Document:

phot_ex1016.htm

Exhibit 10.16

 

LEASE

FOR

STONE CREEK BUSINESS CENTER

 

 

This lease is made by and between STONE CREEK BUSINESS CENTER, LTD., a Colorado limited partnership ("Landlord "), and GROWLIFE HYDROPONICS, INC. ("Tenant").

 

1. LEASE: For and in consideration of and upon the agreements, at the rental, and for the Term set forth in this lease (the "Lease"), Landlord leases to Tenant and Tenant .leases from Landlord the premises (the "Premises ") located in the building (the "Building") in the County of Eagle, Colorado, commonly known as STONE CREEK BUSINESS CENTER. LLLP (the "Project") and highlighted in red on attached Schedule I, which is hereby incorporated herein by reference.

 

(a) 81620; Units 5&6, 40800 Highway 6, Avon, Colorado,

 

(b) Square feet (2502):

 

The approximate square footage of the Premises, as set forth herein, is accepted by both Landlord and Tenant as the size and square footage of the Premises for all purposes under this Lease and shall not be subject to challenge at a later date, it being recognized that there are different methods by which square footage can be measured and that no two individuals measuring the size of the Premises are likely to come up with the same number.

 

2. PROJ ECT LEGA L: Lot 5, Eagle Vail Commercial Service Center first amendment, a re-subdivision of Lots 2 through 6, Block 2, Eagle-Vail Commercial Service Center, Eagle County, Colorado.

 

3. LEASE TERM:

 

1. The term of the Lease (the "Term") and the right of Tenant to take possession of and to occupy the Premises shall commence at twelve o'clock noon on October 21, 2013 (the "Commencement Date"), and, unless extended or sooner terminated pursuant to the Lease, shall terminate at twelve o'clock noon on the last day of September, 2018.

 

2. Subject to the conditions hereinafter set forth, Tenant is hereby granted an option (the "Option") for a 0 year extension of the Term (the "Renewal Term"). If Tenant intends to exercise the Option, then, at least one hundred and eighty (180) calendar days prior to the expiration of the Term, Tenant shall give Landlord written notice that it thereby exercises the Option. Notwithstanding the service of such notice, it shall be a condition precedent to the effective exercise of the Option that, at both the time of service of the written notice and at the time of the commencement of the extension of the Term, Tenant shall not be in default under the Lease. All terms and provisions of the Lease shall apply and be in full force and effect during any Renewal Term resulting from this paragraph 3.02. No additional options for further

 

  

  

  

 

full force and effect during any Renewal Term resulting from this paragraph 3.02. No additional options for further extensions of the Term are created by this paragraph. The foregoing notwithstanding, Landlord may, at Landlord's sole option, upon the giving of written notice to Tenant, terminate and declare null and void the Option described in this paragraph 3.02 in the event that, during the Term of this Lease, Tenant fails to pay Rent when due on more than two (2) occasions or otherwise is declared, in writing, to be in default of any provisions of the Lease. The foregoing notwithstanding, in the event of the exercise by Tenant of any Option to extend the term of the Lease, as provided for herein, Landlord shall, until sixty (60) calendar days prior to the effective date of any such Renewal Term, have the sole and absolute right to modify the terms and conditions of this Lease, but not the "Fixed Minimum Rent" amount or Term of the Lease, but only so as to include in the Lease any standard Lease provisions which, since the date hereof, Landlord has incorporated into its standard lease form for the Project. Upon receipt of any such modification, presented by Landlord to Tenant by way of a new lease agreement or an amendment to this Lease, Tenant shall, prior to thirty (30) calendar days after Tenant's receipt of such new lease agreement or amendment, execute and deliver, or cause to be delivered, to Landlord such new lease agreement or amendment to this Lease. In the event that Tenant fails to execute and deliver to Landlord the new lease agreement or amendment, as described in the preceding sentence, Tenant's notice of having exercised the Option to extend the Term of the Lease shall be void and of no effect, and the Term of the Lease shall end on the date set forth in Section 3.01 above. In the event that Tenant exercises the Option, as allowed by this Lease, the word "Term," as used herein, shall include the "Renewal Term" created by such Option.

 

4. USE OF PREMISES

 

1. Tenant shall occupy and use the Premises for the purpose of conducting thereon the business ofWholesale & Retail sales of indoor agricultural hydroponics equipment and supplies and for no other purpose whatsoever.

 

2.  Tenant shall not use or occupy the Premises, or permit the use or occupation of the Premises, or any part thereof, by any person other than Tenant, for any purpose other than the one specified in paragraph 4.01 herein or for any purpose which (a) constitutes waste or a public or private nuisance, including, but not by way of limitation, the outside storage, display or sales of any items or materials, construction, assembly, or work of any kind, (b) transmits light outside of the Premises (excluding signs allowed pursuant to the Lease), sound, odor or vibrations which are obnoxious or offensive to any one or more of the other Tenants of the Building or to Landlord, (c) violates any governmental (State, Federal or Local) laws, ordinances or regulations, (d) is contrary to any leases, restrictive covenants, agreements or limitations of record, or (e) renders the Building or the Premises, or any part of either, uninsurable with standard insurance at ordinary rates.

 

3. Tenant shall not obtain from any governmental entity, or maintain, any license to distill, manufacture, sell, dispense, or serve malt, vinous, or spirituous liquors, or to operate any retail gaming establishment, as may otherwise be obtained within the State of Colorado pursuant to Colorado Law, except that, with the express written consent of Landlord, which consent may be withheld for any reason, Tenant may obtain a license to operate a package "Retail Liquor Store", as defined by C.R.S. § 12-47-103 (31) or a "Restaurant", as defined in C.R.S. § 12-47- 103 (30) provided, however, that, in the event that Landlord gives written permission for Tenant

 

  

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to operate a licensed "Restaurant'', pursuant to C.R.S. § 12-47-101 et seq., Landlord may impose restrictions pertaining to the nature of such Restaurant operation to ensure that alcoholic beverages are served only in conjunction with, and as part of, the service of food, and specifically prohibiting the inclusion and operation of any bar, nightclub, live or recorded entertainment, amusement devices, floor shows, and so forth from operating as a part of such "Restaurant".

 

4. Tenant, its successors, assigns or sub-tenants, shall not use all or any portion of the Premises for any one or more of the following activities:

 

(a) A wholesale or retail commercial establishment which devotes at least ten percent (10%) of its stock-in-trade or interior floor space to, or receives at least ten percent (10%) of its revenues from, the sale, rental or viewing of books, magazines, periodicals or other printed matter, or photographs, films, motion pictures, video cassettes, compact discs, slides, or other visual representations which are characterized by the depiction or description of "specified sexual activities" or "specified anatomical areas" or sexual accessories or any items for sale primarily of a sexual nature. "Specified sexual activities" shall mean and include (i) human genitals in a state of sexual stimulation or arousal; (ii) actual or simulated acts of human masturbation, sexual intercourse or sodomy; and (iii) actual or simulated fondling or other erotic touching of human genitals, pubic region, buttocks or female breasts. "Specified anatomical areas" shall mean: (i) less than completely and opaquely covered human genitals, pubic region, buttocks, anus, or female breasts below a point immediately above the areola; or (ii) human male genitals in a discernibly turgid state, even if completely and opaquely covered.

 

(b) A nightclub, bar, club, restaurant, concert hall, auditorium or other establishment which features, allows, permits, or conducts live adult entertainment. "Adult entertainment" is defined as any exhibition, display or dance which involves the exposure to view of any portion of the female breasts below the top of the areola, male genitals, female genitals, or the pubic hair, anus, or cleft of the buttocks of any person or male genitals in a discernibly turgid state, even if completely and opaquely covered.

 

(c) Tenant, Tenant's employees, customers, patrons and all other persons on the Premises shall not, without the express written consent of Landlord, which consent may be withheld for any reason, sell, use, consume, purchase, produce, manufacture, grow, or otherwise possess cannabis or marijuana, or any derivative thereof, or any product intended for use in the manufacturing, growing, using or consuming thereof.

 

5. RENT:

 

1. Subject to the same being increased pursuant to paragraph 5.05 herein, during the Term and any extension thereof, Tenant shall pay Landlord a fixed minimum rent (the "Fixed Minimum Rent") computed at the rate of:

 

	
(a)

	 	$	31,275.00	 	
per year, which equates to

	
(b)

	 	$	2,606.25	 	
per month.

 

  

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Notes:    1. Landlord rent concession of $1,303.12.00 for the months of Nov. & Dec, 2013

 

3. Landlord rent concession of $ 521.25.00 for the months of Jan. & Feb, 2014

 

2. Except as is expressly provided for in the Lease, the Fixed Minimum Rent shall be paid in twelve equal installments of monthly rent as provided for in paragraph 5.01 herein, in advance, on the first day of each calendar month during the Term and during any Renewal Term, if applicable, at the office of Landlord, or such other place as Landlord may designate, without any set-off, deduction or counterclaim whatsoever.

 

3. If the Commencement Date shall fall on a day other than the first day of a calendar month, then the installment of the Fixed Minimum Rent due for the calendar month during which the Commencement Date falls shall be prorated so that, as the installment of the Fixed Minimum Rent for such month, Tenant shall pay an amount which bears the same ratio to a regular monthly installment of the Fixed Minimum Rent as the number of days from and including the Commencement Date through the end of such month bears to the total number of days in such month.

 

4. Landlord hereby acknowledges the receipt from Tenant of $ 1,617.96 ($7.76/sf) to be applied toward the payment of the first installments of the Fixed Additional Rent (CAM) coming due pursuant to the Lease from November 1st, 2013 through the last day of November, 2013.

 

5. Commencing with the fiscal year beginning on the first day of the calendar month during which the First (1st) anniversary of the Commencement Date occurs and on the first day of each such fiscal year thereafter, the Fixed Minimum Rent set forth in paragraph 5.01.herein shall be increased by 3.5 % percent

 

6. Other than the Fixed Minimum Rent and Security Deposit (defined in paragraph 6.01 herein), all sums, costs and expenses which Tenant assumes or agrees to pay to Landlord pursuant to the Lease shall be deemed to be additional rent (the "Additional Rent") for the Premises. The total rent payable to Landlord by Tenant (the "Rent") during the Term shall be the sum of the Fixed Minimum Rent for the Term and the Additional Rent which accrues or will accrue during the Term.

 

7. The Additional Rent provided for in paragraph 5.06 herein shall be prorated between Landlord and Tenant in accordance with the number of days of the applicable accounting period during which the Premises were subject to the Lease and not subject to the Lease.

 

8. It is recognized that Landlord will incur additional costs, the exact amount of which may be difficult to ascertain, as a result of and in handling any payment of Rent which is not received by Landlord on or within the three (3) business day period following its due date;

 

  

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therefore, in order to reimburse Landlord for such costs, and not as a penalty, if Tenant fails to timely pay any Rent and/or Additional Rent, and the Rent and Additional Rent are not received by the Landlord on or within the three (3) business day period following its due date, in addition to and with such Rent, Tenant shall pay Landlord an amount equal to fifteen(15%) percent of such Rent and/or Additional Rent, as a Late Charge which shall be added to the total balance due. A business day shall be defined as Monday through Friday of each week, except official Federal or State holidays resulting in the closure of either banks in Colorado and/or the U.S. Post Office.

 

6. SECURITY DEPOSIT:

 

1. To secure the timely and faithful performance of all of Tenant's obligations under the Lease, Tenant has deposited with Landlord the sum of $ 11,163.09 as a security deposit (the "Security Deposit"), the receipt of which is acknowledged. At any time, if Tenant shall be in default in the performance of any of Tenant's obligations under the Lease, at Landlord's option, Landlord may use all or so much of the Security Deposit as Landlord deems necessary to cure any such default without being under any obligation to do so. Upon notification thereof, Tenant shall forthwith pay Landlord the amount of the Security Deposit so expended so that Landlord will at all times have the full amount of the Security Deposit as security. The Security Deposit and the use thereof shall not be considered as liquidated damages in the event of default but only as an application toward actual damages. Within sixty (60) days after the termination of the Lease, Landlord shall return the unused portion of the Security Deposit to Tenant without interest. Landlord is under no obligation to segregate the Security Deposit and may commingle the same with other funds of Landlord.

 

2. If Landlord conveys its interest in the Premises and assigns the Lease, Landlord shall transfer the Security Deposit, or so much thereof as remains, to the grantee of such interest and the Lease and, thereupon, Landlord shall be released from all liability for the return of the Security Deposit to Tenant or for the subsequent use of the Security Deposit pursuant to paragraph 6.01 herein.

 

7. AVAILABILITY OF THE PREMISES:

 

1. Landlord shall not be liable for any damages sustained or costs or expenses incurred by Tenant on account of Tenant's failure to obtain possession of the Premises on or before the Commencement Date and Tenant shall have no right to rescind, cancel or terminate this Lease because of such failure.

 

2. Occupancy of all or part of the Premises by Tenant shall be deemed possession and acceptance thereof by Tenant in good and suitable condition in full accordance with the provisions of the Lease.

 

3. At the expense of Tenant, Tenant shall fully comply with all provisions and standards of the Occupational Safety and Health Act of 1970 (Chapter XVII, Title XIX of the United States Code) and any applicable federal or state statute or regulation adopted pursuant thereto, in lieu thereof, or in conjunction therewith, as the same relate to the Premises, as such may be amended or reenacted from time to time. Tenant shall in indemnify and hold Landlord harmless from all obligations, liability, damages, costs, and expenses, including attorney's fees, concerning any failure to so comply.

 

  

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8. COMMON AREAS:

 

1. At its option, Landlord may provide Common Areas (hereinafter defined) for the non-exclusive use of Tenant, its employees and customers in common with other Tenants and customers of other portions of the Building.

 

2. At all times all common facilities, if any, furnished by Landlord in or near the Building and all such other accommodation areas as Landlord may provide and designate (collectively, the "Common Areas"), including, but not by way of limitation, pedestrian sidewalks, parking areas, landscaped areas, stairways, lamps, restrooms, elevator, and driveways and similar areas and improvements shall be subject to the exclusive control and management of Landlord. From time to time, Landlord may establish, modify, and enforce rules and regulations with respect to the Common Areas to be used by Tenant and its employees, customers, guests and invitees and Tenant agrees to abide by and conform to such rules and regulations and obtain the abidance by its employees, customers, guests and invitees thereto.

 

3. Landlord reserves the right to change the area, location, and arrangement of and to restrict or eliminate the use of any and all Common Areas and to do such other acts in and to the Common Areas as Landlord deems advisable.

 

4. Tenant agrees and acknowledges that Tenant does not have any right of access to any part or portion of the roof of the Building and that neither Tenant, Tenant's employees, agents, guests, or invitees shall at any time enter upon the roof of the Building without the express written approval of Landlord.

 

9. UTILITIES:

 

1. All charges for utilities, including, but not by way of limitation, electricity, natural gas, water, sewer, cable service, and telephone pertaining to the Premises shall be paid when due by Tenant. All utility charges that are separately metered and/or charged solely to the Premises, and which are not shared by any other tenant in the Project, shall be paid solely and exclusively by Tenant when due, whether billed directly to Tenant or to Landlord. The second floor leasable office/commercial space, excluding Common Area hall, restrooms, utility closet, elevator, and stairway, consists of approximately 4,706 total square feet, which is metered separately from the balance of the Building for natural gas and electricity. The Tenant's Premises consists of approximately -0- square feet, or -0- %, of the total second floor leasable space. Tenant shall be billed and shall pay for said percentage of natural gas and electricity costs for the second floor as provided for by the provisions of paragraph 12.01.

 

2. Tenant shall not install any electrical equipment which overloads the lines or interferes with other equipment in or on the Building, or any part thereof, and, if said lines are overloaded by such installation, Tenant shall immediately remedy the same at its own expense.

 

  

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3. Unless caused by the acts or omissions of Landlord, Tenant shall not allow the temperature inside the Premises to become so low as to cause damage to the improvements, specifically including, but not limited to, water pipes and other plumbing in or about the Premises and the Building.

 

10. TAXES: Tenant shall pay when due all personal property taxes levied or imposed against the personal property, Trade Fixtures and/or leasehold improvements placed by Tenant in or about the Premises.

 

11. INSURANCE:

 

1. At Tenant's sole expense, Tenant shall obtain and maintain, during the Term, public liability insurance naming Tenant, and Landlord and it's agents, as co-insured against any and all claims for injury to or death of persons or loss or damage to property occurring upon, in, or about the Premises and the said Common Areas and facilities provided by Landlord, and all portions of the Project used or accessible for use by Tenant and its employees, agents, contractors, subcontractors, invitees and customers. Such insurance shall afford minimum protection of a single limit of liability of $2,000,000.00.

 

2. At Tenant's sole expense, Tenant shall obtain and maintain, during the Term, adequate insurance which insures its fixtures, Trade Fixtures and contents against loss by fire and causes covered by standard extended coverage endorsements. Tenant shall cause Landlord, and it's agents, to be named as a co-insured on all such policies to the extent of its interest in such insured property and shall cause such insurance to be written in a manner so as to provide that the insurance carrier waives all right of recovery by way of subrogation against Landlord, and it's agents, in connection with any loss or damage covered by any such policies.

 

3. All policies of insurance to be obtained by Tenant pursuant to the provisions of the Lease shall be obtained through reputable carriers, authorized to issue insurance policies in the State of Colorado, and acceptable to Landlord; copies of all such policies shall be delivered to Landlord at least three (3) business days prior to the Commencement Date, and a certificate of insurance, as proof that such policies remain in full force and effect, shall be delivered to Landlord on each anniversary of the Commencement Date thereafter, and at any other time within ten (10) business days after written request of Landlord. Such policies shall provide that they may not be cancelled without at least thirty days prior written notice to Landlord. In the event any policy of insurance required to be obtained by Tenant pursuant to the Lease is terminated, cancelled, expires, or is replaced, a copy of the replacement policy shall be immediately delivered to Landlord. Said Certificates shall include, in the "Description of Operations/Special Provisions" section, a statement that Charles C. Murphy, Charles C. Murphy & Associates, Inc, and Stone Creek Business Center, LTD are included as Additionally Insured on General Liability, but only as the Owner/Lessor of the Premises.

 

4. During the Term, Landlord may maintain insurance, with a carrier authorized to do business in the State of Colorado, (a) insuring the Premises and the Building against loss by fire and causes covered by standard extended coverage endorsements, earthquake insurance, boiler insurance, loss of rents insurance, and such other coverage as is deemed appropriate by Landlord from time to time (the "Fire Insurance") and (b) insuring Landlord and its agents

 

  

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against all claims for injury to or death of persons or loss or damage to property occurring upon, in or about the Project (the "Landlord's Liability Insurance") in amounts  determined by Landlord in its sole discretion. In such event, Tenant agrees to do all things, and to conduct its business in a manner, reasonably requested or required by Landlord's insurer in order to lessen or minimize risk of loss by any casualty, regardless of whether such casualty is covered by such insurance.

