LEASE

Exhibit 10.15

 

2153 King Street LEASE

(May 2002)

 

TENANT: Hoku Scientific, Inc.

 

 

LEASE DATE: January 1, 2003

 

 

COMMENCEMENT DATE: Rent Commences February 1, 2003

 

 

TERMINATION DATE: January 31, 2008

 

 

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TABLE OF CONTENTS

 

 

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2153 N. King Street LEASE

 

THIS INDENTURE OF LEASE, is executed in triplicate, by and between DREAL HAWAII LLC , a Hawaii limited liability company, herein called “Landlord,” and the below described “Tenant”:

 

ARTICLE I

 

TERMS, COVENANTS AND CONDITIONS

 

PARTICULAR TO THIS LEASE

 

Section 1.01. Lease Date

 

Section 1.02. Identity of the Tenant and Tenant Information.

 

(a)

Tenant: Hoku Scientific, Inc.

 

(1)

Tenant’s address for receiving notices:

 

2153 North King Street, Suite 306

 

Honolulu, HI 96819

 

(2)

Tenant’s Social Security Number(s) or Federal I.D., Number(s):

 

990351487 (Federal ID)

 

(3)

Tenant’s contact information:

 

Work Phone:                          Home Phone:

 

Work Fax:                                Home Fax:

 

Internet e-email:

 

(4)

Tenant is (check one):

 

(5)

an individual

 

__X__ a corporation incorporated in the State of Hawaii

 

a partnership formed in the State of

 

other: please specify:

 

(b)

“Tenant” Documents . If Tenant is a Corporation, Partnership, Trust or other form of business entity, Tenant shall at the time of execution of this Lease, provide Landlord with true and correct copies of the entity’s articles of incorporation, partnership agreement, trust or trust abstract, and any present or subsequent amendments or modifications thereto which change, alter or modify the constitution or makeup of the entity.

 

Section 1.03. Lease Guaranty . The following person(s) have executed the Lease Guaranty agreement, which is appended, to this Lease and are responsible for the Tenant’s full performance of all covenants, duties, terms and conditions of the “Tenant” during the term of this Lease and any period of extension or renewal thereof.

 

 

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Section 1.04. Identification of the “Demised Premises . 2153 N. King Street Space #306, consisting of approximately 2,545 gross square feet, more or less, (“floor area”). Tenant is accepting the Demised Premises in “as is” condition without warranties, express or implied, or representations as to the condition of the same and assumes all risks of conditions known or unknown. Tenant hereby confirms that it has had the opportunity prior to signing this Lease to consult with a professional, such as an architect, civil engineer, environmental consultant or other person with experience in evaluating the condition of the Demised Premises.

 

Section 1.05. Permitted Use of the Demised Premises . The Demised Premises may be used solely for the purpose of conducting within the Demised Premises the business of Hoku Scientific, Inc. and for no other purpose.

 

Section 1.06. Term of the Lease .

 

(a)

The commencement date is January 1, 2003.

 

(b)

The termination date is January 31, 2008.

 

Section 1.07. Guaranteed Minimum Rent . Tenant shall pay guaranteed gross monthly rent as follows:

 

(a)

For the lease year(s) February 1, 2003 through January 31, 2005, Tenant shall pay to the Landlord a monthly guaranteed minimum rent in the amount of Five Thousand One Hundred Fifty-Four and 17/100 DOLLARS ($5,154.17), plus gross excise tax.

 

(b)

For each and every lease year thereafter Tenant shall pay to the Landlord a monthly guaranteed minimum rent which is to be determined as follows:

 

3% per year commencing February 1, 2005.

 

Section 1.08. Security Deposit . Tenant, has deposited with Landlord the sum of Five Thousand One Hundred Fifty-Four and 17/100 DOLLARS ($5,154.17) as a Security Deposit. The Security Deposit is equal to the sum of Guaranteed Minimum Rent (includes cost of common area maintenance and operation).

 

Section 1.09. Hours of Operation . Tenant agrees to conduct and open its business in the Demised Premises during the days and hours of                      .

 

Section 1.10. Construction Obligations . If construction obligations are to be performed by Landlord and/or Tenant, they are an integral portion of this Lease. All of any such provisions shall be set forth in a written addendum which shall be appended to this Lease and incorporated herein by reference, as fully as if set forth in this Article I.

 

Section 1.11. Additional Provisions . (See attached Exhibit D).

