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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2023
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ until ______
Commission File Number: 001-41588
LA ROSA HOLDINGS CORP.
(Exact name of Registrant as specified in its charter)
| Nevada | 87-1641189 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
|
1420 Celebration Blvd., 2nd floor Celebration, Florida |
34747 |
|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (321) 250-1799
Securities registered under Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: | ||
| Common Stock | LRHC | The Nasdaq Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
| Yes ☐ No ☒ |
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
| Yes ☐ No ☒ |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Yes ☒ No ☐ |
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit post such files).
| Yes ☒ No ☐ |
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Yes ☐ No ☒ |
The registrant was not a public company as of the last business day of its most recently completed second fiscal quarter and, therefore, cannot calculate the aggregate market value of its voting and non-voting common equity held by non-affiliates as of such date.
As of April 16, 2024, the Registrant had 14,302,716 shares of common stock, par value $0.0001 per share, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
In this Annual Report on Form 10-K, unless otherwise stated or as the context otherwise requires, references to “La Rosa Holdings Corp.,” the “Company,” the “Issuer,” the “Registrant,” the “LRHC,” “we,” “us,” “our” and similar references refer to La Rosa Holdings Corp., a Nevada corporation. Our logo and other trademarks or service marks of the Company appearing in this Annual Report on Form 10-K are the property of La Rosa Holdings Corp. This Annual Report on Form 10-K also contains registered marks, trademarks, and trade names of other companies. All other trademarks, registered marks, and trade names appearing in this Annual Report on Form 10-K are the property of their respective holders.
Cautionary Note Regarding Forward-Looking Statements and Industry Data
This Annual Report on Form 10-K, in particular, Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements represent our expectations, beliefs, intentions, or strategies concerning future events, including, but not limited to, any statements regarding our assumptions about financial performance; the continuation of historical trends; the sufficiency of our cash balances for future liquidity and capital resource needs; the expected impact of changes in accounting policies on our results of operations, financial condition or cash flows; anticipated problems and our plans for future operations; and the economy in general or the future of the industry in which we operate, all of which were subject to various risks and uncertainties.
When used in this Annual Report on Form 10-K and other reports, statements, and information we have filed with the Securities and Exchange Commission (“SEC”), in our press releases, presentations to securities analysts or investors, in oral statements made by or with the approval of an executive officer, the words or phrases “believes,” “may,” “will,” “expects,” “should,” “continue,” “anticipates,” “intends,” “will likely result,” “estimates,” “projects” or similar expressions and variations thereof are intended to identify such forward-looking statements. However, any statements contained in this Annual Report on Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. These statements are only predictions. All forward-looking statements included in this Annual Report on Form 10-K are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Any or all of our forward-looking statements in this document may turn out to be wrong. Actual events or results may differ materially. Our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks, uncertainties, and other factors.
This Annual Report on Form 10-K also contains estimates, projections, and other information concerning our industry, our business, and particular markets, including data regarding the estimated size of those markets. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, general publications, government data, and similar sources.
SUMMARY OF RISK FACTORS
The following is a summary of the principal risks described below in Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K. We believe that the risks described in the “Risk Factors” section are material to investors, but other factors not presently known to us or that we currently believe are immaterial may also adversely affect us. The following summary should not be considered an exhaustive summary of the material risks facing us, and it should be read in conjunction with the “Risk Factors” section and the other information contained in this Annual Report on Form 10-K.
Risks Related to Our Business and Operations
| ● | Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.” |
| ● | We have a limited operating history with financial results that may not be indicative of future performance, and our revenue growth rate is likely to slow down due to the recent antitrust litigation and as our business matures. | |
| ● | Impairment of goodwill and intangible assets may adversely impact future results of operations. | |
| ● | We may not realize the expected benefits of our recent acquisitions because of integration difficulties and other challenges. | |
| ● | If we fail to raise additional capital, our ability to implement our business model and strategy could be compromised. | |
| ● | The residential real estate market is cyclical, and we can be negatively impacted by downturns in this market and by general economic conditions. | |
| ● | The lack of financing for homebuyers in the U.S. residential real estate market at favorable rates and on favorable terms has had a material adverse effect on our financial performance and results of operations. | |
| ● | The housing market is currently in flux with higher mortgage interest rates and generally increasing home prices which makes it difficult to predict future market trends. Any decrease in home sales in the future will have an adverse effect on our financial performance and results of operations. | |
| ● | We may fail to successfully execute our strategies to grow our business, including increasing our agent count, expanding the number of our franchisees and agents, or we may fail to manage our growth effectively, which could have a material adverse effect on our brand, our financial performance and results of operations. | |
| ● | We might not be able to attract and retain additional qualified agents and other personnel. | |
| ● | Our financial results are affected directly by the operating results of franchisees and agents, over whom we do not have direct control. | |
| ● | We are dependent upon the truthfulness of our franchisees to provide accurate reports and accounting to us. | |
| ● | We depend substantially on our Founder, Joseph La Rosa, and the loss of any our senior management or other key employees or the inability to hire additional qualified personnel could adversely affect our operations, our brand and our financial performance. | |
| ● | Concentration of ownership of our voting stock by Mr. La Rosa will prevent new investors from influencing significant corporate decisions. |
| ● | Mr. La Rosa will control all matters that come before the stockholders for a vote and thus we are a “controlled company” within the meaning of the Nasdaq listing requirements and, as a result, the Company will qualify for exemptions from certain corporate governance requirements. If we take advantage of such exemptions, you will not have the same protections afforded to stockholders of companies that are subject to such corporate governance requirements. | |
| ● | We are subject to certain risks related to litigation filed by or against us, and adverse results may harm our business and financial condition. | |
| ● | Adverse outcomes in litigation and regulatory actions against the NAR, other real estate brokerage companies and agents in our industry could adversely impact our financial results. | |
| ● | If we attempt to, or acquire other complementary businesses, we will face certain risks inherent with such activities. |
Risks Associated with Our Capital Stock
| ● | We may not be able to maintain the listing of our Common Stock on Nasdaq, which could adversely affect our liquidity and the trading volume and market price of our Common Stock and decrease or eliminate your investment. | |
| ● | The market price for our Common Stock may be particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, and minimal profits, which could lead to wide fluctuations in our share price. | |
| ● | If our securities become subject to the penny stock rules, it would become more difficult to trade our shares. | |
| ● | We may have violated Section 13(k) of the Exchange Act (implementing Section 402 of the Sarbanes-Oxley Act of 2002) and may be subject to sanctions as a result. | |
| ● | Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when we need it. | |
| ● | If we continue to fail to maintain an effective system of disclosure controls and fail to maintain an effective system of internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired. |
General Risks
| ● | If we fail to protect the privacy of employees, independent contractors, or consumers or personal information that they share with us, our reputation and business could be significantly harmed. | |
| ● | Cybersecurity incidents could disrupt our business operations, result in the loss of critical and confidential information, adversely impact our reputation and harm our business. | |
| ● | Anti-takeover provisions in our amended and restated articles of incorporation and bylaws, as well as provisions in Nevada law, might discourage, delay or prevent a change of control of our Company or changes in our management and, therefore, depress the trading price of our Securities. |
We discuss these and other risks and uncertainties in the Item “1A.Risk Factors” of this Annual Report on the Form 10-K.
PART I
Item 1. Business.
Overview
We are the holding company for five agent-centric, technology-integrated, cloud-based, multi-service real estate segments. Our primary business, La Rosa Realty, LLC, has been listed in the “Top 75 Residential Real Estate Firms in the United States” from 2016 through 2020 by the National Association of Realtors, the leading real estate industry trade association in the United States.
Our business was founded by Mr. Joseph La Rosa, a successful real estate developer, business and life coach, author, podcaster and public speaker. Mr. La Rosa’s self-help book “Do It Now” is a roadmap to personal success and well-being based on his transformative theories of family, passion and growth. His philosophy, seminars and educational forums have attracted numerous successful realtors that have spurred the growth of our business.
In addition to providing person-to-person residential and commercial real estate brokerage services to the public, we cross sell ancillary technology-based products and services primarily to our sales agents and the sales agents associated with our franchisees. Our business is organized based on the services we provide internally to our agents and to the public, which are residential and commercial real estate brokerage, franchising, real estate brokerage education and coaching, and property management. Our real estate brokerage business operates primarily under the trade name La Rosa Realty, which we own, and, to a lesser extent, under the trade name Better Homes Realty which we license. We have 19 La Rosa Realty corporate real estate brokerage offices and branches located in Florida, California, Texas, and Georgia. We have 18 La Rosa Realty franchised real estate brokerage offices and branches and two affiliated real estate brokerage offices that pay us fees in two states in the United States and Puerto Rico. Our real estate brokerage offices, both corporate and franchised, are staffed with 2,454 licensed real estate brokers and sales associates as of March 31, 2024.
Our franchised offices are currently:
| Name | Location | |
| La Rosa Realty Success LLC | Apopka, Florida | |
| La Rosa Realty Bayamón LLC | Bayamón, Puerto Rico | |
| Premier Properties LLC | Carolina, Puerto Rico | |
| La Rosa Realty Internacional, LLC | Celebration, Florida | |
| La Rosa Realty LLC | Chappells, South Carolina | |
| La Rosa Realty Central Florida, LLC | Davenport, Florida | |
| La Rosa Realty Beaches LLC | Fort Lauderdale, Florida | |
| Baxpi Holdings LLC | Fort Lauderdale, Florida | |
| La Rosa Realty Jacksonville, LLC | Jacksonville, Florida | |
| La Rosa Realty Lakeland LLC | Lakeland, Florida | |
| La Rosa Realty Kendall, LLC | Miami, Florida | |
| La Rosa Realty Downtown Orlando LLC | Orlando, Florida | |
| La Rosa Realty St. Augustine LLC | St. Augustine, Florida | |
| The Realty Experience Powered By LRR LLC | St. Cloud, Florida | |
| La Rosa Realty St. Petersburg LLC | St. Petersburg, Florida | |
| La Rosa Realty THG Network LLC | Venice, Florida | |
| La Rosa Realty The Elite LLC | Wesley Chapel, Florida |
We have built our business by providing the home buying public with well trained, knowledgeable realtors who have access to our proprietary and third-party in-house technology tools and quality education and training, and valuable marketing that attracts some of the best local realtors who provide value-added services to our home buyers and sellers that are attracted to our brands. We give our real estate brokers and sales agents who are seeking financial independence a turnkey solution and support them in growing their brokerages while they fund their own businesses. This enables us to maintain a low fixed-cost business with several recurring revenue streams, yielding relatively high margins and cash flow.
Our agent-centric commission model enables our sales agents to obtain higher net commissions than they would otherwise receive from many of our competitors in our local markets. We believe that agents who join our Company from the major real estate brokerage firms have increased their income by an average of approximately forty percent (40%). They can then use this additional income to reinvest in their businesses or as take-home profit. This is a strong incentive for them to compete against the discount, flat fee and internet brokerages that have sprung up in the past several years. Instead of us taking a greater share of their income, our agents pay what we believe to be reduced rates for training and mentorship and our proprietary technology. Our franchise model has a similar pricing methodology, permitting the franchise owner the freedom to operate their business with minimal control and lower expense than other franchise offerings.
Moreover, we believe that our proprietary technology, training, and the support that we provide to our agents at a minimal cost to them is one of the best offered in the industry.
Our business stands on three pillars: Family, Passion, and Growth. We believe that our support and philosophy have attracted and will continue to attract and retain the highest producing realtors in our local markets. We believe that our focus on the interaction between our human agents and their clients is a strong weapon against the internet-only commodity websites and the low touch discount brokerages. Our agent count continues to grow organically, which can be attributed to the positive culture created in our Company. By creating a custom solution and a unique experience, we believe that our agents are able to guide their clients seamlessly through what may be their most expensive lifetime purchase.
Disruptions related to the COVID-19 pandemic resulted in a downturn in our local residential real estate market in 2020. However, our local real estate market rebounded significantly in 2021 and continues to hold up notwithstanding significant increases in mortgage rates as the pandemic has caused what appears to be a large migration into our market areas from other states. Because nearly all of our sales agents, who are independent contractors, were working remotely before the pandemic struck, and because Florida did not mandate stay-at-home orders like many other states, the manner in which our business is conducted during the pandemic has not changed significantly and has not affected the productivity of our sales agents in 2021, in 2022, or in 2023.
In addition, a significant driver of our past growth was, and we believe, of our future growth is our ability to create revenue by referring or requiring that our agents and our franchisee’s agents use the different business services that we provide. For example, all agents new to our Company are required to have a “coach” and to attend multi-day training sessions to learn the Company’s philosophy, technology and business practices. Concurrently, the agent works with their coach in obtaining listings, working with consumers and closing transactions. All of these activities are run through our La Rosa Coaching, LLC subsidiary that teaches advanced techniques for team building, personal growth and business development, which we believe will enhance our revenue at a nominal increase in cost to us. In addition, unlike other residential real estate brokerages, we encourage our sales agents to pursue commercial real estate transactions and require them to utilize the services of our commercial real estate company. We anticipate acquiring other complementary businesses, such as title and insurance agencies and a mortgage brokerage, in the near future to enhance our gross revenues and profit margins.
On October 12, 2023, we consummated our initial public offering (the “IPO”). Following our IPO, as of the date of this annual report, we have acquired majority ownership of the following franchisees of the Company: Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.), Horeb Kissimmee Realty, LLC, La Rosa Realty Premier, LLC, La Rosa Realty Orlando, LLC, La Rosa Realty Georgia, LLC, and La Rosa Realty California, and 100% ownership of the following franchisees of the Company: La Rosa CW Properties, LLC, La Rosa Realty North Florida LLC, and La Rosa Realty Winter Garden LLC.
We intend to continue growing our business organically and by acquisition.
It is management’s intention to acquire additional franchisees in 2024. We continuously look to search for potential acquisition targets. Management is in discussions with several franchisees; however, any future agreements may have terms that are materially different than the terms of completed acquisitions. We cannot guarantee that the Company will actually enter into any binding acquisition agreements with any of those companies. If we do, we cannot assure you that the terms of such acquisitions will be substantially the same or better for the Company than those of completed acquisitions.
Our Organization
La Rosa Holdings Corp. was incorporated in the State of Nevada on June 14, 2021 by its founder, Mr. Joseph La Rosa, to become the holding company for five Florida limited liability companies in which Mr. La Rosa held or controlled a one hundred percent ownership interest: (i) La Rosa Coaching, LLC ( “Coaching”); (ii) La Rosa CRE, LLC (“CRE”); (iii) La Rosa Franchising, LLC (“Franchising”); (iv) La Rosa Property Management, LLC (“Property Management”); and (v) La Rosa Realty, LLC (“Realty”). Coaching, CRE, Franchising, Property Management and Realty became direct, wholly owned subsidiaries of the Company as a result of the closing of the Reorganization Agreement and Plan of Share Exchange dated July 22, 2021 which was effective on August 4, 2021. Pursuant to the Reorganization Agreement, each LLC exchanged 100% of their limited liability company membership interests for one share of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), which share was automatically redeemed for nominal consideration upon the closing of the transaction, resulting each LLC becoming the direct, wholly owned subsidiary of the Company.
The Company conducts its operations through its fifteen subsidiaries:
| ● | La Rosa Realty, LLC is engaged in the residential real estate brokerage business; |
| ● | La Rosa Coaching, LLC is engaged in the delivery of coaching services to our brokers and franchisee’s brokers; |
| ● | La Rosa CRE, LLC is engaged in the commercial real estate brokerage business; |
| ● | La Rosa Franchising, LLC is engaged in the franchising of real estate brokerage agencies; |
| ● | La Rosa Property Management, LLC is engaged in property management services to owners of single-family residential properties; |
| ● |
La Rosa Realty Premier, LLC is engaged mostly in the residential real estate brokerage business; |
| ● | La Rosa Realty CW Properties, LLC is engaged mostly in the residential real estate brokerage business; |
| ● | La Rosa Realty North Florida, LLC is engaged mostly in the residential real estate brokerage business; |
| ● | La Rosa Realty Orlando, LLC is engaged mostly in the residential real estate brokerage business; |
| ● | Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.) is engaged mostly in the residential real estate brokerage business; |
| ● | Horeb Kissimmee Realty, LLC is engaged mostly in the residential real estate brokerage business; |
| ● | La Rosa Realty Winter Garden, LLC is engaged mostly in the residential real estate brokerage business; and |
| ● | La Rosa Realty Texas, LLC is engaged mostly in the residential real estate brokerage business; |
| ● | La Rosa Realty Georgia, LLC is engaged mostly in the residential real estate brokerage business; and |
| ● | La Rosa Realty California is engaged mostly in the residential real estate brokerage business. |
We are a “controlled company” as defined under the corporate governance rules of Nasdaq because our Founder, Mr. Joseph La Rosa, as of April 16, 2024, controls 75% of the total voting power of our Common Stock based on his ownership of Common Stock and the 20,000,000 votes provided by his Series X Super Voting Preferred Stock, $0.0001 par value per share, (the “Series X Preferred Stock”) that votes with the Common Stock, with respect to director elections and other matters.
Our Business
We operate primarily in the United States residential real estate market which totaled $47.5 trillion at the end of 2023 reflecting a year over year gain of $2.4 trillion due to a shortage of houses for sale, according to Redfin Corp1.
The Company is the holding company for its direct, majority owned subsidiaries, and has no other operations.
Realty was a traditional residential real estate brokerage firm founded in 2004 by Mr. La Rosa to serve the Florida market. In 2011, La Rosa Realty shifted to an agent-centric real estate brokerage format, offering agents more tools and value while offering experienced agents a 100% commission split. Newly licensed and agents still in training operate on a 60% to agent / 40% commission split (13% to La Rosa Coaching, 14% to the La Rosa individual coach, 10% to the brokerage office who engaged the new agent, and 3% to the Director of Coaching who is employed by La Rosa Holdings). Realty has expanded its geographic footprint over the years by integrating technology into its operations and creating a brokerage that provides its agents with the tools to handle their transactions, accounting, marketing, social media and customer relations. Realty’s full service, high touch engagement with its clients assists them with navigating the complexity of the home purchase/sale transaction through their intimate knowledge of the local market, guiding them on the right pricing for their sale or purchase, assisting in the negotiation of the sales contract, overseeing the home inspections and possible repairs, reviewing the financial details of the transaction to assure that there are no errors and attending the closing of the sale to ensure that there are no last minute surprises. Realty believes that its services build referrals and repeat clients who appreciate the expertise and personal relationships that they develop with our agents.
In 2018, Mr. La Rosa organized Franchising to study the potential to expand nationally by means of creating a franchise model that would be easily duplicable. Franchising began franchising real estate brokerage businesses based on its Franchise Disclosure Document filed with the Federal Trade Commission in 2019 and converted several of its largest offices in Florida to “La Rosa Realty” franchises. Better Homes Realty, Inc., a national real estate franchise founded in 1964, with offices located from coast to coast in the United States, licensed Franchising to sell Better Homes Realty franchises throughout the United States, Canada and elsewhere. Franchising also oversees and administers the offices that it sells, no matter their brand. Franchising uses the typical model for licensing the use of our two brands together with our proprietary business methodology, technology, tools, and training. Our franchisees own their own brokerage businesses, are solely responsible for their operations and risks, and are able to retain the substantial upside of their business if they are profitable. Our franchisees use our successful and well-known brands, our systems and technology, training and personal assistance and guidance to help run their businesses more efficiently and, we believe, more successfully than other branded real estate franchisees. Our franchisees pay us an initial licensing fee, a royalty fee based on their gross commissions, an annual membership fee, a coaching fee payable to Coaching for coaching services, a commercial royalty fee payable to La Rosa CRE for all commercial real estate transactions, a training fee for its administrative personnel and a fee to use our proprietary software. Because our franchise “product” has been developed over the years and is delivered in a “package” format, our fixed costs are low and our franchising gross margins are relatively higher than our more labor intensive businesses. While we intend to continue to sell franchises, we will, in the future, concentrate on opening corporate offices that produce higher revenue and increased margins.
Coaching grew out of Mr. La Rosa’s life and business coaching seminars which were organized in 2019 to provide education and mentoring to new real estate agents who join Realty in any of our offices. Each agent in coaching is assigned an experienced real estate agent/coach who assists and advises the new agent for, at a minimum, their first three sales transactions and the successful completion of our exclusive core competency courses and examinations. Brokers compensate us for the courses and mentoring by splitting their commissions with us when they are involved in the sale and purchase of a property for which we receive thirty percent (30%) of their share of the real estate brokerage commission. Our franchisee brokers also take the in-house course and ongoing coaching that cover topics, including but not limited to local real estate brokerage law, lead generation, recruiting, business management, industry trends, and leadership. We added a second tier of coaching in 2021 that we believe will provide business and personal growth and advanced real estate courses to our and our franchisees’ agents for various fees based on the subject matter and length of the course.
| 1 | https://www.redfin.com/news/housing-market-value-december-2023/ |
Unlike most other residential real estate brokerage companies, we encourage our sales agents to seek out property management business. Property Management, which was organized in 2014, trains our sales agents to provide residential property management services to owners of single-family residential properties and provides our agents with the tools to service those property owners. These tools include management, marketing, accounting and financial services. Our agents generally charge the homeowners between eight to twelve percent (8-12%) of the monthly rental. Our agents pay Property Management to be the point of contact for the property owner and their tenants, handle all tenant screenings, applications, contracts, forms and documents, and deal with attorneys if necessary to enforce the agreements. We collect the rents and disburse payments to vendors, service providers, the agents and the property owners, while retaining $44.00 per agent per property per month. As of April 16, 2024, we had provided property management services for approximately 600 properties in Florida, including single-family residences, condominiums, townhouses and other types of real estate. Consistent with industry custom, management contract terms typically range from one to three years, although some contracts can be terminated at will at any time following a short notice period, usually 30 to 120 days, as is typical in the industry. Property Management has recently added a division to directly manage properties in Florida and to expand those services to our other offices in other states in the future.
Unlike many other real estate brokerages, we encourage our sales agents to seek out commercial real estate business. CRE was organized in 2014 originally to provide “residential-commercial” real estate advisory services such as helping sales agents’ customers lease office space. CRE now assists agents who have customers who wish to purchase multifamily, office, storage, mixed use and apartment properties. We provide, on a fee basis, training to sales agents who wish to work in the commercial real estate space, and advise customers with respect to office leasing, multi-family property sales and leasing, and land and subdivision development. Our customers come primarily from referrals from our Realty brokers who are asked by their clients to assist them in with various commercial real estate property transactions.
From October 2023 to March 2024, the Company also acquired the majority ownership of the following franchisees of the Company: Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.), Horeb Kissimmee Realty, LLC, La Rosa Realty Premier, LLC, La Rosa Realty Orlando, LLC, La Rosa Realty Georgia, LLC, La Rosa Realty California, and 100% ownership of the following franchisees of the Company: La Rosa CW Properties, LLC, La Rosa Realty North Florida LLC, and La Rosa Realty Winter Garden LLC. All of these franchisees are engaged in the residential real estate brokerage business. The Company has also recently formed La Rosa Realty Texas LLC, its 90% owned subsidiary with a 51% profit share.
We also have a number of affiliated companies that are wholly, or majority owned by Mr. La Rosa that we refer to in this report as our affiliates. While our affiliates are not owned by us, some do use our services and contribute to our revenue stream. Our affiliates operate residential real estate brokerage, insurance brokerage and real estate title and full commercial real estate brokerage businesses.
Our Focus
Our Mission Statement is that “we are here to support, empower and elevate those who we serve with integrity.” We are committed to excellence in all we do and are respectful, compassionate, trustworthy, responsible, joyful, inspiring and adaptive. At La Rosa, we inculcate these core values to our sales agents and employees and strive to live by them every day.
We believe home buyers and sellers choose the agent because of their individual marketing prowess, professionalism, and personality. To capitalize on this, we focus on helping our agents improve professionally and increase their financial ability to invest in their personal marketing, and, therefore, capture a greater percentage of customers.
We have built our business on what we know to be our customer’s needs. The purchase of a home is likely the most expensive purchase a consumer will make in his or her lifetime. Many first-time home buyers are young and require knowledgeable, experienced guidance from our agents and our franchisor’s agents. Home sellers need the market ken and potential buyer reach that our agents and our franchisee’s agents provide. Our agents and our franchisee’s agents build lasting relationships with their clients that result in repeat business and referral business. Notwithstanding claims of the internet-only brokerages that homes are a commodity that can be bought and sold like a can of beans, this consumer need is borne out in reality. The research conducted by the National Association of Realtors (the “NAR”)2 in 2023 shows that:
| ● | 89% of buyers recently purchased their home through a real estate agent or broker and 6% purchased directly through the previous owner; |
| ● | having an agent to help them find the right home was what buyers wanted most when choosing an agent at 50%; |
| ● | 71% of buyers interviewed only one real estate agent during their home search; |
| ● | 90% of buyers would use their agent again or recommend their agent to others, and 2% of sellers recommended their agent four or more times since selling their home. |
| 2 | https://cdn.nar.realtor/sites/default/files/documents/2023-profile-of-home-buyers-and-sellers-highlights-11-13-2023.pdf |
| ● | 89% of all sellers used an agent or broker to sell their home; 7% sold via FSBO, and less than 1% sold via iBuyer; |
| ● | 43% of buyers used an agent that was referred to them by a friend, neighbor, or relative, 13% used an agent that they had worked with in the past to buy or sell a home; and |
| ● | 71% of all sellers contacted only one agent before finding the right one to assist with the sale of their home. |
We believe that our agents’ training, knowledge of the market, access to public and non-public data related to transactions, and experience with past transactions gives them a unique insight to provide our home buyer clients with invaluable advice and judgement. Their ability to reach potential buyers and our relationships with other brokers, both within and without our Company and franchisors helps our seller clients achieve the maximum possible price for their properties.
Our Company works in the present but has its eye on the future. We understand that the housing market will change over time and are focusing on how to prepare for that change. The following chart is a projection of the past and future of home ownership rates based on age groups, with the projections noting either slow or fast change.3
As the market slows slightly in out years, we started and intend to continue increasing our use of our technology tools to make our agents more efficient and more productive.
Our People
Our people are our most important asset. We spend significant time and effort in attracting and retaining talented people for our businesses. Many agents contact us after hearing of or experiencing Mr. La Rosa’s personal and business growth seminars, his book or his podcasts. They are attracted to the Company because they desire to work in a diverse, inclusive, welcoming and learning environment that allows the agents to attain their individual potential. The financial attraction is our ability to offer competitive salaries for our employees, a 100% commission “split” with our experienced realtors and a 60% / 40% commission split with our new and inexperienced agents and low annual and monthly dues. Our agents can also receive advanced commissions through an affiliated commission advance company that charges a percentage fee to the agent. Our agents are also eligible to participate in different types of compensation plans, including our New Agent Commission Plan, Premier Plan, Blue Plan, and the Ultimate Plan, which provides for a 90% / 10% commission split. In the Ultimate Plan, an agent can participate in the Company’s Revenue Share Plan rewarding an agent for the recruitment of other agents and for the agents these recruited agents are recruiting. We are also commencing an Agent Incentive Plan by which agents can earn restricted share units of our Common Stock through their outstanding performance. But, most importantly, we believe it is the training, education and ongoing support that we provide to our agents that gives them an edge in a very competitive and crowded real estate brokerage marketplace.
Our businesses emphasize diversity and inclusion in the workplace and the value of home ownership. We strive to create a workplace that is inclusive of everyone, where every person can be authentic, and where that authenticity is celebrated as a strength. Management works diligently to make the Company a desirable place to work by creating learning experiences, programs, compensation, and benefits that attract, develop, train, engage, motivate, reward, and retain the best talent. With a focus on teamwork, collaboration, and diversity and inclusion, we aspire to be a company where the best people want to work and are engaged every day. Outside the office, our agents comply and observe non-discrimination laws and policies and work with all clients to ensure that they are able to acquire the home of their dreams.
| 3 | https://www.urban.org/sites/default/files/publication/103501/the-future-of-headship-and meownership_0.pdf |
Our Technology
We provide our agents and employees with cloud-based real estate brokerage services by utilizing our consumer-facing websites, including our corporate website https://www.larosarealty.com and our proprietary technology that provides brokerage operations management tools. When an agent is on-boarded, they are required to take our monthly Foundations Series which covers the use of our proprietary applications. Through our websites, we provide buyers, sellers, landlords, and tenants with access to all of the available properties for sale or lease on the multiple listing service (“MLS”), in each of the markets in which we operate. We provide each of our Company franchisees and their agents with their own personal website that they can modify to match their personal branding. Our website also gives consumers access to our network of professional real estate agents and vendors. Additionally, the websites we provide use Artificial Intelligence (“AI”) integrated Client Relationship Management (“CRM”) software to enhance the consumers’ internet experience and assist our agents with lead generation and lead capture through the AI features. For example, our CRM software, which is integrated into our websites, uses artificial intelligence to generate marketing leads for our agents by sending marketing materials to potential buyers and sellers automatically without any agent involvement. Our technology platform also provides unique automated blogging and comprehensive social media marketing campaigns for our agents to create top of mind public awareness of our brand.
In October 2023, we launched our proprietary technology system – JAEME, part of “My Agent Account.” JAIME is a real estate AI assistant created to support and inspire our agents with personalized content to drive marketing, efficiency, and sales. This advanced technology can help agents to provide services to their clients in a more efficient way – even from their mobile devices. Through JAEME, La Rosa’s agents can easily create:
| - | Compelling property descriptions |
| - | Effective email campaigns |
| - | Detailed business plans |
| - | Innovative video scripts |
| - | High-conversion newsletter campaigns |
Exclusive lead generation ideas
Our proprietary technology and third-party services and platforms provide our agents and franchisees with commission management and accounting systems, an internal agent “intranet” application, customer relationship management applications, a transaction management solution, and automated marketing and social media applications and privacy and identity protections. The combination of our brands, proprietary technology, services, data, lead generation, and marketing tools gives our agents the power to offer best-in-class service to their clients.
Internally, we use our technology to provide our Company agents, employees and franchisees with the means to find and develop new business, manage their relationships both externally with their clients and internally with the Company or their franchisor, develop better skills and knowledge in their areas of endeavor and, we believe, enhance their earning potential. While no one can predict the ups and downs of the real estate market, we believe that the “weapons” we provide to our Company agents, employees and franchisees help them fight the adverse economic conditions, a volatile market and the competition.
While our offices and our franchisor’s offices act as their “home base,” most agents use our offices primarily for real estate closings and training. We monetize our technology by charging our agents and our franchisor’s agents what we believe to be a reasonable a monthly fee for the use of our suite of tools.
Our Intellectual Property
It is important that we protect our technology and intellectual property. We rely upon a combination of trademarks, trade secrets, copyrights, patents, confidentiality procedures, contractual commitments, domain names, and other legal rights to establish and protect our intellectual property. We generally enter into confidentiality agreements and invention or work product assignment agreements with our officers, employees, agents, contractors, and business partners to control access to, and clarify ownership of, our proprietary information.
As of April 16, 2024, we had service mark registrations in the United States, including registration for “LR La Rosa Realty” and LR logo. We also had trademark and service mark registrations and applications in certain foreign jurisdictions. Additionally, we are the registered holder of a number of domain names, including “larosarealty.com” and “larosaholdings.com”.
We continually review our development efforts to assess the existence and patentability of new intellectual property. We intend to continue to evaluate the benefit of patent protection with respect to our technology and will file additional applications when we believe it will be beneficial.
Our Recent Strategic Partnerships
In November 2023, the Company entered into a strategic referral partnership agreement with Janover Inc. (Nasdaq: JNVR) (“Janover”), an AI-enabled B2B fintech marketplace connecting commercial property borrowers and lenders with a human touch. Janover operates an online commercial loan marketplace that connects prospective borrowers and lenders for originating loans and will introduce the Company to clients that need commercial real estate brokers. The partnership is expected to provide our brokers with new tools to facilitate commercial loans, thereby generating a new revenue stream for our brokers and the Company.
In end of 2023, the Company entered into a strategic partnership with Final Offer, a consumer-facing offer management and negotiation platform driven by agents. Final Offer is a technology platform that is designed to simplify real estate transactions, enabling buyers to make successful offers and sellers to maximize the outcome of their sales. Final Offer’s online process allows sellers to establish a minimum sales price and other deal terms online and pre-approved buyers to make binding offers. If a seller sets a “Final Offer” price and terms, an interested buyer can accept it instantly, putting the property under contract. We believe that the Final Offer’s innovative platform is designed to empower both real estate agents and their clients with real-time transparency, streamlining the offer management and negotiation process, creating a fair playing field for all while also providing accountability and trust.
In March 2024, the Company officially launched Final Offer. Final Offer is available to real estate brokers on the Company’s platform in key markets across Florida and Georgia, with plans to expand the offering across the organization.
Our Markets
Our primary market is in the United States. As of April 16, 2024, we have 19 La Rosa Realty corporate real estate brokerage offices and branches in Florida, California, Texas, and Georgia. We have 18 La Rosa Realty franchised real estate brokerage offices and branches and two affiliated real estate brokerage offices that pay us fees in two states in the United States and Puerto Rico.
Our Revenue Streams
Our financial results are driven by the total number of sales agents in our Company, the number of sales agents closing commercial real estate transactions, the number of sales agents utilizing our coaching services, and the number of agents who work with our franchisees. We grew our total agent count from our founding in 2004 to 2,454 agents as of April 16, 2024.
The majority of our revenue is derived from a stable set of fees paid by our brokers, franchisees, and consumers. We have multiple revenue streams, with the majority of our revenue derived from commissions paid by consumers who transact business with our and our franchisee’s agents, royalties paid by our franchisees, dues and technology fees paid by our sales agents, our franchisees and our franchisees’ agents. Our major revenue streams come from such sources as: (i) residential real estate brokerage revenue, (ii) revenue from our property management services, (iii) franchise royalty fees, (iv) fees from the sale or renewal of franchises and other franchise revenue, (v) coaching, training and assistance fees, (vi) brokerage revenue generated transactionally on commercial real estate, and (vii) fees from our events and forums. Our revenue streams are illustrated in the following chart:
| REVENUE STREAM | DESCRIPTION | PERCENT OF TOTAL 2023 REVENUE |
PERCENT
OF TOTAL 2022 REVENUE |
|||||||
| Brokerage Revenue | Percentage fees paid on agent-generated residential real estate transactions. Other revenues recognized monthly (annual and monthly dues charged to our agents). | 64 | % | 63 | % | |||||
| Property Management Revenue | Management fees paid by the sales agents from fees earned from property owners, rental fees, and rents. | 31 | % | 31 | % | |||||
| Franchise Sales and Other Franchise Revenues | One-time fee payable upon signing of the franchise agreement. Other revenues recognized monthly (annual membership, technology, interest, late fees, renewal, transfer, successor, accounting, other related fees). Per agent per closed transaction; payable monthly. | 3 | % | 4 | % | |||||
| Coaching/Training/Assistance Revenue | Based on real estate commissions earned by the sales agent. Event fees and break-out sessions. | 2 | % | 2 | % | |||||
| Commercial Real Estate Revenue | 10% of every real estate commission earned by the sales agent. Other revenues recognized monthly (monthly dues charged to our agents). | * | * | |||||||
| TOTAL | 100 | % | 100 | % | ||||||
| * | Less than 1%. |
Our Industry
The residential real estate industry is cyclical in nature but has shown strong historical long-term growth. We believe that long-term demand for housing in the U.S. will be primarily driven by the economic health of the domestic economy and local factors such as demand relative to supply, and that the residential real estate market in the U.S. will also benefit over the long term from the following fundamental factors:
| ● | a strong job market and rising real wage growth as the United States continues to recover from the Covid-19 pandemic; |
| ● | pent up demand for affordable housing in the Millennial and Gen Z generations that are seeking to acquire single-family homes; |
| ● | an increase in existing home stock as the Boomer generation downsizes due to retirement, illness and death; and |
| ● | not enough housing starts or resales to accommodate the demand. |
Our brokers deal primarily in sales of existing homes, rather than the sales of new homes that are typically sold by builders. The recent cycle of the growth of the real estate market hit headwinds in the second half of 2022. Mortgage rates dipped from 20 year highs in early 2023, but have risen again and sales have resumed an extended period of declines. The National Association of Realtors reported that for February 2024 (the seasonally adjusted annual rate) there were 4.38 million existing home sales, an increase of 9.5% over January 2024 but a decrease of 3.3% from the prior year. Total housing inventory at the end of February 2024 was 1.07 million units, up 5.9% from January and 10.3% from one year ago (970,000). There was a 2.9-month unsold inventory supply at thein February 2024, down from 3.0 months in January but up from 2.6 months in February 2023. The median sales price increased to $384,500, an increase of 5.7% from February 2023 ($363,600). Properties typically remained on the market 38 days in February, up from 36 days in January and 34 days in February 2023.
Realtors continue to be an integral part of the home buying process. According to NAR:5
| ● | 89% of buyers recently purchased their home through a real estate agent or broker, and 7% purchased directly through the previous owner; |
| ● | Having an agent to help them find the right home was what buyers wanted most when choosing an agent at 50%; |
| ● | 43% of buyers used an agent that was referred to them by a friend, neighbor, or relative, 13% used an agent that they had worked with in the past to buy or sell a home, and 7% found their agent when inquiring about a specific property found online; |
| ● | 71% of buyers interviewed only one real estate agent during their home search; and |
| ● | 90% of buyers would use their agent again or recommend their agent to others. |
The NAR has noted on its website:6
| ● | There are more than 100,000 residential real estate brokerage firms and over an estimated 3 million active real estate licensees operating in the United States; |
| ● | 89% of all realtors are independent contractors; 4% are employees and 7% are “other;” |
| 5 | https://cdn.nar.realtor/sites/default/files/documents/2023-profile-of-home-buyers-and-sellers-highlights-11-13-2023.pdf |
| 6 | https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics |
| ● | The median tenure for realtors with their current firm was six years, up from a median of four years in the 2020 NAR survey; |
| ● | Of the Realtors that use drones in their real estate business of office, 43% hire a professional, 11% have someone in their office that uses drones, and 7% personally use drones. 23% do not use drones; and |
| ● | 68% of broker/broker associates and 66% of sales agents have a website, 86% of NAR members have their own listings on their website, 70% have information about buying and selling, and 66% have a link to their firm’s website; 67% of realtors use Facebook and 49% use LinkedIn for professional purposes, and 20% of all realtor members of the NAR get 1-5% of their business from social media, and 10% get 6-10%. |
Seasonality
Our business is affected by the seasons and weather. The spring and summer seasons, when school is out, have typically resulted in higher sales volumes compared to fall and winter seasons. With the slowdown in the later months, we have experienced slower listing activity, fewer transaction closings and lower revenues and have seen more agent turnover as well. Bad weather or natural disasters also negatively impact listings and sales which reduces our operating income, net income, operating margins and cash flow. While this pattern is fairly predictable, there can be no assurance that it will continue. Moreover, with the impact of climate change, we expect more business disruptions in the coming years, many of which could be unpredictable and extreme.
Our revenues and operating margins will fluctuate in successive quarters due to a wide variety of factors, including seasonality, weather, health exigencies, holidays, national or international emergencies, the school year calendar’s impact on timing of family relocations, and changes in mortgage interest rates. This fluctuation may make it difficult to compare or analyze our financial performance effectively across successive quarters.
In addition, the residential real estate market and the real estate industry in general is cyclical, characterized by “bubbles” that reflect faster-than-usual housing price increases, heavy demand for single-family homes, interest rate fluctuations, easy credit standards and lax government housing policies on the one hand, and protracted periods of depressed home values, lower buyer demand, inflated rates of foreclosure and often changing regulatory or underwriting standards applicable to mortgages on the other hand. It is unclear as to whether the U.S. is currently experiencing a “bursting bubble” from the unusual pent-up demand and move to remote work created by the Covid-19 pandemic followed by the rapid and extreme mortgage rate hikes that has slowed the market in recent months. The best example of the bubble bursting was the significant downturn in the U.S. residential real estate market between 2005 and 2011. While we believe we are well-positioned to compete during a downturn, our business is affected by these cycles in the residential real estate market, which can make it difficult to compare or analyze our financial performance effectively across successive periods.
Competition
The real estate brokerage business is highly competitive. We primarily compete against other independent real estate brokerage agencies in our local markets as well as the international and national real estate brokerage franchisors seeking to grow their franchise system. We compete against other brokerages to attract transactional clients based on our personalized service with experienced brokers who know the local market, the number and quality of listings, our brand and reputation and our marketing efforts. We also compete to attract real estate professionals based on our brand and reputation, the quality of our training and coaching, our marketing efforts, our generous 100% commission “split” for experienced brokers and our technology tools that make the brokers more efficient and productive.
Our largest national franchise competitors in the U.S. include RE/MAX, Realogy Holdings Corp. (which operates several brands including Century 21 and Coldwell Banker), Fathom Holdings Inc., and eXp World Holdings Inc. We believe that competition in the real estate brokerage franchise business is based principally upon the reputational strength of the brand, the quality of the services offered to franchisees, and the amount of franchise-related fees to be paid by franchisees.
We also face competition from internet-based real estate brokers including Realtor.com, Fathom Holdings Inc., Redfin.com, and Zillow.com, brokers offering deeply discounted commissions like SimpleShowing Holdings, Inc., Houwzer LLC and Real Estate Exchange, Inc. (Rexhomes.com) and “flat fee” brokers such as Homie Technology, Inc., Cottage Street Realty, LLC (FlatFeeGroup.com) and Trelora, Inc. These companies do not provide the same personalized brokerage services that we do and emphasize low price and a do-it-yourself philosophy.
In the property management arena, we compete against independent local property management companies and the major national and international commercial real estate property managers such as Jones Lang LaSalle and Cushman & Wakefield plc. While most of our property management business comes from referrals in our local market, we compete on price and our ability to be on the ground and available to handle day-to-day matters for our clients.
Our real estate coaching business competes against other in-house training services operated by independent real estate brokerage agencies and the international and national franchisors named above, as well as online providers including The Mike Ferry Organization, Keller Williams Mega Agent Production Systems, Buffini and Co., Tony Robbins Coaching, Craig Proctor Coaching, and Tom Ferry Coaching. We compete on the basis of personalized instruction, our mentorship program that provides a neophyte agent with an experienced coach to guide her and answer questions on an on-going basis after the classroom instruction has ended.
Many of our existing and potential competitors have substantial competitive advantages, including a larger national and international footprint and more recognizable brand, greater financial resources, longer operating histories, a greater breadth of marketing coverage, more extensive relationships in the residential and commercial real estate industry with brokers, agents, service providers and advertisers, stronger relationships with third party data providers such as multiple listing services and listing aggregators, maintain their own in-house software development, have access to larger user bases and greater intellectual property portfolios.
Government Regulation
Overview
The residential real estate industry is regulated by federal, state and local authorities as well as private associations or state sponsored associations or organizations. We must comply with federal, state, and local laws, as well as private governing bodies’ regulations, which, when combined, results in a highly regulated industry.
We are also subject to federal and state regulations relating to employment, contractors, and compensation practices. Except for our employed Company agents, all agents in our brokerage operations have been retained as independent contractors, either directly or indirectly through our franchisors. With respect to these independent contractors, like most brokerage firms, we are subject to the Internal Revenue Service regulations and applicable state law guidelines regarding independent contractor classification. These regulations and guidelines are subject to judicial and agency interpretation.
Federal Regulation
The Real Estate Settlement Procedures Act of 1974, as amended, became effective on June 20, 1975. RESPA requires lenders, mortgage agents, or servicers of home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process. RESPA also protects borrowers against certain abusive practices, such as kickbacks, and places limitations upon the use of escrow accounts. RESPA also requires detailed disclosures concerning the transfer, sale, or assignment of mortgage servicing, as well as disclosures for mortgage escrow accounts. RESPA is administered and enforced by Consumer Financial Protection Bureau (the “CFPB”). We are also subject to the Fair Housing Act of 1968 (the “FHA”) which prohibits discrimination in the purchase or sale of homes and applies to real estate brokers and agents, among others. The FHA prohibits expressing any preference or discrimination based on race, religion, sex, handicap, and certain other protected characteristics, and applies broadly to many forms of advertising and communications. Other federal laws and regulations applicable to our business include (i) the Federal Truth in Lending Act of 1969; (ii) the Federal Equal Credit Opportunity Act; (iii) the Federal Fair Credit Reporting Act; (iv) the Home Mortgage Disclosure Act; (v) the Gramm-Leach-Bliley Act; (vi) the Consumer Financial Protection Act; (vii) the Fair and Accurate Credit Transactions Act; and (viii) the Do Not Call/Do Not Fax Act and other federal and state laws pertaining to the privacy rights of consumers, our collection, use, and disclosure of data collected from our website and mobile users, and the manner and circumstances under which we or third parties may market and advertise our services to consumer which affects our opportunities to solicit new clients.
Our business is also subject to various antitrust and competition laws, including the Sherman Antitrust Act, the Federal Trade Commission Act, the Clayton Act, and other related federal, state, and provincial laws in the jurisdictions in which we operate. These laws prevent anti-competitive behaviors such as price-fixing and other conduct that unreasonably restrains trade and competition. In 2021, the Department of Justice (“DOJ”) withdrew its consent to a November 2020 proposed settlement with NAR concerning alleged anti-competitive practices in real estate. While the DOJ dismissed its lawsuit against NAR in July 2021, it indicated a broader investigation into NAR’s activities. In November 2021, NAR modified its rules to implement most of the changes the DOJ settlement sought. In January 2023, a court set aside the DOJ’s new investigative demand related to NAR. The indirect and direct effects, if any, of this action upon the real estate industry are not yet clear.
While anti-competition enforcement has intensified across industries, there is a unique focus on the real estate industry in the United States and Canada. For example, the White House issued an Executive Order in July 2021 identifying real estate brokerages and listings as an area of focus. In 2018, a joint workshop by the DOJ and FTC addressed potential competition issues in the residential real estate sector which could be the subject of future enforcement actions.
In recent months, lawsuits have been filed against the NAR and a number of large real estate brokers around the country alleging antitrust violations. We have not, as of the date hereof, been named as a defendant in any antitrust litigation.
On March 15, 2024, the National Association of REALTORS® announced an agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. This settlement resolves claims against NAR and nearly every NAR member; all state, territorial and local REALTOR® associations; all association-owned MLSs; and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below and is subject to court approval. The settlement makes clear that NAR continues to deny any wrongdoing in connection with the Multiple Listing Service cooperative compensation model rule (the MLS Model Rule) that was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation. Under the terms of the agreement, NAR would pay $418 million over approximately four years. In the settlement, effective mid-July 2024, NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS, as well as adopt new rules requiring written agreements between buyers and buyers’ agents. However, the direct and indirect effects, if any, of the judgment upon the real estate industry are not yet entirely clear.
These lawsuits, together with similar lawsuits against other businesses in our industry, have prompted discussion of regulatory changes to rules established by local or state real estate boards or MLSs. At this time, we do not believe to be negatively affected by such lawsuits due to flexibility of our agent-centric commission model, creating multiple revenue streams for our agents, and due to our consumer-centric technology model. However, the resolution of the antitrust litigation and/or other regulatory changes may require changes to our or our brokers’ business models, including changes in agent and broker compensation. This could reduce the fees we receive from our affiliated real estate professionals, which, in turn, could adversely affect our financial condition and results of operations.
Internationally, our operations are also subject to laws against improper payments, including the U.S. Foreign Corrupt Practices Act and similar global regulations.
State and Local Regulation
We are subject to state real estate and brokerage licensing laws and requirements that vary from state to state. In general, all individuals and entities lawfully conducting businesses as real estate agents or sales associates must be licensed in the state in which they carry on business and must at all times be in compliance.
Real estate brokers are required to be employed by the brokerage firm or as an independent contractor and the broker may work for another broker conducting business on behalf of the sponsoring broker. Generally, attorneys may act as brokers in some states without being separately licensed.
States may require a person licensed as a real estate agent, sales associate or salesperson, to be affiliated with a broker, as either an employee or an independent contractor, in order to engage in licensed real estate brokerage activities or allow the agent, sales associate or salesperson to work for another agent, sales associate or salesperson conducting business on behalf of the sponsoring agent, sales associate or salesperson.
Engaging in the real estate brokerage business requires obtaining a real estate broker license (although in some states the licenses are personal to individual agents). In order to obtain this license, most jurisdictions require that a member or manager be licensed individually as a real estate broker in that jurisdiction. If applicable, this member or manager is responsible for supervising the licensees and the entity’s real estate brokerage activities within the state.
Real estate licensees, whether they are salespersons, individuals, agents or entities, must follow the state’s real estate licensing laws and regulations. These laws and regulations generally specify minimum duties and obligations of these licensees to their clients and the public, as well as standards for the conduct of business, including contract and disclosure requirements, record keeping requirements, requirements for local offices, escrow trust fund management, agency representation, advertising regulations and fair housing requirements. Our Company’s management and our franchisors provide oversight with respect to the observance of the statutes and regulations set forth in each state where we or our franchisors, respectively, operate.
Many jurisdictions have local county or city regulations that govern the conduct of the real estate brokerage business. Local regulations generally require additional disclosures by the parties to a real estate transaction or their agents, or the receipt of reports or certifications, often from the local governmental authority, prior to the closing or settlement of a real estate transaction as well as prescribed review and approval periods for documentation and broker conditions for review and approval.
Climate regulation
On March 6, 2024, the SEC has issued final climate disclosure rules to require public companies to include enhanced disclosure regarding corporate climate-related information in their periodic reports and registration statements. Such information would include climate-related risks that are reasonably likely to have a material impact on a registrant’s business or results of operations, as well as certain climate-related financial statement metrics. However, on March 15, 2024, the Fifth Circuit Court of Appeals, in the case Liberty Energy Inc. and Nomad Proppant Services LLC temporarily enjoined the enforcement of those rules. Moreover, we expect state laws and regulations regarding these topics to continue to evolve and impose new and additional requirements. For example, in October 2023, California enacted a new climate accountability package pursuant to its new Climate Corporate Data Accountability Act that will require annual disclosure of certain greenhouse gas emissions and new Climate-Related Financial Risk Act that will require biennial disclosure of certain climate-related financial risks and mitigation measures, each beginning in 2026, subject to applicable implementing regulations and rulemaking that may impact final scope and compliance timing. Globally, the International Sustainability Standards Board and applicable sustainability disclosure standards impact how national regulators and governance bodies approach these and related topics. We intend to comply with applicable rules as they are enacted.
Other regulation
We are also subject to rules established by private real estate groups and/or trade organizations, including, among others, the NAR, state and local associations of realtors, local Multiple Listing Services and homeowners’ associations that have rules governing the sale of properties within their neighborhoods. Each third-party organization generally has prescribed policies, bylaws, codes of ethics or conduct, and fees and rules governing the actions of members in dealings with other members, clients and the public, as well as how the third-party organization’s brand and services may or might not be deployed or displayed.
Human Capital Resources
As of December 31, 2023, we had 42 full-time employees in our Company and our majority owned subsidiaries, and approximately 2,434 real estate agents that are independent contractors with Realty. Our operations are overseen directly by our management. Our management functions cover corporate administration, training, agent relations, business development, technology, and research. We intend to expand our current management to retain skilled employees with experience relevant to our business. Our management’s relationships with our agents and technology team are good. We do not have any collective bargaining agreements and our employees are not represented by a union.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants. The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase stockholder value and the success of our Company by motivating such individuals to perform to the best of their abilities and achieve our objectives.
Available Information
Our website address is www.larosaholdings.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, any amendments to those reports, proxy and registration statements filed or furnished with the SEC, are available free of charge through our website. We make these materials available through our website as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, the SEC. The reports filed with the SEC by our executive officers and directors pursuant to Section 16 under the Exchange Act are also made available, free of charge on our website, as soon as reasonably practicable after copies of those filings are provided to us by those persons. These materials can be accessed through the “Financial Filings” section of our website. The information contained in, or that can be accessed through, our website is not part of this Annual Report on Form 10-K.
Item 1A. Risk Factors.
Our business is subject to many risks and uncertainties, which may affect our future financial performance. If any of the events or circumstances described below occur, our business and financial performance could be adversely affected, our actual results could differ materially from our expectations, and the price of our stock could decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertainties not currently known to us or that we currently do not believe are material that may adversely affect our business and financial performance. You should carefully consider the risks described below, together with all other information included in this report including our financial statements and related notes, before making an investment decision. The statements contained in this report that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our Common Stock could decline, and investors in our securities may lose all or part of their investment.
Risks Related to Our Business and Operations
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
The Company has incurred recurring net losses, including a net loss of $7,823,763 for the year ended December 31, 2023, and the Company’s operations have not provided net positive cash flows in the year ended December 31, 2023. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate positive cash flows from operations and to secure additional sources of equity and/or debt financing. Despite the Company’s intent to fund operations through equity and debt financing arrangements, there is no assurance that such financing will be available on terms acceptable to the Company, if at all.
Our independent auditors have included an explanatory paragraph in their audit report, included in this Annual Report on the Form 10-K, regarding the Company’s ability to continue as a going concern. This going concern risk may materially limit our ability to raise additional funds through the issuance of new debt or equity or may adversely affect the terms upon which such capital may be available. The inability to obtain sufficient financing on acceptable terms could have a material adverse effect on the Company’s financial condition, results of operations, and business prospects.
The Company is actively pursuing strategies to mitigate these risks, focusing on continuing to expand via acquisitions, which can help achieve future profitability, and expanding its customer base. However, there can be no assurance that these efforts will prove successful or that the Company will achieve its intended financial stability. The failure to successfully address these going concern risks may materially and adversely affect the Company’s business, financial condition, and results of operations. Investors should consider the substantial risks and uncertainties inherent in the Company’s business before investing in the Company’s securities.
We have a limited operating history with financial results that may not be indicative of future performance, and our revenue growth rate is likely to slow down as our business matures and may slow down due to the recent antitrust litigation.
We began operations in 2021. As a result of our limited operating history, we have limited financial data that can be used to evaluate our current business, and such data may not be indicative of future performance. We have encountered, and expect to continue to encounter, risks and difficulties frequently experienced by growing companies, including challenges in financial forecasting accuracy, hiring of experienced personnel, hiring of technology employees, determining appropriate investments, developing new products and features, assessing legal and regulatory risks, among others. Any evaluation of our business and prospects should be considered in light of our limited operating history, and the risks and uncertainties inherent in investing in early-stage companies. In addition, recent settlements of litigation based on alleged violations of federal and state antitrust laws may have an adverse impact on our potential growth. See “- Adverse outcomes in litigation and regulatory actions against the NAR, other companies and agents in our industry could adversely impact our financial results,” below.
Impairment of goodwill and intangible assets may adversely impact future results of operations.
An impairment in the carrying value of goodwill, trade names and other long-lived assets could negatively affect our consolidated results of operations and net worth.
Goodwill and indefinite-lived intangible assets, such as trade names, are recorded at fair value at the time of acquisition and are not amortized, but are reviewed for impairment at least annually or more frequently if impairment indicators arise. In evaluating the potential for impairment of goodwill and trade names, we make assumptions regarding future operating performance, business trends and market and economic conditions. Such analyses further require us to make certain assumptions about our sales, operating margins, growth rates and discount rates. There are inherent uncertainties related to these factors and in applying these factors to the assessment of goodwill and trade name recoverability. Goodwill reviews are prepared using estimates of the fair value of reporting units based on the estimated present value of future discounted cash flows. We could be required to evaluate the recoverability of goodwill or trade names prior to the annual assessment if we experience disruptions to the business, unexpected significant declines in operating results, a divestiture of a significant component of our business or market capitalization declines.
We also continually evaluate whether events or circumstances have occurred that indicate the remaining estimated useful lives of our definite-lived intangible assets, such as franchise agreements, agent relationships, real estate listings, and non-compete agreements, and other long-lived assets may warrant revision or whether the remaining balance of such assets may not be recoverable. We use an estimate of the related undiscounted cash flow over the remaining life of the asset in measuring whether the asset is recoverable.
We may not realize the expected benefits of our recent acquisitions because of integration difficulties and other challenges.
The success of our recent acquisitions will depend, in part, on our ability to realize the anticipated revenue, cost-savings, tax, collaboration and other synergies from integrating our two recent acquisitions with our existing business. The integration process may be complex, costly, and time-consuming. The difficulties of integrating the operations could include, among others:
| ● | failure to implement our business plan for the combined business; |
| ● | unanticipated issues in integrating logistics, information, communications, and other systems; |
| ● | unanticipated changes in applicable laws and regulations; |
| ● | negative impacts on our internal control over financial reporting accounting; and |
| ● | other unanticipated issues, expenses, or liabilities that could impact, among other things, our ability to realize any expected synergies on a timely basis, or at all. |
We may not accomplish the integration smoothly, successfully, or within the anticipated costs or time frame. The diversion of the attention of management from our current operations to the integration effort and any difficulties encountered in combining operations could prevent us from realizing the full benefits anticipated to result from the share exchanges and could adversely affect our business. In addition, the integration efforts could divert the focus and resources of the management of the Company from other strategic opportunities and operational matters during the integration process.
If we fail to raise additional capital, our ability to implement our business model and strategy could be compromised.
We have limited capital resources and operations. From time to time, we may seek additional financing to provide the capital required to expand the production of our business operation and development initiatives and/or working capital, as well as to repay outstanding loans if cash flow from operations is insufficient to do so. We cannot predict with certainty the timing or amount of any such capital requirements.
If we do not raise sufficient capital to fund our ongoing development activities, it is likely that we will be unable to carry out our business plans. We may not be able to obtain additional financing on terms acceptable, or at all. Even if we obtain financing for near term operations, we may require additional capital beyond the near term. If we are unable to raise capital when needed, our business, financial condition and results of operations would be materially adversely affected, and we could be forced to reduce or discontinue our operations.
The residential real estate market is cyclical, and we can be negatively impacted by downturns in this market and by general economic conditions.
The residential real estate market tends to be cyclical and typically is affected by changes in general economic conditions which are beyond our control. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets, levels of unemployment, consumer confidence and the general condition of the U.S. and the global economy. The residential real estate market also depends upon the strength of financial institutions, which are sensitive to changes in the general macroeconomic environment. Lack of available credit or lack of confidence in the financial sector could impact the residential real estate market, which in turn could materially and adversely affect our business, financial condition and results of operations. Due to the cyclicality of the real estate market, we cannot predict whether the prior several year period of sustained growth will continue, whether mortgage rates which have climbed over 2022 will remain at relatively higher levels than in years past and whether home prices will stabilize. The U.S. has experienced housing “bubbles” in the past which have burst, resulting in significant price declines, mortgage defaults and home foreclosures by lenders, the last one occurring in the early 2000’s.
Any of the following could be associated with cyclicality in the housing market by halting or limiting the current growth in the housing market, and have a material adverse effect on our business by causing periods of lower growth or a decline in the number of home sales and/or home prices which, in turn, could adversely affect our revenue and profitability:
| ● | a continued rise in inflation; |
| ● | a period of slow economic growth or recessionary conditions; |
| ● | a continued increase in mortgage interest rates; |
| ● | a tightening of credit standards by financial institutions; |
| ● | legislative, tax or regulatory changes that would adversely impact the residential real estate market, including but not limited to those relating to mortgage financing, restrictions imposed on mortgage originators as well as retention levels required to be maintained by sponsors to securitize certain mortgages, the elimination of the deductibility of certain mortgage interest expense, the application of the alternative minimum tax, and real property taxes and employee relocation expense; |
| ● | insufficient home inventory levels in our markets; |
| ● | a continued increase in the acquisition of single-family homes by corporate buyers for rental purposes; |
| ● | a decrease in the affordability of homes; |
| ● | a decrease in consumer confidence; |
| ● | increase in the cost of premiums for home insurance due to recent hurricanes; and |
| ● | natural disasters, such as hurricanes, earthquakes and other disasters that disrupt local or regional real estate markets. |
The lack of financing for homebuyers in the U.S. residential real estate market at favorable rates and on favorable terms has had a material adverse effect on our financial performance and results of operations.
Our business is significantly impacted by the availability of financing at favorable rates or on favorable terms for homebuyers, which may be affected by government regulations and policies. Certain on-going governmental actions or inactions, such as the U.S. federal government’s conservatorship of Fannie Mae and Freddie Mac, capital standards imposed on banks by the Office of the Comptroller of the Currency, the monetary policy of the U.S. government, and any rising interest rate environment may adversely impact the housing industry, including homebuyers’ ability to finance and purchase homes.
The monetary policy of the U.S. government, and particularly the Federal Reserve Board, which regulates the supply of money and credit in the U.S., significantly affects the availability of financing at favorable rates and on favorable terms, which in turn affects the domestic real estate market. Policies of the Federal Reserve Board can affect interest rates available to potential homebuyers. Further, we will be adversely affected by any rising interest rate environment. Changes in the Federal Reserve Board’s policies, the interest rate environment and mortgage market are beyond our control, are difficult to predict and could restrict the availability of financing on reasonable terms for homebuyers, which could have a material adverse effect on our business, results of operations and financial condition. We review all aspects of the current state of legislation, regulations and policies affecting the domestic real estate market and cannot predict whether or not such legislation, regulation and policies may result in increased down payment requirements, increased mortgage costs, and result in increased costs and potential litigation for housing market participants, any of which could have a material adverse effect on our financial condition and results of operations.
The U.S. Bureau of Labor Statistics (“BLS”) reported that the Consumer Price Index for All Urban Consumers (CPI-U), a broad-based measure of goods and services costs, rose 0.4 percent in February 2024 seasonally adjusted, and rose 3.2 percent over the last 12 months, not seasonally adjusted. This increase was well above the Federal Reserve System’s (the “Fed”) targeted inflation rate of 2.0%, resulting in the Fed’s continuation of its course of raising the short-term federal funds interest rate to a target range of 5.25-5.50%, the highest level since September 2007 at the July 2023 meeting of its Open Market Committee. Fed funds rates impact interest rates on government bonds that have a correlated effect on mortgage interest rates, which, as of March 21, 2024, the average rate for a 30-year fixed rate mortgage was 6.87 according to Freddie Mac, the federally chartered home mortgage loan securitizer. Peak mortgage interest rates have continued to have a depressing effect on the sale of existing homes, that include single-family homes, townhomes, condominiums and co-ops, with a year over year decrease of 3.3% in February 2024 to a seasonally adjusted annual rate of 4.38 million. The slowdown of home sales transactions resulted from many would-be buyers being priced out of homeownership while many homeowners with mortgage rates below 4.0% feeling stuck in place, since selling would mean taking on a mortgage with a significantly higher interest rate. This has had an adverse effect on our agents’ ability to close sales and thus on our results of operations in the year ended December 31, 2023. Thus, we expect these trends to continue to adversely affect our revenues in 2024. Any further increase in the Fed funds rate could push the U.S. economy into a recession which is likely to have a further negative effect on our operations, income and financial condition.
The housing market is currently in flux with higher mortgage interest rates and generally increasing home prices which makes it difficult to predict future market trends. Any decrease in home sales in the future will have an adverse effect on our financial performance and results of operations.
The combination of high mortgage rates, continuing high home prices and limited inventory slowed the housing market substantially in 2023. Tight inventory was reflected by the rise in the national median existing home sale price in February 2024 of 5.7% to $384,500 from a year earlier ($363,600). Homes usually go under contract a month or two before they close, so the February data is based on purchase decisions made in December 2023 and January 2024. The average rate for a 30-year fixed mortgage was 6.87% as of March 21, 2024, down from 7.79% during the most recent 52 week period, according to Freddie Mac. This combination of higher mortgage rates and higher sales prices has kept many sellers, who would have to relinquish a mortgage at 4.0% or less, from selling, and has pushed many prospective buyers, especially first-time home buyers, out of the market. Total housing inventory at the end of February 2024 was 1.07 million units, up 5.9% from January and up 10.3% from one year ago (970,000). There was an unsold inventory supply of 2.9-months at the current sales pace, down from 3.0 months in January 2024 but up from 2.6 months in February 2023. Management expects the housing-market slowdown to persist throughout 2024 because home-buying affordability is near its lowest level in decades. Any decline in home sales directly affects the productivity and income of our agents who are paid only upon the closing of their clients’ home purchase or sale. A prolonged depression in home sales will force the least successful agents out of the industry and a decrease in the number of earning agents will have a negative impact on our financial performance and results of operations.
We may fail to successfully execute our strategies to grow our business, including increasing our agent count, expanding the number of our franchisees and agents, or we may fail to manage our growth effectively, which could have a material adverse effect on our brand, our financial performance and results of operations.
We intend to pursue a number of different strategies to grow our revenue and earnings. However, we may not be able to successfully execute these strategies. We intend to pursue a strategy of increasing our agent count by increasing our recruiting efforts. Recent history has shown that a strong real estate market brings in more realtors, some of whom have worked in the industry on a part-time basis. As the market continues to grow, we believe that will enable us to sell more franchises and recruit and retain higher numbers of agents, increasing our revenue and profitability. However, competition for qualified and effective agents is intense, and we may be unable to recruit and retain enough qualified and effective agents to satisfy our growth strategies. This competition creates challenges that include:
| ● | our ability to discover and recruit independent brokerage firms in new markets and being able to acquire them; |
| ● | our ability to increase our brand awareness in new markets in order to penetrate them with our brokerages; |
| ● | our ability to effectively train and mentor a larger number of new agents and franchisees; |
| ● | our ability to continually improve the performance, features and reliability of our technological developments in response to both evolving demands of the marketplace and competitive product offerings; |
| ● | our ability to scale our business services and support quickly enough to meet the growing needs of our real estate agents by improving our internal systems, integrating with third-party systems, and maintaining infrastructure performance; |
| ● | our ability to attract and retain senior management to operate and control the expansion of our business, organically and potentially, through acquisitions; and |
| ● | our ability to enhance our financial reporting, internal control, human resources, legal and other administrative areas to effectively manage the growth of our Company. |
If we do not effectively manage our growth, our brand could suffer. In order to successfully expand our business, we must effectively recruit, develop and motivate new franchisees and new agents and employees, and we must maintain the beneficial aspects of our “three pillars” philosophy. We may not be able to hire new agents or employees and our franchisees may not be able to recruit new agents necessary to manage our growth quickly enough to meet our needs. If we fail to effectively manage our hiring needs and successfully develop our franchisees, our franchisee, agent and employee morale, productivity and retention could suffer, and our brand and results of operations could be harmed. These improvements could require significant capital expenditures and place increasing demands on our management. We may not be successful in managing or expanding our operations or in maintaining adequate financial and operating systems and controls. If we do not successfully manage these processes, our results of operations, financial condition and prospects could be adversely affected.
The failure to attract and retain highly qualified franchisees and to acquire and open new corporate offices could compromise our ability to pursue our growth strategy.
The success of our franchisees depends largely on the efforts and abilities of franchisees and their agents, which are subject to numerous factors, including the fees or sales commissions they receive, and our ability to train and oversee their operations to ensure that they provide the quality service promoted by our brands. If our franchisees do not continue to believe in the value proposition we offer with our brand, believe that we are overcharging them for the services we provide, or, for other reasons decide not to renew their franchise agreements with us, our business may be materially adversely affected. Additionally, if our franchisees are not successful, they will fail to attract and retain productive agents and will fail to generate the revenue necessary to pay the contractual fees and dues owed to us.
In addition, if we are unable to organically increase the number of, and acquire new, corporate realty offices in the future, our growth will stagnate and we could lose high producing agents to other competing brokerages, all of which would have a material adverse effect on our results of operations, financial condition and prospects.
We might not be able to attract and retain additional qualified agents and other personnel.
In order to grow our business, we must attract and retain highly qualified agents and other personnel. In particular, we compete with both national and local real estate brokerages for qualified agents who manage our operations in each state and who are our on-the-ground representatives. With the evolving real estate brokerage market, we must find ways to attract and retain these people. And with the change in the way people work that has been accelerated by the COVID-19 pandemic, finding qualified agents and employees has become more difficult. We might have difficulty in finding, hiring and retaining highly skilled personnel with appropriate qualifications. Many of the companies with whom we compete for experienced personnel have greater resources than we do. In addition, in making decisions about where to work, in addition to cash compensation, people often consider the value of the stock options or other equity incentives they receive. We currently have an equity incentive plan to offer stock incentives to our employees and our agents that we believe is competitive with plans offered by other publicly traded real estate brokerage companies. However, if those plans fail to encourage new hires or to motivate our existing staff, we may fail to attract new personnel or fail to retain our current personnel which would severely harm our growth prospects. Moreover, the forthcoming changes in the way real estate brokers will be compensated brought about by the recent antitrust litigation settlements will likely diminish the revenues earned by lesser producing agents and agents that represent home buyers. This decrease in earnings is likely to result in many agents leaving the industry, increasing competition for high performing agents.
Competition in the residential real estate franchising business is intense and may adversely affect our financial performance.
We compete against national and international real estate brokerage franchisors as well as smaller franchisors. Our products are the brands we sell and their reputation in the marketplace. Potential franchisees, when shopping for a brand, look to see the level of support that they can receive compared to the fees and dues that they will have to pay. This is our value proposition. While the national and international brands far exceed us in financial resources, geographic coverage, marketing ability and infrastructure, we believe that our “family-oriented” style of business, based on our “three pillars” philosophy, is a strong selling point. So, while competing franchisors may offer franchisees monthly ongoing fees that are lower than those we charge, or that are more attractive in particular market environments, we believe that our “high touch” approach is able to overcome many of the factors that competitors sell. Corporate-owned competitors compete primarily on the basis of commission payments to their agents. While we believe that we are competitive in that market, our brand is not as strong as competitors who have been in the market longer and have the financial wherewithal to promote themselves in the media. Our largest competitors in this industry in the U.S. include RE/MAX Holdings, Inc., Realogy Holdings, Corp. (which operates several brands including the Coldwell Banker and Century 21 brands), Fathom Holdings Inc., eXp World Holdings Inc., Real Brokerage Inc., among others.
Our Company owned brokerage business is subject to competitive pressures.
Our Company owned brokerage business, like that of our franchisees, is generally subject to intense competition. We compete with other national and independent real estate organizations including our franchisees and those of other national real estate franchisors, franchisees of local and regional real estate franchisors, regional independent real estate organizations, discount brokerages, internet-based brokerages and smaller niche companies competing in local areas. Competition is particularly intense in the densely populated metropolitan areas in which we operate. In addition, in the real estate brokerage industry, new participants face minimal barriers to entry into the market. We also compete for the services of qualified licensed agents as well as franchisees. The ability of our Company owned brokerage offices to retain agents is generally subject to numerous factors, including the sales commissions, the training and coaching and technological support that they receive and their perception of our brand value. Our largest competitors in the corporate-owned space include Compass Holdings, Inc. and Fathom Holdings, Inc.
Our financial results are affected directly by the operating results of franchisees and agents, over whom we do not have direct control.
Our real estate franchises generate revenue in the form of monthly ongoing royalties and fees, including monthly broker fees tied to gross commissions, training and technology fees charged to our franchisees. Our agents pay us dues out of their income from real estate transactions and new agents split their transaction-based commissions with us. Accordingly, our financial results depend upon the operational and financial success of our franchisees and their agents and our corporate agents, all of whom are independent contractors that we do not control. If industry trends or economic conditions are not sustained or do not continue to improve, our franchisees’ and our agents’ financial results could worsen, and our revenue may decline. We may also have to terminate franchisees more frequently in the future due to non-reporting and non-payment. Further, if franchisees fail to renew their franchise agreements our revenue from ongoing monthly fees may decrease, and profitability may be lower than in the past due to reduced ongoing monthly fees.
We are dependent upon the truthfulness of our franchisees to provide accurate reports and accounting to us.
While we have significant insight into the business activity of our domestic and international regional franchisees and are able to observe their books and records in real time, the franchisees self-report their agent counts, agent commissions and fees due to us. Our tools to validate or verify these reports are not equipped to ferret out under or erroneous reporting, even if unintentional or intentional fraud. If any of those circumstances occur, we may not receive all of the annual agent dues or monthly ongoing fees due to us. In addition, to the extent that we are underpaid, we may not have a definitive method for determining such underpayment. If a material number of our franchisees were to under report or erroneously report their agent counts, agent commissions or fees due to us, it could have a material adverse effect on our financial performance and results of operations.
Our franchise operations are subject to additional business risks.
Our franchise business is exposed to other business risks which may impact our ability to collect recurring, contractual fees and dues from our franchisees, may harm the goodwill associated with our brand, and/or may materially and adversely impact our business, results of operations, financial condition and prospects. One such risk is that one of our franchisees could declare bankruptcy which could have a substantial negative impact on our ability to collect fees and dues owed under such franchisee’s franchise arrangements. In a franchisee bankruptcy, the bankruptcy trustee may reject its franchise contract pursuant to Section 365 under the U.S. Bankruptcy Code, in which case there would be no further payments for fees and dues from such franchisee. Other risks include the risk that our franchisees may be uninsured or underinsured against certain business hazards or that insurance may be unavailable, as was hurricane insurance in Florida for a number of years. Any casualty loss happening to our franchisees could put their entire business at risk and potentially result in its failure and the termination of our franchise agreement. Any such loss or delay in an insurance payment could have a material and adverse effect on a franchisee’s ability to satisfy its obligations under its franchise agreement with us, including its ability to make payments for contractual fees and dues or to indemnify us. Each franchise agreement is subject to termination by us in the event that the franchisee breaches its contract, generally after expiration of applicable cure periods, although under certain circumstances a franchise agreement may be terminated by us upon notice without an opportunity to cure. The default provisions under the franchise arrangements are drafted broadly and include, among other things, any failure to meet operating standards and actions that may threaten our brands. In addition, each franchise agreement eventually expires and upon expiration, we or the franchisee may or may not elect to renew the franchise arrangement. If our agreement is renewed, such renewal is generally contingent on the franchisee’s execution of the then-current form of franchise contract (which may include terms the franchisee deems to be more onerous than the prior franchise agreement), the satisfaction of certain conditions and the payment of a renewal fee. If a franchisee is unable or unwilling to satisfy any of the foregoing conditions, the expiring franchise agreement will terminate upon expiration of the term of the franchise arrangement.
Our operating results are subject to seasonality and vary significantly among quarters during each calendar year, making meaningful comparisons of successive quarters difficult.
The residential real estate industry is subject to seasonality. Sales activity is typically stronger in the spring and summer months when school is not in session compared to the fall and winter seasons. This is true even in the Southeastern U.S. where weather patterns do not change significantly with the seasons. However, extreme weather does affect our business by keeping people focused on matters other than home buying. We have historically experienced lower revenues during the fall and winter seasons, as well as during periods of unseasonable weather, which reduces our operating income, net income, operating margins and cash flow. Real estate listings precede sales, and a period of poor listings activity will negatively impact revenue. Our revenue and operating margins each quarter will remain subject to seasonal fluctuations, which may make it difficult to compare or analyze our financial performance effectively across successive quarters.
A significant increase in private sales of residential property, including through the internet, could have a material adverse effect on our business, prospects and results of operations.
Although, as of 2023, NAR estimated that almost nine in ten home sellers worked with a real estate agent to sell their home, a significant increase in the volume of private sales due to, for example, increased access to the internet and the proliferation of websites that facilitate such sales, and a corresponding decrease in the volume of sales through real estate agents could have a material adverse effect on our business, prospects and results of operations.
The real estate brokerage business is highly regulated and any failure to comply with such regulations or any changes in such regulations could adversely affect our business.
Our Company owned real estate brokerage business and our franchising business are highly regulated and must comply with Federal and state requirements governing the licensing and conduct of real estate brokerage and brokerage-related businesses and franchising in the jurisdictions in which we and they do business. These laws and regulations contain general standards for and prohibitions on the conduct of real estate brokers and agents, including those relating to licensing of brokers and agents, fiduciary and agency duties, administration of trust funds, collection of commissions, advertising and consumer and franchising disclosures. Under state law, the franchisees and our real estate brokers have certain duties to supervise and are responsible for the conduct of their brokerage business.
Our Company owned real estate brokerage business and our franchisees (excluding commercial brokerage transactions) must comply with the Real Estate Settlement Procedures Act (“RESPA”). RESPA and comparable state statutes, among other things, restrict payments which real estate brokers, agents and other settlement service providers may receive for the referral of business to other settlement service providers in connection with the closing of real estate transactions. Such laws may to some extent restrict preferred vendor arrangements involving our franchisees and our Company owned brokerage business. RESPA and similar state laws also require timely disclosure of certain relationships or financial interests that a broker has with providers of real estate settlement services. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd Frank Act”) contains the Mortgage Reform and Anti-Predatory Lending Act (the “Mortgage Act”), which imposes a number of additional requirements on lenders and servicers of residential mortgage loans, by amending certain existing provisions and adding new sections to RESPA and other federal laws.
We are also subject to various other rules and regulations such as:
| ● | the Gramm-Leach-Bliley Act which governs the disclosure and safeguarding of consumer financial information; | |
| ● | the Sherman Antitrust Act which governs anti-competitive practices in the marketplace; |
| ● | various state and federal privacy laws protecting consumer data; |
| ● | the USA PATRIOT Act; |
| ● | the sale of franchises is regulated by various state laws as well as by the Federal Trade Commission (the “FTC”) that generally require that franchisors make extensive disclosure to prospective franchisees and several states have “franchise relationship laws” or “business opportunity laws” that limit the ability of franchisors to terminate franchise agreements or to withhold consent to the renewal or transfer of these agreement; |
| ● | restrictions on transactions with persons on the Specially Designated Nationals and Blocked Persons list promulgated by the Office of Foreign Assets Control of the Department of the Treasury; |
| ● | the Fair Housing Act; |
| ● | state and federal employment laws and regulations, including any changes that would require classification of independent contractors to employee status, and wage and hour regulations; |
| ● | federal and state, “Do Not Call,” “Do Not Fax,” and “Do Not E-Mail” laws; |
| ● | laws and regulations in jurisdictions outside the U.S. in which we do business; and |
| ● | consumer fraud statutes that are broadly written. |
Federal, state and local regulatory authorities also have relatively broad discretion to grant, renew and revoke licenses and approvals and to implement regulations. Accordingly, such regulatory authorities could prevent or temporarily suspend our Company owned brokerages or our franchisees from carrying on some or all of our activities or otherwise penalize them if their financial condition or our practices were found not to comply with the then current regulatory or licensing requirements or any interpretation of such requirements by the regulatory authority. Our failure to comply with any of these requirements or interpretations could limit our ability to renew current franchisees or sign new franchisees or otherwise have a material adverse effect on our operations.
We might not be aware of all the laws, rules and regulations that govern our business, or be able to comply with all of them, given the rate of regulatory changes, ambiguities in regulations, contradictions in laws and regulations between jurisdictions, and the difficulties in achieving both Company-wide and region-specific knowledge and compliance. If we fail, or we have been alleged to have failed, to comply with any existing or future applicable laws, rules and regulations, we could be subject to lawsuits and administrative complaints and proceedings, as well as criminal proceedings. Our noncompliance could result in significant defense costs, settlement costs, damages and penalties.
Climate change and environmental risks could increase our costs and subject us to liability.
Our operations are affected by Federal, state and/or local environmental laws in the countries in which we operate, and we may face liability with respect to environmental issues occurring at properties we manage or occupy. We may face costs or liabilities under these laws as a brokerage company if our agents violate applicable disclosure laws and regulations or as a result of our agents’ role as a property manager. The impact of climate change presents a significant risk. Damage to assets caused by extreme weather events linked to climate change is becoming more evident, highlighting the fragility of global infrastructure. We believe that the effects of climate change will increasingly impact our own operations and those of properties we manage, especially when they are in coastal cities. The impact includes the relative desirability of locations and the cost of operating and insuring acquired properties. Due to residential property damages resulting from hurricanes in the past several years, many insurers have either raised premiums above the national average or ceased doing business in Florida, our main market area. We also may face several layers of national and regional regulations. The risks may not be limited to fines and the costs of remediation. We continue to monitor the effects of climate change and the changes in law, regulation and policies of other companies, especially insurance companies and intend to adjust our business accordingly in the future.
If we re-commence activities abroad, we will be subject to risks of operating in foreign countries.
We had a franchisee located in Peru that closed in 2022 but we may franchise other international locations in the future. For the year ended December 31, 2022, revenue from these operations represented less than one percent (1.0%) of our total revenue. If we re-commence activities abroad, our international operations will be subject to risks that are different from those of our U.S. operations that could result in losses against which we are not insured and therefore negatively affect our profitability. Those international risks include:
| ● | fluctuations in foreign currency exchange rates and foreign exchange restrictions; |
| ● | exposure to local economic conditions and local laws and regulations, including those relating to the agents of our franchisees; |
| ● | foreign economic and credit markets; |
| ● | potential adverse changes in the political stability of foreign countries or in their diplomatic relations with the U.S.; |
| ● | restrictions on the withdrawal of foreign investment and earnings; |
| ● | government policies against businesses owned by foreigners; |
| ● | investment restrictions or requirements; |
| ● | diminished ability to legally enforce our contractual rights in foreign countries; |
| ● | difficulties in registering, protecting or preserving trade names and trademarks in foreign countries; |
| ● | potential governmental and industry corruption; |
| ● | restrictions on the ability to obtain or retain licenses required for operation; and |
| ● | changes in foreign tax laws. |
We depend substantially on our Founder, Joseph La Rosa, and the loss of any our senior management or other key employees or the inability to hire additional qualified personnel could adversely affect our operations, our brand and our financial performance.
Our future success is largely dependent on the efforts and abilities of our Founder, Chief Executive Officer, President and Chairman, Joseph La Rosa, our senior management and other key employees. The loss of the services of Mr. La Rosa and other senior management would have a significant detrimental effect on the Company as its brand is tied to his name, image and personality. We do not maintain key employee life insurance policies on Mr. La Rosa or our other senior management and therefore their loss could make it more difficult to successfully operate our business and achieve our business goals. As a result, we may not be able to cover the financial loss we may incur in losing the services of any of these individuals.
Our ability to retain our employees is generally subject to numerous factors, including the compensation and benefits we pay, the mix between the fixed and variable compensation we pay our employees and prevailing compensation rates. As such, we could suffer significant attrition among our current key employees. Competition for qualified employees in the real estate brokerage and franchising industry is intense. We may be unable to retain existing employees that are important to our business or hire additional qualified employees. The process of locating employees with the combination of skills and attributes required to carry out our goals is often lengthy. We cannot assure you that we will be successful in attracting and retaining qualified employees.
Concentration of ownership of our voting stock by Mr. La Rosa will prevent new investors from influencing significant corporate decisions.
Based on our Common Stock outstanding as of December 31, 2023, Mr. La Rosa beneficially owned approximately 44% of our outstanding Common Stock and all 2,000 shares of our Series X Preferred Stock that provides for 10,000 votes per share when voting with the Common Stock, representing 77% of the total voting power of our capital stock. Thus, Mr. La Rosa, our President and Chief Executive Officer, Chairman of the Board of Directors, and majority stockholder, controls all matters requiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions. The interests of Mr. La Rosa may not coincide with the interests of other stockholders.
Mr. La Rosa may have interests different than yours and may vote in a way with which you disagree and that may be adverse to your interests. In addition, Mr. La Rosa’s concentration of ownership could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our Common Stock to decline or prevent our stockholders from realizing a premium over the market price for their Common Stock. In addition, he may want the Company to pursue strategies that deviate from the interests of other stockholders. Investors should consider that the interests of the Mr. La Rosa may differ from their interests in material respects.
Mr. La Rosa will control all matters that come before the stockholders for a vote and thus we are a “controlled company” within the meaning of the Nasdaq listing requirements and, as a result, the Company will qualify for exemptions from certain corporate governance requirements. If we take advantage of such exemptions, you will not have the same protections afforded to stockholders of companies that are subject to such corporate governance requirements.
Mr. Joseph La Rosa has voting control with respect to director elections and all other matters. Subject to any fiduciary duties owed to other stockholders under Nevada law, Mr. La Rosa controls all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, acquisition, consolidation or sale of all or substantially all of our assets. In addition, due to his significant ownership stake and his service as our Chairman of the Board of Directors and Chief Executive Officer, Mr. La Rosa controls the management of our business and affairs. Mr. La Rosa may have interests that are different than yours and may support proposals and actions with which you may disagree. This concentration of ownership could have the effect of delaying, deferring or preventing a change in control, or impeding a merger or consolidation, takeover or other business combination that could be favorable to our other stockholders and adversely affecting the market price of our Common Stock.
Because Mr. La Rosa controls, as of April 16, 2024, 75% of the total voting power of our capital stock, we are considered a “controlled company” for the purposes of the listing requirements of the Nasdaq Capital Market. A controlled company is not required to have a majority of independent directors or form an independent compensation or nominating and corporate governance committee. Nevertheless, we have a majority of independent directors who will serve on our Audit, Compensation and Nominating and Corporate Governance Committees. However, although we have no current plans to do so, for as long as we remain a controlled company, we could take advantage of such exemptions in the future.
Infringement, misappropriation, or dilution of our intellectual property could harm our business.
We regard our “LR La Rosa Realty” service mark and the “LR” logo that we own, as well as the Better Homes trademark and logo that we license, as having significant value and as being important factors in the marketing of our brands. We believe that this and other intellectual property are valuable assets that are critical to our success. We rely on a combination of protections provided by contracts, as well as copyright, trademark, trade secret and other laws, to protect our intellectual property from infringement, misappropriation, or dilution. We have registered certain trademarks and service marks and have other trademark and service mark registration applications pending in the U.S. and foreign jurisdictions. However, not all trademarks or service marks that we currently use have been registered in all of the countries in which we may do business in the future, and they may never be registered in all of those countries. Although we monitor trademark portfolios internally and impose an obligation on franchisees to notify us upon learning of potential infringement, there can be no assurance that we will be able to adequately maintain, enforce and protect our trademarks or other intellectual property rights.
We are not aware of any challenges to our right to use any of our brand names or trademarks. We are vigilant in enforcing our intellectual property and protecting our brands. Unauthorized uses or other infringement of our trademarks or service marks, including ones that are currently unknown to us, could diminish the value of our brands and may adversely affect our business. Effective intellectual property protection may not be available in every market in which we have franchised or intend to franchise. Failure to adequately protect our intellectual property rights could damage our brands and impair our ability to compete effectively. Even where we have effectively secured statutory protection for our trademarks and other intellectual property, our competitors may misappropriate our intellectual property. Defending or enforcing our trademark rights, branding practices and other intellectual property, and seeking an injunction and/or compensation for misappropriation of confidential information, could result in the expenditure of significant resources and divert the attention of management, which in turn may materially and adversely affect our business and operating results.
Although we monitor and restrict our franchisees’ activities through our franchise agreements, franchisees may refer to our brands improperly in writings or conversations, resulting in the dilution of our intellectual property. Franchisee noncompliance with the terms and conditions of our franchise agreements and our brand standards may reduce the overall goodwill of our brands, whether through the failure to meet the FTC guidelines or applicable state laws, or through the participation in improper or objectionable business practices. Moreover, unauthorized third parties may use our intellectual property to trade on the goodwill of our brand, resulting in consumer confusion or dilution. Any reduction of our brand’s goodwill, consumer confusion, or dilution is likely to impact sales, and could materially and adversely impact our business and operating results.
We are subject to certain risks related to litigation filed by or against us, and adverse results may harm our business and financial condition.
The real estate industry often involves litigation, ranging from individual lawsuits by brokerage clients, sales associates, employees and franchisees to large class actions and government investigations. We often are involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Such litigation and other proceedings have included, and may in the future include, but are not limited to, actions relating to breach of contract, employment matters, sales agent commissions, intellectual property, commercial arrangements, negligence and fiduciary duty claims arising from our brokerage operations, fraud or failure to disclose matters in our franchise documents or agreements, standard brokerage disputes like the failure to disclose hidden defects in a property such as mold, vicarious liability based upon the conduct of individuals or entities outside of our control, including our agents, third-party service or product providers, antitrust claims, general fraud claims, employment law claims, including claims challenging the classification of our agents as independent contractors and compliance with wage and hour regulations, and claims alleging violations of the Real Estate Settlement Procedures Act or state consumer fraud statutes.
Each lawsuit filed against or by us has factors that are unpredictable, including but not limited to, legal fees, insurance coverage, or the ultimate outcome of litigation and remedies or damage awards. Adverse results in such litigation and other proceedings may harm our business, our brands and our financial condition.
We have general liability and an errors and omissions insurance policy to help protect us against claims of inadequate work or negligent action. This insurance might not continue to be available to us on commercially reasonable terms or at all, or a claim otherwise covered by our insurance may exceed our coverage limits, or a claim might not be covered at all. We may be subject to errors or omissions claims that could have an adverse effect on us. Moreover, defending a suit, regardless of its merits, could entail substantial expense and require the time and attention of our senior management. Substantial financial judgments against us would have a material adverse effect on our business, brands, results of operations, financial condition and prospects.
Adverse outcomes in litigation and regulatory actions against the NAR, other real estate brokerage companies and agents in our industry could adversely impact our financial results.
Adverse outcomes in legal and regulatory actions against the NAR, other companies, brokers, and agents in the residential and commercial real estate industry may adversely impact our financial condition and our real estate brokers and agents when those matters relate to business practices shared by the Company, our real estate brokers and agents, or our industry at large. Such matters may include, without limitation, antitrust and anticompetition, RESPA, Telephone Consumer Protection Act of 1991 and state consumer protection law, and worker classification claims. Additionally, if plaintiffs or regulatory bodies are successful in such actions, this may increase the likelihood that similar claims are made against the Company and/or our real estate brokers and agents which claims could result in significant liability and be adverse to our financial results if we or our brokers and agents are unable to distinguish or defend our business practices.
As an example, in the matter of Burnett v. National Association of Realtors (U.S. District Court for the Western District of Missouri), a federal jury found that the NAR and certain other remaining brokerage defendants liable for $1.8 billion in damages on claims that these companies conspired to artificially inflate brokerage commissions, which is in violation of federal antitrust law (the “Burnett Ruling”). The verdict was appealed on October 31, 2023. Additionally, certain other brokerage defendants settled with the plaintiffs, including both monetary and non-monetary settlement terms. That same day, the NAR, EXP World Holdings, Inc., Compass, Inc., Redfin Corporation, Weichert Realtors, United Real Estate, Howard Hann Real Estate Services, and Douglas Elliman, Inc. were named as defendants in Gibson v. National Association of Realtors (U.S. District Court for the Western District of Missouri), alleging a similar fact pattern and antitrust violations. On or about March 15, 2024, NAR agreed to settle the Burnett Ruling, along with a sister litigation, by agreeing to pay $418 million over approximately four years, and changing certain of its rules surrounding agent commissions (the “Burnett Settlement”). The Burnett Settlement is subject to court approval. More recently, on March 22, 2024, real estate brokerage company Compass Inc. announced that it will pay $57.5 million as part of a proposed settlement to resolve lawsuits over real estate commissions and agreed to change its business practices to ensure clients can more easily understand how brokers and agents are compensated for their services.
While the Company was not named as a defendant in any of these actions, it is possible that it could be a litigant at some point in the future. These settlements can result in changes in the way real estate brokers are compensated for their services. Most notably, home sellers will no longer be required to pay buyer agent commissions which will result in lower buyer agent compensation. We cannot predict the full breadth of the outcome of these lawsuits but believe that they will result in a significant adverse effect on our financial condition and results of operations for the foreseeable future.
Security breaches, interruptions, delays and failures in our systems and operations could materially harm our business.
The performance and reliability of our systems and operations and third-party applications are critical to our reputation and ability to attract franchisees and agents to join us. Our systems and operations, as well as the third-party applications that we license are vulnerable to security breaches, interruption or malfunction due to certain events beyond our control, including natural disasters, such as earthquakes, fire and flood, power loss, telecommunication failures, break-ins, sabotage, computer viruses, intentional acts of vandalism and similar events. In addition, we rely on third-party vendors to provide the website platforms and additional systems and related support. If we cannot continue to retain these services on acceptable terms, our access to these systems and services could be interrupted. Any security breach, interruption, delay or failure in our systems and operations could substantially harm our franchisees and agents by interfering with their daily business routines, reducing their transaction volume, impairing the quality of the services we provide, increasing our costs, prompting litigation and other claims, and damaging our reputation, any of which could substantially harm our results of operations, financial condition and prospects.
If we attempt to, or acquire other complementary businesses, we will face certain risks inherent with such activities.
We may seek to acquire, and acquire, certain complementary businesses, including one or more of our affiliates. Any future growth through acquisitions will depend in part on the availability of suitable acquisition targets at favorable prices and with advantageous terms and conditions, which may not be available to us. In addition, we may take on debt to finance these acquisitions which will create new financial risks, or use our Common Stock as currency, which could dilute our then current stockholders. Acquisitions subject us to several significant risks, any of which may prevent us from realizing the anticipated benefits or synergies of the acquisition. The integration of companies is a complex and time-consuming process that could significantly disrupt our businesses and the business of the acquired company, including the diversion of management attention, failure to identify certain liabilities and issues during the due diligence process, the inability to retain personnel and clients of the acquired business and litigation. Any negative outcomes from acquisitions or attempted acquisitions could result in a material adverse effect on our financial condition, results of operations and prospects.
If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”) as a result of our ownership of our subsidiaries, applicable restrictions could make it impractical for us to continue our business as contemplated and could have an adverse effect on our business.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if: (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act and intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business and prospects.
Risks Associated with Our Capital Stock
We may not be able to maintain the listing of our Common Stock on Nasdaq, which could adversely affect our liquidity and the trading volume and market price of our Common Stock and decrease or eliminate your investment.
Our Common Stock is currently listed on the Nasdaq Capital Market on Nasdaq. Nasdaq requires listed issuers to comply with certain standards in order to remain listed on its exchange. If, for any reason, Nasdaq should delist our securities from trading on its exchange and we are unable to obtain listing on another reputable national securities exchange, a reduction in some or all of the following may occur, each of which could materially adversely affect our stockholders.
On November 24, 2023, we received written notification from the staff (the “Staff”) of Nasdaq indicating that, the Company no longer meets Nasdaq Listing Rule 5550(b)(2) (the “Rule”) requiring the Company to maintain a minimum market value of listed securities (“MVLS”) of $35 million. The notice was based on a review of the Company’s MVLS for the past 30 consecutive business days. Nasdaq’s listing rules provide the Company with a compliance period of 180 calendar days, or until May 22, 2024, in which to regain compliance. If at any time during this compliance period the Company’s MVLS closes at $35 million or more for a minimum of ten consecutive business days, Nasdaq will provide written confirmation of compliance and the matter will be closed.
Although Nasdaq has granted us 180 calendar days, or until May 22, 2024, to regain compliance, there can be no assurance that we will regain such compliance and Nasdaq could make a determination to delist our Common Stock.
Any delisting determination by Nasdaq could seriously decrease or eliminate the value of an investment in our Common Stock and other securities linked to our Common Stock. While a listing on an over-the-counter exchange could maintain some degree of a market in our Common Stock, we could face substantial material adverse consequences, including, but not limited to, the following: limited availability for market quotations for our Common Stock; reduced liquidity with respect to and decreased trading prices of our Common Stock; a determination that shares of our Common Stock are “penny stock” under the Securities and Exchange Commission rules, subjecting brokers trading our Common Stock to more stringent rules on disclosure and the class of investors to which the broker may sell the Common Stock; limited news and analyst coverage for our Company, in part due to the “penny stock” rules; decreased ability to issue additional securities or obtain additional financing in the future; and potential breaches under or terminations of our agreements with current or prospective large stockholders, strategic investors and banks. The perception among investors that we are at heightened risk of delisting could also negatively affect the market price of our securities and trading volume of our Common Stock.
The market price for our Common Stock may be particularly volatile given our status as a relatively unknown company with a small and thinly traded public float, and minimal profits, which could lead to wide fluctuations in our share price.
The market for our Common Stock is characterized by significant price volatility when compared to the shares of larger, more established companies that have large public floats, and we expect that our share prices will be more volatile than the shares of such larger, more established companies for the indefinite future, although such fluctuations may not reflect a material change to our financial condition or operations during any such period. Such volatility can be attributable to a number of factors. First, as noted above, our Common Stock will, compared to the shares of such larger, more established companies, likely be sporadically and thinly traded. The price for our Common Stock could, for example, decline precipitously in the event that a large number of our shares are sold on the market without commensurate demand. Secondly, we are a speculative or “risky” investment due to our minimal profits to date. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a larger, more established company that has a large public float. Many of these factors are beyond our control and may decrease the market price of our Common Stock regardless of our operating performance.
In addition to being highly volatile, our Common Stock could be subject to rapid and substantial price volatility in response to a number of factors that are beyond our control, including, but not limited to:
| ● | variations in our revenues and operating expenses; |
| ● | actual or anticipated changes in the estimates of our operating results or changes in stock market analyst recommendations regarding our Common Stock, other comparable companies or our industry generally; |
| ● | market conditions in our industry and the economy as a whole; |
| ● | actual or expected changes in our growth rates or our competitors’ growth rates; |
| ● | developments in the financial markets and worldwide or regional economies; |
| ● | announcements of innovations or new products or services by us or our competitors; |
| ● | announcements by the government relating to regulations that govern our industry; |
| ● | sales of our Common Stock or other securities by us, or in the open market; |
| ● | changes in the market valuations of other comparable companies; and |
| ● | other events or factors, many of which are beyond our control, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the COVID-19 pandemic, and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability. |
There have recently been instances of extreme stock price run-ups followed by rapid price declines and stock price volatility seemingly unrelated to company performance following a number of recent initial public offerings, particularly among companies, like ours, that have had relatively smaller public floats. Such volatility, including any stock run-up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Common Stock.
If, for example, the market for real estate related stocks or the stock market in general experiences loss of investor confidence, the trading price of our Common Stock could decline for reasons unrelated to our business, financial condition or operating results. The trading price of our shares might also decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. Each of these factors, among others, could harm the value of our Common Stock.
Further, in the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, operating results and financial condition.
Future issuances of debt securities, which would rank senior to our Common Stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our Common Stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our Securities.
In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our Common Stock. Moreover, if we issue preferred stock, the holders of such preferred stock could be entitled to preferences over holders of Common Stock in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred stock in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings. Holders of our Securities must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our Securities.
If our securities become subject to the penny stock rules, it would become more difficult to trade our shares.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 per share, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on Nasdaq or another national securities exchange and if the price of our securities is less than $5.00, our securities could be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock, and therefore shareholders may have difficulty selling their Common Stock.
We may have violated Section 13(k) of the Exchange Act (implementing Section 402 of the Sarbanes-Oxley Act of 2002) and may be subject to sanctions as a result.
Section 13(k) of the Exchange Act provides that it is unlawful for a company that has a class of securities registered under Section 12 of the Exchange Act to, directly or indirectly, including through any subsidiary, extend or maintain credit in the form of a personal loan to or for any of its directors or executive officers. From February 2017 to July 2023, La Rosa Realty, LLC, a subsidiary of the Company, provided interest free, due on demand advances to La Rosa Insurance LLC, a company owned by our Chief Executive Officer, which may have be deemed to be personal loans made by us to Mr. La Rosa that are not permissible under Section 13(k) of the Exchange Act. Issuers that are found to have violated Section 13(k) of the Exchange Act may be subject to civil sanctions, including injunctive remedies and monetary penalties, as well as criminal sanctions. During the fourth quarter of 2023, upon us completing our IPO, the Compensation Committee reviewed the advance and determined that the existing related party receivable would be charged as part of the Company’s chief executive officer’s annual bonus as specified in his employment agreement. No outstanding balance exists as of December 31, 2023. Notwithstanding, the imposition of any of such sanctions on us could have a material adverse effect on our business, financial position, results of operations or cash flows.
We are an “emerging growth company” and a “smaller reporting company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor internal controls attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our shares held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second quarter, in which case we would no longer be an emerging growth company as of the following fiscal year end. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected to avail ourselves of the extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K promulgated by the SEC. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our shares held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our shares held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when we need it.
Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors, and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.
If we continue to fail to maintain an effective system of disclosure controls and fail to maintain an effective system of internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of the applicable listing standards of Nasdaq. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming and costly and place significant strain on our personnel, systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. Based upon evaluation of our Chief Executive Officer and Chief Financial Officer as of December 31, 2023, our disclosure controls and procedures are ineffective, as we are a newly publicly traded company with limited resources in our finance department, and we are in the process of establishing our procedures around our disclosure controls. We are continuing to develop our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the applicable time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting.
In order to improve and maintain the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. In addition, changes in accounting principles or interpretations could also challenge our internal controls and require that we establish new business processes, systems and controls to accommodate such changes. We have limited experience with implementing the systems and controls necessary to operate as a public company, as well as adopting changes in accounting principles or interpretations mandated by the relevant regulatory bodies. Additionally, if these new systems, controls or standards and the associated process changes do not give rise to the benefits that we expect or do not operate as intended, it could adversely affect our financial reporting systems and processes, our ability to produce timely and accurate financial reports, or the effectiveness of internal control over financial reporting. Moreover, our business may be harmed if we experience problems with any new systems and controls that result in delays in their implementation or increased costs to correct any post-implementation issues that may arise.
Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our business or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq.
We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. As a public company, we are required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K. Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until our first annual report filed with the SEC where we are an accelerated filer or a large accelerated filer, which will not occur until at least our second annual report on Form 10-K. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could harm our business, financial condition, and results of operations and could cause a decline in the trading price of our Common Stock.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our Common Stock depends in part on the research and reports that securities or industry analysts publish about us or our business. As of the date of this annual report, no analysts cover our stock. If we do not obtain analyst coverage or if one or more of those analysts downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our Company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.
We do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.
We currently intend to retain any future earnings to support the development of our business and do not anticipate paying cash dividends on our Common Stock in the foreseeable future. Our payment of any future dividends will be at the discretion of our Board of Directors after taking into account various factors, including, but not limited to, our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. In addition, our ability to pay dividends on our Common Stock may be limited by Nevada state law or any financial covenants to which we are bound by our debt obligations. Accordingly, investors must rely on sales of their Common Stock after price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our Common Stock.
General Risks
If we fail to protect the privacy of employees, independent contractors, or consumers or personal information that they share with us, our reputation and business could be significantly harmed.
Consumers, agents, independent contractors, and employees have shared personal information with us during the normal course of our business processing residential real estate transactions. This includes, but is not limited to, social security numbers, annual income amounts and sources, names, addresses, telephone and cell phone numbers, and email addresses.
The application, disclosure and safeguarding of this information is regulated by federal and state privacy laws. To comply with privacy laws, we invested resources and adopted a privacy policy outlining policies and procedures for the use of safeguarding personal information. This policy includes informing consumers, independent contractors and employees that we will not share their personal information with third parties without their consent unless required by law.
Privacy policies and compliance with federal and state privacy laws present risk, and we could incur legal liability for failing to maintain compliance. We might not become aware of all privacy laws, changes to privacy laws, or third-party privacy regulations governing the real estate business or be unable to comply with all of these regulations, given the rate of regulatory changes, ambiguities in regulations, contradictions in regulations between jurisdictions, and the difficulties in achieving both Company-wide and region-specific knowledge and compliance.
Our policy and safeguards could be deemed insufficient if third parties with whom we have shared personal information fail to protect the privacy of that information. Our legal liability could include significant defense costs, settlement costs, damages, and penalties, plus, damage our reputation with consumers, which could significantly damage our ability to attract and maintain customers. Any or all of these consequences would result in meaningful unfavorable impact on our brand, business model, revenue, expenses, income, and margins.
Cybersecurity incidents could disrupt our business operations, result in the loss of critical and confidential information, adversely impact our reputation and harm our business.
Cybersecurity threats and incidents directed at us could range from uncoordinated individual attempts to gain unauthorized access to information technology systems to sophisticated and targeted measures aimed at disrupting our business or gathering personal data of our customers. In the ordinary course of our business, we collect and store sensitive data, including proprietary business information and personal information about our customers. Our business, and particularly our cloud-based platform, is reliant on the uninterrupted functioning of our information technology systems. The secure processing, maintenance, and transmission of information are critical to our operations, especially the processing and closing of real estate transactions. Although we employ measures designed to prevent, detect, address, and mitigate these threats (including access controls, data encryption, vulnerability assessments, and maintenance of backup and protective systems), cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption, or unavailability of critical data and confidential or proprietary information (our own or that of third parties, including potentially sensitive personal information of our customers) and the disruption of business operations. Any such compromises to our security could cause harm to our reputation, which could cause customers to lose trust and confidence in us or could cause agents to stop working for us. In addition, we may incur significant costs for remediation that may include liability for stolen assets or information, repair of system damage, and compensation to customers and business partners. We may also be subject to legal claims, government investigation, and additional state and federal statutory requirements.
The potential consequences of a material cybersecurity incident include regulatory violations of applicable U.S. and international privacy and other laws, reputational damage, loss of market value, litigation with third parties (which could result in our exposure to material civil or criminal liability), diminution in the value of the services we provide to our customers, and increased cybersecurity protection and remediation costs (that may include liability for stolen assets or information), which in turn could have a material adverse effect on our competitiveness and results of operations.
Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful stockholder claims against us and may reduce the amount of money available to us.
As permitted by Section 78.7502 of Chapter 78 of the Nevada Revised Statutes (the “NRS”), our amended and restated articles of incorporation limit the liability of our directors to the fullest extent permitted by law. In addition, as permitted by Section 78.7502 of the NRS, our amended and restated articles of incorporation and amended and restated bylaws provide that we shall indemnify, to the fullest extent authorized by the NRS, any person who is involved in any litigation or other proceeding because such person is or was a director or officer of ours or is or was serving as an officer or director of another entity at our request, against all expense, loss, or liability reasonably incurred or suffered in connection therewith. Our amended and restated articles of incorporation provide that indemnification includes the right to be paid expenses incurred in defending any proceeding in advance of its final disposition; provided, however, that such advance payment will only be made upon delivery to us of an undertaking, by or on behalf of the director or officer, to repay all amounts so advanced if it is ultimately determined that such director or officer is not entitled to indemnification.
Section 78.7502 of the NRS permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative, except an action by or in the right of us, by reason of the fact that the person is or was a director, officer, employee, or agent of ours, or is or was serving at our request as a director, officer, employee, or agent of another company, partnership, joint venture, trust, or other enterprise, against expenses, including attorneys’ fees, judgment, fines, and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit, or proceeding if the person is not liable under Section 78.138 of the NRS, or acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful.
The above limitations on liability and our indemnification obligations limit the personal liability of our directors and officers for monetary damages for breach of their fiduciary duty as directors by shifting the burden of such losses and expenses to us. Certain liabilities or expenses covered by our indemnification obligations may not be covered by our directors’ and officers’ insurance policy or the coverage limitation amounts may be exceeded. As a result, we may need to use a significant amount of our funds to satisfy our indemnification obligations, which could severely harm our business and financial condition and limit the funds available to stockholders who may choose to bring a claim against us.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to provisions of Nevada law, the Company has been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in that Act and is, therefore, unenforceable.
Anti-takeover provisions in our amended and restated articles of incorporation and bylaws, as well as provisions in Nevada law, might discourage, delay or prevent a change of control of our Company or changes in our management and, therefore, depress the trading price of our Securities.
Our amended and restated articles of incorporation, bylaws and Nevada law contain provisions that could have the effect of rendering more difficult or discouraging an acquisition deemed undesirable by our Board of Directors (the “Board”). Our corporate governance documents include provisions:
| ● | providing for a single class of directors where each member of the Board shall serve for a one-year term and may be elected to successive terms; |
| ● | authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our Common Stock; |
| ● | limiting the liability of, and providing indemnification to, our directors, including provisions that require the Company to advance payment for defending pending or threatened claims; |
| ● | limiting the ability of our stockholders to call and bring business before special meetings of stockholders; |
| ● | requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board; |
| ● | controlling the procedures for the conduct and scheduling of the Board and stockholder meetings; and, |
| ● | limiting the determination of the number of directors on our Board and the filling of vacancies or newly created seats on the Board to our Board then in office. |
These provisions, alone or together, could delay hostile takeovers and changes in control or changes in our management.
As a Nevada corporation, we are also subject to provisions of Nevada corporate law, including NRS Section 78.411, et seq., which prohibits a publicly-held Nevada corporation from engaging in a business combination with an interested stockholder, generally a person who together with its affiliates owns, or within the last two years has owned, 10% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.
The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our Common Stock. They could also deter potential acquirers of our Company, thereby reducing the likelihood that our stockholders could receive a premium for their Common Stock in an acquisition.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
The Company acknowledges the increasing importance of cybersecurity in today’s digital and interconnected world. Cybersecurity threats pose significant risks to the integrity of our systems and data, potentially impacting our business operations, financial condition, and reputation.
We routinely assess material cybersecurity risks, including potential unauthorized occurrences on, or conducted through, our information systems that may compromise the confidentiality, integrity or availability of those systems or information maintained in them. We devote appropriate resources and designate members of our management, including our Chief Technology Officer, to manage the risk assessment and mitigation process.
As a smaller reporting company, we currently do not have formalized cybersecurity measures, a dedicated cybersecurity team, or specific protocols in place to manage cybersecurity risks. Our approach to cybersecurity is in the developmental stage, and we have not yet conducted comprehensive risk assessments, established an incident response plan, or engaged with external cybersecurity consultants for assessments or services.
Given our current stage of cybersecurity development, we have not experienced any significant cybersecurity incidents to date. However, we recognize that the absence of a formalized cybersecurity framework may leave us vulnerable to cyberattacks, data breaches, and other cybersecurity incidents. Such events could potentially lead to unauthorized access to, or disclosure of, sensitive information, disrupt our business operations, result in regulatory fines or litigation costs, and negatively impact our reputation among customers and partners.
The Company is in the process of evaluating our cybersecurity needs and developing appropriate measures to enhance our cybersecurity posture. This includes considering the engagement of external cybersecurity experts to advise on best practices, conducting vulnerability assessments, and developing an incident response strategy. Our goal is to establish a cybersecurity framework that is commensurate with our size, complexity, and the nature of our operations, thereby reducing our exposure to cybersecurity risks.
Despite our efforts to improve our cybersecurity measures, there can be no assurance that our initiatives will fully mitigate the risks posed by cyber threats. The landscape of cybersecurity risks is constantly evolving, and the Company will continue to assess and update our cybersecurity measures in response to emerging threats.
For a discussion of potential cybersecurity risks affecting the Company, please refer to Item 1A - Risk Factors.
Item 2. Properties.
We lease our principal executive office, which is located in the La Rosa Building at 1420 Celebration Boulevard, 2nd Floor, Celebration, Florida 34747. There is no written lease agreement, and the rent is determined on a month-to-month basis. Our total office space at the principal executive office is approximately 3,000 square feet consisting of an open agent bullpen and technology and print resource area, private and group offices for staff, storage, a conference room, and several multi-purpose spaces including a media set, Zoom room, and a training / large conference room. During 2023, we began leasing additional office space for our subsidiary, La Rosa Realty, on the first floor of the La Rosa Building totaling 1,900 square feet. There is a written lease agreement with a term ending in June 2025.
Our business does not require significant property space. As a real estate brokerage business, we support our agents primarily via mobile technology and video conferencing. However, we do create a primary location for each of our subsidiaries. We lease our space, as we are flexible on how the space is utilized. Our subsidiaries have space that range from 360 square feet to 3,900 square feet, with relatively short terms, so as to minimize our rental expense given our ability to easily relocate.
We believe our office space is adequate for at least the next 12 months.
Item 3. Legal Proceedings.
From time to time, we are involved in lawsuits, claims, investigations, and proceedings, including pending opposition proceedings involving patents that arise in the ordinary course of business. There are no matters pending that we expect to have a material adverse impact on our business, results of operations, financial condition, or cash flows, except as set forth below.
The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on our results of operations for that period or future periods. Other than as described below, we have not been and we are not presently a party to any material pending or threatened legal proceedings.
On February 13, 2023, Mr. Mark Gracy, who served as our Chief Operating Officer from November 18, 2021 to November 15, 2022, filed a civil lawsuit in the Circuit Court of Osceola County, Florida, seeking a jury trial and claiming that the Company breached his employment agreement by reducing his salary and failing to pay him his full severance payments and is looking for payment of his alleged severance of $249,000.00. On April 11, 2023, the Company filed a motion to dismiss Mr. Gracy’s complaint, which is still pending.
On July 14, 2023, a writ of garnishment was issued naming La Rosa Realty, LLC, a subsidiary of the Company, as a purported garnishee for an alleged, but not actual, employee or contractor, Marc Cameron, in the Seventh Judicial Circuit Court of St. Johns’ County, Florida. On October 31, 2023, the Plaintiff voluntarily dismissed the action.
On September 5, 2023, Mr. Anthony Freites, who was an alleged independent contractor of La Rosa Realty, LLC from January 13, 2013 until June of 2021, filed an amended complaint in the Circuit Court of Osceola County, Florida, seeking a jury trial and claiming that the Company breached his contract and is looking for payment of commissions on alleged closed real estate sales as an independent contractor in the amount unspecified but allegedly including actual damages, compensatory damages, attorney’s fees, costs, and prejudgment interest. On October 12, 2023, the Company filed a motion to dismiss Mr. Freites’ complaint, which is still pending.
On January 3, 2024, Ms. Sarah Palmer filed a putative national class action complaint against La Rosa Realty, LLC in the United States District Court, Middle District of Florida, Orlando Division. Ms. Palmer alleges that she received two (2) brief pre-recorded calls one week apart to her cell phone from La Rosa Realty, LLC presenting her an employment opportunity as a real estate agent. Ms. Palmer seeks an undisclosed amount of monetary damages from La Rosa Realty, LLC for the alleged would-be injurious, isolated and opportunistic employment gestures to her through a purported nationwide class action. Ms. Palmer claims that the defendant violated her privacy, annoyed and harassed her, constituted a nuisance, and occupied her telephone line. On March 12, 2024 La Rosa Realty, LLC filed a motion to dismiss the case with prejudice, which is still pending.
The Company believes that the above claims are without merit, and it will vigorously defend against such claims. Moreover, these claims, in the aggregate, would not have a material adverse effect on the Company’s financial condition, business, or results of operations, should the Company’s defense not be successful in whole or in part. Except as stated herein, there is no other action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers, threatened against or affecting our Company or our officers or directors in their capacities as such.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our Common Stock is currently listed on The Nasdaq Capital Market under the symbol “LRHC.” Trading in our Common Stock has historically lacked consistent volume, and the market price has been volatile.
On April 15, 2024, the closing price for our Common Stock as reported on The Nasdaq Capital Market was $1.47 per share.
Holders of Common Stock
On April 16, 2024, there were 201 holders of record of our Common Stock. We believe that the number of beneficial owners of our common stock is greater than the number of record holders, because a number of shares of our common stock is held through brokerage firms in “street name.”
Dividend Policy
We have never paid any cash dividends on our publicly traded Common Stock. We anticipate that we will retain funds and future earnings to support operations and to finance common stock. We anticipate that we will retain funds and future earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future following this offering. Any future determination to pay dividends will be at the discretion of our Board and will depend on our financial condition, results of operations, capital requirements, and other factors that our Board deems relevant. In addition, the terms of any future debt or credit financings may preclude us from paying dividends.
Unregistered Sales of Equity Securities
On January 10, 2022, the Company issued to CGB-TRUST-1001-01-13-22 and ELG-TRUST-1004-09-01-13 equally as assignees of a consultant, Bonilla Opportunity Fund I Ltd., as compensation for its services and for the purchase price of $120.00, a total of 120,000 shares of Common Stock, with anti-dilution and reverse stock split protection to permit that consultant to maintain its percentage ownership prior to and immediately after the closing of the Company’s initial public offering. On July 28, 2022, the Company and Bonilla Opportunity Fund I Ltd. amended the services agreement pursuant to which the Company issued to each of two assignees of Bonilla Opportunity Fund I Ltd., CGB-TRUST-1001-01-13-22 and ELG-TRUST-1004-09-01-13, equally an additional total of 133,040 shares of Common Stock. Those shares were subsequently determined by the Company to have been issued erroneously and were cancelled. On July 31, 2023, the Company evaluated the agreement and determined that the performance condition was satisfied and issued to CGB-TRUST-1001-01-13-22 and ELG-TRUST-1004-09-01-13 a total of 250,168 shares of Common Stock, which were valued at the expected IPO price of $5 a share. The Company relied upon Section 4(a)(2) of the Securities Act of 1933 that exempts from registration “transactions by an issuer not involving any public offering.” The Company believes that the issuance of the Common Stock did not involve a “public offering” because: (i) the offer was made only to one entity who subsequently divided it up among trusts controlled by the managing partner of Bonilla Opportunity Fund I Ltd. (ii) the issuance was not via a general solicitation; (iii) the managing member of Bonilla Opportunity Fund I Ltd was the local attorney for the Company; (iv) the services performed by Bonilla Opportunity Fund I Ltd. were related to advising the Company in the Company’s initial public offering; (v) the offeree had full access to complete due diligence related to the Company, including, but not limited to, the most recent two years of balance sheets; profit and loss, retained earnings, and similar financial statements; as well as a description of the Company’s business operations and the securities being offered for sale; (vi) the general partner of Bonilla Opportunity Fund I Ltd. is a sophisticated investor; (vii) the Company had a pre-existing business relationship with the general partner of Bonilla Opportunity Fund I Ltd.; (viii) the number of securities issued were nominal compared to the total outstanding shares to be registered; (ix) the securities were requested by Bonilla Opportunity Fund, Ltd. as part of its compensation; (x) the securities were purchased for the account of the trusts to which they were transferred; (xi) the securities were noted as “restricted” securities and were not intended to be resold unless registered or sold pursuant to an exemption from registration. Such shares were subsequently registered pursuant to the registration statement on the Form S-1 (Reg. No. 333-264372) declared effective by the SEC on October 4, 2023.
On February 15, 2022, stock options to purchase 20,000 shares of Common Stock were granted to each independent director of the Board under the Company’s 2022 Equity Incentive Plan and vested in full on March 17, 2023. The grant was exempt from the registration requirement of the Securities Act pursuant to Rule 701 thereunder. Such stock options were subsequently registered pursuant to the registration statement on Form S-8 (Reg. No. 323-275118) filed with the SEC on October 20, 2023.
On February 1, 2023, the Company granted 2,813 restricted stock units to Alex Santos, its Chief Technology Officer, pursuant to the terms of his employment agreement and the Company’s 2022 Equity Incentive Plan. The grant was exempt from the registration requirement of the Securities Act pursuant to Rule 701 thereunder. Such equity award was subsequently registered pursuant to the registration statement on Form S-8 (Reg. No. 323-275118) filed with the SEC on October 20, 2023.
On August 28, 2023, in accordance with the terms of the Senior Secured Promissory Note that was issued to Emmis Capital II, LLC (“Emmis Capital”) and repaid by the Company in 2022, the Company issued 30,000 shares of Common Stock valued at $5 per share to Emmis Capital. Such shares were subsequently registered pursuant to the registration statement on the Form S-1 (Reg. No. 333-264372) declared effective by the SEC on October 4, 2023.
From February 2023 through August 2023, we issued 1,523 shares of our Series A Preferred Stock to 77 accredited sophisticated investors in a private placement pursuant to Regulation D under the Securities Act, which automatically converted into 435,113 shares of our Common Stock upon the closing of the IPO.
From March 2023 through May 2023, we exchanged, in a private placement under Sections 3(a)(9) and 4(a)(2) of the Securities Act, certain promissory notes and convertible promissory notes, including those owed to Joseph La Rosa, our founder and Chief Executive Officer, representing an aggregate amount of principal and accrued interest of $1,923,468 for 1,912 shares of our Series A Preferred Stock at an exchange rate of $1,000.00 per share, which shares of the Series A Preferred Stock automatically converted into 546,278 shares of our Common Stock upon the closing of the IPO.
On March 18, 2016, Celebration Office Condos LLC, a company owned by Mr. La Rosa, loaned funds totaling $556,268 to La Rosa Realty LLC to be used as working capital. That loan was interest free and had no fixed payment terms. On December 31, 2022, Celebration Office Condo LLC forgave the loan for one share of Series A Preferred Stock, which was issued in March 2023. The Series A Preferred Stock automatically converted into 285 shares of our unregistered, restricted Common Stock upon the closing of the IPO.
A total of 600,250 shares of Common Stock issued pursuant to the Series A Preferred Stock automatic conversions were subsequently registered pursuant to the registration statement on the Form S-1 (Reg. No. 333-264372) declared effective by the SEC on October 4, 2023, and remained 381,426 shares of Common Stock remained unregistered.
On October 12, 2023, in connection with the closing of the IPO, the Company issued 60,000 shares of unregistered, restricted Common Stock to the Company’s CEO, Joseph La Rosa, with a value of $5.00 per share, in accordance with the debt agreement the Company executed on December 2, 2022. Such securities were sold without registration under the Securities Act in reliance on the exemption provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering.
On October 12, 2023, upon the repayment of a note payable to one of the Company’s lenders, the Company issued 5,000 shares of unregistered, restricted Common Stock with a value of $5.00 per share in accordance with the debt agreement. Such securities were sold without registration under the Securities Act in reliance on the exemption provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering.
On October 12, 2023, the Company issued 6,566 shares of unregistered, restricted Common Stock pursuant to conversion of outstanding debt in accordance with the debt agreements. Such securities were sold without registration under the Securities Act in reliance on the exemption provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering.
On October 13, 2023, the Company issued 125,000 shares of restricted Common Stock to an investor relations services provider pursuant to the consulting agreement between the Company and such provider. Such securities were sold without registration under the Securities Act in reliance on the exemption provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering.
On December 18, 2023, the Company issued 100,000 shares of restricted Common Stock to a service provider pursuant to that certain media advertising agreement between the Company and such provider. Such securities were sold without registration under the Securities Act in reliance on the exemption provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering.
Equity Plan Information
| Plan Category: | Number of securities to be issued upon exercise of outstanding options, warrants and rights: |
Weighted average exercise price of outstanding options, warrants and rights: |
Number of securities remaining available for future issuance: |
|||||||||
| 2022 Equity Incentive Plan: | ||||||||||||
| Equity compensation plans approved by security holders | 1,396,125 | $ | 2.02 | 2,653,369 | ||||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||||
| Total | 1,396,125 | $ | 2.02 | 2,653,369 | ||||||||
Use of Proceeds from our Initial Public Offering of Common Stock
On October 12, 2023, we closed our IPO, in which we sold and issued 1,000,000 shares of our Common Stock, at a price to the public of $5.00 per share. We received $4,360,000 in aggregate net proceeds from our IPO after deducting underwriting discounts and commissions and other offering expenses. Alexander Capital L.P. were the underwriters of our IPO.
The offer and sale of all of the shares of our Common Stock in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-264372), which was declared effective by the SEC on October 4, 2023.
The net proceeds from our IPO have been used to satisfy existing term debt and accrued interest in the aggregate amount of approximately $375,000, the existing balance of the Company’s line of credit of approximately $140,000, related party debt of approximately $150,000, and existing accounts payable of $1,000,000. There has been no material change in our planned use of the net proceeds from our IPO as described in our final prospectus filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on October 10, 2023.
Item 6. [Reserved]
Not applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Prospective investors should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this annual report. Some of the information contained in this discussion and analysis or set forth elsewhere in this annual report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” This discussion should be read in conjunction with our audited consolidated financial statements and the notes thereto included elsewhere in this report.
Business Overview
We operate primarily in the United States residential real estate market. Our agent-centric commission model enables our sales agents to obtain higher net commissions than they would otherwise receive from many of our competitors in our local markets. Moreover, we believe that our proprietary technology, training, and the support we provide to our agents at a minimal cost to them is one of the best offered in the industry. We are currently in the process of developing and deploying our own proprietary technology which will further decrease our overall expenses as we eliminate the need for outside technology services.
A significant driver of our past growth, and we believe, our future growth is our ability to create revenue by referring or requiring our agents and our franchisees’ agents use of business services that we provide. For example, all agents new to our Company are required to have a “coach” and to attend multi-day training sessions to learn the Company’s philosophy, technology, and business practices. Concurrently, the agent works with his or her coach in obtaining listings, working with consumers, and closing transactions. All these activities are run through our La Rosa Coaching, LLC subsidiary which teaches advanced techniques for team building, personal growth, and business development, which we believe will enhance our revenue at a nominal increase in cost to us. In addition, unlike other residential real estate brokerages, we encourage our sales agents to pursue commercial real estate transactions and require them to utilize the services of our commercial real estate company, La Rosa CRE, LLC.
Our agent centric methodology, our advanced technology, and ancillary services, such as property management, will enable us to organically grow our agent base with virtually no incremental cost. In environments with increasing mortgage rates and declining sales transactions, we believe our model is more attractive to real estate agents, who retain more of their commission proceeds compared to traditional brokerage models. In fact, we have organically increased our agent count by just over five and half percent from December 31, 2022 to December 31, 2023.
In order to continue to provide cutting edge technology and provide best-in-class coaching and education, we increased our pricing structure effective September 1, 2023, including increasing our agent annual fees and monthly fees, the fixed transaction fee, technology and accounting fees, and property management fees. The fee increases are the first in over two years.
To maximize the utility of our technological infrastructure, we anticipate acquiring additional brokerage firms that will increase our agent count. We also expect to acquire other complementary businesses, such as title and insurance agencies and a mortgage brokerage. We continue to evaluate opportunities to drive our near-term and long-term growth.
On October 12, 2023, we consummated our IPO pursuant to a registration statement on Form S-1 (File No: 333-264372), which was declared effective by the SEC on October 4, 2023, and we became an Exchange Act reporting company pursuant to a Form 8-A, as amended (File No. 001-41588) on October 4, 2023. On the IPO, we sold 1,000,000 shares of our Common Stock, par value $0.0001, at a price to the public of $5.00 per share, resulting in gross proceeds of $5,000,000. We received net proceeds of $4,360,000 after underwriter discounts, commissions, and expenses. We used the proceeds to repay existing debt and accrued interest of approximately $375,000, related party debt of approximately $150,000, existing accounts payable of $1,000,000, and to fund certain acquisitions, noted below. The remaining funds will be used for general corporate purposes, including continuing to develop propriety technology and to consider accretive acquisitions.
As disclosed by the Company in the current reports on Form 8-K filed with the SEC on October 13, 2023, on October 19, 2023, on December 18, 2023, on December 27, 2023, January 4, 2024, February 23, 2024, March 13, 2024, and March 21, 2024 we acquired controlling interests in 9 of our franchisees: Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.), Horeb Kissimmee Realty, LLC, La Rosa CW Properties, LLC, La Rosa Realty Premier, LLC, La Rosa Realty Orlando, LLC, La Rosa Realty North Florida LLC, La Rosa Realty Winter Garden LLC, La Rose Realty Georgia LLC, and La Rosa Realty California, for a total consideration of $6,351,105, including $565,000 in cash from the proceeds from our IPO, with the remainder in Common Stock.
Description of Our Revenues
Our financial results are primarily driven by the total number of sales agents in our Company, the number of sales agents closing residential real estate transactions, the number of sales agents utilizing our coaching services, the number of agents who work with our franchisees, and the number of properties under management. We grew our agent count by just over five and half percent from 2,305 at December 31, 2022 to 2,434 at December 31, 2023.
The majority of our revenue is derived from a stable set of fees paid by our brokers, franchisees, and consumers. We have multiple revenue streams, with the majority of our revenue derived from commissions paid by consumers who transact business with our and our franchisees’ agents, royalties paid by our franchisees, dues and technology fees paid by our sales agents, our franchisees, and our franchisees’ agents. Our major revenue streams come from such sources as: (i) residential real estate brokerage revenue, (ii) revenue from our property management services, (iii) franchise royalty fees, (iv) fees from the sale or renewal of franchises and other franchise revenue, (v) coaching, training and assistance fees, (vi) brokerage revenue generated transactionally on commercial real estate, and (vii) fees from our events and forums.
The majority of our revenue is derived from fees and dues based on the number of agents working under the La Rosa Realty brand. Due to the low fixed cost structure of both our Company and franchise models, the addition of new sales agents generally requires little incremental investment in capital or infrastructure. Accordingly, the number of commission producing sales agents in our Company and our franchisees is the most important factor affecting our results of operations and the addition of new agents can favorably impact our revenue and our earnings before interest, taxes, depreciation and amortization (“EBITDA”). Historically, the number of agents in the residential real estate industry has been highly correlated with overall home sale transaction activity. We believe that the number of agents and those that produce commissions in our network is the primary statistic that drives our revenue. Another major factor is the cyclicality of the real estate industry that has peaks and valleys depending on macroeconomic conditions that we cannot control. And finally, our revenues fluctuate based on the changes in the aggregate fee revenue per sales agent as a significant portion of our revenue is tied to various fees that are ultimately tied to the number of agents, including annual dues, continuing franchise fees, and certain transaction or service-based fees. Our revenue per agent also increases in other ways including when transaction sides and transaction sizes increase since a portion of our revenue comes from fees tied to the number and size of real estate transactions closed by our agents. While the Company was not named as a defendant in any of the recent class action lawsuits alleging antitrust violations, it is possible that it could be a litigant at some point in the future. Several of these lawsuits have been settled (see “Risk Factors - Adverse outcomes in litigation and regulatory actions against the NAR, other real estate brokerage companies and agents in our industry could adversely impact our financial results). These settlements will result in changes in the way real estate brokers are compensated for their services. Most notably, home sellers will no longer be required to pay buyer agent commissions which will result in lower buyer agent compensation. We cannot predict the full breadth of the outcome of these lawsuits but believe that they will result in a significant adverse effect on our financial condition and results of operations for the foreseeable future.
Key Factors Affecting our Performance
As a result of a number of factors, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Set forth below is a brief discussion of the key factors impacting our results of operations.
Seasonality
Our business is affected by the seasons and weather. The spring and summer seasons, when school is out, have typically resulted in higher sales volumes compared to fall and winter seasons. With the slowdown in the later months, we have experienced slower listing activity, fewer transaction closings and lower revenues and have seen more agent turnover as well. Bad weather or natural disasters also negatively impact listings and sales which reduces our operating income, net income, operating margins and cash flow. While this pattern is fairly predictable, there can be no assurance that it will continue. Moreover, with the impact of climate change, we expect more business disruptions in the coming years, many of which could be unpredictable and extreme.
Our revenues and operating margins will fluctuate in successive quarters due to a wide variety of factors, including seasonality, weather, health exigencies, holidays, national or international emergencies, the school year calendar’s impact on timing of family relocations, and changes in mortgage interest rates. This fluctuation may make it difficult to compare or analyze our financial performance effectively across successive quarters.
Inflation and Market Interest Rates
The U.S. Federal Reserve continues to take action intended to address sharp increases in inflation. The Federal Reserve Board increased the federal funds rate to a range of 525 to 550 basis points as of March 20, 2024 from a range of 0 to 25 basis points as of the first quarter of 2022. These increases have impacted interest rates, which have significantly contributed to rising mortgage rates. During the second half of 2022, the benchmark 30 year fixed conforming mortgage rate rose above 6% for the first time since 2008, according to Freddie Mac data, and has reached a recent peak of about 8% during the second half of 2023. That interest rate stood at 6.87% as of March 21, 2024. Consequently, housing demand is softening, prices are rising, consumer sentiment has weakened and home sales are declining. In 2023, the existing home sales market declined 18.7% compared to 2022, the slowest year for US home sales in nearly 30 years, according to the National Association of Realtors. This decline had an adverse impact on consumer demand for our services, as consumers weighed the financial implications of selling or purchasing a home. Continuing poor housing market conditions would adversely affect our operating performance and results of operations.
Recent Legal Challenges to Sales Agents’ Commission Structure
Recent developments in the real estate industry have seen increased scrutiny and legal challenges related to the structure of real estate agent commissions. Legal actions and regulatory inquiries have been initiated to examine the fairness, transparency, and potential anticompetitive practices associated with the traditional commission model. Courts and regulatory bodies may be increasingly focused on ensuring transparency in commission structures, potentially leading to reforms that impact the earnings and business models of real estate professionals. Changes in legislation or legal precedents could impact the standard practices of commission-sharing between listing agents and buyer’s agents and may adversely affect our business model and revenues. On October 31, 2023, a federal jury in Missouri found that NAR and certain companies conspired to artificially inflate brokerage commissions, which violates federal antitrust law. The judgment was appealed on October 31, 2023, while these and other plaintiffs have filed similar lawsuits against a number of other large real estate brokerage companies. We have not, as of the date hereof, been named as a defendant in any antitrust litigation. On or about March 15, 2024, NAR agreed to settle these lawsuits, by agreeing to pay $418 million over approximately four years, and changing certain of its rules surrounding agent commissions. This settlement resolves claims against NAR and nearly every NAR member; all state, territorial and local REALTOR® associations; all association-owned MLSs; and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below and is subject to court approval. Due to this litigation, there will be rule changes for the NAR. In the settlement, effective mid-July 2024, NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS, as well as adopt new rules requiring written agreements between buyers and buyers’ agents. However, the direct and indirect effects, if any, of the judgment upon the real estate industry are not yet entirely clear.
There could also be further changes in real estate industry practices. All of this has prompted discussion of changes to rules established by local or state real estate boards or multiple listing services. All of this may require changes to many brokers’ business models, including changes in agent and broker compensation. For example, we will likely have to develop mechanisms and a plan that enable buyers and sellers to negotiate commissions. The Company will continue to monitor ongoing and similar antitrust litigation against our competitors. However, the litigation and its ramifications could cause unforeseen turmoil in our industry, the impacts of which could have a negative effect on us as an industry participant.
Recent Accounting Pronouncements
See Note 1, “Basis of Presentation and Summary of Significant Accounting Policies” of the Notes to the consolidated financial statements in Part II, Item 8 of this Form 10-K.
Results of Operations
Revenue
| Year Ended December 31, | Change | |||||||||||||||
| 2023 | 2022 | $ | % | |||||||||||||
| Real Estate Brokerage Services (Residential) | $ | 20,450,348 | $ | 16,413,289 | $ | 4,037,059 | 25 | % | ||||||||
| Franchising Services | 883,606 | 1,034,108 | (150,502 | ) | (15 | )% | ||||||||||
| Coaching Services | 628,846 | 623,934 | 4,912 | 1 | % | |||||||||||
| Property Management | 9,680,688 | 8,030,299 | 1,650,389 | 21 | % | |||||||||||
| Real Estate Brokerage Services (Commercial) | 115,916 | 102,291 | 13,625 | 13 | % | |||||||||||
| Total Revenue | $ | 31,759,404 | $ | 26,203,921 | $ | 5,555,483 | 21 | % | ||||||||
Real Estate Brokerage Services (Residential)
Residential real estate services revenue increased $4.037 million, or 25%, in the year ended December 31, 2023 against the comparable prior year period. The increase was driven by $4.586 million of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023, offset by a 13% decrease in total transaction volume. We increased our transaction fee, monthly agent fee, and annual fee effective September 1, 2023, which, if volume remains consistent, real estate brokerage services revenue will increase in 2024.
Franchising Services
Franchising services revenue decreased $151 thousand, or 15%, in the year ended December 31, 2023 against the comparable prior year period. The decrease was partially attributable from the six acquisitions completed in the fourth quarter of fiscal year 2023, which no longer contribute to franchising royalties fees, which would have totaled $71 thousand in the fourth quarter of 2023. Our remaining franchisees saw a similar decrease in volume related to the same market conditions in our residential services, which negatively impacted our franchising royalty fee revenue.
Coaching Services
Coaching services revenue remained relatively constant in the year ended December 31, 2023 against the comparable prior year period. We were able to maintain the same year-over-year coaching revenue while residential transactional volume decreased by emphasizing our coaching program, which increased our coaching volume, along with additional ancillary coaching services that started at the end of the June 2023.
Property Management
Property management revenue increased $1.650 million, or 21%, in the year ended December 31, 2023 against the comparable prior year period primarily due to a significant increase in the number of properties under management along with a management fee price increase effective September 1, 2023.
Gross Proft and Gross Margin
| Year Ended December 31, | Change | |||||||||||||||
| 2023 | 2022 | $ | % | |||||||||||||
| Real Estate Brokerage Services (Residential) | $ | 1,686,191 | $ | 1,472,070 | $ | 214,121 | 15 | % | ||||||||
| Gross Margin | 8.2 | % | 9.0 | % | (0.7 | )% | ||||||||||
| Franchising Services | $ | 411,297 | $ | 354,522 | $ | 56,775 | 16 | % | ||||||||
| Gross Margin | 46.5 | % | 34.3 | % | 12.3 | % | ||||||||||
| Coaching Services | $ | 298,481 | $ | 320,496 | $ | (22,015 | ) | (7 | )% | |||||||
| Gross Margin | 47.5 | % | 51.4 | % | (3.9 | )% | ||||||||||
| Property Management | $ | 330,440 | $ | 275,723 | $ | 54,717 | 20 | % | ||||||||
| Gross Margin | 3.4 | % | 3.4 | % | 0.0 | % | ||||||||||
| Real Estate Brokerage Services (Commercial) | $ | 114,759 | $ | 102,291 | $ | 12,468 | 12 | % | ||||||||
| Gross Margin | 99.0 | % | 100.0 | % | (1.0 | )% | ||||||||||
| Total Gross Profit | $ | 2,841,168 | $ | 2,525,102 | $ | 316,066 | 13 | % | ||||||||
| Total Gross Margin | 8.9 | % | 9.6 | % | (0.7 | )% | ||||||||||
Real Estate Brokerage Services (Residential)
Costs related to residential real estate brokerage services increased $3.823 million, or 26%, in the year ended December 31, 2023 against the comparable prior year period. The increase was driven by $4.233 million of cost of revenue from the six acquisitions completed in the fourth quarter of fiscal year 2023, offset by a decrease in total transaction volume. The gross profit increased $316 thousand, or 13%, from 2022 to 2023 primarily attributable to the gross profit from acquisitions. The gross margin on the six acquisitions was lower than our historical results, which reduced our gross margin to 8.2% compared to our 2022 gross margin of 9.0%.
Franchising Services
The Company uses external software that supports the Company’s franchises, which is directly used to manage real estate transactions that generates revenue. The software is classified as a cost of revenue, and the Company expects to continue to use the software for the foreseeable future. The decrease in cost of franchising revenue is due to the six acquisitions, which no longer contribute to the cost of franchising revenue, as well as a reduction of price per usage of the software costs based on our review of usage of the software. The gross profit increased $57 thousand, or 16%, from 2022 to 2023 primarily attributable to the reduction in the cost of revenue.
Coaching Services
Costs related to coaching services increased $27 thousand, or 9%, in the year ended December 31, 2023 against the comparable prior year period. Costs related to coaching services moved proportionally with the change in related revenue. Gross profit slightly decreased by $22 thousand, or 7%, due to new initiatives of marketing the coaching programs.
Property Management
Costs related to property management services increased $1.596 million, or 21%, in the year ended December 31, 2023 against the comparable prior year period. The increase in property management costs were primarily related to the increase in properties under management. The gross margin is consistent from 2022 to 2023.
Selling, General and Administrative Expense
| Year Ended December 31, | Change | |||||||||||||||
| 2023 | 2022 | $ | % | |||||||||||||
| Sales and Marketing | $ | 359,717 | $ | 415,770 | $ | (56,053 | ) | (13 | )% | |||||||
| Payroll and benefits | 2,436,888 | 2,043,268 | 393,620 | 19 | % | |||||||||||
| Rent and other | 347,476 | 243,087 | 104,389 | 42 | % | |||||||||||
| Professional fees | 260,106 | 748,371 | (488,265 | ) | (65 | )% | ||||||||||
| Office | 118,296 | 149,841 | (31,545 | ) | (21 | )% | ||||||||||
| Technology | 216,679 | 469,388 | (252,709 | ) | (54 | )% | ||||||||||
| Insurance, training and other | 427,904 | 229,901 | 198,003 | 86 | % | |||||||||||
| Public company costs | 592,857 | — | 592,857 | NM | ||||||||||||
| Amortization and deprecation | 73,134 | — | 73,134 | NM | ||||||||||||
| Total SG&A Expenses | $ | 4,833,057 | $ | 4,299,626 | $ | 533,431 | 12 | % | ||||||||
NM: Not Meaningful
Selling, general and administrative costs increased $533 thousand, or 12%, in the year ended December 31, 2023 against the comparable prior year period. Sales and marketing costs decreased as the Company worked to improve the efficiency of its marketing spend.
Payroll and benefits increased $394 thousand, or 19%, in the year ended December 31, 2023 against the comparable prior year period primarily due to changes in the executive management team at the end of 2022, additional payroll of $177 thousand due to the six acquisitions completed in the fourth quarter of 2023, the imputed bonus award to the CEO to extinguish a related party receivable in the amount of $45 thousand, and the employer portion of payroll tax withholding of approximately $36 thousand for the employees who had their restricted stock units vest upon the Company’s IPO.
Rent and occupancy increased as the Company leases its corporate office from an entity owned by the chief executive officer. The rent expense for 2023 was $135 thousand. During 2022, no rent expense was charged to the Company for its corporate office.
Professional fees decreased $488 thousand, or 65%, in the year ended December 31, 2023 against the comparable prior year period primarily due to a reclass in 2023 of accrued director fees through September 30, 2023 of $346 thousand to stock-based compensation, as the directors accepted stock options in lieu of cash payments. In addition, in 2022, we incurred accounting fees for possible franchise acquisition targets as part of our expected IPO that we did not acquire. As such, the fees were charged to expense.
Office and technology costs decreased due to the Company’s efforts to curtail expenses and improve productivity and efficiency. In particular, the Company’s CTO, who joined the Company in early 2022, streamlined the Company’s software applications, which reduced technology costs after subscription periods ended.
Insurance, training and other costs increased in 2023 primarily due to our new directors and officers (D&O) policies that provide for liability coverage.
Since our IPO in October 2023, we have started incurring public company costs, including listing costs, printer costs, transfer agent fees, and investor relation costs and related professional fees.
Stock-based compensation
We incurred stock-based compensation of $5.100 million in 2023 based upon restricted stock units granted to agents and employees, most of which was part of the IPO ($1.998 million), consultants who provided various services to the company ($1.286 million), option awards to non-management directors ($421 thousand), and an option grant to our CEO pursuant to the terms of his employment agreement ($1.395 million). We incurred stock-based compensation of $231 thousand in 2022 primarily due to option grants given to the non-management directors of our Board in February 2022.
Other Income (Expense), Net
Other expense, net for the year ended December 31, 2023 was $731 thousand compared to other expense, net of $465 thousand for the comparable prior year. The 2023 expense was due to costs related to the amortization of financing fees related to convertible debt instruments with embedded equity elements issued in the fourth quarter of fiscal year 2022 along with interest expense associated with the existing debt issuances in 2022, partially offset by a decrease in the revaluation of the derivative liabilities and the IRS employee retention credit received for prior tax years, net of legal costs to obtain the credit. The 2022 expense was due to costs related to the convertible debt issued in the fourth quarter of 2021, namely, amortization of finance fees, fair market value adjustments of the derivative liability related to the convertible notes, and interest expense on the convertible notes. These additional costs were partially offset by the forgiveness of debt of $149 thousand.
Liquidity and Capital Resources
On December 31, 2023 and 2022 we had cash of $0.96 million and $0.12 million, respectively, on hand.
During 2023, we issued 1,523 shares of series A preferred stock to 77 investors in a private placement pursuant to Regulation D under the Securities Act, raising $1,523,000. We also exchanged convertible debt with an outstanding balance of $598,836, including accrued interest of $87,836, for 591 shares of series A preferred stock. On March 27, 2023, we exchanged a portion of our related party debt with an outstanding gross balance of $1,324,631, excluding debt discount of $469,785, and including accrued interest of $28,101, for 1,321 shares of series A preferred stock. See Note 8, “Stockholders’ Equity” of the Notes to the consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information on the series A preferred stock.
When we completed our IPO in the fourth quarter of 2023, we raised net proceeds of $4,360,000 after deducting underwriter discounts, commissions, and expenses. We used the proceeds to satisfy existing term debt and accrued interest in the aggregate amount of approximately $375,000, the existing balance of our line of credit of approximately $140,000, related party debt of approximately $150,000, and existing accounts payable of $1,000,000. On October 13, 2023 and on October 16, 2023, we acquired controlling interests in two of our franchisees, Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.) and Horeb Kissimmee Realty, LLC for a total consideration of $2,963,147, including $550,000 in cash from the proceeds of the IPO, with the remainder in common stock. See Note 3, “Business Combinations” of the Notes to the consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information regarding the acquisitions.
On February 20, 2024, we entered into securities purchase agreement with an accredited investor for the issuance of a 13% senior secured promissory note with a principal amount of $1,052,632 and a purchase price of $1,000,000 after an original issue discount of $52,632. The note is convertible into shares of our Common Stock at the option of the lender. In addition, on April 1, 2024, we entered into securities purchase agreement with the same accredited investor for the issuance of a 13% senior secured promissory note with a principal amount of $1,316,000 and a purchase price of $1,250,200 after an original issue discount of $65,800. The note is convertible into shares of our Common Stock at the option of the lender. The two promissory notes begin amortizing five months after the date of each loan, with full maturity occurring twelve months after the date of each loan. See Note 15, “Subsequent Events” of the Notes to the consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information.
We are subject to the risks and challenges associated with companies at a similar stage of development. These include dependence on key individuals, successful development and marketing of its offerings, and competition with larger companies with greater financial, technical, and marketing resources than us. Furthermore, during the period required to achieve substantially higher revenue in order to become profitable, we will require additional funds that might not be readily available or might not be on terms that are acceptable to us. Until such time that we fully implement our growth strategy, we expect to continue to generate operating losses in the foreseeable future, mostly due to corporate overhead and costs of being a public company. As such, we anticipate that our existing working capital, including cash on hand, and cash generated from operations will not be sufficient to meet projected operating expenses for the foreseeable future through at least twelve months from the issuance of this annual report on Form 10-K. We will be required to raise additional capital to service the two promissory notes issued in the first half of 2024, to repay the principal balance of each of the notes, and to fund ongoing operations.
We have incurred recurring net losses, and our operations have not provided net positive cash flows. In view of these matters, there is substantial doubt about our ability to continue as a going concern. We plan on continuing to expand via acquisition, which will help achieve future profitability, and we have plans to raise capital from outside investors, as we have done in the past, to fund operating losses and to provide capital for further business acquisitions. We cannot provide any assurance that we can successfully raise the capital needed.
Summary of Cash Flows
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net Cash Used in Operating Activities | $ | (1,894,265 | ) | $ | (1,177,105 | ) | ||
| Net Cash Used in Investing Activities | $ | (141,744 | ) | $ | — | |||
| Net Cash Provided by Financing Activities | $ | 2,950,060 | $ | 1,067,229 | ||||
Cash Flows Used in Operating Activities
For the year ended December 31, 2023, net cash used in operating activities was $1.894 million, which was primarily attributable to the net loss of $2.723 million, excluding stock-based compensation, and changes in working capital of $0.188 million, mostly due to an increase in accounts receivable and a reduction in accrued expenses after our IPO, partially offset by an increase in accounts payable, excluding payments of deferred offering costs, as well as offsets from non-cash interest expense and amortization of debt discount and financing fees of $1.061 million.
For the year ended December 31, 2022, net cash used in operating activities was $1.177 million, which was primarily attributable to the net loss of $2.239 million, excluding stock-based compensation and the non-cash loan forgiveness of $0.2 million, partially offset by contributions from working capital of $0.355 million, non-cash interest expense, amortization of debt discount and financing fees, and the increase expense for the value of derivatives of $0.631 million, and a provision for credit losses of $0.076 million.
Cash Flows Used in Investing Activities
For the year ended December 31, 2023, net cash used in operating activities was $0.141 million, which represents the cash consideration paid for the six acquisitions acquired in the fourth quarter of 2023, less cash acquired. See Note 3, “Business Combinations” of the Notes to the consolidated financial statements in Part II, Item 8 of this Form 10-K for additional information regarding the acquisitions.
Cash Flows Provided by Financing Activities
For the year ended December 31, 2023, net cash provided by financing activities was $2.950 million, which included the proceeds of our IPO from which we raised net proceeds of $4.360 million after deducting underwriter discounts, commissions, and expenses. We incurred payments related to the IPO of $1.765 million. We also raised $1.523 million attributable to the issuance of the series A convertible preferred stock. A partial use of the proceeds raised were used to pay down debt, including our line of credit, our notes payable, advances on future receipts, convertible debt, and amounts due to related party, which totaled $0.991 million, net. We also paid $0.177 million in withholding taxes related to the vesting of employee restricted stock units upon the IPO.
For the year ended December 31, 2022, we received cash of $1.067 million in financing activities attributable to proceeds from related party debt, notes payable, and convertible debt totaling $1.902 million, offset by cash paid for deferred offering costs of $0.512 million and distributions of $0.230 million.
Off-Balance Sheet Arrangements
On December 31, 2023, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities. We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Material Cash Requirements from Known Contractual and Other Obligations
The following table summarizes our contractual obligations as of December 31, 2023 and as for the periods thereafter:
| Payments Due By Period | ||||||||||||||||||||
| Contractual Obligation | Total | Less than 1 year |
1-3 years | 3-5 years | After 5 years |
|||||||||||||||
| Notes payable | $ | 619,527 | $ | 4,400 | $ | 8,800 | $ | 8,800 | $ | 597,527 | ||||||||||
| Interest payments on notes payable | 592,416 | 23,232 | 46,464 | 46,464 | 476,256 | |||||||||||||||
| Advances on future receipts | 84,463 | 84,463 | ||||||||||||||||||
| Undiscounted lease obligations | 749,573 | 366,583 | 302,116 | 80,874 | ||||||||||||||||
| Accrued acquisition cash consideration | 300,000 | 300,000 | ||||||||||||||||||
| Total Contractual Obligations | $ | 2,345,979 | $ | 778,678 | $ | 357,380 | $ | 136,138 | $ | 1,073,783 | ||||||||||
We intend to fund our contractual obligations with cash on hand, working capital and the debt raises on February 20, 2024 and April 1, 2024.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Our most critical estimates include those related to revenue recognition, goodwill and intangible assets, accounting for business combinations, and accounting for stock-based compensation. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
We believe the following critical accounting estimates affect the more significant judgments and estimates used in preparing our consolidated financial statements. See the footnotes to our audited financial statements for the year ended December 31, 2023, included with this annual report for our Summary of Significant Accounting Policies.