 

12. OTHER TENANT EXPENSES:

 

1. As is hereinafter provided, Tenant shall pay Landlord a sum equal to 14.5 % percent of all costs and expenses (collectively, the "Common Area Expenses" or "C.A.M.") of owning, operating, maintaining, and repairing the Building, the Project, the Common Areas and the real property upon which they are located, which are allocable to the period during the Tenn. The Common Area Expenses shall include, but shall not be limited to, the cost and expense of trash disposal and/or hauling; parking lot sweeping and maintenance and replacement of Common Area pavement and line striping; maintenance and replacement of exterior lighting and interior Common Area lighting; installation and maintenance of exterior signs; landscape maintenance, repair, painting, replacements and plantings; snow removal; utilities pertaining to the Common Areas; all water and sewer charges; acquisition and maintenance costs of replacement and/or rents for the leasing of any machinery or equipment used in connection with operations, management or maintenance; professional fees (i.e. legal, accounting, engineering, architectural, etc.); repair and/or replacement of roofs, utility meters, on-site water or sewer lines; repair and/or maintenance of the Building and Project, or any part thereof; any costs incurred by Landlord in making capital improvements or other modifications to the Building and Project, or any part thereof, which costs shall be amortized over the useful life of such improvement or modification with interest at the rate of twelve (12) percent per annum, in accordance with such reasonable life and amortization schedules which shall be determined by Landlord in accordance with generally accepted accounting practices and principles, to the extent that other tenants are not liable for the payment thereof; the Project's real property taxes, personal property taxes, and any special assessments, taxes, liens and/or charges of any kind; all costs of challenging real property tax assessments, to include legal and professional assistance; insurance premiums pertaining to fire and extended coverage, loss of rent, Landlord's liability insurance and other insurance deemed necessary by Landlord; and professional management fees, which shall not exceed six percent (6%) of the gross rents, from all sources, received from the Project. Common Area Expense shall not include: (a) leasing commissions; (b) costs and repairs or other work to the extent that such is insured and insurance proceeds are received therefore; (c) costs, including permits, license and inspection costs, incurred with respect to the installation of tenant or other occupancy improvements in the Building or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Building; (d) depreciation, amortization and interest payments as determined in accordance with generally accepted accounting principles; (e) Landlord's marketing costs; (f) costs incurred by Landlord due to violation by Landlord or any tenant of the terms and conditions of any lease of space in the Building; (g) Landlord's general corporate overhead and administrative expenses, except that a 6% of gross rents management fee, as stated above, will be included as a Common Area Expense, as well as any on-site management office gas and electricity expenses for such office being connected to the C.A.M. meters; (h) rentals and other related expenses incurred in renting HVAC systems, elevators, or other building structural equipment, ordinarily considered to be capital equipment; (i) Landlord's advertising and

  

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promotional expenses; (j) tax penalties incurred as a result of Landlord's negligence, inability or unwillingness to make payments; (k) any and all costs arising from the presence of hazardous materials or substances in or about the Building; (1) Landlord's charitable or political contributions; (m) costs arising from latent defects in the base shell or core of the Building; (n) Landlord's or Manager's entertainment, dining or travel expenses; and (o) Landlord's or Manager's in-house legal or accounting fees, not associated with the operation or management of the Building.

 

2. From time to time, Landlord shall make reasonable projections of the annualized Common Area Expenses allocable to the period during the Term; and, based upon such projections, with each payment of the Fixed Minimum Rent, Tenant shall pay Landlord installments in an amount equal to one-twelfth (1/12) of the amount payable annually pursuant to paragraph 12.01 herein. Following the end of each calendar year during the Term and following the end of the Term, Landlord shall compute the amount of the actual Common Area Expenses for the preceding calendar year, or part thereof, as is appropriate, and Tenant shall pay Landlord any shortages and Landlord shall pay Tenant any overages in the amount of such Common Area Expenses actually paid with respect to the amount payable pursuant to the provisions of paragraph 12.01 herein.

 

3. No delay in the payment of the Common Area Expenses or such installments or in the making of any demand for such payment shall constitute a waiver of the right of Landlord to receive payment of same from Tenant pursuant to the provisions of the Lease.

 

4. The percentage of C.A.M. to be paid by Tenant to Landlord, as described in paragraph 12.01, represents the percentage of the approximate square footage of the Leased Premises ( 2,502square feet) to the total approximate square feet of all leasable floor area in the Project (17,256) square feet, which total does not include the floor area leased to Sherwin - Williams. In the event of an increase or decrease in either the square footage of the Premises or in the square footage of all leased premises in the Project subject to the payment of C.A.M., Landlord shall adjust the percentage of C.A.M. to be paid by Tenant to reflect the then current percentage of the size of the Premises to the total square feet of all leased premises in the Project subject to the payment of C.A.M., which adjustment shall constitute an amendment to this Lease, and shall notify Tenant, in writing, as to the new percentage of C.A.M. to be paid by Tenant to Landlord from the date of such adjustment forward.

 

5. Tenant shall have the right to have Tenant's accountant, lawyer, or other independent professional (non-company employee), review in Landlord's office, at Tenant's expense, all documents necessary to substantiate Common Area Expenses (C.A.M.) upon reasonable written request and the scheduling of an appointment with Landlord. Tenant's right to review documentation substantiating the actual Common Area Expenses imposed for each calendar year, pursuant to this paragraph 12, shall be deemed waived by Tenant unless Tenant delivers to Landlord a written request for such review within fifteen days after Landlord's written notification to Tenant of such actual Common Area Expenses. Tenant's right to question, challenge, contest or object to Landlord's computation of actual Common Area Expenses for any preceding calendar year shall be deemed waived by Tenant unless Tenant delivers to Landlord a written objection of Landlord's computation of actual Common Area Expenses, specifying the nature and reason for such objection, within thirty days after Landlord's notification to Tenant of such actual Common Area Expenses.

 

  

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13. MAINTENANCE, REPAIRS AND ALTERATIONS:

 

01. Except for repairs which become necessary by reason of the improper conduct, carelessness, negligence or act of omission by Tenant, it's employees, agents, servants, customers, guests, invitees, visitors or licensees, within a reasonable time after notice of the necessity of such repairs, Landlord shall repair the roof, foundation and exterior walls, other Common Area and Building facilities of the Premises, except for glass and other breakable materials used in structural portions thereof. All such repair costs involved shall be considered as Common Area Expenses and shall be billed in accordance with the provisions of paragraph 12. Except for repairs which become necessary by reason of the improper conduct, carelessness, negligence or act of omission by Tenant, its employees, agents, servants, customers, guests, invitees, visitors or licensees, within a reasonable time after notice of the necessity of such repairs, Landlord shall repair the roof, foundation and exterior walls, other Common Area and Building facilities of the Premises, except for glass and other breakable materials used in structural portions thereof. Any repairs, service, or work contracted for by Tenant without specific written approval by the Landlord, shall be paid for by the Tenant at its sole expense, even if repair/work would normally be a Common Area Expense.

 

2. Except as otherwise specifically provided in this Lease, Tenant is accepting the herein described Premises in its "AS IS" condition, without representation from either Landlord, and/or Charles C. Murphy & Associates, Inc., and any and all additional improvements, maintenance, repairs, changes in conditions or alterations shall be at the sole cost and expense of Tenant.

 

3. Except as is provided specifically in paragraph 13.01 herein, at its own expense Tenant shall maintain, repair, and replace, as necessary, the interior of the Premises regardless of the cause of the maintenance or repair, including, specifically, all plate glass, exterior and

interior glass surfaces, interior distribution of heating systems and HVAC systems, overhead and entry doors, interior walls, ceilings, plumbing and electrical fixtures, floors, walls and finishes. The foregoing notwithstanding, Landlord reserves the right, at its option, to contract for the work described in the preceding sentence and pass the costs thereof through to Tenant as Additional Rent. In addition, Tenant shall keep the walks, porches, decks, and docks adjacent to the Premises, plus a minimum of four (4) feet into the parking lot and inside any fenced or walled areas immediately adjacent to the Premises, .free of dirt, litter, snow and ice, and shall further be responsible for the proper maintenance of the automobile tire stops within such area.

 

4. Tenant shall make no additions, improvements or alterations in or about the Premises, nor shall Tenant install or attach any Trade Fixture, without first presenting to Landlord copies of plans and specifications, created and stamped by a licenses engineer and or architect, detailing the desired additions, improvements, alterations or Trade Fixtures, which plans and specifications shall include, but shall not be limited to, structural, electrical, and mechanical detailing (loading, circuitry, and distribution), walls, doors, flooring, fixtures and finishes. Such plans and specifications shall clearly identify any addition, improvement, alteration, thing, item or device which Tenant desires to classify as a Trade Fixture (see

 

  

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paragraph 16.02), and no such addition, improvement, alteration, thing, item, or device shall be deemed a Trade Fixture unless and until Landlord agrees, in writing, to such classification. The Tenant must, prior to the start of any such work, obtain the written consent of Landlord for the making of such additions, improvements or alterations, and shall provide Landlord written notice of Tenant's intention to start such work at least five (5) days prior to the actual start of such work, and shall also provide Landlord with the names, address, and telephone numbers of all contractors, subcontractors, laborers, and material suppliers (collectively "Lienors") that will provide either labor or material for all such additions, improvements, alterations, and installations. Prior to Tenant making any additions, improvements or alterations in or about the Premises, Tenant shall obtain and pay for all necessary city or county approvals, building permits, and obtain the endorsements of the insurance referred to in paragraph numbered eleven (11) herein to extend Tenant's coverage during the course of and pertaining to the construction of such additions, improvements or alterations. All such additions, improvements, and alterations shall comply with all applicable building and fire codes and shall be constructed only by contractors and subcontractors approved by Landlord prior to the commencement of such construction. All improvements which are made in or about the Premises shall become property of the Landlord unless specifically agreed otherwise in writing, executed by both Landlord and Tenant, prior to the commencement of the making of such improvements.

 

5. In the event that Tenant makes any improvements to the Premises without first obtaining Landlord's written permission for same, in accordance with paragraph 13.04 above, all such improvements of every kind and nature shall, at Landlord's option, become property of Landlord.

 

6. Landlord shall have the absolute right to send to Lienors and to post at the Premises a notice that Landlord's interest in the Premises shall not be subject to any lien for work or materials performed or supplied by Lienors, and Tenant shall fully cooperate with such efforts.

 

7. Repairs and replacements of any portion of the Project, other than the Premises, which become necessary by reason of the improper conduct, carelessness, negligence, or act of omission by Tenant, its employees, agents, servants, customers, guests, invitees, visitors or licensees shall be repaired by Landlord, with the cost and expense of such repairs to be paid by Tenant as Additional Rent.

 

14. SIGNS AND AWNINGS:

 

1. Tenant shall not install, paint, display, inscribe, place or affix any sign, picture, advertisement, notice, lettering or direction in the interior of the Premises, without Landlord's written consent. All of Tenant's exterior signs and identifications will conform to the sign criteria outlined by Landlord on Schedule II (Sign Criteria) attached hereto and made a part hereof. Tenant agrees to keep all interior and exterior signs in good repair. Landlord reserves the right to alter Schedule II (Sign Criteria) at such times as is necessary due to a change in events such as, but not limited to, changes in the city or county sign ordinance or a redevelopment of the Project.

 

  

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2. Tenant shall comply with all ordinances, laws, statutes and regulations applicable to the Premises and concerning signage.

 

3. If Landlord so desires to install, at Landlord's sole expense, an exterior or interior "FOR LEASE" sign (banner, broker, etc.), during the one hundred eighty (180) days prior to the expiration of this lease, Tenant shall fully cooperate, and shall agree to sign, in Tenants name, any permit applications then required by the city or county. Any applicable application and permit fees shall be paid by Landlord.

 

4. Attached Exhibits As show the approved unit 5&6 sign panel locations for the front and rear of the project. On the front there are 2 options designated as follows:

Option #1: The upper full panel as shown in both drawing and picture. NOTE: Trees will be trimmed properly annually after leaves fall, in order to fully expose the panel.

 

a. Since Landlord will be providing the blank sign panel for this option, the Tenant shall be responsible for the cost and replacing the old panel upon expiration and vacation of the lease.

 

	
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All panel fabrication and install for either option shall be done by "Sign Design" of Eagle Vail (Contact Monte).

 

On the rear panel, the tenant has expressed a desire to use the adjacent panel area to the west. That is acceptable; however, in that event, the blank panel shall we moved adjacent to east, and the tenant shall be responsible for purchasing, fabrication, and installation of the new panel in the west location.

 

15. MECHANICS' LIENS:

 

1. Tenant shall pay when due for all work performed on, for the benefit of, and for materials furnished to, the Premises by any person at Tenant's request and shall indemnify, defend and hold harmless Landlord and its property from all liability and expenses, including attorney fees, resulting from any lien or claim of lien arising from such work, labor or materials. Tenant shall have the right to contest the validity of any such lien or claim of lien.

 

2. Upon Landlord's request, Tenant shall, within 21 days of such request, cause any mechanic's lien filed against the Premises for work or materials supplied to or on behalf of the Tenant to be released by following the procedure outlined in C.R.S. §§ 38-22-101 et seq., or shall post a cash bond with Landlord, in an amount acceptable to Landlord, sufficient to satisfy such lien.

 

16. FIXTURES:

 

1. Unless removed by Tenant pursuant to the provisions of this paragraph sixteen (16), upon the expiration of the Term, the termination of the Lease by Landlord, or the vacation of or removal from the Premises by Tenant, all fixtures, Trade Fixtures, additions, improvements, and installations placed in or about the Premises by Tenant shall be the sole and

 

  

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absolute property of Landlord and Tenant warrants title to the same free and clear of all liens and encumbrances except those liens and encumbrances arising out of the actions of Landlord.

 

2. The term "Trade Fixture," as used in this Lease, is defined as a fixture which is attached to or made a part of any improvement to the Premises which is unique to the Tenant's business and which may be removed from the Premises by Tenant during or at the end of the Term of the Lease, provided that all damage to the remainder of the Premises is removed and/or repaired and the Premises is restored by Tenant in such a manner that the installation and subsequent removal of such Trade Fixture is not visible or evident. The foregoing notwithstanding, no improvement or fixture installed by Tenant shall be deemed to be a Trade Fixture unless Landlord agrees, in writing, to classify such improvement or fixture as a Trade Fixture prior to its installation.

 

3. Upon the expiration of the Term, the termination of the Lease by Landlord, or the vacation of the Premises by Tenant and upon written notice by Landlord, and only in such event, Tenant shall promptly remove any fixtures, Trade Fixtures, additions, improvements, and installations placed in or about the Premises by Tenant and designated in such notice and shall repair any damage occasioned by such removals at Tenant's expense. If Tenant shall fail to promptly remove such items or repair such damage, or both, Landlord may, at its option, effect such removals and repairs and Tenant shall pay Landlord the cost thereof together with interest

at the rate of eighteen (18) percent per annum from the date of payment of such costs by Landlord.

 

17. EXCULPATION OF LANDLORD: Landlord and its agents, servants, employees and contractors shall not be liable to Tenant or any other person, and Tenant hereby releases all claims for damages arising out of the death or of injury to any person or damage to or loss of any property or business sustained by Tenant or any person claiming through Tenant and resulting from any fire, explosion, theft, accident, occurrence or condition of any nature whatsoever in or upon the Premises, the Building, or the Project, including, but not by way of limitation, (a) any defect in or failure of plumbing, heating or air conditioning equipment, electric wiring or installation thereof, gas lines, fixtures or equipment or installation thereof, water pipes, plumbing, stairs, railings, walks or elevators, (b) any equipment or appurtenances becoming out of repair, (c) the bursting, leaking or running of any pool, tank, washstand, water closet, waste pipe, drain or other pipe or tank, (d) the backing up of any sewer pipe or downspout, (e) the escape of steam or hot water, (f) water, snow or ice being upon or coming through the roof, parking areas, common areas or facilities or any other place in or near the Building, (g) the falling of any fixture, plaster or other building material, (h) broken glass and (i) any act or omission of co-tenants or other tenants of the Building or of adjoining or contiguous property or buildings and their agents, employees and contractors.

 

18. INDEMNITY TO LANDLORD:

 

1. Tenant shall indemnify and save harmless Landlord and its agents, employees and contractors and the owners of the fee title of the Project and all mortgages thereof from and against any and all claims, liens, actions, proceedings, judgments, liabilities, damages, costs, attorneys fees and any and all expenses in connection with (a) the use, occupancy, management or control of the Premises, (b) from any injury to or death of any person or damage to any

 

  

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property or business upon the Premises, the Building, the Project, or to or upon adjacent property or to or upon the adjoining street, avenue or sidewalk which was caused in whole or in part by Tenant, its employees, servants, agents, contractors, subcontractors, guests, customers or invitees, (c) from any lien or claim or other matter arising from any construction, addition, repair, maintenance or improvements on the Premises or from any work done in or about the Premises or the Building or the Project by, at the instigation of, or for Tenant, (d) from any use of the Premises for any illegal trade, manufacture or business or for any purpose or in any manner prohibited by law, ordinance, government regulation, regulations of Landlords insurance Company or lender, or the provisions of the Lease, (e) from any failure of Tenant to observe or perform the terms, covenants or conditions of the Lease and from any act or omission by Tenant, its agents, employees, servants, contractors, subcontractors, customers or invitees during the Term, and (f) from the installation , operation, maintenance, repair, removal or replacement of any sign, awning, antenna or other exterior or interior improvement made by Tenant on, in or about the Premises, the Building and the Project.

 

2. Unless defense is actually provided by an insurance carrier, upon demand from time to time, Tenant shall pay for the defense of any action or proceeding brought against Landlord or its agents, employees and contractors or the said fee owners or mortgages, upon any such claims categorized in this paragraph 18.

 

19. DAMAGE BY FIRE OR OTHER CASUALTY:

 

1. If the Premises are damaged by fire or other casualty, but not so as to render the same untenable, after being notified of such damage by Tenant, Landlord shall forthwith repair the damage. The Rent and Additional Rent shall not be abated under such circumstances.

 

2. If the Premises are damaged by fire or other casualty so that any part thereof is untenable and, after Landlord is notified of such damage by Tenant, if any architect selected by Landlord certifies that, in his opinion, such damage can be reasonably expected to be repaired within ninety (90) days of the occurrence of such damage, Landlord shall forthwith repair the damage. Until such repairs are completed, all Rent charges shall be apportioned each month according to that part of the Premises which remains untenable and there shall be no other abatement.