 

Section 1.12. Managing Agent. Landlord’s Managing Agent is:

 

Joe Vierra, DREAL Hawaii LLC

2153 North King Street, Suite 200, Honolulu, HI 96819

Telephone:

 

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ARTICLE II

 

DEMISING AND ACCEPTANCE OF THE LEASEHOLD ESTATE

 

Section 2.01. Demise of the Premises . The Landlord hereby leases to the Tenant, and Tenant hires from Landlord, the “Demised Premises” described in Article I which is a portion of the Belt Collins and office building complex located at 2153 N. King Street, Honolulu, Hawaii, hereinafter called the “Belt Collins Center,” together with the common rights in parking and other common areas set forth in ARTICLE VI hereof for the purpose of conducting within the Demised Premises the “Permitted Use” and business activity and for no other purpose. All common Areas and facilities, which Tenant may be permitted to use and occupy, are to be used and occupied under a revocable license. If the amount of such areas or facilities is ever diminished, such diminution shall not be deemed a constructive or actual eviction and the Landlord shall not be subject to any liability, nor shall Tenant be entitled to any compensation or diminution or abatement of rent. The Demised Premises are shown on the Belt Collins Center Floor Plan, which is attached hereto as Exhibit “A” and made a part hereof by reference. The purpose of Exhibit “A” is to show the approximate location of the Demised Premises within the Belt Collins Center. The Demised Premises is SUBJECT, HOWEVER, to all mortgages, liens, encumbrances, easements, rights of way, covenants, conditions, restrictions, easements and agreements affecting the Belt Collins Center which are now of record in the Bureau of Conveyances of the State of Hawaii and those hereafter permitted as set forth in this Lease. RESERVING unto the Landlord, the Landlord’s successors and assigns the right to condominiumize the Belt Collins Center and portions thereof, and to grant, sell and assign, or mortgage, in leasehold or fee simple, all or any portion of the Belt Collins Center; to add to or reduce the gross leasable area in the Belt Collins Center, to erect additional buildings and kiosks on the common areas, to re-locate various buildings or parking areas, to designate other and additional common areas, and to reduce, add to, adjust, or otherwise modify the area, size, location, and extent of the common areas that may be shown thereon, provided that there shall be caused thereby no unreasonable and material obstruction of Tenant’s right of access to the Demised Premises or unreasonable and material interference with Tenant’s permitted use within the Demised Premises. In the event Tenant within the Demised Premises constructs a mezzanine or additional mezzanine, with the express written consent of the Landlord (which consent may be arbitrarily withheld) the Landlord reserves the right to increase proportionately the Guaranteed Minimum Rent and other charges contained in this Lease.

 

ARTICLE III

 

TERM

 

Section 3.01. Term of Lease . The term of this Lease shall begin at 12:00 a.m. on the commencement date and shall end at 11:59 p.m. on the termination date, as set forth in Article I.

 

ARTICLE IV

 

RENT AND SECURITY DEPOSIT

 

Section 4.01. Guaranteed Minimum Rent .

 

(a)

For each and every calendar month during the term of this Lease, Tenant shall pay to Landlord, on or before the first day of each month, at Landlord’s

 

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office, the guaranteed minimum rent as set forth and determined pursuant to Article I. Payment shall be in advance without demand and without set-off.

 

(b)

In the event the commencement date of the lease term falls on any day other than the first day of the month, Tenant shall pay in advance; the pro rata portion of that first month’s fractional rent based upon the commencement date and the days remaining in said month, and in addition thereto, the guaranteed minimum rent for the month immediately following. Thereafter the full amount of guaranteed minimum rent shall be paid without apportionment.

 

(c)

In the event the termination date of this Lease falls on any day other than the last day of the month, Tenant shall nonetheless pay to the Landlord the entire last month’s guaranteed minimum rent, without apportionment or prorating. Landlord shall, however, rebate to Tenant the pro rata portion of rent for the last month in which this Lease terminates based upon the date the Tenant actually vacates the Demised Premises (not sooner than the termination date) and upon the Tenant’s leaving the Demised Premises in the condition hereinafter required and delivering all keys and possession to the Landlord.

 

(d)

Tenant’s Security Deposit shall under NO circumstances be deemed to be the prepayment of the last month’s rent.

 

Section 4.02. Gross Income Tax . In addition to all rent, taxes and all other charges of every description payable hereunder and those as set forth in Section 3.03 herein below, the Tenant shall pay to the Landlord, without demand, an amount equal to the amount payable by the Landlord pursuant to the Hawaii General Excise Tax Law, or any successor or substitute law, assessed or based on gross income actually or constructively received by the Landlord under or in connection with this Lease, including without limiting the generality of the foregoing, the rents, common area charges, and all other charges payable hereunder and any amount directly or constructively received by the Landlord (to the extent so taxed) by reason of payment by the Tenant to the Landlord or others of property taxes, insurance premiums, common area charges, or any other charges or costs hereunder. Gross Income Tax chargeable at the commencement of this Lease shall be calculated at the rate of 4.166%, which shall be subject to increase or decrease in accordance with any amendments that may, from time to time, be made to the Hawaii General Excise Tax law.