Revenue Recognition
The Company records revenue based upon the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied. A performance obligation is a contractual promise to transfer a distinct good or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.
Goodwill and Intangible Assets
Goodwill is tested for impairment at least annually in the fourth quarter of our fiscal year. We may first perform a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount, and, if so, we then quantitatively compare the fair value of our reporting units to their carrying amount. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not impaired. If the carrying amount of a reporting unit exceeds its fair value, we then record an impairment loss equal to the difference, up to the carrying value of goodwill. The carrying values of identifiable intangible assets are reviewed for recoverability on a quarterly basis. The facts and circumstances considered include the recoverability of the cost of other intangible assets from future undiscounted cash flows to be derived from the use of the asset or asset group. It is not possible for us to predict the likelihood of any possible future impairments or, if such an impairment were to occur, the magnitude of any impairment. Intangible assets are subject to amortization over the expected period of economic benefit to us. We evaluate whether events or circumstances have occurred that warrant a revision to the remaining useful lives of intangible assets. In cases where a revision is deemed appropriate, the remaining carrying amounts of the intangible assets are amortized over the revised remaining useful life.
Business Combinations
The allocation of the purchase price for acquisitions requires use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired, including franchise agreements, agent relationships, existing real estate listings, and non-compete agreements and liabilities assumed based on their respective fair values. The estimates we make include expected cash flows, expected cost savings, and the appropriate weighted average cost of capital. We complete these assessments as soon as practical after the acquisition closing dates. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.
Stock-Based Compensation
We use the fair value method of accounting for our stock options and restricted stock units (“RSUs”) granted to employees, contractors and consultants to measure the cost of services received in exchange for the stock-based awards. The fair value of stock option awards with only service conditions is estimated on the grant date using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs such as the risk-free interest rate, expected term and expected volatility. These inputs are subjective and generally require significant judgment. The fair value of RSUs is measured on the grant date based on the prior day closing fair market value of our Common Stock. The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period. Stock-based compensation expense is recognized on a straight-line basis, net of actual forfeitures in the period.
As we accumulate additional employee stock-based awards data over time and as we incorporate market data related to our Common Stock, we may calculate significantly different volatilities and expected lives, which could materially impact the valuation of our stock-based awards and the stock-based compensation expense that we will recognize in future periods.
Income Taxes
We are subject to taxes in the United States. Significant judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We make these estimates and judgments about our future taxable income that are based on assumptions that are consistent with our future plans. Tax laws, regulations and administrative practices may be subject to change due to economic or political conditions including fundamental changes to the tax laws. As of December 31, 2023, we had recorded a full valuation allowance on our net U.S. deferred tax assets because we expect that it is more likely than not that our U.S. deferred tax assets will not be realized. Should the actual amounts differ from our estimates, the amount of our valuation allowance could be materially impacted.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We qualify as a smaller reporting company, as defined by SEC Rule 229.10(f)(1) and are not required to provide the information required by this Item.
Item 8. Financial Statements and Supplementary Data.
LA ROSA HOLDINGS CORP.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 2023 AND 2022
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
F-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
La Rosa Holdings Corp. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of La Rosa Holdings Corp. and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2021.
New York, NY
April 16, 2024
F-
La Rosa Holdings Corp. and Subsidiaries
Consolidated Balance Sheets
| December 31, 2023 |
December 31, 2022 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 959,604 | $ | 118,558 | ||||
| Restricted cash | 1,484,223 | 1,411,364 | ||||||
| Accounts receivable, net of reserve for credit losses of $83,456 and $29,039, respectively | 826,424 | 424,549 | ||||||
| Other current assets | 45,000 | |||||||
| Due from related party | 41,558 | |||||||
| Total current assets | 3,270,251 | 2,041,029 | ||||||
| Noncurrent assets: | ||||||||
| Property and equipment, net | 14,893 | |||||||
| Right-of-use asset, net | 687,570 | |||||||
| Deferred offering costs | 1,760,447 | |||||||
| Intangible assets, net | 4,632,449 | |||||||
| Goodwill | 5,702,612 | |||||||
| Other long-term assets | 21,270 | 79,314 | ||||||
| Total noncurrent assets | 11,058,794 | 1,839,761 | ||||||
| Total assets | $ | 14,329,045 | $ | 3,880,790 | ||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Line of credit | $ | $ | 86,163 | |||||
| Accounts payable | 1,147,073 | 1,523,936 | ||||||
| Accrued expenses | 227,574 | 522,279 | ||||||
| Due to related party, current | 652,233 | |||||||
| Derivative liability | 1,022,879 | |||||||
| Convertible notes payable, net | 585,779 | |||||||
| Advances on future receipts | 77,042 | |||||||
| Accrued acquisition cash consideration | 300,000 | |||||||
| Notes payable, current | 4,400 | 250,788 | ||||||
| Lease liability, current | 340,566 | |||||||
| Total current liabilities | 2,096,655 | 4,644,057 | ||||||
| Noncurrent liabilities: | ||||||||
| Note payable, net of current | 615,127 | 360,912 | ||||||
| Due to related party, net of current | 338,757 | |||||||
| Security deposits payable | 1,484,223 | 1,415,059 | ||||||
| Lease liability, noncurrent | 363,029 | |||||||
| Other liabilities | 2,950 | |||||||
| Total non-current liabilities | 2,465,329 | 2,114,728 | ||||||
| Total liabilities | 4,561,984 | 6,758,785 | ||||||
| Commitments and contingencies (Note 13) | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock - $0.0001 par value; 50,000,000 shares authorized; 2,000 Series X shares issued and outstanding at December 31, 2023 and December 31, 2022 | ||||||||
| Common stock - $0.0001 par value; 250,000,000 shares authorized; 13,406,480 and 6,000,000 issued and outstanding at December 31, 2023 and December 31, 2022, respectively | 1,341 | 600 | ||||||
| Additional paid-in capital | 18,016,400 | 1,410,724 | ||||||
| Accumulated deficit | (12,107,756 | ) | (4,289,319 | ) | ||||
| Total stockholders’ equity (deficit) – La Rosa Holdings Corp. Shareholders | 5,909,985 | (2,877,995 | ) | |||||
| Noncontrolling interest in subsidiaries | 3,857,076 | |||||||
| Total stockholders’ equity (deficit) | 9,767,061 | (2,877,995 | ) | |||||
| Total liabilities and stockholders’ equity (deficit) | $ | 14,329,045 | $ | 3,880,790 | ||||
See notes to the consolidated financial statements.
F-
La Rosa Holdings Corp. and Subsidiaries
Consolidated Statements of Operations
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | 31,759,404 | $ | 26,203,921 | ||||
| Cost of revenue | 28,918,236 | 23,678,819 | ||||||
| Gross profit | 2,841,168 | 2,525,102 | ||||||
| Operating expenses: | ||||||||
| Sales and marketing | 359,717 | 415,770 | ||||||
| General and administrative | 4,473,340 | 3,883,856 | ||||||
| Stock-based compensation — general and administrative | 5,100,474 | 230,664 | ||||||
| Total operating expenses | 9,933,531 | 4,530,290 | ||||||
| Loss from operations | (7,092,363 | ) | (2,005,188 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense, net | (140,382 | ) | (144,268 | ) | ||||
| Amortization of financing fees | (1,016,644 | ) | (349,913 | ) | ||||
| Change in fair value of derivative liability | 138,985 | (120,599 | ) | |||||
| Forgiveness of debt | 149,312 | |||||||
| Other income, net | 286,641 | |||||||
| Loss before provision for income taxes | (7,823,763 | ) | (2,470,656 | ) | ||||
| Benefit from income taxes | (150,000 | ) | ||||||
| Net loss | (7,823,763 | ) | (2,320,656 | ) | ||||
| Less: Net loss attributable to noncontrolling interests in subsidiaries | (5,326 | ) | ||||||
| Net loss after noncontrolling interest in subsidiaries | (7,818,437 | ) | (2,320,656 | ) | ||||
| Less: Deemed dividend | 1,472,514 | — | ||||||
| Net loss attributable to common stockholders | $ | (9,290,951 | ) | $ | (2,320,656 | ) | ||
| Loss per share of common stock attributable to common stockholders | ||||||||
| $ | (1.27 | ) | $ | (0.39 | ) | |||
| Weighted average shares used in computing net loss per share of common stock attributable to common stockholders | ||||||||
| 7,293,033 | 6,000,000 | |||||||
See notes to the consolidated financial statements.
F-
La Rosa Holdings Corp. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the Years Ended December 31, 2023 and 2022
| Preferred Stock
Series A |
Preferred Stock Series X |
Common Stock | Additional | Total Stockholders’ |
Noncontrolling | |||||||||||||||||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Shares | Par Value | Paid-in Capital |
Accumulated Deficit |
Equity (Deficit) | Interest
In Subsidiaries |
Total Equity | ||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | — | $ | — | 2,000 | $ | — | 6,000,000 | $ | 600 | $ | 425,016 | $ | (1,739,135 | ) | $ | (1,313,519 | ) | $ | — | $ | (1,313,519 | ) | ||||||||||||||||||||||
| Net loss | (2,320,656 | ) | (2,320,656 | ) | (2,320,656 | ) | ||||||||||||||||||||||||||||||||||||||
| Member’s distributions | (229,528 | ) | (229,528 | ) | (229,528 | ) | ||||||||||||||||||||||||||||||||||||||
| Warrants issued | 198,776 | 198,776 | 198,776 | |||||||||||||||||||||||||||||||||||||||||
| Related party loan conversion to capital contribution | 556,268 | 556,268 | 556,268 | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 230,664 | 230,664 | 230,664 | |||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | — | — | 2,000 | — | 6,000,000 | 600 | 1,410,724 | (4,289,319 | ) | (2,877,995 | ) | — | (2,877,995 | ) | ||||||||||||||||||||||||||||||
| Net loss | (7,818,437 | ) | (7,818,437 | ) | (5,326 | ) | (7,823,763 | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock in pubic offering, net of issuance costs of $640,000 | 1,000,000 | 100 | 4,359,900 | 4,360,000 | 4,360,000 | |||||||||||||||||||||||||||||||||||||||
| Reclass deferred offering costs to APIC upon the initial public offering | 1,393,618 | 140 | (2,544,599 | ) | (2,544,459 | ) | (2,544,459 | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of series A preferred stock | 3,436 | — | 3,446,468 | 3,446,468 | 3,446,468 | |||||||||||||||||||||||||||||||||||||||
| Conversion of series A preferred stock into common stock upon public offering | (3,436 | ) | — | 981,676 | 98 | (98 | ) | — | — | |||||||||||||||||||||||||||||||||||
| Issuance of common stock related to debt and related party debt maturity and the extinguishment of related derivative liabilities | 101,566 | 10 | 935,149 | 935,159 | 935,159 | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for six real-estate brokerage acquisitions | 2,750,114 | 275 | 5,485,830 | 5,486,105 | 3,862,402 | 9,348,507 | ||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | 5,100,474 | 5,100,474 | 5,100,474 | |||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services rendered and vesting of restricted stock units, net of shares withheld for taxes | 1,179,506 | 118 | (177,448 | ) | (177,330 | ) | (177,330 | ) | ||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | — | $ | — | 2,000 | $ | — | 13,406,480 | $ | 1,341 | $ | 18,016,400 | $ | (12,107,756 | ) | $ | 5,909,985 | $ | 3,857,076 | $ | 9,767,061 | ||||||||||||||||||||||||
See notes to the consolidated financial statements.
F-
La Rosa Holdings Corp. and Subsidiaries
Consolidated Statement of Cash Flows
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (7,823,763 | ) | $ | (2,320,656 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | 5,100,474 | 230,664 | ||||||
| Amortization and deprecation | 73,134 | — | ||||||
| Forgiveness of debt | (149,312 | ) | ||||||
| Change in fair value of derivatives | (138,985 | ) | 120,599 | |||||
| Amortization of debt discount and financing fees | 1,016,644 | 349,913 | ||||||
| Non-cash interest expense | 44,722 | 160,727 | ||||||
| Provision for credit losses | 21,201 | 76,151 | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts receivable | (370,831 | ) | 119,596 | |||||
| Other current assets | 45,000 | (44,200 | ) | |||||
| Accounts payable | 307,877 | (115,653 | ) | |||||
| Accrued expenses | (238,407 | ) | 297,933 | |||||
| Income taxes payable | (150,000 | ) | ||||||
| Security deposits payable | 69,164 | 310,977 | ||||||
| Other | (641 | ) | (63,844 | ) | ||||
| Net Cash Used In Operating Activities | (1,894,411 | ) | (1,177,105 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Acquisition of businesses, net of cash acquired | (141,744 | ) | ||||||
| Net Cash Used In Investing Activities | (141,744 | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from issuances of common stock in public offering, net of issuance costs | 4,360,000 | |||||||
| Borrowings on bank line of credit | 331,095 | 137,301 | ||||||
| Payments on bank line of credit | (417,736 | ) | (180,690 | ) | ||||
| Proceeds from notes payable | 514,448 | |||||||
| Payments on notes payable | (532,163 | ) | (4,388 | ) | ||||
| Proceeds from advances on future receipts | 500,650 | |||||||
| Payments on advances on future receipts | (679,688 | ) | ||||||
| Payments relating to deferred offering costs | (1,765,081 | ) | (511,619 | ) | ||||
| Proceeds from convertible debt | 120,000 | |||||||
| Payments on convertible debt | (70,000 | ) | (10,000 | ) | ||||
| Proceeds from related party | 45,413 | 1,267,500 | ||||||
| Payments to related party | (168,100 | ) | (35,795 | ) | ||||
| Proceeds from issuance of preferred stock | 1,523,000 | |||||||
| Withholding tax paid on behalf of employees on stock based awards | (177,330 | ) | ||||||
| Distributions paid | (229,528 | ) | ||||||
| Net Cash Provided by Financing Activities | 2,950,060 | 1,067,229 | ||||||
| Net Increase (Decrease) in Cash and Restricted Cash | 913,905 | (109,876 | ) | |||||
| Cash and Restricted Cash at Beginning of Year | 1,529,922 | 1,639,798 | ||||||
| Cash and Restricted Cash at End of Year | $ | 2,443,827 | $ | 1,529,922 | ||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash Paid During the Period for: | ||||||||
| Interest | $ | 129,644 | $ | 34,175 | ||||
| Taxes | ||||||||
| Non-Cash Activities: | ||||||||
| Derivative liabilities embedded in debt instruments | $ | (883,894 | ) | $ | 760,608 | |||
| Loan conversion to capital contribution | $ | $ | 556,268 | |||||
| Warrants issued associated with debt notes | $ | $ | 198,776 | |||||
| Convertible debt and related party debt exchanged for 1,912 shares of Series A Convertible Preferred Stock | $ | 1,923,468 | $ | |||||
| Issuance of 981,676 shares of common stock for beneficial conversion feature of Series A Convertible Preferred Stock | $ | 1,472,514 | $ | |||||
| (Decrease) increase in accounts payable related to deferred offering costs | $ | (981,069 | ) | $ | 701,917 | |||
| Issuance of 1,393,618 shares of common stock for deferred offering costs | $ | 6,968,090 | $ | |||||
| Issuance of 2,750,114 shares of common stock as part of the consideration of acquisitions of businesses | $ | 7,266,078 | $ | |||||
| Issuance of 95,000 shares of common stock as part of the repayment of notes payable | $ | 475,000 | $ | |||||
| Issuance of 6,566 shares of common stock upon the conversion of convertible debt upon the IPO | $ | 26,265 | $ | |||||
| Issuance of 819,000 shares of common stock for services rendered | $ | 1,286,180 | $ | |||||
| Settlement of conversion rights | $ | 433,894 | $ | |||||
| Reconciliation of Cash and Restricted Cash | ||||||||
| Cash | $ | 959,604 | $ | 118,558 | ||||
| Restricted Cash | 1,484,223 | 1,411,364 | ||||||
| Cash and Restricted Cash | $ | 2,443,827 | $ | 1,529,922 | ||||
See notes to the consolidated financial statements.
F-
La Rosa Holdings Corp. and Subsidiaries
Notes to the Consolidated Financial Statements
Note 1 — Basis of Presentation and Summary of Significant Accounting Policies
Description of Business
La Rosa Holdings Corp. (the “Company”), incorporated in Nevada on June 14, 2021, is a holding company for five agent-centric, technology-integrated, cloud-based, multi-service real estate segments. The Company generates revenue primarily by providing person-to-person residential and commercial real estate brokerage services to the public. In addition, the Company cross sells ancillary technology-based products and services to sales agents and the sales agents associated with the Company’s franchisees. The business is organized based on the services provided internally to agents and to the public, which are residential and commercial real estate brokerages, franchising services, real estate brokerage education and coaching, and property management services.
Initial Public Offering
On October 12, 2023, the Company completed an initial public offering (the “IPO”) in which it issued and sold 1,000,000 shares of Common Stock, par value $0.0001, at a public offering price of $5.00 per share. The Company received net proceeds of $4,360,000 after deducting underwriter discounts, commissions, and expenses. The Company also incurred other offering expenses of $2,544,459 and issued 1,393,618 common shares to service providers related to the IPO. These expenses were recorded against the proceeds received from the IPO.
Liquidity – Going Concern and Management’s Plans
On December 31, 2023, the Company had a cash balance of $959,604 and positive working capital of $1,173,596.
On February 20, 2024, the Company entered into securities purchase agreements with an accredited investor for the issuance of a 13% senior secured promissory note with a principal amount of $1,052,632 and a purchase price of $1,000,000 after an original issue discount of $52,632. The note is convertible into shares of the Company’s Common Stock at the option of the lender. In addition, on April 1, 2024, the Company entered into securities purchase agreements with the same accredited investor for the issuance of a 13% senior secured promissory note with a principal amount of $1,316,000 and a purchase price of $1,250,200 after an original issue discount of $65,800. The note is convertible into shares of the Company’s Common Stock at the option of the lender. The two promissory notes begin amortizing five months after the date of each loan, with full maturity occurring twelve months after the date of each loan. See Note 15 — Subsequent Events for additional information.
F-
The Company is subject to the risks and challenges associated with companies at a similar stage of development. These include dependence on key individuals, successful development and marketing of its offerings, and competition with larger companies with greater financial, technical, and marketing resources. Furthermore, during the period required to achieve substantially higher revenue in order to become profitable, the Company will require additional funds that might not be readily available or might not be on terms that are acceptable to the Company. Until such time that the Company fully implements its growth strategy, it expects to continue to generate operating losses in the foreseeable future, mostly due to corporate overhead and costs of being a public company. As such, the Company anticipates that its existing working capital, including cash on hand, and cash generated from operations will not be sufficient to meet projected operating expenses for the foreseeable future through at least twelve months from the issuance of the consolidated financial statements. The Company will be required to raise additional capital to service the two promissory notes, to repay the principal balance of each of the notes, and to fund ongoing operations.
The Company has incurred recurring net losses, and the Company’s operations have not provided net positive cash flows. In view of these matters, there is substantial doubt about the Company’s ability to continue as a going concern. The Company plans on continuing to expand via acquisition, which will help achieve future profitability, and the Company has plans to raise capital from outside investors, as it has done in the past, to fund operating losses and to provide capital for further business acquisitions. There can be no assurance the Company can successfully raise the capital needed.
Basis of Presentation and Consolidation
The Company prepares the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and realization of assets and satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of any uncertainties related to the Company’s going concern assessment. The carrying amounts of assets and liabilities presented in the financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements include the financial statements of the Company, all entities that are wholly-owned by the Company, and all entities in which the Company has a controlling financial interest. All intercompany transactions and balances have been eliminated. Business combinations consummated during a reporting period are reflected in the Company’s results effective from the date of acquisition through the end of the reporting period.
A noncontrolling interest in a consolidated subsidiary represents the portion of the equity in a subsidiary not attributable, directly or indirectly, to the Company. Noncontrolling interests are presented as a separate component of equity in the consolidated balance sheets and the presentation of net income is modified to present earnings attributed to controlling and noncontrolling interests.
On March 21, 2022, the Company effected a 1-for-10 reverse stock split and on April 17, 2023, the Company effected a 2-for-1 forward stock split of the Company’s Common Stock issued and outstanding (including adjustments for fractional shares). As a result, all share information in the accompanying consolidated financial statements has been adjusted as if the reverse stock split and the forward stock split happened on the earliest date presented.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make certain judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures in the accompanying notes. The Company’s significant estimates relate to revenue recognition, business combinations, asset impairments, the fair value of derivatives, stock-based compensation, and income taxes.
These estimates are based on management’s best estimates and judgment. Actual results may differ from these estimates. Estimates, judgments, and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions, judgments, and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
F-
Cash and Restricted Cash
Cash includes cash in banks, cash on hand, and sweep deposits.
Restricted cash consists of cash held by the Company for certain security deposits and rent collected by the Company as part of its property management business, which will be due to owners or tenants in the future. The Company recognizes a corresponding deposit liability until the funds are released. The Company reduces a deposit liability when the associated restricted cash is transferred from escrow.
Accounts Receivable and Allowance for Credit Losses
The Company’s trade accounts receivable consist of balances due from agents, tenants, franchisees, and commissions for closings and are presented on the consolidated balance sheet net of the allowance for credit losses. The allowance is determined by a number of factors, including age of the receivable, current economic conditions, historical losses, and management’s assessment of the financial condition of the debtor. Receivables are written off once they are deemed uncollectible, which may arise when the debtor is deemed unable to pay the amounts owed to the Company. The allowance for credit losses was $83,456, including $35,360 from the six acquisitions acquired in the fourth quarter of 2023, and $29,039 as of December 31, 2023 and 2022, respectively. Estimates of uncollectible accounts receivable are recorded to general and administrative expense.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash. The Company reduces credit risk by placing its cash and cash equivalents with major financial institutions with high credit ratings. The Company maintains certain bank accounts in excess of FDIC insured limits of $250,000.
Leases
Under Financial Accounting Standards Board (“FASB”) ASC Topic 842, Leases, (“ASC 842”), the Company determines whether an arrangement is or contains a lease at contract inception. Right-of-use assets and lease liabilities, which are disclosed on the consolidated balance sheets, are recognized at the commencement date of the lease based on the present value of the lease payments over the lease term using the Company’s incremental borrowing rate on the lease commencement date. Lease expense is recognized on a straight-line basis over the term of the lease. Short-term leases, defined as leases with an initial term of twelve months or less, are not recorded on the consolidated balance sheets.
Property and Equipment, Net
Property and equipment, net is stated at cost less accumulated depreciation and accumulated impairment, if any. Cost of maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:
| Computer Equipment | 3 years | |||
| Furniture and fixtures | 7 years |
F-
Long-lived Assets Including Acquired Intangible Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the asset is not recoverable, its carrying amount would be adjusted down to its fair value. There have not been any impairments of long-lived assets for the years ended December 31, 2023 and 2022.
Intangible assets are stated at cost less accumulated amortization and accumulated impairment, if any. Amortization is calculated on a straight-line basis over the estimated useful lives of the definite-lived intangible assets, as follows:
| Useful Life | ||
| Franchise agreement | 10 to 11 years | |
| Agent relationships | 8 to 11 years | |
| Real estate listings | 1 year | |
| Non-compete agreements | 4 years |
Business Combinations
The Company has completed a number of acquisitions in 2023 and will acquire additional businesses in the future. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition. The Company allocates the purchase price, which is the sum of the consideration provided and may consist of cash, equity, or a combination of the two, in a business combination to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates, and selection of comparable companies.
To date, the assets acquired and liabilities assumed in the Company’s business combinations have primarily consisted of goodwill and finite-lived intangible assets, consisting primarily of franchise agreements, agent relationships, real estate listings, non-compete agreements, and right-of-use assets. The estimated fair values and useful lives of identifiable intangible assets are based on many factors, including estimates and assumptions of future operating performance and cash flows of the acquired business, the nature of the business acquired, and the specific characteristics of the identified intangible assets. The estimates and assumptions used to determine the fair values and useful lives of identified intangible assets could change due to numerous factors, including market conditions, technological developments, economic conditions and competition. In connection with the determination of fair values, the Company engages independent appraisal firms to assist with the valuation of intangible assets acquired and certain assumed obligations.
Transaction costs associated with business combinations are expensed as incurred.
Goodwill
Goodwill is the excess of cost over the fair value of net assets acquired. Goodwill is not amortized but tested for impairment annually or more frequently if certain circumstances indicate a possible impairment may exist. The Company recognized goodwill for the first time in the fourth quarter of 2023. The Company will perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. The qualitative assessment includes, but is not limited to, market and macroeconomic conditions, cost factors, cash flows, changes in key management personnel, and the Company’s share price. The result of this assessment determines whether it is necessary to perform a quantitative goodwill impairment test. The Company determined that there was no impairment in goodwill as of December 31, 2023.
F-
Revenue Recognition
The Company applies the provision of FASB ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company measures revenue within the scope of ASC 606 by applying the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. At contract inception, the Company assesses the goods or services promised within each contract that falls under the scope of ASC 606, determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied. The application of these five steps necessitates the development of assumptions that require judgment.
The Company records revenue based upon the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied. A performance obligation is a contractual promise to transfer a distinct good or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.
Real Estate Brokerage Services (Residential and Commercial)
The Company serves as a licensed broker in the areas in which it operates for the purpose of processing residential real estate transactions. Revenue from real estate brokerage services (residential) mainly consists of commissions generated from real estate brokerage services. The Company is contractually obligated to provide for the fulfillment of transfers of real estate between buyers and sellers. The Company provides these services itself and controls the services of its agents necessary to legally transfer the real estate. Consequently, the Company is defined as the principal in the transaction. The Company, as principal, satisfies its obligation upon the closing of a real estate transaction. The Company has concluded that agents are not employees of the Company, rather deemed to be independent contractors. Upon satisfaction of its obligation, the Company recognizes revenue in the gross amount of consideration it is entitled to receive. The transaction price is calculated by applying the Company’s portion of the agreed-upon commission rate to the property’s selling price. The Company may provide services to the buyer, seller, or both parties to a transaction. In instances in which the Company represents both the buyer and the seller in a transaction, it recognizes the full commission on the transaction. Commissions revenue contains a single performance obligation that is satisfied upon the closing of a real estate transaction, at which point the entire transaction price is earned. The Company’s customers remit payment for the Company’s services to the title company or attorney closing the sale of property at the time of closing. The Company is not entitled to any commission until the performance obligation is satisfied and is not owed any commission for unsuccessful transactions, even if services have been provided. In addition to commission, revenue from real estate brokerage services (residential) consists of annual and monthly dues charged to the agents for providing systems, accounting, marketing tools and compliance services. The annual and monthly dues are recognized each month as services are provided.
Franchising Services
The Company’s franchise agreements offer the following benefits to the franchisee: common use and promotion of La Rosa Realty trademark; distinctive sales and promotional materials; access to technology and training; and recommended procedures for operation of La Rosa Realty franchises. The Company concluded that these benefits are highly related and part of one performance obligation for each franchise agreement, a license of symbolic intellectual property that is billed through a variety of fees including (i) initial franchise fees, (ii) annual dues and (iii) royalty fees. Initial franchise fees consist of a fixed fee payable upon signing the franchise agreement. Annual dues are calculated at a fixed fee per agent (prorated for any partial year) payable annually before the 10th day of January or within 10 days after each agent commences their association with the franchise. Royalty fees are calculated as the greater of a (a) fixed percentage of gross commission income for the period which is made up of all commissions, transaction fees, property management fees, and monthly fees earned by the Franchisee and the Franchisee’s independent sales associates, agents, representatives, contractors, employees, partners, directors, officers, owners, or affiliates, regardless of whether or not such individuals or affiliates are entitled to retain all or part of such gross commission income, or (b) a fixed monthly fee.
F-
Coaching Services
The Company provides mandatory training and guidance to newly licensed agents for their first four sales transactions. For each of the four transactions the newly licensed agents completes, La Rosa Coaching earns 13% of the commission and the brokerage who sponsors the agent, which may be La Rosa Realty, earns 10% of the commission. Coaches also provide optional special education services throughout the year to agents.
Property Management
The Company provides property management services on a contractual basis for owners who lease their residential properties. These services include managing daily operations of the property, tenant background screening, overseeing the tenant application process, and accounting services. The Company is compensated for its services through a flat monthly management fee. At the option of the owner, the Company can also facilitate and account for repair and remodeling costs for properties under management. These costs are not included in the transaction price as the customer is the party paying and receiving these services. Property management services represent a series of distinct daily services rendered over time. Consistent with the transfer of control for distinct, daily services to the customer, revenue is recognized at the end of each period for the fees associated with the services performed.
The amount of revenue recognized is presented gross for any services provided by the Company, as it is under the Company’s control. This is evidenced by the Company’s obligations for its performance and its ability to direct and redirect the work, as well as negotiate the value of such services.
See Note 12 — Segments for additional information on revenue from contracts with customers.
Cost of Revenue
Cost of revenue consists primarily of agent commissions less fees paid by the agents owed to the Company, disbursements to property owners under property management, and the cost of interchange and other fees for credit card processing services.
Advertising
Advertising costs are expensed as incurred. Advertising expenses for the years ended December 31, 2023 and 2022 was $89,501 and $89,565, respectively, and included in sales and marketing expenses in the consolidated statements of operations.
Debt Discounts and Debt Issuance Costs
Debt discounts and costs incurred in connection with obtaining new debt financing are deferred and amortized over the life of the related financing. Debt discounts and deferred costs are recognized as a direct reduction in the carrying amount of the debt instrument on the consolidated balance sheets and are recognized on the consolidated statements of operations to amortization of financing fees over the term of the related debt using the effective interest method. For the years ended December 31, 2023 and 2022, the Company recorded amortization of debt discounts and debt issuance costs of $1,016,644 and $349,913, respectively. Upon abandonment of a pending financing transaction, the related deferred financing costs are charged to expense.
Deferred Offering Costs
The Company capitalized certain legal, accounting, and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ equity as a reduction of additional paid-in capital. Should the planned equity financing be abandoned, the deferred offering costs would be expensed immediately as a charge to operating expenses in the consolidated statement of operations. Deferred offering costs were $1,760,447 as of December 31, 2022. On October 12, 2023 the Company completed its IPO and incurred offering expenses of $2,544,459, which were recorded against the proceeds received from the IPO.
F-
Income Taxes
The Company accounts for income taxes under the liability method, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided if it is determined that it is more likely than not that the deferred tax asset will not be realized. The Company records interest (and penalties where applicable), net of any applicable related income tax benefit, on potential income tax contingencies as a component of the income tax provision.
The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable upon examination. Measurement (step two) determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more likely-than-not threshold of being sustained.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2023 and 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The United States is the Company’s only tax jurisdiction.
Stock Based Compensation
The Company issues stock-based awards to employees, directors, and non-employees that are generally in the form of stock options, restricted shares, or restricted stock units (“RSUs”). Compensation cost for equity awards is measured at their grant-date fair value, and in the case of restricted shares and RSUs, fair value is determined based on the price of the Company’s underlying Common Stock. The grant date fair value of stock options is estimated using the Black-Scholes option pricing model. The Black-Scholes model requires the use of a number of assumptions including volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the stock options.
The expense for awards is recognized over the requisite service period (generally the vesting period of the award). The Company has elected to treat awards with only service conditions and with graded vesting as one award. Consequently, the total compensation expense is recognized straight-line over the entire vesting period, so long as the compensation cost recognized at any date at least equals the portion of the grant date fair value of the award that is vested at that date. The Company recognizes forfeitures as they occur.
See Note 9 — Equity Incentive Plan for additional information.
Recently Adopted Accounting Standards
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. In addition, an entity will have to disclose significantly more information about allowances and credit quality indicators. The new standard was effective for the Company for fiscal years beginning after December 15, 2022. The Company adopted the standard beginning in fiscal year 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06 that, among other updates, simplifies the guidance in ASC 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, by removing certain criteria that must be satisfied in order to classify a contract as equity. The ASU is effective for smaller reporting companies for fiscal years beginning after December 15, 2023 and early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The Company adopted the standard beginning in fiscal year 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.
In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, addressing areas identified by the FASB as part of its post-implementation review of its previously issued credit losses standard (ASU 2016-13) that introduced the current expected credit losses (CECL) model. ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhances disclosure requirements for certain loan refinancings and restructurings made with borrowers experiencing financial difficulty. This update requires an entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. As the Company has already adopted ASU 2016-13, the new guidance was adopted on January 1, 2023. The adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements.
F-
Recently Issued Accounting Standards Not Yet Adopted
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction and requires certain disclosures for equity securities subject to contractual sale restrictions. ASU 2022-03 is effective for the Company in the fiscal year beginning after December 15, 2023, and interim periods within the fiscal year. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact that the adoption of this new accounting standard will have on its consolidated financial statements.
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification (“Codification”). The amendments are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. ASU 2023-06 will become effective for each amendment on the effective date of the SEC's corresponding disclosure rule changes. The Company is currently evaluating the impact that the adoption of this new standard will have on its consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The ASU is effective for annual reporting periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s segment disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures amending existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. The ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis. The Company is currently evaluating the ASU to determine its impact on the Company’s income tax disclosures.
Note 2 — Fair Value Measurements
Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company follows ASC 820, Fair Value Measurement, for financial assets and liabilities measured at fair value on a recurring basis. The Company uses the fair value hierarchy to categorize the financial instruments measured at fair value based on the available inputs to the valuation and the degree to which they are observable or not observable in the market.
The three levels of the fair value hierarchy are as follows:
| ● | Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; |
| ● | Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and |
| ● | Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.
The carrying amounts of financial instruments, including cash, accounts receivable, accounts payable, and accrued expenses reflected in the consolidated financial statements approximate fair value due to their short-term maturities.
The Company determined that during the years ended December 31, 2023 and 2022 certain instruments qualified as derivative liabilities and are recorded at fair value on the date of issuance and re-measured at fair value each reporting period with the change reported in earnings. The fair value of these instruments was computed using the Black Scholes model, incorporating transaction details such as the assumed price of the Company’s Common Stock at an initial public offering, contractual terms, maturity and risk-free rates, as well as assumptions about future financings, volatility, and holder behavior.
A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows:
| As of December 31, 2023 | As of December 31, 2022 | |||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | $ | $ | $ | 1,022,879 | $ | 1,022,879 | ||||||||||||||||||||||
F-
The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the years ended December 31, 2023 and 2022:
| 2023 | 2022 | |||||||
| Beginning Balance | $ | 1,022,879 | $ | 141,672 | ||||
| Issuance of derivative liability | 7,500 | 760,608 | ||||||
| Cash paid to settle derivative liability | (7,500 | ) | ||||||
| Issuance of common stock related to the derivative liability | (450,000 | ) | ||||||
| Extinguishment of derivative liability | (433,894 | ) | ||||||
| Change in fair market value | (138,985 | ) | 120,599 | |||||
| Balance – December 31, | $ | $ | 1,022,879 | |||||
Note 3 — Business Combinations
On October 12, 2023, the Company completed its IPO. Following the IPO, the Company acquired majority ownership of the following franchisees of the Company: Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.) (“Lake Nona”), Horeb Kissimmee Realty, LLC (“Kissimmee”), La Rosa Realty Premier, LLC (“Premier”), and La Rosa Realty Orlando, LLC (“Orlando”), and 100% ownership of the following franchisees of the Company: La Rosa CW Properties, LLC (“CW Properties”) and La Rosa Realty North Florida LLC (“North Florida”). All six franchises engage mostly in the residential real estate brokerage services to the public primarily through sales agents and also provide coaching and support services to agents on a fee basis.
The acquisitions were accounted for using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date.
The following table summarizes the purchase consideration and the purchase price allocation to the estimated fair values of the identifiable assets acquired and liabilities assumed for the six acquisitions:
| Lake Nona | Kissimmee | CW Properties | Premier | Orlando | North Florida | Total | ||||||||||||||||||||||
| Acquired ownership | 51 | % | 51 | % | 100 | % | 51 | % | 51 | % | 100 | % | ||||||||||||||||
| Acquisition date | 10/13/2023 | 10/16/2023 | 12/12/2023 | 12/13/2023 | 12/20/2023 | 12/28/2023 | ||||||||||||||||||||||
| Common stock issued | 324,998 | 513,626 | 714,286 | 259,023 | 415,506 | 522,675 | 2,750,114 | |||||||||||||||||||||
| Cash consideration | $ | 50,000 | $ | 500,000 | $ | $ | 15,000 | $ | $ | 300,000 | $ | 865,000 | ||||||||||||||||
| Equity consideration | 974,994 | 1,438,153 | 1,200,000 | 393,715 | 648,190 | 831,053 | 5,486,105 | |||||||||||||||||||||
| Total purchase price | 1,024,994 | 1,938,153 | 1,200,000 | 408,715 | 648,190 | 1,131,053 | 6,351,105 | |||||||||||||||||||||
| Noncontrolling interest | 984,798 | 1,862,147 | 392,687 | 622,770 | 3,862,402 | |||||||||||||||||||||||
| Acquisition date fair value | $ | 2,009,792 | $ | 3,800,300 | $ | 1,200,000 | $ | 801,402 | $ | 1,270,960 | $ | 1,131,053 | $ | 10,213,507 | ||||||||||||||
| Purchase price allocation | $ | 2,009,792 | $ | 3,800,300 | $ | 1,200,000 | $ | 801,402 | $ | 1,270,960 | $ | 1,131,053 | $ | 10,213,507 | ||||||||||||||
| Less fair value of net assets acquired: | ||||||||||||||||||||||||||||
| Cash | 104,929 | 163,924 | 71,589 | 23,023 | 15,952 | 43,839 | 423,256 | |||||||||||||||||||||
| Working capital (less cash) | (177,064 | ) | (270,028 | ) | (94,755 | ) | 58 | (33,369 | ) | (58,206 | ) | (633,364 | ) | |||||||||||||||
| Intangible assets | 1,172,141 | 1,700,161 | 438,760 | 263,260 | 517,797 | 613,464 | 4,705,583 | |||||||||||||||||||||
| Long-term assets | 371,132 | 184,440 | 64,282 | 7,406 | 32,132 | 659,392 | ||||||||||||||||||||||
| Long-term liabilities | (396,936 | ) | (195,368 | ) | (34,756 | ) | (450 | ) | (16,462 | ) | (643,972 | ) | ||||||||||||||||
| Net assets acquired | 1,074,202 | 1,583,129 | 445,120 | 293,297 | 500,380 | 614,767 | 4,510,895 | |||||||||||||||||||||
| Goodwill | $ | 935,590 | $ | 2,217,171 | $ | 754,880 | $ | 508,105 | $ | 770,580 | $ | 516,286 | $ | 5,702,612 | ||||||||||||||
The purchase consideration of North Florida was comprised of both equity and cash. In accordance with the terms of the purchase agreement, the cash consideration of $300,000 is to be paid over an eight-month period beginning January 2024, with two thirds of the balance to be paid in August 2024. The full cash consideration has been accrued as of December 31, 2023. The cash commitment does not include any contingencies.
Goodwill generated from the acquisition is primarily attributable to expected synergies from future growth and strategic advantages provided through expansion and is not expected to be deductible for income tax purposes.
The classes of intangible assets acquired and the estimated useful life of each class is presented in the table below for the six acquisitions:
| Lake Nona | Kissimmee | CW Properties | Premier | Orlando | North Florida | Total | ||||||||||||||||||||||
| Franchise agreement (10 to 11 years) | $ | 967,107 | $ | 1,199,274 | $ | 359,201 | $ | 234,485 | $ | 402,351 | $ | 580,663 | $ | 3,743,081 | ||||||||||||||
| Agent relationships (8 to 11 years) | $ | 86,688 | $ | 327,123 | $ | 37,068 | $ | — | $ | 71,901 | $ | — | $ | 522,780 | ||||||||||||||
| Real estate listings (1 year) | $ | 82,016 | $ | 116,550 | $ | 31,277 | $ | 23,456 | $ | 25,128 | $ | 20,371 | $ | 298,798 | ||||||||||||||
| Non-compete agreements (4 years) | $ | 36,330 | $ | 57,214 | $ | 11,214 | $ | 5,319 | $ | 18,417 | $ | 12,430 | $ | 140,924 | ||||||||||||||
| Total identifiable intangible assets acquired | $ | 1,172,141 | $ | 1,700,161 | $ | 438,760 | $ | 263,260 | $ | 517,797 | $ | 613,464 | $ | 4,705,583 | ||||||||||||||
F-
The amounts of revenue, cost of revenue, gross profit, and loss from operations before income taxes of the six acquisitions included in the Company’s Consolidated Statement of Operations from the date of the acquisition for the year ended December 31, 2023 is as follows:
| Year ended | ||||
| December 31, 2023 |
||||
| Revenue | $ | 4,585,978 | ||
| Cost of revenue | $ | 4,232,694 | ||
| Gross profit | $ | 353,284 | ||
| Loss before provision for income taxes | $ | (1,823 | ) | |
| Weighted average shares used in computing net loss per share of common stock | 9,799,084 |
|||
The following unaudited pro forma financial information presents the combined operating results of the Company, Lake Nona, Kissimmee, and the four acquisitions as if each acquisition had occurred as of January 1, 2023. The unaudited pro forma financial information includes the accounting effects of the business combinations, including adjustments to the amortization of intangible assets. The unaudited pro forma information does not necessarily reflect the actual results that would have been achieved, nor is it necessarily indicative of the Company’s future consolidated results.
The unaudited pro forma financial information is presented in the table below for the year ended December 31, 2023:
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenue | $ | 61,432,298 | $ | 60,948,732 | ||||
| Cost of revenue | $ | 56,440,603 | $ | 55,908,867 | ||||
| Gross profit | $ | 4,991,695 | $ | 5,039,866 | ||||
| Loss before provision for income taxes | $ | (7,698,511 | ) | $ | (2,570,641 | ) | ||
| $ | (0.94 | ) | $ | (0.29 | ) | |||
| Weighted average shares used in computing net loss per share of common stock attributable to common stockholders | 9,799,084 | 8,750,114 | ||||||
F-
Note 4 — Goodwill and Intangible Assets
Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. The Company recognized goodwill for the first time in the fourth quarter of 2023; as such, the Company will begin goodwill testing in 2024. The gross carrying amount of goodwill as of December 31, 2023 was $5,702,612.
The components of purchased intangible assets were as follows:
| Weighted | ||||||||||||||
| Average | ||||||||||||||
| Remaining | December 31, 2023 | |||||||||||||
| Amortization | Gross | |||||||||||||
| Period (in years) |
Carrying Amount |
Accumulated Amortization |
Net Amount |
|||||||||||
| Franchise agreement | 11 | $ | 3,743,081 | $ | 32,334 | $ | 3,710,747 | |||||||
| Agent relationships | 8 | 522,780 | 8,692 | 514,088 | ||||||||||
| Real estate listings | 1 | 298,798 | 28,366 | 270,432 | ||||||||||
| Non-compete agreements | 4 | 140,924 | 3,742 | 137,182 | ||||||||||
| Total | 10 | $ | 4,705,583 | $ | 73,134 | $ | 4,632,449 | |||||||
The Company recorded $73,134 of amortization of the intangible assets during the year ended December 31, 2023. Based on the intangible assets recorded at December 31, 2023, and assuming no subsequent additions to or impairment of the underlying assets, the remaining estimated annual amortization expense is expected to be as follows:
| Amortization | ||||
| 2024 | $ | 720,661 | ||
| 2025 | 450,229 | |||
| 2026 | 450,229 | |||
| 2027 | 450,229 | |||
| 2028 | 415,934 | |||
| Thereafter | 2,145,167 | |||
| Total | $ | 4,632,449 | ||
Note 5 — Leases
The Company has operating leases for office space in several states. Lease terms are negotiated on an individual basis. Generally, the leases have initial terms ranging from one to five years. Renewal options are typically not recognized as part of the right of use assets and lease liabilities as it is not reasonably certain at the lease commencement date that the Company will exercise these options to extend the leases.
The Company elected certain practical expedients under ASC 842 which allows the Company to combine lease and non-lease components of lease payments in determining right-of-use assets and related lease liabilities. The Company also elected the short-term lease exception. Leases with an initial term of twelve-months or less that do not include an option to purchase the underlying asset are not recorded on the consolidated balance sheets and are expensed on a straight-line basis over the lease term.
F-
The Company leases its corporate office from an entity controlled by the Company’s CEO. The rent expense for the year ending December 31, 2023 was $134,505. During 2022, no rent expense was charged to the Company. There is no written agreement, and the rent is determined on a month-to-month basis. There are no future minimum rental payments, and the lease may be cancelled at any time by either party. On July 1, 2023, the Company began leasing office space for its subsidiary, La Rosa Realty, from an entity owned by Joseph La Rosa, the Company’s CEO, and Michael La Rosa, the Company’s member of the Board. There is a written lease, which includes minimum monthly rent of $4,593, with a term ending in June 2025.
Lease costs for the years ended December 31, 2023 and 2022 was $311,722 and $169,163, respectively, and included in general and administrative expenses in the consolidated statements of operations.
Supplemental cash flow information related to leases is as follows:
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | 94,655 | $ | |||||
| Right-of-use assets obtained in exchange for lease liabilities | $ | 267,914 | $ | |||||
During the year ended December 31, 2023, the Company acquired six franchisees, of which four had remaining lease terms beyond twelve months, resulting in an increase of $644,498 in right-of-use assets and an increase in lease liabilities of $661,165.
Supplemental balance sheet information related to leases is as follows:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Assets: | ||||||||
| Right-of-use assets | $ | 687,570 | $ | |||||
| Liabilities: | ||||||||
| Lease liability, current | 340,566 | |||||||
| Lease liability, noncurrent | 363,029 | |||||||
| $ | 703,595 | $ | ||||||
The Company’s leases do not provide a readily determinable implicit discount rate. The Company estimates its incremental borrowing rate as the discount rate based on the information available at lease commencement. The weighted average discount rate is 4.76%.
F-
Future maturities on lease liabilities as of December 31, 2023, are as follows:
| December 31, | ||||
| 2023 | ||||
| 2024 | $ | 366,583 | ||
| 2025 | 191,386 | |||
| 2026 | 110,730 | |||
| 2027 | 78,342 | |||
| 2028 | 2,532 | |||
| Total minimum lease payments | 749,573 | |||
| Less: imputed interest | (45,978 | ) | ||
| Present value of lease obligations | 703,595 | |||
| Less: current portion | (340,566 | ) | ||
| Long-term portion of lease obligations | $ | 363,029 | ||
There were no leases with residual value guarantees.
Note 6 — Borrowings
Line of Credit
The Company has a line of credit with Regions Bank that allows for advances up to $150,000 with interest at the Prime Rate plus 4.75% with a floor of 4.75% and no maturity date. On December 31, 2023, the interest rate was 13.25% and no amount was drawn under the facility. On December 31, 2022, the outstanding balance on the line of credit was $86,163. The line of credit is collateralized by Company assets.
Term Debt
Total term debt is comprised of the following:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Note payable and OID Note | $ | $ | 250,788 | |||||
| Economic Injury Disaster Loans | 619,527 | 360,912 | ||||||
| Total Notes Payable | 619,527 | 611,700 | ||||||
| Less: Current Portion | (4,400 | ) | (250,788 | ) | ||||
| $ | 615,127 | $ | 360,912 | |||||
Future maturities of term debt as of December 31, 2023, were as follows:
| 2024 | $ | 4,400 | ||
| 2025 | 4,400 | |||
| 2026 | 4,400 | |||
| 2027 | 4,400 | |||
| 2028 | 4,400 | |||
| Thereafter | 597,527 | |||
| Total | $ | 619,527 |
F-
Note Payable
On August 22, 2022, the Company issued to an unaffiliated private investor an unsecured subordinated promissory note that was used for general corporate purposes in the principal amount of $250,000 with a coupon rate of 15% per annum. This note had an original maturity of the earlier of the consummation of the closing of an IPO by the Company or on November 23, 2022. After November 2022, the maturity was extended seven times, with all terms remained unchanged, except beginning January 1, 2023, the Company no longer made monthly interest payments and the principal balance along with all accrued but unpaid interest would be due on note maturity. The last amendment had a final maturity of the earlier of the consummation of the closing of an IPO by the Company or on October 31, 2023. The Company repaid the note principal and all unpaid accrued interest at the closing of the Company’s IPO on October 12, 2023. In addition, the Company issued 5,000 unregistered, restricted shares of Common Stock valued at $25,000 based on the per unit price of the Company’s IPO to the private investor.
OID Note
On November 14, 2022, the Company and Emmis Capital II, LLC, an affiliate of one of the Company’s consultants (“Emmis Capital”), entered into a securities purchase agreement and senior secured promissory note (“OID Note”) in the principal amount of $277,778 that was used for general corporate purposes. The OID Note had an original issue discount of 10%, a coupon rate of 10% per annum, a default interest rate of 24% per annum, and a $5,000 per month per occurrence delinquency penalty. The note holder had the right at any time, at the holder’s option, to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest into shares of the Company’s Common Stock at a price equal to the offering price of the IPO multiplied by 0.75, with certain provisions. The Company also issued warrants to the lenders that are exercisable for 50,000 shares of the Company’s Common Stock and (i) have a term of 60 months; (ii) have full ratchet anti-dilution protection provisions; (iii) are exercisable for a number of shares of the Company’s Common Stock equal to the number of shares that would be issued upon full conversion of this Note; and (iv) have an exercise price equal to the lower of: (A) $5.00 per share, or (B) the price per share of any subsequent offering undertaken by the Company. The Company also granted to the lenders: (i) upon the repayment of the loan, 30,000 shares of the Company’s Common Stock (based on an assumed offering price of $5.00 per share, (ii) the right to participate in any future financings, (iii) additional “piggy back” registration rights, (iv) the right to rollover the principal and interest due to acquire Company securities in any future public or private offering, (v) extensive and non-customary default provisions in the note, and (vi) certain other affirmative and negative covenants. The loan had a maturity of the earlier of (i) six months from the date of issue or (ii) upon the completion of the Company’s IPO. The Company and Emmis Capital agreed to extend the maturity date of the loan to the earlier of the date when the Common Stock is listed on Nasdaq, or July 31, 2023. The parties agreed that in the event of listing of the Common Stock on Nasdaq prior to July 31, 2023, on the effective date of the registration statement, the Company would issue to Emmis Capital shares of Common Stock valued at the IPO price, in lieu of a cash, of the $5,000 delinquency penalty payable from May 14, 2023 to July 31, 2023. In the event the listing was not completed by July 31, 2023, then the delinquency fee would be paid in cash. In addition, Emmis Capital agreed to waive any and all events of default existing under the securities purchase agreement and the OID Note as of June 21, 2023, including but not limited to its right to receive default interest and to receive any additional fees, penalties and charges. On August 28, 2023, the Company repaid the OID Note with a principal balance of $277,778, accrued interest of $21,842, and a delinquency penalty of $17,258. In addition, in accordance with the terms of the OID Note, the Company issued 30,000 shares of Common Stock to Emmis Capital.
Economic Injury Disaster Loans
On June 1, 2020, the Company received net proceeds from Economic Injury Disaster Loans (the “EIDL Loans”) from the Small Business Administration (“SBA”) in the aggregate amount of $365,300. After processing fees, the net proceeds were $365,100 under the terms. The EIDL Loans, which are in the form of promissory notes, mature in May 2050 and bear interest at a rate of 3.75% per annum. Payments are to be made monthly, and each payment is applied first to the interest accrued to the date of receipt of each payment and any remaining payment is applied to principal. The loan terms provide for a collateral interest for the SBA and limits the use of proceeds to working capital to alleviate the effects of COVID-19 on the Company’s economic condition.
During the fourth quarter of 2023, the Company acquired two franchisees that had outstanding EIDL Loans in the aggregate of $263,000. The Company acquired the EIDL Loans, and the EIDL loans have terms similar to the Company’s existing EIDL loans. The EIDL Loans mature in June 2050 and July 2050 and bear interest at a rate of 3.75% per annum.
F-
Convertible Notes
Total convertible notes comprised of the following:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Principal amount | $ | $ | 606,000 | |||||
| Unamortized debt discount | (18,486 | ) | ||||||
| Unamortized debt issuance costs | (1,735 | ) | ||||||
| Net carrying value | $ | $ | 585,779 | |||||
In two private placements conducted from July 2021 through October 2022, the Company entered into convertible note purchase agreements pursuant to which the Company issued unsecured convertible promissory notes (“Convertible Notes”). The Company issued convertible notes in the aggregate principal amount of $616,000 that was used for general corporate purposes. Interest accrued on the principal amount of 16 of the convertible notes at 2.5% per annum with a default rate of 3% per annum. Interest accrued on the principal amount of seven of the Convertible Notes at 18% per annum, with a default interest rate of 20% per annum. The convertible notes had a maturity date of the earlier of the date that the Company’s Common Stock became listed for trading on a national securities exchange or one year from the date of issue of each such note. Prior to the maturity date, the convertible notes would convert the outstanding principal and accrued interest automatically into shares of the Company’s Common Stock on the date of the closing of an IPO at a price per share equal to the IPO price multiplied by 0.80. The conversion feature was deemed to be a derivative liability; as such, the Company recorded a debt discount of $203,782, which represented the fair value of the derivative liabilities at the commitment dates. In addition, the Company incurred $25,000 of professional fees directly related to the issuances of the convertible notes which was recorded as debt issuance costs. The convertible notes had original maturities at various times during 2022 and 2023, which all were extended into 2023. In December 2022, the Company repaid one convertible note with a principal amount of $10,000 plus accrued interest.
During 2023, the Company exchanged, in a private placement under Sections 3(a)(9) and 4(a)(2) of the Securities Act, 18 of the above convertible promissory notes, representing an aggregate amount of principal and accrued interest of $598,836, for 591 shares of the Company’s series A preferred stock at an exchange rate of $1,000 per share.
On the closing of the Company’s IPO on October 12, 2023, the Company repaid the principal and accrued interest of three of the remaining convertible notes totaling $94,433, and the remaining convertible note with a principal balance plus accrued interest of $26,265 was converted into 6,566 shares of the Company’s unregistered, restricted Common Stock based on the IPO price of $5.00.
The Company accrued interest totaling $21,285 and $91,821 during the year ending December 31, 2023 and 2022, respectively.
Cash Advance Agreement
On July 3, 2023, the Company entered into a standard merchant cash advance agreement (the “Cash Advance”) with Cedar Advance LLC (“Cedar”) for the purchase and sale of future receipts pursuant to which the Company sold in the aggregate $764,150 in future receipts of the Company for $500,650. Future receipts include cash, check, credit or debit card, electronic transfer, or other form of monetary payment. Until the purchase price has been repaid, the Company agreed to pay Cedar $27,188 per week. In addition, the Company granted Cedar a security interest in all of the Company’s accounts, including deposit accounts and accounts receivable and proceeds. The Company recorded a debt discount in the amount of $237,150 based upon the difference between the amount of future receipts sold and the actual proceeds received by the Company and debt issuance costs of $26,350. The debt discount and debt issuance costs are reflected as a reduction on the outstanding liability and are being amortized as non-cash interest expense using the effective interest method over the term of the agreement. During the year ended December 31, 2023, non-cash interest expense of $256,080 was recorded from the amortization of the debt discount and the debt issuance costs. As of December 31, 2023, the remaining gross balance of the Cash Advance was $84,463 and a net carrying value of $77,042, which was fully repaid in January 2024.
Total cash advance agreement comprised of the following:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Principal amount | $ | 84,463 | $ | |||||
| Unamortized debt discount | (4,597 | ) | ||||||
| Unamortized debt issuance costs | (2,824 | ) | ||||||
| Net carrying value | $ | 77,042 | $ | |||||
F-
Note 7 — Warrants
Warrants are issued to consultants as compensation or as part of certain capital raises which entitle the holder to purchase shares of the Company’s Common Stock at a fixed price. The strike price of warrants granted in 2022 were set when the Company completed the IPO pricing agreement with the Company’s underwriters on October 9, 2023, which was $5.00.
At December 31, 2023, warrants outstanding that have vested and are expected to vest are as follows:
Number
of |
Weighted
|
Weighted |
Aggregate Intrinsic |
|||||||||||||
| Vested | 140,000 | $ | 9.29 | 3.46 | ||||||||||||
| Expected to vest | 50,000 | 5.50 | 4.76 | |||||||||||||
| Total | 190,000 | $ | 8.29 | 3.80 | ||||||||||||
Additional information with respect to warrant activity:
| Number of Shares |
Weighted
|
|||||||
| Balance – December 31, 2021 | 40,000 | $ | 20.00 | |||||
| Granted | 100,000 | $ | 5.00 | |||||
| Exercised | ||||||||
| Expired or forfeited | ||||||||
| Balance – December 31, 2022 | 140,000 | $ | 9.29 | |||||
| Granted | 50,000 | 5.50 | ||||||
| Exercised | ||||||||
| Expired or forfeited | ||||||||
| Balance – December 31, 2023 | 190,000 | $ | 8.29 | |||||
F-
During 2022 the Company issued warrants to lenders of the Company, including the Company’s CEO, to purchase 100,000 shares of Common Stock. The warrants were immediately vested and have a term of five years from the grant date with an exercise price of $5.00. The warrants are freestanding instruments in a bundled transaction with debt offerings and are accounted for separately. The Company determined that the warrants are classified as equity, and the proceeds of the debt offerings were allocated based on the relative fair values of the debt instruments and the warrants.
During 2023 the Company issued warrants to purchase 50,000 shares of Common Stock to the Company’s underwriter as compensation for providing services to complete the Company’s IPO. The warrants vest on April 2, 2024 and have a term of five years from the grant date with an exercise price of $5.50. The warrants are freestanding instruments in a bundled transaction with the IPO and are accounted for separately. The Company determined that the warrants are classified as equity.
As of December 31, 2023, there was no unrecognized expense related to warrants. As of December 31, 2022, unrecognized amortization of financing fees related to warrants granted totaled $149,995, all of which was recognized in 2023.
The valuation methodology used to determine the fair value of the warrants was the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the warrant.
Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s estimated volatility is an average of the historical volatility of peer entities over the shorter of i) the period equal to the expected life of the award or ii) the period over which the peer company was publicly traded. The Company uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price.
The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the award at the grant date.
The weighted average fair value of warrants granted and the assumptions used in the Black-Scholes model are set forth in the table below.
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Weighted average fair value | $ | 2.96 | $ | 5.70 | ||||
| Dividend yield | 0 | % | 0 | % | ||||
| Expected volatility factor | 69.6 | % | 63.8 | % | ||||
| Risk-free interest rate | 4.69 | % | 3.84 | % | ||||
| Expected life (in years) | 5 | 5 | ||||||
F-
Note 8 — Stockholders’ Equity
The Company is authorized to issue two classes of stock consisting of 250,000,000 shares of Common Stock, $0.0001 par value per share, and 50,000,000 shares of preferred stock, $0.0001 par value per share. On July 22, 2021, the Company issued 6,000,000 shares of Common Stock and 2,000 shares of Series X Super Voting Preferred Stock to Mr. La Rosa as compensation for services and the founding of the Company.
Common Stock
On March 18, 2022, the Company effected a 1-for-10 reverse stock split of its Common Stock issued and outstanding. On April 17, 2023, the Company effected a 2-for-1 forward stock split of its Common Stock issued and outstanding (including adjustments for fractional shares). As a result, all share information in the accompanying financial statements has been adjusted as if the reverse stock split and forward stock split happened on the earliest date presented. The par value of the Common Stock was not impacted by either of the splits.
At December 31, 2023 and 2022 there were 13,406,480 and 6,000,000 shares of Common Stock issued and outstanding, respectively. Holders of common stock are entitled to one vote per share. Holders of Common Stock are not entitled to receive dividends unless declared by the Board of Directors.
Initial Public Offering
On October 12, 2023 the Company completed its IPO and sold 1,000,000 shares of its Common Stock at a price to the public of $5.00 per share, resulting in gross proceeds of $5,000,000. The Company received net proceeds of $4,360,000 after underwriter discounts, commissions, and expenses. The Company also incurred other offering expenses of $2,544,459 and issued 1,393,618 common shares to service providers related to the IPO. These expenses were recorded against the proceeds received from the IPO.
The Company used the proceeds to repay existing debt and accrued interest of approximately $375,000, related party debt of approximately $150,000, existing accounts payable of $1,000,000, and $550,000 toward the purchase of two franchised La Rosa offices. See Note 3 — Business Combinations for additional information.
Common Stock Issuances for IPO Services
On May 12, 2021, the Company entered into a capital market advisory agreement with a consultant. During 2022, the parties amended the agreement, and in addition to other compensation, the amended agreement required the Company to issue 400,000 shares, as adjusted for the stock splits, when the Company’s Common Stock starts trading on a senior exchange. The Company issued the shares on October 9, 2023 valued at the IPO price of $5.00 a share.
On January 10, 2022, the Company entered into an investment banking agreement with a consultant. In addition to other compensation, the agreement required the issuance of Common Stock of the Company equal to 4.0% of the Company. Such shares were to be held in book entry at the transfer agent and were not eligible to be sold until the Company trades on a senior exchange. The consultant was granted anti-dilution protection such that they retained 4.0% of the Company’s fully diluted shares outstanding after the senior exchange listing. The Company evaluated the agreement and determined that the performance condition was satisfied on July 31, 2023. As such, the Company issued 250,168 shares of Common Stock on July 31, 2023, valued at the then expected IPO price of $5.00 a share. Upon the completion of the Company’s IPO on October 12, 2023, the Company issued 228,656 shares of Common Stock, valued at the IPO price of $5.00 a share, representing the remaining shares to be issued to the consultant.
Upon the closing of the Company’s IPO, the Company issued 514,794 shares of Common Stock valued at the IPO price of $5.00 a share to certain third-party service providers in accordance with the respective contractual agreements who directly worked on the IPO process. A portion of the value of the shares extinguished $157,856 of existing accounts payable.
F-
Additional Common Stock Issuances
On August 28, 2023, the Company repaid an OID Note and, in accordance with the terms of the original note, the Company issued 30,000 shares of Common Stock to the lender, valued at the expected IPO price of $5.00 a share.
On October 12, 2023, the Company completed its IPO and, in accordance with the debt agreement the Company executed in December 2022 with the Company’s CEO, the Company issued 60,000 shares of unregistered, restricted Common Stock to the Company’s CEO with a value of $5.00 per share.
On October 12, 2023, upon the repayment of a note payable to one of the Company’s lenders, the Company issued 5,000 shares of unregistered, restricted Common Stock with a value of $5.00 per share in accordance with the debt agreement.
In September 2023, the Company executed a consulting agreement with a service provider to supply certain investor relations services post-IPO. As part of the agreement, the Company issued 125,000 shares of the Company’s unregistered, restricted Common Stock, which were issued on October 13, 2023 and valued at $3.00 per share.
In December 2023, the Company executed a consulting agreement with a service provider to supply certain investor relations services. As part of the agreement, the Company issued 100,000 shares of the Company’s unregistered, restricted Common Stock, which were issued on December 18, 2023 and valued at $1.98 per share.
In the fourth quarter of 2023, the Company acquired controlling interests in four of its franchisees and full control of two of its franchisees. As part of the purchase consideration of all six of the acquisitions, the Company issued 2,750,114 of the Company’s unregistered, restricted Common Stock. Each of the selling members entered into lock-up/leak out agreements with the Company. Pursuant to these agreements, the selling members are restricted from selling more than one-twelfth of the shares they received per calendar month during the one-year period commencing after the six-month holding period under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), subject to applicable securities laws. See Note 3 — Business Combinations for additional information regarding the acquisitions.
Debt Conversion to Common Stock
Upon the first day of trading of the Company’s Common Stock on the Nasdaq stock exchange on October 10, 2023, one remaining convertible note with a principal balance plus accrued interest of $26,265 was converted into 6,566 shares of the Company’s unregistered, restricted Common Stock based on the IPO price of $5.00.
Series X Super Voting Preferred Stock
On July 29, 2021, the Company filed an Amended and Restated Articles of Incorporation with the Secretary of State of Nevada authorizing 50,000,000 shares of “blank check” preferred stock. The Company designated 2,000 shares of the authorized preferred stock as Series X Super Voting Preferred Stock and issued 100% of the Super X Super Voting Preferred Stock to the Company’s CEO. Each share of the Series X Super Voting Preferred Stock entitles its holder to 10,000 votes per share and votes with the Company’s Common Stock as a single class on all matters to be voted or consented upon by the stockholders. The Series X Super Voting Preferred Stock is not convertible into Common Stock or any other securities of the Company. The holders of the Series X Super Voting Preferred Stock are not entitled to any dividend rights or any liquidation preference and have no subscription, redemption or conversion privileges.
Series A Preferred Stock
On February 13, 2023, the Company designated 11,000 shares of the authorized preferred stock as series A preferred stock. The holders of the series A preferred stock do not have voting rights, redemption rights, dividend rights, anti-dilution rights, nor liquidation rights. Each share of the series A preferred stock will automatically convert into shares of the Company’s Common Stock upon the earlier of the closing date of the Company’s IPO or upon a change in control of the Company. Upon the Company’s IPO, the value of each share is converted to common stock at a 30% discount of the IPO price. The discount is accounted for as a deemed dividend that increases the basic net loss per share for common stockholders.
During 2023, the Company issued 1,523 shares of its series A preferred stock to 77 investors in a private placement pursuant to Regulation D under the Securities Act, raising $1,523,000. The Company also exchanged convertible debt with an outstanding balance of $598,836, including accrued interest of $87,836, for 591 shares of series A preferred stock. On March 27, 2023, the Company exchanged a portion of its related party debt with an outstanding gross balance of $1,324,631, excluding debt discount of $469,785, and including accrued interest of $28,101, for 1,321 shares of series A preferred stock. On December 31, 2022, a loan of $556,268 from Celebration Office Condos LLC, a company owned by the Company’s CEO, was forgiven for one share of series A preferred stock which was issued in March 2023.
Upon the first day of trading of the Company’s Common Stock on the Nasdaq stock exchange on October 10, 2023, the 3,436 shares of Series A Preferred Stock outstanding automatically converted into 981,676 shares of the Company’s Common Stock based on the IPO price of $5.00. The 30% discount from the IPO price resulted in an aggregate discount of $1,472,514, which was accounted for as a deemed dividend that increased the basic net loss per share for common stockholders.
F-
Note 9 — Equity Incentive Plan
On January 10, 2022, the Company adopted the La Rosa Holdings Corp. 2022 Equity Incentive Plan (the “2022 Plan”) pursuant to which a maximum of 5,000,000 shares of Common Stock of the Company were authorized to be issued pursuant to the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), performance units and performance shares. Persons eligible to receive awards under the 2022 Plan include employees, consultants, and directors of the Company. The plan is administered by the Compensation Committee of the Board of Directors. On October 20, 2023, the Company filed a Form S-8 to register the securities in the 2022 Plan. As of December 31, 2023, there are 2,653,369 shares available for issuance.
Stock Option Awards
Stock options are awards issued to employees and directors that entitle the holder to purchase Common Stock of the Company at a fixed price. Options issued prior to the Company’s IPO on October 12, 2023 have a strike price equal to the IPO price of $5.00 per share.
On November 1, 2023, the Company issued stock options to its non-management Board of Directors in lieu of paying the directors their cash board fees they had accrued since the initiation of their term through September 30, 2023, which totaled $375,052. The options cover 412,125 shares of the Company’s Common Stock at a strike price of $1.28, the closing price of the Company’s Common Stock on the previous business day from the grant date. The options immediately vested upon grant and have a ten-year term. The Company extinguished the accrued liability recorded at September 30, 2023.
On December 7, 2023, the Company issued a non-qualified stock option to the Company’s CEO in accordance with the CEO’s employment agreement. The option covers 900,000 shares of the Company’s Common Stock at a strike price of $2.09, the closing price of the Company’s Common Stock on the previous business day from the grant date. The option immediately vested upon grant and has a ten-year term.
The Company recorded share-based compensation related to options of $1,816,188 and $230,644 for the year ended December 31, 2023 and 2022, respectively. The Company did not realize any tax benefits associated with share-based compensation for the years ended December 31, 2023 and 2022, as the Company recorded a valuation allowance on all deferred tax assets.
At December 31, 2023, options outstanding that have vested and are expected to vest are as follows:
|
Number of Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (in years) |
Aggregate Intrinsic Value |
|||||||||||||
| Vested | 1,392,125 | $ | 2.02 | 9.81 | $ | 90,709 | ||||||||||
| Expected to vest | ||||||||||||||||
| Total | 1,392,125 | $ | 2.02 | 9.81 | $ | 90,709 | ||||||||||
Additional information with respect to stock option activity:
| Number of Shares |
Weighted Average Exercise Price | |||||||
| Balance – December 31, 2021 | $ | |||||||
| Granted | 80,000 | 5.00 | ||||||
| Exercised | ||||||||
| Expired or forfeited | ||||||||
| Balance – December 31, 2022 | 80,000 | $ | 5.00 | |||||
| Granted | 1,312,125 | 1.84 | ||||||
| Exercised | ||||||||
| Expired or forfeited | ||||||||
| Balance – December 31, 2023 | 1,392,125 | $ | 2.02 | |||||
F-
The weighted average fair value and the assumptions used in calculating the stock options granted during fiscal year 2023 and 2022 were based on estimates at the date of grant as follows:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Weighted average fair value | $ | 1.36 | $ | 3.46 | ||||
| Dividend yield | 0 | % | 0 | % | ||||
| Expected volatility factor | 67.2 | % | 60.7 | % | ||||
| Risk-free interest rate | 4.34 | % | 3.48 | % | ||||
| Expected life (in years) | 9 | 9 | ||||||
As of December 31, 2023, there was no unrecognized compensation expense related to stock option awards. As of December 31, 2022, unrecognized compensation expense related to stock option awards totaled $46,136, all of which was recognized in 2023.
Restricted Stock Units (RSUs)
During July 2022, the Company made agreements with 89 real estate agents and employees, who provide services to the Company, that they would be issued RSUs under the 2022 Plan covering $1,959,860 of value, when the Company’s Common Stock began trading on the Nasdaq stock exchange. The Company’s stock started trading on October 10, 2023, and the RSUs vested immediately upon issuance, which covered 391,972 common shares. To cover employees’ payroll withholding tax liability, the Company netted 35,466 shares of Common Stock from the employee awards for a total issuance of 356,506 shares.
A restricted stock unit covering 4,000 shares of Common Stock issued to the Company’s Chief Technology Officer (CTO) vested on February 1, 2023. In addition, the CTO will receive a future grant of 4,000 restricted stock units on February 1, 2024, which will be issued under the 2022 Plan. The Company records stock-based compensation expense for the new grant ratably over the one-year vesting period. The Company also valued the new award using the assumed IPO price of $5.00 a share. For the year ended December 31, 2023, the Company recorded $38,247 of share-based compensation expense for the CTO’s RSUs, and as of December 31, 2023, unrecognized compensation expense related to the award was $1,753, which will be recognized in 2024. The Company did not realize any tax benefits associated with share-based compensation for the year ended December 31, 2023, as the Company recorded a valuation allowance on all deferred tax assets.
Issuance of Common Shares to Consultants
In the fourth quarter of 2023, the Company executed six consulting agreements with third-party service providers to supply certain services to the Company. The Company issued 594,000 shares of the Company’s Common Stock under the Company’s 2022 Equity Incentive Plan between October 26, 2023 and November 2, 2023, with a weighted-average value of $1.20 per share.
Note 10 — Earnings Per Share
Basic loss per share of common stock attributable to common stockholders is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share of common stock attributable to common stockholders is computed by giving effect to all potential shares of common stock, including those related to the Company’s outstanding warrants and the 2022 Plan, to the extent dilutive. For all periods presented, these potential shares were excluded from the calculation of diluted loss per share because their inclusion would be anti-dilutive. As a result, diluted loss per common share is the same as basic loss per common share for all periods presented. The Company’s mandatory convertible Series A Preferred Stock included a 30% discount from the IPO price. As a result, the aggregate discount of $1,472,514 was accounted for as a deemed dividend that increased the basic net loss per share for common stockholders.
The following table sets forth common stock equivalents that have been excluded from the computation of dilutive weighted average shares outstanding as their inclusion would have been antidilutive:
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Warrants | 190,000 | 140,000 | ||||||
| Options | 1,392,125 | 80,000 | ||||||
| Restricted stock unit | 4,000 | |||||||
| Future equity shares | 90,000 | |||||||
| Total | 1,586,125 | 310,000 | ||||||
F-
Note 11 — Income Taxes
The benefit from income taxes was as follows:
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Current | ||||||||
| U.S. Federal | $ | $ | (128,000 | ) | ||||
| State and local | (22,000 | ) | ||||||
| $ | $ | (150,000 | ) | |||||
| Deferred | ||||||||
| U.S. Federal | $ | (1,496,475 | ) | $ | (535,125 | ) | ||
| State and local | (435,450 | ) | (153,317 | ) | ||||
| Valuation Allowance | 1,931,925 | 688,442 | ||||||
| $ | $ | |||||||
| Total | ||||||||
| U.S. Federal | $ | $ | (128,000 | ) | ||||
| State and local | (22,000 | ) | ||||||
| $ | $ | (150,000 | ) | |||||
A reconciliation of the provision for income taxes with the amounts computed by applying the Federal income tax rate to income from operations before the provision for income taxes is as follows for the years ended December 31, 2023 and 2022:
| 2023 | 2022 | |||||||
| U.S. federal statutory rate | 21.00 | % | 21.00 | % | ||||
| State taxes, net of federal benefit | 4.49 | 3.22 | ||||||
| Permanent items | (0.05 | ) | (3.46 | ) | ||||
| Prior year true-up | 13.6 | |||||||
| Valuation allowance | (24.50 | ) | (27.87 | ) | ||||
| Other | (0.94 | ) | (0.42 | ) | ||||
| Effective income tax rate | % | 6.07 | % | |||||
The components of deferred tax assets (liabilities) were as follows:
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net operating loss carryforwards | $ | 1,251,958 | $ | 629,968 | ||||
| Stock compensation | 1,351,444 | 58,474 | ||||||
| Basis adjustment on acquired assets | (1,043,064 | ) | ||||||
| Right of use assets | (174,299 | ) | ||||||
| Lease liability | 178,362 | |||||||
| Allowance for bad debt | 5,374 | |||||||
| Charitable contributions | 7,528 | |||||||
| Deferred tax assets, before valuation allowance | 1,577,303 | 688,442 | ||||||
| Valuation allowances | (1,577,303 | ) | (688,442 | ) | ||||
| Deferred tax assets, net of valuation allowance | $ | $ | ||||||
F-
A reconciliation of the beginning and ending amount of deferred income tax valuation allowance were as follows:
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Beginning balance of deferred income tax valuation allowance | $ | (688,442 | ) | $ | ||||
| Increase in valuation allowance | (1,931,925 | ) | (688,442 | ) | ||||
| Decrease in valuation allowance – purchase accounting | 1,043,064 | |||||||
| Ending balance of deferred income tax valuation allowance | $ | (1,577,303 | ) | (688,442 | ) | |||
As of December 31, 2023, the Company has federal net operating loss carryforwards of approximately $5.1 million and state net operating loss carryforwards of approximately $5.3 million which can be carried forward indefinitely. Deferred tax assets for net operating loss carryforwards are fully offset by a valuation allowance.
We have taken current and potential future expirations into consideration when evaluating the need for valuation allowances against these deferred tax assets. A valuation allowance for deferred tax assets is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization is dependent upon the generation of future taxable income or the reversal of federal tax liabilities during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which our deferred tax assets are deductible, we believe it is more likely than not that we will not realize the benefits of these deductible differences. We have recorded a valuation allowance for deferred tax assets of $1,577,303 and $688,442 as of December 31, 2023 and 2022, respectively.
The Company applies the FASB’s provisions for uncertain tax positions. The Company utilizes the two-step process to determine the amount of recognized tax benefit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties associated with uncertain tax positions as a component of income tax expense.
As of December 31, 2023, management does not believe the Company has any material uncertain tax positions that would require it to measure and reflect the potential lack of sustainability of a position on audit in its financial statements. The Company will continue to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary. The Company does not believe there will be any material changes in its unrecognized tax positions over the next year.
Note 12 — Segments
The Company’s business is organized into five material reportable segments which aggregate 100% of revenue:
| 1) | Real Estate Brokerage Services (Residential) |
| 2) | Franchising Services |
| 3) | Coaching Services |
| 4) | Property Management |
| 5) | Real Estate Brokerage Services (Commercial) |
F-
The reporting segments follow the same accounting policies used in the preparation of the Company’s consolidated financial statements. The following represents the information for the Company’s reportable segments for the years ended December 31, 2023 and 2022, respectively.
| 2023 | 2022 | |||||||
| Revenue by segment | ||||||||
| Real Estate Brokerage Services (Residential) | $ | 20,450,348 | $ | 16,413,289 | ||||
| Franchising Services | 883,606 | 1,034,108 | ||||||
| Coaching Services | 628,846 | 623,934 | ||||||
| Property Management | 9,680,688 | 8,030,299 | ||||||
| Real Estate Brokerage Services (Commercial) | 115,916 | 102,291 | ||||||
| $ | 31,759,404 | $ | 26,203,921 | |||||
| Cost of goods sold by segment | ||||||||
| Real Estate Brokerage Services (Residential) | $ | 18,764,157 | $ | 14,941,219 | ||||
| Franchising Services | 472,309 | 679,586 | ||||||
| Coaching Services | 330,365 | 303,438 | ||||||
| Property Management | 9,350,248 | 7,754,576 | ||||||
| Real Estate Brokerage Services (Commercial) | 1,157 | |||||||
| $ | 28,918,236 | $ | 23,678,819 | |||||
| Gross profit (loss) by segment | ||||||||
| Real Estate Brokerage Services (Residential) | $ | 1,686,191 | $ | 1,472,070 | ||||
| Franchising Services | 411,297 | 354,522 | ||||||
| Coaching Services | 298,481 | 320,496 | ||||||
| Property Management | 330,440 | 275,723 | ||||||
| Real Estate Brokerage Services (Commercial) | 114,759 | 102,291 | ||||||
| $ | 2,841,168 | $ | 2,525,102 | |||||
The following table disaggregates the Company’s revenue based on the type of sale or service and the timing of satisfaction of performance obligations for the years ended December 31:
| 2023 | 2022 | |||||||
| Performance obligations satisfied at a point in time | $ | 20,448,767 | $ | 15,936,056 | ||||
| Performance obligations satisfied over time | 11,310,637 | 10,267,865 | ||||||
| Revenue | $ | 31,759,404 | $ | 26,203,921 | ||||
Note 13 — Commitments and Contingencies
The Company has entered into indemnification agreements with the Company’s officers and directors for certain events or occurrences. The Company maintains a directors and officers insurance policy to provide coverage in the event of a claim against an officer or director.
Nasdaq Listing Rule
On November 24, 2023, the Company received written notification from the staff (the “Staff”) of Nasdaq indicating that, the Company no longer meets Nasdaq Listing Rule 5550(b)(2) (the “Rule”) requiring the Company to maintain a minimum market value of listed securities (“MVLS”) of $35 million. The notice was based on a review of the Company’s MVLS for the past 30 consecutive business days. Nasdaq’s listing rules provide the Company with a compliance period of 180 calendar days, or until May 22, 2024, in which to regain compliance. If at any time during this compliance period the Company’s MVLS closes at $35 million or more for a minimum of ten consecutive business days, Nasdaq will provide written confirmation of compliance and the matter will be closed.
F-
Legal Proceedings
From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, brokerage or real estate disputes, or other consumer protection statutes, ordinary-course brokerage disputes like the failure to disclose property defects, commission disputes, and vicarious liability based upon conduct of individuals or entities outside of the Company’s control, including agents and third-party contractor agents. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur.
On February 13, 2023, Mr. Mark Gracy, who served as the Company’s Chief Operating Officer from November 18, 2021 to November 15, 2022, filed a civil lawsuit in the Circuit Court of Osceola County, Florida, seeking a jury trial and claiming that the Company breached his employment agreement by reducing his salary and failing to pay him his full severance payments and is looking for payment of his alleged severance of $249,000. On April 11, 2023, the Company filed a motion to dismiss Mr. Gracy’s complaint, which is still pending.
On July 14, 2023, a writ of garnishment was issued naming La Rosa Realty, LLC, a subsidiary of the Company, as a purported garnishee for an alleged, but not actual, employee or contractor, Marc Cameron, in the Seventh Judicial Circuit Court of St. Johns’ County, Florida. On October 31, 2023, the Plaintiff voluntarily dismissed the action.
On September 5, 2023, Mr. Anthony Freites, who was an alleged independent contractor of La Rosa Realty, LLC from January 13, 2013 until June of 2021, filed an amended complaint in the Circuit Court of Osceola County, Florida, seeking a jury trial and claiming that the Company breached his contract and is looking for payment of commissions on alleged closed real estate sales as an independent contractor in the amount unspecified but allegedly including actual damages, compensatory damages, attorney’s fees, costs, and prejudgment interest. On October 12, 2023, the Company filed a motion to dismiss Mr. Freites’ complaint, which is still pending.
On January 3, 2024, Ms. Sarah Palmer filed a putative national class action complaint against La Rosa Realty, LLC in the United States District Court, Middle District of Florida, Orlando Division. Ms. Palmer alleges that she received two (2) brief pre-recorded calls one week apart to her cell phone from La Rosa Realty, LLC presenting her an employment opportunity as a real estate agent. Ms. Palmer seeks an undisclosed amount of monetary damages from La Rosa Realty, LLC for the alleged would-be injurious, isolated and opportunistic employment gestures to her through a purported nationwide class action. Ms. Palmer claims that the defendant violated her privacy, annoyed and harassed her, constituted a nuisance, and occupied her telephone line. On March 12, 2024 La Rosa Realty, LLC filed a motion to dismiss the case with prejudice, which is still pending.
The Company believes that the above claims are without merit, and it will vigorously defend against such claims. Moreover, these claims, in the aggregate, would not have a material adverse effect on the Company’s financial condition, business, or results of operations, should the Company’s defense not be successful in whole or in part. Except as stated herein, there is no other action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers, threatened against or affecting our Company or our officers or directors in their capacities as such.
Note 14 — Related Party Transactions
The Company leases its corporate office from an entity controlled by the Company’s CEO. The rent expense for the year ending December 31, 2023 was $134,505. During 2022, no rent expense was charged to the Company. There is no written agreement, and the rent is determined on a month-to-month basis. There are no future minimum rental payments, and the lease may be cancelled at any time by either party.
On July 1, 2023, the Company began leasing office space for its subsidiary, La Rosa Realty, from an entity owned by Joseph La Rosa, the Company’s CEO, and Michael La Rosa, the Company’s member of the Board. There is a written lease, which includes minimum monthly rent of $4,593, with a term ending in June 2025.
On May 4, 2023, the mother of the Company’s CEO purchased 200 shares of the Company’s series A preferred stock for $200,000. Upon the Company’s IPO, the shares were converted into 57,142 shares of the Company’s Common Stock.
Due from related party
La Rosa Realty, LLC has provided interest-free, due on demand advances to La Rosa Insurance LLC, a company controlled by the Company’s CEO. The outstanding balance was $41,558 as of December 31, 2022. As a newly publicly traded company, the Company must comply with the Sarbanes-Oxley Act of 2002 and specifically Section 402, which amended the Securities Exchange Act of 1934 to prohibit companies from making most personal loans to their directors and executive officers. During the fourth quarter of 2023, upon the Company completing its IPO, the Compensation Committee reviewed the advance, which had a balance of $45,413, and determined that the existing related party receivable would be charged as part of the Company’s CEO’s annual bonus as specified in his employment agreement.
F-
Due to related party (due on demand advances)
Prior to 2023, the Company’s CEO provided interest free, due on demand, advances to the Company for general operations. The outstanding balance of these obligations was $75,591 as of December 31, 2022.
Prior to 2023, a relative of the Company’s CEO provided an interest free, due on demand, advance to the Company. The outstanding balance was $48,000 as of December 31, 2022.
Prior to 2023, an entity owned by the Company’s CEO provided an interest free, due on demand, advance to the Company. The outstanding balance was $40,654 as of December 31, 2022.
The Company repaid all of the advances totaling $149,245 at the closing of the Company’s IPO on October 12, 2023.
Due to related party (term loans)
From February 2022 through October 3, 2022, the Company issued to the Company’s CEO six unsecured subordinated promissory notes in the aggregate principal amount of $765,000. The notes accrued interest at rates ranging from 1.4% per annum to 3.43% per annum, each with a three year term with monthly payments toward principal and interest beginning after the Company’s IPO.
On July 15, 2021, the Company issued to a private investor, Mr. Carlos J. Bonilla, an attorney with the law firm of ELP Global PLLC that represents the Company, an unsecured subordinated promissory note (the “ELP Note”) in the principal amount of $40,000 that was used for general corporate purposes. Interest accrued on the principal amount at 18% per annum. On December 1, 2022, the Company’s CEO, Joseph La Rosa, entered into an agreement with Mr. Bonilla pursuant to which Mr. La Rosa sold to Mr. Bonilla 600,000 shares of his common stock in exchange for the assignment by Mr. Bonilla of the ELP Note plus accrued interest and the payment by Mr. Bonilla to Mr. La Rosa of cash in the amount of $449,500. As a result of the assignment of the ELP Note to Mr. La Rosa, the principal balance of $40,000 was reclassified to “Due to related party” on the consolidated balance sheets.
On December 2, 2022, the Company issued to the Company’s CEO a Convertible OID Promissory Note in the original principal amount of $491,530 for which he paid $449,500. The note had an annual original issue discount of 8.55% with a default interest rate of 24.0% and a $5,000 per month per occurrence delinquency penalty. The holder had the right at any time to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the note into shares of the Company’s Common Stock at a price equal to the offering price of the initial public offering multiplied by 0.75 with certain distribution, fundamental transaction and anti-dilution protections and cash penalties for failure to deliver the shares in a timely manner. The Company also issued to the Company’s CEO warrants exercisable for 50,000 shares of the Company’s Common Stock that: (i) have a term of 60 months; (ii) have full ratchet anti-dilution protection provisions; (iii) are exercisable for a number of shares of our Common Stock equal to the number of shares that would be issued upon full conversion of this note; and (iv) have an exercise price equal to the lower of: (A) $5.00 per share, or (B) the price per share of any subsequent offering undertaken by the Company. The Company also granted to the Company’s CEO (i) upon repayment of the loan, 60,000 shares of the Company’s Common Stock, (ii) the right to participate in any future financings, (iii) the right to rollover the principal and interest due to acquire Company securities in any future public or private offering, (iv) extensive and non-customary default provisions in the note, and (v) certain other affirmative and negative covenants.
In March 2023, the Company exchanged, in a private placement under Sections 3(a)(9) and 4(a)(2) of the Securities Act, the six unsecured subordinated promissory notes, the ELP Note, and the Convertible OID Promissory Note representing an aggregate amount of principal and accrued interest of $1,324,631, for 1,321 shares of the Company’s series A preferred stock. Upon the Company’s IPO, the shares were converted into 377,428 shares of the Company’s Common Stock. See Note 8 – Stockholders’ Equity for additional information.
F-
Note 15 — Subsequent Events
Franchise Acquisitions
On February 21, 2024, the Company completed an acquisition of 100% of the membership interests of La Rosa Realty Winter Garden LLC, a Florida limited liability company and a franchisee of the Company. The purchase price was $352,204, which was settled by the issuance of an aggregate of 268,858 unregistered shares of the Company’s Common Stock based on $1.31 per share, the closing price of the Company’s Common Stock for the previous trading day. Concurrently the selling members entered into lock-up/leak out agreements with the Company pursuant to which the selling members may not sell more than one-twelfth of their common shares per calendar month during the one year period commencing after the six-month holding period under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), subject to applicable securities laws.
On March 7, 2024, the Company completed an acquisition of 51% of the membership interests of La Rosa Realty Georgia LLC, a Georgia limited liability company and a franchisee of the Company. The purchase price was $516,450, which was settled by the issuance of an aggregate of 276,178 unregistered shares of the Company’s Common Stock based on $1.87 per share, the closing price of the Company’s Common Stock for the previous trading day. Concurrently the selling members entered into lock-up/leak out agreements with the Company pursuant to which the selling members may not sell more than one-twelfth of their common shares per calendar month during the one year period commencing after the six-month holding period under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), subject to applicable securities laws.
On March 15, 2024, the Company completed an acquisition of La Rosa Realty California and now holds a 51% stake in the entity. Previously, La Rosa Franchising held a 50% stake in the entity. The purchase price for the one additional percentage ownership was $2,414, which was settled by the issuance of an aggregate of 1,387 unregistered shares of the Company’s Common Stock based on $1.74 per share, the closing price of the Company’s Common Stock for the previous trading day. Concurrently the selling members entered into lock-up/leak out agreements with the Company pursuant to which the selling members may not sell more than one-twelfth of their common shares per calendar month during the one year period commencing after the six-month holding period under Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), subject to applicable securities laws.
Debt Issuances
On February 20, 2024, the Company entered into securities purchase agreement with an accredited investor for the issuance of a senior secured promissory note with an aggregate principal amount of $1,052,632. The note has an original issue discount of 5% and a coupon rate of 13% per annum. In addition, the Company issued 67,000 shares of the Company’s Common Stock as a commitment fee, a warrant to purchase 120,000 shares of the Company’s Common Stock with an exercise price of $3.00, exercisable until the five-year anniversary of the closing date, and a warrant to purchase 95,000 shares of the Company’s Common Stock with an exercise price of $2.25, exercisable until the five-year anniversary of the closing date, which warrant will be cancelled and extinguished if the note is fully paid on or before the note maturity date. The Company also agreed to register the securities issued to the investor by filing a registration statement with the U.S. Securities and Exchange Commission within ninety (90) calendar days from the date of the agreement. The investor also has a security interest in certain property of the Company and its subsidiaries to secure the prompt payment, performance, and discharge in full of all of the Company’s obligations under the note. The principal amount and interest under the note are convertible into shares of the Company’s Common Stock at a conversion price of $2.50 per share unless the Company fails to make an amortization payment when due, in which case the conversion price shall be the lower of $2.50 or the trading price of the shares. The securities purchase agreements contain customary representations and warranties and agreements and obligations of the parties. The proceeds of the note will be used for business development and general working capital purposes. In connection with this financing, the Company also issued to its placement agent, Alexander Capital L.P., a 5-year common stock purchase warrant to purchase 21,053 shares of Common Stock at the exercise price of $1.50 per share. The terms of this warrant are substantially similar to the terms of the warrants issued to the investors.
On April 1, 2024, the Company entered into securities purchase agreement with the same accredited investor for the capital raise on February 20, 2024 for the issuance of a senior secured promissory note with an aggregate principal amount of $1,316,000. The note has an original issue discount of 5% and a coupon rate of 13% per annum. In addition, the Company issued 50,000 shares of the Company’s Common Stock as a commitment fee, a warrant to purchase 150,000 shares of the Company’s Common Stock with an exercise price of $3.00, exercisable until the five-year anniversary of the closing date, and a warrant to purchase 152,300 shares of the Company’s Common Stock with an exercise price of $2.25, exercisable until the five-year anniversary of the closing date, which warrant will be cancelled and extinguished if the note is fully paid on or before the note maturity date. The Company also agreed to register the securities issued to the investor by filing a registration statement with the U.S. Securities and Exchange Commission within ninety (90) calendar days from the date of the agreement. The investor also has a security interest in certain property of the Company and its subsidiaries to secure the prompt payment, performance, and discharge in full of all of the Company’s obligations under the note. The principal amount and interest under the note are convertible into shares of the Company’s Common Stock at a conversion price of $2.50 per share unless the Company fails to make an amortization payment when due, in which case the conversion price shall be the lower of $2.50 or the trading price of the shares. The securities purchase agreement contains customary representations and warranties and agreements and obligations of the parties. The proceeds of the note will be used for business development and general working capital purposes. The additional capital raise solidifies the Company’s ability to meet its obligations for at least the next twelve months.
Executive Equity Awards
On January 2, 2024, the Company issued a non-qualified stock option to the Company’s CEO in accordance with the CEO’s employment agreement. The option covers 800,000 shares of the Company’s Common Stock at a strike price of $1.50, the closing price of the Company’s Common Stock on the previous business day from the grant date. The option immediately vested upon grant and has a ten-year term.
On February 1, 2024, the Company issued non-qualified stock options to the Company’s CEO, CFO, and COO in accordance with the respective employment agreements. The option covers 793,185 shares of the Company’s Common Stock at a strike price of $1.73, the closing price of the Company’s Common Stock on the previous business day from the grant date. The options immediately vested upon grant and have a ten-year term.
On March 15, 2024, the Company issued non-qualified stock options to the Company’s CEO in accordance with the employment agreement. The option covers 600,000 shares of the Company’s Common Stock at a strike price of $1.74, the closing price of the Company’s Common Stock on the previous business day from the grant date. The options immediately vested upon grant and have a ten-year term.
F-
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of December 31, 2023, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are ineffective, as we are a newly publicly traded company with limited resources in our finance department, and we are in the process of establishing our procedures around our disclosure controls.
Evaluation of Internal Controls over Financial Reporting
This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by the rules of the SEC for newly public companies.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(t) and 15d-15(f) under the Exchange Act, during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance.
Directors and Executive Officers
The names, positions and ages of our non-independent directors and executive officers as of April 16, 2024 are as follows:
| Name | Age | Position | Director Since | |||
| Joseph La Rosa | 46 |
President, Chief Executive Officer, and Chairman of the Board of Directors (Principal Executive Officer) |
2021 | |||
| Kent Metzroth | 50 | Executive Vice President and Chief Financial Officer(1) (Principal Financial and Accounting Officer) |
— | |||
| Deana La Rosa | 53 | Chief Operating Officer | — | |||
| Alex Santos | 41 | Chief Technology Officer | — | |||
| Michael A. La Rosa | 42 | Director | 2022 | |||
| Jodi R. White* | 48 | Independent Director | 2022 | |||
| Ned L. Siegel* | 72 | Independent Director | 2022 | |||
| Thomas Stringer* | 49 | Independent Director | 2022 |
| * | Member of the Audit Committee, of the Compensation Committee and of the Nominating and Corporate Governance Committee. |
Joseph La Rosa is our Founder and has been serving as the Company’s President, Chief Executive Officer and the Chairman of the Board since August 2021 and of its five subsidiaries (La Rosa Realty, La Rosa Property Management, La Rosa CRE, La Rosa Coaching and La Rosa Franchising) since their inception. A former police officer in Orlando, Florida, Mr. La Rosa entered his family’s commercial and residential real estate development business in 2001 and became President of La Rosa Development, LLC, a position he holds today. From 2008 to 2010, as President of the Casa Latino group of companies, he co-developed the first Latino real estate franchise throughout the United States, which in 2010 was ranked by the National Association of Realtors as one of the Fastest Growing Real Estate Franchises in the U.S. In 2004, Mr. La Rosa founded La Rosa Realty, LLC and is responsible for its past and current growth into a customer-oriented agent-centric model of real estate brokerage powered by AI based technology tools. In addition to being home to over 2,000 real estate professionals and being one of the top three brokerages in the State of Florida and in the top 20 brokerages in the National Association of Realtors, La Rosa Realty has continued its growth and expansion into supporting auxiliary services such as La Rosa Property Management, La Rosa CRE (commercial), La Rosa Coaching and La Rosa Franchising. From October 2023, Mr. La Rosa serves as a Chief Executive Officer of Nona Legacy Powered By La Rosa Realty, Inc., a majority owned subsidiary of the Company. From December 2023 to date, Mr. La Rosa serves as a Manager of La Rosa Realty CW Properties, LLC, La Rosa Realty North Florida LLC, La Rossa Realty Orlando, LLC, La Rosa Realty Premier, LLC, a majority owned subsidiaries of the Company. From February 2024 to date, Mr. La Rosa serves as a Manager of La Rosa Realty Winter Garden LLC and Horeb Kissimmee Realty, LLC, majority owned subsidiaries of the Company. From March 2024 to date, Mr. La Rosa serves as a Chief Executive Officer and a member of the Board of Directors of La Rosa Realty California, a subsidiary of the Company. Mr. La Rosa graduated from Florida International University with a Bachelor of Science degree in criminal justice. We believe that Mr. La Rosa’s entrepreneurial, real estate, investment and leadership experience makes him well qualified to serve as Chairman of our Board.
Kent C. Metzroth joined the Company in November 2022 as our Executive Vice President and Chief Financial Officer. As CFO, he oversees the holding company’s accounting and controllership, financial planning, analysis and reporting, tax, internal audit, investor relations and treasury. Prior to joining La Rosa Holdings Corp., from 2019 to 2022, Mr. Metzroth served in various senior level finance roles, including as Senior Vice President Finance, Treasury, Tax and Investor Relations, at Finastra International Limited, a global leader in fintech software that is headquartered in the United Kingdom. From 2013 to 2019, Mr. Metzroth was the Vice President of Finance at Veeco Instruments Inc., a global semiconductor capital equipment manufacturing company. Mr. Metzroth also spent 13 years at CA Technologies, where he held positions of increasing responsibility in finance. Mr. Metzroth began his career as an auditor for a regional accounting firm in New York, moving to KPMG LLP nine months later where he was an auditor working with SEC reporting companies. Mr. Metzroth received a BS in Accounting from SUNY Geneseo and an MBA in Finance and Accounting from New York University.
Deana La Rosa was appointed the Chief Operating Officer of the Company in February 2024. Ms. La Rosa brings over 30 years of expertise in finance and real estate to the Company. Ms. La Rosa joined the Company as a Director of Operations in September 2023. Prior to that she served as the CEO of Lighthouse Mortgage Solutions from June 2022 through August 2023 and held key positions in management at Union Home Mortgage Corp. from January 2019 through June 2022 and The Federal Savings Bank from July 2015 through January 2019 as an SVP, where Ms. La Rosa consistently led her teams to top producer status. With almost two decades as a licensed mortgage broker, she has excelled as an owner, sales manager, and operations manager. Notably, Ms. La Rosa played a pivotal role in coaching loan officers and realtors to achieve top-tier performance. Her educational background includes business management and accounting studies at Adelphi University, complemented by a certification in equities and bond market trading from the NY Institute of Finance. Ms. La Rosa’s extensive experience and commitment to excellence underscore her as a distinguished professional in finance and real estate. Ms. La Rosa is the spouse of our Chairman and Chief Executive Officer Joseph La Rosa.
Alex Sincler Santos joined the company in February 2022, initially serving as the Director of Technology before assuming the role of Chief Technology Officer in August 2022. With over 28 years of experience in leadership and software development, Mr. Santos stands as a driving force of technological innovation, consistently delivering transformative solutions that yield substantial business value. Before joining La Rosa Holdings, Mr. Santos served as the Application Development Manager at COLAMCO, Inc., where he adeptly led a team of software developers to achieve a series of successful projects. From 1996 to 2013, Mr. Santos held pivotal roles in technology, including serving as a Senior Software Developer for AmeriBen/IEC Group, Senior Developer/Manager for Finance Express Mortgage, among other esteemed positions. In his current capacity as Chief Technology Officer, Mr. Santos spearheads the technological initiatives of the company, leveraging his expertise to drive innovation and growth focused on a high-tech high-touch approach. Mr. Santos’ dynamic leadership fosters a culture of excellence and collaboration within the technology team, propelling the company forward in a competitive market landscape. Mr. Santos’ educational background includes a bachelor’s degree in software engineering from PUC-PR and continuing education from Harvard University. Throughout his career, Mr. Santos has exemplified a relentless commitment to technological innovation and excellence, making significant contributions to the organizations he has served.
Michael A. La Rosa was appointed to serve as a member of the Company’s Board effective February 2022. From January 2021 to date, Mr. La Rosa has been serving as a Governor-appointed member of the Florida Public Service Commission which is responsible for regulating the state’s telecommunications, electrical, gas, water, and transport companies. In addition, he has been a realtor with La Rosa Realty, LLC since 2004. Mr. La Rosa has also been a Developer in La Rosa Development Corp. since January 2005. Mr. La Rosa was elected in 2012 to the Florida House of Representatives and served until November 2020. During his tenure he was Vice Chairman of Energy and Utilities Subcommittee (2013-2014), Republican Caucus Deputy Whip (2014), Regulatory Affairs Committee Vice Chairman (2015-2016), Gaming Control and Tourism Subcommittee Chairman (2017-2018) and Chairman of Commerce Committee (2019-2020) where he oversaw energy, regulatory and business-related policies. Mr. La Rosa holds a Bachelor of Science from the University of Central Florida. Mr. La Rosa is the brother of our Chairman and Chief Executive Officer Joseph La Rosa. We believe that Mr. La Rosa’s real estate, investment and government service experience makes him well qualified to serve on our Board and as a member of the Board’s committees.
Jodi R. White was appointed to serve as a member of the Company’s Board effective February 2022. Ms. White has been the Senior Leader, Learning Strategy and Leadership Development at The Walt Disney Company (NYSE: DIS), Orlando, Florida, since February 2019. From November 2016 to January 2019, she was the Operations Strategy and Client Engagement Director for FanHero LLC, a white label, all-in-one live streaming and OTT solution. Prior thereto, from September 2014 to October 2016, she was the Senior Manager, Client Relations for Paylocity Holding Corp. (Nasdaq: PCTY) and previously worked for 12 years in various roles, the most recent of which was Senior Manager of Operations, at The Walt Disney Company. Ms. White attended the University of Pittsburgh and Webster University, majoring in Business Administration. We believe that Ms. White’s operations, client engagement, project management and leadership development experience make her well qualified to serve on our Board and as an independent member of the Board’s committees.
Ambassador Ned L. Siegel was appointed to serve as a member of the Company’s Board effective February 2022. Ambassador Siegel is the President of The Siegel Group, a multi-disciplined international business management advisory firm he founded in 1997 in Boca Raton, Florida, specializing in real estate, energy, utilities, infrastructure, financial services, oil and gas and cyber and secure technology. Ambassador Siegel has served since 2013 as Of Counsel to the law firm of Wildes & Weinberg, P.C. From October 2007 until January 2009, he served as the United States Ambassador to the Commonwealth of The Bahamas. Prior to his Ambassadorship, in 2006, he served with Ambassador John R. Bolton at the United Nations in New York, as the Senior Advisor to the U.S. Mission and as the United States Representative to the 61st Session of the United Nations General Assembly. From 2003 to 2007, Ambassador Siegel served on the Board of Directors of the Overseas Private Investment Corporation (“OPIC”), which was established to help U.S. businesses invest overseas, fostering economic development in new and emerging markets, complementing the private sector in managing the risk associated with foreign direct investment and supporting U.S. foreign policy. Appointed by Governor Jeb Bush, Ambassador Siegel served as a Member of the Board of Directors of Enterprise Florida, Inc. (“EFI”) from 1999-2004. EFI is the state of Florida’s primary organization promoting statewide economic development through its public-private partnership. From April 2014 to March 2020, Ambassador Siegel served as a director of the Board of Notis Global Inc. Ambassador Siegel presently serves on the Board of Directors of the following companies: Janover Inc. (from July 2023), Worksport Ltd. (from August 2021), and Bannix Acquisition Corp (from November 2022). He also presently serves in an advisory capacity to the U.S. Medical Glove Company. Ambassador Siegel received a B.A. from the University of Connecticut in 1973 and a J.D. from the Dickinson School of Law in 1976. In December 2014, he received an honorary degree of Doctor of Business Administration from the University of South Carolina. We believe that Ambassador Siegel’s vast professional experience, education, and professional credentials qualify him to serve as a member of the Company’s Board, and as an independent member of the Board’s committees.
Thomas Stringer was appointed to serve as a member of the Company’s Board effective February 2022. Mr. Stringer is the National Site Selection and Incentives Service leader at the consulting firm BDO USA, LLP and has been with that firm from July 2015 to the present. Prior thereto, from November 2010 to July 2015, he was the Principal and Practice Leader for Credits and Incentives, Site Selection and Economic Development Services with a national tax consulting firm. From February 2007 to November 2010, Mr. Stringer was the Director of Site Selection and Business Incentives with Duff & Phelps (now owned by Kroll Inc.) and from August 2004 to January 2007 he was the Senior Manager, Business Incentives and Site Selection for BDO USA, LLP. Prior thereto, he was a Senior Associate at the international accounting firm of KPMG International Limited. Mr. Stringer has a Juris Doctor degree from St. John’s University School of Law and a Bachelor of Science degree in Economics from Villanova University. Mr. Stringer is a member of the Bar of the State of New York and a licensed realtor in that State. We believe that Mr. Stringer’s real estate, accounting and legal experience makes him well qualified to serve on our Board and as an independent member of the Board’s committees.
Corporate Governance
The business and affairs of our Company are managed under the direction of the Board.
Term of Office
Directors serve until the next annual meeting of stockholders and their respective successors are elected and qualified, subject to the earlier of their death, resignation or removal. Our executive officers are elected by, and serve at the discretion of, our Board, subject to the terms of any employment or other agreements.
Our Controlled Company Status
Because, as of April 16, 2024, Mr. La Rosa beneficially owns 5,837,713 shares of our Common Stock and 2,000 shares of our Series X Preferred Stock which has 10,000 votes per share when voting together with the Common Stock, which will represent in the aggregate 25,837,713 votes, he can elect all of our directors and decide all other matters. Accordingly, we are a “controlled company” under the Nasdaq rules. A controlled company is not required to have a majority of independent directors or form an independent compensation or nominating and corporate governance committee.
However, we have a majority of independent directors on our Board and do not currently intend to utilize the exemptions provided by the Nasdaq rules. Nevertheless, for as long as we remain a “controlled company,” we could take advantage of these exemptions at any time. In the event that we cease to be a “controlled company,” we will be required to comply with these provisions within the transition periods specified in the Nasdaq Rules.
Independence
We use the definition of “independence” of The Nasdaq Stock Market to make this determination. Nasdaq Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of our Company or any other individual having a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Nasdaq rules provide that a director cannot be considered independent if:
| ● | the director is, or at any time during the past three years was, an employee of our Company; |
| ● | the director or a family member of the director accepted any compensation from our Company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for Board or Board committee service); |
| ● | a family member of the director is, or at any time during the past three years was, an executive officer of our Company; |
| ● | the director or a family member of the director is a partner in, controlling shareholder of, or an executive officer of an entity to which our Company made, or from which our Company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions); |
| ● | the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of our Company served on the Compensation Committee of such other entity; or |
| ● | the director or a family member of the director is a current partner of our Company’s outside auditor, or at any time during the past three years was a partner or employee of our Company’s outside auditor, and who worked on our Company’s audit. |
Under such definition, our Board has three independent directors. Messrs. Siegel and Stringer and Ms. White are independent directors. Under such rules, Mr. Joseph La Rosa is not independent due to his position as our Chief Executive Officer. Also, as the brother of Joseph La Rosa, Michael A. La Rosa not deemed to be independent.
Family Relationships
Except for our director, Mr. Michael A. La Rosa, who is the brother of our Chairman and Chief Executive Officer Joseph La Rosa, and our Chief Operating Officer, Ms. Deana La Rosa, who is the spouse of our Chairman and Chief Executive Officer Joseph La Rosa and the sister-in-law of our director, Mr. Michael A. La Rosa, there are no family relationships among any of our officers or directors.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers have, during the past ten years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.
Code of Business Conduct and Ethics
We have adopted a written Code of Business Conduct and Ethics (the “Code”) that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of the Code on our website, www.larosaholdings.com. In addition, we will post on our website all disclosures that are required by law or the listing standards of Nasdaq concerning any amendments to, or waivers from, any provision of the Code. The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this Annual Report on Form 10-K.
Clawback Policy
In November 2023, the Board of Directors (the “Board”) of the Company adopted the La Rosa Holdings Corp. Clawback Policy for the recovery of erroneously awarded incentive-based compensation (the “Clawback Policy”), with an effective date of November 29, 2023, in order to comply with Section 10D of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rule 10D-1 of the Exchange Act (“Rule 10D-1”), and the listing rules adopted by The Nasdaq Stock Market, LLC (collectively, the “Final Clawback Rules”). The Board was designated as the administrator of the Clawback Policy.
The Clawback Policy provides for the mandatory recovery of erroneously awarded incentive-based compensation from current and former executive officers as defined in Rule 10D-1 (“Covered Officers”) of the Company in the event that the Company is required to prepare an accounting restatement, in accordance with the Final Clawback Rules. The recovery of such compensation applies regardless of whether a Covered Officer engaged in misconduct or otherwise caused or contributed to the requirement of an accounting restatement. Under the Clawback Policy, the Company may recoup from the Covered Officers erroneously awarded incentive-based compensation received within a lookback period of the three completed fiscal years preceding the date on which the Company is required to prepare an accounting restatement.
Insider Trading Policy
In August 2022, we adopted an insider trading policy governing the purchase, sale, and/or other dispositions of our securities by our directors, officers, and employees, to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards applicable to us. Our insider trading policy, among other things, prohibits our directors, officers, and employees from holding our securities in a margin account or pledging our securities as collateral for a loan. In addition, our insider trading policy prohibits employees, officers, and directors from engaging in put or call options, short selling, or similar hedging activities involving our stock.
Board Committees
Our Board has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each comprised entirely of independent directors. Our Board met a total of 3 times in 2023. The Audit Committee met 1 time in 2023.
Audit Committee
Our Audit Committee consists of three independent directors: Mr. Stringer, Mr. Siegel and Ms. White. Mr. Stringer is the Chairman of the Audit Committee. The Audit Committee will have at all times at least one “independent director” who is “financially literate” as defined under the Nasdaq listing standards. The Nasdaq listing standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement. In addition, we must certify to Nasdaq that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. Our Board has determined that Mr. Stringer qualifies as an “Audit Committee financial expert,” as defined under rules and regulations of the SEC. Currently, all members of our Audit Committee meet the applicable independence requirements under Nasdaq Rules and Rule 10A-3 of the Exchange Act.
The responsibilities of the Audit Committee are included in a written charter. The Audit Committee acts on behalf of our Board in fulfilling our Board’s oversight responsibilities with respect to our accounting and financial reporting processes, the systems of internal control over financial reporting and audits of financial statements and reports and also assists our Board of Directors in its oversight of the quality and integrity of our financial statements and reports and the qualifications, independence and performance of our independent registered public accounting firm. For this purpose, the Audit Committee performs several functions. The Audit Committee’s responsibilities include, among others, the following:
| ● | reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our annual disclosure report; |
| ● | discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; |
| ● | discussing with management major risk assessment and risk management policies; |
| ● | monitoring the independence of the independent auditor; |
| ● | verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; |
| ● | reviewing and approving all related-party transactions; |
| ● | inquiring and discussing with management our compliance with applicable laws and regulations; |
| ● | pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; |
| ● | appointing or replacing the independent auditor; |
| ● | determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; |
| ● | establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and |
| ● | approving reimbursement of expenses incurred by our management team in identifying potential target businesses. |
Compensation Committee
Our Compensation Committee is comprised of three individuals, each of whom is an independent director. Ms. White serves as the Chairman of the committee.
The Compensation Committee acts on behalf of our Board of Directors to fulfill our Board of Directors’ responsibilities in overseeing our compensation policies, plans and programs; and in reviewing and determining the compensation to be paid to our executive officers and non-employee directors. The responsibilities of the Compensation Committee are included in its written charter. The Compensation Committee’s responsibilities include, among others:
| ● | reviewing, modifying and approving and making recommendations to our Board of Directors regarding our overall compensation strategy and policies, and reviewing, modifying and approving corporate performance goals and objectives relevant to the compensation of our executive officers and other senior management; |
| ● | determining and approving (or, if it deems appropriate, recommending to our Board of Directors for determination and approval) the compensation and terms of employment of our Chief Executive Officer, including seeking to achieve an appropriate level of risk and reward in determining the long-term incentive component of the Chief Executive Officer’s compensation; |
| ● | determining and approving (or, if it deems appropriate, recommending to our Board of Directors for determination and approval) the compensation and terms of employment of our executive officers and other members of senior management; |
| ● | reviewing and approving (or, if it deems appropriate, making recommendations to our Board of Directors regarding) the terms of employment agreements, severance agreements, change-of-control protections and other compensatory arrangements for our executive officers and other senior management; |
| ● | conducting periodic reviews of the base compensation levels of all of our employees generally; |
| ● | reviewing and approving the type and amount of compensation to be paid or awarded to non-employee directors; |
| ● | reviewing and approving the adoption, amendment and termination of our stock option plans, stock appreciation rights plans, pension and profit sharing plans, incentive plans, stock bonus plans, stock purchase plans, bonus plans, deferred compensation plans, 401(k) plans, supplemental retirement plans and similar programs, if any; and administering all such plans, establishing guidelines, interpreting plan documents, selecting participants, approving grants and awards and exercising such other power and authority as may be permitted or required under such plans; and |
| ● | reviewing our incentive compensation arrangements to determine whether such arrangements encourage excessive risk-taking, reviewing and discussing at least annually the relationship between our risk management policies and practices and compensation and evaluating compensation policies and practices that could mitigate any such risk. |
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is comprised of three individuals, each of whom is an independent director. Mr. Siegel serves as the Chairman of the committee. The responsibilities of the Nominating and Corporate Governance Committee are included in its written charter. The nominating and corporate governance committee acts on behalf of our Board of Directors to fulfill our Board of Directors’ responsibilities in overseeing all aspects of our nominating and corporate governance functions. The responsibilities of the Nominating and Corporate Governance Committee include, among others:
| ● | making recommendations to our Board of Directors regarding corporate governance issues; |
| ● | identifying, reviewing and evaluating candidates to serve as directors (consistent with criteria approved by our Board of Directors); |
| ● | determining the minimum qualifications for service on our Board of Directors; |
| ● | reviewing and evaluating incumbent directors; |
| ● | instituting and overseeing director orientation and director continuing education programs; |
| ● | serving as a focal point for communication between candidates, non-committee directors and our management; |
| ● | recommending to our Board of Directors for selection candidates to serve as nominees for director for the annual meeting of stockholders; |
| ● | making other recommendations to our Board of Directors regarding matters relating to the directors; |
| ● | reviewing succession plans for our Chief Executive Officer and our other executive officers; |
| ● | reviewing and overseeing matters of corporate responsibility and sustainability, including potential long- and short-term trends and impacts to our business of environmental, social, and governance issues, and our public reporting on these topics; and |
| ● | considering any recommendations for nominees and proposals submitted by stockholders. |
Board Leadership Structure
Our Board of Directors recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide effective oversight of management. Our amended and restated bylaws and corporate governance guidelines will provide our Board of Directors with flexibility to combine or separate the positions of Chairman of the Board of Directors and Chief Executive Officer. Our Board of Directors currently believes that our existing leadership structure, under which Mr. La Rosa serves as our Chief Executive Officer and as Chairman of the Board of Directors, is effective, provides the appropriate balance of authority between independent and non-independent directors, and achieves the optimal governance model for us and for our stockholders.
Role of Board in the Risk Oversight Process
Our Board of Directors is responsible for overseeing our overall risk management process. The responsibility for managing risk rests with executive management while the committees of our Board of Directors and our Board of Directors as a whole participate in the oversight process. Our Board of Directors’ risk oversight process builds upon management’s risk assessment and mitigation processes, which include reviews of long-term strategic and operational planning, executive development and evaluation, regulatory and legal compliance and financial reporting and internal controls with respect to areas of potential material risk, including operations, finance, legal, regulatory, cybersecurity, strategic and reputational risk.
Board Observer
In conjunction with the loan from Emmis Capital and other investors, for as long as such investors own at least 25% of the securities sold in that private placement, if Emmis notifies the Company that it wishes to attend meetings of our Board of Directors, we are required to invite a designated representative of Emmis to attend all such Board meetings in a nonvoting observer capacity and to provide to Emmis copies of all notices, minutes, consents, and other materials that the Company provides to its directors at the same time and in the same manner as provided to such directors except for any information that the Company believes could adversely affect its attorney-client relationship or which the Board believes are trade secrets or which would result in a conflict of interest with such investors. Emmis will maintain the confidentiality of all information so provided.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who own more than 10% of our outstanding shares of common stock (“Ten Percent Holders”) to file with the SEC reports of their share ownership and changes in their share ownership of our Common Stock. Directors, executive officers and Ten Percent Holders are also required to furnish us with copies of all ownership reports they file with the SEC. To our knowledge, based solely on a review of the copies of such reports furnished to us, the following directors, executive officers and Ten Percent Holders did not comply with all Section 16(a) filing requirements as of April 16, 2024 as follows: Mr. Santos filed his form 4 late in 2024.
Item 11. Executive Compensation.
The following table summarizes compensation for the years ended December 31, 2023 and 2022 for our “named executive officers” (the “NEOs”), namely our (i) principal executive officer (PEO); (ii) our two other most highly compensated executive officers whose total compensation exceeded $100,000 for the fiscal year ended December 31, 2023; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to Item 402(m)(2)(ii) of Regulation S-K but for the fact that the individual was not serving as an executive officer of the Company at the end of the last completed fiscal year.
Summary Compensation Table
| Stock | Option | All other | ||||||||||||||||||||||||||
| Fiscal | Salary | Bonus | awards | awards | compensation | Total | ||||||||||||||||||||||
| Name and principal position | Year | ($)(1) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
| Joseph La Rosa, Founder, President and | 2022 | $ | 461,538 | $ | — | $ | — | $ | — | $ | — | $ | 461,538 | |||||||||||||||
| Chief Executive Officer(2) (PEO) | 2023 | $ | 500,000 | $ | 45,413 | $ | $ | 1,395,000 | $ | — | $ | 1,940,413 | ||||||||||||||||
| Kent Metzroth, Executive Vice President and | 2022 | $ | 55,000 | $ | 2,000 | $ | — | $ | — | $ | — | $ | 57,000 | |||||||||||||||
| Chief Financial Officer(3) | 2023 | $ | 330,000 | $ | — | $ | — | $ | — | $ | — | $ | 330,000 | |||||||||||||||
| Alex Santos, Chief Technology Officer | 2022 | $ | 141,023 | $ | 6,391 | $ | — | $ | — | $ | — | $ | 147,414 | |||||||||||||||
| 2023 | $ | 178,333 | $ | 14,250 | $ | 46,580 | $ | — | $ | — | $ | 239,163 | ||||||||||||||||
| (1) | Reflects base salary earned during the fiscal year covered. |
| (2) | Does not include dividends received by Mr. La Rosa in 2022. |
| (3) | Mr. Metzroth commenced his employment on November 1, 2022. |
Employment and Related Agreements
We currently have the following employment agreements with our NEOs:
Joseph La Rosa
On April 29, 2022, we entered into an amended and restated employment agreement with Mr. Joseph La Rosa to serve as our Chief Executive Officer, which was further amended on May 17, 2023, and on December 7, 2023. In addition, he serves as a director and Chairman of the Board, and the board will, during the term, of his agreement, nominate and recommend him for election as a director but he will not receive any additional compensation in respect of his appointment as a director or Chairman of Company. The employment agreement of Mr. La Rosa is for an initial term of one year starting January 1, 2022, and will renew automatically for successive one-year periods thereafter unless prior to 90 days before the anniversary date, either party notices the other that it will not extend the agreement for another year. The Company pays Mr. La Rosa an annual base salary of $500,000 during the term of the agreement, and he is eligible to receive a “Target Bonus” at the rate of 100% of his base salary and stock options for 1.0% of the total outstanding shares of Company Common Stock which will be payable to the extent the applicable performance goals are achieved which goals and payment matrices will be set by the Compensation Committee of the board. Mr. La Rosa is also entitled to receive: (i) annual long term equity awards of at least 1.0% of the outstanding shares of the Company’s Common Stock as determined by the Compensation Committee of the Board inside or outside of any established equity plan, (ii) milestone equity awards in the total amount of 2,600,000 shares of the Company’s Common Stock to be granted in the form of stock options with cashless exercise provision (at the discretion of Mr. La Rosa) from time to time upon achievement by Mr. La Rosa of milestones described in the employment agreement, and (iii) a milestone equity award of 200,000 shares upon the closing of each acquisition after December 7, 2023. The amount and terms of the long-term incentive awards awarded to him will be set by the Compensation Committee. He is also entitled to receive perquisites including a corporate automobile, cellular telephone, health and disability insurance and participation in the Company’s 401(k) plan. Mr. La Rosa will be entitled to 40 days of annual vacation plus Company observed holidays per calendar year and will be reimbursed for his business travel expenses. Any amounts payable under the employment agreement are subject to any policy established by the Company providing for claw back or recovery of amounts that were paid to Mr. La Rosa. The Company will make any determination for claw back or recovery in its sole discretion and in accordance with any applicable law or regulation.
Mr. La Rosa’s employment may be terminated by him or the Company at any time and for any or no reason with least 90 days advance written notice from the terminating party. If Mr. La Rosa’s employment is terminated by his failure to renew his agreement, by the Company for “cause” (as defined in the agreement) or by Mr. La Rosa without “good reason” (as defined in the agreement), then he will be entitled to receive: (i) any accrued but unpaid Base Salary and accrued but unused paid time off; (ii) reimbursement for unreimbursed business expenses properly incurred; and (iii) such employee benefits (including equity compensation), if any, to which he may be entitled under the Company’s employee benefit plans as of the date of termination (“Accrued Amounts”), but he shall not be entitled to any severance or termination payment.
If Mr. La Rosa’s employment is terminated by his death or disability, the Company will pay him or his estate an amount equal to the sum of: (i) the Accrued Amounts; and (ii) a payment equal to the product of (i) the Target Bonus and (ii) a fraction, the numerator of which is the number of days that he was employed by the Company during the year of termination and the denominator of which is the number of days in such year (the “Pro Rata Bonus”). If Mr. La Rosa’s employment is terminated other than for cause, non-renewal of his employment agreement by the Company or if he terminates the agreement for good reason, he will receive from the Company: (i) a lump sum payment of $2,500,000; (ii) the Accrued Amount; (iii) Company reimbursement health insurance continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) until the earliest of: (a) the eighteen month anniversary of the date of his termination of employment; (b) the date that he is no longer eligible to receive COBRA continuation coverage; and (c) the date on which he receives substantially similar coverage from another employer or other source; and (iv) the treatment of any outstanding equity awards shall be determined in accordance with the terms of the 2022 Equity Incentive Plan.
The Company has agreed to indemnify Mr. La Rosa to the fullest extent permitted by applicable law and the Company’s bylaws. As a condition of his employment with the Company, he executed the Company’s employee non-compete agreement.
Kent Metzroth
On November 1, 2022, we entered into an employment agreement with Mr. Kent Metzroth to act as our Chief Financial Officer as of the effective date of his agreement, which was subsequently amended on November 15, 2022, May 17, 2023, August 15, 2023, and February 1, 2024. The employment agreement is for an initial term of two years and shall renew for another one-year period thereafter if the parties consent thereto in writing prior to the second anniversary date of the agreement unless it is sooner terminated.
Mr. Metzroth receives a base salary of $330,000 per year (the “Salary”). In addition, Mr. Metzroth is eligible, following the end of each calendar year beginning with the 2023 calendar year, to receive an annual performance bonus targeted of up to 50% of the his Salary based upon periodic assessments of his performance as well as the achievement of specific individual and corporate objectives determined by the Board of Directors or the Compensation Committee after consultation with Mr. Metzroth and provided to him in writing no later than the end of the first calendar quarter of the applicable bonus year. The target bonus must be approved by the audit and Compensation Committee. The minimum amount of such an annual bonus shall be equal to $25,000. No amount of annual bonus is guaranteed, and Mr. Metzroth must be an employee on December 31 of the applicable bonus year in order to be eligible for any annual bonus for such year.
Pursuant to his employment agreement, on February 1, 2024, Mr. Metzroth was granted a non0qualified stock option to purchase 359,120 shares of the Common Stock of the Company, vesting immediately and exercisable for 10 years at the exercise price per share equal to the Nasdaq Official Closing Price as of January 31, 2024.
Mr. Metzroth is also entitled to receive other benefits generally available to other Company employees (which may include, among other things, a Company’s sponsored retirement plan) and he will be reimbursed for his documented and approved expenses related to the business of the Company. Mr. Metzroth is entitled to five weeks paid vacation per year.
The employment agreement contains covenants of Mr. Metzroth concerning: (i) the confidentiality of Company information; (ii) the assignment of his work product to the Company; (iii) his non-solicitation of Company clients or employees during his term of employment and for two years thereafter; and (iv) his non-disparagement of the Company or its directors, officers and employees. If his employment is terminated under any circumstances other than a termination by the Company without cause or a termination by him for good reason (including a voluntary termination by Mr. Metzroth without good reason or a termination by the Company for cause or due to Mr. Metzroth’s death or disability), the Company’s obligations under the employment agreement will immediately cease and Mr. Metzroth will only be entitled to receive: (i) the Salary that has accrued and is unpaid and to which Mr. Metzroth is entitled as of the effective date of such termination and to the extent consistent with general Company policy; (ii) unreimbursed business expenses; (iii) any bonus earned and approved by the board but not yet paid; (iv) any amounts or benefits to which he is then entitled under the terms of the benefit plans then-sponsored by the Company; and (v) compensation for all accrued but unpaid and untaken vacation days. If Mr. Metzroth’s employment is terminated by the Company without cause or by him for good reason, the Company will: (i) continue to pay his Salary for a period of six months, and (ii) pay him, in a single lump sum an amount in cash equal to the pro-rated amount of any annual bonus for the number of days from the last anniversary date of the agreement to the date of termination.
Alex Santos
On January 10, 2022, we entered into an employment agreement with Mr. Alex Santos, to serve as our Chief Technology Officer as of February 1, 2022. The term of the agreement shall continue until it is terminated by either the Company or Mr. Santos upon 60 days prior written notice. In consideration of his services, the Company is to pay Mr. Santos an annual salary of $180,000. Following the end each calendar year beginning with the 2022 calendar year, Mr. Santos is eligible to receive an annual bonus. Mr. Santos’ minimum guaranteed annual bonus shall be $15,000 payable in quarterly installments. The Company granted to Mr. Santos 2,000 shares of restricted Common Stock, which shall vest on the one-year anniversary of the effective date of the agreement. On each year thereafter, on the annual anniversary of the date of the effective date of the agreement, the Company shall grant Mr. Santos an additional 2,000 shares of restricted Common Stock which shall vest on the one-year anniversary of issuance.
Mr. Santos is also entitled to receive other benefits generally available to other Company employees and he will be reimbursed for his documented and approved expenses related to and for promoting the business of the Company. Mr. Santos is entitled to three weeks paid vacation per year.
The employment agreement contains covenants of Mr. Santos concerning: (i) the confidentiality of Company information; (ii) the assignment of his work product to the Company; (iii) his non-solicitation of Company clients or employees during his term of employment and for three years thereafter; and (iv) his non-disparagement of the Company or its directors, officers and employees. If his employment is terminated under any circumstances other than a termination by the Company without cause or a termination by him for good reason (including a voluntary termination by Mr. Santos without good reason or a termination by the Company for cause or due to Mr. Santos’ death or disability), the Company’s obligations under the employment agreement will immediately cease and Mr. Metzroth will only be entitled to receive: (i) the Salary that has accrued and is unpaid and to which Mr. Santos is entitled as of the effective date of such termination and to the extent consistent with general Company policy; (ii) unreimbursed business expenses; (iii) any bonus earned and approved by the Board but not yet paid; (iv) any amounts or benefits to which he is then entitled under the terms of the benefit plans then-sponsored by the Company. If Mr. Santos employment is terminated by the Company without cause or in the event of change in control of the Company (whether or not Mr. Santos is retained by a successor entity), the Company shall pay to Mr. Santos in a single lump sum an amount of $100,000.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning outstanding equity awards held by the NEOs of the Company as of December 31, 2023:
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| Name |
Number of securities underlying unexercised options (#) exercisable |
Number of securities underlying unexercised options (#) unexercisable |
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) |
Option exercise price ($) |
Option expiration date |
Number (#) |
Market
(#) |
Equity (#) |
Equity ($) |
|||||||||||||||||||||||||||
| Joseph La Rosa, CEO | 900,000 | — | — | $ | 2.09 |
12/7/2033 |
— | — | — | — | ||||||||||||||||||||||||||
| Kent Metzroth, CFO | — | — | — | $ | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Alex Santos, CTO | — | — | — | $ | — | — | 4,000 | $ | 6,933 |
4,000 | $ | 6,933 | ||||||||||||||||||||||||
2022 Equity Incentive Plan
We have adopted the 2022 Equity Incentive Plan (the “2022 Plan”) that was approved by our stockholders and effective as of March 25, 2022. The following is a summary of the material features of the 2022 Plan which is qualified in its entirety by reference to the 2022 Plan which is filed as an exhibit to this report.
Purpose. The 2022 Plan is intended to secure for the Company the benefits arising from ownership of the Company’s Common Stock by the employees, officers, directors, and consultants of the Company, all of whom are responsible for the Company’s future growth. The Plan is designed to attract and retain qualified personnel, reward employees, officers, directors, and consultants for their services to the Company, and motivate such individuals through added incentives to further contribute to the Company’s success.
Eligibility. The 2022 Plan will provide an opportunity for any employee, officer, director, or consultant of the Company (which may include agents of the Company), subject to any limitations provided by federal or state securities laws, to receive incentive stock options (to eligible employees only), non-qualified stock options, restricted stock awards, other stock awards, or any combination of the foregoing. In making such determinations, the Compensation Committee may take into account the nature of the services rendered by such person, his or her present and potential future contribution to the Company’s success, and such other factors as the Compensation Committee in its discretion shall deem relevant. Incentive stock options granted under the 2022 Plan are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code. Non-qualified (non-statutory stock options) granted under the 2022 Plan are not intended to qualify as incentive stock options under the Code. No awards can be issued to any person in consideration for services rendered where such services are in connection with the offer or sale of securities in a capital-raising transaction, or they directly or indirectly promote or maintain a market for the Company’s securities.
No incentive stock option may be granted under the 2022 Plan to any person who, at the time of the grant, owns (or is deemed to own) stock possessing more than 10% of the total combined voting power of our Company or any affiliate of our Company unless the exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and the term of the option does not exceed five years from the date of grant.
Administration. The Plan will be administered by the Compensation Committee of the Board of Directors. The Compensation Committee will have the exclusive right to interpret and construe the 2022 Plan, to select the eligible persons who shall receive an award, and to act in all matters pertaining to the grant of an award and the determination and interpretation of the provisions of the related award agreement, including, without limitation, the determination of the number of shares subject to stock options and the option period(s) and option price(s) thereof, the number of shares of restricted stock or shares subject to stock awards or performance shares subject to an award, the vesting periods (if any) and the form, terms, conditions and duration of each award, and any amendment thereof consistent with the provisions of the 2022 Plan.
Shares Subject to the 2022 Plan. Subject to adjustment in connection with the payment of a stock dividend, a stock split or subdivision or combination of the shares of Common Stock, or a reorganization or reclassification of the Company’s Common Stock, the maximum aggregate number of shares of Common Stock which may be issued pursuant to awards under the 2022 Plan is 5,000,000 shares as adjusted for the 1-for-10 Reverse Stock Split on March 21, 2022 and adjusted for the 2-for-1 Forward Stock Split on April 17, 2023. Such shares of Common Stock will be made available from the authorized and unissued shares of the Company.
If shares of Common Stock subject to an option or performance award granted under the 2022 Plan expire or otherwise terminate without being exercised (or exercised in full), such shares will become available again for grants under the 2022 Plan. If shares of restricted stock awarded under the 2022 Plan are forfeited to us or repurchased by us, the number of shares forfeited or repurchased shall not again be available under the 2022 Plan. Similarly, any shares cancelled in cashless exercises are not available for re-issuance under the 2022 Plan.
The Company cannot determine the amounts of awards that will be granted or allocated under the 2022 Plan or the benefits of any awards to the executive officers and directors of the Company or employees who are not executive officers as a group. Under the terms of the 2022 Plan, the number of awards to be granted is within the discretion of the Compensation Committee. The Compensation Committee may issue options, shares of restricted stock, restricted stock units or other awards under the 2022 Plan for such consideration as determined in their sole discretion, subject to applicable law. Since the date it was approved by the Board of Directors and the sole stockholder, we have issued 800,336 restricted stock units to certain of our agents and employees.
Pricing; Vesting; Expiration. The Compensation Committee, in its sole discretion, will determine the exercise price of any options granted under the 2022 Plan which exercise price will be outlined in an agreement evidencing the option, provided, however, that at no time will the exercise price be less than the par value per share of the Company’s Common Stock. Also, the exercise price of incentive stock options may not be less than the fair market value of the Common Stock subject to the option on the date of the grant and, in some cases, may not be less than 110% of such fair market value. The exercise price of non-statutory options may not be less than the Common Stock’s fair market value on the grant date. The exercise price of options granted under the 2022 Plan must be paid either in cash at the time the option is exercised or, at the discretion of the Compensation Committee: (i) by delivery of already-owned shares of our Common Stock, (ii) pursuant to a deferred payment arrangement, (iii) pursuant to a net exercise arrangement, or (iv) pursuant to a cashless exercise as permitted under applicable rules and regulations of the SEC.
Options and other Awards granted under the 2022 Plan may be exercisable in cumulative increments, or “vest,” as determined by the Compensation Committee. The Compensation Committee has the power to accelerate the time as of which an option may vest or be exercised. Shares of restricted stock acquired under a restricted stock purchase or grant agreement may, but need not, be subject to forfeiture to us or other restrictions that will lapse in accordance with a vesting schedule to be determined by the Compensation Committee. In the event a recipient’s employment or service with our Company terminates, any or all of the shares of Common Stock held by such recipient that have not vested as of the date of termination under the terms of the restricted stock agreement may be forfeited to our Company in accordance with such restricted stock agreement.
The Compensation Committee will determine the expiration date of options and other awards granted under the 2022 Plan. The maximum term of options and performance shares under the 2022 Plan is ten years, except that the maximum term is five years in certain cases.
Adjustments. Upon the occurrence of: (i) the adoption of a plan of merger or consolidation of the Company with any other corporation or association as a result of which the holders of the voting capital stock of the Company as a group would receive less than 50% of the voting capital stock of the surviving or resulting corporation; (ii) the approval by the Board of Directors of an agreement providing for the sale or transfer (other than as security for obligations of the Company) of substantially all of the assets of the Company; or (iii) in the absence of a prior expression of approval by the Board of Directors, the acquisition of more than 20% of the Company’s voting capital stock by any person within the meaning of Rule 13d-3 under the Exchange Act (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company); and unless otherwise provided in the award agreement with respect to a particular award, all outstanding stock options will become immediately exercisable in full, subject to any appropriate adjustments, and will remain exercisable for the remaining option period, regardless of any provision in the related award agreement limiting the ability to exercise such stock option or any portion thereof for any length of time. All outstanding performance shares with respect to which the applicable performance period has not been completed will be paid out as soon as practicable, and all outstanding shares of restricted stock with respect to which the restrictions have not lapsed will be deemed vested, and all such restrictions shall be deemed lapsed and the restriction period ended.
Additionally, after the merger of one or more corporations into the Company, any merger of the Company into another corporation, any consolidation of the Company and one or more corporations, or any other corporate reorganization of any form involving the Company as a party thereto and involving any exchange, conversion, adjustment or other modification of the outstanding shares of the Common Stock, each participant shall, at no additional cost, be entitled, upon any exercise of such participant’s stock option, to receive, in lieu of the number of shares as to which such stock option shall then be so exercised, the number and class of shares of stock or other securities or such other property to which such participant would have been entitled to pursuant to the terms of the agreement of merger or consolidation or reorganization, if at the time of such merger or consolidation or reorganization, such participant had been a holder of record of a number of shares of Common Stock equal to the number of shares as to which such stock option shall then be so exercised.
Modification of Awards. The Compensation Committee may reprice any stock option without the approval of the stockholders of the Company. For this purpose, “reprice” means: (i) any of the following or any other action that has the same effect: (A) lowering the exercise price of a stock option after it is granted, (B) any other action that is treated as a repricing under U.S. generally accepted accounting principles, or (C) cancelling a stock option at a time when its exercise price exceeds the fair market value of the underlying Common Stock, in exchange for another stock option, restricted stock or other equity, unless the cancelation and exchange occur in connection with a merger, acquisition, spin-off or other similar corporate transaction; and (ii) any other action that is considered to be a repricing under formal or informal guidance issued by the exchange or market on which the Company’s Common Stock then trades or is quoted. In addition to, and without limiting the above, the Compensation Committee may permit the voluntary surrender of all or a portion of any stock option granted under the 2022 Plan to be conditioned upon the granting to the participant of a new stock option for the same or a different number of shares of Common Stock as the stock option surrendered, or may require such voluntary surrender as a condition precedent to a grant of a new stock option to such participant. Subject to the provisions of the 2022 Plan, such new stock option will be exercisable at such option price, during such option period and on such other terms and conditions as are specified by the Compensation Committee at the time the new stock option is granted. Upon surrender, the stock options surrendered will be cancelled, and the shares of Common Stock previously subject to them will be available for the grant of other stock options.
Termination of Employment or Consulting. The incentive stock options will lapse and cease to be exercisable upon the termination of service of an employee or director as defined in the 2022 Plan, or within such period following termination of service as determined by the Compensation Committee and set forth in the related award agreement; provided, further, that such period will not exceed the period of time ending on the date three (3) months following termination of service. Non-incentive stock options are governed by the related award agreements.
Tax Withholding. To the extent provided by the terms of an option or other award, a participant may satisfy any federal, state or local tax withholding obligation relating to the exercise of such option, or award by a cash payment upon exercise, or in the discretion of the Compensation Committee, by authorizing our Company to withhold a portion of the stock otherwise issuable to the participant, by delivering already-owned shares of our Common Stock or by a combination of these means.
Federal Tax Consequences. The following is a summary of the principal United States federal income tax consequences to the recipient and our Company with respect to participation in the 2022 Plan. This summary is not intended to be exhaustive and does not discuss the income tax laws of any city, state, or foreign jurisdiction in which a participant may reside.
Incentive Stock Options. There will be no federal income tax consequences to either the recipient upon the grant of an incentive stock option or us. Upon exercise of the option, the excess of the stock’s fair market value over the exercise price, or the “spread,” will be added to the alternative minimum tax base of the recipient unless a disqualifying disposition is made in the year of exercise. A disqualifying disposition is the stock sale before the expiration of two years from the date of grant and one year from the date of exercise. If the shares of Common Stock are disposed of in a disqualifying disposition, the recipient will realize taxable ordinary income in an amount equal to the spread at the time of exercise, and will be entitled (subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation) to a federal income tax deduction equal to such amount. If the recipient sells the shares of Common Stock after the specified periods, the gain or loss on the shares’ sale will be long-term capital gain or loss and will not be entitled to a federal income tax deduction.
Non-statutory Stock Options and Restricted Stock Awards. Non-statutory stock options and restricted stock awards granted under the 2022 Plan generally have the following federal income tax consequences.
There are no tax consequences to the participant or us because of the grant. Upon acquiring the stock, the recipient will recognize taxable ordinary income equal to the excess, if any, of the stock’s fair market value on the acquisition date over the purchase price. However, to the extent the stock is subject to “a substantial risk of forfeiture” (as defined in Section 83 of the Internal Revenue Code of 1986 (the “Code”)), the taxable event will be delayed until the forfeiture provision lapses unless the recipient elects to be taxed on receipt of the stock by making a Section 83(b) election within 30 days of receipt of the stock. If such an election is not made, the recipient will generally recognize income as and when the forfeiture provision lapses, and the income recognized will be based on the stock’s fair market value on such a future date. On that date, the recipient’s holding period for purposes of determining the long-term or short-term nature of any capital gain or loss recognized on a subsequent disposition of the stock will begin. If a recipient makes a Section 83(b) election, the recipient will recognize ordinary income equal to the difference between the stock’s fair market value and the purchase price, if any, as of the date of receipt and the holding period for purposes of characterizing as long-term or short-term any subsequent gain or loss will begin at the date of receipt.
With respect to employees, we are generally required to withhold from regular wages or supplemental wage payments an amount based on the ordinary income recognized. Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, we will generally be entitled to a business expense deduction equal to the taxable ordinary income realized by the participant.
Upon disposition of the stock, the recipient will recognize a capital gain or loss equal to the difference between the selling price and the sum of the amount paid for such stock plus any amount recognized as ordinary income with respect to the stock. Such gain or loss will be long-term or short-term, depending on whether the stock has been held for more than one year.
Section 162(m) of the Code denies a deduction to any publicly held corporation for compensation paid to certain senior executives of our Company (referred to as a covered employee) in a taxable year to the extent that compensation to such employees exceeds $1,000,000. It is possible that compensation attributable to awards, when combined with all other types of compensation received by a covered employee from our Company, may cause this limitation to be exceeded in any particular year.
Modification; Amendment; Termination. The Compensation Committee may adopt, establish, amend and rescind such rules, regulations, and procedures as it may deem appropriate for the proper administration of the 2022 Plan, make all other determinations which are, in the Compensation Committee’s judgment, necessary or desirable for the proper administration of the 2022 Plan, amend the 2022 Plan or a stock award as provided under the 2022 Plan, or terminate or suspend the 2022 Plan as provided therein. The Compensation Committee may also amend the 2022 Plan at any time and from time to time. However, except for adjustments upon changes in Common Stock, no amendment will be effective unless approved by our stockholders to the extent that stockholder approval is necessary to preserve incentive stock option treatment for federal income tax purposes. The Compensation Committee may submit any other amendment to the 2022 Plan for stockholder approval if it concludes that stockholder approval is otherwise advisable.
Unless sooner terminated, the 2022 Plan will terminate ten years from the date of its adoption by our Board of Directors.
Agent Incentive Program
We have adopted, as an adjunct to the 2022 Plan, our Agent Incentive Program. The Agent Incentive Program which is a voluntary compensation plan for our agents who wish to participate in it. The Agent Incentive Program includes the following components:
| ● | Participants in the Agent Incentive Program who perform more than 20 sale transactions or make more than $6,000,000 gross sales volume in verified listing or buy side transactions with La Rosa Realty LLC in a given fiscal year, will receive a number of shares of restricted stock units (“RSUs”) which would be equivalent to $2,000 based on the prior 30 day volume weighted average closing price of the Company’s Common Stock on the Nasdaq Stock Market as of the RSU grant date. Such RSUs vest equally over the 24 months period starting in the month after the award is granted and released as such shares vest. Participants who terminate their relationship with the Company or do not paid their agent dues during the vesting period will forfeit any unvested shares as of the month of termination or 60 days after the dues become payable. |
| ● | A participant in the Agent Incentive Program will receive a number of shares of RSUs which would be equal to $200 based on the prior 30 day volume weighted-average closing of the Company’s Common Stock on the Nasdaq Stock Market as of the RSU grant date for recruitment of every agent who becomes an agent of the Company and remains an agent of the Company for at least 12 consecutive months. |
| ● | If a participant recruits ten (10) agents who become agents of the Company and remain agents of the Company for at least 12 consecutive months, that participant will receive a number of shares of RSUs that will have a value of $8,000 based on the prior 30 day volume weighted-average closing price of the Company’s Common Stock on the Nasdaq Stock Market as of the RSU grant date. Such RSUs vest equally over the 24 months period starting in the month after the award is granted and released as such shares vest. Participants who terminate their relationship with the Company or do not paid their agent dues during the vesting period will forfeit any unvested shares as of the month of termination or 60 days after the dues become payable. |
Director Compensation
The following table sets forth, for the year ended December 31, 2023, information with respect to the compensation for services in all capacities to us and our subsidiaries earned by our directors, who are not officers, who served during the year ended December 31, 2023.
Director Compensation
As of December 31, 2023
| Name | Fees Earned or Paid in Cash ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
All Other Compensation ($) |
Total ($) |
||||||||||||||||||
| Michael La Rosa(1) | 12,000 | — | 77,933 | (2) | — | — | 89,933 | |||||||||||||||||
| Jodi White | 15,000 | — | 97,416 | (3) | — | — | 112,416 | |||||||||||||||||
| Ned Siegel | 15,000 | — | 97,416 | (4) | — | — | 112,416 | |||||||||||||||||
| Thomas Stringer | 15,750 | — | 102,287 | (5) | — | — | 118,037 | |||||||||||||||||
| (1) | Does not include a real estate agent commission paid to Mr. La Rosa by La Rosa Realty in 2023. |
| (2) | Consists of a 10-year fully vested stock option to purchase 85,625 shares of Common Stock at $1.28 per share granted on November 1, 2023. |
| (3) | Consists of a 10-year fully vested stock option to purchase 107,050 shares of Common Stock at $1.28 per share granted on November 1, 2023. |
| (4) | Consists of a 10-year fully vested stock option to purchase 107,050 shares of Common Stock at $1.28 per share granted on November 1, 2023. |
| (5) | Consists of a 10-year fully vested stock option to purchase 112,400 shares of Common Stock at $1.28 per share granted on November 1, 2023. |
Policies and practices for granting certain equity awards.
The Company’s policies and practices regarding the granting of equity awards are carefully designed to ensure compliance with applicable securities laws and to maintain the integrity of our executive compensation program. The Compensation Committee of the Board of Directors is responsible for the timing and terms of equity awards to executives and other eligible employees.
The timing of equity award grants is determined with consideration to a variety of factors, including but not limited to, the achievement of pre-established performance targets, market conditions, and internal milestones. The Company does not follow a predetermined schedule for the granting of equity awards; instead, each grant is considered on a case-by-case basis to align with the Company’s strategic objectives and to ensure the competitiveness of our compensation packages.
In determining the timing and terms of an equity award, the Board of Directors or Compensation Committee may consider material nonpublic information to ensure that such grants are made in compliance with applicable laws and regulations. The Board of Directors or Compensation Committee’s procedures to prevent the improper use of material nonpublic information in connection with the granting of equity awards include oversight by legal counsel and, where appropriate, delaying the grant of equity awards until the public disclosure of such material nonpublic information.
The Company is committed to maintaining transparency in its executive compensation practices and to making equity awards in a manner that is not influenced by the timing of the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. The Company regularly reviews its policies and practices related to equity awards to ensure they meet the evolving standards of corporate governance and continue to serve the best interests of the Company and its shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
This table presents information about our Common Stock’s beneficial ownership as of April 16, 2024, for (i) each named executive officer and director; (ii) all named executive officers and directors as a group; and (iii) each other stockholder known to us owning more than 5% of our outstanding Common Stock.