 

3. If the Premises are damaged by fire or other casualty so that any part thereof is untenable and, if an architect selected by Landlord certifies that, in his opinion, such damage cannot reasonably be expected to be repaired within ninety (90) days of the occurrence of such damage, Landlord, at its option, may do any one of the following three things:

 

(a) Give notice to Tenant that the Lease is terminated and, in such event, all future obligations and rights hereunder shall cease.

 

(b) Give notice to Tenant that Landlord intends to raze and rebuild the Premises, according to plans and specifications which are either substantially similar to those for the Premises so damaged or which are mutually agreed upon by Landlord and Tenant, and complete such rebuilding . Until the Premises are completed and a temporary or permanent certificate for occupancy is issued, all Rent shall abate.

 

  

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(c) Give notice to Tenant that it intends to repair the Premises and proceed to repair the Premises. Until such repairs are completed, all Rent charges shall be apportioned each month according to that part of the Premises which remains untenable and there shall be no other abatement.

 

20. CONDEMNATION: Tenant waives any loss or damage to Tenant as the result of the exercise of the power of eminent domain by any governmental body and the right to receive any portion of any condemnation award, as a participant in the condemnation proceeding or otherwise, whether such loss or damage results from condemnation of part or all the Premises or any portion of the Building Project, Common Areas or facilities or service entrances and exits. Should any power of eminent domain be exercised after Tenant is in possession, such exercise shall not void or impair the Lease unless the Premises shall be substantially taken and, upon the happening of such event, all Rent charges shall proportionately abate as of the date that possession is required by the condemning authority.

 

21. ESTOPPEL, SUBORDINATION AND ATTORNMENT:

 

1. Tenant agrees that this Lease shall be subordinate to any encumbrance affecting the Premises now of record or recorded after the date of this Lease. Such subordination is and shall be effective without further act of Tenant. In the event of foreclosure by the holder or beneficiary of any encumbrance recorded after the date of this Lease, Tenant's right to possession of the Premises pursuant to the terms of this Lease shall continue, provided that Tenant is not in default and all rent payments are Current and provided further that Tenant shall attorn to such holder or beneficiary as may take title to the Premises through foreclosure.

 

2. This Lease is and shall be subordinate to any condominium declaration, or amendment thereto, affecting the Premises regardless of when the condominium declaration or amendment is recorded and such subordination shall be effective without any action by Tenant. All provisions, terms, conditions, covenants and obligations of this Lease shall be subject to such condominium declaration and all other governing documents of the condominium association created in conjunction with the recording of the condominium declaration. In the event of an inconsistency between this Lease and the condominium declaration, articles or bylaws the latter shall control.

 

3. Tenant agrees, at any time and from time to time, to execute, acknowledge and deliver to Landlord upon Landlord's request any documents and instruments which may reasonably be required by Landlord or by the holder or beneficiary of a mortgage or deed of trust to evidence or effectuate such subordination. Tenant further agrees, at any time and from time to time, to execute, acknowledge and deliver to Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect, or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications, and the dates to which any rent or other payments due hereunder from Tenant have been paid in advance, if any, and stating such other reasonable information about the Lease as may be requested, including, but not limited to, whether or not, to the best of the knowledge and information of the Tenant, the Landlord is in default in the performance of any covenant or condition of the Lease and, if so, specifying each such default. It is intended that such a statement will be relied upon by the

 

  

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holder or beneficiary, or prospective holder or beneficiary, of a mortgage or deed of trust, by assignees of such holder or beneficiary or by prospective purchasers and that the Tenant shall be estopped from asserting claims contrary to that which is set forth in such a statement. If Tenant fails to execute and deliver any such documents, instruments or statements, Tenant irrevocably appoints Landlord as Tenant's special attorney-in-fact to execute and deliver such documents, instruments and statements, and, at Landlord's election, such failure shall be a material breach of this Lease.

 

22. SALE OF PREMISES:

 

1. If Landlord shall sell its right, title and interest in and to the Premises, Landlord shall notify Tenant of the identity and address of the purchaser thereof.

 

2. If Landlord shall sell its right, title and interest in and to the Premises, Landlord shall be, and is hereby, released and discharged of all liability under any and all of the covenants and obligations contained in or derived from the Lease arising out of any act, occurrence or omission occurring after the transfer of its title to the Premises by Landlord.

 

23. ACCESS TO PREMISES:

 

1. Upon reasonable notice to Tenant, Landlord shall have the right to enter the Premises at reasonable times for the purpose of inspecting the Premises or exhibiting it to the holder of any mortgage or deed of trust encumbering Landlord's interest in the Project to prospective mortgages, to prospective assignees of any such mortgages or deeds of trust, to prospective purchasers, or to prospective lessees of the Premises and for the purpose of making such repairs, alterations, improvements or additions as may be provided for by the Lease, or as may be agreed upon by Landlord and Tenant, or as may be required by any law, ordinance or regulation. Unless an emergency exists, at least twenty four hours prior notice shall be given to Tenant prior to Landlord's entry into the Premises pursuant to this paragraph 23.01.

 

2. During the 180 days prior to the expiration of the Term, Landlord may exhibit the Premises to prospective lessees.

 

3. For the purpose of attending to any emergency or presumed emergency which

 

may tend to damage the property of Landlord or that of other tenants in the Building, or endanger the lives of anyone, Landlord shall have the right of immediate access to the Premises without notice to Tenant.

 

24. ASSIGNMENT AND SUBLETTING: Tenant shall not assign or in any manner transfer or encumber this Lease or any estate or interest therein, or sublet the Premises or any part thereof, or grant any license, concession or other right to occupy any portion of the Premises without the prior written consent of Landlord, which consent, subject to the terms and conditions set forth herein, shall not be unreasonably withheld. This prohibition includes, without limitation: (i) any subletting or assignment which would otherwise occur by operation of law, merger, consolidation, reorganization, transfer or other change of Tenant's corporate or proprietary structure; (ii) an assignment or subletting to or by a receiver or trustee in any Federal or State bankruptcy, insolvency or other proceedings; (iii) the sale, assignment or transfer of all

 

  

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or substantially all of the assets of Tenant, with or without specific assignment of this Lease; (iv) the sale, encumbrance or other disposition of stock in a corporate Tenant, or ownership in a limited liability company Tenant, which results in the present shareholders or members therein owning or controlling less than fifty-one percent (51%) of the stock or ownership thereof; (v) the change in control in a Tenant partnership, directly or through a change or changes in the ownership of fifty percent (50%) or more of the stock or ownership of one or more corporate or limited liability company general partners; (vi) the change in control in a Tenant limited liability company through a change or changes in the ownership of fifty percent (50%) or more of the stock or one or more corporate members or of a corporate general partner of a partnership member; or (vii) the death of any individual Tenant or guarantor. Consent by Landlord to one or more assignments or sub-lettings shall not operate as a waiver of Landlord's rights as to any subsequent assignments and sub-lettings. Any attempted assignment or sub-lettings by Tenant in violation of the terms and covenants of this paragraph 24 shall be void. Notwithstanding any approved assignment or subletting, Tenant and any guarantor of Tenant's obligations under this Lease shall at all times remain fully responsible and liable for the payment of the Rent herein specified and for compliance with all of Tenant's or any assignee's or subtenant's other obligations under this Lease.

 

In the event that Tenant desires to assign this Lease, or sublet the Premises, or any part thereof, Tenant shall give written notice of such desire to Landlord, and shall provide Landlord with a proposed agreement for assignment or subletting, as the case may be, together with all information and documentation required by paragraphs (a) through (f) of this paragraph 24, together with a written agreement to the effect that Tenant will reimburse Landlord for all of Landlord's expenses incurred as the result of Tenant's written notice and request of Landlord to approve such assignment or subletting. In order to properly consider Tenants request for assignment or subletting, Landlord shall require that the following conditions are met:

 

(a) Tenant shall not be in default under any of the terms or provisions of the Lease.

 

(b) Any proposed new business use for the Premises shall have been approved by Landlord in Landlord's sole and absolute discretion.

 

(c) Any assignee or sublessee shall agree faithfully to perform and to be bound by all of the terms and provisions of the Lease, the same as if such assignee or sublessee were the original Tenant under the Lease.

 

(d) If any assignee or sub-lessee, or any stockholder, general partner, member thereof or venturer therein, is a corporation or a limited liability company (other than a corporation the outstanding voting stock of which is listed on a "national securities exchange" as defined in the Securities Exchange Act of 1934), the owners of at least seventy five percent (75%) of the issued and outstanding shares of stock in that corporation, or owners of at least seventy five percent (75%) of the interests of the ownerships in that limited liability company, shall personally and unconditionally guarantee the performance of all Lease obligations, with such guarantee to be in form and substance reasonably satisfactory to Landlord, or, at the sole option of Landlord, shall personally execute an agreement in a form acceptable to Landlord so as

  

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to make themselves co-tenants under the Lease, jointly and severally liable to Landlord for all obligations arising under the Lease.

 

1. Any assignee or sub-lessee, and all required guarantors, shall submit financial statements in a form acceptable to Landlord which establish to Landlord's reasonable satisfaction their financial ability to perform Tenant's Lease obligations and otherwise to succeed in their proposed business.

 

2. Any assignee or sub-lessee shall reasonably satisfy Landlord: (1) that it is a high quality retailer or other legitimate business operation; (2) that it has adequate prior experience in the type of business proposed for the Premises; and (3) that a good reputation and credit standing have been established in connection with such prior experience.

 

3. Tenant shall pay to Landlord a sum necessary to reimburse Landlord for all costs and expenses, including accounting and/or legal fees, incurred by Landlord as the result of Tenant's request to allow an assumption or subletting of the Premises.

 

25. SURRENDER OF PREMISES:

 

1. Unless otherwise required by Landlord, as provided in this paragraph twenty-five, upon the expiration or other termination of the Lease, Tenant shall quit and surrender to Landlord the Premises in good order, condition, and repair, ordinary wear and tear and damage by fire or other casualty which is insured against with standard extended coverage endorsements excepted, and, except as otherwise provided in the Lease, shall remove all of Tenant's personal property and Trade Fixtures from the Premises.

 

2. Unless otherwise required by Landlord, as provided in this paragraph twenty-five, upon the expiration or other termination of the Lease, Landlord, ten (10) days after written notice to Tenant, may, at Landlord's election, retain, sell, convey, or otherwise dispose of any or all improvements, furniture, fixtures or other tangible personal property left remaining upon the Premises upon termination or expiration of the term. Tenant expressly waives and releases all claims against Landlord for any damage or loss to Tenant resulting from Landlord’s retention or disposition of such property. In such event, Landlord shall have no obligation to inventory or account for such tangible personal property. Tenant shall be liable to Landlord for Landlord's costs for storing, removing and disposing of any or all of Tenant's property.

 

3. All other provisions of the Lease notwithstanding, at Landlord's option, upon the expiration of the Lease term and upon written notice from Landlord to Tenant, given at least thirty (30) days prior to the expiration of the Lease term, Tenant shall, at Tenant's cost and expense, quit and surrender the Premises to Landlord in "Lease Ready Condition," as described and defined paragraph 25.06 hereof. In order to insure that all work required by this paragraph 25.03 is performed to Landlord's requirements and specifications, all such work, demolition, construction, reconstruction, repair, replacement, painting, and so forth required in order to place the Premises in Lease Ready Condition shall be performed by reputable, professional contractors approved by Landlord, with all electrical and plumbing work to be performed by Colorado

 

  

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licensed electricians and plumbers. Furthermore, all such work, demolition, construction, reconstruction, repair, replacement, painting and so forth, required to place the Premises in Lease Ready Condition shall be inspected and approved by Landlord prior to acceptance by Landlord, and if such work does not meet Landlord's requirements and specifications, such work shall be brought to Landlord's requirements and specifications, at Tenant's sole cost and expense, prior to being accepted by Landlord.

 

4. All other provisions of the Lease notwithstanding, at Landlord's option, upon written notice from Landlord to Tenant at any time within sixty (60) days after Landlord takes possession of the Premises as the result of any default or breach of the Lease by Tenant, Landlord may, at Tenant's cost and expense, place the Premises in "Lease Ready Condition," and Tenant shall reimburse Landlord for all costs and expenses of such work within ten (10) days of Landlord's invoice to Tenant there for.

 

5. In addition to the foregoing, Tenant shall, upon the expiration or other termination of the Lease, or upon the Tenant's vacation of the Premises, whichever first occurs, cause all exterior panel signage to be removed by a Landlord approved sign company, with such company to then replace, at Tenant's sole cost and expense, the sign panels so removed with new blank panels which comply with the Sign Criteria for the Building so that the next tenant using that sign area has new panels with which to fabricate such tenant's new sign. Further, where such signage is attached directly to the building itself, rather than as a sign panel, all such signage shall be removed and all areas of the building where the sign was attached shall be properly cleaned, repaired, patched, and, if necessary, painted or stained in order to fully repair any damage cause by the installation, maintenance and removal of such sign.

 

6. "Lease Ready Condition," as that term is used in the Lease, shall entail returning the Premises to as close to the condition as the Premises were in as originally constructed as is reasonably possible, with no interior improvements other than restrooms, dropped grid ceiling system with industry standard drop in lighting, perimeter walls to current electrical code, freshly painted interior walls, and a clean, smooth and flat concrete floor ready for new tenant finishes. "Lease Ready Condition" shall also mean and include the following:

 

(a) All fixtures, furnishings, equipment, plumbing and electrical that are not part of the original demising walls, ceilings, or restrooms, shall be removed.

 

(b) All interior partition walls, excluding only restroom walls, shall be removed and all damage resulting from such removal shall be patched and otherwise repaired.

 

(c) All flooring materials shall be removed and the concrete floor shall be cleaned, repaired and returned to a flat and smooth condition.

 

(d) All demising walls and drywall shall be returned to good, sound, clean and patched condition, and shall be painted.

 

(e) All demising wall knock out panels shall be in place, fully reconditioned, repaired, and patched, as necessary, and painted.

 

  

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(f) All electrical circuitry throughout the Premises shall be certified by a Colorado licensed electrician to meet current electrical codes.

 

(g) All plumbing throughout the Premises shall be certified by a Colorado licensed plumber to meet current plumbing codes.

 

(h) The Premises shall contain a complete and fully functional dropped grid ceiling, or other ceiling acceptable to Landlord, with industry standard lighting included.

 

(i) All interior walls shall be freshly painted with a paint approved by Landlord and all windows shall be cleaned.

 

7. If Tenant fails to surrender the Premises to Landlord within the time, and in the condition, as provided for herein, Tenant shall reimburse, indemnify and hold Landlord harmless from all damages and costs incurred by Landlord and resulting from Tenant's failure to surrender the Premises as required herein, including, without limitation, all costs and expenses incurred by Landlord in completing the work required by this paragraph 25 as well as all claims made by a succeeding tenant resulting from Tenant's failure to surrender the Premises as required.

 

8. Tenant's obligation to observe and perform the provisions of this paragraph twenty-five shall survive the expiration of the Lease term, shall survive any other termination of the Lease, and shall survive Landlord's possession of the Premises pursuant to any provision of this Lease or as otherwise allowed by law.

 

26. HOLDING OVER: If, after the expiration Term or other termination of the Lease, Tenant shall remain in possession of the Premises without a written agreement as to such possession, then such holding over shall be deemed to be a holding over upon a month-to-month tenancy under the same agreements and provisions as the Lease and for a Fixed Minimum Rent equal to one hundred fifty percent of the Fixed Minimum Rent under the Lease. However, nothing contained herein shall give Tenant the right to hold over at any time, and Landlord may exercise any and all remedies at law or equity to recover possession of the Premises, as well as to collect any damages incurred by Landlord due to failure by Tenant to vacate the Premises in accordance herewith.

 

27. COVENANT OF QUIET ENJOYMENT: Upon Tenant paying the Rent herein reserved and observing and performing all of the agreements and provisions of the Lease which are to be observed and performed by Tenant, subject to the agreements and provisions of the Lease, Tenant may peaceably and quietly hold, occupy and enjoy the Premises for the Term of the Lease.

 

28. DEFAULTS BY TENANT AND REMEDIES OF LANDLORD:

 

1. Subject to the other provisions of this paragraph twenty-eight, each of the following events shall constitute a default by Tenant and a breach of the Lease and the occurrence of any one of them shall give Landlord the rights and remedies set forth in this paragraph twenty-eight, to wit:

 

  

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(a) If the Fixed Minimum Rent, or any part thereof, shall be unpaid when due.

 

(b) If any Additional Rent or charges, or any part thereof, shall be unpaid when due.

 

(c) If Tenant does not comply with any provision of the Lease which imposes an obligation on Tenant, other than obligations for the payment of Rent or other charges, and shall not cure such failure within three (3) days after written notice thereof from Landlord, and thereafter refrain from further violations of such provision.

 

(d) If Tenant should violate or fail to comply with any of the statutes, ordinances, rules, orders, regulations and requirements of the federal government or any state, county or city government, or any other governmental body having jurisdiction over the Project, or any pm1thereof, or any of their departments and bureaus applicable to the Premises heretofore or hereafter established, and shall not cure such violation of failure within three (3) days after written notice thereof from Landlord, and thereafter refrain from further violations of the same or similar nature.

 

(e) If the Premises should be abandoned or vacated.

 

(f) If Tenant should attempt to sell, assign or mortgage all or any pai1of or interest in the Lease or sublet all or any part of the Premises without the prior written consent of Landlord having been first had and obtained.

 

(g) If by operation of law the Lease should be transferred to, or pass to, or devolve upon any person other than Tenant except, if Tenant is a corporation, by merger or consolidation.

 

(h) If Tenant is a corporation, if (I) Tenant should dissolve its corporate existence or (II) an action or proceeding for the dissolution or liquidation of Tenant should be commenced.

 

(i) If Tenant should be adjudicated a bankrupt or insolvent and such adjudication should not be vacated within fifteen (15) days.

 

G) If Tenant should file a petition of bankruptcy or make a general assignment for the benefit of creditors.

 

(k) If Tenant should file a petition or answer seeking reorganization or readjustment under federal bankruptcy laws.

 

(1) If a receiver or trustee should be appointed with respect to all or substantially all property of Tenant in any suit or proceeding against Tenant or in any bankruptcy proceeding.

 

(m) If any execution or attachment shall be issued against Tenant or any of Tenant's property whereupon someone other than Tenant shall take or occupy the Premises.