 

Section 4.03. Additional Rent . The Tenant shall pay as additional rent any money or charge required to be paid by Tenant to Landlord under any provision of this Lease, whether or not the same is designated “Additional Rent.” If such amounts or charges are not paid at the times set forth in this Lease, they shall nevertheless, if not paid when due, be collectible as Additional Rent with any installment of rent thereafter falling due hereunder, but nothing herein contained shall be deemed to suspend or delay the payment of any amount of money or charge at the time the same becomes due and payable hereunder, or limit any other remedy of the Landlord.

 

Section 4.04. Late Charges and Bad Check Charges . If the Landlord does not receive any of the rentals or other payments due under this Lease from Tenant on or before the due date, the same shall constitute a default. If any payment due hereunder is not

 

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received by Landlord within FIVE (5) calendar days after it becomes due, then in addition to any other remedies Landlord may have under this Lease, the Landlord shall be entitled to charge, and the Tenant shall pay, without demand, a reasonable late charge in the amount of ten percent (10%) of the payment then due. Tenant shall pay to Landlord a charge of TWENTY-FIVE DOLLARS ($25.00) for any check received by Landlord from Tenant that is dishonored for any reason whatsoever.

 

Section 4.05. Security Deposit . Tenant, contemporaneously with the execution of this Lease, has deposited with Landlord a Security Deposit, in the amount set forth in Article I, the receipt of which is hereby acknowledged by Landlord.

 

(a)

The security deposit shall be held by Landlord, without liability for interest, as security for the faithful performance by Tenant of all of the terms, covenants, and conditions of this Lease by said Tenant to be kept and performed during the term hereof.

 

(b)

If any of the rents herein reserved or any other sums payable by Tenant to Landlord shall be overdue and unpaid or should Landlord make payments on behalf of Tenant, or should Tenant fail to perform any of the terms of this Lease, the Landlord may, at its option, and without prejudice to any other remedy which Landlord may have on account thereof, appropriate and apply said entire Security Deposit or so much thereof as may be necessary to compensate Landlord toward the payment of the rents or other sums due from Tenant, or towards any loss, damage or expense sustained by Landlord resulting from such default on the part of Tenant; and in such event Tenant shall forthwith upon demand restore said Security Deposit to the original sum deposited. In the event Tenant shall fully and faithfully comply with all of the terms, covenants and conditions of this Lease and pay all of the rentals as they fall due and all other sums payable by Tenant to Landlord, said Security Deposit shall be returned in full to Tenant following the date of the expiration of the Lease Term and the surrender of the Demised Premises by Tenant in compliance with the provisions of this Lease.

 

(c)

In the event any bankruptcy, insolvency, reorganization or other creditor-debtor proceedings shall be instituted by or against Tenant, or its successors or assigns, or any Guarantor of Tenant hereunder, such Security Deposit shall be deemed to be applied first to the payment of any rents and/or other charges due Landlord for all periods prior to the institution of such proceedings and the balance, if any, of such Security Deposit may be retained by Landlord in partial liquidation of Landlord’s damages.

 

(d)

The Security Deposit shall not be mortgaged, assigned, transferred or encumbered by Tenant without the prior written consent of Landlord and any such act on the part of Tenant shall be without force and effect and shall not be binding upon the Landlord. Landlord may deliver the Security Deposit to the purchaser of Landlord’s interest, or any person or entity having an interest, in the Demised Premises in the event that such interest may be assigned, sold,

 

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or transferred, and thereupon Landlord shall be discharged and released from all further liability with respect to such Deposit or the return thereof to Tenant, and Tenant agrees to look solely to the new Landlord for the return of said Security Deposit, and this provision shall also apply to any subsequent transferees. No holder of a mortgage or deed of trust or lessor under a ground or underlying lease to which this Lease is now or hereafter may be superior or subordinate shall be responsible in connection with the Security Deposit, unless such mortgagee or holder of such deed of trust or lessor shall have actually received the Security Deposit.

 

ARTICLE V

 

OPERATION OF TENANT’S BUSINESS

 

Section 5.01. Reserved .

 

Section 5.02. Limitation on Type of Business . Tenant shall not operate any business upon the Demised Premises or permit any concessionaire, licensee or subtenant to operate any business upon the Demised Premises other than the business described in Article I. Unless specifically set forth in this Lease, Landlord has made no covenant or agreement with respect to the grant of any exclusive right of Tenant to operate its type of business within the Belt Collins Center.

 

Section 5.03. Deliveries . Tenant shall not load, nor permit the loading or unloading of merchandise, supplies or other property, nor receive the same outside the area and entrance which may from time to time be designated therefore by the Landlord; will not permit the parking or standing outside of said designated loading area of trucks, trailers, or other vehicles or equipment engaged in such loading or unloading in a manner which may interfere with the use of any Common Areas or any pedestrian or vehicular use and common Belt Collins center practice; will use its best efforts to complete or cause to be completed all deliveries, loading, unloading and services to the Demised Premises during hours which may from time to time be promulgated by the Landlord.

 

Section 5.04. Reserved.

