plth_ex101






Exhibit 10.1


 



Certain identified information has been excluded from the exhibit
because it is both not material and is the type that
the registrant treats as private or
confidential.


 





 



INDUSTRIAL REAL ESTATE LEASE

 



(Multi- Tenant Facility)

 



ARTICLE ONE: BASIC TERMS

 


This
Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and
Paragraphs of the Lease referred to in this Article One explain and
define the Basic Terms and are to be read in conjunction with the
Basic Terms.


 



Section
1.01.


Date
of Lease:


April
23rd,
2018





 



Section
1.02.


Landlord:
[REDACTED]





 



Section
1.03.

Tenant
: MM Development Company, Inc., a Nevada corporation, and, Planet
13 Holdings, Inc., a Canadian corporation, jointly and severally
(collectively dba "Planet 13")





 



Address
of Tenant:


2548
West Desert Inn Road, Las Vegas, Nevada 89109





 




Section
1.04.


Premises:
The Premises is part of Landlord% multi-tenant real property
development known as 2548 W. Desert Inn Rd., Las Vegas, Nevada and
described or depicted in Exhibit "A.I" (the "Project"). The Project
includes the land, the buildings and all other improvements located
on the land, and the common areas described in Paragraph 4.05(a).
The Premises is an approximate 112,663 square foot office and
warehouse building situated on a portion of a 9.14 acre parcel of
land located at 2548 W. Desert Inn, Las Vegas, Nevada, APN
162-08-805-009, inclusive of a portion of yard and parking area as
shown on Exhibit "A.2" attached hereto.





 





Section
1.05.


Lease
Term: Seven (7) years beginning May 01, 2018 ("Commencement Date"),
or such other date as is specified in this Lease, and ending on
April 30, 2025.





 




Section
1.06.


Permitted
Uses: (See Article Five) Tenant shall utilize the Premises for
general office, administrative purposes, and retail sales of a
Marijuana dispensary, Marijuana production (including but not
limited to the installation and operation of a commercial kitchen,
and other ancillary uses which may include smoking lounge/cafe, a
nightclub, and other related uses and all related uses compliant
with the laws of the State of Nevada as may be approved by Landlord
in its reasonable discretion. Notwithstanding anything contained in
the foregoing Tenant shall not conduct any grow facilities on the
Premises.





 




Section
1.07.


Performance
Deed of Trust in Lieu of Guaranty. In lieu of a personal guaranty
MM Development Company, Inc., a Nevada corporation, having a
financial interest in Tenant shall pledge, in the form of a
Performance Deed of Trust (the "Lease Guaranty Deed of Trust") all
of its right, title and interest in and to that certain real
property more fully described in Exhibit "D" attached herewith and
incorporated herein by this reference, and as more fully set forth
in Section 13.18.





 




Section
1.08.


Brokers:
(See Article Fourteen)





 

[REDACTED]

 




Section
1.09.


Commission
Payable to Landlord's Broker: (See Article Fourteen) Per separate
agreement





 




Section
1.10.


Initial
Security Deposit: (See Section 3.03) $95,396.00





 




Section
1.11.


Vehicle
Parking Spaces Allocated to Tenant: (See Section 4.05)


























 







 






 














Section
1.12.


Rent
and Other Charges Payable by Tenant:





 





















(a)           

BASE
RENT:





 



Period   



/
SF / Month 


$
/ Month





 








[REDACTED]


 


Tenant
shall be
responsible for NNN expenses for the
months Base Rent is abated.

 


(b)            OTHER
PERIODIC PAYMENTS: This Lease is net-net-net and Tenant shall be
required to pay all of the following: (i) Real Property Taxes (See
Section 4.02); (ii) Utilities (See Section 4,03); (iii) Insurance
Premiums (See Section 4.04); (iv) Tenant shall pay its pro rate
share of Common Area Expenses currently estimated at $0.10 per sq.
ft. of the Premises or $12,663.00 per month (See Section 4.05); (v)
Impounds for Insurance Premiums and Property Taxes (See Section
4.08); (vi) Maintenance, Repairs and Alterations (See Article Six).
All of the foregoing shall be deemed "Additional Rent". As utilized
in this Lease the term "Rent" shall be deemed to include Additional
Rent and Base Rent. All Additional Rent is subject to increase in
an amount and basis as determined by the Landlord as more fully
discussed in Article Four below. Tenant's initial pro rata share of
all Common Area Expenses is 70.428% of the total.

 




Section
1.13.


Landlord's
Share of Profit on Assignment or Sublease: (See Section 9.05) five
percent (5%) the Profit (the "Landlord's Share").





  





Section
1.14.


Exhibits/Riders:
The following Exhibits are attached to and made a part of this
Lease:





 


Exhibit
"A. l" -Site Plan (Project and Premises Description)


Exhibit
"A.T" -Yard & Parking Area


Exhibit
"B" -Condition of Premises; Tenant Improvement


Exhibit
"C" -Rules & Regulations


Exhibit
"D" -Performance Deed of Trust

 


Section
1.15. Option to Extend: So long as Tenant has not been in default
of the terms of this Lease Tenant shall be granted two (2) options
to renew the Lease each for an additional eighty-four (84) month
term upon the same terms and conditions of this Lease, with the
exception that the Base Rent shall be adjusted to include Base
Rental increases of five percent (5.0%) per annum. Tenant must
notify Landlord of its intent to exercise the Option by providing
Landlord with written notice no less than six (6) months and no
more than nine (9) months prior to the expiration of the Lease
Term. This option is assignable by Tenant provided any such
assignee has agreed to be bound by the provisions of this Lease and
such assignment is in compliance with any other requirements
applicable to an assignment as may be set forth
herein.

 


Section
1.16. Payments by Check. All payments due to Landlord of Rent,
Additional Rent, or otherwise, shall be payable by electronic who
transfer or check (supported by good fluids). Cash payments will
not be accepted except in such circumstances wherein Tenant,
through no fault of its own, is unable to utilize a banking
institution due to the nature of Tenant's business operations. In
such circumstances, Landlord may accept cash payment in order to
avoid a default by Tenant, but only until Tenant is able to
re-establish a banking relationship whereby Tenant will be able to
again commence payment by check or wire transfer. Notwithstanding
the foregoing, Landlord shall only be obligated to accept cash
payment (and only under the circumstances described above) for a
period of up to three (3) months.

 



 







 





 



ARTICLE TWO: LEASE TERM

 


Section
2.01. Lease of Premises For Lease Term; "Commencement Date".
Landlord leases the Premises to Tenant and Tenant leases the
Premises from Landlord for the Lease Term. The Lease Term is for
the period stated in Section 1.05 above and shall begin and end on
the dates specified in Section 1.05 above, unless the beginning or
end of the Lease Term is changed under any provision of this Lease.
The "Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or
delayed under any provision of this Lease.

 


Section
2.02. Delay in Commencement. Landlord shall not be liable to Tenant
if Landlord does not deliver possession of the Premises to Tenant
on the Commencement Date. Landlord's non-delivery of the Premises
to Tenant on that date shall not affect this Lease or the
obligations of Tenant under this Lease except that the Commencement
Date shall be delayed until Landlord delivers possession of the
Premises to Tenant and the Lease Term shall be extended for a
period equal to the delay in delivery of possession of the Premises
to Tenant, plus the number: of days necessary to end the Lease Term
on the last day of a month. If Landlord does not deliver possession
of the Premises to Tenant within sixty (60) days after the
Commencement Date, Tenant may elect to cancel this Lease by giving
written notice to Landlord within ten (10) days after the sixty
(60)-day period ends. If Tenant gives such notice, the Lease shall
be canceled and neither Landlord nor Tenant shall have any further
obligations to the other. If Tenant does not give such notice,
Tenant's right to cancel the Lease shall expire and the Lease Term
shall commence upon the delivery of possession of the Premises to
Tenant. If delivery of possession of the Premises to Tenant is
delayed, Landlord and Tenant shall, upon such delivery, execute an
amendment to this Lease setting forth the actual Commencement Date
and expiration date of the Lease. Failure to execute such amendment
shall not affect the actual Commencement Date and expiration date
of the Lease.

 


Section
2.03. Early Occupancy; Tenant Access; Other Access. Tenant shall be
allowed early occupancy of the Premises, subject to the payment of
utilities and the option fee per the Proposal to Lease dated
October 6, 2017 executed between Landlord and Tenant, upon full
execution of the Lease including providing Landlord with a
Certificate of Insurance as provided herein and payment of all
monies due at execution until the date of Lease Commencement.
Tenant's occupancy of the Premises shall be subject to all of the
provisions of this Lease. Early occupancy of the Premises shall not
advance the expiration date of this Lease. Tenant shall be granted
access to the Premises twenty-four (24) hours per day, seven (7)
days per week. Tenant acknowledges and agrees that the Premises is
part of a larger project and ingress and egress over the various
properties comprising the project is hereby permitted.
Specifically, and without limiting the generality of the foregoing,
Tenant specifically acknowledges and agrees that Building 3
depicted on Exhibit "A" shall have ingress and egress through, on
and over the driveways on
Highland Drive and/or Desert Inn Road in a manner reasonably
acceptable to both Tenant and Landlord.

 


Section
2.04. Holding Over. Tenant shall vacate the Premises upon the
expiration or earlier termination of this Lease. Tenant shall
reimburse Landlord for and indemnify Landlord against all damages
which Landlord incurs from. Tenant's delay in vacating the
Premises. If Tenant does not vacate the Premises upon the
expiration or earlier termination of the Lease and Landlord
thereafter accepts rent from Tenant, Tenant's occupancy of the
Premises shall be a "month-to-month" tenancy, subject to all of the
terms of this Lease applicable to a month-to-month tenancy, except
that the Base Rent then in effect shall be increased to one hundred
fifty percent (125%) of the then applicable Base Rent.

 


Section
2.05. Option to Extend. As stated in Paragraph 1.15
above.

 










 





 



ARTICLE THREE: BASE RENT

 


Section
3.01. Time and Manner of Payment. Upon execution of this Lease
Tenant shall pay the first installment of Base Rent ($69,287.75),
the first installment of monthly estimated nnn expenses
($12,663.00) and a Security Deposit in the amount of $95,396.00,
Tenant shall thereafter pay Landlord the Base Rent amount stated in
Paragraph 1.12(a) above for the fourth month of the Lease Term. On
the first day of the fourth month of the Lease term and each month
thereafter, Tenant shall pay Landlord the Base Rent in advance
without offset, deduction or prior demand. The Base Rent, and any
other payment required hereunder shall be payable at Landlord's
address or at such other place as Landlord may designate in
writing.

 




Section
3.02.


Rent
Increases. Increases in Base Rent shall be pursuant to Paragraph
1.12 above.





  





Section
3.03.


Security
Deposit; Increases.





 

(a) Upon
execution of this Lease, Tenant shall deposit with Landlord a cash
Security Deposit in the amount set forth in Section 1.10 above.
Landlord may apply all or part of the Security Deposit to any
unpaid rent or other charges due from Tenant or to cure any other
defaults of Tenant. If Landlord uses any part of the Security
Deposit, Tenant shall restore the Security Deposit to its full
amount within ten (10) days after Landlord's written request.
Tenant's failure to do so shall be a material default under this
Lease. No interest shall be paid on the Security Deposit. Landlord
shall not be required to keep the Security Deposit separate from
its other accounts and no trust relationship is created with
respect to the Security Deposit.

 

(b) Each
Time the Base Rent is increased, Tenant shall deposit additional
funds with Landlord sufficient to increase the Security Deposit to
an amount which bears the same relationship to the adjusted Base
Rent as the initial Security Deposit bore to the initial Base
Rent.