Beneficial ownership complies with SEC rules, generally including voting or investment power over securities. A person or group is deemed to have “beneficial ownership” of any shares they can acquire within sixty (60) days. For percentage calculations, any shares that a person can acquire within sixty days are considered issued and outstanding for that person but not for others. This table does not imply beneficial ownership admission by anyone listed.
| Name and Address of Beneficial Owner(1) | Common Stock | Percentage of Common Stock(2) |
Series X Super Voting Preferred Stock(3) | Percentage of Series X Super Voting Preferred Stock | ||||||||||||
| Officers and Directors | ||||||||||||||||
| Joseph La Rosa | ||||||||||||||||
| (President, CEO, and Chairman) | 8,738,730 | (4) | 50.8 | % | 2,000 | 100 | % | |||||||||
| Kent Metzroth | ||||||||||||||||
| (Chief Financial Officer) | 359,120 | (5) | 2.45 | % | - | - | ||||||||||
| Deana La Rosa | ||||||||||||||||
| (Chief Operating Officer) | 300,000 | (6) | 2.05 | % | ||||||||||||
| Alex Santos | ||||||||||||||||
| (Chief Technology Officer) | 9,611 | * | ||||||||||||||
| Michael A. La Rosa | ||||||||||||||||
| (Director) | 105,625 | (7) | * | - | - | |||||||||||
| Ned L. Siegel | ||||||||||||||||
| (Director) | 127,050 | (8) | * | - | - | |||||||||||
| Thomas Stringer | ||||||||||||||||
| (Director) | 132,400 | (9) | * | - | - | |||||||||||
| Jodi R. White | ||||||||||||||||
| (Director) | 127,050 | (10) | * | - | - | |||||||||||
| All Officers and Directors as a group (8 persons) | 9,599,586 | 53.0 | % | 2,000 | 100 | % | ||||||||||
| 5% Stockholders | ||||||||||||||||
| Carlos J. Bonilla | 839,412 | (11) | 5.87 | % | - | - | ||||||||||
| Carlos G. Bonilla | 1,010,840 | (12) | 7.07 | % | - | - | ||||||||||
| * | Less than 1%. |
| (1) | Unless otherwise indicated, the principal address of the executive officers, directors and 5% stockholders of the Company is c/o 1420 Celebration Boulevard, 2nd Floor, Celebration, Florida 34747. |
| (2) | Based on 14,302,716 shares of Common Stock issued and outstanding on the Record Date and the shares of Common Stock owner has the right to acquire within 60 days of the Record Date. |
| (3) | Based on 2,000 shares of Series X Super Voting Preferred Stock outstanding on the Record Date. Each share of Series X Super Voting Preferred Stock votes together with the Common Stock unless prohibited by law and has 10,000 votes per share. |
| (4) | Includes 285 shares of Common Stock owned by Celebration Office Condos, LLC, an entity owned and controlled by Mr. La Rosa. Includes (i) a 10-year fully vested stock option to purchase 600,000 shares of Common Stock at $1.74 per share granted to Mr. La Rosa on March 15, 2024; (ii) a 10-year fully vested stock option to purchase 134,065 shares of Common Stock at $1.7332 per share granted to Mr. La Rosa on February 1, 2024; (iii) a 10-year fully vested stock option to purchase 800,000 shares of Common Stock at $1.5001 per share granted to Mr. La Rosa on January 2, 2024; (iii) a 10-year fully vested stock option to purchase 900,000 shares of Common Stock at $2.09 per share granted to Mr. La Rosa on December 7, 2023; (iv) a 5-year warrant to purchase 166,667 shares of Common Stock at a price equal to the lower of $1.50 per share or the price per share of any offering by the Company subsequent to the Company’s initial public offering, subject to adjustment, granted to Mr. La Rosa on December 2, 2022. Joseph La Rosa is the spouse of Deana La Rosa and is deemed to beneficially own the shares of Common Stock beneficially owned by Deana La Rosa. |
| (5) | Represents a 10-year fully vested stock option to purchase 359,120 shares of Common Stock at $1.7332 per share granted on February 1, 2024. |
| (6) | Represents a 10-year fully vested stock option to purchase 300,000 shares of Common Stock at $1.7332 per share granted to Ms. La Rosa on February 1, 2024. Deana La Rosa is the spouse of Joseph La Rosa and is deemed to beneficially own the shares of Common Stock beneficially owned by Joseph La Rosa. |
| (7) | Includes (i) a fully vested stock option to purchase 20,000 shares of Common Stock at $5 per share granted on March 17, 2022, and expiring on February 15, 2032; and (ii) a 10-year fully vested stock option to purchase 85,625 shares of Common Stock at $1.28 per share granted on November 1, 2023. |
| (8) | Includes (i) a fully vested stock option to purchase 20,000 shares of Common Stock at $5 per share granted on March 17, 2022, and expiring on February 15, 2032; and (ii) a 10-year fully vested stock option to purchase 107,050 shares of Common Stock at $1.28 per share granted on November 1, 2023. |
| (9) | Includes (i) a fully vested stock option to purchase 20,000 shares of Common Stock at $5 per share granted on March 17, 2022, and expiring on February 15, 2032; and (ii) a 10-year fully vested stock option to purchase 112,400 shares of Common Stock at $1.28 per share granted on November 1, 2023. |
| (10) | Includes (i) a fully vested stock option to purchase 20,000 shares of Common Stock at $5 per share granted on March 17, 2022, and expiring on February 15, 2032; and (ii) a 10-year fully vested stock option to purchase 107,050 shares of Common Stock at $1.28 per share granted on November 1, 2023. |
| (11) | Includes 239,412 shares of Common Stock held by ELG-TRUST-1004-09-01-13, a trust controlled by Mr. Bonilla. Information based on Forms 3 and 4 filed by Carlos J. Bonilla with the SEC. |
| (12) | Stock ownership based on a Schedule 13G filed by Carlos G. Bonilla with the SEC on January 17, 2024. The address of Mr. Bonilla listed on his Schedule 13G is 407 Wekiva Springs Rd, Suite 207, Longwood, FL 32779. |
Equity Plan Information
See Part II, Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Annual Report on Form 10-K.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Related Party Transactions
Set forth below is a description of certain relationships and related person transactions since January 1, 2022, between us or our subsidiaries, and our directors, executive officers and holders of more than 5% of our voting securities that involve the lower of $120,000 or 1% of the average of total assets in the last two fiscal years. We believe that all of the following transactions were entered into with terms as favorable as could have been obtained from unaffiliated third parties.
Certain companies owned by Mr. La Rosa have from time-to-time loaned money to one or more of the Company’s subsidiaries, affiliates or franchisees with balances that, in the aggregate, were less than $120,000 or 1% of the Company’s average of total assets at December 31, 2023 and 2022.
The Company leases its corporate office from an entity controlled by the Company’s CEO. The rent expense for the year ending December 31, 2023 was $134,505. During 2022, no rent expense was charged to the Company. There is no written agreement, and the rent is determined on a month-to-month basis. There are no future minimum rental payments, and the lease may be cancelled at any time by either party.
On July 1, 2023, the Company began leasing office space for its subsidiary, La Rosa Realty, from an entity owned by Joseph La Rosa, the Company’s CEO, and Michael La Rosa, the Company’s member of the Board. There is a written lease, which includes minimum monthly rent of $4,593, with a term ending in June 2025.
On May 4, 2023, the mother of the Company’s CEO purchased 200 shares of the Company’s series A preferred stock for $200,000. Upon the Company’s IPO, the shares were converted into 57,142 shares of the Company’s Common Stock.
Due from related party
La Rosa Realty, LLC has provided interest-free, due on demand advances to La Rosa Insurance LLC, a company controlled by the Company’s CEO. The outstanding balance was $41,558 as of December 31, 2022. As a newly publicly traded company, the Company must comply with the Sarbanes-Oxley Act of 2002 and specifically Section 402, which amended the Securities Exchange Act of 1934 to prohibit companies from making most personal loans to their directors and executive officers. During the fourth quarter of 2023, upon the Company completing its IPO, the Compensation Committee reviewed the advance, which had a balance of $45,413, and determined that the existing related party receivable would be charged as part of the Company’s CEO’s annual bonus as specified in his employment agreement.
Due to related party (due on demand advances)
Prior to 2023, the Company’s CEO provided interest free, due on demand, advances to the Company for general operations. The outstanding balance of these obligations was $75,591 as of December 31, 2022.
Prior to 2023, a relative of the Company’s CEO provided an interest free, due on demand, advance to the Company. The outstanding balance was $48,000 as of December 31, 2022.
Prior to 2023, an entity owned by the Company’s CEO provided an interest free, due on demand, advance to the Company. The outstanding balance was $40,654 as of December 31, 2022.
The Company repaid all of the advances totaling $149,245 at the closing of the Company’s IPO on October 12, 2023.
Due to related party (term loans)
From February 2022 through October 3, 2022, the Company issued to the Company’s CEO six unsecured subordinated promissory notes in the aggregate principal amount of $765,000. The notes accrued interest at rates ranging from 1.4% per annum to 3.43% per annum, each with a three year term with monthly payments toward principal and interest beginning after the Company’s IPO.
On July 15, 2021, the Company issued to a private investor, Mr. Carlos J. Bonilla, an attorney with the law firm of ELP Global PLLC that represents the Company, an unsecured subordinated promissory note (the “ELP Note”) in the principal amount of $40,000 that was used for general corporate purposes. Interest accrued on the principal amount at 18% per annum. On December 1, 2022, the Company’s CEO, Joseph La Rosa, entered into an agreement with Mr. Bonilla pursuant to which Mr. La Rosa sold to Mr. Bonilla 600,000 shares of his common stock in exchange for the assignment by Mr. Bonilla of the ELP Note plus accrued interest and the payment by Mr. Bonilla to Mr. La Rosa of cash in the amount of $449,500. As a result of the assignment of the ELP Note to Mr. La Rosa, the principal balance of $40,000 was reclassified to “Due to related party” on the consolidated balance sheets.
On December 2, 2022, the Company issued to the Company’s CEO a Convertible OID Promissory Note in the original principal amount of $491,530 for which he paid $449,500. The note had an annual original issue discount of 8.55% with a default interest rate of 24.0% and a $5,000 per month per occurrence delinquency penalty. The holder had the right at any time to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the note into shares of the Company’s Common Stock at a price equal to the offering price of the initial public offering multiplied by 0.75 with certain distribution, fundamental transaction and anti-dilution protections and cash penalties for failure to deliver the shares in a timely manner. The Company also issued to the Company’s CEO warrants exercisable for 50,000 shares of the Company’s Common Stock that: (i) have a term of 60 months; (ii) have full ratchet anti-dilution protection provisions; (iii) are exercisable for a number of shares of our Common Stock equal to the number of shares that would be issued upon full conversion of this note; and (iv) have an exercise price equal to the lower of: (A) $5.00 per share, or (B) the price per share of any subsequent offering undertaken by the Company. The Company also granted to the Company’s CEO (i) upon repayment of the loan, 60,000 shares of the Company’s Common Stock, (ii) the right to participate in any future financings, (iii) the right to rollover the principal and interest due to acquire Company securities in any future public or private offering, (iv) extensive and non-customary default provisions in the note, and (v) certain other affirmative and negative covenants.
In March 2023, the Company exchanged, in a private placement under Sections 3(a)(9) and 4(a)(2) of the Securities Act, the six unsecured subordinated promissory notes, the ELP Note, and the Convertible OID Promissory Note representing an aggregate amount of principal and accrued interest of $1,324,631, for 1,321 shares of the Company’s series A preferred stock. Upon the Company’s IPO, the shares were converted into 377,428 shares of the Company’s Common Stock. See Note 8 – Stockholders’ Equity for additional information.
In 2022, we paid $229,528 cash dividends to Joseph La Rosa who was the sole stockholder of the Company on or prior to November 14, 2022.
Item 14. Principal Accountant Fees and Services.
During the years ended December 31, 2023 and 2022, we engaged Marcum LLP as our independent registered accounting firm. For the years ended December 31, 2023 and 2022, we incurred fees, as discussed below:
| Fiscal Year Ended December 31, |
||||||||
| 2023 | 2022 | |||||||
| Audit Fees | $ | 288,470 | $ | 486,675 | ||||
| Audit-Related Fees | $ | 184,232 | $ | 20,256 | ||||
| Tax Fees | $ | — | $ | — | ||||
| All Other Fees | $ | — | $ | — | ||||
| Total | $ | 472,702 | $ | 506,931 | ||||
In the above table, “audit fees” are fees billed for services provided related to the audit of our annual financial statements, quarterly reviews of our interim financial statements, and services normally provided by the independent accountant in connection with regulatory filings or engagements for those fiscal periods. “Audit-related fees” are fees not included in audit fees that are billed by the independent accountant for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. These audit-related fees also consist of the review of our registration statements filed with the SEC and related services normally provided in connection with regulatory filings or engagements. “Tax Fees” are fees primarily for tax compliance in connection with filing US income tax returns. “All other fees” are fees billed by the independent accountant for products and services not included in the foregoing categories.
Audit Committee Pre-Approval Policies
The charter of our Audit Committee provides that the duties and responsibilities of our Audit Committee include the pre-approval of all audit and non-audit services permitted by law or applicable SEC regulations (including fee and terms of engagement) to be performed by our external auditor.
All of the services provided above under the caption “Audit-Related Fees” were approved by our Board of Directors or by our Audit Committee pursuant to our Audit Committee’s pre-approval policies.
PART IV
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this Annual Report on Form 10-K:
| 1. | Financial Statements: The following Financial Statements and Supplementary Data of La Rosa Holdings Corp and the Report of Independent Registered Public Accounting Firm included in Part II, Item 8: |
| ● | Balance Sheets at December 31, 2023 and 2022; |
| ● | Statements of Operations for the years ended December 31, 2023 and 2022; |
| ● | Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2023 and 2022; |
| ● | Statements of Cash Flows for the years ended December 31, 2023 and 2022; and |
| ● | Notes to Financial Statements. |
| 2. | Exhibits: |
The following exhibits are included herein or incorporated by reference.
| * | Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. |
| # | Management contracts or compensatory plans, contracts or arrangements. |
Item 16. Form 10-K Summary.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| LA ROSA HOLDINGS CORP. | |
Dated: April 16, 2024 |
/s/ Joseph La Rosa |
| Joseph La Rosa | |
| President, Chief Executive Officer and Chairman of the Board of Directors |
|
| (Principal Executive Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Joseph La Rosa | Founder, President, Chief Executive Officer, and | April 16, 2024 | ||
| Joseph La Rosa | Director (Principal Executive Officer) | |||
| /s/ Kent Metzroth | Chief Financial Officer (Chief Accounting Officer) | April 16, 2024 | ||
| Kent Metzroth | ||||
| /s/ Michael A. La Rosa | Director | April 16, 2024 | ||
| Michael A. La Rosa | ||||
| /s/ Ned L. Siegel | Director | April 16, 2024 | ||
| Ned L. Siegel | ||||
| /s/ Thomas Stringer | Director | April 16, 2024 | ||
| Thomas Stringer | ||||
| /s/ Jodi R. White | Director | April 16, 2024 | ||
| Jodi R. White |
76
Exhibit 4.8
DESCRIPTION OF REGISTRANT’S SECURITIES REGISTERED UNDER SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
The following description sets forth certain material terms and provisions of the common stock of La Rosa Holdings Corp., a Nevada corporation which are registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This description also summarizes relevant provisions of the Nevada Revised Statutes (“NRS”). The following description is a summary and does not purport to be complete. It is subject to, and qualified in its entirety by reference to, the relevant provisions of the NRS, and to our Amended and Restated Articles of Incorporation, as amended, (the “Articles of Incorporation”), and our Bylaws (the “Bylaws”), which are filed as exhibits to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, of which this Exhibit is a part, and are incorporated by reference herein. We encourage you to read the Company’s Articles of Incorporation and the Bylaws, and the relevant provisions of the NRS for additional information. Unless the context requires otherwise, all references to “we,” “us,” “our” and the “Company” in this Exhibit 4.8 refer solely to La Rosa Holdings Corp.
Authorized Capital Stock
Our authorized capital stock presently consists of 250,000,000 shares of common stock, par value $0.0001 per share, and 50,000,000 shares of “blank check” preferred stock, par value $0.0001 per share, 2,000 shares of which are designated as “Series X Super Voting Preferred Stock”.
Common Stock
Voting
Holders of shares of the common stock are entitled to one vote for each share held of record on matters properly submitted to a vote of our stockholders. Stockholders are not entitled to vote cumulatively for the election of directors.
Dividends
Subject to the dividend rights of the holders of any outstanding series of preferred stock, holders of shares of common stock will be entitled to receive ratably such dividends, if any, when, as, and if declared by our Board of Directors (“Board”) out of the Company’s assets or funds legally available for such dividends or distributions.
Liquidation and Distribution
In the event of any liquidation, dissolution, or winding up of the Company’s affairs, holders of the common stock would be entitled to share ratably in the Company’s assets that are legally available for distribution to its stockholders. If the Company has any preferred stock outstanding at such time, holders of the preferred stock may be entitled to distribution preferences, liquidation preferences, or both. In such case, the Company must pay the applicable distributions to the holders of its preferred stock before it may pay distributions to the holders of common stock.
Conversion, Redemption, and Preemptive Rights
Holders of the common stock have no preemptive, subscription, redemption or conversion rights.
Sinking Fund Provisions
There are no sinking fund provisions applicable to the common stock.
PREFERRED STOCK
On July 29, 2021, we filed an Amended and Restated Articles of Incorporation with the Secretary of State of Nevada authorizing 50,000,000 shares of “blank check” preferred stock and designating 2,000 shares of the authorized preferred stock as “Series X Super Voting Preferred Stock” and issued 100% of the Super X Super Voting Preferred Stock to Mr. Joseph La Rosa, our Chief Executive Officer, President and Chairman.
The holder of our Series X Super Voting Preferred Stock is entitled to the following rights:
| ● | Voting Rights. Each share of our Series X Super Voting Preferred Stock entitles its holder to 10,000 votes per share and votes with our Common Stock as a single class on all matters to be voted or consented upon by the stockholders. |
| ● | Conversion The Series X Super Voting Preferred Stock is not convertible into common stock or any other securities of the Company. |
| ● | Dividend Rights. The holders of our Series X Super Voting Preferred Stock are not entitled to any dividend rights or to participate in dividends paid on the Company's Common Stock. |
| ● | Liquidation Rights. The holders of the Series X Super Voting Preferred Stock are not entitled to any liquidation preference. |
Listing
Our common stock is listed on The Nasdaq Capital Market under the symbols “LRHC”, respectively.
Transfer Agent and Registrar
Our transfer agent and registrar for all securities registered under Section 12 of the Exchange Act is Vstock Transfer, LLC located at 18 Lafayette Place, Woodmere, NY 11598. Their telephone number is (212) 828-8436.
Anti-Takeover Effects of Nevada Law and the Articles of Incorporation and Bylaws
Certain provisions of the Articles of Incorporation and Bylaws, and certain provisions of the NRS could make our acquisition by a third party, a change in our incumbent management, or a similar change of control more difficult. These provisions, which are summarized below, are likely to reduce our vulnerability to an unsolicited proposal for the restructuring or sale of all or substantially all of our assets or an unsolicited takeover attempt. The summary of the provisions set forth below does not purport to be complete and is qualified in its entirety by reference to the Articles of Incorporation and the Bylaws and the relevant provisions of the NRS.
Authorized but Unissued Shares
Our authorized but unissued shares of common stock and preferred stock are available for future issuance. These additional shares may be used for a variety of corporate finance transactions, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could make it more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Our authorized capital includes “blank check.” Our Board has the authority to issue preferred stock in one or more class or series and determine the price, designation, rights, preferences, privileges, restrictions and conditions, including voting and dividend rights, of those shares without any further vote or action by stockholders. The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of holders of any preferred stock that may be issued in the future. The issuance of additional preferred stock, while providing desirable flexibility in connection with possible financings and acquisitions and other corporate purposes, could make it more difficult for a third party to acquire a majority of the voting power of our outstanding voting securities, which could deprive our holders of common stock of a premium that they might otherwise realize in connection with a proposed acquisition of our Company.
Action by Written Consent
Our Bylaws provide that any action required or permitted by law, the Articles of Incorporation, or Bylaws to be taken at a meeting of the stockholders of the Company may be taken without a meeting if a consent or consents in writing, setting forth the action so taken, shall be signed by stockholders holding at least a majority of the voting power; provided that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents is required.
Advance Notice Requirements
Stockholders wishing to nominate persons for election to our Board at a meeting or to propose any business to be considered by our stockholders at a meeting must comply with certain advance notice and other requirements set forth in our Bylaws and Rule 14a-8 of the Exchange Act.
Special Meetings
Our Bylaws provide that special meetings of stockholders may be called for any purpose or purposes by (i) the Chairman of the Board of Directors, (ii) the Chief Executive Officer, (iii) Board of Directors pursuant to a resolution adopted by directors representing a quorum of the Board of Directors, or (iv) the holders of shares entitled to cast not less than 33 1/3% of the votes at the meeting. Business transacted at all special meetings shall be confined to the purposes stated in the notice of the meeting.
Board Vacancies
Our Bylaws provide that any vacancy on our Board, howsoever resulting, shall be filled only by the affirmative vote of a majority of the remaining directors, unless the Board determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders.
Removal of Directors
Our Bylaws provide that any director may be removed either for or without cause at any special meeting of stockholders by the affirmative vote of at least two-thirds of the voting power of the issued and outstanding stock entitled to vote; provided, however, that notice of intention to act upon such matter shall have been given in the notice calling such meeting.
Right to Alter, Amend or Repeal Bylaws
Our Bylaws provide that they may be altered, amended or repealed at any meeting of the Board at which a quorum is present, by the affirmative vote of a majority of the directors present at such meeting.
Indemnification of Officers and Directors and Insurance
Our Bylaws provide for limitation of liability of our directors and for indemnification of our directors and officers to the fullest extent permitted under Nevada law. Our directors and officers may be liable for a breach or failure to perform their duties in accordance with Nevada law only if their breach or failure to perform constitutes gross negligence, willful misconduct or intentional harm on our Company or our stockholders. Our directors may not be personally liable for monetary damages for action taken or failure to take action as a director except in specific instances established by Nevada law.
In accordance with Nevada law, we may generally indemnify a director or officer against liability incurred in a proceeding if he or she acted in good faith, and believed that his or her conduct was in our best interest and that he or she had no reason to believe his or her conduct was unlawful. We may not indemnify a director or officer if the person was adjudged liable to us or in the event it is adjudicated that the director or officer received an improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the U.S. Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Nevada Anti-Takeover Statutes
The NRS contains provisions restricting the ability of a Nevada corporation to engage in business combinations with an interested stockholder. Under the NRS, except under certain circumstances, business combinations with interested stockholders are not permitted for a period of two years following the date such stockholder becomes an interested stockholder. The NRS defines an interested stockholder, generally, as a person who is the beneficial owner, directly or indirectly, of 10% or more of the outstanding shares of a Nevada corporation. In addition, the NRS generally disallows the exercise of voting rights with respect to “control shares” of an “issuing corporation” held by an “acquiring person,” unless such voting rights are conferred by a majority vote of the disinterested stockholders as a special or annual meeting. “Control shares” are those outstanding voting shares of an issuing corporation which an acquiring person and those persons acting in association with an acquiring person (i) acquire or offer to acquire in an acquisition of a controlling interest and (ii) acquire within 90 days immediately preceding the date when the acquiring person became an acquiring person. An “issuing corporation” is a corporation organized in Nevada which has two hundred or more stockholders, at least one hundred of whom are stockholders of record and residents of Nevada, and which does business in Nevada directly or through an affiliated corporation. The NRS also permits directors to resist a change or potential change in control of the corporation if the directors determine that the change or potential change is opposed to or not in the best interest of the corporation.
Exhibit 4.9
NEITHER THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
LA ROSA HOLDINGS CORP.
Warrant Shares: 21,053
Date of Issuance: February 20, 2024 (“Issuance Date”)
This COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Alexander Capital L.P. (including any permitted and registered assigns, the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from LA ROSA HOLDINGS CORP., a Nevada corporation (the “Company”), 21,053 shares of Common Stock (the “Warrant Shares”) (whereby such number may be adjusted from time to time pursuant to the terms and conditions of this Warrant) at the Exercise Price per share then in effect. This Warrant is issued pursuant to that certain Engagement Agreement, by and between the Company and Alexander Capital L.P., dated as of January 12, 2024.
For purposes of this Warrant, the term “Exercise Price” shall mean $1.50, subject to adjustment as provided herein (including but not limited to cashless exercise), and the term “Exercise Period” shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. eastern standard time on the five-year anniversary thereof.
| 1. | EXERCISE OF WARRANT. |
(a) Mechanics of Exercise. Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. On or before the second Trading Day (the “Warrant Share Delivery Date”) following the date on which the Holder sent the Exercise Notice to the Company or the Company’s transfer agent, and upon receipt by the Company of payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “Aggregate Exercise Price” and together with the Exercise Notice, the “Exercise Delivery Documents”) in cash or by wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise Price provided), the Company shall (or direct its transfer agent to) issue and deliver by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise (or deliver such shares of Common Stock in electronic format if requested by the Holder). Upon delivery of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 7) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the Warrant Share Delivery Date. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.
If the Company fails to cause its transfer agent to issue to the Holder the respective shares of Common Stock by the respective Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise in Holder’s sole discretion in addition to all other rights and remedies at law, under this Warrant, or otherwise, and such failure shall also be deemed an event of default (the “Event of Default”), a material breach under this Warrant.
If the Market Price of one share of Common Stock is greater than the Exercise Price, then, unless there is an effective non-stale registration statement of the Company that contains a prospectus that complies with Section 5(b) and Section 10 of the Securities Act of 1933, as amended (the “Securities Act”), at the time of exercise and covers the Holder’s immediate resale of all of the Warrant Shares at prevailing market prices (and not fixed prices) without any limitation, the Holder may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and an Exercise Notice, in which event the Company shall issue to Holder a number of Common Stock computed using the following formula:
X = Y (A-B)
A
| Where | X = | the number of Shares to be issued to Holder. |
| Y = | the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation). |
| A = | the Market Price (at the date of such calculation). |
| B = | Exercise Price (as adjusted to the date of such calculation). |
(b) No Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.
(c) Holder’s Exercise Limitations; Exchange Cap. Notwithstanding anything to the contrary contained herein, the Company shall not effect any exercise of this Warrant, and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 1 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Exercise Notice, the Holder (together with the Holder’s Affiliates), and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 1(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Holder is solely responsible for any schedules required to be filed in accordance therewith. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 1(c), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within three (3) Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding at the time of the respective calculation hereunder. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 1(c), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(c) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
(d) Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Company’s transfer agent to transmit to the Holder the Warrant Shares in accordance with the provisions of this Warrant (including but not limited to Section 1(a) above pursuant to an exercise on or before the respective Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder, within one (1) Business Day of Holder’s request, the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the product of (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder within one (1) Business Day of Holder’s request the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases, or effectuates a cashless exercise hereunder for, Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
(e) Piggyback Registration Rights
(i) If at any time during the period commencing on the date hereof and ending on the third anniversary of the date hereof, the Company proposes to file a registration statement under the Securities Act, with respect to an offering of equity securities, or securities or other obligations exercisable or convertible into, or exchangeable for, equity securities, by the Company for its own account or for stockholders of the Company for their account (or by the Company and by stockholders of the Company including, without limitation, pursuant to Rule 415 under the Securities Act), other than a registration statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) for an offering of debt that is convertible into equity securities of the Company, or (iv) for a dividend reinvestment plan, then the Company shall (x) give written notice of such proposed filing to the Holder as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) offer to the Holder in such notice the opportunity to register the sale of such number of shares of Warrant Shares as the Holder may request in writing within five (5) days following receipt of such notice (a “Piggyback Registration”). The Company shall cause such shares to be included in the registration statement to the same extent as if they were covered by an effective registration statement at such time. If the Holder decides not to include all of its requested shares of Warrant Shares in any registration statement thereafter filed by the Company, the Holder shall nevertheless continue to have the right to include any Warrant Shares in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.
(ii) Notwithstanding the foregoing, if the managing underwriter or underwriters of the proposed offering advise the Company in writing that the inclusion of all of the Warrant Shares requested to be included by the Holder would interfere with the successful marketing of the securities proposed to be offered by the Company, the Company shall include in such registration (a) first, the securities the Company proposes to sell; (b) second, the securities requested to be included therein by holders of the Company’s securities (other than the Holder) entitled to inclusion therein, pro rata among such holders on the basis of the amount of securities entitled to be included therein owned by each such holder; and (c) third, the Warrant Shares requested to be included therein by the Holder, pro rata on the basis of the amount of securities entitled to be included therein owned by the Holder and other holders exercising their piggyback registration rights.
(iii) In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 1(e), the Company shall not be required to include any of the Holder’s securities in such underwriting unless the Holder accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by it, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Warrant Shares, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Warrant Shares, which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders) but in no event shall (x) the amount of securities of the selling stockholders included in the offering be reduced below thirty percent (30%) of the total amount of securities included in such offering, unless such offering is the initial public offering of the Company’s securities, in which case the selling stockholders may be excluded if the underwriters make the determination described above and no other stockholder’s securities are included, or (y) any securities of the Company be included in such offering other than the Warrant Shares if such inclusion would reduce the amount of the Warrant Shares included in such offering below the amount of the Warrant Shares that the Holder has requested to include.
(iv) The Holder’s rights to registration of its Warrant Shares under this section shall be conditioned upon the Holder’s furnishing to the Company such information regarding itself, the Warrant Shares held by it, and the intended method of disposition of the Warrant Shares as shall be required to effect the registered offering of their Warrant Shares.
| 2. | ADJUSTMENTS. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 2. |
(a) Stock Dividends and Splits. Without limiting any provision of Section 2(b), Section 3 or Section 4, if the Company, at any time on or after the Issuance Date, (i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its then outstanding shares of Common Stock into a larger number of shares or (iii) combines (by combination, reverse stock split or otherwise) one or more classes of its then outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event.
(b) Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after the Issuance Date, the Company grants, issues or sells (or enters into any agreement to grant, issue or sell), or in accordance with this Section 2 is deemed to have granted, issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) (other than in an Excluded Issuance (as defined in this Warrant)) for a consideration per share (the “New Issuance Price”) less than a price equal to the Exercise Price in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (such Exercise Price then in effect is referred to herein as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then upon a Triggering Event (as defined in this Warrant), the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price (for the avoidance of doubt, if a Triggering Event occurs, the Holder shall be entitled to the rights hereunder for each Dilutive Issuance that occurred on or after the Issuance Date (including but not limited to each Dilutive Issuance that occurred prior to the Triggering Event). For all purposes of the foregoing (including, without limitation, determining the adjusted Exercise Price and the New Issuance Price under this Section 2(b)), the following shall be applicable:
(i) Issuance of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options (other than in an Excluded Issuance)and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting, issuance or sale (or the time of execution of such agreement to grant, issue or sell, as applicable) of such Option for such price per share. For purposes of this Section 2(b)(i), the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting, issuance or sale (or pursuant to the agreement to grant, issue or sell, as applicable) of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other Person) upon the granting, issuance or sale (or the agreement to grant, issue or sell, as applicable) of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or otherwise pursuant to the terms of or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Convertible Securities (other than in an Excluded Issuance) and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale (or the time of execution of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share. For the purposes of this Section 2(b)(ii), the “lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale (or pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person) upon the issuance or sale (or the agreement to issue or sell, as applicable) of such Convertible Security plus the value of any other consideration received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(b), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.
(iii) Change in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than (i) proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 2(a), or (ii) changes in conversion or exercise prices, as applicable, in respect of securities issued in an Excluded Issuance), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 2(b)(iii), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that was outstanding as of the Issuance Date) are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(b) shall be made if such adjustment would result in an increase of the Exercise Price then in effect.
(iv) Calculation of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance or sale or deemed issuance or sale of any other securities of the Company (as determined jointly by the Holder and the Company), the “Primary Security”, and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities”), together comprising one integrated transaction, (or one or more transactions if such issuances or sales or deemed issuances or sales of securities of the Company either (A) have at least one investor or purchaser in common, (B) are consummated in reasonable proximity to each other and/or (C) are consummated under the same plan of financing) the aggregate consideration per share of Common Stock with respect to such Primary Security shall be deemed to be equal to the difference of (x) the lowest price per share for which one share of Common Stock was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii) above, as applicable) in such integrated transaction solely with respect to such Primary Security, minus (y) with respect to such Secondary Securities, the sum of (I) the Black Scholes Consideration Value of each such Option, if any, (II) the fair market value (as reasonably determined jointly by the Holder and the Company in good faith) or the Black Scholes Consideration Value, as applicable, of such Adjustment Right, if any, and (III) the fair market value (as reasonably determined jointly by the Holder and the Company) of such Convertible Security, if any, in each case, as determined on a per share basis in accordance with this Section 2(b)(iv). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the net amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be the fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor (for the purpose of determining the consideration paid for such Common Stock, Option or Convertible Security, but not for the purpose of the calculation of the Black Scholes Consideration Value) will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be reasonably determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
(v) Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
(c) Holder’s Right of Alternative Exercise Price Following Issuance of Certain Options or Convertible Securities. In addition to and not in limitation of the other provisions of this Section 2, if the Company in any manner issues or sells or enters into any agreement to issue or sell, any Common Stock, Options or Convertible Securities (any such securities, “Variable Price Securities”) after the Issuance Date that are issuable pursuant to such agreement or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may vary with the market price of the shares of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting customary anti-dilution provisions (such as share splits, share combinations, share dividends and similar transactions) (each of the formulations for such variable price being herein referred to as, the “Variable Price”), the Company shall provide written notice thereof via electronic mail and overnight courier to the Holder on the date of such agreement and the issuance of such Common Stock, Convertible Securities or Options. From and after the date the Company enters into such agreement or issues any such Variable Price Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price, as calculated pursuant to the agreements governing such Variable Price Securities, for the Exercise Price upon exercise of this Warrant by designating in the Exercise Notice delivered upon any exercise of this Warrant that solely for purposes of such exercise the Holder is relying on the Variable Price rather than the Exercise Price then in effect. The Holder’s election to rely on a Variable Price for a particular exercise of this Warrant shall not obligate the Holder to rely on a Variable Price for any future exercises of this Warrant.
(d) Stock Combination Event Adjustment. If at any time and from time to time on or after the Issuance Date there occurs any stock split, stock dividend, stock combination recapitalization or other similar transaction involving the Common Stock (each, a “Stock Combination Event”, and such date thereof, the “Stock Combination Event Date”) and the Event Market Price is less than the Exercise Price then in effect (after giving effect to the adjustment in clause 2(a) above), then on the sixteenth (16th) Trading Day immediately following such Stock Combination Event, the Exercise Price then in effect on such sixteenth (16th) Trading Day (after giving effect to the adjustment in clause 2(a) above) shall be reduced (but in no event increased) to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made.
(e) Other Events. In the event that the Company (or any of its subsidiaries (the “Subsidiary”) shall take any action to which the provisions hereof are not strictly applicable, or, if applicable, would not operate to protect the Holder from actual dilution or if any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s board of directors shall in good faith determine and implement an appropriate adjustment in the Exercise Price and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder, provided that no such adjustment pursuant to this Section 2(e) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided further that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and expenses shall be borne by the Company.
(f) Calculations. All calculations under this Section 2 shall be made by rounding to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issuance or sale of Common Stock
(g) Voluntary Adjustment By Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the term of this Warrant, with the prior written consent of the Holder, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board of directors of the Company.
(h) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 2, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment (without regard to any limitations on exercise contained herein). For the avoidance of doubt, the aggregate Exercise Price payable prior to such adjustment is calculated as follows: the total number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership Limitation) multiplied by the Exercise Price in effect immediately prior to such adjustment. By way of example, if E is the total number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment (without regard to the Beneficial Ownership Limitation), F is the Exercise Price in effect immediately prior to such adjustment, and G is the Exercise Price in effect immediately after such adjustment, the adjustment to the number of Warrant Shares can be expressed in the following formula: Total number of Warrant Shares after such adjustment = the number obtained from dividing [E x F] by G.
(i) Notice. In addition to all other notice(s) required under this Section 2, the Company shall also notify the Holder in writing, no later than the Trading Day following any adjustment to the Warrant under this Section 2, indicating therein the occurrence of such applicable exercise price and warrant share adjustment (such notice the “Adjustment Notice”). For purposes of clarification, regardless of whether (i) the Company provides an Adjustment Notice pursuant to this Section 2 or (ii) the Holder accurately refers to the number of Warrant Shares or Exercise Price in the Exercise Notice, the Holder is entitled to receive the adjustments to the number of Warrant Shares and Exercise Price at all times on and after the date of such adjustment event.
| 3. | RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2 above or Section 4(a) below, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to the extent of the Beneficial Ownership Limitation (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly in abeyance) to the same extent as if there had been no such limitation). |
| 4. | PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS. |
(a) Purchase Rights. In addition to any adjustments pursuant to Sections 2 or 3 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Beneficial Ownership Limitation (and shall not be entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent of any such excess) and such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution Parties exceeding the Beneficial Ownership Limitation, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).
(b) Fundamental Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental Transaction, including agreements to deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, which is exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of the applicable Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of publicly traded common stock (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions of this Warrant. Notwithstanding the foregoing, and without limiting Section 1(c) hereof, the Holder may elect, at its sole option, by delivery of written notice to the Company to waive this Section 4(b) to permit the Fundamental Transaction without the assumption of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant) (the “Corporate Event Consideration”). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.
(c) Black Scholes Value.
(i) Change of Control Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered at any time commencing on the earliest to occur of (A) the public disclosure of any Change of Control, (B) the consummation of any Change of Control and (C) the Holder first becoming aware of any Change of Control through the date that is ninety (90) days after the public disclosure of the consummation of such Change of Control by the Company pursuant to a Report on Form 8-K or Report of Foreign Issuer on Form 6-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall exchange this Warrant for consideration equal to the Black Scholes Value of such portion of this Warrant subject to exchange (collectively, the “Aggregate Black Scholes Value”) in the form of, at the Holder’s election (such election to pay in cash or by delivery of the Rights (as defined below), a “Consideration Election”), either (I) rights (with a beneficial ownership limitation in the form of Section 1(c) hereof, mutatis mutandis) (collectively, the “Rights”), convertible in whole, or in part, at any time, without the requirement to pay any additional consideration, at the option of the Holder, into such Corporate Event Consideration applicable to such Change of Control equal in value to the Aggregate Black Scholes Value (as determined in accordance with Section 2(b)(iv) above, but with the aggregate number of Successor Shares (as defined below) issuable upon conversion of the Rights to be determined in increments of 10% (or such greater percentage as the Holder may notify the Company from time to time) of the portion of the Aggregate Black Scholes Value attributable to such Successor Shares (the “Successor Share Value Increment”), with the aggregate number of Successor Shares issuable upon exercise of the Rights with respect to the first Successor Share Value Increment determined based on 70% of the Closing Bid Price of the Successor Shares on the date the Rights are issued and on each of the nine (9) subsequent Trading Days, in each case, the aggregate number of additional Successor Shares issuable upon exercise of the Rights shall be determined based upon a Successor Share Value Increment at 70% of the Closing Bid Price of the Successor Shares in effect for such corresponding Trading Day (such ten (10) Trading Day period commencing on, and including, the date the Rights are issued, the “Rights Measuring Period”)), or (II) in cash; provided, that the Company shall not consummate a Change of Control if the Corporate Event Consideration includes share capital or other equity interest (the “Successor Shares”) either in an entity that is not listed on an Eligible Market or an entity in which the daily share volume for the applicable Successor Shares for each of the twenty (20) Trading Days prior to the date of consummation of such Change of Control is less than the aggregate number of Successor Shares issuable to the Holder upon conversion in full of the applicable Rights (without regard to any limitations on conversion therein, assuming the exercise in full of the Rights on the date of issuance of the Rights and assuming the Closing Bid Price of the Successor Shares for each Trading Day in the Rights Measuring Period is the Closing Bid Price on the Trading Day ended immediately prior to the time of consummation of the Change of Control). The Company shall give the Holder written notice of each Consideration Election at least twenty (20) Trading Days prior to the time of consummation of such Change of Control. Payment of such amounts or delivery of the Rights, as applicable, shall be made by the Company (or at the Company’s direction) to the Holder on or prior to the later of (x) the second (2nd) Trading Day after the date of such request and (y) the date of consummation of such Change of Control (or, with respect to any Right, if applicable, such later time that holders of Common Stock are initially entitled to receive Corporate Event Consideration with respect to the Common Stock of such holder). Any Corporate Event Consideration included in the Right, if any, pursuant to this Section 4(c)(i) is pari passu with the Corporate Event Consideration to be paid to holders of Common Stock and the Company shall not permit a payment of any Corporate Event Consideration to the holders of Common Stock without on or prior to such time delivering the Right to the Holder hereunder.
(ii) Event of Default Redemption. Notwithstanding the foregoing and the provisions of Section 4(b) above, at the request of the Holder delivered at any time after the occurrence of an Event of Default, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder on the date of such request by paying to the Holder cash in an amount equal to the Event of Default Black Scholes Value.
(d) Application. The provisions of this Section 4 shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied as if this Warrant (and any such subsequent warrants) were fully exercisable and without regard to any limitations on the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit of the Beneficial Ownership Limitation, applied however with respect to shares of capital stock registered under the 1934 Act and thereafter receivable upon exercise of this Warrant (or any such other warrant)).
| 5. | NON-CIRCUMVENTION. The Company covenants and agrees that it will not, by amendment of its articles of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved, free from preemptive rights, four (4) times the number of shares of Common Stock into which the Warrants are then exercisable into to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on exercise). |
| 6. | WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders. |
| 7. | REISSUANCE. |
(a) Lost, Stolen or Mutilated Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
(b) Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date.
| 8. | TRANSFER. This Warrant shall be binding upon the Company and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Notwithstanding anything to the contrary herein, the rights, interests or obligations of the Company hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior signed written consent of the Holder, which consent may be withheld at the sole discretion of the Holder (any such assignment or transfer shall be null and void if the Company does not obtain the prior signed written consent of the Holder). During the period of one (1) year following the Issuance Date, the Holder shall not transfer this Warrant or the underlying Warrant Shares to a third party, except to Holder’s officers, partners or members of the selling group. After that, this Warrant or any of the severable rights and obligations inuring to the benefit of or to be performed by Holder hereunder may be assigned by Holder to a third party, in whole or in part, without the need to obtain the Company’s consent thereto. |
| 9. | NOTICES. Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 5:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be: (i) if to the Company, to 1420 Celebration Blvd., 2nd Floor, Celebration, FL 34747, Attn: Chief Executive Officer, or via email to joe@larosarealtycorp.com (or such other address as the Company shall indicate in writing in accordance with this Section), or (ii) if to the Holder, to 10 Drs James Parker Boulevard, #202, Red Bank, NJ 07701, or via email to: info@alexandercapitallp.com or such other address or facsimile number as the Holder may provide to the Company in accordance with this Section. . |
| 10. | DISCLOSURE. Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this Warrant, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 am, New York city time on the Business Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. |
| 11. | ABSENCE OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed, written non- disclosure agreement and subject to compliance with any applicable securities laws, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information to any third party. |
| 12. | AMENDMENT AND WAIVER. The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the signed written consent of the Company and the Holder. |
| 13. | ARBITRATION OF CLAIMS; GOVERNING LAW; AND VENUE. The Company and Holders shall submit all claims (the “Claims”) arising under this Warrant or any other agreement between the parties and their affiliates or any Claim relating to the relationship of the parties to binding arbitration pursuant to the arbitration provisions set forth herein(the “Arbitration Provisions”). The Company and Holder hereby acknowledge and agree that the Arbitration Provisions are unconditionally binding on the Company and Holder hereto and are severable from all other provisions of this Warrant. By executing this Warrant, Company represents, warrants and covenants that Company has reviewed the Arbitration Provisions carefully, consulted with legal counsel about such provisions (or waived its right to do so), understands that the Arbitration Provisions are intended to allow for the expeditious and efficient resolution of any dispute hereunder, agrees to the terms and limitations set forth in the Arbitration Provisions, and that Company will not take a position contrary to the foregoing representations. The Company acknowledges and agrees that Holder may rely upon the foregoing representations and covenants of the Company regarding the Arbitration Provisions. This Warrant shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Nevada. The Company and Holder consent to and expressly agree that the exclusive venue for arbitration of any Claims arising under this Warrant or any other agreement between the Company and Holder or their respective affiliates (including but not limited to the Transaction Documents) or any Claim relating to the relationship of the Company and Holder or their respective affiliates shall be in the Commonwealth of Massachusetts. Without modifying the Company’s and Holder’s obligations to resolve disputes hereunder pursuant to the Arbitration Provisions, for any litigation arising in connection with any of the Transaction Documents (and notwithstanding the terms (specifically including any governing law and venue terms) of any transfer agent services agreement or other agreement between the Company’s transfer agent and the Company, such litigation specifically includes, without limitation any action between or involving Company or otherwise related to Holder in any way (specifically including, without limitation, any action where Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Company’s transfer agent from issuing shares of Common Stock to Holder for any reason)), each party hereto hereby (i) consents to and expressly submits to the exclusive personal jurisdiction of any state or federal court sitting in the Commonwealth of Massachusetts, (ii) expressly submits to the exclusive venue of any such court for the purposes hereof, (iii) agrees to not bring any such action (specifically including, without limitation, any action where Company seeks to obtain an injunction, temporary restraining order, or otherwise prohibit the Company’s transfer agent from issuing shares of Common Stock to Holder for any reason) outside of any state or federal court sitting in the Commonwealth of Massachusetts, and (iv) waives any claim of improper venue and any claim or objection that such courts are an inconvenient forum or any other claim, defense or objection to the bringing of any such proceeding in such jurisdiction or to any claim that such venue of the suit, action or proceeding is improper. Notwithstanding anything in the foregoing to the contrary, nothing herein (i) shall limit, or shall be deemed or construed to limit, the ability of the Holder to realize on any collateral or any other security, or the ability of either party hereto to enforce a judgment or other court ruling in favor of such party, including through a legal action in any court of competent jurisdiction, or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 15 of this Warrant. Each party hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any objection to jurisdiction and venue of any action instituted hereunder, any claim that it is not personally subject to the jurisdiction of any such court, and any claim that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper (including but not limited to based upon forum non conveniens). EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. Each party hereto irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Warrant or any other agreement, certificate, instrument or document contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The prevailing party in any action or dispute brought in connection with this Warrant or any other agreement, certificate, instrument or document contemplated hereby or thereby shall be entitled to recover from the other party its reasonable attorney’s fees and costs. If any provision of this Warrant shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Warrant in that jurisdiction or the validity or enforceability of any provision of this Warrant in any other jurisdiction. |
| 14. | ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein. |
| 15. | DISPUTE RESOLUTION. |
(a) Submission to Dispute Resolution.
(i) Notwithstanding anything to the contrary in this Warrant, in the case of a dispute relating to the Exercise Price, the Closing Sale Price, the Closing Bid Price, Black Scholes Consideration Value, Event of Default Black Scholes Value, Black Scholes Value or fair market value or the arithmetic calculation of the number of Warrant Shares (as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing) (the “Warrant Calculations”), the Company or the Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company, within two (2) Trading Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder, at any time after the Holder learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to agree upon such determination or calculation within two (2) Trading Days following such initial notice by the Company or the Holder (as the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, submit the dispute to an independent, reputable investment bank or independent, outside accountant selected by the Holder (the “Independent Third Party”), and the Company shall pay all expenses of such Independent Third Party.
(ii) The Holder and the Company shall each deliver to such Independent Third Party( A) a copy of the initial dispute submission so delivered in accordance with the first sentence of this Section 15(a) and (B) written documentation supporting its position with respect to such dispute, in each case, no later than 5:00 p.m. (New York time) by second (2nd) Business Day immediately following the date on which the Holder selected such Independent Third Party (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives its right to) deliver or submit any written documentation or other support to such Independent Third Party with respect to such dispute and such Independent Third Party shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such Independent Third Party prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested by such Independent Third Party, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other support to such Independent Third Party in connection with such dispute, other than the Required Dispute Documentation.
(iii) The Company and the Holder shall cause such Independent Third Party to determine the resolution of such dispute and notify the Company and the Holder of such resolution no later than five
(5) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of such Independent Third Party shall be borne solely by the Company, and such Independent Third Party’s resolution of such dispute shall be final and binding upon all parties absent manifest error.
(b) Miscellaneous. The Company expressly acknowledges and agrees that (i) this Section 15 constitutes an agreement to arbitrate between the Company and the Holder (and constitutes an arbitration agreement) under the rules then in effect under the Nevada Rules of Civil Procedure (“NRCP”) and that the Holder is authorized to apply for an order to compel arbitration pursuant to the NRCP in order to compel compliance with this Section 15, (ii) a dispute relating to the Warrant Calculations includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2 of this Warrant, (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument, security or the like constitutes an Option or Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the terms of this Warrant and each other applicable Transaction Document shall serve as the basis for the selected Independent Third Party’s resolution of the applicable dispute, such Independent Third Party shall be entitled (and is hereby expressly authorized) to make all findings, determinations and the like that such Independent Third Party determines are required to be made by such Independent Third Party in connection with its resolution of such dispute (including, without limitation, determining (A) whether an issuance or sale or deemed issuance or sale of Common Stock occurred under Section 2 of this Warrant, (B) the consideration per share at which an issuance or deemed issuance of Common Stock occurred, (C) whether any issuance or sale or deemed issuance or sale of Common Stock was an issuance or sale or deemed issuance or sale, (D) whether an agreement, instrument, security or the like constitutes an Option or Convertible Security and (E) whether a Dilutive Issuance occurred) and in resolving such dispute such Independent Third Party shall apply such findings, determinations and the like to the terms of this Warrant and any other applicable Transaction Documents, and (iv) nothing in this Section 15 shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to any matters described in this Section 15).
| 16. | CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings: |
(a) “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
(b) “Black Scholes Consideration Value” means the value of the applicable Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance thereof calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the public announcement of the execution of definitive documents with respect to the issuance of such Option or Convertible Security (as the case may be), (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of such Option, Convertible Security or Adjustment Right (as the case may be) as of the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be), (iii) a zero cost of borrow and (iv) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of issuance of such Option, Convertible Security or Adjustment Right (as the case may be).
(c) “Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request pursuant to Section 4(c)(i), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the announcement of the applicable Change of Control (or the consummation of the applicable Change of Control, if earlier) and ending on the Trading Day of the Holder’s request pursuant to Section 4(c)(i) and (2) the sum of the price per share being offered in cash in the applicable Change of Control (if any) plus the value of the non-cash consideration being offered in the applicable Change of Control (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c)(i), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c)(i) and (2) the remaining term of this Warrant as of the date of consummation of the applicable Change of Control or as of the date of the Holder’s request pursuant to Section 4(c)(i) if such request is prior to the date of the consummation of the applicable Change of Control, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the earliest to occur of (A) the public disclosure of the applicable Change of Control and (B) the date of the Holder’s request pursuant to Section 4(c)(i).
(d) “Bloomberg” means Bloomberg, L.P.
(e) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the State of Nevada are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in the State of Nevada generally are open for use by customers on such day.
(f) “Change of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the shares of Common Stock in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization, recapitalization or reclassification, (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company or any of its Subsidiaries or (iv) bone fide arm’s length acquisitions by the Company with one or more third parties as long as holders of the Company’s voting power as of the Issuance Date continue after such acquisition to hold publicly traded securities and, directly or indirectly, are, in all material respects, the holders of at least 51% of the voting power of the surviving entity (or entities with the authority or voting power to elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such acquisition.
(g) “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, (i) the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Quotestream or other similar quotation service provider designated by the Holder, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder, or (ii) if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by Quotestream or other similar quotation service provider designated by the Holder, or (iii) if no last trade price is reported for such security by Quotestream or other similar quotation service provider designated by the Holder, the average of the bid and ask prices of any market makers for such security as reported by Quotestream or other similar quotation service provider designated by the Holder. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
(h) “Common Stock” means the Company’s common stock, par value $0.0001, and any other class of securities into which such securities may hereafter be reclassified or changed.
(i) “Common Stock Equivalents” means any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
(j) “Convertible Securities” means any stock or other security (other than Options) that is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common Stock.
(k) “Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, Nasdaq Capital Market, or equivalent national securities exchange.
(l) “Event Market Price” means, with respect to any Stock Combination Event Date, the quotient determined by dividing (x) the sum of the VWAP of the Common Stock for each of the five (5) lowest Trading Days during the twenty (20) consecutive Trading Day period ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Stock Combination Event Date, divided by (y) five (5). All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
(m) “Event of Default Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request pursuant to Section 4(c)(ii), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the highest Closing Sale Price of the Common Stock during the period beginning on the date of the occurrence of the Event of Default through the Trading Day of the Holder’s request pursuant to Section 4(c)(ii), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c)(ii), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c)(ii) and (2) the remaining term of this Warrant as of the date of the occurrence of such Event of Default, (iv) a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following later of (x) the date of the occurrence of such Event of Default and (y) the date of the public announcement of such Event of Default.
(n) “Excluded Issuance” means the issuance or deemed issuance of (i) shares of Common Stock, Options or Convertible Securities issued or issuable to directors, officers, employees or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company pursuant to an equity compensation program or arrangement approved by the Board or the compensation committee of the Board; (ii) shares of Common Stock issued or issuable pursuant to any event for which adjustment is made pursuant to Section 2(a); (iii) shares of Common Stock, Options or Convertible Securities issued or issuable pursuant to and as consideration for (A) the acquisition of another corporation or other entity by the Company, by merger, purchase of stock or other equity interests, purchase of substantially all of the assets or other reorganization approved by the Board, or (B) an acquisition of assets from another corporation or other entity approved by the Board; (iv) shares of Common Stock, Options or Convertible Securities issued or issuable as consideration in connection with a strategic transaction or joint venture approved by the Board relating to the operation of the Company’s or any Subsidiary’s business and not for the primary purpose of raising equity capital, or (v) shares of Common Stock issued upon the exercise of the Warrants.
(o) “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(p) “Fundamental Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to, such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its Common Stock, (B) that the Company shall, directly Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization, recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, (y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such Subject Entities as of the date of this Warrant calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C) directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.
(q) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(r) “Person” and “Persons” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency thereof.
(s) “Principal Market” means the principal securities exchange or trading market where such Common Stock is listed or quoted, including but not limited to any tier of the OTC Markets, any tier of the NASDAQ Stock Market (including NASDAQ Capital Market), or the NYSE American, or any successor to such markets.
(t) “Market Price” means the highest traded price of the Common Stock during the thirty Trading Days prior to the date of the respective Exercise Notice.
(u) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.
(v) “Trading Day” means any day on which the Common Stock is listed or quoted on its Principal Market, provided, however, that if the Common Stock is not then listed or quoted on any Principal Market, then any calendar day.
(w) “Triggering Event” means the occurrence of any Event of Default.
(x) “VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder through its “VAP” function (set to 09:30 start time and 16:00 end time) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported by Quotestream or other similar quotation service provider designated by the Holder, or, if no dollar volume-weighted average price is reported for such security by Quotestream or other similar quotation service provider designated by the Holder for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved in accordance with the procedures in Section 15. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
* * * * * * * IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.
| LA ROSA HOLDINGS CORP. | ||
| /Joseph La Rosa/ | ||
| Name: | Joseph La Rosa | |
| Title: | Chief Executive Officer | |
EXHIBIT A
EXERCISE NOTICE
(To be executed by the registered holder to exercise this Common Stock Purchase Warrant)
THE UNDERSIGNED holder hereby exercises the right to purchase__________________of the shares of Common Stock (“Warrant Shares”) of LA ROSA HOLDINGS CORP., a Nevada corporation (the “Company”), evidenced by the attached copy of the Common Stock Purchase Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
| 1. | Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as (check one): |
| ☐ | a cash exercise with respect to_____Warrant Shares; or |
| ☐ | by cashless exercise pursuant to the Warrant. |
| 2. | Payment of Exercise Price. If cash exercise is selected above, the holder shall pay the applicable Aggregate Exercise Price in the sum of $____to the Company in accordance with the terms of the Warrant. |
| 3. | Delivery of Warrant Shares. The Company shall deliver to the holder_____Warrant Shares in accordance with the terms of the Warrant. |
Date: ____________________________
| (Print Name of Registered Holder) | ||
| By: | ||
| Name: | ||
| Title: | ||
EXHIBIT B
ASSIGNMENT OF WARRANT
(To be signed only upon authorized transfer of the Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto________________________ the right to purchase______________________shares of common stock of LA ROSA HOLDINGS CORP., to which the within Common Stock Purchase Warrant relates and appoints_______, as attorney-in-fact, to transfer said right on the books of LA ROSA HOLDINGS CORP. with full power of substitution and re-substitution in the premises. By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.
Dated: ____________________
| (Signature) * | |
| (Name) | |
| (Address) | |
| (Social Security or Tax Identification No.) |
| * | The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity. |
Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) dated as of the 10th day of January, 2022 and is between La Rosa Holdings Corp., a Nevada corporation (the “Company” ), and Alex Santos, an individual residing at [*] (“Executive”). Each of the Company and Executive are a “party” to this Agreement, and together they are the “parties” hereto.
W I T N E S S E T H:
A. The Company desires to hire Executive as Director of Technology of the Company, and after 6 months retain the title of Chief Technology Officer, and Executive desires to accept such employment.
B. The Company and Executive desire to set forth in this Agreement the terms, conditions and obligations of the parties with respect to such employment, and this Agreement is intended by the parties to supersede all previous understandings, whether written or oral, concerning such employment.
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants contained herein, the parties agree as follows:
1. Employment. As of February 1, 2022 (the “Effective Date”), the Company shall employ Executive as the Director of Technology of the Company and Executive shall accept such employment and this Agreement shall become effective subject to the terms and conditions hereof. During the Term (as defined below), the Executive shall be responsible for the performance of those duties consistent with the Executive’s position as Director of Technology of the Company. Executive shall report to the Company’s Chief Executive Officer, and to the Board of Directors (“Board”) and shall perform and discharge faithfully, diligently, and to the best of Executive’s ability, Executive’s duties and responsibilities hereunder and under the Bylaws of the Company in accordance with applicable law and regulation. Additionally, Executive shall perform services and hold positions at other Affiliates (as defined in Section 5) as directed by the Company’s Chief Executive Officer. Without limiting the generality of the foregoing, Executive shall not, without the written approval of the Company, render services of a business, financial or commercial nature on his own behalf or on behalf of any person, firm, or corporation, for compensation or otherwise, during his employment hereunder except for that of approved Real Estate Services approved by Company.
2. Location. The Executive shall work out of his home office or other office location agreed by the Company from time to time, and shall work one week per month, but not more than 12 weeks per year, at the Company’s principal executive offices in Celebration, Florida (or other principal executive office as designated by the Company).
3. Term. The term of this Agreement shall continue until it is terminated by either the Executive or the Company upon not less than sixty (60) days prior written notice to the non-terminating party unless the Executive is terminated for Cause, in which case the termination date shall be the date set forth in the Company’s notice of termination to the Executive (“Term”).
4. Compensation; Benefits.
(a) Salary. During the Term of this Agreement, the Company agrees to pay Executive an annual salary of $160,000.00 (the “Salary’’). The Salary shall be payable in accordance with the Company’s regular payroll schedule and will be subject to payroll taxes and other customary payroll deductions. On the 1 year anniversary of this agreement the Company agrees to increase the annual salary to $180,000.00.
(b) Annual Bonus: Following the end of each calendar year beginning with the 2022 calendar year, the Executive will be eligible to receive an annual bonus (the “Annual Bonus”). As of the Effective Date, the Executive’s minimum guaranteed annual bonus shall be equal to $15,000 payable in quarterly installments. No amount of such additional annual bonus is guaranteed, and Executive must be an employee on December 31 of the applicable bonus year in order to be eligible for any annual bonus for such year. Any bonus will be paid no later than March 15 of the calendar year following the calendar year to which the additional annual bonus relates.
(c) Equity Awards. The Board or a committee thereof shall grant the Executive (i) 20,000 shares of restricted common stock of the Company, which shall vest on the one year anniversary date of the Effective Date. On each year after on the annual anniversary date of the Effective Date the Board or a committee thereof shall grant the Executive an additional 20,000 shares of restricted common stock of the Company, which shall vest on the one year anniversary of issuance. In the event of the Executive’s death, Disability (as defined herein) or Change of Control of the Company, then-outstanding and unvested portion of Equity Awards described in clause (ii) of this Section 4(c), shall vest at the date of such event. “Change of Control” means the change in effective control of the Company as set forth in Treasury Regulation Section l.409A-3(i)(5)(i), (v), (vi) or (vii) as determined by, the Compensation Committee of the Board. The Equity Awards shall be issued at a per share price equal to the fair market value on the date of issue.
(d) Lock-up Period. The Executive hereby agrees that, without the prior written consent of the Company, he will not, during the period commencing on the date hereof and ending year after the Effective Date (the “Lock-Up Period”), (i) offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose of, directly or indirectly, any Equity Awards or any securities convertible into or exercisable or exchangeable for the Equity Awards; (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Equity Awards, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of the Equity Awards, in cash or otherwise; (iii) make any demand for or exercise any right with respect to the registration of any Equity Awards; or (iv) publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement relating to any Equity Awards. Notwithstanding the foregoing, and subject to the conditions below, the Executive may transfer vested Equity Awards with 10 days prior written notice to, but without the prior written consent of, the Company and only in compliance with the Company’s insider trading policy and subject to the rules and regulations of the Securities and Exchange Commission, in connection with transfers of the Equity Awards: (a) as a bona fide gift, by will or intestacy or to a family member or trust for the benefit of a family member (for purposes of this Agreement, “family member” means any relationship by blood, marriage or adoption, not more remote than first cousin); or (b) transfers of the Equity Awards to a charity or educational institution; provided that in the case of any transfer pursuant to the foregoing clauses (a) or (b), it shall be a condition to any such transfer that (x) the transferee/donee agrees to be bound by the terms of this lock-up agreement (including, without limitation, the restrictions set forth in the preceding sentence) to the same extent as if the transferee/donee were a party hereto; (y) each party (donor, donee, transferor or transferee) shall not be required by law (including without limitation the disclosure requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended) to make, and shall agree to not voluntarily make, any filing or public announcement of the transfer or disposition prior to the expiration of the Lock-Up Period.
(e) Other Benefits. During the Term of Executive’s employment, Executive shall be entitled to participate the Company-funded healthcare insurance plan and in all other benefits, perquisites, holidays, benefit plans or programs of the Company which are available generally to employees of the Company in accordance with the terms of such plans, benefits or programs. During the Term, the Executive will be entitled to three (3) weeks, paid vacation time during each calendar year.
(f) Expenses. Executive shall be reimbursed for Executive’s reasonable, documented and approved expenses related to and for promoting the business of the Company, including expenses for travel and similar items that arise out of Executive’s performance of services under this Agreement.
5. Extent of Service. The Executive agrees to devote his business time, loyalty, attention, skill and efforts to the faithful performance and discharge of his duties and responsibilities as Director of Technology of the Company in conformity with professional standards and in a manner consistent with the obligations imposed under applicable law. Executive shall promote the interests of the Company and each other company or other organization which is controlled directly or indirectly by the Company (each an “Affiliate” and collectively the “Affiliates”) in carrying out Executive’s duties and responsibilities.
6. Covenants Regarding, Confidential Information and Other Matters. All payments and benefits to Executive under the Agreement shall be subject to Executive’s compliance with the provisions of this Section 6. For purposes of this Section 6, the term “Company” shall mean, La Rosa Holdings Corp. and any direct or indirect wholly or majority owned subsidiary of the Company.
(a) Confidential Information: Inventions. (i) Executive shall not disclose or use at any time, either during the Term of this Agreement or thereafter, any Confidential Information (as defined below) of which the Executive is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by the Executive’s performance in good faith of duties for the Company. Executive will take all appropriate steps to safeguard Confidential Information in his possession and to protect it against disclosure, misuse, espionage, loss and theft. Executive shall deliver to the Company at the end of the Term, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer memory devices and software and other documents and data (and copies thereof) relating to the Confidential Information or the Work Product (as hereinafter defined) of the business of the Company which Executive may then possess or have under his control. Notwithstanding the foregoing, Executive may truthfully respond to a lawful and valid subpoena or other legal process, but shall give the Company the earliest possible notice thereof, shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought, and shall assist the Company and such counsel in resisting or otherwise responding to such process.
(ii) As used in this Agreement, the term “Confidential Information” means information that is not generally known to the public and that is used, developed or obtained by the Company in connection with its business, including, but not limited to, information, observations and data obtained by Executive while employed by the Company or any predecessors thereof (including those obtained prior to the Effective Date) concerning: (i) the business or affairs of the Company (or such predecessors), (ii) products or services, (iii) fees, costs and pricing structures, (iv) designs, (v) analyses, (vi) drawings, photographs and reports, (vii) computer software, including operating systems, applications and program listings, (viii) flow charts, manuals and documentation, (ix) data bases, (x) accounting and business methods, (xi) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (xii) customers and clients and customer or client lists, (xiii) other copyrightable works, (xiv) all production methods, processes, technology and trade secrets, and (xv) all similar and related information in whatever form. Confidential Information will not include any information that has been published (other than through a disclosure by Executive in breach of this Agreement) in a form generally available to the public prior to the date Executive proposes to disclose or use such information. Confidential Information will not be deemed to have been published merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.
(iii) As used in this Agreement, the term “Work Product’’ means all inventions, innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or unpatentable, copyrightable, registerable as a trademark, reduced to writing, or otherwise) which relates to the Company’s actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by Executive (whether or not during usual business hours, whether or not by the use of the facilities of the Company, and whether or not alone or in conjunction with any other person) while employed by the Company (including those conceived, developed or made prior to the Effective Date) together with all patent applications, letters patent, trademark, trade name and service mark applications or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing. All Work Product that Executive may have discovered, invented or originated during his employment by the Company prior to the Effective Date, or that he may discover, invent or originate during the Term, shall be the exclusive property of the Company, as applicable, and Executive hereby assigns all of Executive’s right, title and interest in and to such Work Product to the Company, including all intellectual property rights therein. Executive shall promptly disclose all Work Product to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem necessary to protect or perfect its rights therein, and shall assist the Company, at the Company’s expense, in obtaining, defending and enforcing the Company’s rights therein. Executive hereby appoints the Company as his attorney-in-fact to execute on his behalf any assignments or other documents deemed necessary by the Company to protect or perfect the Company’s rights to any Work Product.
(b) Restriction on Competition. Executive agrees that if Executive were to become employed by, or substantially involved in, the business of a competitor of the Company during the Restricted Period (defined below), it would be very difficult for the Executive not to rely on or use the Company’s trade secrets and confidential information. Thus, to avoid the inevitable disclosure of the Company’s trade secrets and confidential information, and to protect such trade secrets and confidential information and the Company’s relationships and goodwill with customers, during the Restricted Period (defined below), the Executive will not directly or indirectly through any other person or entity engage in, enter the employ of, render any services to, have any ownership interest in, nor participate in the financing, operation, management or control of, any competitor of the Company in the United States or globally.
(c) Non-Solicitation of Clients by Executive. Executive agrees that for so long as Executive is employed by the Company and continuing for three (3) years thereafter (such period is referred to as the “Restricted Period”) Executive shall not solicit or attempt to solicit the business of any customers or clients of the Company with respect to services that the Company performs for such customers or clients regardless of how or when the Executive first obtained business from or provided services to such customers or clients.
(d) Non-Solicitation of Employees. Executive agrees that during the Restricted Period not to directly or indirectly, by sole action or in concert with others, induce or influence, or seek to induce or influence any person who is currently engaged by the Company at the time of the termination of Executive’s employment as an employee, agent, independent contractor, or otherwise to leave the employ of the Company or any successor or assign, or to hire any such person.
(e) Non-Disparagement. During Executive’s employment with the Company and at any time thereafter, Executive shall not, directly or indirectly, engage in any conduct or make any statement, whether in commercial or noncommercial speech, disparaging or criticizing in any way the Company, or any of their respective officers, directors, employees, customers or agents or any products or services offered by any of them, nor shall Executive engage in any other conduct or make any other statement that could be reasonably expected to impair the goodwill of any of them.
(f) Understanding of Covenants. (i) Executive acknowledges that, in the course of his employment with the Company, he has become familiar, or will become familiar, with the Company’s trade secrets and with other confidential and proprietary information concerning the Company and that his services have been and will be of special, unique and extraordinary value to the Company. The Executive agrees that the foregoing covenants set forth in this Section 6 (together, the “Restrictive Covenants”) are reasonable and necessary to protect the Company’s trade secrets and other confidential and proprietary information, good will, stable workforce, and customer relations.
(ii) Without limiting the generality of Executive’s agreement in the preceding paragraph, the Executive (A) represents that he is familiar with and has carefully considered the Restrictive Covenants, (B) represents that he is fully aware of his obligations hereunder, (C) agrees to the reasonableness of the length of time, scope and geographic coverage, as applicable, of the Restrictive Covenants, (D) agrees that the Company currently conducts business throughout the United States and in certain foreign countries, and (E) agrees that the Restrictive Covenants will continue in effect for the applicable periods set forth above in this Section 6 regardless of whether Executive is then entitled to receive severance pay or benefits from the Company. Executive understands that the Restrictive Covenants may limit his ability to earn a livelihood in a business similar to the business of the Company, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Company and as otherwise provided hereunder or as described in the recitals hereto to clearly justify such restrictions which, in any event (given his education, skills and ability), Executive does not believe would prevent him from otherwise earning a living. Executive agrees that the Restrictive Covenants do not confer a benefit upon the Company disproportionate to the detriment of the Executive.
(g) Remedies for Breach of Covenants. (i) In the event that a Restrictive Covenant shall be deemed by any court to be unreasonably broad in any respect, it shall be modified in order to make it reasonable and shall be enforced accordingly; provided, however, that in the event that any court shall refuse to enforce any of the Restrictive Covenants, then the unenforceable covenant shall be deemed eliminated from the provisions of this Agreement for the purpose of those proceedings to the extent necessary to permit the remaining covenants to be enforced so that the validity, legality or enforceability of the remaining provisions of this Section 6 shall not be affected thereby.
(ii) Executive acknowledges that any breach of the Restrictive Covenants may cause irreparable harm to the Company which will be difficult if not impossible to ascertain, and the Company shall be entitled to seek equitable relief, including injunctive relief, against any actual or threatened breach hereof, without bond and without liability should such relief be denied, modified or vacated. Neither the right to obtain such relief nor the obtaining of such relief shall be exclusive of or preclude the Company from any other remedy the Company or may have hereunder or at law or equity.
7. Termination. This Agreement and the employment of Executive shall terminate upon the occurrence of the following events.
(a) Death or Disability. This Agreement and the employment of Executive shall terminate upon the death of Executive or the finding by the Company’s Board that the Executive has a Disability. “Disability” means a physical or mental impairment), which as reasonably determined by the Compensation Committee of the Board, prevents Executive from performing the essential functions of Executive’s position for a period of either (x) ninety one (91) days or more in any one hundred twenty (120) consecutive day period or (y) one hundred eighty (180) days or more in any twelve (12) month period.
(b) Termination by the Company. This Agreement and the employment of Executive shall terminate at the election of the Company, with or without Cause (as defined below), immediately upon written notice by the Company to Executive. “Cause” means for purposes of this Section 7 any of the following acts that are committed by the Executive: (i) continued willful failure, as determined in the reasonable good faith discretion of the Board, to perform Executive’s assigned duties or responsibilities as directed or assigned by the Board (other than due to death or Disability) after written notice thereof from the Board describing in reasonable detail the failure to perform and providing to Executive thirty days (30 days) to address such alleged failure; (ii) being convicted of, or entering a plea of nolo contendere to a felony or committing any act of moral turpitude, dishonesty or fraud against the Company or its Affiliates; (iii) intentional damage to the Company’s assets or reputation caused by the Executive; (iv) breach by Executive of Sections 6 or l0(a)(iv) of this Agreement; (v) intentional engagement by the Executive in any competitive activity which would constitute a breach of the Executive’s duty of loyalty to the Company; or (vi) willful conduct by the Executive that is demonstrably and materially injurious to the Company, monetarily or otherwise. No finding of Cause shall be effective unless and until the Board votes to terminate Executive’s employment for Cause at a Board meeting or by unanimous written consent.
8. Effect of Termination.
(a) All Terminations Other Than by the Company Without Cause. If Executive’s employment is terminated under any circumstances other than a termination by the Company without Cause (including a voluntary termination by Executive or a termination by the Company for Cause or due to Executive’s death or Disability), the Company’s obligations under this Agreement shall immediately cease and Executive shall only be entitled to receive: (i) the Salary that has accrued and is unpaid and to which Executive is entitled as of the effective date of such termination and to the extent consistent with general Company policy, to be paid in accordance with the Company’s established payroll procedure and applicable law but no later than the next regularly scheduled pay period; (ii) unreimbursed business expenses for which expenses the Executive has timely submitted appropriate documentation; (iii) any bonus earned and approved by the Board but not yet paid; (iv) any amounts or benefits to which Executive is then entitled under the terms of the benefit plans then-sponsored by the Company in accordance with their terms (and not accelerated to the extent acceleration does not satisfy Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”)) (the payments described in this sentence, the “Accrued Obligations”).
(b) Termination by the Company Without Cause. If Executive’s employment is terminated by the Company without Cause or in the event of a Change in Control of the Company (whether or not the Executive is retained by a successor entity), the Company shall: (i) pay to Executive, in a single lump sum on the Payment Date (as defined below) an amount of $100,000 (the “Severance Benefits”).
(c) Release. As a condition of Executive’s receipt of the Severance Benefits, Executive must execute and deliver to the Company a severance and release of claims agreement in a customary form to be provided by the Company (which shall include a release of all releasable claims, reaffirmation of continuing obligations, and confidentiality and reasonable cooperation obligations, but shall not expand Executive’s then-existing restrictive covenants or impose restrictive covenant obligations on the Executive that do not then exist) (the “Severance Agreement”), which Severance Agreement must become irrevocable within sixty (60) days following the date of Executive’s termination of employment (or such shorter period as may be directed by the Company). The Severance Benefits will be paid or commence to be paid in the first regular payroll beginning after the Severance Agreement becomes effective, provided that if the foregoing sixty (60) day period would end in a calendar year subsequent to the year in which the Executive’s employment ends, the Severance Benefits will not be paid or begin to be paid before the first payroll of the subsequent calendar year (the date the Severance Benefits commence pursuant to this sentence, the “Payment Date”). Executive must not materially breach the Confidentiality Agreement or the Severance Agreement in order to be eligible to receive or continue receiving the Severance Benefits and any post severance breach will subject the Executive to a claw back of such Severance Benefits.
9. Withholding of Taxes. The Company may withhold from any benefits payable under the Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
10. Executive’s Representations and Understandings.
(a) Executive represents and warrants to the Company that: (i) Executive is free to enter into this Agreement; (ii) this Agreement and Executive’s obligations hereunder do not violate the terms of any other agreement to which Executive is a party or by which Executive is bound; (iii) Executive is not subject to any confidentiality agreement, non-competition agreement, non-solicitation agreement or any other similar agreement that restricts Executive’s ability to perform the services for the Company for which Executive was hired; and (iv) other than as has been expressly disclosed to the Company by Executive, Executive has not been: (1) arrested or indicted for a felony crime, a misdemeanor crime involving fraud, dishonesty or illegal drug possession; (2) the subject of a formal complaint filed by a co-worker with a former employer involving sexual harassment or other abusive behavior; or (3) during the last ten (10) years been involved as the subject of any of the events described in Item 401(f) of Regulation S-K under the Securities Act of 1933, as amended. Executive understands and acknowledges that the Company is or plans to become a publicly traded company subject to the rules and regulations of the Securities and Exchange Commission and The NASDAQ Stock Market LLC and as such its Director of Technology’s background is important to the Company’s continued good standing with these regulators, the representations contained in clause (iv) of this Section 10(a) are consistent with the Company’s efforts to maintain such good standing and any breach of clause (iv) would cause the Company material harm.
(b) Executive understands and agrees to comply with all of the written rules and procedures governing employment with the Company, and any direct or indirect wholly or majority owned subsidiary of the Company, including but not limited to the Company’s Handbook, insider trading policy, written supervisory procedures, and any other employment, compliance, and/or supervisory documents the Company issues from time to time.
11. Severability. If any provision of this Agreement, as applied to any party or to any circumstance, shall be found by a court to be void, invalid or unenforceable, the same shall in no way affect any other provision of this Agreement or the application of any such provision in any other circumstance, or the validity or enforceability of this Agreement.
12. Entire Understanding. This Agreement contains the entire understanding of the parties hereto relating to the subject matter contained herein and supersedes all prior and collateral agreements, understandings, statements and negotiations of the parties. Each party acknowledges that no representations, inducements, promises or agreements, oral or written, with reference to the subject matter hereof have been made other than as expressly set forth herein. This Agreement may not be modified or rescinded except by a written agreement signed by both parties.
13. Notices. All notices under this Agreement shall be in writing and shall be: (a) delivered in person, (b) sent by e-mail, or (c) mailed, postage prepaid, either by registered or certified mail, return receipt requested, or overnight express carrier, addressed in each case as set forth on the signature page hereto (or such other address as may be designated by the party by giving notice in accordance with this Section). All notices sent pursuant to the terms of this Section shall be deemed received: (i) if personally delivered, then on the date of delivery; (ii) if sent by e-mail before 2:00 p.m. local time of the recipient, on the day sent if a business day or if such day is not a business day or if sent after 2:00 p.m. local time of the recipient, then on the next business day; (iii) if sent by prepaid overnight, express carrier, on the next business day immediately following the day sent; or (iv) if sent by registered or certified mail, on the earlier of the fourth business day following the day sent or when actually received.
14. Consideration. Executive acknowledges that Executive’s continued employment during the term of this Agreement and the other compensation and benefits provided in this Agreement are sufficient compensation and consideration for purposes of entering into the restrictions and limitations provided herein, including, but not limited to, the restrictions and limitations set forth in Section 6.
15. Waiver. Failure by either party to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any right or remedy hereunder at any time be deemed a waiver or relinquishment of such right or remedy.
16. Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by and construed in accordance with the laws of the State of Florida applicable to contracts made and to be performed therein.
17. No Presumption. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.
18. Counterparts. This Agreement may be executed in multiple counterparts, all of which together shall constitute one and the same instrument
19. Annual Budget. Executive shall be given an annual budget of $650,000 in addition to Executive’s annual salary, which must be approved by the Company, to be used to acquire the technology, resources, or hire additional staff to help with executing the technology plan that has been created by La Rosa Holdings.
IN WITNESS WHERE OF, the parties have executed this Employment Agreement as of the day and year first above written.
| EXECUTIVE | ||
| By: | ||
| Name: Alex Santos | ||
| Address: | ||
| Telephone: | ||
| Email: | ||
| LA ROSA HOLDINGS CORP. | ||
| By: | ||
| Name: | Joseph La Rosa | |
| Title: | Chief Executive Officer | |
11
Exhibit 10.57
Amendment of Maturity Date
La Rosa Realty and ELP Global PLLC
In reference to the note in the amount of $40,000 Issued July 15th, 2021 and as amended April 14, 2022 with a maturity date of June 30th 2022. The Parties, La Rosa Realty and ELP Global PLLC hereby agree to amend the maturity date to Oct 30, 2022. All other terms of the note as amended apply.
| /s/ Joseph LaRosa | /s/ Carlos Bonilla | |
| Joseph LaRosa, CEO 8/22/22 | Carlos Bonilla, Esq. 8/22/22 | |
| La Rosa Realty, LLC | ELP Global PLLC |
Exhibit 10.114
AMENDED AND RESTATED
LA ROSA HOLDINGS CORP.
2022 AGENT INCENTIVE PLAN
| 1. | Introduction: La Rosa Holdings Corp. (the “Company”) has previously approved the Company’s 2022 Equity Incentive Plan (“2022 Plan”) and, pursuant to it, the Company’s Board of Directors (“Board”) has further authorized the creation of the La Rosa Holdings Corp. 2022 Agent Incentive Plan and Participation Election Form dated March 25, 2022 (the “Original Agent Plan”) to be administered in the Board’s discretion. On March 20, 2024, the Compensation Committee of the Board (the “Compensation Committee”) approved this Amended and Restated La Rosa Holdings Corp. 2022 Agent Incentive Plan (the “Agent Plan”) to be effective immediately and to replace the Original Agent Plan in its entirety. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the 2022 Plan. |
Pursuant to the 2022 Plan, the Company may sell, and may, in the Compensation Committee’s absolute discretion, grant, shares of the Company’s common stock or Restricted Stock Units (“RSU”) to all agents and brokers in good standing with the Company, including each of the Company’s majority owned subsidiaries (the “Majority Subsidiaries”), who are defined as “consultants” under the 2022 Plan (“Participants”) as a part of their, or as additional, compensation. This Agent Plan has two components: the i) Agent Equity Program and the ii) Discretionary Bonus Program, which are described in more detail in Section 4 below.
| 2. | Voluntary Participation: All participation in this Agent Plan is voluntary and no agent or broker will be penalized for not participating in this Agent Plan. Agents and brokers may participate in any one or more or none of this Agent Plan programs. All Participants, who are eligible pursuant to Section 3 hereof, will be automatically considered to be participating in this Agent Plan. This Agent Plan will be administered electronically through the Company’s Stock Plan Administrator software (“SPA”). Upon the Participant achieving the targets described in the Section 4 hereof or upon decision of the Compensation Committee pursuant to the Section 5 hereof, the SPA will send a Participant a binding RSU award agreement between the Participant and the Company as set forth herein (the “Agreement”) once the eligibility of such Participant pursuant to Section 3 hereof is confirmed by the Company. The date that the Agreement is executed by the Participant shall be the effective date of the Agreement (“Effective Date”). Participants are urged to seek legal advice before signing the Agreement. A Participant has a right to refuse the award. A failure of the Participant to sign the Agreement within twenty (20) days will be considered a decision of the Participant to not participate in this Agent Plan and the grant will be voided by the Company. The Participant may reinstate their participation in this Agent Plan by providing written notice of such intention to the Chief Financial Officer of the Company by email. |
| 3. | Eligibility: All agents and brokers in good standing with the Company and each of the Company’s Majority Subsidiaries (as described in that certain independent contractor agreement signed by such agent and the Company or its Majority Subsidiary) are eligible to participate in this Agent Plan unless they are licensed brokers, holding an equity interest in brokerage businesses, in which the Company also holds an equity interest. |
In addition, employees or independent contractors hired by the Company as team leaders whose job description specifically includes recruitment functions are precluded from participating in the recruiting portion of the Agent Equity Program described in Section 4(b). Only individuals who provide their social security number to the Company’s SPA are eligible. No business entities can participate in this Agent Plan.
| 4. | Agent Equity Program: The Company’s Agent Equity Program (the “Agent Equity Program”) includes the following two components: |
| a. | Blue Diamond: Participants in the Agent Equity Program who: (i) close more than 20 sale transactions or make more than $6,000,000 gross sales volume in verified listing or buy-side transactions (the “Milestones,” and each a “Milestone”) with the Company and its Majority Subsidiaries in a given fiscal year, and (ii) remain with the Company for at least 12 consecutive months thereafter, will receive RSUs equivalent to $2,000 based on the prior 30-day volume weighted average closing price (“VWAP”) of the Company’s common stock on the Nasdaq Stock Market as of the last trading day prior to the Grant Date (as defined below), rounded down to a whole share. Awards will be granted to qualifying Participants on the last trading day of the month of the first anniversary of the date the Company verifies a Milestone has been achieved (the “Grant Date”). For example, if the Company verifies a Milestone has been achieved on April 12, 2024, the Company will grant the Participate RSUs on April 30, 2025. RSUs will vest in 24 equal installments starting the month following the Grant Date, with any remainder, if any, added to the last month of the vesting schedule. Participants who terminate their relationship with the Company during the vesting period will forfeit any unvested RSUs. If the Participant does not pay his or her annual or monthly dues pursuant to that certain independent contractor agreement signed by such agent and the Company or its Majority Subsidiary within 60 days of the due date, all remaining unvested RSUs will be forfeited. |
| b. | Recruiting: |
1.Participant will receive RSUs that will have a value of $200 per agent recruited based on the prior 30-day VWAP of the Company’s common stock on the Nasdaq Stock Market as of the last trading day prior to the date of the grant, rounded down to a whole share if such Participant: (i) recruits agents who become agents of the Company and remain agents of the Company for at least 12 consecutive months, and (ii) remains with the Company for at least 12 consecutive months. Such RSUs shall be granted for every agent recruited by a Participant. The Company will grant the awards of RSUs to the qualifying Participant on the last trading day of the month of the first anniversary of the date that the Company verifies that a recruited agent has been with the Company for one year. Such RSUs will vest equally over the 24-month period starting the month after the RSUs are issued, with any remainder added to the last month of the vesting schedule. Participants who terminate their relationship with the Company during the vesting period will forfeit any unvested shares. If the Participant does not pay his or her annual or monthly dues (pursuant to that certain independent contractor agreement signed by such agent and the Company or its Majority Subsidiary) within 60 days of the due date, all remaining unvested shares will be forfeited.
2. A Participant will receive RSUs that will have a value of $8,000 based on the prior 30-day VWAP of the Company’s common stock on the Nasdaq Stock Market as of the last trading day prior to the date of the grant, rounded down to a whole share if such a Participant: (i) recruits ten (10) agents in one fiscal year who become agents of the Company and remain agents of the Company for at least 12 consecutive months, and (ii) remains with the Company for at least 12 consecutive months. A Participant will receive an additional award under the same terms and qualifications for every multiple of ten (10) agents recruited in one fiscal year. The Company will grant the awards of RSUs to the qualifying Participant on the last trading day of the month of the first anniversary of the date that the Company verifies that the requisite number of recruited agents have been with the Company for one year. Such RSUs will vest equally over the 24 month period starting the month after the RSUs are issued, with any remainder added to the last month of the vesting schedule. Participants who terminate their relationship with the Company during the vesting period will forfeit any unvested shares. If the Participant does not pay his or her annual or monthly dues pursuant to that certain independent contractor agreement signed by such agent and the Company or its Majority Subsidiary within 60 days of the due date, all remaining unvested shares will be forfeited.
| 5. | Discretionary Bonus Program: All Participants in the Discretionary Bonus Program (the “Bonus Program”) are to be eligible for a grant of RSUs in the Compensation Committee’s discretion. The Compensation Committee or its designee may, from time to time, review the performance of Participants who achieve outstanding results in their endeavors for the Company and may grant RSUs to such Participant without payment by such Participant. All RSUs granted under the Bonus Program will vest equally over the 36-month period starting the month after the award is granted, with any remainder added to the last month of the vesting schedule. Participants who terminate their relationship with the Company during the vesting period will forfeit any unvested shares. If the Participant does not pay his or her annual or monthly dues pursuant to that certain independent contractor agreement signed by such agent and the Company or its Majority Subsidiary within 60 days of the due date, all remaining unvested shares will be forfeited. |
| 6. | Death of Participant: Any distribution or delivery to be made to Participant under the Agreement, if Participant is then deceased, will be made to Participant’s designated beneficiary, or if no beneficiary survives Participant, the administrator or executor of Participant’s estate. |
| 7. | Responsibility for Taxes: Participant acknowledges that, regardless of any action taken by the Company or, if different, Participant’s employer or any Parent or Subsidiary of the Company to which Participant is providing services (together, the “Service Recipients”), the ultimate liability for any tax and/or social insurance liability obligations and requirements in connection with the RSUs or underlying shares of common stock, including, without limitation, (i) all federal, state, and local taxes (including Participant’s Federal Insurance Contributions Act (FICA) obligations) that are required to be withheld by any Service Recipient or other payment of tax-related items related to Participant’s participation in this Agent Plan and legally applicable to Participant, (ii) Participant’s and, to the extent required by any Service Recipient, the Service Recipient’s fringe benefit tax liability, if any, associated with the grant, vesting, or release from escrow of RSUs or underlying shares of common stock, the filing of an 83(b) election with the Internal Revenue Service (IRS) regarding the RSUs or underlying shares of common stock, or the sale of shares, and (iii) any other Service Recipient taxes the responsibility for which Participant has, or has agreed to bear, with respect to the RSUs or underlying shares of common stock (or release from escrow thereof or issuance of shares thereunder) (collectively, the “Tax Obligations”), is and remains Participant’s sole responsibility and may exceed the amount actually withheld by the applicable Service Recipient(s). Participant further acknowledges that no Service Recipient (A) makes any representations or undertakings regarding the treatment of any Tax Obligations in connection with any aspect of the RCUs or underlying shares of common stock, including, but not limited to, the grant, vesting or release from escrow of the RSUs or underlying shares of common stock, the filing of an 83(b) Election (as defined below) with respect to the RSUs or underlying shares of common stock, the subsequent sale of shares acquired pursuant to the Agreement and the receipt of any dividends or other distributions, and (B) makes any commitment to and is under any obligation to structure the terms of the grant or any aspect of the RSUs or underlying shares of common stock to reduce or eliminate Participant’s liability for Tax Obligations or achieve any particular tax result. Further, if Participant is subject to Tax Obligations in more than one jurisdiction between the date of grant and the date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges that the applicable Service Recipient(s) (or former employer, as applicable) may be required to withhold or account for Withholding Obligations (as defined below) in more than one jurisdiction. If Participant fails to make satisfactory arrangements for the payment of any required withholding obligations under applicable law or regulation at the time of the applicable taxable event, Participant acknowledges and agrees that the Company may refuse to issue or deliver the shares. Participant, by signing this enrollment form, certifies that: Participant is not subject to backup withholding because (i) Participant is exempt from backup withholding, or (ii) Participant has been notified by the Internal Revenue Service (IRS) that Participant is not subject to backup withholding, or (iii) the IRS has notified Participant that Participant is no longer subject to backup withholding. |
| 8. | Custody of Shares: All shares of common stock being granted pursuant to the 2022 Plan are registered pursuant to the Registration Statement on the form S-8 filed by the Company with the U.S. Securities and Exchange Commission on October 20, 2023 (the “Registration Statement”). Upon vesting of the RSUs granted under the Agents Plan and their conversion into the free trading shares of common stock of the Company, the SPA will transfer such shares by DWAC or DRS to the brokerage account of respective Participant with Siebert Financial Corp (“Siebert”). The Participant may instruct Sibert to transfer such shares to his or her other brokerage account. |
| 9. | Restricted Stock Units: Each RSU grant under the Agents Plan will be evidenced by an Agreement that will specify the terms and conditions of the grant. Participants acknowledge and agree that all RSUs will NOT be freely tradeable until they vest and convert into the shares of common stock registered under the Registration Statement. Upon vesting each one RSU shall automatically convert into one share of common stock. |
| 10. | Associated Costs: Ownership of RSUs or underlying shares of common stock purchased or granted under this Agent Plan may come with associated costs imposed by third parties, including fees that may be imposed by our stockbroker, Siebert, or others. Participants shall be responsible for all associated costs. |
| 11. | Rights as Stockholder: Neither Participant nor any person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any shares underlying the RSUs deliverable hereunder unless and until certificates representing such shares (which may be in book entry or DRS form) will have been issued and recorded on the records of the Company, and delivered to Participant (including through electronic delivery to a brokerage account). After such issuance, recordation, and delivery, the Participant will have all the rights of a stockholder of the Company with respect to voting such shares and receipt of dividends and distributions on such shares. |
| 12. | No Guarantee of Continued Service: The vesting of the RSUs pursuant to the vesting schedule hereof is earned only by continuing as an agent or broker through the applicable vesting date(s), which unless provided otherwise under applicable laws is at the will of the applicable Service Recipient and not through the act of being hired, being granted the RSU or acquiring shares hereunder. Participant further acknowledges and agrees that the Agreement, the transactions contemplated thereunder and the vesting schedule set forth therein do not constitute an express or implied promise of continued engagement as an agent or broker for the vesting period, for any period, or at all, and shall not interfere in any way with Participant’s right or the right of any Service Recipient to terminate Participant’s relationship as an agent or broker, subject to applicable law, which termination, unless provided otherwise under applicable law, may be at any time, with or without cause. |
| 13. | Unvested RSUs Are Not Transferable: The unvested RSUs subject to the Agreement and the rights and privileges conferred hereby will not be transferred, assigned, pledged, or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process until such shares shall have vested in accordance with the provisions of the Agreement. Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of the unvested RSUs subject to the Agreement, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment, or similar process, the then-unvested RSUs will thereupon be forfeited at no cost to the Company and Participant will have no further rights thereunder. |
| 14. | No Advice Regarding Grant: The Company is not providing any tax, legal, or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in this Agent Plan or the Participant’s acquisition or sale of the underlying shares. Participant is hereby advised to consult with his or her own personal tax, legal, and financial advisers regarding his or her participation in this Agent Plan before taking any action related to this Agent Plan. |
| 15. | Termination: This Agent Plan is subject to termination at the discretion of the Compensation Committee at any time. Any termination will not adversely affect RSUs purchased or vested before the date of termination. Participants will be notified of such termination. |
| 16. | Data Privacy: Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in the Agreement and any other materials by and among, as applicable, the Service Recipients for the exclusive purpose of implementing, administering and managing Participant’s participation in this Agent Plan. |
| 17. | Successors and Assigns: The Company may assign any of its rights under the Agreement to single or multiple assignees, and the Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, the Agreement shall be binding upon Participant and Participant’s heirs, executors, administrators, successors, and assigns. The rights and obligations of the Participant under the Agreement may be assigned only with the prior written consent of the Company. |
| 18. | No Waiver: Either party’s failure to enforce any provision or provisions of the Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party from thereafter enforcing each and every other provision of the Agreement. The rights granted to both parties herein are cumulative and shall not constitute a waiver of either party’s right to assert all other legal remedies available under the circumstances. |
| 19. | Governing Law; Severability: This Agent Plan, the Agreement, and the RSUs are governed by the internal substantive laws, but not the choice of law rules, of the State of Nevada. If any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void, the remainder of this Agreement shall continue in full force and effect. |
| 20. | Entire Agreement: The 2022 Plan is incorporated herein by reference. The 2022 Plan, this Agent Plan and the Agreement constitute the entire agreement of the parties concerning the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified adversely to Participant’s interest except through a writing signed by the Company and Participant. |
| 21. | Contact Information. If you would like to sign up for or terminate your participation in this Agent Plan, please contact representatives of the Company via accounting@larosarealtycorp.com. |
4
Exhibit 10.120
Exhibit 10.121
L E A S E
ARTICLE 1. Basic Lease Provisions.
The Palm Plaza Building - All property real, personal or mixed, owned by Landlord as of this date, at the site generally known as: Celebration Office Condos.
DATE: (effective date) July 1st, 2023
| LANDLORD: | 1146 Vision Holdings LLC. | ADDRESS: | 1420 Celebration Blvd, Suite 200 Celebration, FL 34747 |
| TENANT: | La Rosa Realty LLC, | TRADE NAME: | La Rosa Realty LLC |
| TENANT’S EMAIL: | joe@larosarealtycorp.com | PHONE: | 321-939-3748 |
| ADDRESS: | 1420 Celebration Blvd, Suite 200, Celebration, FL 34747 |
| CONTACT: | La Rosa Building Management, Inc. |
| TELEPHONE: | 321-939-1475 |
| PREMISES ADDRESS: |
1420 Celebration Blvd, Suite 101, 103 Celebration, FL 34747 |
(The approximate location of the premises is shown on Exhibit “A”.)
| AREA: | Approximately 1868 gross square feet. |
| LEASE TERM: | 24 months |
| COMMENCEMENT: | July 1st, 2023 |
| RENT COMMENCEMENT: | July 1st, 2023 |
| LEASE EXPIRES: | June 30th, 2025 |
| RENT PER ANNUM: | $63,600.00 (plus applicable county and state sales tax) |
| RENT PER MONTH: | $5,300.00 (plus applicable county and state sales tax) |
| TENANT’S USE: | Realtor |
|
REQUIRED Commencement of Lease DATE: |
July 1st, 2023 |
| SECURITY DEPOSIT: | TBD |
| PREPAID RENT: | None |
| ESCALATION: | None |
| Page |
INITIALS: |
| LANDLORD: _________ | |
| TENANT: ____________ | |
The terms defined in this Article 1 shall have the meaning herein indicated throughout the Lease unless otherwise stated. If there is any conflict between any of the provisions of this Article 1 and the other terms of the Lease, the other terms of the Lease shall control.
ARTICLE 2. Term:
Section 1: The term of this Lease shall be as provided in Article 1 unless terminated or extended as provided in the Lease.
Section 2: For purposes of this Lease, the term “Lease Year” shall mean each consecutive period of twelve (12) calendar months, commencing on the first day of the calendar month immediately following the month in which the Rent Commencement Date occurs and each anniversary of such day, except that the first Lease year (“First Lease Year”) shall also include the period from the Rent Commencement Date until the first day of the following month.
ARTICLE 3. Rent:
Section 1: Without previous demand therefor and without any setoff or deduction whatsoever, Tenant shall pay to Landlord rent at the address indicated in Article 1, or at such place as Landlord may from time to time designate, on the first day of each month of the Lease term as provided in Article 1.
Section 2: Upon Tenant’s execution of this Lease, Tenant shall provide Landlord with a cashier’s check for an amount equal to: 1st month’s minimum base rent and security deposit as provided above.
Section 3: If Tenant pays rent or additional rent late three (3) times in any twelve (12) month period, in addition to Landlord’s other remedies, Landlord may cancel this Lease.
ARTICLE 4. Use: During the term of this Lease, the Premises shall be used and occupied only for the purposes provided in Article 1 and for no other purposes. Tenant agrees to open and operate one hundred percent (100%) of the Premises during the term of this Lease, and to conduct its business at all times in a high class and reputable manner under the trade name stated in Article 1. Tenant shall, at its sole expense, promptly comply with all Federal, State and local laws, ordinances and lawful orders and regulations affecting the appearance, cleanliness, safety, occupation and use of the Premises. No auction, fire, going out of business or bankruptcy sales shall be conducted in the Premises without Landlord’s written consent. Tenant shall not use the sidewalks adjacent to the Premises for business purposes without Landlord’s written consent. Tenant agrees not to use flashing or traveling lights, loudspeakers, phonographs, radio broadcasts, or other audio-visual or mechanical devices in a manner to be heard or seen outside the Premises. In its advertising, Tenant shall use the name of the Building but shall not indulge in any advertising or sales promotion which, in the opinion of Landlord is: undignified or not in conformity with the higher standards of practice among stores dealing in similar merchandise; might tend to harm the business reputation of Landlord or its managing agent; reflect unfavorably on the Building; or, might tend to confuse or mislead the public. Tenant shall not perform any acts or carry on any practices which causes waste to the Building, or be a nuisance or menace to other tenants or invitees of the Building, and shall keep the Premises, the sidewalks adjacent to the Premises, the rear area of the Premises and the service area and corridors allocated for the use of Tenant, clean and free from rubbish and dirt at all times. All trash and garbage shall be collected for disposal within the Premises. No aspect of Tenant’s business shall feature the display of any nude body parts or pornographic material. Tenant shall not operate its Premises in a manner which violates any exclusive rights of any other tenant in the Building. Tenant shall not burn any trash of any kind in or about the Building. Tenant shall not permit any noxious, foul or disturbing odors to emanate from the Premises.
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ARTICLE 5. Utilities: Tenant shall pay all electricity charges and for other expenses associated with any data & phone communications used in connection with the Premises. In the event Tenant fails to pay these charges within this time period, Landlord, at its sole discretion, may pay these charges and bill Tenant for the sums paid plus a twenty percent (20%) service charge, as additional rent. All utilities to the Premises shall be separately metered at Tenant’s sole expense. Landlord shall have no liability to Tenant for disruption of any utility service and in no event shall such disruption constitute constructive eviction or entitle Tenant to an abatement of rent or other charges.
ARTICLE 6. Repairs and Maintenance:
Section 1: Landlord shall keep the foundation, the outer walls and roof of the building in which the Premises is located in good repair, except the Landlord shall not be called upon to make any repairs caused by the negligence of Tenant, its agents or employees. Landlord shall not be called upon to make any other improvements or repairs of any kind on the Premises.
Section 2: The Premises shall at all times be kept in good order, condition and repair by Tenant, and in a clean, sanitary and safe condition in accordance with all directions, rules and regulations of the health officer, fire marshal, building inspector or other officers of any governmental agencies having jurisdiction, all at the sole cost and expense of Tenant. Tenant shall permit no water damage or injury to the Premises. Tenant shall, at its own cost and expense, maintain and take good care of and make necessary and governmentally required repairs, structural and otherwise, to the interior of the Premises, and all fixtures and equipment, including but not limited to the exterior and interior windows, doors, locks, entrances, storefronts, signs, showcases, floor coverings, interior walls, columns and partitions, lighting fixtures, heating, ventilating and air conditioning equipment and plumbing and sewage facilities. Tenant shall also be responsible for replacing all fixtures and equipment listed above which are stolen, damaged beyond repair or worn out. The Premises shall be remodeled by Tenant periodically as determined by Landlord which shall be at least every five (5) years. The remodeling shall include, but not be limited to, flooring, wallcovering, ceiling, storefront, and furnishings, so the Premises are put into like-new condition. Tenant agrees to keep and maintain in force a standard maintenance agreement with a company acceptable to Landlord on all air conditioning equipment and provide a copy of such maintenance agreement to Landlord. The maintenance agreement shall provide that the company: (i) regularly services the air conditioning units on the Premises at least on a monthly basis, changing belts, filters, and other parts as required; (ii) performs emergency and extraordinary repairs on the air conditioning units; (iii) keeps a detailed record of all service performed on the Premises; (iv) prepares a yearly service report to be furnished to Tenant at the end of each calendar year. Tenant shall furnish to Landlord, at the end of each calendar year, a copy of said yearly service report. Not later than thirty (30) days prior to the date of commencement of the term of this Lease and annually thereafter, Tenant shall furnish to Landlord a copy of the air conditioning maintenance contract described above, and proof that the annual premium for the maintenance contract has been paid. Nothing stated herein above shall limit Tenant’s obligation to maintain the air conditioning unit(s) in good condition and repair throughout the term of this Lease. Tenant also shall pay for and maintain a termite and pest extermination service for the Premises. Tenant shall have the obligation to keep the exterior fronts, sidewalks and rear of the Premises in a neat and orderly condition, and free from debris and rubbish at all times. Tenant shall not paint or decorate any part of the exterior of the Premises, or any part of the interior visible from the exterior thereof, without first obtaining Landlord’s written approval. Tenant will remove promptly upon notice from Landlord, or take such other action as Landlord may direct, any such paint or decoration which has been applied without the Landlord’s required approval. If Tenant fails to repair, maintain, improve or remodel the Premises as provided in this article, Landlord may perform the required work and charge Tenant all costs of the work plus an administrative charge of twenty percent (20%), as additional rent.
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ARTICLE 7. Surrender of Premises: At the expiration or earlier termination of this Lease, Tenant shall surrender the Premises in the same condition as at the commencement of the term, reasonable wear and tear, loss by fire or other unavoidable casualty not due to Tenant’s negligence or willful act excepted. All alterations, additions, improvements and fixtures, other than trade fixtures, which may be made or installed by Landlord or Tenant upon the Premises and which in any manner are attached to the floors, walls or ceilings, shall be the property of Landlord and at the termination of this Lease shall remain upon and be surrendered with the Premises. Any linoleum or other floor covering which is adhesively or permanently affixed to the floor of the Premises shall become the property of Landlord.
ARTICLE 8. Signage: Tenant Company or name of Business shall be displayed on Building Directory in Main Lobby along with Office Signage directly outside the main entrance door to business. All signage must be approved by owner, Building association and Management.
ARTICLE 9. Personality of Tenant:
Section 1: If Tenant does not remove all of his effects from the Premises upon expiration or earlier termination of this Lease, Landlord may, at its option, remove all or part of Tenant’s effects and store them in a reasonable manner without liability for loss, and Tenant shall be liable to Landlord for all expenses incurred in such removal and storage of its effects plus a twenty percent (20%) service charge, as additional rent.
Section 2: In addition to Landlord’s statutory lien for rent pursuant to Florida Statutes Chapter 83, Tenant hereby pledges and assigns to Landlord, as security for the payment of any and all rent due under this Lease, all of the furniture, fixtures, personal property, equipment, goods and chattels of Tenant which shall or may be brought, put on or into or regularly kept at the Premises, and Tenant agrees that said lien may be enforced by distress, foreclosure or otherwise, at the election of Landlord. Tenant agrees hereby to execute and deliver upon request a standard Uniform Commercial Code Financing Statement, which Tenant acknowledges is in a form sufficient to perfect the lien in favor of Landlord created by this paragraph. Provided that the Landlord agrees to provide a subordination agreement and sign a UCC 3 reflecting same in favor of such commercial lender or the SBA as to such property of the Tenant.
Section 3: Tenant agrees for itself and its assignees or sub-lessees that it shall execute such further documentation as may be required by Landlord in connection with the perfection or continuation of this lien. Failure by Tenant to execute such documentation shall be an event of default, entitling Landlord to the remedies provided under Article 18 and shall further entitle Landlord to execute such documents as Tenant’s attorney-in-fact. Tenant hereby irrevocably constitutes and appoints Landlord as Tenant’s attorney-in-fact to execute any such document for and on behalf of such Tenant.
Section 4: During the entire term of this Lease, Tenant shall not remove any property from the Premises, other than in Tenant’s ordinary course of business, without Landlord’s written consent. Removal of Tenant’s property without Landlord’s consent shall be an event of default under this Lease, and Landlord shall be entitled to enforce its rights by injunction in addition to any other remedy available under this Lease and Florida law.
Nothing hereunder shall be deemed or construed to be a waiver of Landlord’s statutory lien for rent; the express contractual lien herein granted is in addition and supplementary thereto.
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ARTICLE 10. Indemnity: Landlord, its mortgagees and agents, shall be defended (by an attorney acceptable to Landlord), held harmless and indemnified by Tenant from and against any liability for claims, actions, costs, and damages for injuries or death to any person, or for damage, theft or loss of any property, arising wholly or in part from the use and occupancy of the Premises, from any activity, work or thing done, permitted or suffered by Tenant in or about the Premises, from any breach or default of this Lease, or due to any other act or omission of Tenant its agents, contractors, employees, subtenants, concessionaires and invitees. All property kept, stored or maintained on the Premises shall be done so at the risk of Tenant only. This paragraph shall survive the termination or expiration of the Lease.
ARTICLE 11. Insurance:
Section 1: Tenant shall not carry any goods or conduct its business in a manner which will in any way tend to increase the insurance rates on the Premises or the building of which they are a part. Tenant agrees to pay as additional rent any increase in Landlord’s insurance premiums, resulting from Tenant’s activities, whether or not Landlord has consented to such activity. If Tenant installs any equipment that overloads any of the Building systems, Tenant shall at its own expense make whatever changes are necessary to these systems to comply with the requirements of the insurance underwriters and governmental authorities having jurisdiction. Tenant shall promptly comply with the recommendations or demands made by the insurance carrier insuring the Building concerning health, safety and welfare matters. If Tenant fails to comply, Landlord may take all steps necessary to comply with the insurance carrier’s recommendation or demands and charge Tenant for all costs of compliance plus a service charge of twenty percent (20%), as additional rent.
Section 2: Tenant shall keep in effect a liability insurance policy with respect to the Premises and the business operated by Tenant, which policy shall be issued by an insurer with a Best’s Rating of at least A-VII and in which the limits of liability shall be not less than one million dollars ($1,000,000) for one person and one million dollars ($1,000,000) for more than one person in any single incident. The limits of liability shall be increased by at least twenty percent (20%) each five (5) years of the Lease term and any extensions. Tenant shall furnish Landlord with a certificate of insurance or other acceptable evidence that such insurance is in force, and evidence that the premiums have been timely paid by Tenant.
Section 3: Tenant shall keep in effect a policy of insurance upon its fixtures, equipment, stock of goods and upon all of the plate glass in or around the Premises including the front and side of the Premises, against loss by fire and windstorm and for extended coverage in reasonable amounts as may be required by Landlord, which coverage shall in no event be less than the full replacement cost with a deductible not exceeding one thousand dollars ($1,000.00). Tenant shall furnish Landlord with a certificate of insurance or other acceptable evidence that such insurance is in force, and evidence that the premiums have been timely paid by Tenant.
Section 4: Business interruption insurance in an amount sufficient to reimburse Tenant for a minimum of one year’s income for direct or indirect loss of earnings attributable to perils commonly insured against by prudent tenants or attributable to prevention of access to the Premises as a result of such perils shall be maintained by Tenant.
Section 5: All insurance required of Tenant in this Lease shall include (i) Landlord and Landlord’s Managing Agent as additional insureds; (ii) a clause or endorsement denying the insurer any right of subrogation against the Landlord and Managing Agent to the extent rights have been waived by the Tenant prior to the occurrence of injury or loss; and (iii) a provision requiring the insurer to give Landlord thirty (30) days’ notice prior to cancellation. Tenant waives any rights of recovery against the Landlord and Managing Agent for injury or loss due to hazards covered by insurance.
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In the event Tenant fails to purchase and maintain the insurance required herein, Landlord may purchase such insurance on behalf of Tenant and charge Tenant the premium for such insurance, together with a service charge of twenty percent (20%), as additional rent.
ARTICLE 12. Deliveries and Garbage Removal: Tenant agrees that all receiving and delivery of goods and merchandise and all removal of garbage and refuse shall be made only by the way of the service areas and rear doors provided for such purposes. Landlord grants to Tenant the right during the Lease term to use, in common with others entitled to their use, such service areas and corridors subject to such reasonable regulations as Landlord may make from time to time. There shall be no deliveries or garbage removal between 8:00 p.m. and 7:00 a.m.
ARTICLE 13. Assignment, Sublease or Transfer: Tenant shall not, without the prior written consent of Landlord, assign, encumber, dispose of, convey, or transfer this Lease or any interest under it. Tenant shall not allow any assignment, subletting or other transfer of this Lease or any lien upon the Tenant’s interest by operation of law or by voluntary or involuntary bankruptcy, insolvency or reorganization proceedings. Tenant’s request for an assignment or other transfer shall be in writing to Landlord and will only be considered by Landlord if Tenant is not in default of any provision of this Lease. Further, Tenant shall not sublet all or any part of the Premises, or permit the use or occupancy of all or any part of the Premises by anyone other than the Tenant. Landlord, at its sole discretion, may establish standards for the approval of a proposed assignee or subtenant which standards may include, but not be limited to, net worth, type of business, business experience, reputation, and effect on tenant mix. If Landlord shall consent to any assignment, the assignee shall assume all obligations of the Tenant under the Lease and neither Tenant nor any assignee shall be relieved of any liability under the Lease and in the event of default by the assignee in the performance of any of the Lease terms, no notice of such default or demand of any kind need be served on the Tenant or assignee to hold him or them liable to Landlord. If the Tenant’s interest in this Lease be assigned or if the Premises or any part thereof be sublet, Landlord may, after default by Tenant, collect the rent from the assignee or subtenant and apply the net amount collected to the rent due from Tenant. No such collection shall be deemed a waiver of the covenant herein against sale, transfer, mortgage, assignment and subletting or release of Tenant from the performance of the covenants herein contained. In the event of such default, Tenant hereby assigns the rent due from the subtenant or assignee to Landlord, and hereby authorizes such subtenant or assignee to pay the rent directly to Landlord. If Tenant is a corporation and any transfer, sale, pledge or other disposition of the stock shall occur, or power to vote the majority of the outstanding stock be changed, then Tenant shall so notify Landlord and Landlord shall have the right, at its option, to terminate this Lease upon ten (10) days notice to Tenant. Any assignment subletting, or other transfer of the Premises by the Tenant without Landlord’s written consent shall be, at the option of Landlord, null and void, and shall constitute a default under this Lease. In the event Tenant assigns, sublets or transfers this Lease for all or any portion of the Premises without Landlord’s the prior written consent, the base and additional rent for the Premises shall be double the rate stated in this Lease until Tenant complies with the terms of this paragraph. Landlord’s written consent to any one assignment or other transfer shall not constitute a waiver of the consent requirements with respect to any subsequent assignment or transfer. Tenant shall pay Landlord a non-refundable processing fee equal to the greater of three percent (3%) of Tenant’s annual base rent at the time of request for assignment or transfer, or nine hundred fifty dollars ($950.00), as reimbursement for legal expenses in connection with review and preparation of documents. If the rent and all other sums received by Tenant on account of a sublease of all or any portion of the Premises exceeds the rent and additional rent allocable to the space subject to the sublease (in the proportion of the area of such space to the entire Premises), Tenant shall pay to Landlord, as an additional charge, one hundred percent (100%) of such excess, monthly or as otherwise received by Tenant. Tenant shall pay to Landlord, as an additional charge, one hundred percent (100%) of all sums paid to Tenant for the assignment of its interest in the Lease.
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ARTICLE 14. Entry and Inspection: Landlord and its authorized representatives shall have the right to enter upon the Premises at all reasonable hours to inspect or for making repairs, additions or alterations necessary to protect the Premises and keep it safe for the public. If Landlord deems any repairs required to be made by Tenant necessary, it may demand that Tenant make the repairs promptly, and, if Tenant refuses or neglects to commence such repairs and complete them with reasonable dispatch, Landlord may make or cause such repairs to be made and shall not be responsible to Tenant for any loss or damage that may accrue to its stock or business. If Landlord makes or causes such repairs to be made, Tenant shall pay to Landlord the cost of the repairs plus a twenty percent (20%) service charge, as additional rent. Provided however any repairs needed to conform the Building or the Premises to local code or ADA shall be at the Landlords expense. For a period commencing ninety (90) days prior to the termination of this Lease, Landlord may have reasonable access to the Premises for the purpose of exhibiting the Premises to prospective tenants and for posting leasing signs.
ARTICLE 15. Eminent Domain: If the whole of the Premises shall be taken by any public authority under the power of eminent domain, then at the time of taking the term of this Lease shall cease, and the rent due shall be paid up to that day. If any part of the Premises shall be taken, and such partial taking shall render that portion not taken unsuitable for the business of Tenant, as determined by Landlord, then the term of this Lease shall cease and the rent due shall be paid up to that date. If such partial taking is not extensive enough to render the Premises unsuitable for business of Tenant, then this Lease shall continue in effect except that the minimum rent shall be reduced in the same proportion that the floor area of the Premises taken bears to the original floor area demised. If this Lease is not terminated pursuant to this Article 16, Landlord shall, upon receipt of the condemnation award, make all necessary repairs or alterations to the building in which the Premises are located so as to constitute the portion of the building not taken a complete architectural unit, but such work shall not exceed the scope of the work to be done by Landlord in originally constructing said building. Landlord shall not be required to spend for such work an amount in excess of the amount received by Landlord as damages for the part of the Premises so taken. “Amount received by Landlord” shall mean that part of the condemnation award, which is free and clear to Landlord of any collection of mortgages for the value of the diminished fee. If more than twenty percent (20%) of the floor area of the building in which the Premises are located shall be taken, Landlord may, terminate this Lease upon thirty (30) days written notice to Tenant. All damages awarded for such taking shall belong to Landlord whether such damages shall be awarded as compensation for diminution in value to the leasehold or to the fee of the Premises; provided, however, that Landlord shall not be entitled to any portion of the award made to Tenant for cost of removal of stock and fixtures.
ARTICLE 16. Destruction or Damage: If the Premises shall be damaged by fire, the elements or other casualty not due to Tenant’s negligence but are not rendered untenantable in whole or in part, Landlord shall within a reasonable time and at its own expense commence to cause such damage to be repaired and the rent shall not be abated. If by reason of such occurrence, the Premises shall be rendered untenantable in whole or in part, Landlord may, at its option, and at its own expense, cause the damage to be repaired and the minimum rent shall not be abated. In the event Landlord repairs the Premises, Landlord and Tenant shall have the same respective obligations to construct or install improvements as were imposed on said parties at the execution of this Lease. Tenant shall, at its sole expense, replace its stock in trade, fixtures, furniture, and equipment. However, Landlord shall have the right, to be exercised by notice to Tenant in writing within sixty (60) days of the occurrence of the casualty, to elect not to reconstruct the damaged Premises if the Premises are rendered untenantable in whole or in part, and in such event this Lease and the tenancy created shall cease as of the date of the occurrence causing the damage, and the minimum rent to be adjusted as of such date.
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In the event that fifty percent (50%) or more of the rentable area of the Building shall be damaged or destroyed by fire or other cause, notwithstanding any other provision contained herein and that the Premises may be unaffected by such fire or other cause, Landlord shall have the right, to be exercised by notice in writing to Tenant within sixty (60) days of said occurrence, to elect to cancel and terminate this Lease. Upon the giving of such notice to Tenant, the term of this Lease shall expire by lapse of time upon the third day after such notice is given, and rent shall be adjusted as of such date.
If the Premises are destroyed or damaged during the last eighteen (18) months of the term of this Lease (initial or as extended) and the estimated cost of repair exceeds ten percent (10%) of the minimum base rent then remaining to be paid by Tenant for the balance of the Lease term, Landlord may, at its option, cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Tenant of its election to do so within thirty (30) days of the date of occurrence of such damage, and rent shall be adjusted as of such date.
For purposes of this section of the Lease, a Florida licensed architect designated by Landlord shall determine the extent of the damage or destruction and will provide Landlord and Tenant with certificates attesting to the condition of the demised Premises or building in which the demised Premises are situated. The architect’s certificate shall bind the parties as to: (a) whether or not all or a portion of the demised Premises or building in which the demised Premises are situated are rendered untenantable and the extent of untenantability; and (b) the date the demised Premises or building became untenantable, the date they will regain tenantability, and the date they regained tenantability.
ARTICLE 17. Default and Remedies: If Tenant (i) fails to pay rent or any other monies due under the Lease at the time and in the manner required by the Lease; (ii) fails to perform any other condition, stipulation or agreement of the Lease; or, (iii) is the subject of a lawsuit for involuntary bankruptcy or is adjudged a voluntary or involuntary bankrupt, makes an assignment for the benefit of creditors, or, if there is a receiver appointed to take charge of the Premises either in the state or federal courts, Landlord may, at its option, declare this Lease in default, and, shall in addition to all remedies at law available to Landlord, have the right to terminate the Lease and declare the entire minimum rent and any other charges, for the balance of the Lease term due and payable immediately. Landlord shall also have the option, without terminating the Lease, to resume possession and re-lease or re-rent the Premises for the remainder of the Lease term for the account of Tenant. Landlord shall not be required to pay Tenant any surplus of any sums received by Landlord on a reletting of the Premises in excess of the rent provided in the Lease. In the event Tenant is in default of any non-monetary term of this Lease, and Tenant has not cured the default within fifteen (15) days of the date of Landlord’s notice, in addition to Landlord’s other remedies provided in this Lease, Landlord may cure the default and charge Tenant as additional rent the cost of such cure plus a twenty percent (20%) service charge.
Tenant agrees that, in exchange for the promises made in this Lease and other good and valuable consideration received from Landlord, in the event Tenant files a voluntary petition in bankruptcy or is the subject of an involuntary bankruptcy at any time during the Lease term or any extensions hereof, Landlord shall not be subject to the provisions of 11 U.S.C. §362, and shall automatically and immediately be entitled to relief from the stay imposed thereby without necessity of further action or court approval.
Without waiving any other available rights and remedies, Landlord shall be entitled to a late charge, payable as additional rent, on any payment not made when due equal to the greater of eighteen percent (18%) per annum or the maximum percentage permitted by law. A service charge of the greater of one hundred dollars ($100.00) or ten percent (10%) of the returned check will be assessed, as additional rent, for handling a returned check. In the event Landlord brings suit under this Lease, the prevailing party shall be awarded attorneys fees and costs whether incurred before trial, at trial or on appeal.
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ARTICLE 18. Holdover: In the event Tenant remains in possession of the Premises after the expiration date or sooner termination of this Lease and without the execution of a new Lease, Tenant shall be deemed a Tenant at will from month to month, subject to all the conditions of this Lease except for rent. The parties recognize and agree that the damage to Landlord resulting from any failure by Tenant to timely surrender possession of the Premises will be substantial, will exceed the amount of the monthly installments of the rent payable under the Lease, and will be impossible to measure accurately. Tenant therefore agrees that if possession of the Premises is not surrendered to Landlord upon the expiration date or sooner termination of the Lease, in addition to any other rights or remedies Landlord may have under the Lease or at law, Tenant shall pay to Landlord, without demand therefor as liquidated damages, for each month and for each portion of any month during which Tenant holds over in the Premises after the expiration date or sooner termination of this Lease, a sum equal to three (3) times the aggregate of that portion of the minimum base rent and additional rent that was payable under this Lease during the last month of the term. Nothing herein contained shall be deemed to permit Tenant to retain possession of the Premises after the expiration date or sooner termination of the Lease. Tenant shall defend, indemnify, and hold Landlord harmless from any and all liabilities, loss, cost and expense of every kind suffered by Landlord as a result of Tenant’s holding over. The provisions of this paragraph shall survive the expiration date or sooner termination of the Lease.
ARTICLE 19. Non-Waiver: The failure of Landlord in one or more instances to insist upon strict performance or observance of one or more of the covenants or conditions of this Lease or to exercise any remedy, privilege or option reserved to Landlord, shall not be construed as a waiver for the future of such covenant or condition or the right to enforce the same or to exercise such privilege, option or remedy. The receipt by Landlord of rent or any other payment required to be made by Tenant shall not be a waiver of any other additional rent or payment then due, nor shall such receipt, though with knowledge of the breach of any covenant or condition of this Lease, operate as or be deemed a waiver by Landlord of any of the provisions of the Lease, or of any of Landlord’s rights, remedies, privileges or options.
ARTICLE 20. Subordination: Tenant agrees that this Lease shall be subordinate to each and every mortgage or ground Lease that is now or may hereafter be placed upon the Premises and to any and all advances to be made and all renewals, replacements, assignments, extensions and future advances of these mortgages or ground leases. Tenant agrees, upon request, to execute any document which Landlord may deem necessary to accomplish that end. If Tenant fails to do so, Landlord may execute such document in the name of Tenant, as Tenant’s agent.
ARTICLE 21. Notice: Whenever under this Lease a provision is made for notice of any kind, it shall be deemed sufficient notice and service if such notice to Tenant is in writing addressed to Tenant at the address indicated in Article 1, the last known post office address of Tenant, or at the Premises and delivered by hand or sent by certified mail. Any notice to Landlord shall be in writing addressed to the Landlord and Managing Agent to the addresses shown in Article 1 for the Landlord and Managing Agent and sent by certified mail with postage prepaid. Notice need be sent to but one Tenant where Tenant is more than one person. In any case where notice is required to be mailed hereunder, the parties agree that such notice may be delivered by a generally recognized overnight courier service, or by facsimile transmission with a confirmation of transmission and receipt. Notices are deemed to have been given upon receipt.
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ARTICLE 22. Security Deposit: Tenant has simultaneously with the execution of this Lease paid to Landlord the sum stated in Article 1 as a security deposit for the faithful performance by Tenant of the Lease terms. The security deposit shall not bear interest to Tenant and may be commingled with other funds of Landlord. In the event that Tenant breaches any of the terms of this Lease, then Landlord may use all or any part of the security deposit to compensate Landlord for damages occasioned by Tenant’s breach. In the event Landlord’s damages exceed the amount of the security deposit, then Landlord shall apply the security deposit to Landlord’s damages over and above the security deposit. Tenant shall replenish the security deposit if Landlord uses the deposit as permitted by this Article. Landlord agrees that, in the event this Lease is in good standing at the expiration of the term, it will redeliver the security deposit to Tenant less any sums due Landlord within thirty (30) business days of receiving possession of the Premises from Tenant. Any sale of the Building shall relieve Landlord of responsibility for return of the security deposit, and Tenant shall look solely to the purchaser of the Building for its return. Tenant shall not look to Landlord or Landlord’s mortgagees or its assignees, if any, for the return of any security deposit in the event of a foreclosure or deed in lieu transaction.
ARTICLE 23. Limit of Liability: Tenant shall look solely to Landlord’s interest in the Building for the satisfaction of any judgment or decree requiring the payment of money by Landlord, based upon any default, and no other property or asset of Landlord, its Managing Agent, or any mortgagee, shall be subject to levy, execution or other enforcement procedure for the satisfaction of such judgment or decree. In the event Tenant violates this paragraph, in addition to all other remedies available to Landlord, Tenant shall pay Landlord an amount equal to three (3) times the cost of Landlord’s expenses defending the claim, as additional rent.
ARTICLE 24. Delivery of Premises:
Section 1: Tenant has inspected and accepts the Premises “As Is”. Tenant acknowledges that: (i) the Premises are in satisfactory condition and are suitable for the use contemplated hereunder; and (ii) Landlord has complied with all of the requirements imposed upon it under the terms of the Lease. Tenant agrees that it shall accept administrative possession of the Premises without the keys if Tenant fails to provide the insurance as outlined in Article 13 of this Lease.
Section 2: It is contemplated that the Premises will be ready for occupancy by Tenant on or prior to the commencement date of this Lease. However, in the event that Landlord is unable to deliver possession of the Premises to Tenant on or before this date, then Landlord agrees to deliver possession of the Premises to Tenant as soon as practicable thereafter, and the minimum rental shall be abated proportionately and Tenant will be relieved of the liability for paying same during such time Tenant does not have possession. In no event shall Tenant have any claim for damages (except for the abatement of rent as specified) on account of the failure of Landlord to deliver possession of the Premises.
ARTICLE 25. Landlord Construction: Landlord reserves the right at any time to perform maintenance operations and to make repairs, alterations or additions to and to build additional stories on the building in which the Premises are contained and to build adjoining the spaces. Landlord also reserves the right to construct other spaces or improvements in the Building from time to time and to make alterations or additions. Tenant agrees to cooperate with the Landlord, permitting the Landlord to accomplish any such maintenance, repairs, alterations, additions or construction.
ARTICLE 26. Rules and Regulations: Tenant agrees to abide by Landlord’s rules and regulations for the building, as such rules and regulations shall be compiled by Landlord from time to time. A copy of the current rules and regulations is attached to this Lease. Tenant agrees to instruct its employees to park in the area designated by Landlord as employees’ parking area. Tenant shall not permit its employees to park in any area of the Building other than that designated by Landlord as employees’ parking area. If Tenant or its employees fail to park in the area designated for employees, Landlord may at its option charge Tenant, as additional rent, twenty dollars ($20.00) per day for each car wrongfully parked.
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ARTICLE 27. Estoppel Certificates: Tenant agrees at any time, and from time to time, upon not less than seven (7) days prior notice by Landlord, to execute, acknowledge and deliver to Landlord, a statement in writing addressed to Landlord certifying the following: (a) that this Lease or any sublease is unmodified and in full force and effect (or, if there have been modifications, that they are in full force and effect as modified and stating the modifications), stating the dates to which the base rent, additional rent and other charges have been paid; (b) Tenant has accepted possession of the demised Premises and is presently occupying the Premises; (c) stating whether or not to the best knowledge of the signer of such certificate, there exists any default by Landlord in the performance of any covenant, agreement, term, provision or condition contained in this Lease, and if so, specifying each such default, it being intended that any such statement may be relied upon by Landlord, by any holder or prospective holder of any mortgage affecting the Building or by any purchaser of the Building; and, (d) any other information reasonably requested by a prospective purchaser, mortgagee or tenant of the Building. Tenant’s failure to respond to Landlord’s request for a written statement within the seven (7) day period mentioned in this article shall constitute a material default by Tenant under this Lease, and in such event, Tenant agrees to pay Landlord as liquidated damages therefor (and in addition to all equitable remedies available to Landlord) an amount equal to one hundred fifty dollars ($150.00), as additional rent, per day for each day that Tenant fails to deliver such certificate to Landlord after the expiration of such seven (7) day period.
ARTICLE 28. Attornment: In the event of any transfer of the ownership of the Premises whether voluntary or involuntary by foreclosure, bankruptcy, sale, or otherwise, Tenant shall, at the option of the transferee of said ownership, attorn to said transferee to the same extent as if said transferee were the initial Landlord under the Lease.
ARTICLE 29. Tenant Waivers: Tenant waives its rights to trial by jury in any action, proceeding or counterclaim brought against the Landlord on any matter arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, the Tenant’s use or occupancy of the Premises, and any claim for the Tenant’s use or occupancy of the Premises, and any claim for injury or damage. In the event Landlord commences any proceeding for the non-payment of base or additional rent, Tenant shall not file any counterclaims in such proceedings. This shall not, however, be construed as a waiver of Tenant’s right to assert such counterclaims in a separate action brought by Tenant. Tenant expressly waives any and all rights of redemption granted by or under any present or future laws should Tenant be evicted or disposed from the Premises for any cause, or Landlord re-enters the Premises following the occurrence of any default, or this Lease is terminated before the Lease term expiration date stated in the Lease. Tenant expressly waives any right to assert a defense based on merger and agrees that neither the commencement or settlement of any action or proceeding, nor the entry of judgment shall bar Landlord from bringing any subsequent actions or proceedings from time to time.
ARTICLE 30. Authority to Execute: Each of the persons executing this Lease on behalf of Tenant covenant and warrant that: (i) Tenant is a duly authorized existing corporation; (ii) Tenant is qualified to do business in the State of Florida; (iii) Tenant has full right and authority to enter into this Lease; (iv) Each of the persons executing this Lease on behalf of Tenant is authorized to do so; and (v) This Lease constitutes a valid and legally binding obligation of Tenant, enforceable in accordance with its terms.
ARTICLE 31. Hazardous Waste: Tenant, its officers, directors, employees, contractors, agents and invitees shall not permit the presence, handling, storage or transportation of hazardous or toxic materials or medical waste (“hazardous waste”) in or about the Premises or the Building, except in strict compliance with all laws, ordinances, rules, regulations, orders and guidelines of any government agency having jurisdiction, the applicable board of insurance underwriters, and the Rules and Regulations of the Building. In no event shall hazardous waste be disposed of in or about the Premises or the Building. Tenant shall obtain and maintain throughout the term of this Lease all licenses and permits required in connection with Tenant’s activities involving hazardous waste. Upon Landlord’s request, Tenant shall provide to Landlord copies of all such licenses and permits and shall also furnish Landlord copies of all contracts or agreements Tenant enters into for hazardous waste disposition.
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Tenant shall notify Landlord immediately of any discharge or discovery of any hazardous waste at, upon, under, or within the Premises or the Building. Tenant shall, at its sole cost and expense, comply with all remedial measures required by any governmental agency having jurisdiction. Tenant shall promptly forward to Landlord copies of all orders, notices, permits, applications, or other communications and reports received by Tenant in connection with any discharge or the presence of any hazardous waste or any other matters relating to the toxic waste or any similar laws or regulations, as they may affect the Premises or the Building (collectively “Notice”).
The obligations, liabilities and responsibilities of Tenant, its officers and directors under this Article 40 shall survive the expiration or termination of this Lease and shall include:
(a) The removal of any material deemed at any time to be hazardous waste on, within or released from the Premises or the Building, whether such removal is done or completed by Tenant, Landlord, or any other person or entity and regardless of whether or not such removal is rendered pursuant to a court order or the order of a Governmental Agency (as defined below);
(b) Claims asserted by any person or entity (including, without limitation, any governmental agency or quasi-governmental authority, board, bureau, commission, department, instrumentality, public body, court, or administrative tribunal [a “Governmental Agency”], in connection with or in any way arising out of the presence, storage, use, disposal, generation, transportation, or treatment of any hazardous waste at, upon, under or within the Premises or the Building, after the time that Tenant became an occupant or had control of the Premises;
(c) The preparation of an environmental audit on the Premises or the Building, whether conducted or authorized by Tenant, Landlord or any third party, and the implementation of any such environmental audit’s recommendations;
(d) To indemnify, defend and hold Landlord, its agents and mortgagees harmless from and against any and all claims, liabilities, injuries, damages, costs and expenses (including attorney’s fees and costs through appeal) arising out of or in connection with any breach of this Article, including any direct, indirect, or consequential damages suffered by any individuals or entities related in any way to Tenant’s use of hazardous materials at the property.
Note: Radon is a naturally occurring naturally active gas that, when accumulated in a building in sufficient quantities, may present a health risk to persons who are exposed to it over time. Levels of radon that exceed State guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.
ARTICLE 32. Miscellaneous: Landlord and Tenant agree:
(a) All modification of space to be approved by owner and or owner’s representative. This includes any alterations to floor plan, painting, flooring or other attached items within unit, including but not limited to any items that would alter the functionality of unit, including electrical and communication system. Formal request for alterations or modifications must be submitted via email and or carrier mail with return acknowledgment from owner or owner’s representative.
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(b) If any term or condition of this Lease or the application of the Lease to any person or circumstance is, to any extent, invalid or unenforceable, the remainder of this Lease, or the application of such term or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, is not to be affected and each term and condition of this Lease is to be valid and enforceable to the fullest extent permitted by law;
(c) This Lease shall be governed by and construed in accordance with the laws of the State of Florida and venue for any action arising hereunder shall lie in Osceola County, Florida;
(d) Submission of this Lease to Tenant does not constitute an offer, and this Lease becomes effective only upon execution and delivery of the Lease by both Landlord and Tenant and not until such time as any deposit and advance rent paid by Tenant to Landlord in connection with this Lease has been cleared by Tenant’s bank;
(e) Tenant will pay before delinquency all taxes assessed during the term against any occupancy interest in the Premises or personal property of any kind owned by or placed in, upon or about the Premises by Tenant;
(f) If Tenant, with Landlord’s consent, occupies all or part of the Premises prior to the beginning of the term, all provisions of this Lease shall be in full force and effect commencing upon such occupancy, and base rent and additional rent, for such period shall be paid by Tenant at the same rate specified;
(g) Tenant shall not record this Lease or any memorandum of Lease;
(h) Whenever under this Lease Landlord’s consent or approval is required, the same may be arbitrarily withheld except as otherwise specified;
(i) All exhibits, and riders shall form a part of this Lease if initialed on behalf of Landlord and Tenant and identified at the end of this Lease;
(j) This Lease does not create, nor shall Tenant have, any express or implied easement for or other rights to air, light or view over or about Landlord’s property;
(k) Any acts to be performed by Landlord under or in connection with this Lease may be delegated by Landlord to its managing agent or other authorized entity or person;
(l) This Lease shall not be more strictly construed against either party by reason of the fact that one party may have drafted or prepared any or all of the terms and provisions. It is acknowledged that both parties have contributed substantially to the contents of this Lease;
(m) This Lease shall be binding upon and inure to the benefit of the Landlord and Tenant and their respective heirs, successors and legal representatives and their respective assigns;
(n) The headings of the separate articles of this Lease and the Lease index are mere titles and are not part of the Lease and shall have no effect on the construction of the Lease;
(o) Governmental penalties, fines or damages imposed on any portion of the Building as a result of the activities of Tenant, its employees, agents or invitees shall be paid by Tenant within three (3) days of the earlier of the governmental notice to Tenant or Landlord’s notice to Tenant. If Tenant fails to pay as required in this section, in addition to all other remedies provided by this Lease, Landlord may pay the sums owed or challenge them administratively or judicially and Tenant shall pay all sums owed and all of Landlord’s attorney’s fees and costs plus a twenty percent (20%) administrative fee to Landlord upon demand, as additional rent;
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(p) Landlord makes no express or implied representations, covenants, promises, or warranties that the Premises are suitable for Tenant’s proposed use or that Landlord or Tenant will be able to obtain applicable municipal or local governmental approvals, variance or zoning necessary to perform any construction or conduct Tenant’s business as specified herein;
(q) Tenant hereby represents and warrants to Landlord that Tenant has made its own investigation and examination of all the relevant data relating to or affecting the Premises and is relying solely on its own judgment in entering into this Lease; specifically, and without limitation, Tenant represents and warrants to Landlord that Tenant has had an opportunity to measure the actual dimensions of the Premises and agrees to the square footage figures set forth herein for all purposes of this Lease;
(r) THE LEASE SETS FORTH ALL THE REPRESENTATIONS, PROMISES, AGREEMENTS, CONDITIONS AND UNDERSTANDINGS BETWEEN LANDLORD AND TENANT RELATIVE TO THE PREMISES, AND THERE ARE NO PROMISES, AGREEMENTS, CONDITIONS OR UNDERSTANDINGS, EITHER ORAL OR WRITTEN, EXPRESSED OR IMPLIED, BETWEEN THEM, OTHER THAN AS SET FORTH IN THE LEASE. ANY VERBAL OR OTHER REPRESENTATIONS (I.E., MARKETING BROCHURES, ETC.) SHALL BE MERGED INTO THE WRITTEN TERMS OF THIS LEASE. EXCEPT AS OTHERWISE PROVIDED IN THIS LEASE, NO ALTERATIONS, AMENDMENTS, CHANGES OR ADDITIONS TO THIS LEASE SHALL BE BINDING UPON LANDLORD OR TENANT UNLESS REDUCED TO WRITING AND SIGNED BY THEM;
(s) Time is of the essence for all matters provided in this Lease;
(t) No payment by Tenant or receipt by Landlord of a lesser amount than the monthly rent stipulated in the Lease 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 may 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 the Lease or by law;
(u) All sums payable to Landlord hereunder, including minimum rent, percentage rent, operating expenses, late fees, promotional expenses and any other charges due Landlord shall be payable as, and deemed to be, rent or additional rent;
(v) Anything in this agreement to the contrary notwithstanding, the Landlord shall not be deemed in default with respect to failure to perform any of the terms, covenants and conditions of this Lease other than Tenant’s obligation to pay rent if such failure to perform shall be due to any strike, lockout, civil commotion, war-like operation, invasion, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, inability to obtain any material, service or financing, through Act of God or other cause beyond the control of the Landlord. Provided, however, no extension shall be due or granted if Tenant fails to provide plans and specifications or if Tenant fails to apply for its permits in the time and manner provided by Article 30 of this Lease. Any delay in Landlord’s performance of any term, covenant or condition of this Lease resulting from any of the above causes beyond Landlord’s control, shall toll the time for Landlord’s performance;
(w) Landlord does not, in any way or for any purpose, become a partner of Tenant in the conduct of its business, or otherwise or joint adventurer or a member of a joint enterprise with Tenant, nor does anything in this Lease confer any interest in Landlord in the conduct of Tenant’s business. The provisions of this Lease relating to percentage rent are included solely for the purpose of providing a method for the rent to be measured and ascertained;
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(x) Language contained in this Lease which is shaded has no significance other than it was inserted from prior negotiations. Shaded language shall have no more significance or bearing than language, which is not shaded. Any stricken language is deemed stricken from this Lease.
ARTICLE 33. Build Out: Tenant will take space in as in condition, with current build out and floor plan as-is.
ARTICLE 34. Lease Options: to be negotiated, Term of lease only
ARTICLE 35. OFFICE USAGE: The zoning requirements for this building are Class “A” Office Space. Any other use of office space other then Professional office usage is not allowed. Gatherings or organized conferences of more people then allocated per occupancy rate is not allowed in building.
ARTICLE 36. This Lease consists of 0 additional pages of exhibits, riders and addenda, which are attached hereto and incorporated herein.
IN WITNESS WHEREOF, the parties have executed this Lease as provided below.
| Witness: | LANDLORD: | 1146 Vision Holdings LLC. | |
| (Signature of Witness) | |||
| (Print Name of Witness) | By: | ||
| Print Name: | |||
| Title: | |||
| (Signature of Witness) | |||
| (Print Name of Witness) | |||
| TENANT: | |||
| (Signature of Witness) | |||
| (Print Name of Witness) | |||
| By: | |||
| Print Name: | JOE LA ROSA | ||
| Title: | CEO | ||
| (Signature of Witness) | |||
| (Print Name of Witness) | |||
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RULES AND REGULATIONS
Rules set forth by Building/Owners Associations
Tenant agrees as follows:
1. All deliveries or shipments of any kind to and from the Premises, including loading of goods, shall be made only by way of the rear of the Premises or any other location designated by Landlord, and only at such time designated for such purpose by Landlord.
2. Garbage and refuse shall be kept in the kind of container specified by Landlord or duly constituted public authority and shall be placed at the location within the Building designated by Landlord, for collection at the times specified by Landlord shall maintain all common leading areas and areas adjacent to garbage receptacles in a clean manner satisfactory to Landlord. Tenant shall store soiled and dirty linen in approved fire ruling organization containers.
3. No radio, television, phonograph or other similar devices or aerial attached thereto (inside or outside) shall be installed without first obtaining in each instance the Landlord’s consent in writing and if such consent be given, no such device shall be used in a manner so as to be heard or seen outside of the Premises. Landlord shall consent, subject to the payment by the Tenant of any royalties for such broadcasts, the installation of a TV monitor for displaying videos and DVD’s on the subject Premises.
4. Tenant shall not place, suffer or permit any obstructions or merchandise in such areas and shall not use such areas for any purpose other than ingress or egress to and from the Premises.
5. Plumbing facilities shall not be used for any other purposes than that for which they are constructed, and no foreign substances of any kind shall be thrown therein. The expense of any breakage, stoppage or damage resulting from a violation of this provision shall be borne by Tenant.
6. Tenant shall not place, suffer or permit displays on the sidewalk in front of the Premises or upon the common area of the Building.
7. Landlord reserves the right, exercisable without notice and without liability to Tenant, to change the name and street address of the Building.
8. Tenant shall not do anything, or permit anything to be done, in or about the Building, or bring or keep anything therein, that will in any way increase the possibility of fire or other casualty or obstruct or interfere with the rights of, or otherwise injure or annoy, other tenants, or do anything in conflict with the valid pertinent laws, rules or regulations of any governmental authority. Tenant shall not use or keep in the Premises any inflammable or explosive fluid or substance, or an illuminating material, unless it is battery powered, and UL approved. Tenant shall at all times maintain an adequate number of suitable fire extinguishers on the Premises for use in case of local fires, including electrical or chemical fires. A competent person or a recognized extinguisher servicing company should provide annual servicing for all extinguishers on the Premises. A tag should be attached indicating the month and year of maintenance and the recharge, if performed.
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9. Tenant shall not solicit business in the parking area or the common area, or distribute handbills or other advertising matter in or upon automobiles parked in the parking area.
10. Tenant will not utilize any unethical method of business operation nor shall any space in the Premises be used for living quarters, whether temporary or permanent.
11. Tenant shall have full responsibility for protecting the Premises and the property located therein from theft and robbery and shall keep all doors and windows securely fastened when not in use.
12. Tenant shall not burn any trash or garbage of any kind in or about the Premises, the Building, or within one mile of the outside property lines of the Building.
13. Tenant shall not cause or permit any unusual or objectionable odors to be produced upon or permeated from the Premises nor shall Tenant vent any cooking fumes or odors into the interior of the Building.
14. Tenant shall not permit, allow or cause any public or private auction, “going-out-of-business”, bankruptcy, distress or liquidation sale on the Premises. It is the intent of the preceding sentence to prevent the Tenant from conducting his business in any manner that would give the public the impression that he is about to cease operation and Landlord shall be the sole judge as to what shall constitute a “distress-type” sale.
15. Tenant shall not erect or maintain any barricade or scaffolding which may obscure the signs, entrances or show window of any other tenant in the Building or tend to interfere with any such other tenant’s business.
16. Landlord reserves the right to amend or rescind any of these rules and make such other and further rules and regulations as in the judgment of Landlord shall from time to time be needed for safety, protection, care and cleanliness of the Building, the operation thereof, the preservation of good order therein, and the protection and comfort of its tenants, their agents, employees and invitees, which rules when made the notice thereof given to a tenant shall be binding upon him in like manner as if originally herein prescribed. Landlord reserves the right to waive any rule in any particular instance or as to any particular person or occurrence.
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EXHIBIT “A”
| Parcel: 13-25-27-2671-0001-1010 | ||
| Suite 101 |
| Parcel: 13-25-27-2671-0001-1030 | ||
| Suite 103 |
This site plan is intended solely to depict the location of the Premises within the Building. Nothing herein should be construed as a representation as to the quality or quantity of Landlord’s title to the Building and/or its surrounding areas and nothing herein should be construed as a representation as to the tenants in the Building.
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Exhibit 10.122
Exhibit 10.123
O F F I C E L E A S E
THIS AGREEMENT is made as of the 21st day of February, 2019, between TGC MS PHASE I NORTH LLC, a Florida limited liability company, hereinafter called “Lessor”, and LA ROSA REALTY GROUP, LLC, a Florida limited liability company, hereinafter called “Lessee”.
A R T I C L E I
DEMISE, TERM
Section 1.0 - Demise; Term:
Lessor, in consideration of the agreement of Lessee herein contained, hereby leases and demises to Lessee an agreed 1,234 square feet of rentable office space on the 1st floor with assigned suite number 105 (hereafter, “the Premises”) in the Laurel Court office building located at 15500 New Barn Road, Miami Lakes, Miami-Dade County, Florida, 33014 (hereafter, the “Building”), for a term beginning on June 1, 2019, continuing for five (5) years, ending May 31, 2024 (hereafter, the “Term”) reserving to Lessor the rental hereinafter set forth in this lease, (the “Lease”), to be upon all of the terms and conditions herein contained.
A R T I C L E II
LESSEE’S COVENANTS
Lessee hereby covenants with Lessor as follows:
Section 2.0 - Rent:
(A) Rent shall be paid in advance on or before the first day of each month, together with applicable tax thereon as follows:
| PERIOD | MONTHLY RENT | TAX* | TOTAL | |||||||||
| June 1, 2019 through May 31, 2020 | $ | 1,810.00 | $ | 121.27 | $ | 1,931.27 | ||||||
| June 1, 2020 through May 31, 2021 | $ | 1,900.50 | $ | 127.33 | $ | 2,027.83 | ||||||
| June 1, 2021 through May 31, 2022 | $ | 1,995.53 | $ | 133.70 | $ | 2,129.23 | ||||||
| June 1, 2022 through May 31, 2023 | $ | 2,095.30 | $ | 140.39 | $ | 2,235.69 | ||||||
| June 1, 2023 through May 31, 2024 | $ | 2,200.07 | $ | 147.40 | $ | 2,347.47 | ||||||
| * | All sales, use, or similar taxes now or hereinafter imposed on the payment of rent by Lessee, whether federal, state, or local, which is currently 6.7%. |
(B) Lessee acknowledges that late payments or returned checks by Lessee to Lessor of rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impractical to fix. Such costs include, without limitation, processing and accounting charges and late charges or handling charges that may be imposed on Lessor for late payment of obligations paid out of the cash flow from Lessee. Therefore, if any installment of rent or other required payment due from Lessee is not received by Lessor when due or is paid by a check which is returned, Lessee shall pay to Lessor an additional sum of five percent (5%) of the then current minimum monthly rent plus all applicable sales tax as a late or returned check charge. In the case of a late payment and a returned check, the amount charged will be for both the late payment and the returned check (i.e., a double charge equaling a total of 10%). The parties agree that this late payment and returned check charge represents a fair and reasonable estimate of the costs that Lessor will incur. Acceptance of a late charge or returned check charge shall not constitute a waiver of Lessee’s default with respect to the overdue amount or prevent Lessor from exercising any of the other rights and remedies available to Lessor. All amounts owing by Lessee under this Lease shall be deemed to be rent or additional rent, and if payment of the same are past due, interest on the amounts owing shall be due at the rate of eighteen percent (18%) per annum. Lessee shall pay all sales, use or similar taxes now or hereinafter imposed on the payment of rent by Lessee, whether federal, state or local, which is currently 6.7%.
February 14, 2019
Section 2.1 - Security Deposit:
Upon execution of this Lease, the parties acknowledge that Lessee has deposited with Lessor the sum of TEN THOUSAND AND NO/100 U.S. DOLLARS ($10,000.00), paid by check, subject to collection, as a security deposit to guarantee the performance of all of Lessee’s covenants contained herein. The security deposit shall be returned to Lessee thirty (30) days after the expiration of this Lease (or any renewal or extension of the Term) or its prior termination through no fault of Lessee, provided that all sums lawfully due Lessor under the Lease have been paid and that Lessee has fully performed its obligations under the Lease. In the event of an assignment of this Lease by Lessee, Lessee authorizes and directs Lessor to pay the balance of said security deposit to such assignee or subsequent assignee. In the event said security deposit, or any portion thereof, is spent by Lessor in order to satisfy any obligation of Lessee or assigns hereunder, then Lessee or assigns shall upon notice from Lessor immediately deposit a sufficient amount with Lessor to replenish the amount spent. The security deposit shall not be used by Lessee, in whole or part, for the final month’s rent.
Section 2.2 - Rent Payment:
Lessee shall pay the rent herein reserved, in advance and without set-off, deduction or demand, promptly upon the days the same becomes due and payable, to Lessor at 6843 Main Street, Miami Lakes, Florida, 33014, or at such address as may from time to time be designated by Lessor.
Section 2.3 - Use:
Lessee, its successors and assigns, shall use the Premises exclusively for the purpose of operating a residential real estate sales office, and the parking lot for employee and customer parking in connection therewith, and for no other use without the prior written consent of Lessor. Outside storage, including without limitation, storage of trucks and other vehicles is prohibited without Lessor’s prior written consent.
Section 2.4 - Assignment, Subletting:
(A) Lessee shall not sublet the Premises or any part thereof or assign any interest in this Lease (whether by sale of assets, merger, consolidation or otherwise, or by sale or disposition of control or ownership) without first having obtained the written consent of Lessor. Lessor hereby consents to the assignment of this Lease to a wholly owned subsidiary or parent of the original Lessee with the exception that Lessee shall not have the right to sublease or assign all or any part of the Premises to organizations conducting their primary business in retail sales, food services, or health care, but no such assignment shall relieve the Assignor of any liability hereunder. Notwithstanding anything contained in this Lease to the contrary, Lessor shall not be obligated to entertain or consider any request by Lessee to consent to any proposed sublease or assignment of the Premises unless each request by Lessee is accompanied by a nonrefundable fee payable to Lessor in the amount of $250.00 to cover Lessor’s administrative, legal, and other costs and expenses incurred in processing each of Lessee’s requests. Neither Lessee’s payment nor Lessor’s acceptance of the foregoing fee shall be construed to impose any obligation whatsoever upon Lessor to consent to any of Lessee’s requests.
(B) Lessor shall have the right of first refusal to repossess the space to be subleased or assigned. In the case of such repossession by Lessor, this Lease shall terminate on that date of repossession and shall then be null and void and of no further force or effect, and neither Lessor nor Lessee shall have any further obligation or liability hereunder except as provided in Sections 4.20, 4.21, and 4.30 of this Lease as the Lease applies to space vacated. This Lease shall remain in effect on any space not repossessed by Lessor.
(C) Should Lessor not exercise its right of first refusal to repossess the Premises, Lessee shall be free to sublet such space to any third party with the exception of the aforementioned, subject to the following conditions:
(1) In no event shall more than two tenants be allowed to occupy said Premises (Tenant and one subtenant or two subtenants).
(2) Any subtenancy shall be for not more than one day less than the remaining term of the original Lease.
(3) No sublease shall be valid and no sublessee shall take possession of the Premises subleased until an executed counterpart of such sublease has been delivered to Lessor.
(4) No sublessee shall have a right to further to sublet; and
(5) Any sums or other economic consideration received directly or indirectly by Lessee or any other entity related to or affiliated with Lessee, as a result of such subletting (except rental or other payments received which are attributable to the amortization of the cost of leasehold improvements, other than building standard tenant improvements made to the sublet portion of the Premises by Lessor), whether denominated rentals under the sublease or otherwise, which exceed, in the aggregate, the total sums which Lessee is obligated (allocable to that portion of the Premises subject to such sublease) shall be payable to Lessor as additional rent under this Lease without affecting or reducing any other obligation of Lessee hereunder. In no event shall Lessee sublease the Premises and charge less rent per month than stipulated in this Lease.