 

Section 5.05. Annoying or Injurious Conduct . Tenant shall take no action which would violate any of Landlord’s contracts, if any, affecting the Belt Collins Center, or which would create or contribute to any work stoppage, strike, picketing, labor disruption or dispute, or which would interfere, in any way, with the business of Landlord or any other tenant or occupant of the Belt Collins Center or with the rights and privileges of any invitees, licensees, employees, customers, or any other persons lawfully in and upon said Belt Collins Center, or which would cause any impairment or reduction of the good will and reputation of the Belt Collins Center. Tenant shall not use any false or misleading advertising, or engage in any unfair trade practices injurious to other tenants in the Belt Collins Center.

 

ARTICLE VI

 

COMMON AREAS AND EXPENSES

 

Section 6.01. Right to Use Common Areas . Subject to the Landlord’s right to alter, amend, and modify the common areas, it

 

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is understood that in connection with the business to be conducted upon the Demised Premises the Tenant, Tenant’s employees and customers shall have the non-exclusive right in common with the Landlord and other tenants of the Belt Collins Center and their employees and customers and all others to whom Landlord has or may hereafter grant rights, to use the mall, sidewalks, stairways, driveways, and other Common Areas as designated by Landlord, subject to such rules and regulations as Landlord may impose. Landlord may at any time permanently close any Common Area, make repairs or changes or prevent the acquisition of public rights in such area or discourage non-customer parking.

 

Section 6.02. Definition of Gross Leasable Area . The term “Gross Leasable Area”, as used in this Lease means the actual number of square feet of rentable floor space, within the Belt Collins Center and within the exterior faces of the exterior walls (except party walls as to which the center line thereof instead of the exterior face thereof shall be used) of all floors, including mezzanines, showcases and entrances within the exterior limits of said building and the Demised Premises, but there shall not be included space on the roofs, other structures on roofs, any unleased roof decks or lanais. There shall further not be included in the calculation of “Gross Leasable Area” open space areas such as paved yard areas, driveways, open service areas or the like, even though the same may be under lease to a tenant, where any such lease provides that tenant is primarily responsible for the operation, maintenance, cleaning and repair of the open space area. No deduction or exclusion shall be made from floor area by reason of columns, stairs, elevators, escalators or other interior construction or equipment. Changes by way of either addition or reduction of the Gross Leasable Area of the Belt Collins Center occurring during any calendar month shall be effective on the first day of the next succeeding calendar month.

 

Section 6.03. Common Areas Maintenance Charge .

 

(a)

In order to defray the expenses incurred by Landlord in operating, managing and maintaining the parking areas, streets, sidewalks, roadways, service roads, planting, and other areas and facilities common to occupants of the Belt Collins Center, Tenant shall pay to Landlord in addition to the rentals specified in ARTICLE IV hereof and at the time and together with the payments provided in ARTICLE IV, Section 4.01, in accordance with billings by Landlord, a share of the cost of maintenance and operation of parking and other common areas. Tenant’s proportionate share of the Common Area Maintenance Costs shall be computed by multiplying the total amount of the Common Area Maintenance Costs each year by a fraction, the numerator of which shall be the Floor Area of the Demised Premises as set forth in Article I and the denominator of which shall be the effective annualized total Gross Leasable Area within the Belt Collins Center, as determined pursuant to Section 7.02. Tenant’s proportionate share of Common Area Maintenance Costs for each full calendar year or partial calendar year shall be paid in monthly installments on the first day of each month, in advance, in an amount estimated by Landlord from time to time, hereinafter referred to as “Common Area Maintenance Payment”. Subsequent to the end of each full calendar year or partial calendar year, Landlord shall notify Tenant of Tenant’s proportionate share of Common Area Maintenance Costs for such full calendar year or partial calendar year. Landlord shall include in such notice, a certification of the

 

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Common Area Maintenance Costs by the Landlord, and such certification shall be deemed conclusive as to the actual amount of Common Area Maintenance Costs. Landlord may secure the services of a Certified Public Accountant to assist in the certification process and the fee for such certification of Common Area Maintenance Costs shall be included in the Common Area Maintenance Costs. If the Common Area Maintenance Payment paid by Tenant pursuant to this Article for any full or partial calendar year shall be less than the actual amount due from Tenant for such year as shown on such notice, Tenant shall pay to Landlord the difference between the amount paid by Tenant and the actual amount due, within ten (10) days after receipt of such notice. If the total amount paid by Tenant for any full or partial calendar year shall exceed the actual amount due from Tenant for such full or partial calendar year, such excess shall be credited against the next Common Area Maintenance Payment(s) due from Tenant to Landlord pursuant to this Article. If the Commencement date is a day other than the first day of the calendar year, or if the term of this Lease shall end on a day other than the last day of the calendar year, then Tenant’s proportionate share of Common Area Maintenance Costs shall be billed and adjusted on the basis of such fraction of a calendar year. If any common area adjacent to the Demised Premises requires additional or extraordinary cleaning as a result of heavy use by the Tenant’s employees or customers, an additional common areas maintenance charge will be assessed against the Tenant. Said additional common areas maintenance charge shall equal the cost of the additional or extraordinary cleaning of the common area made necessary by the heavy use, plus a surcharge of ten percent (10%) for overhead costs and an additional amount equal to the Gross Income Tax thereon, which shall be payable at the same times and in the same manner as the common areas maintenance charge. Additional charges for cleaning, painting, development, maintenance, marketing and advertising along with the aforesaid surcharge may be assessed by the Landlord to each and every Tenant who shall use the common areas as locations available for patron seating or consumption of food and beverages.