 


Section
3.04. Termination; Advance Payments; Landlord's Termination Right.
Upon termination of this Lease under Article Seven (Damage or
Destruction), Article Eight (Condemnation) or any other termination
not resulting from Tenant's default, and after Tenant has vacated
the Premises in the manner required by this Lease, Landlord shall
refined or credit to Tenant (or Tenant's successor) the unused
portion of the Security Deposit, any advance rent or other advance
payments made by Tenant to Landlord, any amounts paid for real
property taxes and other reserves which apply to any time periods
after termination of the Lease. Following the initial Lease Term,
and in the event Tenant has properly exercised its options to
extend the Lease as set forth in Section 1.15, in the event
Landlord determines that it desires to redevelopment either the
Project or the Premises, based upon a bona fide plan acceptable to
the Landlord, Landlord shall have the right to terminate the Lease
conditioned upon the following: (a) the termination right shall
only become effective during an option period (said termination
rights shall not be available to Landlord during the initial Lease
Term); (b) Landlord shall provide written notice to the Tenant of
the exercise of the termination right thirty (30) days prior to the
effective date of termination; (c) within thirty (30) days of
Landlord deriving at an acceptable redevelopment plan, or receiving
an acceptable letter of intent, offer, or similar memorandum of
interest concerning such plan of redevelopment of the Property,
Landlord shall inform Tenant, in writing, of such plan or interest
from a third party (the "ROFR Notice") and continue to update
Tenant on a monthly basis regarding the progress of any
negotiations; and (d) in the event Landlord ultimately desires to
exercise its termination right, Tenant shall have a right to
purchase the Premises ("Tenant's Right of First Refusal") on the
exact terms of sale being offered to Landlord in the event landlord
is selling the Premises. If Tenant does not exercise Tenant's Right
of First Refusal within ten (10) days of the Landlord's delivery of
the ROFR Notice described above, Landlord may proceed to terminate
the Lease and shall pay Tenant a maximum termination fee of Four
Hundred Fifty Thousand Dollars ($450,000.00) amortized over sixty
(60) months. By way of example, in the event Landlord exercises the
termination right and the effective date of the termination is the
first day of the option term the termination fee would be Four
Hundred Fifty Thousand Dollars ($450,000.00). If Landlord exercises
its termination right and the effective date of the termination is
half way through the option term, the termination fee would be Two
Hundred Twenty-Five Thousand Dollars ($225,000.00). For further
clarity, in the event the termination right is exercised and the
effective date of the termination is ninety percent (90%) of the
way through the option term, the termination fee would be
Forty-Five Thousand Dollars ($45,000.00) (the remaining 10% of the
full termination fee). Payment of the termination fee (if such
right is exercised) shall be made by Landlord in one (I) lump sum
payment. Tenant's Right of First Refusal shall be evidenced by a Memorandum of Right
of First Refusal
in a form acceptable to Landlord in its sole discretion, to be
executed by Tenant and Landlord and recorded in the official
records of the Clark County Recorder concurrently with the
execution of this Lease.


 


Notwithstanding
anything contained herein to the contrary, Landlord may not
exercise the termination right set forth in this Section 3.04 if
any of the anticipated future uses involves any marijuana related
business or establishment that exceeds up to twenty percent (20%)
of the Premises. The foregoing limitation shall terminate five (5)
years from the date Landlord exercises the termination right set
forth in this Section.. 


 










 











ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT

 


Section
4.01. Additional Rent. All charges payable by Tenant other than
Base Rent are called "Additional Rent" Unless this Lease provides
otherwise, Tenant shall pay all Additional Rent then due with the
next monthly installment of Base Rent. The term "Rent" shall mean
Base Rent and Additional Rent.

 


Section
4.02. Property Taxes.

 

(a) Real
Property Taxes. Tenant shall pay all real property taxes on the
Premises (including any fees, taxes or assessments against, or as a
result o£ any tenant improvements installed on the Premises by
or for the benefit of Tenant) during the Lease Term. Subject to
Paragraph 4.02(c) and Section 4.08 below, such payment shall be
made at least ten (10) days prior to the delinquency date of the
taxes. Within such ten (10) day period, Tenant shall furnish
Landlord with satisfactory evidence that the real property taxes
have been paid. If Tenant fails to pay the real property taxes
whene due, Landlord may pay the taxes and Tenant shall reimburse
Landlord for the amount of such tax payment as Additional Rent such
failure to pay by Tenant shall be a default hereunder.

 

(b) Definition
of "Real Property Tax". "Real property tax" means: (i) any fee,
license fee, license tax,
business license fee, commercial rental tax, levy, charge,
assessment, penalty or tax imposed by any taxing authority against
the Premises; (ii) any tax on the Landlord's right to receive, or
the receipt of, rent or income from the Premsies or against
Landlord's business of leasing the Premises; (iii) any tax or
charge for fire protection, streets, sidewalks, road maintenance,
refuse or other services provided to the Premises by any
governmental agency; (iv) any tax imposed upon this transaction or
based upon a reassessment of the Premises due to a change of
ownership, as defined by applicable law, or othertransfer of all or
part of Landlord's interst in the Premises; and (v) any charge or
fee replacing any tax previously included within the definition of
real property tax. "Real property tax" does not, however, include
Landlord's federal or state income, franchise, inheritance or
estate taxes.

 

(c) Joint
Assessment. If the Premises is not separately assessed, Landlord
shall reasonably determine Tenant's share of the real property tax
payable by Tenant under Paragraph 4.02(a) from the assessor's
worksheets or other reasonably available information. Tenant shall
pay such share to Landlord within fifteen (15) days after receipt
of Landlord's written statement.

 

(d) Personal
Property Taxes.

 


(1)            Tenant
shall pay all taxes charged against trade fixtures, furnishings,
equipment or any other personal property belonging to Tenant.
Tenant shall try to have personal property taxed separately from
the Premises.

 


(ii)            If
any of Tenant's personal property is taxed with the Premises,
Tenant shall pay Landlord the taxes for the personal property
within fifteen (15) days after Tenant receives a written statement
from Landlord for such personal property taxes.

 


Section
4.03. Utilities. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer
service, telephone, water, refuse disposal and other utilities and
services supplied to the Premises. However, if any services or
utilities are jointly metered with other property, Landlord shall
make a reasonable and objective determination of Tenant's
proportionate share of the cost of such utilities and services and
Tenant shall pay such share to Landlord within fifteen (15) days
after receipt of Landlord's written statement.

 










 





 


Section
4.04. Insurance Policies.

 

(a) Liability
Insurance. During the Lease Term, Tenant shall maintain a policy of
commercial general liability insurance (sometimes known as broad
form comprehensive general liability insurance) insuring Tenant
against liability for bodily injury, property damage (including
loss of use of property) and personal injury arising out of the
operation, use or occupancy of the Premises. Tenant shall name
Landlord as an additional insured
under such policy. The initial amount of such insurance shall be
[REDACTED]
oroccurrence
and shall be subject to periodic increase based upon inflation,
increased liability awards, recommendation of Landlord's
professional insurance advisers and other relevant factors. The
liability insurance obtained by Tenant under this Paragraph 4.04(a)
shall (i) be primary and non-contributing (ii) contain
cross-liability endorsements; and (iii) insure Landlord against
Tenant's performance under Section 5.05, if the matters giving rise
to the indemnity under Section 5.05 result from the negligence of
Tenant. The amount and coverage of such insurance shall not limit
Tenant's liability nor relieve Tenant of any other obligation under
this Lease. To the extent that, in Landlord's reasonable
determination Tenant's existing policies of insurance are
insufficient to protect Landlord's reasonable interests, Landlord
may also obtain comprehensive public liability insurance in an
amount and with coverage reasonably determined by Landlord to be
necessary for the purpose of insuring Landlord against liability
arising out of ownership, operation, use or occupancy of the
Premises. The policy obtained by Landlord shall not be contributory
and shall not provide primary insurance.

 

(b) Premises
and Rental Income Insurance. During the Lease Term, Landlord shall
maintain policies of insurance covering loss of or damage to the
Premises in the full amount of its replacement value. Such policy
shall contain an Inflation Guard Endorsement and shall provide
protection against all perils included within the classification of
fire, extended coverage, vandalism, malicious mischief, special
extended perils (all risk), sprinkler leakage and any other perils
which Landlord deems reasonably necessary. Landlord shall have the
right to obtain flood and earthquake insurance if required by any
lender holding a security interest in the Premises. Landlord shall
not obtain insurance for Tenant's fixtures or equipment or building
improvements installed by Tenant on the Premises. During the Lease
Term, Landlord shall also maintain a rental income insurance
policy, with loss payable to Landlord, in an amount equal to one
year's Base Rent, plus estimated real property taxes and insurance
premiums. Tenant shall be liable for the payment of any deductible
amount under Landlord's or Tenant's insurance policies maintained
pursuant to this Section 4.04, in an amount not to exceed Five
Thousand Dollars ($5,000.00). Tenant shall not do or permit
anything to be done which invalidates any such insurance
policies.

 

(c) Payment
of Premiums. Subject to Section 4.08, Tenant shall pay all premiums
for the insurance policies described in Paragraphs 4.04(a) and (b)
(whether obtained by Landlord or Tenant) within fifteen (15) days
after Tenant's receipt of a copy of the premium statement or other
evidence of the amount due, except Landlord shall pay all premiums
for non-primary comprehensive public liability insurance which
Landlord elects to obtain as provided in Paragraph 4.04(a). For
insurance policies maintained by Landlord which cover improvements
on the entire Project, Tenant shall pay Tenant's prorated share of
the premiums, in accordance with the formula in Paragraph 4.05(e)
for determining Tenant's share of Common Area costs. If insurance
policies maintained by Landlord cover improvements on real property
other than the Project, Landlord shall deliver to Tenant a
statement of the premium applicable to the Premises showing in
reasonable detail how Tenant's share of the premium was computed.
If the Lease Term expires before the expiration of an insurance
policy maintained by Landlord, Tenant shall be liable for Tenant's
prorated share of the insurance premiums. Before the Commencement
Date, Tenant shall deliver to Landlord a copy of any policy of
insurance which Tenant is required to maintain under this Section
4.04. At least thirty (30) days prior to the expiration of any such
policy, Tenant shall deliver to Landlord a renewal of such policy.
As an alternative to providing a policy of insurance, Tenant shall
have the right to provide Landlord a Certificate of Insurance,
executed by an authorized officer of the insurance company, showing
that the insurance which Tenant is required to maintain under this
Section 4.04 is in full force and effect and containing such other
information which Landlord reasonably requires.

 

(d) General
Insurance Provisions.

 


(i)
   Any insurance which Tenant is required to maintain
under this Lease shall include
a provision which requires the insurance carrier to give Landlord
not less than thirty (30) days' written notice prior to any
cancellation or modification of such coverage.

 


(ii) If
Tenant fails to deliver any policy, certificate or renewal to
Landlord required under this Lease within the prescribed time
period or if any such policy is canceled or modified during the
Lease Tenn without Landlord's consent, Landlord may obtain such
insurance, in which case Tenant shall reimburse Landlord for the
cost of such insurance within fifteen (15) days after receipt of a
statement that indicates the cost of such
insurance.

 


(iii) Tenant
shall maintain all insurance required under this Lease with
companies holding a "General Policy Rating" or A-12 or better, as
set forth in the most current issue of "Best Key Rating Guide".
Landlord and Tenant acknowledge the insurance markets are rapidly
changing and that insurance in the form and amounts described in
this Section 4.04 may not be available in the future. Tenant
acknowledges that the insurance described in this Section 4.04 is
for the primary benefit of Landlord. If at any time during the
Lease Term, Tenant is unable to maintain the insurance required
under the Lease, Tenant shall nevertheless maintain insurance
coverage which is customary and commercially reasonable in the
insurance industry for Tenant's type of business, as that coverage
may change from time to time. Landlord makes no representation as
to the adequacy of such insurance to protect Landlord's or Tenant's
interests. Therefore, Tenant shall obtain any such additional
property or liability insurance which Tenant deems necessary to
protect Landlord and Tenant

 


(iv) Unless
prohibited under any applicable insurance policies maintained,
Landlord and Tenant each hereby waive any and all rights of
recovery against the other, or against the officers, employees,
agents or representatives of the other, for loss of or damage to
its property or the property of others under its control, if such
loss or damage is covered by any insurance policy in force (whether
or not described in this Lease) at the time of such loss or damage.
Upon obtaining the required policies of insurance, Landlord and
Tenant shall give notice to the insurance carriers of this mutual
waiver of subrogation.

 



 







 





 


Section
4.05. Common Areas; Use, Maintenance and Costs.

