LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into this 15th day of November,
1999, by and between H2C2 & ASSOCIATES LLC, hereinafter called LESSOR, and R-TEC
CORPORATION, an Idaho corporation, hereinafter called LESSEE.
WITNESSETH:
FOR AND IN CONSIDERATION OF the rentals hereinafter provided, and the
covenants and agreements herein set forth, LESSOR hereby leases and demises to
LESSEE, for the term stated below, the portion described in Exhibit A-1 of the
premises situated in the County of Ada, State of Idaho more fully set forth in
Exhibit A-2. Both Exhibits are attached hereto and incorporated herein by
reference.
This Agreement is subject to the following terms and conditions, to which
the parties mutually agree:
1. Lease Term. The initial term of this Lease shall be five (5) years,
commencing the 1st day of December, 1999. At the option of the Lessee, this
Lease may be extended for an additional five (5) year period, subject to Cost of
Living Index increases.
2. Rental. LESSEE shall pay to LESSOR the following rentals:
A. Minimum Rental. LESSEE shall pay to LESSOR upon execution of this
Lease the sums set forth in Exhibit C which is attached hereto and
incorporated herein by reference.
B. Utilities. LESSOR shall provide LESSEE a statement each month of
LESSEE'S prorata share of utilities used for the leased premises and LESSEE
shall pay LESSOR for the utilities within ten (10) days of receipt of said
statement.
C. Telephone. LESSEE shall provide and pay for its own telephone
service.
D. Past Due Charges. In the event that any rental or utilities herein
payable to LESSOR is not paid within ten (10) days after the date
recognized as the due date, the LESSOR shall have the right and option to
invoke a one and one-half percent (1 1/2) per month service charge (18%
annual rate) on all unpaid balances.
3. Use of Premises. LESSEE shall not use the leased premises for any
purpose other than the business of LESSEE as contemplated by this lease, without
the prior written
LEASE AGREEMENT - PG. 1
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consent of LESSOR, which consent shall not be unreasonably withheld. Nor shall
LESSEE use the premises in any unlawful manner, or in any manner which would
cause increases in fire insurance rates upon the premises, or result in
increases in maintenance expenses over those normally experienced in connection
with the business purpose above stated.
4. Remodeling and Additions by Lessee: LESSEE may at its expense make
reasonable alterations, additions, and improvements to the interior of the
leased premises from time to time, but plans therefore shall be submitted to
LESSOR for approval prior to commencement of such work. Floor covering and
installation thereof within the leased area is at LESSEE'S expense. Other than
removable trade fixtures, all such alteration, additions, and improvements shall
at the expiration or termination of this Lease become a part of the real estate
and remain upon the premises. All such alterations, additions, and improvements
shall be in accordance with all applicable fire, safety, and building codes,
laws, and regulations. LESSEE shall promptly pay for all labor and materials
utilized in any such work, and shall not permit any liens to attach to the
premises.
5. Repairs and Maintenance. LESSEE shall pay and be responsible for all
repairs and maintenance.
6. Emergency Access; Necessary Repairs. LESSOR shall have the right to
enter upon the leased premises at all reasonable times for making repairs or
maintenance should the LESSEE fail to timely perform the same. LESSOR shall be
entitled to be reimbursed for the same within thirty (30) days of providing a
statement for the same to LESSEE. LESSEE shall provide LESSOR a current key for
said access.
7. Indemnification and Insurance. LESSEE agrees to indemnify and save
LESSOR harmless from and against all claims arising from any act, omission, or
negligence of LESSEE, or its contractors, licensees, agents, servants, and
employees, or arising from any accident injury, or damage whatsoever caused to
any person or any property within the leased premises, and against all costs,
expenses, and liabilities incurred in or in connection with any such claim or
proceeding brought thereon. LESSEE shall, at its own expense, maintain in full
force at all times during the term of this Lease a policy or policies of
comprehensive liability insurance against personal injuries or property damage
within the scope of the foregoing indemnification agreement, and such insurance
shall name LESSOR as one of the insured parties, as its interest may appear. The
limits of liability under such insurance shall not be less than one million
dollars
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for any one occurrence. Copies of such insurance policies, or certificates
evidencing such insurance coverage, shall be furnished to LESSOR and kept
current at all times. If no verification is furnished LESSOR, LESSOR may obtain
same at LESSEE's expense. Such policies shall contain an endorsement stating
that such insurance coverage shall not be canceled except upon ten (10) days
written notice to LESSOR. It shall be the responsibility of LESSEE to carry such
policies of insurance covering losses to its own personal property, fixtures,
and leasehold improvements, as it may deem fit and proper, and LESSOR shall not
be liable for any losses thereto resulting from any insurable cause.
8. Default by Lessee. The following eventualities shall be acts of default
by LESSEE, upon occurrence of which LESSOR shall have the right and option to
declare this Lease immediately terminated, without the necessity for further
notice to LESSEE:
A. Failure of LESSEE to pay. Failure of LESSE to pay any rentals or
utilities hereunder within ten (10) days after the same becomes due and
payable.