 

(b)

Landlord shall make available from time to time within the Belt Collins Center such Common Areas as and to the extent Landlord alone shall from time to time deem appropriate. Common Areas shall be defined as including but not limited to any parking areas, driveways, service courts, access and egress roads, side walks, opened and enclosed courts and malls, landscaped and planted areas, fire corridors, meeting areas and public restrooms. Landlord shall operate, manage, equip, light, repair and maintain said Common Areas for their intended purposes in such manner as Landlord shall in its sole discretion from time to time determine, and may from time to time change the size, location, elevation, nature and/or use of any Common Areas and may make installations and/or construct or erect leasable buildings, structures, booths therein or thereon and move or remove the same and shall have the right to retain revenue from income-producing events whether or not conducted for

 

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promotional purposes. In the event Landlord erects any additional buildings upon the heretofore-defined common areas, and the same are not placed into common use, Landlord shall make appropriate adjustments in the Tenant’s obligations to pay for common area expenses as set forth in this Article. Landlord reserves the right to grant licenses and concessions to others who may operate and conduct business at or about or upon what might otherwise be determined to be a portion of the common areas. Upon the granting of any such concession or license the Landlord shall in its sole discretion fix and establish the amount of such concessionaire’s or licensee’s monthly common area maintenance payment based upon the Landlord’s sole opinion of the amount of effective area utilized by that business and cost of use by that business and its patrons of the services, furnishings and facilities for which common area maintenance costs are charged to all tenants of the Belt Collins Center. All common area maintenance payments collected thereby shall be applied by the Landlord against the payment of the common expenses of the Belt Collins Center.

 

(c)

Tenant shall pay to Landlord its proportionate share of the cost and expense to Landlord of operating, maintaining, preserving, and repairing said Common Areas (hereinafter referred to as “Common Area Maintenance Costs”). For these purposes, the term “Common Area Maintenance Costs” shall mean all sums incurred in a manner deemed by Landlord to be reasonable and appropriate and for the best interests of the Belt Collins Center in connection with the operation, maintenance, preservation and repair of the Common Areas and the Belt Collins Center and shall include, but not be limited to, the costs and expenses of (the following subparagraphs are for definition only and are not to be construed so as to impose any obligations on Landlord):

 

(1)

garbage and trash removal; maintenance, repair and replacement of all common area and parking lot surfaces, service areas and courts, including cleaning, sweeping, painting, striping and repaying; maintenance, repair and replacement of sidewalks, curbs, guard rail, bumpers, fences, screens, flagpoles, bicycle racks, Belt Collins Center identification signs, directional signs, traffic signals, and other traffic markers and signs.

 

(2)

the installation, maintenance, repair, and replacement of (i) storm, ground water and sanitary drainage and pumping systems, including disposal plants and lift stations and retention ponds or basin; (ii) gas, irrigation and water systems; (iii) electrical, gas, water and telephone systems; (iv) lighting systems (including bulbs, poles and fixtures); (v) emergency water and sprinkler systems; (vi) other utility systems; (vii) heating, ventilating and common area air conditioning systems; (viii) electrical equipment including the central electrical distribution system and electrical conduit from Landlord’s utility room to any portion of the Belt Collins Center; (ix)

 

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fire protection sprinkler main line; (x) security systems; and including any gas, solar, electric and water utility charges in connection with any of the foregoing systems and further including the installation, maintenance and operation of any computerized system for any of the foregoing.

 

(3)

interior or exterior planting, replanting and replacing of flowers, shrubbery, plants, trees and other landscaping;

 

(4)

maintenance, painting, re-roofing, termite treatment and tenting, repair and replacement of all portions of the buildings, both interior and exterior, of the Belt Collins Center (excluding the Demised Premises and premises leased to other tenants), including, but not limited to, floors, floor coverings, ceilings, walls, roofs and roof flashings, water proofing , canopies, skylights, signs, planters, benches, fountains, elevators, escalators and stairs, fire exits, doors and hardware, joint use windows, glass and glazing;

 

(5)

premiums or contributions for insurance, including, without limitation, liability insurance for personal injury, death and property damage; insurance against liability for defamation and claims of false arrest occurring in and about the Common Areas; worker’s compensation; broad form peril insurance covering the Common Areas and buildings in the Belt Collins Center (for the purposes of this provision of subsection (5) only, Common Areas shall be deemed to include the Demised Premises and premises leased to other tenants); premiums for plate glass insurance if deemed necessary by the Landlord;

