Premises”). (See also Paragraph 2)

1.3     Term: Five (5) years and two (2) months (“Original Term”) commencing
January 11. 2016 (“Commencement Date*”) and ending February 26. 2021
(“Expiration Date”). (See also Paragraph 3)

1.4     Early Possession: N/A, (“Early Possession Date”). (See also Paragraphs
32 and 3.3)

1.5     Base Rent Twenty-two Thousand Dollars & 00/100’s ($22,000.00) per month
(“Base Rent”), payable on the first (1”) day of each month. (See also Paragraph
4)

☒ If this box is chocked, there are provisions in this Lease for the Base Rent
to be adjusted.

1.6     Base Rent Paid Upon Execution: $0 (See Addendum One).

1.7     Security Deposit Paid Upon Execution: See Addendum One (“Security
Deposit”). (See also Paragraph 5)

1.8     Agreed Use: Cultivation, Processing, and any other legal uses. rotated
to medical marijuana including but not limited to general office/administrative,
storage, sates, and distribution. (See also Paragraph 6)

1.9     Insuring Party: Lessor is the “Insuring Party” unless otherwise stated
herein. (See also Paragraph 8)

1.10     Real Estate Brokers: (See also Paragraph 15)

(a)     Representation: The following real estate brokers (collectively, the
“Brokers”) and brokerage relationships exist in this transaction (check
applicable boxes):

☒ Greg Panctrov & Mike De Lew of Colliers International represents Lessor
exclusively (“Lessor’s Broker”):

☐ _____________________________________________represents Lessee exclusively
(“Leasee’s Broker”): or

☐ N/A _________________________________________represents both Lessor and Lessee
(“Dual Agency”).

(b)      Payment to Brokers: Upon execution and delivery of this Lease by both
Parties, Lessor shall pay to the Broker the fee agreed to in their separate
written agreement which shall be split equally between Lessor’s Broker &
Lessee’s Broker).

1.11     Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by N/A (“Guarantor”). (See also Paragraph 37 and Exhibit “D”)

1.12     Attachments. Attached hereto are the following, all of which constitute
a part of this Lease:

☒ Addendum One consisting of Paragraphs 50 through 75:

☒ Exhibit “A” - Parcel Map;

☒ Exhibit “B” - First Floor Building Plan;

☒ Option to Purchase Lease Rider;

2.     Premises.

2.1     Letting. Lessor hereby leases to Lessee, and Lessee hereby teases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of size set forth in this Lease, or that may have been
used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size 13 more or less.

2.2     Compliance. Lessor warrants that the improvements on the Premises comply
with all applicable laws, covenants or restrictions of record, building codes,
regulations and ordinances (“Applicable Requirements”) in effect when the
improvements were constructed. Said warranty does not apply to the use to which
Lessee will put the Premises or lo any Alterations or Utility Installations (as
defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is
responsible for determining whether or not the zoning is appropriate for
Lessee’s Intended use. and acknowledges that past uses of the Premises may no
longer be allowed. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided, promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same al Lessor’s expense. II Lessee does not give
Lessor written notice of a non-compliance with this warranty within thirty (30)
days following the Start Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee’s sole cost and expense. If the Applicable
Requirements have changed since the improvements were constructed. Lessee shall
incur the cost of such.

2.3     Acknowledgements. Lessee acknowledges that; (a) it has been advised by
Lessor and/or Brokers to satisfy Itself with respect to the condition of the
Premises (including but not limited to the electrical. HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements), and their suitability for Lessee’s Intended use; (b) Lessee has
made such investigation as it deems necessary with reference to such matters and
assumes all responsibility therefore as the same relate to its occupancy of the
Premises; and (c) neither Lessor. Lessor’s agents, nor any Broker has made any
oral or written representations or warranties with respect to said matters other
than as set forth In this Lease. In addition. Lessor acknowledges that (a)
Broker has made no representations, promises or warranties concerning Lessee’s
ability to honor the Lease or suitability to occupy the Premises: and (b) it Is
Lessor’s sole responsibility to investigate the financial capability and/or
suitability of an proposed tenants.

2.4     Lessee as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises, in such event, Lessee
shall be responsible for any necessary corrective work.

3.     Term.

3.1     Term. The Commencement Date. Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.

3.2     Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease
(including, but not limited to, the obligations to pay Real Property Taxes and
insurance premiums, and any and all other expenses, as well as to maintain the
Promises) shall, however, be in effect during such period. Any such early
possession shall not affect the Expiration Date.

3.3     Delay In Possession. Lessor agrees to use Kb best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts. Lessor is unable to deliver
possession as agreed. Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be obligated to pay Rent or perform its other obligations until It receives
possession of the Premises. If possession is not delivered within sixty (60)
days after the Commencement Date, Lessee may, at its option, by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten (10)
day period. Lessee’s right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease, as aforesaid, arty period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee. If possession of the Premises is not delivered within
four (4) months after the Commencement Date, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.

3.4     Lessee Compliance. Lessor shall not be required to tender possession of
the Premises lo Lessee until Lessee complies with its obligations herein
including but not limited to providing evidence of insurance (Paragraph 8.5).
Pending delivery of such evidence, Lessee shall be required to perform ail of
its obligations under this Lease from and alter the Start Date. Including the
payment of Rent, notwithstanding Lessor’s election

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to withhold possession pending receipt of such evidence of Insurance. Further.
If Lessee is required to perform any other conditions prior to or concurrent
with the Start Date, the Stare Data shall occur but Lessor may elect to withhold
possession until such conditions are satisfied.

4.     Rent.

4.1.     Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
(“Rent”).

4.2     Payment Lessee than cause payment of Rent to be received by Lessor in
lawful money of the United Stales, without offset or deduction (except as
specifically permitted in this Lease), an or before the day on which it is due.
Rent for any period during the term hereof which is for less than one (1) full
calendar month shall be prorated based upon (he actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated heroin or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor’s rights to the balance of such Rent regardless of
Lessor’s endorsement of any check so stating.

5.     Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee’s faithful performance of its
obligations under this. Lease. If Lessee falls to pay Rent or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee Shad within ten (10) days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. If the Base Rent Increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional monies with Lessor so that the total amount of the Security Deposit
shall at all times bear the same proportion lo the Increased Base Rent as the
initial Security Deposit bore to the Initial Base Rent. Should the Agreed Use be
amended to accommodate a material change In the business of Lessee or to
accommodate a sublease or assignee, Lessor shall have the right to Increase the
Security Deposit to the extent necessary, in Lessor’s reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor’s reasonable
judgment, significantly reduced. Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on said change in financial condition.
Lessor shall not be required to Keep the Security Deposit separate from its
general accounts. Within fourteen (14) days after the expiration or termination
of this Lease, if Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the
Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment
for any monies lo be paid by Lessee under this Lease.

6.     Use.

6.1     Use. Lessee shall use and occupy the Premises only for the Agreed Use.
or any other legal use which is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to neighboring properties. Lessor 3hall not
unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use. so long as the same will not Impair the
structural integrity of the Improvements on the Premises or the mechanical or
electrical systems therein. Is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent. Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor’s objections to the change in use.

6.2     Hazardous Substances.

(a)     Reportable Uses Require Consent The term “Hazardous Substance” as used
in this Lease shall mean any product, substance, or waste whose presence, use.
manufacture, disposal, transportation. or release, either by itself or in
combination with other materials expected to be on the Premises, is either (i)
potentially injurious lo the public health, safety or welfare, the environment
or the Premises, (ii) regulated or monitored by any governmental authority, or
(iii) a basis for potential liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not bo limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.
Lessee shall not engage in any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee’s expense) with all
Applicable Requirements. “Reportable Use” shall moan (i) the installation or use
of any above or below ground storage tank. (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used In the normal course of the Agreed Use, so long as such use
is in compliance witn all Applicable Requirements, is not a Reportable Use, and
does nol expose the Premises or neighboring property to any meaningful risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may condition its consent lo any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself,
the public, the Premises and/or the environment against damage, contamination,
injury and/or liability. Including, but not limited to. the installation (and
removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements) and/or Increasing the Security
Deposit

(b)     Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in on, under or about
the Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor, and provide Lessor with
a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.

(c)     Lessee Remediation. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in. on. under, or about the Premises
(Including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee’s expense, lake all Investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any
contamination of. and for the maintenance. security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to
by Lessee, or pertaining lo or involving any Hazardous Substance brought onto
the Premises during the term of this Lease, by or for Lessee, or any third
party.

(d)     Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor,
its agents, employees, lenders and ground lessor, if any. harmless from and
against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys’ and consultants’ fees arising out of
or Involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party authorized by Lessee (provided, however, that Lessee shall
have no liability under this Lease with respect to underground migration of any
Hazardous Substance under the Premises from adjacent properties). Lessee’s
obligations shall include. but not be limited to, the effects of any
contamination or Injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances, unions specifically so agreed by Lessor In
writing at the time of such agreement

(e)     Lessor Indemnification. Lessor and Its successors and assigns shall
indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, Including the cost
of remediation, which are caused by the gross negligence or willful misconduct
of Lessor, its agents or employees. Lessor’s obligations, as and when required
by the Applicable Requirements. shall include. but not be limited to, the cost
of Investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease.

(f)     Investigations and Remediation, Lessee shall pay for any Investigations
or remediation measures required by governmental entities having jurisdiction
with respect to the existence of Hazardous Substances on the Premises after the
Start Data. Lessee shall cooperate fully In any such activities at the request
of Lessor, including allowing Lessor and Lessor’s agents to have reasonable
access to the Premises at reasonable times in order to carry out any
investigative and remedial activities.

(g)     Lessor Termination Option. If a Hazardous Substance Condition occurs
during the term of this Lease, unless Lessee is legally responsible therefor (in
which case Lessee shall make the investigation and remediation thereof required
by the Applicable Requirements and this Lease shall continue in full force and
effect, but subject to Lessor’s rights under Paragraph 6.2(d) and Paragraph 13),
Lessor may, at Lessor’s option, either (i) Investigate and premeditate such
Hazardous Substance Condition, if required, as soon as reasonably possible at
Lessor’s expense. In which event this Lease shall continue in full force and
effect or (ii) if the estimated cost to remediate such condition exceeds two (2)
times the then monthly Base Rent or $50,000. whichever is greater, give written
notice to Lessee, within thirty (30) days after receipt by Lessor of knowledge
of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In the event Lessor elects lo give a termination notice, Lessee may,
within ten (10) days thereafter, give written notice to Lessor of Lessee’s
commitment to pay the amount by which the cost of the remediation of such
Hazardous Substance Condition exceeds an amount equal to two (2) times the
monthly Base Rent or $50,000, whichever is greater. Lessee shall provide Lessor
with said funds or satisfactory assurance (hereof within thirty

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(30) days following such commitment. In such event this Lease shall continue in
full force and effect, and Lessor shall proceed to make such remediation as soon
as reasonably possible after the required funds are available. If Lessee does
not give such notice and provide the required funds or assurance thereof within
the time provided, this Lease shall terminate as of the date specified In
Lessor’s notice of termination.