B. Breach of any other covenant. Breach of any other covenant of this
Lease which shall not have been cured or corrected by LESSEE within thirty
(30) days following written notice of intent to declare default given to
LESSEE by LESSOR.
C. Commencement of proceedings. Commencement of proceedings to declare
LESSEE a bankrupt, or for relief under any of the Chapters of the
Bankruptcy by reason of any insolvency of LESSEE, whether any of the same
be voluntary or involuntary; the appointment of any receiver or trustee of
the assets of LESSEE situated in or upon the leased premises; or the
seizure of all or any substantial portion of the assets of LESSEE in or
upon the leased premises under any levy of attachment or execution which
shall not have been released within five (5) days after the date thereof.
D. Abandonment of the premises by LESSEE. Upon termination of this
Lease by declaration of LESSOR upon occurrence of any of the causes above
set forth, LESSOR shall have the immediate right of re-entry and may remove
all persons and property from the leased premises, and may cause any
property so removed to be stored in a public warehouse or elsewhere at the
cost and risk of, and for the account of, LESSEE, all without service of
notice or resort to legal process and without being deemed guilty or
trespass, or becoming liable for any loss or damage which may be occasioned
thereby. Said property may be held by LESSOR until subject indebtedness has
been resolved, or if not resolved, LESSOR shall have the right and
LEASE AGREEMENT - PG. 3
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option to dispose of said property to settle said indebtedness. The remedies
hereby granted to LESSOR shall not be exclusive, but shall be in addition to all
of the other rights and remedies provided by law to LESSOR, which said rights
and remedies may be prosecuted by LESSOR contemporaneously or otherwise with the
exercise of the said right of termination and re-entry as herein provided for
(except in such event LESSEE'S liability for such rental payment shall be
reduced in the amount of any rentals received by LESSOR from others by reason of
re-renting said premises during the balance of the term of this Lease, less
LESSOR'S reasonable costs and expenses of re-renting the same, including
preparation of the premises for such new tenant or tenants).
9. Eminent Domain. If any portion of the leased premises shall, during the
term hereof, be taken by any public authority under the power of eminent domain,
either party hereto may at its option declare this lease terminated as of the
date of such taking, whereupon all rights and liabilities of both parties
hereunder shall cease (except for liabilities already accrued at the time of
termination, including, but not limited to, prorated liability of LESSEE for
annual percentage rentals). All compensation received by reason of any such
taking, except any compensation to which LESSEE may be entitled by loss of
business, or depreciation of and cost of removal of stock in trade and removable
trade fixtures, shall be the property of LESSOR and LESSEE shall have no right
or interest therein.
10. Termination. Upon termination of this Lease as provided, or upon
expiration of its term or any renewal term, LESSEE shall quietly and peaceably
quit and surrender possess-ion of the premises to LESSOR in as good condition as
when received, reasonable wear and tear excepted, together with all alterations,
additions, and improvements to the premises required to remain therewith as
provided in this Lease, and such possession shall be so surrendered without the
necessity for any notice or demand therefore on the part of LESSOR.
11. Damage or Destruction by Fire, Etc. In case the premises or the
building in which the same are situated shall be damaged or destroyed by fire or
other casualty insurable under standard extended risk coverage (hereinafter
called "insurable loss"), or other cause (hereinafter called "other loss"), the
respective rights and duties of the parties hereto shall be as follows:
(a) If the leased premises shall be damaged or destroyed, or more than
fifty percent (50%) of the building within which the same are situated
shall be damaged or destroyed,
LEASE AGREEMENT - PG. 4
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by a cause above defined as "other loss", LESSOR may at its option, repair or
restore the premises within a reasonable time after such loss, or by written
notice to LESSEE given within thirty (30) days after occurrence of such loss,
LESSOR may declare this lease terminated.
(b). If the leased premises shall be damaged by insurable loss so that
the same may be repaired or restored to tenantable condition within a
period of sixty (60) days, with reasonable diligence in prosecution of the
work, LESSOR shall repair and restore the said premises to tenantable
condition within a reasonable time following occurrence of such loss.
(c) If the leased premises are damaged or destroyed by insurable loss
other than as described in Subparagraph B of this Article, LESSOR may, at
its discretion (notice of which shall be given to LESSEE within fifteen
(15) days after occurrence of such loss), repair and restore the premises
to tenantable condition as rapidly as practicable after the loss, or LESSOR
may declare this Lease terminated effective as of the date of such loss.
(d) In any case wherein the premises are rendered untenantable by
reason of any insurable loss or other loss as above defined, a
proportionate part of the minimum rental provided for hereunder shall be
abated during the time such premises shall remain untenable.
(e) In any case wherein LESSOR elects to, or is obligated to, repair
and restore the premises following any insurable loss or other loss as
above defined, its obligation to repair or rebuild shall be limited to the
basic building, and interior work provided originally hereunder at LESSOR'S
expense, and shall not extend to any of LESSEE'S leasehold improvements or
LESSEE'S fixtures, inventory, or other property situated within or upon the
leased premises, it being understood that it is the obligation of LESSEE to
insure against all losses to the same, as provided elsewhere in this Lease.