 

(6)

maintenance, repair and acquisition cost (rental fees and/or purchase price or in lieu of purchase price, the annual depreciation allocable thereto) of all capital items subject to joint use or those erected, affixed or placed in, at, or upon buildings or the common areas for the benefit of the tenants including but not limited to, all security devices, machinery and equipment used in the operation and maintenance of the Common Areas, and all personal property taxes and other charges incurred in connection with such security devices, machinery and equipment (as used herein, the term “equipment” shall be taken to include both personally and fixtures);

 

(7)

all license and permit fees, and all parking surcharges that may result from any environmental or other laws, rules, regulations, guidelines or orders; the cost of obtaining and operating public transportation or shuttle bus systems as used in connection with bringing customers to the Belt Collins Center or if required by any environmental or other laws, rules, regulations, guidelines or orders;

 

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(8)

the cost of installation and/or operation of music programs and loudspeaker systems;

 

(9)

personnel, including, without limitation, independent contractors, security and maintenance people of the Belt Collins Center, parking attendants, secretaries and bookkeepers (including, without limitation, the payroll taxes and employee benefits of such personnel), accountants, certified public accountants, and attorneys;

 

(10)

real property taxes; any expenses incurred in contesting real property assessments and any assessments or charges made under any betterment or improvement law or otherwise or in controlling picketing and handling labor disputes affecting common areas, depreciation on machinery and equipment used in maintenance and repair as set forth hereinabove, and all gross income taxes payable on account of the receipt by Landlord of reimbursement of said cost.

 

(11)

any space which is determined by the Landlord to be reasonable and dedicated to the use by purveyors of the Belt Collins Center, clients, customers, and other members of the public shall be charged at the fair market rental value in addition to operation costs.

 

(12)

landlord’s administrative costs and facilities in an amount not greater than twenty percent (20%) of the total aggregate cost of operating, maintaining and repairing the Belt Collins Center and the Common Areas, including but not limited to all items listed above.

 

(d)

Landlord shall not be required to render monthly accounting or make irregular accounting at the request of Tenant for any of the costs, charges or assessments or detail the apportionment of assessments required by this Article VI. Landlord shall during the second and third quarter of each calendar year advise Tenant of the date and hours and will make all books and records related to Common Area Maintenance Costs and Charges open and available for inspection by Tenant or its designated agent.

 

Section 6.04. Method of Billing . The charges provided for in Section 6.03 shall be paid in twelve (12) monthly installments in advance on the first day of each calendar month. The charge for any period less than a full Lease Year shall be pro rated. They shall be estimated annually, with adjustment in January of each year to reconcile such estimates with actual expenditures.

 

Section 6.05. Fire, Flood and Property Damage Insurance . Landlord shall maintain as a common expense fire, flood and real property damage insurance in such amount as Landlord may determine, and where and to the extent it is reasonably obtainable, and Tenant shall pay a weighted pro-rata share of its cost. “Weighted” as used herein means the allocation of Landlord’s insurance costs in excess of the premiums customarily charged based on local insurance practices and the average business activities of other tenants in the Belt Collins Center as compared with the additional premium, if any, charged on account of the nature of the business activities

 

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of the Tenant herein. The allocation to Tenant of any weighted portion of the costs of insurance shall be conclusively established to be in such amount as is determined by the Landlord’s insurance company, by their adjusters, or their rating bureau. Landlord assumes no responsibility for any damages that may result from ground or water flooding of the common area and common facilities.

 

Section 6.06. Real Property Taxes .

 

(a)

The Tenant shall pay its pro rata share (as determined by Section 6.03 herein) of all real property taxes which are levied or assessed by any lawful authority against the Belt Collins Center during the lease term and of all assessments or charges made under any betterment or improvement law or otherwise which may be legally imposed upon said Demised Premises and said land or any part thereof or to which said Demised Premises and said land or any part thereof, or the Landlord or Tenant, are now or may during the lease term become liable. Payment of such pro rata share shall be in addition to repayment by the Tenant of a pro rata share of real property taxes and assessments or charges made under any betterment or improvement law levied or assessed against common areas as provided in ARTICLE VI. All such taxes and all such assessments or charges assessed prior to but payable in whole or in installments after the effective date of the lease term, and all taxes and assessments or charges assessed during the term but payable in whole or in installments after the lease term, shall be adjusted and prorated, so that the Landlord shall pay its pro rata share for the period prior to and for the period subsequent to the lease term and the Tenant shall pay its pro rata share for the lease term.