6.3     Lessee’s Compliance with Applicable Requirements. Except as otherwise
provided in this Lease. Lessee shall, at Lessee’s sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire Insurance underwriter or
rating bureau, and the recommendations of Lessor’s engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date. Lessee
shall, within ten (10) days after receipt of Lessor’s written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee’s compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
catalog, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.

6.4     Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined In
Paragraph 30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of Inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. The cost of any such inspections shall be
paid by Lessor, unless a violation of Applicable Requirements, or a
contamination is found lo exist or be Imminent, or the inspection is requested
or ordered by a governmental authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection is
reasonably related to the violation or contamination.

7.     Maintenance: Repairs, Utility installations; Trade Fixtures and
Alterations.

7.1     Lessee’s Obligations.

(a)     In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3
(Compliance), 6.3 (Lessee’s Compliance with Applicable Requirements). 7.2.
(Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee
shall, at Lessee’s sole expense, keep the Premises, Utility installations, and
Alterations in good order, condition and repair (whether or not the portion of
the Premises requiring repairs, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee’s use. any prior use. the elements or the
age of such portion of the Premises), Including, but not limited to. all
equipment of facilities, such as plumbing, heating. ventilating,
air-conditioning, electrical, lighting facilities, boilers, pressure vessels,
fire protection system, fixtures, walls (interior and exterior). Foundations,
ceilings, roofs, floors, windows, doors, plate glass, skylights, landscaping,
driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways
located in, on. or adjacent to the Premises. Lessee. in keeping the Premises in
good order, condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the service
contracts required by Paragraph 7.1(b) below. Lessee’s obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair. Lessee shall, during the term of this Lease, keep the exterior
appearance of the Building In a first-class condition consistent with the
exterior appearance of other similar facilities of comparable age and size in
the vicinity, including, when necessary, the exterior repainting of the
Building.

(b)     Service Contracts. Lessee shall, at Lessee’s sole expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced In the maintenance of the
following equipment and Improvements. if any. if and when Installed on the
Premises: (i) HVAC equipment (ii) boiler, and pressure vessels, (iii) fire
extinguishing systems. Including fire alarm and/or smoke detection. (iv)
landscaping and irrigation systems, (v) roof covering and drains, (vi) driveways
and parking lots, (vii) clarifiers (viii) basic utility feed to the perimeter of
the Building, and (Ix) any other equipment if reasonably required by Lessor.

(c)     Replacement Subject to Lessee’s Indemnification of Lessor as set forth
in Paragraph 8.7 below, and without relieving Lessee of liability resulting from
Lessee’s failure to exercise and perform good maintenance practices, if the
Basic Elements described In Paragraph 7.1(b) cannot be repaired other than at a
cost which is in excess of 50% of the cost of replacing such Basic Elements,
then such Basic Elements shall be replaced by Lessor, and the cost thereof shall
be prorated between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on which Base
Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one. and the denominator of
which is the number or months of the useful life of such replacement as such
useful life is specified pursuant to Federal income tax regulations or
guidelines for depreciation thereof (including interest on the unamortized
balance as is then commercially reasonable in the judgment of Lessor’s
accountants), with Lessee reserving the right to prepay its obligation at any
time.

7.2     Lessor’s Obligations. Subject to the provisions of Paragraphs 22
(Condition). 2.3 (Compliance). 9 (Damage or Destruction) and 14 (Condemnation).
It Is Intended by the Parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises, or the equipment
therein, all of which obligations are intended to be that of the Lessee. It is
the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect lo
the extent it is Inconsistent with the terms of this Lease.

7.3     Utility Installations; Trade Fixtures; Alterations.

(a)     Definitions; Consent Required. The term “Utility Installations” refers
to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures. HVAC equipment plumbing, and fencing in or on the Promises.
The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can
be removed without doing material damage to the Premises. The term “Alterations”
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. “Lessee Owned
Alterations and/or Utility Installations” are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor’s prior written consent. Lessee
may, however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost
thereof during this Lease as extended does not exceed $50,000 in the aggregate
or $10,000 in anyone year,

(b)     Consent Any Alterations or Utility Installations that Lessee shall
desire to make and which require the consent of the Lessor shall be presented to
Lessor in written form with detailed plans. Consent shall be deemed conditioned
upon Lessee’s: (i) acquiring all applicable governmental permits, (ii)
furnishing Lessor with copies of both the permits and the plans end
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alteration a or Utility installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
For work which costs an amount equal to the greater of one month’s Base Rent or
$10,000. Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alteration or Utility installation and/or upon Lessee’s posting an
additional Security Deposit with Lessor,

(c)     Indemnification. Lessee shall pay. when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use on the Premises, which claims are or may be secured by any mechanic’s or
material men’s lien against the Premises or any Interest therein. Lessee shall
give Lessor not less than ten (10) days’ notice prior to the commencement of any
work in. on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility. If Lessee shall contest the validity of any such
lien, claim or demand, then Lessee shall. at its sole expense defend and protect
itself. Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof. If Lessor shall require. Lessee shall furnish a surety bond In an
amount equal to one and one-half limes the amount of such contested lien, claim
or demand, Indemnifying Lessor against liability for the same. If Lessor elects
to participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and
costs.

7.4     Ownership; Removal; Surrender; and Restoration.

(a)     Ownership. Subject to Lessor’s right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a part of the
Premises. Lessor may, at any time, elect in writing to be the owner of all or
any specified part of the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per Paragraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or termination of
this Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.

(b)     Removal. By delivery to Lessee of written notice from Lessor not earlier
than ninety (90) and not later than thirty (30) days prior to the end of the
term of this Lease. Lessor may require that any or all Lessee Owned Alterations
or Utility installations be removed by the expiration or termination of this
Lease. Lessor may require the removal at any time of all or any part of any
Lessee Owned Alterations or Utility Installations made without the required
consent.

(c)     Surrender; Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom dean and free of debris, and in good operating
order, condition and slate of repair, ordinary wear and tear excepted. “Ordinary
wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice Lessee shaft repair any damage
occasioned by the Installation, maintenance or removal of Trade Fixtures, Lessee
Owned Alterations and/or

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Utility Install actions. Furnishings, and equipment as well as the removal of
any storage tank installed by or for Lessee, and the removal, replacement or
remediation of any soil, material or groundwater contaminated by Lessee. Trade
Fixtures shall remain the property or Lessee and shall be removed by Lessee. The
failure by Lessee to timely vacate the Premises pursuant to this Paragraph
7.4(c) without [he express written consent of Lessor shall constitute a holdover
under the provisions of Paragraph 26 below.

8.     Insurance; Indemnity.

8.1     Payment For Insurance. Lessee shall pay for all insurance required under
this Paragraph 8. except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) In excess of £3,000,000 per
occurrence. Premiums for policy periods commencing prior to or extending beyond
the Lease term shall be prorated to correspond to the Lease term. Payment shall
be made by Lessee to Lessor within ten (10) days following receipt of an
invoice.

8.2     Liability Insurance.

(a)     Carried by Lessee. Lessee shall obtain and keep in force a Commercial
General Liability Policy of Insurance protecting Lessee and Lessor against
claims for bodily Injury, personal Injury and property damage based upon or
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such Insurance shall be on an occurrence basis
providing single limit coverage in an amount not less than S3.000.000 per
occurrence with an “Additional Insured-Managers or Lessors of Promises
Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement”
for damage caused by heat smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an Insured contract’ for the performance of Lessee’s Indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
Insurance earned by Lessee shall be primary to and not contributory with any
similar Insurance carried by Lessor, whose insurance shaft be considered excess
insurance only.

(b)     Carried by Lessor. Lessor shall have the option to maintain liability
insurance as described in Paragraph 8.2(a), In addition to, and not in lieu of.
the Insurance required to be maintained by Lessee. Lessee shall not be named as
an additional insured therein.

8.3     Property Insurance - Building, Improvements and Rental Value.

(a)     Building and Improvements. The insuring Party shall obtain and keep in
force a policy or policies In the name of Lessor, with loss payable to Lessor,
any groundless or. and to any Lender(s) insuring loss or damage to the Premises.
The amount of such insurance shall be equal to the full replacement cost of the
Premises, as the same shall exist from time to time, or the amount required by
any Lenders, but in no event more than the commercially reasonable and available
insurable value thereof. If Lessor is the insuring Party, however, Lessee Owned
Alterations and Utility installations. Trade Fixtures, and Lessee’s personal
property shall be insured by Lessee under Paragraph 8.4 rather than by Lessor.
If the coverage is available and commercially appropriate, such policy or
policies shall insure against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake unless required by a Lender),
Including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement
of any portion of the Premises as the result of a covered loss. Said policy or
policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and Inflation guard protection
causing an Increase In the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labor Consumer Price Index for
All Urban Consumers for the city nearest to where the Premises are located. If
such Insurance coverage has a deductible clause, the deductible amount shall not
exceed $5,000 per occurrence, and Lessee shall be liable for such deductible
amount in the event of an Insured Loss.

(b)     Rental Value. The Insuring Party shall obtain and keep in force a policy
or policies In the name of Lessor with loss payable to Lessor and any Lender,
ensuing the loss of the full Rent for one (1) year. Said Insurance shaft provide
that in the event the Lease is terminated by reason of an insured loss, the
period of Indemnity for such coverage shall be extended beyond the date of the
completion of repairs or replacement of the Premises, to provide for one full
year’s loss of Rent from the date of any such loss. Said Insurance shall contain
an agreed valuation provision In lieu of any coinsurance clause, and the amount
of coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by Lessee, for the next twelve (12) month period. Lessee shall be liable
for any deductible amount in (he event of such loss.

(c)     Adjacent Premises. If the Premises are part of a larger building, or of
a group of buildings owned by Lessor which are adjacent to the Promises, the
Lessee shall pay for any increase in the premiums for the property insurance of
such buildings if said increase is caused by Lessee’s acts, omissions, use or
occupancy of the Premises.

8.4     Lessee’s Property/Business Interruption Insurance.

(a) Property Damage. Lessee shall obtain and maintain insurance coverage on all
of Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations and
Utility Installations. Such Insurance shell be fun replacement cost coverage
with a deductible of not lo exceed $1 .000 per occurrence. The proceeds from any
such insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such Insurance Is in force.