 


(a) Common
Areas. As used in this Lease, "Common Areas" shall mean all areas
within the Project which are available for the common use of
tenants of the Project and which are not leased or held for the
exclusive use of Tenant or other tenants, including, but not
limited to, parking areas, driveways. sidewalks, loading areas,
access roads, corridors, landscaping and planted areas. Landlord,
from time to time, may change the size, location, nature and use of
any of the Common Areas, convert Common Areas into leasable areas,
construct additional parking facilities ('including parking
structures) in the Common Areas, and increase or decrease Common
Area land and/or facilities. Notwithstanding the foregoing,
Landlord may not make any substantive or unreasonable changes to
the Common Areas which in any way alter the access to the Premises
from surrounding surface streets nor which substantively or
unreasonably interfere with the interior traffic flow or parking
serving the Premises. Tenant acknowledges that such activities may
result in inconvenience to Tenant. Such activities and changes are
permitted if they do not materially affect Tenant's use of the
Premises.

 


(b) Use
of Common Areas. Tenant shall have the nonexclusive right (in
common with other tenants and all others to whom Landlord has
granted or may grant such rights) to use the Common Areas for the
purposes intended, subject to such reasonable rules and regulations
as Landlord may establish from time to time. Tenant shall abide by
such rules and regulations and shall use its best effort to cause
others who use the Common Areas with Tenant's express or implied
permission to abide by Landlord's rules and regulations. Tenant
shall not interfere with the rights of Landlord, or other tenants
or any other person entitled to use the Common
Areas.

 


(c) Specific
Provision re: Vehicle Parking. Tenant shall be entitled to use the
vehicle parking spaces within the yard of their Premises (see
Subject area in Exhibit "A.2") of the Lease without paying any
additional rent. Tenant's parking shaft not be reserved and shall
be limited to vehicles no larger than standard size automobiles or
pickup utility vehicles. Tenant shall not cause large trucks or
other large vehicles to be parked within the Project, other than
within the yard area of their Premises, or on the adjacent public
streets. Temporary parking of large delivery vehicles in the
Project may be permitted by the rules and regulations established
by Landlord. Vehicles shall be parked only in striped parking
spaces and not in driveway, loading areas or other locations not
specifically designated for parking. Handicapped spaces shall only
be used by those legally permitted to use them. If Tenant parks
vehicles in the common area of the Project of this Lease, such
conduct shall be a material breach of this Lease. In addition to
Landlord's other remedies under the Lease, Tenant shall pay a daily
charge determined by Landlord for each such additional vehicle. The
common area as illustrated in Exhibit "A" 
shall be used solely for the purposes of ingress/egress and for
common, day-use only parking for customers of the
Project

 


(d) Maintenance
of Common Areas. Landlord shall maintain the Common Areas in good
order, condition and repair and shall operate the Project, in
Landlord's sole discretion, in a commercially reasonable condition.
Tenant shall pay Tenant's pro rata share (as determined below) of
all costs incurred by Landlord for the operation and maintenance of
the Common Areas. Common Area costs include, but are not limited
to, costs and expenses for the following: gardening and
landscaping; utilities, water and sewage charges; maintenance of
signs (other than tenants' signs); premiums for liability, property
damage, fire and other types of casualty insurance on the Common
Areas and worker's compensation insurance; all property taxes and
assessments levied on or attributable to the Common Areas and all
Common Area improvements; all personal property taxes levied on or
attributable to personal property used in connection with the
Common Areas; straight-line depreciation on personal property owned
by Landlord which is consumed in the operation or maintenance of
the Common Areas; rental or lease payments paid by Landlord for
rented or leased personal property used In the operation or
maintenance of the Common Areas; fees for required licenses and
permits; repairing, resurfacing, repaving, maintaining, painting,
lighting, cleaning, refuse removal, security and similar items;
reserves for roof replacement, pavement replacement, exterior
painting and other appropriate reserves; and a reasonable allowance
to Landlord for Landlord's supervision of the Common Areas (not to
exceed ten percent (10%) of the gross rents of the Project for the
calendar year). Landlord may cause any or all of such services to
be provided by third parties and the cost of such services shall be
included in Common Area costs. Common Area costs shall not include
depreciation of real property which forms part of the Common Areas.
Notwithstanding the foregoing, Common Area costs shall not include:
(1) the initial costs of equipment properly chargeable to a capital
account using generally accepted accounting principles consistently
applied or the original costs of constructing the Premises/Common
Areas; (2) expenses for which the Landlord is or will be reimbursed
by another source, including but not limited to repair or
replacement of any item covered by warranty; (3) costs incurred to
benefit ( or as a result of) a specific tenant or items and
services selectively supplied to any specific tenant; (4) expenses
for the defense of the Landlords title to the Property; (5)
depreciation and amortization of the Premises or financing costs,
including Interest and principal amortization of debts; (6)
charitable, lobbying, special interest or political contributions;
(7) costs of improving or renovating space for a tenant or space
vacated by a tenant; (8) costs to correct original or latent
defects in the design, construction or equipment of the
Premises/Common Areas; (9) expenses paid directly by any tenant for
any reason (such as excessive utility use (10) any repair,
rebuilding or other work necessitated by condemnation, fire,
windstorm or other insured casualty or hazard; and (1 1) cost of
the initial stock of tools and equipment for operation, repair and
maintenance of the Premises/Common Areas.

 


(e) Tenant's
Share and Payment. Tenant shall pay Tenant's annual pro rata share
of all Common Area costs (prorated for any fractional month) upon
written notice from Landlord that such costs are due and payable,
and in any event prior to delinquency. Tenants pro rata share shall
be calculated by dividing the square foot area of the Premises, as
set forth in Section 1.04 of the Lease, by the aggregate square
foot area of the Project which is leased or held for lease by
tenants, as of the date on which the computation is made. Tenants
initial pro rata share is set out in Paragraph 1.12(b). Any changes
in the Common Area costs and/or the aggregate area of the Project
leased or held for lease during the Lease Term shall be effective
on the first day of the month after such change occurs. Landlord
may, at Landlords election, estimate in advance and charge to
Tenant as Common Area costs, all real property taxes for which
Tenant is liable under Section 4.02 of the Lease, all insurance
premiums for which Tenant is liable under Section 4.04 of the
Lease, all maintenance and repair costs for which Tenant is liable
under Section 6.04 of the Lease, and all other Common Area costs
payable by Tenant hereunder. At Landlord's election, such
statements of estimated Common Area costs shall be delivered
monthly, quarterly or at any other periodic intervals to be
designated by Landlord. Landlord may adjust such estimates at any
time based upon Landlord's experience and reasonable anticipation
of costs. Such adjustments shall be effective as of the next Rent
payment date after notice to Tenant. Within sixty (60) days after
the end of each calendar year of the Lease Term, Landlord shall
deliver to Tenant a statement prepared in accordance with generally
accepted accounting principles setting forth, in reasonable detail,
the Common Area costs paid or incurred by Landlord during the
preceding calendar year and Tenant's pro rata share. Upon receipt
of such statement, there shall be an adjustment between Landlord
and Tenant, with payment to or credit given by Landlord (as the
case may be) so that Landlord shall receive the entire amount of
Tenant's share of such costs and expenses for such period. Landlord
shall keep records showing all expenditures incurred as Common Area
costs, Landlord's Insurance and Real Property Taxes for each
calendar year for a period of one (1) year following each year, and
such records shall be made available for 
inspection and photocopying by Tenant and/or its agents during
ordinary business hours in the city in which the Premises are
located. Any dispute with respect to Landlord's calculations of
Tenant's share of Common Area costs shall be resolved by the
parties through consultation in good faith within sixty (60 )days.
However, if the dispute cannot be resolved within such period, the
parties shall request an audit of the disputed matter from an
independent, certified public accountant selected by both Landlord
and Tenant, whose decision shall be based on generally accepted
accounting principles and shall be final and binding on the
parties. If there is a variance of seven percent (7%) or more
between said decision and the Landlord's determination, Landlord
shall pay the costs of said audit and shall credit any overpayment
toward the next rent payment falling due or pay such overpayment to
Tenant within thirty (30) days. If the variance is less than seven
percent (7%), Tenant shall pay the cost of said
audit.

 




 








 






 



(f)     Cap on Controllable Common Area Costs.
Tenant shall not be obligated to pay for 
Controllable Common Area Costs in any year to the extent they have
increased by more than five percent (5%) per annum, compounded
annually on a cumulative basis from the first full calendar year
following the Commencement Date during the Term. For purposes of
this Section, Controllable CommonArea Costs shall mean all Common
Area costs as set forth in this Section of the Lease, except for
taxes, insurance premiums, costs in connection with adverse weather
conditions (including, without limitation, snow removal), and
repairs or maintenance necessary exclusively as a result of
activities of Tenant or its agents at the Project and utility
costs. Controllable Common Area Costs shall be determined on an
aggregate basis and not on an individual basis, and the cap on
Controllable Common Area Costs shall be determined on Common Area
costs as they have been adjusted for vacancy or usage pursuant to
the terms of the Lease. In the event the original Premises is
expanded, the first full calendar year following any expansion
shall become the base year for the purposes of calculating the cap
on increases to Controllable Operating Expenses after any such
expansion date.







Section 4.06. Late Charges. Tenant's failure to pay Rent promptly
may cause Landlord to incur unanticipated costs. The exact amount
of such costs are impractical or extremely difficult to ascertain.
Such costs may include, but are not limited to, processing and
accounting charges and late charges which may be imposed on
Landlord by any ground lease, mortgage or trust deed encumbering
the Premises. Therefore, if Landlord does not receive any Rent
payment within ten (10) days after it becomes due, Tenant shall pay
Landlord a late charge equal to one percent (I%) of the overdue
amount per each day such payment is late up to a maximum of ten
percent (10%) if such payment is ten (10) or more days late. The
parties agree that such late charge represents a fair and
reasonable estimate of the costs Landlord will incur by reason of
such late payment.

 



Section 4.07. Interest on Past Due Obligations. Any amount owed by
Tenant to Landlord which is not paid when due shall bear interest
at the lesser of (i) the prime rate then in effect plus five
percent (5%) per annum; or (ii) fifteen percent (15%) from the due
date of such amount. However, interest shall not be payable on late
charges to be paid by Tenant under this Lease. The payment of
interest on such amounts shall not excuse or cure any default by
Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate
is hereby decreased to the maximum legal interest rate permitted by
law. As used herein, the term "prime rate" shall mean the prime
rate as published in the Money Rates Section of The Wall Street
Journal; however, if such rate is, at any time during the term of
this Agreement, no longer so published, the term prime rate shall
mean the average of the prime interest rates which are announced,
from time to time, by the three (3) largest banks (by assets)
headquartered in the United States which publish a prime, base or
reference rate.

 



Section 44)8. Impounds for Insurance Premiums and Real Property
Taxes. If requested by any lender to whom Landlord has granted a
security interest in the Premises, or if Tenant is more than ten
(10) days late in payment of Rent more than once in any consecutive
twelve (12) month period,Tenant shall pay landlord a sum equal to
one-twelfth (1/12) of the annual real property taxes and insurance
premiums payable by Tenant under this Lease, together with each
payment of Base Rent. Landlord shall hold such payments in a
non-interest bearing impound account. If unknown, Landlord shall
reasonably estimate the amount of real property taxes and insurance
premiums when due. Tenant shall pay any deficiency of funds in the
impound account to Landlord upon written request. If Tenant
defaults under this Lease, Landlord may apply any funds in the
impound account to any obligation then due under this
Lease.

 



ARTICLE FIVE: USE OF PREMISES

 



Section 5.01. Permitted Uses. Tenant may use the Premises only for
the Permitted Uses set forth in Section 1.06 above. To Landlord's
best knowledge and belief the Permitted Uses are not prohibited by
any CC&Rs, loan covenants, declarations, or any other document
or agreement which would preclude the use of the Premises for
marijuana related uses or which otherwise would prohibit any
uses.

 




 








 






 



Section 5.02. Manner of Use. Tenant shall not cause or permit the
Premises to be used in any way which constitutes a violation of any
law, ordinance, or governmental regulation or order, which annoys
or interferes with the rights of tenants of the Project, or which
constitutes a nuisance or waste. Tenant shall obtain and pay for
all permits, including a Certificate of Occupancy, required for
Tenant's occupancy of the Premises and shall promptly take all
actions necessary to comply with all applicable statutes,
ordinances, rules, regulations, orders and requirements regulating
the use by Tenant of the Premises, including the Occupational
Safety and Health Act.