 

  

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2. Upon the occurrence of any of the events of default set forth in paragraph 28.01 herein, Landlord shall have the option to pursue any one or more of the following remedies without any prior notice or demand whatsoever:

 

(a) Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in Rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying such Premises or any part thereof, provided that such action can be taken without a breach of the peace, without being liable for prosecution of any claim of damages therefor and Tenant hereby specifically waives any and all claims for damages that may otherwise result therefrom.

 

(b) Without terminating this Lease, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying such Premises or any part thereof, provided that such action can be taken without a breach of the peace, without being liable for prosecution or any claim for damages therefore, and Tenant hereby specifically waives any and all claims for damages that may otherwise result therefrom; and re-let the Premises and receive the rent therefor.

 

(c) Enter upon the Premises, provided that such action can be taken without a breach of the peace, without being liable for prosecution or any claim for damages therefore, and Tenant hereby specifically waives any and all claims for damages that may otherwise result therefrom; and do whatever Tenant is obligated to do under the terms of this Lease; and Tenant agrees to reimburse Landlord on demand for any expenses which Landlord my incur in thus effecting compliance with Tenant's obligations under this Lease and Tenant further agrees that Landlord shall not be liable for any damages resulting to Tenant from such action, and Tenant hereby specifically waives any and all claims for damages that may otherwise result therefrom, whether caused by the negligence of Landlord or otherwise.

 

(d) Alter all locks and other security devices at the Premises without terminating this Lease.

 

(e) Take any action allowed by law.

 

3. In the event Landlord serves or causes to be served upon Tenant a notice to pay/for compliance or for possession pursuant to C.R.S. § 13-40-104 ("Demand Notice"), such Demand Notice shall not be construed as an election on Landlord's part to terminate the Lease. Further, Tenant's delivery of the Premises in compliance with a Demand Notice, or Tenant's forfeiture or Landlord's lawful reentry of the Premises, shall not serve to terminate the Lease or relieve Tenant's obligations under this Lease for any Rents or other amounts currently due hereunder, or which may become due after service of the Demand Notice until the end of the Term.

 

4. Exercise by Landlord of any one or more of the remedies herein granted or otherwise available shall not be deemed to be an acceptance of surrender of the Premises by

 

  

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Tenant, whether by agreement or by operation of law, it being understood that such surrender can be effected only by the written agreement of Landlord and Tenant. No such alteration of locks or other security devices and no removal or other exercise of dominion by Landlord over the property of Tenant or others at the Premises shall be deemed unauthorized or constitute a conversion, Tenant hereby consenting, after any event of default, to the aforesaid exercise of dominion over Tenant's prope11y within the Premises. All claims for damages by reason of such reentry and/or repossession and/or alteration of locks or other security devices are hereby waived, as all claims for damages by reason of any distress warrant, forcible detainer proceedings, sequestration proceedings or other legal process, to the extent permitted by law. Tenant agrees that any reentry by Landlord may be pursuant to judgment obtained in forcible detainer proceedings or other legal proceedings or without the necessity for any legal proceedings, as Landlord may elect, and Landlord shall not be liable in trespass or otherwise.

 

5. In the event Landlord elects to terminate the Lease by reason of an event of default then, notwithstanding such termination, Tenant shall be liable for and shall pay to Landlord, at the address specified for notice to Landlord herein, the sum of all Rent and other indebtedness accrued to date of such termination, plus, as damages for loss of the bargain and not as a penalty, an aggregate sum which, at the time of such te1mination of this Lease, represents the excess, if any, of (a) the aggregate of all Rent and other sums payable by Tenant hereunder that would have accrued for the balance of the Lease Term, or extension thereof, over (b) the aggregate rental value of the Premises for the balance of the Lease Term, or extension thereof, both discounted to present value at the rate of 8% per annum.

 

6. In the event that Landlord elects to repossess the Premises without terminating the Lease, whether by legal process or otherwise, then Tenant shall be liable for and shall pay to Landlord, at the address specified for notice to Landlord herein, all Rent and other indebtedness accrued to the date of such repossession, all plus Rent required to be paid by Tenant to Landlord during the remainder of the Lease Term until the date of expiration of the Term as stated herein, all of which Rent, including future Rent, shall be immediately due and payable. Provided that Tenant pays all such Rent, including future Rent, Landlord shall, on an annual basis beginning twelve months after Tenant has paid all such Rent, pay to Tenant all rental income, if any, Landlord has received for the Premises during the remainder of the Term of the Lease, less Landlord's costs and expenses in re-letting the Premises, including any and all management fees and expenses incurred by Landlord. However, in no event shall Tenant be entitled to any excess of any rental obtained by re-letting over and above the rental herein reserved.

 

7. In the event of any default or breach by Tenant or threatened or anticipatory breach or default, Tenant shall also be liable and shall pay to Landlord, in addition to any sums provided to be paid above, broker's fees and all other expenses incurred by Landlord in connection with re-letting the whole or any part of the Premises; the costs of removing and storing Tenant's or other occupants' property; the costs of repairing, altering, remodeling or otherwise putting the Premises into condition acceptable to a new tenant or tenants; and all reasonable expenses incurred by Landlord in enforcing or defending Landlord's rights and/or remedies, including reasonable attorney fees and related expenses, whether suit was actually filed or not.

 

  

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8. In the event of termination of the Lease, or the retaking of possession of the Premises for any event of default, whether through legal process or otherwise, or breach of the Lease on the part of Tenant, Tenant hereby waives and releases Landlord from any obligation that Landlord may otherwise have to mitigate Landlord's damages resulting from Tenant's default or breach of Lease, and Landlord shall not have any obligation to re-let or attempt to re­ let the Premises or any portion thereof or to collect rental after re-letting; and in the event or re­ letting, Landlord may re-let the whole or any portion of the Premises for any period to any Tenant and for any use or purpose.

 

9. If Tenant shall fail to make any payment or cure any default hereunder within the time herein permitted, Landlord, without being under any obligation to do so and without thereby waiving such default, may make such payment and/or remedy such other default for the account of Tenant (and enter the Premises for such purpose) and thereupon Tenant shall be obligated to and hereby agrees to pay Landlord upon demand all costs, expenses and disbursements,

including reasonable attorney fees, and other expenses related thereto, incurred by Landlord in taking such remedial action.

 

10. Landlord is entitled to accept, receive in cash or deposit any payment made by Tenant for any reason or purpose or in any amount whatsoever and apply the same at Landlord's option to any obligation of Tenant and the same shall not constitute payment of any amount owed except that to which Landlord has applied the same. No endorsement, restrictive endorsement, or statement on any check or letter of Tenant shall be deemed an accord and satisfaction or recognized for any purpose whatsoever. The acceptance of any such check or payment shall be without prejudice to Landlord's rights to recover any and all amounts owed by Tenant hereunder and shall not be deemed to cure any other default nor prejudice Landlord's rights to pursue any other available remedy.

 

29. LANDLORD'S RIGHT TO CURE: Landlord shall not be in breach or default under any term or provision of this Lease unless and until Tenant has first given to Landlord written notice of such breach or default and Landlord has failed or refused to cure such breach or default within thirty (30) days of Landlord's receipt of such notice, except where such failure or refusal constitutes a threat to Tenant's ability to conduct normal business operations, in which event such breach or default shall be cured or corrected as promptly as is reasonably possible after receipt by Landlord of such written notice.

 

30. RIGHT TO CURE DEFAULTS: If at any time Tenant should be in default in the performance of any covenant or condition of the Lease, other than the payment of Rent, in addition to any other remedies Landlord may have, Landlord may cure any such default at the expense of Tenant after giving Tenant three (3) day’s notice of Landlord's intention to take curative action. All costs and expenses incurred by Landlord in taking such curative action, including attorney fees, and related expenses, shall be deemed to be Additional Rent due upon demand of Landlord.

31. RELATIONSHIP OF PARTIES: Landlord and Tenant are lessor and lessee, respectively, and are not, nor shall they become by virtue of the Lease or any actions taken pursuant hereto, anything other than lessor and lessee. Landlord and Tenant are not joint ventures, partners, employed by one and the other or agents of one and the other.

 

  

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32. NOTICES: All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been sufficiently given or served if delivered in person, if delivered by a nationally recognized delivery service, such a Federal Express, United Parcel Service, or if deposited for mailing with the United States Postal Service, registered or certified, return receipt requested, postage prepaid and addressed as follows:

 

	
  

	
If to Landlord:

	
Stone Creek Commercial Center, Ltd.

% Charles C. Murphy & Associates,

P.O. Box 769,

Littleton CO. 80160-0769

8151 So. Peninsula Dr.

Littleton, CO 80120

 

	
  

	
If to Tenant:

	
GrowLife Hydroponics, Inc. 20301 Ventura Blvd, Suite 126 Woodland Hills, CA 91364

 

33. ATTORNEY FEES: If Tenant shall be in violation or breach of any provision of this Lease, Tenant shall pay to Landlord all attorney fees incurred by Landlord in connection with such violation or breach, or Landlord's enforcement of any of Tenant's obligations hereunder, or all of them, and in addition Tenant shall pay all costs and attorney fees incurred by Landlord and associated with any litigation commenced by Landlord against Tenant, or commenced by Tenant against Landlord, including, but not limited to, all costs, expenses and attorney fees incurred in enforcing any judgment obtained by Landlord against Tenant and Tenant's guarantors.

 

34. BROKERAGE: Both Landlord and Tenant represent to each other that no broker was influential in negotiating the Lease or was a procuring cause thereof except for NAI Mountain Commercial, representing Stone Creek Commercial Center, LTD

 

35. INTEREST : Any delinquent payments of Rent or any other sum or amounts due from Tenant to Landlord pursuant to the terms of the Lease, including any Late Charges specified above, shall accrue interest at the rate of eighteen percent (18%) per annum, compounded monthly, from the date such Rent, Late Charge, or other sum or amount became due. The provisions of this paragraph 35 shall in no way relieve Tenant of the obligation to pay Rent, Late Charges, and all other sums and amounts due on or before the date on which such are due, or affect Landlord's remedies under paragraph 28, but shall be in addition thereto.

 

36. AUCTIONS: Tenant shall not conduct or permit to be conducted any sale by auction on the Premises, whether said auction is voluntary, involuntary, pursuant to any assignment for the payment of creditors, or pursuant to any bankruptcy or other insolvency proceeding.

 

37. JOINT OBLIGATION: If there shall be more than on Tenant, the obligations of Tenant hereunder imposed shall be the joint and several obligations of all Tenants.

 

  

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38. MARGINAL HEADINGS: The marginal headings and titles to the paragraphs of this Lease are not a part of the Lease and shall have no effect upon the construction or interpretation of any part hereof.

 

39. TIME: Time is of the essence with respect to all obligations set forth in this Lease and each and all of its provisions in which performance is a factor.

 

40. INABILITY TO PERFORM: This Lease and the obligations of the Tenant hereunder shall not be affected, waived, delayed, or impaired because Landlord is unable to fulfill any of its obligations hereunder or is delayed in doing so, if such inability or delay is caused by reason of strike, labor troubles, acts of God, or any other cause beyond the reasonable control of the Landlord.

 

41. AUTHORITY OF TENANT: If Tenant is a corporation, limited liability company, or other similar entity, each individual executing this Lease on behalf of such entity represents and warrants that (i) he is duly authorized to execute and deliver this Lease on behalf of said entity, in accordance with the governing documents of said entity; (ii) this Lease is binding upon said entity; and (iii) an appropriate entity resolution to that effect in form reasonably acceptable to Landlord shall be provide immediately upon request.

 

42. LANDLORD EXCULPATION: Landlord and all partners, shareholders, or members of Landlord, as the case may be, shall have absolutely no personal liability with respect to any provision of this Lease, or any obligation or liability arising in connection herewith. Tenant shall look solely to the equity in the Premises for the satisfaction of any remedies of Tenant in the event of a breach by the Landlord of any of its obligations or in the event of any claim of Tenant arising in law or equity. Such exculpation of liability shall be absolute without any exception whatsoever.

 

43. LANDLORD'S LIEN: Tenant hereby grants to Landlord a lien against and a security interest in and to any and all of Tenant's furniture, fixtures, Trade Fixtures, equipment and inventory whenever acquired, their proceeds and the proceeds of any and all insurance policies carried thereon as and for additional security for the faithful performance by Tenant of all of its obligations hereunder. Tenant agrees to execute and deliver to Landlord, upon request, such additional documents as Landlord may require to establish and perfect such security interest including, without limitation, a security agreement and/or financing statement in forms satisfactory to Landlord, which are to be executed and delivered by Tenant to Landlord. The exercise by Landlord of any rights in and to such furniture, fixtures, Trade Fixtures, equipment and inventory upon default hereunder shall be governed by Article 9 of the Colorado Uniform Commercial Code, as in effect at the time of such default, but such exercise shall not preclude Landlord from exercising any or all other rights and remedies hereunder or as provided by law or herein.

 

44. NO RECORDATION: Without the prior written consent of Landlord, which consent may be withheld in Landlord's sole discretion, Tenant shall not record this Lease or any evidence of this Lease. Any recordation of this Lease in violation hereof shall constitute an Event of Default under paragraph 28 of this Lease.

 

  

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45. WAIVER OF JURY TRIAL: LANDLORD AND TENANT HEREBY MUTUALLY WAIVE ANY AND ALL RIGHTS WHICH EITHER PARTY MIGHT OTHERWISE HAVE TO REQUEST A TRIAL BY JURY IN ANY PROCEEDING AT LAW OR IN EQUITY IN ANY COURT OF COMPETENT JURISDICTION IN ANY ACTION ARISING FROM OR PERTAINING TO THIS LEASE.

 

46. TIME: In computing any period of time prescribed or allowed by this Lease, the day of the act or triggering event from which the designated time begins to run shall not be included and all references to days shall be calendar days.

 

47. COUNTERPART SIGNATURES: This Lease may be executed simultaneously in two or more counterparts, each of which shall be deemed an original and all of which, when taken together, constitute one and the same document. The signature, including facsimile signatures, of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart

 

48. ENTIRE AGREEMENT: The Lease, with all Schedules and addendum's annexed hereto, contains the entire understanding and agreement between Landlord and Tenant and supersedes and incorporates all prior understandings, discussions, agreements, representations and other communications between Landlord and Tenant concerning the subject matter hereof and any agreement hereafter made between Landlord and Tenant shall be ineffective to change, waive, release, discharge, terminate or effect an abandonment of the Lease, in whole or in part, unless such agreement is in writing and signed by the party against whom it is sought to be enforced.

 

49. SEVERABILITY: If any provision, sentence, phrase, or word of the Lease or application thereof to any person or circumstance shall be held invalid, the remainder of the Lease or the application of such provision, sentence, phrase or word to persons or circumstance other than those as to which it is held invalid shall not be affected thereby.

 

50. INTERPRETATION: When necessary for proper construction, the masculine of any word used in the Lease shall include the feminine and neuter gender, and the singular shall include the plural and vice versa.

 

51. BINDING EFFECT: Except as is otherwise provided for herein, the Lease shall be binding upon and inure to the benefit of the heirs, devisees, personal representatives, successors and assigns of Tenant and the successors and assigns of Landlord.

 

52. DUMPSTER USE: Tenant agrees not to place equipment, furniture, cabinetry, or other large items in, near, at, or about any dumpster serving the Project, the Building, or the Premises. All trash must be cut up or broken down into pieces with maximum measurements of 3'x 5' and placed in an appropriate dumpster. Under no circumstance shall any trash of any kind be placed outside the dumpster containers. Tenant shall not transport and dump Tenant's offsite project trash into Project Common Area dumpster containers. The Landlord, at its sole discretion, may assess a charge up to $500.00 against Tenant for each violation of this paragraph 52, which charge Tenant acknowledges is imposed in order to reimburse Landlord for time and expenses incurred by Landlord in enforcing this provision of the Lease, and not as a penalty.

 

  

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Landlord, the County of Eagle, the waste management provider servicing the Project, or other governmental agency may require Tenant to obtain and use one or more special use dumpsters or waste receptacles. In such event, all cost associated with such special use dumpster or waste receptacle shall be borne by Tenant, and such dumpster or receptacle shall be placed and maintained in a manner and location as reasonably required by the Landlord. In such event, and so long as Tenant is still permitted by Landlord to use the Project Common Area dumpsters, Tenant shall remain responsible for C.A.M. dumpster fees.

 

53. OVERNIGHT PARKING: No outside, overnight parking or storage of any vehicle, product, trash, and/or equipment under the control of Tenant or Tenant's employees, agents, guests, customers, or invitees is allowed. The Landlord, at its sole discretion, may assess a charge up to $500.00 for each violation of this paragraph 53, which charge Tenant acknowledges is imposed in order to reimburse Landlord for time and expenses incurred by Landlord in enforcing this provision of the Lease, and not as a penalty. Said charge shall be accompanied by pictures of vehicle, and license plate with date and time attached.

 

54. TENANT/EMPLOYEE PARKING: All Tenants and their employees shall park their vehicles in the designated Tenant/Employee parking spots as shown on the attached "Schedule I". No vehicle shall be larger than a standard size SUV, or 3/4 ton pick-up. The Landlord, at its sole discretion, may assess a charge of up to $500.00 for each violation of this paragraph 54, which charge Tenant acknowledges is imposed in order to reimburse Landlord for time and expenses incurred by Landlord in enforcing this provision of the Lease, and not as a penalty.

 

55. LANDLORDS RESPONSIBILITY TO COMPLETE:

 

56. NO PETS ALLOWED ON PREMISES: Tenant may make provisions to allow for Tenant's customers to enjoy a dog friendly (canine only) atmosphere allowing such customers to temporarily, and for short periods of time to bring their canines onto the Property and into the Premises. No canine shall, however, be left on the Property or Premises overnight. The foregoing notwithstanding, neither, Tenant nor Tenant's employees shall be allowed to bring or keep any pet (canine, feline, reptile, rodent, marsupials, birds, amphibians, or any other domestic or wild animals) on or about the Premises or Property.

 

57. ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord of a lesser amount than any and all rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord shall accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy provided in this Lease. TENANT HEREBY EXPRESSLY WAIVES AND RELINQUISHES ANY AND ALL RIGHTS IT MIGHT HAVE TO CLAIM AN ACCORD AND SATISFACTION UNDER OR PURSUANT TO C.R.S. ' 4-3-311.

 

58. GOVERNING LAW; JURISDICTION. The laws of the State of Colorado shall govern the interpretation, validity, performance and enforcement of this Lease. Tenant and Landlord understand and agree that the State Courts of the State of Colorado located in the County of Eagle, State of Colorado shall have sole and exclusive subject matter jurisdiction to

 

  

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entertain any action brought to enforce this Lease or with respect to any dispute arising herefrom and, by execution hereof, Tenant and any guarantors of this Lease voluntarily submit to the personal jurisdiction of such Courts.