(b)     Business Interruption. Lessee shall obtain and maintain loss of income
and extra expense insurance in amounts as will reimburse Lessee for direct or
indirect loss of earnings attributable to all perils commonly insured against by
prudent lesses in the business of Lessee or attributable to prevention of access
to the Premises as a result of such perils.

(c)     No Representation of Adequate Coverage. Lessor makes no representation
that the limits or forms of coverage of Insurance specified herein are adequate
to cover Lessee’s property, business operations or obligations under this Lease.

8.5     Insurance Policies. Insurance required herein shall be by companies duly
licensed or admitted lo transact business In the state where the Premises are
located, and maintaining during the policy term a “General Policyholders Rating*
of at (east B+. V. as set forth in the most current issue of “Best’s Insurance
Guide”, or such other rating as may be required by a Lender. Lessee shall not do
or permit to be done anything which invalidates the required insurance policies.
Lessee shall, prior lo the Start Date, deliver to Lessor certified copies of
policies of such insurance or certificates evidencing the existence and amounts
of the required Insurance. No such policy shall be cancelable or subject to
modification except after thirty (30) days prior written notice to Lessor.
Lessee shall, at least thirty (30) days prior to the expiration of such
policies. furnish Lessor with evidence of renewals or Insurance binders”
evidencing renewal thereof, or Lessor may order such Insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less. If either Party shall fall
to procure and maintain the Insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.

8.6     Waiver of Subrogation. Without affecting any other rights or remedies.
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be Insured against
herein. The effect of such releases and waivers is not limited by the amount of
insurance earned or required, or by any deductibles applicable hereto. The
Parties agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the Insurance is not Invalidated thereby.

8.7     Indemnity. Except for Lessor’s gross negligence or willful misconduct
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents. Lessor’s master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising
out of, involving, or In connection with, the use and/or occupancy of the
Premises by Lessee. If any action or proceeding is brought against Lessor by
reason of any of the foregoing matters. Lessee shall upon notice defend the same
at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be defended or Indemnified.

8.8     Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee’s employees, contractors, Invitees, customers, or any other
person in or about the Premises, whether such damage or Injury is caused by or
results from fire, steam, electricity, gas. water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said Injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
Notwithstanding Lessor’s negligence or breach of this Lease. Lessor shall under
no circumstances be liable for injury to Lessee’s business or for any loss of
income or profit therefrom.

9.     Damage or Destruction.

9.1     Definitions.

(a)     “Premises Partial Damage” shall mean damage or destruction lo the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in six (6) months or less from
the dale of the damage or destruction. Lessor shall notify Lessee in writing
within thirty (30) days from the date of the damage or destruction as to whether
or not the damage Is Partial or Total.

(b)     “Premises Total Destruction” shall mean damage or destruction to the
Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which cannot reasonably be repaired in six (6) months or less
from the date of the damage or destruction. Lessor shall notify Lessee In
writing within thirty (30) days from the dale of the damage or destruction as to
whether or not the damage is Partial or Total.

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(c)      “Insured Loss” shall mean damage or destruction to Improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.

(d)      “Replacement Cost” shall mean the cost to repair or rebuild the
Improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depredation.

(e)      “Hazardous Substance Condition” shall mean the occurrence or discovery
of a condition involving the presence or. or a contamination by a Hazardous
Substance as defined in Paragraph 6.2(a), in, on, or under the Premises.

9.2     Partial Damage - Insured Loss, If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor’s expense, repair such damage
(but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon at reasonably possible and this Lease shall continue in
full force and effect’ provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair
of which is $100,000 or less, and in such event. Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, If the required insurance was not in
force or the Insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee’s responsibility) as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
Insurance coverage was not commercially reasonable and available. Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within ten (10) days
following receipt of written notice of such shortage and request therefor. If
Lessor receives said funds or adequate assurance thereof within said ten (10)
day period, the party responsible for making the repairs shall complete them as
soon as reasonably possible and this Lease shall remain in full force and
effect. If such funds or assurance are not received. Lessor may nevertheless
elect by written notice to Lessee within ten (10) days thereafter to: (i) make
such restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or have this Lease terminate thirty (30) days thereafter. Lessee shall
not be entitled to reimbursement of any funds contributed by Lessee to repair
any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be
some Insurance coverage, but (he net proceeds of any such Insurance shall be
made available for the repairs if made by either Party.

9.3     Partial Damage - Uninsured Loss. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee’s expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor’s expense. In which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease. Lessee shall
have the right within ten (10) days after receipt of the termination notice to
give written notice to Lessor of Lessee’s commitment to pay for the repair of
such damage without reimbursement from Lessor. Lessee shall provide Lessor with
said funds or satisfactory assurance thereof within thirty (30) days after
making such commitment in such event this Lease shall continue in full force and
effect and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not make the
required commitment this Lease shall terminate as of the date specified in the
termination notice.

9.4     Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (30) days
following such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee. Lessor shall have the right to
recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.

9.5     Damage Near End of Term. If at any time during the lost six (6) months
of this Lease there is damage for which the cost to repair exceeds one (1)
month’s Base Rent whether or not an Insured Loss. Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (30) days after
the date of occurrence of such damage. Notwithstanding the foregoing, If Lessee
at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by. (a) exercising such option and
(b) providing Lessor with any shortage in Insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the dale which Is ten days after Lessee’s receipt of Lessor’s written notice
purporting to terminate this Lease, or (ii) the day prior lo the date upon which
such option expires. If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) lo cover any shortage
In Insurance proceeds. Lessor shall, at Lessor’s commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect if Lessee fails to exercise such option and
provide such funds or assurance during such period, then this Lease shall
terminate on the date specified in the termination notice and Lessee’s option
shall be extinguished.

9.6     Abatement of Rent; Lessee’s Remedies.

(a)     Abatement in the event of Premises Partial Damage or Premises Total
Destruction or a Hazardous Substance Condition for which Lessee Is not
responsible under this Lease, the Rem payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation. repair or
restoration except as provided herein.

(b)     Remedies. If Lessor shall be obligated to repair or restore the Premises
and does not commence, in a substantial and meaningful way. such repair or
restoration within ninety (90) days after such obligation shall accrue. Lessee
may. at any time prior to the commencement of such repair or restoration, give
written notice to Lessor and to any Lenders of which Lessee has actual notice,
of Lessee’s election to terminate this Lease on a date not less than sixty (60)
days following the giving of such notice. If Lessee gives such notice and such
repair or restoration is not commenced within thirty (30) days thereafter, this
Lease shall terminate as of the date specified In said notice. If (he repair or
restoration is commenced within said thirty (30) days, this Lease shall continue
in full force and effect “Commence’ shall mean either the unconditional
authorization of the preparation of the required plans, or the beginning of the
actual work on the Premises, whichever first occurs.

9.7     Termination — Advance Payments. Upon termination of this Lease pursuant
to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rant and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, rectum to Lessee so much of Lessee’s Security
Deposit as has not been, or is not then required to be, used by Lessor.

9.8     Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute lo the extent inconsistent herewith,

10.     Real Property Taxes.

10.1     Definition of “Real Property Taxes.” As used herein, the term “Real
Property Taxes” shall include any form of assessment real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, persona) Income or estate taxes): Improvement bond; and/or license
fee Imposed upon or levied against any legal or equitable Interest of Lessor in
the Premises. Lessor’s right to other income therefrom, and/or Lessor’s business
of leasing, by any authority having the direct or Indirect power to tax and
where the funds are generated with reference to the Building address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. The
term “Real Property Taxes” shall also Include any tax. fee. levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including but not limited to, a change in the ownership
of the Premises.

10.2

(a)     Payment of Taxes. Lessee shall pay the Real Property Taxes applicable to
the Premises during the term of this Lease. Subject to Paragraph 10.2(b) all
such payments shall be made at least ten (10) days prior to any delinquency
date. Lessee shall promptly furnish Lessor with satisfactory evidence that such
taxes have been paid If any such taxes shall cover any period of time prior to
or after the expiration or termination of this Lease. Lessee’s share of such
taxes shall be prorated to cover only that portion of the tax bill applicable to
the period that this Lease is In effect and Lessor or Lessee shall reimburse the
Other for any overpayment or prorated amounts due. If Lessee shall fail to pay
any required Real Property Taxes. Lessor shall have the right to pay the same,
and Lessee shall reimburse Lessor therefor upon demand including any late fees
and penalties.

(b)     Advance Payment. In the event Lessee incurs a late charge on any Rent
payment Lessor may, at Lessor’s option, estimate the current Real Property
Taxes, and require that such taxes be paid in advance to Lessor by Lessee,
either (i) in a rump sum amount equal to the installment due. at least twenty
(20) days prior to the applicable delinquency date, or (ii) monthly in advance
with the payment of the Base Rent If Lessor elects to require payment monthly in
advance, (he monthly payment shall be an amount equal to the amount of the
estimated Installment of taxes divided by the number of months remaining before
the month in which said installment becomes delinquent. When the actual amount
of the applicable tax bill Is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the
applicable taxes. If the amount collected by Lessor is insufficient to pay such
Real Property Taxes when due. Lessee shall pay Lessor, upon demand, such
additional sums

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as are necessary to pay such obligations. All monies paid to Lessor under this
Paragraph may be Intermingled with other monies of Lessor and shall not bear
Interest. In the event of a Breach by Lessee in the performance of its
obligations under this Lease, then any balance of funds paid to Lessor under the
provisions of this Paragraph may, at the option of Lessor, be treated as an
additional Security Deposit.

10.3     Joint Assessment. If the Premises are not separately assessed, Lessee’s
liability shall be an equitable proportion of the Real Property Taxes for all of
the land and improvements included within the tax parcel assessed, such
proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor’s work sheets or such other information as
may be reasonably available.

10.4     Persona] Property Taxes. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations Utility
Installations. Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee’s said
personal property shall be assessed with Lessor’s real property. Lessee shall
pay Lessor the taxes attributable to Lessee’s property within ten (10) days
after receipt of a written statement.

11.     Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal, fire sprinkler monitoring end maintenance,
janitorial. security, and other utilities and services supplied to the Premises,
together with any taxes thereon. If any such services are not separately metered
to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor,
of all charges Jointly metered.

12.     Assignment and Subletting.

12..1     Lessor’s Consent Required.

(a)     Lessee shall no! voluntarily or by operation of law assign, transfer,
mortgage or encumber (collectively, “assign or assignment”) or sublet all or any
part of Lessee’s Interest In this Lease or In the Premises without Lessor’s
prior written consent.

(b)     A change In the control of Lessee shall constitute an assignment
requiring consent. The transfer, on a cumulative basis, of twenty-five percent
(25%) or more of the voting control of Lessee shall constitute a change in
control for this purpose.