 



Section 5.03. Hazardous Materials. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives,
radioactive materials, hazardous or toxic substances, material or
waste or related materials, including any substances defined as or
included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials" or "toxic substances" now or
subsequently regulated under any applicable federal, state or local
laws or regulations, including without limitation petroleum-based
products, paints, solvents, lead, cyanide,. DDT, printing inks,
acids, pesticides, ammonia compounds and other chemical products,
asbestos, PCBs and similar compounds, and including any different
products and materials which are subsequently found to have adverse
effects on the environment or the health and safety of persons.
Except in instances where such use is reasonable or customary, as
defined below, for Tenant's Permitted Uses. Tenant shall not cause
or permit any Hazardous Material to be generated, produced, brought
upon, used, stored, treated or disposed of in or about the Premises
by Tenant, its agents, employees, contractors, sub-lessees or
invitees without the prior written consent of Landlord. Landlord
shall be entitled to take into account such other factors or facts
as Landlord may reasonably determine to be relevant in determining
whether to grant or withhold consent to Tenant's proposed activity
with respect to Hazardous Material. In no event, however, shall
Landlord be required to consent to the installation or use of any
storage tanks on the Premises. Reasonable and customary use shall
mean Tenant's use of chemicals, compounds, and materials in the
formulation and production of goods, which uses are both reasonable
and customary in the manufacturing industry, including marijuana
production facilities, and which Permitted Uses are permitted and
approved under applicable federal, state or local
laws.

 


Section 5.04. Signs
and Auctions. Landlord shall permit Tenant to install signage on
the Premises subject to Landlord's prior written approval, which
approval may not be unreasonably withheld, conditioned or delayed.
Additionally, at Tenant's cost, Tenant shall have the right to
place signage on the east face of the 3290 S. Highland building
(the wall that faces the common parking area of the Premises). Said
signage will be affixed in a manner deemed appropriate by the
Landlord to such standards as may be adopted by the Landlord in its
reasonable discretion. All such signage must be in compliance with
all State, County, Municipal and local codes and restrictions, as
applicable. Tenant shall be responsible for any and all costs
related to said signage. Tenant shall not conduct or permit any
auctions or sheriffs sales at the Premises. Please see Exhibit "C"
attached.

 


Section
5.05. Indemnity. Tenant shall indemnify Landlord against and hold
Landlord harmless from any and all costs, claims or liability
arising from: (a) Tenant's use of the Premises; (b) the conduct of
Tenant's business or anything else done or permitted by Tenant to
be done in or about the Premises, including any contamination of
the Premises or any other property resulting from the presence or
use of Hazardous Material caused or permitted by Tenant; (c) any
breach or default in the performance of Tenant's obligations under
this Lease; (d) any misrepresentation or breach of warranty by
Tenant under this Lease; or (e) other acts or omissions of Tenant.
Tenant shall defend Landlord against any such cost, claim or
liability at Tenant's expense with counsel reasonably acceptable to
Landlord or, at Landlord's election, Tenant shall reimburse
Landlord for any legal fees or costs incurred by Landlord in
connection with any such claim. As a material part of the
consideration to Landlord, Tenant assumes all risk of damage to
property or injury to persons in or about the Premises arising from
any cause, and Tenant hereby waives all claims in respect thereof
against Landlord, except for any claim arising out of Landlord's
gross negligence or wilful misconduct. As used in this Section, the
term "Tenant" shall include Tenant's employees, agents, contractors
and invitees, if applicable. Notwithstanding anything contained in
the foregoing, Tenant's 
obligation to indemnify and hold Landlord harmless shall not
include any cost, claim or liability arising from, or in connection
with those specific environmental conditions disclosed by Landlord
in that certain Phase I Environmental Site Report conducted by SCS
Engineers (Project No. 01212007.00), dated February 8, 2012 and
that certain Ground Water Monitoring Report (201724) conducted by
OGI Environmental, dated January 10, 2018 (collectively the
"Identified Environmental Issues"). Landlord agrees to indemnify,
defend and hold Tenant harmless from claims which may arise
directly from the Identified Environmental Issues. Additionally,
and except as otherwise herein provided, Landlord and its
successors and assigns shall indemnify, defend, and hold Tenant
harmless from and against any and all subterranean environmental
damages, including the cost of remediation, which result from
Hazardous Substances which existed in any subterranean portion of
the Premises prior to Tenant's occupancy, or which are caused by
the gross negligence or willful misconduct of Landlord, its agents
or employees.

 











 





 



Section 5.06. Landlord's Access. Landlord or its agents may enter
the Premises at all reasonable times to show the Premises to
potential buyers, investors or tenants or other parties; to do any
other act or to inspect and conduct tests in order to monitor
Tenant's compliance with all applicable environmental laws and all
laws governing the presence and use of Hazardous Material; or for
any other purpose Landlord deems necessary. Landlord shall give
Tenant prior notice of such entry, except in the case of an
emergency. Landlord may place "For Sale" or "For Lease" signs on
the Premises upon the following conditions: (a) Tenant has notified
Landlord that it does not intend to exercise a renewal option; (b)
the period of time in which the Tenant was to have exercised a
renewal option has lapsed; (c) the Lease has otherwise been
terminated pursuant to the terms of the Lease; or (d) Tenant is in
the process of vacating or otherwise abandoning the Premises.
Landlord acknowledges that the Tenant will have certain obligations
relating to the Permitted Use which may limit Landlord's right to
access some or all of the Premises and which may require that the
Landlord is accompanied by a representative of Tenant during any
such access. Landlord shall comply with all of Tenant's security
protocols and requirements. Except in the case of emergency,
Landlord's access rights granted in this Section 5.06 shall be
further subject to all applicable regulations relating to the
Permitted Use.

 



Section 5.07. Quiet Possession. If Tenant is not in default of any
of the provisions hereof and pays all Rent and other charges
described herein and complies with all other terms of this Lease,
Tenant may occupy and enjoy the Premises for the MI Lease Term,
subject to the provisions of this Lease.

 



ARTICLE SIX: CONDITION OP' PREMISES: MAINTENANCE. REPAIRS AND
ALTERATIONS

 



Section 6.01. Existing Conditions. Tenant accepts the Premises in
its "AS IS", "WHERE IS" condition as of the execution of the Lease,
subject to all recorded matters, laws, ordinances, and governmental
regulations and orders. Except as provided herein, Tenant
acknowledges that neither Landlord nor any agent of Landlord has
made any representation as to the condition of the Premises or the
suitability of the Premises for Tenant's intended use. Tenant
represents and warrants that Tenant has made its own inspection of
and inquiry regarding the condition of the Premises and is not
relying on any representations of Landlord or any Broker with
respect thereto.

 



Section 6.02. Exemption of Landlord from Liability. Landlord shall
not be liable for any damage or injury to the person, business (or
any loss of income therefrom), goods, wares, merchandise or other
property of Tenant, Tenant's employees, invitees, customers or any
other person in or about the Premises, whether such damage or
injury is caused by or results from: (a) fire, steam, electricity,
water, gas or rain; (b) the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or any other cause; (c)
conditions arising in or about the Premises or upon other portions
of the Project, or from other sources or places; or (d) any act or
omission of any other tenant of the Project. Landlord shall not be
liable for any such damage or injury even though the cause of or
the means of repairing such damage or injury are not accessible to
Tenant. The provisions of this Section 6.02 shall not, however,
exempt Landlord from liability for Landlord's gross negligence or
willful misconduct.

 



Section 6.03. Landlord's Obligations.

 



(a)     Except as provided in Article Seven
(Damage or Destruction) and Article Eight 
(Condemnation), Landlord shall keep the following in good order,
condition and repair: the foundations, pre-existing underground
utilities, exterior walls and roof of the Premises (excluding
painting the exterior surface of the exterior walls of the Premises
which shall be an obligation of Tenant, if necessary in Landlord's
discretion). However, 
Landlord shall not be obligated to maintain or repair windows,
doors, plate glass or the interior surfaces of exterior walls.
Landlord shall make repairs under this Section 6.03 within a
reasonable time after receipt of written notice from Tenant of the
need for such repairs. In no event shall the Landlord be obligated
to maintain the heating or air conditioning systems, or any other
HVAC/ventilation facilities located in the Premises, all of which
shall be the responsibility of Tenant.

 



(b)    Tenant shall pay or reimburse Landlord for
all costs Landlord incurs under Paragraph 6.03(a) above as Common
Area costs as provided for in Section 4.05 of the Lease. Tenant
waives the benefit of any statute in effect now or in the future
which might give Tenant the right to make repairs at Landlord's
expense or to terminate this Lease due to Landlord's failure to
keep the Premises in good order, condition and
repair.

 



Section 6.04. Tenant's Obligations.

 


(a) Except
as provided in Section 6.03, Article Seven (Damage or Destruction)
and Article Eight (Condemnation), Tenant shall keep all portions of
the Premises (including structural, nonstructural, interior,
systems and equipment) in good order, condition and repair
(including interior repainting and refinishing, as needed). If any
portion of the Premises or any system or equipment in the Premises
which Tenant is obligated to repair cannot be fully repaired or
restored, Tenant shall promptly replace such portion of the
Premises or system or equipment in the Premises, regardless of
whether the benefit of such replacement extends beyond the Lease
Term. Tenant shall maintain a preventive maintenance contract
providing for the regular inspection and maintenance of the heating
and air conditioning system by a licensed ventilation, heating and
air conditioning contractor. If any part of the Premises or the
Project is damaged by any act or omission of Tenant, Tenant shall
pay Landlord the cost of repairing or replacing such damaged
property, whether or not Landlord would otherwise be obligated to
pay the cost of maintaining or repairing such property. It is the
intention of Landlord and Tenant that at all times Tenant shall
maintain the portions of the Premises which Tenant is obligated to
maintain in an attractive, first-class and fully operative
condition.

 


(b) Tenant
shall fulfill all of Tenant's obligations under this Section 6.04
at Tenant's sole expense. If Tenant fails to maintain, repair or
replace the Premises as required by this Section 6.04, Landlord
may, upon ten (10) days' prior notice to Tenant (except that no
notice shall be required in the case of an emergency), enter the
Premises and perform such maintenance or repair (including
replacement, as needed) on behalf of Tenant. In such case, Tenant
shall reimburse Landlord for all costs incurred in performing such
maintenance or repair immediately upon demand.

 



 







 





 



Section 6.05. Alterations, Additions, and
Improvements.

 


(a) After
the initial Tenant Improvements more fully described in Exhibit
"B", Tenant shall not make any alterations, additions, or
improvements to the Premises without Landlord's prior written
consent, except for non-structural alterations which do not exceed
Fifty Thousand Dollars ($50,000) in cost annually and which are not
visible from the outside of any building of which the Premises is
part. Landlord may require Tenant to provide demolition and/or lien
and completion bonds in form and amount satisfactory to Landlord.
Tenant shall promptly remove any alterations, additions, or
improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions, and
improvements shall be done in a good and workmanlike manner, in
conformity with all applicable laws and regulations, and by a
contractor approved by Landlord. Upon completion of any such work,
Tenant shall provide Landlord with "as built" plans, copies of all
construction contracts, and proof of payment for all labor and
materials.

 


(b) Tenant
shall pay when due all claims for labor and material furnished to
the Premises. Tenant shall give Landlord at least thirty (30) days'
prior written notice of the commencement of any work on the
Premises, regardless of whether Landlord's consent to such work is
required. Landlord may elect to record and post notices of
non-responsibility on the Premises.

 



Section 6.06. Condition upon Termination. Upon the termination of
the Lease, Tenant shall surrender the Premises to Landlord, broom
clean and in the same condition as received. In addition, Landlord
may require Tenant to remove any alterations, additions or
improvements (whether or not made with Landlord's consent) prior to
the expiration of the Lease and to restore the Premises to its
prior condition, all at Tenant's expense. All alterations,

additions and improvements which Landlord has not required Tenant
to remove shall become Landlord's property and shall be surrendered
to Landlord upon the expiration or earlier termination of the
Lease, except that Tenant may remove any of Tenant's machinery or
equipment which can be removed without material damage to the
Premises. Tenant shall repair, at Tenant's expense, any damage to
the Premises caused by the removal of any such machinery or
equipment. In no event, however, shall Tenant remove any of the
following materials or equipment (which shall be deemed Landlord's
property) without Landlord's prior written consent: any power
wiring or power panels; lighting or lighting fixtures; wall
coverings; drapes, blinds or other window coverings; carpets or
other floor coverings; heaters, air conditioners or any other
heating or air conditioning equipment fencing or security gates; or
other similar building operating equipment and
decorations.