 

(b)

Basis for Determination . The State and/or County Tax Assessor’s valuations and assessments and the betterment or improvement law or other assessments or charges shall be the basis for determining the real property taxes and the assessments or charges made under any betterment or improvement law or otherwise, respectively, attributable to the Demised Premises if the Demised Premises are separately assessed or charged. Tenant’s pro rata share shall be determined by the ratio Tenant’s gross leasable area, including storage, office, leased lanais, roof decks and mezzanine areas, as it bears to all gross leasable areas in the portion of the Belt Collins Center assessed. In the event the area of Tenant’s premises shall be changed or the aggregate areas in the portion of the Belt Collins Center shall at any time in the future be changed, as for example by developing additional areas, Tenant’s pro rata share shall be effective upon the date of change and recomputed by Landlord within a reasonable time after receipt of the assessment.

 

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(c)

Right to Contest . The Tenant may contest by appropriate proceedings the amount or validity of the State and/or County Tax Assessor’s assessments upon the Demised Premises and the land under the Demised Premises for real property tax purposes or the amount or validity of any assessment or charge made under any betterment or improvement law or otherwise applicable to the Demised Premises and the land under the Demised Premises or any part thereof. If such proceedings are instituted, however, the Tenant shall pay its pro rata share of such tax or such assessment or charge or shall deposit with the Landlord the amounts so contested and unpaid, together with a sum sufficient to cover all charges including penalties that may accrue or be assessed against the Demised Premises as a result of such proceedings, unless such proceedings operate to prevent or stay the collection of such tax or such assessment or charge. Upon the termination of such proceedings and upon proof of the amount of the tax or the amount of the assessment or charge so determined, the Landlord shall pay such tax or such assessment or charge out of the funds deposited with it and refund any balance to the Tenant. If said funds are insufficient, Tenant shall immediately pay any deficiency. The Landlord, at the Tenant’s sole expense, shall join in such proceedings if any law shall so require. In the event the Landlord shall contest the State Tax Assessor’s assessments or charges made under any betterment or improvement law or otherwise, Tenant shall, upon demand pay to the Landlord a pro rata share of all legal and other expenses incurred in contesting the same, Tenant’s pro rata share to be in the ratio that the total gross leasable area of the Demised Premises bears to the total gross leasable area of the Belt Collins Center.

 

Section 6.07. Rules and Regulations. Landlord shall have the right to police, regulate traffic in, and otherwise control the use of parking, the pickup and drop off of customers within the parking area, the sidewalks, and other common areas. In furtherance of such right Landlord may promulgate reasonable rules and regulations for the entire Belt Collins Center, including the Demised Premises, which shall be binding upon Tenant. For the enforcement of said rules and regulations, Landlord shall have all remedies provided for in this Lease for a breach of the provisions of this Lease, as if said rules and regulations were expressly incorporated herein, and all legal or equitable remedies whether or not provided for in this Lease are hereby reserved. A copy of the current rules and regulations governing the Belt Collins Center is attached hereto as Exhibit “C”.

 

Section 6.08. Exclusion of Trespassers . Landlord may at any time and from time to time during the term hereof exclude and restrain any persons from the use or occupancy of the parking and other common areas, excepting, however, bona fide customers, patrons and service-suppliers of the Tenant and other tenants of the Landlord who make use of the said areas in accordance with the rules and regulations established by Landlord from time to time with respect thereto. The rights of Tenant hereunder in and to said automobile parking areas, the parking spaces thereon and the driveways, entrances and exits thereto, the delivery and service road and entrances and exits thereto, and the sidewalks and pedestrian passageways, shall be subject to the rights of the Landlord and of all other tenants of the Landlord using the same in common with Tenant, and it shall be the duty of Tenant to keep all of said areas free and clear of any obstructions created or permitted by Tenant or

 

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resulting from Tenant’s operations and to permit the use of any of said areas only for normal parking and ingress and egress by said customers, patrons and service-suppliers, to and from the buildings occupied by Tenant and such other tenants of the Landlord. Tenant shall have the right to remove from said areas, or to restrain the use of any of said areas by any persons not specifically authorized by the Landlord or by the Tenant or by other tenants or not making use of said areas in accordance with the rules and regulations of Landlord. If, in the opinion of Landlord, unauthorized persons are using any of said areas by reason of the presence of Tenant in the Demised Premises, Tenant, upon demand of Landlord, shall take such action as is legally permissible without breach of the peace and by resorting to judicial relief, if necessary, to restrain the use of any of said areas by unauthorized persons or to remove any unauthorized persons from said areas; provided, however, nothing contained herein shall preclude Landlord from taking such action.