 

59. BUILDING CONDOMINIUMIZATION. Landlord reserves the right to condominimise the Building and/or the Project at any time and without notice to Tenant so as to create two or more condominium units. In such event, the Premises may become one or more condominium units, or portions of one or more condominium units, as defined and described in the condominium declaration and condominium map. In the event that the Building and/or the Project is condominimised, all assessments of every kind, nature and description imposed upon the condominium unit or units making up the Premises shall, at the option of Landlord, be paid by Tenant as Additional Rent, it being recognized that such assessments may take the place of some, but not all, other charges due hereunder as Additional Rent as the result of some expenses being converted from Landlord expenses to condominium association expenses. In the event that the Premises, or any portion thereof, is a part of, but not all of, a condominium unit, Tenant shall pay a pro-rata share of the assessments for such condominium unit based upon the ratio of the area of the Premises to the area of the condominium unit. The foregoing notwithstanding, Landlord may, in the event of the condominimisation of the Building and/or the Project, adjust the Rent and or additional rent (Common Area Expense or C.A.M.), due under this Lease so as to insure that such total Rent due hereunder does not increase or decrease solely as the result of such condominimisation process, and the assessments due resulting there from. Also, in no way, shall the use of this provision cancel any additional lease extensions herein grated.

 

 

	Landlord: Stone Creek Commercial Center LLP 	 	 	Tenant: GrowLife Hydroponics, Inc.	 
	 	 	 	 	 
	By /s/ Charles C. Murphy	 	 	By /s/ Sterling Scott	 
	 	 	 	 	 
	
Charles C. Murphy

	 	 	
/s/ Sterling Scott

	 
	
as agent for Landlord 

	 	 	
President and CEO

	 
	 	 	 	 	 
	
Date: October 21, 2013 

	 	 	
Date: October 21, 2013

	 

 

 

  

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SCHEDULE I

Stone Creek Business Center 

Avon, Colorado

 

Floor Plan

 

  

30

  

 

SCHEDULE II

Stone Creek Business Center 

Avon, Colorado

 

Sign Criteria

 

 

I. INTENT:

 

These criteria are established on the principle that the success of the center, as a whole, benefits the individual merchant. Their purpose is to establish an appearance of orderliness and neatness associated with any successful business. Architectural coordination of signs also adds an element of professionalism to the entire center for the benefit of all concerned. In the interest of maintaining quality standards, proper illumination, and good contemporary design, signs must be manufactured in accordance with these criteria. Conformance will be strictly enforced and all non-conforming or unapproved signs will be brought into conformance at the expense of the tenant.

 

II. GENERAL REQUIREMENTS :

 

a. Tenant shall be responsible for the fulfillment of all requirements of these criteria.

 

b. Tenant shall submit or cause to be submitted to the Landlord for approval, prior to fabrication, at least two (2) copies of detailed shop drawings indicating size, layout, location, design, construction, and color of the proposed signs, including all lettering, logos and/or graphics.

 

c. All permits, if any or required, for signs and their installation shall be obtained and paid for by the tenant or it's designated representative prior to fabrication and installation.

 

d. All signs shall be constructed and installed, including electrical hook-up (when applicable), at Tenant's expense. Every effort should be made to have sign(s) fabricated and installed prior to Tenant's opening. TEMPORARY BANNERS WILL NOT BE PERMITTED.

 

e. The sign contractor, for the Center shall have to be approved by the Landlord, prior to any construction.

 

f. No signage shall be permitted on the East and West ends of the building.

 

g. Any willful deviation from these criteria that is not corrected immediately upon written notification by the Landlord shall be considered a default under the default provisions of the lease.

 

III. SPECIFIC REQUIREMENTS:

 

A. WHERE SIGN BAND IS PROVIDED:

 

1. Stone Creek Business Center will provide the sign band including all electrical components.

 

2. The sign band will be powered from the house meter and the cost for electricity will be included into the C.A.M. charges.

 

3. Elevation drawings are attached. The portion of the sign band designated for the Tenant will be redlined.

 

4. Each Tenant will be required to provide the sign face panels, after Landlord's approval of design, at Tenant's expense. The sign face will be, .125 aluminum, paint color and specifications to be determined by the Landlord. Copy will be routed and backed with 3/16" Plexiglas. Copy color will be Tenant's option. If Landlord has provided the sign face panels, Landlord shall be re-reimbursed the cost of said panels in the amount of $ Cost as provided by Sign Design located on Highway 6. Eagle Vail, CO, option #'2 paragraph of the lea se.

 

5. The horizontal dimension of the copy may not exceed 75% of the sign band area designated for the Tenant space. Vertical dimension of the copy may not exceed 21".

 

B. WHERE SIGN BAND IS NOT PROVIDED (Single story north and south exposure only)

 

1. All signs are to be individual pan channel letters, internally illuminated with remote transformers.

 

2. The horizontal dimension of the Tenant's sign shall not exceed 40% of the leased storefront (including logo cabinets).

 

3. Overall sign height shall not exceed 30".

 

4. Letters shall be constructed of 22-gage Paint Loe sheet metal or equivalent strength aluminum and shall have 5" returns. Channel me or similar materials will not be permitted.

 

5. All letters shall have 3/16" Plexiglas faces with l" Jewel Late trim.

 

6. All letters shall be illuminated by neon on 60 MA transformers, or by red neon on 30 MA transformers .

 

7. Letter style and color shall be selected by Tenant.

 

8. Logo cabinets will be permitted. Logo cabinets shall not exceed 30"x30" and will be illuminated by neon (see number 6 above).

 

9. Raceways will not be permitted.

 

10. Approval or disapproval sl1all remain the sole right of the Landlord.

 

11. All signs must be constructed to meet UL standards and must carry UL labels.

 

C. EXTERIOR TENANT SOFFIT IDENTIFICATION SIGNS.

 

1. All Tenants shall be required to have an exterior walkway soffit identification sign mounted contiguous to the Tenant's entry.

 

2. All soffit signs will be fabricated, installed, and maintained by the Landlord.

 

3. All costs of fabrication, installation, and maintenance shall be included in Common Area Charges (C.A.M.).

 

 

 

31phot_ex1017.htm

 

 

Exhibit 10.17

 

RETAIL LEASE AGREEMENT

 

This RETAIL  LEASE  AGREEMENT  (this “Agreement”)  made this  23rd  day of January, 2014 (the “Effective Date”), by and between  W-ADP MEADOWS VII, L.L.C., a Delaware limited liability company (“Landlord”), and GROWLIFE HYDROPONICS, INC., a Delaware corporation (“Tenant”).

1. Leased Premises.

 

(a) Landlord, for and in consideration of the Rent (as defined below) and other conditions and covenants to be observed, satisfied, fulfilled and performed by Tenant, demises and leases to Tenant, and Tenant leases from Landlord, the space depicted on the site plan attached hereto as Exhibit A-1, comprising approximately 3,24l rentable square feet, identified on the site plan as Space E-106 and having a physical address of 4880 Baseline Road, Building E, Suite 106, Boulder, CO 80303 (the “Leased Premises”), in the shopping center known as Meadows on the Parkway, upon the terms and conditions set forth herein. The “Shopping Center” shall be hereinafter defined as those portions of Meadows on the Parkway which are owned by Landlord from time to time, which portions shall be deemed to be the Shopping Center for purposes of this Agreement only during the time of such ownership. The current Shopping Center is depicted on Exhibit A attached hereto.

 

(b) Rentable square footage for purposes of this Agreement shall be measured from the outside face of exterior walls and the center of interior common demising walls. Landlord and Tenant acknowledge that Landlord may cause the square footage of the Leased Premises to be re-measured (the “Certified Area”). If the Certified Area varies from the area specified in this Agreement, this Agreement shall be modified accordingly.

2. Term. The term of this Agreement shall be for a period of thirty-nine (39) full calendar months, commencing on the Rent Commencement Date (as defined below) and expiring on the last day of the thirty-ninth (39th) full calendar month thereafter (the “Term”), unless earlier terminated pursuant to any other provision of this Agreement. The parties hereto acknowledge that all provisions of this Agreement other than those relating to the payment of Rent (as defined below), apply prior to the Term, and the parties agree to be bound by those provisions immediately upon execution of this Agreement. Tenant shall have the option(s) to extend the Term pursuant to Addendum 1 attached to this Agreement.

 

3.  Rent.

 

(a) Commencing on the date which is the earlier of: (i) the date Tenant opens for business in the Leased Premises; or (ii) sixty (60) days after Landlord's delivery of the Leased Premises to Tenant (collectively, the “Rent Commencement Date”), Tenant agrees to pay Landlord Minimum Rent, as follows:

 

	 	 	MONTHS	 	 	RATE/S.F.	 	 	ANNUAL RENT	 	 	MONTHLY RENT	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Primary Term	 	 	1 - 12	*	 	$	15.00	 	 	$	48,615.00	 	 	$	4,051.25	 
	Primary Term	 	 	13 - 24	 	 	$	15.45	 	 	$	50,073.45	 	 	$	4,172.79	 

 

  

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Primary Term

	 	 	25 - 36	 	 	$	15.91	 	 	$	51,564.31	 	 	$	4,297.97	 
	
Primary Term

	 	 	37 - 39	 	 	$	16.39	 	 	$	53,122.92	 	 	$	4,426.91	 

 

* First full three (3) calendar months during the Term are subject to rent abatement as provided in this paragraph below.

 

Minimum Rent shall be payable in advance, on or before the first day of each and every calendar month during the Term. All Rent shall be payable, without setoff or deduction, without notice or demand, in lawful money of the United States of America, at Landlord's address or at such other address as Landlord may from time to time designate in writing. “Rent” shall mean Minimum Rent, and all other charges payable by Tenant under this Agreement, including without limitation, Tenant's Proportionate Share of Operating Expenses (as defined below). Minimum Rent for any period which is less than one (1) month shall be a prorated portion of the monthly installment herein based upon the actual days in the month. Provided Tenant is not then in default under this Agreement, Minimum Rent shall be abated for the first three (3) full calendar months following the Rent Commencement Date; provided however, that during any such period of rent abatement, Tenant shall pay Tenant's Proportionate Share of Operating Expenses. If the Rent Commencement Date occurs on a date other than the first day of a calendar month, Tenant shall pay Minimum Rent for the period of time between the Rent Commencement Date and the first day of the succeeding calendar month, and rent abatement shall commence on the first day of the first full calendar month of the Lease Term.

(b) Within ten (10) days after the end of each calendar month, Tenant shall deliver to Landlord: (i) a written statement, in the form of Exhibit C attached hereto, certified by Tenant, setting forth the amount of Gross Sales made during the preceding calendar month or partial month at the beginning of the Term; and (ii) copies of sales receipts and state sales tax records.

 

(c) The term “Gross Sales” is defined as the total amount in dollars of the actual price charged, whether for cash or on credit, for all sales or receipts of whatever kind from all business conducted by Tenant from the Leased Premises. Gross Sales shall not include any sums collected and paid out for any retail sales on retail excise tax which is separately stated and paid to the taxing authority.

 

(d) Tenant shall keep for at least one (1) year after the expiration of this Agreement, all books and records showing Gross Sales. Landlord shall have the right, at any time, upon forty-eight (48) hours' prior written notice, to audit all Gross Sales and to examine Tenant's books and records, and Tenant shall make all such records available at the Leased Premises for such examination.

 

4. Trade Name and Permitted Use. Tenant shall use and occupy the Leased Premises solely for the purpose of operating a retail store selling hydroponic horticulture products (“Permitted Use”) and for no other purpose, without the prior written consent of Landlord, which Landlord may withhold in its sole discretion. Tenant shall not use the Leased Premises in any manner that violates any exclusive or prohibited use restriction shown on Exhibit D attached to this Agreement. From time to time, Landlord may request that Tenant

 

  

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provide reasonable evidence of its compliance with such restrictions, and Tenant shall deliver the same within fifteen (15) days thereafter. Tenant shall operate its business in the Leased Premises solely under the trade name of GrowLife Hydroponics (”Tenant’s Trade Name”) and under no other name, without the prior written consent of Landlord, which Landlord may withhold in its sole discretion.

 

5. Hours of Operation. Tenant shall open on or before the date which is ninety (90) days after the Effective Date fully fixtured, stocked and staffed for the Permitted Use (the “Initial Opening Date”) and shall thereafter, continuously during the Term, conduct and carry on Tenant's business in the Leased Premises during the usual business hours of each and every business day as is customary for businesses of like character in the area in which the Shopping Center is located. If Tenant violates this paragraph 5 by failing to open for more than sixty (60) consecutive days after the Initial Opening Date, then Landlord shall have the right to terminate this Agreement, upon such termination Tenant shall  reimburse Landlord for the unamortized portion of the Tenant Improvement  Allowance within five (5) days after Landlord's request for such amount; provided, however, that this provision shall not  apply  if the  Leased  Premises should be closed and the business of Tenant temporarily discontinued therein on account of remodeling or renovation which is completed within ninety (90) days after the closure or if the Leased Premises are closed during any casualty or Force Majeure event and if closure of the Leased Premises does not continue beyond one hundred eighty (180) days after the occurrence of such casualty or Force  Majeure event. Upon termination under this paragraph 5, both parties shall be automatically released from any further liability or obligation whatsoever arising out of or based upon this Agreement, except for all surviving obligations arising prior to or after termination, including, without limitation, indemnities under paragraphs 22 and  24  below, leasing commission under paragraph 30 below and Tenant's obligations for any unpaid bills and liens attributable to work performed by Tenant; provided, however, Tenant shall not be released from its obligations under this Agreement if it has not paid the amounts provided in  this paragraph within the five (5) day period set forth above. Tenant's obligations under this paragraph 5 shall survive termination of this Agreement.

 

6.  Common Areas; Operating Expenses; Other Fees.

(a) “Common Areas” shall mean all areas of the Shopping Center which are available for the common use of tenants, as designated by Landlord from time to time, and which are not leased or  held for the exclusive use of Landlord or  other tenants, including without limitation parking areas, driveways, sidewalks, loading areas, access roads, landscaping and planted areas, and signs. Landlord may from time to time change the size, location, nature and use of any of the Common Areas. Tenant, its agents, employees, customers, licensees and subtenants shall have the non-exclusive right to use the Common Areas for the entire Term for ingress or egress, automobile parking and any other purpose for which the Common Areas were designed; provided, however, that Tenant shall use commercially reasonable efforts to cause its employees to park in any on- or off-site employee parking area promulgated by Landlord for employees of the Shopping Center.

(b) “Operating Expenses” shall mean all direct and indirect costs incurred by Landlord to insure, maintain,  repair,  replace,  operate and manage  the  Shopping  Center to the

 

  

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extent not maintained by other tenants of Landlord in the Shopping Center.  Operating Expenses may include, without limitation, costs and expenses for, among other things, the following: (i) utilities (to the extent not separately metered); (ii) Real Property Taxes (as defined below); (iii) the cost of Landlord's Insurance (as defined below); (iv) property management  fees (not to exceed four percent (4%) of gross rents); (v) fees for supervision and administration paid to a third party, which may be an affiliate of Landlord, not exceeding fifteen percent (15%) of all other Operating Costs; (vi) costs and expenses paid by Landlord pursuant to any documents which are currently recorded or which are recorded in the future against the Shopping Center in the Office of the Clerk and Recorder of the County of Boulder, except for any mortgage, deed of trust or other lien presently existing or hereafter placed upon any portion of the Shopping Center by Landlord (“Matters of Record”); and (vii) capital improvement costs, provided the same are amortized on a straight line basis over the useful life of the capital item being replaced and/or repaired. Tenant shall pay Tenant's proportionate share (which shall be calculated by dividing the rentable area of the Leased Premises by the rentable area of all of the buildings located and owned by Landlord in the Shopping Center) (“Tenant’s Proportionate Share”) of all Operating Expenses in advance, on or before the first of each calendar month during the Term. By April 30th of each year, Landlord shall endeavor to give Tenant a statement showing the total Operating Expenses for the prior calendar year, as well as an estimate of the Operating Expenses for the current year (which estimate may be revised by Landlord at any time). In the event the total of the monthly payments which Tenant has made for the prior calendar year is less than Tenant's actual share of such Operating Expenses, then Tenant shall pay the difference to Landlord in a lump sum within ten (10) days after receipt of such statement. Any over-payment by Tenant shall be credited to Tenant's next payments of Tenant's Proportionate Share of Operating Expenses becoming due and payable. Tenant shall have the right, at any time within ninety (90) days after a statement of actual Operating Expenses, but upon ten (10) business days' prior written notice and during normal business hours, to examine Landlord's books and records relating to such Operating Expenses. Unless Tenant objects to the rental adjustment within said ninety (90) day period, such statement and adjustment shall be deemed conclusively binding upon Tenant.

(c) “Real Property Taxes” shall mean the following: (i) any fee, license fee, license tax, business license fee, commercial rental tax, levy, charge, assessment and/or tax imposed by any taxing authority against the land and buildings comprising the Shopping Center attributable to the Term; (ii) any charge or fee replacing any tax previously included within the definition of Real Property Taxes, in whole or in part; and (iii) any assessments or charges levied now or in the future against the Shopping Center by any district or other entity formed in connection with any public financing mechanism for the development of the Shopping (“District”).  “Real Property Taxes” do not, however, include Landlord's federal or state income, franchise, inheritance or estate taxes.

(d) Notwithstanding anything else in this Agreement to the contrary, Landlord at anytime and from time to time shall have the right to combine or separate the calculation and allocation of some or all Operating Expenses among any portion of or tenant grouping within the Shopping Center, and, in such event, Tenant's Pro Rata Share with respect to said Operating Expense(s) shall be equitably adjusted to reflect such allocation.

  

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7. Signage. The size, design and manner of installation of all signs by Tenant shall be subject to: (a) the prior written approval of Landlord and applicable governmental and private authorities; and (b) Landlord's signage criteria for the Shopping Center, which have been previously provided to Tenant.

8. Displays. Tenant may not display or sell merchandise or allow grocery carts or other similar devices within the control of Tenant to be stored or to remain outside the defined exterior walls and permanent doorways of the Leased Premises, nor allow any advertising medium that may be heard or seen outside the Leased Premises.

9. Utilities. Commencing on the Rent Commencement Date, Tenant shall pay, when due, all charges for water, sewer, electricity, gas, telephone service and other utilities supplied to the Leased Premises directly to the applicable utility provider. Landlord shall not be liable to Tenant for damages or otherwise if the utilities are interrupted or tern1inated for any cause.