 



ARTICLE SEVEN: DAMAGE OR DESTRUCTION

 



Section 7.01. Partial Damage to Premises.

 


(a) Tenant
shall notify Landlord in writing immediately upon the occurrence of
any damage to the Premises. If the Premises is only partially
damaged (i.e., less than fifty percent (50%) of the Premises is
untenantable as a result of such damage or less than fifty percent
(50%) of Tenant's operations are materially impaired) and if the
proceeds received by Landlord from the insurance policies described
in Paragraph 4.04(b) are sufficient to pay for the necessary
repairs, this Lease shall remain in effect and Landlord shall
repair the damage as soon as reasonably possible. Landlord may
elect (but is not required) to repair any damage to Tenant's
fixtures, equipment, or improvements.

 


(b) If
the insurance proceeds received by Landlord are not sufficient to
pay the entire cost of repair, or if the cause of the damage is not
covered by the insurance policies which Landlord maintains under
Paragraph 4.04(b), Landlord may elect either to (i) repair the
damage as soon as reasonably possible, in which case this Lease
shall remain in full force and effect, or (ii) terminate this Lease
as of the date the damage occurred. Landlord shall notify Tenant
within thirty (30) days after receipt of notice of the occurrence
of the damage whether Landlord elects to repair the damage or
terminate the. Lease. If Landlord elects to repair the damage,
Tenant shall pay Landlord the "deductible amount" (if any) under
Landlord's insurance policies and, if the damage was due to an act
or omission of Tenant, or Tenant's employees, agents, contractors
or invitees, the difference between the actual cost of repair and
any insurance proceeds received by Landlord. If Landlord elects to
terminate the Lease, Tenant may elect to continue this Lease in
full force and effect in which case Tenant shall repair any damage
to the Premises and any building in which the Premises is, located.
Tenant shall pay the cost of such repairs, except that upon
satisfactory completion of such repairs, Landlord shall deliver to
Tenant any insurance proceeds received by Landlord for the damage
repaired by Tenant. Tenant shall give Landlord written notice of
such election within ten (10) days after receiving Landlord's
termination notice.

 


(c) If
the damage to the Premises occurs during the last six (6) months of
the Lease Term and such damage will require more than thirty (30)
days to repair, either Landlord or Tenant may elect to terminate
this Lease as of the date the damage occurred, regardless of the
sufficiency of any insurance proceeds. The party electing to
terminate this Lease shall give written notification to the other
party of such election within thirty (30) days after Tenant's
notice to Landlord of the occurrence of the
damage.

 



Section 7.02. Substantial or Total Destruction. If the Premises is
substantially or totally destroyed by any cause whatsoever (i.e.,
the damage to the Premises is greater than partial damage as
described in Section 7.01), and regardless of whether Landlord
receives any insurance proceeds, this Lease shall terminate as of
the date the destruction occurred. Notwithstanding the preceding
sentence, if the Premises can be rebuilt within six (6) months
after the date of destruction, Landlord may elect to rebuild the
Premises at Landlord's own expense, in which case this Lease shall
remain in full force and effect. Landlord shall notify Tenant of
such election within thirty (30) days after Tenant's notice of the
occurrence of total or substantial destruction. If Landlord so
elects, Landlord shall rebuild the Premises at Landlord's sole
expense, except that if the destruction was caused by an act or
omission of Tenant, Tenant shall pay Landlord the difference
between the actual cost of rebuilding and any insurance proceeds
received by Landlord.

 



Section 7.03. Temporary Reduction of Rent. If the Premises is
destroyed or damaged and Landlord or Tenant repairs or restores the
Premises pursuant to the provisions of this Article Seven, any Rent
payable during the 
period of such damage, repair and/or restoration shall be reduced
according to the degree, if any, to which Tenant's use of the
Premises is impaired. However, the reduction shall not exceed the
sum of one year's payment of Base Rent, insurance premiums and real
property taxes. Except for such possible reduction in Base Rent,
insurance premiums and real property taxes, Tenant shall not be
entitled to any compensation, reduction, or reimbursement from
Landlord as a result of any damage, destruction, repair, or
restoration of or to the Premises.

 


Section 7.04.
Waiver. Tenant waives the protection of any statute, code or
judicial decision which grants a tenant the right to terminate a
lease in the event of the substantial or total destruction of the
leased property. Tenant agrees that the provisions of Section 7.02
above shall govern the rights and obligations of Landlord and
Tenant in the event of any substantial or total destruction of the
Premises.

 



 







 





 



ARTICLE EIGHT: CONDEMNATION

 



If all or any portion of the Premises is taken under the power of
eminent domain or sold under the threat of that power (all of which
are called "Condemnation"), this Lease shall terminate as to the
part taken or sold on the date the condemning authority takes title
or possession, whichever occurs first If more than twenty percent
(20%) of the floor area of the building in which the Premises is
located, or which is located on the Premises, is taken, either
Landlord or Tenant may terminate this Lease as of the date the
condemning authority takes title or possession, by delivering
written notice to the other within ten (10) days after receipt of
written notice of such taking (or in the absence of such notice,
within ten (10) days after the condemning authority takes title or
possession). If neither Landlord nor Tenant terminates this Lease,
this Lease shall remain in effect as to the portion of the Premises
not taken, except that the Base Rent and Additional Rent shall be
reduced in proportion to the reduction in the floor area of the
Premises. Any Condemnation award or payment shall be distributed in
the following order: (a) first, to any ground lessor, mortgagee or
beneficiary under a deed of trust encumbering the Premises, the
amount of its interest in the Premises; (b) second, to Tenant, only
the amount of any award specifically designated for loss of or
damage to Tenant's trade fixtures or removable personal property;
and (c) third, to Landlord, the remainder of such award, whether as
compensation for reduction in the value of the leasehold, the
taking of the fee, or otherwise. If this Lease is not terminated,
Landlord shall repair any damage to the Premises caused by the
Condemnation, except that Landlord shall not be obligated to repair
any damage for which Tenant has been reimbursed by the condemning
authority. If the severance damages received by Landlord are not
sufficient to pay for such repair, Landlord shall have the right to
either terminate this Lease or make such repair at Landlord's
expense.

 



ARTICLE NINE: ASSIGNMENT AND SUBLETTING

 



Section 9.01. Landlord's Consent Required. No portion of the
Premises or of Tenant's interest in this Lease may be acquired by
any other person or entity, whether by sale, assignment, mortgage,
sublease, transfer, operation of law, or act of Tenant, without
Landlord's prior written consent, except as provided in Section
9.02 below. Landlord has the right to grant or withhold its consent
as provided in Section 9.05 below. Any attempted transfer without
consent shall be void and shall constitute a non-curable breach of
this Lease. If Tenant is an entity, any cumulative transfer of more
than twenty-five percent (25%) of the entity (whether stock,
membership interests, partnership interests, or otherwise)
interests shall require Landlord's written consent If Tenant is a
corporation, any change in the ownership of a twenty-five percent
(25%) or more interest of the voting stock of the corporation shall
require Landlord's consent. Notwithstanding the two immediately
preceding sentences, Landlord acknowledges that Tenant is currently
anticipating transitioning into a publicly-traded entity whose
shares are freely traded on one or more public markets. The
restrictions on transfer of ownership of more then twenty-five
percent (25%) of the stock/voting stock of the Tenant shall not
require Landlord's consent in the event that: (i) Tenant's stock is
listed on a domestic or reputable foreign public exchange within
three (3) years of the Date of Lease; and (ii) the Tenant entity
has a minimum net worth of Fifty Million Dollars ($50,000,000.00)
at the time of such transfer.

 



Section 9.02. Tenant Affiliate/Ancillary Uses. Tenant may assign
this Lease once during the initial Lease Term, without Landlord's
consent, to any corporation which controls, is controlled by or is
under common control with Tenant, or to any corporation resulting
from the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume in
writing all of Tenant's obligations under this Lease, and there
shall be no release of the Tenant (or any Guarantor) upon such
assignment Notwithstanding anything contained herein to the
contrary, Tenant shall be entitled to sublease any portion of the
Premises to a user for a use which is complementary or ancillary to
the Permitted Uses upon obtaining Landlord's consent, which consent
shall not be 
unreasonably withheld, conditioned or delayed. Notwithstanding the
foregoing Tenant shall at all times be and remain primarily
responsible for performance of the obligations under this
Lease.

 



Section 9.03. No Release of Tenant. No transfer permitted by this
Article Nine, whether with or without Landlord's consent, shall
release Tenant or change Tenant's primary liability to pay the Rent
and to perform all other obligations of Tenant under this Lease.
Landlord's acceptance of Rent from any other person is not a waiver
of any provision of this Article Nine. Consent to one transfer is
not a consent to any subsequent transfer. If Tenant's transferee
defaults under this Lease, Landlord may proceed directly against
Tenant without pursuing remedies against the transferee. Landlord
may consent to subsequent assignments or modifications of this
Lease by Tenant's transferee, without notifying Tenant or obtaining
its consent. Such action shall not relieve Tenant's liability under
this Lease.

 



Section 9.04. Offer to Terminate. If Tenant desires to assign the
Lease or sublease the Premises, Tenant shall have the right, but
not the obligation, to offer, in writing, to terminate the Lease as
of a date specified in the offer. If Landlord elects in writing to
accept the offer to terminate within twenty (20) days after notice
of the offer, the Lease shall terminate as of the date specified
and all the terms and provisions of the Lease governing termination
shall apply. If Landlord does not so elect, the Lease shall
continue in effect until otherwise terminated and the provisions of
Section 9.05 with respect to any proposed transfer shall continue
to apply.

 



Section 9.05. Landlord's Consent.

 


(a) Tenant's
request for consent to any transfer described in Section 9.01 shall
set forth in writing the details of the proposed transfer,
including the name, business and financial condition of the
prospective transferee, financial details of the proposed transfer
(e.g., the term of and the Rent and security deposit payable under
any proposed assignment or sublease), and any other information
Landlord deems relevant. Landlord shall have the right to withhold
consent, if reasonable, or to grant consent, based on the following
factors: (i) the business of the proposed assignee or subtenant and
the proposed use of the Premises; (ii) the net worth and financial
reputation of the proposed assignee or subtenant; (iii) Tenant's
compliance with all of its obligations under the Lease; and (iv)
such other factors as Landlord may reasonably deem
relevant.

 


(b) If
Tenant assigns or subleases, the following shall
apply:

 


(i) Tenant
shall pay to Landlord as Additional Rent under the Lease the
Landlord's Share (stated in Section 1.13) of the Profit (defined
below) on such transaction as and when received by Tenant, unless
Landlord gives written notice to Tenant and the assignee or
subtenant that Landlord's Share shall be paid by the assignee or
subtenant to Landlord directly. The "Profit" means (A) all amounts
paid to Tenant for such assignment or sublease, including "key"
money, monthly rent in excess of the monthly rent payable under the
Lease, and all fees and other consideration paid for the assignment
or sublease, including fees under any collateral agreements, less
(B) costs and expenses directly incurred by Tenant in connection
with the execution and performance of such assignment or sublease
for real estate broker's commissions and costs of renovation or
construction of tenant improvements required under such assignment
or sublease. Tenant is entitled to recover such costs and expenses
before Tenant is obligated to pay the Landlord's Share to Landlord.
The Profit in the case of a sublease of less than all the Premises
is the rent allocable to the subleased space as a percentage on a
square footage basis.

 


(ii) Tenant
shall provide Landlord a written statement certifying all amounts
to be paid from any assignment or sublease of the Premises within
thirty (30) days after the transaction documentation is signed, and
Landlord may inspect Tenant's books and records to verify the
accuracy of such statement. On written request, Tenant shall
promptly furnish to Landlord copies of all the transaction
documentation, all of which shall be certified by Tenant to be
complete, true and correct. Landlord's receipt of Landlord's Share
shall not be a consent to any further assignment or subletting. The
breach of Tenant's obligation wider this Paragraph 9.05(b) shall be
a material default of the Lease.