February 14, 2019
(6) Notwithstanding anything contained in this Lease or any Addendum attached hereto, or otherwise, no sublessee shall have any rights as to building identification without the prior written consent of Lessor. No sign, advertisement, notice or other lettering shall be exhibited, inscribed, painted or affixed by any sublessee on any part of the outside or inside of the Premises or Building without the prior written consent of Lessor. In the event of the violation of the foregoing, Lessor may, at its sole option, treat such violation as an event of default hereunder. In addition, Lessor may remove such lettering without any liability and may charge the expense incurred by such removal to the Lessee and/or sublessee. The prior approval of all lettering must be obtained by sublessee from Lessor.
(7) Regardless of Lessor’s consent, no subletting or assignment shall release Lessee from Lessee’s obligations hereunder; nor shall it alter the primary liability of Lessee to pay the rental and to perform all other obligations to be performed by Lessee hereunder. The acceptance of rental by Lessor from any other person shall not be deemed to be a waiver by Lessor of any provision hereof. In the event of default by any assignee of Lessee or any successor of Lessee in the performance of any of the terms hereof, Lessor may proceed directly against Lessee without the necessity of exhausting remedies against such assignee or successor.
(8) Lessee shall be expressly prohibited from subleasing to any sublessee or from assigning to any party whose intended business use is other than that described in Section 2.3 herein unless otherwise approved by Lessor in writing.
(9) In no event shall any amendment to the sublease, whether or not Lessor shall approve same, affect or modify or be deemed to affect or modify the Lease in any respect.
(10) In no event shall Lessor be deemed to be in privity of contract with sublessee or owe any obligation or duty to sublessee under the Lease or otherwise. Any duties of Lessor under the Lease or required by law being in favor of or for the benefit of Lessee are enforceable solely by Lessee.
Section 2.5 - Surrender/Hold Over:
(A) Upon the expiration of the Term of this Lease, Lessee will, without demand, quietly and peacefully deliver possession of the Premises (including any improvements that may be made by Lessee) to Lessor in as good condition as when received, ordinary wear and tear only excepted. Lessee agrees that, if Lessee does not surrender to Lessor said Premises at the end of the Term of this Lease, or upon any cancellation of the Term of this Lease, then Lessee will pay to Lessor all damages Lessor may suffer on account of Lessee’s failure to so surrender to Lessor possession of said Premises, and will indemnify Lessor on account of delay caused Lessor in delivering possession of said Premises to any succeeding tenant so far as such delay is occasioned by failure of Lessee to so surrender said Premises. Lessee will pay to Lessor all damages including, but not limited to, loss of profits.
(B) Any holding over after the expiration of the Term hereof, with the consent of Lessor, shall be construed to be a tenancy from month to month at a rental rate to be determined and provided for in the written consent document and shall otherwise be on the terms and conditions herein specified, so far as is applicable. This consent must be in writing. In the absence of any written agreement to the contrary, if Lessee, or any assignee or sublessee shall remain in occupancy after the expiration of the Lease Term, it shall so remain as a Lessee at Sufferance from month-to-month and all provisions of this Lease applicable to such tenancy shall remain in full force and effect, except that Lessee shall pay rent at the maximum allowable by Florida Statutes. Acceptance by the Lessor of any Rent after termination shall not constitute a renewal of this Lease or a consent to such hold over occupancy nor shall it waive the Lessor’s right of re-entry or any other right contained in this Lease or provided by law. Holding over for any partial month will require Lessee to pay the full monthly rental payment.
Section 2.6 - Floor Loads:
Lessee will not overload the floors nor install any heavy business machines or any heavy equipment of any kind in excess of fifty pounds per square foot on the second or third floors. All heavy business machines or heavy equipment to be moved into the Premises will be done only with the prior written approval of Lessor, which consent will not be unreasonably withheld, but which may be conditioned upon moving by skilled licensed handlers and installation and maintenance at Lessee’s expense of special reinforcing and settings adequate to absorb and prevent noise and vibration.
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Section 2.7 - Alterations, Additions, Improvements:
(A) Lessee shall commit or permit no waste 01· injury to the Premises, and Lessee shall not make any alterations, additions, or improvements, inside or outside, including, without limitation, any holes in or penetrations of the roof, without the prior written consent of Lessor. At least fifteen (15) days’ notice in writing must be given Lessor before Lessee desires to make any such alterations, additions or improvements.
(B) All additions or improvements, except only office furniture and fixtures which shall be readily removable without injury to the Premises, shall be and remain a part of the Premises at the expiration of this Lease.
(C) Lessee shall not be permitted to install any type of wall covering on an exterior Building wall.
Section 2.8 - Lessee’s Compliance:
Lessee will not use or permit the Premises to be used for any illegal, immoral or improper purposes, and Lessee will execute and comply with, at Lessee’s own cost and expense, all laws, rules, orders, ordinances and regulations now in force or at any time issued, applicable to the Premises or to Lessee’s occupancy thereof, by the Local, State and Federal governments and of each and every department, bureau and official thereof, and with any fire underwriting requirements of any insurance company. Lessee shall not advertise or permit any advertising which, in Lessor’s opinion, tends to injure the reputation of the Building or impair its desirability as an office building for the location of financial institutions, insurance companies, and other businesses of like nature; and upon written notice from Lessor, Lessee shall refrain from or discontinue any such advertising. Lessee’s use and occupancy of the Premises must be carried out so as not to cause or permit any loud or unreasonable noises or unreasonable disturbances to emanate therefrom, and so as not to disturb, annoy or otherwise interfere with the use and enjoyment of other spaces and public spaces by tenants and visitors. Lessee shall not permit any refuse, debris or rubbish to be placed in the halls or public spaces in the Building and shall not allow the same to collect or accumulate in the Premises.
Section 2.9 - Liability:
Lessee agrees to indemnify and save Lessor harmless from, and Lessor shall not be liable for, any damage, loss or injury to any person or property throughout the Term of this Lease and any extension or renewal thereof, including any damage or injury (i) occasioned by or resulting from the breakage, leakage or obstruction of the water, gas or sewer pipes or of the roof or rain ducts, or any fire sprinkler or other quenching system, or other leakage or overflow or otherwise, in or about the Premises, (ii) arising or resulting from any carelessness, negligence, improper conduct on the part of Lessee or Lessee’s employees, subtenants (if any), agents, guests or invitees on, in, or about the Premises, (iii) arising or resulting from the use of the Premises during the term of this Lease, or (iv) suffered on, in or about the Premises by reason of any present, future, latent or other defects to the form, character, structure or condition of Premises or any part or portion thereof, or by reason of water, rain, fire, storms or accidents; and the rent shall not be diminished or withheld by reason or on account of any such loss or damage. The provisions of this section shall survive expiration or termination of this Lease.
Section 2.10 - Right to Entry:
Lessee shall permit Lessor and Lessor’s representative and independent contractors at any time during usual business hours and without interfering with Lessee’s business operations (unless an emergency exists, Lessee is in default or Lessor reasonably anticipates that a default is imminent, in which case time of entry is unrestricted), to enter the Premises for the purpose of inspections necessary for the safety, comfort or preservation of the Building of which the Premises are a part or for the removal of alterations or additions not in conformity with the Lease. Since certain pipes, conduits, ducts and utilities (“Conduits”) pass through Lessee’s space and are supported by the overhead structure, Lessor will have the right of access to these Conduits at any time which does not unreasonably interfere with Lessee’s business operations. Lessor shall have the right to exhibit the property for sale, lease, appraisal or mortgage and to post and keep upon the Premises a “For Rent” sign at any time within ninety (90) days before the expiration of the Lease.
Section 2.11 -Attorneys’ Fees:
Lessee shall pay all and singular costs, charges and expenses, including attorney’s and legal assistant’s fees (including those in connection with any appeal) reasonably incurred or paid at any time by Lessor, because of the failure on the part of Lessee to comply with and abide by each and every of the stipulations, agreements, covenants and conditions of this Lease.
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Section 2.12 - Waiver:
The failure of Lessor to insist in any one or more instances upon the strict performance of any one or more of the covenants, terms and agreements of this Lease, shall not be construed as a waiver of such covenants, terms or agreements, but the same shall continue in full force and effect, and no waiver by Lessor of any of the provisions hereof shall in any event be deemed to have been made (by acceptance of rent or otherwise) unless the same be expressed in writing, signed by Lessor, and all remedies provided for by the terms of this Lease shall be cumulative.
Section 2.13 - Condition of Premises:
Lessee shall at all times keep the interior of the Premises in a clean, orderly and tenantable condition befitting a first-class office building. Lessee shall not bring any furniture or fixtures into the Premises that contain termites and other wood destroying insects.
Section 2.14 - Liability Insurance:
Lessee shall maintain at its own expense throughout the Term of this Lease Commercial General Liability Insurance for personal injury and property damage to protect both Lessor and Lessee against damage, costs and attorneys’ fees arising out of accidents of any kind occurring on or about the Premises. Said liability insurance shall be written by a company or companies acceptable to Lessor naming Lessor an additional insured and will have liability limits of not less than $3,000,000.00 combined single limit for bodily injury and property damage. A certificate showing such insurance in force shall be delivered to Lessor prior to commencement of the Lease Term, and such certificate shall be maintained with Lessor throughout the Term of this Lease. The certificate shall require thirty (30) days written notice from the insurer to Lessor of any cancellation or reduction in coverage.
Section 2.15 - Statement by Lessee (Estoppel Certificate):
From time to time upon ten (10) days’ prior written notice, Lessee and each subtenant, assignee or occupant of Lessee shall execute, acknowledge and deliver to Lessor and any designee of Lessor a written statement certifying: (a) that this Lease is unmodified and in full force and effect (or that this Lease is in full force and effect as modified and stating the modifications); (b) the dates to which rent and any other charges have been paid; (c) that Lessor is not in default in the performance of any obligation (or specifying the nature of any default); (d) the address to which notices are to be sent; (e) that this Lease is subject and subordinate to all Mortgages; (f) that Lessee has accepted the Premises and all work thereto has been completed (or specifying the incomplete work); and (g) such other matters as Lessor may request. Any such statement may be relied upon by any owner of the Property, any prospective purchaser thereof, the holder or prospective holder of a Mortgage or any other person or entity. In the event Lessee fails or refuses to deliver any such certificate within said 10-day period, in addition to all other rights and remedies available under this Lease, at law or in equity upon a default by Lessee under this Lease: (i) Lessee hereby appoints Lessor as attorney-in-fact for Lessee with full power and authority to execute and deliver in the name of Lessee any such certificate, and (ii) Lessee shall be deemed to have accepted, agreed to and certified to, each of the statements set forth in any such certificate.
Section 2.16 - Security Interest:
Lessee hereby pledges, assigns and gives a security interest to Lessor in all the furniture, fixtures, goods and chattels of Lessee, which shall or may be brought or put on the Premises as security for the payment of the rent herein reserved, and Lessee agrees that the said lien may be enforced by distress, foreclosure, or otherwise, under the Florida Uniform Commercial Code at the election of the said Lessor.
Section 2.17 - Damage to Premises:
Lessee shall make good to Lessor immediately upon demand any damage to the plumbing, electrical wiring, lights, glass, walls, doors, floors, carpets (if any) or any fixture, appliances or appurtenances of the Premises, or of the Building, caused by any act or neglect of Lessee, or of any person or persons in the employ or under the control of Lessee.
Section 2.18 - Waiver of Right of Redemption:
Lessee hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Lessee’s being evicted or dispossessed for any cause, or in the event of Lessor’s obtaining possession of the Premises, by reason of the violation by Lessee of any of the covenants or conditions of this Lease, or otherwise. Lessor expressly reserves the right to hold Lessee in strict default, and Lessee has no right to cure except as provided by statutory law.
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Section 2.19 - Waste Disposal System:
At all times during the Term of this Lease and any renewals thereof, Lessee at its own cost and expense, shall comply with all requirements of the Miami Dade Water and Sewer Authority, or its successor, regulating the type and quality of waste that may be discharged into the sanitary sewers serving the Premises, including, without limitation, the installation of any alternative waste disposal or pretreatment system that may from time to time be designated by said authority. Lessee hereby agrees to indemnify and hold Lessor harmless from and against any and all claims, costs, liabilities, damages, fines, fees or other expenses whatsoever, (including reasonable attorneys’ fees and appellate attorneys’ fees and legal assistants’ fees and court costs) arising from or growing out of Lessee’s failure to comply with any such requirements. Any alternative waste disposal or pretreatment system shall immediately become and remain part of the real estate and property of Lessor. Lessor shall have the right from time to time to order such tests as it may determine to be necessary to detect and analyze the waste and effluent being discharged into the waste collection and pretreatment system for the Premises.
A R T I C L E III
LESSOR’S COVENANTS
Lessor hereby covenants with Lessee as follows:
Section 3.0 - Building Services and Utilities:
(A) Lessor agrees to furnish Lessee, while Lessee is occupying the Premises and during such times as Lessee is not in default, the following, subject to the terms of this Lease including those pertaining to operating expenses:
(1) Water; cold and refrigerated, at those points of supply provided for the use of tenants in the Building.
(2) Heat and refrigerated air conditioning at such temperatures and in such amounts as are considered by Lessor to be standard shall be provided by Lessor from 8:00 a.m. to 6:00 p.m., Monday through Friday, and upon Lessee’s request shall be provided from 8:00 a.m. to 1:00 p.m. on Saturday. Heat and refrigerated air conditioning shall not, however, be provided by Lessor·on holidays, i.e., New Year’s Day, July 4, Memorial Day, Labor Day (observed), Thanksgiving Day, Christmas Day. Such service on holidays and at other times not specified above shall be furnished only at the request of Lessee, who shall request such service at least 24 hours in advance and who shall bear the entire cost thereof. Lessor agrees, however, that the temperatures and amounts of such heat or refrigerated air conditioning shall be consistent with the temperatures and amounts which are customarily furnished to tenants of other suburban office buildings in Miami-Dade County, Florida. Whenever machines or equipment that generate abnormal heat are used in the Premises which affect the temperature otherwise maintained by the air conditioning system, Lessor shall have the right to install supplemental air conditioning to cool the Premises and the cost thereof, including the cost of installation, operation, use and maintenance, and replacement, if necessary, shall be paid by Lessee to Lessor as Additional Rent on demand.
(3) Elevator service in common with other tenants for ingress to and egress from the Premises during normal business hours as stipulated in Section 3.0 (a) (2).
(4) Janitorial cleaning services as may in the judgment of Lessor be reasonably required.
(5) Electricity for lighting and other normal business uses in the Premises as mentioned in Section 3.0 (A) (2).
(6) Electric lighting for public areas and service areas of the Building as may in the judgment of Lessor be reasonably required.
(B) Failure to any extent to furnish or any stoppage of these defined services (“Interruption of Service”) resulting from any cause whatsoever shall not render Lessor liable in any respect to any person, property or business, nor be construed as an eviction of Lessee or work an abatement of rent, nor relieve Lessee from fulfillment of any covenant or agreement hereof. Lessor reserves the right, without any liability to Lessee and without being in breach of any covenant of this Lease, to effect an Interruption of Service, as may be required by this Lease or by law, or as Lessor in good faith deems advisable, whenever and for so long as may be necessary, to make repairs, alterations, upgrades, changes, or for any other reason, to the Building’s systems serving the Premises, or any other services required of Lessor under this Lease. In each instance, Lessor shall exercise reasonable diligence to eliminate the cause of the Interruption of Service, if resulting from conditions within the Building, and to conclude the Interruption of Service. Lessor shall give Lessee notice, when practicable, of the commencement and anticipated duration of such Interruption of Service. The occurrence of an Interruption of Service shall not constitute an actual or constructive eviction of Lessee, in whole or in part, entitle Lessee to any abatement or diminution of Rent, Additional Rent, or any other costs due from Lessee pursuant to this Lease, relieve or release Lessee from any of its obligations under this Lease, or entitle Lessee to terminate this Lease.
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(C) Lessor may charge Lessee such amounts as Lessor’s engineer may determine adequate for lighting and heat or air conditioning requested by Lessee for periods other than when provided by Lessor. Lessee shall request such lighting and heat or air conditioning service at least 24 hours in advance. Charges for additional lighting and heat or air conditioning may be for providing such service to the entire floor on which Lessee’s Premises are located.
(D) No electrical current shall be used except that furnished or approved by Lessor, nor shall electric cable or wire be brought into the Premises, except upon the written consent of Lessor. Lessee shall use only office machines and equipment that operate on the Building’s standard electric circuits, but which in no event shall overload the Building’s standard electric circuits from which Lessee obtains electric current. Any consumption of electric current in excess of that considered by Lessor to be usual, normal and customary for all tenants, or which requires special circuits or equipment (the installation of which shall be at Lessee’s expense and subject to approval in writing by Lessor), shall be paid for by Lessee as Additional Rent to Lessor upon demand in an amount determined by Lessor, based upon Lessor’s estimated cost of such excess electric current consumption or based upon the actual cost thereof if such excess electric current consumption is separately metered. Lessee will not, without written consent of Lessor, use any apparatus or device in the Premises, including, but without limitation thereto, electronic data processing machines, punch card machines, and machines using in excess of 120 volts, which will increase the amount of electricity usually furnished or supplied for the use of the Premises as general office space; nor connect with electric current except through existing electrical outlets in the Premises, any apparatus or device, for the purpose of using electric current. If Lessee shall require water or electric current in excess of that usually furnished or supplied for the use of the Premises as general office space, Lessee shall first procure the written consent of Lessor, which Lessor may refuse, to the use thereof and Lessor may cause a water meter or electrical current meter to be installed in the Premises, so as to measure the amount of water and electric current consumed for any such use. The cost of any such meters and of installation, maintenance and repair thereof shall be paid for by Lessor, and Lessee agrees to pay to Lessor promptly upon demand therefor by Lessor for all such water and electric current consumed as shown by said meters, at the rates charged for such services by the local public utility furnishing the same, plus any additional expense incurred in keeping account of the water and electric current so consumed. If a separate meter is not installed, such excess cost for such water and electric current will be established by an estimate made by a utility company or electrical engineer.
Section 3.1 - Maintenance and Repairs by Lessor:
(A) Lessor shall not be called upon and shall have no obligation to undertake the making of any repairs, improvements or alterations whatsoever to the Premises except that during the term of this Lease, Lessor shall use its reasonable efforts to maintain the exterior walls, windows and exterior doors in good repair, and to keep the roof of the Building water tight which costs shall be part of Operating Expenses; provided that Lessor shall not be liable for or required to make any repairs, or perform any maintenance, to or upon the Premises which are required by, related to or which arise out of negligence, fault, misfeasance or malfeasance of and by Lessee, its employees, agents, invitees, licensees or customers, in which event Lessee shall be responsible therefor.
(B) Lessor’s liability with respect to any defects, repairs or maintenance for which Lessor is responsible under any of the provisions of this Lease shall be limited to the cost of such repairs or maintenance or the curing of such defect.
(C) Lessee shall provide Lessor with at least fifteen (15) days written notice (except in the case of an emergency in which case notice must be reasonable under the circumstances) of needed repairs and Lessor shall have a reasonable time thereafter to cause work on said repairs to be commenced, and once commenced, said work shall be continued and completed with reasonable dispatch provided that Lessor shall not be liable for failure to complete such repairs by reason of Force Majeure.
(D) Lessor shall not be responsible for repair or replacement of upgraded interior light fixtures or bulbs.
Section 3.2 - Quiet Enjoyment:
Subject to the terms and conditions of this Lease, Lessee may quietly hold and occupy the Premises without any interruption by Lessor or persons claiming through or under Lessor, so long as the Lessee is not in default under this Lease.
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A R T I C L E IV
MUTUAL COVENANTS
It is mutually covenanted and agreed as follows:
Section 4.0 - Waiver of Subrogation:
Lessor and Lessee each waive any claim. against the other for property damage to the extent that such claim is covered by valid and collectible property insurance carried for the benefit of the party entitled to make such claim; on condition, further, that this waiver shall not apply if the policy of such insurance would be invalidated by the operation of said waiver.
Section 4.1 - Mechanics’ Liens:
Lessee shall not permit or perform any act, nor is Lessee authorized to make any contract which may create or be the foundation for any lien or other encumbrance upon any interest of Lessor or any ground lessor or underlying lessor in any portion of the Building. If, because of any act or omission (or alleged act or omission) of Lessee, any mechanic’s or other lien, charge or order for the payment of money or other encumbrance shall be filed against Lessor and/or any ground lessor or underlying lessor and/or any mortgagee and/or any portion of the Building (whether or not such lien, charge, order or encumbrance is valid or enforceable as such), Lessee shall, at its own cost and expense, cause the same to be discharged of record, bonded or transferred to other security as provided by Florida Statutes so as to free title to the Premises of any alleged claim of lien within ten (10) days after notice to Lessee of the filing thereof. Lessee shall indemnify and save harmless Lessor, all ground lessor(s) and underlying lessor(s) and all mortgagees against and from all costs, liabilities, suits, penalties, claims and demands, including reasonable counsel fees and appellate counsel and legal assistant fees resulting therefrom. In the event Lessee fails to comply with the foregoing provisions of this section, Lessor shall have the option of discharging or bonding any such lien, charge, order or encumbrance, by payment or otherwise, and Lessee agrees to reimburse Lessor for all costs, expenses and other sums of money in connection therewith (as Additional Rent) with interest at the rate of eighteen percent (18%) per annum promptly upon demand. All laborers, mechanics, and materialmen may be put on notice of the provisions of this Section by the recordation, at Lessor’s option, of a memorandum of this Lease in Miami-Dade County public records, and Lessee shall execute and acknowledge such a memorandum if requested.
Section 4.2 - Notices:
Any notice required or permitted under this Lease shall be in writing and shall be deemed given if delivered to Lessor at the place designated for the payment of rent, if such notice is to Lessor, and if delivered to the Premises, if such notice is to Lessee.
Section 4.3 - Removal of Fixtures:
Lessee shall have the right to install office furniture, office fixtures and equipment necessary or convenient to the use permitted under this Lease, all of which shall remain the property of Lessee and which may be removed by Lessee at the end of the Lease Term provided that Lessee is not then in default. However, if any damage results to the Premises by reason of installation or removal of such office furniture, office fixtures and equipment, Lessee shall repair the same at its own expense prior to the expiration of the Lease Term and immediately upon quitting the Premises. In the event that Lessor consents as required under Section 2.7 to any alterations, additions and improvements to the Premises, then all such alterations, additions and improvements shall immediately become and remain part of the real estate and the property of Lessor, or else shall be removed by Lessee and the Premises restored, as Lessor may elect.
Section 4.4 - Force Majeure:
The term “Force Majeure” as used in this Lease shall include acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy, wars, terrorism or bioterrorism, blockades, riots, acts of armed forces, epidemics, delays by carriers, inability to obtain materials, acts of public authorities and any other causes, whether or not enumerated in this Section, which causes are beyond the control of the party required to perform.
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Section 4.5 - Hazard Insurance:
Lessor shall carry property insurance on the Premises and the Building. Such insurance may be effected by a blanket policy or policies of insurance. Should Lessee engage in any activity which causes an increase in the property cost to Lessor, Lessee will pay the cost of said increase to Lessor within thirty (30) days after demand in addition to the reimbursement to Lessor for Lessee’s Share of the cost of insurance as provided in Section 4.20. Lessor reserves the right at any time and from time to time to change the insurance company, and such change will not relieve Lessee of any obligation under this Section. Lessee shall provide its own insurance against any damage to Lessee’s fixtures, equipment or other personal property of Lessee or any other party, and against water damage, vandalism, malicious mischief, or any other cause. Lessor shall have no responsibility for such insurance. Notwithstanding anything herein to the contrary, Lessor shall have no liability of any nature for property damage to Lessee’s or any other parties’ personal property or fixtures arising from any cause whatsoever including, but not limited to, theft, vandalism, or casualty.
Section 4.6 - Charges for Service:
Any charges against Lessee by Lessor for services or for work done on the Premises by order of Lessee or otherwise accruing under this Lease shall be considered as rent due and shall be included in any lien for rent due and unpaid.
Section 4.7 - Delay of Possession:
(A) If Lessor is unable to give possession of the Premises on the date of the commencement of the aforesaid term because Lessor is performing or is delayed in performing work to ready the Premises for Lessee’s occupancy or for any other reason or combination of reasons which are not caused by Lessee, an abatement of the rent to be paid hereunder shall be allowed Lessee under such circumstances, and the Term of the Lease shall be extended by the amount of the delay. Said abatement in the rent shall be the full extent of Lessor’s liability to Lessee for any loss or damage to Lessee on account of said delay in obtaining possession of the Premises. Lessor shall not be liable for any damages related to Loss of Profits.
(B) If the delay of possession is caused by acts of Lessee, then there shall be no delay of the commencement of the Term or abatement of rent for the period which can reasonably be determined to be caused by Lessee’s acts or failure to act.
(C) If Lessor is unable to give possession of the Premises to Lessee within one hundred twenty (120) days after the commencement of the term of this Lease, then Lessee shall have the right to cancel this Lease upon written notice thereof delivered to Lessor within ten (10) days after the lapse of said one hundred twenty (120) day period, and upon such cancellation, Lessor and Lessee shall each be released and discharged from all liability under this Lease. Failure by Lessee to take possession of the Premises on the date of commencement of the aforesaid term, or as soon thereafter as possession is offered by Lessor, shall constitute a default by Lessee entitling Lessor to all of the remedies provided in case of default.
Section 4.8 - Casualty Loss:
If the Premises (or a portion thereof) are rendered untenantable by reason of fire, bad weather, an act of war, terrorism, or bioterrorism, or other casualty loss, the rent or a just proportion thereof shall abate while untenantable. Lessor, in such case, shall have the option either to continue this Lease in effect, in which event Lessor shall cause the Premises to be repaired (except as to any improvements made by Lessee) within six (6) months after the date of the loss (subject to the delay caused by any Force Majeure affecting the work), or to cancel this Lease as of the date of the loss. Lessor shall notify Lessee after a loss as to which option Lessor elects. Should Lessor elect to repair the Premises, Lessee shall repair and/or restore any damaged improvements made by Lessee to the Premises.
Section 4.9 - Condemnation:
In the event that the Premises or any part thereof are taken for any public or quasi-public use by condemnation or by right of eminent domain, or purchase in avoidance or settlement of a condemnation or eminent domain proceeding, Lessor and Lessee agree as follows:
(A) If all of the Premises or such a part of the Premises are taken so as to render the Premises unsuitable for the business of Lessee, then this Lease shall be cancelled, and rent shall abate as of the date of taking.
(B) In the event of a partial taking which does not render the Premises unsuitable for the business of Lessee, a fair and just proportion of the rent shall abate as of the date of taking, and Lessor shall have the option either to continue this Lease (in which event Lessor shall proceed to repair the damage to the Premises caused by such partial taking), or to cancel this Lease as of the date of taking, with rent abating as of that date. Lessor shall notify Lessee after a taking as to which option Lessor elects. Lessor shall not be liable to Lessee in the event any Force Majeure delays completion of repairs.
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(C) Lessee shall have no right to any apportionment of or share in any condemnation award or judgment for damages made for the taking of any part of the Premises or the Building, but may seek its own award for loss of or damage to Lessee’s business or its property resulting from such taking, provided that such an award to Lessee does not in any way diminish the award payable to Lessor on account of such taking.
Section 4.10 - Default:
If any one or more of the following events (herein sometimes called “events of default”) shall happen:
(A) if default shall occur in the payment of any rents herein reserved upon the date the same become due and payable and such default continues for a period of three (3) days after written notice thereof from Lessor to Lessee; or
(B) if default shall be made by Lessee in the performance of or compliance with any of the covenants, agreements, terms or conditions contained in this Lease other than those referred to in the foregoing subsection (a) and such default shall continue for a period of seven (7) days after written notice thereof from Lessor to Lessee.
(C) if Lessee shall: (i) generally not pay its debts as they come due, (ii) admit in writing its inability to pay its debts, (iii) make a general assignment for the benefit of creditors, (iv) commence any case, proceeding or other action, seeking any reorganization, arrangement, composition, adjustment, liquidation, wage earner’s plan, dissolution or similar relief under the present or any future law relating to bankruptcy, insolvency, reorganization, or relief of debtors, (v) seek or consent to or acquiesce in the appointment of any trustee, receiver, custodian, or other similar official for Lessee or for all or any substantial part of Lessee’s assets or of the demised property, or (vi) take any corporate action to authorize any of the actions set forth in clauses (i) through (v); or
(D) if any case, proceeding or other action against Lessee shall be commenced seeking to have an order for relief entered against it as debtor, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization, or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, and such case, proceeding or other action (i) results in the entry of an order for relief against it which is not fully stayed within thirty (30) days after the entry thereof or (ii) remains undismissed for a period of ninety (90) days; or
(E) if Lessee’s interest in the Premises shall be seized under any levy, execution, attachment or other process of court and the same shall not be promptly vacated or stayed on appeal or otherwise, or if Lessee’s interest in the Premises is sold by judicial sale and the sale is not promptly vacated or stayed on appeal or otherwise;
then in any such event, Lessor may at any time thereafter terminate this Lease and pursuant to judicial process retake possession, or pursue any other remedy afforded by law or in equity, provided that such default and all other defaults at the time existing have not been fully cured, and all reasonable expenses and costs actually incurred by Lessor, including reasonable attorneys’ fees, in connection with enforcing this Lease, shall not have been fully paid. Any such termination shall apply to any extension or renewal of the Term herein demised, and to any right or option on the part of Lessee that may be contained in this Lease or any agreement. In the event of a default hereunder, in addition to all other remedies, Lessor shall have the option to declare immediately due and payable the entire Base Rent and Additional Rent hereunder to be paid during the Term of this Lease and such shall then become immediately due and payable, including all applicable sales tax. Nothing herein contained shall be construed as precluding Lessor from performing such obligations of Lessee as may be and become necessary in order to preserve Lessor’s right or the interest of Lessor, in the Premises and in this Lease, even before the expiration of the grace or notice periods provided for in this Lease, if under particular circumstances then existing the allowance of such grace or the giving of such notice will prejudice or will endanger the rights and estate of Lessor in this Lease and in the Premises.
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Section 4.11 - Signs:
Lessee shall not affix, paint, erect or inscribe any sign, projection, awning, signal or advertisement of any kind to any part of the Premises or Building, including without limitation, the inside or outside of windows or doors, without Lessor’s written permission. In the event of violation of the foregoing, Lessor may, at his sole option, treat such violation as an event of default hereunder. In addition, Lessor may remove such lettering without any liability and may charge the expense incurred by such removal to the Lessee and/or sublessee. Lessee, at its cost, shall be provided building standard signage adjacent to its principal entry and on the building directory located in the lobby.
Section 4.12 - Brokerage:
Lessee represents and warrants that neither Lessee nor any of Lessee’s representatives, employees or agents has dealt or consulted with any real estate broker in connection with this Lease. Without limiting the effect of the foregoing, Lessee hereby agrees to indemnify and hold Lessor harmless against any claim or demand made by any other real estate broker or agent claiming to have dealt or consulted with Lessee or any of Lessee’s representatives, employees or agents contrary to the foregoing representation and warranty.
Section 4.13 - Entire Agreement:
This Lease contains the entire agreement between Lessor and Lessee with respect to the Premises and extinguishes all prior negotiations with respect thereto. No modification hereof shall be valid unless it is in writing and signed by both Lessor and Lessee.
Section 4.14 - Effect and Construction:
The provisions of this Lease shall inure to the benefit of and shall be binding upon the parties hereto and their respective successors and assigns. The underlined Section headings are inserted for convenience of reference only and shall not be deemed to limit or expand upon any of the provisions of this Lease.
Section 4.15 - Subordination to Mortgage; Attornment:
(A) This Lease shall automatically be subordinate to any first mortgage on the fee simple title given by Lessor (each a “Mortgage”), to any advances made or to be made thereunder, and to any renewal, extension, modification or replacement of said first mortgage lien. Lessee covenants to execute any agreement requested by the mortgagee to evidence the agreements of this Section.
(B) If the property containing the Premises (the “Property”) is sold at a foreclosure sale under the Mortgage or the Property is conveyed by deed-in-lieu of foreclosure, Lessee shall attorn to the holder of such Mortgage (“Lender”) or any purchaser of the Property and, subject to the other provisions of this Lease, the Lease shall continue, in accordance with its terms, between Lessee and Lender or such purchaser (Lender or such purchaser being hereinafter sometimes called “Successor Lessor”). In such event, Successor Lessor shall not be (a) liable for any act or omission of any prior lessor (including Lessor), (b) liable for the return of any security deposit not actually received by Successor Lessor, (c) subject to any offsets or defenses which Lessee might have against any prior lessor (including Lessor), (d) bound by any advance payment of rent or additional rent made by Lessee to Lessor except for rent or additional rent applicable to the then current month, unless such advance payment is actually received by Successor Lessor, (e) bound by any amendment or modification of the Lease made without the written consent of Lender, or (f) liable for the performance or payment for any construction for Lessee’s occupancy of the Premises.
Section 4.16 - Special Provisions on Bankruptcy:
(A) If Lessee assumes this Lease and proposes to assign the same pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. 101 et seq. (the “Bankruptcy Code”), to any person or entity who shall have made a bona fide offer to accept an assignment of this Lease on terms acceptable to Lessee, then notice of such proposed assignment, setting forth (i) the name and address of such person, (ii) all of the terms and conditions of such offer, and (iii) the adequate assurance to be provided Lessor to assure such person’s future performance under the Lease, including, without limitation, the assurance referred to in Section 365 (b) (3) of the Bankruptcy Code, shall be given to Lessor by Lessee no later than twenty (20) days after receipt by Lessee, but in any event no later than ten (10) days prior to the date that Lessee shall make application to a court of competent jurisdiction for authority and approval to enter into such assignment and assumption, and Lessor shall thereupon have the prior right and option, to be exercised by notice to Lessee given at any time prior to the effective date of such proposed assignment, to accept an assignment of this Lease upon the same terms and conditions and for the same consideration, if any, as the bona fide offer made by such person, less any brokerage commissions which may be payable out of the consideration to be paid by such person the assignment of this Lease.
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(B) Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. 101 et seq., shall be deemed without further act or deed to have assumed all of the obligations arising under this Lease on and after the date of such assignment. Any such assignee shall upon demand execute and deliver to Lessor an instrument confirming such assumption.
(C) Notwithstanding anything in this Lease to the contrary, all amounts payable by Lessee to or on behalf of Lessor under this Lease, whether or not expressly denominated as rent, shall constitute rent for the purposes of Section 502(b)(7) of the Bankruptcy Code, 11 U.S.C. 502(b)(7).
Section 4.17 - Name “Miami Lakes”:
Lessee acknowledges that the name “Miami Lakes” is the property of Lessor, and Lessee agrees not to use such name in the business name, trade name or corporate name of Lessee at any time during the Term of this Lease except with the written consent of Lessor.
Section 4.18 - Rules and Regulations:
Lessor reserves the right to make such reasonable rules and regulations (Exhibit “A”) applicable to all lessees within the Building of which the Premises are a part as in Lessor’s judgment may from time to time be needful for the safety, protection, care and cleanliness of the Premises, and for the comfort and in the best interests of all of the lessees in the Building, and such rules and regulations so made shall be binding upon Lessee and Lessee’s employees. Lessee and Lessee’s employees will at all times observe, perform, and abide by said rules and regulations.
Section 4.19 -Additions by Lessor:
It is agreed that Lessor shall have the right and privilege to construct additions to the Building of which the Premises are a part, and to make such alterations and repairs to portions of the Building not under Lease to Lessee as Lessor may deem wise and advisable without any liability to Lessee for doing so.
Section 4.20 - Operating Expenses:
(A) For the purposes of this Section, the following definitions apply:
(1) “Utilities” means water, sewer, electricity, fuel oil, gas, and refuse removal.
(2) “Operating Expenses” means all expenses, costs and disbursements of every kind and nature which Lessor shall pay or become obligated to pay because of or in connection with the ownership and/or operation of the Building including common areas within the office park, but shall not include the replacement of capital investment items and new capital improvements except as noted in paragraphs (g) and (h) below. By way of explanation and clarification, but not by way of limitation, these Operating Expenses will include the following:
(a) Wages and salaries of all employees engaged in operation and maintenance of the Building and common areas of the office park; employer’s social security taxes, unemployment taxes or insurance, and any other taxes which may be levied on such wages and salaries; the cost of disability and hospitalization insurance, pension or retirement benefits, and any other fringe benefits for such employees.
(b) All supplies and materials used in operation and maintenance of the Building and common areas of the office park.
(c) Cost of utilities including electricity, fuel oil, gas, sewer and water used by the Building and not charged directly to another tenant.
(d) Cost of customary Building management and office park management; janitorial services; trash and garbage removal; service and maintenance of all systems and equipment, including, but not limited to, elevators, plumbing, heating, air-conditioning, ventilating, lighting, electrical, security, fire alarms, fire pumps, fire extinguishers, hose cabinets, lawn sprinklers, guard service, painting, caulking, pressure or steam cleaning of Building exterior, roof repairs, window cleaning, and landscaping and gardening.
(e) Cost of casualty and liability insurance applicable to the Building and office park and Lessor’s personal property used in connection therewith.
(f) All charges assessed against the Building or against the underlying land by any property owners association common to the area or subdivision.
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(g) Expenditures for capital improvements which, under generally accepted accounting principles, are regarded as deferred expenses and for capital expenditures required by law, in either of which cases the cost thereof shall be included in Operating Expenses for the calendar year in which the costs are incurred or subsequent years, appropriately allocated to such years on a straight-line basis to the extent that such items are amortized over a useful life or over an appropriate period, but in no event more than ten years, with the addition of a reasonable interest factor to compensate Lessor for having initially incurred said expenditure;
(h) If Lessor shall purchase any item of capital equipment or make any capital expenditure designed to result in savings or reductions in any of the elements of Operating Expenses, then the costs for such capital equipment or capital expenditure are to be included within the definition of “Operating Expenses” for the year in which the costs are incurred or subsequent years, appropriately allocated to such years on a straight-line basis to the extent that such items are amortized over such period of time as reasonably can be estimated as the time in which such savings or reductions in Operating Expenses are expected to equal Lessor’s costs for such capital equipment or capital expenditure, with the addition of a reasonable interest factor to compensate Lessor for having initially incurred said expenditure. If Lessor shall lease any such item of capital equipment designed to result in savings or reductions in Operating Expenses, then the rentals and other costs paid pursuant to such leasing shall be included in Operating Expenses for the year in which they are incurred.
(3) “Lessee’s Proportionate Share” shall be defined as follows:
(a) In the case of expenses relating to the entire Building (for example, parking lot lighting and maintenance), Lessee’s Proportionate Share shall be the ratio of Lessee’s rentable area to the Building’s total rentable area, and
(b) In the case of Operating Expenses relating only to the Premises (for example, but not limited to, management fees, and janitorial services for the Premises), Lessee’s Proportionate Share shall be 100%.
(4) “Expense Statement” means a statement from the Lessor setting forth the Operating Expenses.
(B) Lessee shall pay as Additional Rent Lessee’s Proportionate Share of the Operating Expenses currently estimated to be $863.80 plus all sales, use or similar taxes now or hereinafter imposed on the payment of rent by Lessee, whether federal, state or local, which is currently 6.77% or $57.87 for a total of $921.67 per month on the first (1st) day of each month during the Lease Term. Thereafter, for each calendar year Lessor shall furnish Lessee with an Expense Statement showing in reasonable detail the Operating Expenses incurred by the Lessor for the prior calendar year and the estimated Operating Expenses for the next calendar year. If Lessee’s actual proportionate share is greater than the estimated Operating Expenses remitted to Lessor, Lessee shall, within thirty (30) days of receipt of such notice, pay to Lessor the difference, plus all sales, use or similar taxes now or hereinafter imposed on the payment of rent by Lessee, whether federal, state, or local. In the event the Lessee’s estimated Operating Expense payments exceeded Lessee’s actual proportionate share of the Operating Expenses, said excess will be credited toward the next year’s estimated payments. If this Lease terminates before the end of a calendar year, payment will be based on the percentage of the year in which Lessee occupied the Premises. The Expense Statement will also include the amount which Lessor estimates will be the amount of Lessee’s Proportionate Share of Operating Expenses for the then current calendar year. Lessee shall pay to Lessor the new estimated amount in 12 equal monthly installments during the current calendar year. A retroactive adjustment will be made back to the beginning of the current calendar year for any months of the current calendar year in which Lessee made a payment based on the prior year’s estimate. If the new estimated monthly amount is greater Lessee shall remit the difference to Lessor within thirty (30) days) of receipt of such notice. If the new estimated monthly amount is less the excess payments will be credited toward the current year’s estimated payments. If this Lease terminates before the end of a calendar year, payment will be based on the percentage of the year in which Lessee occupied the Premises.
(C) Provided Lessee is not in default of this Lease, Lessee shall have the right to reasonably review supporting data for any portion of an Expense Statement that Lessee claims is incorrect. In order for Lessee to exercise its right under this paragraph, Lessee shall, within sixty (60) days after any such Expense Statement is sent, deliver a written notice to Lessor specifying the portions of the Expense Statement that are claimed to be incorrect. The right under this paragraph may only be exercised once for any Expense Statement, and if Lessee fails to meet any of the above conditions as a prerequisite to the exercise of such right, the right of Lessee under this paragraph for a particular Expense Statement shall be deemed waived. Any review to be conducted under this paragraph shall be at the sole expense of Lessee and shall be conducted by an independent firm of certified public accountants of national standing. Lessee acknowledges and agrees that any records reviewed under this paragraph constitute confidential information of Lessor which shall not be disclosed to anyone other than the accountants performing the review and the principals of Lessee who receive the results of the review. Any errors disclosed by the review of records under this paragraph shall be promptly corrected, provided Lessor shall have the right to cause another review of the records to be made by an independent firm of certified public accountants of national standing. In the event of disagreement between the two accounting firms, the review that discloses the least amount of deviation from the Expense Statement shall be deemed correct. In the event that the results of the review reveal that Lessee has overpaid its obligations, the amount of such overpayment shall be credited against Lessee’s subsequent installment obligations to pay its share of estimated Operating Expenses. In the event that such results show that Lessee has underpaid its obligations, the amount of such underpayment shall be paid by Lessee to Lessor with the next succeeding installment obligation of estimated Operating Expenses.
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(D) Notwithstanding any language in the Lease seemingly to the contrary, if the Building is not fully occupied during any calendar year of the Lease Term, actual “Operating Expenses” shall be determined as if the Building had been fully occupied during such year. For the purpose of the Lease, “fully occupied” shall mean occupancy of 95% of the Net Rentable Area in the Building.
Section 4.21 - Real Estate Taxes:
(A) Lessee shall pay Lessee’s proportionate share of the estimated ad valorem real estate taxes, general and specific (“Real Estate Taxes’’) for the Premises on the first (1st) day of each month during the Lease Term. Lessee shall pay to Lessor, as Additional Rent, an amount equal to one-twelfth (1/12th) of Lessee’s proportionate share of the estimated Real Estate Taxes, such estimate to be made by Lessor based upon the previous year’s Real Estate Taxes using the November discount, as adjusted for each calendar year. Initially, the estimate will be calculated at $226.23 plus all sales, use or similar taxes now or hereinafter imposed on the payment of rent by Lessee, whether federal, state or local, which is currently 6.7% or $15.16 for a total of $241.39 per month for the fast Tax year. Lessee’s share of any taxes shall be in the amount equal to a fraction of such tax, the numerator of which shall be the grossfloor area of the Premises, set forth on Page 1 of this Lease, and the denominator of which shall be the gross floor area of all rentable space for which the tax is being levied. Such taxes shall be prorated as of the beginning date and the termination date of the Term. Lessee shall be responsible for payment of all personal property taxes in connection with the Premises.
(B) Upon receipt of and in accordance with the Real Estate Tax bill, Lessor shall calculate the proportionate tax due from Lessee, and shall notify Lessee of Lessee’s actual proportionate share. If Lessee’s actual proportionate share is greater than the estimated taxes remitted to Lessor, Lessee shall, within five (5) days of receipt of such notice, pay to Lessor the difference, plus all sales, use or similar taxes now or hereinafter imposed on the payment of rent by Lessee, whether federal, state, or local. In the event the Lessee’s estimated real estate tax payments exceed Lessee’s actual proportionate share of the real estate taxes due, said excess will be credited toward the next year’s estimated payments.
(C) Lessor may, at its sole option, choose to appeal or settle the tax assessment applicable to the Premises. In the event it chooses to do so, it shall be entitled to reimbursement from Lessee of its proportionate share for any attorneys’ fees and other professional fees and costs incurred in appealing or settling the assessment. These fees and costs shall be credited by Lessor against any proportionate tax savings which may be obtained as a result of any tax appeal or settlement. If said tax savings are insufficient to recover fees and costs in that year, then said fees and costs shall be credited against the proportionate tax savings in subsequent years until recovered in full. The remaining tax savings, if any, shall be credited against any outstanding sums due to Lessor from Lessee. The balance of any remaining tax savings then will be paid directly to Lessee by Lessor. In no event shall Lessee be responsible for any fees and costs in excess of any tax savings.
Section 4.22 - Severability:
If any term, covenant or condition of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, covenant or condition to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby and each other term, covenant and condition of this Lease shall be valid, and be enforced, to the fullest extent permitted by law.
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Section 4.23 - Right to Relocate Lessee:
Lessor expressly reserves the right, at Lessor’s sole cost and expense, to remove Lessee from the Premises and to relocate Lessee in some other space of Lessor’s choosing of approximately the same dimensions and size, which other space shall be decorated by Lessor at Lessor’s expense. Lessor shall have the right, in Lessor’s sole discretion, to use such decorations and materials from the existing Premises, or other materials, so that the space in which Lessee is relocated shall be comparable in its interior design and decoration to the Premises from which Lessee is removed; provided, however, that if Lessor exercises its election to remove and relocate Lessee to other space, which is at that time leasing for a higher rental rate, then Lessee shall not be required to pay the difference between the rental rate of the Premises and the higher rental rate of the space in which Lessee is relocated; provided further, that if Lessee is removed and relocated in other space which is then leasing at a lower rental rate than the Premises, then the rental rate shall be reduced to the rental rate then being charged for the space in which Lessee has been relocated. Nothing herein contained shall be construed to relieve Lessee or imply that Lessee is relieved of the liability for an obligation to pay any additional rent due by reason of the provisions contained in this Lease, the provisions of which shall be applied to the space to or from which Lessee is relocated. Lessee agrees that Lessor’s exercise of its election to remove and relocate Lessee shall not terminate this Lease or release Lessee, in whole or in part, from Lessee’s obligation to pay the rents and perform the covenants and agreements hereunder for the full term of this Lease.
Section 4.24 - Early Occupancy:
If Lessee, with Lessor’s consent, occupies the Premises before the beginning of the Term, as provided in Section 1.0, all provisions of this Lease shall be in full force and effect commencing upon such occupancy, and rent for such period shall be abated. Such early occupancy shall not alter the Lease Term.
Section 4.25 - Time:
Time is of the essence in all the terms, provisions, covenants and conditions of this Lease.
Section 4.26 - Control of Common Areas and Garage Facilities by Lessor:
(A) Lessor shall make available to Lessee uncovered surface parking spaces on a nonexclusive basis for the use of Lessee, its agents, employees, contractors, guests, and invitees at the rate required by the Town of Miami Lakes Development Code as of the date of Lease execution. All parking by Lessee, its agents, employees, contractors, guests, and invitees must be off-street and situated at the sides or the rear of the Building.
(B) All automobile parking areas, driveways, entrances and exits thereto, and other facilities furnished by Lessor including pedestrian walkways and ramps, landscaped areas, stairways, corridors, common areas and other areas and improvements provided by Lessor for the general use, in common, of tenants, their officers, agents, employees, servants, invitees, licensees, visitors, patrons and customers, shall be at all times subject to the exclusive control and management of Lessor, and Lessor shall have the right from time to time to establish, modify and enforce reasonable rules and regulations with respect to all facilities and areas and improvements and to police same; from time to time to change the area, level and location and arrangement of parking areas and other facilities herein referred to; to reserve the Tight to charge parking fees to persons using the parking areas (Lessor shall have the right, however, to grant parking concessions to occupants and to make agreements with Tenants for validated parking), to restrict parking to tenants, their officers, agents, invitees, employees, servants, licensees, visitors, patrons and customers; to close all or any portion of said areas or entrances and exits by means which are considered by Lessor’s counsel to be legally sufficient to prevent a dedication thereof or the accrual of any rights to any person or the public therein; to close temporarily all or any portion of the public areas; and to do and perform such other acts in and to said areas and improvements as, in the sole judgement of Lessor, Lessor shall determine to be advisable with a view to the improvement of the convenience and use thereof by tenants, their officers, agents, employees, servants, invitees, visitors, patrons, licensees and customers. Lessor will operate and maintain the common areas and other facilities referred to in such reasonable manner as Lessor shall determine from time to time. Without limiting the scope of such discretion, Lessor shall have the full right and authority to designate a manager of the parking facilities and/or common areas and other facilities who shall have full authority to make and enforce rules and regulations regarding the use of the same or to employ all personnel and to make and enforce all rules and regulations pertaining to and necessary for the proper operation and maintenance of the parking areas and/or common areas and other facilities. Reference in this Section to parking areas and/or facilities shall in no way be construed as giving Lessee hereunder any right and/or privileges in connection with such parking areas and/or facilities unless such rights and/or privileges are expressly set forth in this Lease.
Section 4.27 - Lessee’s Building Improvements:
(A) Lessee accepts the Premises in “As Is” condition. Lessee, at its sole expense, covenants and agrees to construct the Premises substantially in accordance with the terms and conditions agreed to by and between the Lessor and the Lessee as set forth in Exhibit “B”.
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(B) Lessee, at Lessee’s sole cost and expense, shall be responsible for the selection of a licensed and insured contractor to install plenum-rated cable and wiring for voice and data systems. Said contractor is currently required by the Town of Miami Lakes to obtain a permit for such installation and work. All voice and data work is required to be completed, inspected and approved by the Town of Miami Lakes prior to the final inspections for the Lessee improvement work and issuance of a Certificate of Occupancy. Delays in the issuance of a Certificate of Occupancy caused by delays in installation of cable and wiring by Lessee’s vendors shall be considered a Lessee delay and shall not delay the commencement of the Lease. Upon the expiration of this Lease, Lessee, at its sole cost and expense, shall remove all voice and data system cable and wiring from the Premises. If Lessee does not remove said cable and wiring, Lessee agrees that Lessor may remove same and deduct the cost of the removal from the security deposit.
(C) Within thirty (30) days of occupancy, Lessee shall procure a Certificate of Use through the Town of Miami Lakes and provide Lessor with a copy. Additionally, Lessee shall be responsible to obtain a Business Tax Receipt from the Town of Miami Lakes.
Section 4.28 - Singular / Plural:
As used in this Lease and when required by the context, each number (singular or plural) shall include all numbers, and each gender shall include all genders; and unless the context otherwise requires, the word “person” shall include “corporation, firm or association”.
Section 4.29 - Security Systems:
(A) Lessor, at its sole discretion, determination and option, may enter into a contract or otherwise provide or make arrangement for the providing of a security service system which may include security guards and/or electronic devices. In the event that Lessor elects to obtain such a security system or systems, then Lessee shall pay its proportionate share of the expense. Lessee’s proportionate share of the expense shall be determined by taking the total square footage of Lessee’s Premises as a numerator and dividing that by the total square footage of the buildings served by that security system, as the denominator, and then multiplying that by the annual cost of the service or system. Lessee shall pay its proportionate share on a monthly basis together with its rental payment.
(B) Lessor is not an insurer and shall in no way be responsible for the performance of the obligations of the security guards, and Lessee hereby releases Lessor from any claims of any nature whatsoever in connection with the furnishing of security guard services and for any losses arising out of the negligent performance or non-performance of said guard services. Insurance, if any, for any type of loss shall be obtained by Lessee. Lessee further acknowledges that should said services be provided on a negligent basis, that its sole and exclusive remedy shall be to seek recovery against the security service company.
Section 4.30 - Covenants, Representations and Warranties Concerning Environmental Laws Compliance and Hazardous Waste Compliance:
Lessee hereby covenants with Lessor and represents and warrants to Lessor as follows:
(A) Lessee will strictly comply, at its sole cost and expense, with any and all applicable federal, state and local environmental laws, rules, regulations, permits and orders affecting the Premises and the business operations conducted on the Premises, whether now in effect or as may be promulgated hereafter, and as may be amended from time to time (hereinafter referred to as “Environmental Laws”), and Lessee will obtain and strictly comply with, at its sole cost and expense, all federal, state and local permits and other governmental approvals in connection with Lessee’s use and occupancy of the Premises. Lessee acknowledges that Lessor makes no representations, express or implied, concerning the availability or likelihood of obtaining any required permits or approvals for Lessee to conduct its business operation on the Premises.
(B) Without limiting the generality of Paragraph (A) of this Section, Lessee, as its sole cost and expense, will strictly comply with any and all applicable Environmental Laws relating to the generation, recycling, re-use, sale, storage, handling, transport, disposal and presence of any “Hazardous Materials” (as hereinafter defined) on the Premises. As used in this Section, the term “Hazardous Materials(s)” shall mean any substances defined as or included in the definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”, “toxic substances”, contaminants”, or other pollution under any applicable Environmental Laws. Notwithstanding anything to the contrary contained herein, Lessor’s consent to any action by Lessee shall not operate to relieve Lessee of the obligation to comply with all of the provisions of this Section. Lessee will not permit or allow, and will take all actions necessary to avoid, the occurrence of any spills, releases or discharges of Hazardous Materials on or off the Premises as a result of any construction on or use of the Premises. Lessee shall promptly advise Lessor in writing immediately upon becoming aware of (i) the existence of any spills, releases or discharges of Hazardous Materials that occur on or unto the Premises, or off the Premises as the result of any construction on or use of the Premises, and of any existing or threatened violation of this Section; (ii) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened by any governmental authority with respect to the Property from time to time under any applicable Environmental Laws; (iii) any and all claims made or threatened by any nongovernmental party against Lessee or the Property relating to damage, contribution cost, recovery, compensation, loss or injury resulting from any Hazardous Materials or any violation of applicable Environmental Laws; and (iv) Lessee’s discovery of any occurrence or condition and any real property adjoining or in the immediate vicinity of the Property that could cause the Property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Environmental Laws. Lessee acknowledges that it has inspected the Premises and has undertaken all appropriate inquiry into the present and past uses of the Premises consistent with good commercial practice to minimize potential liability for violations of any and all Environmental Laws.
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(C) Without Lessor’s prior written consent, Lessee shall not enter into any settlement, consent or compromise with respect to any “Envirnomental Claim(s)”, as hereinafter defined, provided, however, that Lessor’s prior consent shall not be necessary for Lessee to take any remedial action if ordered by a court of competent jurisdiction or if the presence of Hazardous Materials at the Property poses an immediate, significant threat to the health, safety or welfare of any individual who otherwise requires an immediate remedial response. As used in this Section, “Environmental Claim(s)”, shall mean any claim(s) or cause(s) of action resulting from the failure of Lessee or the Premises to comply with any Environmental Law relating to Hazardous Materials, industrial hygiene or environmental conditions. In any event, Lessee shall promptly notify Lessor of any action so taken.
(D) Without limiting the generality of Paragraph (A) of this Section at all times during the Term of this Lease and any renewals or extensions hereof, Lessee, at its sole costs and expense, shall comply with any and all applicable laws, regulations, ordinances, permits and orders regulating the type and quantity of waste that may be discharged into the sanitary sewer system serving the Premises, including, but not limited to, all rules, regulations, permits, and orders of the Miami Dade Water and Sewer Authority, or its successor.
(E) Lessee agrees that Lessor and Lessor’s agents and independent contractors may enter and inspect the Premises at any time, and from time to time, to verify that Lessee’s operations on the Premises do not violate any of the provisions of this Section and that they comply with any and all applicable Environmental Laws. Lessor may obtain, from time to time, reports from Licensed professional engineers or other environmental scientists with experience in environmental investigations and may require Lessee to permit such licensed professional engineers or other environmental scientists to conduct complete and thorough on-site inspections of the Premises, including without limitation, sampling and analysis of the soil, surface water, groundwater and air, to determine whether Lessee is in compliance with the provisions of this Section and all Environmental Laws. Lessee and its agents shall cooperate with Lessor and its agents in connection with the conduct of such investigations. In the event such investigations disclose that Lessee is in default under this Section, Lessee shall, immediately, upon demand, reimburse Lessor for all costs and expenses of investigations; moreover, Lessor may, at its option, undertake such steps as it deems necessary to cure such default and to bring the Premises into compliance with the terms of this Section, and Lessee shall, immediately upon demand, reimburse Lessor for all costs and expenses incurred in curing such default and bringing the Premises into compliance with the terms of this Section.
(F) Lessee shall indemnify and hold Lessor harmless from and against any and all claims, demands, damages, losses, liens, liabilities, penalties, fines, lawsuits and other proceedings, costs, and expenses (including without limitation reasonable attorney’s fees and costs at trial and all appellate levels), arising directly or indirectly from or in any way connected with: (i) the presence, or use, generation, treatment, sale or storage on, under or about the Premises of any Hazardous Substance on the Premises, whether or not expressly approved by Lessor in writing or otherwise; (ii) any violation or alleged violation of any Environmental Law, including but not limited to violations of the Federal Comprehensive Environmental Response Compensation and Liability Act of 1980 and regulations promulgated thereunder, as the same may be amended from time to time; (iii) the costs of any necessary inspection, audit, cleanup or detoxification of the Premises under any Environmental Laws, and the preparation and implementation of any closure, remedial or other required plans, consent orders, license application or the like; or (iv) any default by Lessee under this Section. All sums paid and costs incurred by Lessor with respect to any Environmental Claim or any other matter indemnified against hereunder shall be due and payable by Lessee immediately upon demand. If after demand Lessee fails to pay any sums due pursuant to this indemnification, such sums shall bear interest at the highest rate then permitted by applicable law, from the date so paid or incurred by Lessor until Lessor is reimbursed by Lessee. The indemnification contained herein shall survive the termination of the leasehold estate created hereby and any assignment by Lessor of its rights under this lease.
(G) Any breach of covenants, representations or warranties contained in this Section, included but not limited to the occurrence of any environmental claim, violation of Environmental Laws, or spills, release or discharges of Hazardous Materials on or about the Premises shall constitute a default under this Lease, and shall entitle Lessor to immediately terminate this Lease. No waiver of any breach of any provision of this Section shall constitute a waiver of any preceding or succeeding breach of the same, or any other provisions hereof.
Section 4.31 - Liability Limitation:
Notwithstanding anything to the contrary contained in this Lease, in the event of any default or breach by Lessor (which shall include any mortgagee of Lessor that has succeeded to the interest of the Lessor hereunder), Lessee shall look solely to the interest of Lessor (or any successor to Lessor) in the Premises and Building for the collection of any judgment (or any other judicial procedures requiring the payment of money by Lessor) and no other property or assets of Lessor shall be subject to levy, execution or other procedures for satisfaction of Lessee’s remedies.
Section 4.32- WaiveT of Trial By Jury:
It is mutually agreed by and between Lessor and Lessee that the respective parties hereto shall and hereby do waive Trial By Jury in any action, proceeding, or counterclaim brought by either party hereto against the other on any matters arising out of or in any way connected with this Lease.
February 14, 2019
Section 4.33 - RADON GAS DISCLOSURE STATEMENT:
RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT HEALTH RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER TIME. LEVELS OF RADON THAT EXCEED FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA. ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE OBTAINED FROM YOUR COUNTY PUBLIC HEALTH UNIT.
EXECUTED as of the date first above written in several counterparts, any one of which shall be deemed an original, but all constituting only one instrument.
| LESSOR | |||
| Signed in the presence of: | TGC MS PHASE I NORTH LLC, a Florida limited | ||
| liability company | |||
| BY: THE GRAHAM COMPANIES, a Florida corporation, its Manager | |||
| By | |||
| Carol G. Wyllie | |||
| Title: | Executive Vice-President | ||
| Attest: | |||
| (As to Lessor) | Robert S. Whitehead | ||
| Title: | Assistant Secretary | ||
| (LESSOR’S CORPORATE SEAL) | |||
| LESSEE | |||
| LA ROSA REALTY GROUP, LLC, a Florida limited liability company | |||
| By: | |||
| Title: | |||
| Attest: | |||
| (As to lessee) | Title: | ||
| (LESSEE’S CORPORATE SEAL) | |||
February 14, 2019
Exhibit “A”
Rules and Regulations
| 1. | Sidewalks, doorways, vestibules, halls, stairways and similar areas shall not be obstructed by Lessee or used for any purpose other than ingress and egress to and from the Premises and for going from one to another part of the Building. |
| 2. | Plumbing fixtures and appliances shall be used only for purposes for which constructed, and no sweepings, rubbish, rags or other unsuitable material shall be thrown or placed therein. Damage resulting to any such fixtures or appliances from misuse by Lessee shall be paid by Lessee, and Lessor shall not in any case be responsible therefore. |
| 3. | No signs or signs will be allowed in any form on the exterior of the Building or on any window or windows inside or outside of the Building and no sign or signs, except in uniform location and uniform style fixed by Lessor, will be permitted in the public corridors or on corridor doors or entrance to Lessee’s space. All signs will be contracted for by Lessor for Lessee at the rate fixed by Lessor from time to time, and Lessee will be billed and pay for such service accordingly. Written consent from Lessor is an absolute prerequisite for any such sign or signs any Lessee may be so permitted to use. |
| 4. | Lessor shall provide a central directory(s) on the main or ground floor of the Building for the listing of the names of the tenants within the Building. The spaces provided on the directory board shall be at no cost to the Lessee. However, the number of spaces requested by Lessee shall not be unreasonable and Lessor reserves the right to promulgate such Rules and Regulations with respect to the allocation of such spaces. |
| 5. | Lessee shall not do or permit anything to be done in or around the Building, or bring or keep anything therein that will in any way increase the rate of fire or other insurance on the Building, or on property kept therein, or obstruct or interfere with the rights of or otherwise injure or annoy any other Lessee in the Building, or do anything in conflict with the valid pertinent laws, rules or regulations of any governmental authority. |
| 6. | All damage done to the Building by taking in or putting out any property of Lessee, or done by Lessee’s property while in the Building, shall be repaired at the expense of Lessee. |
| 7. | Should Lessee require any communication service, Lessor will direct the electricians where and how wires are to be introduced and placed, and none shall be introduced or placed except as Lessor shall direct. Electric current shall not be used for power or heating without Lessor’s prior written permission. |
| 8. | Lessor shall, at reasonable hours, have the right to enter the Premises to examine same or to make such alterations and repairs as may be deemed necessary, or to exhibit same to prospective Tenants. |
| 9. | Lessee shall not make or permit any improper noises in the Building, or otherwise interfere in any way with other tenants, or persons having business with them. |
| 10. | Nothing shall be swept or thrown into the corridors, halls, elevator shafts or stairways. No birds or animals shall be brought into or kept in or about the Building. |
| 11. | No machinery of any kind (other than normal office equipment) shall be operated on the Premises without the prior consent of Lessor, who may condition such consent upon the payment by Lessee of additional rent as compensation for excess consumption of water and/or electricity occasioned by the operation of said machinery, nor shall Lessee use or keep in the Building any inflammable or explosive fluid or substance, or any illuminating material, except candles. |
| 12. | Lessee will refer all contractors, contractors’ representatives and installation technicians, rendering any service to Lessee, to Lessor for Lessor’s supervision, approval and control before performance of any contractual service. This provision shall apply to all work performed in the Building including installations of telephones, telegraph equipment electrical devices and attachments, and installations of any nature affecting floors, walls, woodwork, trim, windows, ceilings, equipment or any other physical portion of the Building. |
| 13. | Movement in or out of the Building of furniture or office equipment or dispatch or receipt by Lessee of any merchandise or materials which requires use of elevators or stairways, or movement through Building entrances or lobby shall be restricted to hours designated by Lessor. All such movement shall be under supervision of Lessor and in the manner agreed between Lessee and Lessor by prearrangement before performance. Such prearrangements initiated by Lessee will include determination by Lessor and subject to his decision and control, of the time, method and routing of movement, and limitations imposed by safety or other concerns which may prohibit any article, equipment or any other item from being brought into the Building. Lessee is to assume all risk as to damage to articles moved and injury to persons or public engaged or not engaged in such movement, including equipment, property and personnel of Lessor if damaged or injured as a result of acts in connection with carrying out this service for Lessee from time of entering property to completion of work; and Lessor shall not be liable for acts of any persons engaged in, or any damage or loss to any of said property or persons resulting from, any act in connection with such service performed for Lessee. |
February 14, 2019
| 14. | No draperies, shutters, or other window covering shall be installed on exterior windows or wall and doors facing public corridors without Lessor’s prior written approval. Lessor does require installation and continued use of uniform window covering for such windows. All drapes and/or blinds shall be closed for efficient operation of the air conditioning system when required by Lessor. Lessee shall not alter any interior finishing window treatment such as blinds or curtains as may be provided by Lessor. |
| 15. | No portion of Lessee’s area or any other part of the Building shall at any time be used or occupied as sleeping or lodging quarters. |
| 16. | Lessor will not be responsible for any stolen property, equipment, money or jewelry from Lessee’s Premises or public rooms, regardless of whether such loss occurs when area is locked against entry or not. |
| 17. | Lessor specifically reserves the right to refuse admittance to the Building from 6 p.m. to 8 a.m. daily, or on Sundays or on legal holidays, to any person or persons who cannot furnish satisfactory identification, or to any person or persons who, for any other reason in Lessor’s judgement, should be denied access to the Premises. Lessor, for the protection of the Lessees and their efforts, may prescribe hours, and intervals during the night, on Sundays and holidays as stipulated in Section 3.0, when all persons entering and departing the Building shall be required to enter their names, the offices to which they are going to or from which they are leaving, and the time of entrance or departure in a register provided for that purpose by Lessor. |
| 18. | Throughout the Term of the Lease, Lessor shall maintain in a good state of repair the roof and structural portions of the Premises, provided, however, that if Lessee makes any penetration of or hole in the roof, then Lessee shall reimburse Lessor upon demand for the cost differential that Lessor encounters in repairing or replacing the roof compared with what the cost would have been without any such penetration or hole. |
| 19. | All vehicle parking by Lessee, Lessee’s employees, agents, servants, invitees, licensees, visitors, patrons and customers shall be in designated parking areas only. No vehicles shall be parked overnight without Lessor’s prior written approval. |
| 20. | Lessee shall be responsible for notifying the Lessor prior to occupying and vacating its space to make all necessary arrangements for moving. Lessee must place a deposit with the Lessor for the use of elevator pads for said move. Upon return of these pads, deposit shall be refunded to Lessee provided pads are not damaged. Lessee shall be solely responsible for any damage to elevator cab interior while it is in Lessee’s possession. |
| 21. | Without the prior written approval of Lessor, no Lessee shall employ any person or persons, other than the janitor of the Lessor for the purpose of cleaning, or taking charge of the Premises, it being understood and agreed that the Lessor shall be in no way responsible to any lessee for any damage done to the furniture or other effects of any Lessee by the janitorial service or any of its employees, or any other person, of for any loss of property of any kind whatsoever within the Premises, however occurring. Lessee will see each day that the doors are securely locked before leaving the Building. |
| 22. | The Lessor shall have the right to prohibit any advertising by any Lessee, which, in its opinion, tends to impair the reputation of the Building or its desirability as a Building for offices or for financial, insurance or other institutions and businesses of like nature; and upon written notice from the Lessor, Lessee shall refrain from or discontinue such advertising. |
| 23. | Without Lessor’s prior written approval, Lessee agrees not to install food or drink vending machines, or any other food service equipment. |
| 24. | Per Florida Statutes, the Building shall be smoke free. In addition, vaping is not permitted in the Building. Lessee shall be responsible to enforce and institute policies to address same within the Premises. |
| 25. | Lessor reserves the right to rescind any of these rules and make such other and further reasonable rules and regulations as in Lessor’s judgment shall from time to time be needful for the safety, protection, care and cleanliness of the Building and the protection and comfort of its tenants, their agents, employees and invitees, which rules when made and written notice thereof given to Lessee, shall be binding upon him in like manner as if originally prescribed. |
February 14, 2019
Exhibit “B”
Construction Work Letter
1. This Construction Work Letter constitutes the entire Agreement between the Lessor and the Lessee for the construction of improvements located at 15500 New Barn Road, Suite 105, Miami Lakes, Florida 33014 and shall be binding unto the parties hereto. No modification hereof shall be valid unless it is in writing signed by both Lessor and Lessee.
2. The “Authorized Representative” shall mean the person representing a particular party who has the power to bind said party to this Agreement and any modification thereto, including change orders.
| Entity | Authorized Representative | Phone No. | ||
| Lessor | Lester Debs | [*] | ||
| Lessee | Ivel Nerey | [*] |
3. Lessee covenants and agrees to construct the Premises substantially in accordance with the terms and conditions agreed to herein. Lessee shall provide Lessor with the following documentation upon completion of the construction of improvements: a Final Release and waiver of Lien for Lessee’s Work from such general contractor together with a final contractors affidavit indicating that all parties performing labor, or providing services or materials, have been paid in full (or with respect to any filed lien, the same has been discharged and fully bonded), copies of final releases of liens from major subcontractors and suppliers, a copy of the Certificate of Occupancy, a copy of the “as built’’ plans and specifications covering the alterations (including final architectural and MEP CAD files with the fire alarm and fire sprinkler plans, if applicable), copies of fire alarm plans approved by the Fire Department, reasonable evidence that no liens exist or are filed (and not fully discharged of record) against the Premises or Property as a result of Lessee’s Work, and proof that there are no open or expired permits.
Lessee acknowledges that liens filed against the Premises or Property will cause Lessor to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impractical to fix. Therefore, in the event that a lien is filed against the Premises or Property as a result of Lessee’s work, Lessee agrees to pay to Lessor a fee of $250.00 per lien. The fee will be due upon receipt of invoice together with proof of the lien from Lessor. This fee shall in no way relieve Lessee of its obligation to cause the same to be discharged of record, bonded or transferred to other security as provided by Florida Statutes so as to free title to the Premises of any alleged claim of lien within ten (10) days after notice to Lessee of the filing thereof.
4. Lessee must furnish Working Plans and Specifications for Lessor’s prior approval. Lessor shall use its best efforts to obtain approval of Lessee’s Preliminary Plans within ten (10) days after submission thereof by Lessee. Lessee’s Tenant Improvement work must be consistent with Lessor’s minimum standards at Lessor’s sole discretion. Any modifications to the shell building including, but not limited to, elevator lobby, window treatments, etc. must be approved by Lessor.
5. Lessee agrees to have its Contractor meet with Lessor’s Construction and Property Management personnel for a pre-construction meeting to determine logistics of Lessee’s construction.
6. The repair, replacement, and maintenance of any improvements that are not of Lessor’s standard materials shall be the responsibility of Lessee. Lessee shall not be permitted to install any type of wallcovering on exterior building walls.
7. Lessee covenants and agrees to commence and promptly complete its construction work and installation of fixtures with all due diligence in accordance with its Working Plans and Specifications. If Lessee shall neglect, fail or refuse to promptly commence its work as aforesaid and thereafter neglects, fails or refuses to diligently proceed with and complete its work, then Lessor may immediately, without prior notice to Lessee, (a) complete Lessee’s work at Lessee’s expense and thereupon commence the Term of this Lease, (b) commence the Term of this Lease and all of Lessee’s payment obligations hereunder, notwithstanding the incompletion of Lessee’s work, (c) declare this Lease canceled and of no further force and effect, or (d) declare this Lease in default and accelerate all rents reserved hereunder.
8. It is understood and agreed that all work performed by Lessee meet the Town of Miami Lakes Building and Zoning Codes and Lessee shall furnish to Lessor all certificates and approvals with respect to work done by Lessee or on Lessee’s behalf that may be required from any authority including a Certificate of Occupancy. Lessor shall have no responsibility or liability whatsoever for any loss or damage to any of Lessee’s improvements, fixtures or equipment installed or left in the Premises.
February 14, 2019
9. Lessee’s entry on and occupancy of the Premises prior to the commencement of this Lease shall be governed by and subject to all the provisions, covenants and conditions to this Lease other than those requiring the payment of Minimum Rent and other charges.
10. During the period of construction prior to the commencement of the Term and throughout the Term of this Lease Lessee agrees to protect and save Lessor harmless from any and all liability for any damage to any person, property or effects of Lessee or any other person during the term of this Lease and any extension or renewal thereof, from the breakage, leakage, or obstruction of the water, gas, sewer pipes or of the roof or rain ducts, or other leakage or overflow or otherwise, in or about the Premises, or from any carelessness, negligence or improper conduct on the part of Lessee or Lessee’s employees or agents, on, in or about the Premises or the public areas (if any) adjoining the same and Lessor shall not be liable for any damage, loss or injury to the person, property or effects of Lessee or any other person, suffered on, in or about the Premises by reason of any present, future, latent or other defects in the form, character or condition of the Premises or any part or portion thereof, or by reason of water, rain, fire, storms or accidents, and the Rent shall not be diminished or withheld by reason or on account of any such loss or damage.
11. Any contractor, architect, engineer or designer to be used by Lessee to perform Lessee’s Work, must first be approved in writing by Lessor. Such approval shall be in Lessor’s sole discretion based on the candidate’s financial condition and his ability to perform in a quality manner and such other criteria as Lessor may in its sole discretion adopt from time to time. Lessee and its contractor must abide by “Lessor’s Construction Guidelines” (attached as Exhibit “B-1”) and execute the “Affidavit to Assume Liability for Damages Caused by Construction” (attached as Exhibit “B-2”) prior to beginning any construction.
12. Lessee, at its sole cost, shall have the air conditioning tested and balanced upon completion of its tenant improvement work. Lessee agrees to use a company approved by Lessor to complete the test and balance.
13. Lessee, at Lessee’s sole cost and expense, shall be responsible for the selection of a licensed and insured contractor to install plenum-rated cable and wiring for voice and data systems. Said contractor is currently required by the Town of Miami Lakes to obtain a permit for such installation and work. All voice and data work is required to be completed, inspected and approved by the Town of Miami Lakes prior to the final inspections for the Tenant Improvement work and issuance of a Certificate of Occupancy. Delays in the issuance of a Certificate of Occupancy caused by delays in installation of cable and wiring by Lessee’s vendors shall be considered a Lessee delay and shall not delay the commencement of the Lease.
14. The Lessee shall use best efforts to see that the contractor shall diligently pursue obtaining all building permit(s) necessary to construct the improvements.
15. Upon completion of the work, the Lessor and the Lessee shall meet at the job site and prepare a punch list. Said meeting shall take place not later than five (5) business days after notification by the contractor of its completion of work. In the event punch list items are incomplete or workmanship is deficient, Lessor reserves the right to withhold funds sufficient to correct deficiencies.
February 14, 2019
Exhibit “B-1”
Contractor Construction Guidelines
Documentation:
Contractors shall submit the following before commencement of construction:
| 1. | A copy of building plans “Approved” by the Building Dept. |
| 2. | Contractor’s Name and contact info: |
| 3. | Certificate of Insurance – Liability and Workers Compensation |
Certificate Holder:
| The Graham Companies (“TGC”), 6843 Main St.,
Miami Lakes, FL 33014 Attn: Nancy Roark (305) 817-4058 Fax: (305) 820-1655 |
|
| Email: Nancy.Roark@grahamcos.com |
| Additional Named Insured: |
| Submit copy of Endorsement naming The Graham Companies as Additional Insured. |
| 4. | Copy of the Building Permit. |
| 5. | TGC will provide the Notice of Commencement to be filed by the contractor. Call Nancy Roark at (305) 817-4101. |
| 6. | Provide a construction schedule. |
| 7. | Contractors will be required to sign an “Affidavit to Assume Liability for Damages caused by Construction”. |
Building Access:
You will receive one set of keys for the restroom, mechanical & electric room. Make copies immediately to avoid $20 charges per key for replacements.
Dumpsters:
Locate in a pre-approved location. Clean around daily. Protect sidewalks & pavement.
Protection:
Protect all doors: Wrap suite entrance door face with cardboard and edges with HD viscuine for duration of project.
Protect elevator walls with protective pads. Protect elevator entrance casing also.
Protect elevator floors: On days of heavy hauling, place old carpet on elevator floor. Give TGC property manager 24-hrs notice to install the elevator pads.
Protect curbs, pavers and pavement: Place plywood under dumpsters and delivery truck hydraulic stabilizer pads.
Protect all HVAC systems: Install horsehair filters on all RA ducts and protect existing smoke detectors with plastic bags during construction.
February 14, 2019
Deliveries:
Coordinate timing and access route for all deliveries with TGC Construction Manager. Use of elevators and normal working hours may be restricted in specific areas or buildings.
Signage:
Project or Advertising signs must be approved by TGC prior to installation.
Safety:
| 1. | Temporary barricades must be used in all areas affecting public safety. |
| 2. | Warning signs or caution tape should be displayed at all hazards. |
Demolition:
| 1. | Routes to dumpster must minimize impact upon existing tenants. |
| 2. | Demolition material must be removed from the building before or after the normal working hours of affected tenants. |
| 3. | Visual barriers must be constructed to isolate any demolition or construction adjacent to ongoing businesses or in areas that are deemed unsightly to other tenants or the public. |
Construction:
| 1. | “Pardon our Remodeling” signs must be posted whenever construction is visible to the public. |
| 2. | Delivery of materials should be made before or after the normal working hours of affected tenants. |
| 3. | Projects must be supervised at all times. |
| 4. | Pre-schedule all work in affecting other tenants so that TGC Property Manager can provide courtesy calls to other tenants. |
| 5. | Workers should be dressed in a professional manner. Whistling or remarks to tenants or residents are absolutely forbidden. |
| 6. | Meter Room Access – Keys will be provided by the property mgr. |
| 7. | Clean up daily; especially areas affecting other tenants. |
| 8. | Punch lists must be completed within 10 days. |
| 9. | Work hours: Normal working hours are 7am – 6pm weekdays. Weekend work must be arranged with the property manager. No delivery trucks after 10am on Main Street. |
| 10. | Storage – No storage of any kind is permitted in the breezeways under the stairs. Meter Rooms must also be kept clean and organized for access to electric panels. |
Noise:
Excessive noise (high velocity pin guns, jack hammers etc.) is prohibited during normal working hours of affected tenants.
February 14, 2019
Parking:
Workers must allow tenants and the general public priority with regard to parking adjacent to buildings. Material and equipment deliveries must not disrupt traffic.
Smoking:
Smoking is not allowed at any time in any of our buildings.
Fire Alarms:
Property Managers must be notified 24 hrs prior to sounding alarms, so all tenants can be notified. Call TGC maintenance at (305) 817-4018 to silence alarms before testing. World Security at (305) 477-9640 handles maintenance of the alarm systems. It is the General Contractor’s responsibility to protect all existing devices and panels during construction.
Upon completion, submit:
| 1) | 1 copy of Approved Fire Alarm plans to TGC. |
| 2) | Email final CAD file for archiving. |
| 3) | Submit 2 reduced copies (llxl7). Place one in fire alarm panel log book on site and one to TGC office. |
Fire Protection:
Call TGC maintenance at (305) 817-4018 24 hrs prior to schedule draining the system and silencing the alarm.
Project Completion:
| 1. | There will be a walk-through and Punch List by TGC. Punch List must be completed within 2 weeks. |
| 2. | Obtain a Certificate of Occupancy from Miami Lakes Building Department and forward to TGC. |
| 3. | Submit a Contractor’s Affidavit and Final Releases for all major subcontractors and suppliers. |
Contact Information:
| 1. | 24-Hr. Security - Security Alliance Tel. (954) 529-3009. |
| 2. | TGC Maintenance - Dulce Perez Tel. (305) 817-4018. |
| 3. |
TGC Construction Supervisor - Lester Debs Tel. (305) 817-4016; Fax. (305) 820-1655; |
| 4. |
TGC Property Manager: Melissa Massey Tel. (305) 817-4003; Fax. (305) 557-0313; |
| 5. | Police Non-Emergency- (305) 476-5423 |
Revised 03/21/07
February 14, 2019
Exhibit “B-2”
AFFIDAVIT
to ASSUME LIABILITY for DAMAGES
CAUSED by CONSTRUCTION
LESSEE shall be liable for all direct and incidental damages to existing facilities, premises and property caused by all employees, subcontractors and their employees, material and equipment supplier deliveries and their employees incurred as a result of construction activities.
LESSEE shall also assume all responsibility for protection and coordination of disruptions to the other tenants with The Graham Companies’ Construction/ Property Manager.
LESSEE also agrees to make every attempt possible to minimize the impact of all construction related activities on all neighboring tenants first and foremost.
LESSEE acknowledges that it has received a copy of “CONTRACTOR CONSTRUCTION GUIDELINES”, dated 3/21/07.
LESSEE:
LA ROSA REALTY GROUP, LLC, a Florida limited liability company
| By: | DATE: | |||
| PRINT NAME: | ||||
| TITLE: |
February 14, 2019
26
Exhibit 10.124
The Crescent
LEASE AGREEMENT
3474-3483 Satellite Blvd, Duluth, GA 30096
| Tenant | Landlord | |||
| La Rosa Realty Georgia LLC, Joseph
La Rosa, individually and Carmen Delgado, individually |
American Capital Properties,
LLC 3483 Satellite Blvd., Suite 100 South |
|||
| 3483 Satellite Blvd, Suite 115 South | Duluth, GA 30096 | |||
| Duluth, GA 30096 | (971) 413-7003 | |||
| HQ: (503) 675-4596 |
| Lease Information | ||||
| Suite Number: | 115 South | |||
| Rentable Square Footage: | Approximately 2,005 ± | |||
| Lease Term: | 36 months | |||
| Security Deposit: | $3,566.00 | |||
| Starting Base Rent: | $3,297.00 | |||
| Commencement Date: | Estimated to be May 1, 2024 | |||
Lease Provisions
| 1. | Premises: Pursuant to this lease agreement (“Lease”), Landlord hereby leases to Tenant upon the terms and conditions herein, a suite identified as Suite 115 South (“Premises”), estimated at approximately 2,005 ± rentable square feet, situated in the office building known as The Crescent located at 3483 Satellite Blvd, Duluth, Gwinnett County, Georgia 30096 (“Building”). The Premises does not include the structure, roof, interior or exterior common areas, or the exterior surfaces of exterior walls of the Building. The Premises, Building, and the land on which the Building is located are collectively the “Property.” Tenant shall inspect and accept the Premises in its “AS-IS” condition upon taking possession per Section 3. Landlord will not be liable to Tenant, and Tenant will have no claim against Landlord for any damage, injury, or loss of use caused by the condition of the Premises or the Property. Tenant will be solely responsible for thoroughly inspecting the Premises and ensuring that it is in compliance with all applicable laws. |
| 2. | Term: The Term of this Lease will be for thirty-six (36) months commencing on the Date of Tender, which is estimated to be May 1, 2024 (the “Commencement Date”) and ending thirty-six (36) Lease Months thereafter. |
| 3. | Date of Tender: On or before the Commencement Date, Landlord shall tender possession of the Premises to Tenant (“Date of Tender”) and Tenant shall take possession of the Premises and sign the Certificate of Acceptance (attached as Exhibit D). |
| 4. | Rent: Rent will be due and payable in advance on the first day of each month beginning on the Commencement Date. If a Rent payment is not received within five (5) days of the date specified, a ten percent (10%) late charge will be assessed and due immediately. The base rental rate (“Rent”) for the use and occupancy of the Premises is as follows: |
| Lease Month | Monthly Installment | |
| 1–12 | $3,297.00 | |
| 13–24 | $3,429.00 | |
| 25–36 | $3,566.00 |
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Rent may be mailed to: American Capital Properties. LLC. P.O. Box 920. Lake Oswego, OR 97034.
Payments may also be tendered by ACH. Instructions will be provided.
The first “Lease Month,” also known as “Lease Month 1,” will commence on the Date of Tender. If the Date of Tender is a day other than the first day of the month, Lease Month 1 will end on the last day of the month in the following month. Each subsequent Lease Month shall commence on the day immediately following the last day of the preceding Lease Month, and Tenant will be charged a pro-rata amount for the additional days in Lease Month 1(“Additional Day(s)”), if any. Tenant shall make a payment of $108.39 for each Additional Day in Lease Month 1, if applicable, which will be due on the Date of Tender.
| 5. | Use of Premises: Tenant shall use the Premises as a professional real estate office and shall not use the Premises for any other purpose without first securing the consent of Landlord in writing. Tenant shall not: (i) use or occupy the Premises for any purpose which is unlawful or dangerous; (ii) permit the maintenance of any nuisance or disturb the quiet enjoyment of other tenants or portions of the Property; (iii) emit offensive odors or conditions into other portions of the Property; (iv) cause or permit any waste to occur in the Premises; or (v) overload the floors, or any mechanical, electrical, plumbing, or utility systems serving the Premises. If Tenant’s Permitted Use of the Premises results in an increase in any rate of insurance on the Property, Tenant shall pay to Landlord, upon demand as additional Rent, the amount of any such increase. However, any such payment will not waive Tenant’s duty to comply with this Lease. Landlord and any agent thereof does not represent or warrant that the Premises, Building, or Property conforms to applicable restrictions, ordinances, requirements, or other matters related to Tenant’s intended use. Tenant must satisfy itself that the Premises may be used as Tenant intends by independently investigating all matters related to its intended use. Tenant shall comply with all laws, ordinances, orders, rules, and regulations of all governmental agencies having jurisdiction over the Premises regarding the use, construction, condition, or occupancy of the Premises. Both parties shall give prompt notice to the other of any notice they receive of the violation of any law or any requirement of any public authority regarding the Premises or the use or occupancy thereof. Tenant shall, at Tenant’s expense, comply with all laws and requirements of any public authorities that, in respect of the Premises or the use and occupancy thereof, or the abatement of any nuisance in, on, or about the Premises, impose any violation, order, or duty on Landlord or Tenant, arising from (a) Tenant’s use of the Premises; (b) the manner of conduct of Tenant’s business or operation of its installations, equipment, or other property therein; (c) any cause or condition created by or at the instance of Tenant; or (d) breach of any of Tenant’s obligations hereunder. |
| 6. | Common Areas: Tenant will have the nonexclusive right (in common with other tenants of the Building, Landlord, and any other person granted use by Landlord) to use all areas and facilities outside of the Premises and within the Property kept for the non-exclusive use of Landlord, Tenant, and other tenants of the Building and their respective employees, guests, and invitees (the “Common Areas”). Common Areas include portions of the Building used in common, including, but not limited to, lobby areas, building corridors, fire vestibules, elevators, foyers, electrical and telephone closets, common restrooms, mechanical and service rooms, janitor’s closets, loading docks, parking areas, and similar facilities. |
| 7. | Equipment: Tenant may install only such equipment in the Premises as is customary for the Permitted Use and will not overload the floors or electrical circuits of the Premises or Building or change the wiring or plumbing of the Building or Premises. Any equipment, cables, wiring, conduit, additional dedicated circuits, and any additional air conditioning required because of any such equipment installed by Tenant will be installed, maintained, and operated at Tenant’s sole expense and in accordance with Landlord’s requirements. Tenant agrees that any cabling installed by or for its use during its occupancy must meet the requirements of all applicable national, state, and local fire and safety codes. |
| 8. | Signs and Other Installations: Landlord shall provide Tenant with Building-standard signage located adjacent to the main entry doorway of the Premises and on the Building directory. Tenant may place signage on the Premises door, however, Tenant must obtain written approval of any signage from Landlord before installation. No other signs, awnings, or other apparatus may be painted on or attached to the Building or anything placed on any glass or woodwork of the Premises or positioned to be visible from outside the Premises, including any window covering (e.g., shades, blinds, curtains, drapes, screens, or tinting materials) without Landlord’s written consent, and Landlord’s approval of design, size, location, and color. All signs installed by Tenant must comply with Landlord’s standards for signs and all applicable codes. All signs and sign hardware must be removed by Tenant, at Tenant’s sole cost and expense, upon termination of this Lease, with the sign location restored to its former state unless Landlord elects to retain all or any portion thereof. |
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| 9. | Security Deposit: Upon execution of this Lease, Tenant shall pay to Landlord the sum of $3,566.00 (“Security Deposit”) to be held by Landlord without liability for interest, as security for the faithful performance by Tenant of Tenant’s obligations under all terms and conditions of the Lease. The Security Deposit does not represent payment of, and Tenant may not presume application of same as payment of the last monthly installment of Rent due under this Lease. Landlord will have no obligation to segregate or otherwise account for the Security Deposit except as provided for under this Section 9. Upon Tenant’s full performance of its obligations and the terms and conditions of this Lease, and, after an inspection of the Premises by Landlord, any unused portion of the Security Deposit will be returned by Landlord to Tenant, with a written description of damages and charges, if any, within (i) ninety (90) days after the date of the expiration of the Term or sooner termination of the Term of this Lease; (ii) the surrender of the Premises by Tenant in compliance with the provisions of this Lease; and (iii) Landlord’s receipt of Tenant’s forwarding address. Tenant agrees that it waives any rights and remedies with regard to the Security Deposit if it fails to provide its forwarding address to Landlord, including waiver of the right to receive a refund and to receive a description of damages and charges. However, if Tenant fails to pay Rent or other charges when due, or fails to comply with any of Tenant’s other obligations under this Lease, Landlord may apply or use all or any portion of the Security Deposit for the payment due Landlord, or to reimburse or compensate Landlord for any cost, expense, loss, claim, liability, or damage (including attorneys’ fees and any in-house legal, accounting, or other administrative costs) which Landlord suffers or incurs as a result thereof. If Landlord uses or applies any of the Security Deposit, Tenant shall, within fourteen (14) days after written request by Landlord, restore the Security Deposit to the full amount required by the Lease. |
| 10. | Execution of Lease: Upon execution of this Lease, Tenant will deliver to Landlord, a certificate of insurance as provided for under Section 11, below, the pro-rata Rent for the additional Days in Lease Month 1, if applicable, Rent for Lease Month 1 ($3,297.00), and the Security Deposit ($3,566.00). |
| 11. | Insurance: Throughout the Term, Tenant shall maintain, with a Landlord approved company, licensed to sell insurance in the State of Georgia, (i) commercial general liability insurance (“Liability Policy”) written on ISO form CG 00 01 or equivalent, with limits of at least $1,000,000 per occurrence and $2,000,000 aggregate for each location in which Tenant operates its business, in a form providing occurrence basis coverage; (ii) a special form policy of insurance covering any insurable interest that Tenant may have in the Premises or in any equipment serving the Premises, Tenant’s leasehold improvements, trade fixtures, equipment and personal property kept at the Premises, in an amount not less than the full replacement value of those items with a special form cause of loss endorsement, including coverage for wind and hail (Landlord may also require flood and/or earthquake coverage); (iii) plate glass insurance covering all plate glass in the Premises as evidenced by endorsement ISO form CP1470, or equivalent; and (iv) any other insurance required by any applicable law governing Tenant’s intended use and licenses. All such insurance policies shall (i) be written as primary coverage and noncontributory with or in excess of any coverage that Landlord may carry as evidenced by endorsement ISO form CG2001 or equivalent; (ii) contain an express waiver of any right of subrogation by the insurer against Landlord as evidenced by endorsement ISO form CG2404; and (iii) the insurance policy will not be cancelled unless Landlord is given thirty (30) days’ prior written notice. In addition, Tenant’s Liability Policy shall (i) list Landlord as additional insured, and any other parties with an insurable interest in the Premises designated by Landlord as evidenced by endorsement CG201 land CP1219 or equivalents, and (ii) be endorsed to require the insurance carrier to notify Landlord in writing of any losses charged against the policy. If any losses are charged against Tenant’s Liability Policy, Tenant shall take the necessary steps to restore such insurance so that Tenant’s insurance coverage under each such policy at all times equals at least $1,000,000 per occurrence and $2,000,000 aggregate. Before the Date of Tender, in order to gain occupancy to the Premises, and before any such insurance policy expires, Tenant shall deliver to Landlord a certificate of insurance with proper endorsements for each policy or renewal thereof that Tenant is required to maintain under this Section. If Tenant fails to maintain any insurance required by this Section, Landlord may obtain such insurance, and any premium paid by Landlord will be immediately payable by Tenant to Landlord as additional Rent. Tenant shall, at Tenant’s expense, maintain in full force and effect worker’s compensation insurance with no less than the minimum limits required by law, and employer’s liability insurance with a minimum limit of coverage of $500,000. |
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| 12. | Assignment and Subletting: Tenant shall not assign this Lease by operation of law or otherwise (including without limitation by transfer of stock, merger, or dissolution), mortgage or pledge the same, or sublet the Premises or any part thereof, without prior written consent of Landlord, which may not be unreasonably withheld. Landlord’s consent to an assignment or subletting will not release Tenant from any obligation hereunder, and Landlord’s consent will be required for any subsequent assignment of subletting. If Tenant desires to assign or sublet the Premises, it must notify Landlord at least sixty (60) days in advance, pay a nonrefundable $500.00 fee, and it shall provide Landlord with a copy of the proposed assignment or sublease and any additional information requested to allow Landlord to make informed judgments as to the proposed transferee. After receipt of notice, Landlord may elect to: (i) cancel the Lease as to the Premises or portion thereof proposed to be assigned or sublet; or (ii) consent to the proposed assignment or sublease; and if the Rent and the other consideration payable in respect thereof exceeds the Rent payable hereunder, Tenant shall pay to Landlord such excess within ten (10) days following receipt thereof by Tenant; or (iii) withhold its consent, which will be deemed to be elected unless Landlord gives Tenant written notice otherwise. |
| 13. | Access: Landlord and its agents may, at any time, enter the Premises to: inspect and supply janitorial or other services; show the Premises to prospective lenders, purchasers, or tenants; and alter, improve, or repair the Premises or the Building. Tenant waives any claim for damages for any injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, or any other loss occasioned by Landlord’s entry into the Premises in accordance with this Section. Landlord shall at all times have a key and alarm code to the Premises. Landlord may use any means which it deems proper to open any door in an emergency without liability therefor. Landlord may prevent access to or close the Building as necessary for the protection of the Building, its tenants, and visitors. |
| 14. | Landlord Obligations: Landlord shall furnish to Tenant at Landlord’s expense: |
| A. | Water at those points of supply provided for the general use of tenants of the Building; |
| B. | Heat and air conditioning in season, at such times as Landlord determines, and at such temperatures and in such amounts as reasonably considered necessary by Landlord. Service on Sundays, Saturdays, and holidays are optional on the part of Landlord; |
| C. | Janitorial services to the Premises on weekdays other than holidays and window washing as may, in Landlord’s judgment, be reasonably required. Tenant requested, nonstandard cleaning, including deep cleaning and disinfecting due to COVID-19 or other infectious pathogens, will be billed to Tenant; |
| D. | Passenger elevators for ingress and egress to and from the Premises, in common with other tenants; |
| E. | Replacement of building-standard light fixtures and bulbs; and |
| F. | Electric lighting for public areas and special service areas of the Building to the extent deemed by Landlord to be reasonable. |
| (i) | Landlord shall furnish electrical current required for normal office use of the Premises. Tenant shall pay Landlord’s cost for any excess use of electricity within ten (10) days after being invoiced therefor. Additionally, if the cost per kilowatt hour (“kwh”) for electricity serving the Building increases after the Rent Commencement Date of this Lease, Landlord may pass through any such increase (including all charges assessed as part of the electricity bill) to Tenant based on Tenant’s pro-rata share of the total square footage of the Building. Tenant shall pay such charge immediately upon receipt of written notice thereof. Landlord and its management company shall calculate said charges, and its determination will be binding on all parties. |
| (ii) | Failure to furnish, stoppage, or interruption of these services resulting from any cause other than Landlord’s gross negligence will not render Landlord liable, in any respect, for damages to either person, property or business, or be construed as an eviction of Tenant, work as an abatement of rent, or relieve Tenant from performance of its obligations. Should any equipment furnished by Landlord cease to function properly, Tenant shall notify Landlord immediately, and Landlord shall use reasonable diligence to repair the same promptly. If Tenant fails to notify Landlord of any such defective condition when Tenant knows or should reasonably know of the condition, Tenant will be solely responsible for any damage or loss of any kind that results from the defective condition. Landlord shall not be obligated to furnish these services if Tenant is in default under this Lease. In the event of a stoppage of services caused by Landlord’s gross negligence, rent will be abated in accordance with the number of days, or partial days, in which services were unavailable to the Premises. |
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| (iii) | Landlord shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire hydrants, parking lots, walkways, parkways, driveways, fences, utility systems, and any repairs of these areas that are the result of weather. Landlord shall not be obligated to paint the exterior or interior surfaces of exterior walls, nor will Landlord be obligated to maintain, repair, or replace windows, doors, or plate glass of the Premises. Tenant expressly waives the benefit of any statute now or hereafter in effect which would otherwise afford Tenant the right to make repairs at Landlord’s expense because of Landlord’s failure to keep the building, or common areas in good order, condition, and repair. |
| 15. | Tenant Maintenance: Tenant shall, at Tenant’s sole cost and expense and at all times, keep the Premises and every part of it in good order, condition, and repair, including interior walls, interior surfaces of exterior walls, ceilings, floors, windows, blinds, doors, keys, locks, plate glass, plumbing, and hot water heaters located inside or servicing the Premises, all appliances and systems that serve the Premises, and signage, but excluding any items which are the responsibility of Landlord as listed above. Tenant, in keeping the Premises in good order, condition, and repair, shall exercise and perform good maintenance practices. If Tenant fails to perform Tenant’s obligations under this Section, Landlord may enter upon the Premises after ten (10) days’ prior written notice to Tenant (except in the case of an emergency as reasonably determined by Landlord, in which case no notice will be required), perform such obligations on Tenant’s behalf, and, at Tenant’s cost, put the Premises in good order, condition, and repair at Tenant’s sole cost and expense. |
| 16. | Landlord / Tenant Improvements: Landlord shall touch up the existing wall paint and professionally shampoo the existing carpet. Otherwise, tenant shall accept the Premises in its “AS-IS” condition. Any and all tenant improvements must be approved by Landlord in writing before commencement of any work, which will be at Tenant’s sole expense. Tenant’s improvements must not harm the structure, electrical, plumbing, heating, or air conditioning facilities of the Premises or the Building and must comply with all applicable building codes, regulations, and laws, including the Americans with Disabilities Act and other laws relating to the use of the public areas of the Premises by individuals with disabilities. |
| 17. | Renovations to Premises: Landlord may, at Landlord’s sole discretion and at Landlord’s sole expense, perform such acts and make such other changes to the Premises (except for changing the dimensions of the Premises) as Landlord may deem appropriate, but Landlord will undertake reasonable care with respect to such acts or changes to the Premises so as to cause as little interference with Tenant’s business as is reasonably possible. |
| 18. | Rules: Tenant shall abide by the Property Rules and Regulations (attached as Exhibit B) which may be changed or amended, at any time, by Landlord to promote a safe, orderly, and professional building environment, and Landlord shall uniformly enforce such Property Rules and Regulations against all tenants leasing space at the Property. |
| 19. | Notices: All notices and other communications hereunder must be in writing, delivered in person, by email transmission, or by certified and first class U.S. mail, postage prepaid, to Landlord or Tenant, as the case may be, at its address set forth on Page 1 of this Lease, except that Landlord may also give Tenant notice by posting at the Premises. Either party may designate in writing a change in its notice address, but Landlord may always give notice to Tenant by posting it at the Premises. Notices that are delivered in person, posted, or emailed will be deemed given when received, posted, or emailed. Notices that are mailed will be deemed given three (3) days after the date they are mailed. |
| 20. | Option to Renew: Provided this Lease is in full force and effect and Tenant is not then in default under this Lease, Tenant will have the option to extend this Lease for one (1) period of three (3) years (“Renewal Period”) on the same terms and conditions as the initial Lease Term with the exception of the Base Rent, which will be set at the prevailing market rate for comparable space in the Duluth area. This renewal option will be exercisable upon notice from Tenant to Landlord at least one hundred eighty (180) days before the expiration of the Term, time being of the essence, upon which notice Landlord shall provide Tenant with the Base Rent for the Renewal Period per the provisions of this section. |
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| 21. | Surrender of Premises: Tenant shall surrender the Premises by the end of the last day of the Term, or any earlier termination date, clean and free of debris and in good operating order, condition, and state of repair, in the same or better condition as provided to Tenant by Landlord, ordinary wear and tear excepted. Ordinary wear and tear will not include any damage or deterioration that would have been prevented by good maintenance practice or by Tenant performing all of its obligations under this Lease. Tenant shall also remove any and all improvements and alterations made to the Premises by Tenant or made at Tenant’s expense unless waived by written authorization of Landlord. If any property or fixtures, whether owned by Tenant or a third party, remain in the Premises after surrender, Landlord may remove, store, or dispose of the property or fixtures in any manner it deems appropriate, at Landlord’s sole discretion and at Tenant’s sole expense, and Landlord will not be liable for any trespass or any other associated claim. |
| 22. | No Right to Holdover: If Tenant fails to vacate the Premises or any part thereof on expiration or early termination of this Lease, including failure to remove all its personal property or Tenant-owned alterations, Landlord may elect either: (i) to treat Tenant as a tenant from month-to-month, subject to the provisions of this Lease, except that Rent will be increased to two hundred percent (200%) of the total Rent attributable pro-rata to the month immediately preceding such expiration; or (ii) to eject Tenant from the Premises (using self-help or otherwise) and recover from Tenant damages caused by the wrongful holdover, including, but not limited to lost Rent, damage and repair of the Premises, cost of reletting, broker’s commission, and attorneys’ fees and costs, including fees for in-house legal, accounting, and other administrative staff and expenses. In addition, Landlord, at its sole option and discretion, may dispose of any personal property or Tenant owned alterations without notice to Tenant by throwing away the property or by giving it away without consideration to a nonprofit or to a person unrelated to Landlord without being deemed guilty of trespass and without liability for any loss or damages to Tenant. |
| 23. | Default: If Tenant fails to make payment of any installment of Rent or other payment within five (5) days of when due, or Tenant’s failure to perform any of the covenants herein, Tenant shall, at Landlord’s request, quit and render to Landlord the peaceable possession of the Premises, but Tenant’s obligation to pay Rent through the end of the Term will not cease. Landlord will have the right, but not the obligation, with or without judicial process, to change locks to the Premises, to remove all personal property and store or dispose of it at Tenant’s expense without being deemed guilty of trespass and without liability for any loss or damage, reenter into possession, and/or to re-rent all or any portion of the Premises at Landlord’s sole discretion and credit such rentals received, less any expenses involved, including, but not limited to, the damage and repair of the Premises, cost of reletting, broker commission, and attorneys’ fees and costs (including fees for in-house legal, accounting, and other administrative staff and expenses) to the obligation of the Tenant. Tenant agrees to surrender the peaceful possession of the Premises in the condition as required above. If Tenant defaults, Landlord may: (a) request submission of Tenant’s financial statements, in form reasonably requested by Landlord; and (b) run credit reports and other similar reports on Tenant. Landlord’s pursuit of any remedy or remedies, including without limitation, any of the remedies herein, will not preclude pursuit of any other remedy or remedies provided in this Lease Agreement or by law or in equity, separately or concurrently or in any combination. Non-monetary covenant violations by Tenant will require notification by Landlord and have a ten (10) day cure period after written notification. Tenant’s failure to perform any obligation set forth in this Lease two (2) or more times in any twelve (12) month period shall effect an immediate default, and Landlord thereupon may exercise any remedy set forth in this Section without affording Tenant any opportunity to cure such default. |
| 24. | Payment upon Default: Upon any event of Default, Tenant shall pay to Landlord all costs incurred by Landlord (including court costs and attorneys’ fees and costs (including fees for in-house legal, accounting, and other administrative staff and expenses) in (a) obtaining possession of the Premises; (b) removing, storing, or disposing of Tenant’s or any other occupants’ property; (c) repairing, restoring, altering, remodeling, or otherwise putting the Premises into condition acceptable to a new tenant; (d) if Tenant is dispossessed of the Premises and this Lease is not terminated, reletting all or any part of the Premises (including brokerage commissions, costs of tenant finish work, and all other costs incidental to such reletting); (e) performing Tenant’s obligations which Tenant failed to perform, including payment of Rent through the end of the Lease Term; and (f) enforcing, or advising Landlord of its rights, remedies, and recourses arising out of the Event of Default. If Tenant commits a monetary default, Landlord, at its sole discretion, may demand and declare due a sum, without offset, credit or deduction, equal to the full amount of all Base Rent for the Term not yet paid by Tenant. Tenant shall pay such sum as damages for Tenant’s default, not as a penalty. If Landlord subsequently relets the Premises, the accelerated amount collected from Tenant will be rebated to Tenant from the amounts received by Landlord from such reletting, after deducting the costs and expenses of such reletting, and such deduction will include any difference in rental rate of such reletting compared to the Base Rent. Tenant agrees that Landlord’s damages caused by a Tenant breach of this lease would be difficult or impossible to estimate accurately. Payment of accelerated rent under this provision is intended not as a penalty but as liquidated damages. |
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| 25. | Payment Default: In addition to the remedies in Section 23 above, after any default payment by Tenant (i.e., late payment, a returned check, or reversed credit card charge), Landlord may require that the Tenant make future payments by certified check, cashier’s check, or money order, for so long as Landlord may reasonably require. In addition, Tenant shall pay Landlord a fifty dollar ($50) fee for each check received by Landlord which is returned by Tenant’s bank unpaid and each credit or debit card payment by Tenant which is declined, in addition to any fee charged by Landlord’s bank or payment processing institution. |
| 26. | Attorneys’ Fees: If Landlord employs an attorney to interpret, enforce, or defend any of its rights or remedies hereunder, Tenant shall pay Landlord’s reasonable attorneys’ fees and costs, including fees for in-house legal, accounting, and other administrative staff and expenses incurred in such dispute. |
| 27. | Attornment: If any proceedings are brought for the foreclosure of any mortgage or trust deed, if any ground or underlying Lease is terminated, or the Building and Property are sold, Tenant shall attorn, without any deductions or set-offs, to the purchaser upon any such foreclosure sale, to the Lessor of such ground or underlying Lease, or to the new owner, as the case may be, if requested by such Purchaser or Lessor, and shall recognize such Purchaser or Lessor as the Landlord under this Lease, so long as the Lienholder or Purchaser or Ground Lessor agrees to accept this Lease and not disturb Tenant’s occupancy, so long as Tenant timely pays the Rent and observes and performs all its obligations under this Lease. Furthermore, such lender, as successor to Landlord, will not be liable for any act, omission, or obligation of any prior landlord, and lender will have the option, if lawful, to reject such attornment. Tenant shall, immediately upon request, execute such documents, including estoppel letters, as may be required for the purposes of subordinating or verifying this Lease. |
| 28. | Indemnity: Unless as a result of Landlord’s or its contractors’, employees’, or agents’ negligent or willful or wanton acts or omissions, Landlord will not be liable for, and Tenant will defend, indemnify, and hold harmless Landlord against all fines, suits, claims, demands, losses, and actions, including attorneys’ fees, for any injury to persons or damage to or loss of property on or about the Premises or in or about the Building caused by the Tenant, its employees, invitees, licensees, or by another person entering the Premises or the Building under express or implied invitation of the Tenant, or arising out of Tenant’s occupation, use, maintenance, and/or modification of the Property or Landlord’s maintenance of the Property. This waiver and indemnity obligation will survive the termination or expiration of the Lease. |
| 29. | Landlord’s Liability: The liability of Landlord to Tenant for any default by Landlord under the terms of this Lease will be limited to Tenant’s actual direct, but not consequential, damages therefrom and will be recoverable from the interest of Landlord in the Building, and Landlord will not be personally liable for any deficiency. Landlord expressly advises Tenant that Landlord’s intention is that Tenant will have full responsibility for, and shall assume all risk to, persons and property while in, on, or about the Premises. |
| 30. | Casualty: If the Building is totally destroyed by casualty, or if the Premises or the Building is so damaged that Landlord determines, within its sole discretion, that repairs cannot be completed within one hundred twenty (120) days after the date of such damage, Landlord may terminate this Lease. Landlord will not be required to rebuild, repair, or replace any part of the furniture, equipment, fixtures, and other improvements which may have been placed by Tenant in the Premises. Any insurance which may be carried by Landlord against loss or damage to the Building or the Premises, will be for the sole benefit of Landlord, and/or the party carrying such insurance. |
| 31. | Landlord’s Lien: In addition to any statutory Landlord’s lien, Tenant grants to Landlord a security interest to secure payment of all Rent and performance of all of Tenant’s other obligations hereunder, in all equipment, furniture, fixtures, improvements, and other personal property located in or on the Premises, and all proceeds therefrom. Such property will not be removed from the Premises without Landlord’s written consent until all Rent due and all Tenant’s other obligations have been performed. In addition to any other remedies, upon an event of default, Landlord may exercise the rights afforded a secured party under the Uniform Commercial Code Secured Transactions for the state in which the Building is located. Tenant grants to Landlord a power of attorney to execute and file financing statements and continuation statements necessary to perfect Landlord’s security interest, which power is coupled with an interest and will be irrevocable during the Term. Any property left in the Premises at the time of a default, or termination of the Lease for whatever reason, will be deemed abandoned and, after thirty (30) days from default or termination, Landlord may dispose of it by any means it deems appropriate without notice to Tenant. |
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| 32. | Entire Agreement; Joint and Several; Successors and Assigns: This Lease constitutes the entire agreement between the parties concerning the matters set forth herein. All obligations of each undersigned Tenant will be joint and several, and all references to Tenant shall mean each and every Tenant. This means that each Tenant signing below is responsible for all obligations in this Lease. This Lease will be binding upon and inure to the benefit of the parties and their respective successors, permitted assigns, heirs, and legal representatives. |
| 33. | Applicable Law: This Lease will be governed by and construed pursuant to the laws of the state in which the Building is located. |
| 34. | Severability: If any provision of this Lease is declared null, void, or unenforceable by any court having jurisdiction over this Lease, the Premises, and/or the Building, then the remainder of this Lease not so declared null, void, or unenforceable will be and remain in full force and effect. |
| 35. | Authority: If Tenant executes this Lease as a corporation or other entity, each of the persons executing this Lease on behalf of Tenant personally covenants and warrants that Tenant is duly authorized and validly existing, that Tenant is qualified to do business in the state in which the Building is located, that Tenant has full right and authority to enter into this Lease, and that each person signing on be half of Tenant is authorized to do so. |
| 36. | Electronic Signatures and Counterparts: This Lease may be executed in one or more counterparts, which taken together, will constitute one and the same original document. Copies of original signature pages of this Lease may be exchanged electronically, and any such copies will be treated as originals. This Lease may be executed and stored under the provisions of the Uniform Electronic Transactions Act, Ga. Code Ann. § 10-12-1 et seq. |
| 37. | Representation: Carmen Delgado with La Rosa Realty represents the Tenant regarding this agreement and will be paid a commission by landlord per separate agreement. |
| 38. | Exhibits: |
Exhibit A: Floor Plan
Exhibit B: Property Rules and Regulations
Exhibit C: Lease Contact Information Request
Exhibit D: Certificate of Acceptance
(Signatures to follow)
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Landlord and Tenant have executed this Lease Agreement under seal on this____day of__________, 2024 (“Effective Date”).
| LANDLORD: | TENANT: | |
| AMERICAN CAPITAL PROPERTIES, LLC | LA ROSA REALTY GEORGIA, LLC | |
| Signature: _______________________(Seal) | Signature:_______________________(Seal) | |
| Printed:_________________________ | JOSEPH LA ROSA | |
| Title:____________________________ | Title: CEO | |
| Date:____________________________ | Date:____________________________ |
| TENANT: | TENANT: | |
| CARMEN DELGADO | JOSEPH LA ROSA | |
| ____________________________________(Seal) | _________________________________(Seal) | |
| Carmen Delgado | Joseph La Rosa | |
| Date:____________________________ | Date:____________________________ |
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EXHIBIT A
FLOOR PLAN
Intentionally omitted.
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EXHIBIT B
PROPERTY RULES AND REGULATIONS
| 1. | Tenant shall refer all contractors, contractors representatives, and installation technicians rendering any service to Tenant, to Landlord for Landlord’s supervision, approval and control before performance of any contractual service. This provision shall apply to all work performed in the Building including installations of telephones, electrical devices and attachments, and installations of any nature affecting doors, walls, woodwork, trim, windows, ceilings, equipment, or any other physical portion of Building. |
| 2. | No additional locks or bolts may be placed upon any of the doors or windows by any tenant nor may any changes be made to existing locks or the mechanism thereof without consulting Landlord. Tenant shall, upon the termination of its tenancy, return to Landlord all keys to the Premises. If Tenant fails to return any such key. Tenant shall pay to Landlord the cost of changing the locks to the Premises. Tenant shall receive a maximum of ten (10) building access cards. |
| 3. | Tenant assumes all risk for damage and injury to persons or public due to the movement of articles including equipment, property, and personnel, whether or not it is engaged in such movement. Landlord will not be liable for acts of any person engaged in, or any damage or loss to any property or persons resulting from, or any act in connection with, such service performed for Tenant. All hand trucks, carryalls, or similar appliances used for the delivery or receipt of merchandise or equipment will be equipped with rubber tires, side guards and such other safeguards Landlord may require. |
| 4. | No signs, advertisements or notices will be painted or affixed on or to any windows or doors, or other parts of the Building or Property, except of such color, size and style and in such places, as will be first approved in writing by Landlord, the cost of which will be borne by Tenant. No nails, hooks, or screws will be driven or inserted in any part of the Building, except by the Building maintenance personnel, nor shall any part be defaced by Tenant. Building standard suite entrance signs to Premises will be placed thereon by a contractor designated by Landlord at Tenant’s expense. |
| 5. | Except as otherwise permitted by the Lease, Tenant shall not place, install, or operate on the Premises or in part of the Building, any engine, refrigerating equipment (other than a home-type refrigerator), heating or air conditioning apparatus, stove or machinery, or conduct mechanical operations or cook thereon (other than in a home-type microwave oven), or place in or about the Premises any explosives, gasoline, kerosene, oil, acids, caustics, or any other inflammable, explosive, hazardous, or odorous material without the prior written consent of Landlord. Home - type refrigerators and microwaves may only be placed in a designated kitchen area. No portion of the Premises may at any time be used for cooking (other than in a home-type microwave oven) or as lodging quarters. No tenant may cause or permit any unusual or objectionable odors to be produced upon or emanate from the Premises. Tenant and its agents and invitees shall not conduct or permit any activities that might constitute a nuisance or otherwise present or constitute a health or safety hazard or illegal activity. |
| 6. | Landlord will not be responsible for lost or stolen personal property, equipment, money, or jewelry from the Building, the Premises, or any other area on or about the Property, regardless of whether such loss occurs when these areas were locked against entry or not. |
| 7. | No birds or other animals may be brought into or kept in or about the Building, except service animals per the Americans with Disabilities Act. |
| 8. | Employees of Landlord shall not receive or carry messages for or to Tenant or other person, nor contract with or render free or paid services to Tenant or Tenant’s agents, employees, or invitees. |
| 9. | Landlord shall not permit entrance to Tenant’s offices by, use of pass keys controlled by Landlord to any person at any time without written permission by Tenant, except employees, contractors, or service personnel directly supervised by Landlord. |
| 10. | The entries, passages, doors, elevators and elevator doors (if provided), hallways or stairways must not be blocked or obstructed; no rubbish, litter, trash, or material of any nature will be placed, emptied or thrown into these areas, and such areas must not be used at any time except for ingress or egress by Tenant, Tenant’s agents, employees or invitees to or from the Premises. No tenant and no employees or invitees of any tenant shall go upon the roof of the Building. Tenant shall not prop open the entry doors to Building or Premises. |
| 11. | Plumbing fixtures and appliances must be used only for purposes for which constructed, and no sweepings, rubbish, rags or other unsuitable material may be thrown or placed therein. Damage resulting to any such fixtures or appliances from misuse by Tenant, its employees, agents, visitors, or licensees will be paid by Tenant and Landlord shall not in any case be responsible therefor. |
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| 12. | Landlord wants to maintain the highest standards of environmental comfort and convenience for all tenants. Please report any undesirable conditions or lack of courtesy or attention directly to the management. Tenant shall give immediate notice to Landlord of accidents in the Premises or in the Common Areas or of defects therein or in any fixtures or equipment, or of any known emergency in the Building. Tenant shall not hold events in the parking areas or Common Areas without prior, written approval of Landlord. |
| 13. | Tenant shall not make, or permit to be made, any unseemly or disturbing noises, interfere with occupants of this or neighboring buildings or premises, or those having business with them, whether by the use of any devise, musical instrument, radio, unmusical noise, whistling, singing, or in any other way interfering with others’ quiet enjoyment of the Building. |
| 14. | Landlord will have the right to make such other and further reasonable rules and regulations as in the judgment of Landlord may from time to time be needful for the safety, appearance, care, and cleanliness of the Building and for the preservation of good order therein. Landlord will not be responsible to Tenant for any violations of rules and regulations by other tenants. |
| 15. | Tenant and its agents, employees, and invitees shall obey all parking control measures put in place by Landlord such as signs, identifying decals, or other instructions. Bicycles may be stored in the Premises if the floors are cleaned of any dirt or debris left at the end of the Lease Term. |
| 16. | No safes or other objects, larger or heavier than the Building is limited to carry, will be brought into or installed on the Premises. Landlord may prescribe the weight and position of safes or other heavy objects, and Tenant shall install additional supportive materials at Tenant’s expense, if Landlord so requires. |
| 17. | Landlord has no obligation to clean, repair, re-stretch, or replace carpeting. Tenant shall provide and use chair pads and carpet protectors at all desk and furniture locations. |
| 18. | Names to be replaced on or removed from directories must be given to Landlord in writing on Tenant’s letterhead. All replacement directory strips will be installed at Tenant’s expense. Landlord shall determine size and uniformity of strips. |
| 19. | Tenant shall see that the doors and windows of the Premises are closed and securely locked before leaving the Building and must observe strict care not to leave such doors and windows open and exposed to the weather or other elements. Tenant shall exercise extraordinary care and caution to shut off all water faucets or water apparatus before the Tenant or Tenant’s employees leave the Building, and Tenant shall shut off all electricity, gas, and air conditioning to prevent waste or damage, where controlled by Tenant. |
| 20. | Canvassing, soliciting, and peddling in the Building are prohibited. All Tenants shall cooperate to prevent the same. |
| 21. | Tenant shall patch and repair all nail holes in the Premises when vacating the Premises. |
| 22. | All holiday decorations and other temporary or special decorations must be flame-retardant. No live Christmas trees or candles may be used in the Building. No decorations may be hung on the exterior windows or on exterior suite doors. |
| 23. | No smoking is permitted in the Building. |
| 24. | The Premises must not be used for any purpose that is disreputable or may draw protests. Landlord may exclude or expel from the Building any person who, in the judgment of Landlord, is intoxicated, or who violates any of the Rules and Regulations. |
| 25. | On Saturdays, Sundays, legal holidays, and on any other days between the hours of 2:00 p.m. and 7:00 a.m., Landlord may keep all doors to the Building locked and access to the Building, halls, corridors, elevators, stairways, or to the Premises may be refused unless the person seeking access is an employee of the Building or is properly identified as a tenant of the Building. Landlord will not be liable for damages for any error with regard to the admission or exclusion from the Building of any person. |
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| 26. | Parking: |
The parking rules are designed to assure our tenants and visitors safe use and enjoyment of the facilities, All parking. unless otherwise designated by Landlord, is unreserved. Please remove or hide any personal items of value from plain sight to avoid temptation leading to vandalism of vehicles. Please exercise added caution when using the parking lot at night. Please keep vehicles locked at all times. Please report violations of these rules to Landlord immediately. Please report any lights out or other possibly dangerous situations to Landlord as soon as possible.
Restrictions:
| ● | Damage caused by a vehicle is the responsibility of that vehicle’s owner. |
| ● | Landlord is not responsible for theft or damage to any vehicles. |
| ● | The speed limit is five miles per hour in the parking areas. |
| ● | Vehicles on the Property must be properly maintained to prevent leaks or discharge onto the parking surface. |
| ● | Mechanical repairs to vehicles are not permitted on property. |
| ● | Large or oversize vehicles such as motor homes, boats, or trailers arc not permitted. |
| ● | No parking in fire lanes, loading zones, or any other areas not designated as a parking space. |
| ● | Landlord, at Landlord’s sole discretion, may add or modify the parking rules. |
Landlord, at its sole discretion. may designate or change the specific space or area in which vehicles must be parked. Violations of parking rules may result in towing from the Property. Towing from the Property may only be ordered by Landlord or its agents. Charges for towing must be paid by the vehicle’s owner.
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EXHIBIT C
TENANT CONTACT INFORMATION
To ensure Landlord’s electronic notification system works properly, and Tenant receives Lease notifications, Landlord requests the following contact information from Tenant.
| Tenant: | Carmen and Joe | , Suite 115 South at the Crescent |
Main Contact:
| Name: | Carmen Delgado | Title: | Manager | ||
| Email: | [*] | Phone: | [*] |
Billing Contact (this individual will only receive electronic notifications)
| Name: | Caroline Marte | Title: | Accounting Manager | ||
| Email: | caroline@larosarealtycorp.com | Phone: | 407-901-3199 |
Emergency Contact:
| Name: | Carmen Delgado | Title: | Manager | ||
| Email: | [*] | Phone: | [*] |
Should this contact information change please update this information by forwarding the updated information to Landlord by
Facsimile: (503) 699-1185, Attn: Lease Contact
or by Email to: tenantinquiry@americancapitalpropertiesllc.com
Please note the following example, as this is how automatic notifications will arrive in your email. Depending on your service provider’s settings, this message may be placed in a junk or spam folder until you release or indicate the messages are safe. All electronic notifications from our office will arrive via:
cdr@yardi.com on behalf @americancapitalpropertiesllc.com
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EXHIBIT D
JANITORIAL SERVICE
Tenant requests the following janitorial services which are provided each night Sunday through Thursday excluding holidays:
☒ Full service
☐ No service:
☐ Limited service (please list special instructions):___________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
Alarm code: ___________________________________
After hours’ emergency contact:
| Name: | CARMEN DELGADO | Phone: | [*] |
A copy of this exhibit will be provided to the janitorial company for reference.
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EXHIBIT E
CERTIFICATE OF ACCEPTANCE
The undersigned, having entered into a certain Lease dated on or about the_____day of _____________, 2024, by and between the undersigned as Tenant and American Capital Properties, LLC as Landlord, DOES HEREBY CERTIFY that:
| 1. | The Lease in in full force and effect without offset or defense; |
| 2. | The undersigned has taken possession of the Premises described in the Lease; |
| 3. | The Commencement Date is______________________________, |
| 4. | The Date of Tender is__________________ |
| 5. | If the Date of Tender is a day other than the first day of the month, the number of Additional Days, to calculate the prorated Rent amounts for Lease Month 1, is (days); |
| 6. | The prorated Additional Days Rent for Lease Month 1, if any, is $_______________days x Additional Days Rent at $108.39 per diem); |
| 7. | The Rent for Lease Month 1 is $3,297.00; and |
| 8. | The Security Deposit is $3,566.00.00. |
I have hereunto set my hand and seal this____day of_______, 2024.
| LA ROSA REALTY GEORGIA, LLC | |
| ________________________________(Seal) | |
| Tenant’s Signature | |
| JOSEPH LA ROSA | |
| ________________________________(Seal) | |
| Tenant’s Signature | |
| CARMEN DELGADO | |
| ________________________________(Seal) | |
| Tenant’s Signature |
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Exhibit 10.125
| COMMERCIAL LEASE AGREEMENT |
THIS COMMERCIAL LEASE AGREEMENT (the “Lease”) is made and entered into as of this 1st Day of March 2024 by and between HOLDER INVESTMENTS, INC. (the “Landlord”) and LA ROSA REALTY, LLC (The “Tenant”) for the transfer of certain lease hold interests and the possession, occupancy and use of the Premises, as hereinafter described. (The Landlord and the Tenant are also collectively referred to as the “Parties” herein).
W I T N E S S E T H:
WHEREAS, Landlord desires to lease unto Tenant the Premises for the period and under the terms and conditions set forth herein.
NOW THEREFORE, for and in consideration of the premises and mutual covenants hereinafter contained, the receipt and sufficiency of which are hereby mutually acknowledged, Landlord agrees to lease unto Tenant and Tenant agrees to lease, rent and possess the Premises upon the following terms and conditions:
ARTICLE ONE- DEFINITIONS
1.1 Definitions. The following terms shall, throughout this Lease have the definition set forth adjacent to them below:
“Additional Rent” shall mean all charges payable by Tenant other than Base Rent.
“Building” (shall mean that certain building structure and related improvements, common areas, facilities and systems located on the Property with a common street address of 1165 E Plant St. Unit 8, Winter Garden, Florida 34787 and within which is situated the Premises.
“Commencement Date” shall mean the 1st Day of March 2024.
“Lease Term” shall mean the period commencing with the Commencement Date and ending with the Termination Date.
“Net Rentable Area” shall mean that portion of the Building, measured in square feet, potentially available for rental, which shall be determined by the Landlord in its sole discretion.
“Premises” shall mean that certain space located within the Building which is shown on Exhibit “B” and which is by this reference made a part hereof and commonly known as 1165 E Plant St. Unit 8, Winter Garden, Florida 34787.
“Property” shall mean that certain parcel of real property upon which is situated the Building, which is more particularly described on the attached Exhibit “A” and which is by this reference made a part hereof.
“Renewal Lease Term” shall mean the period of any renewal term of the Lease.
“Rent Commencement Date” shall mean the 1st Day of March 2024.
“Rules and Regulations” shall mean the common rules and regulations adopted from time to time, as the same may be amended, by the Landlord in its sole reasonable discretion and in connection with its operation of the Premises, Building and Property, which shall, in addition to the Lease, govern the Tenant’s possession, use and occupation of the Premises and Building, attached hereto as Exhibit “C”.
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
“Tenant’s Proportionate Share” shall mean the percentage which the Net Rentable Area then leased by the Tenant in the Building bears to the total Net Rentable Area contained in the Building and is agreed by the parties to be .06%.
“Termination Date” shall mean the 28th Day of February 2027.
ARTICLE TWO - LEASE OF PREMISES
Landlord leases unto Tenant and Tenant does hereby rent, lease and take the Premises under this Lease for the period and according to the terms and conditions set forth herein. The common areas serving the Building will at all times be subject to Landlord’s exclusive control and management in accordance with the terms and provisions of this Lease and the Rules and Regulations of the Building.
ARTICLE THREE - TERM
3.1 Term. The Lease Term is for a period of 3 years (36 months) commencing on the Commencement Date and ending on the Termination Date, unless postponed or sooner terminated in accordance with the terms this Lease.
3.2 Delays in Commencement. Landlord shall not be liable to Tenant if Landlord does not deliver possession of the Premises to Tenant on the Commencement Date. Landlord’s non-delivery of the Premises to Tenant on the Commencement Date shall not affect this Lease or the obligations of Tenant under this Lease except that the Commencement Date shall be delayed until Landlord delivers possession of the Premises to Tenant and the Lease Term shall be extended for a period equal to the delay in delivery of possession of Premises to the Tenant, plus the number of days necessary to end the Lease Term on the last day of a month. If Landlord does not deliver possession of the Premises to Tenant within sixty (60) days after the Commencement Date, and if such delay is caused by factors within the control of the Landlord, Tenant may elect to cancel this Lease by giving written notice to Landlord within ten (10) days after the sixty-day period ends. If Tenant gives such notice, and Landlord does not deliver possession of the Premises to Tenant within three (3) days after receipt of said notice, the Lease shall be canceled and neither Landlord nor Tenant shall have any further obligations to the other except for any obligations that survive termination of the Lease as set forth herein. If Tenant does not give such notice, Tenant’s right to cancel the Lease shall automatically expire and the Lease Term shall commence upon delivery of possession of the Premises to Tenant. If delivery of possession of the Premises is delayed, and Landlord so requests, Landlord and Tenant shall, upon such delivery, execute an amendment to this Lease setting forth the actual Commencement Date and Termination Date of the Lease. Failure to execute such amendment shall not affect the actual Commencement Date or Termination Date of the Lease.
3.3 Early Occupancy. If Tenant occupies the Premises or any portion thereof prior to the Commencement Date, Tenant’s occupancy of the Premises shall be subject to all of the provisions of this Lease. Early occupancy of the Premises shall not advance the Termination Date of this Lease.
3.4 Holding Over. Tenant shall vacate the Premises upon the expiration or earlier termination of this Lease. Tenant shall reimburse Landlord for and indemnify Landlord from and against all damages, which Landlord may incur for Tenant’s delay in vacating the Premises. If Tenant does not vacate the Premises upon the expiration or earlier termination of this Lease and Landlord thereafter accepts rent from Tenant, Tenant’s occupancy of the Premises shall be a “month-to-month” tenancy, subject to all of the terms and provisions of this Lease applicable to a month-to-month tenancy, except that the Base Rent shall be increased to twice the amount due under the last year of the Lease Term, prorated on a daily basis until Tenant surrenders possession as required by this Lease.
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
ARTICLE FOUR - THE PREMISES:
USE AND INITIAL
CONDITION; PARKING AND COMMON AREAS
4.1 Use of Premises. Tenant shall use and occupy the Premises for the conduct of Tenant’s business as a real estate agent office as agreed upon by the Landlord and for no other purpose. The Premises shall not be used for any illegal purpose, or in any manner to create any nuisance or trespass; or in a manner which is disruptive to other tenants; nor in any manner to invalidate Landlord’s insurance or to increase Landlord’s insurance premium rate (all to be determined at Landlord’s sole discretion). Tenant shall not connect any apparatus, machinery, equipment or device with existing water lines without the written consent of the Landlord.
4.2 Compliance with Law. Tenant shall not use the Premises nor permit anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter be enacted or promulgated. Tenant shall at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any board of underwriters or other similar body now or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises.
4.3 Rules and Regulations. Tenant agrees to, and shall, comply with the Rules and Regulations attached hereto as Exhibit “C” which by reference are incorporated herein, and all reasonable modifications and additions to the Rules and Regulation’s from time to time adopted by the Landlord in its sole and absolute discretion. The Landlord shall not be responsible to the Tenant for the nonperformance of any of the Rules or Regulations by any other tenant of the Building. The existence of and incorporation into this Lease of the Rules and Regulations shall not have the effect of subrogating the Tenant to the rights of the Landlord to enforce the Rules and Regulations against other Tenants in the Building. The existence of the Rules and Regulations shall not be construed to impose upon the Landlord any duty or obligation to enforce the Rules and Regulations.
4.4 Condition of Premises. Tenant hereby acknowledges (per the Inspection Check list See Exhibit “F”) that it has inspected and examined the Premises and Tenant agrees that the Premises is in good and habitable condition and is fully acceptable and suitable for Tenant’s intended use. Tenant’s taking of possession shall be deemed conclusive evidence and confirmation of the foregoing. In the event alterations or improvements are to be made to the Premises, such shall be made in accordance with a separate written agreement between Landlord and Tenant. Unless Tenant provides written notification to Landlord of any objections to the condition of the Premises following any such alterations or improvements within ten (10) days of Tenant’s initial possession, it shall be conclusive evidence that the alterations and improvements specified in such separate agreement were properly completed and Tenant agrees that the Premises, as altered and improved, is in good and habitable condition and is fully acceptable and suitable for Tenant’s intended use. Tenant represents and warrants that it has not relied on any oral statement of the landlord prior to entering this Lease and further states that Tenant solely relied on the terms and conditions of this Lease. Tenant agrees to release and hold harmless Landlord from any such misrepresentations or warranties pertaining to the condition, zoning or other matters affecting the Premises.
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
4.5 Parking. In addition to the use of the Premises, Tenant shall have a nonexclusive right of use of parking paces located in the automobile parking areas, together with driveways and foot ways, and the Landlord may designate such loading facilities as from time to time. Tenant’s rights hereunder shall be subject to the terms and conditions of this Lease and to reasonable Rules and Regulations regarding the use thereof as may, from time to time, be prescribed by the Landlord. Individual parking spaces will be unassigned. Landlord reserves the right in Landlord’s sole discretion to designate areas for Tenant’s parking spaces. Landlord shall not be liable for any damage of any nature whatsoever to, or any theft of, vehicles or the contents there of, while in or about the automobile parking areas.
4.6 Common Areas. All common areas and facilities which the Tenant may be permitted to use and occupy, are to be used and occupied under a revocable license, and if such license is revoked, or if the amount of such areas are diminished, the Landlord shall not be subject to any liability nor shall the Tenant be entitled to any compensation or diminution or abatement of rent, nor shall such revocation of license or diminution of such areas be deemed constructive or actual eviction. Tenant’s use of the common areas shall be subject to the Rules and Regulations.
ARTICLE FIVE - RENT
5.1 Initial Base Rent. Tenant shall pay to the Landlord at the place hereinafter designated by the section entitled “Notices”, or at such other place as the Landlord may from time-to-time designate Initial Base Rent. The payment of Initial Base Rent shall be due and payable in twelve equal monthly installments (See Section 5.2) in legal tender of the United States of America in advance without notice, demand, and deduction or set-off of any kind, payable on the first day of each month, plus all applicable sales and use taxes. The first such installment shall be paid on or before the first day of the first full calendar month of the Lease Term and successive installments on or before the first day of each and every successive calendar month thereafter during the Lease Term. If any rent payment shall not be paid on or before the date due, the Tenant shall pay a late charge equal to $20.00 per day for each day any rent payment shall be past due; provided, however, that in the event any rent payment shall be five (5) days past due, the Tenant shall also pay a late charge equal to ten percent (10.0%) of the rent due. There will be a $100.00 processing fee for any rent payments that are returned for any reason.
5.2 Initial Base Rent Adjustment. For multiple year leases the initial Base Rent for each twelve-month period after the first complete twelve (12) Month period shall be increased 4% (Four Percent) as per annum as follows:
| Lease Period | Initial Base Rent | Additional Rent | Total (Initial Base Rent + Additional Rent) |
Sales Tax | Total Monthly Rent Payment |
|||||||||||||||
| 3/1/24-2/28-25 | $ | 2,700.00 | $ | 75.00 | $ | 2,775.00 | $ | 138.75 | $ | 2,913.75 | ||||||||||
| 3/1/25-2/28/26 | $ | 2,808.00 | $ | 78.00 | $ | 2,886.00 | $ | 144.30 | $ | 3,030.30 | ||||||||||
| 3/1/26-2/28/27 | $ | 2,920.32 | $ | 81.12 | $ | 3,001.44 | $ | 150.07 | $ | 3,151.51 | ||||||||||
Landlord and Tenant agree that in the event the area of the Premises is expanded by subsequent written agreement between the parties and/or the amount of the Base Rent is increased for any portion of the Premises in connection with such expansion, the above increase, regardless of the date on which such subsequent agreement is entered into, shall be applied to the aggregate new Base Rent and shall be applied at the times specifically set forth above.
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
5.3 Additional Rent. In addition to the Base Rent, Tenant shall pay to Landlord as Additional Rent, Tenant’s Proportionate Share of dumpster, storm water runoff, utilities, and any other fees paid by Landlord for the benefit of the Tenant; All charges payable by Tenant other than Base Rent are called “Additional Rent”. Unless this Lease provides otherwise, Tenant shall pay all Additional Rent then due with the next monthly installment of Base Rent. The term “Rent” or “rent” shall mean Base Rent, Additional Rent and all other sums due from Tenant to Landlord in accordance with this Lease.
5.4 Payment of Sums Other than Rent. Any sums due from the Tenant to the Landlord hereunder shall be due and payable within ten (10) days after the Landlord renders a statement therefor. Any sums not paid within said ten (10) day period, including Rent and Additional Rent, but excluding late charges, shall bear interest thereafter at the highest lawful rate per annum until payment is made.
5.5 Utilities. Tenant shall pay directly to the appropriate supplier the cost of all - natural gas, heat, light, power, sewer service, telephone and other communication service, water, refuse disposal, janitorial service and other utilities and services supplied to the Premises, whether separately metered to the Premises or charged directly to Tenant or the Premises by the supplier of the utility service or services. Tenant shall pay all costs arising from the hookup or connection of all utilities or services to the Premises. Landlord shall not be liable to Tenant nor shall Tenant be entitled to any reduction or abatement of Rent, by reason of any loss or damage Tenant may sustain in connection with the hookup and furnishing of such utilities and services (including the lack or failure thereof), and Tenant’s obligations under this Lease shall not be affected thereby.
ARTICLE SIX - SECURITY DEPOSIT
6.1 Deposits and Use of Security Deposit. The Tenant shall deposit the sum of $3,000.00 (Three Thousand Dollars) with the Landlord as a Security Deposit upon execution of this lease agreement. Landlord hereby declares and gives notice that all monies taken as security deposits or advanced rents are commingled with the funds of the Landlord’s general bank account and do not accrue interest. The Landlord shall hold the Security Deposit as security for the faithful performance by the Tenant of all the terms and conditions of this Lease to be observed and performed by the Tenant. If any Base Rent, Additional Rent or any other sum payable by the Tenant to the Landlord shall be overdue and unpaid, or should Landlord make payments on behalf of the Tenant, or should Tenant fail to perform any of the terms, covenants or conditions of this Lease, then the Landlord may, at its option and without prejudice to any other remedy which the Landlord may have, appropriate and apply all or part of the Security Deposit toward the payment of the Base Rent, Additional Rent or any other amounts due resulting from a failure by Tenant to pay such amounts or otherwise to comply with its obligations hereunder. Landlord’s claim against the Security Deposit includes any damage or deficiencies in the relating of the Premises due to Tenant’s default, whether such damage or deficiencies accrue before or after summary proceedings or other reentry to the Premises by the Landlord.
6.2 Replenishment and Return of Security Deposit. In the event the Landlord shall exercise its claim against the Security Deposit, the Tenant shall forthwith upon demand restore the Security Deposit to the original sum deposited. Should Tenant comply with all of the terms, covenants and conditions of this Lease and promptly pay all of the rentals and other sums due hereunder as they fall due, the Security Deposit shall be returned in full to the Tenant at the end of the Lease Term. Provided, however, the Landlord may hold the Security Deposit for a period of thirty (30) days following surrender or possession of the Premises and may deduct from the amount refunded any rental due and payable, the costs of repairing any damage or replacing any damaged portion of the Premises and the costs of cleaning the Premises if the Tenant fails to do so prior to surrender of possession. In the event of bankruptcy or other creditor-debtor proceedings against the Tenant, the Security Deposit shall be deemed to be applied first to the payment of rent and other charges due the Landlord for all periods prior to the filing of such proceedings.
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
ARTICLE SEVEN -TENANTS
OBLIGATIONS WITH
RESPECT TO THE PREMISES
7.1 Tenant’s Repair and Maintenance Obligations. Subject to the terms and provisions of Article Ten (Damage by Casualty and Condemnation), Tenant shall, at Tenant’s sole cost and expense, repair, maintain and replace (if necessary) and keep in a good, clean, sanitary and safe condition:
(a) The interior portion of the exterior walls, ceilings and partitions of the Premises, the partition walls or structures within the Premises and each of their respective wall coverings;
(b) All personal property, improvements or fixtures, located within the Premises, including, but not limited to, floor coverings, window coverings, blinds, draperies, interior cabinets, woodwork, molding, millwork,, paneling, and other interior improvements to the Premises, ceiling tiles and ceiling grids, light fixtures and bulbs, doors, door handles and lock sets, vaults, safes, or secured areas, bathrooms and kitchen areas;
(c) In the event of a break-in or vandalism Tenant will be responsible for all repairs related to said incident, to include repairs to exterior of building, i.e., replacement of broken glass, doors, walls, etc.
(d) The Building systems, equipment and conduit, including, without limitation, plumbing, heating, air conditioning and ventilation including the air conditioning condenser located on the outside of the Building, electrical, lighting, telephone, security systems, security and fire alarms, fire pumps, fire extinguishers which are located inward from the exterior walls of the Premises.
(e) Any systems, equipment, or other items, not considered Building standard, which have been installed by either Landlord or Tenant for the exclusive use and benefit of Tenant, whether located within or without the Premises.
(f) In connection with Tenant’s obligation to maintain the HVAC System serving the Demised Premises, Tenant shall, during the Lease Term, and any renewals thereof, at its sole cost and expense, maintain a service contract with a licensed HVAC contractor for the routine performance of standard HVAC System maintenance, including but not limited to, periodic replacement of filters, oiling of mechanical components and inspection for wear and tear. Prior to Rent Commencement Date and annually thereafter, Tenant shall furnish to Landlord a copy of the maintenance contract described above and proof that the annual premium for maintenance contract has been paid. Landlord reserves the right to designate an HVAC contractor with whom Tenant shall contract for such routine HVAC system maintenance so long as the fee charged by Landlord’s designated contractor shall be comparable to the fee charged by Tenant’s contractor for similar services. If Tenant fails to commence or complete repairs promptly and adequately, Landlord may make or complete said repairs and Tenant shall pay the cost thereof to Landlord upon demand, together with the sum of fifteen percent (15%) of said costs for overhead and an additional sum equal to ten percent (10%) of said amount for profit.
If Tenant should fail to perform its obligations hereunder in a manner reasonably satisfactory to the Landlord, the Landlord shall have the right to cause such obligation to be accomplished on behalf of the Tenant, and the Tenant shall pay to the Landlord as Additional Rent the cost incurred by the Landlord in performing such obligation. Further, Landlord may elect to perform any or all of the above-referenced items required to be performed by Tenant, and bill Tenant for same as Additional Rent.
| Tenant’s Initials: ____________ |
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Landlord Initial’s:____________ |
7.2 Waiver of Right to Repair at Landlord’s Cost. The Tenant waives all rights to make repairs at the expense of the Landlord as provided by any law, statute or ordinance now or hereafter in effect In addition, the Tenant specifically understands and agrees that the Landlord has no obligation and has made no promise to alter, remodel, improve, repair, decorate or paint the Premises or any part thereof and that no representations respecting the condition of the Premises, the Property or the Building has been made by the Landlord except as specifically contained in this Lease.
7.3 Alterations. Except as may be provided in Section 4.4 and Exhibit “C” hereof Tenant shall not make nor allow to be made any alterations, additions or improvements to or of the Premises or any part thereof without the express prior written consent of the Landlord. Any alterations, additions or improvements (except movable furniture and trade fixtures) shall at once become a part of the Premises and become the property of the Landlord. In the event the Landlord consents to any alterations, additions, or improvements to the Premises by the Tenant, the Tenant shall undertake such alterations, additions or improvements at the Tenant’s sole cost and expense and any contractor or person selected by the Tenant must first be approved in writing by the Landlord. Upon the expiration or earlier termination of the Lease Term, the Tenant shall upon demand by the Landlord, at the Tenant’s sole cost and expense, immediately remove any alterations, additions or improvements made by the Tenant, designated by the Landlord to be removed, and the Tenant shall, immediately and at its sole cost and expense, repair any damage to the Premises caused by such removal and restore the Premises to their original condition.
7.4 Surrender of Premises. The voluntary or other surrender of this Lease or the Premises by the Tenant, or a mutual cancellation thereof, shall not automatically work a merger of the Landlord’s and Tenant’s estates. At the option of the Landlord, such surrender shall terminate all or any existing subleases or subtenancies, or may, at the option of the Landlord, operate as an assignment to it of any or all such subleases or subtenancies. Upon the termination of the Lease Term, by lapse of time or otherwise, the Tenant shall surrender the Premises in the same condition as they have been received, excepting only damage by act of God or by the elements. If the Tenant is requested by the Landlord to remove any personal property from the Building upon the termination of the Lease and shall have failed to remove it, such personal property shall be considered abandoned and the Landlord may at its option remove the personal property in the manner the Landlord may choose and store said personal property without liability to the Tenant for the loss thereof. Tenant shall pay the Landlord on demand any and all expenses incurred in such removal and storage, including court costs and attorneys’ fees and costs. The Landlord may, in its sole discretion, without notice, sell the personal property or any part thereof at private sale and without legal process for such price as the Landlord may obtain. Landlord shall apply the proceeds of the sale first upon the expense incident to the removal and sale of the personal property, apply the balance to any amounts due from the Tenant to the Landlord pursuant to this Lease, and hold any additional balance, without interest, for the benefit of the Tenant.
7.5 Liens. Neither the Landlord, nor the Landlord’s estate or interest in the Premises, Building or Property, shall be liable for any services, work, labor, materials or other items furnished, or to be furnished to the Premises, Building or Property, at the request or instruction of, or for the benefit of, the Tenant, its agents, employees, officers or owners, or anyone claiming under the Tenant, and no construction or other liens for any such services, work, labor, materials or other items shall become a lien upon, attach to, encumber or affect the estate or interest of the Landlord in and to the Premises, Building or Property. The Tenant has absolutely no authority to cause any such lien to attach to, encumber or affect the estate or interest of the Landlord in and to the Premises, Building or Property. The Tenant shall not do or allow anything to be done whereby the Premises, Building or Property may be encumbered by any construction or other lien. Further, the Tenant shall notify all contractors, subcontractors, laborers, materialmen and others of this Lease provision prior to engaging them to work upon the Premises. If any construction lien or notice or claim thereof is filed against the Premises, Building or Property with respect to services, work, labor or materials furnished, or to be furnished, at the request or instruction of, or for the benefit of, the Tenant, its agents,- employees, officers or owners, or anyone claiming under the Tenant, the Tenant shall within ten (10) days from the date of such filing, cause the same to be withdrawn, discharged or removed by payment, deposit, bonding and transfer proceedings or otherwise. If the Tenant fails to do so, the Landlord may do so and may pay any judgments recovered by any such lienor. Tenant shall immediately reimburse the Landlord for all amounts paid pursuant to this Section, which amounts shall constitute an additional obligation of the Tenant under this Lease.
| Tenant’s Initials: ____________ |
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Landlord Initial’s:____________ |
7.6 Compliance with Environmental Laws. Tenant shall not permit or cause the presence of Hazardous Materials (hereinafter defined) in, on or under the Premises or any other portion of the Building or the Property. Tenant shall defend, protect, indemnify and hold Landlord harmless from and against any and all claims, causes of action, liabilities, damages, costs and expenses, including, without limitation, attorneys’ fees, arising because of any alleged personal injury, property damage, death, nuisance, loss of business or otherwise, by Landlord, any employee of Landlord, or from and against any governmental act or enforcement, arising from or in any way connected with conditions existing or claimed to exist with respect to such Hazardous Materials within the Premises, Building or Property. As used herein the term “Hazardous Materials” shall be defined as any hazardous substance, contaminant, pollutant or hazardous release (as such terms are defined in any federal, state or local law, rule, regulation or ordinance, including without, limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended) and other said wastes. In the event Tenant shall cause or permit the presence of Hazardous Materials in, on or under the Premises or any other portion of the Building or Property, Tenant shall promptly, at Tenant’s sole cost and expense, take any and all action necessary (as required by appropriate government authority or otherwise) to return the areas affected thereby to the condition existing prior to the presence of any such Hazardous Materials thereon, subject to Landlord’s prior written consent. The foregoing covenants shall survive termination of this Lease.
7.7 Signs and Other Structures. The Tenant shall not place or maintain or permit to be placed or maintained, any signs, awnings, structures, materials or advertising of any kind whatsoever on the exterior of the Building, or on any exterior windows in said Building without the express prior written consent of the Landlord which Landlord shall be permitted to withhold in its sole and absolute discretion. Tenant agrees that any signs erected by it without Landlord’s prior approval or not maintained in accordance with the Landlord’s policy will be immediately removed by the Tenant at the Landlord’s request or may be removed by the Landlord at the Tenant’s expense.
ARTICLE EIGHT - LANDLORD'S
OBLIGATION WITH RESPECT TO THE PREMISES
8.1 Landlord’s Repair and Maintenance Obligations. Subject to the terms and provisions of Article Seven (Tenant’s Obligations with Respect to the Premises) and Article Ten (Damage by Casualty and Condemnation), Landlord shall repair and maintain and keep in a good, clean, sanitary and safe condition the exterior portion of the exterior walls of the Building and the roof, landscaped areas, parking areas and driveways. Landlord shall not be liable for, and Tenant shall not be entitled to any abatement or reduction of rental by reason of, the Landlord’s failure to comply with the foregoing provision when such failure is caused by accident, breakage, repairs, strikes, lockouts, or other labor disputes of any character, or by any other cause, beyond the reasonable control of the Landlord. Landlord shall not be liable under any circumstances for loss of or injury to property, however occurring, through or in connection with or incidental to failure to comply with the foregoing provision. Nor shall any such failure relieve the Tenant from the duty to pay the full amount of rent and other sums of money herein provided to be paid by the Tenant, nor shall it constitute a constructive eviction of the Tenant.
| Tenant’s Initials: ____________ |
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Landlord Initial’s:____________ |
8.2 Duty to Report Defective Conditions. Tenant agrees to report immediately in writing to the Landlord any defective condition in or about the Premises, the Property or Building known to Tenant whether Tenant is obligated to repair such defective condition or not.
ARTICLE NINE - INSURANCE AND INDEMNIFICATION
9.1 Indemnifications and Hold Harmless. Landlord shall not be liable to Tenant for any injury or damage to any person or property in or about the Premises, Building or Property from any cause whatsoever, unless caused by the gross negligence willful misconduct of Landlord, including, and without limitation, water leakage caused by water leaks of any character from the roofs, walls, pipes, basement or other portion of the Premises or the Building, or caused by gas, fire, oil, electricity or any cause whatsoever in, on or about the Premises or the Building or any part thereof. The Tenant shall save harmless and indemnify the Landlord against any liability of the Landlord to the occupiers or owners of land and premises adjoining or in the vicinity of the Demised Premises resulting from the use of the Demised Premises by the Tenant, its customers or invitees.