10.  Insurance.

(a) Commencing on the date upon which Landlord first delivers the Leased Premises to Tenant and at all times thereafter, Landlord shall carry and maintain, or cause to be carried and maintained, the following insurance (“Landlord’s Insurance”): (i) a "Special Form" property insurance policy insuring the Shopping Center in an amount required by Landlord or Landlord's lender; and (ii) any other policy(ies) of insurance which Landlord deems necessary and/or which Landlord's lender requires to be kept in force.

(b) Commencing on the date upon which Landlord first delivers the Leased Premises to Tenant and at all times thereafter, Tenant shall carry and maintain, at its sole cost and expense:

(i) Commercial General Liability Insurance (ISO 00 01 occurrence form or equivalent acceptable to Landlord) naming Tenant as the named insured and Landlord and (at Landlord's request) Landlord's mortgagee (and managing agent) or any other person or entity as requested by Landlord, if any, as additional insureds, protecting Tenant and the additional insureds against liability for bodily injury, death and property damage occurring upon or in the Leased Premises, with a minimum combined single limit of $1,000,000.00 and a general aggregate limit of $2,000,000.00. If the policy also covers locations other than the Leased Premises, the policy shall include a provision to the effect that the aggregate limit of $2,000,000.00 shall apply separately at the Leased Premises;

(ii) “Special Form”  property insurance covering  all alterations made by Tenant and all of Tenant's property in, on or about the Leased Premises, and written for at least the full replacement cost with a deductible of not more than $10,000.00 per occurrence;

(iii) Plate glass insurance covering all plate glass in the Leased Premises which Tenant may elect to self insure. Tenant shall be and remain liable for the repair and restoration of all such plate glass;

  

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(iv) Automobile liability insurance on ISO form CA 00 01 or an equivalent acceptable to Landlord covering any auto (including owned, hired and non-owed autos), with a limit of not less $1,000,000 each accident; and

 

(v) Workers compensation and employers liability insurance for all Tenant's employees. The workers compensation insurance must fulfill applicable statutory requirements. The employers liability insurance must have limits of not less than $1,000,000 each accident for bodily injury by accident, $1,000,000 each employee for bodily injury by disease, and $1,000,000 policy limit for bodily injury by disease.

(vi) Business interruption, loss of income and extra expense insurance in amounts sufficient to insure and pay not less than a twelve-months of Tenant's expenses and loss of income.

(c) Tenant shall deliver certificates of such insurance to Landlord before occupying the Leased Premises or installing any of its property, and in any event, within 10 days after the signing of this Agreement, and at any date the prior policy expires. All such policies shall include a provision that Landlord shall receive at least 30 days' advance written notice prior to material changes or cancellation thereof. Tenant's Insurance shall be issued by an insurance company of recognized standing, authorized to do business in the State of Colorado and having a Best's Insurance Guide rating of at least A:X. All public liability property damage, liability and casualty policies maintained by Tenant shall be written as primary policies, not contributing with and not supplemental to coverage that Landlord may carry.

11. Subrogation. Tenant hereby waives any and all rights of recovery against Landlord and against the officers, employees, agents or representatives of Landlord for loss of or damage to property, if such loss or damage is covered by any insurance policy in force (or required to be in force) at the time of such loss or damage. Landlord hereby waives any and all rights of recovery against Tenant, and against the officers, employees, agents or representatives of Tenant, for loss of or damage to property, if such loss or damage is covered by any insurance policy in force (or required to be in force) at the time of such loss or damage. Landlord and Tenant, from time to time, shall cause their respective insurers to issue appropriate endorsements to all policies of insurance carried in connection with the Shopping Center or the Leased Premises or the contents of the Leased Premises, which endorsements waive such insurer's subrogation rights under such policies against the beneficiaries of this waiver.

12.  Delivery of the Leased Premises and Alterations.

(a) Tenant acknowledges and agrees that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Leased Premises or with respect to the suitability of any part of the same for the conduct of Tenant's business. The taking of possession of the Leased Premises by Tenant shall conclusively establish that the Leased Premises were at such time in a good and sanitary order, condition and repair acceptable to Tenant. Tenant shall be conclusively deemed to have accepted the Leased Premises "AS IS" in the condition existing on the date Tenant first takes possession, and to have waived all claims relating to the condition of the Leased Premises. Landlord shall deliver the Leased Premises to Tenant upon the mutual execution of this Agreement.

  

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(b) “Tenant’s Work” shall mean those items which are the responsibility of Tenant as set forth on Exhibit B attached hereto. Tenant shall commence Tenant's Work within ten (10) days after Landlord's delivery of the Leased Premises to Tenant and shall diligently prosecute such installation to completion. Tenant shall cause any Contractors (as defined in Exhibit B-1 to comply with the insurance requirements set forth on Exhibit B-1.

(c) Landlord agrees to contribute $10.00 per rentable square foot of the Leased Premises (“Tenant Improvement Allowance”) toward the cost of Tenant's Work. Upon Tenant's written request to Landlord, Landlord shall pay such sum to Tenant within forty-five (45) days after the later to occur of the following: (i) Landlord has received Tenant's payment of Tenant's Proportionate Share of Operating Expenses for the first month of the Term;

 

(ii) Tenant has opened for business to the public for the Permitted Use in the entire Leased Premises; and (iii) Tenant has delivered to Landlord all mechanics' lien releases or other lien releases on account of Tenant's Work, which are notarized, unconditional and in recordable form or in such form as Landlord shall have approved, and all invoices Tenant's Work.

(d) Tenant shall not make any alterations, improvements, changes, modifications or installments in, on or about the Leased Premises without the prior written approval of Landlord. Tenant shall complete all improvements in compliance with all Applicable Laws (as defined below) and insurance requirements applicable thereto, including, without limitation, the insurance requirements set forth on Exhibit B-1. During the course of all alterations, additions and/or improvements to the Leased Premises, Tenant shall post and keep posted (until completion of the same), in a conspicuous place upon the Leased Premises, and shall personally serve upon all contractors and subcontractors performing any of the alterations, additions and/or improvements, a notice consistent with Colorado Revised Statute Section 38-22- 105, stating that Landlord's interest in the Leased Premises shall not be subject to any lien for said work.

13.  Maintenance of Leased Premises.

(a) Tenant shall keep and maintain the Leased Premises (including, without limitation, the store front, doors, window casements, plate glass, glazing, plumbing, pipes, electrical wiring and conduits) and the surrounding area, including any equipment and improvements installed therein, neat, clean, free of debris and trash, and in good order and repair, consistent with the general character of the Shopping Center. In addition, (i) Tenant shall keep and maintain the heating and air conditioning (“HVAC”) system serving the Leased Premises in good order and repair and (ii) Tenant shall obtain a service contract for repairs and maintenance of the HVAC system which conforms to the requirements under the warranty, if any, on such system. Tenant shall comply with all rules and regulations promulgated by Landlord or the District from time to time. Landlord reserves the right to enter upon the Leased Premises at all reasonable hours for the purpose of inspecting the same, or for making emergency repairs. The exercise by Landlord of any of its rights herein shall not be deemed an eviction or disturbance of Tenant's use and possession of the Leased Premises.

 

  

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(b) Notwithstanding the provisions of subparagraph (a) above, Landlord shall repair and maintain the Common Areas and the structural portions of the building of which the Leased Premises are a part (the “Building”), including the exterior walls (excluding plate glass), slab floor, sidewalks, loading docks, utility lines not exclusively used by and located within the Leased Premises, utilities lines located  outside of the Leased Premises, and roof, unless such maintenance and repairs are caused in part or in whole by the act, neglect, fault or omission of any duty by Tenant, its agents, servants, employees, invitees, or any damage caused by breaking and entering, in which case Tenant shall pay to Landlord the actual cost of such maintenance and repairs. Landlord shall not be liable for any failure to make such repairs or to perform any maintenance unless such failure persists for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant. There shall be no abatement or rent and no liability of Landlord by reason of any injury to or interference with Tenant's business arising from the making of any repairs, alterations or improvements in or to any portion of the Building or the Leased Premises or in or to fixtures, appurtenances and equipment therein. Tenant waives the right to make repairs at Landlord's expense under any law, statute or ordinance now or hereafter in effect.

14. Liens. Should any liens be filed or recorded against the Leased Premises and/or any portion of the Shopping Center arising out of any work performed, materials furnished or obligations incurred by or on behalf of Tenant, or should any action affecting the title thereto be commenced, Tenant shall cause such liens to be removed of record within five (5) days.  If Tenant desires to contest any claim of lien, Tenant may do so only if, within such five (5) day period, Tenant posts adequate security with a court  of competent jurisdiction  and  obtains  an order discharging the lien of record, as then provided by the Colorado mechanics'  lien statute.  If a final judgment is entered establishing the validity or existence of any lien for any amount which lien has not been discharged or bonded off as required above, Tenant shall pay and satisfy the same at once.

15. Governmental Approvals.  Tenant shall: (a) obtain, at its own cost and expense, all necessary municipal and governmental  approvals,  licenses, permits and certificates required for its occupation of the Leased Premises and Tenant's Work; (b) comply with all laws, statutes, ordinances, rules and regulations (“Applicable Laws”) and all Matters of Record; and (c) pay before delinquency all taxes charged against trade fixtures, furnishings, equipment or any other personal property belonging to Tenant or imposed upon its business operations and/or sale of goods and services and which become payable during the Term.

16. Interest and Administrative Costs. If (a) Tenant fails to make any payment under this Agreement when due; (b) Landlord performs any obligation of  Tenant  under  this Agreement; or (c) Landlord incurs any costs or expenses as a result of Tenant's default under this Agreement, then Tenant shall pay, upon demand, interest, (i) with respect to payments due to Landlord pursuant to clause (a) above, from the date such payment was due, or (ii) from the date Landlord incurs such costs or expenses relating to the performance of any such obligation or Tenant's default, as the case may be, until the applicable amount is paid, at the rate of eighteen percent (18%) per annum, plus the  payment due under (a), or the  amount of  such costs and expenses incurred under  (b) or (c), and Landlord's  administrative  costs in connection therewith

 

  

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in the amount of five percent (5%) of the applicable amount, regardless of whether  or not otherwise expressly provided for in this Agreement.

17. Surrender   of   Leased   Premises.     At  the  expiration  of  the  Term  or  earlier termination of this Agreement, Tenant shall quit and surrender the Leased Premises  and the alterations therein (unless Landlord elects to have Tenant remove the same) in good  order and condition, wear and tear thereof excepted, and shall remove Tenant's trade fixtures,  equipment and other personal property, and repair any and all damages caused by such removal.   Any trade fixtures, equipment or other personal property not removed shall be deemed abandoned, but Tenant shall remain liable for the cost of removal and disposal.

18. Assignment and Subletting. Without Landlord's prior written consent Tenant shall not assign, mortgage or pledge this Agreement, or enter into any sublease, concession or license of the Leased Premises, it being understood that a change in the management of Tenant or the transfer, directly and/or indirectly, such as through the transfer of proxy rights or interests in intermediary entities that indirectly own Tenant, of thirty percent (30%) or more of the voting interests in Tenant, shall be deemed an assignment.

19. Estoppel Certificates. Tenant, upon not less than ten (10) days' prior written notice from Landlord, agrees to execute and deliver to Landlord an estoppel certificate in the form provided by Landlord.

20. Notices. All notices and demands provided herein shall be delivered by hand delivery or sent by a nationally recognized overnight courier service or by prepaid certified mail, return receipt requested, to the parties at the addresses set forth below. If service shall be made by certified mail, such service shall be deemed completed as of the third day following the mailing of such notice in the manner aforesaid. If service shall be made by overnight courier, such service shall be deemed completed as of the next business day following the deposit with the overnight courier.

If to Landlord:

 

W-ADP Meadows VII, L.L.C.

c/o Alberta Development Partners, LLC 5750 DTC Parkway, Suite 210 Greenwood Village, CO 80111 Attention: Lease Administration

 

Copy:

W-ADP Meadows VII, L.L.C.

Alberta Development Partners, LLC 5750 DTC Parkway, Suite 210 Greenwood Village, CO 80111

Attention: Meadows on the Parkway Property Management

 

  

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Copy:

 

Brownstein Hyatt Farber Schreck, LLP 410 17th Street, Suite 2200

Denver, Colorado 80202 Attention:  Robert Kaufmann

 

If to Tenant:

GrowLife Hydroponics, Inc.

4880 Baseline Road, Building E, Suite 106 Boulder, CO 80303

Attention:  John Genesi, Chief Financial Officer

 

Copy:

GrowLife Hydroponics, Inc.

4880 Baseline Road, Building E, Suite 106 Boulder, CO 80303

Attention: Justin Manns, Controller

 

21.  Default.  If Tenant shall: (a) fail to pay when due any installment of Rent or other sum of money when due without the necessity of demand therefor or notice thereof; (b) fail to perform or comply with any other term, condition or covenant on the part of Tenant  to  be observed herein and shall fail to cure same within five (5) days after written notice to Tenant; or

 

(c) vacate, abandon or cease to continuously operate the Leased Premises as set forth herein, in any such event, Tenant shall be in breach hereunder and Landlord, at its option, any  time thereafter, may:

 

(i) Terminate this Agreement by written notice to Tenant and, upon service of said notice, Tenant shall immediately vacate the Leased Premises in accordance with the provisions of this Agreement, and Landlord, in addition to its other remedies, may recover from Tenant all damages incurred by Landlord as a result of such breach (all of which shall be immediately due and payable), including, but not limited to, (A) the cost of recovering possession of the Leased Premises; (B) expenses of reletting, including repairs, renovation and alteration of the Leased Premises; (C) reasonable attorneys' fees; (D) the unpaid amount of all monetary obligations payable under this Agreement which had been earned at the time of termination; (E) the worth at the time of award of the amount by which the unpaid amount of all monetary obligations payable under this Agreement for the balance of the Term after the time of such award exceeds the amount of such loss for the same period that Tenant proves could be reasonably avoided; (F) that portion of any leasing commissions paid by Landlord and applicable to the unexpired Term; and (G) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this

  

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Agreement or which in the ordinary course of things would  be  likely to result therefrom; Landlord shall be required to use reasonable efforts to mitigate its damages, but efforts by Landlord to mitigate damages caused by the default shall not waive Landlord's right to recover all or any part thereof in a separate suit;

(ii) Landlord may, without terminating the Term, re-enter and take possession of the Leased Premises or any part thereof, without being liable for prosecution on account thereof or being deemed guilty of any manner of trespass. Landlord reserves the right, following any reentry or reletting, to exercise its right to terminate this Agreement by giving Tenant written notice thereof. No such reentry or taking possession of the Leased Premises by Landlord shall be construed as an election by Landlord to terminate this Agreement unless a written notice of such intention is given to Tenant. No notice from Landlord hereunder or under a forcible entry and detainer statute or similar law shall constitute an election by Landlord to terminate this Agreement unless such notice specifically so states. After recovering possession of the Leased Premises, Landlord may, from time to time, but shall not be obligated to, relet the Leased Premises, or any part thereof, for the account of Tenant, for such term or terms and on such conditions and upon such other terms as Landlord, in its discretion, may determine. Landlord may make such repairs, alterations or improvements as Landlord may consider reasonably appropriate to accomplish such reletting, and Tenant shall reimburse Landlord upon demand for all reasonable costs and expenses (including but not limited to the costs of such repairs, alterations or improvements, leasing commissions and attorneys' fees) which Landlord may incur in connection with such reletting. Notwithstanding Landlord's recovery of possession of the Leased Premises, Tenant shall continue to pay on the dates herein specified, the Rent and all additional amounts which would be payable hereunder if such repossession had not occurred, less a credit for the net amounts, if any, actually received by Landlord through any reletting of the Leased Premises; and

(iii) Upon a breach by Tenant hereunder, Landlord shall also have all other rights available to it at law or in equity, including without limitation, seeking specific performance or injunctive relief, or performing Tenant's obligations hereunder and getting reimbursed the reasonable cost and expenses therefor upon demand. All rights and remedies of Landlord herein created or otherwise existing at law or equity are cumulative and may be exercised concurrently, whenever and as often as deemed desirable, and the exercise of one shall not be taken to exclude or waive the right to the exercise of any other.

22. Indemnity and Release; Limitation on Right of Recovery Against Landlord.

 

(a) Except in the case of the gross negligence or willful misconduct of Landlord, Tenant shall indemnify, save harmless and, at Landlord's option, defend Landlord, from and against all claims, actions, damages, liability and expense, fines, penalties, suits, proceedings, actions and causes of action of every kind or nature, including without limitation reasonable attorneys' fees and expenses incurred by Landlord arising out of or in any way connected with Tenant's operations, or the condition, use, or occupancy of the Leased Premises, or in any way arising out of the activities in the Common Areas or other portions of the Shopping Center, of Tenant or its, employees, servants or contractors.

  

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(b) To the maximum extent permitted by law, Landlord, its partners and members, and their respective shareholders, partners, members, trustees, agents, representatives, directors, officers, employees and mortgagee(s) shall not be liable for, and Tenant waives all claims for, loss or damage to Tenant's business or injury or damage to person or property sustained by Tenant, or any person claiming by, through or under Tenant, resulting from any accident or occurrence in, on, or about the Shopping Center, including, without limitation, claims for loss or damage resulting from: (i) any equipment or appurtenances being or becoming out of repair; (ii) wind or weather; (iii) any defect  in or failure to operate any sprinkler, HVAC equipment, electric wiring, gas, water or steam pipe, stair, railing or walk; (iv) broken glass; (v) the backing up of any sewer pipe or downspout; (vi) the escape of gas, steam or water; (vii) water, snow or ice being upon the Shopping Center or coming into the Leased Premises; (viii) the falling of any fixture, plaster, tile, stucco or other material; or (ix) any act, omission or negligence of other tenants or the public.

(c) Moreover, Tenant agrees that, in the event Tenant shall have any claim against Landlord under this Agreement arising out of the subject matter of this Agreement, Tenant's sole recourse shall be against Landlord's interest  in the Shopping Center, for the satisfaction of any claim, judgment or decree requiring the payment of money by Landlord as a result of a breach hereof or otherwise in connection with this Agreement, and no other property or assets of Landlord, its officers, directors, employees, successors or assigns, shall be subject to the levy, execution or other enforcement procedure for the satisfaction of any such claim, judgment, injunction or decree. MOREOVER, TENANT AGREES THAT LANDLORD SHALL IN NO EVENT AND UNDER NO CIRCUMSTANCES BE RESPONSIBLE FOR ANY LOST PROFITS AND/OR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES INCURRED OR SUSTAINED BY TENANT, OR ITS EMPLOYEES, AGENTS, CONTRACTORS OR INVITEES AS A RESULT OF OR IN ANY WAY CONNECTED TO TENANT'S OCCUPANCY OF THE LEASED PREMISES. In connection therewith, Tenant assumes all risk of, and waives any and all right to assert claims against, or obtain any damages from, Landlord, with respect to, loss, injury, or damages which may be sustained by the person, goods, wares, merchandise or property of Tenant and/or any other person or entity in or about the Leased Premises from any cause whatsoever, whether such damage or injury results from conditions arising within the Leased Premises or from other sources and whether known, unknown, foreseen, unforeseen, patent or latent. Tenant understands and acknowledges the significance and consequence of such specific assumption of risk and waiver.