(c)     The Involvement of Lessee or its assets in any transaction, or series of
transactions (by way of merger, sale, acquisition, financing, transfer,
leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee’s assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than
twenty-five percent (25%) of such Net Worth as it was represented at the time of
the execution of this Lease or at the time of the most recent assignment to
which Lessor has consented, or as it exists Immediately prior to said
transaction or transactions constituting such reduction, whichever was or is
greater, shall be considered en assignment of this Lease to which Lessor may
withhold its consent. “Net Worth of Lessee” shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles.

(d)     An assignment or subletting without consent shall, at Lessor’s option,
be a Default curable after notice per Paragraph 13.1(c), or a nondurable Breach
without the necessity of any notice and grace period. If Lessor elects to treat
such unapproved assignment or subletting as a nondurable Breach. Lessor may
either, (i) terminate this Lease, or (ii) upon thirty (30) days written notice.
Increase the monthly Base Rent to one hundred ton percent (110%) of the Base
Rent then in effect. Further, in the event of such Breach and rental adjustment,
(i) the purchase price of any option to purchase the Premises held by Lessee
shall bo subject to similar adjustment to one hundred ten percent (110%) of the
price previously in effect, and (II) all fixed and non-fixed rental adjustments
scheduled during the remainder of the Lease term shall be increased to One
Hundred Ten Percent (110%) of the scheduled adjusted rent.

(e)     Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be
limited to compensatory damages and/or Injunctive relief.

12.2     Terms and Conditions Applicable to Assignment and Subletting.

(a)     Regardless of Lessor’s consent any assignment or subletting shall not:
(i) be effective without the express written assumption by such assignee or sub
lessee of the obligations of Lessee under this Lease; (ii) release Lessee of any
obligations hereunder; or (iii) alter the primary liability of Lessee for the
payment of Rent or for the performance of any other obligations to be performed
by Lessee.

(b)     Lessor may accept Rent or performance of Lessee’s obligations from any
person other than Lessee ponding approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppels of
Lessor’s right to exercise its remedies for Lessee’s Default or Breach.

(c)     Lessor’s consent to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting.

(d)     In the event of any Default or Breach by Lessee. Lessor may proceed
directly against Lessee, any Guarantors or anyone else responsible for the
performance of Lessee’s obligations under this Lease, including any assignee or
sublessee, without first exhausting Lessor’s remedies against any other person
or entity responsible therefore to Lessor, or any security held by Lessor.

(e)     Each request for consent to an assignment or subletting shall be in
writing, accompanied by Information relevant to Lessor’s determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee. Including but not limited to the intended use and/or
required modification of the Premises, if any. together with a fee of $1,000 or
ten percent (10%) of the current monthly Base Rent applicable to the portion of
the Premises which is the subject of the proposed assignment or sublease,
whichever is greater, as consideration for Lessor’s considering and processing
said request. Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested.

(f) Any assignee of. or sublessee under, this Lease shall, by reason of
accepting such assignment or entering Into such sublease, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.

12.3     Additional forms and Conditions Applicable to Subletting. The following
terms and conditions shall apply to any subletting by Lessee of all or any part
of the Premises and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein;

(a)     Lessee hereby assigns and transfers to Lessor all of Lessee’s interest
in all Rent payable on any sublease, and Lessor may collect such Rent and apply
same toward Lessee’s obligations under this Lease; provided, however, that until
a Breach shall occur In the performance of Lessee’s obligations. Lessee may
collect said Rent. Lessor shall not by reason of the foregoing or any assignment
of such sublease, nor by reason of the collection of Rent, be deemed liable to
the sublessee for any failure of Lessee to perform and comply with any of
Lessee’s obligations to such sublessee. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee’s obligations under this
Lease, to pay to Lessor all Rent due and to become due under the sublease.
Sublessee shall rely upon any such notice from Lessor and shall pay all Rants to
Lessor without any obligation or right to inquire as to whether such Breach
exists. notwithstanding any claim from Lessee to the contrary.

(b)     In the event of a Breach by Lessee, Lessor may. at its option, require
sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however. Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.

(c)     Any matter requiring the consent of the sublessor under a sublease shall
also require the consent of Lessor.

(d)     No sublessee shall further assign or sublet all or any part of the
Premises without Lessor’s prior written consent.

(e)     Lessor shall deliver a copy of any notice of Default or Breach by Lessee
to the sublessee, who shall have the right to cure the Default of Lessee within
the grace period, if any. specified in such notice. The sublessee shall have a
right of reimbursement and offset from and against Lessee for any such Defaults
cured by the sublessee.

13.     Default; Breach; Remedies.

13.1     Default; Broach. A “Default” is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A “Breach” is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:

(a)     The abandonment of the Premises, or the vacating of the Premises without
providing a commercially reasonable level of security, or where the coverage of
the property insurance described in Paragraph 8.3 is jeopardized as a result
thereof, or without providing reasonable assurances to minimize potential
vandalism.

(b)     The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or surety bond, or
to fulfill arty obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of three (3) business days
following written notice to Lessee.

(c)     The failure by Lessee to provide (I) reasonable written evidence of
compliance with Applicable Requirements, (ii) the service contracts, (Hi) the
rescission of an unauthorized assignment or subletting. (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 42 (easements),
or (viii) any other documentation or Information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice to Lessee.

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(d)      A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described In subparagraphs 13.1(a), (b) or (c). above, where
such Default continues for a period of thirty (30) days after written notice:
provided, however, that if the nature of Lessee’s Default la such that more than
thirty (30) days ore reasonably required for its cure, then it shall not be
deemed to be a Breach It Lessee commerce’s such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.

(e)      The occurrence of any of the following events; (i) the making of any
general arrangement or assignment for the benefit of creditors; (ii) becoming a
“debtor” as defined in 11 U.S.C. § 101 or any successor statute thereto (unless,
in the case of a petition filed against Lessee. the same is dismissed within
sixty (60) days): (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee’s assets located at the Premises or of
Lessee’s Interest in this Lease, where possession is not restored to Lessee
within thirty (30) days; or (iv) the attachment execution or other judicial
seizure of substantially all of Lessee’s assets located at the Premises or of
Lessee’s interest In this Lease, where such seizure is not discharged within
thirty (30) days; provided, however, in the event that any provision of this
subparagraph 13.1 (e) is contrary to any applicable law. such provision shall be
of no force or affect, and not affect the validity of the remaining provisions.

(f)      The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.

(g)      If the performance of Lessee’s obligations under this Lease Is
guaranteed: (i) the death of a Guarantor: (ii) the termination of a Guarantor’s
liability with respect to this Lease other then in accordance with the terms of
such guaranty: (iii) a Guarantor’s becoming insolvent or the subject of a
bankruptcy filing: (iv) a Guarantor’s refusal to honor the guaranty; or (v) a
Guarantor’s breach of its guaranty obligation on an anticipatory basis, and
Lessee’s failure, within sixty (60) days following written notice of any such
event, to provide written alternative assurance or security, which, when coupled
with the then existing resources of Lessee, equals or exceeds the combined
financial resources of Lessee and the Guarantors that existed at the lime or
execution of this Lease.

13.2     Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within (en (10) days attar written notice (or In case of an
emergency. without notice). Lessor may. at its option, perform such duty or
obligation on Lessee’s behalf, including but not limited to the obtaining of
reasonably required bonds. Insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn.
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier’s check. In the event of a 8reach. Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:

(a)     Terminate Lessee’s right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall immediately
surrender possession to Lessor. In such event Lessor shall be entitled to
recover from Lessee: (i) the unpaid Rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Losses proves could be
reasonably avoided: and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee’s failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of relating, including necessary renovation
and alteration of the Premises, reasonable attorneys’ fees, and that portion of
any leasing commission paid by Lessor In connection with this Lease applicable
to the unexpired term of this Lease. The worth at the time of award of the
amount referred to in provision (iii) of the Immediately preceding sentence
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of the District within which the Premises are located at the time
of award plus one percent (1%). Efforts by Lessor to mitigate damages caused by
Lessee’s Breach of this Lease shall not waive Lessor’s right to recover damages
under Paragraph 12. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
In such proceeding any unpaid Rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit. If a notice and grace period required under Paragraph 13.1 was not
previously given, a notice to pay rent or quit, or to perform or quit given to
Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shah constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.

(b)     Continue the Lease and Lessee’s right to possession and recover the Rent
as ft becomes due. In which event Lessee may sublet or assign, subject only to
reasonable limitations. Acts of maintenance, efforts to relet and/or the
appointment of a receiver to protect the Lessor’s interests, shall not
constitute a termination of the Lessee’s right to possession.

(c)     Pursue any other remedy now or hereafter available under the laws or
judicial decisions of the state wherein the Premises are located. The expiration
or termination of this Lease and/or the termination of Lessee’s right to
possession shall not relieve Lessee from liability under any Indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee’s occupancy of the Premises.

13.3     Late Charges. Lessee hereby acknowledges that late payment by Lessee of
Rent will cause Lessor to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing and accounting charges, and late charges
which may be Imposed upon Lessor by any Lender. Accordingly, if any Rent shall
not be received by Lessor within five (5) days after such amount shall be due,
then, without any requirement for notice to Lessee. Lessee shall pay to Lessor a
one-time late charge equal to ten percent (10%) of each such overdue amount. The
Parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will Incur by reason of such late payment
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee’s Default or Breach with respect to such overdue amount nor prevent
the exercise of any of the other rights and remedies granted hereunder. In the
event that a late charge is payable hereunder, whether or not collected, for
three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary. Base Rent shall, at Lessor’s option,
become due and payable quarterly in advance.

13.4     Interest Any monetary payment due Lessor hereunder, other than tale
charges, not received by Lessor, when due as to scheduled payments (such as Base
Rent) or within thirty (30) days following the date on which it was due for
non-scheduled payment shall bear interest from the date when due. as to
scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest (“Interest”) charged shall be equal to the
greater of: (i) fifteen percent (15%) per annum; or (ii) the prime rate reported
in the Wall Street Journal as published closest prior to the date when due plus
four percent (4%), but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for In
Paragraph 13.4.

13.5     Breach by Lessor.

(a)     Notice of Broach. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph, a reasonable time
shall be: (i) five (5) business days for emergency situations (i.e. access to
the Premises or a utility servicing the Premises): and (ii) in all other cases
shall be thirty (30) days after receipt by Lessor, and any Lender whose name and
address shall have been furnished Lessee in writing for such purpose, of written
notice specifying wherein such obligation of Lessor has not been performed;
provided, however, that If the nature of Lessor’s obligation is such that more
than thirty (30) days are reasonably required for its performance, then Lessor
shall not be in breach If performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.