The Tenant will indemnify, defend and save harmless the Landlord and its agents from and against any and all liability, claims, demands, damages, expenses, fees, fines, penalties, suits proceedings, actions, and costs of actions of any kind and nature, unless the same are caused by the gross negligence of Landlord including attorneys’ fees and costs, for injury (including deaths) to persons or damage to property or. property rights:
| (a) | Occurring in, on or about the Premises or any part thereof; |
| (b) | Occurring in, on or about the Building or Property, or any part thereof (including, without limiting the generality of the foregoing, driveways and parking areas), when any such injury or damage shall be caused or resulting whole or in part by any act, negligence, fault or omission of any duty by the Tenant, its agents, servants, employees, licensees or invitees, or by any person under the control or discretion of the Tenant; |
| (c) | Arising or growing out of or connected with any breach, violation, nonperformance, or failure to abide by any covenant, condition, agreement or provision contained in this Lease on the part of the Tenant to be kept, performed, complied with or abided by. |
9.2 The Tenant shall have all of their Clients sign a release releasing Holder Investments, Inc. of any and all claims.
9.3 Landlord’s Insurance. Landlord shall insure the Building and Property and shall maintain liability and other insurance in such amounts as may be required by Landlord’s mortgagee or in such amounts as Landlord, in its sole discretion, may deem appropriate. All such insurance shall be for the sole benefit of Landlord and, if required, Landlord’s mortgagee.
9.4 Tenant’s Insurance. Tenant shall, at Tenant’s sole expense, obtain and keep in force during the Lease Term and any extension or renewal hereof: (a) fire and extended coverage insurance with vandalism and malicious mischief endorsements, on all of its personal property, including removable trade fixtures, located in the Premises, and on all leasehold improvements and all additions and improvements made by Tenant; (b) comprehensive general liability insurance, including contractual liability coverage, insuring Landlord (as an additional insured) and Tenant against any liability arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto; (c) worker’s compensation insurance (including employees’ liability insurance) in the statutory amount covering all employees of Tenant employed at or performing services at the Premises, in order to provide the statutory benefits required by the laws of the State of Florida.
| Tenant’s Initials: ____________ |
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Landlord Initial’s:____________ |
Said insurance shall be with insurance companies approved by Landlord. Such companies shall be responsible insurance carriers authorized to issue the relevant insurance, authorized to do business in Florida and at least A-rated in the most current edition of Best’s Insurance Reports and shall have minimum limits of One Million Dollars ($1,000,000.00) for any loss of or damage to property from any one occurrence, One Million Dollars ($1,000,000.00) for death of or injury to any one person from any one occurrence, One Hundred Thousand Dollars ($100,000.00) for damage to rented premises (each occurrence), Five Thousand Dollars ($5,000.00) Medical Expense (Any one Person), One Million Dollars ($1,000,000.00) Personal & Adv Injury, Two Million Dollars ($2,000,000.00) General Aggregate and Two Million ($2,000,00.00) Products-Comp/OP Aggregate and the Deductible must not exceed One Thousand Dollars ($1,000.00). SEE EXHIBIT “E” The limits of said insurance shall not, however, limit the liability of the Tenant hereunder. The policies cannot contain provisions, which deny coverage because the loss is due to the fault of Landlord or Tenant. If Tenant shall fail to procure and maintain said insurance, Landlord may, but shall not be required to, procure and maintain same, but at the expense of Tenant. Tenant shall deliver to Landlord, prior to occupancy of the Premises, copies of policies of liability insurance required herein, or certificates evidencing the existence and amounts of such insurance, with loss payable clauses satisfactory to Landlord. No policy shall be cancelable or subject to reduction of coverage except after thirty (30) days prior written notice to the Landlord. Notwithstanding anything herein to the contrary, Landlord shall have the right to review the Tenant’s insurance no more frequently than once every year and to require Tenant to alter its insurance coverage to cover the effect of inflation and to include or eliminate certain provisions in the Tenant’s insurance policy which reflect the then current industry standards for this type of insurance coverage.
9.5 Subrogation. Insurance carried by it against loss or damage by fire or other casualty shall contain, a clause whereby the insurer waives its right to subrogation against the Landlord.
ARTICLE TEN- DAMAGE BY CASUALTY AND CONDEMNATION
10.1 Damage by Casualty. In the event fire or other casualty damages (excluding break-in’s or vandalism) to the Premises or the Building, and the Landlord has adequate insurance coverage, the Landlord shall forthwith repair the damage, provided the repairs can be made within one hundred twenty (120) days from the date of the casualty. During the period of repair, this Lease shall remain in full force and effect except that the Tenant shall be entitled to a proportionate reduction in its rent obligation while such repairs are being made. The proportionate reduction of rent is to be based upon the extent to which the making of such repairs shall interfere with the business carried on by the Tenant in the Premises. If the repairs cannot be made within the one hundred twenty (120) day period, the Landlord shall have the option to either (1) repair or restore such damage, this Lease continuing in full force and effect, but the rent to be proportionately reduced as above stated, or (2) give notice to the Tenant at any time within thirty (30) days after the casualty terminating this Lease as of the date to be specified in such notice, which date shall be not less than thirty (30) days nor more than sixty (60) days after the giving of such notice. In the event of the giving of such notice this Lease shall expire and all interest of the Tenant in the Premises shall terminate on the date so specified in such notice and rent shall be paid up to the date of such termination. The Landlord agrees to refund to the Tenant any rent theretofore paid for any period of time subsequent to the date of termination. Notwithstanding anything to the contrary, the Landlord shall not be required to repair any injury or damage by fire or other casualty, or to make any repairs or replacements of any paneling, decorations, partitions, railings, ceilings, floor coverings, office fixtures or any other property installed in the Premises by the Tenant.
| Tenant’s Initials: ____________ |
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Landlord Initial’s:____________ |
10.2 Condemnation. If all of the Premises shall be taken or appropriated by any public or quasi-public authority under the power of eminent domain, either party hereto shall have the right, at its option, to terminate this Lease, and the Landlord shall be entitled to any and all income, rent, awards, or any interest therein whatsoever that may be paid or made in connection with such public or quasi-public use or purpose and the Tenant shall have no claim against the Landlord for the value of any unexpired term of this Lease. If only a part of the Premises shall be so taken or appropriated, the rental thereafter to be paid shall be equitably reduced as determined by the Landlord. The Tenant may terminate this Lease by reason of taking or an appropriation under eminent domain authority only if such taking or appropriation shall be of such extent and nature as to substantially handicap, impede or impair the Tenant’s use of the Premises for the purposes set forth herein.
ARTICLE ELEVEN - ASSIGNMENT AND SUBLETTING
Tenant may not, without the prior written consent of the Landlord (which the Landlord may withhold in its sole and absolute discretion), assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any interest therein, or sublet the Premises or any part thereof, or permit the use of the Premises by any party other than the Tenant and its employees. Any transfer, sale, pledge or other disposition of more than thirty-five (35%) percent of the stock of the Tenant shall be deemed an assignment of the Lease; and the Tenant agrees that at all times during the term of this Lease and any renewal thereof, the persons signing this Lease on behalf of the Tenant shall be and remain officers and directors of the Tenant corporation and shall be and remain, collectively, the owners of at least thirty-five (35%) percent of all stocks, equities and securities of said Tenant.
ARTICLE TWELVE - SALE BY LANDLORD
12.1 Sale hy Landlord. In the event of a sale or conveyance of the Building and/or Property by the Landlord, the same shall operate to release the Landlord from any future liability upon any of the covenants or conditions, expressed or implied, herein contained in favor of the Tenant. In such event, the Tenant agrees to look solely to the successor in interest of the Landlord in and to this Lease in pursuit of any remedies or obligations due Tenant hereunder. This Lease shall not be affected by any such sale, and the Tenant agrees to attorn to the purchaser or assignee.
ARTICLE THIRTEEN - DEFAULTS AND REMEDIES
13.1 Defaults. The occurrence of one or more of the following events shall constitute a default under this Lease:
(a) The failure or omission of the Tenant to pay when due any portion of Base Rent, Additional Rent or other monetary amounts due hereunder; provided, such failure shall continue for three (3) days following the date when such payment was due;
(b) The failure of the Tenant to keep, observe or perform any term or condition of this Lease required hereunder to be kept, observed or performed by the Tenant; provided, such failure shall continue for three (3) days following the date when such performance was due;
(c) If any representation, warranty or covenant made by or on behalf of Tenant in this Lease or in any other instrument or document executed by or furnished by or on behalf of Tenant to Landlord is false, incorrect or contains any misrepresentations in any material respect on the date when made or reaffirmed;
| Tenant’s Initials: ____________ |
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Landlord Initial’s:____________ |
(d) The making of an assignment by the Tenant for the benefit of its creditors;
(e) The commencement of proceedings in bankruptcy or reorganization of the Tenant or for the adjustment of any of its debts under the Bankruptcy Code or under any other law, whether state or federal now or hereafter existing for the relief of debtors;
(f) The appointment of a receiver or trustee for the Tenant or for any substantial part of its assets, or the institution of any proceedings for the dissolution, or the full or partial liquidation of the Tenant;
(g) The Tenant becomes insolvent or unable to pay its debts as they mature.
A default under this Lease shall constitute a default under the terms and conditions of any other agreements then existing and executed by and between the Tenant and Landlord.
13.2 Remedies Upon Default. Upon the occurrence of any default under this Lease the Landlord shall have and may exercise any or all of the following rights:
(a) Terminate this Lease, in which event the Tenant shall immediately surrender the Premises to the Landlord, but if the Tenant shall fail to do so, the Landlord may, without further notice and without prejudice to any other remedy the Land lord may have for possession or arrearages in rental, enter upon the Premises and expel or remove the Tenant and its personal property without being liable to prosecution of any claim for damages therefor and without said entry affecting the Landlord’s right to thereafter claim and collect all monies owed and to be owed under this Lease. The Tenant shall indemnify the Landlord for all loss and damage that Landlord may suffer by reason of such termination, whether through inability to sublet the Premises, or through decrease in rental, or otherwise;
(b) Declare the entire amount of the rent that would become due and payable during the remainder of the Lease Term to be due and payable immediately, in which event the Tenant shall pay the same at once, together with all rent theretofore due. The Landlord and the Tenant agree that such payment shall not constitute a penalty or forfeiture but is payment of liquidated damages. The acceptance of such payment by the Landlord shall not constitute a waiver of any failure of the Tenant to comply with any term, provision, or covenant of this Lease or any violation of the Rules and Regulations;
(c) Enter the Premises as the agent of the Tenant without being liable to prosecution or any claim for damages therefor, and relet the Premises as the agent of the Tenant, and receive the rental therefor, and Tenant shall pay to the Landlord, on demand, at the office of the Landlord any deficiency that may arise in the event of such reletting;
(d) As agent of the Tenant, do whatever the Tenant is obligated to do by provisions of this Lease and enter the Premises, without being liable to prosecution or any claims for damage therefor, in order to accomplish this purpose. The Tenant shall reimburse the Landlord immediately upon demand for any expense that the Landlord may incur in effecting compliance with this Lease on behalf of the Tenant, and the Tenant further agrees that the Landlord shall not be liable for any injury to person or damage to property resulting from such action.
| Tenant’s Initials: ____________ |
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Landlord Initial’s:____________ |
Pursuit by the Landlord of any of the foregoing causes of action shall not constitute an election of remedies nor shall it preclude the pursuit of any other causes of action herein provided or any other remedies provided by law. No termination of this Lease by lapse of time or otherwise shall affect the Landlord’s right to collect rent for a period prior to the termination hereof.
No act or thing done by the Landlord or its employees and agents during the Lease Term shall be deemed an acceptance or surrender of the Premises, nor a constructive eviction, and no agreement to accept a surrender of the Premises shall be valid, unless the same shall be in writing and signed by the Landlord. Should it be necessary or proper for the Landlord to bring any action under this Lease, and/or enforce any of the Landlord’s rights hereunder through an attorney regarding any breach of this Lease, the Tenant shall, in each and every such case, pay the Landlord’s attorneys’ fees and costs (including such fees and costs in any appellate or bankruptcy proceedings). The receipt by the Landlord of rental with knowledge of the breach of any covenant contained in this Lease shall not be deemed a waiver of such breach.
No payment by Tenant or receipt by Landlord of a lesser amount than the rent payment agreed to in this Lease shall be deemed to be other than on account of the rent, nor shall any endorsement or statement on any check or payment as rent (or in any letter accompanying a check or payment as rent) be binding on Landlord or be deemed an accord and satisfaction (unless Landlord expressly agrees to an accord and satisfaction in a separate written agreement duly accepted by Landlord), and Landlord may 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 or under applicable law.
13.3 Abandonment. In the event of abandonment of the Premises, any personal property belonging to the Tenant and left on the Premises shall be deemed to be abandoned, at the option of the Landlord, and this Lease shall constitute a bill of sale to convey the personal property to Landlord, and the rights conferred upon the Landlord by this Lease with regard to the disposition of said personal property shall remain in full force and effect.
13.4 Right of Landlord to Perform. All covenants and obligations to be performed by the Tenant under any of the terms of this Lease shall be performed by the Tenant at the Tenant’s sole cost and expense and without any abatement of rent. If the Tenant shall fail to pay any sum of money, other than rent, required to be paid by it hereunder or shall fail to perform any other action on its part to be performed, and such failure shall continue for seven (7) days after notice thereof by the Landlord, the Landlord may, but shall not be obligated to, and without waiving or releasing the Tenant from any obligation of the Tenant, perform on the Tenant’s behalf any such acts to be made or performed. Any cost so incurred by Landlord, together with interest thereon at the rate of eighteen percent (18%) per annum, shall be payable to the Landlord on demand, and the Landlord shall have the same rights and remedies in the event of the nonpayment thereof as in the event of default by the Tenant in the payment of rent. The Tenant further agrees to pay all reasonable costs and expenses, including a reasonable attorneys’ fee, which may be sustained or incurred by the Landlord in the enforcement or declaration of any of the rights and remedies of the Landlord or obligations of the Tenant, whether arising under this Lease or granted, permitted or imposed by law or otherwise.
ARTICLE FOURTEEN - GENERAL
14.1 Time of the Essence. Time, and timely performance, is of the essence of this Lease and of the covenants and provisions hereunder. Any time period that shall end on a Saturday, Sunday, legal holiday, or bank holiday shall extend to 5:00 p.m. of the next full business day.
| Tenant’s Initials: ____________ |
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Landlord Initial’s:____________ |
14.2 Litigation and Attorneys’ Fees. In the event it shall be necessary for either party to this Lease to bring suit to enforce any provision hereof or for damages on account of any breach of this Lease, the prevailing party shall be entitled to recover from the other, in addition to any damages or other relief granted as a result of such litigation, all costs and expenses of such litigation and reasonable attorneys’ fees (including attorneys’ fees and costs in any appellate or bankruptcy proceedings) as fixed by the Court.
14.3 Governing Law. This Lease shall be interpreted and enforced under the laws of the State of Florida.
14.4 Captions. The captions for each section of this Lease are for convenience and reference only and in no way define, describe, extend, or limit the scope or intent of this Lease, or the intent of any provision hereof.
14.5 Severability. Whenever possible, each provision of this Lease shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Lease shall be prohibited by or held invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Lease.
14.6 No Third Party Beneficiaries. It is the intent and understanding of the Tenant and the Landlord that this Lease is solely between them and for their benefit and, accordingly, no party other than the Tenant and the Landlord shall have any rights or privileges under this Lease either as third party beneficiaries or otherwise.
14.7 Notices. All notices provided for in this Lease shall be in writing and sent or delivered to the addresses set forth below or at such other addresses as the parties shall designate to each other in writing:
| Landlord Name: | HOLDER INVESTMENTS, INC. | |
| Address: | 10339 Birch Tree Lane | |
| Windermere, FL 34786 | ||
| Tenant Name: | LA ROSA REALTY, LLC | |
| Rental Address: | 1165 E Plant St. Unit 8 | |
| Winter Garden, FL 34787 | ||
| Mailing Address: | 1420 Celebration Blvd #200 | |
| Celebration, FL 34747 |
Any notice or demand so given, delivered or made by United States mail shall be deemed to have been given: (a) In the case of hand delivery, when delivered to the address set forth above, (b) in the case of mailing, on the second business day after said document has been deposited in the United States Mail, postage prepaid, and sent by certified or registered mail and addressed to the other party at the address set forth above, and (c) in any case (including facsimile or electronic delivery) upon the actual receipt by the other party. Delivery to either party’s legal counsel shall be deemed sufficient and complete delivery to such party. The Landlord and Tenant may from time to time notify the other of changes with respect to where and to whom notices should be sent by sending notification of such changes pursuant to this section.
14.8 Entry and Inspection: Landlord reserves at all times the right to enter the Premises to inspect the same. Landlord may submit the Premises to prospective purchasers or tenants, have entry to post notices of non-responsibility, and to alter, improve, or repair the Premises and any portion of the Building without abatement of rent Landlord may for that purpose erect scaffolding and other necessary structures where reasonably required by the character of the work to be performed, always providing the entrance to the Premises shall not be blocked thereby, and further providing that the business of the Tenant shall not be interfered with unreasonably. Tenant waives any claim for damages for any injury or inconvenience to or interference with the Tenant’s business and loss of occupancy or quiet enjoyment of the Premises. For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in the Premises. Landlord shall have the right to use any means which Landlord may deem proper to open said doors in an emergency and any entry to the Premises obtained by the Landlord by any of said means, or otherwise, shall not under any circumstances be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of the Tenant from the Premises or any portion thereof.
| Tenant’s Initials: ____________ |
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Landlord Initial’s:____________ |
14.9 Entire Agreement. The foregoing constitutes the entire agreement between the parties and may be modified only by a writing signed by both parties. The following Exhibits, if any, have been made a part of this Lease before the parities’ execution hereof: Exhibit “A” Exhibit “B” Exhibit “C” Exhibit “D”, Exhibit “E”, and Exhibit “F”.
14.10 Heirs, Successors and Assigns. This lease is binding upon and inures to the benefit of the heirs, assigns, and successors in interest to the parties.
4.11 Limitation on Landlord’s Liability. The liability of the Landlord shall exist only so long as it is the owner of the fee, or the leasehold of the Property and such liability shall not continue or survive after transfer of Ownership of said fee or leasehold by Landlord. Tenant shall look only to Landlord’s estate and interest in the Property for the satisfaction of Tenant’s remedies for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default by Landlord hereunder, and no other property or assets of Landlord or its partners or principals, disclosed or undisclosed, shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant’s remedies under or with respect to this Lease, the relationship of Landlord and Tenant hereunder or Tenant’s use or occupancy of the Premises.
14.12 Radon Gas. Radon is a naturally occurring radio active gas that, when it has accumulated in building insufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon gas and radon testing may be obtained from your county public health unit.
14.13 Authority. If Tenant is a corporation or partnership, each individual executing this Lease on behalf of said corporation of partnership represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of said corporation or partnership in accordance with the duly adopted resolution of the Board of Directors of said corporation or with the bylaws of said corporation or under pertinent partnership agreements, that any required consents or approvals of third parties have been obtained and that this Lease is binding upon said corporation or partnership.
14.14 Force Majeure. In the event Landlord or Tenant is prevented or delayed in the performance of any improvement or repair or fulfilling any other obligation required under this Lease due to delays caused by fire, catastrophe, strikes or labor trouble, civil commotion, acts of God, governmental prohibitions or regulation, inability or difficulty to obtain materials or other causes beyond the performing party’s reasonable control, the performing party shall, within ten (10) days of the event causing such delay, provide written notice to the other party of the event causing the delay and the anticipated period of delay, and the period of such delay shall be added to the time for performance thereof. The performing party shall have no liability by reason of such permitted delays. In the event the performing party fails to provide notice to the other party of the force Majeure delay within such ten (10) day period, the performing party shall not be excused from the timely performance of such obligation regardless of the cause. Notwithstanding anything contained in the Lease to the contrary, this provision shall not excuse Tenant from its obligation to pay Base Rent, Additional Rent and any money due to the Landlord under this Lease. Covid-19 (the “coronavirus”) shall not constitute a force majeure event.
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
14.15 Severability. In the event that any provision or section of this Lease is rendered invalid by the decision of any court or by the enactment of any law, ordinance or regulation, such provision of this Lease shall be deemed to have never been included therein, and the balance of this Lease shall continue in effect in accordance with its terms.
14.16 Recording. This Lease shall not be recorded in any public records office or department by Tenant.
14.17 Financial Statements. Tenant shall, within ten (10) days after receipt of a written request from Landlord, furnish to Landlord Tenant’s current financial statement. Landlord covenants that the financial information provided by Tenant shall be treated as confidential, except that Landlord may disclose such information to any prospective purchaser, prospective or existing lender or prospective or existing ground or underlying lessor upon the condition that the prospective purchaser, prospective or existing lender or underlying lessor shall also covenant to treat such information as confidential.
14.18 Accord and Satisfaction. No payment by Tenant, or anyone occupying the Premises by, through or under Tenant, or receipt by Landlord of a lesser amount than the rents stated herein shall be deemed to be other than on behalf of Tenant and on account of the next due 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 may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or pursue any other remedy provided for in this Lease or available at law or in equity.
14.19 Mold. Tenant acknowledges that mold spores are part of the natural environment and mold may grow indoors when mold spores land on moist locations. Tenant acknowledges the necessity of housekeeping, ventilation and moisture control (especially around plumbing, heating/ventilation/air conditioning systems, and exterior wall surfaces of corner rooms) for mold prevention. Tenant acknowledges that Tenant has inspected the Premises and confirms that Tenant has not observed mold, mildew or moisture within the Premises. Tenant agrees to notify Landlord promptly if material mold/mildew and/or moisture conditions (from any source, including leaks) are discovered and to take appropriate steps to repair leaks and remediate any mold or mildew related conditions at Tenants sole cost and expense in the event that the mold/mildew and/or moisture conditions are caused by the negligent act or omission of Tenant. Tenant releases Landlord from any liability for any personal injury or damages to property caused by or associated with moisture or the growth of or occurrence of mold or mildew on the Premises.
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
14.20 Personal Guaranty. Landlord and Tenant agree that simultaneously with the execution of this Lease Agreement, Joseph A. LaRosa & Deana M. LaRosa shall each sign a personal guaranty which will guaranty the performance of the Tenant under this Lease for the Term. This guaranty shall be as set forth in Exhibit “D”.
14.21 Subordination. This Lease, and Tenant’s rights hereunder shall be subject and subordinate to the lien of any mortgages, ground leases or deeds of trust or other similar instrument that may now exist or may hereafter be placed upon the Property, Building or Premises and all renewals, replacements, and extensions thereof without further notice or action on the part of Landlord or Tenant. Tenant shall execute and deliver to Landlord within fifteen (15) days from receipt of Landlord’s request such instruments (including but not limited to a Memorandum of Lease and/or a Subordination, Non-Disturbance and Attornment Agreement in recordable form) which may be required by Landlord’s mortgagee or trustee to evidence such subordination.
14.22 Estoppel Certificates. At any time and from time to time, Tenant agrees, upon request in writing from Landlord, to execute and deliver to Landlord, for the benefit of such persons as Landlord names in such request, a statement in writing and in substance satisfactory to Landlord certifying to such of the following information as Landlord shall request: (i) that this Lease constitutes the entire agreement between Landlord and Tenant and 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); (ii) the dates to which the Base Rent and other charges hereunder have been paid, and the amount of any security deposited with Landlord; (iii) that the Premises have been completed on or before the date of such letter and that all conditions precedent to this Lease taking effect have been carried out; (iv) that Tenant has accepted possession, that the Lease Term has commenced, that Tenant is occupying the Premises, that Tenant knows of no default under the Lease by Landlord and that there are no defaults or offsets which Tenant has against enforcement of this Lease by Landlord except as may be specifically identified in such document by Tenant; (v) the Rent Commencement Date of this Lease and the expiration date of this Lease; and (vi). Tenant acknowledges and agrees that Tenant’s failure to execute and deliver to Landlord any estoppel certificate(s) requested by Landlord within fifteen (15) days from Tenant’s receipt of Landlord’s request shall be deemed Tenant’s acknowledgement that the terms and conditions contained in such estoppel certificate are true and correct and that such terms and conditions may also be relied upon by any third party or parties identified in such estoppel certificate.
14.23 Waiver. The failure of the Landlord or the Tenant to insist upon strict performance of any covenant or condition on the part of the Tenant or the Landlord respectively contained in this Lease or to exercise any right or option hereunder shall not be construed as waiver or relinquishment of such covenant or condition or any subsequent or other default hereunder. The acceptance of any rent from or the performance of any obligation hereunder by a person other than the Tenant shall not be construed as an admission by the Landlord of any right, title or interest of such person as subtenant, assignee, transferee or otherwise in the place and stead of the Tenant, nor shall it constitute a waiver of any breach of this Lease. If the Landlord should make an error in calculating or billing any monies payable by the Tenant under this Lease, such shall not be deemed to be a waiver of its right to collect the proper amount of monies payable by the Tenant hereunder.
14.24 Interpretation. Unless the context otherwise requires, the word “Landlord” wherever it is used herein shall be construed to include and shall mean the Landlord, its successors and/or assigns, and the word “Tenant” shall be construed to include and shall mean the Tenant, its successors and/or assigns and when there are two or more persons bound by the covenants herein contained, their obligations hereunder shall be joint and several. Where the context requires, the singular shall include the plural and vice versa; and the masculine, feminine and neuter shall each include the other.
14.25 Brokers. The Parties are not represented by a broker or agent in connection with this Lease. The Landlord and the Tenant represent and warrant that they have not engaged the services of, and are not liable to, any real estate agent, broker,finder or any other person or entity for any brokerage or finder’s fee, commission or other amount with respect to this Lease., The Landlord and the Tenant each agree to indemnify, defend and hold the other harmless against all loss, liability and expense, including reasonable attorneys’ fees and related legal costs, suffered by either party due to a breach of the foregoing representation, covenant and warranty.
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
IN WITNESS WHEREOF, the Parties hereto have caused this Lease to be executed as of the date set forth adjacent to their signatures below.
| LANDLORD | ||
| HOLDER INVESTMENTS, INC. | ||
| By: | ||
| Scott Holder | ||
| As its President | ||
| Date Executed: _________ | ||
| TENANT | ||
| LA ROSA REALTY, LLC | ||
| By: | ||
| Joseph La Rosa | ||
| As its Manager | ||
| Date Executed: _________ | ||
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
EXHIBIT “A” - LEGAL DESCRIPTION OF PROPERTY
1165 E PLANT STREET
WINTER GARDEN, FLORIDA 34787
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
EXHIBIT “B”
| SUITE 9 | STUITE 9 |
| LOS AMIGOS | LOS AMIGOS |
| SUITE 8 | SAGACIOUS STONE |
| LA ROSA REALTY | SUITE 17 |
| SUITE 7 | THREE LITTLE HEARTS |
| OMAR BARBER SHOP | SUITE 16 |
| HILLCREST | THE TINT MAN |
| SUITE 6 | SUTIE 15 |
| ALL AMERICAN KARATE | |
| SUITE 5 | |
| VINE OF LIFE | |
| SUITE 4 | |
| DON PONCHO | |
| SUITE 3 | |
| ESCAPE GOAT, LLC | |
| SUITE 2 | |
| PANDERIA CARDENAS | |
| SUITE 1 | |
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
EXHIBIT “C”- RULES AND REGULATIONS
| 1. | Landlord is responsible for maintenance of landscaping, parking lots, and the exterior of the Building. |
| 2. | Tenant shall pay for all utilities. |
| 3. | Tenant shall be responsible for trash disposal in dumpsters. Tenants shall breakdown cardboard cartons. Tenant shall not put anything outside the dumpster all debris is to be in the dumpster. Tenant shall not put any type of trash/debris from job sites in dumpster. Tenant shall not put any pallets in or around dumpster; pallets must be disposed of off premises. |
| 4. | Tenants shall not park any vehicle outside the Premises that is not properly tagged and operable. |
| 5. | Tenant shall be responsible for keeping glass storefronts clean. |
| 6. | Tenant shall be responsible for any vandalism to their unit. |
| 7. | Tenant shall not change locks without prior approval from Landlord, and all locks mut be keyed to the Master Key. |
| 8. | Tenants shall not store any material or equipment outside the Premises. All work shall be performed within the Tenants Premises unless previous permission is received from the Landlord to perform specific functions outside. |
| 9. | Tenant shall provide pest control in its Premises if desired. |
| 10. | Tenant shall provide its own security alarm system if such system is desired. |
| 11. | Tenant shall provide signage if desired. Tenant shall have sole responsibility for compliance with all governmental codes and regulations regarding signage for the premises. Landlord shall approve signage prior to Tenant’s submission to governmental authorities for permitting if needed. Signage is only permitted on the Glass Storefronts. |
| 12. | Tenant shall be responsible for all interior maintenance including plumbing and air conditioning. Filters must be changed on a regular basis. Tenant also responsible for ale condenser at exterior of building. |
| 13. | Tenant shall lubricate roll up doors monthly. |
| 14. | Tenant shall maintain exit lights per city codes. |
| 15. | Tenant shall service fire extinguishers yearly per city code. |
| 16. | Tenant shall keep all walls painted a specific color as per Landlord’s specifications. |
| 17. | Tenant shall keep all sidewalks outside their units cleaned and swept off at all times. |
| 18. | No smoking in Building |
| 19. | No pets on Premises. |
| 20. | Tenant shall not attach anything to Premises without Landlords approval. |
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
EXHIBIT “D” - LEASE GUARANTY
THIS LEASE GUARANTY (the “Guaranty”) is given by Joseph A LaRosa & Deana M. LaRosa (“Guarantor”) to induce HOLDER INVESTMENTS, INC. (the “Landlord”) to enter into that certain Commercial Lease Agreement dated March 1st, 2024, between the Landlord and LA ROSA REALTY, LLC (The “Tenant”).
W I T N E S S E T H:
WHEREAS, the Tenant desires to lease from Landlord certain premises located in Orange County, Florida, at 1165 E Plant St. Unit 8, Winter Garden, FL 34787 on terms and conditions set forth in the Lease; and
WHEREAS, the Landlord has agreed to enter into the Lease and lease the Premises described therein to the Tenant on the express condition that the Guarantor executes this Guaranty; and
WHEREAS, the Guarantor desires that the Landlord enter into the Lease with the Tenant. NOW THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Guarantor, the Guarantor agrees as follows:
1. Obligation of Guarantor. The Guarantor, on behalf of himself and his successors, assigns, legal representatives and heirs, jointly and severally, absolutely and unconditionally guarantees to the Landlord, its successors and assigns, the full and prompt performance and observance of all the provisions, terms and conditions of the Lease which Tenant is required to perform and observe, including, without limitation, the rules and regulations which Landlord may deliver to Tenant during the Lease Term pursuant to the Lease. There shall be absolutely no requirement of any notice of non-payment, non-performance, or non-observance, or requirement of proof, or notice, or demand. This guaranty is continuing, absolute and unconditional.
2. Term of Guaranty. The liability of the Guarantor hereunder shall continue until all obligations to be performed and amounts to be paid by the Tenant pursuant to the terms and conditions of the Lease have been completely performed or fully paid, whether during the Lease Term or thereafter. This shall include the payment of any loss or damage incurred by the Landlord with respect to the Lease and Tenant’s occupancy of the Premises, or any other matter covered by this Guaranty. Further, this Guaranty shall remain in full force and effect and bind Guarantor to its terms and conditions during or with respect to any extension, modification or renewal of the Lease.
3. Consent to Landlord’s Acts. The Guarantor consents, without affecting the Guarantor’s liability to the Landlord hereunder, that the Landlord may, without notice to or consent of the Guarantor, with or without consideration and upon such terms as it may deem advisable: (a) extend, in whole or in part, by renewal or otherwise, and for any period or periods, the term of the Lease or time for payment of amounts now or hereafter owed to Landlord by the Tenant pursuant to the Lease, or amounts held by the Landlord as security for any such obligation; (b) settle or compromise any claim of the Landlord, and (c) release, in whole or in part, any person primarily or secondarily liable or obligated under the Lease or any other indebtedness or obligation of Tenant to Landlord. The Guarantor hereby ratifies and confirms any such extension, renewal, release, surrender, exchange, modification, impairment, settlement, or compromise; and all such actions shall be binding upon the Guarantor who hereby waives all defenses, counterclaims, or offsets which the Guarantor might have by reason thereof.
4. Waiyers by Guarantor. The Guarantor waives: (a) notice of default or failure of performance or payment, notice of demand for payment, or other notices required or presented pursuant to the Lease; and (b) all defenses, offsets and counterclaims that the Guarantor may at any time have to any claim of the Landlord against the Tenant.
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
5. Representation by Guarantor. The Guarantor represents that, at the time of the execution and delivery of this Guaranty, nothing exists to impair the effectiveness of the liability of the Guarantor to the Landlord hereunder, or the immediate taking effect of this Guaranty as the sole agreement between the Guarantor and the Landlord with respect to guaranteeing the performance and repayment of the Tenant’s obligation to the Landlord pursuant to the Lease. The Guarantor further represents that it has received a copy of the Lease with all exhibits and attachments hereto, if any.
6. Remedy of Landlord. The Landlord may at its option proceed in the first instance against the Guarantor to enforce performance or collect amounts due under the Lease or any other obligation covered by this Guaranty, without first proceeding against the Tenant, or any other person, firm, or corporation, and without first resorting to any property at any time held by the Landlord as collateral security.
7. Attorney’s Fees and Costs. If any legal action or other proceeding or action is brought for the enforcement of this Guaranty, or because of an alleged dispute, breach, default, or misrepresentation in connection with any provision of this Guaranty, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees, court costs, and all other expenses, even if not taxable court costs (including, without limitation, all such fees, costs and expenses incident to arbitration, appellate, bankruptcy, and post-judgment proceedings), incurred in that action or proceeding or any appeal, in addition to any other relief to which the party or parties may be entitled. Attorneys’ fees include paralegal fees, expert witness fees, investigative fees, administrative costs, and all other charges billed by the attorney to the prevailing party.
8. Modification of Guaranty. The whole of this Guaranty is herein set forth and there is no verbal or other written agreement, and no understanding or custom affecting the terms hereof. Only a written instrument signed by the party to be charged therewith can modify this Guaranty.
9. Constructions and Benefit. This Guaranty is delivered and made in, and shall be construed pursuant to, the laws of the State of Florida, and is binding upon the Guarantor and his successors, heirs, assigns and legal representatives, and shall inure to the benefit of the Landlord, its successors and assigns.
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed this 1ST DAY OF MARCH 2024.
| GUARANTOR | |
| Joseph La Rosa | |
| As its Guarantor | |
| Dated:_________ | |
| STREET ADRESS: [*] | |
| SOCIAL SECURITY: [*] |
STATE OF FLORIDA
COUNTY OF__________
The foregoing instrument was acknowledged before me by means of ☒ Physical presence ☐ online notarization, this____day of ______________ 20____, by ______ (Name of Person Acknowledging).
| (Seal) | |
| Signature of Notary Public | |
| Print, Type or Stamp Name of Notary | |
| Personally Known: |
| OR Produced Identification: |
| Type of Identification Produced: |
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed this 1ST DAY OF MARCH 2024
| GUARANTOR | |
| Deana M. LaRosa | |
| As its Guarantor | |
| Date Executed: _________ | |
| STREET ADRESS: [*] | |
| SOCIAL SECURITY: [*] |
STATE OF FLORIDA
COUNTY OF
The foregoing instrument was acknowledged before me by means of ☒ Physical presence ☐ online notarization, this____day of ______________ 20____, by ______ (Name of Person Acknowledging).
| (Seal) | |
| Signature of Notary Public | |
| Print, Type or Stamp Name of Notary | |
| Personally Known: |
| OR Produced Identification: |
| Type of Identification Produced: |
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
Tenant has inspected the above Premises prior to occupancy and accepts it with the conditions and/or exceptions noted above. Tenant acknowledges this report as part of the Lease with the Landlord for the above Premises. Tenant agrees to return the Premises in like condition upon termination of tenancy. Furthermore, any and all improvement(s) to Premises either by the Tenant or by the Landlord become the property of the Landlord.
| Tenant’s Signature | |
| Date |
| Tenant’s Initials: ____________ |
|
Landlord Initial’s:____________ |
Exhibit 10.126
RETAIL LEASE
(Osceola Village)
LANDLORD:
SGO OSCEOLA VILLAGE, LLC, a Delaware limited liability company (“Landlord”),
TENANT:
LA ROSA REALTY, LLC, a Florida limited liability company (“Tenant”) doing business as La Rosa Realty
| Lease |
 |
TABLE OF CONTENTS
| 1. | Premises | 4 | |
| 2. | Term | 4 | |
| 3. | Rent | 5 | |
| 4. | Common Area | 5 | |
| 5. | Security Deposit | 8 | |
| 6. | Use | 8 | |
| 7. | Payments and Notices | 11 | |
| 8. | Brokers | 11 | |
| 9. | Surrender; Holding Over | 12 | |
| 10. | Taxes | 12 | |
| 11. | Possession; Condition of Premises; Repairs | 14 | |
| 12. | Alterations | 15 | |
| 13. | Liens | 16 | |
| 14. | Assignment and Subletting | 16 | |
| 15. | Entry by Landlord | 17 | |
| 16. | Utilities and Services | 17 | |
| 17. | Indemnification and Exculpation | 18 | |
| 18. | Damage or Destruction | 18 | |
| 19. | Eminent Domain | 20 | |
| 20. | Tenant’s Insurance | 21 | |
| 21. | Landlord’s Insurance | 22 | |
| 22. | Waivers of Subrogation | 22 | |
| 23. | Tenant’s Default and Landlord’s Remedies | 23 | |
| 24. | Landlord’s Default | 24 | |
| 25. | Subordination | 26 | |
| 26. | Estoppel Certificate | 26 | |
| 27. | Project Planning | 27 | |
| 28. | Modification and Cure Rights of Landlord’s Mortgagees and Lessors | 27 | |
| 29. | Quiet Enjoyment | 27 | |
| 30. | Transfer of Landlord’s Interest | 27 | |
| 31. | Limitation on Landlord’s Liability | 28 | |
| 32. | Miscellaneous | 28 | |
| 33. | Lease Execution | 30 | |
| 34. | Waiver of Jury Trial | 31 | |
| 35. | Intentionally Deleted | 31 |
| Lease | - |
|
| EXHIBITS |
| EXHIBIT “A” | Building Site Plan | |
| EXHIBIT “B” | Floor Plan | |
| EXHIBIT “C” | Work Letter | |
| EXHIBIT “D” | Sample Form of Notice of Lease Term Dates | |
| EXHIBIT “E” | Rules and Regulations | |
| EXHIBIT “F” | Sample Form of Tenant Estoppel Certificate | |
| EXHIBIT “G” |
Intentionally Deleted |
|
| EXHIBIT “H” |
Sign Criteria |
|
| EXHIBIT “I” |
Prohibited, Restricted and Exclusive Uses |
| RIDERS | ||
| No. 1 | Reserved | |
| No. 2 | Tenant’s Obligations |
| Lease | - |
|
SUMMARY OF BASIC LEASE INFORMATION AND DEFINITIONS
This SUMMARY OF BASIC LEASE INFORMATION AND DEFINITIONS (“Summary”) is hereby incorporated into and made a part of the attached Retail Lease which pertains to the Building described in Section 1.4 below. All references in the Lease to the “Lease” shall include this Summary. All references in the Lease to any term defined in this Summary shall have the meaning set forth in this Summary for such term. Any initially captalized terms used in this Summary and any initially capitalized terms in the Lease which are not otherwise defined in this Summary shall have the meaning given in the Lease.
| 1.1 | Landlord’s Address: |
SGO OSCEOLA VILLAGE, LLC
c/o Glenborough LLC
400 South Ei Camino Real, Suite 1100
San Mateo, CA 94402
Attn: Legal Department
Payment Remittal to be sent to the Address Below:
SGO OSCEOLA VILLAGE, LLC
c/o Glenborough air
400 South Ei Camino Real, Suite 1100
San Mateo, California 94402
| 1.2 | Tenant’s Address: |
| (Prior to the Commencement Date) | (After the Commencement Date) |
| La Rosa Realty, LLC | La Rosa Realty, LLC |
| Attn: Elvi Hebra | 3032 Dyer Blvd. |
| 1420 Celebration Blvd., Suite 100 | Kissimmee, FL 34741 |
| Celebration, FL 34747 | Telephone: ___________________ |
| Telephone: 407-809-5320 ext. 10 | |
| Email: ______________________ | Email: ______________________ |
| 1.3 | Project: That certain shopping and entertainment center known as Osceola Village located at 3020-3086 Dyer Boulevard North, in the City of Kissimmee, County of Osceola, State of Florida, as shown on the site plan attached hereto as Exhibit “A”. The aggregate Floor Area of all of buildings (including the Building) located within the Project is approximately 116,645 square feet. The term “Floor Area,” as used in this Lease, shall mean all areas designated by Landlord for the exclusive use of a tenant measured from the exterior surface of exterior walls (and extensions, in the case of openings) and from the center of interior demising walls, and shall include, but not be limited to, restrooms, mezzanines, warehouse or storage areas, clerical or office areas and employee areas. |
| 1.4 | Building: A building located in the Project, commonly known as Retail B, and containing the Premises. |
| 1.5 | Premises: Those certain premises within the Building, the address of which is 3032 Dyer Boulevard shown on the floor plan attached hereto as Exhibit “B” containing approximately 2,800 square feet of Floor Area. |
| 1.6 | Reserved. |
| Lease | - |
|
| 1.7 | Commencement Date: August 1, 2016. |
| Delivery Date: The Commencement Date. |
| 1.8 | Term: Sixty-five (65) full calendar months, commencing on the Commencement Date, as set forth in Section 2.1 of the Lease. |
| 1.9 | Basic Rent: |
| Months | Monthly
Basic Rent |
|
| 1 to 17 | $4,666.67* | |
| 18 to 29 | $4,806.67 | |
| 30 to 41 | $4,950.87 | |
| 42 to 53 | $5,099.39 | |
| 54 to 65 | $5,252.37 |
* Notwithstanding anything contained in this Section to the contrary, provided Tenant is not in default under the Lease, and has not yet commenced the operation of business from the Premises, Tenant’s monthly Basic Rent shall be abated for the first five (5) months of the Term (the “Basic Rent Abatement”), it being understood that Landlord is providing Tenant with the Basic Rent Abatement to allow Tenant a five (5) month construction period. If Tenant commences the operation of business from the Premises during the Basic Rent Abatement period, then Tenant shall immediately commence payment of Basic Rent and the Basic Rent Abatement shall be null and void. Nothing herein shall be construed as abating Tenant’s Monthly Common Area Expense Charge or any additional rent or other sums due under the Lease during such five (5) month Basic Rent Abatement period, or otherwise.
| 1.10 | Reserved. |
| 1.11 | Security Deposit: $11,500.00. |
| 1.12 | Permitted Use: Subject to Exhibit “I” attached hereto, the Premises shall be used for a real estate office and no other use or purpose without Landlord’s prior written consent. |
| Trade Name: La Rosa Realty. |
| 1.13 | Brokers: Bishop Beale Realty, LLC for Landlord; La Rosa Realty, LLC for Tenant. |
| 1.14 | Interest Rate: The maximum rate permitted by law. |
| 1.15 | Tenant Improvements: See Exhibit “C” attached hereto. |
| 1.16 | Guarantor: Not Applicable. |
| 1.17 | Minimum Hours of Operation: Tenant agrees that it shall open for business in the Premises on Monday through Sunday not later than 8:30 a.m. and shall close for business on such days not earlier than 5:30 p.m. (the “Minimum Hours of Operation”) and shall not stay open later than 5:30 p.m. |
| Lease | - |
|
RETAIL LEASE
This RETAIL LEASE (“Lease”), which includes the preceding Summary of Basic Lease information and definitions (“Summary”) attached hereto and incorporated herein by this reference (collectively, the “Lease”), is made as of the ____ day of ____ 2016 (the “Effective Date”), by and between SGO OSCEOLA VILLAGE, LLC, a Delaware limited liability company (“Landlord”) and LA ROSA REALTY, LLC, a Florida limited liability company doing business as La Rosa Realty (“Tenant”).
| 1. | Premises. |
1.1 Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises upon and subject to the terms, covenants and conditions contained in this Lease to be performed by each party.
1.2 Landlord’s Reservation of Rights. Provided Tenant’s use of and access to the Premises is not interfered with in an unreasonable manner, Landlord reserves for itself the right from time to time to install, use, maintain, repair, replace and relocate pipes, ducts, conduits, wires and appurtenant meters and equipment above the ceiling surfaces, below the floor surfaces and within the walls of the Building and the Premises. In addition, Landlord shall have the right, at any time and from time to time during the Term, upon not less than thirty (30) days’ prior written notice to Tenant, to remodel, renovate or expand the Shopping Center or any portion thereof. Landlord shall take all reasonable steps to prevent such remodel, renovation or expansion from materially and adversely affecting Tenant’s operations from the Premises.
| 2. | Term. |
2.1 Term; Notice of Lease Dates. The Term of this Lease shall be for the period designated in Section 1.8 of the Summary commencing on the Commencement Date, and ending on the expiration of such period, unless the Term is sooner terminated or extended as provided in this Lease. Notwithstanding the foregoing, if the Commencement Date falls on any day other than the first day of a calendar month then the term of this Lease will be measured from the first day of the month following the month in which the Commencement Date occurs. Within ten (10) days after Landlord’s written request, Tenant shall execute a written confirmation of the Commencement Date and expiration date of the Term in the form of the Notice of Lease Term Dates attached hereto as Exhibit “D”. The Notice of Lease Term Dates shall be binding upon Tenant unless Tenant objects thereto in writing within such ten (10) day period. For purposes of this Lease, the term “Lease Year” shall mean each consecutive twelve (12) month period during the Term: provided that, if the Commencement Date shall be other than the first day of a calendar month, then the first Lease Year shall commence on the Commencement Date and shall end on the last day of the month in which the first anniversary of the Commencement Date occurs; and further provided that, the last Lease Year shall end on the Expiration Date.
2.2 Commencement Date. The Lease Term shall commence on the date set forth in Section 1.7 of the Summary (the “Commencement Date”).
2.3 Early Occupancy. If Tenant occupies the Premises prior to the Commencement Date for the purpose of completing the Initial Tenant Improvements (as defined in Exhibit “C” attached hereto) or for any other purpose with Landlord’s prior written consent, such early occupancy shall be subject to all of the terms and conditions of this Lease, including, without limitation, the provisions of Sections 17, 20 and 22 except that provided Tenant does not commence the operation of business from the Premises, Tenant will not be obligated to pay rent during the period of such early occupancy.
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| 3, | Rent. |
3.1 Basic Rent. Tenant agrees to pay Landlord, as basic rent for the Premises, the Basic Rent designated in Section 1.9 of the Summary. The Basic Rent shall be paid by Tenant in twelve (12) equal monthly installments of Monthly Basic Rent in the amounts designated in Section 1.9 of the Summary in advance on the first day of each and every calendar month during the Term, except that the first full month’s Monthly Basic Rent (and the first Installment of Tenant’s Monthly Common Area Expense Charge) shall be paid upon execution of this Lease by Tenant. Monthly Basic Rent for any partial month shall be prorated in the proportion that the number of days this Lease is in effect during such month bears to the actual number of days in such month.
3.2 Additional Rent. All amounts and charges payable by Tenant under this Lease in addition to the Basic Rent described in Section 3.1 above and percentage rent, if any, shall be considered additional rent for the purposes of this Lease, and the word “rent” in this Lease shall include such additional rent unless the context specifically or clearly implies that only the Basic Rent or percentage rent, if any, is referenced. The Basic Rent, percentage rent, if any, and additional rent shall be paid to Landlord as provided in Section 7, without any prior demand therefor and without any deduction or offset, in lawful money of the United States of America.
3.3 Percentage Rent. N/A.
3.4 Late Payments. Late payments of Monthly Basic Rent and/or any Item of additional rent will be subject to interest and a late charge as provided in Sections 23.6 and 23.7 below.
| 4. | Common Area. |
4.1 Definition of Common Area. The term “Common Area,” as used in this Lease means all areas and the improvements thereon within the exterior boundaries of the Project now or later made available for the general use of Landlord, Tenant and other persons entitled to occupy floor area in the Project and their customers, including, without limitation, the parking facilities of the Project which serve the Building, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways, landscaped areas, and similar areas and facilities situated within the Project which are not reserved for the exclusive use of any Project occupants, and the exterior surfaces and roofs of all buildings (including the Building) located within the Project. Without limiting this definition, Landlord may include in the Common Area those portions of the Project presently or later sold or leased to purchasers or tenants, as the case may be, until the commencement of construction of the building(s) thereon, at which time there shall be withdrawn from the Common Area those areas not provided by such owner or lessee for common use. Common Area shall not include (i) the entryway to a tenant’s premises, (ii) any improvements installed by a tenant outside of its premises, whether with or without Landlord’s knowledge or consent, or (iii) any areas or facilities that are included in the description of premises leased to a tenant.
4.2 Maintenance and Use of Common Area. The manner in which the Common Area shall be maintained shall be solely determined by Landlord. If any owner or tenant of any portion of the Project maintains Common Area located upon its parcel or demised premises (Landlord shall have the right in its sole discretion to allow any purchaser or tenant to so maintain Common Area located upon its parcel or demised premises and to be excluded from participation in the payment of Common Area Expenses as provided below), Landlord shall not have any responsibility for the maintenance of that portion of the Common Area and Tenant shall have no claims against Landlord arising out of any failure of such owner or tenant to so maintain its portion of the Common Area. The use and occupancy by Tenant of the Premises shall include the right to use the Common Area (except those portions of the Common Area on which have been constructed or placed permanent or temporary kiosks, displays, carts, and stands and except areas used in the maintenance or operation of the Project), in common with Landlord and other tenants of the Project and their customers and invitees, subject to (i) any covenants, conditions and restrictions affecting the Project, or any portion thereof, which are incorporated herein by this reference, as the same may be amended from time to time (“Declarations”), and (ii) such rules and regulations concerning the Project as may be established by Landlord from time to time including, without limitation, the Rules and Regulations attached hereto as Exhibit “E” Tenant agrees to promptly comply with all such rules and regulations and any amendments thereto, upon receipt of written notice from Landlord. Tenant hereby acknowledges that Landlord shall have no obligation whatsoever to provide security service or other security measures for the benefit of the Premises, the Building or the Shopping Center. Tenant assumes all responsibility for the protection of Tenant, its agents, employees, contractors, customers and invitees and the property of Tenant and of Tenant’s agents, employees, contractors, customers and Invitees, from acts of third parties. Nothing herein contained shall prevent Landlord, at Landlord’s sole option, from providing security protection for the Shopping Center or any part of it.
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4.3 Control of and Changes to Common Area. Landlord shall have the sole and exclusive control of the Common Area, as well as the right to make reasonable changes to the Common Area. Provided Landlord does not materially interfere with Tenant’s use of and access to the Premises, Landlord’s rights shall include, but not be limited to, the right lo (a) restrain the use of the Common Area by unauthorized persons; (b) cause Tenant to remove or restrain persons from any unauthorized use of the Common Area if they are using the Common Area by reason of Tenant’s presence in the Project; (c) utilize from time to time any portion of the Common Area for promotional, entertainment, and related matters; (d) place permanent or temporary kiosks, displays, carts, and stands in the Common Area and to lease same to tenants; (e) temporarily close any portion of the Common Area for repairs, Improvements or alterations, to discourage non-customer use, to prevent public dedication or an easement by prescription from arising, or for any other reason deemed appropriate In Landlord’s judgment; and (f) reasonably change the shape and size of the Common Area, add, eliminate or change the location of improvements to the Common Area, including, without limitation, buildings, lighting, parking areas, landscape areas, roadways, drive aisles, walkways and curb cuts.
4.4 Common Area Expenses. The term “common Area Expenses” as used in this Lease means all costs and expenses incurred by Landlord, in (a) operating, managing, policing, insuring, servicing, repairing and maintaining the Common Area, (b) maintaining, repairing and replacing the exterior surface of exterior walls and maintaining, repairing and replacing roots of the buildings from time to time constituting the Project including the Building; (c) operating, insuring, repairing, replacing and maintaining the Common Utility Facilities, and (d) Landlord’s pro rata share of common area expenses applicable under any Declaration which is applicable to the Project. “Common Utility Facilities” are defined to include but are not limited to, sanitary sewer lines and systems, gas lines and systems, water lines and systems, fire protection lines and systems, electric power, telephone and communication lines and systems, and storm drainage and retention facilities not exclusively serving the premises of any tenant or store located in the Project. Common Area Expanses shall include, without limitation, the following: expenses for maintenance, landscaping, repaving, resurfacing, repairs, replacements, painting, lighting, cleaning, trash removal, security, fire protection and similar items; wages payable lo persons whose duties are connected with maintaining and operating the Property (but only for the portion of such persons’ time allocable to the Project), together with all payroll taxes, unemployment insurance, vacation allowances and disability, pension, profit sharing, hospitalization, retirement and other so-called “fringe benefits” paid in connection with such persons (allocated in a manner consistent with such persons wages); non-refundable contributions toward one or more reserves for replacements other than equipment; rental on equipment; charges, surcharges, and other levies related to the requirements of any federal, state or local governmental agency; expenses related to the Common Utility Facilities; personal property taxes and Real Property Taxes (as defined in Section 10.1 below); costs of insurance maintained by Landlord pursuant to Section 22; costs of improvements to the Common Area as may be required from time to time by any laws, ordinances, rules or regulations of any governmental authority or agency having jurisdiction thereof; and a sum payable to Landlord for administration and overhead in an amount equal to ten percent (10%) of the Common Area Expenses for the applicable year.
4.5 Determination of Tenant’s Monthly Common Area Expense Charge. From and after the Commencement Date, Tenant shall pay to Landlord, on the first day of each calendar month during the Term of this Lease, Tenant’s share of an amount estimated by Landlord to be the Monthly Common Area Expenses for the Project for that month (“Tenant’s Monthly Common Area Expense Charge”). Tenant’s share of Monthly Common Area Expenses (“Tenant’s Share”) shall be computed by multiplying the Common Area Expenses by a fraction, the numerator or which shall be the Floor Area of the Premises and the denominator of which shall be all of the Floor Area of the building space that is constructed in the Landlord Maintenance Area (as defined below) and occupied or intended for occupancy. Notwithstanding the foregoing, Landlord may, In its reasonable discretion, establish pools for various components of Common Area Expenses. Tenant’s Share for each pool shall be based upon the ratio of the Floor Area of the Premises to the Floor Area of the premises participating in the pool. For example, if one tenant is exclusively financially responsible for maintaining that area of sidewalk directly in front of its premises, Tenant and the remaining tenants shall not have Included In the Common Area Expenses for which they are responsible, any costs or charges attributable to that specific area of the sidewalk, and consequently, the denominator for Common Area Expenses attributable to that specific area of sidewalk maintenance shall exclude the Floor Area occupied by such tenant The “Landlord Maintenance Area” means, at any given time, the parcels, as adjusted from time to time, within the Shopping Center whose Common Area is maintained by Landlord at Its expense.
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4.6 Estimate Statement. Prior to the Commencement Date and on or about March 1st of each subsequent calendar year during the Term of this Lease, Landlord will endeavor to deliver to Tenant a statement (“Estimate Statement”) wherein landlord will estimate both the Common Area Expenses and Tenant’s Monthly Common Area Expense Charge for the then current calendar year, Subject to Section 4.5 above, Tenant agrees to pay Landlord, as additional rent, Tenant’s estimated Monthly Common Area Expense Charge each month thereafter, beginning with the next installment of rent due, until such time as Landlord issues a revised Estimate Statement or the Estimate Statement for the succeeding calendar year; except that, concurrently with the regular monthly rent payment next due following the receipt of each such Estimate Statement, Tenant agrees to pay Landlord an amount equal to one monthly installment of Tenant’s estimated Monthly Common Area Expense Charge (less any applicable Common Area Expenses already paid) multiplied by the number of months from January, in the current calendar year, to the month of such rent payment next due, all months Inclusive. If at any lime during the Term of this Lease, but not more often than quarterly, Landlord reasonably determines that Tenant’s Share of Common Area Expenses for the current calendar year will be greater than the amount set forth in the then current Estimate Statement, Landlord may issue a revised Estimate Statement and Tenant agrees to pay Landlord, within ten (10) days of receipt of the revised Estimate Statement, the difference between the amount owed by Tenant under such revised Estimate Statement and the amount owed by Tenant under the original Estimate Statement for the portion of the then current calendar year which has expired. Thereafter Tenant agrees to pay Tenant’s Monthly Common Area Expense Charge based on such revised Estimate Statement until Tenant receives the next calendar year’s Estimate Statement or a new revised Estimate Statement for the current calendar year.
4.7 Actual Statement. By March 1st (or as soon thereafter as is reasonably practical for Landlord) of each calendar year during the Term of this Lease, Landlord will also endeavor to deliver to Tenant a statement (“Actual Statement”) which states Tenant’s Share of the actual Common Area Expenses for the preceding calendar year. If the Actual Statement reveals that Tenant’s Share of the actual Common Area Expenses is more than the total Additional Rent paid by Tenant for Common Area Expenses on account of the preceding calendar year, subject to Section 4.5 above, Tenant agrees to pay Landlord the difference in a lump sum within ten (10) days of receipt of the Actual Statement. If the Actual Statement reveals that Tenant’s Share of the actual Common Area Expenses is less than the Additional Rent paid by Tenant for Common Area Expenses on account of the preceding calendar year, Landlord will credit any overpayment toward the next monthly Installment(s) of Tenant’s Share of the Common Area Expenses due under this Lease.
4.8 Miscellaneous. Any delay or failure by Landlord in delivering any Estimate Statement or Actual Statement pursuant to this Section 4 will not constitute a waiver of its right to require an increase in Rent nor will it relieve Tenant of its obligations pursuant to this Section 4, except that Tenant will not be obligated to make any payments based on such Estimate Statement or Actual Statement until ten (10) days after receipt of such Estimate Statement or Actual Statement. If Tenant does not object to any Estimate Statement or Actual Statement within thirty (30) days after Tenant receives any such statement, such statement will be deemed final and binding on Tenant. Even though the Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant’s Share of the actual Common Area Expenses for the year in which this Lease terminates, Tenant agrees to promptly pay any increase due over the estimated expenses paid and, conversely, any overpayment made in the event said expenses decrease shall promptly be rebated by Landlord to Tenant. Such obligation will be a continuing one which will survive the expiration or termination of this Lease. Prior lo the expiration or sooner termination of the Lease Term and Landlord’s acceptance of Tenant’s surrender of the Premises, Landlord will have the right to estimate the actual Common Area Expenses for the then current Lease Year and to collect from Tenant prior to Tenant’s surrender of the Premises, Tenant’s Share of any excess of such actual Common Area Expenses over the estimated Common Area Expenses paid by Tenant in such Lease Year.
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5. Security Deposit. Concurrently with the execution of this Lease, Tenant shall deposit with Landlord the Security Deposit designated in Section 1.11 of the Summary. The Security Deposit shall be held by Landlord as security for the full and faithful performance by Tenant of all of the terms, covenants and conditions of this Lease to be performed by Tenant during the Term. The Security Deposit is not, and may not be construed by Tenant to constitute, rent for the last month or any portion thereof. If Tenant defaults with respect to any of its obligations under this Lease, Landlord may (but shall not be required to) use, apply or retain all or any part of the Security Deposit for the payment of any rent or any other sum in default, or for the payment of any other amount, loss or damage which Landlord may spend, incur or suffer by reason of Tenant’s default. If any portion of the Security Deposit is so used or applied, Tenant shall, within ten (10) days after demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount. Landlord shall not be required to keep the Security Deposit separate from its general funds, and Tenant shall not be entitled to interest on the Security Deposit. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the Security Deposit or any balance thereof shall be returned to Tenant within thirty (30) days following the expiration of the Lease term, provided that Landlord may retain the Security Deposit until such time as any amount due from Tenant in accordance with Section 5 hereof has been determined and paid in full. If Landlord sells its interest in the Building during the Term and if Landlord deposits with the purchaser the Security Deposit (or balance thereof), and such purchaser acknowledges receipt thereof, then, upon such sale, Landlord shall be discharged from any further liability with respect to the Security Deposit.
| 6. | Use. |
6.1 General. Tenant shall use the Premises solely for the Permitted Use and under the trade name specified in Section 1.12, and shall not use or permit the Premises to be used for any other use or purpose or under any other trade name without Landlord’s prior written consent. Nothing in this Lease shall be construed to warrant that Tenant shall have the right to use the Premises for the Permitted Use and/or to grant Tenant an exclusive right lo such Permitted Use or any other use. Tenant shall observe and comply with the “Rules and Regulations” attached hereto as Exhibit “E”, and all reasonable non-discriminatory modifications thereof and additions thereto from time to time put into effect and furnished to Tenant by Landlord. Landlord shall endeavor to enforce the Rules and Regulations, but shall have no liability to Tenant for the violation or non-performance by any other tenant or occupant of the Project of any such Rules and Regulations. Tenant shall, at its sole cost and expense, observe and comply with all requirements of any board of fire underwriters or similar body relating to the Premises, and all laws, statutes, codes, rules and regulations now or hereafter in force relating to or affecting the use, occupancy, alteration or improvement of the Premises, including, without limitation, the provisions of Title III of the Americans with Disabilities Act of 1990 as it pertains to Tenant’s use, occupancy, improvement and alteration of the Premises. Tenant shall not use or allow the Premises to be used (a) in violation of any Declaration or any other recorded covenants, conditions and restrictions affecting the Project or of any law or governmental rule or regulation, or of any certificate of occupancy issued for the Premises or the Building, or (b) for any improper, immoral, unlawful or reasonably objectionable purpose. Tenant shall not do or permit to be done anything which will obstruct or interfere with the rights of other tenants or occupants of the Project, or injure or annoy them. Tenant shall not cause, maintain or permit any nuisance in, an or about the Premises, the Building or the Project, nor commit or suffer to be committed any waste in, on or about the Premises. Tenant and Tenant’s employees and agents shall not solicit business in the Common Area, nor shall Tenant distribute any handbills or other advertising matter in the Common Area.
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6.2 Operation of Business. Tenant covenants to open for business to the public and to continuously and uninterruptedly operate all of the Floor Area of the Premises during the Minimum Hours of Operation specified in Section 1.17 of the Summary throughout the entire Term with due diligence and efficiency so as to maximize the gross receipts which may be produced by Tenant’s business therein. If subsequent to commencing the operation of Tenant’s business from within the Premises, Tenant ceases the operation of its business from within the Premises for its Permitted Use for more than ninety (90) consecutive days for reasons other than temporary remodeling, Landlord in its sole discretion and without limiting Landlord’s other remedies under this Lease, including, without limitation, those under Section 23 hereof, shall have the right to recapture possession of the Premises and terminate this Lease by providing Tenant with written notice of Landlord’s election to do so (hereinafter referred to as the “Recapture Notice”). This Lease shall terminate on the date set forth in the Recapture Notice (the “Recapture Date”), provided, however, nothing in this Section 6.2 shall release Tenant from its obligation to pay Landlord all payments of Rent due under the terms of this Lease prior to such Recapture Date, and in such event, Tenant shall also be liable to reimburse Landlord for the unamortized amount of leasing commissions and the tenant improvement allowance incurred by Landlord under this Lease amortized over the initial Term of this Lease. Tenant shall carry at all times in the Premises a stock of merchandise of such size, character and quality as shall be reasonably designed to produce the maximum return to Landlord and Tenant, and shall retain sufficient sales personnel to care for the patronage and conduct its business in accordance with sound business practices. Tenant shall install and maintain at all times displays of merchandise in the display windows (if any) for the Premises. Tenant shall keep its storefront sign well lighted during the hours from sundown to 11:00 p.m. During the Term, neither Tenant, nor any entity owned or controlled directly or indirectly by Tenant, its constituent partners, shareholders or directors, shall, without the prior written consent of Landlord, directly or indirectly engage in any similar or competing business with that to be operated by Tenant in the Premises within a radius of three (3) miles from the outside boundary of the Project.
6.3 Parking. Tenant and its employees shall park their vehicles only in those portions of the Common Area from time to time designated for such purpose by Landlord. Further, Landlord shall have the right to adopt and implement such alternative parking programs as may be necessary to alleviate parking problems during peak traffic periods. The use of the parking area shall be subject to the Parking Rules and Regulations attached hereto as Exhibit “E” and any other reasonable, non-discriminatory rules and regulations adopted by Landlord and/or Landlord’s parking operators from time to time, including any system for controlled ingress and egress and charging visitors and invitees, with appropriate provision for validation of such charges. Tenant shall furnish Landlord with a list of its employees and the license numbers of their vehicles within fifteen (15) days after Landlord requests such information. Tenant shall be responsible for ensuring that its employees comply with all the provisions of this Section and such other parking rules and regulations as may be adopted and implemented by Landlord from time to time, including, but not limited to, systems of validation, shuttle transportation or any other programs which may be deemed necessary or appropriate by Landlord to control, regulate or assist parking by customers of the Project.
6.4 Signs, Awnings and Canopies. Tenant will not place or suffer to be placed or maintained on the roof or on any exterior door, wall or window (or within 48 inches of any window) of the Premises any sign, awning or canopy, or advertising matter on the glass of any window or door of the Premises without Landlord’s prior written consent. Tenant further agrees to maintain such sign, awning, canopy, decoration, lettering or advertising matter as may be approved in good condition and repair at all times. Tenant agrees, at Tenant’s sole cost, to obtain a canopy type sign and any other signs as required by Landlord in, strict conformance with Landlord’s sign criteria as set forth on Exhibit “H” attached hereto (“Sign Criteria”) as to design, material, color, location, size and letter style from the source designated by Landlord. Tenant’s sign shall be installed prior to Tenant’s opening for business and shall thereafter be maintained by Tenant at its own expense. If Tenant fails to maintain any sign, awning, canopy, decoration, lettering or advertising, Landlord may do so and Tenant shall reimburse Landlord for such cost plus a twenty percent (20%) overhead fee. If, without Landlord’s prior written consent, Tenant installs any sign, awning, canopy, decoration, lettering or advertising, Landlord may have Tenant’s sign, awning, canopy, decoration, lettering or advertising removed and stored at Tenant’s expense. The removal and storage costs shall bear interest until paid at the maximum rate allowed by law. Landlord reserves the right to revise the Sign Criteria, at any time as a result of any governmental requirement or Landlord’s renovation of the Premises, the Building or the Project. Within ninety (90) days of Landlord’s request and provided that Tenant has been in occupancy of the Premises for at least five (5) years, Tenant shall remove Tenant’s existing sign, patch the fascia, and install a new sign, at Tenant’s sole cost and expense, in accordance with Landlord’s then Sign Criteria.
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6.5 Advertising. No advertising medium shall be utilized by Tenant which can be heard or experienced outside the Premises, including without limitation, flashing lights, searchlights, loudspeakers, phonographs, radios or television. Except with Landlord’s prior written consent, Tenant shall not display, paint or place, or cause to be displayed, painted or placed, any handbills, bumper stickers or other advertising devices on any vehicle parked in the parking area of the Shopping Center, including those belonging to Tenant, or to Tenant’s agent or any other person; nor shall Tenant distribute or cause to be distributed in the Shopping Center any handbills or other advertising devices. Tenant shall have no right to paint the exterior or interior of the windows or doors without Landlord’s prior written consent.
6.6 Hazardous Materials. Except for ordinary and general office supplies, such as copier toner, liquid paper, glue, ink and common household cleaning materials (some or all of which may constitute “Hazardous Materials” as defined in this Lease), Tenant agrees not to cause or permit any Hazardous Materials to be brought upon, stored, used, handled, generated, released or disposed of on, in, under or about the Premises, the Building, the Common Areas or any other portion of the Project by Tenant, its agents, employees, subtenants, assignees, licensees, contractors or invitees (collectively, “Tenant’s Parties”), without the prior written consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion. Upon the expiration or earlier termination of this Lease, Tenant agrees to promptly remove from the Premises, the Building and the Project, at its sole cost and expense, any and all Hazardous Materials, including any equipment or systems containing Hazardous Materials which are installed, brought upon, stored, used, generated or released upon, in, under or about the Premises, the Building and/or the Project or any portion thereof by Tenant or any of Tenant’s Parties. To the fullest extent permitted by law, Tenant agrees to promptly indemnify, protect, defend and hold harmless Landlord and Landlord’s partners, officers, directors, employees, agents, successors and assigns (collectively, “Landlord Indemnified Parties”) from and against any and all claims, damages, judgments, suits, causes of action, losses, liabilities, penalties, fines, expenses and costs (including, without limitation, clean-up, removal, remediation and restoration costs, sums paid in settlement of claims, attorneys’ fees, consultant fees and expert fees and court costs) which arise or result from the presence of Hazardous Materials on, in, under or about the Premises, the Building or any other portion of the Project and which are caused or permitted by Tenant or any of Tenant’s Parties. Tenant agrees to promptly notify Landlord of any release of Hazardous Materials in the Premises, the Building or any other portion of the Project which Tenant becomes aware of during the Term of this Lease, whether caused by Tenant or any other persons or entities. In the event of any release of Hazardous Materials caused or permitted by Tenant or any of Tenant’s Parties, Landlord shall have the right, but not the obligation, to cause Tenant to immediately take all steps Landlord deems necessary or appropriate to remediate such release and prevent any similar future release to the satisfaction of Landlord and Landlord’s mortgagee(s). At all times during the Term of this Lease, Landlord will have the right, but not the obligation, to enter upon the Premises to Inspect, investigate, sample and/or monitor the Premises to determine if Tenant is in compliance with the terms of this Lease regarding Hazardous Materials. As used in this Lease, the term “Hazardous Materials” shall mean and include any hazardous or toxic materials, substances or wastes as now or hereafter designated under any law, statute, ordinance, rule, regulation, order or ruling of any agency of the State, the United States Government or any local governmental authority, including, without limitation, asbestos, petroleum, petroleum hydrocarbons and petroleum based products, urea formaldehyde foam insulation, polychlorinated biphenyls (“PCBs”), and freon and other chlorofluorocarbons. Tenant shall give Landlord written notice of any evidence of Mold, water leaks or water infiltration in the Premises and/or within the Project, promptly upon discovery of same. At its expense, Tenant shall investigate, clean up and remediate any Mold in the Premises resulting from any acts or omissions of Tenant and/or any of Tenant’s Parties. Investigation, clean up and remediation may be performed only after Tenant has Landlord’s written approval of a plan for such remediation. All clean up and remediation shall be done in compliance with all applicable Laws and to the reasonable satisfaction of Landlord. As used in this Lease, “Mold” means mold, fungi, spores, microbialmatter, mycotoxins and microbiological organic compounds. The provisions of this Section 6.6 will survive the expiration or earlier termination of this Lease.
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6.7 Refuse and Sewage. Tenant agrees not to keep any trash, garbage, waste or other refuse on the Premises except in sanitary containers and agrees to regularly and frequently remove same from the Premises. Tenant shall keep an containers or other equipment used for storage of such materials in a clean and sanitary condition. Tenant shall properly dispose of an sanitary sewage and shall not use the sewage disposal system for the disposal of anything except sanitary sewage. Tenant shall keep the sewage disposal system free of all obstructions and in good operating condition. If the volume of Tenant’s trash becomes excessive in Landlord’s judgment, Landlord shall have the right to charge Tenant for additional trash disposal services and/or to require that Tenant contract directly for additional trash disposal services at Tenant’s sole cost and expense.
6.8 Hours for Deliveries. Tenant shall use its reasonable efforts to require all deliveries (exclusive of United Parcel Service and U.S. Postal Service), loading, unloading and services to the Premises to be completed between 7:00 a.m. and 10:00 a.m. each day. All deliveries, loading, unloading and services to the Premises shall be accomplished within the service areas of the Shopping Center (or within such other locations as Landlord shall reasonably designate).
6.9 Auctions. No auction, “fire”, bankruptcy or sidewalk sales may be conducted in or upon the Premises without Landlord’s prior written consent.
6.10 Other Tenancies. Landlord reserves the right to effect such other tenancies in the Shopping Center as Landlord, in the exercise of its sole business judgment, shall determine to best promote the interests of the Shopping Center. Tenant does not rely on the fact, nor does Landlord represent, that any specific tenant or number of tenants shall during the term of this Lease occupy any space in the Shopping Center.
6.11 Prohibited Uses. Without limiting in any way the restriction in this Lease that the Premises be used only for the Permitted Use specified in Section 1.12 of the Summary, in no event shall the Premises be used for any prohibited or restricted uses set forth in Exhibit “1” attached hereto or for any exclusive use granted by Landlord to other tenants of the Shopping Center including those granted subsequent to the date of this Lease (provided as to such subsequent exclusive(s), they are granted before Tenant commences a change in use to any such exclusive use).
7. Payments and Notices. All rent and other sums payable by Tenant to Landlord hereunder shall be paid to Landlord at the address designated in Section 1.1 of the Summary, or to such other persons and/or at such other places as Landlord may hereafter designate In writing. Any notice required or permitted to be given hereunder must be in writing and may be given by personal delivery (including delivery by nationally recognized overnight courier or express mailing service), facsimile transmission, or by registered or certified mail, postage prepaid, return receipt requested, addressed to Tenant at the address(es) designated in Section 1.2 of the Summary, or to Landlord at the address(es) designated in Section 1.1 of the Summary. Either party may, by written notice to the other, specify a different address for notice purposes.
8. Brokers. The parties recognize that the broker(s) who negotiated this Lease are stated in Section 1.13 of the Summary, and agree that Landlord shall be solely responsible for the payment of brokerage commissions to said broker(s), and that Tenant shall have no responsibility therefor unless written provision to the contrary has been made. Each party represents and warrants to the other, that to its knowledge, no other broker, agent or finder (a) negotiated or was instrumental in negotiating or consummating this Lease on its behalf, and (b) Is or might be entitled to a commission or compensation in connection with this Lease. Any broker, agent or finder of Tenant whom Tenant has failed to disclose herein shall be paid by Tenant. Tenant shall indemnify, protect, defend (by counsel reasonably approved in writing by Landlord) and hold Landlord harmless from and against any and all claims, judgments, suits, causes of action, damages, losses, liabilities and expenses (Including attorneys’ fees and court costs) resulting from any breach by Tenant of the foregoing representation, including, without limitation, any claims that may be asserted against Landlord by any broker, agent or finder undisclosed by Tenant herein. Landlord shall indemnify, protect, defend (by counsel reasonably approved in writing by Tenant) and hold Tenant harmless from and against any and all claims, judgments, suits, causes of action, damages, losses, liabilities and expenses (including attorneys’ fees and court costs) resulting from any breach by Landlord of the foregoing representation, including, without limitation, any claims that may be asserted against Tenant by any broker, agent or finder undisclosed by Landlord herein. The foregoing indemnities shall survive the expiration or earlier termination of this Lease.
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| 9. | Surrender; Holding Over. |
9.1 Surrender of Premises. Upon the expiration or sooner termination of this Lease, Tenant shall surrender all keys for the Premises lo Landlord, and Tenant shall deliver exclusive possession of the Premises to Landlord broom clean and in first class condition and repair, reasonable wear and tear excepted (and casualty damage excepted if this Lease is terminated as a result thereof pursuant to Section 18), with all of Tenant’s personal property (and those items, if any, of Tenant Improvements and Alterations identified by Landlord pursuant lo Section 12.2 below) removed therefrom and all damage caused by such removal repaired, as required pursuant to Sections 12.2 and 12.3 below. If, for any reason, Tenant fails to surrender the Premises on the expiration or earlier termination of this Lease (including upon the expiration of any subsequent month lo month tenancy consented to by Landlord pursuant to Section 9.2 below), with such removal and repair obligations completed, then, in addition to the provisions of Section 9.3 below and Landlord’s rights and remedies under Section 12.4 and the other provisions of this Lease, Tenant shall indemnify, protect, defend (by counsel reasonably approved in writing by Landlord) and hold Landlord harmless from and against any and all claims, judgments, suits, causes of action, damages, losses, liabilities and expenses (including attorneys’ fees and court costs) resulting from such failure to surrender, including, without limitation, any claim made by any succeeding tenant based thereon. The foregoing indemnity shall survive the expiration or earlier termination of this Lease.
9.2 Holding Over. If Tenant holds over after the expiration or earlier termination of the Lease Term, Tenant shall become a tenant at sufferance only, upon the terms and conditions set forth in this Lease so far as applicable (including Tenant’s obligation to pay all Common Area Expenses and any other additional rent under this Lease), but at a Monthly Basic Rent equal to the greater of: (a) one hundred fifty percent (150%) of the Monthly Basic Rent applicable to the Premises immediately prior to the date of such expiration or earlier termination; or (b) one hundred fifty percent (150%) of the prevailing market rate excluding any rental or other concessions (as reasonably determined by Landlord) for the Premises in effect on the date of such expiration or earlier termination. Acceptance by Landlord of rent after such expiration or earlier termination shall not constitute a consent to a hold over hereunder or result in an extension of this Lease. Tenant shall pay an entire month’s Monthly Basic Rent calculated in accordance with this Section 9.2 for any portion of a month it holds over and remains in possession of the Premises pursuant lo this Section 9.2.
9.3 No Effect on Landlord’s Rights. The foregoing provisions of this Section 9 are in addition to, and do not affect, Landlord’s right of re-entry or any other rights of Landlord hereunder or otherwise provided at law or in equity.
| 10. | Taxes. |
10.1 Real Property Taxes. Tenant agrees to pay its pro rata share of all general and special real property taxes, assessments (including, without limitation, change in ownership taxes or assessments), liens, bond obligations, license fees or taxes and any similar impositions in lieu or other impositions now or previously within the definition of real property taxes or assessments (collectively “Real Property Taxes”) which may be levied or assessed by any lawful authority against the Project applicable to the period from the Commencement Date until the expiration or sooner termination of this Lease. Tenant’s pro rata share shall be apportioned according to the floor area of the Premises as it relates to the total leasable rentable square feet of the Building or buildings located within the Project (including the Premises) for which Landlord is primarily obligated to pay such Real Estate Taxes.
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All Real Property Taxes for the tax year in which the Commencement Date occurs and for the tax year in which this Lease terminates shall be apportioned and adjusted so that Tenant shall not be responsible for any Real Property Taxes for a period of time occurring prior to the Rent Commencement Date or subsequent to the expiration of the Term.
The amount to be paid pursuant to the provisions of this Section 10.1 shall be paid monthly in advance as part of Common Area Expenses as estimated by Landlord based on the most recent lax bills and estimates of reappraised values (If reappraisal is to occur), commencing with the month (or partial month on a prorated basis if such be the case) that the Commencement Date occurs. The Initial estimated monthly charge for Tenant’s pro rata share of Real Property Taxes is included in the Monthly Common Area Expense Payment as provided in Section 4.
If at any time during the Term under the laws of the United States, or the state, county, municipality, or any political subdivision thereof in which the Project is located, a tax or excise on rent or any other tax however described is levied or assessed by any such political body against Landlord on account of rent payable to Landlord hereunder or any tax based on or measured by expenditures made by Tenant on behalf of Landlord, such tax or excise shall be considered “Real Property Taxes” for purposes of this Section 10.1, and shall be payable in full by Tenant. At Landlord’s option, such taxes or excises shall be payable monthly in advance on an estimated basis as provided in this Section 10.1 or shall be payable within ten (10) days after Tenant’s receipt of the tax bill therefor from Landlord.
10.2 New Taxes. Tenant shall reimburse to Landlord, within thirty (30) days of the mailing of notice or demand therefor, any and all taxes and special assessments of every kind and nature assessed by any governmental authority because of the ownership, leasing and operation of Landlord’s property, payable by Landlord (other than net income, estate and inheritance taxes), and all costs incurred by Landlord in the appeal of any tax assessments associated with the Premises, whether or not now customary or within the contemplation of the parties hereto: (a) upon, allocable to, or measured by the area of the Premises or on the rent payable hereunder, including, without limitation, gross income tax or excise tax levied by the state, any political subdivision thereof, city or federal government with respect lo the receipt of such rent; or (b) upon or with respect to the possession, leasing, operations, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion thereof; or (c) any fees or charges levied against Landlord or the Premises by or on behalf of any governmental (either public or quasi-public) entity for services rendered by or on behalf of any governmental (public or quasi-public) entity, including those established in place of property taxes, whether called “tees” or otherwise.
10.3 Personal Property Taxes. Tenant shall be liable for, and shall pay before delinquency, all taxes and assessments (real and personal) levied against (a) any personal property or trade fixtures placed by Tenant in or about the Premises (including any increase in the assessed value of the Premises based upon the value of any such personal property or trade fixtures): and (b) any Tenant Improvements or alterations in the Premises (whether installed and/or paid for by Landlord or Tenant). If any such taxes or assessments are levied against Landlord or Landlord’s property, Landlord may, after written notice to Tenant (and under proper protest if requested by Tenant) pay such taxes and assessments, and Tenant shall reimburse Landlord therefor within ten (10) business days after demand by Landlord; provided, however, Tenant, at its sole cost and expense, shall have the right, with Landlord’s cooperation, to bring suit in any court of competent jurisdiction to recover the amount of any such taxes and assessments so paid under protest.
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| 11. | Possession; Condition of Premises; Repairs, |
11.1 Delivery of Possession. If, for any reason not caused by Tenant, Landlord cannot deliver possession of the Premises to Tenant on or before estimated Delivery Date, this Lease will not be void or voidable, nor will Landlord be liable to Tenant for any loss or damage resulting from such delay. If the delay in possession is caused by Tenant, then the Term and Tenant’s obligation to pay Rent will commence as of the date the Commencement Date would have occurred but for Tenant’s delay, even though Tenant does not yet have possession. Notwithstanding the foregoing, Landlord will not be obligated to deliver possession of the Premises to Tenant (but Tenant will be liable for rent if Landlord can otherwise deliver the Premises to Tenant) until Landlord has received from Tenant all of the following: (i) a copy of this Lease fully executed by Tenant; (ii) the Security Deposit and the first installments of Monthly Basic Rent and Tenant’s Monthly Common Area Expense Charge; and (iii) copies of policies of insurance or certificates thereof as required under Section 20 of this lease.
11.2 Condition of Premises. Tenant acknowledges that, except as otherwise expressly set forth in this Lease, neither Landlord nor any agent of landlord has made any express or implied representation or warranty with respect to the Premises, the Building or the Project or their condition, or with respect to the suitability thereof for the conduct of Tenant’s business, or the likelihood of deriving business from the Project, the economic feasibility of Tenant’s business, or any other matter. The taking of possession of the Premises by Tenant shall conclusively establish that the Project, the Premises, any existing Tenant Improvements therein, the Building and the Common Areas were at such time complete and in good, sanitary and satisfactory condition and repair and without any obligation on Landlord’s part to make any alterations, upgrades or improvements thereto.
11.3 Landlord’s Repair Obligations. Landlord shall, as part of the Common Area Expenses, repair and maintain (a) the Building shell and other structural portions of the Building (including the roof and foundations), (b) the basic plumbing, healing, ventilating, air conditioning, sprinkler and electrical systems within the Building core (but not any conduits or connections thereto or distribution systems thereof within the Premises or any other tenant’s premises), and (c) the Common Areas of the Project; provided, however, to the extent such maintenance or repairs are required as a result of any act, neglect, fault or omission of Tenant or any of Tenant’s agents, employees, contractors, licensees or invitees, Tenant shall pay to landlord, as additional rent, the costs of such maintenance and repairs. Tenant waives the right to make repairs at landlord’s expense under any law, statute or ordinance now or hereafter in effect.
11.4 Tenant’s Repair Obligations. Except for Landlord’s obligations specifically set forth in Sections 11.2, 11.3, 18.1 and 19.2 hereof, Tenant shall at all times and at Tenant’s sole cost and expense, keep, maintain, clean, repair and preserve the Premises and all parts thereof including, without limitation, all Tenant Improvements, Alterations, utility meters, pipes and conduits, all heating, ventilating and air conditioning systems located within or solely serving the Premises, all fixtures, furniture and equipment, Tenant’s storefront, Tenant’s signs, locks, closing devices, security devices, windows, window sashes, casements and frames, floors and floor coverings, shelving, restrooms, if any, and any alterations, additions and other property located within the Premises in first class condition and repair, reasonable wear and tear excepted. Tenant shall replace, at its expense, any and all plate and other glass in and about the Premises which is damaged or broken from any cause whatsoever except due to the gross negligence or willful misconduct of Landlord, its agents or employees. Such maintenance and repairs shall be performed with due diligence, lien free and in a first class and workmanlike manner, by licensed contractor(s) which are selected by Tenant and approved by Landlord, which approval Landlord shall not unreasonably withhold or delay. Except as otherwise expressly provided in this Lease, Landlord shall have no obligation to alter, remodel, improve, repair, renovate, redecorate or paint all or any part of the Premises.
11.5 HVAC. Tenant shall procure and maintain, at Tenant’s sole cost and expense, maintenance contracts for the following system(s), to the extent the same are located within or serve solely the Premises, with contractors specializing and experienced in the maintenance of such systems: heating, ventilation and air conditioning (“HVAC”), providing for not less than four (4) inspections per year including, but not limited to, annual coil cleaning, quarterly filter changes, pressure checks, condensate pan cleaning, electrical testing, belt inspections, motor lubrication, and visual inspections. Tenant shall provide Landlord with copies of all maintenance contracts and immediately notify Landlord of any changes, modifications, or cancellations thereof. The foregoing notwithstanding, in the event that landlord elects to provide maintenance for the HVAC system serving the Premises, such costs shall be reimbursable by Tenant to Landlord upon demand.
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12. Alterations.
12.1 Alterations; Conditions.
| (a) | Tenant shall not make any alterations, additions, improvements or decorations to the Premises (collectively, “Alterations” and Individually, a “Tenant Change”) unless Tenant first obtains Landlord’s prior written approval thereof, which approval Landlord shall not unreasonably withhold. Notwithstanding the foregoing, Landlord’s prior approval shall not be required for any Tenant Change which satisfies the following conditions (hereinafter a “Pre Approved Change”): (i) the costs of such Tenant Change does not exceed Five Hundred Dollars ($500.00) individually; (ii) the costs of such Tenant Change when aggregated with the costs of all other Alterations made by Tenant during the Term of this Lease do not exceed Fifteen Hundred Dollars ($1,500.00); (iii) Tenant delivers to Landlord final plans, specifications and working drawings for such Tenant Change at least ten (10) days prior to commencement of the work thereof; and (iv) Tenant and such Tenant Change otherwise satisfy all other conditions set forth in this Section 12.1. |
| (b) | All Alterations shall be performed: (i) in accordance with the approved plans, specifications and working drawings; (ii) lien free and in a first class and workmanlike manner; (iii) in compliance with all laws, rules and regulations of all governmental agencies and authorities including, without limitation, the provisions of Title III of the Americans with Disabilities Act of 1990; (iv) in such a manner so as not to unreasonably interfere with the occupancy of any other tenant in the Building or any other building located within the Project, nor impose any additional expense upon nor delay Landlord in the maintenance and operation of the Building or any other building located within the Project; and (v) at such times, in such manner and subject to such rules and regulations as Landlord may from time to time reasonably designate. |
| (c) | Throughout the performance of the Alterations, Tenant shall obtain, or cause its contractors to obtain, workers compensation insurance and commercial general liability insurance in compliance with the provisions of Section 20 of this Lease. |
12.2 Removal of Alterations and Tenant Improvements. All Alterations and the initial Tenant Improvements in the Premises (whether installed or paid for by Landlord or Tenant), shall become the property of Landlord and shall remain upon and be surrendered with the Premises at the end of the Term of this Lease; provided, however, Landlord may, by written notice delivered to Tenant at any time prior to the date which is thirty (30) days before the expiration of the Lease Term (or immediately upon any sooner termination of this Lease) identify those Items of the initial Tenant Improvements and Alterations which Landlord shall require Tenant to remove at the end of the Term of this Lease. If Landlord requires Tenant to remove any such items as described above, Tenant shall, at its sole cost, remove the identified items on or before the expiration or sooner termination of this Lease and repair any damage to the Premises caused by such removal (or, at Landlord’s option, shall pay to Landlord all of Landlord’s costs of such removal and repair).
12.3 Removal of Personal Property. All articles of personal property owned by Tenant or installed by Tenant at its expense in the Premises (including business and trade fixtures, furniture and movable partitions) shall be, and remain, the property of Tenant, and shall be removed by Tenant from the Premises, at Tenant’s sole cost and expense, on or before the expiration or sooner termination of this Lease. Tenant shall repair any damage caused by such removal.
12.4 Tenant’s Failure to Remove. If Tenant fails to remove by the expiration or sooner termination of this Lease all of its personal property, or any items of Tenant Improvements or Alterations identified by Landlord for removal pursuant to Section 12.2 above, Landlord may, (without liability to Tenant for loss thereof), at Tenant’s sole cost and in addition to Landlord’s other rights and remedies under this Lease, at law or in equity: (a) remove and store such items in accordance with applicable law; and/or (b) upon ten (10) days’ prior notice to Tenant, sell all or any such items at private or public sale for such price as Landlord may obtain as permitted under applicable law. Landlord shall apply the proceeds of any such sale to any amounts due to Landlord under this Lease from Tenant (including Landlord’s attorneys’ fees and other costs incurred in the removal, storage and/or sale of such items), with any remainder to be paid to Tenant.
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13. Liens. Tenant shall not permit any mechanic’s, materialmen’s or other liens to be filed against all or any part of the Project, the Building or the Premises, nor against Tenant’s leasehold interest in the Premises, by reason of or in connection with any repairs, alterations, improvements or other work contracted for or undertaken by Tenant or any other act or omission of Tenant or Tenant’s agents, employees, contractors, licensees or invitees. Tenant shall, at Landlord’s request, provide Landlord with enforceable, conditional and final lien releases (and other reasonable evidence reasonably requested by Landlord to demonstrate protection from liens) from all persons furnishing labor and/or materials with respect to the Premises. Landlord shall have the right at all reasonable times to post on the Premises and record any notices of non responsibility which it deems necessary for protection from such liens. If any such liens are filed, Tenant shall, at its sole cost, immediately cause such lien to be released of record or bonded so that it no longer affects title to the Project, the Building or the Premises. If Tenant falls to cause such lien to be so released or bonded within twenty (20) days after filing thereof, Landlord may, without waiving its rights and remedies based on such breach, and without releasing Tenant from any of its obligations, cause such lien to be released by any means it shall deem proper, including payment in satisfaction of the claim giving rise to such lien. Tenant shall pay to Landlord within five (5) days after receipt of Invoice from Landlord, any sum paid by Landlord to remove such liens, together with interest at the Interest Rate from the date of such payment by Landlord.
14. Assignment and Subletting.
14.1 Restriction on Transfer. Tenant will not assign or encumber this Lease in whole or in part, nor sublet all or any part of the Premises, without the prior written consent of Landlord, which consent Landlord will not unreasonably withhold, except as provided in this Section 14. The consent by Landlord to any assignment, encumbrance or subletting shall not constitute a waiver of the necessity for such consent to any subsequent assignment or subletting. This prohibition against assigning or subletting shall be construed to include a prohibition against any assignment or subletting by operation of law. If this Lease is assigned by Tenant, or if the Premises or any part thereof are sublet or occupied by any person or entity other than Tenant, Landlord may collect rent from the assignee, subtenant or occupant, and apply the net amount collected to the rent herein reserved, but no such assignment, subletting, occupancy or collection shall be deemed a waiver on the part of Landlord, or the acceptance of the assignee, subtenant or occupant as Tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained unless expressly made in writing by Landlord. Irrespective of any assignment or sublease, Tenant shall remain fully liable under this Lease and shall not be released from performing any of the terms, covenants and conditions of this Lease. Without limiting Landlord’s right to withhold its consent on any reasonable grounds, it is agreed that Landlord will not be acting unreasonably in refusing to consent to an assignment or sublease if, in Landlord’s opinion, (i) the quality of the operation of the proposed assignee or subtenant is not equal to that of the Tenant, (ii) such assignee or subtenant may adversely affect (a) the business of the other tenants, (b) the tenant mix in the Project, or (c) Landlord’s ability to obtain percentage rent, (iii) the net worth or financial capabilities of such assignee or subtenant is less than that of Tenant at the date hereof, or (iv) the proposed assignment or sublease involves a change of use of the Premises from that specified herein. Any proposed assignee or subtenant which Landlord does not disapprove shall be deemed a “Permitted Business”. If Tenant assigns this Lease or sublets the Premises to a third party who is not in any way affiliated or connected with Tenant by way of a merger, reorganization, consolidation or otherwise, any rent, additional rent or other compensation paid to Tenant in addition to the rent payable to Landlord as set forth in this Lease shall be paid by Tenant to Landlord as additional rent. If Tenant is a corporation, or is an unincorporated association or partnership, the transfer, assignment or hypothecation of any stock or interest in such corporation, association or partnership in the aggregate in excess of forty nine percent (49%) shall be deemed an assignment within the meaning and provisions of this Section 14.
14.2 Transfer Notice. If Tenant desires to effect a Transfer, then at least thirty (30) days prior to the date when Tenant desires the Transfer to be effective (the “Transfer Date”), Tenant agrees to give Landlord a notice (the “Transfer Notice”), stating the name, address and business of the proposed assignee, sublessee or other transferee (sometimes referred to hereinafter as “Transferee”), reasonable information (including references) concerning the character, ownership, and financial condition of the proposed Transferee, the Transfer Date, any ownership or commercial relationship between Tenant and the proposed Transferee, and the consideration and all other material terms and conditions of the proposed Transfer, all in such detail as Landlord may reasonably require.
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14.3 Landlord’s Options. Within fifteen (15) days of Landlord’s receipt of any Transfer Notice, and any additional information requested by Landlord concerning the proposed Transferee’s financial responsibility, Landlord will notify Tenant of its election to do one of the following: (i) consent to the proposed Transfer subject to such reasonable conditions as Landlord may impose in providing such consent; (ii) refuse such consent, which refusal shall be on reasonable grounds; or (iii) terminate this Lease as to all or such portion of the Premises which is proposed to be sublet or assigned and recapture all or such portion of the Premises for reletting by Landlord.
14.4 Additional Conditions. A condition to Landlord’s consent to any Transfer of this Lease will be the delivery to Landlord of a true copy of the fully executed instrument of assignment, sublease, transfer or hypothecation, in form and substance reasonably satisfactory to Landlord. Tenant agrees to pay to Landlord, as additional rent, all sums and other consideration payable to and for the benefit of Tenant by the assignee or sublessee in excess of the rent payable under this Lease for the same period and portion of the Premises. In calculating excess rent or other consideration which may be payable to Landlord under this Section, Tenant will be entitled to deduct commercially reasonable third party brokerage commissions and attorneys’ fees and other amounts reasonably and actually expended by Tenant in connection with such assignment or subletting if acceptable written evidence of such expenditures is provided to Landlord. No Transfer will release Tenant of Tenant’s obligations under this Lease or alter the primary liability of Tenant to pay the rent and to perform all other obligations to be performed by Tenant hereunder. Landlord may require that any Transferee remit directly to Landlord on a monthly basis, all monies due Tenant by said Transferee. Consent by Landlord to one Transfer will not be deemed consent to any subsequent Transfer. In the event of default by any Transferee of Tenant or any successor of Tenant in the performance of any of the terms hereof, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against such Transferee or successor. If Tenant effects a Transfer or requests the consent of Landlord to any Transfer (whether or not such Transfer is consummated), then, upon demand, and as a condition precedent to Landlord’s consideration of the proposed assignment or sublease, Tenant agrees to pay Landlord a non-refundable administrative fee of One Thousand Dollars ($1,000.00), plus Landlord’s reasonable attorneys’ fees and costs and other costs incurred by Landlord in reviewing such proposed assignment or sublease.
15. Entry by Landlord. Landlord and its employees and agents shall at all reasonable times have the right to enter the Premises to inspect the same, to supply any service required to be provided by Landlord to Tenant under this Lease, to exhibit the Premises to prospective lenders or purchasers (or during the last year of the Term, to prospective tenants), to post notices of non responsibility, and/or to alter, Improve or repair the Premises or any other portion of the Building, all without being deemed guilty of or liable for any breach of Landlord’s covenant of quiet enjoyment or any eviction of Tenant, and without abatement of rent. In exercising such entry rights, Landlord shall endeavor to minimize, as reasonably practicable, the interference with Tenant’s business, and shall provide Tenant with reasonable advance written notice of such entry (except in emergency situations). Landlord shall have the means which Landlord may deem proper to open Tenant’s doors in an emergency in order to obtain entry to the Premises. Any entry to the Premises obtained by Landlord by any to said means or otherwise shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the Premises or any portion thereof, or grounds for any abatement or reduction of rent and Landlord shall not have any liability to Tenant for any damages or losses on account of any such entry by Landlord except, subject to the provisions of Section 22.1, to the extent of Landlord’s gross negligence or willful misconduct.
16. Utilities and Services. As of the Delivery Date, Tenant shall be solely responsible for and shall promptly pay all charges for heal, air conditioning, water, gas, electricity or any other utility used, consumed or provided in, furnished to or attributable to the Premises at the rates charged by the supplying utility companies and/or Landlord. Should Landlord elect to supply any or all of such utilities, Tenant agrees to purchase and pay for the same as additional rent as apportioned by Landlord. The rate to be charged by Landlord lo Tenant shall not exceed the rate charged to Landlord by any supplying utility. Tenant shall reimburse Landlord within ten (10) days of billing for fixture charges and/or water tariffs, if applicable, which are charged to Landlord by local utility companies. Landlord will notify Tenant of this charge as soon as it becomes known. This charge will increase or decrease with current charges being levied against Landlord, the Premises or the Building by the local utility company, and will be due as additional rent. In no event shall Landlord be liable for any interruption or failure in the supply of any such utility services to Tenant.
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| 17. | Indemnification and Exculpation. |
17.1 Tenant’s Assumption of Risk and Waiver. Except to the extent such matter is not covered by the insurance required to be maintained by Tenant under this Lease and such matter is attributable to the gross negligence or willful misconduct of Landlord, Landlord shall not be liable to Tenant, Tenant’s employees, agents or invitees for: (i) any damage to property of Tenant, or of others, located in, on or about the Premises, (ii) the loss of or damage to any property of Tenant or of others by theft or otherwise,
(iii) any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or leaks from any part of the Premises or from the pipes, appliance of plumbing works or from the roof, street or subsurface or from any other places or by dampness or by any other cause of whatsoever nature, or (iv) any such damage caused by other tenants or persons in the Premises, occupants of adjacent property of the Project, or the public, or caused by operations in construction of any private, public or quasi-public work. Landlord shall in no event be liable for any consequential damages, special or punitive damages, or for loss of business, revenue, income or profits and Tenant hereby waives any and all claims for any such damages. All property of Tenant kept or stored on the Premises shall be so kept or stored at the sole risk of Tenant and Tenant shall hold Landlord harmless from any claims arising out of damage to the same, including subrogation claims by Tenant’s insurance carriers, unless such damage shall be caused by the gross negligence or willful misconduct of Landlord. Landlord or its agents shall not be liable for interference with the light or other intangible rights.
17.2 Tenant’s Indemnification of Landlord. Tenant shall be liable for, and shall indemnify, defend, protect and hold Landlord and Landlord’s partners, officers, directors, employees, agents, successors and assigns (collectively, “Landlord Indemnified Parties”) harmless from and against, any and all claims, damages, judgments, suits, causes of action, losses, liabilities and expenses, including attorneys’ fees and court costs (collectively, “Indemnified Claims”), arising or resulting from (a) any act or omission of Tenant or any of Tenant’s agents, employees, contractors, subtenants, assignees, licensees or with respect to acts or omissions within the Premises only, Tenant’s invitees (collectively, “Tenant Parties”); (b) the use of the Premises and Common Areas and conduct of Tenant’s business by Tenant or any Tenant Parties, or any other activity, work or thing done, permitted or suffered by Tenant or any Tenant Parties, in or about the Premises, the Building or elsewhere on the Project; and/or (c) any default by Tenant of any obligations on Tenant’s part to be performed under the terms of this Lease. In case any action or proceeding is brought against Landlord or any Landlord indemnified Parties by reason of any such Indemnified Claims, Tenant, upon notice from Landlord, shall defend the same at Tenant’s expense by counsel approved in writing by Landlord, which approval shall not be unreasonably withheld.
17.3 Survival; No Release of Insurers. Tenant’s indemnification obligation under Section 17.2, shall survive the expiration or earlier termination of this Lease. Tenant’s covenants, agreements and indemnification in Sections 17.1 and 17.2 above, are not intended to and shall not relieve any insurance carrier of its obligations under policies required to be carried by Tenant, pursuant to the provisions of this Lease.
| 18. | Damage or Destruction. |
18.1 Landlord’s Rights and Obligations. In the event the Premises are damaged by fire or other casualty to an extent not exceeding twenty five percent (25%) of the full replacement cost thereof, and Landlord’s contractor estimates in a writing delivered to the parties that the damage thereto is such that the Premises may be repaired, reconstructed or restored to substantially its condition immediately prior to such damage within one hundred twenty (120) days from the date of such casualty, and Landlord will receive insurance proceeds sufficient to cover the costs of such repairs, reconstruction and restoration (including proceeds from Tenant and/or Tenant’s insurance which Tenant is required to deliver to Landlord pursuant to Section 18.2 below), then Landlord shall commence and proceed diligently with the work of repair, reconstruction and restoration and this Lease shall continue in full force and effect. If, however, the Premises are damaged to an extent exceeding twenty five percent (25%) of the full replacement cost thereof, or Landlord’s contractor estimates that such work of repair, reconstruction and restoration will require longer than one hundred twenty (120) days to complete, or Landlord will not receive insurance proceeds (and/or proceeds from Tenant, as applicable) sufficient to cover the costs of such repairs, reconstruction and restoration, then Landlord may elect to either:
| (a) | repair, reconstruct and restore the portion of the Premises damaged by such casualty (including the Tenant Improvements and Alterations), In which case this Lease shall continue in full force and effect; or |
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| (b) | terminate this Lease effective as of the date which is thirty (30) days after Tenant’s receipt of Landlord’s election to so terminate. |
Under any of the conditions of this Section 18.1, Landlord shall give written notice to Tenant of its intention to repair or terminate within the later of sixty (60) days after the occurrence of such casualty, or fifteen (15) days after Landlord’s receipt of the estimate from Landlord’s contractor.
18.2 Tenant’s Costs and Insurance Proceeds. In the event of any damage or destruction of all or any part all the Premises, Tenant shall immediately: (a) notify Landlord thereof; and (b) deliver to Landlord all insurance proceeds received by Tenant with respect to the Tenant Improvements and Alterations in the Premises to the extent such items are not covered by Landlord’s casualty insurance obtained by Landlord pursuant to Section 21 below (excluding proceeds for Tenant’s furniture and other personal property), whether or not this Lease is terminated as permitted in this Section 19, and Tenant hereby assigns to Landlord all rights to receive such insurance proceeds. If, for any reason (including Tenant’s failure to obtain insurance for the full replacement cost of any Alterations which Tenant is required to insure pursuant to Sections 12.1 and/or 20.1(a) hereof), Tenant fails to receive insurance proceeds covering the full replacement cost of such Alterations which are damaged, Tenant shall be deemed to have self-insured the replacement cost of such Alterations, and upon any damage or destruction thereto, Tenant shall immediately pay to Landlord the full replacement cost of such items, less any insurance proceeds actually received by Landlord from Landlord’s or Tenant’s Insurance with respect to such items.
18.3 Abatement of Rent. In the event that as a result of any such damage, repair, reconstruction and/or restoration of the Premises, Tenant is prevented from using, and does not use, the Premises or any portion thereof, then the rent shall be abated or reduced, as the case may be, during the period that Tenant continues to be so prevented from using and does not use the Premises or portion thereof, in the proportion that the rentable square feet of the portion of the Premises that Tenant is prevented from using, and does not use, bears to the total rentable square feet of the Premises. Notwithstanding the foregoing to the contrary, if the damage is due to the negligence or willful misconduct of Tenant or any Tenant Parties, there shall be no abatement of rent. Except for abatement of rent as provided hereinabove, Tenant shall not be entitled to any compensation or damages for loss of, or interference with, Tenant’s business or use or access of all or any part of the Premises resulting from any such damage, repair, reconstruction or restoration.
18.4 Inability to Complete. Notwithstanding anything to the contrary contained in this Section 18, if Landlord is obligated or elects to repair, reconstruct and/or restore the damaged portion of the Premises pursuant to Section 18.1 above, but is delayed from completing such repair, reconstruction and/or restoration beyond the date which Is six (6) months after the date estimated by Landlord’s contractor for completion thereof pursuant to Section 18. 1, by reason of any causes beyond the reasonable control of Landlord (including, without limitation, any events of Force Majeure as defined in Section 32.16 and delays caused by Tenant or any Tenant Parties), then Landlord may elect to terminate this Lease upon thirty (30) days’ prior written notice to Tenant.
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18.5 Damage Near End of Term. In addition to its termination rights in Sections 18.1 and 18.4 above, Landlord shall have the right to terminate this Lease If any damage to the Building or Premises occurs during the last twelve (12) months of the Term of this Lease and Landlord’s contractor estimates in a writing delivered to the parties that the repair, reconstruction or restoration of such damage cannot be completed within the earlier of (a) the scheduled expiration date of the lease Term, or (b) sixty (60) days after the date of such casualty.
18.6 Waiver of Termination Right. This Lease sets forth the terms and conditions upon which this Lease may terminate In the event of any damage or destruction.
| 19. | Eminent Domain. |
19.1 Substantial Taking. Subject to the provisions of Section 19.4 below, in case the whole of the Premises, or such part thereof as shall substantially interfere with Tenant’s use and occupancy of the Premises as reasonably determined by Landlord, shall be taken for any public or quasi public purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or eminent domain, or sold to prevent such taking, either party shall have the right to terminate this Lease effective as of the date possession is required to be surrendered to said authority.
19.2 Partial Taking; Abatement of Rent. In the event of a taking of a portion of the Premises which does not substantially interfere with the conduct of Tenant’s business, then, except as otherwise provided in the immediately following sentence, neither party shall have the right to terminate this Lease and Landlord shall thereafter proceed to make a functional unit of the remaining portion of the Premises (but only to the extent Landlord receives proceeds therefor from the condemning authority), and rent shall be abated with respect to the part of the Premises which Tenant shall be so deprived on account of such taking. Notwithstanding the immediately preceding sentence to the contrary, if any part of the Building or the Project shall be taken (whether or not such taking substantially interferes with Tenant’s use of the Premises), Landlord may terminate this Lease upon thirty (30) days’ prior written notice to Tenant as long as Landlord also terminates leases of all other tenants leasing comparably sized space within the Building for comparable lease terms.
19.3 Condemnation Award. Subject to the provisions of Section 19.4 below, in connection with any taking of the Premises or the Building, Landlord shall be entitled to receive the entire amount of any award which may be made or given in such taking or condemnation, without deduction or apportionment for any estate or interest of Tenant, it being expressly understood and agreed by Tenant that no portion of any such award shall be allowed or paid to Tenant for any so called bonus or excess value of this Lease, and such bonus or excess value shall be the sole property of Landlord. Tenant shall not assert any claim against Landlord or the taking authority for any compensation because of such taking (including any claim for bonus or excess value of this Lease); provided, however, if any portion of the Premises is taken, Tenant shall be granted the right to recover from the condemning authority (but not from Landlord) any compensation as may be separately awarded or recoverable by Tenant for the taking of Tenant’s furniture, fixtures, equipment and other personal property within the Premises, for Tenant’s relocation expenses, and for any loss of goodwill or other damage to Tenant’s business by reason of such taking.
19.4 Temporary Taking. In the event of a taking of the Premises or any part thereof for temporary use, (a) this Lease shall be and remain unaffected thereby and rent shall not abate, and (b) Tenant shall be entitled to receive for itself such portion or portions of any award made for such use with respect to the period of the taking which, Is within the Term, provided that if such taking shall remain in force at the expiration or earlier termination of this Lease, Tenant shall perform its obligations under Section 9 with respect to surrender of the Premises and shall pay to Landlord the portion of any award which is attributable to any period of time beyond the Term expiration date. For purpose of this Section 19.4, a temporary taking shall be defined as a taking for a period of two hundred seventy (270) days or less.
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| 20. | Tenant’s Insurance. |
20.1 Types of Insurance. On or before the earlier of the Commencement Date or the date Tenant commences or causes to be commenced any work of any type in or on the Premises pursuant to this Lease, and continuing during the entire Term, Tenant shall obtain and keep in full force and effect, the following insurance:
| (a) | All Risk insurance, including fire and extended coverage, sprinkler leakage (including earthquake sprinkler leakage), vandalism, malicious mischief and earthquake coverage upon property of every description and kind owned by Tenant and located in the Premises or the Building, or for which Tenant is legally liable or installed by or on behalf of Tenant including, without limitation, furniture, equipment and any other personal property, and all Alterations and Tenant Improvements installed in the Premises by Tenant, in an amount not less then the full replacement cost thereof. In the event that there shall be a dispute as to the amount which comprises full replacement cost, the decision of Landlord or the mortgagees of Landlord shall be presumptive. |
| (b) | Commercial general liability insurance coverage, Including personal injury, bodily injury (including wrongful death), broad form property damage, operations hazard, owner’s protective coverage, contractual liability (including Tenant’s indemnification obligations under this Lease, including Section 18 hereof), liquor liability (if Tenant serves alcohol on the Premises), products and completed operations liability, and owned/non owned auto liability, with a general aggregate of not less than Two Million Dollars ($2,000,000.00). The general aggregate amount of such commercial general liability insurance shall be increased every five (5) years during the Term of this Lease to an amount reasonably required by Landlord. |
| (c) | Worker’s compensation and employer’s liability Insurance, in statutory amounts and limits. |
| (d) | Loss of income, extra expense, business interruption and rent loss insurance in such amounts as will reimburse Tenant for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent tenants or attributable to prevention of access to the Premises, Tenants parking areas or to the Building as a result of such perils. |
| (e) | Any other from, or forms of insurance as Tenant or Landlord or the mortgagees of Landlord may reasonably require from lime to time, in form, amounts and for insurance risks against which a prudent tenant would protect itself, but only to the extent such risks and amounts are available in the insurance market at commercially reasonable costs. |
20.2 Requirements. Each policy required to be obtained by Tenant hereunder shall: (a) be issued by insurers authorized to do business in the stale in which the Building is located and rated not less than financial class X, and not less than policyholder rating A in the most recent version of Best’s Key Rating Guide (provided that, in any event, the same insurance company shall provide the coverages described in Sections 20.1 (a) and 20.1 (d) above); (b) be in form reasonably satisfactory from lime to time to Landlord; (c) name Tenant as named Insured thereunder and shall name Landlord: Landlord’s agents and, at Landlord’s request, Landlord’s mortgagees and ground lessors and other parties reasonably designated by Landlord of which Tenant has been informed in writing, as additional insureds thereunder, all as their respective interests may appear, (d) shall not have a deductible amount exceeding Five Thousand Dollars ($5,000.00); (e) specifically provide that the insurance afforded by such policy for the benefit of Landlord and Landlord’s mortgagees and ground lessors shall be primary, and any insurance carried by Landlord or Landlord’s mortgagees and ground lessors shall be excess and non-contributing; (f) except for worker’s compensation insurance, contain an endorsement that the insurer waives its right to subrogation as described in Section 22 below; and (g) contain an undertaking by the insurer to notify Landlord (and the mortgagees and ground lessors or Landlord who are named as additional insureds) in writing not less than thirty (30) days prior to any material change, reduction in coverage, cancellation or other termination thereof. Tenant agrees to deliver to Landlord, prior to the date Tenant takes possession of all or any part of the Premises, certificates from the insurance company evidencing the existence of such insurance and Tenant’s compliance with the foregoing provisions of this Section 20). Tenant shall cause replacement certificates to be delivered to Landlord not less than thirty (30) days prior to the expiration of any such policy or policies. If any such initial or replacement certificates are not furnished within the time(s) specified herein, Tenant shall be deemed to be in material default under this Lease without the benefit of any additional notice or cure period provided in Section 23.1 below, and Landlord shall have the right, but not the obligation, to procure such policies and certificates at Tenant’s expense.
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20.3 Effect on Insurance. Tenant shall not do or permit to be done anything which will (a) violate or invalidate any insurance policy maintained by Landlord or Tenant hereunder, or (b) increase the costs of any insurance policy maintained by Landlord pursuant to Section 21 or otherwise with respect to the Building or the Project. If Tenant’s occupancy or conduct of its business in or on the Premises results in any increase in premiums for any insurance carried by Landlord with respect to the Building or the Project, Tenant shall pay such increase as additional rent within ten (10) days after being billed therefor by Landlord. If any insurance coverage carried by Landlord pursuant to Section 21 or otherwise with respect to the Building or the Project shall be cancelled or reduced (or cancellation or reduction thereof shall be threatened) by reason of the use or occupancy of the Premises by Tenant or by anyone permitted by Tenant to be upon the Premises, and if Tenant fails to remedy such condition within five (5) days after notice thereof, Tenant shall be deemed to be in default under this Lease, without the benefit of any additional notice or cure period specified in Section 23.1 below, and Landlord shall have all remedies provided in this Lease, at law or in equity, including, without limitation, the right (but not the obligation) to enter upon the Premises and attempt to remedy such condition at Tenant’s cost.
21. Landlord’s Insurance. During the Term, Landlord shall insure the Common Area Improvements, the Building, the Premises, any Tenant improvements installed in the Premises by Landlord (excluding, however, Tenant’s furniture, equipment and other personal property and Alterations) against damage by fire and standard extended coverage perils and with vandalism and malicious mischief endorsements, rental loss coverage, at Landlord’s option, earthquake damage coverage, and such additional coverage as Landlord deems appropriate. Landlord shall also carry commercial general liability insurance, in such reasonable amounts and with such reasonable deductibles as would be carried by a prudent owner of a similar building in the state in which the Building is located. At Landlord’s option, all such insurance may be carried under any blanket or umbrella policies which Landlord has In force for other buildings and projects. In addition, at Landlord’s option, Landlord may elect to self-insure all or any part of such required insurance coverage. Landlord may, but shall not be obligated to, carry any other from or forms of insurance as Landlord or the mortgagees or ground lessors of Landlord may reasonably determine is advisable. The cost of insurance obtained by Landlord pursuant to this Section 21 shall be included in Common Area Expenses.
| 22. | Waivers of Subrogation. |
22.1 Mutual Waiver of Parties. Landlord and Tenant hereby waive their rights against each other with respect to any claims or damages or losses which are caused by or result from (a) property damage insured against under any property insurance policy carried by Landlord or Tenant (as the case may be) pursuant to the provisions of this Lease and enforceable at the time of such damage or loss, or (b) property damage which would have been covered under any insurance required to be obtained and maintained by Landlord or Tenant (as the case may be) under Sections 20 and 21 of this Lease (as applicable) had such insurance been obtained and maintained as required therein. The foregoing waivers shall be in addition to, and not a limitation of, any other waivers or releases contained in this Lease.
22.2 Waiver of Insurers. Each party shall cause each property insurance policy required to be obtained by it pursuant to Sections 20 and 21 to provide that the insurer waives all rights of recovery by way of subrogation against either Landlord or Tenant, as the case may be, in connection with any claims, losses and damages covered by such policy. If either party fails to maintain property insurance required hereunder, such Insurance shall be deemed to be self-insured with a deemed full waiver of subrogation as set forth in the immediately preceding sentence.
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| 23. | Tenant’s Default and Landlord’s Remedies. |
23.1 Tenant’s Default. The occurrence of any one or more of the following events shall constitute a default under this Lease by Tenant:
| (a) | the vacation or abandonment of the Premises by Tenant. “Abandonment” is herein defined to include, but is not limited to, any absence by Tenant from the Premises for five (5) business days or longer while in default of any other provision of this Lease; |
| (b) | the failure by Tenant to make any payment of rent or additional rent or any other payment required to be made by Tenant hereunder, within three (3) days of when due; |
| (c) | the failure by Tenant to observe or perform any of the express or implied covenants or provisions of this Lease to be observed or performed by Tenant, other than as specified in Sections 23.1(a) or (b) above, where such failure shall continue for a period of ten (10) days after written notice thereof from Landlord to Tenant; provided, however, that any such notice shall be in lieu of, and not in addition to, any notice required under applicable Florida law and provided further that, if the nature of Tenant’s default Is such that more than ten (10) days are reasonably required for its cure, then Tenant shall not be deemed to be in default If Tenant shall commence such cure within said ten (10) day period and thereafter diligently prosecute such cure to completion, which completion shall occur not later than sixty (60) days from the date of such notice from Landlord; and |
| (d) | (i) the making by Tenant of any general assignment for the benefit of creditors, (ii) the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against the Tenant, the same Is dismissed within sixty (60) days), (iii) the appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where possession is not restored to Tenant within sixty (60) days, or (iv) the attachment, execution or other judicial seizure of substantially all of Tenant’s assets located at the Premises or or Tenant’s interest in this Lease where such seizure is not discharged within sixty (60) days. |
23.2 Landlord’s Remedies; Termination. In the event of any such default by Tenant, in addition to any other remedies available to Landlord under this Lease, at law or in equity, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder. In the event that Landlord shall elect to so terminate this Lease, then Landlord may recover from Tenant:
| (a) | the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus |
| (b) | the worth at the lime of the award of the amount by which the unpaid rent which would have been earned after termination until the time or award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus |
| (c) | the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of- award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus |
| (d) | any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom including, but not limited to: unamortized tenant improvement costs; attorneys’ fees; unamortized brokers’ commissions; the costs of refurbishment, alterations, renovation and repair or the Premises; and removal (including the repair of any damage caused by such removal) and storage (or disposal) of Tenant’s personal property, equipment, fixtures, Alterations, Tenant Improvements and any other items which Tenant is required under this Lease to remove but does not remove. |
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As used in Sections 23.2(a) and 23.2(b) above, the “worth at the lime of award” is computed by allowing interest at the Interest Rate set forth In Section 1.14 of the Summary. As used In Section 23.2(c) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
23.3 Landlord’s Remedies; Re Entry Rights. In the event of any such default by Tenant, in addition to any other remedies available to Landlord under this Lease, at law or In equity, Landlord shall also have the right, with or without terminating this Lease, to re-enter the Premises and remove all persons and property from the Premises; such property may be removed, stored and/or disposed of pursuant to Section 12.4 of this Lease or any other procedures permitted by applicable law. No re-entry or taking possession of the Premises by landlord pursuant to this Section 23.3, and no acceptance of surrender of the Premises or other action on Landlord’s part, shall be construed as an election to terminate this Lease unless a written notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction.
23.4 Landlord’s Remedies; Continuation of Lease. In the event of any such default by Tenant, in addition to any other remedies available to Landlord under this Lease, at law or in equity, Landlord shall have the right to accelerate the payment of rent and other monetary sums payable by Tenant for the balance of the Term and upon any such election, such sums shall be immediately due and payable. In the event of any such default by Tenant, in addition to any other remedies available to Landlord under this Lease, at law or in equity, Landlord shall have the right to continue this Lease in full force and effect, whether or not Tenant shall have abandoned the Premises. In the event Landlord elects to continue this Lease in full force and effect pursuant to this Section 23.4, then landlord shall be entitled to enforce all of its rights and remedies under this Lease, including the right to recover rent as it becomes due. Landlord’s election not to terminate this Lease pursuant to this Section 23.4 or pursuant to any other provision of this Lease, at law or In equity, shall not preclude Landlord from subsequently electing to terminate this Lease or pursuing any of its other remedies.
23.5 Landlord’s Right to Perform. Except as specifically provided otherwise in this Lease, all covenants and agreements by Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement or offset of rent. If Tenant shall fail to pay any sum of money (other than Basic Rent) or perform any other act on its part to be paid or performed hereunder and such failure shall continue for three (3) days with respect to monetary obligations (or ten (10) days with respect to non-monetary obligations) after Tenant’s receipt of written notice thereof from Landlord, Landlord may, without waiving or releasing Tenant from any of Tenant’s obligations, make such payment or perform such other act on behalf of Tenant. All sums so paid by Landlord and all necessary incidental costs Incurred by Landlord in performing such other acts shall be payable by Tenant to Landlord within five (5) days after demand therefor as additional rent.
23.6 Interest. If any monthly installment of Basic Rent or Common Area Expenses, or any other amount payable by Tenant hereunder is not received by landlord by the dale when due, it shall bear interest at the Interest Rate set forth in Section 1.14 of the Summary from the date due until paid. All interest, and any late charges imposed pursuant to Section 23.7 below, shall be considered additional rent due from Tenant to Landlord under the terms of this Lease.
23.7 Late Charges. Tenant acknowledges that, in addition to interest costs, the late payments by Tenant to landlord of any Basic Rent or other sums due under this Lease will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and Impractical to fix. Such other costs include, without limitation, processing, administrative and accounting charges and late charges that may be imposed on Landlord by the terms of any mortgage, deed of trust or related loan documents encumbering the Premises, the Building or the Project. Accordingly, if any monthly installment of Basic Rent or Common Area Expenses or any other amount payable by Tenant hereunder is not received by Landlord by the due dale thereof, Tenant shall pay to Landlord an additional sum of ten percent (10%) of the overdue amount as a late charge, but in no event more than the maximum late charge allowed by law. The parties agree that such late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of any late payment as hereinabove referred to by Tenant, and the payment of late charges and interest are distinct and separate in that the payment of Interest Is to compensate Landlord for the use of Landlord’s money by Tenant, while the payment of late charges is to compensate Landlord for Landlord’s processing, administrative and other costs incurred by Landlord as a result of Tenant’s delinquent payments. Acceptance of a late charge or interest shall not constitute a waiver of Tenant’s default with respect to the overdue amount or prevent Landlord from exercising any of the other rights and remedies available to Landlord under this Lease or at law or in equity now or hereafter in effect. In the event that any payments of any kind made by Tenant are returned for insufficient funds, Tenant shall pay to Landlord upon receipt of written demand (1) the actual NSF fee charged by the respective bank, and (2) an additional handling charge of up to $60.00, and thereafter, Landlord may require Tenant to pay all future payments of Rent or other sums due by money order or cashier’s check.
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23.8 Security Interest. Tenant hereby grants to Landlord a lien and security interest on all property of Tenant now or hereafter placed in or upon the Premises including, but not limited to, all fixtures, machinery, equipment, furnishings and other articles of personal property, and all proceeds of the sale or other disposition of such property (collectively, the “Collateral”) to secure the payment of all rent to be paid by Tenant pursuant to this Lease. Such lien and security interest shall be in addition to any landlord’s lien provided by law. This Lease shall constitute a security agreement under the Commercial Code of the State so that Landlord shall have and may enforce a security interest in the Collateral. Tenant agrees to execute as debtor and deliver such financing statement or statements and any further documents as Landlord may now or hereafter reasonably request to protect such security interest pursuant to such code. Landlord may also at any time file a copy of this Lease as a financing statement. Landlord, as secured party, shall be entitled to all rights and remedies afforded as secured party under such code, which rights and remedies shall be in addition lo Landlord’s liens and rights provided by law or by the other terms and provisions of this Lease.
23.9 Rights and Remedies Cumulative. All rights, options and remedies of Landlord contained in this Section 24 and elsewhere in this Lease shall be construed and held to be cumulative, and no one of them shall be exclusive of the other, and Landlord shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law or In equity, whether or not stated in this Lease. Nothing in this Section 24 shall be deemed to limit or otherwise affect Tenant’s indemnification of Landlord pursuant to any provision of this Lease.
23.10 Inducement Recapture. Any agreement for early or beneficial occupancy, free, reduced or abated rent or other charges, all of which concessions are hereinafter referred to as "Inducement Provisions”, shall be deemed conditioned upon Tenant’s full and faithful performance of all of the terms, covenants and conditions of this Lease. In the event that this Lease is terminated early due to a default committed by Tenant, then without any waiver of rights or remedies by Landlord, any amounts paid, abated or deferred by Landlord pursuant to any Inducement Provisions shall become immediately due and payable by Tenant to Landlord, and Landlord shall retain the right to pursue any and all remedies available under this Lease and applicable laws.
24. Landlord’s Default. Landlord shall not be in default in the performance of any obligation required to be performed by Landlord under this lease unless Landlord has failed to perform such obligation within thirty (30) days after the receipt of written notice from Tenant specifying in detail landlord’s failure to perform; provided however, that if the nature of Landlord’s obligation is such that more than thirty (30) days are required for its performance, then Landlord shall not be deemed In default if it commences such performance within such thirty (30) day period and thereafter diligently pursues the same to completion. Upon any such uncured default by Landlord, Tenant may exercise any of its rights provided in law or at equity; provided, however. (a) Tenant shall have no right to offset or abate rent in the event of any default by Landlord under this Lease, except to the extent offset rights are specifically provided to Tenant in this Lease; and (b) Tenant’s rights and remedies hereunder shall be limited to the extent (i) Tenant has expressly waived in this Lease any of such rights or remedies and/or (ii) this lease otherwise expressly limits Tenant’s rights or remedies, including the limitation on Landlord’s liability contained in Section 31 hereof.
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25. Subordination. Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, and at the election of Landlord or any mortgagee of a mortgage or a beneficiary of a deed of trust now or hereafter encumbering all or any portion of the Building or the Project, or any lessor of any ground or master lease now or hereafter affecting all or any portion of the Building or the Project, this Lease shall be subject and subordinate at all times to such ground or master leases (and such extensions and modifications thereof), and to the lien of such mortgages and deeds of trust (as well as to any advances made thereunder and to all renewals, replacements, modifications and extensions thereof). Notwithstanding the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any or all ground or master leases or the lien of any or all mortgages or deeds of trust to this Lease. In the event that any ground or master lease terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any reason, at the election or Landlord’s successor in interest, Tenant shall attorn to and become the tenant of such successor. Tenant hereby waives its rights under any current or future law which gives or purports to give Tenant any right to terminate or otherwise adversely affect this lease and the obligations of Tenant hereunder in the event of any such foreclosure proceeding or sale. Tenant covenants and agrees to execute and deliver to Landlord within ten (10) days alter receipt of written demand by Landlord and In the form reasonably required by Landlord, any additional documents evidencing the priority or subordination of this lease with respect to any such ground or master lease or the lien of any such mortgage or deed of trust. Should Tenant fail to sign and return any such documents within said ten (10) day period, Tenant shall be in default hereunder without the benefit of any additional notice or cure periods specified in Section 23.1 above.
| 26. | Estoppel Certificate. |
26.1 Tenant’s Obligations. Within ten (10) days following Landlord’s written request, Tenant shall execute and deliver to Landlord an estoppel certificate, in a form substantially similar to the form of Exhibit “F” attached hereto or such other form as Landlord may require, certifying: (a) the Commencement Date of this Lease; (b) that this Lease is unmodified and in full force and effect (or, if modified, that this Lease is in full force and effect as modified, and stating the date and nature of such modifications); (c) the date to which the rent and other sums payable under this Lease have been paid; (d) that there are not, to the best of Tenant’s knowledge, any defaults under this Lease by either Landlord or Tenant, except as specified in such certificate; and (e) such other matters as are reasonably requested by Landlord. Any such estoppel certificate delivered pursuant to this Section 26.1 may be relied upon by any mortgagee, beneficiary, purchaser or prospective purchaser of any portion of the Project, as well as their assignees.
26.2 Tenant’s Failure to Deliver. Tenant’s failure to deliver such estoppel certificate within such time shall be conclusive upon Tenant that: (a) this Lease is in full force and effect without modification, except as may be represented by Landlord; (b) there are no uncured defaults in Landlord’s or Tenant’s performance; and (c) not more than one (1) month’s rental has been paid in advance. Tenant shall indemnify, protect, defend (with counsel reasonably approved by Landlord in writing) and hold Landlord harmless from and against any and all claims, judgments, suits, causes of action, damages, losses, liabilities and expenses (including attorneys’ fees and court costs) attributable to any failure by Tenant to timely deliver any such estoppel certificate lo Landlord pursuant to Section 26.1 above.
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27. Project Planning. If Landlord requires the Premises for use by another tenant or for other reasons connected with the Project planning program, then Landlord shall have the right, upon thirty (30) days’ prior written notice to Tenant, to relocate the Premises to other space in the Building or the Project of substantially similar size as the Premises, and with tenant improvements of substantially similar age, quality and layout as then existing in the Premises. In the event of any such relocation, Landlord shall pay for the cost of providing such substantially similar tenant improvements (but not any furniture or personal property), and Landlord shall reimburse Tenant, within thirty (30) days after Landlord’s receipt of invoices and paid receipts, for the reasonable moving, telephone installation and stationery reprinting costs actually paid for by Tenant In connection with such relocation. If Landlord so relocates Tenant, the terms and conditions of this Lease shall remain in full force and effect and apply to the new space, except that (a) a revised Exhibit “B” shall become part of this Lease and shall reflect the location of the new space, (b) the Summary to this Lease shall be amended to include and state all correct data as to the new space, and (c) such new space shall thereafter be deemed to be the “Premises”. Notwithstanding the foregoing provisions of this Section 27 to the contrary, if the new space contains more rentable square feet than the original Premises, Tenant shall not be obligated to pay any more Basic Rent or Common Area Expenses than otherwise applicable to the original Premises. Landlord and Tenant agree to cooperate fully in order to minimize the inconvenience of Tenant resulting from such relocation.
28. Modification and Cure Rights of Landlord’s Mortgagees and Lessors.
28.1 Modifications. If, in connection with Landlord’s obtaining or entering into any financing or ground lease for any portion of the Building or the Project, the lender or ground lessor shall request modifications to this Lease, Tenant shall, within ten (10) days after request therefor, execute an amendment to this Lease Including such modifications, provided such modifications are reasonable, do not increase the obligations of Tenant hereunder, or adversely affect the leasehold estate created hereby or Tenant’s rights hereunder.
28.2 Cure Rights. In the event of any default on the part of Landlord, Tenant will give notice by registered or certified mail to any beneficiary of a deed of trust or mortgagee covering the Premises or ground lessor of Landlord whose address shall have been furnished to Tenant, and shall offer such beneficiary, mortgagee or ground lessor a reasonable opportunity to cure the default (including with respect to any such beneficiary or mortgagee, time to obtain possession of the Premises, subject to this Lease and Tenant’s rights hereunder, by power of sale or judicial foreclosure, if such should prove necessary to effect a cure).
29. Quiet Enjoyment. Landlord covenants and agrees with Tenant that, upon Tenant performing all of the covenants and provisions on Tenant’s part to be observed and performed under this Lease (including payment of rent hereunder), Tenant shall and may peaceably and quietly have, hold and enjoy the Premises in accordance with and subject to the terms and conditions of this Lease.
30. Transfer of Landlord’s Interest. The term “Landlord” as used in this Lease, so far as covenants or obligations on the part of the Landlord are concerned, shall be limited to mean and Include only the owner or owners, at the time in question, of the fee title to, or a lessee’s Interest in a ground lease of, the Project. In the event of any transfer or conveyance of any such title or interest (other than a transfer for security purposes only), the transferor shall be automatically relieved of all covenants and obligations on the part of Landlord contained in this Lease accruing after the date of such transfer or conveyance. Landlord and Landlord’s transferees and assignees shall have the absolute right to transfer all or any portion of their respective title and Interest in the Project, the Building, the Premises and/or this Lease without the consent of Tenant, and such transfer or subsequent transfer shall not be deemed a violation on Landlord’s part of any of the terms and conditions of this Lease.
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31. Limitation on Landlord’s Liability. Notwithstanding anything contained in this Lease to the contrary, the obligations of Landlord under this Lease (including any actual or alleged breach or default by Landlord) do not constitute personal obligations of the Individual partners, members, directors, officers or shareholders of Landlord or Landlord’s constituent partners or members, and Tenant shall not seek recourse against the individual partners, members, directors, officers or shareholders of Landlord or of Landlord’s constituent partners or members, or any of their personal assets for satisfaction of any liability with respect to this Lease. In addition, in consideration of the benefits accruing hereunder to Tenant and notwithstanding anything contained in this Lease to the contrary, Tenant hereby covenants and agrees for itself and all of its successors and assigns that the liability of Landlord for its obligations under this Lease (including any liability as a result of any actual or alleged failure, breach or default hereunder by Landlord), shall be limited solely to, and Tenant’s and its successors’ and assigns’ sole and exclusive remedy shall be against, Landlord’s interest in the Project and proceeds therefrom, and no other assets of Landlord. Notwithstanding any contrary provision herein, neither Landlord (nor or of any of the partners which comprise Landlord, if any, or of the officers, shareholders, directors, partners or principals of such partners comprising Landlord, (if any) wherever situated) shall be liable under any circumstances for injury or damage to, or interference with, Tenant’s business, including loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring. Except as may be necessary to secure jurisdiction of Landlord, no constituent partner or member of Landlord shall be sued or named as a party in any suit or action and no service of process shall be made against any partner or member of Landlord. No constituent partner or member of Landlord shall be required to answer or otherwise plead to any service of process. No judgment will be taken against any constituent partner or member of Landlord and any judgment taken against any constituent partner or member of Landlord may be vacated and set aside at any time after the fact. The provisions of this Section 31 are enforceable both Landlord and also by any individual partners, members, directors, officers or shareholders of Landlord and any of Landlord’s constituent partners or members.
32. Miscellaneous.
32.1 Governing Law. This Lease shall be governed by, and construed pursuant to, the laws of the State where the Project is located, without regard to any choice of law concept or rule which would require the application of the laws of any other jurisdiction.
32.2 Successors and Assigns. Subject to the provisions of Section 30 above, and except as otherwise provided in this Lease, all of the covenants, conditions and provisions of this Lease shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective heirs, personal representatives and permitted successors and assigns; provided, however, no rights shall inure to the benefit of any Transferee of Tenant unless the Transfer to such Transferee is made in compliance with the provisions of Section 14, and no options or other rights which are expressly made personal to the original Tenant hereunder or in any rider attached hereto shall be assignable to or exercisable by anyone other than the original Tenant under this Lease.
32.3 No Merger. The voluntary or other surrender of this Lease by Tenant or a mutual termination thereof shall not work as a merger and shall, at the option of Landlord, either (a) terminate all or any existing subleases, or (b) operate as an assignment to Landlord of Tenant’s interest under any or all such subleases.
32.4 Professional Fees. If either Landlord or Tenant should bring suit against the other with respect to this Lease, including for unlawful detainer or any other relief against the other hereunder, then an costs and expenses incurred by the prevailing party therein (including, without limitation, its actual appraisers’, accountants’, attorneys’ and other professional fees, expenses and court costs and similar costs incurred in connection with any appeal), shall be paid by the other party.
32.5 Waiver. The waiver by either party of any breach by the other party or any term, covenant or condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant and condition herein contained, nor shall any custom or practice which may become established between the parties in the administration of the terms hereof be deemed a waiver of, or in any way affect, the right of any party to insist upon the performance by the other in strict accordance with said terms. No waiver of any default of either party hereunder shall be implied from any acceptance by Landlord or delivery by Tenant (as the case may be) of any rent or other payments due hereunder or any omission by the non-defaulting party to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect defaults other than as specified in said waiver. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such rent.
32.6 Terms and Headings. The words “Landlord” and “Tenant” as used herein shall include the plural as well as the singular. Words used in any gender include other genders. The Section headings of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof.
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32.7 Time. Time is of the essence with respect to performance of every provision of this Lease in which time or performance is a factor. All references in this Lease to “days” shall mean calendar days unless specifically modified herein to be “business” days.
32.8 Prior Agreements; Amendments. This Lease, including the Summary and all Exhibits and Riders attached hereto, contains all of the covenants, provisions, agreements, conditions and understandings between Landlord and Tenant concerning the Premises and any other matter covered or mentioned in this Lease, and no prior agreement or understanding, oral or written, express or implied, pertaining to the Premises or any such other matter shall be effective for any purpose. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest. The parties acknowledge that all prior agreements, representations and negotiations are deemed superseded by the execution of this Lease to the extent they are not expressly incorporated herein.
32.9 Separability. The invalidity or unenforceability of any provision of this Lease (except for Tenant’s obligation to pay Basic Rent and Common Area Expenses under Sections 3 and 4 hereof) shall in no way affect, impair or Invalidate any other provision hereof, and such other provisions shall remain valid and in full force and effect to the fullest extent permitted by law.
32.10 Recording. Neither Landlord nor Tenant shall record this Lease. In addition, neither party shall record a short form memorandum of this Lease without the prior written consent (and signature on the memorandum) of the other, and provided that prior to recordation Tenant executes and delivers to Landlord, in recordable form, a properly acknowledged quitclaim deed or other instrument extinguishing all of the Tenant’s rights and interest in and to the Project, the Building and the Premises, and designating Landlord as the transferee, which deed or other Instrument shall be held by Landlord and may be recorded by Landlord once this Lease terminates or expires (but not prior thereto). If such short form memorandum is recorded in accordance with the foregoing, the party requesting the recording shall pay for all costs of or related to such recording, including, but not limited to, recording charges and documentary transfer taxes.
32.11 Exhibits and Riders. All Exhibits and Riders attached to this lease are hereby incorporated in this Lease for all purposes as though set forth at length herein.
32.12 Auctions. Tenant shall have no right to conduct any auction in, on or about the Premises, the Building or the Project.
32.13 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the rent payment herein stipulated shall be deemed to be other than on account of the 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 may 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 agrees that each of the foregoing covenants and agreements shall be applicable to any covenant or agreement either expressly contained in this Lease or imposed by any statute or at common law.
32.14 Financial Statements. Upon ten (10) days prior written request from Landlord (which Landlord may make at any time during the Term but no more often than once in any calendar year), Tenant shall deliver to Landlord a current financial statement of Tenant and any guarantor of this Lease. Such statements shall be prepared in accordance with generally acceptable accounting principles and certified as true in all material respects by Tenant (if Tenant is an individual) or by an authorized officer or general partner of Tenant (if Tenant is a corporation or partnership, respectively).
32.15 No Partnership. Landlord does not, in any way or for any purpose, become a partner of Tenant in the conduct of its business, or otherwise, or joint venturer or a member of a joint enterprise with Tenant by reason of this Lease. The provisions of this Lease relating to Percentage Rent payable hereunder, if any, are included solely for the purpose of providing a method whereby rent is to be measured and ascertained.
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32.16 Force Majeure. In the event that either party hereto shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of strikes, lock-outs, labor troubles, inability to procure materials, failure of power, governmental moratorium or other governmental action or inaction (including failure, refusal or delay in issuing permits, approvals and/or authorizations), injunction or court order, riots, insurrection, war, fire, earthquake, windstorm, flood or other natural disaster or other reason of a like nature not the fault of the party delaying in performing work or doing acts required under the terms of this Lease (but excluding delays due to financial inability) (herein collectively, “Force Majeure Delays”), then performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period or such delay. The provisions of this Section 32.16 shall not apply to nor operate to excuse Tenant from the payment of Monthly Basic Rent, Common Area Expenses, percentage rent, if any, additional rent or any other payments strictly in accordance with the terms of this Lease.
32.17 Counterparts. This Lease may be executed in one or more counterparts, each of which shall constitute an original and all of which shall be one and the same agreement.
32.18 Nondisclosure of Lease Terms. Tenant acknowledges and agrees that the terms of this Lease are confidential and constitute proprietary information of Landlord. Disclosure of the terms could adversely affect the ability of Landlord to negotiate other leases and impair Landlord’s relationship with other tenants. Accordingly, Tenant agrees that it, and its partners, officers, directors, employees, agents and attorneys, shall not intentionally and voluntarily disclose the terms and conditions of this Lease to any newspaper or other publication or any other tenant or apparent prospective tenant of the Building or other portion of the Project, or real estate agent, either directly or indirectly, without the prior written consent of Landlord, provided, however, that Tenant may disclose the terms to prospective subtenants or assignees under this Lease.
32.19 Non-Discrimination. Tenant acknowledges and agrees that there shall be no discrimination against, or segregation of, any person, group of persons, or entity on the basis of race, color, creed, religion, age, sex, marital status, national origin, or ancestry in the leasing, subleasing, transferring, assignment, occupancy, tenure, use, or enjoyment of the Premises, or any portion thereof.
33. Lease Execution.
33.1 Tenant’s Authority. If Tenant executes this Lease as a partnership or corporation, then Tenant and the persons and/or entities executing this Lease on behalf of Tenant represent and warrant that: (a) Tenant is a duly authorized and existing partnership or corporation, as the case may be, and is qualified to do business in the state in which the Building is located; (b) such persons and/or entitles executing this Lease are duly authorized to execute and deliver this Lease on Tenant’s behalf in accordance with the Tenant’s partnership agreement (if Tenant is a partnership), or a duly adopted resolution of Tenant’s board of directors and the Tenant’s by laws (if Tenant is a corporation); (c) this Lease is binding upon Tenant in accordance with its terms; and (d) no party that constitutes, owns, controls, or is owned or controlled by Tenant, any guarantor hereof or any subtenant of Tenant is, or at any time during the Term will be (i) in violation of any laws relating to terrorism or money laundering, or (ii) among the parties identified on any list compiled pursuant to Executive Order 13224 for the purpose of identifying suspected terrorists or on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its website, http://www.treas.gov/ofac/tllsdn.pdf or any replacement website or other replacement official publication of such list.
33.2 Joint and Several Liability. If more than one person or entity executes this Lease as Tenant: (a) each of them is and shall be jointly and severally liable for the covenants, conditions, provisions and agreements of this Lease to be kept, observed and performed by Tenant: and (b) the act or signature of, or notice from or to, any one or more of them with respect to this Lease shall be binding upon each and all of the persons and entitles executing this Lease as Tenant with the same force and effect as if each and all of them had so acted or signed, or given or received such notice.
33.3 Guaranty. Landlord’s execution of the Lease is conditioned upon its receipt of a guaranty of Tenant’s obligations under the Lease executed by the Guarantor(s) identified in Section 1.16 above, such guaranty to be in the form attached hereto as Exhibit G. The execution of such guaranty is a material inducement to Landlord to enter into this Lease.
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33.4 No Option. The submission of this Lease for examination or execution by Tenant does not constitute a reservation of or option for the Premises and this Lease shall not become effective as a Lease until it has been executed by Landlord and delivered to Tenant.
34. Waiver of Jury Trial.
LANDLORD AND TENANT EACH ACKNOWLEDGES THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY, AND, TO THE EXTENT ENFORCEABLE UNDER APPLICABLE LAW, EACH PARTY DOES HEREBY EXPRESSLY AND KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER (AND/OR AGAINST ITS MEMBERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE. FURTHERMORE, THIS WAIVER AND RELEASE OF ALL RIGHTS TO A JURY TRIAL IS DEEMED TO BE INDEPENDENT OF EACH AND EVERY OTHER PROVISION, COVENANT, AND/OR CONDITION SET FORTH IN THIS LEASE.
IN THE EVENT THAT THE JURY WAIVER PROVISIONS OF THIS SECTION 34 ARE NOT ENFORCEABLE UNDER ANY APPLICABLE LAW, THEN THE FOLLOWING PROVISIONS OF THIS SECTION 34 SHALL APPLY. IT IS THE DESIRE AND INTENTION OF THE PARTIES TO AGREE UPON A MECHANISM AND PROCEDURE UNDER WHICH CONTROVERSIES AND DISPUTES ARISING OUT OF THIS LEASE OR RELATED TO THE PREMISES WILL BE RESOLVED IN A PROMPT AND EXPEDITIOUS MANNER. ACCORDINGLY, EXCEPT WITH RESPECT TO ACTIONS FOR UNLAWFUL OR FORCIBLE DETAINER OR WITH RESPECT TO THE PREJUDGMENT REMEDY OF ATTACHMENT, ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER (AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR SUBSIDIARY OR AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, TENANT’S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE, SHALL BE HEARD AND RESOLVED BY A REFEREE UNDER THE PROVISIONS OF APPLICABLE LAW WITH RESPECT TO ARBITRATION OF DISPUTES (AS SAME MAY BE AMENDED, OR ANY SUCCESSOR STATUTE(S) THERETO) (THE “REFEREE SECTIONS”). ANY FEE TO INITIATE THE JUDICIAL REFERENCE PROCEEDINGS SHALL BE PAID BY THE PARTY INITIATING SUCH PROCEDURE; PROVIDED HOWEVER, THAT THE COSTS AND FEES, INCLUDING ANY INITIATION FEE, OF SUCH PROCEEDING SHALL ULTIMATELY BE BORNE IN ACCORDANCE WITH SECTION 32.4 ABOVE. THE VENUE OF THE PROCEEDINGS SHALL BE IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED. WITHIN TEN (10) DAYS OF RECEIPT BY ANY PARTY OF A WRITTEN REQUEST TO RESOLVE ANY DISPUTE OR CONTROVERSY PURSUANT TO THIS SECTION 34, THE PARTIES SHALL AGREE UPON A SINGLE REFEREE WHO SHALL TRY ALL ISSUES, WHETHER OF FACT OR LAW, AND REPORT A FINDING AND JUDGMENT ON SUCH ISSUES AS REQUIRED BY THE REFEREE SECTIONS. IF THE PARTIES ARE UNABLE TO AGREE UPON A REFEREE WITHIN SUCH TEN (10) DAY PERIOD, THEN ANY PARTY MAY THEREAFTER FILE A LAWSUIT IN THE COUNTY IN WHICH THE PREMISES ARE LOCATED FOR THE PURPOSE OF APPOINTMENT OF A REFEREE UNDER APPLICABLE LAW. IF THE REFEREE IS APPOINTED BY THE COURT, THE REFEREE SHALL BE A NEUTRAL AND IMPARTIAL RETIRED JUDGE WITH SUBSTANTIAL EXPERIENCE IN THE RELEVANT MATTERS TO BE DETERMINED, FROM JAMS/ENDISPUTE, INC., THE AMERICAN ARBITRATION ASSOCIATION OR SIMILAR MEDIATION/ARBITRATION ENTITY. THE PROPOSED REFEREE MAY BE CHALLENGED BY ANY PARTY FOR ANY OF THE GROUNDS UNDER APPLICABLE LAW, AS SAME MAY BE AMENDED OR ANY SUCCESSOR STATUTE(S) THERETO. THE REFEREE SHALL HAVE THE POWER TO DECIDE ALL ISSUES OF FACT AND LAW AND REPORT HIS OR HER DECISION ON SUCH ISSUES, AND TO ISSUE ALL RECOGNIZED REMEDIES AVAILABLE AT LAW OR IN EQUITY FOR ANY CAUSE OF ACTION THAT IS BEFORE THE REFEREE, INCLUDING AN AWARD OF ATTORNEYS’ FEES AND COSTS IN ACCORDANCE WITH APPLICABLE LAW. THE REFEREE SHALL NOT, HOWEVER, HAVE THE POWER TO AWARD PUNITIVE DAMAGES, NOR ANY OTHER DAMAGES WHICH ARE NOT PERMITTED BY THE EXPRESS PROVISIONS OF THIS LEASE, AND THE PARTIES HEREBY WAIVE ANY RIGHT TO RECOVER ANY SUCH DAMAGES. THE PARTIES SHALL BE ENTITLED TO CONDUCT ALL DISCOVERY AS PROVIDED UNDER APPLICABLE LAW, AND THE REFEREE SHALL OVERSEE DISCOVERY AND MAY ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE, WITH RIGHTS TO REGULATE DISCOVERY AND TO ISSUE AND ENFORCE SUBPOENAS, PROTECTIVE ORDERS AND OTHER LIMITATIONS ON DISCOVERY AVAILABLE UNDER APPLICABLE LAW. THE REFERENCE PROCEEDING SHALL BE CONDUCTED IN ACCORDANCE WITH APPLICABLE LAW (INCLUDING THE RULES OF EVIDENCE), AND IN ALL REGARDS, THE REFEREE SHALL FOLLOW FLORIDA LAW APPLICABLE AT THE TIME OF THE REFERENCE PROCEEDING. THE DECISION OF THE REFEREE UPON THE WHOLE ISSUE MUST STAND AS THE DECISION OF THE COURT, AND UPON THE FILING OF THE STATEMENT OF DECISION WITH THE CLERK OF THE COURT, OR WITH THE JUDGE IF THERE IS NO CLERK, JUDGMENT MAY BE ENTERED THEREON IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE PARTIES SHALL PROMPTLY AND DILIGENTLY COOPERATE WITH ONE ANOTHER AND THE REFEREE, AND SHALL PERFORM SUCH ACTS AS MAY BE NECESSARY TO OBTAIN A PROMPT AND EXPEDITIOUS RESOLUTION OF THE DISPUTE OR CONTROVERSY IN ACCORDANCE WITH THE TERMS OF THIS SECTION 34.4. TO THE EXTENT THAT NO PENDING LAWSUIT HAS BEEN FILED TO OBTAIN THE APPOINTMENT OF A REFEREE, ANY PARTY, AFTER THE ISSUANCE OF THE DECISION OF THE REFEREE, MAY APPLY TO THE COURT OF THE COUNTY IN WHICH THE PREMISES ARE LOCATED FOR CONFIRMATION BY THE COURT OF THE DECISION OF THE REFEREE IN THE SAME MANNER AS A PETITION FOR CONFIRMATION OF AN ARBITRATION AWARD PURSUANT TO APPLICABLE LAW (AS SAME MAY BE AMENDED OR ANY SUCCESSOR STATUTE(S) THERETO).