(d) Landlord shall not be in default hereunder unless Landlord fails to perform the obligations required of Landlord within a reasonable time, but in no event later than thirty

(30) days after written notice by Tenant to Landlord specifying wherein Landlord has failed to perfom1 such obligation; provided, however, if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance, then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion.

23. Holding Over.  If Tenant, or any person claiming through Tenant, shall continue to occupy the Leased Premises after the expiration or earlier termination  of the Term, such

 

  

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occupancy shall be deemed to be on a day-to-day basis under the same terms and conditions set forth in this Agreement; provided, however, that Rent during such continued occupancy shall be double the amount in effect immediately prior to expiration or earlier termination. In addition, Tenant shall pay any damages and hold Landlord harmless from any liability incurred m connection with any claims made by any succeeding occupant based on delay of possession.

24. Hazardous Substances. No Hazardous Substances (as hereafter defined) shall be used, generated, stored, treated, released, disposed or otherwise managed by or on behalf of Tenant or any invitee at the Leased Premises or the Shopping Center with the exception of minor amounts of Hazardous Substances customarily and lawfully used in conjunction with the Permitted Use in a manner that complies with Applicable Laws and all manufacturers' instructions. Tenant shall immediately notify Landlord upon discovery of any Hazardous Substance release affecting the Leased Premises and, at its sole expense and at Landlord's option, remediate to Landlord's satisfaction or reimburse Landlord's costs of investigation or remediation of any release of Hazardous Substances arising from any act or omission of Tenant, its employees, agents, contractors or invitees. In any remediation or cleanup Tenant shall be the generator of any such Hazardous Substances, shall sign all manifests with respect thereto and take responsibility therefor. Tenant shall cooperate with Landlord and provide Landlord with access to the Leased Premises from time to time for inspections and assessments of environmental conditions and shall remove all Hazardous Substances from the Leased Premises upon expiration or termination of this Agreement. Tenant agrees to indemnify, defend and hold Landlord harmless from and against all liabilities, obligations, damages, judgments, penalties, claims, costs, charges and expenses, including all remediation or cleanup costs or expenses, reasonable architects' and attorneys' fees, which may be imposed upon, incurred by or asserted against Landlord arising, directly or indirectly, out of or in connection with the presence of Hazardous Substances at or affecting the Shopping Center due to any act of Tenant, its agents, servants, employees  or contractors.   As used herein, “Hazardous Substances” shall mean:

 

(a) hazardous or toxic substances, wastes, materials, pollutants  and contaminants which are included in or regulated by any federal, state or local law, regulation, rule or ordinance, including, without limitation CERCLA, Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, and the Toxic Substances Control Act, as any of the foregoing may be amended from time to time; (b) petroleum products; (c) asbestos; (d) polychlorinated biphenyls; (e) substances known to cause cancer and/or reproductive toxicity, and/or mold; (f) halogenated and non-halogenated solvents; and (g) all other regulated chemicals, materials and solutions which, alone or in combination with other substances, are potentially harn1ful to the environment, public health or safety or natural resources.

25. Security Deposit. Upon Tenant's execution and delivery of this Agreement to Landlord, Tenant shall deposit with Landlord the sum of $5,590.73 as security for the performance by Tenant of all of the terms, covenants, and conditions required to be performed by it hereunder (the “Security Deposit”). Such sum shall be returned to Tenant after a reasonable period following the expiration of the Term if, at such time, Tenant has fully performed all such terms, covenants and conditions. Tenant shall not be entitled to any interest on the Security Deposit. In the event of default by Tenant in performing any of its obligations under this Agreement, Landlord may, in addition to any other right or remedy available to Landlord hereunder, use, apply, or retain all or any part of this Security Deposit for the payment

  

13

  

 

of any unpaid Rent or for any other amount which Landlord may be required to expend by reason of the default of Tenant. If a portion of the Security Deposit is used or applied by Landlord during the Term, Tenant shall, upon five (5) days' written demand, deposit with Landlord an amount sufficient to restore the Security Deposit to its original amount.

26. Waiver of Jury Trial. Landlord and Tenant each hereby waives any and all rights to a trial by jury of any and all issues arising in any claim, action, proceeding, or counterclaim between Landlord and Tenant (or their successors, assigns, personal or legal representatives or heirs) under or in connection with this Agreement, any of its provisions, the use or occupancy of the Leased Premises, the relationship of Landlord and Tenant, and/or any claim for injury or damage. If either Landlord or Tenant are a partnership, this waiver shall be binding upon the parties of each as well.

27. Governing Law, Entirety of Agreement and Partial Invalidity.  This Agreement shall be governed by the State of Colorado. If any provision in the Agreement is held by any court to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force and effect.

28. Attorneys'   Fees.   In the event of any litigation  or arbitration between  Landlord and Tenant to enforce any provision of this Agreement or any right of either party hereto, the unsuccessful party to such litigation or arbitration consents to pay to the successful party all costs and expenses, including reasonable attorneys' fees, incurred therein.

29. Entire Agreement. This Agreement contains the entire agreement between the parties, and all prior understandings and agreements between the parties are merged into this Agreement. This Agreement may be changed or modified only by a writing executed by the party against whom enforcement thereof is sought. Notwithstanding anything in this Agreement to the contrary, Landlord does not represent or warrant the accuracy or completeness of the tenants and occupants or the dimensions of the premises and properties shown on any site plan attached hereto as an exhibit, and the same may change from time to time.

30. Broker's Commission. Except for WalderaScott Real Estate Partners Dean Callan and Company, Inc., whose commissions will be paid by Landlord in accordance with a separate commission agreement, Landlord and Tenant each warrants and represents to the other that no broker, finder or agent has acted for or on its behalf in connection with the negotiation, execution or procurement of this Agreement. Landlord and Tenant each agrees to indemnify and hold the other harmless from and against all liabilities, obligations and damages arising, directly or indirectly, out of or in connection with a claim from a broker, finder or agent with respect to this Agreement or the negotiation thereof, including costs and attorneys' fees incurred in the defense of any claim made by a broker alleging to have performed services on behalf of the indemnifying party.

 

31. Force Majeure. “Force Majeure” shall mean any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain labor or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other non-financial causes beyond the reasonable control of the party obligated to perform.

 

  

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32. Waiver. One or more waivers of any covenant, term or condition of this Agreement by either party shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition. The consent or approval by either party shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition.

33. Subordination. Tenant accepts this Agreement subject and subordinate to any mortgage, deed of trust or other lien presently existing or hereafter placed upon any portion of the Shopping Center, which includes the Leased Premises, and to any renewals and extensions thereof. Tenant further agrees to attorn to any mortgagee, ground lessor, trustee under a deed of trust, or purchaser at a foreclosure sale or trustee's sale as landlord under this Agreement (as the case may be, “Morgagee”); provided, however, as part of such attornment, Tenant agrees for the benefit of any Mortgagee that if such Mortgagee succeeds to Landlord's (or any successor's) interest in this Agreement, such Mortgagee will have no liability for any act or omission of any prior landlord under this Agreement that occurs prior to the date such Mortgagee succeeds to Landlord's (or any successor's) interest in this Agreement nor any liability for claims, offsets, or defenses that Tenant might have had against Landlord (or any successor). Tenant agrees that any Mortgagee has the right at any time to subordinate its mortgage, deed of trust or other lien to this Agreement; provided, however, whether or not this Agreement may be (or  be  made  to  be) superior to a mortgage, deed of trust or other lien, the Mortgagee will not be liable for prepaid rentals, security deposits and claims accruing during Landlord's ownership; further provided that the provisions of a mortgage, deed of trust or other lien relative to the rights of the Mortgagee with respect to proceeds arising from an eminent domain taking (including a voluntary conveyance by Landlord) and provisions relative to proceeds arising from insurance payable by reason of damage to or destruction of the Leased Premises will be prior and superior to any contrary provisions contained in this instrument with respect to the payment or usage thereof. Landlord is hereby irrevocably vested with full power and authority to subordinate this Agreement to any mortgage, deed of trust or other lien hereafter placed upon  the  Leased Premises or the Shopping Center as a whole, and Tenant agrees upon demand to execute such further instruments subordinating this Agreement (or evidencing the subordination of this Agreement pursuant to the terms hereof) as Landlord may request; provided, however, that upon Tenant's written request and notice to Landlord, Landlord must use good faith efforts to obtain from any such Mortgagee a written agreement that after a foreclosure (or a deed in lieu of foreclosure) the rights of Tenant will remain in full force and effect during the term of this Agreement, except as otherwise provided in this paragraph and as may be required  by Mortgagee, so long as Tenant recognizes and performs all of the covenants and conditions of this Agreement. Tenant agrees to execute a  non-disturbance,  attornment  and  subordination agreement if requested by Landlord and to return the san1e within ten (10) days following receipt of written request therefor.

34. Successors and Assigns. Subject to the terms of paragraph 18, the covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of the parties hereto. In the event of any sale of the Leased Premises by Landlord, Landlord shall be and is hereby entirely freed and relieved of all liability under any and all of its covenants and obligations contained in or derived from this Agreement arising out of any act, occurrence or omission occurring after the consummation of such sale.

  

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35. Relocation. Landlord reserves the right to relocate the Leased Premises to other space in the Shopping Center comparable to the original Leased Premises in size and tenant finish. Landlord will give Tenant at least forty-five (45) days' prior written notice of Landlord's exercise of this right of relocation, and designate in such notice a proposed effective date for such relocation. Landlord shall pay the reasonable costs of moving Tenant's fixtures, furniture and equipment to the new Leased Premises, and any other reasonable business expense incurred in connection with such relocation up to a maximum of $1,000.00. Prior to the relocation, but effective upon the date the actual relocation is completed, Landlord and Tenant will execute an amendment to this Agreement deleting the description of the original Leased Premises and inserting a description of the new Leased Premises.

36. Inducement Recapture. If this Agreement provides for any rent concession, then, for purposes of this paragraph 36, any such rent concession is called the “Abated Rent”. If this Agreement provides for Landlord's payment of any form of tenant improvement allowance to Tenant, then, for purposes of this subsection, such allowance is called the “Allowance”. Tenant shall be credited with having paid all of the Abated Rent on the expiration of the Tem1 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 Tenant surrenders the Leased Premises in the physical condition required by this Agreement.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 Agreement.Tenant further acknowledges that its right to receive the Allowance is absolutely conditioned upon Tenant's full, faithful and punctual performance of its obligations under this Agreement.If Tenant defaults and does not fully cure such default pursuant to the provisions of this Agreement, the Abated Rent shall immediately become due and payable in full, the amount of any Allowance paid to (and/or on behalf of) Tenant shall immediately be returned (and/or repaid, as applicable) to Landlord, and this Agreement shall be enforced as if there were no such rent abatement, other rent concession or Allowance. In such case, Abated Rent shall be calculated based on the full initial Rent payable under this Agreement.

37.  Casualty/Reconstruction.

(a) In the event that the Leased Premises are partially or totally destroyed by fire or any other peril covered by insurance maintained by Landlord, Landlord shall, within a period of one hundred eighty (180) days after the occurrence of such destruction (but only to the extent that: (i) Landlord can restore the Leased Premises to the condition in which it existed prior to the casualty within three hundred sixty-five (365) days following the casualty;  (ii) proceeds of such insurance are available to Landlord for such purpose; (iii) the damage and/or destruction was not due to the acts or omissions of Tenant, its agents, employees or contractors; and (iv) Landlord is not restricted by any governmental authority), commence reconstruction and restoration of the Leased Premises and prosecute the same diligently to completion, in which event this Agreement shall continue in full force and effect. In the event either: (A) insurance proceeds are not sufficient to pay the cost of such reconstruction; (B) if the damage or destruction is due to the acts or omissions of Tenant, its agents, employees or contractors (in which case Tenant, at its sole cost and expense, shall cause the Leased Premises  and  the Shopping Center to be reconstructed,  restored  and repaired); (C) Landlord  is restricted  by any

 

  

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governmental authority; or (D) the reconstruction and restoration of the Leased Premises would take longer than three hundred sixty-five (365) days from the date of the casualty, Landlord may elect to either terminate this Agreement or pay the cost of such reconstruction.  If Landlord elects to or is obligated to reconstruct and repair the Leased Premises, such reconstruction shall be only to the extent necessary to restore the Lease Premises in substantially the same condition as of the Effective Date and Tenant shall be obligated for the restoration of all other leasehold improvements, trade fixtures and other personal property in the Leased Premises.

(b) In the event that the Leased Premises are partially or totally destroyed as a result of any casualty or peril not covered by Landlord's  insurance,  Landlord  may  within  a period of one hundred eighty (180) days after the occurrence of such destruction: (i) commence reconstruction and restoration of  the Leased Premises and prosecute the same diligently to completion, in which event this Agreement shall continue in full force and effect; or (ii) notify Tenant in writing that it elects not to so reconstruct or restore the Leased  Premises, in which event this Agreement shall cease and terminate as of the date of service of such notice, unless Tenant is unable to continue the operation of its business after the occurrence of such destruction, in which event this Agreement shall cease and terminate as of the date of such destruction. In the event of any reconstruction of the Leased Premises by Landlord following destruction as a result of any casualty or peril not covered by Landlord's insurance, such reconstruction shall be only to the extent necessary to restore the Lease Premises in substantially the same condition as of the Effective Date and Tenant shall be obligated for the restoration of all of all other leasehold improvements, trade fixtures and other personal property on the Premises.

(c) Notwithstanding  anything to the contrary herein contained, in the event of a total destruction of the Building or the Shopping Center or a partial destruction of the Building or the Shopping Center, the cost of restoration of which would exceed one third (1/3) of the then replacement value of the Building or the Shopping Center, by any cause whatsoever, whether or not insured against and whether or not the Leased Premises are partially or totally destroyed, Landlord may, within a period of one hundred eighty (180) days after the occurrence of such destruction, notify Tenant in writing that it elects not to so reconstruct or restore the Building or the Shopping Center, as applicable, in which event this Agreement shall cease and terminate as of the date of such destruction.

(d) Notwithstanding the foregoing, in the event that the Leased Premises are partially or totally destroyed during the last year of the Term, Landlord and Tenant each shall have the option to terminate this Agreement by giving written notice to the other of the exercise of such option within thirty (30) days after such destruction, in which event this Agreement shall cease and terminate as of the date of service of such notice. For the purposes of this subparagraph, partial destruction shall be deemed to be a destruction to an extent of at least one third (1/3) of the full replacement cost of the Leased Premises as of the date of destruction.

(e) In the event of any termination of this Agreement  in accordance with this paragraph 37, the parties shall be released thereby without further obligation to the other party coincidental with the surrender of possession of the Leased Premises to Landlord except for the obligations that expressly survive termination.

 

  

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(f) In the event of reconstruction and restoration as herein provided, and provided Tenant has maintained the business interruption or loss of income insurance required under this Agreement, to the extent that the proceeds of such business interruption or loss of income insurance may be exhausted  during the period of reconstruction and restoration, Minimum Rent payable hereunder shall be thereafter  abated proportionately with the degree to which Tenant's use  of the Leased Premises is impaired  during the remainder of the period of reconstruction and restoration; provided, however, the amount of Minimum Rent abated shall in no event exceed the amount of loss of rental insurance proceeds actually received by Landlord. Tenant shall continue the operation of its business on the Leased Premises  during  any  such period to the extent reasonably practicable from the standpoint of prudent business management, and the obligation of Tenant all other charges, except the entire Minimum Rent, shall remain in full force and effect. Tenant shall not be entitled to any compensation  or  damages  from Landlord for loss of the use of the whole or any part of the Leased Premises, Tenant's personal property or any inconvenience or annoyance occasioned by such destruction, reconstruction or restoration. Tenant hereby waives any statutory rights of termination, which may arise by reason of any partial or total destruction of the Leased Premises, which Landlord is obligated to restore or may restore under any of the provisions of this Agreement.

38.  Eminent Domain.

If all or substantially all of the Leased Premises is condemned or taken in any manner for public or quasi public use, including but not limited to, a conveyance or assignment in lieu of the condemnation or taking (collectively, a “Condemnation”), this Agreement shall automatically tem1inate as of the earlier of the date on which actual physical possession is taken by the condemnor or the date of dispossession of Tenant as a result of such Condemnation. If less than all or substantially all of the Leased  Premises  is so condemned, taken, or conveyed or assigned in lieu thereof, this Agreement shall automatically terminate only as to the portion of the Leased Premises so taken as of the earlier of the date on which actual physical possession is taken by, or conveyed or assigned to the condemnor or the date of dispossession of Tenant as a result of such Condemnation. If a portion of the Building not including the Leased Premises is condemned, taken, or otherwise conveyed or assigned in lieu thereof so as to require, in the opinion of Landlord, a substantial alteration or reconstruction of the remaining portions thereof, this Agreement may be terminated by Landlord, as of the date on which actual physical possession is taken by the condemnor or dispossession of Tenant  as a result of such Condemnation, by written notice to Tenant delivered within sixty (60) days following notice to Landlord of the date on which such physical possession is taken or dispossession will occur.

(a) Landlord shall be entitled to the entire award in any proceeding for a Condemnation for public or quasi public use, including, without limitation, any award made for the value of the leasehold estate created by this Agreement. No award for any partial or total taking shall be apportioned, and Tenant hereby assigns to Landlord any award that may be made in such Condemnation, together with any and all rights of Tenant now or hereafter arising in or to the same or any part thereof. Although all damages in the event of any Condemnation are to belong to Landlord whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the Leased Premises, Tenant shall have the right to claim and

 

  

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recover from the condemnor, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant's own right on account of damages to Tenant's business by reason of the Condemnation and for or on account of any cost or loss incurred by Tenant in  connection with  removal of Tenant's merchandise, furniture and other personal property, fixtures, and equipment or for the interruption of or damage to Tenant's business, so long as such recovery does not diminish Landlord's award.