(b)     Performance by Lessee on Behalf of Lessor. In the event that neither
Lessor nor Lender cures said breach within thirty (30) days after receipt of
said notice, or if having commenced said cure they do not diligently pursue it
to completion, then Lessee may elect to cure said breach at Lessee’s expense and
offset from Rent an amount equal to the greater of one month’s Base Rent or the
Security Deposit and to pay an excess of such expense under protest, reserving
Lessee’s right to reimbursement from Lessor. Lessee shall document the cost of
said cure and supply said documentation to Lessor.

14.     Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively “Condemnation”), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than ten percent (10%) of any building portion of the
Premises, or more than twenty-five percent (25%) of the land area portion of the
Premises not occupied by any building, is taken by Condemnation, Lessee may. at
Lessee’s option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution In value of the
leasehold, the value of the part taken, or for severance damages: provided,
however, that Lessee shall be entitled to any compensation for Lessee’s
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this

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Paragraph. All Alterations and Utility Installations made to the Premises by
Lessee, for purposes of Condemnation only, shall bo considered the property of
the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation. Lessor shall repair any damage to the Premises, caused by such
Condemnation.

15.     Brokers Fee.

15.1     Additional Commission. In addition to the payments owed pursuant to
Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree In
writing. Lessor agrees that: (a) if Lessee exercises any Option, (b) If Lessee
acquires any rights to the Premises or other promises owned by Lessor and
located within the same Project if any. within which the Premises is located,
(c) if Lessee remains In possession of the Premises, with the consent of Lessor,
after the expiration of this Lease, or (d) If Base Rent Is Increased, whether by
agreement or operation of an escalation clause herein, then. Lessor shall pay
Brokers a fee in accordance with the schedule of said Brokers in effect at the
time of the execution of this Lease.

15.2     Assumption of Obligations. Any buyer or transferee of Lessor’s interest
in this Lease shall be deemed to have assumed Lessor’s obligation hereunder.
Each Broker shall be a third party beneficiary of the provisions of Paragraphs
1.10, 15, 22 and 31. If Lessor falls to pay to a Broker any amounts due as and
(or commissions pertaining to this Lease when due. then such amounts shall
accrue Interest. In addition, if Lesser fails to pay any amounts to Lessee’s
Broker when due. Lessee’s Broker may send written notice to Lessor and Lessee of
such failure and If Lessor fails to pay such amounts within ten (10) days alter
said notice. Lessee shall pay said monies to its Broker and offset such amounts
against Rent In addition, Lessee’s Broker shall be deemed to be a third party
beneficiary of any commission agreement entered into by and/or between Lessor
and Lessor’s Broker.

15.3     Representations and Indemnities of Broker Relationships. Lessee and
Lessor each represent and warrant to the other that it has had no dealings with
any person, firm, broker or finder (other than the Brokers, If any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder’s fee in connection herewith. Lessee and
Lessor do each hereby agree to Indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the Indemnifying Party, including any costs,
expenses, and/or attorneys’ fees reasonably incurred with respect thereto.

16.     Estoppel Certificates.

(a)     Each Party (as “Responding Party”) shall within ten (10) days after
written notice from the other Party (the “Requesting Party”) execute,
acknowledge and deliver to the Requesting Party a statement In writing in form
similar to the then most current “Estoppel Certificate” form published by the
American Industrial Real Estate Association, plus such additional Information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

(b)     If the Responding Party shall fail to execute or deliver the Estoppel
Certificate within such ten day period, the Requesting Party may execute an
Estoppel Certificate stating that (i) the Lease is In full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Parry’s performance. and (iii)
if Lessor is the Requesting Party, not more than one month’s Rent has been paid
In advance. Prospective purchasers and encumbrances may rely upon the Requesting
Party’s Estoppels Certificate, and the Responding Party shall be stopped from
denying the truth of the facts contained in said Certificate.

(c)     If Lessor desires to finance, refinance, or sell the Premises, or any
part thereof. Lessee and all Guarantors shall deliver to any potential lender or
purchaser designated by Lessor such financial statements as may be reasonably
required by such lender or purchaser. Including, but not limited to. Lessee’s
financial statements for the past throe (3) years. All such financial statements
shall bo received by Lessor and such lender or purchaser in confidence and shall
be used only for the purposes herein set forth.

17.     Definition of Lessor. The term “Lessor” as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or. If
this is a sublease, of the Lessee’s interest in the prior lease. In the event of
a transfer of Lessor’s title or interest in the Premises or this Lease. Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit hold by Lessor. Except as provided in Paragraph 15, upon such
transferor assignment and delivery of rhe Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants In this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above, and subject to the provisions of Paragraph
20 below, the original Lessor under this Lease, and all subsequent holders of
the Lessor’s Interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6 above.

18.     Severability. The Invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.

19.     Days. Unless otherwise specifically Indicated to the contrary, the word
“days” as used in this Lease shall mean and refer to calendar days.

20.     Limitation on Lability. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or Its or their individual partners.
directors, officers or shareholders, or any of their personal assets lor such
satisfaction.

21.     Time of Essence. Time is of the essence with respect to the performance
of all obligations To be performed or observed by the Parties under this Lease,

22.     No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to arty matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and Attorneys’
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker’s liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

23.     Notices.

23.1     Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by courier) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mall, with postage prepaid, or by Email, or facsimile transmission, and
shall be deemed sufficiently given If served in a manner specified in this
Paragraph 23. The addressee noted adjacent to a Party’s signature on this Lease
shall be that Party’s address for delivery or mailing of notices. Either Party
may by written notice to the other specify a different address for notice,
except that upon Lessee’s taking possession of the Premises, the Premises shall
constitute Lessee’s address (or notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.

23.2     Date of Notice. Any notice sent by registered or certified mall, return
receipt requested, shall be deemed given on the date of deliver shown on the
receipt card, or if no delivery date is shown, the postmark thereon. If sent by
regular mail the notice shall be deemed given forty-eight (48) hours after the
same is addressed as required herein and mailed with postage prepaid. Notices
delivered by United States Express Mail or overnight courier that guarantee next
day delivery shall be deemed given twenty-four (24) hours after delivery of die
same to the Postal Service or courier. Notices transmitted by facsimile
transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mall.
If notice is received on a Saturday. Sunday or legal holiday. It shall be deemed
received on the next business day.

24.     Waivers. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor’s
consent to, or approval of. any act shall not be deemed to render unnecessary
the obtaining of Lessor’s consent to, or approval of. any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of monies or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
In connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.

25.     Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge end deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees applicable thereto.

26.     No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall, without the
requirement of notice, be Increased to one hundred fifty percent

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(150%) of the Base Rent applicable during the month immediately preceding the
expiration or termination. Nothing contained herein shall be construed as
consent by Lessor to any holding over by Lessee.

27.     Cumulative Remedies. No remedy of election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28.     Covenants and Conditions; Construction of Agreement. AS provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both Parties
hat) prepared it.

29.     Binding Effect; Choice of Law. This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State In which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30-     Subordination; Attornment; Non-Disturbance.

30.1     Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively. “Security Device”), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as “Lessor’s Lender”) shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of Its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof.

30.2     Attornment Subject to the non-disturbance provisions of Paragraph 30.3.
Lessee agrees to attorn to a Lender or any other party who acquires ownership of
the Premises by reason of a foreclosure of a Security Device, and that In the
event of such foreclosure, such now owner shall not: (i) be liable for any act
or omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (ii) be subject to any offsets or defenses which
Lessee might have against any prior lessor or (iii) be bound by prepayment of
more than one (1) month’s rent

30.3     Non-Disturbance. With respect to Security Devices entered Into by
Lessor after the execution of this Lease. Lessee’s subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a “Non-Disturbance Agreement”) from the Lender which Non-Disturbance
Agreement provides that Lessee’s possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within sixty (60) days after the execution of this Lease,
Lessor shall use Its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee’s option, directly contact Lessor’s lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement

30.4     Self-Executing. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises. Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31.     Attorneys’ Fees. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof or to declare rights
hereunder, the Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not such action or proceeding is pursued to decision or Judgment. The term.
“Prevailing Party” shall include, without limitation, a Party or Broker who
substantially obtains or defeats the relief sought, as the case may be. whether
by compromise, settlement judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys’ fees award shall not be computed
in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys’ fees reasonably incurred. In addition. Lessor shall be
entitled to attorneys’ fees, costs and expenses incurred in the preparation and
service of notices of Default and consultations In connection therewith, whether
or not a legal action is subsequently commenced In connection with such Default
or resulting Breach.

32.     Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents
shall have the right to enter the Premises at any time, In the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to (he Premises as Lessor may deem necessary.
All such activities shall be without abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises any ordinary “For Sale” signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary “For Lease” signs. Lessee may at any time place on or
about the Premises any ordinary “For Sublease” sign.

33.     Auctions. Lessee shall not conduct, not permit to be conducted any
auction upon the Premises without Lessor’s prior written consent Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.

34.     Signs. Except for ordinary “For Sublease” signs, Lessee shall not place
any sign upon the Premises without Lessor’s prior written consent All signs must
comply with all Applicable Requirements.

35.     Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Promises; provided however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor’s failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor’s election to have such event
constitute the termination of such interest

36.     Consents. Except as otherwise provided herein, wherever in this Lease
the consent of a Party Is required to an act by or for the other Party, such
consent shall not be unreasonably withheld or delayed. Lessor’s actual
reasonable costs and expenses (including, but not limited to, architects*.
attorneys’, engineers’ and other consultants’ fees) incurred in the
consideration of. or response to, a request by Lessee for any Lessor consent.
including, but not limited to. consents to an assignment a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an Invoice and supporting documentation therefor. Lessor’s consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically slated in writing by Lessor at the time of such consent
The failure to specify herein any particular condition to Lessor’s consent shall
not preclude the imposition by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the particular matter
for which consent is being given. In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests the
reasons for such determination, the determining party shall furnish its reasons
in writing and in reasonable detail within ten (10) business days following such
request

37.     Guarantor.

37.1     Execution. The Guarantors, if any, shall each execute a guaranty in the
form most recently published by the American Industrial Real Estate Association,
and each such Guarantor shall have the same obligations as Lessee under this
Lease.

37.2      Default. It shall constitute a Default of the Lessee if any Guarantor
fails or refuses, upon request to provide: (a) evidence of the execution of the
guaranty, including the authority of the party signing on Guarantor’s behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of Its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) a Tenancy Statement or (d)
written confirmation that the guaranty Is still in effect

38.     Quiet Possession. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee’s part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.

39.     Options.

39.1     Definition. “Option” shall mean: (a) the right to extend the term of or
renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor (b)the right of first refusal or first offer to lease either
the Premises or other property of Lessor; (c) the right to purchase or the right
of first refusal to purchase the Premises or other property of Lessor.

39.2     Options Personal To Original Lessee. Each Option granted to Lessee in
this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee Is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.