35. Intentionally Deleted.
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IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year first above written.
“TENANT”
| LA ROSA REALTY, LLC | ||||
| a Florida limited liability company | Witness: | |||
| By: | ||||
| Name: | Joe La Rosa | Witness: | ||
| Its: | CEO | |||
“LANDLORD”
| SGO OSCOLA VILLAGE, LLC, | ||||
| a Delaware limited liability company | Witness: | |||
| By: | ||||
| Its: | GP | Witness: | ||
| Date: | ||||
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EXHIBIT “C”
WORK LETTER
This WORK LETTER (this “Work Letter”) is made and entered into by and between SGO OSCEOLA VILLAGE, LLC, a Delaware limited liability company (“Landlord”) and LA ROSA REALTY, LLC, a Florida limited liability company (“Tenant”), as of the day and year of the Lease between Landlord and Tenant to which this Work Letter is attached. Except as defined in this Work Letter to the contrary, all terms utilized in this Work Letter shall have the same meanings as the defined terms in the Lease.
1. General. Tenant acknowledges and agrees that the Premises have previously been constructed including interior tenant improvements therein, and is satisfactory and shall be accepted by Tenant in its “AS IS” condition as of the date of execution of this Lease and on the date Landlord delivers possession of the Premises to Tenant. Tenant, following the delivery of the Premises by Landlord and the full and final execution and delivery of the Lease, shall have the right to perform tenant improvements in the Premises (the “Tenant Improvements”) at its sole cost (subject to the Tenant Improvement Allowance) pursuant to the approved Construction Documents (as defined below).
2. Construction Documents. Following the execution and delivery of the Lease, Tenant shall arrange for plans and specifications for the Tenant improvements (the “Construction Documents”) to be prepared by Tenant’s architect/designer (“Tenant’s Designer”), which shall be approved by Landlord in its reasonable discretion. Landlord shall approve or disapprove any Construction Documents submitted to Landlord for approval within seven (7) business days after receipt by Landlord of the Construction Documents. If Landlord timely disapproves the Construction Documents, Landlord shall provide a reasonably detailed explanation as to the basis for such disapproval and Tenant shall, within 10 days of receipt of Landlord’s notice of disapproval, revise and resubmit such Construction Documents, correcting or altering such disapproved items. The Construction Documents, when approved by Landlord, shall be attached to this Work Letter as Exhibit “C-1” and made a part hereof. The cost of all architectural and design work, as well as the cost of all engineering governmental fees relating to the development of Tenant Improvements, shall be paid by Tenant. Tenant agrees and understands that Landlord makes no representations regarding, and shall not be the guarantor of, or responsible for, the correctness or accuracy of the Construction Documents or compliance of the Construction Documents with any applicable laws.
3. Tenant Improvement Allowance.
Provided Tenant is not in default of the Lease, is open for business to the public, and has paid the first month’s Rent, Landlord will contribute up to a maximum of $28,000.00 as a one-time allowance towards the cost of (i) preparing design and construction documents and mechanical and electrical plans for the Tenant Improvements, (ii) obtaining all necessary permits for construction of the Tenant Improvements, and (iii) hard costs of the Tenant Improvements. The Allowance shall be paid to Tenant or, at Landlord’s option, to the order of the general contractor that performed the Tenant Improvements, within thirty (30) days following receipt by Landlord of (1) Tenant’s request for disbursement, (2) receipted bills covering all labor and materials expended and used in the Tenant Improvements (or, if payment is being made to the general contractor, bills marked “approved” by Tenant); (3) full and final waivers of lien; and (4) and any other reasonable information required by Landlord for such work. Any costs in excess of the Allowance shall be the sole responsibility of Tenant. If Tenant does not submit a request for payment of the entire Allowance to Landlord in accordance with the provisions contained herein by March 31, 2017 (the “Outside Date”), any unused amount shall accrue to the sole benefit of Landlord, it being understood that Tenant shall not be entitled to any credit, abatement or other concession in connection therewith.
4. Permits. Tenant shall be responsible for obtaining all governmental approvals of the Construction Documents to the full extent necessary for the issuance of a building permit for the Tenant Improvements based upon such Construction Documents. Thereafter, Tenant shall also cause to be obtained all other necessary approvals and permits from all governmental agencies having authority over the construction and installation of the Tenant Improvements In accordance with the approved Construction Documents and shall undertake all steps necessary to insure that the construction of the Tenant Improvements is accomplished in strict compliance with all Laws applicable to such construction and the requirements and standards or any insurance underwriting board, inspection bureau or insurance carrier insuring the Premises pursuant to the Lease. Landlord shall reasonably cooperate with Tenant in obtaining all of the approvals and permits described herein and shall sign all permits, applications and other instruments requested by Tenant in connection with the same.
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5. Construction. Tenant shall employ an outside contractor or contractors of Tenant’s choice (collectively, “Contractor”), subject to Landlord’s reasonable approval as described below, to construct the Tenant Improvements in substantial conformance with the Construction Documents; provided, however, that the construction contracts between Tenant and Contractor and Tenant’s subcontractors shall be subject to Landlord’s prior, reasonable approval, such construction contracts shall provide for progress payments, and, Tenant shall pay for the entire cost of design and construction of the Tenant Improvements and all permits, review and approval fees in connection therewith. Landlord, at its election, has the right to have its contractor submit a bid to Tenant for the completion of the Tenant Improvements. The selection of Contractor and the performance to the work shall be subject to the following conditions:
(a) Contractor shall be duly licensed and subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed, but shall be conditioned on the Contractor’s reputation for quality of work, timeliness of performance, integrity and Landlord’s prior experience (if any) with such Contractor.
(b) Landlord or Landlord’s agents shall have the right, during reasonable times following reasonable prior written notice to Tenant, to inspect the construction of the Tenant Improvements by Tenant during the progress thereof, it being the intent of the parties hereto that Landlord shall be reasonable in its inspection of the construction of the Tenant Improvements and that Landlord shall recognize, to the extent commercially reasonable and practicable, the necessity of field changes based on field conditions. Landlord shall use its best efforts, and cause its agents to use their best efforts, to minimize interference with the construction of the Tenant Improvements during such inspections. If Landlord shall give notice of faulty construction or any material deviation from the Construction Documents, Tenant shall cause Contractor to make corrections promptly. However, neither the privilege herein granted to Landlord to make such inspections, nor the making of such inspections by Landlord, shall operate as a waiver of any rights of Landlord to require good and workmanlike construction and improvements erected in accordance with the Construction Documents.
(c) Tenant shall cause the Contractor to commence to construct the Tenant Improvements within ten (10) business days (or as soon thereafter as is reasonably practical) following Landlord’s approval of the Construction Documents and Instruct the Contractor to cause the Tenant improvements to be completed as soon as reasonably possible.
(d) Tenant’s construction of the Tenant Improvements shall comply with the following: (i) the Tenant Improvements shall be constructed in substantial accordance with the Construction Drawings; (ii) Tenant and/or Contractor shall submit schedules of all work relating to the Tenant Improvements to Landlord for Landlord’s approval within ten (10) business days following the selection of Contractor and the approval of the Construction Drawings (or as soon thereafter as is reasonably practical). Landlord shall, within ten (10) days of receipt thereof, reasonably approve or disapprove any work schedule submitted lo Landlord. If Landlord falls to disapprove any work schedule within such 10-day period, the applicable work schedule shall be conclusively deemed approved. If Landlord timely disapproves any work schedule, Landlord shall provide a reasonably detailed explanation as to the basis for such disapproval and Tenant and/or Contractor shall, within ten (10) days of receipt of Landlord’s notice of disapproval, revise and resubmit such work schedule; and (iii) Tenant shall abide by all reasonable and nondiscriminatory rules (provided such rules do not materially interfere with Tenant’s use and operation of the Premises or reduce Tenant’s rights under this Lease and provided further that such rules have first been given to Tenant in writing) made by Landlord with respect to the use of freight, loading dock and service elevators, storage of materials, coordination of work with the contractors of other Tenants, and any other matter in connection with this Work Letter, including, without limitation, the construction of the Tenant Improvements.
| Lease | EXHIBIT “C”
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(e) Tenant hereby indemnifies and holds Landlord harmless with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or Tenant’s Contractor, or anyone directly or indirectly employed by any of them, or in connection with (1) Tenant’s non-payment of any amount arising out of the Tenant Improvements, and (2) any defect in the Tenant Improvements. In addition, Tenant shall promptly correct or cause Tenant’s Contractor to promptly correct any non-compliance with applicable laws of the Tenant Improvements. The provisions of this paragraph shall survive the term of this Work Letter and the Lease.
(f) Tenant’s Contractor and the subcontractors utilized by Tenant’s Contractor shall guarantee to Tenant and for the benefit of Landlord that the portion of the Tenant Improvements for which it is responsible shall be free from any defects in workmanship and materials for a period of not less than one (1) year from the date of completion thereof. Each of Tenant’s Contractor and the subcontractors utilized by Tenant’s Contractor shall be responsible for the replacement or repair, without additional charge, of all work done or furnished in accordance with its contract that shall become defective within one (1) year after the later to occur of (i) completion of the work performed by such contractor or subcontractors and (ii) the Commencement Date. All such warranties or guarantees as to materials or workmanship of or with respect to the Tenant Improvements shall be contained in the Contract or subcontract and shall be written such that such guarantees or warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests may appear, and can be directly enforced by either. Tenant covenants to give to Landlord any assignment or other assurances which may be necessary to affect such right of direct enforcement.
6. Default. Any default by Tenant under the terms of this Work Letter shall constitute a default under the Lease to which this Work Letter is attached, and shall entitle Landlord to exercise all remedies set forth in the Lease. Tenant shall have any and all rights to remedy such default pursuant to the provisions of the Lease.
7. Reasonable Diligence. Both Landlord and Tenant agree to use reasonable diligence in performing all of their respective obligations and duties under this Work Letter and in proceeding with the construction and completion of the Tenant Improvements in the Premises,
8. Insurance Requirements. Contractor shall carry worker’s compensation insurance covering all of their respective employees, and shall also carry pubic liability insurance, including property damage, all with limits, in form and with companies as are required to be carried by Tenant as set forth in the Lease. Tenant shall carry “Builder’s All Risk” insurance in a commercially reasonable amount covering the construction of the Tenant Improvements, it being understood and agreed that the Tenant Improvements shall be insured by Tenant as required under the Lease immediately upon completion thereof.
Certificates for all insurance carried pursuant to this Work Letter must comply with the requirements of the Lease and shall be delivered to Landlord before the commencement of construction of the Tenant Improvements and before Contractor’s equipment is moved onto the site. In the event that the Tenant Improvements are damaged by any cause during the course of the construction thereof, Tenant shall immediately repair the same at Tenant’s sole cost and expense. Contractor shall maintain all of the foregoing insurance coverage in force until the Tenant Improvements are fully completed and accepted by Landlord. All policies carried under this paragraph shall insure Landlord and Tenant, as their interests may appear, as well as Contractor. All insurance, except Workers’ Compensation, maintained by Contractor shall preclude subrogation claims by the insurer against anyone insured thereunder. Such insurance shall provide that it is primary insurance as to the owner and that any other insurance maintained by owner is excess and noncontributing with the insurance required hereunder.
9. Notice of Completion; Copy of Plans. Within ten (10) days after completion of construction of the Tenant Improvements, Tenant shall cause a Notice of Completion to be recorded in the office of the recorder of the county in which the Project is located, and shall furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do so, Landlord may execute and file the same on behalf of Tenant as Tenant’s agent for such purpose. If Tenant prepares “as built drawings”, it shall cause them to be delivered to Landlord and/or Landlord’s representative no later than thirty (30) days after the completion of the Tenant Improvements. If “as built” drawings are not prepared, then Tenant shall provide to Landlord a full set of the approved plans and specifications for the Tenant Improvements.
10. Representative. Tenant has designated Elvi Habra as its sole representative with respect to the matters set forth in this Work Letter, who, until further notice to the Landlord, shall have full authority and responsibility to act on behalf of the Tenant as required in this Work Letter.
| Lease | EXHIBIT “C”
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EXHIBIT “D”
NOTICE OF LEASE TERM DATES
Date:
| To: | ||
Re:
Retail Lease dated _________, 201_ between ___________, a ______________(“Landlord”), and 
,
a 
(“Tenant” concerning Suite _3032_ (“Premises”) ___________
located at, __________, _____________, ______________.
Gentlemen:
In accordance with the Retail Lease (the “lease”), we wish to advise you and/or confirm as follows:
| 1. | The Delivery Date occurred on _8/1/15_ The Commencement Date of the Lease is __________; provided, however, If Tenant commences to conduct business in the Premises prior to the Commencement Date, then the Commencement Date shall instead be the date that Tenant first commences to conduct business in the Premises. The initial Lease Term expires on the last day of the________(____) full calendar month after the Commencement Date, subject to earlier termination as provided in the Lease. |
| 2. | That the Premises have been accepted by Tenant as being substantially complete in accordance with the Lease, and that there is no deficiency in construction. |
| 3. | The approximate number of square feet within the Premises is _2, 803_ square feet. |
| “Landlord”: | ||
| SGO OSCEOLA VILLAGE, LLC, | ||
| a Delawarge limited liability company, acting by and through Glenborough LLC (“Agent” for Owner) | ||
| By: | Glenborough LLC, | |
| a Delaware limited liability company as Agent for Owner | ||
| By: | ||
| Its: | ||
Agreed to and Accepted as of _____, 201___.
| “Tenant” | ||
| a | ||
| By: | ||
| its: | CEO | |
| Lease | EXHIBIT “C”
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EXHIBIT “E”
RULES AND REGULATIONS
1. No sign, advertisement, name or notice shall be installed or displayed on any part of the outside or inside of the Building or in any part of the Common Area without the prior written consent of Landlord. Landlord shall have the right to remove, at Tenant’s expense and without notice, any sign installed or displayed in violation of this rule. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by a person approved by Landlord, using materials and in a style and format approved by Landlord.
2. Tenant shall not place anything or allow anything to be placed near the glass of any window, door, partition or wall which may appear unsightly from outside the Premises, in Landlord’s sole discretion. No awnings or other projection shall be attached to the outside walls of the Building without the prior written consent of Landlord.
3. Tenant shall not obstruct any sidewalks, halls, passages, exits, entrances, or loading docks of the Building. Neither Tenant nor any employee, invitee, agent, licensee or contractor of Tenant shall go upon or be entitled to use any portion of the roof of the Building.
4. Unless expressly set forth to the contrary in Tenant’s Lease, Tenant shall have no right or entitlement lo the display of Tenant’s name or logo on any Project sign, monument sign or pylon sign.
5. All cleaning and janitorial services for the Premises shall be provided, at Tenant’s sole cost and expense, exclusively by or through Tenant or Tenant’s janitorial contractors in accordance with the provisions of Tenant’s Lease. Tenant shall not cause any unnecessary labor by carelessness or Indifference to the good order and cleanliness of the Premises.
6. Tenant, upon termination of its tenancy, shall deliver to Landlord the keys of all doors which have been furnished to, or otherwise procured by Tenant.
7. Tenant shall not use or keep in the Premises any kerosene, gasoline or inflammable or combustible fluid or material other than those limited quantities necessary for the operation or maintenance of office equipment, subject to any express provisions of Tenant’s Lease to the contrary.
8. Tenant shall not use or permit to be used in the Premises any foul or noxious gas or substance, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odors or vibrations, nor shall Tenant bring into or keep in or about the Premises any birds or animals (except service animals).
9. Tenant shall not use any method of healing or air conditioning other than that supplied by Landlord.
10. Landlord reserves the right from time to time, in Landlord’s sole and absolute discretion, exercisable without prior notice and without liability to Tenant (a) to name or change the name of the Building or Project; (b) to change the address of the Building, and/or (c) to install, replace or change any signs in, on or about the Common Areas, the Building or Project (except for Tenant’s signs, if any, which are expressly permitted by Tenant’s Lease).
11. Tenant shall close and lock all doors of its Premises and entirely shut off all water faucets or other water apparatus, unless otherwise needed for Tenant’s business and, except with regard to Tenant’s computers and other equipment, If any, which reasonably require electricity on a 24 hour basis, all electricity before Tenant and Its employees leave the Premises. Tenant shall be responsible for any damage or injuries sustained by other tenants or occupants of the Building or by Landlord for noncompliance with this rule.
| Lease | EXHIBIT “E”
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12. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed, and no foreign substances of any kind whatsoever shall be thrown therein.
13. Tenant shall not make any room to room solicitation of business from other tenants in the Building.
14. Tenant shall not use the Premises for any business or activity other than that specifically provided for in the Lease.
15. Tenant shall not install any radio or television antenna, loudspeaker or other device on the roof or exterior walls of the Building. Tenant shall not interfere with radio or television broadcasting or reception from or in the Building or elsewhere.
16. Canvassing, soliciting and distribution of handbills or any other written material, and peddling in the Common Area and other portions of the Project are expressly prohibited, and each tenant shall cooperate to prevent same.
17. Landlord reserves the right to exclude or expel from the Project any person who, in Landlord’s judgment, is intoxicated or under the influence of liquor or drugs or who is in violation of any of the Rules and Regulations of the Project.
18. Tenant shall store all its trash and garbage within its Premises or in designated trash containers or enclosures within the Project. Tenant shall not place in any trash box or receptacle any material which cannot be disposed of in the ordinary and customary manner of trash and garbage disposal. All garbage and refuse disposal shall be made in accordance with directions reasonably issued from time to time by Landlord.
19. The Premises shall not be used for lodging or for manufacturing or any kind.
20. Tenant agrees that it shall comply with all fire and security regulations that may be issued from time to time by Landlord, and Tenant also shall provide Landlord with the name of a designated responsible principal or employee lo represent Tenant in all matters pertaining to such fire or security regulations. Tenant shall cooperate fully with Landlord in all matters concemlng fire and other emergency procedures.
21. Tenant assumes any and all responsibility for protecting Its Premises from theft, robbery and pilferage. Such responsibility shall Include keeping doors locked and other means or entry to the Premises closed.
22. Landlord may waive any one or more of these Rules and Regulations for the benefit of Tenant or any other tenant, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of Tenant or any other such tenant, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any and all of the tenants in the Building.
23. These Rules and Regulations are in addition lo, and shall not be construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of premises in the Shopping Center.
24. Landlord reserves the right to make such other and reasonable Rules and Regulations as, in its judgment, may from time to time be needed for safely, security, care and cleanliness of the Project and for the preservation of good order therein. Tenant agrees to abide by all such Rules and Regulations here in above slated and any additional rules and regulations which are adopted.
25. Tenant shall be responsible for the observance of all of the foregoing rules by Tenant’s employees, agents, clients, customers, invitees or guests.
| Lease | EXHIBIT “E”
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PARKING RULES AND REGULATIONS
In addition to the foregoing rules and regulations and the parking provisions contained in the Lease to which this Exhibit is attached, the following rules and regulations shall apply with respect to the use of the Project’s parking areas.
| 1. | Every parker Is required to park and lock his/her own vehicle. All responsibility for damage to or loss of vehicles is assumed by the parker and Landlord shall not be responsible for any such damage or loss by water, fire, defective brakes, the act or omissions of others, theft, or for any other cause. |
| 2. | Tenant and its employees shall only park in parking areas designated by landlord. Tenant shall not leave vehicles in the parking areas overnight nor park any vehicles in the parking areas other than automobiles, motorcycles, motor driven or non motor driven bicycles or four wheeled trucks. |
| 3. | No overnight or extended term storage of vehicles shall be permitted. |
| 4. | Vehicles must be parked entirely within painted stall lines of a single parking stall. |
| 5. | All directional signs and arrows must be observed. |
| 6. | The speed limit within all parking areas shall be fifteen (15) miles per hour. |
| 7. | Parking is prohibited: (a) in areas not striped for parking; (b) in aisles or fire lanes; (c) where “no parking• signs are posted; (d) on ramps; (e) in cross hatched areas; and (I) in reserved spaces and in such other areas as may be designated by landlord. |
| 8. | Washing, waxing, cleaning or servicing of any vehicle in any area not specifically reserved for such purpose Is prohibited. |
| 9. | Landlord may refuse to permit any person who violates these rules to park in the parking areas, and any violation of the rules shall subject the vehicle to removal, at such vehicle owner’s expense. |
| Lease | EXHIBIT “E”
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EXHIBIT “F”
SAMPLE FORM OF TENANT ESTOPPEL CERTIFICATE
The undersigned (“Tenant”) hereby certifies to __________________________________________ (“Landlord”), and __________________________ , as follows:
1. Attached hereto is a true, correct and complete copy of that certain Project Lease dated___________, 201_ between Landlord and Tenant (the “Lease”), which demises Premises which are located at _____________________________________. The Lease is now in full force and effect and has not been amended, modified or supplemented, except as set forth in Section 6 below.
2. The term of the Lease commenced on _______________, 201_.
3. The term of the Lease is currently scheduled to expire on _______________ 201_.
4. Tenant has no option to renew or extend the Tenn of the Lease except: _____________________.
5. Tenant has no preferential right to purchase the Premises or any portion of the Building or Project upon which the Premises are located, and Tenant has no rights or options to expand into other space in the Building except:__________________________________________.
6. The Lease has: (Initial One)
( ) not been amended, modified, supplemented, extended, renewed or assigned.
( ) been amended, modified, supplemented, extended, renewed or assigned by the following described agreements, copies of which are attached hereto: ___________________.
7. Tenant has accepted and is now in possession of the Premises and has not sublet, assigned or encumbered the Lease, the Premises or any portion thereof except as follows:
8. The current Monthly Basic Rent is $ _____; and current monthly parking charges are $.____________.
9. Tenant’s Monthly Common Area Expense Payment currently payable by Tenant is $ ______________ per month.
10. The amount of security deposit (if any) is $ ______________ . No other security deposits have been made.
11. All rental payments payable by Tenant have been paid in full as of the date hereof. No rent under the Lease has been paid for more than thirty (30) days in advance of its due date.
12. All work required to be performed by Landlord under the Lease has been completed and has been accepted by Tenant, and all tenant Improvement allowances have been paid in full.
13. To the best of Tenant’s knowledge, as of the date hereof, there are no defaults on the part of Landlord or Tenant under the Lease.
| Lease | EXHIBIT “F”
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14. Tenant has no defense as to Its obligations under the Lease and claims no set off or counterclaim against Landlord.
15. Tenant has no right to any concession (rental or otherwise) or similar compensation in connection with renting the space it occupies, except as expressly provided in the Lease.
16. All insurance required of Tenant under the Lease has been provided by Tenant and all premiums have been paid.
17. There has not been filed by or against Tenant a petition in bankruplcy, voluntary or otherwise, any assignment for the benefit of creditors, any petition seeking reorganization or arrangement under the bankruptcy laws of the United States or any state thereof, or any other action brought pursuant to such bankruptcy laws with respect to Tenant.
18. Tenant pays rent due Landlord under the lease to landlord and does not have any knowledge of any other person who has any right to such rents by collateral assignment or otherwise.
The foregoing certification is made with the knowledge that______________is about to [fund a loan to landlord or purchase the Building from Landlord], and that _________ is relying upon the representations herein made in [funding such loan or purchasing the Building].
Dated: ______ _, 201_.
“TENANT”
SAMPLE ONLY [NOT FOR EXECUTION]
| By: | ||
| By: | ||
| Lease | EXHIBIT “F”
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EXHIBIT “G”
Intentionally Deleted
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EXHIBIT “H”
SIGN CRITERIA
This Exhibit is attached to and made a part of the Lease by and between SGO OSCEOLA VILLAGE, LLC, a Delaware limited liability company (“Landlord”) and LA ROSA REALTY, LLC, a Florida limited liability company (“Tenant”), for the Premises described in the Lease.
The following criteria, instructions and specifications shall govern all exterior sign work furnished and installed by Tenant.
I. GOVERNING CRITERIA AND APPROVALS
| 1) | The criteria set forth herein are governed by the Osceola Village “Sign Criteria” and the City of Kissimmee Sign Ordinance “Sign Ordinance”. Nothing herein or in any specific approval by Landlord shall be construed as acceptance or approval of any exceptions or deviations from the criteria set forth herein, the Approved Sign Program or the Sign Ordinance. It is the Tenant’s responsibility to verify and provide the Landlord with proof of compliance with all applicable criteria, ordinances and codes in the manner set forth herein. |
| 2) | Unless otherwise provided in the Lease, all costs associated with furnishing, installation, service and repair of Tenant’s Signage shall be the Tenant’s responsibility and at Tenant’s sole cost and expense. Tenant shall hold Landlord harmless and keep the property lien free. |
| 3) | All approved signs shall be installed and operational prior to Tenant opening for business. |
| 4) | Prior written approval of design, content, materials, colors, size, details and location of signs must be obtained from Landlord. Approval by Landlord of preliminary plans or working drawings for the Tenant’s Premises is separate from the approval of signage and does not constitute approval of any signage. |
| 5) | No sign of any type shall be placed anywhere on the Premises without the express prior written approval of the Landlord as to design, color, format, layout, typeface and location. Landlord reserves the right to disapprove any sign which in its sole opinion is not compatible with these Sign Criteria. |
| 6) | Each Tenant and its sign contractor shall review the specifications and criteria set forth herein before preparing sign drawings for submittal. Concurrently with or promptly after submission of preliminary plans for the tenant improvements, Tenant shall submit to Landlord drawings and specifications “The Sign Drawings”, including a description of materials and colors for all proposed signs. The Sign Drawings shall clearly show the location of each sign, together with all graphics, color and construction and attachment details and complete information on electrical load. |
| 7) | Landlord shall return one set of The Sign Drawings, within 10 working days to Tenant, marked either “APPROVED” or “DISAPPROVED”. If Landlord approves The Sign Drawings with certain conditions, Landlord shall return to Tenant two sets marked “APPROVED SUBJECT TO LANDLORD’S MODIFICATIONS AND COMMENTS”. Tenant shall then return one of these sets to Landlord bearing Tenant’s acceptance of Landlord’s conditions or shall submit revised Sign Drawings. |
| 8) | Following receipt of Landlord Approval, Tenant shall obtain approval of the City of Kissimmee. Prior to Installation of any signage, Tenant shall submit to Landlord copies of all such approvals and permits together with a copy of the sign contractor’s license and insurance certificate naming Landlord as additional insured. |
| 9) | In the Event that Tenant makes modifications to the proposed signs after receipt of Landlord Approval, Tenant shall submit revised plans to Landlord for approval. |
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II. TENANT SIGN SPECIFICATIONS
| 1) | Each Tenant shall be entitled to one (1) “Tenant Sign” per storefront. The wording of the Tenant Sign shall be limited to the store name. Corporate crests, insignias or shields are acceptable and shall be contained in an illuminated logo box. Outer end units shall be entitled to two (2) signs, one per storefront. All signs and identifying marks shall occur within the limits of the Premises. |
| 2) | The Tenant Sign shall be of individual sheet metal channel letters with illuminated Plexiglas faces. Returns and trim cap shall be painted the same color as the adjacent building surface or the same color as the Plexiglas face. |
| 3) | Illuminated plastic face single sign cans will not be permitted. |
| 4) | The area of a sign is the area of a rectangle surrounding all the letters and the logo box of the sign. Where upper and lower case letters are used, the largest height letter shall be used to determine the height of the rectangle. |
| 5) | Foot Frontage of a storefront is the length of the facade measured along the lease line separating the premises from adjacent spaces. |
| 6) | Tenant Signs shall be centered horizontally and vertically on the building element lo which they are mounted. |
III. DISPLAY WINDOWS AND SPECIAL EVENT SIGNS
| 1) | Painted or hand lettered signs are not permitted on display windows. Decals, gold leaf and vinyl graphics will be permitted on display windows not to exceed a total of four (4) square feet in area per Storefront. |
| 2) | Grand opening or liquidation sale signs on site may be permitted in connection with the opening of a business, major remodeling under an active building permit, new owner or closure of a business, with the approval of the City of Kissimmee and of the Landlord, subject to the following: |
| a) | Grand opening or liquidation sale signs shall be limited to one time per opening of a business, major remodeling under an active building permit, new owner or closure of a business. |
| b) | Grand opening or liquidation sale signs shall be permitted for an initial period of up to thirty (30) days. |
| c) | Grand opening or liquidation sale signs shall not exceed a total area of 15 square feet |
| d) | Grand opening or liquidation sale sign copy shall be limited to “Going out of business”, “Liquidation sale”, or “Grand opening”. There shall be no limitation on the color of the letters. |
| 3) | No signs of any type other than those herein described may be attached to the display windows of any store except where constructed of self supporting materials and made an integral part of the display in said window. Credit card decals shall be permitted on the exterior of display windows |
| Lease |
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IV. CONSTRUCTION, INSTALLATION AND ELECTRICAL WORK
| 1) | All illuminated signs must be UL approved and labeled and their installation shall comply with applicable building, sign and electrical codes. Signs and electrical connections shall be weather tight. Signs shall be wired to the Tenant’s electrical panel and controlled by a timer. Signs shall have no moving or flashing parts or lights and no luminous letters on back panels. No flashing or animated signs will be permitted. |
| 2) | Exposed raceways are prohibited. |
V. MAINTENANCE
| 1) | Tenant shall, at Tenant’s sole cost and expense, maintain all signs in good order and repair, which shall include replacement of damaged or faded letters and burned out bulbs and lamps and insulation and weatherproofing of all parts including wiring. Landlord shall not be responsible for any damage to signs that may be caused by water penetration into any portion of the sign or related electrical installation. |
| 2) | Repairs shall be made within 72 hours of becoming aware of such need. Should Tenant fail to comply, Landlord reserves the right to perform such repairs for Tenant and charge Tenant directly for all costs incurred, including administrative charges of a minimum of 20% of the total costs incurred by Landlord to complete the repairs. Tenant hereby agrees to reimburse Landlord within 10 days of receipt of invoice for all costs and administrative charges incurred. |
| 3) | Tenant shall maintain all illuminated signs on a timer which will control operation pursuant to the schedule established by Landlord. |
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EXHIBIT “I”
PROHIBITED, RESTRICTED AND EXCLUSIVE USES
| 1 | PROHIBITED USES |
| 1.1. | Project Restrictions. All improvements shall be used for retail businesses, for restaurants, or for service businesses of the type generally found in a first-class retail shopping center in Central Florida including, without limitation, financial institutions, medical or veterinary offices and other service oriented uses. |
| 1.2 | Prohibited Uses. Except as otherwise expressly permitted by Landlord, no portion of the Project shall be used for any non-retail use or for any of the following purposes: a flea market or a business selling so-called “second hand” goods (except quality, previously-owned merchandise stores which are associated generally with "first-class" retail developments (such as Play It Again Sports, Neiman- Marcus Last Call and similar operations) will be permitted with the consent of Landlord): cemetery; mortuary; an establishment engaged in the business of selling, exhibiting or delivering pornographic or obscene materials; a so-called “head shop”; off-track betting parlor; junk yard; flea market; recycling facility or stockyard; equipment rental facility; automotive repair shop (including lubrication and/or service center), body and fender shop, car wash facility or gasoline station, or motor vehicle or boat storage facility; a warehouse (however, a warehouse-style retailer is a permitted use in the Project); discotheque, dance hall, comedy club, night club or adult entertainment facility; bowling alley; skating rink; billiard or pool hall; massage parlor; game parlor or video arcade (which shall be defined as any store containing more than three electronic games); fitness center, workout facility, gym, health spa or studio, or exercise facility; a beauty school, barber college, reading room, place of instruction or any other operation catering primarily to students or trainees and not to retail customers; industrial, residential or manufacturing uses; school; house of worship; or bar, tavern or cocktail lounge, unless it is operated in conjunction with a restaurant where the service of alcoholic beverages for on-premises consumption is ancillary to the restaurant business. |
(a) Without the prior written consent of Landlord, traveling carnivals, lairs, or auctions shall not be allowed to operate in the Project.
(b) No portion of the Project shall be used for a business or use which (i) creates strong, unusual or offensive odors, fumes, dust or vapors: (ii) emits light, noise or sounds which are objectionable due to brightness, vibrations, intermittence, beat, frequency, shrillness or loudness; (iii) creates unusual fire, explosive or other hazards; or (iv) materially increases the rate of insurance for any Landlord or any other premises within the Project or any other occupant of the Project.
(c) No portion of the Project shall be used (i) for the maintenance of any nuisance or the conduct of any activity which violates public policy; (ii) for any activity which physically interferes with the business of any other occupant of the Project; (iii) in violation of any governmental or quasi- governmental regulations: (iv) for any “sidewalk sales;” or any other sales, promotional activities or displays of merchandise outside the exterior wall of the Promises, or any similar use, except for Project promotional events or as may be approved by Landlord, which approval may be withheld in the sole and absolute discretion of Landlords: (v) for the storage of any items, other than the storage of items within the confines of the Premises, which items are incidental to the business conducted thereon, and other than trash to be stored in appropriate containers within an enclosed trash area; (vi) to permit advertising media which can be heard or experienced from the exterior of the Premises, from which it emanates, such as flashing lights, searchlights, loudspeakers, phonographs, radios or televisions; (vii) for the distribution of any handbills, bumper stickers or other advertising devices on any vehicle parked in the parking area of the Project or elsewhere in the Project; or (viii) for any other unreasonable use not compatible with the operation of a first- class retail and commercial shopping center with a diversified grouping of retail stores, restaurants, and other mercantile establishments, well maintained, in accordance with the standards of any laws, ordinances, rules or regulations of any governmental authority or agency having jurisdiction thereof.
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RIDER NO. 1 TO RETAIL LEASE
Reserved
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RIDER NO. 2 TO RETAIL LEASE – TENANT’S OBLIGATIONS
This Rider No. 2, is made and entered into by and between SGO OSCEOLA VILLAGE, LLC, a Delaware limited liability company (“Landlord”) and LA ROSA REALTY, LLC, a Florida limited liability company (“Tenant”), as of the day and year of the Lease between Landlord and Tenant to which this Rider is attached. Landlord and Tenant hereby agree that, notwithstanding anything contained in the Lease to the contrary, the provisions set forth below shall be deemed to be part of the Lease and shall supersede any Inconsistent provisions of the Lease. All references In the Lease and in this Alder to the “Lease” shall be construed to mean the Lease (and all Exhibits attached thereto), as amended and supplemented by this Rider. All capitalized terms not defined in this Rider shall have the same meaning as set forth in the Lease.
Tenant's Repair and Maintenance Obligations. In addition to those obligations contained in Section 11.4 of this Lease, Tenant shall be responsible for the following obligations In connection with its use and operation within the Premises:
(1) Janitorial Services. Tenant shall arrange for the janitorial services at the Premises on a daily basis, which services can be provided by either an outside janitorial services contractor or by Tenant’s employees or agents. The foregoing notwithstanding, in the event that Tenant receives any notice of violation by the Department of Health Services (or similar entity) or any other applicable local or state governmental or quasi-governmental body, then Tenant must, at its sole cost and expense, enter into (and keep in full force and effect throughout the Term of this Lease and any extensions hereof) a full service janitorial contract with a janitorial company to provide janitorial service to the Premises. Landlord shall not provide any janitorial or cleaning service for the Premises. If Tenant directly contracts with a third party for its janitorial services for the Premises, (i) Tenant shall do so at its sole cost and expense, and (ii) such third party and its janitors shall comply with Landlord's reasonable rules and regulations with respect to their access to and work in the Premises.
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(2) Refuse, Sewage, and Waste. Tenant shall, at Tenant's own cost and expense, cause the removal and disposal of its refuse from the Premises after 6:00 p.m. and before 8:00 a.m. of each day, so as not to create an unsightly appearance, or to inconvenience, render uncomfortable or annoy the tenants, visitors or invitees of or to the Building or Project. All such refuse will be removed from the Premises to the location designated by Landlord from which said refuse is to be picked up. Tenant agrees to not keep any trash, garbage, non-medical waste or other refuse on the Premises except in sanitary containers and agrees to regularly and frequently remove same from the Premises. Tenant shall keep all containers or other equipment used for storage of such materials in a clean and sanitary condition. Tenant shall properly dispose of all sanitary sewage and shall not use the sewage disposal system for the disposal of anything except sanitary sewage. Tenant shall keep the sewage disposal system free of all obstructions and in good operating condition. If the volume of Tenant's trash becomes excessive in Landlord's judgment, Landlord shall have the right to charge Tenant for additional trash disposal services and/or require that Tenant contract directly for additional trash disposal services at Tenant’s sole cost and expense. Tenant agrees to handle, store, and dispose of all medical waste (including without limitation all “sharp” waste) in compliance with all applicable requirements. Tenant shall not accumulate or permit materials to accumulate in hallways, service corridors or other Common Areas. Any waste or garbage, and any deliveries, stored or accumulated by Tenant outside of the Premises (other than the garbage placed in the appropriate trash container) may be removed immediately by Landlord without notice to Tenant and the cost of such removal, together with $250 per occurrence to cover Landlord's cost in providing such service to Tenant, shall be Additional Rent payable by Tenant to Landlord upon demand.
(3) Store Front. Tenant shall, at Tenant's sole cost and expense, professionally maintain and keep clean at all times the interior and exterior of the store front forming the exterior of the Premises, including but not limited to the interior and exterior of all glass windows, partitioning, cases, glass side lights and metal trim around and between the windows, doors and thresholds thereof (the “store Front”), in a first class manner. Landlord shall not be obligated to clean or otherwise maintain the Store Front. Tenant agrees that any cleaning of the Store Front will, at Tenant's expense, be performed only by a professional contractor. Tenant acknowledges that the entire appearance of the Premises, including but not limited to the Store Front, is an essential element of the first class appearance of the Building. Therefore, Tenant agrees that Landlord shall have the right, upon reasonable prior notice to Tenant, to inspect the exterior and interior of the Store Front to verify that Tenant is maintaining and cleaning the interior and exterior of the Store Front in a first-class manner. If Landlord determines that Tenant is not maintaining and cleaning the Interior or exterior or the Store Front in a first-class manner, Landlord shall provide notice of this fact to Tenant, and if Tenant does not commence to cure such non-compliance within ten (10) days after receipt of Landlord's notice and thereafter diligently pursue such cure to completion, Landlord may, at Landlord's option, in addition to Landlord's other remedies for breach of Tenant's obligations hereunder cure such non-compliance and charge Tenant for Landlord's costs in connection therewith, plus a fee of 15% of such costs, which charges shall be paid by Tenant to Lessor within ten (10) days after Tenant's receipt of Landlord's demand therefor provided such action by Landlord shall not be deemed to cure Tenant's breach of its obligations hereunder.
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(4) Pesis. Tenant shall enter into (and keep in full force and effect throughout the Term of the Lease), a full service preventive and remedial extermination contract, with a licensed and bonded pest control operator, to keep the Premises at all times free from pests and vermin, including control coverage for the following: cockroaches, ants, earwigs, weevils, silverfish, spiders, beetles, rats, mice and rodents of all types, and dry rot and fungus. Without limiting the foregoing, if the Premises becomes infested with pests or vermin, including cockroaches, ants, earwigs, weevils, silverfish, spiders, beetles, rats, mice and rodents of all types or dry rot or fungus, Tenant shall, at Tenant’s own cost and expense, cause the same to be exterminated and/or removed, from time to time, to the satisfaction of Landlord. Notwithstanding the foregoing, if Tenant or Tenant’s pest control operator fails to immediately remedy such event of infestation to Landlord's sole satisfaction, Landlord may in addition to Landlord’s other remedies for breach of Tenan’'s obligations hereunder contract with its own pest control operator to remedy such event of infestation, and the total costs incurred by Landlord, plus a fee of 15% of such costs, shall be paid by Tenant to Landlord within thirty (30) calendar days after written demand by Landlord, provided such action by Landlord shall not be deemed to cure Tenant's breach of its obligations hereunder.
(5) Moisture Damage. Tenant shall, if requested to do so by Landlord, install and keep installed at all times in the Premises, at Tenant's sole cost and expense, insulation and moisture-resistant barriers in such quantities, qualities and location as specified by Landlord, sufficient to prevent moisture (including but not limited to that produced by steam) from escaping from the Premises or entering, penetrating or otherwise damaging any portion of the Building, including but not limited to walls, ceilings, floors, electrical wiring and mechanical apparatus. Further, Tenant shall install and keep In good repair, at Tenant's sole cost and expense, such special ventilation and air conditions equipment as may be necessary to prevent moisture from entering, penetrating or otherwise damaging any portion of the Building, including but not limited to walls, ceilings, floors, electrical wiring and mechanical apparatus. Should Tenant fail to Install or keep in good repair such insulation and/or moisture resistant barriers or fail to install or keep in good repair such ventilation and air conditioning equipment, Landlord may install and maintain the same at the expense of Tenant.
Landlord shall have the right, as often as Landlord desires, to make inspections of the Premises upon at least 24-hour advance written notice to Tenant (except in the case of an emergency) to ensure that the Premises are not being damaged by moisture and, if upon inspection Landlord discovers such damage, Tenant shall make all repairs necessary thereto to repair any moisture damage and to preserve the Premises in good order and condition. Should Tenant fail to correct such damage, Landlord may in addition to Landlord's other remedies for breach of Tenant's obligations hereunder repair such damage at the expense of Tenant, and the total costs incurred by Landlord therefor, plus a fee of 15% of such costs, shall be paid by Tenant to Landlord within thirty (30) calendar days after written demand by Landlord provided such action by Landlord shall not be deemed to cure Tenant's breach of its obligations hereunder.
(6) Plumbing. Tenant shall, at all limes, at Tenant's sole cost and expense, maintain the "Plumbing for the Premises in good working order. “Plumbing” shall mean all plumbing equipment and related pipes and fixtures which are located within or outside the Premises which solely are for the use of the Premises. Notwithstanding the foregoing, if Tenant fails to immediately remedy any problems with the Plumbing to Landlord's sole satisfaction, Landlord may in addition to Landlord's other remedies for breach of Tenant's obligations hereunder remedy such problem, and the total costs incurred by Landlord, plus a fee of 15% of such costs, shall be paid by Tenant to Landlord within thirty (30) calendar days after written demand by Landlord provided such action by Landlord shall not be deemed to cure Tenant's breach of its obligations hereunder.
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FIRST AMENDMENT TO LEASE
This First Amendment to Lease (the “First Amendment”) is made and entered into this 2nd day of May, 2020, by and between SGO OSCEOLA VILLAGE, LLC, a Delaware limited liability company (“Landlord”) and La Rosa Realty, LLC, a Florida limited liability company, (“Tenant”).
R E C I T A L S
A. By Retail Lease dated August 1, 2016 (the “Lease”), by and between Landlord, and Tenant, Landlord leased to Tenant and Tenant leased from Landlord approximately 2,800 square feet of space (the “Premises”) of that certain building located at 3032 Dyer Blvd., Kissimmee, Florida in the shopping center commonly known as Osceola Village Shopping Center (“Shopping Center”).
B Landlord and Tenant desire to amend the Lease to extend the Term and to otherwise modify and amend the terms and conditions of the Lease, all in accordance with the following.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
A G R E E M E N T
1. Agreement to Defer Base Rent and a portion of Additional Rent. Landlord agrees that Tenant’s Base Rent for the months of April, May and June, 2020 (the “Deferment Period”) shall be deferred, as provided below. Landlord further agrees that one half (1/2) of Tenant’s Additional Rent shall be deferred during the Deferment Period. The total amount of deferred Base and Additional Rent is referred to above shall be defined herein as the “Deferred Rent”. During the Deferment Period, Tenant shall continue to pay one half (1/2) of Tenant’s Additional Rent, with such amounts that were due April 1, and May 1 to be paid within five (5) business days of the date of this Amendment.
2. Repayment of Deferred Rent. Landlord and Tenant agree that Tenant shall repay the Deferred Rent concurrently with the payment by Tenant of Base Rent, over a period of six (6) months, commencing with the Base Rent payment due on July 1, 2020, and ending with the Base Rent payment due on December 1, 2020.
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3. Acceleration of Repayment Obligation. All Deferred Rent shall immediately and automatically become due if (i) Tenant defaults under the Lease beyond any applicable notice or cure period; (ii) Tenant breaches the confidentiality provisions contained below; (iii) the Lease is terminated before its scheduled expiration date; (iv) a prohibited assignment of the Lease or a sublease of all or any portion of the Premises occurs; (v) Tenant transfers all or substantially all of its assets to a third party in violation of the terms of the Lease; (vi) Tenant makes an assignment for the benefit of creditors; or (vii) a receiver, liquidator or trustee is appointed for Tenant, or Tenant is adjudicated a bankrupt or insolvent, or any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, is filed by or against, consented to, or acquiesced in by, Tenant, or any proceeding for the dissolution or liquidation of Tenant is instituted (and, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by Tenant, the same is not discharged, stayed or dismissed within 30 days).
4. Confidentiality. Tenant agrees that neither Tenant nor its agents or any other parties acting for or on behalf of Tenant shall disclose any matters set forth in this Amendment or disseminate or distribute any information concerning the terms, details or conditions hereof to any person, firm or entity without obtaining the express written consent of Landlord (to be given or withheld by Landlord in its sole discretion).
5. No Broker. Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this First Amendment, and that they know of no real estate broker or agent who is entitled to a commission in connection with this First Amendment. Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, and costs and expenses (including, without limitation, reasonable attorney’s fees) with respect to any leasing commission alleged to be owing on account of any dealings with any broker or agent, occurring by, through or under the indemnifying party.
6. No Further Modifications. All other terms and conditions of the Lease shall remain in full force and effect.
This First Amendment modifies and amends the Lease. To the extent there are any inconsistencies between this First Amendment and the Lease, the terms and provisions of this First Amendment shall control.
IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment to Lease as of the date first above written.
| LANDLORD: | ||
| SGO OSCEOLA VILLAGE, LLC, | ||
| a Delaware limited liability company | ||
| By: | ||
| Its: | President | |
| TENANT: | ||
| La Rosa Realty, LLC, | ||
| a Florida limited liability company | ||
| By: | ||
| Its Broker | ||
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Exhibit 10.127
ASSIGNMENT, ASSUMPTION AND CONSENT AGREEMENT
THIS ASSIGNMENT, CONSENT AND AMENDMENT AGREEMENT (“Agreement”) dated this 30th day of November 2021 by and between, La Rosa Realty, LLC (“Assignor”), and Horeb Kissimmee Realty, LLC d/b/a La Rosa Realty Kissimmee (“Assignee”), and ECA Buligo Osceola Partners, LP successor in interest to SGO OSCEOLA VILLAGE, LLC, (Landlord).
WHEREAS, Landlord and Tenant did enter into and execute a Lease dated August 1, 2016, as amended by First Amendment to Lease dated May 2, 2020 (collectively the “Lease”) for those certain premises located in Kissimmee, Florida at 3032 Dyer Boulevard at Osceola Village;
WHEREAS, Assignor desires to assign the Lease to Assignee and Landlord desires to consent to such assignment subject to the terms and conditions of the Lease and of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
| 1. | Assignor hereby and by these presents does grant and transfer unto and assign all of Assignor’s right, title, and interest in and to the Lease as of January 1, 2022 to have and to hold the same unto Assignee, it’s heirs, executors, and administrators, subject however, to the Lease and all the terms, conditions, and provisions thereof as amended by this Agreement. |
| 2. | Assignee assumes and agrees to perform each and every obligation under the Lease, effective as of January 1, 2022. Assignee will accept the premises, demised under the Lease, in their condition as of said date. |
| 3. | Landlord hereby consents to the assignment of the Lease from Assignor to Assignee, subject to the terms of the Lease as amended by this Agreement. Landlord’s consent hereunder shall not be construed to allow further assignments or transfers under the Lease and no further assignment shall be made without the prior written consent of Landlord. |
| 4. | Assignor and Assignee acknowledge that in the event of any assignment or subletting of this Lease, any options to extend the term or to expand the Leased Premised contained in the Lease shall immediately terminate and shall become null and void. |
| 5. | Assignor and Assignee acknowledge that Landlord has complied with all of its obligations under the Lease as of the date of this Agreement. |
| 6. | Assignee hereby unconditionally assumes, becomes party to and agrees to perform all of the terms, covenants and conditions of the Lease as amended by this Agreement as though Assignee was for all intents and purposes the Lessee named in the Lease, but only as to matters arising after December 31, 2021. |
| 7. | Assignor and Assignee hereby waive and agree not to assert against Landlord any defense, set-off, recoupment, claim or counterclaim which it might have against Landlord arising from the Lease. |
| 8. | Upon execution of this Agreement Assignor shall pay all rents and fees due through December 31, 2021. |
| 9. | Assignor and Assignee agree that the existing security deposit, in the amount of $11,500.00 shall be transferred to the Assignee. |
| 10. | Minimum Rent, Common Area Maintenance, Real Estate Taxes, and Insurance charges shall continue to be paid per the Lease. |
| 11. | As of the effective date of this Agreement the Term as set forth in Section 1.9 of the Summary of Basic Lease Information and Definitions shall be modified to be paid in accordance with Section 2.1 of the Lease as follows: |
| Time Period | Annual | Monthly | ||||||
| 01/01/2022 - 12/31/2022 | $ | 64,919.29 | $ | 5,409.94 | ||||
| 01/01/2023 - 12/31/2023 | $ | 66,866.87 | $ | 5,572.24 | ||||
| 01/01/2024 - 12/31/2024 | $ | 68,872.88 | $ | 5,739.41 | ||||
| 12. | In addition to terms set forth in Section 14 of the Lease, Assignee shall have the right to sublease up to 50% of the Premises with the prior written consent of Landlord and upon such terms and conditions as may be mutually agreed upon by the parties. Assignee shall not receive any monetary benefit, in excess of the actual Rent obligation of Assignee as agreed between the Assignee and Landlord, through a transfer to a third party. |
| 13. | Provided Assignee is not in default in any way under this Lease, Landlord will provide Assignee a Tenant Improvement Allowance in the amount of $25,000.00 which shall be paid within 30 days following the execution of this Agreement. In the event Assignee defaults on the Lease beyond a thirty (30) day cure period or terminates the Lease prior to the expiration of the Lease, Assignee shall reimburse Landlord the full amount of the Tenant Improvement Allowance. |
| 14. | The liability of Assignor and Assignee under the Lease will be joint and several. |
| 15. | In the event of any default under this Lease, Landlord may proceed directly against Assignor, or anyone else responsible for the performance of this Lease including the Assignee, jointly or severally, without first exhausting Landlord’s remedies against any other person or entity responsible therefor to Landlord, or any security held by Landlord. Notwithstanding the foregoing, in the event of a default hereunder, Landlord agrees to first demand performance by remedies against Assignee. If Assignee fails to perform within the time periods set forth in notice of demand, then Landlord may proceed against Assignor and/or any other parties under this Lease. |
| 16. | Landlord hereby consents to the assignment evidenced by this Agreement. There shall be no amendment or modification to the Lease, without consent of Assignors and Assignee. No such amendment shall limit or alter Assignors’ liability under the Lease, as it may be amended from time to time and further, no such amendment will increase the amount of rent for which Assignors are obligated under the Lease. Landlord may transfer its interest without the consent of Assignor and Assignee. |
| 17. | Ratification: It is expressly understood and agreed that this Assignment, consent, and Amendment Agreement between the parties hereto is intended to amend and modify the Lease, only to the extent as set forth and that in all other terms and conditions, The Lease, as |
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed by their respective officers, duly authorized, the day and year first above written.
| LANDLORD: ECA Buligo Osceola Partners, LP a Delaware limited partnership |
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| By: | ECA Osceola, Corp. | |
| a Delaware Corporation | ||
| its General Partner | ||
| By: | ||
| Name: | Christopher Wild | |
| Title: | President |
| ASSIGNOR: La Rosa Realty, LLC | ||
| By: | ||
| Name: | Joseph La Rosa | |
| Title: | ||
| ASSIGNEE: Horeb Kissimmee Realty, LLC | ||
| By: | ||
| Name: | Maria Flores-Garcia | |
| Title: | ||
GUARANTY
In consideration of Ten Dollars ($10.00), cash in hand paid, and other good and valuable consideration, including the execution of the attached Agreement by and between ECA Buligo Osceola Partners. LP (Landlord”) and Maria Flores-Garcia and Anderson Correa (jointly and severally, “Tenant”) dated November 30, 2021, and the extension of credit, from time to time, by Landlord to Tenant, and as an inducement to Landlord to enter into said Lease, which Lease shall personally benefit the undersigned, the undersigned and each of them jointly and severally guarantee the due payment and performance by Tenant of all monies to be paid, and all things to be done, pursuant to each and every condition and covenant contained in said Lease, including attorneys’ fees due under said Lease or incurred in the enforcement of this Guaranty. The undersigned agree that their liability hereunder is direct and unconditional and may be enforced without requiring Landlord to resort to any other right, remedy or security.
Dated this day of , 2021.
| Guarantor: | |
| Maria Flores-Garcia | |
| Guarantor: | |
| Anderson Correa |
hereby amended and modified, is ratified and confirmed.
Exhibit 10.128
COMMERCIAL LEASE AGREEMENT
THIS COMMERCIAL LEASE AGREEMENT (hereinafter referred to as the “Lease”) made and entered into on December 1, 2022 by and between Horeb Legacy Investments LLC, a Florida limited liability company (hereinafter referred to as the “Landlord”), and La Rosa Realty Kissimmee, a Florida corporation (hereinafter referred to as the “Tenant”)
WITNESSETH:
In consideration of the rents, covenants and agreements herein, Landlord does hereby lease to Tenant and Tenant hereby leases from Landlord upon terms, provisions and conditions herein, the real property hereinafter described.
ARTICLE I
DESCRIPTION OF PROPERTY, TERMS, AND USE
1.1 Description of Property. Landlord leases to Tenant a 2,450.00 square foot space, hereinafter referred to as the (“Leased Premises”), as shown on the plan attached hereto as Exhibit “A” and incorporated by reference: located within the building known as as 3040 Loopdale Lane, Kissimmee, FL 34741, Parcel #05-25-29-1597-0001-0027, together with the shared improvements located thereon (hereinafter referred to as the “Common Areas”) situated in Osceola County, Florida, more particularly described as follows (hereinafter referred to as “Land”):
A portion of Lot 1 Loop Medical and Professional Park, as recorded in Plat Book 27 at Pages 96-97 of the Public Records of Osceola County, Florida, being a portion of Section 5, Township 25 South, Range 29 East, Osceola County, Florida, being more particularly described as follows:
Commencing at the most northeasterly corner of said Lot 1, said point being on the westerly right of way line of Ball Park Road, as shown on the Plat of Osceola Village, according to the plat thereof, recorded in Plat Book 21, Pages 17-18, Public Records of Osceola County, Florida; thence go S89o59’25’‘W along the north line of said Lot 1, a distance of 126.63 feet; thence departing said north line of Lot 1 go S26o25’46’‘E, a distance of 173.85 feet to the Point of Beginning; thence continue S26o25’46’‘W, a distance of 73.67 feet; thence N63o34’14’‘E, a distance of 53.00 feet to the Point of Beginning.
1.2 Condition of Leased Premises. Tenant accepts the Leased Premises in its “As Is, Where Is” condition. Tenant acknowledges that Landlord has not made any representations or warranties with respect to the condition of the Leased Premises and neither Landlord nor any assignee of Landlord shall be liable for any latent or patent defect(s) therein. Tenant has inspected the Property and is familiar and satisfied with its present condition. The taking of possession of the Property by Tenant shall be conclusive evidence that the Property was in good and satisfactory condition at the time such possession was taken.
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1.3 Term. Tenant is to have the Leased Premises herein described, subject to the terms and conditions hereof for a term of Twenty-Four (24) months (the “Term”), commencing on December 1, 2022, (the “Commencement Date”) and ending on November 30, 2024 unless earlier terminated by Landlord in accordance with the provisions hereof.
1.5. Use. The Leased Premises shall be used and occupied by Tenant for the operation of Real Estate services, and Property Managment Business (the “Business”) and no other purposes unless otherwise authorized in writing by Landlord, to the extent such operation is authorized under governmental laws, ordinances, and regulations.
1.5.1. Prohibited Use. The Tenant is only allowed to engaging in Real Estate related services, such as real estate sales, leasing or property management. No repair or servicing of any motorized vehicle, equipment or machinery shall be allowed in the Leased Premises, in any parking or loading areas, roadways or service areas within the complex. No vehicle abandoned or disabled or in a state of non-operation or disrepair shall be left upon the property of the Landlord, and Tenant shall enforce this restriction against Tenant’s employees, agents, visitors, licensees, invitees, contractors and customers. Should Landlord determine that a violation of this restriction has occurred, Landlord shall have the right to cause the offending vehicle, equipment, trailer or machinery to be removed from Landlord’s property, and all costs of such removal shall be the obligation of the Tenant responsible for such vehicle under the terms of the lease and shall be reimbursed to the Landlord by Tenant within ten (10) days of written notice to Tenant
Tenant covenants to comply with the provisions of all recorded covenants, conditions and restrictions and all building, zoning, fire and other governmental laws, ordinances and regulations, rules applicable to the Leased Premises and all requirements of the carriers of insurance covering the Leased Premises. Tenant shall not do or permit anything to be done in or about the Leased Premises or bring or keep anything on the Leased Premises that may increase any insurance premium upon the Leased Premises; that may injure the Leased Premises; that may constitute waste; or that may be a nuisance, public or private, or, without limiting the generality of the foregoing, Tenant shall not allow said Leased Premises to be used for any improper, immoral, unlawful or objectionable purpose; provided that the ordinary operation of the Business shall not, alone, constitute a violation of the foregoing. Tenant agrees that it has determined to Tenant’s satisfaction that the Leased Premises can be used for the purpose for which it is leased and waives any right to terminate this Lease in the event the Leased Premises cannot be used for such purpose.
1.6. Compliance with Condominium Association Rules. The Leased Property consists of a Condominium Unit in the Loop Medical & Professional Park (the “Condominium”). Tenant’s right to use and occupy the Leased Premises shall be subject and subordinate in all respects to the provisions of the Condominium Bylaws, the Condominium association’s Rules and Regulations, and any other document referred to those documents that affect the rights and obligations of an owner or occupant in the Condominium (collectively, the “Condominium Documents”). Failure by Tenant, or any person on the Leased Premises or Condominium as a result of Tenant’s occupancy, to comply with the provisions of the Condominium Documents shall constitute a material breach of the Lease.
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ARTICLE II
RENT AND SECURITY DEPOSIT
2.1 Rent. Tenant shall pay to Landlord as Rent during the Term of the Lease payable in advance and without notice in monthly installments of Six Thousand and 200 Dollars and 00/100 ($6,200.00) (the “Base Rent”) together with additional rent charges listed in Sections 2.2, 2.4, and 2.5, beginning on the Commencement Date until November 30, 2023. Commencing on December 1, 2023, the monthly Base Rent installments shall increase by Five Percent (5%) for each additional 12-month period thereafter without notice or demand and without any deduction, off-set or abatement to the Landlord at the address stated herein for notice or to such other persons or such other places as the Landlord may designate to Tenant in writing. All payments are to be made to Landlord via check or such other manner that Landlord may from time to time designate in writing. Tenant shall make the monthly installment payments of rent on the first day of each and every month during the term of this Lease beginning on the Commencement Date. Should the Lease commence on a day other than the first day of a month or end on a day other than the last day of a month, then the rent shall be appropriately prorated.
2.2. Late Charge. If the Tenant defaults in the payment of rent and the rent remains unpaid for five (5) calendar days after it becomes due, the Tenant shall pay to Landlord a late charge of Three Hundred and 00/100 Dollars ($300.00), in addition to the monthly rental payment, to compensate for the extra expense of handling late payments. An additional fee of $20.00 per day shall be assessed for each additional day Rent is late, until Rent is paid in full. Additionally, any Rent (including any Additional Rent) due to Landlord that is not paid when due shall bear interest, from the date due, at a rate of eighteen percent (18%) per annum. All late fees and interest shall be deemed additional rent payable by Tenant.
2.3. Security Deposit. Concurrent with Tenant’s execution of this Lease, Tenant shall deposit with Landlord a security deposit (the “Security Deposit”) in the amount of Seven Thousand and 00/100 Dollars ($7,000.00). The Security Deposit shall be held by Landlord as security for the faithful performance by Tenant of all the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the Lease Term. If Tenant defaults with respect to any provisions of this Lease, including, but not limited to, the provisions relating to the payment of Rent, Landlord may, but shall not be required to, use, apply or retain all or any part of the Security Deposit for the payment of any Rent or any other sum in default, or for the payment of any amount that Landlord may spend or become obligated to spend by reason of Tenant’s default, or to compensate Landlord for any other loss or damage that Landlord may suffer by reason of Tenant’s default. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the Security Deposit, or any balance thereof, shall be returned to Tenant, or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder, within thirty (30) days following the expiration of the Lease Term. Tenant shall not be entitled to any interest on the Security Deposit.
2.4. Additional Rent Charges. Tenant shall include to each monthly rental installment provided in Section 2.1, as additional rent:
(a) The respective applicable Florida Sales Tax due; and
(b) Tenant’s proportional share of the property taxes, association dues and routine common area maintenance and operational costs of maintaining and operating the Common Areas that serve the Condominium Association. Said payment, hereinafter referred to as “Common Area Maintenance Payment,” shall begin at the base rate of ($7.350) per square foot of Tenant’s Leased Premises per year, payable at the rate of $1000.00 per month. Landlord reserves the right to make annual adjustments as and if required to reflect actual costs. The term “Common Area Maintenance” used in this Lease Agreement includes, but is not limited to, routine cleaning and maintenance of the exterior of the Leased Premises to include periodic window cleaning; the cleaning, maintenance and sweeping of the parking lot and sidewalks; the care and maintenance of the landscaping and landscaped areas to include the retention pond areas; common area security lighting and other power charges, if any; water and sewer charges and assessments, if any; routine rubbish collection, and any other costs customarily considered as a common area maintenance expense and the property taxes for the Leased Premises. The Common Area Maintenance charges shall not include depreciation on any improvement; any capital expense or improvements; moving or relocation costs; legal or collection costs; remodeling costs; repairs or maintenance to the roof or structural components, real estate commissions and management fees; or executive salaries.
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2.5. Taxes, Insurance, and Assessments. During the Term, Tenant shall be solely responsible for the payment of: (a) all real estate property taxes and assessments which shall accrue during the Term hereof and which shall be imposed by any governmental or public authority on, or become a lien in respect to the Leased Premises or any structure thereon or appurtenant thereto; (b) prorata share of the Landlord’s fire and causality insurance premiums that become due during the Term for coverage of the Leased Premises; and (c) all Condominium assessments issued for the Leased Premises that becomes due during the Term. The charges reflected herein above are included in the Common Area Maintenance Payments outlined in section 2.4 (b) above, subject to annual adjustment. Tenant shall be solely responsible for the payment of all Tenant’s general liability insurance premiums that become due during the Term of the Lease, all personal property taxes levied on any personal property located on the Leased Premises during the Term, and for all taxes, charges, license fees, or similar fees imposed by reason of the use of the Leased Premises by Tenant. Tenant shall have the right to pay any such tax, assessment or charge under protest and contest the validity or amount of such tax, assessment, or charge with the governmental authority which imposed it; provided, however, that Tenant may not undertake any such contest if it has not paid such tax, assessment, or charge. Upon Tenant’s contest, Landlord shall have no obligation to take part therein or to contribute toward the expenses thereof. In the event of either (a) the real estate property taxes and assessments which shall accrue during the Term hereof exceed $8,000.00 per year; (b) Landlord’s insurance premiums that become due during the Term for the Leased Premises and its building exceed $2,500.00 per year; or (c) the Condominium Assessment for the Leased Premises that becomes due during the Term exceed $2.25 per square foot for the Leased Premises, then, upon Landlord’s notice, Tenant shall be responsible to reimburse Landlord the difference of the prorate share of the costs actually incurred by Landlord.
2.6. Utilities. Tenant shall make all arrangements to connect and pay for all water, gas, heat, light, power, telephone and other utility services supplied to the Leased Premises together with any taxes thereon and for all connection charges. Tenant, at its sole expense, shall be liable for and shall timely pay any and all charges for the application, connection and use of any and all utilities, water, sewer, gas, electricity, telephone service and similar charges affecting the Leased Premises and all such services and utilities shall be in the name of Tenant only. Landlord shall not be required to furnish any services or facilities to, or to make any repairs to or replacements or alterations of the Leased Premises. Tenant hereby waives any and all claims of any kind, nature or description against Landlord, arising out of the failure of the Landlord from time to time to furnish any of the services contemplated hereunder including, without limitation, air conditioning, heat, electricity, telephone and plumbing. As for water utility services, Tenant shall be directly billed by the Condominium association for the water usage on the Leased Premises. The Landlord shall invoice the water bill to the Tenant monthly. The invoice needs to be paid separately.
2.7. If Tenant shall refuse, neglect, or otherwise fail or omit to make any of the payments herein required, then the Landlord may, at its option, but without being obligated to do so, pay the same and the amount or amounts of money so paid, including reasonable attorneys’ fees and expenses which may have been incurred together with interest on all such amounts at the highest lawful rate permitted under the laws of the State of Florida, shall be considered as rent immediately due and payable. The payment of such rent may be collected or enforced by Landlord in the same manner as though it were an installment of rent specifically required by the terms of this Lease to be paid by Tenant to Landlord.
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ARTICLE III
REPAIR AND MAINTENANCE OF LEASED PREMISES
3.1 Except as otherwise set forth herein, Tenant shall at its sole cost and expense keep and maintain the interior of the Leased Premises (non-structural only) in good condition and repair, normal wear and tear excepted, including, but not by way of limitation, necessary replacements of the interior painting, mechanical equipment, fire protection devices, doors, and floors.
3.2 Landlord shall not furnish any services whatsoever to the Leased Premises for the non-structural maintenance of the interior of the Leased Premises. Tenant shall be solely responsible for all operating expenses necessary for the proper and efficient operation and non structural maintenance of the interior of the Leased Premises.
ARTICLE IV
HOLDING OVER
If Tenant should remain in possession of the Leased Premises after the termination or expiration of the Term, without the execution by Landlord and Tenant of a new lease, then Tenant shall be deemed to be occupying the Leased Premises as a tenant at sufferance, subject to all the covenants and obligations of this Lease and at a daily rental of twice the per day rent in effect immediately prior to such expiration or termination, computed on the basis of a thirty (30) day month, but such holding over shall not extend the Term set herein.
ARTICLE V
ALTERATIONS, ADDITIONS, IMPROVEMENTS
Tenant will make no alteration, change, improvements or addition to the Leased Premises without the prior written consent of Landlord. Landlord will not unreasonably withhold or delay its approval for such items after first reviewing the plans and specifications depicting the improvements. The Tenant may, without the written consent of the Landlord, but at the sole cost and expense of the Tenant and in a good and workmanlike manner, erect and alter shelves, movable partitions, and trade fixtures and equipment as the Tenant may deem advisable so long as such activity does not alter the basic character of the building or improvements, and in each case complying with all applicable governmental laws, ordinances, regulations and other applicable requirements. Tenant may remove its trade fixtures, office supplies, and moveable office furniture and equipment not attached to the Leased Premises provided such removal is made prior to the termination or expiration of the term, Tenant is not then in default in the timely performance of any obligation or covenant under this Lease, and Tenant promptly repairs all damage caused by such removal. All other property at the Leased Premises and any alteration or addition to the Leased Premises (including, but not limited to, wall-to-wall carpeting, drywall partitions, paneling or other wall covering) and any other article attached or affixed to the floor, wall or ceiling of the Leased Premises shall become the property of the Landlord and shall be surrendered with the Leased Premises as part thereof at the termination of this Lease, without payment or compensation therefore. If, however, Landlord so requests in writing, Tenant will prior to vacating the premises upon the termination or expiration of this Lease, remove any and all alterations, additions, fixtures, equipment and property placed or installed by it in the Leased Premises and will repair any damage caused by such removal.
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ARTICLE VI
ASSIGNMENT AND SUBLETTING
6.1 Tenant shall not assign this Lease nor any rights hereunder, nor let or sublet all or any part of the Leased Premises, nor suffer or permit any person or entity to use any part of the Leased Premises, without first obtaining the express written consent of Landlord, which consent shall not be unreasonably withheld. Should Landlord consent to such assignment of the Lease, or to a sublease of all or any part of the Leased Premises, Tenant does hereby guarantee payment of all rent herein reserved until the expiration of the term hereof, sublessee, or assignees shall become directly liable to Landlord for all obligations of Tenant hereunder, and no failure of Landlord to promptly collect from any assignee or sublessee, or any extension of the time for payment of such rent, shall release or relieve Tenant from its guaranty or obligation of payment of such rent. Any assignment or sublet approved by Landlord shall not relieve Tenant of its obligations hereunder. Tenant shall reimburse Landlord for all of the reasonable and necessary legal, accounting and other direct costs incurred due to Tenant’s sublet or assignment. In determining whether or not to grant consent to the Tenant’s sublet or assignment request, Landlord may consider any reasonable factor. Landlord and Tenant agree that any one of the following factors, or any other reasonable factor, will be reasonable grounds upon which Landlord may approve or deny the Tenant’s request:
(a) Financial strength of the proposed subtenant/assignee must be at least equal to that of the existing Tenant at the time of the Lease commenced;
(b) Business reputation of the proposed subtenant/assignee must be in accordance with generally acceptable commercial standards;
(c) Use of the Leased Premises by the proposed subtenant/assignee will not violate or create any potential violation of any laws, covenants, or other agreements affecting the Leased Premises.
6.2 Landlord shall have the right to transfer and assign, in whole or in part, all of its rights and obligations hereunder, and in the Leased Premises referred to herein, and upon any such transfer or assignment, no further liability or obligation shall thereafter accrue against Landlord hereunder (except to the extent of any retained Landlord’s interest by Landlord upon any partial assignment of its interest in this Lease).
6.3 Should Tenant be a corporation, any transfer of this Lease by merger, consolidation or liquidation or any change in the ownership of or power to vote a majority of its outstanding voting stock shall constitute an assignment. Such an assignment shall require Landlord’s consent if by one or more sales or transfers, by operation of law or otherwise or by creation of new stock, an aggregate of more than fifty percent (50%) of Tenant’s stock shall become vested in a party or parties who are not stockholders of Tenant as of the Commencement Date of this Lease. An assignment to a subsidiary or parent corporation of the corporate Tenant shall not require Landlord’s consent, but Tenant shall remain liable for Tenant’s obligations hereunder. Should Tenant be a partnership, trust, or other association or entity having transferable ownership interests, any transfer of more than fifty percent (50%) of such ownership interests to a party or parties who are not holders of such ownership interest at the Commencement Date shall constitute an assignment hereunder which shall require Landlord’s consent.
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ARTICLE VII
INSURANCE
7.1 At all times during the term of this Lease, Tenant shall purchase and maintain, at its sole cost and expense, the following insurance in the name of Landlord:
(a) Fire and Extended Coverage Casualty Insurance upon the Leased Premises in an amount equal to the full replacement value of the improvements on the Leased Premises. The value of the improvements will exclude the costs of foundation, underground piping and/or wiring, outside paving and landscaping. Such insurance shall include the “Inflation Guard Endorsement” or shall be adjusted annually to reflect the then current construction costs.
(b) Rent loss insurance on an “All Risk” basis in an amount equal to the annual rent plus the sum of the annual taxes on the rent and premiums on insurance required to be carried under this Section 7.1.
(c) Comprehensive General Liability Insurance covering both bodily injury liability and property damage liability with a combined single limit of $1,000,000.00 for each occurrence.
(d) Other insurance. Tenant shall provide and keep in force other insurance in amounts that may from time to time be reasonably required by Landlord against other insurable hazards as are commonly insured against for the type of business activity that Tenant will conduct.
7.2 The insurance to be maintained under this Article VII also will be subject to the requirements of any mortgagee, including, but not limited to, federal Flood Insurance. This insurance will be maintained with insurance companies licensed and qualified to do business in the State of Florida and having a general policy holders’ rating of A or A+ and a financial rating of Class X as established by A.M. Best Company of Oldwick, New Jersey or an equivalent rating assigned by a similar rating agency acceptable to Landlord, or otherwise acceptable to Landlord.
7.3 To the extent that a loss is covered by insurance in force and recovery is made for such loss, Landlord and Tenant hereby mutually release each other from liability and waive all right of recovery against each other for any loss from perils insured against under their respective policies. Landlord and Tenant also agree to obtain a waiver of subrogation from their insurance carriers permitting this waiver.
7.4 The original of each such policy of insurance or certified duplicate thereof issued by the insurance or insuring organization shall be delivered by Tenant to Landlord prior to commencement of the Lease term and ten (10) days prior to the expiration or termination of any existing policy. Any mortgagee of Landlord shall be named as an additional insured under such insurance and such insurance shall be primary and noncontributing with any insurance carried by Landlord. The insurance policies shall contain endorsements requiring thirty (30) days written notice to Landlord prior to any cancellation or any reduction in amount of coverage. Tenant shall deliver to Landlord as a condition precedent to its maintaining occupancy of the Leased Premises (but not to its obligation to pay rent) a certificate evidencing each renewal of such insurance and shall maintain such insurance in effect throughout the term of this Lease. Tenant shall promptly notify Landlord of any accident or injury occurring on the Leased Premises.
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ARTICLE VIII
HOLD HARMLESS
Except for loss, damage or claims arising from the Landlord’s negligent acts, omissions or breaches of this Lease, Landlord shall not be liable to Tenant for any injury or damage to any person or property in or about the Leased Premises from any cause whatsoever. Tenant shall indemnify and hold harmless the Landlord, its partners, shareholders, members, employees, officers, directors, agents, and their respective successors and assigns from and against any and all liability, claims, demands, damages, expenses, fees, fines, penalties, suits, proceedings, actions and costs of actions of any kind and nature, including attorneys’ fees, for injury or death to persons or damage to property or property rights (a) occurring in, on or about the Leased Premises or any part thereof, or (b) occurring in, on or about the Leased Premises or any part thereof, when any such injury or damage shall be caused or result in whole or in part by any act, negligence, or fault or omission of any duty by the Tenant, its agents, servants, employees, licensees or invitees, or by any person under the control or direction of Tenant, except to the extent arising or growing out of or connected with Landlord’s negligent acts, omissions or breaches of this Lease. Tenant will further indemnify and save harmless the Landlord for all liability, claims and other items above mentioned, arising or growing out of or connected with any breach, violation, non-performance or failure to abide by any covenant, condition, agreement or provisions contained in this Lease or in the Condominium Documents on the part of the Tenant to be kept, performed, complied with or abided by as an occupant of the Leased Premises, except to the extent arising or growing out of or connected with Landlord’s negligent acts, omissions or breaches of this Lease. If it becomes necessary for the Landlord to defend any action seeking to impose any such liability, the Tenant will pay the Landlord all costs of court and reasonable attorneys’ fees incurred by Landlord in such defense, in addition to any other sums which said Landlord may be called upon to pay by reason of the entry of a judgment or decree against the Landlord in the litigation in which such claim is asserted.
ARTICLE IX
DESTRUCTION OR DAMAGE BY FIRE OR OTHER CASUALTY
In the event of a fire or other casualty on the Leased Premises, Tenant shall promptly give notice thereof to Landlord. Within thirty (30) days from Tenant’s notice herein, Landlord shall notify Tenant whether the damage or destruction is such that in the reasonable opinion of Landlord it cannot be repaired with reasonable diligence within one hundred eighty (180) days from the date of such casualty. Within ten (10) days of Tenant’s receipt of Landlord’s opinion, either Landlord or Tenant may terminate this Lease by giving to the other written notice of such termination. Should this Lease be so terminated, then all rent owed up to the date of such casualty shall be paid by Tenant to Landlord and this Lease shall then terminate. In the event that neither Landlord nor Tenant so terminates this Lease, then Landlord shall repair said improvements with all reasonable speed and rent shall be proportionately abated with respect to any portion of the Leased Premises rendered unusable until such time as the Leased Premises is repaired.
If the damage or destruction is such that in the reasonable opinion of Landlord it can be repaired with reasonable diligence within thirty (30) days from the date of such casualty, then the rent hereby reserved shall abate from the date of such casualty until the damage has been repaired and Landlord shall repair the damage with all reasonable speed. Landlord shall provide his opinion in writing and to Tenant within thirty (30) days after said casualty. Notwithstanding the giving of such opinion by Landlord, Landlord shall not be liable to Tenant if Landlord shall not actually repair such damage within said thirty (30) day period if Landlord shall proceed diligently with such repair work.
If in the reasonable opinion of Landlord the damage can be repaired within one hundred eighty (180) days of the date of casualty and the damage is such that the Leased Premises is capable of being partially used by Tenant, then until such damage has been repaired the rent shall proportionately abate as to the portion of the Leased Premises rendered untenantable until such time as the Leased Premises is repaired. Landlord shall provide his opinion in writing and to Tenant within thirty (30) days after said casualty.
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ARTICLE X
CONDEMNATION
If the Leased Premises or any part thereof shall be taken or condemned for any public purpose (or conveyed in lieu or in settlement thereof) to such an extent as to render the remainder of the Leased Premises, in the reasonable opinion of Landlord, not reasonably suitable for occupancy, this Lease shall, at the option of either party, forthwith cease and terminate, and all proceeds from any taking or condemnation of the Leased Premises shall belong to and be paid to Landlord. Tenant shall be entitled to maintain an independent claim against any condemning authority for damages suffered by Tenant. If this Lease is not so terminated, Landlord shall repair any damage resulting from such taking, to the extent and in the manner provided in Article IX and rental hereunder shall be abated proportionately to the extent the Leased Premises is rendered untenantable during the period of repair, and thereafter be adjusted on an equitable basis considering the areas of the Leased Premises taken and remaining.
ARTICLE XI
SIGNS
Tenant may erect signs on the Leased Premises with respect to the Tenant’s business. During the term of this Lease, Tenant shall have the right to maintain those signs or signs of equivalent size and quality in such locations as may be in compliance with local laws, ordinances, regulations, and Condominium Documents. Any additional signs or changes to existing signs shall require the written consent of Landlord.
ARTICLE XII
DEFAULT
12.1 Each of the following shall be an “Event of Default”:
(a) Tenant shall fail to pay within ten (10) days after the date such payment is due any monthly installment of rent or any other charge or payment required of Tenant hereunder.
(b) Tenant shall violate or fail to perform any of the other conditions, covenants or agreements herein made by Tenant and such violation or failure shall continue for a period of fifteen (15) days after written notice thereof to Tenant from Landlord.
(c) Tenant shall make a general assignment for the benefit of its creditors or shall file a petition for bankruptcy or other reorganization, liquidation, dissolution or similar relief.
(d) A proceeding is filed against Tenant seeking any relief mentioned in (c) above.
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(e) A trustee, receiver, or liquidator shall be appointed for Tenant or a substantial part of its property.
(f) Tenant shall vacate or abandon the Leased Premises (an absence of substantial activity by Tenant in the Leased Premises for more than thirty (30) consecutive days shall constitute such abandonment).
(g) Tenant shall mortgage, assign, or otherwise encumber its leasehold interest except as otherwise permitted hereunder.
12.2 If any such Event of Default occurs, Landlord may, without further notice, immediately or at any time thereafter do one or more of the following:
(a) Re-enter and repossess the Leased Premises and remove any property therein and store the same elsewhere at Tenant’s expense without relieving Tenant from any liability or obligation hereunder.
(b) Relet the Leased Premises or any part thereof for Tenant’s account, but without obligation to do so and without relieving Tenant from any liability or obligation hereunder. Any amount received by Landlord from reletting will apply first to all reasonable costs and expenses incurred by Landlord in reletting (including, without limitation, broker’s commissions, advertising expenses, cleaning and remodeling expenses).
(c) Bring an action then or thereafter against Tenant to recover the amount of any payment owing by Tenant to Landlord as the same is due, becomes due or accumulates.
(d) Terminate this Lease by giving Tenant written notice thereof, without relieving Tenant from any liability or obligation for payments theretofore becoming due or for present and prospective damages resulting from tenant’s default.
(e) Accelerate the entire amount of rent due under this Lease for the entire term of this Lease, which amount shall be immediately due and payable.
(f) Pursue any other remedy provided by law.
12.3 If Tenant fails to pay Landlord any amount that Tenant is obligated to pay, Tenant shall pay Landlord interest thereon at the rate of eighteen percent (18%) per annum on the amount of the delinquency or deficiency from the date due until the date paid. Landlord’s remedies set forth in this Lease are cumulative and not in limitation to any remedies given by law.
12.4 If, upon default by Tenant or termination of this Lease, Landlord shall enter or take possession of the Leased Premises, Landlord shall have the right but not the obligation to remove from the Leased Premises all personal property, fixtures, furnishings and other property located therein, and to store such property in any place selected by Landlord, including, but not limited to, a public warehouse, at the expense and risk of the owners thereof, with the right to sell such stored property, without notice to Tenant, after it has been stored for a period of thirty (30) days or more, or as otherwise provided by law. The proceeds of such sale shall be applied first to the cost of such sale, second to the payment of the charges for storage, if any, and third to the payment of any other sums of money which may then be due from Tenant to Landlord under any of the terms hereof, the balance, if any, to be paid to Tenant.
12.5 If Tenant asserts that Landlord has failed to meet its obligations under this Lease, Tenant shall give written notice to Landlord specifying the alleged failure to perform. If Landlord has not begun and pursued with reasonable diligence the cure of any failure of the Landlord to meet its obligations under this Lease within thirty (30) days of receipt of the notice, then Landlord shall be in default. In no event shall Tenant have the right to terminate or rescind this Lease as a result of Landlord’s default as to any covenant or agreement contained herein. Tenant hereby waives such remedy of termination and rescission and hereby agrees that Tenant’s remedy for default hereunder by Landlord shall be limited to a suit for damages or for an injunction or both. Landlord’s liability for a default by Landlord under this Lease shall, in all events, be limited to its interest in the Leased Premises.
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ARTICLE XIII
SUBORDINATION, ATTORNMENT, AND NON-DISTURBANCE
This Lease and all rights of the Tenant hereunder are subject and subordinate to any mortgage or other security instrument which does now or hereafter encumber the Leased Premises or any interest of Landlord therein and to any and all advances made on the security thereof, and to any and all increased, renewals, modifications, consolidations, and extension of any such mortgage or security instrument. No further writing from Tenant shall be necessary to evidence such subordination, however, within fifteen (15) days after written request from Landlord, Tenant agrees to execute any instrument which may be deemed necessary or desirable by Landlord to further effect the subordination of this Lease to any mortgage. Should Tenant fail to respond to such request, Tenant hereby irrevocably appoints Landlord as attorney-in-fact of Tenant at any time for Tenant, and in Tenant’s name, to execute proper subordination agreements to this effect. If the interest of Landlord in the Leased Premises is transferred to any person or entity by reason of foreclosure or other proceedings for enforcement of any mortgage or security interest or by delivery of a deed in lieu of foreclosure or other proceedings, Tenant shall immediately and automatically attorn to such person or entity. In the event of such transfer, this Lease and Tenant’s rights hereunder shall continue undisturbed so long as Tenant is not in default.
ARTICLE XIV
ACCESS BY LANDLORD
Tenant shall permit Landlord or its agents or representatives to enter into and upon any part of the Leased Premises at all reasonable hours to inspect same; to clean; to make repairs, alterations or additions thereto, as Landlord may deem necessary or desirable, or for any other purpose deemed reasonable by Landlord. Landlord shall use reasonable efforts to minimize any interference with Tenant’s normal business operations.
ARTICLE XV
ESTOPPEL
Within three (3) days after request therefore by Landlord, its agents, successors or assigns, Tenant shall deliver, in recordable form, a certificate to any proposed mortgagee or purchaser or to Landlord, together with a true and correct copy of this Lease, certifying (if such be the case) the following:
(a) That this Lease is in full force and effect without modification or, if modified, confirming the terms of such modification.
(b) The amount of rent currently being paid and the amount, if any, of prepaid rent and security deposit paid by Tenant to Landlord.
(c) That Landlord has performed all of its obligations due to be performed under this Lease and that there are no defenses, counterclaims, deductions, offsets outstanding or other excuses for Tenant’s performance under this Lease.
(d) That Tenant is occupying the Leased Premises and has accepted same.
(e) Any other fact reasonably requested by Landlord or such proposed mortgagee or purchaser.
Tenant’s failure to timely deliver the above-described certificate shall be conclusive upon Tenant that the above statements are true, that no more than one month’s rent has been paid in advance and that the amount of the security deposit held by Landlord is as represented by Landlord.
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ARTICLE XVI
QUIET ENJOYMENT
Landlord covenants that so long as Tenant pays the rent reserved in this Lease and performs its agreements hereunder, Tenant shall have the right to quietly enjoy and use the Leased Premises for the term hereof, subject only to the provisions of this Lease.
ARTICLE XVII
TENANT FORBIDDEN TO ENCUMBER LANDLORD’S INTEREST
It is expressly agreed and understood between the parties hereto that nothing in this Lease shall ever be construed as empowering the Tenant to encumber or cause to be encumbered the title or interest of Landlord in the Leased Premises in any manner whatsoever. In the event that regardless of this prohibition any person, furnishing or claiming to have furnished labor or materials at the request of the Tenant or of any person claiming by, through or under the Tenant shall file a lien against Landlord’s interest therein, Tenant, within thirty (30) days after being notified thereof, shall cause said lien to be satisfied of record or the Leased Premises released therefrom by the posting of a bond or other security as prescribed by law, or shall cause same to be discharged as a lien against Landlord’s interest in the Leased Premises by an order of a court having jurisdiction to discharge such lien. Accordingly, the parties shall execute a memorandum of lease of even date herewith to be recorded in the public record in the county where the Leased Premises is located.
ARTICLE XVIII
APPLICABLE LAW, VENUE, AND WAIVER OF JURY TRIAL
This Lease is entered into in the State of Florida and shall be governed by the applicable law of said state. Venue for any and all actions or proceedings which arise from this Lease shall be Osceola County, Florida. The parties hereto hereby waive trial by jury with respect to any and all proceedings maintained regarding this Lease.
ARTICLE XIX
RECOVERY OF LITIGATION EXPENSE
In the event either party requires the services of an attorney in connection with enforcing the terms of this Lease or in the event suit is brought for the recovery of any rents due under this Lease or for the breach of any covenant or condition of this Lease or for the restitution of the Leased Premises to Landlord and/or eviction of Tenant, the party prevailing in such legal action shall be entitled to an award of all legal costs and expenses, including a reasonable sum for attorneys’ fees and costs incurred by Landlord (including appellate and bankruptcy proceedings) enforcing the terms of this Lease when such enforcement is settled by the parties without entry of a final judgment.
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ARTICLE XX
NOTICES
All notices required by the law and this Lease to be given by one party to the other shall be in writing, and the same shall be served by Certified Mail, Return Receipt Requested, in postage prepaid envelopes addressed to the following addresses or such other addresses as may be by one party to the other designated in writing:
| As to Landlord: | Horeb Legacy Investments LLC |
| 2500 Oak Hammock Preserve Blvd. | |
| Kissimmee, FL 34746 | |
| Attn.: Anderson Correa |
| As to Tenant: | La Rosa Realty Kissimmee |
| 2801 Carte Grover Lane | |
| Kissimmee, FL 34741 | |
| Attn.: Maria L. Correa |
Such notice shall be deemed to be received within forty-eight (48) hours from the time of mailing, if mailed as provided for in this paragraph.
ARTICLE XXI
WAIVER
No assent or consent to changes in or waiver of any part of this Lease shall be deemed or taken as made, unless the same be done in writing and attached hereto and endorsed by Landlord. No covenant or term of this Lease stipulated in favor of Landlord shall be waived except by express written consent of Landlord, whose forbearance or indulgence in any regard whatsoever shall not constitute a waiver of the covenant, term or condition to be performed by Tenant. Until complete performance by the Tenant of said covenant, term or condition, the Landlord shall be entitled to invoke any remedy available under this Lease or by law despite such forbearance or indulgence.
ARTICLE XXII
RADON GAS
Radon is a naturally occurring radioactive gas which, when accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.
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ARTICLE XXIII
HAZARDOUS WASTE
23.1 Hazardous Substances. The term “Hazardous Substances,” as used in this lease, shall include without limitation, flammables, explosives, radioactive materials, asbestos, polychlorinated biphenyls (PCBs), chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances or related materials, petroleum and petroleum products, to the extent such substances are declared to be hazardous or toxic under any law or regulation now or hereafter enacted or promulgated by any governmental authority.
23.2 Tenant’s Restrictions. Tenant shall not cause or permit to occur:
(a) Any violation of any federal, state or local law, ordinance, or regulation now or hereafter enacted, related to environmental conditions on, under or about the Leased Premises, arising from Tenant’s use or occupancy of the Leased Premises, including but not limited to, soil and ground water conditions; or
(b) The use, generation, release, manufacture, refining, production, processing, storage, or disposal of any Hazardous Substances on, under, or about the Leased Premises or the transportation to or from the Leased Premises of any Hazardous Substances, except as may be permitted by applicable law and regulation.
23.3 Environmental Clean-Up.
(a) Tenant shall, at Tenant’s own expense, comply with all law regulating the use, generation, storage, transportation, or disposal of Hazardous Substances (“Laws”) arising as a result of Tenant’s use of the Leased Premises.
(b) During Tenant’s occupancy, Tenant shall, at Tenant’s own expense, make all submissions to provide all information required by, and comply with all requirements of all governmental authorities (the “Authorities”) under the Laws.
(c) Should any Authority demand that a clean-up plan be prepared and that a clean-up be undertaken because of any deposit, spill, discharge, or other release of Hazardous Substances that occurs during the term of this Lease, at or from the Leased Premises which arises at any time from Tenant’s use or occupancy of the Leased Premises, then Tenant shall, at Tenant’s own expense, prepare and submit the required plans and all related bonds and other financial assurances; and Tenant shall carry out all such clean-up plans.
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(d) Tenant shall promptly provide all information regarding the use, generation, storage, transportation, or disposal of Hazardous Substances that is reasonably requested by Landlord. If Tenant fails to fulfill any duty imposed under this Section within a reasonable time after notice, Landlord may do so; and in such case, Tenant shall cooperate with Landlord in order to prepare all documents Landlord deems necessary or appropriate to determine the applicability of the Laws to the Leased Premises and Tenant’s use thereof, and for compliance therewith, and Tenant shall execute all documents promptly upon Landlord’s request. No such action by Landlord and no attempt made by Landlord to mitigate damages under any Law shall constitute a waiver of any of Tenant’s obligations under this Section.
(e) Tenant’s obligations and liabilities under this Section shall survive the expiration of this Lease.
(f) As of the date of this Lease, Landlord has not received written notice from any Authorities and does not otherwise have knowledge that the Leased Premises contains Hazardous Substances or of any other violation of Laws with respect to the Leased Premises.
23.4 Tenant’s Indemnity.
(a) Tenant shall indemnify, defend, and hold harmless Landlord from all fines, suits, procedures, claims, and actions of every kind, and all costs associated therewith (including attorneys’ fees) arising out of or in any way connected with any deposit, spill, discharge, or other release of Hazardous Substances that occurs during the term of this Lease at or from the Leased Premises that are caused by the Tenant’s use of the Leased Premises and did not exist as of the date of this Lease, or which arises at any time during the term of this Lease as a result of Tenant’s use or occupancy of the Leased Premises, or from Tenant’s failure to provide all information, make all submissions, and take all steps required by the Authorities under the Laws and all other environmental laws with respect to same.
(b) Tenant’s obligations and liabilities under this Section shall survive the expiration of this Lease.
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ARTICLE XXIV
MISCELLANEOUS
24.1 No Smoking. Tenant acknowledges that smoking is NOT permitted on the Leased Premises. Tenant agrees that smoke related damages should in no way be considered ordinary wear and tear. Smoking is only permitted outside the Leased Premises. If the Leased Premises is damaged in any way due to smoke, Tenant agrees that it shall be fully responsible for eradication of smoke-related odors and/or repair of damage due to smoke.
24.2. No pets. Tenant shall not keep any animal or pet in or around the Leased Premises or allow any pet to enter the Leased Premises without Landlord’s prior written approval. If a pet of any kind is found in the Leased Premises without written permission, either temporarily or permanently, Tenant will be in breach of this agreement and security deposit will be forfeiture.
24.3. Time. Time is of the essence of this Lease and of each and every provision hereof.
24.4. Captions; Construction; Gender. The captions, headings and titles in this Lease are solely for convenience of reference and shall not affect any interpretation hereof. This Lease shall be construed without regard to any presumption or other rule requiring construction against the party causing this Lease to be drafted. Each covenant, agreement, obligation, or other provision of this Lease on Tenant’s part to be performed, shall be deemed and construed as a separate and independent covenant of Tenant, not dependent on any other provision of this Lease, and time shall be of the essence with respect thereto. All terms and words used in this Lease, regardless of the number or gender in which they are used, shall be deemed to include any other number and any other gender as the context may require.
24.5. Brokers. Landlord and Tenant each represent to one another that each has had no dealings with any brokers or finders in connection with this Lease and each party hereby indemnifies and holds the other harmless from any and all liabilities, costs, damages, claims and/or expenses (including, without limitation, reasonable attorney’s fees and costs through all levels) arising from its breach of the representation made pursuant to this Section.
24.6. No Recordation. Neither this Lease, nor any memorandum hereof, shall be recorded by Tenant in the Public Records of Osceola County, Florida or in any other place. Any attempted recordation by Tenant shall render this Lease null and void and entitle Landlord to the remedies provided for by Tenant’s default.
24.7 Counterparts; Facsimile Signature. This Lease may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. A facsimile of a signature to this Lease shall be deemed an original signature.
ARTICLE XXIV
ENTIRE AGREEMENT, BINDING EFFECT, AND SEVERABILITY
This Lease and any written addenda and all exhibits hereto (which are expressly incorporated herein by this reference) shall constitute the entire agreement between Landlord and Tenant; no prior written or prior or contemporaneous oral promises or representations shall be binding. This Lease shall not be amended, changed or extended except by written instrument signed by both parties hereto. Except for the amount and terms of payment of rent due hereunder, Tenant agrees to approve and accept reasonable revisions to the terms and conditions of this Lease required by any lender providing financing for the development of the Leased Premises or other property of Landlord adjacent thereto, provided that no changes will be made which materially diminish Tenant’s rights or increase Tenant’s obligations hereunder. The provisions of this Lease shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the parties, but this provision shall in no way alter the restrictions on assignment and subletting applicable to Tenant hereunder. Time is of the essence in the performance of the obligations of the parties hereto. If any provision of this Lease or the application thereof to any person or circumstance shall at any time or to any extent be held invalid or unenforceable, and the basis of the bargain between the parties hereto is not destroyed or rendered ineffective thereby, the remainder of this Lease or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affect thereby.
(SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have executed this Lease the day and year first above written.
| LANDLORD: Horeb Legacy Investments LLC | ||||||
| Print: | By: | Anderson Correa | Its: | |||
| Print: | Anderson Correa | |||||
| TENANT: La Rosa Realty Kissimmee | ||||||
| Print: | By: | Maria L. Correa | Its: | Broker | ||
| Print: | Maria L Correa | |||||
Page 17 of 17
Exhibit 10.129
LEASE AGREEMENT
THIS LEASE AGREEMENT (“Lease”), made as of the _1st_ day of __October_2020__, by and between Baymeadows Properties LLC (“Lessor”), whose address is 9250 Baymeadows Road, Suite 400, Jacksonville, FL 32256, and _La Rosa Realty North Florida_LLC__________(“Lessee”), whose address is 9250 Baymeadows Rd, Jacksonville FL 32256
W I T N E S S E T H:
The Lessor hereby leases and rents unto the Lessee and the Lessee hereby hires and takes from the Lessor the following described property (“Leased Premises”), to wit:
Space designated as Suite 230_, deemed to be 1,005__ rentable square feet, as shown on Exhibit A (floor plan) attached hereto, located in that certain building situate at 9250 Baymeadows Road, Jacksonville, Florida 32256, such building and any other buildings and/or improvements forming a part of the office complex and related facilities owned by the Lessor being herein referred to as the “Project”.
1. TERM:
Lessee to have and to hold the Leased Premises for a term of _61__ months commencing on the _1st_ day of _October, 2020____, (the “Commencement Date”), and ending on the 31st day of _2025___, on the terms and conditions as set forth herein.
2. RENT:
(a) Base Rent. Lessee hereby covenants and agrees to pay as monthly base rent (“Base Rent”) the following amounts:
| Rental Period | Monthly | Taxes 6.5% | Total | |||||||||
| 10/1/2020-10/30/20 | 0 | 0 | 0 | |||||||||
| 11/1/2020-10/30/21 | $ | 1,423.75 | $ | 92.54 | $ | 1,516.29 | ||||||
| 11/1/2021-10/30/22 | $ | 1,466.46 | $ | 95.31 | $ | 1,561.77 | ||||||
| 11/1/2022-10/30/23 | $ | 1,510.85 | $ | 98.20 | $ | 1,609.05 | ||||||
| 11/1/2023-10/30/24 | $ | 1,556.08 | $ | 101.14 | $ | 1,657.22 | ||||||
| 11/1/2024-10/30/25 | $ | 1602.98 | $ | 104.19 | $ | 1,707.17 | ||||||
Such amounts shall be payable in lawful United States currency, together with any and all sales and/or use taxes levied upon the use and/or occupancy of the Leased Premises, in advance without set off or deduction, beginning on the Commencement Date of this Lease and on the first day of each and every month thereafter throughout the term of this Lease. Rent shall be paid to Lessor at 9250 Baymeadows Road, Suite 400, Jacksonville, FL 32256 or at such other address as Lessor may from time to time designate by written notice to Lessee.
(b) Additional Rent. In addition to the Base Rent as described in Section 2(a) above, Lessee shall pay to Lessor as “Additional Rent” the “Lessee’s proportionate share” of any increases in “Operating Expenses” and “Taxes”, as hereinafter defined, above the “Base Year Operating Expenses and Taxes”. As used herein, the following terms shall have the following meanings:
(i) “Lessee’s proportionate share” shall mean the percentage which the rentable square feet in the Leased Premises then leased by the Lessee in the Project bears to the total rentable square feet contained in the Project. For purposes of this Lease, Lessee’s proportionate share shall be deemed to be 0.02%.
(ii) Notwithstanding anything to the contrary contained herein this Section 2(b), in the event (A) the Lessee expands the Leased Premises within the Project at any time during the term or of this Lease, or (B) the rentable area of the Leased Premises or Project changes for any other reason, then in such event, the Lessee’s proportionate share shall be adjusted and the Lease amended to reflect the new Lessee’s proportionate share, it being intended that the Lessee’s proportionate share always reflects the relationship of the Leased Premises to the total rentable square feet contained in the Project.
(iii) “Operating Expenses” shall mean all expenses, costs and disbursements, of every kind and nature, which Lessor shall pay or become obligated to pay because of or in connection with the management, maintenance, repair, refurbishing, redecorating or operation of the Project (including any future improvements constructed on the site of the Project) and Common Areas (as defined below), computed on an accrual basis. Notwithstanding the foregoing, Operating Expenses shall not include the cost of individual lessee improvements, leasing commissions or legal fees associated with leasing specific space within the Project, or disputes with tenants of the Project. By way of explanation and clarification, but not by way of limitation, Operating Expenses include the following:
(A) Wages and salaries of all employees to the extent they are engaged in the operation and maintenance of the Project, employer’s social security taxes, unemployment taxes or insurance, and any other taxes which may be levied on such wages and salaries, the cost of disability and hospitalization insurance, pension or retirement benefits, and any other fringe benefits for such employees.
(B) All tools, supplies, materials, equipment and vehicles used in the operation and/or maintenance of the Project.
(C) Cost of all utilities, including water, sewer, electricity, gas and fuel oil used in the Project and not charged directly to another tenant.
(D) Cost of management, rent for space used for the management office cost of ground leases, association fees, janitorial services, accounting and legal services (but not in connection with tenant disputes), trash and garbage removal, pest control, servicing, maintenance, repair and replacement of all systems and equipment including, but not limited to, elevators, plumbing, heating, air conditioning, ventilating, lighting, electrical, security and fire alarms, fire pumps fire extinguishers and hose cabinets, mail chutes, rent for space used as a mail room, guard service, painting, window cleaning, parking lot maintenance, resurfacing and striping, landscaping and gardening.
(E) Amortization (including reasonable finance charges) of the cost of capital improvements or investment items which are for the sole purpose of (i) reducing (or minimizing increases of) Operating Expenses or, (ii) improving the security of the Project or, (iii) complying with requirements of governmental agencies, including but not limited to, replacement of air conditioning equipment due to freons and chlorofluoracarbons, fire protection systems, improvements required by the Americans with Disabilities Act of 1990 ("ADA") and other such mandated programs which may occur from time to time. All such costs shall be amortized on a straight-line basis over the reasonable life of the capital investment item(s), determined in accordance with generally accepted accounting principles, and in no event to extend beyond the reasonable life of the Project.
(F) Premiums for casualty, fire and extended coverage with vandalism and malicious mischief endorsements and sprinkler leakage endorsements, public liability insurance with respect to damage to personal property and/or injury and/or death to individuals, flood insurance and any other type of insurance that Lessor shall deem appropriate in connection with the Project as Lessor shall deem appropriate in its sole and absolute discretion, individuals, flood insurance and any other type of insurance that Lessor shall deem appropriate in connection with the Project as Lessor shall deem appropriate in its sole and absolute discretion.
(iv) “Taxes” shall mean all real estate taxes, assessments (whether they be general or special), sewer rents, rates and charges, transit taxes, taxes based upon the receipt of rent and any other federal, state or local government charges, general, special, ordinary or extraordinary, which may now or hereafter be levied or assessed against the Project and the land upon which the same is situate, hereinafter collectively referred to as “Real Property”. If at any time during the term of this Lease the method of taxation then prevailing shall be altered so that any new tax, assessment, levy, imposition or charge or any part thereof shall be imposed upon Lessor in place, or partly in place, of any such taxes, or contemplated increase therein, and shall be measured by or be based in whole or in part upon the Project (including the Real Property) or the rents or other income therefrom, then all such new taxes, assessments, levies, impositions or charges or part thereof, to the extent that they are measured or based, shall be included in taxes levied or assessed against Real Property within the meaning of this Section 2 to the extent that such items would be payable if the Real Property were the only property of Lessor subject thereto and the income received by Lessor from the Real Property were the only income of Lessor. Taxes shall also include any personal property taxes imposed upon the furniture, fixtures, machinery, equipment, apparatus, systems and appurtenances used in connection with the Real Property by Lessor for the operation thereof. Notwithstanding the foregoing, Taxes shall not include federal and state taxes on income, death taxes, excess profit taxes, county and city taxes on income and profits, capital levy, succession, inheritance or any other taxes imposed upon or measured by Lessor’s net income or profits, unless the same be imposed in lieu of real estate taxes.
(v) “Base Year Operating Expenses and Taxes” shall mean the amount of actual Operating Expenses and Taxes incurred by the Lessor for the operation, maintenance and service of the Project during calendar year ____. The Base Year Operating Expenses and Taxes are stated as an annual amount per rentable square foot and determined by dividing the total amount of Operating Expenses and Taxes of the Project for calendar year 2020 by the total rentable square feet of the Project. For purposes of this Lease the Base Year Operating Expenses and Taxes are estimated to be $9.05 per rentable square foot.
(c) Statements of Amounts Due and Payment of Additional Rent. Lessor shall maintain accounting books and records reflecting Operating Expenses of the Project in accordance with generally accepted accounting principles. Within ninety (90) days of this Lease. Additionally, Lessor shall notify Lessee within thirty (30) days prior to the end of the first calendar year of the term (or as soon as reasonably possible thereafter), and each calendar year thereafter during the term, of the amount which Lessor estimates (as evidenced by budgets prepared by or on behalf of Lessor) will be the amount of Lessee’s proportionate share of any increase in Operating Expenses and Taxes over the Base Year Operating Expenses and Taxes for the next calendar year of the term. Beginning on the 1st day of January of each year thereafter, Lessee shall pay such sum as Additional Rent in advance to Lessor in equal monthly installments, during the balance of said calendar year, on the first day of each remaining month in said calendar year. Within ninety (90) days following the end of each calendar year thereafter during the term, Lessor shall submit to Lessee a statement showing the actual amount of Operating Expenses and Taxes for the past calendar year compared to the Base Year Operating Expenses and Taxes, the additional amount thereof actually paid during that year by Lessee and the amount of the resulting balance due, or overpayment thereof, as the case may be, provided however, in no case shall the Lessee ever be entitled to any refund of Operating Expenses and Taxes below the Base Year Operating Expense and Taxes. Additionally within thirty (30) days after receipt by Lessee of such statement, Lessee shall have the right to inspect Lessor’s books and records, at Lessor’s office, during normal business hours, after five (5) business days prior written notice, showing the Operating Expenses and Taxes for the Project for the calendar year covered by said statement. Said statement shall become final and conclusive unless Lessor receives written objections with respect thereto within said thirty (30) day period. Any balance shown to be due pursuant to said statement shall be paid by Lessee to Lessor within thirty (30) days following Lessee’s receipt thereof. Any overpayment shall be immediately credited against Lessee’s obligation to pay expected Additional Rent in connection with anticipated increases in Operating Expenses and Taxes, or if by reason of any termination of the Lease no such future obligation exists, refunded to Lessee. Anything herein to the contrary notwithstanding, Lessee shall not delay or withhold payment of any balance shown to be due pursuant to the statement rendered by Lessor to Lessee, pursuant to the terms hereof, because of any objection that Lessee may raise with respect thereto and Lessor shall immediately credit any overpayment found to be owing to Lessee against Lessee’s proportionate share of increases in Operating Expenses and Taxes for the then current calendar year (and future calendar years, if necessary) upon the resolution of said objection or, if at the time of the resolution of said objection the Lease term has expired, immediately refund to Lessee any overpayment found to be owing to Lessee. The provisions of this Section 2(c) shall survive the expiration or termination of this Lease.
(d) Operating Expense Adjustment. In determining the Lessee’s proportionate share of increases in Operating Expenses and Taxes for the purpose of this Section 2, if less than 95% of the Project shall have been occupied by tenants and fully used by them, at any time during the year, Operating Expenses and Taxes shall be adjusted to an amount equal to the Operating Expense and Taxes that would normally be expected to be incurred, had such occupancy been 95% and had full utilization been made during the entire period.
(e) In order to defray the additional expenses involved in collecting and handling delinquent payments, Lessee shall pay on demand in addition to any Base Rent or Additional Rent due hereunder a late charge equal to the greater of 10% of the amount due or One Hundred and Fifty Dollars and No/100 ($150.00) for each installment of Base Rent and/or Additional Rent that is not paid within ten (10) days of the date when due. Lessee acknowledges that this charge is made to compensate Lessor for additional costs incurred by Lessor as a result of Lessee’s failure to pay when due, and is not a payment for the extension of the rent due date. Failure of Lessor to insist upon the payment of the late charge, isolated or repeated, shall not be deemed a waiver of Lessor’s right to collect such charge for any future delinquencies.
3. COMMON AREAS
(a) Common Areas and Facilities. Lessor, at Lessor’s option, may make available from time to time such areas and facilities of common benefit to the tenants and occupants of the Project as Lessor shall deem appropriate and shall at all times be subject to the exclusive control and management of Lessor (the “Common Areas”). Lessor shall operate, manage, equip, heat, ventilate, cool, light, insure, repair and maintain the Common Areas and facilities. Lessor may from time to time change the size, location and nature of any Common Areas and facilities, may make installations therein and move and remove such installations.
(b) Use of Common Areas. Lessee and its permitted concessionaires, licensees, officers, employees, agents, customers and invitees (the “Lessee Parties”) shall have the nonexclusive right, in common with Lessor and all others to whom Lessor has or may hereafter grant rights, to use the Common Areas. In addition to its other rights hereunder, Lessor may at any time temporarily close any part of the Common Areas to make repairs or changes, to prevent the acquisition of public rights in such areas, and may do such other acts in and to the Common Areas as in its sole discretion Lessor may deem desirable; provided, however, Lessor shall use its commercially reasonable efforts not to unreasonably interfere with Lessor’s business operations. Lessor shall not at any time interfere with the rights of Lessor, other tenants, or their permitted concessionaires, licensees, officers, employees, agents, customers and invitees use of the Common Areas.
4. LESSEE IMPROVEMENTS; POSSESSION:
(a) The Leased Premises are being provided by the Lessor to Lessee in its current “as is” condition, together with, but not necessarily limited to, all existing demising and interior partitions, doors, frames, hardware, ceilings, electrical fixtures and distribution wiring and panels, HVAC distribution systems and controls, sprinkler systems, fire alarms and controls, lighting, interior finishes, built-in millwork, and any and all other improvements located therein. In addition, Lessor shall cause to be performed to the Leased Premises that work (the “Work”) more particularly described in Exhibit “B” attached hereto and made a part hereof.
(b) Lessee acknowledges that it has fully inspected and accepts the Leased Premises in its present condition and “as is”, or in the event certain work is to be performed at the Leased Premises (i.e., Work) which is yet to be performed, that it has reviewed the drawings and specifications and/or other plans for said construction and will accept the Leased Premises when it is constructed substantially in accordance with said drawings and specifications and/or other plans, and in either event, that the Leased Premises is suitable for the uses specified herein.
(c) Possession. The Lessor agrees to use commercially reasonable efforts to have the “Work” completed and the Leased Premises ready for possession on or before the Commencement Date. If Lessor is unable to give possession of the Leased Premises on the Commencement Date by reason of the holding over of any prior lessee or lessees, incomplete construction or for any other reason whatsoever, unless the same shall result from causes attributable to the Lessee, then the scheduled Commencement Date shall be postponed for the period of time Lessor is unable to give possession until the date Leased Premises is delivered, and the term of this Lease shall be extended beyond the agreed expiration date by the number of days delivery of possession was delayed. Under no circumstances shall Lessor be liable to Lessee for any loss or damage to Lessee on account of delay in obtaining possession of the Leased Premises. If the Leased Premises have not been tendered to Lessee within ninety (90) days after the scheduled Commencement Date, Lessee shall have the right to terminate this Lease after fifteen days written notice to the Lessor.
(d) In the event there is a delay in completion of the Work, Lessor shall notify Lessee of the same and the amount of the duration of the delay and corresponding extension. In the event of a delay and corresponding extension as above provided, at such time as the Work is completed and the Leased Premises are ready for possession, Lessor shall provide Lessee an additional notice stating the same and the date of delivery of possession (i.e., the new Commencement Date). Notwithstanding anything else to the contrary herein, should Lessor not provide any notice to Lessee, then it shall be deemed that the Work is completed and that the Leased Premises are ready for possession by Lessee as of the Commencement Date specified in Section 1 above.
(e) Upon taking possession of the Leased Premises, Lessee shall be deemed to have accepted the Leased Premises in their then “as is” condition as of the Commencement Date (as of the same may be adjusted by any delay as provided above) and to have agreed that the Work has been completed in accordance with the terms hereof, unless Lessor has acknowledged in writing that certain elements or parts of the Work have not been completed.
(f) Expiration of Term. The Lessee, at the expiration of the term, shall deliver up the Leased Premises in good repair and condition, ordinary wear and tear excepted.
5. USE:
It is understood that the Leased Premises are to be used for general office purposes and for no other use without prior written consent of Lessor. The Leased Premises shall not be used for any unlawful purpose nor shall it be used so as to constitute a nuisance.
6. SALES AND USE TAX:
Any sales, use or other tax (excluding state and/or federal income taxes) payable with respect to the Base Rent, Additional Rent or any other amounts payable under this Lease, or payable with regard to this Lease for any reason whatsoever, now or hereafter imposed by the United States of America, the State of Florida, or any political subdivision thereof, shall be paid by Lessee. The sale or use tax now imposed on rent under this Lease in the County of Duval, State of Florida, is 6.5%, and shall be paid at the time and with payment of the rent upon which it is assessed.
7. NOTICES:
All notices shall be in writing, and shall be deemed given when deposited in the United States certified mail, postage prepaid (return receipt requested), or when deposited with a reputable overnight courier, or when delivered by hand delivery, in each case addressed to the party to be notified at the address of such party stated below. A party hereunder may change its address for notices by giving notice of such change of address as provided herein.
| If to Lessor: | Baymeadows Properties, LLC | |
| 9250 Baymeadows Road, Suite 400 | ||
| Jacksonville, FL 32256 | ||
| If to Lessee: | La Rosa Realty North Florida, LLC | |
| 9250 Baymeadows Rd, Suite 230 | ||
| Jacksonville, FL 32256 |
8. ORDINANCES AND REGULATIONS:
The Lessee hereby covenants and agrees to comply with all laws, rules, ordinances and/or regulations of (i) the Board of Fire Underwriters and any other rules and regulations imposed by the insurance companies providing casualty and/or liability insurance for the Project, (ii) all governmental authorities, having jurisdiction over the Leased Premises and Project and (iii) of the State of Florida or the United States of America. Such compliance shall be at Lessee’s sole cost and expense, but only insofar as any of such rules, ordinances and regulations pertain to the manner in which the Lessee shall use the Leased Premises.
9. AMERICANS WITH DISABILITIES AACT. Lessee and Lessor acknowledge that the Americans with Disabilities Act of 1990 (42 U.S.C. §12101, et seq.) and regulations and guidelines promulgated thereunder, all as amended and supplemented from time to time (collectively the “ADA”) and applicable State Accessibility Building Codes (the “Codes”) establish requirements for business operations, accessibility and barrier removal, which may or may not apply to the Leased Premises or the Project depending on, among other things: (1) whether Lessee’s business is deemed a “public accommodation” or “commercial facility,” (2) whether such requirements are “readily achievable,” and (3) whether a given alteration affects a “primary function area” or triggers “path of travel” requirements. The parties agree that: (a) Lessor shall be responsible for ADA Title III and Codes compliance for the Common Areas, except as provided below, (b) Lessee shall be responsible for ADA Title III and Codes compliance for the Leased Premises, including any improvements or other work to be performed in the Leased Premises under or in connection with this Lease, and (c) Lessor may perform, or require that Lessee perform, at Lessee’s expense, “path of travel” requirements triggered by alterations to the Leased Premises. The parties shall each be solely responsible for requirements under Title I of the ADA relating to their respective employees. Lessee may not rely on any written consents or approvals of Lessor for plans and improvements as compliance with ADA or Codes requirements or guidelines or as a waiver by Lessor of Lessee’s obligations hereunder.
10. SIGNS:
The Lessee will not place any signs or other advertising matter or material on the exterior of the Leased Premises, or on the interior of the Leased Premises where they can be seen from the exterior, without the written consent of the Lessor. Any lettering or signs shall be for directional purposes only and at Lessee’s expense, shall be of a size and type standard to the Project, and shall otherwise be subject to the approval of Lessor.
11. UTILITIES AND SERVICES:
(a) Utilities. So long as Lessee is not in default under any of the covenants of this Lease, Lessor shall furnish and maintain (a) heat and air conditioning, Monday through Friday (except holidays), during normal business hours (7:00 a.m. to 6:00 p.m.) for normal office occupancy; (b) in common areas, water for drinking fountain and toilet and lavatory purposes only; (c) janitorial service (which shall be provided in a building standard format as deemed necessary by Lessor for normal office occupancy); (d) building standard fluorescent ceiling lighting fixtures; and (e) electricity for light and ordinary office purposes.
(b) Use by Lessee. Lessee agrees to exercise due care and prudence in the use of utilities at all times, and to comply with all federal, state and local guidelines concerning same, and with the requirements of Lessor. Lessor in furnishing the foregoing services does not contemplate occupancy involving extraordinary consumption of electricity or generation of heat affecting temperatures otherwise normally maintained by the air conditioning system. Lessor reserves the right to discontinue temporarily any of the aforesaid services where necessary by reason of accident, need for repairs, strikes, labor disputes, the necessity for alterations or improvements requested by Lessee or other tenants, or for other causes beyond Lessor’s control. Lessor shall not be liable for damages for such discontinuance and there shall be no abatement or reduction in rent unless such discontinuance shall be as a direct result of Lessor’s gross negligence or willful misconduct.
(c) Excess Use of Utilities. If Lessee shall require utility service in the Leased Premises in excess of that usually furnished or supplied to space comparable to the Leased Premises when used as general office space, including but without limitation, electricity and/or water for electrical heating or refrigeration equipment, electronic data processing machines, punch card machines, machines or equipment using current in excess of 110 volts or which will in any way increase the amount of water or electricity usually furnished, such additional service shall be subject to the prior written approval of Lessor. In the event Lessor approves such additional utility service, Lessee shall pay Lessor for the additional expense involved, including any installation costs associated therewith. Further, use of utilities (e.g., HVAC) during hours other than “normal business hours” as described herein will result in additional charges. Lessee agrees to reimburse Lessor within ten (10) days following the rendering of a bill to Lessee for any such charges so incurred. Provision of HVAC services after hours and on weekends will be billed at $65.00 per hour or at such other hourly rate as Lessor may determine from time to time, which rates shall be specified in a schedule that shall be available to Lessee upon its request.
12. REPAIRS:
Lessee shall keep the Leased Premises in a good, clean and sanitary condition, making all needed repairs promptly. Lessee shall not commit or permit any waste to the Leased Premises. The Lessee further agrees to provide and use carpet mats for all desk areas in order to prevent the unnecessary wear and tear on the carpeted areas. Lessee shall promptly repair any damage done to the Leased Premises and to the Project, or any part thereof, including replacement of damaged portions thereof caused by Lessee or Lessee’s agents, contractors, subcontractors, employees, invitees or visitors. All such work or repairs by Lessee shall be effected in compliance with all applicable laws. If Lessee fails to make such repairs or replacements promptly, Lessor may, at its option, make the repairs or replacements, and Lessee shall pay the cost thereof to Lessor within ten (10) days of Lessor’s demand therefor.
13. ALTERATIONS:
Lessee shall not make or suffer to be made any alterations, additions or improvements to or of the Leased Premises or any part thereof without prior written consent of Lessor. In the event Lessor consents to the proposed alterations, additions or improvements, the same shall be at the Lessee’s cost and expense and Lessee shall hold the Lessor harmless on account of the cost thereof. Any such alterations shall be made at such times and in such manner as not to unreasonably interfere with the occupation, use and enjoyment of the remainder of the Project by the other tenants thereof. If required by Lessor, such alterations shall be removed by Lessee upon the expiration or sooner termination of the term of this Lease and Lessee shall repair damage to the Leased Premises caused by such removal, all at Lessee’s cost and expense.
Lessee agrees not to suffer or permit any lien of any contractor, supplier mechanic or materialman to be placed or filed against the Project or the Leased Premises. In case any such lien shall be filed, Lessee shall immediately satisfy and release such lien of record. If Lessee shall fail to have such lien immediately satisfied and released of record, Lessor may, on behalf of Lessee, without being responsible for making any investigation as to the validity thereof, pay the amount of said Lien or to bond the same off, and Lessee shall promptly reimburse Lessor therefor. Lessee has no authority or power to cause or permit any lien or encumbrance of any kind whatsoever whether created by act of Lessee, operation of law or otherwise, to attach to or be placed upon Lessor’s title or interest in the Property, and any and all liens and encumbrances created by Lessee shall be attached to Lessee’s leasehold interest only.
For the avoidance of doubt, nothing in this Lease is to be construed as consent on the part of Lessor to subject Lessor’s estate in the Leased Premises or the Project to any lien or liability for any improvements made by Lessee under any jurisdiction in which the Leased Premises or Project is located. PURSUANT TO §713.10, FLORIDA STATUTES, THE INTEREST OF THE LESSOR SHALL NOT BE SUBJECT TO LIENS FOR IMPROVEMENTS MADE BY LESSEE. Lessee shall not and does not have any right or authority under the Lease to subject Lessor’s estate in the Leased Premises or the Project to any lien or liability and Lessee shall not represent that it has such right or authority. This Lease contains no provision authorizing present or future work or improvements by Lessee without Lessor’s consent. In all events, unless otherwise provided herein, this Lease provides that Lessee is solely responsible for payment of the entire cost of any and all leasehold improvements. Lessee shall notify each contractor, supplier, mechanic and materialman making any improvements to the Leased Premises the content of the capitalized provision above. Lessee hereby acknowledges that it understands that, pursuant to the above-referenced statute, the knowing or willful failure of Lessee to provide such notice to the contractor shall render the contract between the Lessee and the contractor, supplier, mechanic and materialman voidable. Lessor be permitted to record in the record of the county where the Leased Premises are located, without the requirement of Lessee’s signature (but Lessee shall execute on Lessor’s request), a memorandum of this Lease sufficient to secure Lessor’s rights under Fla. Stat. §713.10 and to notify the public with regard to, or secure, other matters relating to this Lease which are for Lessor’s benefit.
14. QUIET ENJOYMENT:
The Lessor covenants and agrees that Lessee, upon Lessee’s paying the rent and promptly performing its covenants herein, shall and may peaceably and quietly hold and enjoy the Leased Premises for the term aforesaid without undue interference from Lessor.
15. LESSOR’S RIGHT TO INSPECT AND ENTER:
The Lessor shall have the right, at reasonable times during the term of this Lease, to enter the Leased Premises for the purpose of examining or inspecting same and of making such repairs or alterations therein as the Lessor shall deem necessary, and Lessor may at any time within the six (6) months immediately preceding the expiration of the specified term show the Leased Premises to others for the purpose of rental and may affix to suitable parts of the Leased Premises a notice of Lessor’s intention to lease or sell the Leased Premises and/or Project.
16. FIRE OR CASUALTY:
In the event the Project or Leased Premises is damaged or destroyed as a result of fire, the elements, accident, or other casualty, including, without limitation, by smoke and water damage (the “Casualty”), and (i) such Casualty results in either 20% or more of the total rentable area of the Project, or 25% or more of the common areas of the Project (including the parking facilities), whether or not the Leased Premises are affected by such occurrence being destroyed or damaged, or (ii) the Casualty occurs to the Project or any part thereof by reason of any cause in respect of which there are no proceeds of insurance available to Lessor, (iii) the proceeds of insurance are insufficient to pay for the costs of rebuilding or making fit the Project or any part thereof (including the Leased Premises), or (iv) any mortgagee or other person entitled to the proceeds of insurance does not consent to the payment to Lessor of such proceeds for such purpose, or (v) if in Lessor’s opinion any such damage or destruction is caused by any fault, neglect, default, negligence, act, or omission of Lessee, or those for whom Lessee is in law responsible, or any other person entering upon the Leased Premises under express or implied invitation of Lessee, then upon any of the foregoing events occurring, Lessor may, at its option (to be exercised by written notice to Lessee within 90 days following the occurrence of the casualty), elect to terminate this Lease. In the case of such election, the term and tenancy hereby created shall expire on the 30th day after such notice is given, without indemnity or penalty payable or any other recourse by one party to or against the other; and Lessee shall, within such 30-day period, vacate the Leased Premises and surrender them to Lessor, with Lessor having the right to re-enter and repossess the Leased Premises discharged of this Lease and to expel all persons and remove all property therefrom. All rent shall be due and payable without reduction or abatement subsequent to the destruction or damage and until the date of termination, unless the Leased Premises shall have been destroyed or damaged as well, in which event Base Rent (but not Additional Rent) shall abate proportionately to that portion of the Leased Premises rendered untenantable from the date of the destruction or damage until the date of termination.
In the event this Lease is not terminated as herein provided, the Lease shall continue in full force and effect, but the Project (including that portion of the Leased Premises insured by Lessor) shall be promptly and fully repaired and restored by the Lessor, provided however that the cost of such repairs and restoration shall be limited to the amount of insurance proceeds received by the Lessor for such damage or destruction (the “Lessor’s Restoration”). Nothing contained herein this Section shall require Lessor to restore repair or replace any leasehold improvements, inventory, furniture, chattels signs, contents, fixtufurniture (including trade fixtures), or personal property of Lessee located on, in under, above, or which serve the Leased Premises. The Lessor shall be given a reasonable period of time to complete the Lessor’s Restoration and due allowance shall be made for the adjustment and settlement of insurance claims, and for such other delays as may result from government restrictions, permitting, controls on construction, strikes, national emergencies and other conditions beyond the reasonable control of the Lessor. If the Casualty is such so as to make the entire Leased Premises untenantable, or a portion of the Leased Premises untenantable, then the Base Rent (but not Additional Rent) which the Lessee is obligated to pay hereunder shall abate proportionately as to the portion of the Leased Premises rendered untenantable from the date of the Casualty until such time as the Leased Premises become tenantable or to the date the Lessor’s Restoration is completed, whichever first occurs. Any unpaid or prepaid Base Rent for the month in which the Casualty occurs shall be prorated accordingly.
17. CONDEMNATION:
If any part of the Leased Premises is taken by eminent domain, Lessor may, at its sole option, terminate this Lease by giving written notice to Lessee within forty-five (45) days after the taking, or if by reason of any such taking, Lessee’s operation on the Leased Premises is materially impaired, Lessee shall have the option to terminate this Lease, by giving written notice to Lessor within forty-five (45) days after the taking, and the rent will be adjusted as of the date of termination. If the Leased Premises are damaged or if access to the Leased Premises is impaired by reason of such taking and neither Lessor nor Lessee elects to terminate this Lease, Lessor will promptly rebuild or repair the damage to the extent possible within the limitations of the available condemnation awards. All condemnation awards shall belong to Lessor, except that amount, if any, specifically awarded to Lessee for its separate personal property and fixtures.
18. ASSIGNMENT AND SUBLEASE:
Lessee shall not mortgage or assign this Lease nor sublet the Leased Premises without the prior written consent of Lessor, which consent may be withheld by Lessor in its sole and absolute discretion. In the event Lessor shall approve any assignment of this Lease, Lessor may require that (i) the assignee execute and deliver to Lessor a written confirmation in favor of Lessor that the assignee has assumed the Lessee’s obligations hereunder, and (ii) the original Lessee execute and deliver to Lessor a written confirmation that such assignment has not relieved the original Lessee of its obligations under this Lease.
19. HOLDOVER:
Any holding over by the Lessee after the expiration of this Lease shall be construed as a tenancy at sufferance, in which event the Lessee will be a tenant from month to month, upon the same terms and conditions of this Lease, except Base Rent shall be at twice the rate in effect as of the expiration of this Lease. Acceptance by the Lessor of any rent after such termination shall not constitute a renewal of this Lease except as above provided.
20. SUBORDINATION;
This Lease shall be subject and subordinated at all times to the lien of any mortgage or deed of trust in any amount or amounts whatsoever now existing or hereafter encumbering the Leased Premises or Project, without the necessity of having further instruments executed by the Lessee to effect such subordination. Notwithstanding the foregoing, Lessee covenants and agrees to execute and deliver upon demand such further instruments evidencing such subordination of this Lease, and if Lessee shall fail to do so within seven (7) days of Lessor’s request, Lessor is hereby granted an irrevocable power of attorney to execute such instruments in the name of Lessee as the act and deed of Lessee, and this authorization is hereby declared to be coupled with an interest and not revocable. Lessee shall attorn to any holder of a mortgage encumbering the Leased Premises or Project that acquires title to the Leased Premises or Project as a result of foreclosure or conveyance in lieu thereof. So long as the Lessee hereunder shall pay the rent reserved and comply with, abide by and discharge the terms, conditions, covenants and obligations on its part to be kept and performed hereunder and shall attorn to the successor in title notwithstanding the foregoing, the peaceable possession of the Lessee in and to the Leased Premises for the term of this Lease shall not be disturbed, in the event of the foreclosure of any such mortgage or deed of trust, by the purchaser at such foreclosure sale or such purchaser’s successor in title.
21. INDEMNITY AND INSURANCE:
(a) Indemnity. Lessee will save Lessor harmless and indemnify Lessor from and against any and all claims, actions, damages, liability and expenses in connection with loss of life, personal injury or loss or damage of whatever nature including property damage (1) caused by or resulting from, or claimed to have been caused by or to have resulted from, wholly or in part, any act, omission or negligence of Lessee or anyone claiming under Lessee (including, but without limitation subtenants, concessionaires, agents, employees, servants and contractors of Lessee or its subtenants or concessionaires), no matter where occurring, or (2) occurring in, upon, or at the Leased Premises, no matter how caused or (3) arising out of the occupancy or use by the Lessee of the Leased Premises or any part thereof. This indemnity and hold harmless agreement shall include indemnity against all costs, expenses and liability incurred in connection with any such injury, loss or damage or any such claim, or any proceeding brought thereon or the defense thereof. If Lessee or anyone claiming under Lessee or the whole or any part of the property of Lessee shall be injured, lost or damaged by theft, fire, water or steam or in any other way or manner whether similar or dissimilar to the foregoing, no part of said injury, loss or damage is to be borne by the Lessor or its agents. Lessee agrees that Lessor shall not be liable to Lessee or anyone claiming under Lessee for any injury, loss, or damage that may be caused by or result from the act, omission, default or negligence of any persons occupying adjoining premises or any other part of the Project. In case the Lessor shall without fault on its part, be made a party to any litigation commenced by or against Lessee, the Lessee shall protect and hold Lessor harmless and shall pay all costs, expenses and reasonable attorney’s fees incurred or paid by Lessor in connection with such litigation. Lessee shall also pay all costs, expenses and reasonable attorney’s fees that may be incurred or paid by Lessor in enforcing the covenants and agreements in this Lease.
(b) Insurance. Lessee will maintain public liability insurance with respect to Leased Premises, naming Lessor and Lessee as insureds, with a combined single limit of not less than One Million Dollars ($1,000,000) (or such greater amount as Lessor may from time to time require) on an occurrence basis with respect to both bodily injury and property damage. Lessee shall deliver to Lessor a certificate of insurance at least fifteen (15) days prior to the commencement of the term of this Lease and renewal certificate at least fifteen (15) days prior to the expiration of the certificate it renews. Said certificates must provide for thirty (30) days notice to Lessor in event of material change or cancellation. Lessee also agrees to maintain during the term hereof, broad form coverage on Lessee’s personal business property and improvements and betterments.
(c) Waiver of Subrogation. Neither party shall be liable to the other for loss or damage, caused by fire or any other peril insured against under standard extended coverage insurance even though the loss of or damage is caused by the party’s negligence. Each insurance policy carried by Lessor and Lessee in accordance with this paragraph shall contain a provision by which the insurance company shall waive all right of recovery by subrogation against the other party for loss or damage to the insured property.
22. CONSTRUCTION OF LANGUAGE:
Words of any gender used in this Lease shall be held to include any other gender, and words in the singular number shall be held to include the plural when the context so requires. The paragraph heading and titles are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof.
23. DEFAULT:
(a) Events of Default. The happening of any one or more of the following listed events shall constitute a breach of this Lease on the part of Lessee:
(i) The failure of Lessee to pay any rent (Base Rent or Additional Rent) payable under this Lease on the due date thereof;
(ii) The failure of Lessee to fully and properly perform any act required of it in the performance of this Lease, or otherwise to comply with any term or provision hereof, within thirty (30) days of written notice from Lessor to Lessee to so perform or comply; (iii) The filing by or on behalf of Lessee of any petition or pleading to declare Lessee a bankrupt or the adjudication in bankruptcy of Lessee under any bankruptcy law or act;
(iv) The appointment by any court or under any law of a receiver, trustee, or other custodian of the property, assets, or business of Lessee;
(v) The assignment by Lessee of all or any part of its property or assets for the benefit of its creditors;
(vi) The levy, execution, attachment or other encumbrance of property, assets or of the leasehold interest of Lessee by process of law or otherwise in satisfaction of any judgment, debt or claim; or
(vii) The abandonment of the Leased Premises by the Lessee for a period of thirty (30) days or more.
(b) Remedies. Upon the happening of any event of default, Lessor, if it shall so elect, may either (i) collect each and every installment of rent when the same matures; (ii) accelerate rent for the remainder of the term of this Lease, (iii) terminate this Lease, and/or (iv) enter the Leased Premises without process of law and terminate Lessee’s possession without being liable for any prosecution therefore, and re-lease the Leased Premises to any person, firm, or corporation, and upon such terms and conditions as Lessor may deem advisable, as agent of Lessee or otherwise, for whatever rent it can obtain, in which event Lessee shall remain liable for the rent reserved herein, and all other obligations hereunder. In the event Lessor shall elect to proceed under subparagraph (iv) above, Lessor shall apply the proceeds of such re-leasing (i) first to the payment of expenses that Lessor may incur in the entering and re-leasing, including, without limitation, leasing commissions and the cost of tenant improvement work, and (ii) then to the payment of the rent due by Lessee and the fulfillment of Lessee’s covenants and obligations hereunder. In the case of a re-letting for the account of Lessee, if there be any deficiency, Lessee shall remain liable for the same. Lessee hereby waives service of any demand for payment of rent, notice to terminate or demand for possession of the Leased Premises, including any and all other forms of demand and notice prescribed by law.
(c) Attorney’s Fees and Costs. The parties hereto agree that in the event either of the parties hereto are required to institute legal proceedings to enforce any of the terms, covenants and conditions of this Lease, the prevailing party shall be entitled to be reimbursed for all reasonable attorney’s fees incurred (including appellate fees), as well as court costs.
(d) Additional Security. As additional security for the performance of Lessee’s obligations hereunder, Lessee hereby pledges and assigns to Lessor all the furniture, fixtures, goods, inventory, stock and chattels of Lessee which are now or may hereafter be brought or put in the Leased Premises, and further grants to Lessor a security interest therein under the Uniform Commercial Code as enacted in the State of Florida. Upon the request of Lessor, Lessee hereby agrees to execute and deliver to Lessor all financing statements, amendments thereto, or other similar statements which Lessor may reasonably request, or, alternatively, authorize Lessor to execute any of the same for the account of Lessee. Lessor is herein specifically granted all of the rights of a secured creditor under the Uniform Commercial Code as enacted in the State of Florida with respect to the property in which Lessor has been granted a security interest by Lessee.
(e) No Waiver by Lessor. Nothing herein contained shall be deemed to be a waiver by Lessor of its statutory lien to rent, and the remedies, rights and privileges of Lessor in the case of default of Lessee as set forth above shall not be exclusive and in addition thereto Lessor may also exercise and enforce all its rights at law or in equity which it may otherwise have as a result of Lessee’s default hereunder.
24. NOTICE OF TERMINATION NOT REQUIRED:
Notwithstanding any provision of law or any judicial decision to the contrary, no notice shall be required to terminate the term of this Lease, or extension hereof, on the date herein specified; and the term hereof shall expire on the date herein provided without notice being required from either party.
25. SUCCESSORS AND ASSIGNS:
This Lease shall bind and inure to the benefit of the successors, heirs, and assigns of the parties hereto.
26. SECURITY DEPOSIT:
The Lessee, concurrently with the execution of this Lease, has deposited with the Lessor the sum of _$1423.75__ the receipt being hereby acknowledged, which sum shall be retained by the Lessor as security for the payment by the Lessee of the rent herein agreed to be paid and for the faithful performance of the covenants of this Lease. If at any time the Lessee shall be in default in any of the provisions of this Lease, the Lessor shall have the right to apply said deposit, or so much thereof as may be necessary in payment of any rent in default as aforesaid and/or in payment of any expense incurred by the Lessor regarding the curing of any default by said Lessee, and/or in payment of any damages incurred by the Lessor by reason of such default of the Lessee or, at the Lessor’s option, the same may be retained by the Lessor in liquidation of part of the damages suffered by the Lessor by reason of the default of the Lessee. Following any such application of such deposit, Lessee shall pay to Lessor on demand of Lessor the amount so applied in order to restore such deposit to its original amount. Lessor shall be entitled to deposit, apply or otherwise utilize Lessee’s security deposit as Lessor shall deem appropriate. Such deposit may be commingled with other funds of Lessor. In no event shall Lessee be entitled to interest on said deposit, except to the extent required by applicable law. If Lessee is not in default at the termination of this Lease, the balance of such deposit remaining shall be returned by Lessor to Lessee within fifteen ( 15) days after Lessee’s vacation of the Leased Premises. If Lessor transfers its interest in the Leased Premises or Project during the term of this Lease, Lessor may assign the deposit to the transferee and thereafter Lessor shall have no further liability for the return of any such deposit.
27. RELATIONSHIP OF THE PARTIES;
Nothing herein contained shall be deemed or construed as creating the relationship of principal and agent or of partnership or joint venture between the parties hereto; it being understood and agreed that neither the method of computing rent nor a provision contained herein nor any acts of the parties hereto shall be deemed to create any relationship between the parties other than that of landlord and tenant. As to any mortgagee taking possession or control of the Project, Lessee hereby agrees not to look to the mortgagee, as mortgagee, mortgagee in possession, or successor in title to the property for accountability for any security deposit required by the Lessor hereunder, unless said sums have actually been received by said mortgagee as security for the Lessee’s performance of this lease.
28. ENTIRE AGREEMENT:
It is agreed between the parties that neither Lessor nor Lessee nor any of their agents have made any statement, promises, or agreements verbally or in writing in conflict with the terms of this Lease. Any and all representations by either of the parties or their agents made during negotiations prior to the execution of this Lease and which representations are not contained in the provisions hereof shall not be binding upon either of the parties hereto. It is further agreed that this Lease contains the entire agreement between the parties, and no rights are to be conferred upon either party until the Lease has been executed by Lessee and Lessor.
29. MODIFICATION:
No modification, alteration or amendment to this Lease shall be binding unless in writing and executed by the parties hereto.
30. BROKER’S COMMISSION:
Lessee covenants, represents, and warrants the Lessee has had no dealing or negotiations with any real estate broker or agent, other than NAI Hallmark_Partners, LLC (“Broker”), in connection with the consummation of this Lease, and Lessee covenants and agrees to pay, hold harmless and indemnify Lessor from and against any and all costs, expenses (including reasonable attorneys’ fees, whether incurred before trial, at trial, and on appeal) or liability for any compensation, commissions, or charges claimed by any broker or agent, other than the Broker set forth in this paragraph with respect to this lease or the negotiation thereof.
31. PROVISIONS SEVERABLE:
If any term or provision of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease Agreement or the application of such term or provision to persons or circumstances other than those to which it is held invalid or unenforceable shall not be affected thereby and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law.
32. NO RECORDING:
This Lease shall not be recorded by Lessee in the public records without Lessor’s prior written consent.
33. LAW AND VENUE:
This Lease shall be enforced in accordance with the laws of the State of Florida. The agreed upon venue is Jacksonville, Duval County, Florida.
34. PARKING SPACES; COMMON AREAS:
Lessor shall provide ample parking spaces in the parking lot and/or garage forming a part of the Project. Such spaces may be relocated from time to time as Lessor may determine in its sole discretion. Lessee’s use of the parking area, and associated driveways and other common areas of the Project, shall be used with others in common, including other lessees. The Lessee acknowledges and agrees that the Lessor may change, modify or reduce the common areas as Lessor may determine from time to time in its sole discretion. Use of parking spaces and other common areas by Lessee shall be subject to the Rules and Regulations hereinafter described.
35. RELOCATION OF PREMISES:
Lessor reserves the right on sixty (60) days notice to remove Lessee to other similarly improved space in the Project under the terms of this Lease except the Base Rent will be adjusted for variation in the square footage of the new Leased Premises. Lessor agrees to make reasonable efforts to accommodate Lessee’s request regarding the location and size of said relocated premises. If Lessor and Lessee do not agree in writing within ten (10) days of Lessor’s notice upon the terms and conditions of the relocation, this Lease shall become null and void and no further effect, sixty (60) days from the date of Lessor’s notice. Lessor agrees to pay or credit expenses to Lessee in the amount of Lessee’s Base Rent hereunder for two (2) months as the sole compensation to Lessee for moving Lessee to the new space agreed upon. Lessee agrees that such amount constitutes valid consideration for the expenses that would be incurred by Lessee in connection with such a relocation.
36. RULES AND REGULATIONS:
The Rules and Regulations pertaining to the Project, attached hereto as Exhibit “C,” and all Rules and Regulations which Lessor may hereafter from time to time adopt and promulgate for the management of the Project, are hereby made a part of this Lease and shall, during the term of this Lease be in all respects observed and performed by Lessee and Lessee’s employees, servants, agents, invitees and guests. Lessee agrees to abide by, uphold and fully comply with the Rules and Regulations as shown on Exhibit “C” and with such reasonable modifications thereof and additions thereto as Lessor may make. Insofar as the attached Rules and Regulations conflict with any of the terms and provisions of this Lease, the terms and provisions of this Lease shall control. Lessee further agrees that Lessor shall have the right to waive any or all such rules in the case of any one or more tenants in the Project without affecting Lessee’s obligations under this Lease and Rules and Regulations and that Lessor shall not be responsible to Lessee for the failure of any other tenant to comply with the Rules and Regulations.
37. EXCULPATION:
The liability of Lessor to Lessee for any default by Lessor under the terms of this Lease shall be limited to the interest of Lessor in the Project and Lessee agrees to look solely to Lessor’s interest in the Project for recovery of any judgment from the Lessor, it being intended that the Lessor shall not be personally liable for any judgment or deficiency.
38. ESTOPPEL CERTIFICATE:
At any time during the term of this Lease and within ten (10) days after Lessor’s request, Lessee shall execute in recordable form and deliver a declaration to any person designated by Lessor (i) ratifying this Lease, (ii) stating the commencement and termination dates of this Lease, and (iii) certifying (a) that this Lease is in full force and effect and has not been assigned, modified, supplemented or amended (except by such writing as shall be stated), (b) that all conditions under this Lease to be performed by Lessor have been satisfied (stating exceptions if any), (c) no defenses or offsets against the enforcement of this Lease by Lessor exist (or, if any, stating those claims), (d) advance rent, if any, paid by Lessee, (e) the date by which Base Rent and Additional Rent have been paid, (f) the amount of security deposited with Lessor, and (g) such other information as Lessor reasonably requires. All persons receiving any such statement shall be entitled to rely upon them.
39. RADON GAS:
RADON is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease to be duly executed as of the date of this Lease, by their respective officers or parties thereunto duly authorized.
| Signed, sealed and delivered in the presence of: | LESSEE: | ||
| By: | |||
| By: | |||
| Title | |||
| LESSOR | |||
| By | |||
| Title | |||
Exhibit “A”
Exhibit “B”
Lessor improvements as follows:
Landlord to provide cleaned, stain free carpet or if not possible to clean will provide new carpet.
Landlord to paint all walls white.
Landlord to provide additional outlets as follows
Two TV outlets and 2 additional outlets at countertop height on north wall entrance.
Tenant Improvements as follows:
Tenant to add programmable lock at entrance and lock on manager’s office
Tenant to add cabinets and countertop on north wall at entrance
Tenant to add 2 closets (Ikea) TBD
Tenant to add 2 pendant lights along west window wall
Addendum to section 35 Relocation of Premises:
Lessor agrees to reimburse Lessee for the cost of construction, labor, furniture and Fixtures purchased specifically for suite 230. Tenant will provide lessor with all receipts as confirmation of amount due Lessee only if Lessee only if Lessor exercises their right to relocate Lessee to other similarly improved space within the project.
Exhibit “C”
RULES AND REGULATIONS
| l. | Lessee shall not operate any machinery or apparatus at the Leased Premises other than usual small business machines. No article deemed hazardous because of flammability and no explosive or other articles of an intrinsically hazardous nature shall be brought into the Project. As to any equipment approved by Lessor that needs to be installed in the Leased Premises, Lessee agrees to bear the cost of installation. |
| 2. | No additional locks or similar devices shall be placed upon doors of the Leased Premises and no locks shall be changed except with written consent of Lessor. Upon the termination of the Lease; Lessee shall surrender to Lessor all keys to Leased Premises. |
| 3. | Lessee shall be permitted to move furniture and office furnishings into or out of the Project only at such times and in such a manner designated by Lessor so as to cause the least inconvenience to other lessees. Safes, furniture, boxes or other bulky articles shall be brought into and placed into the Project only with prior written consent of Lessor and only in accordance with Lessor’s directions. Any damage done to the Project, other lessee’s property, or other persons, by moving a safe or other bulky articles in or out of Leased Premises, or by overloading the floor, shall be paid for by the Lessee. |
| 4. | No person shall be employed by Lessee to do janitorial work in Leased Premises, and no person other than the janitors for Project shall clean Leased Premises, unless Lessor shall first give its written consent. Any person employed by Lessee with Lessor’s consent to do janitorial work shall, while in Project, be subject to and under the control and direction of the Lessor’s Building Superintendent, but shall not be considered the agent or servant of the Superintendent or of Lessor. |
| 5. | Window coverings other than building standard, either inside or outside the windows, may only be installed with Lessor’s prior written consent and must be furnished, installed and maintained at the expense of Lessee and at Lessee’s risk and must be of such shape, color, material, quality and design as may be prescribed by Lessor. |
| 6. | If Lessee desires additional telegraphic or telephonic connections, or the installation of other electrical wiring, Lessor will, upon receiving a written request from Lessee and at Lessee’s expense, direct the electricians as to where and how the wires are to be introduced and run, and without such direction no boring, cutting or installation of wires will be permitted. Lessee shall not install or erect any antennae, serial wires or other equipment inside or outside the Project without in every instance obtaining prior written approval from Lessor. |
| 7. | The sidewalks, entrances, passages, courts, corridors, vestibules, halls, in or about the Project shall not be obstructed or used for storage or for any purpose other than normal ingress and egress by Lessee. |
| 8. | Lessee shall not create or maintain a nuisance in the Leased Premises nor make or permit any noise or odor or use or operate any electrical or electronic devices that emit loud sounds, air waives, or odors, that are objectionable to other occupants or lessees of the Project or any adjoining building or premises; nor shall the Leased Premises be used for lodging or sleeping nor for any immoral or illegal purpose that will damage the Leased Premises, or injure the reputation of the Project. |
| 9. | Lessee and occupants shall observe and obey all parking and traffic regulations imposed by Lessor at the Project. Lessor in all cases reserves the right to designate “no parking” zones, traffic right-of-ways and general parking area procedures. Failure of Lessee to comply with parking regulations will constitute a violation of the Lease. Lessor may institute such measures for proper parking as are necessitated by conditions existing at particular time; including, but not limited to, towing, impounding and/or tagging improperly parked vehicles. |
| 10. | Lessor reserves the right at all times to exclude newsboys, loiterers, vendors, solicitors and peddlers from the Project and to require registration, satisfactory identification and credentials from all persons seeking access to any part of the Project at times other than during ordinary business hours. Lessor shall not be held liable for granting or refusing such access. |
| 11. | Any sign, lettering, picture, notice or advertisement installed within the Leased Premises which is visible from the public corridors within the Project shall be installed in such manner and be of such character and style as Lessor shall approve in writing. No sign, lettering, picture, notice or advertisement shall be placed on any outside window or in a position to be visible from outside the Project. |
| 12. | Lessee shall not use the name of the building for any purpose other than that of the business address of Lessee, and shall not use any picture or likeness of the Project in any circulars, notices, advertisements or correspondence without Lessor’s prior written consent. |
| 13. | No animals or pets, bicycles, skateboards or other vehicles shall be permitted to be in the Project or the Leased Premises. |
| 14. | Lessee shall not make any room to room canvas to solicit business from other lessees of the Project. |
| 15. | Lessee shall not waste electricity, water or air conditioning and shall cooperate fully with Lessor to assure the most effective operation of the Project’s HVAC. Lessee shall not adjust any controls other than room thermostats installed for Lessee’s use. Lessee shall not tie, wedge, or otherwise fasten open any water faucet or outlet. Lessee shall keep all corridor doors closed. |
| 16. | Lessee assumes full responsibility for protecting the Leased Premises from theft, robbery and pilferage. Except during Lessee’s normal business hours, Lessee shall keep all doors to the Leased Premises locked and other means of entry to the Leased Premises closed and secured, and be liable for any loss caused by negligence thereto. |
| 17. | Lessee shall not in any manner deface or damage the Project. |
| 18. | Lessee shall not use more electrical current from individual or collective circuits as is designated by the amperage rating of said circuits at the circuit breaker panels for Lessee’s suite. Should Lessee exceed the safe capacity as stated on the circuit breakers for said circuits then Lessee shall bear the entire expense of modifications to adjust or increase the amperage for Lessee’s safe and proper electrical consumption. Lessor’s consent to such modifications to the electrical system shall not relieve Lessee from the obligation to use less electricity than such safe capacity. |
| 19. | Lessor reserves the right to make such further reasonable rules and regulations as in its judgment may from time to time be necessary for the safety, care and cleanliness of the Leased Premises and for the preservation of good order therein. Any additional rules and regulations promulgated by Lessor shall be binding upon the parties hereto with the same force and effect as if they had been inserted herein at the time of execution hereof. |
Lessee shall be responsible for the observance of all of the foregoing rules and regulations by Lessee’s employees, agents, clients, customers, invitees and guests. Lessor shall not be responsible for any violation of the foregoing rules and regulations by other lessees of the Project and shall have no obligation to enforce the same against other lessees.
26
Exhibit 10.130
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into this 29th day of August, 2022, by and between Epiphany Property Holdings, LLC whose address is 5429 Satin Leaf Ct, Sanford, FL, 32771 hereinafter “Landlord”, and The Executive Group, Inc., whose address is 1805 W. Colonial Dr, Suite B-1, Orlando, FL 32804, hereinafter referred to as “Tenant”; joined by Reinaldo Zapata and all Personal Guarantors.