 



Section 9.06. No Merger. No merger shall result from Tenant's
sublease of the Premises under this Article Nine, Tenant's
surrender of this Lease or the termination of this Lease in any
other manner. In any such event, Landlord may
terminate any or all sub-tenancies or succeed to the interest of
Tenant as sub-Landlord under any or all
sub-tenancies.

 










 





 



ARTICLE
TEN: DEFAULTS: REMEDIES

 



Section 10.01. Covenants and Conditions. Tenant's performance of
each of Tenant's obligations under this Lease is a condition as
well as a covenant. Tenant's right to continue in possession of the
Premises is conditioned upon such performance. Time is of the
essence in the performance of all covenants and
conditions.

 



Section 10.02. Defaults. Tenant shall be in material default under
this Lease:

 


(a) If
Tenant abandons the Premises or if Tenant's vacation of the
Premises lasts longer than fifteen (15) days or results in the
cancellation of any insurance described in Section
4.04;

 


(b) If
Tenant fails to pay Rent or any other charge when
due;

 


(c) If
Tenant fails to perform any of Tenant's non-monetary obligations
under this Lease for a period of ten (10) days after written notice
from Landlord; provided that if more than thirty (30) days are
required to complete such performance, Tenant shall not be in
default if Tenant commences such performance within the thirty
(30)-day period and thereafter diligently pursues its completion.
However, Landlord shall not be required to give such notice if
Tenant's failure to perform constitutes a non-curable breach of
this Lease. The notice required by this Paragraph is intended to
satisfy any and all notice requirements imposed by law on Landlord
and is not in addition to any such requirement

 

(d) (i)
If Tenant makes a general assignment or general arrangement for the
benefit of creditors; (ii) if a petition for adjudication of
bankruptcy or for reorganization or rearrangement is filed by or
against Tenant and is not dismissed within thirty (30) days; (iii)
if a trustee or receiver is appointed to take possession of
substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease and possession is not restored to
Tenant within thirty (30) days; or (iv) if substantially all of
Tenant's assets located at the Premises or of Tenant's interest in
this Lease is subjected to attachment, execution or other judicial
seizure which is not discharged within thirty (30) days. If a court
of competent jurisdiction determines that any of the acts described
in this subparagraph (d) is not a default under this Lease, and a
trustee is appointed to take possession (or if Tenant remains a
debtor in possession) and such trustee or Tenant transfers Tenant's
interest hereunder, then Landlord shall receive, as Additional
Rent, the excess, if any, of the Rent (or any other consideration)
paid in connection with such assignment or sublease over the Rent
payable by Tenant under this Lease.

 


(e) If
Tenant attempts to revoke or otherwise terminate, or purports to
revoke or otherwise terminate, the Lease Guaranty Deposit or the
Security Device.

 



Section 10.03. Remedies. On the occurrence of any material default
by Tenant, Landlord may, at any time thereafter, with or without
notice or demand and without limiting Landlord in the exercise of
any right or remedy which Landlord may have:

 



(a)           Terminate
Tenant's right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. In
such event, Landlord shall be entitled to recover from Tenant all
damages incurred by Landlord by reason of Tenant's default,
including (i) the worth at the time of the award of the unpaid Base
Rent, Additional Rent and other charges which Landlord had earned
at the time of the termination; (ii) the worth at the time of the
award of the amount by which the unpaid Base Rent, Additional Rent
and other charges which Landlord would have earned after
termination until the time of the award exceeds the amount of such
rental loss that Tenant proves Landlord could have reasonably
avoided; (iii) the worth at the time of the award of the amount by
which the unpaid Base Rent, Additional Rent and other charges which
Tenant would have paid for the balance of the Lease Term after the
time of award exceeds the amount of such rental loss that Tenant
proves Landlord could have reasonably avoided; and (iv) any other
amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations
under the Lease or which in the ordinary course of things would be
likely to result therefrom, including, but not limited to, any
costs or expenses Landlord incurs in maintaining or preserving the
Premises after such default, the
cost of recovering possession of the Premises, expenses of
reletting, including necessary renovation or alteration of the
Premises, Landlord's reasonable attorneys' fees incurred in
connection therewith, and any real estate commission paid or
payable. As used in subparts (i) and (ii) above, the "worth at the
time of the award" is computed by allowing interest on unpaid
amounts at the rate of fifteen percent (15%) per annum, or such
lesser amount as may then be the maximum lawful rate. As used in
subpart (iii) above, the "worth at the time of the award" is
computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award,
plus one percent (1%). If Tenant has abandoned the Premises,
Landlord shall have the option of (i) retaking possession of the
Premises and Recovering from Tenant the amount specified in this
Paragraph 10.03(a), or (ii) proceeding under Paragraph
10.03(b);

 










 





 

(b) Maintain
Tenant's right to possession, in which case this Lease shall
continue in effect whether or not Tenant has abandoned the
Premises. in such event, Landlord shall be entitled to enforce all
of Landlord's rights and remedies under this Lease, including the
right to recover the Rent as it becomes due;

 


(c) Pursue
any other remedy now or hereafter available to Landlord under the
laws or judicial decisions of the state in which the Premises is
located.

 



Section 10.04. Repayment of "Free" Rent. If this Lease provides for
a postponement of any monthly rental payments, a period of "free"
Rent or other Rent concession, such postponed Rent or "free" Rent
is called the "Abated Rent". Tenant shall be credited with having
paid all of the Abated Rent on the expiration of the Lease Term
only if Tenant has fully, faithfully, and punctually performed all
of Tenant's obligations hereunder, including the payment of all
Rent (other than the Abated Rent) and all other monetary
obligations and the surrender of the Premises in the physical
condition required by this Lease. Tenant acknowledges that its
right to receive credit for the Abated Rent is absolutely
conditioned upon Tenant's full, faithful and punctual performance
of its obligations under this Lease. If Tenant defaults and does
not cure within any applicable grace period, the Abated Rent shall
immediately become due and payable in full and this Lease shall be
enforced as if there were no such rent abatement or other rent
concession. In such case Abated Rent shall be calculated based on
the full initial Rent payable under this Lease.

 



Section 10.05. Optional Termination. Notwithstanding any other term
or provision hereof to the contrary, the Lease shall, at Landlord's
option, terminate on the occurrence of any act which affirms the
Landlord's intention to terminate the Lease as provided in Section
10.03 hereof; including the filing of an unlawful detainer action
against Tenant. On such termination, Landlord's damages for default
shall include all costs and fees, including reasonable attorneys'
fees that Landlord incurs in connection with the filing,
commencement, pursuing and/or defending of any action in any
bankruptcy court or other court with respect to the Lease; the
obtaining of relief from any stay in bankruptcy restraining any
action to evict Tenant; or the pursuing of any action with respect
to Landlord's right to possession of the Premises. All such damages
suffered (apart from Base Rent and other rent payable hereunder)
shall constitute damages which must be reimbursed to Landlord prior
to assumption of the Lease by Tenant or any successor to Tenant in
any bankruptcy or other proceeding.

 


Section 10.06.
Cumulative Remedies. Landlord's exercise of any right or remedy
shall not prevent it from exercising any other right or
remedy.

 


ARTICLE
ELEVEN: PROTECTION OF
LENDERS

 



Section 11.01. Subordination. Landlord shall have the right to
subordinate this Lease to any ground lease, deed of trust or
mortgage encumbering the Premises, any advances made on the
security thereof and any renewals, modifications, consolidations,
replacements or extensions thereof, whenever made or recorded.
Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Premises or the Lease. Tenant
shall execute such further documents and assurances as such lender
may require, provided that Tenant's obligations under this Lease
shall not be increased in any material way (the performance of
ministerial acts shall not be deemed material), and Tenant shall
not be deprived of its rights under this Lease. Tenant's right to
quiet possession of the Premises during the Lease Term shall not be
disturbed if Tenant pays the Rent and performs all of Tenant's
obligations under this Lease and is not otherwise in default. If
any ground lessor, beneficiary or mortgagee elects to have this
Lease prior to the lien of its ground lease, deed of trust or
mortgage and gives written notice thereof to Tenant, this Lease
shall be deemed prior to such ground lease, deed of trust or
mortgage whether this 
Lease is dated prior or subsequent to the date of said ground
lease, deed of trust or mortgage or the date of recording
thereof.

 



Section 11.02. Attornment. If Landlord's interest in the Premises
is acquired by any ground lessor, beneficiary under a deed of
trust, mortgagee, or purchaser at a foreclosure sale, Tenant shall
attorn to the transferee of or successor to Landlord's interest in
the Premises and recognize such transferee or successor as Landlord
under this Lease. Tenant waives the protection of any statute or
rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Premises upon
the transfer of Landlord's interest.

 



Section 11.03. Signing of Documents. Tenant shall sign and deliver
any instrument or documents necessary or appropriate to evidence
any such sacrament or subordination or agreement to do so. If
Tenant fails to do so within ten (10) days after written request,
Tenant hereby makes, constitutes and irrevocably appoints Landlord,
or any transferee or successor of Landlord, the attorney-in-fact of
Tenant to execute and deliver any such instrument or
document.

 



Section 11.04. Estoppel Certificates.

 


(a) Upon
Landlord's written request, Tenant shall immediately execute,
acknowledge and deliver to Landlord a written statement certifying:
(i) that none of the terms or provisions of this Lease have been
changed (or if they have been changed, stating how they have been
changed); (ii) that this Lease has not
been canceled or terminated; (iii) the last date of payment of the
Base Rent and other charges and the time period covered by such
payment; (iv) that Landlord is not in default under this Lease (or,
if Landlord is claimed to be in default, stating why); and (v) such
other representations or information with respect to Tenant or the
Lease as Landlord may reasonably request or which any prospective
purchaser or encumbrancer of the Premises may require. Tenant shall
deliver such statement to Landlord within five (5) days after
Landlord's request. Landlord may give any such statement by Tenant
to any prospective purchaser or encumbrancer of the Premises. Such
purchaser or encumbrancer may rely conclusively upon such statement
as true and correct.

 



 







 





 


(b) If
Tenant does not deliver such statement to Landlord within such five
(5) day period, Landlord, and any prospective purchaser or
encumbrancer, may conclusively presume and rely upon the following
facts: (i) that the terms and provisions of this Lease have not
been changed except as otherwise represented by Landlord; (ii) that
this Lease has not been canceled or terminated except as otherwise
represented by Landlord; (iii) that not more than one month's Base
Rent or other charges have been paid in advance; and (iv) that
Landlord is not in default under the Lease. In such event, Tenant
shall be estopped from denying the truth of such
facts.

 


(c) Upon
the request of Tenant, Landlord shall deliver an estoppel
certificate of the same type, and in the same manner as applicable
to Tenant pursuant to Sections 11.04(a) and
(b).

 



Section 11.05. Tenant's Financial Condition. No more than once per
calendar year, and within ten (10) days after written request from
Landlord, Tenant shall deliver to Landlord such financial
statements as Landlord reasonably requires to verify the net worth
of Tenant or any assignee, subtenant, or guarantor of Tenant. In
addition, and no more than once per calendar year, Tenant shall
deliver to any lender designated by Landlord any financial
statements required by such lender to facilitate the financing or
refinancing of the Premises. Tenant represents and warrants to
Landlord that each such financial statement is a true and accurate
statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the
purposes set forth in this Lease. Tenant's obligation to deliver
the foregoing financial information shall be conditioned on
receiving a commercially reasonably nondisclosure agreement from
Landlord and any party which will be given access to such financial
information.

 



ARTICLE TWELVE: LEGAL COSTS

 



Section 12.01. Legal Proceedings. If Tenant or Landlord shall be in
breach or default under this Lease, such party (the "Defaulting
Party") shall reimburse the other party (the "Nondefaulting Party")
upon demand for any costs or expenses that the Nondefaulting Party
incurs in connection with any breach or default of the Defaulting
Party under this Lease, whether or not suit is commenced or
judgment entered. Such costs shall include reasonable legal fees
and costs incurred for the negotiation of a settlement, enforcement
of rights or otherwise. Furthermore, if 
any action for breach of or to enforce the provisions of this Lease
is commenced, the court in such action shall award to the party in
whose favor a judgment is entered, a reasonable sum as attorneys'
fees and costs. The losing party in such action shall pay such
attorneys' fees and costs. Tenant shall also indemnify Landlord
against and hold Landlord harmless from all costs, expenses,
demands and liability Landlord may incur if Landlord becomes or is
made a party to any claim or action (a) instituted by Tenant
against any third party, or by any third party against Tenant, or
by or against any person holding any interest under or using the
Premises by license of or agreement with Tenant; (b) for
foreclosure of any lien for labor or material furnished to or for
Tenant or such other person; (c) otherwise arising out of or
resulting from any act or transaction of Tenant or such other
person; or (d) necessary to protect Landlord's interest under this
Lease in a bankruptcy proceeding, or other proceeding under Title
11 of the United States Code, as amended. Tenant shall defend
Landlord against any such claim or action at Tenant's expense with
counsel reasonably acceptable to Landlord or, at Landlord's
election, Tenant shall reimburse Landlord for any legal fees or
costs Landlord incurs in any such claim or
action.