39.3     Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later Option cannot be exorcised unless the prior
Options have been validly exercised.

39.4     Effect of Default on Options.

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(a)     Lessee shall have no right to exercise an Option: (!) daring the period
commenting with the giving of any notice of Default and continuing until said
Default is cured, (ii) during the period of time any Rent Is unpaid (without
regard to whether notice thereof is given Lessee). (iii) during the time Lessee
is in Breach of this Lease, or (iv) in the event that Lessee has been given
three (3) or more notices of separate Default, whether or not the Defaults are
cured, during the twelve (12) month period immediately preceding the exercise of
the Option.

(b)     The period of time within which an Option may be exercised shall not be
extended or enlarged by reason of Lessee’s inability to exercise an Option
because of the provisions of Paragraph 39.4(a).

(c)     An Option shall terminate and be of no further force or effect,
notwithstanding Lessee’s due and timely exercise of the Option. if, after such
exercise and prior to the commencement of the extended term. (i) Lessee falls to
pay Rent for a period of thirty (30) days after such Rent becomes due (without
any necessity of Lessor to give notice thereof), (ii) Lessor gives to Losses
three (3) or more notices of separate Default during any twelve (12) month
period, whether or not the Defaults are cured, or (iii) if Lessee commits a
Breach of this Lease.

40.     Multiple Buildings. If the Premises are a part of a group of buildings
controlled by Lessor. Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties. Including the care and cleanliness of the
grounds and including the parking, loading and unloading of vehicles, and that
Lessee will pay its fair share of common expenses Incurred in connection
therewith.

41.     Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Promises. Lessee,
its agents and invitees and their property from the acts of third parties.

42.     Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to causal the recordation of parcel
maps and restrictions, so long as such Basements, rights. dedications, maps and
restrictions do not unreasonably Interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions..

43.     Performance Under Protest. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment “under protest” and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or arty part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay.

44.     Authority. If either Party hereto Is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she Is
duly authorized to execute and deliver this Lease on its behalf. Each Party
shall, within thirty (SO) days altar request, deliver to the other Party
satisfactory evidence of such authority.

45.     Conflict. Any conflict between the printed provisions of this Lease and
the typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.

46.     Offer. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to tease to
the other Party. This Lease is not Intended to be binding until executed and
delivered by all Parties hereto.

47.     Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee’s obligations hereunder. Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.

48.     Multiple Parties. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.

49.     Mediation and Arbitration of Disputes. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease is ☐ is not ☒ attached to this Lease.

 

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION! CONTAINED HEREIN. AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HERE8Y AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED. THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

 

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY.
LEGAL EFFECT. OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

 

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES, SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES. THE ZONING OF THE PREMISES, THE STRUCTURAL
INTEGRITY. THE CONDITION OF THE ROOF AND OPERATING SYSTEMS. AND THE SUIT ABILITY
OF THE PREMISES FOR LESSEE’S INTENDED USE.

 

WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.

 

The Parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

Date: 12/14/15                                      

 

Date: 12/9/15                                         

Time: 1:15PM                                      

 

Time: 5.31 PM                                       

By LESSOR:

 

By LESSEE:

SFC Leasing. LP,

 

Serenity Wellness Growers. LLC,

a Nevada limited liability company

 

A Nevada Limited liability company

by:

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by:

[ex_122955img002.jpg]

Name Printed:

Charles Urata

 

Name Printed:

Benjamin J. Sillitoe

Title:

General Partner

 

Title:

Member

Address:

3430 Luyung Drive

 

Address:

120 W. Flamingo Rd. #4188

 

Rancho Cordova, CA 95742

   

Las Vegas NV 89147

Telephone:

(016) 638-5364

 

Telephone:

(202) 572-9130

Facsimile:

(916)

 

Facsimile:

( )

Email:

Charlie@urataconcrete.com and Kelly@urataconcrete.com

 

Email:

bensillitoe@yahoo.com

Federal ID No.

   

Federal ID No.

61-1742277

 

NOTE:

These forms are often modified to meet the changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION. 700 So. Rower Street
Suite 600. Los Angeles. California 90017. (213) 687-8777. Fax No. (213)687-8616

 

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Addendum One

 

This Addendum One and Exhibits thereto (this “Addendum One) are attachment to
that certain lease dated December 3. 2015 (the “Lease”) by and between SFC
Leasing. L.P. a California limited partnership (“Lessor”) and Setenity Wellness
Growers, LLC, a Nevada limited liability company (“Lessee”),

 

Terms

 

In consideration of the mutual promises, provisions, terms, and conditions
herein contained, the Parties hereby agree to the following additional
provisions of the Lease. In the event of any inconsistencies or conflicts
between the Lease and Addendum One the provisions of the Addendum shall prevail.

 

50.

Base Rent Schedule – Pursuant to Section 1.5 of the Lease, the monthly Base Rent
shall be payable from Lessee to Lessor in accordance with the following schedule
(any partial months shall be prorated based on the actual days in such month);

January 11 2016 - January 31 2016:

$11,900.00 NNN

February 1 2016 - December 31, 2016:

$22.000.00 per month NNN

January 1 2017 - December 31 2017:

$22.000.00 per month NNN

January 1 2018 - December 31 2018:

$22.880.00 per month NNN

January 1 2019 - December 31 2019:

$23.795.00 per month NNN

January 1 2020 - February 28 2021:

$24.717.00 per month NNN

 

51

Option to Purchase – Lessor grants Leasee the option to purchase the Premises,
at any time between January 15th 2016 and August 15th 2016 subject to the Option
to Purchase Lease Rider dated of even date herewith by and between Lessor and
Lessee.

 

52.

Option to Extend Term – Per Section 1.3 and 3, Lessee shall have the option to
extend the term of this Lease for one (i) period of five (5) years (the
“Extended Term”). Lessee shall exercise any such option by delivering written
notice to Lessor, of its intention to extend the term pursuant to such option no
lose than one hundred and eighty days prior to the commencement of the proposed
Extended Term. If the option is so exercised. The Extended Term shall expire
five {5) years following the end of the immediately preceding term. Upon such
notification by Lessee, Lessor and Leasee shall execute an appropriate
memorandum acknowledging the extension of the term of this Lease. All of the
terms and provisions of this Lease shall continue in full force and effect
during any such extension period, except that the Base Rent payable by Lessor
during the extension period(s), if exercised, shall as set forth below.

March 1 2021 - February 28 2022:

$25.489.00 per month NNN

March 1 2022 - February 28 2023:

$26.254.00 per month NNN

March 1 2023 - February 29 2024:

$27.041.00 per month NNN

March 1 2024 - February 28 2025:

$28,683.00 par month NNN

March 1 2025 - February 28 2026:

$29.549.00 per month NNN

 

53.

Payment of Base Rent and Security Deposit – The Initial Security Deposit shall
be Fifty Thousand Dollars ($50,000) to be payable upon Tenant’s execution hereof
and shall be refundable to Lessee until January 11th 2016 and if tenant does not
cancel the Lease on or before January 11”. 2016 as provided for herein, the
deposit shall become nonrefundable to Lessen as sot form herein. Upon Lesson’s
waiver of the Lease Cancellation Right and Lessee’s desire to use the Premises
as set forth herein, Lessee shall: (i) pay the Base Rent payable of $14,903.00
for the period from January 11th 2016 through January 31 2016: and (II) deposit
an additional One Hundred Thousand Dollars ($100,000) with Lessor for a total
Security Deposit equal to One Hundred and Fifty Thousand Dollars ($150,000). Any
unused portion of the One Hundred and Fifty Thousand Dollar ($150.000) Security
Deposit shall be applicable to the Purchase Price in the event the Lessee
exercises the Option to Purchase as provided for herein.

 

54.

Acceptance of Premises – Other than Lessor’s Warranty per section 63 hereof.
Lessee shall accept the Premises in an “as-is” condition. Lessor shall not be
responsible for any improvement and Lessor does not make any warranty or
representations as to the condition thereof.

 

55.

Improvements – Lessee shall be responsible for causing any and all required
improvements to the Promises. Lessor will cooperate with Lessee, at no cost to
Lessor. related to assisting Lessee in processing any permits requited for
Lessee’s required improvements.

 

56.

Use – Notwithstanding the provisions herein contained. Lessee shall be allowed
to occupy the Premises as of the Start Date however. Lessee shall not be allowed
to operate its business or otherwise cause any improvements to or fixturize the
Premises in any way until Lessee has waived the Lease Cancellation Right and
Lessee has deposited the additional portion of the Security Deposit as set forth
herein. Additionally. Lessee shall lake any and all actions necessary, at
Lessee’s sale cost and expense, to adhere to any and all state and local
requirements as it relates to operating Lessee’s business.

 

57.

Hazardous Waste and Materials – Lessee agrees to Indemnify and hold harmless the
Lessor from any and ail claims, damages, fines. judgments, penalties, costs,
liabilities or losses (including, without limitation, any all sums paid for
settlement of claims, attorneys’ fees, consultant and expert lees) arising
during or after the Lease Term from or in connection with the presence or
suspected presence of Hazardous Substances in or on the Property, provided the
hazardous Substances are present due to direct or indirect actions of Lessee.
Lessee’s agents, employees, contractors or invitees. Without limitations of the
foregoing, this indemnification shall include any and all costs incurred due to
any investigation of the site or any clean-up, removal or restoration mandated
by a Federal, slate or local agency or political subdivision. This
indemnification shall specifically include any and all costs due to Hazardous
Substances which flow, diffuse, migrate or percolate into, onto or under the
Properly after the Lease Terms commences, c) Lessee’s Covenants. Lessee shall
not engage in any activity on or about the Property that violates any
Environmental Law. and shall promptly, at Lessee’s sole cost and expense, take
all Investigator and/or remedial action required or ordered by any governmental
agency or Environmental Law for cleanup and removal or any contamination
involving any Hazardous Material created or caused directly or indirectly by
Lessee.

 

58.

Lease Cancellation Right – Lessor acknowledges and agrees that Lesson is in the
process of seeking and must obtain any and all governmental approvals for the
operation of Lessee’s business consistent with the Agreed Use including, without
limitation, all zoning and use permit approvals, all business licenses and all
state issued certificates necessary for the Agreed Use. If Lessee is unable to
obtain all of “he desired approvals, on or before January 11th, 2016. Lessee may
terminate this Lease with written notice delivered to Lessor on or before
January 11th 2016. Provided Lessee has provided the required termination notice,
the initial Fifty Thousand Dollar ($50.000) portion of the Security Deposit
shall be refunded to Lessee. Lessee shall return Possession of the Premises to
Lessor in a condition consistent with this Lease, and neither Lessor nor Lessee
shall have any further right or obligate; under this Lease. If Lessee shall fail
to exercise or waives in writing such termination as specified herein on or
before January 11th 2016, this Lease shall continue and Lessee snail be
obligated as set forth in this Lease. Lessor agrees during the Lease to
cooperate with Lessee in good faith to effectuate the foregoing rights and
benefits of Lessee at no cost in Lessor. including without limitation, executing
any and all documents required therefor. Lessee reserves the right to waive the
Cancellation Right, by delivering a written waiver to Lesser at any time prior
to January 11th, 2016.