WITNESSETH
1. Premises. Landlord, in consideration of the rents, covenants, agreements and conditions hereinafter contained, does hereby lease unto said Tenant the premises described as: Unit C-1, at 1805 W. Colonial Dr., Orlando, FL 32804, hereinafter called the “Premises” which is identified on the attached sketch.
2. Term. The Premises are leased for a term of two (2) years, commencing on the First day of September, 2022, and terminating on the Thirty-First (31st) day of August, 2024 or such earlier date as this Lease may terminate as hereinafter provided. Occupancy will not be provided until all conditions of this lease are satisfied, including: (i) Insurance as required by Paragraph 18; (ii) Landlord’s receipt of the Deposit required by Paragraph 14 and the first month’s rent.
3. Option. In addition to the original term under this Lease Agreement, the Landlord grants to the Tenant one (1) three (3) year option which may be exercised by the Tenant only upon the giving of ninety (90) days’ written notice prior to the expiration of the original tem1. Time is of the essence to comply with this notice requirement.
4. Base Rent. The Base Rent for each year of the original term hereof is the sum of Eighteen Thousand ($18,000.00) DOLLARS which is payable in equal monthly installments, plus sales and use tax, in advance on the first (1st) day of each calendar month during the term in the amount of One Thousand Five Hundred Dollars ($1,500.00) DOLLARS, plus sales and use tax from September 1, 2022 thru August 31, 2023 and One Thousand Five Hundred Seventy Five ($1,575.00) Dollars, plus sales and use tax from September 1, 2023 thru August 31, 2024.
5. Use. Tenant shall use and occupy the premises as a Real Estate Office and for no other purpose. Tenant shall not make any noise, emit any odors or allow any other action which interferes with the use of any other units in the building.
The Executive Group ~ Suite C-1 Lease
6. Examination of Premises. Tenant hereby represents and warrants to Landlord that Tenant has carefully examined and fully familiarized itself with the condition of the Premises and has agreed to accept, and has in fact accepted, the same “AS IS,” “WHERE IS,” in its existing condition and state of repair and without any representation or warranty by or on behalf of Landlord as to (a) MERCHANTABILITY, (b) HABITABILITY, (c) fitness for Tenant’s intended purposes or any other particular purpose, (d) the condition or state of repair of the Premises, (e) the absence or presence of any structural or other defects or deficiencies in the Premises, or (f) any other matter or aspect pertaining to the Premises or the use or condition of either of same, and without any promise or undertaking on the part of Landlord or its agents, to make any improvement, alteration or repair to the Premises. Tenant hereby expressly covenants and agrees that Landlord shall, under no circumstances, be liable for any latent, patent or other defects or deficiencies in the Premises. Tenant acknowledges that Landlord has entered into this Lease with Tenant at the rental and upon the terms and conditions set forth herein in material reliance upon the representations, warranties and undertakings of Tenant as set forth in this section.
7. Landlord’s Work P1ior to Commencement of Lease: In the event Landlord has agreed to perform any work on the Premises prior to delivery of possession to Tenant, then the work is described in Exhibit A and is checked as being applicable in Paragraph 47. If Exhibit A is not applicable, then the Landlord is not performing any work on the premises and Tenant accepts the Premises as it now exists.
8. Tenant’s Work: Tenant agrees to pay the full cost for and perform the work to the Premises, IF ANY, as set forth in Exhibit B and all other work subsequently approved in writing by Landlord in accordance with the construction requirements set forth in Exhibit C and the Construction Rules and Regulations set forth in Exhibit D which must be signed by each contractor who performs work for Tenant.
9. Tenant Maintenance and Repairs: Tenant shall keep and maintain at Tenant’s sole expense not to be reimbursed by Landlord the interior of the Premises, together with all fixtures and all electrical, plumbing, heating, air conditioning and all other mechanical and other installations which service the interior, all doors, and all plate glass and door and window glass, in good working order and proper repair, using materials and labor of kind and quality equal to or better than the original work, and shall surrender the Premises at the expiration or earlier termination of this Lease in as good condition as when received, excepting only and solely deterioration caused by mere ordinary wear and tear and damage by fire or other casualty of the kind actually insured against by Tenant in standard policies of fire insurance with extended coverage. Tenant shall retain the services of a licensed HVAC contractor, acceptable to the Landlord, to maintain, inspect and service the HVAC unit(s) for the Premises. The HVAC contractor shall inspect the unit(s) not less then four times per calendar year and provide a written report of each inspection to Landlord. A copy of Tenant’s HVAC maintenance agreement shall be furnished to Landlord upon Tenant possession of Premises.
10. Real Property Taxes. The Landlord shall pay all real property taxes and assessments for the Premises.
The Executive Group ~ Suite C-1 Lease
11. Landlord’s Liability: It is expressly agreed that the Tenant shall not be entitled to assert a damage claim against Landlord seeking loss of income, lost profits, lost customers or other consequential damages for any type of claim. In the event Landlord breaches this Lease and does not cure the breach within 30 days after receipt of written notice from Tenant, ( or to commence to cure default if the default can not be reasonably cured within 30 days) then Tenant’s sole remedy shall be the right to terminate this Lease and to seek damages against Landlord for damages which shall be limited to the actual cost to Tenant of obtaining substantially similar premises which shall not exceed three (3) times the amount of the monthly Base Rent. Tenant waives the right to seek all other types of damages. Notwithstanding any provision contained in this Lease or elsewhere now or hereafter to the contrary, Tenant agrees and acknowledges that Tenant shall look solely and only to Landlord’s interest in the leasehold in the unit leased to Tenant in the event of any default or breach by Landlord with respect to any of the terms and provisions of this Lease on the part of the Landlord to be performed or observed; and no other assets whatsoever of Landlord shall be subject to liability, levy, execution, or other judicial process or award for the satisfaction of Tenant’s claim(s) of any kind or sort whatsoever. In the event of a sale or conveyance by Landlord of the building or a foreclosure by any creditor of Landlord, the same shall operate to release Landlord from any liability upon any of the covenants or conditions, express or implied, herein contained in favor of Tenant, and Tenant shall solely look to the new owner for any claims under this Lease.
12. Utilities and Personal Property Taxes. In addition to Base Rent, Tenant shall pay all personal property taxes and assessments which may be levied or assessed on all personal property of Tenant located in or about the Premises. It is further understood and agreed the Tenant shall be responsible for Sixty (60%) of all monthly utilities which are metered together for Suite C-1 & C-2 including water, electric, and sewer, and shall be responsible for the insurance requirements set forth in this Lease. Landlord shall pay utility payments when due and shall charge Tenant for its portion of utility expenses on a monthly basis. All Utility reimbursements to Landlord shall be due and payable with the next monthly lease payment and shall be assessed late fees and penalties as outlined in Section 13 of this Lease Agreement if not paid when due.
13. Rent and Late Charges. The term “rent” as used in this Lease shall mean and include Base Rent and all other sums payable hereunder to Landlord. All rent shall be paid to Landlord at the address listed herein or at such other place or to such other person as Landlord may from time to time direct in writing, or as is otherwise provided herein, in lawful money of the United States of America. Rent is due on the FIRST day of each month and considered late after the THIRD day of the month. In the event Tenant fails to make any such payment when the same becomes due, then in addition to all rights, powers and remedies provided herein, by law or otherwise in the case of nonpayment of rent, Landlord shall be entitled to recover from Tenant the greater of 10% of the amount due or $150.00, whichever is greater, to reimburse Landlord for its overhead and administration charges in connection with such late payment. In addition, a daily late fee in the amount of $30/day will be assessed on all outstanding amounts until payment is received. Tenant acknowledges that these charges are fair and reasonable. Tenant will also pay to Landlord on demand, interest at the rate of 18% per annum (or the highest rate permitted by applicable law, whichever is lower) on all overdue installments of rent and on overdue amounts relating to obligations which Landlord shall have paid on behalf of Tenant, in each case from the due date thereof until paid in full. If any check tendered by Tenant in payment of any sum due pursuant to this Lease shall be returned for insufficient funds or for any other reason not the fault of Landlord, then Tenant shall pay to Landlord, a processing fee equal to the greater of: (i) $40.00; or (ii) five percent (5%) of the face amount of the returned check, not to exceed the maximum amount permitted by law. Should Tenant’s check be returned or dishonored on more than one occasion during the Term of this Lease (or any renewal or extension thereof), then, from and after the dishonor or return of the second of Tenant’s checks, all subsequent payments due hereunder during the remainder of the Term of this Lease (and all renewals and/or extensions thereof) shall, at Landlord’s option, be tendered to Landlord by certified or cashier’s check.
The Executive Group ~ Suite C-1 Lease
14. Security Deposit. Upon execution of this Lease, the Tenant shall pay to Landlord a security deposit of $1500.00 to secure Tenant’s lease obligations under this Lease. The deposit may be deposited into Landlord’s account, commingled with Landlord’s funds and used by Landlord, in its sole discretion, to pay any of Tenant’s obligations under this Lease. If Tenant fully and timely performs its obligations under this Lease, the deposit amount shall be returned to Tenant within thirty (30) days after the termination of the Lease.
15. Waste. Tenant shall commit no act of waste and shall take good care of the Premises and the fixtures and appurtenances therein and shall, in the use and occupancy of the Premises, conform to all laws, orders, and regulations of the federal, state, and municipal governments or any of their departments. During the terms of this Lease, Tenant shall make all necessary repairs to the Premises to keep them in good condition and repair. All improvements made by Tenant to the Premises which are so attached to the Premises shall become the property of Landlord upon installation. Not later than the last day of the term, Tenant shall, at Tenant’s expense, remove all of the Tenant’s personal property and those improvements made by Tenant which have not become the property of the Landlord, including trade fixtures, cabinet work, moveable paneling, partitions, and the like; repair all injury done by or in connection with the installation or removal of such property and improvements; and surrender the premises in as good condition as they were at the beginning of the term, normal wear and tear, damage by fire, the elements, casualty, or other cause not due to the misuse, negligence, or intentional acts of Tenant or Tenant’s agents, employees, visitors, or licensees, excepted. All property of Tenant remaining on the premises after the last day of the term of this Lease shall be conclusively deemed abandoned, may be removed and destroyed by Landlord and Tenant shall reimburse Landlord for the cost of such removal and destruction. At Landlord’s option, all abandoned property shall become Landlord’s property.
16. Hazardous Waste. Tenant hereby represents and covenants that Tenant will not use, handle, store, transport or dispose of or permit the use, handling, storage, transportation or disposal of hazardous or toxic substances, as those terms may be defined or used in any local, state, or federal environmental, hazardous substance or land or water use laws or regulations onto the premises, and in the event of any use or spillage of such substance, Tenant agrees: (i) to notify Landlord immediately of any contamination, claim of contamination, loss or damage; (ii) after consultation and approval by Landlord, to clean up the contamination in full compliance with all applicable statutes, regulations, and standards; and (iii) to indemnify, defend and save harmless Landlord from and against all loss, costs, expenses, fines, penalties, reimbursement costs and damages (including attorney’s fees) arising as a result of any such contamination, claim of contamination, loss or damage or Tenant’s violation of any provision of local, state, or federal law, including common law, which prohibits or regulates the use, handling, storage, transportation or disposal of a hazardous or toxic substance or which requires removal or remedial action and the costs of removal or remedial action of such hazardous or toxic substance, including any fines levied in connection therewith, whether such costs or expenses are incurred by the Landlord or any local, state, or federal governments or by other persons and including any personal injuries suffered in connection therewith. This provision shall survive the termination of the Lease.
The Executive Group ~ Suite C-1 Lease
17. Alterations and Repairs. Tenant shall not, without first obtaining the written approval of the Landlord, make any alterations, repairs, additions, or improvements in, to, or on and about the Premises.
18. Insurance. The Tenant shall. carry fire and extended coverage insurance insuring the building for its full insurable value, including Tenant’s interest in any of Tenant’s improvements in the Premises, and Tenant’s interest in Tenant’s office furniture, equipment and supplies, naming Landlord as an additional named insured. Tenant waives any right of action against Landlord for loss or damage covered by such insurance, and the policy shall permit such waiver.
In addition thereto, Tenant shall at all times during this Lease maintain in full force and effect at its sole cost and expense a broad form comprehensive general public liability insurance policy that meets the following requirements:
a. The Insurance Company shall have a minimum rating of A by AM. Best Company. The Insurance Company referenced should have a minimum financial size “V,” which is $10 to $25 Million of U.S. dollars of reported capital, surplus and conditional reserve funds.
b. The policy minimum limits shall be One Million ($1,000,000) CSL per occurrence/Two Million ($2,000,000) per aggregate.
c. The insurance policy shall be a Comprehensive General Liability: Combined Single Limit (CSL) and shall include the following coverages:
| ● | Premises Operations |
| ● | Aggregate Per Project/Location |
| ● | Products Completed Operations |
| ● | Contractual Liability |
| ● | Broad Form Property Damage |
| ● | Personal Injury |
d. A certificate of insurance shall be provided to Landlord upon signing of the Lease. The certification of insurance shall provide that the insurance policy cannot be cancelled without thirty (30) days prior written notice to Landlord.
e. The Additional Insureds under the policy shall be EPIPHA Y PROPERTY HOLDINGS, LLC, MASTERPIECE PROPERTY MANAGEMENT, LLC., and their officers, directors, members and employees and their successors and assigns.
Tenant shall furnish Landlord, on or before Tenant takes occupancy, original policies or certificates of insurance evidencing the coverages required by this Lease. All policies required hereunder shall contain an endorsement providing that the insurer will not cancel or materially change the coverage of such policy or policies without giving ten (10) days prior written notice thereof to Landlord.
In the event Tenant fails to comply with any of the provisions of this Section of the Lease, then Landlord, in addition to all other remedies under this Lease and at law, shall be entitled to an immediate judicial injunction prohibiting Tenant from being in possession of the Premises and from conducting any business in the Premises.
19. Indemnification of Landlord. Tenant shall defend, indemnify and hold Landlord and its officers, employees and representatives harmless from all liability, costs, expenses, damages and claim for damages by reason of any injury to any person or persons, including Tenant, or property of any kind whatever and to whomsoever belonging, including Tenant’s, from any cause or causes whatsoever while in, upon or in any way connected with the Premises, adjacent sidewalks, parking, lot, building and other property of Landlord during the term of this Lease and any extension hereof or any occupancy hereunder, including all claims occasioned wholly or in part by any act or omission of Tenant, its agents, customers, invitees, principals, officers, directors or employees.
The Executive Group ~ Suite C-1 Lease
20. Accumulation of Waste or Refuse Prohibited. Tenant shall not permit the accumulation of waste or refuse matter on the premises or anywhere in or near the building. Should Tenant, in Landlord’s judgment, violate the provisions of this paragraph, Landlord may arrange for the removal of said waste or refuse matter and remit the invoice for same to Tenant. Tenant’s failure to remit full payment within seven (7) days of the amount of said invoice shall constitute a default under this Lease. Additionally, Tenant shall breakdown all boxes and keep refuse inside the waste bins. Should Tenant have excess rubbish and/or rubbish that does not fit within the waste receptacle, Tenant will notify Landlord of such overage and be responsible for excess fees charged to Landlord. Excess charges will be billed to Tenant account.
21. Destruction of Premises. If during the term hereof the building in which the Premises are situate shall be damaged or destroyed by fire, act of God, strikes, riots, or public commotion, the Tenant shall give immediate notice thereof to Landlord, and Landlord may elect to repair same, provided such repairs can be made within one hundred twenty (120) days by working in the usual and ordinary manner and under the laws and regulations of the federal, state, county or municipal authorities and are paid for by insurance proceeds, but such destruction or damage shall in no way annul or avoid this Lease, except that the Tenant shall be entitled to a proportionate reduction of rent while such repairs are being made, such proportionate reduction to be based upon the extent to which the making of such repairs shall interfere with the business carried on by the Tenant in said premises. In the event that the Landlord does not so elect to make such repairs, this Lease may be terminated by Lessor.
If, at the time Landlord shall have elected to cancel and terminate this Lease as in this section provided, and if Tenant shall not have been in default as to any terms, conditions, or agreements under this Lease, Landlord shall restore to Tenant any unearned rents paid in advance by Tenant or other money or property deposited by Tenant as security for the performance of this Lease by Tenant, less any amounts due Landlord from Tenant, whether for rent, damages, or otherwise.
22. Condemnation. If any part of the Premises shall be taken or condemned for a public or quasi-public use, and a part thereof remains which is susceptible of occupation hereunder, this Lease shall, as to the part so taken, terminate as of the date title shall vest in the condemnor, and the rent payable hereunder shall be adjusted so that the Tenant shall be required to pay for the remainder of the term only such portion of such rent as the value of the part remaining after condemnation bears to the value of the entire premises at the date of condemnation; but in such event, Landlord shall have the option to terminate this Lease as of the date when title to the part so condemned vests in the condemnor. If all of the Premises, or such part thereof be taken or condemned so that there does not remain a portion susceptible for occupation hereunder, this Lease shall thereupon terminate. If a part or all of the Premises be taken or condemned, all compensation awarded upon such condemnation or taking shall go to the Landlord, and Tenant shall have no claim thereto, and the Tenant hereby irrevocably assigns and transfers to the Landlord any right to compensation or damages to which the Tenant may become entitled during the term hereof by reason of the condemnation, taking, or appropriation of all or a part of the Premises. A private sale in lieu of condemnation or taking shall constitute a taking or appropriation for purposes of this paragraph.
The Executive Group ~ Suite C-1 Lease
23. Assignment and Subletting. Tenant shall not, without first obtaining the prior written consent of Landlord which consent Landlord may withhold in its sole discretion, assign, sublet, mortgage, pledge, or encumber this Lease, in whole or in part, or sublet the premises or any part thereof. Landlord may assign the Lease. In the event that Landlord assigns the Lease, the Landlord shall be relieved of further liability under the Lease and Tenant shall look solely to the assigned party for obligations under this Lease.
24. Tenant’s Default. In the event the Tenant shall default in the payment of Base Rent, Additional Rent, or any other sums payable by the Tenant hereunder (“monetary default”) and such monetary default shall continue for a period of three (3) days, or if the Tenant shall default in the performance of any other covenants or agreements of this Lease (“non-monetary default’’) and such non-monetary default shall continue for ten (10) days, or if the Tenant should become bankrupt or insolvent or any debtor proceedings be taken by or against the Tenant, then and in addition to any and all other legal remedies and rights, the Landlord may declare the entire balance of the rent for the remainder of the term to be due and payable and may collect the same by distress or otherwise, may terminate the Lease, may terminate Tenant’s right to possession without terminating the Lease or take any other remedy allowed by Florida law, and Landlord shall have a lien on the personal property of the Tenant which is located in the Premises. Landlord may, without first obtaining a distress warrant, lock up the Premises in order to protect said interest in the secured property, or the Landlord may terminate this Lease and retake possession of the Premises, or enter the Premises and relet the same without termination, in which latter event the Tenant covenants and agrees to pay any deficiency after Tenant is credited with the rent thereby obtained less all repairs and expenses (including the expenses of obtaining possession), or the Landlord may resort to any two or more of such remedies or rights, and adoption of one or more of such remedies or rights shall not prevent the enforcement of others concurrently or thereafter.
The Tenant also covenants and agrees to pay all attorney’s fees and costs and expenses of the Landlord, including court costs, if the Landlord employs an attorney to collect rent or enforce other rights of the Landlord herein in the event of any breach as aforesaid, and the same shall be payable regardless of whether collection or enforcement is effected by suit or otherwise.
25. Strict Performance. The failure of Landlord to insist on strict performance of any covenant or condition hereof or to exercise any option contained herein shall not be construed as a waiver of such covenant, condition, or option in any other instance. This Lease may not be modified or terminated except in writing signed by Landlord.
26. Liens. Tenant shall not have any authority to create any liens for labor or material on or against the Landlord’s interest in the Premises or Landlord’s building and all persons contracting with the Tenant for the destruction or the removal of any building or for the erection or for the erection, installation, alteration, or repair of any building or other improvements in, on or to the Premises; and all material men, contractors, subcontractors, sub subcontractors, mechanics, and laborers are hereby charged with notice that they must look solely and only to the Tenant’s interests only in the Premises to secure the payment of any bill for work done or material furnished during the rental period created. by this Lease and, specifically, not to the Landlord or the Landlord’s Interest. Tenant agrees that it will include the language of this paragraph in any contract or agreement for any work done by Tenant in the Premises. Tenant shall, within ten (10) days after notice from Landlord, discharge any mechanic’s liens for materials or labor claimed to have been furnished to the Premises on Tenant’s behalf by posting an appropriate bond.
The Executive Group ~ Suite C-1 Lease
27. Right of Entry. Landlord may enter the Premises at any reasonable time, on reasonable notice to Tenant (except that no notice need be given in case of emergency) for the purpose of inspection or the making of such repairs, replacements, or additions in, to, or on and about the Premises or the building, as the Landlord deems necessary or desirable. TENANT shall provide keys to Landlord for Landlord’s access at ALL TIMES. ANY time Tenant changes locks to leased premises, Landlord shall immediately be provided an access key to such premises. Such key(s) shall be kept in a locked box by Management Company. Landlord shall not be held liable for any charges relating to access to the unit if Tenant is in default of this provision.
28. Amendment. No representations or promises shall be binding on the parties hereto except those representations contained herein or in a writing signed by the party making such representations or promises.
29. Covenants of Quiet Enjoyment: Landlord covenants that if, and so long as, Tenant pays the rent and any additional rent as herein provided, and performs the covenants hereof, Tenant shall peaceably and quietly have, hold, and enjoy the Premises for a term herein mentioned, subject to the provisions of this Lease.
30. Signs. The Tenant shall not place any signs or other advertising matter or material on the exterior or on the interior, where possible to be seen from the exterior, of the Premises or of the building in which the Premises are located, without the prior written consent of the Landlord which, if given, may be subsequently revoked at any time. Any lettering or signs which may be granted by Landlord in its sole discretion shall be of a type, kind, character and description to be approved by Landlord in writing.
31. Parking. Tenant shall be entitled to use a total of 4 parking spaces at the building. Landlord reserves the right to assign parking spaces to be used by Tenant and its employees, invitees and customers. Tenant shall take action to make sure that its employees, customers and invitees do not use more than the number of parking spaces assigned to Tenant by Landlord. In the event Tenant or its customers, invitees and guests violate this provision, then Tenant is subject to a fine of $25.00 per instance for each violation of this parking requirement. The payment of this fine shall not entitle Tenant to the use of additional spaces.
32. Ordinances and Regulations. The Tenant hereby covenants and agrees to promptly comply with all the rules and regulations of all governments and agencies having jurisdiction over the Premises, and with all laws, ordinances and regulations of governmental authorities wherein the Premises are located, at Tenant’s sole cost and expense.
33. Notice. Any notice required to be given hereunder shall be sufficient if given by hand delivery or overnight mail with proof of delivery, certified mail, return requested or email and fax if listed below, to the parties as follows:
| As to Landlord: | 1805 W. Colonial Drive | |
| 5429 Satin Leaf Ct, | ||
| Sanford, FL 32771 | ||
| Email: [*] | ||
| As to Tenant: | The Executive Group | |
| Attn: Rey Zapata | ||
| 1805 W. Colonial Dr, Ste B-1 | ||
| Orlando, FL 32804 | ||
| Phone: [*] | ||
| Email: [*] |
34. Attorney’s Fees and Costs. In connection with any litigation arising out of this Lease, the prevailing party shall be entitled to recover all costs incurred, including, but not limited to, reasonable attorney’s fees and costs.
35. Radon Gas. As required by law, Landlord makes the following disclosure: “RADON GAS” - Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.
36. Multiple Counter arts. This Lease Agreement and attached exhibits may be executed in any number of counterparts, each of which shall be deemed an original, and all of such counterparts shall constitute one instrument; but in making proof of this Lease, it shall not be necessary to produce or account for more than one such counterpart. A facsimile or email signature when sent to the other party shall be deemed an original signature with the same effect as if an original document and original signature had been delivered.
The Executive Group ~ Suite C-1 Lease
37. Benefit. The provisions of this Lease shall apply to, bind, and inure to the benefit of Landlord and Tenant, and their respective heirs, successors, legal representatives, and assigns as allowed by the Lease. It is understood that the term “Landlord” as used in this Lease means only the owner, a mortgagee in possession, or a term Tenant of the building, so that, in the event of any ale of the building or of any lease thereof, or if a mortgagee shall take possession of the premises, the Landlord named herein shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder accruing thereafter, and it shall be deemed without further agreement that the purchaser, the term Tenant of the building, or the mortgagee in possession has assumed and agreed to carry out any and all covenants and obligations of the Landlord hereunder.
38. Waiver of Jury Trial and Right to Counterclaim. Landlord and Tenant hall and do hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matter arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises or any emergency or other statutory remedy. Tenant further agrees that it shall not interpose any counterclaim(s) in any summary proceeding or in any action based on holdover or nonpayment of rent or any other sum payable by Tenant pursuant to the terms of this Lease but rather shall assert such counterclaim in a separate action.
39. Time of Essence. Time is of the essence of this Lease, and all provisions herein relating thereto shall be strictly construed.
40. Governing Law, Jurisdiction and Lease. This Lease shall be construed and enforced in accordance with the laws of the state of Florida. The parties agree that the State Courts in Orange County, Florida and their Appellate Courts shall have exclusive jurisdiction for all lawsuits between them.
41. Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the rent or other amounts herein stipulated shall be deemed to be other than on account of the stipulated rent and amounts due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment thereof be deemed an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such amounts or pursue any other remedy provided in this Lease.
42. Entire Agreement. This Lease and the Exhibits, Riders, Addenda and Guaranty, if any, attached hereto and forming a part hereof, set forth all the covenants, promises, agreements, conditions and understandings between Landlord and Tenant concerning the Premises, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between Landlord and Tenant concerning the Premises except those herein set forth.
The Executive Group ~ Suite C-1 Lease
43. Recordation. Tenant shall not record this Lease, or a memorandum hereof, without the prior written consent of Landlord. Any such recordation in violation of this provision shall at Landlord’s option render this Lease null and void. Tenant shall, at the request of Landlord, execute, acknowledge and deliver, at any time after the date of this Lease, a short form lease or Memorandum of Lease prepared by Landlord but the provisions of this Lease shall control the rights and obligations of the parties.
44. Corporate Tenant/Tenants. In the event the Tenant hereunder is a corporation, the persons executing this Lease on behalf of the Tenant hereby covenant and warrant that: (a) the Tenant is a duly constituted corporation qualified to do business in the state in which the Premises is located; (b) all Tenant’s franchise and corporate taxes have been paid to date; (c) all future forms, reports, fees and other documents necessary for Tenant to comply with applicable laws will be filed by Tenant when due; and (d) such persons are duly authorized, by the governing body of such corporation, to execute and deliver this Lease an behalf of the corporation.
45. Conversion to Condominium. The unit being leased to Tenant is one unit of a multi-unit building. The Landlord may elect to convert the building into condominium units and to sell other units. Tenant agrees to consent to and sign all documents as requested by Landlord which are needed in order to convert the building into condominiums.
46. Guaranty. This lease agreement is conditioned upon the Guarantors personally guaranteeing Landlord’s obligations under this Lease by their execution of the Guaranty attached as Exhibit E.
47. Exhibits. The following exhibits, if checked as applicable, are attached and made a part of this Lease:
| Applicable | Not Applicable | |||
| A | Description of Landlord’s Work | X | ||
| B | Description of Tenant’s Work | X | ||
| C | Construction Requirements | X | ||
| D | Construction Rules and Regulations | |||
| E | Guaranty | X | ||
| F | Tenant Construction Allowance Rider | X |
The Executive Group ~ Suite C-1 Lease
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
| Landlord: | ||
| Epiphany Property Holdings, LLC | ||
| By: | ||
| ANTHONY LASALA, Manager | ||
| Dated: | ||
| Tenant: | ||
| The Executive Group/La Rosa Realty | ||
| By: | ||
| REYNALDO ZAPATA, Branch Manager | ||
| Dated: | ||
The Executive Group ~ Suite C-1 Lease
EXHIBIT “A”
DESCRIPTION OF LANDLORD’S WORK
THIS PAGE INTENTIONALLY LEFT BLANK
The Executive Group ~ Suite C-1 Lease
EXHIBIT “B”
DESCRIPTION OF TENANT’S WORK
The following work is to be done by Tenant at Tenant’s sole expense:
| 1. | COMPLETION OF DEMISED PREMISES: |
All work required to complete and place the Premises in finished condition for opening for business, except only for the work specifically described in Exhibit “A” as Landlord’S work, is to be done by Tenant at Tenant’s sole expense: included in such work, but without limitation, are all subdivision walls, floor coverings, wall finishes, all store fixture work, all painting and decorating.
| 2. | TENANT’S CONSTRUCTION: |
(a) Comply with existing Code requirements for building permits including a provision required by the American Disabilities Act of 1992.
(b) Non-combustible materials must be used above ceiling.
(c) Mezzanines not permitted unless approved by Landlord.
(d) Plastered or dry walls, or their equivalent finish, required throughout the sales area. Any exposed studs in storeroom area will be finished with dry wall or its equivalent. Paint and decorate interior of Premises.
(e) Provide all partitions.
(f) Provide all floor coverings.
(g) Provide trash room within Premises.
(h) Provide for any heating and air conditioning equipment, required by Tenant in addition to units supplied by Landlord, all wiring and duct work, designed by a professional engineer with seal. Space above ceiling may not be used as a return air plenum unless Tenant provides proper fireproofing. If space above ceiling is not used as a return air plenum, then heating ducts above ceiling shall be .insulated. No roof penetrations will be permitted without prior written approval of Landlord. All such equipment to be in proper operation on day that Tenant opens the Premises for business.
The Executive Group ~ Suite C-1 Lease
(i) All cutting and patching of the roof area required for installation of air conditioning and ventilation systems, plumbing or utilities shall be paid by the Tenant. However, in all cases said work shall be performed by the Landlord’s contractor’s roofing subcontractor.
(j) Provide all utilities, plumbing, electric and telephone as well as other Tenant requirements under the floor slab and other areas within the store buildings and pay for hookup charges and all additional connection fees imposed by the Water and Sewer Authorities.
(k) Tenant shall furnish information to Landlord’s architect for its requirements for lights and power, and its estimated load.
(1) Provide hot water and drinking fountain, if any, with all necessary connections.
(m) Provide fire extinguisher which may be required.
(n) Provide all time clocks.
| 5. | ACCESS TO DEMISED PREMISES: |
Landlord, Landlord’s agent or designee, an independent contractor, or an authorized utility company, as the case may be, shall have the right to run utility lines, pipes, conduits or duct work where necessary or desirable, through attic space, column space, or other parts of the Premises, and to repair, alter, replace or remove the same, all in a manner which does not interfere unnecessarily with Tenant’s use of the Premises.
| 6. | LABOR DISPUTES: |
To the end that there shall be no labor dispute which would interfere with the construction, completion or operation of the building, or with any work being carried on therein, Tenant shall engage the services of only such contractors and subcontractors as will work in harmony with each other, those of Landlord, and any others then working in the building, and only such labor as will work in harmony with all other labor then working in the building.
The Executive Group ~ Suite C-1 Lease
| 7. | INSURANCE: |
TENANT shall require its contractors to furnish Landlord or Landlord’s contractors evidence of adequate insurance coverage as set forth in Exhibit D prior to Tenant’s contractor performing any work in the Premises, and Tenant agrees to indemnify and hold harmless Landlord and Landlord’s contractors from and against any claims, actions or damages resulting from acts of negligence of Tenant, its agents, employees, or contractors in performance of Tenant’s work.
| 8. | TENANT’S EMPLOYEES AND CONTRACTORS: |
Tenant shall be limited to performing its work, including any office or storage for construction purposes within the Premises only. Tenant and Tenant’s contractors shall be responsible for daily removal from the Building of all trash, rubbish, and surplus materials resulting from construction, fixturing and merchandising of the Premises. Tenant shall limit its deliveries and worker’s to hours approved by Landlord and only to the rear of the Premises. Tenant shall conduct its work so as to cause the least amount of disruption and disturbance to pedestrian and vehicular traffic as possible.
| 9. | TEMPORARY UTILITIES: |
Tenant shall be responsible for temporary utility connections for its work, including payment of utility charges.
| 10. | APPROVALS: |
Tenant shall not perform any work, repairs or alterations to the Premises unless the Landlord has given its prior written approval of such work. Any approval or consent by Landlord or Landlord’s architect shall in no way obligate Landlord in any manner whatsoever in respect to the finished product, design and/or construction by Tenant. Any deficiency in design or construction, although the same had prior approval of Landlord, shall be solely the responsibility of Tenant.
The Executive Group ~ Suite C-1 Lease
EXHIBIT “C”
CONSTRUCTION REQUIREMENTS
CONSTRUCTION:
| 1. | TENANT’S WORK: |
All work, other than that specifically agreed to in writing to be performed by Landlord shall be performed by Tenant, at Tenant’s sole cost and expense, and in accordance with the plans and specifications hereinafter referred to in this Section, prepared by Tenant’s architect in conformity with the description of Tenant’s work in Exhibit “B”. Tenant shall prepare and submit to Landlord for approval, within thirty (30) days from the date of this Lease, three (3) complete sets of preliminary plans, drawings and specifications covering Tenant’s work, prepared in conformity with the applicable provisions of Exhibit “B”. If Landlord or Landlord’s architect notifies Tenant of any objections to such plans, drawings, and specifications, Tenant shall make the necessary revisions to Landlord’s reasonable satisfaction and promptly resubmit the same after such notice. Landlord’s approval will be evidenced by endorsement to that effect on two (2) sets of the preliminary plans, drawings and specifications, one set to be retained by Landlord and one set by Tenant. Within thirty (30) days after Landlord’s approval of the preliminary plans, drawings and specifications, Tenant shall deliver to Landlord three (3) complete sets of working plans, drawings and specifications, each of which sets shall have been initialed by Tenant, thereby evidencing Tenant’s approval thereof. Landlord shall notify Tenant of the manner, if any in which said working plans, drawings and specifications as submitted to Tenant fail to conform with said preliminary plans, drawings and specifications and with the applicable provisions of Exhibit “B”. Tenant shall revise or correct said working plans, drawings and specifications to Landlord’s reasonable satisfaction and promptly submit such revisions or corrections to Landlord similarly initialed. Landlord’s approval will be evidenced by endorsement to that effect on one set of the working drawings and specifications and the return of such signed set to Tenant.
| 2. | COMMENCEMENT OF TENANT’S WORK: |
Tenant shall expeditiously commence construction of Tenant’s work at a time and in a manner which will not interfere with completion of Landlord’s work and will perform and complete Tenant’s work in compliance with such reasonable rules and regulations as Landlord and its architect or contractor or contractors may make (provided that Tenant shall be commenced within thirty (30) days after the last of the following to occur (“Tenant Construction Commencement Date”) (i) Landlord’s approval of Tenant’s working plans, drawings and specifications and (ii) Landlord’s notice to Tenant that the Premises will, within thirty (30) days after said notice, be substantially completed (except for finishing operations or items of work necessarily awaiting the performance of Tenant’s work) to the extent reasonably required that Tenant’s work can be commenced. Tenant’s work shall be performed in accordance with the approved working plans, drawings and specifications and Exhibit “B”.
The Executive Group ~ Suite C-1 Lease
| 3. | CONSTRUCTION SCHEDULE: |
Time is of the essence with respect to the performance by Tenant of each of the provisions concerning construction. If Tenant fails or omits to make timely submission to Landlord of its plans, drawings, or specifications or unreasonably delays in submitting or supplying information or in giving authorization or in performing or commencing to perform or completing Tenant’s work or unreasonably delays or interferes with the performance of Landlord’s work, Landlord, in addition to any other right or remedy it may have at law or in equity, may pursue any one or more of the following remedies: (a) Until Tenant shall have commenced Tenant’s work, Landlord may give Tenant at least ten (10) days written notice that if a specified failure, omission or delay is not cured by the date therein stated this Lease shall be deemed cancelled and terminated; and if such notice shall not be complied with, this Lease shall, on the date stated in such notice, ipso facto, be cancelled and terminated without prejudice to Landlord’s rights hereunder; or (b) Landlord may, after written notice of intention to do so, at Tenant’s cost and expense, including, without limitation, all expenses for such overtime as Landlord’s architect may deem necessary, proceed with the completion of any such plans, drawings, or specifications for Tenant’s work as the case may be, and such performance by Landlord shall have the same effect hereunder as if the desired plans, drawings, specifications, information, approval, authorization work or other action by Tenant had been done as herein required; and Landlord may require Tenant to pay to Landlord, as additional rent hereunder, the full cost to Landlord of completing the Premises in accordance with the terms of this Lease over and above what would have been such cost had there been no such failure, omission or delay; and, alternatively, (c) Landlord may give written notice of Tenant (notwithstanding that such a notice is not required hereunder) that the lease term will be deemed to have commenced on the date to be therein specified when the same would have commenced if Tenant had made timely submission or supply of plans, drawings, specifications, estimates or other information or approval of any thereof, and on and after the date so specified, Landlord shall be entitled to be paid on the terms as agreed the Base Rent and any other rents and charges which are payable under this Lease by Tenant during the Lease Term. In exercising any of the foregoing remedies set forth in (a), (b), or (c), Landlord shall be entitled to retain and have recourse to any, if any, bond, escrow deposit, advance rent or Deposit previously deposited by Tenant under this Lease.
| 4. | OBLIGATIONS BEFORE LEASE TERM COMMENCES: |
Tenant shall perform promptly such of its obligations under this Lease, including, without limitation, its obligation to pay charges for temporary water, heating, cooling and lighting pursuant to Exhibit “B” from the date upon which the Premises are made available to Tenant for its work (or from the date when Tenant commenced to perform its said work, if earlier), until the actual commencement of the lease term in the same manner as though the lease term began when the Premises were so made available to Tenant or when Tenant commenced performing its said work, if earlier.
The Executive Group ~ Suite C-1 Lease
| 5. | COMPLETION OF TENANT’S WORK: |
Upon the completion of Tenant’s work and prior to Tenant opening for business, Tenant shall (a) deliver to Landlord an affidavit by Tenant stating that Tenant’s work has been substantially completed in accordance with Exhibit “B”, which shall include a detailed breakdown of Tenant’s final and total construction costs, together with receipted invoices showing payment thereof, or Tenant may deliver a final Release of Lien from Tenant’s general contractor, together with an affidavit from the general contractor that all bills for labor and materials furnished to the Premises have been paid, in lieu of a detailed breakdown of Tenant’s total and final construction costs, together with receipted invoices, and which affidavit shall also state the names and addresses of all those in privity with such general contractor and it is understood that any deliberately false statement by Tenant therein shall constitute a breach of this Lease, and (b) deliver to Landlord the affidavit of the general contractor or general contractors performing Tenant’s work, stating that Tenant’s work has been substantially completed in accordance with Exhibit “B”, that all subcontractors, subsubcontractors, laborers and material men supplying labor or materials for Tenant’s work have been paid in full and that all liens therefore that have been or might be filed have been discharged of record or waived, and that no security interests relating thereto are outstanding, and (c) deliver to Landlord written certifications and approvals with respect to Tenant’s work and its right to use and occupy the Premises that may be required for any government authority, Landlord’s mortgagees and any Board of Fire Underwriters or similar body and (d) furnish to Landlord the insurance required by the Lease.
| 6. | OWNERSHIP OF IMPROVEMENTS: |
Without limiting any other similar provision(s) contained elsewhere in the Lease, all installations, additions, betterments or improvements in or upon the Premises, made by either party, including, without limitation, all pipes, ducts, conduits, wiring, paneling, partitions, railings, mezzanine floors, galleries and the like shall become the property of Landlord at the time the improvements are made and shall remain upon and surrendered with the Premises as a part thereof at the expiration or sooner termination.
The Executive Group ~ Suite C-1 Lease
EXHIBIT “D”
CONSTRUCTION RULES AND REGULATIONS
Tenant and Tenant Contractor
| Re: | _______________________________ |
Tenant Contractor Requirements
To Whom It May Concern:
Welcome to ______________________ ! As a part of preparing your Premises for opening, you may perform Work that requires a Tenant Buildout Contractor. I have previously furnished a list of preferred contractors to your leasing representative. The following requirements must be satisfied before any Tenant Contractors commence Work on the above referenced project:
| 1. | Tenant Lease must be fully executed by Tenant and Landlord. |
| 2. | Tenant’s Contractor must be a Licensed Contractor in the State of Florida. |
| 3. | Any permanent utilities must be turned over in the Tenant’s name prior to commencement of Work. |
| 4. | The Tenant’s Premises shall be clearly identified as Exhibit A to this document. |
| 5. | The Tenant shall be assigned a staging area by Landlord for the duration of construction activities to the Tenant’s space. |
| 6. | Tenant’s Contractor shall at all times maintain in full force and effect insurance policies that meet the following requirements: |
| a) | Each Insurance Company shall have a minimum rating of A by A.M. Best Company. The Insurance Company referenced should have a minimum financial size “V,” which is $10 to $25 Million of U.S. dollars of reported capital, surplus and conditional reserve funds. |
| b) | A Comprehensive General Liability: Combined Single Limit (CSL) policy with minimum limits of One Million ($1,000,000) CSL per occurrence / Two Million ($2,000,000) per aggregate and shall include the following coverages: |
| ● | Premises Operations |
| ● | Aggregate Per Project/Location |
| ● | Products Completed Operations |
| ● | Contractual Liability |
The Executive Group ~ Suite C-1 Lease
| ● | Broad Form Property Damage |
| ● | Personal Injury |
| c) | A “Any Auto” or Hired and Non-owned Automobile policy with a minimum limit of One Million ($1,000,000) CSL. |
| d) | A workers compensation policy to cover all employees of the contractor and any subcontractor in full compliance with the Workers Compensation Law of the State of Florida and all applicable Federal Laws in the minimum limits of: |
| ● | Employers Liability per Accident: | $100,000 | ||
| ● | Employers Liability Disease each Employee: | $100,000 | ||
| ● | Employers Liability Disease Policy Limit: | $500,000 |
| e) | Certificates of insurance shall be provided to Landlord prior to the commencement of any construction work. The certifications of insurance shall provide that the insurance policies cannot be cancelled without thirty (30) days prior written notice to Landlord. |
| f) | The Additional Insureds under the policy shall be the Tenant, WCDO, LLC, Paul and Sally Curtis Family Limited Partnership, Paul Curtis Realty, Inc., Village Property Management, Inc. and their officers, directors, members and employees and their successors and assigns. If the Tenant’s Contractor commences work prior to the Shell Contractor (contractor performing any work for Landlord) finalizing all of Landlord’s work, then the Shell Contractor shall be named as an additional insured. |
| 7. | Tenant Contractor shall adhere to Project safety standards. At a minimum, all construction personnel shall be required to wear hard hats when necessary, shirts, and work shoes. The project is a drug free workplace, and alcohol, drugs, and firearms shall not be permitted on the Project. |
| 8. | The Tenant or Tenant Contractor is responsible for obtaining any required interior build out Permit or Occupational License from the County. |
| 9. | Tenant Contractor shall be responsible for their own temporary services, such as water, power, toilets, and dumpsters. |
| 10. | No Tenant Contractor signage is allowed. |
| 11. | The location of any required refuse containers shall be approved by the Landlord. |
| 12. | All parking for personnel and trucks (other than deliveries) shall be in the Contractor’s staging area or offsite. |
The Executive Group ~ Suite C-1 Lease
| 13. | All Tenant build out plans shall be approved by the Landlord pnor to commencement of Tenant build out activities |
| 14. | All significant material deliveries shall be coordinated with the Landlord. |
| 15. | A Construction Schedule shall be delivered to the Landlord prior to commencement of Tenant build out activities. |
| 16. | The Tenant and the Tenant Contractor shall deliver emergency telephone numbers to the Landlord prior to commencement of Work. |
| 17. | The Landlord and Architect shall perform an inspection of the shell construction prior to commencement of Tenant build out activities, if the building shell is not yet completed. |
| 18. | Tenant Contractor shall be required to utilize the services of the Building Fire Protection Contractor for any changes to the Fire Protection System. |
| 19. | Tenant Contractor shall be required to utilize the services of the Building Roofing Contractor for any proposed roof penetrations. |
| 20. | Tenant Contractor shall be required to utilize the services of the Building EIFS Contractor for any proposed EIFS changes or penetrations. |
| 21. | A Master Key shall be maintained in the building Knox Box at all times or provided to Landlord. |
| 22. | As-bui1t drawings shall be submitted to the Landlord for review and approval after construction is complete. |
| 23. | The Tenant Contractor, or Tenant, shall post a $5,000.00 Security Deposit to Landlord prior to Commencement of Work. This deposit shall be returned within 15 days of satisfactory completion of all Tenant Buildout activities, and a satisfactory release from the Landlord. |
| 24. | The Landlord Construction Representatives shall be as follows: |
Whoever, Construction Manager
Address
Telephone
Facsimile
Please feel free to contact me with any questions or concerns that may arise from these requirements.
| Proposed by: | Accepted by: | |
| Landlord Rep | Tenant Contractor | |
| Construction Consultant | ||
| WCDO, LLC |
The Executive Group ~ Suite C-1 Lease
EXHIBIT “E”
PERSONAL GUARANTY
FOR VALUE RECEIVED and in consideration for and as an inducement to Landlord, WCDO, LLC, making the within Lease with TENANT, the undersigned Guarantors, on behalf of himself, his legal representative, heirs, successors and assigns, jointly and severally, absolutely and unconditionally guarantees to Landlord, Landlord’s successors and assigns, the full performance and observance of all the provisions therein provided to be performed and observed by Tenant, including the rules and regulations, without requiring any notice of nonpayment, nonperformance, or nonobservance, or proof, or notice, or demand, whereby to charge the undersigned therefore, all of which the undersigned expressly agrees that the validity of this agreement and the obligations of the undersigned guarantor hereunder shall not be terminated, affected or impaired by reason of the assertion by Landlord against Tenant of any of the rights or remedies reserved to Landlord pursuant to the provisions of the within Lease. The undersigned farther agrees that this guaranty shall remain and continue in full force and effect as to any renewal, modification, assignment or extension of this Lease and that such actions may be taken without prior notice to guarantors. As a further inducement to Landlord to make this Lease and in consideration thereof, Landlord and the undersigned agree that, in any action or proceeding brought by either Landlord or the undersigned against the other on any matters whatsoever arising out of, or by virtue of the terms of this Lease or of this guaranty, Landlord and the undersigned shall, and do hereby, absolutely and unconditionally waive trial by jury and the right to file a counterclaim. In the event Landlord incurs any expenses in the enforcement of this guaranty, whether legal action be instituted or not, the undersigned agrees to be liable for same (including, without limitation, reasonable attorney’s fees at all levels of trial and appeals) and to pay same promptly on demand by Landlord. The undersigned acknowledges receipt of a complete copy of the Lease with all Exhibits and other attachments, if any. Guarantors consent to the jurisdiction and venue of the State Courts in Orange County, Florida.
| Dated: | ||||
| Witnesses: | ||||
| By: | ||||
| Print Name: | ||||
| Address: | ||||
| Social Security # | ||||
| By: | ||||
| Print Name: | ||||
| Address: | ||||
| Social Security # | ||||
The Executive Group ~ Suite C-1 Lease
EXHIBIT F
TENANT CONSTRUCTION ALLOWANCE RIDER
As incentive for Tenant to lease, Landlord agrees to contribute toward Tenant’s improvements, fixtures and inventory, an allowance in an amount not to exceed None (“Allowance”) as reimbursement for actual costs incurred by Tenant. Provided Tenant is not in default of this Lease, Landlord agrees to give Tenant a credit against rents in the amount of $ N/A per month until the Allowance is fully credited. The granting of the Allowance credits is conditioned upon the satisfactory conclusion of Tenant’s work and the receipt of the following:
| 1. | Commencement of Rent |
| 2. | Certificate of Occupancy |
| 3. | Certificate of Insurance |
| 4. | Final Waivers of Lien |
| 5. | General Release and No Lien Affidavit from all Contractors |
| 6. | Proof of payment by Tenant of funds for these purposes |
The granting of this credit is conditioned upon Tenant being open for business, paying rent and not defaulting any of the terms and conditions of the Lease. In the event Tenant defaults in any of Tenant’s obligations under the Lease, then the obligation by Landlord to pay this Allowance shall automatically become null and void and Tenant shall pay to Landlord the amount of any credit obtained prior to Tenant’s default. Time is of the essence as to all of Tenant’s obligations. Request for commencement of the Allowance credit shall be made by Tenant to Landlord in writing. Said credit shall commence to be made to Tenant within thirty (30) days of receipt of those items listed above.
The Executive Group ~ Suite C-1 Lease
23
Exhibit 10.131
ATLANTA COMMERCIAL BOARD OF REALTORS ® , INC. OFFICE LEASE AGREEMENT THIS LEASE is dated , by and among 2. TERM. The Tenant shall have and hold the Premises for a term of beginning on the ) Office Lease Agreement (#003) Rev. 05/05 1 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 The rent including property taxes and CAM charges. (C) All payments, other than those specified above, as required in this Lease to be made by Tenant to Landlord shall be deemed to be and shall become additional rent hereunder, whether or not the same shall be designated as such and shall be due and payable along with usual rental payments subject to the same conditions and remedies as exist for said rental payments . 4 . LATE CHARGES . Other remedies for nonpayment of rental notwithstanding, time is of the essence of this Lease and i f Landlord elects to accept rent on or after the sixth ( 6 th) day of the month, a late charge equal to the greater of five percent ( 5 % ) of the monthly rent or One Hundred Dollars ( $ 100 . 00 ) will be due as additional rent . Tenant agrees to tender all late rents by cashier's check, certified check, or money order . In the event Tenant's rent check is dishonored by the bank, Tenant agrees to pay Landlord $ 25 . 00 as a handling charge and, i f applicable, the late charge, and Tenant shall deliver said monies to Landlord as specified in Paragraph 3 . Dishonored checks must be replaced by cashier's check, certified check or money order . In the event more than one check is dishonored, Tenant agrees to pay all future rents and charges in the form of cashier's check, certified check, or money order . Any other amounts payable to Landlord under this Lease, with the exception of rent, shall be considered past due 30 days from Landlord's billing date and Tenant shall pay a monthly service charge of 5 % of the amount past due for that and each subsequent month that the amount remains past due . The parties agree that such charges represent a fair and reasonable estimate of the costs the Landlord will incur by reason of such late payment and/or returned check . 4/6/2021 Daia Group LLC (“Landlord”), La Rosa Realty Georgia, LLC (“Tenant”), Coldwell Banker Commercial Metro Brokers (“Broker”) and La Rosa Realty Georgia, LLC (“Co - Broker”). 1 . PREMISES . Landlord, for and in consideration of the rents, covenants, agreements, and stipulations hereinafter mentioned, provided for and contained hereinafter to be paid, kept and performed by Tenant, leases and rents unto Tenant and Tenant hereby rents and leases from Landlord the following described space in 5855 Medlock Bridge Parkway, Suite 100, Alpharetta, GA 30022 (“Building”) being approximately 4 , 248 +/ - rentable square feet ( N/A usable square feet) located at Fulton County, Georgia, (“Premises”) . The Premises are more particularly described and shown on Exhibit “A” as attached hereto and made a part hereof . No easement for light or air is granted hereunder . 36 months 1st day of May , 2021 , and ending on the 30th day of April , 20 24 , at midnight, unless sooner terminated as hereinafter provided, or unless adjusted pursuant to Paragraph 6(“Term”). 3. RENTAL AND COVENANTS TO PAY RENT. (A) Tenant shall pay to Landlord at 6985 BRIXTON PLACE, SUWANEE, GA 30024 or at such other place as Landlord may designate in writing without demand, deduction or set - off, an annual rental of (“Base Rental”), payable in equal monthly installments of four thousand and 00 / 100 Dollars ( $ 4 , 000 . 00 ) in advance on the first day of each calendar month during the Term subject to adjustment as provided in this paragraph . However, the rental shall be no less than the Base Rental as specified above . Rental for any period during the Term which is for less than one month shall be a prorated portion of the monthly rental due .
(B) Base Rental shall escalate as follows : forty - eight thousand and 00/100 Dollars ($ 48,000.00 Month #13 ~ #24: Month #25 ~ #36: $4,120.00 per month $4,243.60 per month 5. SECURITY DEPOSIT. On the date of execution of this Lease by Tenant, Tenant will pay to Landlord the first full month’s Base Rental in the amount of $ and a security deposit in the amount of Office Lease Agreement (#003) Rev. 05/05 2 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 See Exhibit "B"(4) $ See Exhibit "B"( 4 ) . Landlord shall have the right, but not the duty, to apply any part of said deposit to cure any default of Tenant and if Landlord does so, Tenant shall upon demand deposit with Landlord the amount so applied so that Landlord shall have the full deposit on hand at all times during the Term of this Lease . Landlord shall have the right, but not the duty, to hold said security deposit in an interest bearing escrow account and retain any interest accrued . In the event of a sale of the Building, or a lease of the Building, subject to this Lease, Landlord shall transfer the security deposit to the new landlord, and the Tenant shall attorn to the new landlord and the present Landlord shall thereupon be released from all liability for the return of such security deposit and Tenant shall look solely to the new landlord for the return of such security deposit and this provision shall apply to every transfer or assignment made of the security deposit to a new landlord . The security deposit under this Lease shall not be assigned or encumbered by Tenant without the written consent of Landlord and any such assignment or encumbrance without the Landlord’s written consent shall be void . Such security deposit shall be returned to Tenant within 30 days following the end of the Term of this Lease provided that Tenant has performed Tenant’s obligations under this Lease and provided that no defective conditions, other than normal wear and tear and casualty are left unrepaired by Tenant and that Tenant does not owe Landlord any debts . Any portion of the security deposit not required to reimburse Landlord for Landlord’s expense in repairing defective conditions caused by Tenant, or for paying amounts owed by Tenant to Landlord, shall be refunded to Tenant as provided above . 6. COMMENCEMENT . The date on which possession of the Premises is taken by Tenant (hereinafter called “Commencement Date”) will establish the commencement of rent on this Lease i f possession is taken before the 1 st day of May , 20 21 . I f for any reason Landlord fails to deliver the Premises ready for occupancy on the above date, this Lease shall remain in full force and effect and Landlord shall have no liability to Tenant due to delay in occupancy and rental shall commence when the Premises are ready for occupancy . Moreover, the Term of this Lease shall be proportionately extended for an additional period of time to the end so that this Lease shall provide for a full Term as herein provided . I f a delay in having the Premises ready for occupancy is caused by Tenant, or i f the Premises are ready for occupancy on the above date but Tenant does not take occupancy, rental in either case will commence as of the above date, unless specified otherwise herein . 7. ACCEPTANCE OF PREMISES . Landlord and Landlord's broker have made no representations or promises with respect to the Building, the Premises, or this Lease except as herein expressly set forth . The taking of possession of the Premises by Tenant shall be conclusive evidence that Tenant accepts the Premises "as is" and that the Premises and the Building are suitable for the use intended by Tenant and were in good and satisfactory condition at the time such possession was so taken, excluding any punch list items . 8. REPAIR BY TENANT AND REMOVAL OF IMPROVEMENTS AND ALTERATIONS UPON TERMINATION . (A) Tenant will, at Tenant's expense, take good care of the Premises and the fixtures and appurtenances therein, and will cause no active or permissive waste or injury thereof ; and Tenant shall, at Tenant's expense, but under the direction of Landlord, promptly repair any damage to the Premises or the Building caused by the misuse or neglect thereof, or by persons permitted on the Premises by Tenant, or Tenant moving in or out of the Premises . (B) Tenant will not, without Landlord's written consent, make any alterations, additions or improvements in or about the Premises and will not do anything to or on the Premises which will increase the rate of fire insurance on the Building . All alterations, additions or improvements (including but not limited to carpets, window treatments, and window treatment hardware) made or installed by Tenant to the Premises shall become the property of Landlord at the expiration of the Term of this Lease, or any extensions or renewals thereof . Landlord reserves the right to require Tenant to remove any improvements, additions or voice or data cabling or other low voltage wiring made to the Premises by Tenant or for Tenant’s benefit ; Tenant further agrees to do so prior to the expiration of the Term or within thirty ( 30 ) days after notice from Landlord, whichever shall be later, provided that Landlord give such notice no later than thirty ( 30 ) days after expiration of the Term of this Lease, or any extensions or renewals thereof . (C) No later than the last day of the Term, Tenant will remove all of Tenant's personal property and trade fixtures and repair all damage done by or in connection with the installation or removal of said property and will surrender the Premises (together with all keys to the Premises) in as good a condition as existed at the beginning of the Term, reasonable wear and tear, damage by fire, the elements or casualty excepted .
All property of Tenant remaining on the Premises after expiration of the Term shall be deemed conclusively abandoned and may be removed by Landlord, and Tenant shall reimburse Landlord for the cost of such removal, subject, however, to Landlord's right to require Tenant to remove any improvements or additions made to the Premises by Tenant pursuant to sub - paragraph (B) of this paragraph . (D) In doing any work of any nature in, to or about the Premises, Tenant will use only contractors or workmen approved by Landlord . Tenant shall promptly cause the removal of any lien for material or labor claimed to be furnished to Premises at Tenant’s request . 9 . REPAIRS AND MAINTENANCE OF THE BUILDING . Landlord shall provide for the cleaning, repair and maintenance of the public portions of the Building . Unless otherwise expressly stipulated herein, Landlord shall not be required to make any improvements or repairs of any kind or character on the Premises during the Term of this Lease, except repairs to the exterior walls, corridors, windows, roof and other structural elements and equipment of the Building, and such additional maintenance as may be necessary because of damage by persons other than Tenant, its brokers, employees, invitees or visitors . Landlord shall not be liable to Tenant for losses due to theft or burglary or for damages done by unauthorized persons on the Premises . 10. USE. Tenant shall use the Premises for and for all lawful activities normally incidental thereto and related to the conduct of Tenant’s business, but for no other purposes . Tenant shall not use or occupy the Premises, or permit the Premises to be used or occupied, in violation of any ordinance, law or regulation of any governmental body, or in any manner which would vitiate or increase the premium charged for insurance on the Premises or the Building or that would cause damage to the Building, or that would constitute a public nuisance, or that would disturb the quiet enjoyment of the other tenants of the Building . 11. SERVICES - WATER, CLEANING, AND ELECTRICITY . Landlord shall furnish the following services without additional charge : (A) Heat and air conditioning in Landlord's judgment sufficient to reasonably cool or heat the Premises, at the proper season, during standard building hours ( 8 : 00 A . M . to 6 : 00 P . M . on Mondays through Fridays, inclusive and 8 : 00 A . M . to 1 : 00 P . M . on Saturdays) on normal business days, except holidays observed by national banks as legal holidays ; (B) Restroom facilities including water, paper towels, and toilet tissue reasonably used on the Premises ; (C) Janitorial services each Monday through Friday, except holidays observed by national banks as legal holidays ; (D) Electric current for lighting and for small business machines only (e . g . typewriters, personal computers, copiers and other small office equipment) using 110 volt, 20 AMP circuits . Tenant will not use any electrical equipment which in Landlord's opinion will overload the wiring installations or interfere with the reasonable use thereof by other users in the Building . Tenant will not, without Landlord's prior written consent in each instance (which shall not be unreasonably withheld) connect any additional items (such as electric heaters, data processing equipment or copy machines) to the Building’s electrical distribution system, or make any alterations or addition s to such system . Should Landlord grant such consent, all additional circuits or equipment required therefore shall be provided by Landlord and the reasonable cost thereof shall be paid by Tenant upon Landlord's demand ; (E) If Tenant uses an excessive amount of any of the services enumerated in this Paragraph, then Landlord reserves the right to charge Tenant as additional rent a reasonable sum for such excess ; (F) Landlord shall in no way be liable for cessation of any of the above services caused by strike, accident or reasonable breakdown, nor shall Landlord be liable for damages resulting from any of the fixtures or equipment in the Building being out of repair, or for injury to person or damage to property, caused by any defects in the electrical equipment, heating, ventilating and air conditioning system, water apparatus, or for any damages arising out of failure to furnish the services enumerated in this Paragraph 11 . 12. DESTRUCTION OF OR DAMAGE TO PREMISES . I f the Premises are made untenantable in whole or in part by fire or other casualty, the rent, until repairs shall be made or this Lease is terminated as hereinafter provided, shall be apportioned on a per diem basis and prorated according to the part of the Premises which is usable by the Tenant, if, but only if, such fire or other casualty was not caused by the fault or negligence of the Tenant, its contractors, invitees, brokers or employees . I f such damage shall be so extensive that the Premises cannot be restored by the Landlord within a period of one hundred twenty ( 120 ) days (as evidenced by a written declaration from Landlord to Tenant), then either party shall have the right to cancel this Lease by notice to the other given at any time within thirty ( 30 ) days after the date of such damage . I f this Lease is not so terminated, the Landlord will promptly repair the damage at the Landlord’s expense . 13. RULES AND REGULATIONS . Tenant will faithfully observe and comply with the “Rules and Regulations” attached office hereto and made a part hereof, and such further reasonable rules and regulations as Landlord may prescribe, on written notice to Office Lease Agreement (#003) Rev. 05/05 3 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 alterations and repairs; third, to the payment of the monthly rental and additional rent due and unpaid hereunder, and Office Lease Agreement (#003) Rev.
05/05 4 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 Tenant, for the safety, care and cleanliness of the Building, and the comfort, quietness and convenience of other occupants of the Building. 14. EVENTS OF DEFAULT . The happening of any one or more of the following events (hereinafter any one of which may be referred to as an “Event of Default”) during the term of this Lease, or any renewal or extension thereof, shall constitute a breach of this Lease on the part of the Tenant : (A) Tenant fails to pay the rental as provided for herein, and such failure continues for a period of five (5) calendar days; (B) Tenant abandons or vacates the Premises; (C) As set forth in Subsection 14(A), except Tenant fails to comply with or abide by and perform any other obligation imposed upon Tenant under this Lease, and such failure continues for a period of thirty (30) calendar days following written notice from Landlord to Tenant of said failure. (D) Tenant is adjudicated bankrupt or files for bankruptcy protection; (E) A permanent receiver is appointed for Tenant’s property and such receiver is not removed within sixty (60) days after written notice from Landlord to Tenant to obtain such removal; (F) Tenant either voluntarily or involuntarily takes advantage of any debt or relief proceedings under the present or future law, whereby the rent or any part thereof is, or is proposed to be reduced or payment thereof deferred; (G) Tenant makes an assignment for benefit of creditors; or (H) Tenant’s effects are levied upon or attached under process against Tenant, which is not satisfied or dissolved within thirty (30) days after written notice from Landlord to Tenant to obtain satisfaction thereof. 15. REMEDIES UPON DEFAULT . Upon the occurrence of an Event of Default, Landlord, in addition to any and all other rights or remedies it may have at law or in equity, shall have the option of pursuing any one or more of the following remedies : (A) Landlord may terminate this Lease by giving written notice of termination, in which event this Lease shall expire and terminate on the date specified in such notice of termination, with the same force and effect as though the date so specified were the date herein originally fixed as the termination date of the term of this Lease, and all rights of Tenant under this Lease and in and to the Premises shall expire and terminate, and Tenant shall remain liable for all obligations under this Lease arising up to the date of such termination and Tenant shall surrender the Premises to Landlord on the date specified in such notice ; (B) Landlord may terminate this Lease as provided in Paragraph 15 (A) hereof and recover from Tenant all damages Landlord may incur by reason of Tenant’s default, including, without limitation, a sum which, at the date of such termination, represents the then value of the excess, if any, of (i) the monthly rental and additional rent for the period commencing with the day following the date of such termination and ending with the date hereinbefore set for the expiration of the full term hereby granted, over (ii) the aggregate reasonable rental value of the Premises (less reasonable brokerage commissions, attorney’s fees and other costs relating to the reletting of the Premises) for the same period, all of which excess sum shall be deemed immediately due and payable ; (C) Landlord may, without terminating this Lease, declare immediately due and payable all monthly rental and additional rent due and coming due under this Lease for the entire remaining term hereof, together with all other amounts previously due, at once ; provided, however, that such payment shall not be deemed a penalty or liquidated damages but shall merely constitute payment in advance of rent for the remainder of said term ; upon making such payment, Tenant shall be entitled to receive from Landlord all rents received by Landlord from other assignees, tenants and subtenants on account of the Premises during the term of this Lease, provided that the monies to which Tenant shall so become entitled shall in no event exceed the entire amount actually paid by Tenant to Landlord pursuant to this clause (C) less all costs, expenses and attorney’s fees of Landlord incurred in connection with the reletting of the Premises ; or (D) Landlord may, from time to time without terminating this Lease, and without releasing Tenant in whole or in part from Tenant’s obligation to pay monthly rental and additional rent and perform all of the covenants, conditions and agreements to be performed by Tenant as provided in this Lease, make such alterations and repairs as may be necessary in order to relet the Premises, and, after making such alterations and repairs, Landlord may, but shall not be obligated to, relet the Premises or any part thereof for such term or terms (which may be for a term extending beyond the Term of this Lease) at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable or acceptable ; upon each reletting, all rentals received by Landlord from such reletting shall be applied first, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord ; second, to the payment of any costs and expenses of such reletting, including brokerage fees and attorneys’ fees, and of costs of such execute a subordination and attornment agreement incorporating the provisions set forth above and otherwise in form reasonably Office Lease Agreement (#003) Rev.
05/05 5 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 the residue, if any, shall be held by Landlord and applied against payments of future monthly rental and additional rent as the same may become due and payable hereunder ; in no event shall Tenant be entitled to any excess rental received by Landlord over and above charges that Tenant is obligated to pay hereunder, including monthly rental and additional rent ; if such rental received from such reletting during any month is less than those to be paid during the month by Tenant hereunder, including monthly rental and additional rent, Tenant shall pay any such deficiency to Landlord, which deficiency shall be calculated and paid monthly ; Tenant shall also pay Landlord as soon as ascertained and upon demand all costs and expenses incurred by Landlord in connection with such reletting and in making any alterations and repairs which are not covered by the rentals received from such reletting ; notwithstanding any such reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach . Tenant acknowledges that the Premises are to be used for commercial purposes, and Tenant expressly waives the protections and rights set forth in Official Code of Georgia Annotated Section 44 - 7 - 52. 16. ASSIGNMENT AND SUBLETTING . Tenant shall not, without the prior written consent of Landlord, which shall not be unreasonably withheld, assign this Lease or any interest hereunder, or sublet the Premises or any part thereof, or permit the use of the Premises by any party other than the Tenant . Consent to any assignment or sublease shall not impair this provision and all later assignments or subleases shall be made likewise only on the prior written consent of Landlord . The assignee of Tenant, at the option of Landlord, shall become liable to Landlord for all obligations of Tenant hereunder, but no sublease or assignment by Tenant shall relieve Tenant of any liability hereunder . Consent to any assignment or sublease shall nullify any lease options or first rights of refusal . 17. EMINENT DOMAIN . If all or any part of Premises or the land on which Building stands or any estate therein are taken by virtue of eminent domain or conveyed or leased in lieu of such taking, this Lease shall expire on the date when title shall vest, or the term of such lease shall commence, and any rent paid for any period beyond said date shall be repaid to Tenant . It is expressly agreed that the Tenant shall not have any right or claim of any award made to or received by the Landlord for such taking . The widening of streets abutting the land on which the Building stands shall not effect this Lease, provided no part of the Building is so taken . Nothing herein contained, however, shall preclude Tenant from claiming, proving and receiving from the condemning authority a separate award for the value of any of Tenant’s personal property taken which Tenant could have rightfully removed from the Premises hereunder and for relocation and moving expenses, so long as the Landlord’s award is not thereby reduced . 18. LANDLORD’S ENTRY OF PREMISES . Landlord may enter the Premises with prior notice, except in case of emergencies, at reasonable hours with prospective purchasers or tenants , or to inspect the Premises , or to make repairs required by Landlord under the terms hereof or repairs to adjoining space within the Building . 19. RELOCATION OF TENANT . Landlord reserves the right at its option and upon giving sixty ( 60 ) days written notice in advance to the Tenant to transfer and remove from the Premises any Tenant leasing 1 , 500 rentable square feet or less to any other available space of substantially equal size and area and equivalent rental in the Building . Landlord shall bear all reasonable cost and expense of said removal as well as the cost and expense of any renovations or alterations necessary to make the new space substantially conform in layout and appointment with the original Premises . If Landlord transfers Tenant to any such new space, this Lease shall remain in full force and effect and be deemed applicable to such new space, and such new space shall thereafter be the Premises as though Landlord and Tenant had entered into an express written amendment of this Lease with respect thereto . 20. SUBORDINATION . Landlord may, from time to time, grant first lien deeds of trust, security deeds, mortgages or other first lien security interests covering its estate in the Building (each a “Mortgage”) . Tenant agrees that this Lease shall be subject and subordinate to each Mortgage, including any modifications, extensions, renewals thereof and advances thereunder from time to time in effect . The foregoing provisions shall be self operative, and no further instrument of subordination shall be required to make this Lease subject and subordinate to any Mortgage . Tenant shall, upon request, from time to time execute and deliver to Landlord or the holder of any Mortgage any instrument requested by Landlord or the holder of such Mortgage to evidence the subordination of this Lease to any such Mortgage . Tenant agrees to recognize and attorn to any party succeeding to the interest of Landlord as a result of the enforcement of any Mortgage, and be bound to such party under all the terms, covenants, and conditions of this Lease, for the balance of the Term of this Lease, including any extensions or renewals thereof, with the same force and effect as i f such party were the original Landlord under this Lease . Upon the request of Landlord, Tenant agrees to with possession of the Premises, and thereafter as necessary to assure that Landlord always has current certificates evidencing Office Lease Agreement (#003) Rev.
05/05 6 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 acceptable to Landlord. 21. ESTOPPEL CERTIFICATE . At any time and from time to time, Tenant shall execute, acknowledge, and deliver to Landlord and to such assignee, mortgagee or other party as may be designated by Landlord, a certificate (in a form to be specified by Landlord) stating : (i) that by such certificate the Lease is ratified ; (ii) the commencement date and the date on which Tenant entered into occupancy of the Premises ; (iii) the amount of the monthly portion of base rent and additional rent payable hereunder ; (iv) that the Lease (and any modifications) represents the entire agreement between the parties as to the Premises and is in full force and effect ; (v) the expiration date ; (vi) that, as of the date of the certificate, there are no defaults by Landlord or Tenant under the Lease ; (vii) the amount of base rent and security deposit which has been deposited with Landlord ; (viii) the month and year through which base rent and additional rent have been paid ; (ix) that no actions, voluntary or involuntary, are pending against Tenant under the bankruptcy laws of the United States or any State thereof ; (x) that the person executing the certificate is duly authorized to execute the same on behalf of Tenant, and that the certificate is and shall be binding on Tenant, its successors and assigns ; (xi) that Tenant has not requested any repairs or replacements to the Premises or any other part of the Project that are Landlord's responsibility under the Lease and that have not been completed ; and (xii) such other matters relating to the Lease as requested by Landlord . If Tenant fails to deliver such certificate to Landlord within ten ( 10 ) days after written request by Landlord, Tenant shall be deemed to have approved the contents of the certificate as submitted to Tenant by Landlord at the time of the written request therefore, and Landlord is hereby authorized to so certify . Tenant hereby expressly acknowledges and agrees that Landlord, any such assignee, mortgagee or other party shall be entitled to rely upon the certificate so certified by Landlord or any certificate delivered by Tenant hereunder . 22. INDEMNITY AND WAIVER OF CLAIMS . Except to the extent caused by the gross negligence or willful misconduct of Landlord or any of its trustees, members, principals, beneficiaries, partners, officers, directors, employees, lenders and agents (the “Landlord Related Parties”), Tenant hereby waives all claims against and releases Landlord and Landlord Related Parties from all claims for any injury to or death of persons, damage to property or business loss in any manner related to (a) Force Majeure, (b) acts of third parties, (c) the bursting or leaking of any tank, water closet, drain or other pipe, (d) the inadequacy or failure of any security services, personnel or equipment, or (e) any matter not within the reasonable control of Landlord . Except to the extent caused by the gross negligence or willful misconduct of Landlord or any Landlord Related Parties, Tenant shall indemnify, defend and hold Landlord and Landlord Related Parties harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys’ fees and other professional fees (if and to the extent permitted by Law) (collectively referred to as “Losses”), which may be imposed upon, incurred by or asserted against Landlord or any of the Landlord Related Parties by any third party and arising out of or in connection with any damage or injury occurring in the Premises or any acts or omissions (including violations of Law) of Tenant, the Tenant Related Parties or any of Tenant’s transferees, contractors or licensees . Except to the extent caused by the gross negligence or willful misconduct of Tenant or any Tenant Related Parties, Landlord shall indemnify, defend and hold Tenant, its trustees, members, principals, beneficiaries, partners, officers, directors, employees and agents (“Tenant Related Parties”) harmless against and from all Losses which may be imposed upon, incurred by or asserted against Tenant or any of the Tenant Related Parties by any third party and arising out of or in connection with any damage or injury occurring in the common areas of the Building or the acts or omissions (including violations of Law) of Landlord or the Landlord Related Parties . 23. INSURANCE . Tenant shall maintain the following insurance (“Tenant’s Insurance”) : (a) Commercial General Liability Insurance applicable to the Premises and its appurtenances providing, on an occurrence basis, a minimum combined single limit of $ 2 , 000 , 000 . 00 ; (b) Property/Business Interruption Insurance written on an All Risk or Causes of Loss - Special Form, with coverage for broad form water damage including earthquake, sprinkler leakage, at replacement cost value and with a replacement cost endorsement covering all of Tenant’s business and trade fixtures, equipment, movable partitions, furniture, merchandise and other personal property within the Premises (“Tenant’s Property”) [and any Leasehold Improvements performed by or for the benefit of Tenant] ; (c) Workers’ Compensation Insurance in amounts required by Law ; and (d) Employers Liability Coverage of at least $ 1 , 000 , 000 . 00 per occurrence . Any company writing Tenant’s Insurance shall have an A . M . Best rating of not less than B+VIII . All Commercial General Liability Insurance policies shall name as additional insureds Landlord (or its successors and assignees), the managing agent for the Building (or any successor), any lender of Landlord and their respective members, principals, beneficiaries, partners, officers, directors, employees, and agents, and other designees of Landlord and its successors as the interest of such designees shall appear . All policies of Tenant’s Insurance shall contain endorsements that the insurer(s) shall endeavor to give Landlord and its designees at least 30 days’ advance written notice of any cancellation, termination, material change or lapse of insurance .
Tenant shall provide Landlord with a certificate of insurance evidencing Tenant’s Insurance prior to the earlier to occur of the Commencement Date or the date Tenant is provided Tenant’s Insurance . So long as the same is available at commercially reasonable rates, Landlord shall maintain so called All Risk or Causes of Loss - Special Form property insurance on the Building at [ not less than eighty percent ( 80 % )] replacement cost value as reasonably estimated by Landlord . 24. SUBROGATION . Landlord and Tenant hereby waive and shall cause their respective insurance carriers to waive any and all rights of recovery, claims, actions or causes of action against the other for any loss or damage with respect to Tenant’s Property, Leasehold Improvements, the Building, the Premises, or any contents thereof, including rights, claims, actions and causes of action based on negligence, which loss or damage is (or would have been, had the insurance required by this Lease been carried) covered by insurance . 25. RIGHTS CUMULATIVE . All rights, powers and privileges conferred hereunder upon the parties hereto shall be cumulative and not restrictive of those given by law . 26. HOLDING OVER. If Tenant remains in possession of the Premises after expiration of the term hereof, with Landlord's acquiescence and without any express agreement of the parties, Tenant shall be a tenant at will at the monthly rental which i s in effect at the end of this Lease in accordance with Paragraph 3 above and there shall be no renewal of this Lease by operation of law . If Tenant remains in possession of the Premises after expiration of the term hereof without Landlord's acquiescence, Tenant shall be a tenant at sufferance and commencing on the date following the date of such expiration, the monthly rental payable under Paragraph 3 above shall for each month, or fraction thereof during which Tenant so remains in possession of the Premises, be 150 % of the monthly rental which is in effect at the end of this Lease in accordance with Paragraph 3 above and there shall be no renewal of this Lease by operation of law . 27. WAIVER OF RIGHTS . No failure of Landlord to exercise any power given Landlord hereunder or to insist upon strict compliance by Tenant of its obligations hereunder and no custom or practice of the parties at variance with the terms hereof shall constitute a waiver of Landlord’s right to demand exact compliance with the terms hereof . 28. SECTION TITLES . The section titles in this Lease are included for convenience only and shall not be taken into consideration in any construction or interpretation of this Lease or any of its provisions . 29. NOTICE . All notices required or permitted under this Lease shall be in writing and shall be personally delivered or sent by U . S . Certified Mail, return receipt requested, postage prepaid or a nationally recognized overnight courier with delivery tracking . Broker shall be copied with all required or permitted notices . Notices to Tenant shall be delivered or sent to the address shown below, except that upon Tenant's taking possession of the Premises, then the Premises shall be Tenant's address for notice purposes . Notices to Landlord and Broker shall be delivered or sent to the addresses hereinafter stated, to wit : Landlord: Tenant: Broker: Co - Broker: Coldwell Banker Commercial Metro Brokers 175 John W Morrow Jr Pkwy Office Lease Agreement (#003) Rev. 05/05 7 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 5775 Glenridge Drive Bldg. D, Suite #100 Atlanta, GA 30328 ATTN: Benjamin L. Choi Daia Group LLC 6985 BRIXTON PLACE, SUWANEE, GA 30024 ATTN: DAI CHOUL SHIN La Rosa Realty Georgia, LLC 3305 Bluffton Dr Gainesville, GA 30507 ATTN: Carmen Delgado La Rosa Realty Georgia, LLC Gainesville, GA 30501 ATTN: Carmen Delgado All notices shall be effective upon delivery.
Any party may change his notice address upon written notice to the other parties. 30. DEFINITIONS . “Landlord” as used in this Lease shall include the undersigned, its heirs, representatives, assigns and successors in title to the Premises . “Tenant” shall include the undersigned and its heirs, representatives, and successors, and if this Lease is validly assigned or sublet, shall also include Tenant’s assigns or subtenants covered by such assignment or sublease . “Broker” and “Co - Broker” shall include the undersigned, their successors, assigns, heirs and representatives . “Landlord”, “Tenant”, “Broker”, and “Co - Broker” include male and female, singular and plural, corporation, partnership or individual, as may fit the particular parties . 31. ENTIRE AGREEMENT . This Lease contains the entire agreement of the parties hereto, and no representations, inducements, promises or agreements, oral or otherwise, between the parties, not embodied herein, shall be of any force or effect . No subsequent alteration, amendment, change or addition to this Lease, except as to changes or additions to the Rules and Regulations described in Paragraph 13 , shall be binding upon Landlord or Tenant unless reduced to writing and signed by Landlord and Tenant . 32. BROKER'S COMMISSION . Tenant represents and warrants to Landlord that except for Broker and Co - Broker (collectively “Brokers”), no broker, agent, commission salesman, or other person has represented Tenant in the negotiations for and procurement of this Lease and of the Premises and that no commission, fees or compensation of any kind are due and payable in connection herewith to any broker, agent, commission salesman, or other person . Tenant agrees to indemnify Landlord against and hold Landlord harmless from any and all claims, suits or judgments (including, without limitation, reasonable attorneys' fees and court costs incurred in connection with any such claims, suits or judgments or in connection with the enforcement of this indemnity) for any fees, commissions or compensation of any kind which arise out of or are in any way connected with any claimed agency relationship with Tenant, except with respect to Brokers . Tenant and Landlord acknowledge and agree that Brokers have rendered a valuable service by assisting in the creation of the landlord - tenant relationship hereunder . The commission to be paid in conjunction with the creation of the relationship by this Lease has been negotiated between Landlord and Brokers and Landlord hereby agrees to pay Brokers as compensation for Brokers’ services in procuring this Lease and creating the aforesaid landlord - tenant relationship □ X pursuant to a separate commission agreement, or □ as follows : vicinity of the Premises. Voluntary cancellation of this Lease shall not nullify Brokers’ right to collect the commission due for Office Lease Agreement (#003) Rev. 05/05 8 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 Brokers’ commission shall not apply to any “additional rental” as that term is used in this Lease . Any separate commission agreement is hereby incorporated as a part of this Lease by reference and any third party assuming the rights and obligations of Landlord under this lease shall be obligated to perform all of Landlord’s obligations to Brokers under said separate commission agreement . I f the Tenant becomes a tenant at will or at sufferance pursuant to Paragraph 26 above, or i f the term of this Lease is extended or i f this Lease is renewed or i f a new lease is entered into between Landlord and Tenant covering either the Premises or any part thereof, or covering any other premises as an expansion of, addition to, or substitution for the Premises, regardless of whether such premises are located adjacent to or in the vicinity of the Premises, Landlord, in consideration of Brokers’ having assisted in the creation of the landlord - tenant relationship, agrees to pay Brokers additional commissions as set forth above, i t being the intention of the parties that Brokers shall continue to be compensated so long as the parties hereto, their successors and/or assigns continue the relationship of landlord and tenant which initially resulted from the efforts of Brokers, whether relative to the Premises or any expansion thereof, or relative to any other premises leased by Landlord to Tenant from time to time, whether the rental therefore is paid under this Lease or otherwise . Brokers agree that, in the event Landlord sells the Premises, and upon Landlord’s furnishing Brokers with an agreement signed by the purchaser assuming Landlord’s obligations to Brokers under this Lease, Brokers will release the original Landlord from any further obligations to Brokers hereunder . I f the purchaser of the Premises does not agree in writing to assume Landlord’s obligations to Brokers under this Lease, Landlord shall remain obligated to pay Brokers the commissions described in this Paragraph 34 even after the expiration of the original term of this Lease i f the purchaser (A) extends the term of this Lease ; (B) renews this Lease ; or (C) enters into a new lease with Tenant covering either the Premises or any part thereof, or covering any other premises as an expansion of, addition to, or substitution for the Premises, regardless of whether such premises are located adjacent to or in the Office Lease Agreement (#003) Rev.
05/05 9 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 the remaining term of this Lease and the provisions contained herein above relative to additional commissions shall survive any cancellation or termination of this Lease . In the event that the Premises are condemned, or sold under threat of and in lieu of condemnation, Landlord shall, on the date of receipt by Landlord of the condemnation award or sale proceeds, pay to Brokers the commission, reduced to its present cash value at the existing legal rate of interest, which would otherwise be due to the end of the term contracted for under Paragraph 2 above . Limitation of Brokers’ Services and Disclaimer – Brokers are a party to this Lease for the purpose of enforcing their rights under this Paragraph . Tenant must look solely to Landlord as regards to all covenants, agreements and warranties herein contained, and Brokers shall never be liable to Tenant in regard to any matter which may arise by virtue of this Lease . It is understood and agreed that the commissions payable to Brokers under this Paragraph are compensation solely for Brokers’ services in assisting in the creation of the landlord - tenant relationship hereunder ; accordingly, Brokers are not obligated hereunder on account of payment of such commissions to furnish any management services for the Premises . 33 . ATTORNEY’S FEES . In the event that any action or proceeding is brought to enforce any term, covenant or condition of this Lease on the part of Landlord or Tenant, the prevailing party in such litigation shall be entitled to recover reasonable attorney’s fees to be fixed by the court in such action or proceeding, in an amount at least equal to fifteen percent of any damages due from the non - prevailing party . Furthermore, Landlord and Tenant agree to pay the attorney’s fees and expenses of (A) the other party to this Lease (either Landlord or Tenant) i f i t is made a party to litigation because of its being a party to this Lease and when i t has not engaged in any wrongful conduct itself, and (B) Broker, i f Broker is made a party to litigation because of its being a party to this Lease and when Broker has not engaged in any wrongful conduct itself . 34. LIMITATION ON BROKER’S SERVICES AND DISCLAIMER . Broker and Co - Broker are parties to this Lease for the purpose of enforcing their rights to receive a real estate commission . Tenant must look solely to Landlord as regards all covenants and agreements contained herein, and Broker and Co - Broker shall never be liable to Tenant in regard to any matter which may arise by virtue of this Lease . Landlord and Tenant acknowledge that the Atlanta Commercial Board of REALTORS, Inc . has furnished this Standard Office Lease form to its members as a service and that i t makes no representation or warranty as to the enforceability of this Standard Office Lease form or any paragraph thereof . 35. NO ESTATE IN LAND . This Lease shall create the relationship of landlord and tenant between the parties hereto . Tenant has only a usufruct not subject to levy and sale, and not assignable by Tenant except by Landlord’s consent . 36. TIME OF ESSENCE . Time is of the essence of this Lease . 37. EXCULPATION OF LANDLORD . Landlord’s obligations and liability to Tenant with respect to this Lease shall be limited solely to Landlord’s interest in the Building, and neither Landlord nor any joint ventures, partners, officers, directors, employees or shareholders of or in Landlord shall have any personal liability whatsoever with respect to this Lease . 38. CERTAIN ENVIRONMENTAL MATTERS . (A) Tenant shall not use, store, treat, discard or dispose of any hazardous substances in or about the Premises . For purposes of this Lease, hazardous substances shall mean and include those elements or compounds which are contained in the list of hazardous substances adopted by the Environmental Protection Agency (EPA) and the list of toxic pollutants designated by Congress or the EPA under any applicable environmental law or legislation ; as such lists may be supplemented, amended or newly enacted from time to time . To the extent that any of the applicable environmental laws of the State of Georgia establish a meaning for hazardous substances which is broader than that specified in any federal legislation or laws, such broader meaning shall apply . Applicable environmental law shall mean and include the collective aggregate of the following : any law, statute, ordinance, rule, regulation, order or determination of any governmental authority or any board of fire underwriters (or body exercising similar functions) or any restrictive covenant or deed restriction (recorded or otherwise) affecting the Premises pertaining to health or the environment . (B) The occupancy, operation and use of the Premises by Tenant shall not violate any applicable environmental laws, of any federal, state, local or other governmental authority .
(C) Without limiting the generality of the above, Tenant represents that it is not the subject of any pending or, to the best of Tenant’s knowledge, threatened investigation or inquiry by any governmental authority, or subject to any remedial obligations under any applicable environmental laws, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 , as amended (CERCLA), the Resource Conservation and Recovery Act of 1987 , as amended, and any and all applicable state laws, and this representation and warranty would continue to be true and correct following disclosure to any applicable governmental authority of all relevant facts, conditions and circumstances pertaining to the Tenant . (D) Tenant represents that it is not required to obtain any permits, licenses or authorization to occupy, operate or use any portion of the Premises by reason of any applicable environmental laws . (E) Tenant represents that it has not received any notice from any governmental authority with respect to any violation of any applicable environmental laws . (F) Tenant shall not cause any violation of any applicable environmental laws, nor permit any sub - tenant of any portion of the Premises to cause such a violation, nor permit any environmental liens to be placed on any portion of the Building or the Premises . (G) Tenant shall give notice to Landlord immediately upon (i ) Tenant’s receipt of any notice from any governmental authority of a violation of any applicable environmental laws or upon acquiring knowledge of the receipt of any such notice by any sub - tenant of any portion of the Premises, and (ii ) acquiring knowledge of the presence of any hazardous substances on the Premises in a condition that is resulting or could reasonably be expected to result in any adverse environmental impact, with a full description thereof . Tenant shall promptly comply with all applicable environmental laws requiring the notice, removal, treatment, or disposal of such hazardous substances, caused by or within the control of Tenant and provide the Landlord with satisfactory evidence of such compliance . 39. FORCE MAJEURE . Whenever a period of time is herein prescribed for action to be taken by Landlord, Landlord shall not be liable or responsible for, and there shall be excluded from the computation of any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, theft, fire, public enemy, injunction, insurrection, court order, requisition or any other causes or any kind whatsoever which are beyond the control of Landlord . 40. SEVERABILITY . The terms, conditions, covenants and provisions of this Lease shall be deemed to be severable . I f any clause or provision herein contained shall be adjudged to be invalid or unenforceable by a court of competent jurisdiction or by operation of any applicable law, i t shall not affect the validity of any other clause or provision herein, but such other clauses or provisions shall remain in full force and effect . 41. QUIET ENJOYMENT . If Tenant shall pay the rent herein and other amounts to be paid by Tenant to Landlord, and will faithfully keep, perform, and observe all of the covenants, agreements and conditions herein stipulated to be kept, performed and observed by Tenant, Tenant shall at all times during the term of the Lease have the peaceable and quiet enjoyment of the Premises without hindrance of Landlord or any person lawfully claiming under Landlord subject, however, to the terms of this Lease and any mortgage placed on the property of which the Premises are a part . 42. PURCHASE OF PROPERTY BY TENANT . In the event that Tenant acquires title to the property of which the Premises are a part, or any part thereof, or any premises as an expansion of, addition to or substitution for the Premises at any time during the term of this Lease, or any renewals thereof, or within six ( 6 ) months after the expiration of the term hereof or the extended term hereof, Landlord shall pay Broker a commission on the sale of the property in lieu of any further commission which otherwise would have been due under this Lease . Such commission, as negotiated between the parties, shall be six percent ( 6 % ) of the gross sales price, payable in full in cash at closing . The commission shall be paid in the following manner : 3 % to Coldwell Banker Commercial Metro Brokers / 3 % to La Rosa Realty Georgia, LLC 43. AGENCY DISCLOSURE . Pursuant to Regulation 520 - 1 . 06 of the Georgia Real Estate Commission’s Regulations and Georgia’s Brokerage Relationships in the Real Estate Transactions Act (“BRRETA”), O . C . G . A . Section 10 - 6 A - 1 et . seq . , Landlord and Tenant hereby acknowledge that Broker and Co - Broker, if any, make the following disclosures, checking all that apply : As to Broker : □ X (A) □ (B) Broker represents the only; or Broker represents both the Landlord and Tenant jointly and such dual agency is expressly consented to by the parties by their execution of a Dual Agency Disclosure and Consent Agreement. □ (C) Broker has assigned Broker’s affiliated license # to represent solely the Office Lease Agreement (#003) Rev. 05/05 10 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 Landlord n/a Landlord as its designated agent and has assigned Broker’s affiliated licensee # n/a Office Lease Agreement (#003) Rev.
05/05 11 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 to represent solely the Tenant as its designated agent ; or Broker represents neither the Landlord nor the Tenant, but rather is acting as a transactional broker pursuant to BRRETA. □ (D) As to Co - Broker: □ X (A) □ (B) Co - Broker represents the Tenant only; or Co - Broker represents both the Landlord and Tenant jointly and such dual agency is expressly consented to by the parties by their execution of a Dual Agency Disclosure and Consent Agreement. Co - Broker has assigned Broker’s affiliated license # n/a to represent solely the Landlord as its designated agent and has assigned Broker’s affiliated licensee # n/a to represent solely the Tenant as its designated agent ; or Co - Broker represents neither the Landlord nor the Tenant, but rather is acting as a transactional broker pursuant to BRRETA. □ (C) Neither Broker nor Co - Broker shall owe any duty to Landlord or Tenant greater than what is set forth in BRRETA, Official Code of Georgia Annotated Section 10 - 6 A - 1 et . seq . 44. NO OPTION. The submission of this Lease for examination does not constitute a reservation of or option for the Premises and this Lease shall become effective only upon execution and delivery of a fully executed Lease by Landlord. 45. ATLANTA COMMERCIAL BOARD OF REALTORS, INC. (“ACBR”) DISCLAIMER; WAIVER AND RELEASE OF CLAIMS . This “Disclaimer ; Waiver and Release of Claims” provision, without any changes, modifications, deletions or revisions, must be included in all ACBR Form documents that include any reference to ACBR . The parties hereto hereby acknowledge and agree that : (A) THIS DOCUMENT HAS IMPORTANT CONSEQUENCES, LEGAL, FINANCIAL AND OTHERWISE, AND ACBR HAS ADVISED THE PARTIES THAT THEY SHOULD EACH CONSULT WITH AN ATTORNEY OR OTHER PROFESSIONAL OF THEIR CHOICE WITH RESPECT TO THE TERMS OF, AND/OR THE COMPLETION, MODIFICATION AND/OR EXECUTION OF, THIS DOCUMENT ; (B) form documents by their nature are designed to be of general application, and may not be applicable to specific facts and circumstances, may not address a given party’s specific conditions or requirements and/or may not reflect the relative bargaining or negotiations of the parties, as such variables may arise on any given transaction ; (C) to avoid any possible misunderstanding or confusion as to the original form of this document and any revisions, modifications or changes to it, any and all revisions, modifications or changes to the original should be made readily apparent by highlighting, underscoring or other means to distinguish them from the original ACBR form ; (D) ACBR has made the original versions of this document and other document forms available to ACBR’s members as a service, but makes no representation or warranty, express or implied, as to the suitability or applicability of the terms and conditions of, or the enforceability of, this document or other document forms ; (E) ACBR document forms are updated by ACBR from time to time, and ACBR strongly recommends to the parties that they use the most current, updated versions of any such document forms ; and (F) by executing this document the parties hereto each hereby waive and release ACBR, its officers, directors, members, employees and agents, from any and all claims, demands and/or causes of action (whether known or unknown) arising out of, pertaining to or resulting directly or indirectly from the use of this form document . 46. SPECIAL STIPULATIONS. Special stipulations shall control if in conflict with any of the foregoing provisions of this Lease. - Signatures on Following Page -IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed, under seal, in their respective names and on their behalf by their duly authorized officials, the day and year indicated below.
LANDLORD: Daia Group LLC By: (Seal) Name: Title: Phone: Date: TENANT: By : Name: Carmen Delgado / Camille Viera - Hewell Title : Phone : Date : BROKER: Coldwell Banker Commercial Metro Broker s By: (Seal) Name: Benjamin L. Choi Title: Agent Firm License #: Phone: Date: Agent Name(s): Benjamin L. Choi Agent License # (s): CO - BROKER: La Rosa Realty Georgia, LLC By: (Seal) Name: Title: Firm License #: Phone: Date: Agent Name(s): Agent License # (s): Add additional names & License #’s of other agents involved in connection with this transaction. Office Lease Agreement (#003) Rev. 05/05 12 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 La Rosa Realty Georgia, LLC Carmen Delgado Office Lease Agreement (#003) Rev.
05/05 13 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 RULES AND REGULATIONS (which are referred to in the Lease and made a part thereof) 1. The sidewalks, entry passages, corridors, halls, and stairways shall not be obstructed by tenants, or used by them for any purpose other than those of ingress and egress. 2. The water closet and other water apparatus, shall not be used for any other purpose than those for which they were constructed, and no sweepings, rubbish, or other obstructing substances shall be thrown therein. 3. No advertisement or other notice shall be inscribed, painted or affixed on any part of the outside or inside of the Building . Window shades, blinds or curtains of a uniform color and pattern only, as specified by Landlord, shall be used throughout the Building to give a uniform color exposure through exterior windows . No awnings shall be placed on Building . 4. No tenant shall do or permit to be done in the Building, or bring or keep anything thereon, which shall in any way obstruct or interfere with the rights of other tenants, or in any way injure or annoy them, or conflict with the laws relating to fires, or with the regulations of the Fire Department, or any part thereof, or conflict with any of the rules and ordinances of the Board of Health . Tenants, their invitees and employees shall maintain order in the Building, shall not make or permit any improper noise in the Building or interfere in any way with other tenants or those having business with them . No rooms shall be occupied or used as sleeping or lodging apartments at any time without permission of Landlord . No part of the Building shall be used or in any way appropriated for gambling, immoral or other unlawful practices . No intoxicating liquor or liquors shall be sold in the Building by Tenant without Landlord's permission . 5. Tenants shall not employ any persons other than the janitors of Landlord (who will be provided with pass - keys into the offices) for the purpose of cleaning or taking care of Premises. 6. No animals, birds, bicycles, or other vehicles shall be allowed into the offices, halls, corridors, or elsewhere in the Building. 7. All glass, locks and trimmings in or upon the doors and windows of the Building shall be kept whole, and when any part thereof shall be broken, the same shall immediately be replaced and put in order under direction and to the satisfaction of Landlord, or its broker, and shall be left whole and in good repair . Tenants shall not deface the Building, the woodwork or the walls of the Premises . 8. No additional locks or latches shall be put upon any door without the written consent of Landlord. Tenants at the termination of their Lease of the Premises shall return to Landlord all keys and security cards to doors in Building. 9. Landlord in all cases retains power to prescribe the weight and position of iron safes, files having excessive weight, or other heavy articles . Any damage done to the Building or to tenants or to other persons by taking a safe or other heavy article in or out of Premises, for overloading a floor, or in any other manner shall be paid for by Tenant causing such damage . 10. Parking facilities supplied by Landlord for Tenants shall be used for vehicles that may occupy a standard parking area only (i . e . 8 ' x 13 ') . Moreover, the use of such parking facilities shall be limited to normal business parking and shall not be used for a continuous parking of any vehicle or trailer regardless of size . 11. The Landlord shall not be responsible to any Tenant for the non - observance or violation of any of these Rules and Regulations by any other tenants. 12. Tenant shall not permit in the Premises any cooking or the use of any apparatus for the preparation of food nor the use of any electrical apparatus likely to cause an overload of electrical circuits, with the exception of a microwave oven, coffee machine and refrigerator .
Office Lease Agreement (#003) Rev. 05/05 14 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2005 13. Tenant shall maintain no food or drink coin operating vending machines within the Premises or the Building without the written consent of Landlord ; such consent shall not preclude Landlord from charging Tenant for utility costs thereof . Tenant agrees that all personal property, including machines permitted by Landlord under this paragraph, brought into the Premises by Tenant, its employees, licensees and invitees shall be at the sole risk of Tenant and Landlord and shall not be liable for theft or of money deposited therein or for any damages thereto ; such theft or damage being the sole responsibility of Tenant . 14. All Tenants and occupants shall observe strict care not to leave their windows or doors open when it rains or snows, or while air - conditioning or heating systems are in operation, and for any fault or carelessness in any of these respects, shall indemnify other tenants for any injury sustained by other Tenants, and to Landlord for damage to paint, plastering or other parts of the Building, resulting from such default or carelessness . 15. Landlord may waive one or more of these Rules and Regulations for the benefit of any particular tenant, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant, nor prevent Landlord from thereafter enforcing such Rules and Regulations against any or all of the other tenants of the building . 16. These Rules and Regulations are supplemental to, and shall not be construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of any premises in the Building.
"A"
ATLANTA COMMERCIAL BOARD OF REALTORS ® , INC. EXHIBIT Special Stipulations (#026) Rev. 09/04 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2004 "B" SPECIAL STIPULATIONS 1. Tenant understands there is one meter for water, gas, and electricity for the entire Building. Tenant shall pay its pro - rata share of electricity, gas, and water. The Tenant is responsible for paying all utilities within its Premises. 2. The HVAC unit(s) must be maintained by Tenant and Tenant must hire a qualified specialist(s) to perform it's biannual(twice a year)inspections, servicing, and maintenance work. 3. In the event that Tenant breaches the LEASE, in addition to the remedies already outlined on this LEASE agreement, Landlord permanently retains the security deposit and any additional deposits or payments or pre - payments made by Tenant. 4. At the time of the Lease signing, the Tenant shall pay the first full month rent ($4,000.00), last month's rent ($4,243.60), and a security deposit equal to one full month's rent ($4,000.00). The amount due at the Lease signing is $12,243.60 in CERTIFIED CHECK payable to Daia Group LLC. 5. The Landlord shall waive June 2021 rent (1 - month rent waived). 6. The Landlord shall grant a first - right - of - refusal for the Tenant to purchase the Property by providing a 14 - day calendar notice. 7. The Tenant understands the Building is for sale. And as such, the Tenant shall accommodate the Landlord with building tours including access to the Premises during reasonable business hours. 8. La Rosa Realty Georgia, LLC will be paid a leasing commission amount equal to one month's rent. 9. The Landlord shall allow the Tenant to paint all interior baseboards, all interior doors, and all interior door frames to white color in the Premises. See an example depiction in Exhibit C. 10. The Landlord shall allow early access to Tenant in the approximately 3,000 +/ - SF of unoccupied space on the first floor as depicted in Exhibit D during the remainder of the month in April 2021. The early access period shall be used for the Tenant to set up the currently vacant section of the first floor, paint trims as delineated in Paragraph #9 (Exhibit B), and cleaning. All terms of the Lease as delineated in the Lease Agreement shall apply during the early access period. Tenant must furnish Insurance Certificate, as delinated in Section 23, effectively covering the early access period and the rest of the Lease prior to receiving access to the Premises.
"C"
"D" 1. Accessible area by Tenant during early access period during the remainder of the month in April 2021.
ATLANTA COMMERCIAL BOARD OF REALTORS ® , INC. EXHIBIT "E" SPECIAL STIPULATIONS Special Stipulations (#026) Rev. 09/04 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2004 - The rent is based on the designated area based on the mutual agreement between the landlord and the tenant. All parties are aware that square footage numbers used herein are approximate figures and are not specifically used for figuring rental or purchase amounts. - All measurements are only approximate estimates; thus shall not be relied upon as accurate. The lessee(s) needs to confirm any information pertaining to the square footage of the space independently if such information is important to the lessee. By signing this lease agreement, the lessee agrees that the landlord and Coldwell Banker Commercial Metro Brokers and its affiliated real estate agents cannot guarantee any of the measurements. Also by signing this lease agreement, the lessee(s) agree to hold the landlord, Coldwell Banker Commercial Metro Brokers, and its real estate agents harmless from any losses that are suffered by the lessee(s), including but not limited to, past, present, and future monetary and emotional sufferings, due to the payments made over incorrectly measured spaces. - All information above has been obtained from sources believed reliable. No warranty or representation, expressed or implied, is made by Coldwell Banker Commercial Metro Brokers or its real estate agents as to the accuracy of information contained herein. It is the responsibility of each lessee, purchaser, and property owner to independently confirm its accuracy and completeness of this lease agreement. Coldwell Banker Commercial Metro Brokers and its affiliated agents are no way responsible for any errors or omissions, whether preprinted, written, or typed, on this lease agreement. - By agreeing to use this legal document, all parties involved in this transaction agrees to hold Coldwell Banker Commercial Metro Brokers and its real estate agents harmless from any damages arising from this transaction. - By executing this document, the parties hereto each hereby waive and release Coldwell Banker Commercial Metro Brokers, and all of its affiliated agents and members, from any and all claims, demands and/or causes of action(whether known or unknown)arising out of, pertaining to or resulting directly or indirectly from the use of this form document.
ATLANTA COMMERCIAL BOARD OF REALTORS ® , INC. LEASE GUARANTY THIS GUARANTY AGREEMENT is made in reference to the Lease dated 4 / 6 / 2021 , (the “Lease”) by and between Daia Group LLC (“Landlord”) and La Rosa Realty Georgia, LLC (“Tenant”), demising certain space located at 5855 Medlock Bridge Parkway, Alpharetta, GA 30022 , Fulton County, State of Georgia, all as more particularly described in the Lease . 1. In consideration of, and as an inducement to the execution of the Lease by Landlord, the undersigned (hereinafter referred to as “Guarantor”), intending to be legally bound, hereby unconditionally guarantees, jointly and severally, the prompt and faithful performance by Tenant of the Lease and all the terms, covenants and conditions thereof including, but not limited to, the payment by Tenant of the rental and all other sums to become due thereunder . 2. Guarantor agrees that ( 1 ) this obligation shall be binding upon Guarantor without any further notice or acceptance hereof, but the same shall be deemed to have been accepted by the execution of the Lease ; ( 2 ) upon each and every default by Tenant, without any notice to or demand upon Guarantor and without Landlord’s first or contemporaneously suing or seeking any other remedy arising and accruing in favor of Landlord, either pursuant to the provisions of the Lease or otherwise, Guarantor will pay to Landlord all rentals and other sums due and payable under the Lease and will comply with and perform all terms, covenants and conditions of the Lease which shall be binding upon said Tenant as provided in the Lease ; ( 3 ) no extension, forbearance, or leniency extended by Landlord to Tenant shall discharge Guarantor, and Guarantor agrees at all times it will be liable notwithstanding same and notwithstanding the fact that Guarantor has had no notice of any default or of any said forbearance or extension ; ( 4 ) Landlord and Tenant, without notice to or consent by Guarantor, may at any time or times enter into such modifications, extensions, amendments or other covenants respecting the Lease, and Guarantor shall not be released thereby, it being intended that Guarantor shall continue as Guarantor with respect to the Lease as so modified, extended, amended or otherwise affected ; ( 5 ) neither Guarantor’s obligations to make payment in accordance with the terms of this Guaranty nor any remedy for the enforcement thereof shall be impaired, modified, changed, released or limited in any manner whatsoever by an impairment, modification, change, release or limitation of the liability of Tenant or its estate in bankruptcy or of any remedy for the enforcement thereof, resulting from the operation of any present or future provision of the U . S . Bankruptcy Code or other statute, or from the decision of any court, and ( 6 ) this Guaranty shall be enforceable by Landlord in an action against Guarantor without the necessity of any suit, action or proceeding by Landlord of any kind or nature whatsoever against Tenant, without the necessity of any notice to Guarantor of Tenant’s default or breach under the Lease, and without the necessity of any other notice or demand to Guarantor to which Guarantor might otherwise be entitled, all of which notice Guarantor hereby expressly waives . 3. Guarantor further agrees to be bound by each and every covenant, obligation, power and authorization, without limitation, in the Lease, with the same force and effect as if Guarantor were designated in and had executed the Lease as Tenant thereunder . 4. In the event that other agreements similar to this Guaranty are executed from time to time by other entities or persons with respect to the Lease, the Agreement shall be cumulative of any such other agreements to the effect that the liabilities and obligations of Guarantor hereunder shall be joint and several with those of each other guarantor, and the liabilities and obligations of Guarantor hereunder shall in no event be affected or diminished by reason or any such other agreement . 5. All of Landlord’s rights and remedies under the Lease or under this Guaranty are intended to be distinct, separate and cumulative and no such right and remedy therein or herein is intended to be the exclusion of or a waiver of any other . 6. Guarantor hereby waives (A) notice of acceptance of this Guaranty (B) demand of payment, presentation and protest, (C) all right to assert or plead any statute of limitations as to or relating to this Guaranty and the Lease, (D) any right to require the Landlord to proceed against the Tenant or any other Guarantor or any other person or entity liable to Landlord, including without limitation the provisions of Official Code of Georgia Annotated Section 10 - 7 - 24 (Michie 1982 , as amended), (E) any right to require Landlord to apply to any default, any security deposit or other security it may hold under the Lease, (F) any right to require Landlord to proceed under any other remedy Landlord may have before proceeding against Guarantor, (G) any right Lease Guaranty (#010) Rev. 11/08 1 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2008 of subrogation, (H) any right to legal or equitable discharge of this Guaranty, including, without limitation, a discharge based on an increase in risk to the Guarantor, and (I) trial by jury.
7. Landlord may, without notice, assign this Guaranty in whole or in part, or may assign all of its interests in and to the Lease, and, in such event, each and every successive assignee of the Lease or of the Guaranty shall have the right to enforce this Guaranty, by suit or otherwise, for the benefit of such assignee as fully as if such assignee were named herein . Guarantor shall not assign or delegate Guarantor’s obligations under this Guaranty nor shall any assignment of the Lease by Tenant release Guarantor of its obligations hereunder . 8. This Guaranty, all acts and transactions hereunder and the rights and obligations of the parties hereto shall be governed by and construed and enforced in accordance with the laws of the State of Georgia . As part of the consideration for Landlord’s entering into the Lease which this Guaranty is a part, the Guarantor hereby agrees that all actions or proceedings arising directly or indirectly hereunder may, at the option of Landlord, be litigated in courts having situs with the State of Georgia, and the Guarantor hereby expressly consents to the jurisdiction of any such local, state or federal court, and consents that any service of process in such action or proceeding may be made by personal service upon the Guarantor wherever the Guarantor may then be located, or by certified or registered mail directed to such Guarantor at the address indicated below . Time is of the essence of this Guaranty . This Guaranty contains the entire agreement between Guarantor and Landlord relating to the guarantying of the Lease by Guarantor and supersedes entirely any and all prior written or oral agreements with respect thereto ; and Guarantor and Landlord acknowledge that there are no contemporaneous oral agreements with respect to the subject matter hereof . Notices under or pursuant to this Guaranty shall be given either by United States Postal Service certified mail return receipt requested, or by receipted same - day or overnight private courier service (e . g . Federal Express or similar carrier), to the Guarantor at the address specified herein or to their last address specified by at least fifteen ( 15 ) days’ prior written notice to the Landlord to the notice address set forth in the Lease . Notices shall be deemed effective on the date of delivery, refusal to accept delivery or inability to deliver, as evidenced by return receipt or by records or the courier service . 9. Notwithstanding anything to the contrary herein, Guarantor’s liability hereunder shall be limited to : . 10. ATLANTA COMMERCIAL BOARD OF REALTORS, INC . (“ACBR”) DISCLAIMER ; WAIVER AND RELEASE OF CLAIMS . THIS “DISCLAIMER ; WAIVER AND RELEASE OF CLAIMS” PROVISION, WITHOUT ANY CHANGES, MODIFICATIONS, DELETIONS OR REVISIONS, MUST BE INCLUDED IN ALL ATLANTA COMMERCIAL BOARD OF REALTORS, INC . FORM DOCUMENTS THAT INCLUDE ANY REFERENCE TO “ACBR” . THE USER HEREBY ACKNOWLEDGES AND AGREES THAT : (A) THE FORMS CREATED ON THIS WEBSITE HAVE IMPORTANT CONSEQUENCES, LEGAL, FINANCIAL AND OTHERWISE, THE USER SHOULD CONSULT AN ATTORNEY OR OTHER PROFESSIONAL OF HIS/HER CHOICE WITH RESPECT TO THE TERMS OF AND/OR THE COMPLETION, MODIFICATION AND/OR EXECUTION OF, ANY ACBR FORM CREATED IN CONNECTION WITH THIS WEBSITE ; (B) FORM DOCUMENTS BY THEIR NATURE ARE DESIGNED TO BE OF GENERAL APPLICATION, AND MAY NOT BE APPLICABLE TO SPECIFIC FACTS AND CIRCUMSTANCES, MAY NOT ADDRESS A GIVEN PARTY’S SPECIFIC CONDITIONS OR REQUIREMENTS AND/OR MAY NOT REFLECT THE RELATIVE BARGAINING OR NEGOTIATIONS OF THE PARTIES, AS SUCH VARIABLES MAY ARISE ON ANY GIVEN TRANSACTION ; (C) TO AVOID ANY POSSIBLE MISUNDERSTANDING OR CONFUSION AS TO THE ORIGINAL FORM PROVIDED ON THIS WEBSITE AND ANY REVISIONS, MODIFICATIONS OR CHANGES TO IT, ANY AND ALL REVISIONS, MODIFICATIONS OR CHANGES TO THE ACBR FORM SHOULD BE MADE READILY APPARENT BY HIGHLIGHTING, UNDERSCORING OR OTHER MEANS TO DISTINGUISH THEM FROM THE ORIGINAL ACBR FORM ; (D) ACBR HAS MADE THE ORIGINAL VERSIONS OF THIS DOCUMENT AND OTHER DOCUMENT FORMS AVAILABLE TO ACBR’S MEMBERS AS A SERVICE, BUT MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE SUITABILITY OR APPLICABILITY OF THE TERMS AND CONDITIONS OF, OR THE ENFORCEABILITY OF, THIS Lease Guaranty (#010) Rev. 11/08 2 Copyright © Atlanta Commercial Board of REALTORS, Inc.
2008 DOCUMENT OR OTHER DOCUMENT FORMS ; (E) ACBR DOCUMENT FORMS ARE UPDATED BY ACBR FROM TIME TO TIME, AND ACBR STRONGLY RECOMMENDS TO THE USER THAT HE OR SHE USE THE MOST CURRENT, UPDATED VERSIONS OF ANY SUCH DOCUMENT FORMS ; AND (F) BY CLICKING ON “I UNDERSTAND”, THE USER HEREBY WAIVES AND RELEASES ACBR, ITS OFFICERS, DIRECTORS, MEMBERS, REPRESENTATIVES, EMPLOYEES AND AGENTS, FROM ANY AND ALL CLAIMS, DEMANDS AND/OR CAUSES OF ACTION (WHETHER KNOWN OR UNKNOWN) ARISING OUT OF, PERTAINING TO OR RESULTING DIRECTLY OR INDIRECTLY FROM THE USE OF ANY ACBR FORM DOCUMENT . ANY MODIFICATION, REMOVAL, ALTERATION OR DELETION OF THE DISCLAIMER PARAGRAPH IN ANY ACBR FORM DOCUMENT SHALL NOT SERVE TO INCREASE OR ATTACH ANY LIABILITY OF ACBR . IN WITNESS WHEREOF, each Guarantor hereto, intending to be legally bound, has caused this Guaranty to be executed under seal, the day and year set forth below GUARANTOR: By: (Seal) Name: Title: Address: Phone: SSN or FEIN: Date: GUARANTOR: By: (Seal) - T - it l - e: - Name: Camille Viera - He well Address: Phone: SSN or FEIN: Date: Lease Guaranty (#010) Rev. 11/08 3 Copyright © Atlanta Commercial Board of REALTORS, Inc. 2008 Carmen Delgado
Exhibit 10.132
SHOPPING CENTER LEASE
NAME OF CENTER WATERFORD TOWERS
626 N Alafaya Trail, #207, Orlando, FL 32828
1. PARTIES. This Lease, dated as of this 9th day of September, 2016, is made by and between DENO P. DIKEOU (herein called “Landlord”) and LA ROSA REALTY, LLC (herein called “Tenant”).
2. PREMISES. Landlord does hereby lease to Tenant and Tenant hereby leases from Landlord that certain space (herein called “Premises”), having dimensions of approximately 19.8 feet in frontage by 95 feet in depth and containing approximately 1,881 square feet of floor area. The location and dimensions of said Premises are delineated on Exhibit “A” attached hereto and incorporated by reference herein. Said Premises are located in the City of Orlando, County of Orange, State of Florida.
This Lease is subject to the terms, covenants and conditions herein set forth and the Tenant covenants as a material part of the consideration for this Lease to keep and perform each and all of said terms, covenants and conditions by it to be kept and performed.
3. USE. Tenant shall use the Premises for REAL ESTATE OFFICE ONLY and shall not use or permit the Premises to be used for any other purpose without the prior written consent of landlord. Tenant shall not violate any exclusive uses listed in Exhibit E attached.
EXCLUSIVE: TENANT SHALL HAVE EXCLUSIVE RIGHT TO BE THE ONLY REAL ESTATE OFFICE OR TITLE COMPANY OFFICE LOCATED IN BUILDING F AT 626 N ALAFAYA TRAIL, ORLANDO, FLORIDA, SO LONG AS ALL PAYMENTS ARE MADE ON OR BEFORE THE FIRST OF EACH MONTH.
4. MINIMUM RENT.
4.A. Tenant agrees to pay to Landlord as Minimum Rent, without notice or demand, the monthly sum of TWO THOUSAND FOUR HUNDRED TWENTY NINE AND 63/100 ($2,429.63/$15.50PSF) FOR LEASE YEAR ONE; THEREAFTER BASE RENT INCREASES THREE (3%) PERCENT ANNUALLY BEGINNING LEASE YEAR TWO Dollars, in advance, on or before the first day of each and every successive calendar month during the term hereof, except the first month’s rent shall be paid upon the execution hereof. The rental and lease shall commence:
☐ On the 1st day of February, 2017, if the premises are being leased in its “as is” condition or subject to such incidental work as is to be performed by Landlord prior to said date (this work, if any, to be set forth in the attached Exhibit B and in this latter event, the rental shall commence on said date only if Landlord shall have completed said work). POSSESSION OF PREMISES ON SIGNING OF LEASE AND PAYMENTS ARE REQUIRED HEREIN.
Rent for any period which is for less than one (1) month shall be a prorated portion of the monthly installment herein based upon a thirty (30) day month. Said rental shall be paid to Landlord, without deduction or offset in lawful money of the United States of America and at such place as Landlord may from time to time designate in writing. Notwithstanding anything to the contrary herein, all payments are recognized to be payments as a gross lease payment amount per square foot as it relates to the total amount paid.
5. TERM. The Lease term shall be Three (3) full calendar years, plus the partial month in which the rental commences. The parties hereto acknowledge that certain obligations under various articles hereof may commence prior to the lease term, i.e. construction, hold harmless, liability insurance, etc.; and the parties agree to be bound by these articles prior to commencement of the lease term.
6. SECURITY DEPOSIT. Concurrently with Tenant’s execution of this Lease, Tenant has deposited with Landlord a sum equivalent to the first two months base rent. Said sum shall be held by Landlord as security for the faithful performance by Tenant of all the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the term hereof. If Tenant defaults with respect to any provision of this Lease, including, but not limited to the provisions relating to the payment of rent, Landlord may (but shall not be required to) use, apply or retain all or any part of this security deposit for the payment of any rent or any other sum in default, or for the payment of any amount which Landlord may spend or become obligated to spend by reason of Tenant’s default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s default. If any portion of said deposit is so used or applied Tenant shall, within five (5) days after written demand therefore, deposit cash with landlord in an amount sufficient to restore the security deposit to its original amount and Tenant’s failure to do so shall be a default under this Lease. Landlord shall not be required to keep this security deposit separate from its general funds, and Tenant shall not be entitled to interest on such deposit. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the security deposit or any balance thereof shall be returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder) within ten (10) days following expiration of the Lease term. In the event of termination of Landlord’s interest in this Lease, Landlord shall transfer said deposit to Landlord’s successor in interest.
7. ADDITIONAL CHARGES
II. Within thirty (30) days after the end of each calendar month following commencement of rents, Tenant shall furnish to Landlord a statement in writing, certified by Tenant to be correct, showing the total gross sales made in, upon, or from the Premises during the preceding calendar monthWithin thirty (30) days after the end of each calendar year of the term hereof, Tenant shall furnish to Landlord a statement in writing, certified to be correct, showing the total gross sales by months made in, upon, or from the Premises during the preceding calendar year I. In addition to the Minimum Rent provided in Article 4 hereinabove, and commencing at the same time as any rental commences under this Lease, Tenant shall pay to Landlord the following items, herein called Adjustments:
7.B. Adjustments.
(a) All real estate taxes and insurance premiums on the Premises, including land, building, and improvements thereon except Tenant shall provide its own insurance covering tenant improvements and betterments. Said real estate taxes shall include all real estate taxes and assessments that are levied upon and/or assessed against the Premises, including any taxes which may be levied on rents. Said insurance shall include all insurance premiums for fire, extended coverage, liability, and any other insurance that Landlord deems necessary on the Premises. Said taxes and insurance premiums for purpose of this provision shall be reasonably apportioned in accordance with the total floor area of the Premises as it relates to the total floor area of the Shopping Center which is from time to time completed as of the first day of each calendar quarter, (provided, however, that if any tenants in said building or buildings pay taxes directly to any taxing authority or carry their own insurance, as may be provided in their leases, their square footage shall not be deemed a part of the floor area).
(b) That percent of the total cost of the following items as Tenant’s total floor area bears to the total floor area of the Shopping Center which is from time to time completed as of the first day of each calendar quarter.
(i) All real estate taxes including assessments, all insurance costs and all costs to maintain, repair, and replace common areas landscaping and proportionate share of pylon sign, common area electric, roof system, including roof membrane and roof drainage systems, parking lots, sidewalks, driveways, and other areas used in common by the tenants of the Shopping Center.
(ii) All costs to supervise and administer said common areas, parking lots, sidewalks, driveways, and other areas used in common by the tenants or occupants of the Shopping Center. Said costs shall include such fees as may be paid to a third party in connection with same and shall in any event include a fee to Landlord to supervise and administer same in an amount equal to ten (10%) percent of the total costs of (i) above.
(iii) Any parking charges, utilities surcharges, or any other costs levied, assessed or imposed by, or at the direction of, or resulting from statutes or regulations, or interpretations thereof, promulgated by any governmental authority in connection with the use or occupancy of the premises or the parking facilities serving the premises.
II. Upon commencement of rental, Landlord shall submit to Tenant a statement of the anticipated monthly Adjustments for the period between such commencement and the following January and Tenant shall pay these Adjustments on a monthly basis concurrently with the payment of the Rent. Tenant shall continue to make said monthly payments until notified by Landlord of a change thereof. By March 1 of each year Landlord shall endeavor to give Tenant a statement showing the total Adjustments for the Shopping Center for the prior calendar year and Tenant’s allocable share thereof, prorated from the commencement of rental. In the event the total of the monthly payments which Tenant has made for the prior calendar year be less than the Tenant’s actual share of such Adjustments then Tenant shall pay the difference in a lump sum within ten days after receipt of such statement from Landlord and shall concurrently pay the difference in monthly payments made in the then calendar year and the amount of monthly payments which are then calculated as monthly Adjustments based on the prior year’s experience. Any over-payment by Tenant shall be credited towards the monthly Adjustments next coming due. The actual Adjustments for the prior year shall be used for purposes of calculating the anticipated monthly Adjustments for the then current year with actual determination of such Adjustments after each calendar year as above provided; excepting that in any year in which resurfacing is contemplated Landlord shall be permitted to include the anticipated cost of same as part of the estimated monthly Adjustments. Even though the term has expired and Tenant has vacated the premises, when the final determination is made of Tenant’s share of said Adjustments for the year in which this Lease terminates, Tenant shall immediately pay any increase due over the estimated Adjustments previously paid and, conversely, any over payment made shall be immediately rebated by landlord to Tenant. Failure of Landlord to submit statements as called for herein shall not be deemed to be a waiver of Tenant’s requirement to pay sums as herein provided.
8. USES PROHIBITED. Tenant shall not do or permit anything to be done in or about the Premises nor bring or keep anything therein which is not within the permitted use of the premises which will in any way increase the existing rate of or affect any fire or other insurance upon the Building or any of its contents, or cause a cancellation of any insurance policy covering said Building or any part thereof or any of its contents. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of the Building or injure or annoy them or use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose; nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or allow to be committed any waste in or upon the Premises.
9. COMPLIANCE WITH LAW. Tenant shall not use the Premises, or permit anything to be done in or about the Premises, which will in any way conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar bodies now or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises, excluding structural changes not related to or affected by Tenant’s improvements or acts. The judgment of any court of competent jurisdiction or the admission of Tenant in any action against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any law, statute, ordinance or governmental rule, regulation or requirement, shall be conclusive of that fact as between the Landlord and Tenant.
10. ALTERATIONS AND ADDITIONS. Tenant shall not make or allow to be made any alterations, additions or improvements to or of the premises or any part thereof without first obtaining the written consent of Landlord and any alterations, additions or improvements to or of said Premises, including, but not limited to, wall covering, paneling and built-in cabinet work, but excepting movable furniture and trade fixtures, shall at once become a part of the realty and belong to the Landlord and shall be surrendered with the Premises. In the event Landlord consents to the making of any alterations, additions or improvements to the Premises by Tenant, the same shall be made by Tenant at Tenant’s sole cost and expense. Upon the expiration or sooner termination of the term hereof, Tenant shall, upon written demand by Landlord, given at least thirty (30) days prior to the end of the term, at Tenant’s sole cost and expense, forthwith and with all due diligence, remove any alterations, additions, or improvements made by Tenant, designated by Landlord to be removed, and Tenant shall, forthwith and with all due diligence, at its sole cost and expense, repair any damage to the premises caused by such removal.
11. REPAIRS.
11.A. By entry hereunder, Tenant shall be deemed to have accepted the Premises as being in good, sanitary order, condition and repair. Tenant shall, at Tenant’s sole cost and expense, keep the Premises and every part thereof in good condition and repair (except as hereinafter provided with respect to Landlord’s obligations) including without limitation, the maintenance, replacement and repair of any storefront, doors, window casements, glazing, heating and air-conditioning system (when there is an air-conditioning system, Tenant shall obtain a service contract for repairs and maintenance of said system, said maintenance contract to conform to the requirements under the warranty, if any, on said system), plumbing, pipes, electrical wiring and conduits. Tenant shall, upon the expiration or sooner termination of this Lease hereof, surrender the Premises to the Landlord in good condition, broom clean, ordinary wear and tear and damage from causes beyond the reasonable control of Tenant excepted. Any damage to adjacent premises caused by Tenant’s use of the Premises shall be repaired at the sole cost and expense of Tenant.
11.B. Notwithstanding the provisions of Article 11.A. hereinabove, Landlord shall repair and maintain the structural portions of the Building, including the exterior walls unless such maintenance and repairs are caused in part or in whole by the act, neglect, fault or omission of any duty by the 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 shall persist for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant. Except as provided in Article 25 hereof, there shall be no abatement of 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 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.
12. LIENS. Tenant shall keep the Premises and the property in which the Premises are situated free from any liens arising out of any work performed, materials furnished or obligations incurred by or on behalf of Tenant. Landlord may require, at Landlord’s sole option, that Tenant shall provide to Landlord, at Tenant’s sole cost and expense, a lien and completion bond in an amount equal to one and one-half (1 1/2) times the estimated cost of any improvements, additions, or alterations in the Premises which the Tenant desires to make, to insure Landlord against any liability for mechanics’ and materialmen’s liens and to insure completion of the work.
13. ASSIGNMENT AND SUBLETTING. Tenant shall not either voluntarily, or by operation of law, assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any interest therein, and shall not sublet the said Premises or any part thereof, or any right or privilege appurtenant thereto, or allow any other person (the employees, agents, servants and invitees of Tenant excepted) to occupy or use the said Premises, or any portion thereof, without first obtaining the written consent of Landlord, which consent shall not be unreasonably withheld. A consent to one assignment, subletting, occupation or use by any other person shall not be deemed to be a consent to any subsequent assignment, subletting, occupation or use by another person. Consent to any such assignment or subletting shall in no way relieve Tenant of any liability under this Lease. Any such assignment or subletting without such consent shall be void, and shall, at the option of the Landlord, constitute a default under the terms of this Lease.
In the event that Landlord shall consent to a sublease or assignment hereunder, Tenant shall pay Landlord reasonable fees, not to exceed Three Hundred ($300.00) Dollars, incurred in connection with the processing of documents necessary to giving of such consent. Tenant cannot sublet to any business that would compete with any business existing in center, nor may Tenant compete with any business in center.
14. HOLD HARMLESS. Tenant shall indemnify and hold harmless Landlord against and from any and all claims arising from Tenant’s use of the Premises or from the conduct of its business or from any activity, work, or other things done, permitted or suffered by the Tenant in or about the Premises, and shall further indemnify and hold harmless Landlord against and from any and all claims arising from any breach or default in the performance of any obligation on Tenant’s part to be performed under the terms of this Lease, or arising from any act or negligence of the Tenant, or any officer, agent, employee, guest, or invitee of Tenant, and from all costs, attorney’s fees, and liabilities incurred in or about the defense of any such claim or any action or proceeding brought thereon and in case any action or proceeding be brought against Landlord by reason of such claim, Tenant upon notice from Landlord shall defend the same at Tenant’s expense by counsel reasonably satisfactory to landlord. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property or injury to persons in, upon or about the Premises, from any cause other than Landlord’s negligence; and Tenant hereby waives all claims in respect thereof against Landlord. Tenant shall give prompt notice to Landlord in case of casualty or accidents in the Premises.
Landlord or its agents shall not be liable for any loss or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water or rain which may leak from any part of the Building or from the pipes, appliances or plumbing works therein or from the roof, street or subsurface or from any other place resulting from dampness or any other cause whatsoever, unless caused by or due to the negligence of Landlord, its agents, servants or employees. Landlord or its agents shall not be liable for interference with the light, air, or for any latent defect in the Premises.
15. SUBROGATION. As long as their respective insurers so permit, Landlord and Tenant hereby mutually waive their respective rights of recovery against each other for any loss insured by fire, extended coverage and other property insurance policies existing for the benefit of the respective parties. Each party shall apply to their insurers to obtain said waivers. Each party shall obtain any special endorsements, if required by their insurer to evidence compliance with the aforementioned waiver.
16. LIABILITY INSURANCE. Tenant shall, at Tenant’s expense, obtain and keep in force during the term of this Lease a policy of comprehensive public liability insurance insuring Landlord and Tenant against any liability arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be in the amount of not less than $1,000,000.00 for bodily injury liability and property damage liability arising out of any one occurrence. The limit of any such insurance shall not, however, limit the liability of the Tenant hereunder. Tenant may provide this insurance under a blanket policy, provided that said insurance shall have an additional insured endorsement attached thereto. If Tenant shall fail to procure and maintain said insurance, Landlord may, but shall not be required to, procure and maintain same, but at the expense of Tenant. Insurance required hereunder shall be in companies rated A(-)8 or better in “Best’s Insurance Guide”. Tenant shall deliver to Landlord, prior to right of entry, copies of policies of liability insurance required herein or certificates evidencing the existence and amounts of such insurance with an additional insured endorsement naming the Landlord. The policy shall contain a clause providing at least sixty (60) days notice in the event of cancellation unless such cancellation is the result of non-payment of premium, in which case state statutory provisions apply. All such policies shall be written as primary policies not contributing with and not in excess of coverage which Landlord may carry. In the event of cancellation of coverage, the Landlord may exercise its right to purchase said coverage and charge all costs incurred to the Tenant.
17. UTILITIES. Tenant shall pay for all water, gas, heat, light, power, sewer charges, telephone service and all other services and utilities supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Tenant, Tenant shall pay a reasonable proportion to be determined by Landlord of all charges jointly metered with other premises.
18. PERSONAL PROPERTY TAXES. Tenant shall pay, or cause to be paid, before delinquency any and all taxes levied or assessed and which become payable during the term hereof upon all Tenant’s leasehold improvements, equipment, furniture, fixtures, and any other personal property located in the Premises. In the event any or all of the Tenant’s leasehold improvements, equipment, furniture, fixtures and other personal property shall be assessed and taxed with the real property, Tenant shall pay to Landlord its share of such taxes within ten (10) days after delivery to Tenant by Landlord of a statement in writing setting forth the amount of such taxes applicable to Tenant’s property.
19. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the rules and regulations that Landlord shall from time to time promulgate and/or modify. The rules and regulations shall be binding upon the Tenant upon delivery of a copy of them to Tenant. Landlord shall not be responsible to Tenant for the nonperformance of any said rules and regulations by any other tenants or occupants. Said Rules and Regulations as set forth in Exhibit F is incorporated herein by reference as though fully set forth herein.
20. HOLDING OVER. If Tenant remains in possession of the Premises or any part thereof after the expiration of the term hereof with the express written consent of Landlord, such occupancy shall be a tenancy from month to month at a rental in the amount of the last Monthly Minimum Rent, plus all other charges payable hereunder, and upon all the terms hereof applicable to a month to month tenancy.
21. ENTRY BY LANDLORD. Landlord reserves, and shall at any and all times have, the right to enter the Premises to inspect the same, to submit said Premises to prospective purchasers or tenants, to post notices of non-responsibility, to repair the Premises and any portion of the Building of which the Premises are a part that Landlord may deem necessary or desirable, without abatement of rent, and may for that purpose erect scaffolding and other necessary structures where reasonably required by the character of the work to be performed, always providing that the entrance to the Premises shall not be unreasonably blocked thereby, and further providing that the business of the Tenant shall not be interfered with unreasonably. Tenant hereby waives any claim for damages or for any injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby. For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding Tenant’s vaults, safes and files, and Landlord shall have the right to use any and all means which Landlord may deem proper to open said doors in an emergency, in order to obtain entry to the Premises without liability to Tenant except for any failure to exercise due care for Tenant’s property and any entry to the Premises obtained by Landlord by any of said means, or otherwise, shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the Premises or any portion thereof.
22. TENANT’S DEFAULT. The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant.
22.A. The vacating or abandonment of the Premises by Tenant.
22.B. The failure by Tenant to make any payment of rent or any other payment required to be made by Tenant hereunder, as and when due, where such failure shall continue for a period of three (3) days after written notice thereof by Landlord to Tenant.
22.C. The failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by the Tenant, other than described in Article 22.B, above, where such failure shall continue for a period of thirty (30) days after written notice hereof by Landlord to Tenant; provided, however, that if the nature of Tenant’s default is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said thirty (30) days period and thereafter diligently prosecutes such cure to completion.
22.D. The making by Tenant of any general assignment or general arrangement for the benefit of creditors; or the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt, or a petition or reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days); or the appointment of a trustee or a receiver to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where possession is not restored to Tenant within thirty (30) days; or the attachment, execution or other judicial seizure of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where such seizure is not discharged in thirty (30) days.
23. REMEDIES IN DEFAULT. In the event of any such default or breach by Tenant, Landlord may at any time thereafter, in his sole discretion, with or without notice or demand and without limiting Landlord in the exercise of a right or remedy which Landlord may have by reason of such default or breach:
23.A. Terminate Tenant’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant’s default including, but not limited to, the cost of recovering possession of the Premises; expenses of reletting, including necessary renovation and alteration of the Premises; reasonable attorney’s fees; the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent and other charges and Adjustments called for herein 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; and that portion of any leasing commission paid by Landlord and applicable to the unexpired term of this Lease. Unpaid installments of rent or other sums shall bear interest from the date due at the maximum legal rate; or
23.B. Maintain Tenant’s right to possession, in which case this Lease shall continue in effect whether or not Tenant shall have abandoned the Premises. In such event Landlord shall be entitled to enforce all of Landlord’s rights and remedies under this Lease, including the right to recover the rent and any other charges and Adjustments as may become due hereunder; or
23.C. Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the State in which the Premises are located.
24. DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided, however, that 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. In no event shall Tenant have the right to terminate this Lease as a result of Landlord’s default and Tenant’s remedies shall be limited to damages and/or an injunction.
25. RECONSTRUCTION. In the event the Premises are damaged by fire or other perils covered by extended coverage insurance, Landlord agrees to forthwith repair same, and this Lease shall remain in full force and effect, except that Tenant shall be entitled to a proportionate reduction of the Minimum Rent from the date of damage and while such repairs are being made, such proportionate reduction to be based upon the extent to which the damage and making of such repairs shall reasonably interfere with the business carried on by the tenant in the Premises. If the damage is due to the fault or neglect of Tenant or its employees, there shall be no abatement of rent.
In the event the Premises are damaged as a result of any cause other than the perils covered by fire and extended coverage insurance, then Landlord shall forthwith repair the same, provided the extent of the destruction be less than ten (10%) percent of the then full replacement cost of the Premises. In the event the destruction of the Premises is to an extent of ten (10%) percent or more of the full replacement cost then Landlord shall have the option; (21) to repair or restore such damage, this Lease continuing in full force and effect, but the Minimum Rent to be proportionately reduced as hereinabove in this Article provided; or (2) give notice to Tenant at any time within sixty (60) days after such damage, terminating this Lease as of the date specified in such notice, which date shall be no more than thirty (30) days after the giving of such notice. In the event of giving such notice, this Lease shall expire and all interest of the Tenant in the Premises shall terminate on the date so specified in such notice and the Minimum Rent, reduced by a proportionate reduction, based upon the extent, if any, to which such damage interfered with the business carried on by the Tenant in the Premises, shall be paid up to date of said such termination.
Notwithstanding anything to the contrary contained in this Article, Landlord shall not have any obligation whatsoever to repair, reconstruct or restore the Premises when the damage resulting from any casualty covered under this Article occurs during the last twenty-four months of the term of this Lease or any extension thereof.
Landlord shall not be required to repair any injury or damage by fire or other cause, or to make any repairs or replacements of any leasehold improvements, fixtures, or other personal property of Tenant.
26. EMINENT DOMAIN. If more than twenty-five (25%) percent of the Premises shall be taken or appropriated by any public or quasi-public authority under the power of eminent domain, either party hereto shall have the right, at its option, within sixty (60) days after said taking, to terminate this Lease upon thirty (30) days written notice. If either less than or more than 25% of the Premises are taken (and neither party elects to terminate as herein provided), the Minimum Rent thereafter to be paid shall be equitably reduced. If any part of the Shopping Center other than the Premises may be so taken or appropriated, Landlord shall within sixty (60) days of said taking have the right at its option to terminate this Lease upon written notice to Tenant. In the event of any taking or appropriation whatsoever, Landlord shall be entitled to any and all awards and/or settlements which may be given and Tenant shall have no claim against Landlord for the value of any unexpired term of this Lease.
27. PARKING AND COMMON AREAS. Landlord covenants that upon completion of the Shopping Center an area approximately equal to the common and parking areas as shown on the attached Exhibit “A” shall be at all times available for the non-exclusive use of Tenant during the full term of this Lease or any extension of the term hereof, provided that the condemnation or other taking by any public authority, or sale in lieu of condemnation, of any or all of such common and parking areas shall not constitute a violation of this covenant. Landlord reserves the right to change the entrances, exits, traffic lanes and the boundaries and locations of such parking area or areas, provided, however, that anything to the contrary notwithstanding contained in this Article 27, said parking area or areas shall at all times be substantially equal or equivalent to that shown on the attached Exhibit “A”.
27.A. Prior to the date of Tenant’s opening for business in the Premises, Landlord shall cause said common and parking area or areas to be graded, surface, marked and landscaped at no expense to Tenant.
27.B. The Landlord shall keep said automobile parking and common areas in a neat, clean and orderly condition and shall repair any damage to the facilities thereof, but all expenses in connection with said automobile parking and common areas shall be charged and prorated in the manner as set forth in Article 7 hereof.
27.C. Tenant, for the use and benefit of Tenant, its agents, employees, customers, licensees and sub-tenants, shall have the non-exclusive right in common with Landlord, and other present and future owners, tenants and their agents, employees, customers, licensees and sub-tenants, to use said common and parking areas during the entire term of this Lease, or any extension thereof, for ingress and egress, and automobile parking.
27.D. The Tenant, in the use of said common and parking areas, agrees to comply with such reasonable rules, regulations and charges for parking as the Landlord may adopt from time to time for the orderly and proper operation of said common and parking areas. Such rules may include but shall not be limited to the following: (1) The restricting of employee parking to a limited, designated area or areas; and (2) The regulation of the removal, storage and disposal of Tenant’s refuse and other rubbish at the sole cost and expense of Tenant.
28. SIGNS. The Tenant may affix and maintain upon the glass panes and supports of the show windows and within twelve (12) inches of any window and upon the exterior walls of the Premises only such signs, advertising placards, names, insignia, trademarks and descriptive material as shall have first received the written approval of the Landlord as to type, size, color, location, copy nature and display qualities. Anything to the contrary in this Lease notwithstanding, Tenant shall not affix any sign to the roof. Tenant shall, however, erect one sign on the front of the Premises not later than the date Tenant opens for business, in accordance with a design to be prepared by Tenant and approved in writing by Landlord. Exhibit C is attached hereto and incorporated herein as though fully set forth herein.
29. DISPLAYS. The 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 Premises. Tenant further agrees not to install any exterior lighting, amplifiers or similar devices or use in or about the Premises any advertising medium which may be heard or seen outside the Premises, such as flashing lights, searchlights, loudspeakers, phonographs or radio broadcasts.
30. AUCTIONS. Tenant shall not conduct or permit to be conducted any sale by auction in, upon or from the Premises whether said auction be voluntary, involuntary, pursuant to any assignment for the payment of creditors or pursuant to any bankruptcy or other insolvency proceeding.
31. HOURS OF BUSINESS. Subject to the provisions of Article 25 hereof, Tenant shall continuously during the entire term hereof conduct and carry on Tenant’s business in the Premises and shall keep the Premises open for business and cause Tenant’s business to be conducted therein during the usual business hours of each and every business day as is customary for businesses of like character in the city in which the Premises are located to be open for business; provided, however, that this provision shall not apply if the Premises should be closed and the business of Tenant temporarily discontinued therein on account of strikes, lockouts or similar causes beyond the reasonably control of Tenant. Tenant shall keep the Premises adequately stocked with merchandise, and with sufficient sales personnel to care for the patronage, and to conduct said business in accordance with sound business practice.
In the event of breach by the Tenant of any of the conditions contained in this Article, the Landlord shall have in addition to any and all remedies herein provided, the right at its option to collect not only the Minimum Rent herein provided, but additional rent at the rate of one-thirtieth (1/30) of the Minimum Rent herein provided for each and every day that the Tenant shall fail to conduct its business as herein provided; said additional rent shall be deemed to be in lieu of any percentage rent that might have been earned during such period of the Tenant’s failure to conduct its business as herein provided.
32. MERCHANTS’ ASSOCIATION. If a majority of tenants in the Shopping Center shall determine that it is in the best interests of the Shopping Center, Tenant will become a member of, and participate fully in, and remain in good standing in the Merchants’ Association (as soon as the same has been formed), organized for tenants occupying premises in the Shopping Center, and Tenant will abide by the regulations of such Association. Each member tenant shall have one (1) vote, and the Landlord shall also have one (1) vote, in the operation of said Association. The objects of such Association shall be to encourage its members to deal fairly and courteously with their customers, to encourage ethical business practices, and to assist the business of the tenants by sales promotion and center wide advertising. The Tenant agrees to pay minimum dues to the Merchants’ Association, provided however, that in no event shall the dues paid by Tenant in any fiscal year of said Association be in excess of twenty (20) cents per square foot of Premises leased to Tenant. Default in payment of dues shall be treated in similar manner to default in rent with like rights of Landlord at its option to the collection thereof on behalf of the Merchants’ Association.
33. GENERAL PROVISIONS.
(i) Plats and Riders. Clauses, plats, riders, exhibits and addendums, if any, affixed to this Lease are a part hereof.
(ii) Waiver. The waiver by landlord of any term, covenant or condition herein contained shall not be deemed to be a waiver of such term, covenant or condition or any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding default by Tenant of any term, covenant or condition of this Lease, other than the failure of the Tenant to pay the particular rental so accepted, regardless of Landlord’s knowledge of such preceding default at the time of the acceptance of such rent.
(iii) Joint Obligation. If there be more than one Tenant the obligations hereunder imposed shall be joint and several.
(iv) Marginal Headings. The marginal headings and article titles to the articles of this Lease are not a part of the Lease and shall have no effect upon the construction or interpretation of any part hereof.
(v) Time. Time is of the essence of this Lease and each and all of its provisions in which performance is a factor.
(vi) Successors and Assigns. 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.
(vii) Recordation. Neither Landlord nor Tenant shall record this lease, but a short form memorandum hereof may be recorded at the request of Landlord.
(viii) Quiet Possession. Upon Tenant paying the rent reserved hereunder and observing and performing all of the covenants, conditions and provisions on Tenant’s part to be observed and performed hereunder, Tenant shall have quiet possession of the Premises for the entire term hereof, subject to all the provisions of this Lease.
(ix) Late Charges. Tenant hereby acknowledges that late payment by Tenant to Landlord of rent or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Landlord by terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of rent or any sum due from Tenant shall not be received by landlord or Landlord’s designee within ten (10) days after written notice that said amount is past due, then Tenant shall pay to Landlord a late charge equal to the maximum amount permitted by law (and in the absence of any governing law, ten percent of such overdue amount), plus any attorneys’ fees incurred by Landlord by reason of Tenant’s failure to pay rent and/or other charges when due hereunder. The parties hereby agree that such late charges represent a fair and reasonable estimate of the cost that Landlord will incur by reason of the late payment by Tenant. Acceptance of such late charges by the Landlord shall in no event constitute a waiver of Tenant’s default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder.
(x) Prior Agreements. This lease contains all of the agreements of the parties hereto with respect to any matter covered or mentioned in this Lease, and no prior agreements or understanding pertaining to any such matters shall be effective for any purpose. No provision of this Lease may be amended or added to except by an agreement in writing signed by the parties hereto or their respective successors in interest. This Lease shall not be effective or binding on any party until fully executed by both parties hereto.
(xi) Inability to Perform. This Lease and the obligations of the Tenant hereunder shall not be affected or impaired because the 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.
(xii) Partial Invalidity. Any provision of this Lease which shall prove to be invalid, void, or illegal shall in no way affect, impair or invalidate any other provision hereof and such other provision shall remain in full force and effect.
(xiii) Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, whenever possible, be cumulative with all other remedies at law or in equity.
(xiv) Choice of Law. This Lease shall be governed by the laws of the State in which the Premises are located.
(xv) Attorneys’ Fees. In the event of any action or proceeding brought by either party against the other under this Lease the prevailing party shall be entitled to recover for the fees of its attorneys in such action or proceeding, including costs of appeal, if any, in such amount as the court may adjudge reasonable as attorneys’ fees. In addition, should it be necessary for Landlord to employ legal counsel to enforce any of the provisions herein contained, Tenant agrees to pay all attorneys’ fees and court costs reasonably incurred.
(xvi) Sale of Premises by Landlord. In the event of any sale of the 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 lease arising out of any act, occurrence or omission occurring after the consummation of such sale; and the purchaser, at such sale or any subsequent sale of the Premises shall be deemed, without any further agreement between the parties or their successors in interest or between the parties and any such purchaser, to have assumed and agreed to carry out any and all of the covenants and obligations of the Landlord under this Lease.
(xvii) Subordination, Attornment. Upon request of the landlord, Tenant shall in writing subordinate its rights hereunder to the lien of any mortgage or deed of trust, to any bank, insurance company or other lending institution, now or hereafter in force against the Premises, and to all advances made or hereafter to be made upon the security thereof.
In the event any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the landlord covering the Premises, the Tenant shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the landlord under this Lease. The provisions of this Article to the contrary notwithstanding, and so long as Tenant is not in default hereunder, this Lease shall remain in full force and effect for the full term hereof.
(xviii) Notices. All notices and demands which may or are to be required or permitted to be given by either party on the other hereunder shall be in writing. All notices and demands by the Landlord to the Tenant shall be sent by United States Mail, postage prepaid, addressed to the Tenant at the Premises, and to the address herein below, or to such other place as Tenant may from time to time designate in a notice to the landlord. All notices and demands by the tenant to the landlord shall be sent by United States Mail, postage prepaid, addressed to the Landlord at the address set forth herein, and to such other person or place as the Landlord may from time to time designate in a notice to the Tenant.
To Landlord at: ________________________________________________________________________
To Tenant at: 1420 Celebration Blvd, #100, Celebration, FL 34747
(xix) Tenant’s Statement. Tenant shall at any time and from time to time, upon not less than three days prior written notice from landlord, execute, acknowledge and deliver to Landlord a statement in writing (a) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as so modified is in full force and effect), and the date to which the rental and other charges are paid in advance, if any, and (b) acknowledging that there are not, to Tenant’s knowledge, any uncured defaults on the part of the Landlord hereunder, or specifying such defaults if any are claimed, and (c) setting forth the date of commencement of rents and expiration of the term hereof. Any such statement may be relied upon by the prospective purchaser or encumbrancer of all or any portion of the real property of which the Premises are a part.
(xx) Authority of Tenant. If Tenant is a corporation, each individual executing this Lease on behalf of said corporation represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of said corporation, in accordance with the bylaws of said corporation, and that this Lease is binding upon said corporation.
34. ACCELERATED RENT. In addition to the foregoing rights and remedies of the Landlord as set forth in Paragraphs 22 and 23 above, in the event of Tenant default terminating Tenant’s rights under the Lease, the landlord shall have the option to accelerate all current and future monetary obligations of the Tenant, including remaining installments of rent, and such other amounts due under the term of the Lease. Such accelerated unpaid rent and other amounts due under the terms of the Lease (gross rents) shall accrue interest at the highest rate allowed by law until paid in full.
| LANDLORD | |||
| WITNESS for DENO P. DIKEOU | |||
| DENO P. DIKEOU | |||
| WITNESS FOR LA ROSA REALTY, LLC | TENANT: LA ROSA REALTY, LLC | ||
| BY: | |||
| Joseph La Rosa its Owner/CEO | |||
ADDENDUM
Addendum to that lease dated the 12 day of September 2016, by and between DENO P. DIKEOU, herein called “LANDLORD”, and LA ROSA REALTY, LLC, herein called “TENANT”.
WHEREAS, it is intended that the parties to that lease add additional terms therein and to have full force and effect as though set forth in said lease.
NOW, THEREFORE, in consideration of mutual promises, Ten Dollars and other valuable consideration, sufficiency and receipt acknowledged, the parties herein further agree as follows:
1. Tenant and its employees and invitees are, except as otherwise specifically provided in this lease, privileged to use the parking and common areas in common with other occupants of the shopping center during the term of the lease. Landlord shall keep or cause to be kept said common area in a clean condition, properly lighted and landscaped and shall repair and replace any damage to the facilities thereof and shall generally maintain the same in good condition and repair. The costs of such common area expenses shall be charged and prorated and paid by Tenant in the manner previously set forth. The phrase “common area expenses” as used herein shall include, but not be limited to all sums expended in connection with said common area for water, electricity, electricity to operate sewer lift station; maintenance repair and replacement of sewer lift station; maintenance repair and replacement of elevators; trash pick-up, utilities, sewer and other utility lines and facilities not dedicated to the public, service contract for quarterly HVAC filter changes and annual HVAC clean and check and general maintenance; maintenance, replacement and repair of parking lot, sidewalks, curbs and shopping center signs; maintenance, replacement and repair of lawn sprinkler systems, painting, plants and shrubbery, landscaping, pylon and directional signs and other markers and bumpers; maintenance, replacement and repair of any fire protection systems and related governmental fees, common area lighting systems, common area storm drainage systems, and sewer lift station, insurance deductibles; all expenses included in the Reciprocal Easement and Operation Agreement and First Amendment attached hereto as Exhibit A-1 incorporated by reference as though fully set forth herein, including but not limited to main entrance, retention pond, etc.; personnel to implement such services, including, if Landlord deems necessary the cost of security guards and security cameras and systems; and a reasonable allowance for Landlord’s supervision of said common area in an amount not to exceed ten percent (10%) of the total of the aforementioned expenses for each lease year. Landlord may cause any or all of said services to be provided by an independent contractor or contractors. Should Landlord make available additional land for parking or other common area purposes, then said expenses shall also include all expenses incurred in connection with said additional land.