Section 12.02.
Landlord's Consent. Tenant shall pay Landlord's reasonable
attorneys' fees incurred in connection with Tenant's request for
Landlord's consent wider Article Nine (Assignment and Subletting),
or in connection with any other act which Tenant proposes to do and
which requires Landlord's consent.







 



ARTICLE THIRTEEN:
MISCELLANEOUS PROVISIONS



 



Section 13.01. Landlord's liability; Certain
Duties.

 


(a) As
used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Premises or Project or the
leasehold estate under a ground lease of the Premises or Project at
the time in question. Each Landlord is obligated to perform the
obligations of Landlord under this Lease only during the time such
Landlord owns such interest or title. Any Landlord who transfers
its title or interest is relieved of all liability with respect to
the obligations of Landlord under this Lease to be performed on or
after the date of transfer. However, each Landlord shall deliver to
its transferee all funds that Tenant previously paid if such funds
have not yet been applied under the terms of this
Lease.

 


(b) Tenant
shall give written notice of any failure by Landlord to perform any
of its obligations under this Lease to Landlord and to any ground
lessor, mortgagee or beneficiary under any deed of trust
encumbering the Premises whose name and address have been furnished
to Tenant in writing. Landlord shall not be in default under this
Lease unless Landlord (or such ground lessor, mortgagee or
beneficiary) fails to cure such nonperformance within thirty (30)
days after receipt of Tenant's notice. However, if such
non-performance reasonably requires more than thirty (30) days to
cure, Landlord shall not be in default if such cure is commenced
within such thirty (30) day period and thereafter diligently
pursued to completion.

 


(c) Notwithstanding
any term or provision herein to the contrary, the liability of
Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Premises and
the Project, and neither the Landlord nor its partners,
shareholders, officers or other principals shall have any personal
liability under this Lease.

 



 







 





 


Section
13.02. Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof
is illegal or unenforceable shall not cancel or invalidate the
remainder of such provision or this Lease, which shall remain in
full force and effect.

 



Section 13.03. Interpretation. The captions of the Articles or
Sections of this Lease are to assist the parties in reading this
Lease and are not a part of the terms or provisions of this Lease.
Whenever required by the context of this Lease, the singular shall
include the plural and the plural shall include the singular. The
masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions
of Tenant, the term "Tenant" shall include Tenant's agents'
employees, contractors, invitees, successors or others using the
Premises with Tenant's expressed or implied
permission.

 



Section 13.04. Incorporation of Prior Agreements; Modifications.
This Lease is the only agreement between the parties pertaining to
the lease of the Premises and no other agreements are effective.
All amendments to this Lease shall be in writing and signed by all
parties. Any other attempted amendment shall be
void.

 



Section 13,05. Notices. All notices required or permitted under
this Lease shall be in writing and shall be personally delivered or
sent by certified mail, return receipt requested, postage prepaid.
Notices to Tenant shall be delivered to the address specified in
Section 1.03 above. Notices to Landlord shall be delivered to the
address specified in Section 1.02 above. An notices shall be
effective upon delivery. Either party may change its notice address
upon written notice to the other party.

 



Section 13.06. Waivers. All waivers must be in writing and signed
by the waiving party. Landlords failure to enforce any provision of
this Lease or its acceptance of rent shall not be a waiver and
shall not prevent Landlord from enforcing that provision or any
other provision of this Lease in the future. No statement on a
payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without
notice to Tenant, negotiate such check without being bound to the
conditions of such statement.

 



Section 13.07. No Recordation. Tenant shall not record this Lease
without prior written consent from Landlord. However, either
Landlord or Tenant may require that a "Short Form" memorandum of
this Lease executed by both parties be recorded. The party
requiring such recording shall pay all transfer taxes and recording
fees.

 



Section 13.08. Binding Effect; Choice of Law. This Lease binds any
party who legally acquires any rights or interest in this Lease
from Landlord or Tenant However, Landlord shall have no obligation
to Tenant's successor unless the rights of interests of Tenant's
successor are acquired in accordance with the terms of this Lease.
The laws of the State of Nevada shall govern this
Lease.

 



Section 13.09. Corporate Authority; Partnership Authority. If
Tenant is a corporation, each person signing this Lease on behalf
of Tenant represents and warrants that he has full authority to do
so and that this Lease binds the corporation. Within ten (10) days
after this Lease is signed, Tenant shall deliver to Landlord a
certified copy of a resolution of Tenant's Board of Directors
authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a
partnership, each person or entity signing this Lease for Tenant
represents and warrants that he or it is a general partner of the
partnership, that he or it has full authority to sign for the
partnership and that this Lease binds the partnership and all
general partners of the partnership. Tenant shall give written
notice to Landlord of any general partner's withdrawal or addition.
Within ten (10) days after this Lease is signed, Tenant shall
deliver to Landlord a copy of Tenant's recorded statement of
partnership or certificate of limited
partnership.

 


Section 13.10.
Joint and Several Liability. All parties signing this Lease as
Tenant shall be jointly and severally liable for all obligations of
Tenant.

 


Section
13.11. Reserved.

 



Section 13.12. Execution of Lease. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the
counterparts shall constitute a single binding instrument
Landlord's delivery of this Lease to Tenant shall not be deemed to
be an offer to lease and shall not be binding upon either party
until executed and delivered by both parties.

 



Section 13.13. Survival. All representations and warranties of
Landlord and Tenant shall survive the termination of this
Lease.

 



Section 13.14. Agency Disclosure; No Other Brokers. Landlord and
Tenant each warrant that they have dealt with no other real estate
broker(s) in connection with this transaction except: Jones Lang
LaSalle, whom represents the Landlord in this
transaction.

 



In the event that Jones Lang LaSalle represents both Landlord and
Tenant, Landlord and Tenant hereby confirm that they were timely
advised of the dual representation and that they consent to the
same, and that they do not expect said broker to disclose to either
of them the confidential information of the other
party.

 



Section 13.15. Confidentiality. Tenant acknowledges that the terms
and conditions contained herein and the details of this Lease will
remain confidential between the parties and any proposals, lease
drafts, leases or summaries of any
kind will be distributed, copies or otherwise transmitted, orally
or in writing to any other person of entity.

 










 





 


Section
13.16. Special Provisions; Tenant's Use.

 


(a) Tenant
represents and warrants that their use of the Premises will be in
compliance with all applicable local and state law. Additionally,
Tenant is of the opinion that even though their use is in conflict
with Federal law, Tenant believes that Federal policy is such that
the Federal government, or any agency thereof will not prosecute
Landlord for Tenant's use of the Premises.

 


(b) Tenant
and the principals of Tenant shall indemnify, defendant, and hold
harmless Landlord (including its affiliates or employees), from
loss and/or action taken by a governmental entity, or agency of
competent jurisdiction, as a direct result of Tenant's use of the
Premises.

 



Notwithstanding the above, Landlord may consider accepting an
insurance policy or bond that will adequately cover Landlord's risk
exposure with respect to Tenant's use.

 


(c) In
the event of any action taken against Landlord (including its
affifliates or employees) by a governmental entity, or agency of
competent authority in which Landlord (including its principals,
affiliates, or employees) is at risk of civil or criminal action as
a result of Tenant's occupancy and/or use of the Premises, then
Landlord may require an immediate termination of the use in
question at the Premises. Without limiting the generality of the
foregoing, a cease and desist letter (or similar directive)
directed to Landlord from a governmental authority of appropriate
jurisdiction shall be included in the definition of an
"action".

 



Section 13.17. Access to Building Three. Building Three, positioned
at the north-east corner of the Property, is currently unoccupied
and inhabitable. This building is also land-lock by the yard and
parking area of the Premises. Should Landlord wish to improve
Building Three and re-tenant same, then Tenant shall permit
reasonable access through their yard and/or parking area for 24/7
access to Building Three, subject to compliance with applicable
laws and regulations applicable to Tenant's Permitted
Use.

 


Section 13.18.
Lease Guaranty Deed of Trust - Replacement. In lieu of a personal
guaranty, the Performance Deed of Trust attached herewith as
Exhibit "D" shall be recorded against the property described
therein, commonly known as [REDACTED] (collectively the "Pledged
Property"). The Lease Guaranty Deed of Trust shall serve as
collateral for the obligations of Tenant to secure the performance
of Tenant's obligations as set forth in Section 6.06 of the Lease
relating to the condition of the Premises upon expiration or
earlier termination. [REDACTED.] At any time during the terms of
this Lease or any renewal thereof, Tenant may satisfy the
obligations of the Lease Guaranty Deed of Trust and cause it to be
reconveyed by Landlord by posting a security bond in favor of
Landlord in the amount of Six Hundred Thousand Dollars
($600,000.00) in a form acceptable to Landlord in its commercially
reasonable discretion, or by posting an additional cash security
deposit in the amount of Two Hundred Fifty Thousand Dollars
($250,000.00).

 



*** SIGNATURES ON NEXT PAGE ***

 















 






 


Landlord and Tenant
have executed this Lease at the place and on the dates specified
adjacent to their signatures below and have initialed all Exhibits
which are attached to or incorporated by reference in this
Lease.

 


 



“LANDLORD”                                                                           

“TENANT”






 


 




[REDACTED]                                                                


MM DEVELOPMENT COMPANY, INC.,







A NEVADA CORPORATION



 



By: /s/ Robert A.
Groesbeck



Robert A. Groesbeck, President



 



 



PLANET 13 HOLDINGS, INC.,



A CANADIAN CORPORATION



 



By: /s/ Robert A.
Groesbeck



Robert A. Groescbeck, Co-CEO



 



By: /s/ Larry
Scheffler


Larry Scheffler,
Co-CEO


 










 







	








 



Exhibit “A”


 


 


 


 


 


 


 


 


 


 


 


 










 





 



EXHIBIT "Al"

 



SITE PLAN

 



(PROJECT AND PREMISES)

 



 

 















 





 



EXHIBIT "A.2"

 


YARD
& PARKING AREA

 



 

 










 










 



EXHIBIT "B"

 



CONDITION OF PREMISES; TENANT IMPROVEMENT

 


Notwithstanding
anything contained within the Lease to the contrary, Tenant shall
accept the Premises in an "AS IS", "WHERE IS"
condition.

 


Tenant
shall cause the following improvements to be made to the Premises
at Tenant's sole cost and expense:

 


1.Tenant,
at Tenant's sole cost and expense, shall build out a minimum of One
Million Dollars


($1,000,000)
of Tenant Improvements to the Premises within the firth twelve (12)
months of the Lease Term. The improvements include but are not
limited to the following:

 


Tenant,
at Tenant's sole cost and expense, shall build out a minimum of One
Million Dollars ($1,000,000) of Tenant Improvements to the Premises
within the first twelve (12) months of the Lease Term. The
improvements include, but are not limited to the following:
renovation of approximately 9,000 square feet of existing office
space, and development of approximately 16,200 square feet of
dispensary floor space, including operational support facilities,
in addition to exterior elevation improvements. Total cost of these
initial improvements are estimated at between $5,000,000-$6,000,000
(Tenant's Work).

 


Any
and all other Tenant's Work and other improvements and expenses
associated with the Premises shall be paid for by
Tenant."

 


("Tenant's
Work"). [Tenant's Work shall include the construction of demising
gates and fences to separate the Premises from remainder of the
Project].

 


Any
and all other improvements and expenses associated with the
Premises shall be paid for by the Tenant.


 



 







 






 



Exhibit "1"

 



Refer to Exhibit "A.1", the Site Plan.