12. Other Matters.
A. Subletting or Assignment. The premises herein described may not be
sublet nor may this Lease be assigned by LESSEE without the prior written
consent of LESSOR; provided, however, such consent shall not be
unreasonably withheld.
B. Taxes. LESSEE shall pay all real estate taxes which may during the
term of this Lease be assessed against the leased premises, and LESSEE
shall pay all personal property taxes which may during the term hereof be
assessed against LESSEE'S improvements and property within or upon the
leased premises.
C. Notices. All notices hereunder shall be in writing and shall be
deemed
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given when personally delivered to the employee in charge of the receiving
party's business premises during normal working hours, or when deposited in the
United States Mail by certified mail, addressed to the receiving party's
business premises at:
LESSOR LESSEE
H2C2 & ASSOCIATES LLC R-TEC CORPORATION
6190 S. Tarrega Lane 1471 E. Commercial Ave.
Meridian, Idaho 83642 Meridian, Idaho 83642
D. Enforcement. The forbearance or failure of any party hereunder to
strictly enforce any covenant of this Lease, or to give notice of default
or of termination of this Lease by reason of any act, omission, or
occurrence, shall not be deemed a waiver of any of the provisions of this
Lease as regards any other or further such breach, default, act, omission,
or occurrence, nor shall consent or approval of LESSOR given in any one
instance be construed to waive the necessity for such consent or approval
as regards any other or further similar act by LESSEE, unless such
intention be expressly stated in writing by LESSOR.
E. Relationship of Parties. Nothing herein contained shall be
construed to create the relationship of partners, joint venturers, or
parties to a joint enterprise in any manner between LESSOR and LESSEE.
F. Sale of Property. LESSOR shall have the right to sell the real
property upon which the leased premises are situated, or to mortgage or
otherwise hypothecate the same, all subject to this Lease, and LESSEE shall
recognize the purchaser of said real property as the LESSOR hereunder from
and after time of any such sale, and in the event of foreclosure of any
mortgage or exercise of any power of sale by any party to whom such
property has been hypothecated, LESSEE shall recognize the purchaser from
such foreclosure or sale as the LESSOR hereunder, all with the same force
and effect as if such party or parties had originally executed this Lease
as the LESSOR.
G. Quiet Enjoyment. Upon performing all of its duties and obligations
hereunder in accordance with the terms and conditions of this Lease, LESSEE
shall be entitled to quietly and peaceably have, hold, occupy, possess, and
enjoy the leased premises during the term hereof, without hinderance or
ejection by persons lawfully claiming under LESSOR.
H. Governing Law. This Lease shall be governed by, and construed in
accordance with, the laws of the State of Idaho.
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I. Successors and Assigns. This Lease shall endure and be binding upon
the successors and assigns of the parties hereto, subject to the provisions
of Subparagraph A of this Article.
J. Amendments. Provisions of this Agreement may be amended only upon
the written consent of all parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed effective as of the day and year first above written.
LESSOR
By /s/ GARY A. CLAYTON
------------------------------------
Its
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LESSEE
By /s/ DOUGLAS G. HASTINGS
------------------------------------
Its
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LEASE AGREEMENT - PG. 7
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STATE OF IDAHO )
) ss.
County of Ada )
On this 15 day of November, 1999, before me, a Notary Public in and for
said State, personally appeared Douglas Hastings, known to me to be the person
whose name is subscribed to the foregoing instrument and acknowledged before me
that s/he executed the same individually and in his/her corporate capacity.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ VERNETTA HASTINGS
------------------------------------------
Notary Public for Idaho
Residing at 2910 E. Victory, Meridian, ID.
My Commission Expires:
September 2003
STATE OF IDAHO )
) ss.
County of Ada )
On this 15 day of November, 1999, before me, a Notary Public in and for
said State, personally appeared Gary Clayton, known to me to be the person whose
name is subscribed to the foregoing instrument and acknowledged before me that
s/he executed the same individually and in his/her capacity as manager of the
Limited Liability Company.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ VERNETTA HASTINGS
------------------------------------------
Notary Public for Idaho
Residing at 2910 E. Victory, Meridian, ID.
My Commission Expires:
September 2003
LEASE AGREEMENT - PG. 8
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EXHIBIT A-1
LEASE AGREEMENT
FLOOR PLAN
[GRAPHIC]
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EXHIBIT A-2
LEASE AGREEMENT
Lot 3 in Block 3 of RAILSIDE PARK SUBDIVISION, according to
the OFFICIAL Plat thereof, filed in Book 73 of Plats at Pages
7561-7562, records of Ada County, Idaho.
<PAGE>
EXHIBIT C
LEASE AGREEMENT
LESSEE shall pay to LESSOR upon execution of this Lease the sum of $2,950.00
which shall be deemed the payment of minimum rental for the first month of the
term hereof. Thereafter, LESSEE shall pay to LESSOR each month, in advance, on
or before the 1st day of the month, during the balance of the term of this
Lease, the sum of $2,950.00 as and for minimum rental for the premises hereby
leased to LESSEE. The minimum rental payment, at the option of LESSOR, shall be
subject to Cost of Living Index increases on an annual basis.