 

59.

Certificates of Insurance – Lessee shall provide, upon execution of Lease
Agreement and prior to occupying the Properly, a Certificate of insurance for
$3.000.000.00 minimum coverage with Lessor as Additional Insured as stated in
Section 8.2 (a).

 

60.

Returned Rent Checks/Non-Sufficient Funds – Notwithstanding the provisions set
forth in Section 13.3. LATE CHARGES, and Section 13.4. INTEREST on past one
obligations, of the Lease, the following shall take place in the event Lessees
monthly rent check is returnee to Lessor due to non-sufficient funds:

 

 

 

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First Occurrence: In the event that Lessee’s monthly rent check is returned to
Lessor due to non-sufficient funds. Lessee shall be required to submit said
funds to Lessor in the form of a cashier’s check. Said cashier’s check shall
include, but not be limited to all late charges incurred by Lessee and any bank
fees incurred by Lessor.

 

Second Occurrence - In the event that Lessee’s monthly rent check is returned to
Lessor due to non-sufficient funds. Lessee shall be required, for the remainder
of the Lease Term, to pay Lessor said monthly rent in the loom of a cashers
check.

 

61.

Utilities/Services – Lessor shall pay for any and all utility service costs that
have occurred from the date hereof up to the Commencement Date of this Lease.
Lessee shall be required to contract and pay for the separate metered utilities
and other services to the Premises directly to the appropriate service provider
to include but not limited to personal, phone. electrical. gas, internet
service, pest control service, and any other utility services required by
Lessee.

 

62.

Payments Upon Execution – Lessee shall pay 10 Lessor concurrent with the
execution hereof an amount equal to $50,000.00 payable to Lessor, which shall
serve as the initial Security Deposit ($50,000.00).

 

63.

Base Rental Abatement – The Base Rent shall be abated during the months of March
2016 and April 2016 during the initial Lease Term and April 2021 during the
Extended Term. Lessee shall remain responsible for payment of all other costs
and expenses as outlined in the Lease.

 

64.

Lessor’s Warranty – Lessor shall warrant that the HVAC. evaporative coolers,
electrical, roof, plumbing, mechanical. roll-up doors, and fire sprinkler system
are in good working order at the Commencement Date (subject to any damage
suffered as a result of Lessee’s negligence).

 

65.

Access – Lessee shall be granted twenty-four (24) hour, seven (7) day per week.
fifty-two (52) weeks per year access to the Premises.

 

66.

Signage – All costs associated with the design, purchase. installation and
maintenance of signage will be Lessee’s sole responsibility and expense. Lessee
shall submit it sign criteria and design prior to installation for Lessor’s
written approval, which shall not be unreasonably withheld or delayed.

 

67.

HVAC Maintenance – Pursuant to Section 7.1(b) of the Lease. Lessee shall provide
Lessor. within a period at thirty (45) days of its occupancy of the Premises,
with evidence that it has entered into a preventative maintenance contract with
a licensed heating and air conditioning contractor. At a minimum, said
contractor shall maintain the evaporative coolers and HVAC systems within the
Premises two (2) times per year (Spring & Fall) for the duration of the Term.
Lessee agrees to change the filters for the office HVAC system every sixty (60)
days in order to prevent damage to the units.

 

68.

Estimated NNN Expenses – In the event Lessee does not timely contract and pay
for any of the required maintenance agreements and/or utilities servicing the
Premises, and/or if Lessee does not timely pay for the Real Property Taxes per
section 10, and/or reimburse Lessor for the Property insurance premiums per
section 8, Lessor shall have the right to estimate a budget for the NNN expenses
(including but not limited to. Property Insurance premiums per Section 8. Real
Property Taxes per Section 10, Utilities not separately metered, market property
management fees, and Common Area Maintenance/Association Fees (if applicable)
for the calendar year. The estimated NNN expenses shall be paid by Lessee to
Lessor monthly during each 12-month period of the Original Term, on the same day
as the Base Rent is due hereunder. Lessor shall deliver to Lessee within 60 days
after the expiration of each calendar year a reasonably detailed statement
showing the actual NNN Expenses incurred during the preceding year. If Lessee’s
payments under this Paragraph 67 during the preceding year exceed the actual NNN
Expenses as indicated on such statement. Lessee shall be credited the amount of
such over-payment against Lessee’s Estimated NNN Expenses next becoming due. If
Lessee’s payments under this Paragraph 67 during the preceding year were less
than the actual NNN Expenses as indicated on such statement. Lessee shall pay to
Lessor the amount of the deficiency within 10 days after delivery by Lessor to
Lessee of the statement. If Lessor, in its reasonable opinion and option,
estimates that the actual NNN Expenses will be significantly greater than or
less than the then current Estimated NNN Expenses, Lessor may adjust the Est
mated NNN Expenses to an amount in accordance with the most recent annual
estimate.

 

69.

Lessor’ access – Notwithstanding the provisions of section 32 herein. Lessor
snail provide Lessee with no less than forty eight (48) hour prior notice for
non-emergency access and shall provide prior telephonic and/or email notice in
the case of an emergency.

 

70.

Notices – Notwithstanding the provisions of section 23 herein, any Notice shall
also be sent to: 

 

71.

Subletting – Notwithstanding the provisions set forth in Section 12 of the
Lease. Lessee shall be allowed to sublease the Premises to any amity Serenity
Wellness Growers is affiliated with.

 

72.

Rent Payments – The payment of Rent to payable to Lessor and due on the first
(1”) day of each month without notice from Lessor.

 

73.

Counterparts – This Lease may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the Parties hereto and
delivered to the other.

 

74.

Telecopy Execution and Delivery – A email transmission of this Lease may be
executed by one or more Parties hereto and an executed copy may be delivered by
one or more Parties by email transmission pursuant to which the signature of on
behalf of such party can be seen, and such execution and delivery shall be
considered valid, binding and effective for all purposes. At the request of any
Party, all Parties agree to execute an original of this Lease as wall as any
facsimile, email transmission or other reproduction hereof.

 

75.

Not an Offer – Preparation of this Lease by Lessor or Lessor’s agent and
submission of some to Lessee shall not be deemed an offer to Lessee to lease.
This Lease shall become effective and binding upon the parties hereto only upon
mutual execution by both parties Lessee shall be aware that Lessor’s customary
practice is nut to reserve the space, which is the subject of this Lease until
such time as this Lease has been fully executed by both parties. As a result.
Lessor may have made or subsequently may make other proposals on the space,
which is the subject of this Lease

 

 

 

 

[ex10-72img3.jpg]

 

 

Initials

Page 12 of 14

 

 

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Exhibit “A”

 

Parcel Map

 

[ex_122955img003.jpg]

 

 

 

[ex10-72img3.jpg]

 

 

Initials

Page 13 of 14

 

 

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Exhibit “B”

 

First Floor Building Plan
(for depiction purposes only)

 

[ex_122955img004.jpg]

 

 

 

[ex10-72img3.jpg]

 

 

Initials

Page 14 of 14

 

 

 

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Option to Purchase Lease Rider

 

This Option to Purchase Lease Rider (“Option to Purchase”) is an attachment to
that certain Lease dated December 3, 2015 entered into by and between SFC
Leasing, LP. a California limited partnership (“Lessor”) and Serenity Wellness
Growers. LLC, a Nevada limited liability company (“Lessee”), Lessor shall grant
Lessee the right to purchase the approximate 22,000 square foot industrial
office/warehouse building located at 203 E Mayflower. North Las Vegas, Nevada
89030 (“Premises’’) under the following terms and conditions:

 

1.

Purchase Price - The Purchase Price shall be: Three Million and 00/100’s Dollars
($3,000,000).

 

2.

Closing - At any time during the period beginning with January 15th 2016 and
August 15th2016, with the required Closing Notice hereunder.

 

3.

Closing Notice - Lessee shall give Lessor a minimum of thirty (30) days advance
written notice prior to the Closing date. Upon receipt of said notice, Lessor
shall cause a standard purchase agreement to be prepared inclusive of the terms
contained herein. The Parties agree to execute the standard purchase agreement
and open escrow within ten (10) days after Lessee’s notice.

 

4.

Condition of Premises Purchased - Purchaser is purchasing the Building in an
“as-is” condition, without warranty, express, implied or statutory including,
without limitation, any warranty of merchantability or fitness for a particular
purpose. Nor shall Seller otherwise be liable for the condition of the Building.
Purchaser shall rely solely on Purchaser’s own inspection and examination of the
Building and not on any representations or warranties of Seller.

 

5.

Seller’s Obligations at Closing - At the Closing, Seller shall deliver, or cause
to be delivered, to Purchaser the following:

 

(a)

Grant Bargain and Sale Deed. Seller shall execute and deliver to Escrow Agent
for recording a Grant, Bargain and Sale Deed in form and substance reasonably
satisfactory to Purchaser, fully executed and acknowledged by Seller, conveying
the Building to Purchaser;

 

(b)

Owner’s Title Policy. Seller shall cause the Escrow Agent to issue and deliver
to Purchaser a standard coverage owner’s policy of title insurance (“Owner’s
Standard Title Policy”) in the amount of the Purchase Price, insuring that
Purchaser is owner of the Building subject only to such matters as would be
deemed reasonable exceptions to title (excluding rights of parties in possession
and unrecorded easements). In the event the Purchaser desires to upgrade the
owner’s policy above the Owner’s Standard Title Policy, the Purchaser shall pay
for the increased costs related to the increased coverage including the cost of
an ALTA survey if required;

 

6.

Good and Marketable Title. Seller shall deliver to Purchaser good and marketable
title to the Premises free and clear of any lien or encumbrance (other than the
Permitted Exceptions, governmental liens, and any liens caused by Lessee).

 

7.

Other Instruments. Seller shall execute and deliver such other documents as are
customarily executed in the State of Nevada in connection with the conveyance of
real property, including all required closing statements, releases, affidavits,
evidences of authority to execute the documents and any other instruments.

 

8.

Purchaser’s Obligations at Closing

 

(a)

Payment of Purchase Price. At the Closing. Purchaser shall pay the Purchase
Price in cash;

 

(b)

Other Instruments. Purchaser shall execute and deliver such other documents as
are customarily executed in the State of Nevada in connection with the
conveyance of real property, including all required closing statements,
releases, affidavits, evidences of authority to execute the documents, and any
other instruments that may reasonably be required by the Escrow Agent

 

9.