(b) In the event of a partial Condemnation that does not result in a termination of this Agreement as to the entire Leased Premises, Minimum Rent and all other charges shall abate in proportion to the portion of the Leased Premises taken by, or conveyed or assigned in lieu of such Condemnation. If this Agreement is terminated, in whole or in part, pursuant to any of the provisions of this paragraph 38, all charges payable by Tenant to Landlord hereunder and attributable to the Leased Premises taken shall be paid up to the date upon which actual physical possession shall be taken by, or assigned or conveyed to the condemnor. Landlord shall be entitled to retain all of the security Deposit until such time as this Agreement is terminated as to all of the Leased Premises.

(d) If all or any portion of the Leased Premises is condemned or taken for public or quasi public use, or conveyed or assigned in lieu thereof, for a limited period of time, this Agreement shall remain in full force and effect and Tenant shall continue to perform all terms, conditions and covenants of this Agreement; provided, however, Minimum Rent and all other charges payable by Tenant to Landlord hereunder shall abate during such limited period in proportion to the portion of the Leased Premises that is rendered untenantable and unusable as a result of such condemnation or other taking. Landlord shall be entitled to receive the entire award made in connection with any such temporary condemnation or other taking. Tenant shall have the right to claim and recover from the condemnor, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant's own right on account of damages to Tenant's business by reason of the condemnation and for or on account of any cost or loss incurred by Tenant in connection with removal of Tenant's  merchandise, furniture and other personal property, fixtures and equipment or for the interruption of or dan1age to Tenant's business, so long as such recovery does not diminish Landlord's award.

(e) Landlord may,  without any obligation to Tenant,  agree to sell and/or convey to the condemner the Leased Premises, the Building, the Shopping Center or any portion thereof, sought by the condemnor, free from this Agreement and the rights of Tenant hereunder, without first requiring that any action or proceeding be instituted or, if instituted, pursued to a judgment.

39. Counterparts. This Agreement may be executed in any number of counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement. Executed copies hereof may be delivered by PDF or email, and, upon receipt, shall be deemed originals and binding upon the parties hereto.

40. Confidentiality. Tenant agrees that the terms of this Agreement are confidential and constitute proprietary information of the parties and that disclosure of the terms could adversely affect the ability of Landlord to negotiate with other tenants of the Shopping Center.

 

  

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Tenant agrees that Tenant, and its partners, officers, directors, members, managers, employees, contractors, agents, attorneys, and other representatives, will not disclose the terms of this Agreement to any other person or entity without the prior written consent of Landlord, except by order of a court of competent jurisdiction.

 

[SIGNATURES FOLLOW ON NEXT PAGE]

  

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, hereby have executed this Agreement under their respective hands and seals as of the day and year first above written.

 

LANDLORD:

 

W-ADP MEADOWS VII, L.L.C.,

a Delaware limited liability company

By:          W-ADP HOLDINGS VII, L.L.C.,

a Delaware limited liability company, 

its Sole Member

 

By:          W-ADP INVESTORS VII, L.L.C.,

a Delaware limited liability company, 

its Member

 

By:          Walton Acquisition REOC Holdings VII, L.L.C., 

a Delaware limited liability,

its Sole Member

By:          Walton Street Real Estate Fund VII-Q, L.P., 

a Delaware limited partnership,

its Managing Member

 

By:          Walton Street Managers VII, L.P., 

a Delaware limited partnership,

its General Partner

By:          WSC Managers VII, Inc., 

a Delaware corporation, 

its General Partner

                                                            By:  W-ADP MEADOWS VII, L.L.C.,

                                                               Name:  W-ADP MEADOWS VII, L.L.C.,

 

                                                               Title:  Manager

 

 

TENANT:

GROWLIFE HYDROPONICS,  INC.,

a Delaware corporation

 

By:  /s/ John Genesi

 

Name:  John Genesi

Title:  CFO

 

  

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EXHIBIT A

 

SITE PLAN OF SHOPPING CENTER

 

 

 

 

  

A-1

  

 

EXHIBIT A-1

 

SITE PLAN OF LEASED PREMISES

 

  

A-1-1

  

EXHIBIT B 

 

CONSTRUCTION  PROVISIONS

 

	
I.  

	
TENANT  AGREES  to  complete  the  Leased  Premises  m  the  following  manner (“Tenant’s Work”):

 

	
I.  

	
To contract for the construction of (and pay for) all work and to also pay for any additional expenses (e.g., revisions to plans to architect, changes to the Building occasioned by Tenant or governmental codes, etc.) not included as part of Landlord's original contract cost for said Building.

 

	
2.  

	
To provide fixtures for the Leased Premises in a manner comparable with stores of a similar nature, including installation of all interior fixtures and appropriate floor covering and wall treatment. Tenant hereby agrees that it shall build the most current design prototype consistent with the "flagship" or "A Level" retail stores being operated under Tenant's Trade Name

	
3.  

	
To provide, install, connect and maintain all signs at Tenant's expense prior to the Rent Commencement Date. Said sign plans shall be approved by Landlord prior to fabrication and installation of signs and shall conform to the sign criteria of the Shopping Center provided by Landlord.

	
4.  

	
To meet all other requirements necessary to open said Leased Premises for the business herein authorized.

	
5.  

	
Plan Approvals - Tenant's Plans and Drawings.

	
(i)  

	
Preliminary Plans. Tenant shall submit its preliminary, schematic or design development level plans for Tenant's Work (the “Tenant’s Preliminary Plans”) to Landlord for review and approval.   Within  ten (10) days after Landlord’s receipt of the Tenant's Preliminary Plans, Landlord shall either approve or disapprove the same in writing.

 

	
(ii)  

	
Construction Drawings. Within ten (10) days after Tenant's receipt of Landlord's approval of the Tenant's Preliminary Plans, Tenant shall submit construction drawings and any other supplementary documents reasonably required by Landlord for the Tenant's Work (collectively, the “Tenant’s Construction Drawings”)  to  Landlord  for  Landlord's  review and  approval.    Within ten (10) days after Landlord’s receipt   of the Tenant’s Construction   Drawings,   Landlord   shall   either   approve or disapprove the Tenant's Construction Drawings in writing.   Tenant shall not commence Tenant's Work until Tenant has provided to Landlord a copy of its building permit.

	
(iii)  

	
Deemed Approval. If Landlord fails to approve or disapprove the applicable   plans   or   drawings   within   the   timeframes   set  forth   in subparagraphs (i) and (ii) above, then the applicable plans or drawings shall be deemed approved by such Landlord.

 

  

B-1

  

	
6.  

	
Tenant agrees to execute a contract(s) for Tenant's Work (the "Contract") with contractors and subcontractors reasonably satisfactory to Landlord (collectively, the “Tenant’s Contractors”). Prior to execution of the Contract, Tenant will provide a copy to Landlord for its review and approval. Landlord will review the Contract for compliance with the requirements of this Exhibit B (the “Requirements”) within five (5) business days after receipt thereof and advise Tenant of any objections thereto. If Landlord objects to the Contract, Tenant will cause the same to be corrected, so that it is in compliance with the Requirements and resubmit the same to Landlord for approval. The parties will continue the procedure set fo11h above until Landlord's approval is obtained.  Following such approval, Tenant will promptly commence and proceed diligently to complete Tenant’s Work.

	
7.  

	
Landlord has no obligation to Tenant or Tenant's Contractors in connection with Tenant's Work except as set forth herein.

	
8.  

	
Tenant will cause Tenant's Contractors to:  (i)  cooperate  with  contractors employed by Landlord who are completing work anywhere in the  Shopping Center (“Landlord’s Contractors”) so as to not interfere with Landlord's Contractors; (ii) conduct work so as not to unreasonably interfere with  other tenants in the Shopping Center; (iii) reach agreement with Landlord or Landlord's Contractors as to the terms and conditions for hoisting, systems interfacing, and use of temporary utilities; and (iv) deliver to Landlord such evidence  of compliance with the provisions of this paragraph as Landlord may reasonably request.

	
9.  

	
Tenant assumes full responsibility for Tenant's Contractors' performance of  all work including, without limitation, compliance with all Applicable Laws and for all Tenant's Contractors' property, equipment, materials,  tools  or  machinery placed or stored in the Leased Premises during the completion thereof. All such work is to be perfo1med in a good and workmanlike manner consistent with first class standards. Tenant shall require its general contractor to place a refundable security deposit in the amount of $5,000.00 with the Landlord. Such deposit shall be used only to repair any damage done by the Tenant's Contractors to the Landlord's property, or, to complete any Landlord issued punch-list items not completed by Tenant.

	
10.  

	
In the event Tenant's Work includes any work involving in any manner the roof, fire sprinkler and/or fire alarm, Tenant agrees to only use Landlord's Contractors for any such work at Tenant's cost.

	
11.  

	
Tenant will indemnify, defend and hold  harmless  Landlord,  Landlord's mortgagee, Shopping Center and/or  Building  manager,  and  Landlord's Contractors  from  and  against  any  and  all  liabilities,  claims  demands,  damages,

 

  

B-2

  

 

expenses, fees (including without limitation, attorneys' fees), fines, penalties, suits, proceedings, actions and causes of action of any and every kind or nature arising out of, or resulting from the performance of the Tenant's Work, including, but not limited to, mechanics' or other liens or claims (and all costs associated therewith). Notwithstanding the preceding and without diminishing Tenant's obligations set forth above, Landlord reserves the right to select its own counsel in defending any such lien, claim, action or proceeding, and Tenant shall immediately reimburse Landlord upon demand for all fees and expenses incurred in connection therewith. Tenant will also immediately  repair or cause to be repaired, at its expense, all damage caused to the Leased Premises and/or the Shopping Center by Tenant's Contractors. Further, Landlord shall have the right to post and maintain any notices of non-liability.

	
12.  

	
Following construction of the Tenant's improvements, Tenant will submit a black-line translucent bond set and two disks of Adobe .PDF "As-Built" drawings to the Landlord for its records.

	
13.  

	
Tenant shall require Tenant's Contractors to execute lien waivers acceptable to Landlord, contemporaneously with their receipt of payment, copies of which will be immediately delivered to Landlord.

	
14.  

	
Tenant designates and authorizes John Nash, E-Mail: jnash@growlifehydro.com, Phone #: 720-627-9032, to act for Tenant in connection with construction matters concerning this Exhibit B.

	
15.  

	
Tenant designates and authorizes John Nash, E-Mail: jnash@growlifehydro.com, Phone #: 720-627-9032, to act for Tenant in connection with architectural matters concerning this Exhibit B.

 

	
16.  

	
Landlord designates and authorizes Jeb Boshart, E-mail: jeb@albdev.com, Phone#: 303-771-4004 to act for Landlord in connection with matters concerning this Exhibit B.

 

	
17.  

	
All notices required hereunder will be in writing in accordance with the terms and provisions for notices set forth in the Agreement between Landlord and Tenant.

 

	
18.  

	
Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Agreement between Landlord and Tenant.

 

  

B-3

  

 

EXHIBIT B-1 

 

CONTRACTOR  INSURANCE  PROVISIONS

 

1. Required Insurance. Tenant acknowledges and agrees that it shall cause any contractor, including Tenant's Contractors (each a “Contractor”) constructing the  Tenant's Work or any alterations or improvements to the Leased Premises (as permitted under this Agreement) (the “Work”) shall to maintain the following insurance without interruption through final completion, at any time thereafter when the Contractor enters the Leased Premises to perform the Work, and during any additional periods specified herein:

(a) Commercial general liability insurance written on the current ISO CG 00 01 occurrence form or an equivalent acceptable Landlord (the “CGL”), (i) covering liability arising from premises, operations, independent contractors, products-completed operations, personal and advertising injury, and liability assumed under an insured contract (including the tort  liability  of another  assumed  in  a business  contract),  (ii) with  limits  of not  less  than $1,000,000 each occurrence, $1,000,000 personal and advertising injury, $2,000,000 general aggregate and a separate $2,000,000 products-completed operations aggregate, (iii) including the Additional Insureds (as defined in Section 6 of this Exhibit B-1) as additional insureds, using one or more additional insured endorsements that provides coverage for both ongoing and completed operations and is acceptable to Landlord, (iv) that applies as primary and non­ contributing insurance with respect to any other insurance or self-insurance program afforded to the Additional Insureds, (iv) that provides that any general aggregate limit applies separately to the Work on a "per project" basis, (v) that does not limit the scope of coverage for liability arising from "XCU" (explosion, collapse, or underground) hazards, and (vi) that includes a standard ISO separation of insureds provision or a substantially similar provision. The Contractor shall maintain its products-completed operations coverage for at least three years after substantial completion of the Work or the earlier termination of this Agreement.

(b) Business automobile liability insurance to cover liability arising out of any auto (including owned, hired and non-owned autos), with a limit of not less than $1,000,000 each accident. The Contractor waives all rights against the Additional Insureds for recovery of damages to the extent such damages are covered under any applicable auto physical damage coverage.

(c) Workers compensation and employers liability insurance, for all persons the Contractor employs in carrying out any Work. The workers compensation insurance must fulfill applicable statutory requirements. The employers liability insurance must have limits of not less than $1,000,000 each accident for bodily injury by accident, $1,000,000 each employee for bodily injury by disease, and $1,000,000 policy limit for bodily  injury by disease. The Contractor waives all rights against the Additional Insureds for recovery of damages covered by the workers compensation and employers liability insurance obtained by the Contractor pursuant to this Section l(c), and shall obtain an endorsement to allow this waiver.

 

  

B-4

  

 

(d) Follow form excess or umbrella liability insurance with respect to the Contractor's CGL, employers liability and business automobile liability insurance for the Project, with a limit of not less than $2,000,000 each occurrence. Such insurance must provide that aggregate limits of liability apply separately with respect to the Leased Premises on a "per project" basis.

2. Insurance Carried by Subcontractors and Consultants of the Contractor.  Tenant shall cause each Contractor by written agreement to require each of its subcontractors and consultants of every tier (“Subcontractors”) to maintain as if they were “Contractor" the same insurance required in Section 1 (including naming the Additional   Insureds as additional insureds), except that the amount of excess or umbrella liability insurance will be mutually agreed on a case-by-case basis by Contractor and Landlord, based on the type of Work or services performed.

3. Design   Services  or  Design-Build   Services.  If the  Work  includes  any  design services or design-build work, the entity providing the design services shall provide professional liability insurance with a limit of not less than $1,000,000 each claim and $1,000,000 aggregate. Such insurance must be retroactive to the date of the commencement of the design services, and must be kept in force for three (3) years after substantial completion of the Work or the earlier termination of this Agreement.

4. General Requirements.  Each insurance policy  required  under this Exhibit   B-1 (the “Required Insurance”) must, unless otherwise agreed in writing by Landlord, be issued by reputable insurance carriers having a Best's rating of at least A:X. Each policy and certificate will be subject to reasonable approval by Landlord and the Contractor shall make available to Landlord copies of policies within 15 days after the Landlord's request.   The cost (including deductibles and self-insured retentions) of the Required Insurance, as well as the cost of any other insurance carried by the Contractor with respect to the Work, will be borne solely by the Contractor.

 

5. Evidence of Insurance.    Prior to commencement of any Work at the Leased Premises, Tenant shall provide to Landlord (i) an insurance certificate evidencing the Required Insurance, and (ii) an endorsement to Contractor's CGL adding the Additional   Insureds as additional insureds.  Tenant shall cause the Contractor to ensure that the Landlord is notified at least 30 days prior to the cancellation or non-renewal of any Required Insurance, or 10 days prior in the case of cancellation due to non-payment. Tenant shall cause the Contractor to provide an updated certificate of insurance before the expiration of the term of any Required Insurance. The Tenant's failure to require the Contractor to provide evidence of Required Insurance, or the Landlord's acceptance of evidence that indicates insurance that fails to satisfy the requirements of this Section, will not constitute a waiver of such requirements.

6. Additional Insureds. The “Additional Insureds” are as follows: Landlord, any mortgagee of Landlord, Tenant, and each of their respective affiliates, subsidiaries, parent corporations, owners, members (direct or indirect), managers, trustees, directors, officers, partners, shareholders, employees, and agents.

 

  

B-5

  

 

EXHIBIT C

 

GROSS SALES STATEMENT FORM

 

Please mail to:

W-ADP MEADOWS VII, L.L.C.

c/o Alberta Development Partners, LLC 

5750 DTC Parkway, Suite 210 

Greenwood Village, Colorado 80111 

Attention:  Lease Administration

 

 

Tenant Name: 

 

Property:                                       

 

Date:                                                         

 

I hereby certify that, to the best of my knowledge, Gross Sales as defined in the Agreement for the above location are as follows:

 

Month:                                                     

 

Sales Amount:                                                  

 

 

Signature:                                                        [Tenant] 

 

Name and Title (print):                                               

 

Phone No.:                                                                           

 

Email:                                           

  

C-1

  

 

EXHIBIT D

 

LIST OF EXCLUSIVE AND PROHIBITED USES

  

D-1

  

 

ADDENDUM l 

OPTION TO EXTEND

 

Tenant shall have the option (“Option”) to extend the Term of the Agreement for one (1) additional period of thirty-six (36) full calendar months (“Option Period”), subject to the following terms and conditions:

A. Tenant may exercise an Option by giving Landlord written notice of its intent to exercise such Option (“Exercise Notice”) at least one hundred twenty (120) days prior to the expiration of the original Term.

B. At the time of exercise, Tenant: (i) is not in default under the Agreement; and (ii) is operating a business in the Leased Premises in accordance with the Permitted Use.

C. If within any twelve (12) month period during the Term or any Option Period, Tenant shall have been in default under the Agreement in the payment of Rent thereunder more than two (2) times, and Landlord shall have served Tenant within said twelve (12) month period two (2) or more notices of Tenant's failure to pay Rent, Landlord may, at Landlord's sole and absolute discretion, cancel and void the applicable Exercise Notice by delivering written notice of such cancellation to Tenant, in which event the applicable Option shall be void and canceled, and the Agreement shall terminate at the end of the original Term or the then current Option Period.

D. All other terms and conditions of the Agreement shall remain unchanged and apply during any Option Period, except that Minimum Rent shall be as set forth below:

	  	 	
MONTHS

	 	 	
RATE/S.F.

	 	 	
ANNUAL RENT

	 	 	
MONTHLY  RENT

	 
	
Option Period

	 	 	1 - 12	 	 	$	16.88	 	 	$	54,716.61	 	 	$	4,559.72	 
	  	 	 	13 - 24	 	 	$	17.39	 	 	$	56,358.11	 	 	$	4,696.51	 
	  	 	 	25 - 36	 	 	$	17.91	 	 	$	58,048.85	 	 	$	4,837.40	 

 

E. If an Option is not timely exercised, Tenant's right to extend shall expire and the Agreement shall terminate at the end of the original Tenn.

 

 

 

 

 

 

Addendum 1-1

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