 


 














 










 



EXHIBIT "C"

 



RULES AND REGULATIONS

 



(ATTACHED TO AND MADE A PART OF THIS LEASE)

 


Dated:
February 01, 2018

 


By
and Between: The Gabriel Gomes Saia, Jr. Revocable Living Trust
("Landlord') and MM Development Company, LLC
("Tenant").

 



General rules

 

1. Tenant
shall not suffer or permit the obstruction of any Common Areas,
including driveways and walkways.

 

2. Landlord
reserves the right to refuse access to any persons which Landlord,
in good faith, judges to be a threat to the safety, reputation, or
property of the Project and its occupants.

 

3. When
reasonably appropriate and when not in direct conflict with
Tenant's Permitted Use, Tenant shall perform all daily work
activities with the roll-up door(s) closed to abate any excessive
noise pollution.

 

4. Tenant
shall not make or permit any noise or odors that unreasonably annoy
or interfere with other Tenants or persons having business within
the Project.

 

5. Tenant
shall not keep animals or birds within the Project and shall not
bring bicycles, motorcycles or other vehicles into areas not
designated as authorized for same.

 

6. Storage
of items in the yard of the Premises shall be permitted so long as
such storage is kept in an orderly fashion and free of debris.
Storage of inoperable vehicles, inoperable equipment, and fallow
materials shall not be permitted.

 

7. Tenant
shall not make, suffer or permit litter except in appropriate
receptacles for that purpose.

 

8. Tenant
shall have signage rights upon Landlord's approval, which shall not
be unreasonably withheld. Tenant shall be responsible for all costs
related to Tenant Signage.

 

9. Landlord
will furnish Tenant, free of charge, with a key to each door in the
Premises of which Landlord has hi its possession of same. Landlord
may charge a reasonable fee for any additional keys. Tenant shall
be responsible for changing any lock or installing new or
additional locks or any bolts on any door of the
Premises.

 

10. Tenant
shall not deface the walls, partitions or other surfaces of the
Premises or Project.

 

11. Tenant
shall not employ any service or contractor for services or work to
be performed in the Building, except as reasonably approved in
advance by Landlord.

 

12. Tenant
shall return all keys at the termination of its tenancy and shall
be responsible for the cost of replacing any keys that are
lost.

 

13. Tenant
shalt not use or keep in the Premises or the Building any
unapproved kerosene, gasoline, or flammable or combustible fluid or
material, or use any method of heating or air conditioning other
than as are typically found in projects or operations of similar
type and quality in the Las Vegas area, or those that have been
previously approved in writing by Landlord and/or by applicable
governmental authorities.

 










 





 

14. The
Premises shall not be used for Commercial lodging.

 

15. Tenant
shall comply with all safety, fire protection and evacuation
regulations established by Landlord or any applicable governmental
agency.

 

16. The
washroom partitions, minors, wash basins and other plumbing
fixtures shall not be used for any purpose other than those for
which they were constructed, and no sweeping, rubbish, rags or
other substances shall be thrown therein. All damage resulting from
any misuse of the fixtures
shall be borne by the Tenant who, or whose servants, employees,
agents, visitors, or licensees, shall have caused the
same.

 

17. Tenant
shall not disturb, solicit, or canvass any occupant of the Building
and shall cooperate to prevent same.

 

18. Without
the written consent of Landlord, Tenant shall not use the name of
the Building in connection with or in promoting or advertising the
business of Tenant except as Tenant's address.

 

19. Tenant
assumes all risk from theft or vandalism and agrees to keep its
Premises locked as may be required.

 

20. Tenant
shall not suffer or permit anything in or around the Premises or
Building that causes excessive vibration in any part of the
Project

 

21. Tenant
shall be responsible for any damage to the Project and/or Premises
arising from such activity as moving of furniture, freight and
equipment

 

22. Reserved.

 

23. Tenant
shall not suffer or permit smoking or carrying of lighted cigars or
cigarettes in areas reasonably designated by Landlord or by
applicable governmental agencies as non-smoking areas.

 

24. Reserved.

 

25. Reserved.

 

26. Landlord
reserves the right to waive anyone of these rules and regulations
and/or to any particular Tenant, and any such waiver shall not
constitute a waiver of any other rule or regulation or any
subsequent application thereof to such Tenant

 

27. Landlord
reserves the right to make such other reasonable rules and
regulations as it may from time to time deem necessary for the
appropriate operation and safety of the Project and its occupants.
Tenant agrees to abide by these and such reasonable rules and
regulations.

 

28. Tenant
will be required to furnish their own trash dumpster at Tenant's
expense. Trash dumpsters maintained by Tenant shall be stored
within the yard of Tenant's Premises at all times except on pick-up
days. Should Landlord provide trash dumpsters as part of the Common
Area Maintenance, such dumpsters are to be used for common area
refuse only. No Equipment, production materials, or any other
discards are to be placed in the common area dumpsters or dumpster
enclosures. Any cardboard boxes shall be cut up and/ or flattened
and placed in the dumpster utilizing as little space as possible.
The dumpster is full, waste will be stored in Tenant's lease space
until the dumpster is emptied.

 










 





 



PARKING RULES

 

1. Users
of the parking area will obey all posted signs and park only in the
areas designated for vehicle parking.

 

2. The
maintenance, of vehicles in the parking area or common area is
prohibited. Tenant shall be permitted to wash their vehicles within
the yard of their Premises, conditioned upon (a) no water runoff
shall travel to the common areas or to any other area for the
exclusive use of other tenants; and (b) Tenant shall be responsible
for damage caused to the pavement as a result of their washing
activities.

 

3. Tenant
shall be responsible for seeing that all of its employees, agents
and invitees comply with the applicable parking rules, regulations,
laws and agreements.

 

4. Parking
areas shall be used only for parking by vehicles no longer than
full size, passenger automobiles herein called "Permitted Size
Vehicles". Vehicles other than Permitted Size Vehicles are herein
referred to as "Oversized Vehicles". No unauthorized parking of
recreational vehicles, motor homes, boats and/ or trailers, is
permitted within the Project

 




5.

Tenant's
service vehicles, if any, shall be parked within the yard of their
Premises warehouse at night.





 

6. Unless
otherwise instructed, every person using the parking area is
required to park and lock his own vehicle. Landlord will not be
responsible for any damage to vehicles, injury to persons or loss
of property, all of which risks are assumed by the party using the
parking area.

 

7. Landlord
reserves the right to modify these rules and/ or adopt such other
reasonable and nondiscriminatory rules and regulations as it may
deem necessary for the proper operation of the parking
area.

 










 





 



EXHIBIT "D"

 


Escrow
No.

 


When
Recorded please send to:

 



PERFORMANCE DEED OF
TRUST






This
Performance Deed of Trust ("Deed of Trust"), made this 24th day of
April, 2018, between MM DEVELOPMENT COMPANY, INC., a Nevada
corporation, herein called TRUSTOR herein, whose address is 2548 W.
Desert Inn Road, Las Vegas, Nevada 89109; FIRST AMERICAN
TILEI_
whose address is 2500 N. Buffalo #150 Las VNevada 89128, herein
called TRUSTEE, [REDACTED] herein called BENEFICIARY.


 


Witnesseth:
That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO TRUSTEE
IN TRUST, WITH POWER OF SALE, that property in Nye County, Nevada,
described as follows:

 


PARCEL
1:

 


TOWNSHIP
12 SOUTH, RANGE 47 EAST, M.D.B.&M., SECTION 30; GOVERNMENT LOT
2 OF THE NORTHWEST QUARTER (NW 1/4).

 


PARCEL
2:

 


THE
SOUTHEAST QUARTER (SE 1/4) OF THE NORTHWEST QUARTER (NW 1/4) AND
THAT PORTION SOUTH OF THE CENTER LINE OF BEAM AIRPORT ROAD, OF THE
NORTHEAST QUARTER (NE 1/4) OF TIM NORTHWEST QUARTER (NW 1/4) OF
SECTION 30, TOWNSHIP 12 SOUTH, RANGE 47 EAST, M.D.B.&M., AS
MORE FULLY SET FORTH IN THAT CERTAIN MAP ATTACHED AS EXHIBIT "AS"
TO THAT OFFER OF DEDICATION OF STREET/ROAD RIGHT-OF-WAY RECORDED ON
SEPTEMBER 28, 2007, AS FILE NO. 694944 OF NYE COUNTY,
NEVADA.

 


Assessor's
Parcel Nos. 018-37-16 and 018-37-17

 


This
Deed of Trust is given for the purpose of securing full and timely
performance of Trustor's obligations as set forth in that certain
Industrial Real Estate Lease (Multi-Tenant Facility) dated April
-1.kt
2018, and specifically Tenant's obligations set forth in Sections
6.06 and 13.18 thereof. A copy of said Lease is attached hereto as
Exhibit "A" and incorporated herein by this reference. In the event
of default as set forth in the Lease, and resulting foreclosure,
Beneficiary shall be entitled to credit bid all amounts reasonably
expended in connection with the referenced Sections of the Lease,
including without limitation any attorney fees and costs incurred
together with any foreclosure fees, costs or expenses
incurred.


 



The undersigned Trustor requests that a copy of any Notice of
Default and of any Notice of Sale hereunder be mailed to 2548 W.
Desert Inn Road, Las Vegas, Nevada 89109 hereinbefore set
forth.


 


 


	

 

	
MM DEVELOPMENT COMPANY,
INC


	

 


	

 

	

 

	

 

	

 


	

	
By:  

	
/s/ Robert A.
Groesbeck


	

 


	

 

	

 

	
Its:
President


	

 


	

 

	

 

	
	

 







 










 





 



INDUSTRIAL REAL ESTATE LEASE

 



(Multi- Tenant Facility)

 



ADDENDUM:

 


This
addendum is made this 23rd day of April, 2018,
and is added to and amends that certain agreement and between MM
Development Company, Inc. as Tenant [REDACTED] Landlord, which
agreement is dated 23rd day of April,
2018.

 


Recitals

 


WHEREAS,
the lease requires the signatures of Robert Groesbeck and Larry
Scheffler as co-CEOs of Planet 13 Holdings, Inc., which entity
exists at this time under the name of Carpincho Capital Corp., a
Canadian public company.

 


WHEREAS,
MM Development Company, Inc. has engaged in a reverse take-over
process with Carpincho Capital Corp., with the share exchange
agreement anticipated to be signed on or around April 26, 2018, and
public disclosures have been made regarding a subsequent name
change of Carpincho Capital Corp. to Planet 13 Holdings, Inc., and
that the Canadian public company will be a tenant at the facilities
described herein.

 


WHEREAS,
MM Development Company, Inc. is indirectly owned 47% by Robert
Groesbeck, 47% by Larry Scheffler, and 6% by Chris Wren, all of
whom have approved and committed to the reverse take-over
transaction.

 


WHEREAS,
pursuant to the reverse take-over transaction, Robert Groesbeck and
Larry Scheffler will hold a majority of the shares of Carpincho
Capital Corp., and have agreements to be appointed as the co-CEO's
of Carpincho Capital Corp. for a term of 5 years, and further are
designated as directors of the public company following the close
of the transaction.

 


WHEREAS,
immediately after the consummation of the reverse take-over,
Carpincho Capital Corp. shall file a name change to Planet 13
Holdings, Inc.

 


NOW
THEREFORE, Robert Groesbeck and Larry Scheffler, individually, do
hereby covenant and agree as follows:

 

1. Upon
appointment as co-CEOs of Planet 13 Holdings, Inc., they shall
immediately execute this lease agreement as corporate officers of
Planet 13 Holdings, Inc. and Planet 13 Holdings, Inc. shall have
all obligations and rights arising under this lease upon such
execution.


 

2. They
shall notify all investors and make such disclosures as necessary
to put all parties on notice, public or otherwise, that a requisite
event of the reverse take-over described in the recitals to this
lease addendum includes that Planet 13 Holdings, Inc. shall enter
into the lease agreement as a tenant on or immediately after the
close of the reverse take-over transaction.


 



By:
/s/ Robert A.
Groesbeck


Date:
4-23-18







Robert A. Groesbeck, individually

 








By:
/s/ 
Larry Scheffler

Date:
4-23-18









Larry Scheffler, individually


 










 










 



INDUSTRIAL REAL ESTATE LEASE


(Multi-
Tenant Facility)

 



ADDENDUM, page 2:

 



Addendum acknowledged and accepted by:

 


"LANDLORD"

 


 



[REDACTED]