 

Section 6.09. Employee Parking . It is understood and agreed that the employees of Tenant, and of other tenants within the Belt Collins Center of which the Demised Premises are a part, shall be permitted to park their automobiles in the Belt Collins Center’s parking areas until such time as the Landlord in its sole discretion shall determine that the total parking space is inadequate to fill the needs of customers and employees. In such event, the Landlord shall have the right to limit Tenant and employee parking on a uniform pro rata basis, or to prohibit Tenant and employee parking at the Belt Collins Center. At all times Landlord shall have the right to designate the particular parking areas to be used by any such employees and any such designation may be changed from time to time and the use of said automobile parking areas by any of such employees shall at all times be secondary and subordinate to the use by customers and patrons of Tenant, of Landlord and of other occupants of said Belt Collins Center. Tenant, upon written notice from the Landlord, shall within five (5) days, furnish to the Landlord the automobile license numbers assigned to its cars and the cars of all of its employees. In the event that the Tenant or its employees fail to park their cars in designated parking areas as aforesaid, then the Landlord at its option may charge the Tenant and Tenant shall pay to Landlord as additional rent TEN AND N0/100 DOLLARS ($10.00) per day per car parked in any area other than those designated. In addition to the above, Landlord shall have the right to have any such vehicle of Tenant or its employees parked in violation of this provision towed from the Belt Collins Center premises and Tenant shall be liable to pay to Landlord upon demand as additional rent all costs incurred by Landlord in having the vehicle towed away, and Tenant shall indemnify and hold Landlord harmless from liability of any nature whatsoever, including costs and attorney’s fees, arising out of or connected with removal of any such vehicle.

 

ARTICLE VII

 

STORE FIXTURES, SIGNS, AND ALTERATIONS

 

Section 7.01. Fixtures and Alterations . All fixtures installed by Tenant shall be new or completely reconditioned. Tenant will not make or cause to be installed any trade fixtures, exterior signs, interior or exterior lighting, plumbing fixtures, shades or awnings or make any changes to the store front except upon the written consent of the Landlord first had and obtained. Tenant shall present to the Landlord plans and specifications for said work at the time approval is sought. Tenant shall use treated lumber or structural steel framing in all construction done on the Demised Premises.

 

Section 7.02. Alterations Belong to Landlord . All alterations or improvements to the Demised Premises shall remain

 

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for the benefit of the Landlord and shall not be removed unless otherwise expressly agreed in writing and shall be presumed to become an integral part of the Demised Premises.

 

Section 7.03. Abandoned Fixtures Belong to Landlord . Subject to Landlord’s lien rights in Section 24.08, Tenant shall have the right, if not in default in the performance of its obligations under this Lease, to remove during the last thirty (30) days of the term any trade fixtures, signs, and other personal property installed or placed in the Demised Premises, so long as Tenant repairs any damage caused by such removal. In the event Landlord shall be required to repair any damage caused to the Demised Premises by such removal, Tenant shall pay the cost of the same together with a mark-up of ten percent (10%) on said cost to cover Landlord’s overhead. Any fixtures, signs and other furnishings or equipment left in the Demised Premises by the Tenant after the termination date hereof shall be deemed abandoned by Tenant and shall be the property of the Landlord.

 

Section 7.04. Bond Against Liens . Prior to commencing any interior construction, or any alterations, remodeling or other construction in the Demised Premises, Tenant shall furnish evidence satisfactory to Landlord that Tenant is financially able to pay the contractor, and shall furnish a copy of a bond, if required, in an amount, in a form and with a surety acceptable to Landlord naming Landlord and Tenant as obligees, and insuring completion of the proposed work free and clear of liens.

 

Section 7.05. Protection Against Liens . Tenant shall promptly pay all contractors and material men, so as to minimize the possibility of a lien attaching to the Demised Premises or to the land under the Demised Premises, and should any such lien be made or filed, Tenant shall bond against or discharge the same within ten (10) days after written request by Landlord.

 

Section 7.06. Improper Signs. The general signage policy of the Belt Collins Center is set forth in Exhibit “B”. All signage in the Belt Collins Center shall comply with a policy of uniformity as established by the Landlord. Written consent from the Landlord is at all times required and Landlord reserves the absolute right and power to prohibit Tenant from erecting, installing, painting, inscribing or placing on any exterior walkway, door, wall, window or other surface, whether interior or exterior, visible from the sidewalk, mall, or other area outside the Demised Premises any sign, lettering, picture, placard or other visible mode of communication which Landlord in its sole discretion deems detrimental to the aesthetics or commercial purpose of the Belt Collins Center or potentially dangerous or hazardous to persons or property, and Tenant shall, immediately upon being directed in writing by Landlord to do so, remove forever any such prohibited item as Landlord shall direct. Breach of this provision by Tenant shall, in addition to other remedies available to Landlord, such as but not limited to injunctive relief without bond, be cause for default to which the ten (10) day period specified hereinafter in Section 23.02, of ARTICLE XXIII, Right to Appointment of Receiver or to Re-enter , shall not apply.

 

Section 7.07. Restriction on External Air-conditioning and Solar Heating . The Landlord shall designate, from time to time, those areas within the Belt Collins Center where Tenant, along with other Tenants, may place its central air conditioning compressor, heat pump or like facilities. No window or external air conditioning, heat pumps, solar cooling or evaporative coolers or solar heating units shall be placed within, on or about any portion of the interior or exterior of the Demised Pr