Prorations - All real estate taxes relating to the Building for the year of the
Closing shall be prorated as of the date of Closing between Seller and
Purchaser. Purchaser shall take title to the Building subject to any outstanding
unpaid governmental assessments. If the amount of taxes for that year are not
known at the time of Closing, the prorations shall be based on an estimate of
the taxes for the year of Closing, and when the tax information becomes
available, Seller or Purchaser may request reimbursement from the other party
for any excess amount charged to that party at the Closing. Likewise, any other
amounts normally prorated between Seller and Purchaser, if any, shall be
prorated between Seller and Purchaser as of the date of Closing.

 

10.

Closing Costs - Seller and Purchaser each agree to pay the following costs at
the Closing:

 

(a)

Paid by Seller. Seller agrees to pay the cost of preparing the Grant, Bargain
and Sale Deed; the premium for the Owner’s Title Policy; the Commission, the
real property transfer taxes or documentation taxes; the cost of preparing and
recording any releases and other documents necessary to convey the Property in
accordance with this Agreement; one-half (1/2) of any escrow or closing fee
charged by the Escrow Agent; Seller’s attorney’s fees, and any other similar
closing costs customarily paid by a seller of real property.

 

 

(b)

Paid by Purchaser. Purchaser agrees to pay the recording fee for the Grant,
Bargain and Sale Deed; one-half (1/2) of any escrow or closing fee charged by
the Escrow Agent; Purchaser’s attorney’s fees and any other similar closing
costs customarily paid by a purchaser of real property.

 

[ex10-72img10.jpg]

 

 

[ex10-72img2.jpg]

Lessor Initials

 

 

Lessee Initials

 

Page 1 of 2

 

 

 

--------------------------------------------------------------------------------

 

 

11.

Brokers - In the event Lessee or an affiliated party purchase the Premises,
Seller shall pay a real estate broker’s commission, through escrow at closing
thereof, payable to the Brokers as listed in the Lease in an amount equal to
five percent (5%) of the Purchase Price (less any unearned leasing commission).
Purchaser and Seller agree to indemnify and hold harmless one another from all
loss, damage, cost, expense and liability relating to any claim for a commission
by any other person or entity with respect to this transaction, claiming by,
through or under one another. Seller and Purchaser represent and warrant that no
other broker(s), other than the above named, have been involved in this
transaction and no other broker(s), other than the above named, are entitled to
a commission.

 

12.

Section 1031 Exchange - The Parties hereby agree to cooperate with the other
party in a tax-deferred exchange should either party so elect. The affecting
Party hereby agrees to indemnify the other Party from any and all costs, taxes,
assessments and/or liability that may be proximately caused by such tax-deferred
exchange. In the event either Party affects a tax-deferred exchange, such
exchange shall not otherwise delay the Closing nor shall the other Party be
required to take title to any property so as to accommodate the other Party’s
exchange.

 

13.

Escrow - The Parties agree to use Michele Seibold, or other mutually agreeable
officer, of First American Title Insurance Company 2490 Paseo Verde Parkway,
Suite 100 Henderson, Nevada 89074.

 

Date: 12/14/15                                                 

 

Date: 12/9/15                                                        

Time: 1:04 PM                                                

 

Time: 5.31 PM                                                      

By LESSOR:

 

By LESSEE:

SFC Leasing. LP,

 

Serenity Wellness Growers. LLC,

a Nevada limited liability company

 

A Nevada Limited liability company

 

by:

[ex_122955img001.jpg]

 

by:

[ex_122955img002.jpg]

 

Name Printed:

Charles Urata

 

Name Printed:

Benjamin J. Sillitoe

Title:

General Partner

 

Title:

Member

Address:

3430 Luyung Drive

 

Address:

10120 W. Flamingo Rd. #4188

 

Rancho Cordova, CA 95742

   

Las Vegas NV 89147

Telephone:

(916) 638-5364

 

Telephone:

(202) 572-9730

Facsimile:

(916)

 

Facsimile:

( )

Email:

Charlie@urataconcrete.com and Kelly@urataconcrete.com

 

Email:

bensillitoe@yahoo.com

 

 

[ex10-72img10.jpg]

 

 

[ex10-72img2.jpg]

Lessor Initials

 

 

Lessee Initials

 

Page 2 of 2

 

 

 

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First Amendment to STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET

 

This First Amendment to Standard Industrial/Commercial Single-Tenant Lease - Net
(this “First Amendment”) is made January 12, 2016 by and between SFC Leasing.
LP. a California limited partnership (“Lessor”) and Serenity Wellness Growers.
LLC, a Nevada limited liability company (“Lessee”).

 

RECITALS

 

Lessor and Lessee entered into a written lease agreement and Option to Purchase
Lease Rider dated December 3, 2015 (the “Lease”) for the lease of approximately
22,000 square feet located at 203 E. Mayflower Avenue, North Las Vegas, Nevada
89030 (the “Premises”). Lessee has paid the Initial Security Deposit of Fifty
Thousand Dollars ($50,000) and has waived the Lease Cancellation Right.

 

TERMS

 

In consideration of the mutual agreement of said Lease herein contained, the
Parties hereby agree to modifications of the Lease so illustrated in this First
Amendment:

 

Term: Per Section 1.3 of the Lease, the Lease Term shall commence on January 15,
2016 and shall expire on February 28, 2021.

 

Payment of Base Rent and Security Deposit: Lessee shall: (i) pay the Base Rent
payable of $11.000.00 for the period from January 15th 2016 through January 31
2016; and (ii) deposit an additional Fifty Thousand Dollars ($50,000) with
Lessor no later than January 15th 2016 and an additional Fifty Thousand Dollars
($50,000) with Lessor no later than February 15th 2016 for a total Security
Deposit equal to One Hundred and Fifty Thousand Dollars ($150,000). Any unused
portion of the One Hundred and Fifty Thousand Dollar ($150,000) Security Deposit
shall be applicable to the Purchase Price in the event the Lessee exercises the
Option to Purchase as provided for herein

 

Ratification: Except as herein modified, the Lease shall remain in full force
and effect and any and all payments currently due under the Lease shall continue
to be due until the new rental payments commence pursuant to the revised terms,
as herein provided.

 

Counterparts: This First Amendment may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the Parties hereto and
delivered to the other.

 

Telecopy Execution and Delivery: A facsimile or email transmission of this First
Amendment may be executed by one or more parties hereto, and an executed copy of
this agreement may be delivered by one or more parties by facsimile or email
transmission pursuant to which the signature of or on behalf of such party can
be seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party, all parties agree to
execute an original of this agreement as well as any facsimile, email
transmission or other reproduction hereof.

 

Capitalized Terms: The capitalized terms contained herein shall have the same
meanings as defined in the Lease.

 

In witness hereof, this First Amendment has been executed by the Parties as of
the date first written above.

 

 

LESSOR:

 

LESSEE:

SFC Leasinq. LP.
a California limited partnership

 

Serenity Wellness Growers, LLC,
A Nevada limited liability company

     

By:

[ex_122955img001.jpg]

 

By:

[ex_122955img002.jpg]

 

    Its: Manager                                        

Print Name: Benjamin J. Sillitoe             

 

    Date: 1-12-2016                                  

Its: Member                                             

         

Date: 1/12/2016                                       

 

 

 

Page 1 of 1

 

 

 

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Second Amendment to STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET

 

This Second Amendment to Standard Industrial/Commercial Single-Tenant Lease - N
et (this “ Second Amendment”) is made August 22. 2016 by and between SFC
Leasing. LP, a California limited partnership (“Lessor”) and Serenity Wellness
Growers. LLC, a Nevada limited liability company (“Lessee”).

 

RECITALS

 

Lessor and Lessee entered into a written lease agreement and Option to Purchase
Lease Rider dated December 3, 2015 for the lease of approximately 22,000 square
feet located at 203 E. Mayflower Avenue, North Las Vegas, Nevada 89030 (the
“Premises”) and subsequent First Amendment dated January 12, 2016 referred to as
the First Amendment (collectively the “Lease”).

 

TERMS

 

In consideration of the mutual agreement of said Lease herein contained, the
Parties hereby agree to modifications of the Lease so illustrated in this Second
Amendment:

 

Base Rent Schedule: Pursuant to Section 1.5 of the Lease and Section 50 of
Addendum One, Lessee has requested Lessor to modify the monthly Base Rent
Schedule as a material concession to Lessee. Lessor and Lessee have agreed to
the following modified monthly Base Rent Schedule:

 

September 1 2016-December 31, 2016:

January 1 2017-December 31 2017:

January 1 2018-December 31 2018:

January 1 2019-December 31 2019:

January 1 2020 - February 28 2021:

$14,000.00 per month NNN

$18,000.00 per month NNN

$21,500.00 per month NNN

$25,000.00 per month NNN

$29,000.00 per month NNN

 

The above modified monthly Base Rent Schedule is applicable provided that Lessee
shall not be in Breach of the Lease at any time during the Lease Term. In the
event Lessee is in Breach of the Lease at any time during the Lease Term, Lessee
shall owe Base Rent to Lessor as though the original Base Rent Schedule was
never modified and the monthly Base Rent due in Section 50 of Addendum One
commencing from September 1, 2016 shall be applicable including any and all Late
Fees and Interest due per Sections 13.3 and 13.4 of the Lease.

 

Ratification: Except as herein modified, the Lease shall remain in full force
and effect and any and all payments currently due under the Lease shall continue
to be due until the new rental payments commence pursuant to the revised terms,
as herein provided.

 

Counterparts: This Second Amendment may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the Parties hereto and
delivered to the other.

 

Telecopy Execution and Delivery: A facsimile or email transmission of this
Second Amendment may be executed by one or more parties hereto, and an executed
copy of this agreement may be delivered by one or more parties by facsimile or
email transmission pursuant to which the signature of or on behalf of such party
can be seen, and such execution and delivery shall be considered valid, binding
and effective for all purposes. At the request of any party, all parties agree
to execute an original of this agreement as well as any facsimile, email
transmission or other reproduction hereof.

 

Capitalized Terms: The capitalized terms contained herein shall have the same
meanings as defined in the Lease.

 

In witness hereof, this Second Amendment has been executed by the Parties as of
the date first written above.

 

 

LESSOR:

SFC Leasing, LP, 

a California limited partnership

 

LESSEE:

Serenity Wellness Growers, LLC,

A Nevada limited liability company

     

By:

[ex_122955img005.jpg]

 

By:

[ex_122955img006.jpg]

     

Its: Manager                                         

 

Print Name: Debra Freeman                

     

Date: 8/25/16                                       

 

Its: Manager                                        

         

Date: August 25, 2016                          

 

 

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