2. Tenant shall erect and attach, at Tenant’s sole cost and expense, its standard identifying sign on the fascia of the front of the premises, subject to and in accordance with all rules, regulations, laws, ordinances, having jurisdiction thereof, and subject to Exhibit C.
3. This paragraph is intentionally omitted.
4. All rent adjustments, expenses and all monies due under this lease shall be considered as additional rent and payable as such.
5. The Tenant shall be responsible for the maintenance and insuring of the plate glass on the premises.
6. The term “Floor area” as used in the lease shall include all areas for the exclusive use and occupancy by an occupant, measure from the exterior surface of exterior walls (and from the exterior thereof in the case of openings) and from the center of walls dividing the premises from other premises. If there are no objections within three (3) months of signing the Lease as to the accuracy of the floor area square feet, both parties permanently waive the right to raise objection to the square feet accuracy.
7. The base rent is TWO THOUSAND FOUR HUNDRED TWENTY NINE AND 63/100 DOLLARS ($2,429.63) per month for Lease Year One. Thereafter, the base rent increases three (3%) percent annually beginning Lease Year Two. In no event shall the rent ever be below the prior base period rent.
8. In addition to all other payments, the Tenant shall pay a 6.5% sales tax and any increases in such tax on the total amount paid to Landlord including, but not limited to, rent, real estate taxes, insurance, common area maintenance fees and common area utilities.
9. CONSTRUCTION LIENS OR CLAIMS: Nothing contained in this lease shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any architect, engineer, surveyor, contractor, subcontractor, laborer, materialmen or mechanic for the performance of. any labor or the furnishing of any materials or services requested by Tenant for or in connection with the Demised Premises of the Building of which the Demised premises are a part. Notice is hereby given that Landlord shall not be liable for any labor or materials or services furnished or to be furnished to Tenant upon credit, and that no construction or other lien for such labor, materials or services shall attach to or affect the fee or reversionary or other estate or interest of Landlord in the Demised Premises or the Building of which the Demised Premises are a part or in this Lease. All persons dealing with the Demised Premises or the Building of which the Demised Premises are a part and with the Tenant are hereby put on notice that the Tenant does not have the power to deal with the Demised Premises or the Building of which the Demised Premises are a part in such a manner as to authorize the creation of construction liens, by implication or otherwise; and all persons making improvements to the Demised Premises or the Building of which the Demised Premises are a part, either by doing work or labor or services, or by supplying materials thereto, at the request of Tenant or persons dealing by, through or under Tenant, are hereby put upon notice that they must look solely to the Tenant and not to the Demised Premises, or the building of which the Demised Premises are a part, or any part thereof or to the Improvements or to this Lease for the payment of all services, labor and materials performed upon or delivered to the Demised Premises or the Building of which the Demised Premises are a part.
10. The Landlord shall not be responsible for any repairs that the Tenant shall contract with other parties. This lease does not require any additions or repairs to be made by the Tenant initially as a requirement or condition precedent to the entering of this lease. However, the Tenant shall be responsible for repairs as set forth in this lease during the lease duration.
10.A. Tenant, for Tenant’s for Tenant’s work, is to keep the building free of all construction liens. These improvements do not go to the pith of the Lease. The obligation to pay rent accrues whether or not Tenant work construction is ever commenced or completed.
11. Notwithstanding other assignment provisions in this lease that are in conflict with the following provisions of assignment the following assignment provisions shall prevail:
A. Tenant may not assign this lease or sublease the premises, in whole or in part, to a wholly owned corporation or controlled subsidiary of Tenant without first having obtained the written consent of Landlord, such consent not to be unreasonably withheld.
B. If Tenant is a corporation, any transfer, sale, pledge or other disposition of more than ten percent ( 10%) of the common stock shall occur, or voting control or power to vote the majority of the outstanding capital stock be changed, such action shall be deemed an assignment under the terms of this lease and shall be subject to all the terms and conditions thereof. Any breach of the assignment clause by Tenant will constitute a default under the terms of this lease.
C. In the event the Tenant shall transfer, assign, or sublease the entire or any portion of the premises for rentals or any consideration in excess of those rentals or consideration payable hereunder, Tenant shall pay to Landlord, as additional rent hereunder, all such excess rentals and consideration paid for the transfer, sublease and/or assignment of the lease.
D. All provisions of paragraph 13 of the base lease remains in full force and effect when not in conflict with paragraph 11 herein and more specifically, but not limited thereto, consent to any assignment or subletting shall in no way relieve Tenant of any liability under this lease.
E. Any proposed assignee or subTenant of Tenant shall assume Tenant’s obligations hereunder and deliver to Landlord an assumption agreement in form satisfactory to Landlord no less than ten days prior to the effective date of the proposed assignment.
F. Notwithstanding any of the foregoing provisions, if Tenant is in default under any of the terms of this lease, Tenant may not assign or sublet the premises in whole or in part.
12. Additional provisions for security deposit: If Tenant should be overdue in the payment of monthly rent or other sums payable to Landlord on at least two or more occasions during a year, Landlord, at its option, may require Tenant to increase the amount of security deposit now held by Landlord by an amount sufficient to cover at least two month’s rent or greater amount to be determined at sole discretion of Landlord. In this event, upon receipt of the additional security sum, Landlord and Tenant shall evidence such receipt by a letter signed and acknowledged by both parties to be incorporated as part of this lease, stating the “New Total Amount” so held without liability for any interest.
13. Tenant shall be responsible for any increase in the hazard insurance premium rates when said increase in the premium rates is directly attributable to the unique use of the premises by the Tenant.
14. Mortgage Financing: If any lending institution, being a life insurance company, pension fund, savings and loan association, bank or other institution regularly engaged in long term lending, with which Landlord has negotiated or may negotiate a purchase or interim or long term financing for the Shopping Center or part thereof does not approve the credit rating of Tenant, or if such lending institution shall require change(s) in the lease as condition or one of the conditions of its approval of this lease for such purchase or financing; and if within fifteen (15) days after notice from Landlord (i) Tenant fails or refuses to supply or execute guarantees which are stated by Landlord as necessary to secure the approval of Tenant’s credit by any such lending institution, or (ii) if Tenant fails or refuses to execute with Landlord the amendment or amendments to this lease accomplishing the changes(s) which are stated by Landlord to be needed in connection with approval of this lease for purposes of such sale or financing, or (iii) if for any reason, such sale or financing in an amount satisfactory to Landlord cannot be obtained, Landlord shall have the right to cancel this lease at any time prior to the Rental Commencement Date. In the event of cancellation by Landlord hereunder, this lease shall be and become null and void and both parties shall automatically be released as of the date of Landlord’s cancellation notice from any and all liability or obligation under this lease. Notwithstanding anything contained herein to the contrary, Tenant shall not be required to agree, and Landlord shall not have any right of cancellation for Tenant’s refusal to agree, to any modification of the provisions of this lease relating to the amount of minimum rent and percentage rent reserved, the size or location of the demised premises, the duration or commencement date of the term, or the value of the improvements to be made by Landlord to the demised premises prior to tender of possession.
Tenant shall, upon the request of Landlord, execute and deliver such instruments as may be required by Landlord to make this lease either superior or subordinate to any mortgages nor or hereafter placed upon Landlord’s interest in the Shopping Center or the demised premises or future additions thereto. Tenant hereby attorns to any purchaser at a foreclosure sale or sale in lieu of foreclosure, and agrees to execute all agreements required by any such purchaser affirming such attornment.
Upon request of any mortgagee of record, Tenant shall give such mortgagee copies of all notices given by Tenant to Landlord hereunder, and Tenant shall allow such mortgagee a reasonable length of time (in any event, not less than sixty days from the date of such notice) in which to cure any default by Landlord hereunder. Any such notice shall be sent to such department and address as such mortgagee shall direct Tenant in writing.
15. Extra insurance premium cost, if any, caused by Tenant’s unique use of the premises, i.e. hair parlor/salon, restaurant, to be paid by Tenant upon the signing of lease.
16. Improvement of Demised Premises. Between the date of this lease and the date for commencement of the lease term as set forth in paragraph 4 of the base lease, Landlord will attempt to complete improvements to the demised premises in accordance with Exhibit B, which is attached hereto and made a part hereof by this reference. In the event Landlord cannot complete the improvement to the demised premises by the date stated in paragraph 4 of the base lease for the commencement of the lease term, this lease shall not be void or voidable nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom, provided Landlord is taking reasonable actions to make the demised premises available for occupancy reasonably promptly. In such event, the demised premises shall be “ready for occupancy” when Landlord and its contractors have substantially completed the work required to be done by them in Exhibit “B”, ( excluding any special requirements requested by Tenant), or such earlier date when such work would have been done but for delays caused by Tenant. This lease is contingent upon the Landlord obtaining satisfactory construction and permanent financing necessary to construct the building which will contain the demised premises. In the event Landlord cannot obtain such financing and the building is not built, this lease shall be null and void whereupon all obligations of each party to the other, monetary or otherwise, under this lease shall thereupon cease without any liability accruing between the parties as a result of such failure. Notwithstanding anything to the contrary contained in this lease, Landlord shall not in any manner be liable to Tenant for damages or any other claim resulting from failure to deliver the demised premises or for any delay in commencing or completing any work Landlord is to perform under Exhibit B, or failure to build the building containing the demised premises, and Tenant hereby waives all such liability whatsoever and any right it may have to terminate this lease; provided that in the event the lease commencement date shall not have occurred within eight months after the date stated in paragraph 4 of the base lease for the commencement of the lease term, then this lease shall automatically become null and void (except that Landlord shall reimburse Tenant for any advance rent paid, or security deposit, and except for items which have been theretofore accrued obligations hereunder, in which event each party will, at the other’s request, execute an instrument in recordable form containing a release and surrender of all right, title and interest in and to this lease.
17. Noise. Tenant agrees not to generate unreasonable noise so as to unduly interfere with the business and the operation of the other Tenant in the shopping center.
18. Toxic Waste. The Tenant represents and warrants to Landlord that Tenant will not utilize the leased premises, nor any part thereof, to treat, deposit, store, dispose of, or place any hazardous substances, as defined by 42 U.S.C.A. Section 9601 (14) or pollutants, as defined in Section 376.301, Florida Statutes; nor will Tenant authorize any other person or entity to treat, deposit, store, dispose of, or place any hazardous substance, as defined above, or pollutants on the leased premises, or any part thereof.
In the event Tenant or its servants, employees, invitees or agents intentionally or negligently cause a release or threatened release of a hazardous substance or pollutant on the leased premises which subjects Landlord to liability, in any form whatsoever, under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.A. Section 9607, under the Florida Resource Recovery and Management Act, Florida Statute Section 403.727 (1990) or under other statutory or common law, Tenant agrees to indemnify, hold harmless and defend Landlord from and against any and all claims or liability that might arise from the existence of hazardous substances or pollutants on the lease premises. Such indemnification shall include all damages, costs, expenses, attorneys’ fees at trial or appeal, or other expense which Landlord may incur.
Without limiting the generality of the foregoing, this indemnification shall survive the expiration of this Lease and does specifically cover costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision because of the presence or suspected presence of Hazardous Materials in the soil, groundwater or soil vapor on or under the Shopping Center, unless the Hazardous Materials are present solely as the result of the acts of Landlord, its officers, agents or employees.
19. As used in this Lease and Addendum, the term “REA” shall mean that certain Reciprocal Easement and Operation Agreement dated September 23, 1999, by and between Waterford Commercial Land Joint Venture, a Florida partnership, and Landlord and recorded September 24, 1999, with the Clerk of the Circuit Court of Orange County, Florida in Official Records Book 5845 at Page 1099, as amended by that certain First Amendment to Reciprocal Easement and Operation Agreement dated January 26, 2000, by and between Landlord and Home Depot U. S. A., Inc. a Delaware corporation (“Home Depot”), and recorded January 28, 2000, with the clerk of the Circuit Court of Orange County, Florida in Official Records Book 5931 at Page 4466. Said REA as defined herein is incorporated by reference herein as though fully set forth herein.
20. Tenant shall purchase its own water meter, open a water and sewer account in its own name, pay all water meter ERC and ERU fees, and be responsible for the water line from the water meter and pay all fees related to sewer water and meter to its premises for maintenance, repair and replacement if required. Initially, Landlord shall install a water line from the meter to the premises at its sole cost. Notwithstanding the foregoing, Landlord shall provide to Tenant one (1) ERU and one (1) ERC for Tenant’s use in connection with the Premises.
21. Landlord and Tenant hereby mutually, voluntarily, and intentionally waive the right either may have to a trial by jury in respect to any and all civil action commenced by either party in connection with this Lease. If there are any facts or allegations that need to be tried in a court of law, every position of said trial will be before a court without a jury.
22. Permitted Uses and Exclusives: Tenant’s use and any assignment or subletting to assignee or subTenant, is restricted and subject to Exhibit E and Tenant’s Lease Paragraph 3 USE description and to any use in existence in the Center at the time of sublet or assignment to an assignee or subTenant.
23. If the Tenant should be a restaurant, or other Tenant that requires a grease trap, the following shall apply:
A. Tenant agrees to contract with a licensed contractor for monthly cleaning of the interior/exterior grease trap (s) and sewer waste lines to the point where the Tenant’s sewer waste line intersects the main sewer line. A copy of said contract shall be furnished to Landlord as proof of said maintenance.
B. Tenant agrees to dispose of grease in a sealed container, which will be emptied on a routine basis by a company licensed to handle grease products. The grease disposal container must be placed in a containment vessel.
C. Tenant agrees to contract with a licensed contractor for monthly cleaning of the exhaust hood, exhaust flue, and roof mounted exhaust fan as required to keep all components free of any accumulation of grease.
D. Tenant agrees to keep the common area behind Tenant’s demised premise free of all trash and debris including, but not limited to, cleaning equipment, boxes, fixtures, food waste, etc.
E. Tenant agree to dispose of all waste water in drains or other receptacles, not pouring liquid products of any type on the common area.
F. Tenant agrees to dispose of all hazardous chemicals in compliance with Federal/State/Local requirements.
G. Tenant agrees that operating a restaurant could create an objectionable odor and thereby create a nuisance to co-Tenants of the Shopping Center. Should the Landlord receive any complaints of odors emanating from the premises or trash outside the premises for disposal, Landlord will notify Tenant, in writing, requiring Tenant to solve the odor problem within thirty (30) days. In the event the problem is not or cannot be solved within said 30 day period, Landlord will notify Tenant that the Lease will be terminated and Tenant is to vacate the premises within thirty (30) days of such notice.
H. Should Tenant’s grease trap or waste products create damage to the parking lot, common areas, sewer lines, storm sewer lines and retention pond, Tenant will be responsible for said damages and cost of clean up. Such repair and clean up shall be contracted for immediately by Tenant and the work completed within fifteen (15) days of written notice from Landlord.
24. WAIVER OF JURY TRIAL. THE PARTIES WAIVE TRIAL BY JURY IN CONNECTION WITH ANY ACTION ARISING UNDER OR RELATED TO THIS LEASE OR THIS ADDENDUM.
IN WITNESS WHEREOF, the parties have executed this Addendum this day of , 2016.
| LANDLORD | ||
| WITNESS for DENO P. DIKEOU | ||
| DENO P. DIKEOU | ||
| TENANT: LA ROSA REALTY, LLC | ||
| WITNESS for LA ROSA REALTY, LLC | BY: | |
| Joseph La Rosa its Owner/CEO |
SECOND ADDENDUM
THIS SECOND ADDENDUM to that Lease dated the 9th day of September, 2016, by and between DENO P. DIKEOU, [*], hereinafter referred to as “Landlord”, and LA ROSA REALTY, LLC, hereinafter referred to as “Tenant”, for the premises commonly known as 626 N. Alafaya Trail, Suite 207, Orlando, FL.
WHEREAS, the parties desire to amend the terms of the Lease as to the Lease and Rent commencement date and description of Tenant’s Work.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other valuable consideration, sufficiency and receipt of which is hereby acknowledged, the parties hereby agree as follows:
| 1. | The parties hereby agree that Tenant shall have possession of the premises effective September 9, 2016. |
| 2. | Lease and Rent shall commence March 1, 2017. |
| 3. | An extra month’s rent is given as free rent from February 1, 2017 to February 28, 2017 in consideration to compensate for irregularities in the concrete floor Tenant assumes complete responsibility for to repair, if required, at Tenant’s sole cost and expense. |
| 4. | All other terms of the Lease and prior Addendums shall remain in full force and effect, and only terms enumerated as set forth herein shall prevail. |
| 5. | This Addendum shall be interpreted and enforced in accordance with the laws of the State of Florida. |
| 6. | This Addendum shall be binding upon the heirs, successors and assigns of the parties. |
IN WITNESS WHEREOF, the parties hands and seals have been hereunto affixed this day of , 2016.
| LANDLORD | ||
| WITNESS for DENO P. DIKEOU | ||
| DENO P. DIKEOU | ||
| TENANT: LA ROSA REALTY, LLC | ||
| WITNESS for LA ROSA REALTY, LLC | BY: | |
| Joseph La Rosa its Owner/CEO |
GUARANTY
La Rosa Realty Second Addendum In consideration of DENO P. DIKEOU, whose address is [*], (hereinafter referred to as “Landlord”) entering into that certain Lease with La Rosa Realty LLC. (hereinafter referred to as “Tenant”) dated September 9, 2016, for premises located at 626 N Alafaya Trail, Suite 207, Orlando, Florida 32828 does hereby guarantee to Landlord performance in full by Tenant of all of Tenant’s obligations, including payment of rentals, as contained in said Lease referred to and all damages and expenses that may arise in consequence of any default by Tenant, its successors and assigns under said Lease, including, without limitations, all reasonable attorneys’ fees incurred by Landlord resulting from any such default and/or by the enforcement of this Guaranty, subject only to such defenses and rights as Tenant may have.
This Guaranty shall be enforceable against Joseph La Rosa, Deana La Rosa, Elvi Hebra, and Andres Hebra Individually including their successors and assigns without the necessity for any suit or legal proceedings on Landlord’s part as against Tenant, its successors and assigns. The validity of this Guaranty and the obligations of JOSEPH LA ROSA, DEANA LA ROSA, ELVI HEBRA, and ANDRES HEBRA hereunder shall in nowise be terminated, affected or impaired by reason of the assertion or the failure to assert any of the rights or remedies reserved to Landlord pursuant to the provisions of said Lease.
This Guaranty shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by: (a) any amendment, or modification of, or supplement to, the Lease, or any assignment or transfer thereof; (b) any exercise or non-exercise of any right, power, remedy or privilege under or in respect of the Lease or this Guaranty or any waiver, consent, extension, renewal, modification or any change in any of the terms, covenants, conditions or provisions of the Lease or any other assignment of or transfer thereof; (c) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or similar proceeding relating to Tenant, its successors and assigns or their properties or creditors; (d) any limitation of the liability or obligation of Tenant under the Lease or its estate in bankruptcy or of any remedy for the enforcement thereof resulting from the operation of any present or future provision of the National Bankruptcy Act or other statute, or from the decision of any court; or (e) any transfer by Tenant or any assignment of its interest under the Lease; whether or not JOSEPH LA ROSA, DEANA LA ROSA, ELVI HEBRA, and ANDRES HEBRA shall have notice or knowledge of any of the foregoing.
This Guaranty is for the benefit of Landlord and Landlord’s heirs, personal representatives, successors and assigns. This Guaranty is binding not only upon the undersigned, but also upon their heirs, personal representatives, successors and assigns.
All amounts which Guarantor may owe hereunder shall be due and payable in Orange County, Florida, which shall have venue of any action hereunder, and this Guaranty shall be construed according to the laws of the State of Florida.
IN WITNESS WHEREOF, has executed this Guaranty this day of , 2016.
| WITNESS FOR JOSEPH LA ROSA | JOSEPH LA ROSA, INDIVIDUALLY | |
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| WITNESS FOR DEANA LA ROSA | DEANA LA ROSA, INDIVIDUALLY | |
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| WITNESS FOR ELVI HEBRA | ELVI HEBRA, INDIVIDUALLY | |
| WITNESS FOR ANDRES HEBRA | ANDRES HEBRA, INDIVIDUALLY | |
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THIRD ADDENDUM
THIS THIRD ADDENDUM to that Lease dated the 9th day of September, 2016, by and between DENO P. DIKEOU, [*], hereinafter referred to as “Landlord”, and LA ROSA REALTY, LLC, hereinafter referred to as “Tenant”, for the premises commonly known as 626 N. Alafaya Trail, Suite 207, Orlando, FL.
WHEREAS, the parties desire to add a Tenant to the Lease and amend the terms of the Lease as to the length of the Lease and monthly payments designated in the Lease.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other valuable consideration, sufficiency and receipt of which is hereby acknowledged, the parties hereby agree as follows:
| 1. | The parties hereby agree that La Rosa Realty Premier, LLC shall be added as a Tenant on the Lease. |
| 2. | The parties hereby agree to extend the Lease for a three (3) year term, beginning February 1, 2020 and ending January 31, 2023. |
| 3. | Tenant agrees to pay to Landlord as minimum base rent, without notice or demand, the following base rent: |
| Lease Year 4 (2/1/2020-1/31/2021) $2,577.60/month | $30,931.20/year | $16.44psf | |
| Lease Year 5 (2/1/2021-1/31/2022) $2,654.93/month | $31,859.16/year | $16.94psf (3% increase) | |
| Lease Year 6 (2/l/2022-1/31/2023) $2,734.58/month | $32,814.96/year | $17.45psf (3% increase) |
Payable in advance, on or before the first day of each and every successive calendar month.
| 4. | Tenant, in addition to base rent, shall pay its prorata share of real estate taxes, insurance and common area maintenance, plus a 10% administrative fee on real estate tax, insurance and common area maintenance, including sales tax on all monies paid. |
| 5. | All other terms of the Lease and prior Addendums shall remain in full force and effect, and only terms enumerated as set forth herein shall prevail. |
| 6. | This Addendum shall be interpreted and enforced in accordance with the laws of the State of Florida. |
| 7. | This Addendum shall be binding upon the heirs, successors and assigns of the parties. |
IN WITNESS WHEREOF, the parties hands and seals have been hereunto affixed this day of , 2020.
| LANDLORD | TENANT: LA ROSA REALTY PREMIER, LLC | |
| By:_______________________________ | ||
| ___________ its ______________________ | ||
| DENO P. DIKEOU | ||
| WITNESSES for DENO P. DIKEOU | WITNESSES FOR LA ROSA REALTY PREMIER, LLC | |
La Rosa Realty Third Addendum REVISED 02202020
FOURTH ADDENDUM
THIS FOURTH ADDENDUM to that Lease dated the 9th day of September, 2016, by and between DENO P. DIKEOU, [*], hereinafter referred to as “Landlord”, and LA ROSA REALTY, LLC and LA ROSA REALTY PREMIER, LLC, hereinafter referred to as “Tenant”, for the premises commonly known as 626 N Alafaya Trail Suite 207, Orlando, Florida 32828.
WHEREAS, the parties desire to amend the terms of the Lease due to difficulties caused by the COVID-19 Virus.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other valuable consideration, sufficiency and receipt of which is hereby acknowledged, the parties hereby agree as follows:
| 1. | The parties hereby agree to a moratorium for payment of base rent to the Lease for the months of April 2020, May 2020 and June 2020. Normal base rent to resume July 1, 2020. |
| 2. | Triple net items, commonly known as adjustments to rent or common area maintenance, that include insurance, real estate taxes and common area maintenance, shall continue to be paid during the months of April 2020, May 2020 and June 2020, plus sales tax due on these amounts. |
| 3. | In consideration of said moratorium, suspension of payment, the current Lease term shall be extended by three months, February 1, 2023 to April 30, 2023, that would include payment of base rent, adjustments and sales tax on all monies paid. | |
| 4. | Congress has passed legislation granting loans to small business to pay employees and rent, and if they so use loans accordingly, the loans will be subsequently forgiven. If Tenant obtains a loan of this type, this Addendum will be rendered null and void, and all sums due regularly under the Lease, and arrearages, will be paid in full, from said loan, and Lease extension cancelled. |
| 5. | All other terms of the Lease and prior Addendums shall remain in full force and effect, and only terms enumerated as set forth herein shall prevail. |
| 6. | This Addendum shall be interpreted and enforced in accordance with the laws of the State of Florida. |
| 7. | This Addendum shall be binding upon the heirs, successors and assigns of the parties. |
| 8. | THE TERMS OF THIS ADDENDUM SHALL REMAIN CONFIDENTIAL. SHOULD CONFIDENTIALITY BE BROKEN, THE BASE RENT FORGIVEN HEREIN SHALL BE REINSTATED AND ALL OTHER TERMS OF LEASE REMAIN BINDING ON ALL PARTIES. |
IN WITNESS WHEREOF, the parties hands and seals have been hereunto affixed this day of , 2020.
| LANDLORD | TENANT: LA ROSA REALTY, LLC | |
| By:_______________________________ | ||
| ___________ its ______________________ | ||
| DENO P. DIKEOU | ||
| TENANT: LA ROSA REALTY PREMIER, LLC | ||
| BY: | ||
| Andres L. Hebra its Owner |
626 La Rosa Realty Fourth Addendum 04032020
FIFTH ADDENDUM
THIS FIFTH ADDENDUM to that Lease dated the 9th day of September, 2016, by and between DENO P. DIKEOU, [*], hereinafter referred to as “Landlord”, and LA ROSA REALTY, LLC and LA ROSA REALTY PREMIER, LLC, hereinafter referred to as “Tenant” for the premises commonly known as 626 N Alafaya Trail Suite 207, Orlando, Fl 32828.
WHEREAS, in order to accomplish estate planning on behalf of the Landlord, the Landlord, who personally appears on the Lease as “Deno P. Dikeou”, desires to transfer the Lease to the “400-688 N Alafaya Trail, LLC”. Landlord requires Tenant to join in and acknowledge said transfer by executing this assignment.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other valuable consideration, sufficiency and receipt of which is hereby acknowledged, the parties hereby agree as follows:
| 1. | In order to accomplish estate planning on behalf of the Landlord, the Landlord, who personally appears on the Lease as “Deno P. Dikeou”, desires to transfer the Lease to the “400-688 N Alafaya Trail, LLC”. Landlord requires Tenant to join in and acknowledge said transfer by executing this assignment. |
| 2. | Deno P. Dikeou, personally, hereinafter referred to as “Assignor”, assigns this Lease to 400-688 N Alafaya Trail, LLC, hereinafter referred to as “Assignee”. |
| 3. | The undersigned Assignor and Assignee agree that all security deposits, if any, are transferred to the Assignee and governed by the terms of the Lease. |
| 4. | All monetary and non-monetary terms of the Lease are incorporated herein by reference, including base lease and all addendums. |
| 5. | All other terms of the Lease and prior Addendums shall remain in full force and effect, and only terms enumerated as set forth herein shall prevail. |
| 6. | This Addendum shall be interpreted and enforced in accordance with the laws of the State of Florida. |
| 7. | This Addendum shall be binding upon the heirs, successors and assigns of the Parties. |
| 8. | This Addendum may be executed in one or more counterparts, each of which, when so executed and delivered, shall be deemed to be an original, but all of which when taken together, shall constitute one and the same instrument. |
| 9. | This Addendum may be executed by e-mail [in so-called “portable document format” (“PDF”)] or electronic signature and shall be deemed to have been executed and delivered by each party on the date so transmitted to the other party, and in such event, each party will promptly furnish to the other party an original counterpart hereof executed by such party. |
IN WITNESS WHEREOF, the parties hands and seals have been hereunto affixed this day of , 2021.
| LANDLORD ASSIGNOR: | TENANT: LA ROSA REALTY, LLC | |
| BY:_________________________________ | ||
| ___________ its ______________________ | ||
| DENO P. DIKEOU | ||
| LANDLORD ASSIGNEE: | TENANT: LA ROSA REALTY PREMIER, LLC | |
| 400-688 N Alafaya Trail, LLC | ||
| BY: _________________________________ | By: _________________________________ | |
| DENO P. DIKEOU, Manager | ANDRES L. HEBRA ITS OWNER |
626 La Rosa Realty Fifth Addendum 02102021
SIXTH ADDENDUM
THIS SIXTH ADDENDUM to that Lease dated the 9th day of September, 2016, by and between DENO P. DIKEOU, subsequently assigned to 400-688 N ALAFAYA TRAIL, LLC, [*], hereinafter referred to as “Landlord”, and LA ROSA REALTY, LLC and LA ROSA REALTY PREMIER, LLC, hereinafter referred to as “Tenant”, for the premises commonly known as 626 N. Alafaya Trail, Suite 207, Orlando, FL.
WHEREAS, the parties desire to amend the terms of the Lease as to the length of the Lease and monthly payments designated in the Lease.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other valuable consideration, sufficiency and receipt of which is hereby acknowledged, the parties hereby agree as follows:
| 1. |
The parties hereby agree to extend the Lease for a five (5) year one (1) month term, beginning May 1, 2023 and ending May 31, 2028. |
| 2. |
Tenant agrees to pay to Landlord as minimum base rent, without notice or demand, the following base rent: |
| 4/1/23-5/31/23 | FREE RENT | ||||
| 6/1/23-5/31/28 | $2,821.50/month | $33,858.00/year |
$18.00psf |
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payable in advance, on or before the first day of each and every successive calendar month.
| 3. | Tenant, in addition to base rent, shall pay its prorata share of real estate taxes, insurance and common area maintenance, plus a 10% administrative fee on real estate tax, insurance and common area maintenance, including sales tax on all monies paid. |
| 4. |
All other terms of the Lease and prior Addendums shall remain in full force and effect, and only terms enumerated as set forth herein shall prevail. |
| 5. |
This Addendum shall be interpreted and enforced in accordance with the laws of the State of Florida. |
| 6. |
This Addendum shall be binding upon the heirs, successors and assigns of the parties. |
| 7. |
This Addendum may be executed in one or more counterparts, each of which, when so executed and delivered, shall be deemed to be an original, but all of which when taken together, shall constitute one and the same instrument. |
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| 8. |
This Addendum may be executed by e-mail [in so-called “portable document format” (“PDF”)] or electronic signature and shall be deemed to have been executed and delivered by each party on the date so transmitted to the other party, and in such event, each party will promptly furnish to the other party an original counterpart hereof executed by such party. |
IN WITNESS WHEREOF, the parties hands and seals have been hereunto affixed this day of , 2023.
| LANDLORD: | TENANT: | ||
| 400-68n ALAFAYA TRAIL, LLC | LA ROSA REALTY, LLC | ||
| By:_________________________________ | |||
| By:________________________________ | ___________ its ______________________ | ||
| DENO P. DIKEOU, Manager | |||
| TENANT: | |||
| LA ROSA REALTY PREMIER, LLC | |||
| By: | |||
| Andres L. Hebra Its President | |||
La Rosa Realty Sixth Addendum 04192023
SEVENTH ADDENDUM
THIS SEVENTH ADDENDUM to that Lease dated the 9th day of September, 2016, by and between DENO P. DIKEOU, subsequently assigned to 400-688 N ALAFAYA TRAIL, LLC, [*], hereinafter referred to as “Landlord”, and LA ROSA REALTY PREMIER, LLC, hereinafter referred to as “Tenant”, for the premises commonly known as 626 N. Alafaya Trail, Suite 207, Orlando, FL.
WHEREAS, the parties desire to assign a portion of the Lease on behalf of Tenant.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other valuable consideration, sufficiency and receipt of which is hereby acknowledged, the parties hereby agree as follows:
| 1. | The franchisor, La Rosa Holding Corp., is acquiring 51% of the franchisee, La Rosa Realty Premier, LLC. |
| 2. | The parties all agree that this is an assignment of a portion of the Lease. The parties all agree, including Landlord, to this assignment. |
| 3. | The parties all agree that the Assignee, La Rosa Holding Corp., shall assume, together with La Rosa Realty Premier, LLC, all of the obligations required under the Lease. |
| 4. | All other terms of the Lease and prior Addendums shall remain in full force and effect, and only terms enumerated as set forth herein shall prevail. |
| 5. | This Addendum shall be interpreted and enforced in accordance with the laws of the State of Florida. |
| 6. | This Addendum shall be binding upon the heirs, successors and assigns of the parties. |
| 7. | This Addendum may be executed in one or more counterparts, each of which, when so executed and delivered, shall be deemed to be an original, but all of which when taken together, shall constitute one and the same instrument. |
| 8. | This Addendum may be executed by e-mail [in so-called “portable document format” (“PDF”)] or electronic signature and shall be deemed to have been executed and delivered by each party on the date so transmitted to the other party, and in such event, each party will promptly furnish to the other party an original counterpart hereof executed by such party. |
IN WITNESS WHEREOF, the parties hands and seals have been hereunto affixed this day of , 2023.
| LANDLORD: | TENANT ASSIGNOR: | |
|
400-68n ALAFAYA TRAIL, LLC |
LA ROSA REALTY PREMIER, LLC | |
| By:_________________________________ | ||
| By:________________________________ | Andres L. Hebra its President | |
| DENO P. DIKEOU, Manager | ||
| TENANT ASSIGNEE: LA ROSA HOLDING CORP. | ||
| By: _________________________________ | ||
| Joseph La Rosa Its CEO |
La Rosa Realty Seventh Addendum 12122023
Exhibit 10.133
COMMERCIAL SUBLEASE AGREEMENT ೦ A ೦೦ REALTORS" 2024 Printing For and in consideration of the mutual covenants set forth herein and other good and valuable considerations, the receipt and sufficiency of which is hereby acknowledged, this Sublease is entered into this date of 01 / 01 / 2024 between the undersigned tenant (hereinafter "Tenant"), and the undersigned subtenant (hereinafter "Subtenant") . Tenant leases to Subtenant, and Subtenant leases from Tenant, the Property described as follows: Suite(s) c Complex, commonly known as UGHTHOUSE BUSINESS CENTER in th e Building or (hereinafter "Building" or "Complex"), located on all that trac t o f land lying an d bein g i n Lan d Lot. o f th e District, Sectio n o f _ Hall County, Georgia, an d with th e following address 175 Joh n w Morrow J r Pkwy , City Gainesville , Georgia, Zip Code 3 0501 , all being hereinafter collectively referred to as the "Subleased Premises," and being more particularly described in the lease agreement dated _01/01/2024 between (hereinafter "Land lord") andTenant (hereinafter "Lease"), a copy of which is attached as Carmen Delgado Exhibit"_ A _" an d incorporated herein. 1. Term. Tenant hereby subleases to Subtenant the Subleased Premises for a term which commencing on 0 ..... 11_01.1 .,, .2 0 _ 24 . --- ,, .,. ೦ . .: - ..,.. --- , .. -- - - - - - (the "Commencement Date") through and including ೦ 12/ _ 3 1 - ' - /2_0_2 _7 (the "E ... xp . iration Date"). 2. Subordination . Tenant andSubtenant agree that thisSublease is subject and subordinate to all of the terms, covenants and conditions of the Lease . 3. Incorporation of Terms . The terms, covenants and conditions in the Lease shall constitute the terms, covenants and conditions of this Sublease, except to the extent that they are inapplicable hereto or inconsistent herewith . Subtenant agrees to be bound by the provisions of theLease and to assume all of the obligations ofTenant unless specifically provided otherwise in thisSublease . The remedies of the parties under thisSublease shall be the same as the respective remedies of Landlord andTenant under the Lease . Subtenant shall not have any rights with respect to the Subleased Premises greater than the rights of Tenant under the Lease and Tenant shall have no liability toSubtenant for any matter or thing for which Tenant does not have co - extensive rights as tenant under the Lease . 4. Possession . IfTenant is unable to deliver possession of theSubleased Premises on the Commencement Date, rent shall be abated on a daily basis until possession is granted . If possession is not granted within fourteen ( 14 ) days of the Commencement Date, Subtenant may terminate thisSublease in which eventTenant shall promptly refund all deposits toSubtenant . Tenant shall not be liable for delays in the delivery of possession toSubtenant . Copyright© 2024 by Georgia Association of REALTORS®, Inc. CF40, Commercial Sublease Agreement, Page 1 of 7, 01/01/24 5. Rent. {Check one. The section not marked shall not be a part ofthis Agreement.] D Subtenant shall assume Tenant's obligation to pay rent and all other payments directly to Landlord as provided in the Lease. li2J Subtenant shall pay Tenant base rent in the sum of twothousandthreehundredthirty - sixpointsixty - four Dollars ( $ _ 2 , 3 3 6 . 6 4 ) per month on the first day of each month during theSubleaseTerm or any renewals thereof, at the address set forth on theSignature Page of thisSublease (or at such other address as may be designated from time to time byTenant in writing) . If the Commencement Date begins on the 2 nd day through the last day of any month, the rent shall be prorated for that portion of the month and shall be paid at the time of leasing theSubleased Premises . Subtenant shall also pay the following in the same manner as the base rent : Utilities proration based on the square feet of occupancy . 6. Termination of Underlying Lease . If the Lease shall be terminated prior to the expiration date of this Sublease, this Sublease shall thereupon be terminated . Tenant shall not be liable toSubtenant by reason thereof, unless said termination shall have been effected because of a default by the Tenant under the Lease that was not the result of a default by Subtenant . Rent and all other obligations hereunder shall be adjusted between the parties as of date of such termination . 7. Security Deposit. A. Security Deposit to be Held by Tenant or Broker: [Check one. The section not marked shall not be a part of this Agreement.] D Tenant Holding Security Deposit. (1) Subtenant has paid toTenant as security for Subtenant's fulfillment of the conditions of thisSublease a security deposit of zero . Dollar s ( $ _o ) i n O cash, 0 mone y orde r and/o r Ocheck ("Security Deposit") . ( 2 ) Tenant shall deposit the Security Deposit in Tenant's general account with Tenant retaining the interest if the account is interest bearing . Subtenant acknowledges and agrees that Tenant shall have the right to use such funds for whatever purpose Tenant sees fit, and such funds will not be segregated or set apart in any manner . THI S FORM I S COPYRIGHTE D AND MAY ONLY B E USE D I N REA L ESTATE TRANSACTIONS IN WHIC H Camill e Viera - Hewel l I S INVOLVE D A S A REAL ESTATE LICENSEE . UNAUTHORIZED USE OF THE FORM MAY RESULT IN LEGAL SANCTIONS BEING BROUGHT AGAINST THEOSER AND SHOULD BE REPORTED TO THE GEORGIA ASSOCIATION OF REALTORS® AT ( 770 ) 451 - 1831 .
(3) Subtenant recognizes and accepts the risk of depositing the Security Deposit with Tenant. Subtenant acknowledges that Subtenant has not relied upon the advice of any Broker in deciding to pay such Security Deposit to Tenant. Tenant and Subtenant acknowledge and agree that: (a) Broker has no responsibility f o r, or control over, any Security Deposit deposited with Tenant; (b) Broker has no ability or obligation to insure that the Security Deposit is properly applied or deposited; (c) The disposition of the Security Deposit is the sole responsibility of Tenant and Subtenant as herein provided; and (d) Tenant and Subtenant agree to indemnify and hold harmless Broker and Broker's affiliated licensees against all claims, damages, losses, expenses or liability arising from the handling of the Security Deposit by Tenant . Tenant shall return Security Deposit to Subtenant, after deducting any sum which Subtenant owes Tenant hereunder or any sum which Tenant may expend to repair arising out of or related to Subtenant's occupancy hereunder, abandonment of the Subleased Premises or default in this Sublease(provided Tenant reasonably seeks to mitigate such actual damages), including but no limited to any repair, replacement, cleaning or painting of the Subleased Premises reasonably necessary due to the negligence, carelessness, accident, or abuse of Subtenant or Subtenant's employees, agents, invitees, guests, or licensees . In the event Tenant elects to retain any part of the Security Deposit, Tenant shall provide Subtenant with a written statement setting forth the reasons for the retention of any portion of the Security Deposit, including the damages for which any portion of the Security Deposit is retained . The use and application of the Security Deposit by Tenant shall be at the discretion of Tenant . Appropriation by Tenant of all or part of the Security Deposit shall not be an exclusive remedy f o r Tenant, but shall be cumulative, and in addition to all remedies of Tenant at law or under this Sublease . The Copyright© 2024 by Georgia Association of REALTORS®, Inc. CF40, Commercial Sublease Agreement, Page 2 of 7, 01/01/24 Subtenant may not apply the Security Deposit to any rent payment. D Broker Holding Security Deposit. (1) Subtenant has paid to Broker as security for Subtenant's fulfillment of the conditions of this Sublease a security deposit of ( - " S - ec u - ri t - y D - e p - o s - it" ) - . --------- Dollars($_ )Ocash, Dmon e y orde r and/o r Ocheck (2) The Broker shall deposit the Security Deposit in Broker's escrow/trust account (with Broker retaining the interest if the account is interest bearing) within five( 5 ) banking days from the Binding Agreement Date . (3) Broker shall disburse the Security Deposit only as follows : (a) upon the failure of the parties to enter into a binding Sublease ; (b) upon a written agreement signed by all parties having an interest in the funds ; (c) upon order of a court or arbitrator having jurisdiction over any dispute involving the security deposit ; (d) upon a reasonable interpretation of this Agreement by Broker ; (e) as provided in the General Provisions section below of this Paragraph ; or (f) upon the termination of the agency relationship between Tenant and Broker, in which event Broker shall only disburse the Security Deposit, to another licensed Georgia Real Estate Broker selected by Tenant unless otherwise agreed to in writing by Tenant and Subtenant after notice to Broker and Subtenant . Prior to disbursing the Security Deposit pursuant to a reasonable interpretation of this Agreement ; Broker shall give all parties fifteen ( 15 ) days notice, stating to whom the disbursement will be made . Any party may object in writing to the disbursement, provided the objection is received by Broker prior to the end of the fifteen( 15 ) day notice period . All objections not raised in a timely manner, shall be waived . In the event a timely objection is made, Broker shall consider the objection and shall do any or a combination of the following : (a) hold the Security Deposit for a reasonable period of time to give the parties an opportunity to resolve the dispute ; (b) disburse the Security Deposit and so notify all parties ; and/or (c) interplead the Security Deposit into a court of competent jurisdiction . Broker shall be reimbursed for and may deduct from any funds interpleaded its costs and expenses, including reasonable attorney's fees . The prevailing party in the interpleader action shall be entitled to collect from the other party the costs and expenses reimbursed to Broker . No party shall seek damages from Broker(nor shall Broker be liable f o r the same) for any matter arising out of or related to the performance of Broker's duties under this Security Deposit paragraph . B. General Provisions: (1) In the event any Security Deposit check is not honored, for any reason, by the bank upon which it is drawn, the holder thereof shall promptly notify Subtenant and Tenant . Subtenant shall have three( 3 ) banking days after notice to deliver good funds to the holder . (2) In the event Subtenant does not timely deliver good funds, the Tenant shall have the right to terminate this Agreement upon written notice to the Subtenant . (3) The entire Security Deposit, if held by Tenant, will be returned to Subtenant within thirty( 30 ) days after the Subleased Premises is vacated if : (a) The term of the Lease or Sublease has expired or the Sublease has been terminated in writing by the mutual consent of both parties ; (b) All monies due under this Sublease by Subtenant have been paid ; (c) The Subleased Premises is not damaged and is left in its original condition, normal wear and tear excepted ; (d) All keys have been returned ; and(e) Subtenant is not in default under any of the terms of this Sublease . 8. Insurance . Subtenant agrees that during Sublease Term, Subtenant will carry and maintain, at its sole cost, the following types of insurance, in the amounts specified and in the form hereinafter provided for: [Check all that apply. The sections not marked shall not be a part of this Agreement.] (llA . General Commercial Liability Insurance {or reasonable equivalent thereto) : Such insurance shall cover the Subleased Premises and Subtenant's use thereof against claims f o r personal injury, bodily injury or death, property damage and products liability occurring upon, in, or about the Subleased Premises . The limits of such policy shall be in such amounts as Tenant may from time to time reasonably require, but in any event not less than one m = illion . , .. - r - , - ..,. r - ..,. , - _,, - . - Dollars($.1,000,000 ) for each occurrence. Such insurance s - y h - a .::,., 11 ::.;. be::.:.e_ n...:.do_r_s - ed to_cov_e_r ௭ , - nde_p_e_n_d e - n t c_on_ tra_ct - o - rs _ a_nd contractual liability. Such insurance shall extend to any liability of Subtenant arising out of the indemnities provided for in this Lease.
Os. Fire and Extended Coverage Insurance (or reasonable equivalent thereto): Such insurance shall cover Subtenant's interest in its improvements to the Subleased Premises, and all furniture, equipment, supplies, and other property owned, leased, held or possessed by it and contained therein. Such insurance coverage shall be in an amount equal to not less than ,_,_,_ _ _ _ Copyright© 2024 by Georgia Association of REALTORS®, Inc. CF40, Commercial Sublease Agreement, Page 3 of 7, 01/01/24 percent (%) of full replacement cost as updated from time to time during the Sublease Term. Subtenant shall promptly provide Tenant written notice in the event of any damages to persons or property occurring on the Subleased Premises from fire, accident, or any other casualty. applicable law. De. Workers' Compensation Insurance (or reasonable equivalent thereto): Such insurance shall include coverage as required by Do . Contractors Insurance (or reasonable equivalent thereto) : If Subtenant engages any contractor or subcontractor to construct improvements or perform any other work on the Subleased Premises, Subtenant shall require that such contractor or subcontractor have in force commercial general liability insurance, including personal injury coverage, contractual liability coverage, completed operations coverage, property damage endorsement, and, for any work which is subcontracted, contractors' protective liability coverage, insuring against any and all liability for injury to or death of a person or persons and for damage to property occasioned by or arising out of such work . The limits of such policy for both damage to property and bodily injury to be in such amounts as Tenant may from time to time reasonably require, but in any event not less than - , -- - -- , --- -- ----- , --- , --- , ----- : ----- : - : ---- , - - , - - - -- , -- ....,.... , - -- , - D ollars ( $ ...., for each occurrence. Any such contractor or subcontractor shall also be required to maintain workers' compensation insurance as required by applicable law . All insurance policies procured and maintained herein (other than workers' compensation insurance) shall name Landlord, Landlord's property manager(s), Landlord's lender, Tenant, Tenant's property manager(s), and Tenant's lender as additional insured, shall be carried with insurance companies licensed to do business in the State of Georgia and having Best's Ratings of not less than B+ (Financial Strength Rating) . Such policies shall be non - cancellable and may not be materially altered except after thirty ( 30 ) days notice to Tenant . Such insurance policies or, at Tenant's election, duly executed certificates of such policies, accompanied by proof of the premium for such insurance, shall be delivered to Landlord and Tenant before the earlier of (a) the initial entry by Subtenant upon the Subleased Premises for the installation of its equipment or improvements ; or (b) the Commencement D ate of the Sublease Term . Certificates of renewal of such insurance or copies of any replacement insurance policies, accompanied by proof of payment of the premiums for such insurance, shall be delivered to Landlord andTenant at least 10 (ten) days before the expiration of each respective policy term . Subtenant shall comply with all rules and regulations applicable to the Subleased Premises issued by the Board of Fire Underwriters or by any body hereinafter constituted exercising similar functions . Subtenant shall not intentionally do anything, or permit anything to be done, on or about the Subleased Premises that might adversely affect, contravene, or impair any policies of insurance that may are in force for the Subleased Premises or any part thereof . Subtenant shall pay all costs, damages, expenses, claims, fines, or penalties incurred by Landlord, Tenant or Subtenant because of Subtenant's failure to comply with this Paragraph . Subtenant indemnifies Landlord and Tenant from all liability with reference thereto . 9. Inspection . Subtenant acknowledges that Subtenant has inspected the Subleased Premises and that it is fit for its stated use . Subtenant agrees that no representations respecting the Subleased Premises or the condition thereof and no promises to alter, decorate, improve, or repair have been made by Tenant, Broker, or their agents unless specified in this Lease . 10. Renewal Term . Either party may terminate this Sublease at the end of the term by giving the other party thirty ( 30 ) days written notice prior to the end of the term . If neither party gives notice of termination, the Sublease will automatically be extended on a month - to - month basis with all terms remaining the same . Thereafter, Subtenant may terminate this Sublease upon thirty ( 30 ) days written notice to Tenant andTenant may terminate this Sublease upon thirty ( 30 ) days written notice to Subtenant, except that Tenant reserves the right to increase the amount of rent upon delivery of written notice to Subtenant thirty ( 30 ) days prior to the effective date of any increase . Notwithstanding anything herein, this Sublease shall terminate automatically upon the expiration of the Lease . 11. Sublet and Assignment . Subtenant may not sublet the Subleased Premises in whole or in part or assign this Subleasewithout the prior written consent ofTenant and Landlord . This Sublease shall create the relationship ofTenant and Subtenant between the parties hereto ; no estate shall pass out of Tenant and this Sublease shall create a usufruct only . 12. Default. A . If Subtenant defaults under any term, condition or provision of this Sublease, including, but not limited to, failure to pay rent or failure to reimburse Tenant for any damages, repairs or costs when due, Tenant shall have the right to terminate this Sublease by giving written notice to Subtenant and accelerate all remaining payments that Subtenant is required to pay under this Sublease . These payments shall be due and payable fifteen days after Subtenant receives the aforementioned notice . Tenant and Subtenant acknowledge thatTenant shall be damaged by Subtenant's default, thatTenant's actual damages are hard to estimate, and that the above amount represents a reasonable pre - estimate ofTenant's damages rather than a penalty . IfTenant accelerates as provided in this subparagraph, it shall seek another Subtenant for the Subleased Premises and credit any amounts received to the Subtenant, less the following : (1) reimbursement for all expenses incurred as a result of Subtenant's failure to perform its obligations under the Lease; (2) the costs of securing another Subtenant, including, but not limited to, advertising and brokerage commissions; and (3) the costs of altering, dividing, painting, repairing, and replacing the Subleased Premises to accommodate a new Subtenant. Tenant's rights expressed herein are cumulative of any and all other rights expressed in this Sublease . Subtenant shall remain liable for rents from and after any action byTenant under a proceeding against Subtenant for holding over or distress warrant, whether or not Subtenant retains the right to possession of the Subleased Premises .
B . If Subtenant abandons the Subleased Premises or otherwise fails to abide by and perform any of the obligations, terms, conditions or provisions of this Sublease, each and any such breach shall constitute a default under this Sublease . If any such default continues for ten ( 10 ) calendar days after Tenant delivers written notice of said default to Subtenant, Tenant may, at his option, terminate this Sublease by delivering written notice thereof to Subtenant and pursue the remedy described herein . C . All rights and remedies available to Tenant by law or in this Sublease shall be cumulative and concurrent . 13. Estoppel Certificat e . Subtenant shall, from time to time, upon Tenant's request execute, acknowledge, and deliver to Tenant, within ten ( 1 O) days of such request, a certificate certifying : (a) that this Sublease is unmodified and in full force and effect (or if there has been modification thereof, that the same is in full force and effect as modified and stating the nature thereof) ; (b) that to the best of its knowledge there are no uncured defects on the part of the Tenant (or if any such defaults exist, a specific description thereof) ; (c) the date to which any rents or other charges have been paid in advance ; and (d) any other reasonable matters requested by Tenant . Tenant and any prospective purchaser or transferee of Tenant' interest hereunder or any then existing or prospective mortgagee or grantee of any deed to secure debt may rely on such certificates . 14. Destructio n o f Subleased Premises . A. If earthquake, fire, storm, or other casualty shall totally destroy (or so substantially damaged as to be untenantable) the Subleased Premises, rent shall abate under the same conditions as rent shall abate under the Lease . If Landlord determines that restoration cannot be completed pursuant to the terms of the Lease and terminates the Lease, this Sublease shall terminate, whereupon rent and all other obligations hereunder shall be adjusted between the parties as of date of such destruction . In the event the Landlord elects to complete such restoration, but fails to do so within the period provided for in the Lease, this Sublease may be terminated as of the date provided for the termination of the Lease . B. If the Subleased Premises are damaged but not rendered wholly untenantable by earthquake, fire, storm, or other casualty, rent shall abate in such proportion as the rent shall abate under the terms of the Lease . C. Rent shall not abate nor shall Subtenant be entitled to terminate this Sublease if the damage or destruction of the Subleased Premises, whether total or partial, is the result of the negligence of Subtenants, its contractors, employees, agents, invitees, guests, or licensees . 15. Disclaimer . Subtenant and Tenant acknowledge that they have not relied upon any advice, representations or statements of Brokers and waive and shall not assert any claims against Brokers involving the same . Subtenant and Tenant agree that Brokers shall not be responsible to advise Subtenant and Tenant on any matter, including but not limited to the following : any matter which could have been revealed through a survey, title search or inspection of the Subleased Premises ; the condition of the Subleased Premises, any portion thereof, or any item therein ; building products and construction techniques ; the necessity or cost of any repairs to the Subleased Premises : mold ; hazardous or toxic materials : termites and other wood destroying organisms ; the tax or legal consequences of this transaction ; the availability and cost of utilities or community amenities ; the appraised or future value of the Subleased Premises ; any condition(s) existing off the Subleased Premises which may affect the Subleased Premises ; the terms, conditions and availability of financing ; and the uses and zoning of the Subleased Premises whether permitted or proposed . Subtenant and Tenant acknowledge that Brokers are not experts with respect to the above matters and that, if any of these matters or any other matters are of concern to them, they shall seek independent expert advice relative thereto . Subtenant further acknowledges that in every neighborhood there are conditions which different Subtenants may find objectionable . Subtenant shall therefore be responsible to become fully acquainted with neighborhood and other off site conditions which could affect the Subleased Premises . 16. Consent of Landlord . This Sublease shall be of no force unless consented to, in writing, by Landlord within 1 days after execution of this Sublease . 17. Agenc y an d Brokerage . A. Agency Disclosure : In this Lease, the term "Broker" shall mean a licensed Georgia real estate broker or brokerage firm and, where the context would indicate, the Broker's affiliated licensees . No Broker in this transaction shall owe any duty to Tenant or Owner/Landlord greater than what is set forth in their brokerage engagements and the Brokerage Relationships in Real Estate Transactions Act, O . C . G . A . † 10 - 6 A - 1 et . seq .; 1. No Agency Relationship : Tenant and Subtenant acknowledge that, if they are not represented by a Broker, they are each solely responsible for protecting their own interests, and that Broker's role is limited to performing ministerial acts for that party . 2. Listing Broker : Broker working with the Tenant is identified on the signature page as the "Listing Broker" ; and said Broker D is, OR D is not representing Tenant ; 3. Leasing Broker : Broker working with Subtenant is identified on the signature page as "Leasing Broker" ; and said Broker liZI is, OR D is not representing Subtenant ; and 4. Dual Agency or Designated Agency : If Tenant and Subtenant are both being represented by the same Broker, a relationship of either D designated agency OR D dual agency shall exist . a. Dual Agency Disclosure: [Applicable only ifdual agency has been selected above.] Tenant and Subtenant are aware that Broker is acting as a dual agent in this transaction and consent to the same. Tenant and Subtenant have been advised that: (1) In serving as a dual agent, Broker is representing two clients whose interests are or at times could be different or even adverse; (2) As dual agent, Broker will disclose all known adverse, material facts relevant to the transaction to all parties in the transaction, except for information made confidential by request or instructions from either client, and which is not othe rw is e require d t o b e disclose d b y law; (3) Tenant and Subtenant do not have to consent to dual agency and, the consent of the Tenant and Subtenant to dual agency has been given voluntarily and the parties have read and understand their brokerage engagement agreements; Copyright© 2024 by Georgia Association of REALTORS®, Inc.
CF40, Commercial Sublease Agreement, Page 4 of 7, 01/01/24 ( 4 ) Notwithstanding any provision to the contrary contained herein, Tenant and Subtenant each hereby direct Broker, while acting as a dual agent, to keep confidential and not reveal to the other party any information which could materially and adversely affect its negotiating position . b. Designated Agency Assignment: {Applicable only if the designated agency has been selected above.] Broke r ha s assigned Carmen G . Delgad o t o wor k exclusivel y wit h Tenant as Tenant's designated agent and - - - - -- -- ೦ - --- -- - e, - - - ೦೦ -- - ---- : - to work exclusively with Subtenant as Subtenant's designated agent . Each designated agent shall exclusively represent the party to whom each has been assigned as a client and shall not represent in this transaction the client assigned to the other designated agent . B. Material Relationship Disclosure : The Broker and/or affiliated licensees have no material relationship with either client except as follows : TENANT AND LANDLORD HOLD REAL ESTATE LICENSE IN THE STATE OF GEORGIA (A material relationship means one actually known of a personal, familial or business nature between the Broker and/or affiliated licensees and a client which would impair their ability to exercise fair judgment relative to another client.) C. Property Management : Broker D is OR E 2 I is not the authorized agent of Tenant for the purposes of managing Property in accordance with a separate management agreement . If there is an agreement between Tenant and Broker to manage Property, the termination of the management agreement shall not terminate this Lease . D. Brokerage : The Brokers listed below have performed a valuable service in this transaction and are made parties hereunder to enforce their commission rights . Payment of commission to a Broker shall not create an agency or subagency relationship between Leasing Broker and either Tenant or Tenant's Broker . Tenant agrees to pay the Broker listed below and representing Tenant to Sublease and/or manage the Subleased Premises ("Listing Broker") a commission (which commission has already been negotiated Copyright© 2024 by Georgia Association of REALTORS®, Inc. CF40, Commercial Sublease Agreement, Page 5 of 7, 01/01/24 in a separate agreement) of: [Check one. The section not marked shall not be a part of this Agreement] D $ o or percent (%) of the Sublease amount, which shall be due and payable upon occupancy. D $ o or -- -- percent (%) of base rents paid, which shall be due and payable on the same date as Subtenant's monthly payment of rent is due Landlord. In the event the Sublease is made in cooperation with another Broker listed below as the Leasing Broker, the Listing Broker shall receive percent (%) of the total real estate commission paid hereunder and the Leasing Broker shall receive percent (%) of the total real estate commission paid hereunder. In the event Subtenant and/or Tenant fail or refuse to - ೦ -- perform any of their obligations herein, the non - performing party shall immediately pay the Listing Broker and the Leasing Broker their full commissions. The Listing Broker and Leasing Broker may jointly or independently pursue the non - performing party for that portion of the commission which they would have otherwise received under the Lease. 18. Othe r Provisions . A. Time o f Essence : Tim e i s o f th e essenc e o f this Lease . B. No Waiver : Any failure of Tenant to insist upon the strict and prompt performance of any covenants or conditions of this Sublease or any of the rules and regulations set forth herein shall not operate as a waiver of any such violation or of Tenant's right to insist on prompt compliance in the future of such covenant or condition, and shall not prevent a subsequent action by Tenant for any such violation . No provision, covenant or condition of this Sublease may be waived by Tenant unless such waiver is in writing and signed by Tenant . C. Definitions : "Tenant" as used in this Sublease shall include its representatives, heirs, agents, assigns, and successors in title to Subleased Premises . Broker shall be considered the authorized agent of Tenant except to the extent specifically provided for herein . The terms "Tenant" and "Subtenant" shall include singular and plural, and corporations, partnerships, companies or individuals, as may fit the particular circumstances . D. Entire Agreement : This Sublease and any attached addenda constitute the sole and entire agreement between the parties . No representation, promise or inducement not included in this Agreement shall be binding upon any party hereto . This Agreement and the terms and conditions herein may not be amended, modified or waived except by the written agreement of Owner . Any agreement to terminate this Agreement or any other subsequent agreement of the parties relating to the Property must be in writing and signed by the parties . The failure of the parties to adhere strictly to the terms and conditions of this Agreement shall not constitute a waiver of the right of the parties later to insist on such strict adherence . E. Attorney's Fees and Costs of Collection : Whenever any sums due hereunder are collected by law, or by attorney at law to prosecute such an action, then both parties agree that the prevailing party will be entitled to reasonable attorney's fees, plus all costs of collection. F. Indemnification : Subtenant releases Tenant and Broker from liability for and agrees to indemnify Tenant and Broker against all losses incurred by Tenant or Broker as a result of : (a) any breach or violation of any of the terms, covenants, or conditions of the Lease resulting from the actions or omissions of Subtenant ; (b) Subtenant's failure to fulfill any condition of this Sublease ; (c) any damage or injury happening in or about the Subleased Premises to Subtenant or Subtenant's employees, agents, invitees, guests, or licensees or such persons' property, except where such damage or injury is due to gross negligence or willful misconduct of Tenant or Broker ; (d) Subtenant's failure to comply with any requirements imposed by any governmental authority ; and (e) any judgment, lien or other encumbrance filed against the Subleased Premises as a result of Subtenant's actions . G. No Partnership : Subtenant by execution of this Sublease is not a partner of Tenant in the conduct of its business or otherwise joint venturer, or a member of any joint enterprise with Tenant . H. No Recordation : Subtenant shall not record this Sublease nor any short form memorandum thereof without Tenant's prior written consent . I. Right to Relocate : Tenant has the right to relocate Subtenant during the Sublease Term or any renewal thereof, to similar or better quality office space within the building or Complex .
Copyright© 2024 by Georgia Association of REALTORS®, Inc. CF40, Commercial Sublease Agreement, Page 6 of 7, 01/01/24 J. Notices : (1) Generally : All notices given hereunder shall be in writing, legible and signed by the party giving the notice . In the event of a dispute regarding notice, the burden shall be on the party giving notice to prove delivery . The requirements of this notice paragraph shall apply even prior to this Agreement becoming binding . Notices shall only be delivered : ( 1 ) in person ; ( 2 ) by courier, overnight delivery service or by certified or registered U . S . mail(hereinafter collectively "Delivery Service") ; or( 3 ) by e mail or facsimile . The person delivering or sending the written notice signed by a party may be someone other than that party . (2) Delivery of Notice : A notice to a party shall be deemed to have been delivered and received upon the earliest of the following to occur : ( 1 ) the actual receipt of the written notice by a party ; ( 2 ) in the case of delivery by a Delivery Service, when the written notice is delivered to an address of a party set forth herein(or subsequently provided by the party following the notice provisions herein), provided that a record of the delivery is created ; ( 3 ) in the case of delivery electronically, on the date and time the written notice is electronically sent to an e - mail address or facsimile number of a party herein(or subsequently provided by the party following the notice provisions herein) even if it is not opened by the recipient . Notice to a party shall not be effective unless the written notice is sent to an address, facsimile number or e - mail address of the party set forth herein(or subsequently provided by the party following the notice provisions herein) . (3) When Broker Is Authorized to Accept Notice for Client : Except where the Broker is acting in a dual agency capacity, the Broker and any affiliated licensee of the Broker representing a party in a client relationship shall be authorizedagents of the party for the limited purpose of receiving notice and such notice to any of them shall for all purposes herein be deemed to be notice to the party . Notice to an authorized agent shall not be effective unless the written notice is sent to an address, facsimile number or e - mail address of the authorized agent set forth herein(or subsequently provided by the authorized agent following the notice provisions herein) even if it is not opened by the recipient . Except as provided for herein, the Broker's staff at a physical address set forth herein of the Broker or the Broker's affiliated licensees are authorized to receive notices delivered by a Delivery Service . The Broker, the Broker's staff and the affiliated licensees of the Broker shall not be authorized to receive notice on behalf of a party in any transaction in which a brokerage engagement has not been entered into with the party or in which the Broker is acting in a dual agency capacity . In the event the Broker is practicing designated agency, only the designated agent of a client shall be an authorized agent of the client for the purposes of receiving notice . Governing Law and Interpretation : This Agreement may be signed in multiple counterparts each of which shall be deemed to be an original and shall be interpreted in accordance with the laws of Georgia . No provision herein, by virtue of the party who drafted it, shall be interpreted less favorably against one party than another . All references to time shall mean the time in Georgia . If any provision herein is held to be unenforceable, it shall be severed from this Agreement while the remainder of the Agreement shall, to the fullest extent permitted by law, continue to have full force and effect as a binding contract . L . GAR Forms : The Georgia Association of REALTORS®, Inc . ("GAR") issues certain standard real estate forms . These GAR forms are frequently provided to the parties in real estate transactions . No party is required to use any GAR form . Since these forms are generic and written with the interests of multiple parties in mind, they may need to be modified to meet the specific needs of the parties using them . If any party has any questions about his or her rights and obligations under any GAR form, he or she should consult an attorney . Provisions in the GAR Forms are subject to differing interpretations by our courts other than what the parties may have intended . At times, our courts may strike down or not enforce provisions in our GAR Forms, as written . No representation is made that the GAR Forms will protect the interests of any particular party or will be fit for any specific purpose . The parties hereto agree that the GAR forms may only be used in accordance with the licensing agreement of GAR . While GAR forms may be modified by the parties, no GAR form may be reproduced with sections removed, altered or modified unless the changes are ·visible on the form itself or in a stipulation, addendum, exhibit or amendment thereto . 19. Sale of Subleased Premises to Subtenant . Subtenant shall pay Broker a commission in the amount of n/a percent( % ) of the gross sales price at closing if Subtenant, or a related entity of Subtenant, acquires from Landlord title to the Subleased Premises or any part thereof or any property as an addition, expansion, or substitution for the property during the term of this Sublease, any renewals thereof, or within one year after the expiration of this sublease . Such commission shall be payable in lieu of any further commission which otherwise Broker would have been due under this sublease . 20. Beware of Cyber Fraud : Fraudulent e - mails attempting to get you to wire money to criminal computer hackers are increasingly common in real estate transactions . Under this scam, computer hackers fraudulently assume the online identity of the actual mortgage lender, closing attorney and/or real estate broker with whom you are working in the real estate transaction . Posing as a legitimate company, they then direct you to wire money to them . In many cases, the fraudulent e - mail is sent from what appears to be the authentic web page of the legitimate company responsible for sending the wiring instructions . You should use great caution in sending or receiving funds based solely on wiring instructions sent to you by e - mail . Independently verifying the wiring instructions with someone from the company sending them is the best way to prevent fraud . In particular, you should treat as highly suspect any follow up e - mails you receive from a mortgage lender, closing attorney and/or real estate broker directing you to wire funds to a revised account number . Never verify wiring instructions by calling a telephone number provided along with a second set of wiring instructions since you may end up receiving a fraudulent verification from the computer hackers trying to steal your money . Independently look up the telephone number of the company who is supposed to be sending you the wiring instructions to make sure you have the right one . 21. Exhibits. All exhibits attached hereto, listed below or referenced herein are made a part of this Lease. If any such exhibit conflicts with any preceding paragraph, said exhibit shall control: Buildin g Layou t a s Exhibi t A SPECIAL STIPULATIONS. The following Special Stipulations, if conflicting with any exhibit or preceding paragraph, shall control: 1. All parties acknowledge and agree Sub tenant originally occupied premises on same suite in November/2018. This new contract is a renewal lease agreement. 2. Base rent shall be as follows for the 2nd and 3rd year: $2,406.74 for months 13 - 24 and $2,476.84 for months 25 - 36. D Additiona l Specia l Stipulations (F246) are attached.
By signing this Agreement, Subtenant and Tenant acknowledge that they have each read and understood this Agreement and agree to its terms. L a Ros a Realt y Georg i a Prin t o r Typ e Name D ೦ te 1 2 Subtenant's Signature Print o r Typ e Name Date D Additiona l Signature Page i s a tt ached. Leasing Broker/Affiliated Licensee Contact Information Leasin g Broke r Broke r/ A ffl ii atea Li ce ns ee s1gna t0 re Print o r Typ e Name GA Real Estate Licens e # Licensee's Phone Number Fax Number Licensee' s E - mai l Addres s REALTOR® Membership Broker' s Address Broker' s Phon e Number Fa x Number ML S O ffi c e Cod e Brokerage Fir m Licens e Number Multiple Listing Number - n/a - ,....,.... ೦ = _ c il l _ V _ _ _ S - : - ,.. . l'V l _ · _ am e i era e ce _s - =.... 0a / " - : - .i. . + - . / ' / 2 - c./ Print o r Typ e Name 111:: ೦ J f enanf' s Signature Pnnt or I ype N ame Date D Additiona l Signature Page i s a tt ached. Listing Broker/Affiliated Licensee Contact Information Carme n G . Delg ad o Prml or Typ e Name 678 - 778 - 2022 cdel Licensee's Em a i l A d dr ess NAMAR R E ALTOR® M em ber ship 175 John M orrow Broker' s A ddress Gainesville, Broker' s Phon e Number H - 76783 29 4725 GA Rea l Es ta t e Licens e # L icensee's Phone N u m b er Fa x Number Fa x Number LAR M L O S O O l ffic e Code Brokerag e Frrm Licens e Number Acceptance Date . T h e a b o v e p r o p o s ition i s hereby accepted, // - 0 ೦ o'cloc k _ _A,_.m. o n th e dat e of . l ( / ೦ ("Acceptance Date"). This Amendment will become binding upon the parties when notice of the ac / cepra / nce C/ of this Amendment has been received by offeror. The offeror shall promptly notify offeree when acceptance has been received. 1 Subtenant's Signature La Rosa Realty Georgia Listing Broker 1 Tenant's Signature Copyright© 2024 by Georgia Association of REALTORS®, Inc. CF40, Commercial Sublease Agreement, Page 7 of 7, 01/01/24
Exhibit 10.134
Commercial Net Lease for Part of Building
This lease is made by Báez-Pavón Insurance Group LLC, Landlord and La Rosa Realty LLC, Tenant.
Landlord is leasing to Tenant and Tenant is leasing from Landlord the following premises:
3388 Magic Oak Ln, Sarasota, Florida 34232
Part of Building only: Specifically, Tenant is leasing three office spaces, two on the left and one on the right.
As part of the lease, Tenant and Tenant’s employees and customers may use the following additional facilities in common with other tenants, employees, and customers:
Parking spaces: Side of the building
Restroom facilities: Two restrooms
Conference area: Meeting/conference area located in the rear of the unit.
Term of lease: This lease begins on January 1st, 2023, and ends on December 31st, 2023, with the option to renew.
Rent: Tenant will pay rent in advance on the 1st, of each month. Tenant’s first rent payment will be on January 1st, 2023, in the amount of One Thousand Two hundred Dollars ($1,200.00). The tenant will pay rent of $1,200.00 per month thereafter. The tenant will pay this rental amount for the entire term of the lease.
Late fee: There will be a late fee of Twenty-Five Dollars ($25.00) if rent is received after the 5th day of the month and an additional Five Dollars ($5.00) for each day thereafter.
Option to extend lease: Landlord grants Tenant the option to extend/renew this lease for an additional term of one year. To exercise this option, Tenant must give Landlord written or verbal notice on or before December 1st 2023. Tenant may exercise this option only if Tenant is in substantial compliance with the terms of the lease. The tenant will lease the premises on the same terms as in this lease except for the renewal price, subject to negotiation.
Security Deposit: Tenant has deposited Eight Hundred Dollars ($800.00) in the year 2020 with Landlord as security deposit for tenant’s performance of this lease. Landlord will refund the full security deposit to Tenant within 14 days following the end of the lease if Tenant returns the premises to Landlord in good
Improvements by Tenant: Tenant may make alterations and improvements to the premises only after obtaining the Landlord’s written consent. At any time before the lease expires, the Tenant must remove any of Tenant’s alterations and improvements, as long as Tenant repairs any damages caused by attaching the items to or removing them from the premises including wall color. The tenant may change the wall color but must return the premises to the original white wall color.
Tenant’s use of premises: Tenant will the premises for the purpose of Real Estate office and meeting only. The Tenant may also use the premises for purpose reasonable related to the main use.
Landlord’s Representations: Landlord represents that:
| A. | At the beginning of the term of the lease, the premises will be properly zoned for tenant’s stated use and will be following all applicable laws and regulations. | |
| B. | The premises will not be used for storage or disposal of any toxic or hazardous substances, and Landlord has received no notice of any government authority concerning removal of any toxic or hazardous substance from the property. |
Utilities and services: Landlord will pay for all utilities, including water, electric and trash collection. Tenant will pay Fifty dollars ($50.00) per month to Landlord for internet services. The tenant will pay for internet services on the lst day of each month in addition to the rent amount.
Maintenance and Repair of Common Areas: Landlord and tenant will maintain and make all necessary repairs to the common areas of the building and adjacent premises and keep these areas safe and free of trash.
Maintenance and Repair of Leased Premises: Landlord will maintain and make all necessary repairs to the following parts of the building in which the leased premises are located:
Interior common walls, plumbing system, Electrical system, Heating, Air conditioning systems.
The tenant will maintain and repair the leased premises and keep the leased premises in good condition except for those items specified above as being the Landlord’s responsibility. The tenant will repair any wall damage to leased areas.
Insurance: Landlord and Tenant release each other from any liability of the other for any property loss, property damage or personal injury to the extend covered-by insurance carried by the party suffering the loss, damage, or injury. The tenant must carry own liability and property insurance policy. Landlord is not responsible for any damage or loss caused by natural disaster and/or fire, theft including documents and personal property.
the use of the premises with a maximum period of 30 days. If the Tenant substantially is deprived from the use of the premises for more than 60 days because of such damage, Tenant may terminate this lease by delivering written notice of termination to Landlord with a minimum of 30 days advanced notice.
Notice of Default: Before starting a legal action to recover possession of the premises based on Tenant’s default, Landlord will notify Tenant in writing of the default. Landlord will take legal action only if Tenant does not correct the default within 10 calendar days after written notice is given or mailed to Tenant.
Quite Enjoyment: The Tenant has the right to occupy the premises peacefully and without interference. The Tenant acknowledges that it must conduct itself so as not to interfere with other tenants’ rights to quite enjoyment.
Eminent Domain: This Iese will become void if any part of the leased premises or the building in which the leased premises are located are taken by eminent domain. The Tenant has the right to receive and keep any amount of money that the agency taking the premises by eminent domain pays for the value of the Tenant’s lease, its loss of business, and for moving and relocation expenses.
Holding Over: If the Tenant remains in possession of the premises after the lease ends, the continuing tenancy will be on a month-to-month basis and the price will be determined by the landlord.
Disputes: Mediation and Possible Litigation: If a dispute arises, each party will cooperate fully and fairly with a mediator chosen by the Landlord. If the dispute is not resolved within 30 days after it is referred to the mediator, the dispute will be arbitrated by and arbitrator chosen by the Landlord and if not resolved within 30 days, the matter will be taken to court.
Judgment on the arbitration award may be entered in any court that has jurisdiction over the matter. Costs of arbitration, including lawyers’ fees will be allocated by the arbitrator.
Entire agreement: This is the entire agreement between the parties. It replaces and supersedes any and all oral agreements between the parties, as well as any prior written agreements.
Successors and Assignees: This lease benefits the heirs, successors, and assignees of the parties.
Notices: All notices must be in writing. A notice may be delivered to a party to the address that follows the party’s signature or to a new address that a party designates in writing. A notice may be delivered in person, via email, to the address provided below, by certified mail, or by overnight courier.
Governing Law: This lease will be governed by and construed in accordance with the laws of the
Waiver: If one party waives any term or provision of this lease at any time, the waiver will be effective only for the specific instance and specific purpose for which the waiver was given. If either party fails to exercise or delays exercising any of its rights or remedies under this lease, the party retains the right to enforce that term or provision later.
Severability: If any court determines that any provision of this lease is invalid or unenforceable, any invalid or unenforceability will affect only that provision and will not make any other provision of this lease invalid or unenforceable, and shall be modified, amended, or limited only to the extent necessary to render it valid and enforceable.
Dated: December 1st, 2022.
| Landlord | Tenant | |||
| Name of Business: | Name of Business: | |||
| Baez-Pavon Insurance Group LLC | La Rosa Realty LLC | |||
| By: | Julissa Baez-Pavon | |||
| By: | ||||
| Title: | MBR | Title: | ||
| Address: 3388 Magic Oak Ln | Address: 1420 Celebration Blvd | |||
| Sarasota, FL 34232 | Suite 200, Celebration, FL 34747 | |||
| Email: | Email: | |||
4
Exhibit 10.135
LEASE AGREEMENT
FOR
LAS PALMAS SHOPPING CENTER
LESSEE: La Rosa Realty, LLC.
LESSOR:
Narcoossee Acquisitions, LLC
LEASE INDEX
LEASE AGREEMENT Las Palmas For La Rosa Realty.docx
3/22/2017
| 1. | PREMISES | 1 |
| 2. | LEASE TERM AND COMMENCEMENT DATE | 1 |
| 3. | RENT COMMENCEMENT | 1 |
| 4. | RENT ABATEMENT PERIOD | 1 |
| 5. | FAILURE TO OPEN | 1 |
| 6. | QUIET ENJOYMENT | 1 |
| 7. | EFFECTIVE DATE | 1 |
| 8. | ACCEPTANCE OF PREMISES | 1 |
| 9. | TENANT IMPROVEMENTS | 2 |
| 10. | USE | 2 |
| 11. | BASE RENT | 2 |
| 12. | ADDITIONAL RENT | 2 |
| 13. | ADJUSTMENTS OF ADDITIONIAL RENT / RECONCILIATION | 3 |
| 14. | PRORATION | 3 |
| 15. | APPLICATION OF PAYMENTS FROM LESSEE | 3 |
| 16. | SECURITY DEPOSIT | 3 |
| 17. | CONTRACTUAL SECURITY INTEREST | 4 |
| 18. | USE OF COMMON AREAS | 4 |
| 19. | IMPROVEMENTS AND ALTERATIONS OF SHOPPING CENTER | 4 |
| 20. | OPERATING COSTS | 4 |
| 21. | IMPROVEMENTS AND ALTERATIONS OF PREMISES BY LESSEE | 4 |
| 22. | REPAIRS BY LESSOR | 5 |
| 23. | REPAIRS BY LESSEE | 5 |
| 24. | RUBBISH REMOVAL | 6 |
| 25. | SIDEWALKS | 6 |
| 26. | UTILITIES | 6 |
| 27. | PERSONAL PROPERTY AND LEASHOLD IMPROVEMENT TAXES | 6 |
| 28. | LIABILITY INSURANCE | 6 |
| 29. | PERSONAL PROPERTY INSURANCE | 6 |
| 30. | SUBROGATION | 6 |
| 31. | LIMITED LIABILITY | 7 |
| 32. | INDEMNIFICATION | 7 |
| 33. | DAMAGE OR DESTRUCTION | 7 |
| 34. | CONDEMNATION | 7 |
| 35. | ASSIGNMENT AND SUBLETTING | 7 |
| 36. | SUBORDINATION | 8 |
| 37. | DEFAULT | 8 |
| 38. | BANKRUPTCY | 9 |
| 39. | RIGHTS AND REMEDIES | 9 |
| 40. | WAIVER OF JURY | 9 |
| 41. | ACCESS BY LESSOR | 9 |
| 42. | SALE BY LESSOR | 9 |
| 43. | SURRENDER OF PREMISES | 9 |
| 44. | RELOCATION OF PREMISES – INTENTIONALLY OMITTED | 9 |
| 45. | NOTICES | 9 |
| 46. | INABILITY TO PERFORM | 10 |
| 47. | ADVERTISING AND PROMOTIONAL FUND – INTENTIONALLY OMITTED | 10 |
| 48. | RULES AND REGULATIONS | 10 |
| 49. | ATTORNEY’S FEES | 11 |
| 50. | INTEREST OF PAST DUE OBLIGATIONS | 11 |
| 51. | TIME OF ESSENCE | 11 |
| 52. | HOLDING OVER | 11 |
| 53. | PARTIAL INVALIDITY | 11 |
| 54. | BROKER DISCLAIMER | 11 |
| 55. | WAIVER | 11 |
| 56. | LEASE GUARANTEE – INTENTlONALLY OMITTED | 11 |
| 57. | SUCCESSORS AND ASSIGNS | 11 |
| 58. | HEADINGS OF LESSOR AND LESSEE | 11 |
| 59. | NO ESTATE BY LESSEE | 12 |
| 60. | ENTIRE AGREEMENT | 12 |
| 61. | GOVERNING LAW | 12 |
| 62. | RADON GAS | 12 |
| 63. | HAZARDOUS SUBSTANCES | 12 |
| 64. | EXHIBITS AND ADDENDUM | 12 |
| 65. | NO RECORDING | 12 |
| 66. | LAWS AND REGULATIONS | 12 |
| 67. | OPTION TO RENEW | 13 |
| 68. | BILLBOARD | 13 |
| 69 | PARKING | 13 |
| 70. | COMMISSION | 13 |
| 71. | DECLARATION | 13 |
Exhibit A - LOCATION OF PREMISES/SITE PLAN
Exhibit B - PROPERTY LEGAL DESCRIPTION
Exhibit C - INTENTIONALLY DELETED
Exhibit D - LANDLORDS WORK
Exhibit E - SIGN CRITERIA
Exhibit F - RULES AND REGULATIONS
LEASE AGREEMENT FOR
LAS PALMAS SHOPPING CENTER
THIS LEASE, made as of this 1st of April, 2017, by and between Narcoossee Acquisitions, LLC, whose principal address for purposes hereunder is 130 S. Orange Avenue suite 300, Orlando, FL 32801 (“LESSOR”). and La Rosa Realty, LLC. whose principal address 1420 Celebration Blvd Suite 100 Celebration, FL 34747 (“LESSEE”).
1. PREMISES
LESSEE hereby leases from LESSOR that certain space identified as Suite: D (the “Premises”), containing approximately 3,900 square feet of leasable area, having an address listed as 8236 Lee Vista Blvd, and situated within the Las Palmas Shopping Center at (the “Shopping Center”), with the approximate dimensions and location of the Premises within the Shopping Center more fully delineated within attached Exhibit A. The Premises does not include any space above the interior surface of the celling, nor any part of the exterior walls of the building in which the Premises are located, nor the walks or Common Areas, as the latter is defined herein.
LESSEE covenants, as a material part of the consideration for this LEASE, to keep and perform each and all of the terms, covenants, and conditions herein set forth.
2. LEASE TERM AND COMMENCEMENT DATE
The term of this LEASE (the “LEASE Term”) shall commence upon full execution LEASE by both parties and in no event later than April 1, 2017 and shall expire Sixty (60) months following the Rent Commencement as defined below. LESSEE shall provide written acknowledgment of the LEASE commencement and expiration dates to LESSOR prior to LESSEE’s possession of the Premises. LESSEE, upon completion of buildout and obtaining certificate of occupancy, shall continuously operate its business in the entire Premises, as required by this LEASE, during the entire LEASE Term. LESSEE shall pay a total of $29,955 upon execution of lease representing first month’s rent, last month’s rent, and Security Deposit as further defined in paragraph 16.
3. RENT COMMENCEMENT
The Rent Commencement Date shall be November 1, 2017. However, LESSEE shall be obligated to make payments of Additional Rent during the Rent Abatement Period further defined below.
4. RENT ABATEMENT PERIOD
Base Rent payments due from LESSEE shall be waived for the period from April 1, 2017 to October 31, 2017 (“Rent Abatement Period”). During the Rent Abatement Period, LESSEE shall make monthly payments of Additional Rent comprised of CAM, Real Estate Taxes, and Insurance in the total amount of $2,025.00 per month (including sales tax).
5. FAILURE TO OPEN
In the event LESSEE shall fail to open for business, fully fixtured, stocked and staffed within Two Hundred and Ten (210) days following the Lease Commencement Date, LESSOR shall have, In addition to any and all remedies provided herein, the sole option to terminate this LEASE.
6. QUIET ENJOYMENT
Subject to LESSEE observing and performing all of the covenants, conditions and provisions required of LESSEE herein, LESSEE shall have quiet possession of the Premises during the LEASE term.
7. EFFECTIVE DATE
This LEASE shall become a binding and enforceable agreement upon April 1, 2017, hereby known as (the “Effective Date”)
8. ACCEPTANCE OF PREMISES
LESSEE acknowledges it will accept the Premises In “AS IS” condition. LESSOR represents that the Premises have been constructed substantially in accordance with Landlord’s Work, as set forth In Exhibit D attached hereto, subject to modifications and alterations constructed by the previous tenant. It shall be LESSEE’S obligation to fully Inspect the Premises and to determine all existing conditions of the Premises and their suitability for LESSEE’S intended use and buildout of the space. LESSOR shall only be responsible and will only warrant that the air conditioning units currently servicing the space are in good working condition at the time of LESSEE’S taking of possession of the Premises.
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9. TENANT IMPROVEMENTS
LESSEE shall submit construction plans for LESSOR’S approval and file permit application with the City of Orlando within sixty (60) business days after Lease execution. LESSEE will permit and construct Improvements and modifications per LESSEE’S design and requirements subject to reasonable approval by LESSOR as further described and in accordance with Paragraph 21. LESSOR will provide a Tenant Improvement Allowance (“TIA”) of $15 per square foot ($58,500). LESSOR will pay the TIA in three equal installments. The first two payments to be paid within seven (7) business days of written notification by LESSEE with LESSEE’S contractor certification of 30% and 60% completion of construction Improvements. Lest payment to be made upon LESSEE obtaining and delivering to LESSOR the following documents; Certificate of Occupancy from the City of Orlando, statement and affidavit of final lien releases by general contractor and any subcontractors that have filed Notice to Owners, LESSEE’S Business Occupational License, and any other documentation reasonably required to evidence of completion and payment of all costs of Tenant Improvements.
10. USE
LESSEE shall use and occupy the Premises for a Real Estate Sales Office and direct related uses, and LESSEE shall neither use nor occupy the Premises for any other purposes. LESSEE shall not interfere with nor violate the use rights nor conduct any activity which may injure or annoy other lessees within the Shopping Center nor use or occupy the Premises In violation of any law, ordinance, government regulation or directive.
11. BASE RENT
LESSEE shall pay to LESSOR, at the office of LESSOR, without notice, demand, deduction or set-off whatsoever, in lawful United States currency, the following rentals as Base Rent, together with any sales, use or other taxes assessed thereon, on or before the first day of each calendar month during the LEASE Term:
| Period | Monthly Base Rent | |
| Years 1-5 | $7,475 plus sales tax |
Unless provided for otherwise under separate written agreement between the parties, the first scheduled payment of Base Rent and Additional Rent, as the latter is herein defined, shall be paid by LESSEE upon execution of the Lease Agreement. The date of LESSEE’s second scheduled payment of Base Rent and Additional Rent, as determined herein, shall be the second month following the Rent Commencement date,
Payments of Base Rent and Additional Rent not received by the fifth (5th) day of the month shall be subject to an administrative charge’of ten (10%) of the base Rent and Additional Rent. In the event Base Rent and Additional Rent have not been received by the fifteenth (15th) day of the month, LESSEE’S account shall be transferred to an attorney for collection, and in addition to the costs and charges described above, LESSEE shall also be responsible for the payment of all associated legal expenses incurred therefrom. Should a check from LESSEE be dishonored or returned by the bank for any reason, LESSOR shall be entitled to apply, in addition to the above assessments, a service charge of twenty-five dollars ($25) for each such occurrence. LESSEE acknowledges and agrees that the above charges represent a fair and reasonable estimate and liquidation of LESSOR’S expense in the management of the Shopping Center resulting from such incidents, which expense is not contemplated nor included in any other rental or charge provided to be paid by LESSEE.
12. ADDITIONAL RENT
It is the intent for the Base Rent and all sales or use taxes imposed thereon payable to LESSOR to be absolutely net of all annual expenses associated with the operation of the Shopping Center. Therefore, In addition to Base Rent, LESSEE shall pay, as Additional Rent, its Pro Rata Share (as herein defined), plus any sales or use taxes assessed thereon, of the following:
(a) TAXES: Representing the amount of all real and personal property taxes or assessments, including without limitation: sanitary taxes, solid waste fees, or special assessments, and all costs and expenses incurred by LESSOR in contesting the same, which are levied, imposed or assessed upon the Shopping Center.
(b) INSURANCE: Representing the cost of all fire, extended coverage, liability, workman’s compensation and other insurance coverage carried by LESSOR on the Shopping Center. If LESSEE’S approved use or occupancy of the Premises shall cause any increase in premiums for insurance coverage of the Shopping Center, LESSEE shall be responsible for payment of the entire premium increase.
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(c) COMMON AREA MAINTENANCE (CAM): Representing the Shopping Center’s Operating Costs (as defined In Section 18 below). CAM (controllable) shall be capped at ten percent (10%) per annum on a cumulative basis. In addition, any management or Administrative Fee included in CAM charges, must not be in excess of eight percent (8%) of annual Operating Expenses which will include CAM, Real Estate Taxes, and Insurance costs.
In addition, CAM shall include the proportionate share of Lots 4 and 5 (Las Palmas) association operating expenses charged by the Vista Palms Commercial Property Owners Association, Inc. (the “Association”) in accordance with the Amended and Restated Declaration of Covenants, Conditions and Restrictions, recorded in Official Records Book 9495, Page 3931 of the public records of Orange County, Florida (the “Declaration”) attributable to LESSEE’S premises, which amounts shall be due and payable with Rent and CAM.
LESSEE’S Pro Rata Share shall be determined by dividing the approximate square footage of the Premises by the approximate square footage of the total leasable area of the Shopping Center. If any lessees of the Shopping Center directly pay Taxes, Insurance, or Common Area Maintenance charges to any taxing authority, insurance carrier, utility provider, or service contractor, the square footage of those lessees shall be excluded from the total leasable area of the Shopping Center in computing LESSEE’S Pro Rata Share of those Items. LESSOR shall cap additional first year rent to be $3.05 per square foot for CAM and $2.80 per square foot for Taxes and Insurance.
13. ADJUSTMENTS OF ADDITIONAL RENT / RECONCILIATION
LESSEE shall pay LESSOR, together with Base Rent, a monthly installment of Additional Rent in an amount estimated by LESSOR as provided herein. By March 1 of each year the LEASE is in effect, LESSOR shall endeavor to deliver to LESSEE a statement of the actual Additional Rent payable by LESSEE for the prior calendar year. Any (further Additional Rent amount due to LESSOR shall be paid by LESSEE, without prejudice to any written exception, within thirty (30) days following LESSOR’s delivery of said statement. If the total Additional Rent payment received by LESSOR is greater than the actual Additional Rent due for the same period, LESSEE shall receive a credit in the amount of the overpayment against the next required payment of Additional Rent. In the event LESSOR estimates Additional Rent will be payable by LESSEE following LEASE expiration, LESSOR may deduct such estimated sums from LESSEE’S Security Deposit prior to return of same to LESSEE but such deduction shall not remove LESSEE’S obligation to pay Its Pro Rata Share of actual Additional Rent once such determination is made. Should a credit be due LESSEE at the termination of this LEASE, LESSOR shall remit payment to LESSEE within thirty (30) days of statement issuance date. The initial contribution to be paid by LESSEE for the payment of Additional Rent shall be $(3900sf x $ 5.85)/12)(plus sales tax) per month, and LESSOR shall have the right to increase this estimate, effective on March 1 of each year, based on the actual Additional Rent for the prior year.
LESSEE shall have the authorization to examine LESSOR’S books and records, during normal business hours, to verify LESSOR’S annual statement of actual Additional Rent payable by LESSEE within fifteen (15) days following LESSOR’S issuance of said statement. Following expiration of this inspection period, and absence of LESSEE’s written exception to any assessed Item, LESSOR’S annual statement of actual Additional Rent shall be considered as final and accepted by LESSEE.
14. PRORATION
If the first day of the LEASE commences on any day other than the first day of a month, or if this LEASE ends on any day other than the last day of a month, any payment due to LESSOR by reason of any Base Rent or Additional Rent shall be justly and fairly prorated.
15. APPLICATION OF PAYMENTS FROM LESSEE
LESSOR shall apply payments from LESSEE in the following order: First, toward interest charges accrued against LESSEE’S account; Second, toward administrative fees, late fees, service charges or legal expenses assessed against LESSEE’S account; Third, toward LESSOR’S reimbursable expenses, and then Fourth, toward Base Rent.
16. SECURITY DEPOSIT
Upon execution of the Lease, LESSEE shall pay a Security Deposit representing One (1) month’s total rent (LESSEE, concurrently with its execution of this LEASE, has remitted to, deposited with, LESSOR, a Security Deposit in the amount of $9,985 as partial security for its full and faithful performance of this LEASE. If LESSEE Defaults with respect to the payment of Base Rent, or Additional Rent due under this LEASE, LESSOR, in its sole discretion, may elect to use, apply or retain all, or any part of the Security Deposit for the payment of any monies due LESSOR, and LESSEE shall, on demand, restore the Security Deposit to its full amount. LESSOR shall not be required to keep the Security Deposit separate from its general funds and LESSEE shall not be entitled to interest on such deposit. If LESSEE fully performs each provision of this LEASE, the Security Deposit shall be returned to LESSEE within thirty (30) days following LEASE expiration and LESSEE’S vacating the Premises, provided that all financial obligations of LESSEE have been met hereunder, including but not limited to LESSEE’S obligation to pay Additional Rent in accordance with Section 11 hereof.
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17. CONTRACTUAL SECURITY INTEREST
In addition to any security or lien interest arising out of operation of law or statute, LESSEE grants LESSOR a valid Security Interest upon all of LESSEE’s equipment, fixtures, furniture, Improvements and any other personal property presently in or which may hereafter be situated within the Premises, and all proceeds from sale therefrom. LESSEE agrees to execute and deliver to LESSOR, a financing statement on Form U.C.C.-1, and if LESSEE fails to deliver said document, LESSOR shall have the right to execute the form as LESSEE’s attorney-in-fact.
18. USE OF COMMON AREAS
The use and occupancy by LESSEE of the Premises shall include the use in common with others entitled to the use of the common areas, employee parking areas, service roads, loading facilities, sidewalks and customer parking areas located from time to time within the Shopping Center (collectively referred to as the “Common Areas”) provided however, the use of the Common Areas by LESSEE shall be subject at all times to the regulations adopted therefore by LESSOR.
19. IMPROVEMENTS AND ALTERATIONS OF SHOPPING CENTER BY LESSOR
Exhibit A sets forth the general layout of the Shopping Center and shall not be deemed to be a warranty, representation or agreement on the part of LESSOR that the Shopping Center will be or is exactly as indicated on said diagram. LESSOR may increase, reduce or change the number, dimensions or location of the walks, buildings and parking areas in any manner whatsoever LESSOR shall deem proper, and LESSOR reserves the right to make alterations or additions to the building in which the Premises are located, and to add buildings to the Shopping Center so long as such do not materially, adversely affect LESSEE ability to do business.
20. OPERATING COSTS
The term “Operating Costs” shall mean the total cost and expenses incurred in connection with the management, operation, preventive and corrective maintenance and repair of the Shopping Center, the implementation and costs for which shall be at the sole discretion of LESSOR, whether paid to employees of LESSOR or parties engaged by LESSOR, including without limitation: landscaping, building repairs, line painting, building painting, property maintenance allocations, roof cleaning, bumpering and top coating; lighting fixtures; electricity; sanitary control; removal of trash, rubbish, garbage and other refuse; rental on machinery or equipment used in such maintenance; the cost of supervisory personnel and contract labor to implement such services (including social security, unemployment and disability insurance); property owner association fees assessed to the shopping center; legal fees; and an Administration Fee equal to eight percent (8%) of LESSEE’s Operating Costs. LESSOR may direct that trash intensive lessees within the Shopping Center arrange for the use of their own trash receptacle and removal service at lessee’s expense, or in the alternative, LESSOR may assess a surcharge for lessee’s excess trash collection and removal service.
21. IMPROVEMENTS AND ALTERATIONS OF PREMISES BY LESSEE
LESSEE, upon obtaining the written consent of LESSOR, which consent may not be unreasonably withheld, may make improvements or alterations to the Premises as LESSEE may from time to time deem necessary or desirable, provided however, LESSEE shall not have the right to make any improvements or alterations that affect the structure, or outward appearance of the Premises or the Shopping Center. LESSEE shall submit to LESSOR complete plans and specifications for such work at the time LESSOR’S approval for same is requested. Any improvements or alterations made to the Premises shall be in compliance with all insurance requirements and regulations and ordinances of governmental authorities, and shall, upon the expiration or sooner termination of this LEASE, become the property of LESSOR provided however, LESSOR may require LESSEE, at LESSEE’S sole cost and expense, to remove any such improvements or alterations and to repair any damages to the Premises caused by such removal. Furthermore, in the event LESSEE makes any improvements or alterations to the Premises, LESSEE shall cause all of LESSEE’S construction debris to be removed from the Premises and be disposed of outside the boundaries of the Shopping Center. The construction of any improvements shall be undertaken and maintained in a neat and orderly condition at all times with construction materials and equipment, if any, stored so as to be screened from view to the greatest extant possible.
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The interest of LESSOR in the Premises and the Shopping Center is not subject to liens for improvements or alterations made by LESSEE. LESSEE shall comply with the Construction Lien Law of the State of Florida as set forth in Florida Statutes, Chapter 713. LESSEE will not create, nor permit to be created, nor allow to remain as a result of any action or work done or contracted for by LESSEE, any lien, encumbrance or charge levied on account of any imposition, or any construction lien which might be, or become a lien, encumbrance or charge upon the Premises or the Shopping Center. Any construction lien shall be discharged in accordance with the following:
If any construction lien shall at any time be filed against the Premises, or the Shopping Center, as a result of any action or work done on behalf of, or contracted for by LESSEE, LESSEE, within fifteen (15) days after notice of the filing thereof, shall cause it to be discharged of record by payment, deposit, bond, or order of a court of competent jurisdiction. If LESSEE shall fail to cause such lien to be so discharged within the period aforesaid, then in addition to any other right or remedy available to LESSOR,’ LESSOR may, but shall not be obligated to, discharge such lien either by paying the amount claimed to be due or by transferring same to security, and in any such event, LESSOR shall be entitled, If LESSOR so elects, to compel the prosecution of any action for the foreclosure of such lien by the lienor and to pay the amount of any judgment in favor of the lienor with interest, costs and allowances. Any amount so paid by LESSOR, and all costs, expenses, and fees, including without limitation attorneys, fees incurred by LESSOR in connection with any construction lien, whether or not the same has been discharged of record, together with interest thereon at one and one-half percent (1½%) per month from the respective dates of LESSOR’s making of the payments and incurring of the costs and expenses, shall constitute Additional Rent payable by LESSEE to LESSOR upon demand.
Nothing contained in this LEASE shall be deemed or construed in any way as constituting the consent or request of LESSOR to any professional, contractor, subcontractor, laborer or materialman for the performance of any labor, or the furnishing of any materials, for any alteration, addition, improvement or repair to the Premises or the Shopping Center, or as giving LESSEE any right, power or authority to contract for or permit the rendering of any services, or the furnishing of any materials that would give rise to the filing of any lien against the Premises, or the Shopping Center, nor to subject LESSOR’S estate in the Premises or the Shopping Center to liability under the Construction Lien Law of the State of Florida in any way.
22. REPAIRS BY LESSOR
LESSOR agrees to keep and maintain In good order and repair only the structural components of the roof and foundation, and the structural components of the exterior walls (exclusive of all signs, doors, windows and glass, including plate glass) of the Premises. If any such maintenance and repairs are caused in part or in whole by the act, neglect, fault or omission by LESSEE, its agents. servants, or employees, or by breaking and entering, LESSEE shall pay to LESSOR the actual cost of such maintenance and repairs. LESSEE shall at once report in writing to LESSOR any known defective condition which LESSOR is required to repair pursuant to this Paragraph and LESSEE’S failure to report to LESSOR any such known condition or defect shall make LESSEE responsible to LESSOR for any liabilitie, costs, expenses, and attorneys’ fees incurred by LESSOR as a result of such defect. LESSOR shall not be liable for failure to make such repairs or to perform any maintenance unless such failure shall persist for a period in. excess of sixty (60) days following written notice to LESSOR of the need for such repair or maintenance. Except as herein provided regarding casualty loss, there shall be no abatement of rent, and no liability of LESSOR by reason of any injury to or interference with LESSEE’S business arising from the making of any repairs, alterations or improvements in or to any portion of the Shopping Center or the Premises, or in or to fixtures and equipment therein. LESSEE waives the right to make repairs at LESSOR’s expense under any law, statute or ordinance now or hereafter in effect.
23. REPAIRS BY LESSEE
LESSEE shall at all times, and at its own cost and expense, be responsible for the maintenance and repair of all portions of the Premises not maintained by LESSOR, including all heating and air-conditioning equipment (including compressors, fans and ventilation ducts), and the water, sewer, electrical and fire sprinkler-systems specifically serving the Premises. LESSEE shall maintain and pay for a preventive maintenance contract with LESSOR’S designated HVAC contractor to provide a minimum of bi-monthly preventive maintenance inspections and service. To the extent any contractor warranties on said equipment or system are in effect at the time of LESSEE’S occupancy and use of the Premises, LESSOR shall assign or otherwise make available to LESSEE such warranties for LESSEE’S use. In the event the equipment or building contractor’s warranty on any of the referenced equipment or system has expired, LESSOR shall be responsible for the repair and maintenance of this item during LESSEE’S first ninety (90) day occupancy period of the Premises. LESSEE shall return the Premises to LESSOR at the termination of this LEASE in as good condition and repair as when first received, reasonable wear and tear excepted. On at least an annual basis, and following the termination of this LEASE, and prior to return of LESSEE’S security deposit, LESSEE shall furnish LESSOR with an inspection report from an HVAC maintenance company acceptable to LESSOR that states the Premise’s heating, ventilation and air conditioning systems are operating property and have not suffered from neglect. Failure by LESSEE to provide LESSOR with an HVAC inspection report, or for the report to state that the Premise’s heating, ventilation and air conditioning systems have been damaged as a result of neglect, shall result in LESSOR applying part or all of LESSEE’S security deposit to obtain the inspection report or repair or replace any damaged equipment. All damage or injury to the Shopping Center, Premises, or the Common Areas caused by the act or negligence of LESSEE, its agents, employees, or licensees shall be promptly repaired by LESSEE at its sole cost and expense and to the satisfaction of LESSOR. LESSOR may make such repairs which are not made promptly by LESSEE and charge LESSEE for the cost thereof as Additional Rent.
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24. RUBBISH REMOVAL
LESSEE shall keep the Premises clean, both inside and outside, and will remove all refuse from the Premises in accordance with rules and regulations established by LESSOR for same. LESSEE shall not burn any materials or rubbish of any description upon the Premises or Common Areas.
25. SIDEWALKS
LESSEE shall neither encumber nor obstruct the sidewalks adjoining the Premises nor allow the same to be obstructed or encumbered in any manner. LESSEE shall not place, nor cause to be placed, any merchandise, signs, vending machines or anything else on the sidewalk or exterior of the Premises without the prior written consent of LESSOR.
26. UTILITIES
LESSEE shall pay the cost of water and sewer, gas, electricity, fuel, light, heat, power, telephone, cable, and all other utilities furnished to the Premises, or the Shopping Center, and used by LESSEE, whether such utility costs are determined by separate metering or are billed by LESSOR. LESSEE shall not install any equipment nor use the Premises in a manner that will exceed or overload the capacity of any utility facilities. If LESSEE’S use of the Premises shall require additional utility facilities, the same shall be installed only after obtaining LESSOR’s written approval, and such cost shall be at LESSEE’S expense and in accordance with plans and specifications approved in writing by LESSOR. If LESSEE’S use or occupancy of the Premises results in an increase to LESSOR of any utility expense, or connection or user fees, or charges for increased usage or capacity, or assessments of any kind whatsoever, LESSEE shall pay the entire amount thereof within thirty (30) days of LESSOR’s written statement for same. In no event shall LESSOR be liable for any interruption or failure in the supply of utilities to the Premises.
27. PERSONAL PROPERTY AND LEASEHOLD IMPROVEMENT TAXES
LESSEE shall pay all real property taxes separately assessed against any permanently constructed improvements to the Premises made by LESSEE, and all personal property taxes assessed against or levied upon LESSEE’s fixtures, signs, furnishings, equipment, and all other personal property of any kind owned by LESSEE and used in connection with the Premises.
28. LIABILITY INSURANCE
LESSEE shall carry at its own expense Commercial General Liability Insurance (1986 ISO Form or its equivalent) with combined single limits of not less than $1,000,000 with Insurance companies admitted to do business in Florida holding a current Best’s Rating of not less than A-8, insuring LESSOR and LESSEE as additional insured and upon written request by LESSOR, also insuring any holder of a first mortgage lien encumbering the Premises, against any liability arising out of the ownership, use, occupancy or maintenance of the Premises, including loss of income, and LESSEE shall also maintain such Workmen’s Compensation coverage in full force and effect as may be required under Florida law. The insurance policy or policies shall contain provisions prohibiting the modification non renewal or cancellation of insurance without at least thirty (30) days prior written notice to LESSOR. LESSEE shall deliver said policies or certificates thereof to LESSOR by the earlier of LESSEE’S occupancy of the Premises, or commencement of any construction improvements thereto, and annually thereafter. The limit of any such insurance shall not limit the liability of LESSEE hereunder. LESSEE may provide this insurance under a blanket policy provided said insurance shall have a LESSOR’s, protective liability endorsement attached thereto. The failure of LESSEE to effect said insurance in the names herein called for, or to pay the premiums required, or to deliver said policies or certificates to LESSOR, shall be a material Default under this LEASE.
29. PERSONAL PROPERTY INSURANCE
LESSEE shall be solely responsible for securing and maintaining the equivalent of ISO Special Form Property Insurance on a replacement cost basis on LESSEE’S stock, trade fixtures, equipment or other personal property located in the Premises, and LESSOR shall not have any obligation to repair or replace same. Lessor shall be an additional insured on each insurance and a certificate of insurance shall be provided to Lessor on or before the commencement of this lease and annually thereafter. Coverage shall not be canceled, non-renewed, or materially reduced without at least thirty (30) days written notice to lessor.
30. SUBROGATION
As long as their respective insurers so permit, LESSOR and LESSEE hereby mutually waive their respective rights of recovery against each other to the extent of losses covered by property insurance. Each party shall apply to their insurers to obtain said waivers and each party shall obtain any special endorsements if required by their insurer to evidence compliance with the waiver.
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31. LIMITED LIABILITY
Neither LESSOR, nor its agents, shall be liable for any loss or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water or rain which may leak from any part of the Premises, or Shopping Center, or from the pipes, appliances or plumbing works therein, or from the roof, street or subsurface, or from any other place resulting from dampness, or any other cause whatsoever, unless caused by or due to the gross negligence or willful misconduct of LESSOR. LESSOR shall not be liable for Interference with the light, air or any latent defect in the Premises, and LESSOR shall not be liable for any damage caused by other lessees of the Shopping Center, or persons in or about the Premises, or the Shopping Center, occupants of adjacent property, or the public, or caused from the construction of any private or public work. All property of LESSEE kept or stored on the Premises shall be so kept or stored at the risk of LESSEE and LESSEE shall hold LESSOR harmless from any claims arising out of damage to same, unless such damage shall be caused by the willful act or gross negligence of LESSOR. LESSEE acknowledges that the police and law enforcement security protection provided by law enforcement agencies for the Premises is limited to that provided to other businesses or enterprises situated in Orange County, and any special security measures deemed necessary for additional protection of the Premises shall be at the sole responsibility and expense of LESSEE. LESSEE agrees to look solely to LESSOR’s estate and property in the Shopping Center, or the proceeds thereof, for the satisfaction of LESSEE’S remedies for the collection of a judgment or other Judicial process requiring the payment of money by LESSOR in the event of any Default by LESSOR, and no other property or assets of LESSOR shall be subject to levy, execution or other enforcement procedure for the satisfaction of any claim by LESSEE that in any way arises out of this Lease.
32. INDEMNIFICATION
LESSEE and LESSOR shall each indemnify, defend and hold each other harmless against and from any and all claims arising from the use of the Premises, or from the conduct of business, or from any activity, or work done, permitted or suffered in or about the Premises, except to the extent of the either parties gross negligence or willful misconduct and LESSEE and LESSOR shall indemnify and hold each other harmless against and from any and all claims arising from any Default in the performance of this LEASE resulting from any act or negligence of the other party, or their officers, agents, or employees (acting within the scope of their employment). LESSEE shall assume all risk of damage to property or injury to persons in, upon or about the Premises.
33. DAMAGE OR DESTRUCTION
If the Premises are damaged by an insured casualty and insurance proceeds have been made available to LESSOR, said damage shall be repaired by LESSOR, to the extent of such available insurance proceeds, provided such repairs can be made within ninety (90) days after the occurrence of the casualty, and without the payment of overtime or other premiums. Until such repairs are completed, Base Rent and Additional Rent shall be abated in proportion to that part of the Premises unusable by LESSEE. LESSOR shall have no obligation to restore, rebuild, or replace LESSEE’S personal property and trade fixtures and LESSOR shall not be liable for any damage to or any inconvenience or interruption of business of LESSEE or LESSEE’S agents occasioned by any casualty to the Premises. If the damage is due to the fault or neglect of LESSEE, or its employees, contractors, or agents, there shall be no abatement of Base Rent or Additional Rent. Should the Premises be damaged as a result of any cause not covered by insurance, or if the insurance proceeds have not been made available to LESSOR, or if repairs cannot be completed within ninety (90) days following the casualty date, or if the unexpired LEASE TERM is less than two (2) years, excluding any existing but unexercised LEASE renewal option(s), LESSOR shall have the option to: (1) repair the damage, this LEASE continuing in effect, but Base Rent and Additional Rent to be abated as provided above until such repairs are completed; or, (2) terminate this LEASE effective as of the casualty date, such notice of election to be made by LESSOR within sixty (60) days of the casualty date.
34. CONDEMNATION
If the Premises or more than thirty percent (30%) of the total Shopping Center shall be taken under power of eminent domain, this LEASE shall automatically terminate as of the date of such taking. LESSEE hereby assigns to LESSOR any award which may be made in such taking, provided however, nothing contained herein shall be deemed to give LESSOR any interest in nor require LESSEE to assign to LESSOR any award made to LESSEE for the taking of LESSEE’S personal property and fixtures, nor for the interruption of, or damage to, LESSEE’S business.
35. ASSIGNMENT AND SUBLETTING
Unless prior approved in writing by LESSOR is obtained by LESSEE, such approval not to be unreasonably withheld, LESSEE shall not sell or assign this LEASE, nor sublet the Premises, and such an event contrary to the provisions of this Paragraph shaft constitute a Default under this LEASE. If LESSEE is a corporation, any merger, consolidation or change in voting stock ownership representing more than forty-nine percent (49%) of the corporation shall constitute an assignment under this LEASE. Any assignment approval of this LEASE by LESSOR shall be conditioned on the ASSIGNEE’S assumption of total payment responsibility for Base Rent and Additional Rent as defined in this LEASE. Any request by LEASEE for approval to assign or sublet the Premises, shall be accompanied by a processing charge of $1,000. LESSOR shall withhold approval if use of the Premises violates any exclusive use agreements between LESSOR and other tenants of Las Palmas or the Vista Palms Shopping Center.
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36. SUBORDINATION
This LEASE is subject and subordinate to any and all mortgages or deeds of trust, protective land covenants, or leasehold estates pursuant to a ground lease (herein co referred to as “Title Interests”), now existing, or which may hereafter be executed, covering the Premises or the real property of which the same are a part, and to all advances made or hereafter to be made upon the security thereof. This provision shall be self-operative and no further instrument of subordination need be required by any mortgagee or ground lessor. Furthermore, LESSEE agrees to execute, acknowledge and deliver upon request, any and an documents or instruments requested by LESSOR to evidence the subordination of this LEASE to any Title Interests, provided, however, the rights of LESSEE shall continue in full force and effect for so long as LESSEE is not in Default hereunder and further provided, the holder of any Title Interests shall not be liable for any accrued obligation of LESSOR, nor for any act or omission of LESSOR, nor subject to any offsets or counterclaims which may have accrued to LESSEE against LESSOR prior to the date upon which such holder becomes the owner of the Premises. LESSEE hereby agrees to attom to any person, firm or corporation purchasing or otherwise acquiring the Premises at any sale or other proceeding, as if such person, entity, firm or corporation had been named as lessor herein. LESSEE agrees to execute, acknowledge and deliver in recordable form to any existing or proposed holder of Title Interests, or to LESSOR, a certificate certifying the following, if such be the case: (a) this LEASE is in full force and effect and there are no defenses or offset, thereto, or if LESSEE claims any defenses or offsets, stating those claimed by LESSEE; (b) LESSEE has accepted possession of the Premises as of the date of such certificate; and (c) LESSEE agrees to notify all Title Interests of any Default by LESSOR hereunder. LESSEE’S failure to deliver such statement within ten (10) days after LESSOR’s written request therefore shall be conclusive that this LEASE is in full force and effect without modification except as may be represented by LESSOR.
37. DEFAULT
If LESSEE shall fall: (a) to pay Base Rent, Additional Rent, or any other item to be paid by LESSEE hereunder when due, and such failure shall not have been cured within five (5) days after written notice thereof to LESSEE; or (b) to perform any other term, covenant, or condition of this LEASE, and such failure shall not have been cured to the satisfaction of LESSOR within twenty (20) days after written notice thereof to LESSEE, LESSOR may declare LESSEE to be in Default hereunder, and thereupon, LESSOR shall be entitled, without further notice, to exercise any remedy permitted by law.
In the event of a default by LESSEE, In addition to any other remedies LESSOR may have, LESSOR may, without obligation, waiver, or mutual exclusivity, and without further notice to LESSEE, elect any one or more of the following remedies:
(1) LESSOR may terminate this Lease, in which event LESSEE shall immediately surrender the Lease Premises to LESSOR, and if LESSEE fails to do so, LESSOR may, without prejudice to any other remedy which it may have, enter upon and take possession of the Leased Premises, and expel or remove LESSEE and any other person who may be occupying all or any part of the Leased Premises. LESSOR shall not be liable to LESSEE or any other person or entity for any claim for damages as a result of such actions. LESSEE agrees to pay on demand the amount of all losses, costs, expenses, deficiencies, and damages, including without limitation, advertising expenses, attorneys’ fees and brokers’ commissions, which LESSOR may incur or suffer by reason of the termination of the Lease under this subparagraph, whether through inability to relet the Leased Premises on satisfactory terms or otherwise.
(2) LESSOR may enter upon and take possession of the Leased Premises, and expel or remove LESSEE and any other person who may be occupying all or any part of the Leased Premise, (without being liable for prosecution for any claim for damages caused by such actions), and relet the Leased Premises on behalf of LESSEE and receive the rent directly by reason of the reletting. LESSEE agrees to pay LESSOR on demand any deficiency that may arise by reason of any reletting of the Leased Premises and to reimburse LESSOR on demand for any losses, costs, and expenses, including without lirnitation, advertising costs or broker’s commissions, which LESSOR may incur or suffer in reletting the Leased Premises. LESSEE further agrees to reimburse LESSOR for any expenditures made by it for remodeling or repairs necessary in order to relet the Leased Premises. In the event LESSOR is successful in reletting the Leased Premises at a rental in excess of that agreed to be paid by LESSEE pursuant to this Lease, LESSOR and LESSEE agree that LESSEE shall not be entitled, under any circumstances, to such excess rental, and LESSEE does hereby specifically waive any claim to such excess rental.
(3) LESSOR may enter upon the Leased Premises, (without being liable for prosecution for any claim for damages caused by such actions therefore) and do whatever LESSEE is obligated to do under the terms of this Lease. LESSEE agrees to reimburse LESSOR on demand for any losses, costs and expenses which LESSOR may incur in effecting compliance with LESSEE’S obligations under this Lease. LESSEE further agrees that LESSOR shall not be liable for any damages resulting to LESSEE from effecting compliance with LESSEE’s obligations under this subparagraph, whether caused by the negligence of LESSOR or otherwise.
(4) In addition to its remedies at law and hereunder, LESSOR may accelerate all rental due under the Lease in which case LESSEE shall pay to LESSOR an amount equal to the rental past due plus the amount of rental accelerated plus costs, expenses and damages as described above.
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38. BANKRUPTCY
The leasehold interest created by this LEASE shall not be treated as an asset of LESSEE’S, or any guarantor’s, estate. In the event LESSEE, or any guarantor of the LEASE, files for protection under the Bankruptcy Laws, LESSOR may terminate this LEASE upon thirty (30) days notice, provided however, the obligations of LESSEE. and any guarantor of the LEASE, under the LEASE shall be fully forgiven, and further provided, LESSOR shall have obtained possession of the Premises within sixty (60) days following the Bankruptcy filing date. Should LESSOR elect not to terminate the LEASE in accordance herein, LESSOR shall be entitled to recover the maximum award permitted for any damages or losses which are suffered from this event.
39. RIGHTS AND REMEDIES
The various rights and remedies herein granted to LESSOR may be exercised concurrently, and shall be cumulative and in addition to any others LESSOR may be entitled to by law, and the exercise of one or more rights or remedies shall not impair LESSOR’s right to exercise any other right or remedy. The failure or forbearance of LESSOR to enforce any right or remedy in connection with any Default shall not be deemed a waiver of such Default, nor a consent to a continuation thereof, nor a waiver of the same Default at any subsequent date.
40. WAIVER OF JURY
LESSOR and LESSEE hereby mutually, voluntarily, and intentionally waive the right either may have to a trial by jury in respect to any and all civil action commenced by either party in connection with this LEASE. If there are any facts or allegations that need to be tried in a court of law, every position of said trial will be before a court without a jury.
41. ACCESS BY LESSOR
LESSOR, and its agents, shall have the right to enter the Premises at all reasonable times with prior notice for the purpose of examining, inspecting, or showing the Premises to prospective purchasers or to other lessees of the Premises, or Shopping Center, and to make such alterations, repairs, improvements or additions to the Premises as LESSOR may deem necessary or desirable. Nothing herein contained however, shall be deemed or construed to impose upon LESSOR any obligation, responsibility or liability whatsoever, for the care, maintenance or repair of the Premises, or the Shopping Center, except as otherwise herein specifically provided. During the last three (3) months of this LEASE, LESSOR shall have the right to place upon the Premises the usual notices indicating the Premises to be for lease and LESSEE shall not interfere with such notices. LESSOR may enter the Premises whenever necessary in the event of an emergency.
42. SALE BY LESSOR
In the event LESSOR transfers its ownership interest In the Shopping Center, LESSOR shall be released of all LEASE obligations and liabilities which occur after the date of such transfer. Any Security Deposit or other funds controlled by LESSOR in which LESSEE has an Interest therein shall be delivered to the new lessor at the time of ownership conveyance, it being understood and acknowledged by the parties that the covenants and obligations contained in this LEASE on the part of LESSOR are to be binding only during each LESSOR’S respective period of ownership interest in the Shopping Center.
43. SURRENDER OF PREMISES
At the termination of this LEASE, LESSEE shall surrender the Premises to LESSOR in “broom clean” condition, or as good a condition and repair as reasonable and proper, and if not then in Default, LESSEE shall, except as provided otherwise within this LEASE, have the right to remove its equipment. furniture, trade fixtures or other personal property placed in the Premises, provided that, LESSEE promptly repairs any damage to the Premises, or the Shopping Center, caused by such removal. Any liability of LESSEE hereunder shall survive the expiration or termination of this LEASE. If LESSEE falls to remove any property belonging to it within three (3) days of LESSOR’s notice to remove such property, or subsequent to a court order directing such removal, all such property shall be deemed abandoned by LESSEE and shall become the property of LESSOR.
44. RELOCATION OF PREMISES
INTENTIONALLY OMITTED
45. NOTICES
Any notice required to be given hereunder, Including copies thereof which are to be concurrently transmitted to such parties as LESSOR or LESSEE may designate from time to time, shall be in writing, and may be given by personal delivery or by mail, and when property forwarded by mall, shall be deemed sufficiently given five (5) days following the date transmitted by registered or certified mail, postage prepaid, return receipt requested. Unless LESSOR is advised in writing to the contrary, the Premises shall constitute LESSEE’S address for notice purposes herein.
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46. INABILITY TO PERFORM
This LEASE, end the obligations of LESSEE hereunder. shall not be Impaired because LESSOR 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 or other labor troubles, civil commotion, invasion, rebellion, hostllities, military or usurped power, sabotage, governmental regulations or controls, inability to obtain any material or service, energy shortages, acts of God, or by any other causes beyond the control of LESSOR. If LESSOR is unable to give possession of the Premises to LESSEE within one (1) year from the date hereof, or within one (1) year following an insured casualty to the Premises, this LEASE shall automatically terminate and LESSOR, by reason thereof, shall not be subject to any liability therefore except LESSOR shall return to LESSEE all deposit monies and any pre-paid rent which LESSOR has heretofore received from LESSEE.
47. ADVERTISING AND PROMOTIONAL FUND
INTENTIONALLY OMITTED
48. RULES AND REGULATIONS
LESSOR reserves the right to promulgate, and LESSEE hereby agrees to comply with, the Rules and Regulations for the Premises, Shopping Center, and Common Areas, induding but not limited to the following:
(a) LESSEE shall continuously keep the Premises occupied and open for business during the hours specified within Paragraph 46(i) herein.
(b) LESSEE shall load and unload goods only at such times, in such areas and through such entrances as may be designated for such purposes by LESSOR. Trailers, trucks, or other vehicles shall not be permitted to remain parked overnight in any area of the Shopping Center.
(c) LESSEE shall keep all garbage and refuse and to place same outside of the Premises prepared for collection in a manner and at times specified by LESSOR.
(d) LESSEE shall keep the outside areas Immediately adjoining the Premises clean, and not to bum, place or permit any rubbish, obstruction or merchandise in such areas.
(e) LESSEE shall keep the Premises clean, orderly, sanitary and free from objectionable odors, and insects, vermin and other pests.
(f) LESSEE shall not distribute any handbills or other advertising matter on or about any part of the Shopping Center outside of the Premises.
(g) LESSEE shall not use or operate any machinery that, in LESSOR’s opinion, is harmful or disturbing to other lessees in the Shopping Canter, nor shall LESSEE use any loud speakers, televisions, phonographs, radios or other devices in a manner so as to be heard outside of the Premises, nor display merchandise on the exterior of the Premises for sale or promotional purposes.
(h) LESSEE shall not conduct any auction, fire, bankruptcy or going out of business sale on or about the Premises.
(i) LESSEE shall be allowed to occupy the premises and operate during normal business hours and at such additional reasonable times as needed for LESSEE’s use as a Real Estate Office and related uses.
(j) LESSEE, and its employees, shall park their vehicles only in areas designated by LESSOR, LESSOR reserves the right to assess LESSEE a charge of ten dollars ($10) per day, or any pan thereof, when LESSEE, or LESSEE’S employees, use parking spaces not designated by LESSOR. Vehicles not conforming to the aforesaid requirements may be removed by LESSOR, without notice, with the cost of such removal to be paid by LESSEE. Any signage displayed on operable vehicles is restricted to a size which does not require the issuance of a permit by government authorities for use.
(k) LESSOR shall not be liable to LESSEE for any violation of the rules and regulations, or for the breach of any covenant or condition by any other lessee’s in the Shopping Center.
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49. ATTORNEY’S FEES
LESSEE shall be liable for and shall pay LESSOR for the expense of LESSOR’S attorney’s fees for any legal matter, dispute, action or proceeding provided however, in the event such action or proceeding is adjudicated, the non-prevailing party shall be liable for and shall pay the expense of the prevailing party’s attorney’s fees and court costs. If either party hereto without fault is made a party to any litigation instituted by or against any other party to this LEASE, such other party shall indemnify and hold harmless the other party against all costs and expenses, including reasonable attorney’s fees incurred in connection therewith. “Attorney’s fees”, as referred to in this LEASE, shall include fees incurred by after an occurrence of a monetary or nonmonetary Default, or after the recognition of an issue by deemed significant enough, in the exclusive judgment of, to be the basis of any legal action, whether or not such action is commenced, that seeks any type of relief or declaratory judgment, which shall include fees and expenses of its attorneys for all legal services, negotiation services and collection services through trial and appeal, and in bankruptcy court.
50. INTEREST ON PAST DUE OBLIGATIONS
Any amount due from LESSEE to LESSOR hereunder which is not paid when due shall bear interest at the highest legal rate from the due date until paid.
51. TIME OF ESSENCE
Time is of the essence with respect to the performance of each of LESSEE’S covenants of this LEASE, and the strict performance of each shall be a condition precedent to LESSEE’S rights to remain in possession of the Premises or to have this LEASE continue in effect.
52. HOLDING OVER
Should LESSEE continue occupancy of the Premises after expiration of this LEASE with the consent of LESSOR but without any written agreement between the parties, LESSEE shall become a LESSEE from month to month upon each and all of the terms herein but in no event shall any such holding over constitute a renewal or extension of this LEASE. During such holding over, LESSEE shall pay, at LESSOR’S sole discretion, Base Rent at two times the monthly amount which was payable by LESSEE immediately prior to the hold over occurrence.
53. PARTIAL INVALIDITY
Any provision of this LEASE which shall be held to be invalid, void or illegal shall in no way effect, impair or invalidate any other provision hereof, and the remainder of this LEASE shall continue in full force.
54. BROKER DISCLAIMER
LESSEE warrants it has had no dealings with any real estate broker or agents in connection with the negotiation of this LEASE except La Rosa Realty, LLC., and with respect to this transaction, Sullivan Properties is the representing agent for LESSOR. LESSOR shall be responsible for the payment of any fees or commissions due to Broker, associated with this LEASE and LESSEE agrees to indemnify and hold LESSOR harmless from and against any other fee or commission claim that may be made by another real estate broker or agent in reference to this LEASE. Commission is to be paid in accordance with separate agreement.
55. WAIVER
LESSOR’S approval of any act by LESSEE requiring LESSOR’S consent shall not be deemed to render unnecessary the obtaining of LESSOR’S approval again of any subsequent act by LESSEE that requires LESSOR’S approval.
LESSOR may, at its option, accept partial payments of Base Rent or Additional Rent without waiving any rights concerning the existence of any monetary or non-monetary Default under this LEASE, which Default shall serve and continue unaffected by the receipt of any such partial payment.
56. LEASE GUARANTY
INTENTIONALLY OMITTED
57. SUCCESSORS AND ASSIGNS
Except as otherwise provided in this LEASE, all of the covenants, conditions and provisions of this LEASE shall be binding upon and shall inure to the respective representatives, successors, and permitted assigns of LESSOR and LESSEE.
58. HEADINGS OF LESSOR AND LESSEE
The article and paragraph captions contained in this LEASE are for convenience only and do not in any way limit or amplify any term or provision hereof. The terms “LESSOR” and “LESSEE” as used herein shall include the plural as well as the singular, and the neuter shall include the masculine and feminine genders.
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59. NO ESTATE BY LESSEE
This LEASE shall only create a relationship of landlord and LESSEE between LESSOR and LESSEE. LESSEE has only a right of use for the Premises, not subject to levy or sale, and not assignable by LESSEE except as expressly provided herein.
60. ENTIRE AGREEMENT
LESSEE acknowledges it has read this entire LEASE, evidencing same by the initialing all LEASE pages. and that LESSEE understands and agrees to all of the terms and conditions contained herein. LESSEE makes no representations as to the period or periods that any other stores within the Shopping Center will be open for business, and this LEASE shall not be effected by the closing of any such businesses. LESSOR and LESSEE further acknowledge that the preparation of this LEASE has been a joint effort of each party, and the resulting document shall not, solely as a matter of judicial construction, be construed more severely against one party over the other. This LEASE, and any attached Exhibits and Addendum, constitute the entire agreement between LESSOR and LESSEE, and no prior agreement or understanding shall be effective. No provision of this LEASE may be amended except by written agreement signed by LESSOR and LESSEE.
61. GOVERNING LAW
This LEASE shall be construed, Interpreted and governed by and in accordance with the laws of the State of Florida. Any legal proceedings with respect to this LEASE shall be instituted in the Circuit Court of Orange County, and LESSEE submits itself to the jurisdiction of this court.
62. RADON GAS
Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risk to persons who are exposed to it over time. Levels of radon that exceed Federal and State guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from the Orange County public health unit. This notice is given pursuant to 404.058(8) of the Florida Statutes
63. HAZARDOUS SUBSTANCES
The term “Hazardous Substances” as used in this LEASE shall include, without limitation: flammables, explosives, radioactive materials, asbestos, polychlorinated biphenyls (PCBs), chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances or related materials, petroleum and petroleum products, and substances declared to be hazardous or toxic under any law or regulation now or hereafter enacted or promulgated by any governmental authority.
LESSEE shall not cause nor permit to occur any violation of any federal, state, or local law, ordinance, or regulation now or hereafter enacted, related to environmental conditions on, under or about the Premises arising from LESSEE’s use or occupancy therein, nor shall LESSEE cause or permit the use, generation, release, manufacture, refinement, production, processing, storage or disposal of any Hazardous Substance without LESSOR’s prior written consent, which consent may be withdrawn, conditioned, or modified by LESSOR in its sole and absolute discretion. LESSOR warrants that to its actual knowledge without further investigation, no existing Hazardous Substances exist on the Premises.
LESSEE shall indemnify, defend and hold LESSOR, its respective officers. directors, beneficiaries, shareholders, partners, agents, and employees harmless from all fines, suits, procedures, claims, and actions of every kind, and all costs associated therewith, including attorneys’s and consultants’ fees, arising out of, or in any way connected with, any deposit, spill, discharge or other release of Hazardous Substances, at or from the Premises, or which arises at any time from LESSEE’s use or occupancy of the Premises, or from LESSEE’s failure to comply with or satisfy government required action on the matter. LESSEE’s obligations and liabilities under this Paragraph shall survive the termination of this LEASE.
64. EXHIBITS AND ADDENDUM
Exhibits A, B, C, D, and E together with any fully executed Addendum, shall be attached to and made a part of the LEASE.
65. NO RECORDING
This LEASE shall not be recorded in the public records however, a Memorandum of LEASE, acceptable to LESSOR, may be executed and delivered for such purpose.
66. LAWS AND REGULATIONS
Lessee shall comply with all Federal, State, County and City laws, ordinances, rules and regulations affecting or respecting the use or occupancy of the Leased Premises by the Lessee or the business at any time thereon transacted by the Lessee.
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67. OPTION TO RENEW
LESSOR hereby grants to LESSEE an option to continue leasing the Leased Premises for one (1) period of five (5) year(s). commencing on the day following the last day of the initial term of this Lease, provided that LESSEE has not been in default under the Lease during the term of the Lease and does not go into default before the renewal term commences. LESSEE shall exercise a renewal option by serving on Landlord at least One Hundred and Eighty (180) days prior to the expiration of the initial term of this Lease, written notice from the LESSEE stating whether or not LESSEE intends to exercise said renewal option. In the event such notice states that LESSEE is not exercising its renewal option hereunder, or the notice from LESSEE is not timely received, all renewal options shall immediately cease and be thereafter null and void. During any renewal term, the terms and provisions of this Lease shall remain unchanged. Shall LESSEE exercise the option, the Base Rental rate during the five (5) year option period shall be $25.30 per square foot and Additional Rent shall be calculated based on LESSOR’s actual Operating Costs.
68. BILLBOARD
LESSOR owns the Billboard on Lee Vista Blvd. located on Lot 2 of the Vista Palms Shopping Center. LESSOR shall grant LESSEE the right to place signage on the Billboard face beginning at the Rent Commencement date for a period of six (6) months at no additional charge to LESSEE. LESSEE shall pay for cost of sign copy and installation of Billboard vinyis and LESSEE will contract directly through LESSOR’s designated sign company. LESSEE will be restricted to display advertising only related to LESSEE’s company and the sign copy design will be subject to LESSOR’s reasonable approval prior to placement.
69. PARKING
LESSOR hereby grants LESSEE exclusive use of two (2) designated parking spaces located directly In front of the premises as identified in Exhibit A. LESSEE may put signage restricting the spaces for LESSEE’s use subject to LESSOR’s prior approval. LESSEE shall have periodic use of additional parking spaces adjacent to the premises for sales meetings and other related activities however, LESSEE’s use of these spaces shall not interfere with other tenant’s reasonable use of parking spaces directly in front of their respective premises. LESSOR will assist in resolving any parking issues.
70. COMMISSION
$11,212 to La Rosa Realty, 50% due at LESSEE’s commencement of Tenant Improvement Construction and 50% balance payable upon Rent Commencement Date.
DECLARATION
LESSEE acknowledges that it is subject to the Amended and Restated Declaration of Covenants, Conditions and Restrictions recorded in Official Records Book 9495, Page 3931 of the public records of Orange County, Florida, and any amendments thereto.
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IN WITNESS WHEREOF, the parties hereto have signed and sealed this LEASE as of the day and year first above written.
| NARCOOSSEE ACQUISITIONS, LLC. | ||
| By: | ||
| Name & Title: | Robert A, Yeager, Manager | |
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Witness
STATE OF FLORIDA COUNTY OF ORANGE
Before me, this 23rd day of March 2017, personally appeared Robert A. Yeager, as Managing Member of Narcoossee Acquisitions, LLC, Landlord in the foregoing Lease, who acknowledged the signing of the Lease to be his free act and deed on behalf of the Landlord.
| Notary Public | |||
| Signed, sealed and delivered in the presence of: | LA ROSA REALTY, LLC. | ||
| By: | |||
| Witness | Name & Title: | ||
| Witness | |||
STATE OF FLORIDA COUNTY OF ORANGE
Before me, this 22nd day of March 2017, personally appeared Elvi Hebra, the President of the LESSEE in the foregoing Lease, who acknowledged the signing of the Lease to be his free act and deed on behalf of the LESSEE.
| Notary Public |
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EXHIBIT A
LOCATION OF PREMISES/SITE PLAN
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EXHIBIT B
PROPERTY LEGAL DESCRIPTION
LOT 4 AND 5 OF THE VISTA PALMS COMMERCIAL PLAT RECORDED IN PLAT BOOK 69, PAGE 37 OF THE PUBLIC RECORDS OF ORANGE COUNTY, FLORIDA.
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EXHIBIT D
LANDLORDS WORK
Las Palmas Shopping Center
Landlords Work • Vanilla Shell “A”
| FLOOR | Concrete floor with existing vinyl tile and carpeting. Bathrooms to have building standard VCT. | |
| WALLS | The demising walls to be 5/8” gypsum board over metal studs, taped sanded and ready for paint or wall covering by others. Demising wall to be 1 hr rated and extend to the underside of the deck. Bathroom walls to terminate 6” above the acoustical celling. | |
| RESTROOM | One ADA compliant restroom including wood door with building standard lockable hardware, toilet, wall hang lavatory toilet paper holder, lavatory mirror and paper towel dispenser. Ceiling to be building standard 2x4 acoustical grid. Building standard acoustical tile. Bathrooms also to be pre-wired for a small hot water heater (instahot). | |
| ELECTRIC | Two (2) 200 AMP 3 phase services with a 200 AMP 120/208 volt panel (30 CKT) to be located at the meter center with breakers provided for HVAC equipment, lighting, and code required general purpose receptacles. Junction box and 20 amp circuit will be provided for tenant’s signage. | |
| HVAC | Cooling and heating of premises to be provided by Trane roof top mounted units on the basis of one ton per 350 SF of space. Fiber board trunk distribution, diffusers (6), return air grill, and thermostat shall be provided by landlord. | |
| STOREFRONT | Metal framing and glass materials shall be utilized with one standard door per demised premises per the architects plan. | |
| REAR EXIT | Standard 3x7 metal door with metal frame and door hardware. Door to be painted per architects plan. | |
| FIRE SPRINKLER | A wet sprinkler system installed per local code requirements. Modifications to the sprinkler system by tenant (to be approved by landlord prior to permitting). | |
| TELEPHONE | Telephone service conduit (1”) and pull string will be provided to a location within the premises from the utility exterior service box. | |
| CEILING | 2x4 acoustical ceiling grid in as is condition. | |
| LIGHTING | 2x4 Fluorescent lighting and emergency egress lights. | |
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Note: The above improvements subject to alterations and modifications by previous tenants. LESSEE to verify existing conditions and LESSOR makes no warranty or representations regarding the condition of these Improvements or suitability for LESSEE’s intended use. Subject to HVAC per paragraph 7. (Acceptance of Premises) |
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EXHIBIT E
SIGN CRITERIA
Requirements
| 1. | The Sign Criteria is designed to insure quality of signage within the Center. The requirements contained herein are intended to provide adequate exposure for the Tenant’s merchandising and identification while maintaining the overall appearance to the success of the Center. |
| 2. | In order to provide continuity and to protect the Landlord’s structure, an Tenants will be required, at their expense, to employ a Landlord approved sign contractor to install their signage. All store front signs MUST be operated from a clock timer, to be installed by tenant’s electrician. Included in this will be electrical connections to the Tenant’s individually metered service. |
| 3. | To verify compliance with the design intent of these Criteria, the Owner / Landlord reserves the right to review and approve or disapprove all proposed signs and/or graphic treatments per the Owner / Landlord’s interpretation of these Criteria, and to require revisions of any sign design which the Owner / Landlord judges to be not in compliance. |
| 4. | Tenant shall be responsible for the removal of their signs upon Termination of Lease. Fascia and other building elements shall be returned to their original condition and all penetrations associated and resulting from the Tenant’s sign installation shall be repaired by the Tenant to the satisfaction of the Owner/ Landlord. |
| 5. | The Owner / Landlord reserves the right to make periodic changes in the Criteria as it deems fit for the benefit of the Center. |
| 6. | All signs must be fabricated as described below by a Sign Contractor approved by the Owner / Landlord. |
| 7. | Each Tenant shall supply three (3) copies of scaled drawings to the Owner / Landlord for review. A copy of the permit must be provided to the Landlord prior to installing all wall signs. |
| 8. | Tenant is responsible for maintaining its sign in good operating condition including prompt replacement of burned out lighting or damaged pieces. Tenant has 24 hours to initiate repairs after being notified by the Landlord. |
| 9. | All signs shall be mounted according to Landlord approved drawings. |
| 10. | Sign company names or stamps shall be concealed if permitted by Code. |
Signs Not Allowed
No Box signs or cabinets are permitted. No exposed raceways. No animated components, flashing lights, formed plastic, injection molded box type or solid panel signs are permitted.
No exposed neon tubes will be allowed. Sintra will not be permitted for Tenant storefront signage.
Tenant shall not erect, install, paint or fix any signs, posters, cards, banners or other advertising medium to, upon or above the exterior of the building, nor on the interior or exterior of the building, nor on the interior or exterior of the glass surface of the windows and doors except as stated herein. Tenant shall be held liable and shall bear all costs for removal and/or correction of sign installation and damage to the building by signs that do not conform to the Sign Criteria or those signs required to be removed by Termination of Lease. The Owner / Landlord reserve the right to have all non-conforming signs removed regardless of the stage of erection.
No graphics what so ever may be placed on shopping centers awnings.
Additional Signage
Each Tenant may submit proposals for additional signage but approval of such will be granted only when appropriate for the storefront design requirements and if the proposal not only adheres to the requirements but also enhances, in the opinion of the project architect, the design intent. The proposed graphics may be signage on the glass or naon hanging signs. No more than 25% of window glass may be covered or blocked with graphics or neon signs. Door glass may have store name, hours of operation and telephone number using white vinyl only. No color graphics allowed on door glass. Interior border window neon will NOT be allowed.
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LESSEE is permitted up to two (2) building mounted signs for the Suite D endcap space. Calculation of the area of the wall sign to be in accordance with City of Orlando Code. For single signs, the sign area is calculated by 1 ½ times the storefront length equals the maximum allowable square footage for the building sign. End cap locations qualify for two signs to be in accordance with City of Orlando Code.
No part of a wall sign shall extend above the eave line of the roof, above the top of fascia or parapet on that side of the building.
Allowable Signage
Illuminated Flush Mount Channel letters or back-lit channel letters are the only allowable sign type. They may include a flush mount channel logo or tag line box. All returns/sides of letters MUST be black. The trim cap and face color must be spec’d on elevation drawing supplied to Landlord. Tenant’s trademark lettering style colors are acceptable at the discretion of the Landlord. Logo or tag line box must at least 25% smaller than main signage consisting of the Illuminated flush mount letters. Maximum channel letter height shall be 24” and the minimum channel letter height of 14”.
Service Door Sign: Tenant is required to have the store address and Tenant name applled to the back entrance of premises. Addresses are to be placed 4” from top of door and be white 6” inch Swiss BK BT font. Store name shall be 3” inch white vinyl lettering applied 14” inches from top of door.
Signage Construction & Illumination
Flush mount letters and logo/tag line boxes may not extend more than 6” from wall fascia. Back-lit signs are permitted with a maximum stand off of 2” Inches. Signs shall be lighted from dusk to dawn. seven days a week.
Sign fabrication and Installation shall comply with any applicable Building Codes and the National Electrical Code. All internal and external wiring, lighting and other electrical devices shall bear the UL symbol. It is the Tenant’s responsibility to verify that the sign and installation are In accordance with these requirements and with local signage ordinances.
The Sign shall be lndividual, internally Illuminated, flush mounted channel letters with neon illumination. Transformers are to be 30MA and concealed in each letter or behind the fascia sign band in the tenant space ceiling. Exposed raceways are not permitted. The letters and backing are to be total aluminum construction, with 1/8” acrylic facing. Transparent acrylic is not permitted. Faces are to be flat (not formed) translucent acrylic with color to be approved by Landlord. The color and type style of each letter face is subject to Landlord approval. Interior metal surfaces are to be painted white.
All signs, bolts, fastening and clips shall be of a non-corrosive metal or equivalent. All letters shall be fabricated using full welded construction or equivalent materials. All penetrations of the building structure required for sign installation shall be neatly sealed with caulk for a watertight condition.
All signs and their installation shall comply with city and county building and electrical codes. Sign contractor shall repair any damage to the building caused by his work. Landlord has exact paint codes. Nearest match is not acceptable.
MONUMENT SIGN
LESSEE shall be allowed to place two (2) panels, facing east and west on the Las Palmas Monument Sign located on Lee Vista Blvd. Size and location of the panels shall be provided by LESSOR upon request of the LESSEE.
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EXHIBIT F
RULES AND REGULATIONS
ALL THOSE RULES AND REGULATIONS CONTAINED IN THE DECLARATION AND IN ADDITION THE FOLLOWING:
| (a) | Al loading and unloading of goods shall be done only at such times, in the areas, and through the entrances designated for such purposes by Landlord. |
| (b) | The delivery or shipping of merchandise, supplies and fixtures to and from the Premises shall be subject to such rules and regulations as in the judgment of Landlord are necessary for the proper operation of the Leased Premises or the Center. |
| (c) | All garbage and refuse shall be kept in the kind of container specified by Landlord or duly constituted public authority, and shall be placed outside of the Leased Premises prepared for collection in the manner and at the times and places specified by Landlord. Tenant shall pay the cost of removal of any Tenant’s refuse or rubbish and maintain all common loading areas and areas adjacent to garbage receptacles in a clean manner satisfactory to Landlord. Should Tenant fail to keep the area around its garbage receptacle in a clean manner as specified by Landlord, Landlord or its agents or subcontractors may clean such area and bill Tenant for the cost of cleaning plus twenty percent (20%) overhead, to be paid upon presentation of the bill. |
| (d) | Tenant will not utilize any unethical method of business operation, nor shall any space in the Leased Premises be used for living quarters, whether temporary or permanent. |
| (e) | Tenant shall have full responsibility for protecting the Leased Premises end the property located therein from theft and robbery, and shall keep all doors and windows securely fastened when not in use. |
| (f) | No radio or television or other similar device shall be installed without first obtaining in each instance Landlord’s prior consent in writing which shall not be unreasonably withheld. No aerial shall be erected on the roof or exterior walls of the Leased Premises or on the grounds without, in each instance, the prior written consent of Landlord which consent may be denied or qualified in the sole unfettered discretion of Landlord. Any aerial so installed without such written consent shall be subject to removal without notice at any time without liability to Landlord, and the expenses, involved in said removal shall be charged to and paid by Tenant upon demand. |
| (g) | No loudspeakers, televisions, phonographs, radios or other devices shall be used in a manner so as to be heard or seen outside of the Leased Premises without the prior written consent of Landlord which consent may be denied or qualified in the sole unfettered discretion of Landlord. |
| (h) | Tenant shall maintain the Inside of the Leased Premises at a temperature sufficiently high to prevent freezing of water in pipes and fixtures inside the Premises. |
| (i) | The plumbing facilities shall not be used for any other purpose than that for which they are constructed, and no foreign substance of any kind shaft be deposited therein, and the expense of any breakage, stoppage or damage resulting from a violation of this provision shall be borne by Tenant. |
| Tenant shall not burn any trash or garbage of any kind in or about the Leased Premises, the Center, or within one mile of the outside property lines of the Center. |
| (k) | Tenant shall not cause or permit any unusual or objectionable odors to be produced upon or permeated from the Leased Premises, nor shall Tenant vent any cooking fumes or odors into the interior of the building. |
| (l) | Tenant shall not permit (unless Tenant is planning on going out of business), allow or cause any public or private auction, “going-out-of-business”, bankruptcy, distress, fire or liquidation sale in the Leased Premises. It is the intent of the preceding sentence to prevent the Tenant from conducting its business in any manner that would give the public the impression that it is about to cease its operation, and Landlord shall be the sole judge as to what shall constitute a “distress - type” sale. |
| (m) | The sidewalk, entrances, passages, quarters and halls shall not be obstructed or encumbered by a Tenant or used for any purpose other than ingress or egress to and from the Leased Premises. |
| (n) | No sales tables, merchandise displays, signs, vending machines, pay phones or other articles shall be put in front of or affixed to any part of the exterior building, nor placed in the hells, common passageways, corridors, vestibules or parking areas without the prior written consent of Landlord which consent may be denied or qualified in the sole unfettered discretion of Landlord. |
| (o) | Tenant shall not erect or maintain any barricades or scaffolding which may obscure the signs, entrances or show windows of any other Tenant in the Center, or tend to interfere with any such other tenant’s business. |
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| (p) | Tenant shall not create or maintain nor allow others to create or maintain, any nuisances, including without limiting the foregoing general language, loud noises, sound effects, bright lights, changing, flashing, flickering or lighting devices or similar devices, smoke or dust, the effect of which will be visible from the exterior of the Leased Premises. |
| (q) | Landlord reserves the right to waive any rule in any particular instance, or as to any particular person or occurrence, and further, Landlord reserves the right to amend and rescind new rules to the extent Landlord, in its sole judgment, deems suitable for the safety, care and cleanliness of the Center and the conduct of high standards of merchandising and services therein. Tenant agrees to conform to such new or amended rules upon receiving written notice of the same. This provision will only be in effect prior to lease renewal or if Tenant agrees to any changes in rules. Tenant shall not unreasonably disagree with any changes in rules. |
| (r) | Landlord may from time to time impose parking requirements, including the designation of specific areas in which vehicles owned by Tenant, it’s , officers. employees and agents must be parked. If Landlord shall designate such parking areas, and if any vehicle of Tenant or permitted concessionaire, officer, employee or agent of Tenant is parked in any other portion of the Center, Tenant shall pay to Landlord upon demand the sum of Twenty-Five and 00/100 Dollars ($25.00) for each such vehicle fur each day, or part thereof, such vehicle is so parked, and Tenant hereby authorizes Landlord to tow or cause any such vehicle to be towed from the Center, and agrees to reimburse Landlord for the cost thereof upon demand, and to otherwise indemnify and hold Landlord harmless with respect thereto. |
| (s) | No forklift, tow truck, or other powered freight handling machines may be used in the building except in such a manner and in those areas of the building as approved by the Landlord in writing. |
| (t) | No animals of any kind may be kept on the Leased Premises by Tenant or its employees except as specifically approved by the Landlord in writing. |
| (u) | Tenant shall use, at Tenant’s cost, such peat extermination contractors as Landlord may direct and at such time intervals as Landlord may require if and only If a pest problem is created by Tenant. |
-22-
Exhibit 10.136
FIRST AMENDMENT TO LEASE AGREEMENT
THIS FIRST AMENDMENT TO LEASE AGREEMENT (“First Amendment’’) is made and entered into this ____ day of ____, 2020 by and between NARCOOSSEE ACQUISITIONS, LLC, (“Lessor”), and LA ROSA REALTY, LLC, (hereinafter referred to as “Lessee”),
W I T NE S S E T H;
WHEREAS, Lessee and Lessor entered into that certain Lease dated April 1, 2017 (“Lease”);
WHERE AS, Due to the COVID-19 pandemic, Lessee has requested that Base Rent be partially deferred for a limited period of time, and Lessor has consented to the same, subject to the deferred Base Rent being repaid by Lessee in six equal monthly payments from July 2020 through December 2020 in conjunction with the current Rent due that month;
WHEREAS, Lessor and Lessee agree to modify and amend the Lease upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual terms and conditions herein contained, the parties hereby agree as follows:
1. Capitalized Terms. Except to the extent specifically set forth in this First Amendment to the contrary, all capitalized terms in this First Amendment shall have the meaning and definition for said terms set forth in the Lease.
2. Rent Modification and Deferment. Lessee and Lessor agree that for the months of May and June, 2020. fifty percent (50%) of the Base Rent due Lessor under the terms of the Lease shall be deferred, and the amount deferred amortized equally and paid over six (6) months from July 2020 through December 2020 along with each monthly Rent payment as listed on Exhibit “A”. Fifty percent (50%) of the Base Rent and all other charges, costs and payment obligations due from Lessee under the Lease (including but not limited to, all CAM, Taxes and Insurance and other items defined as “Additional Rent” under the Lease), shall be paid by Lessee to Lessor in accordance with the terms of the Lease. Lessor’s obligation to defer payment of the Base Rent as provided in this section is absolutely contingent upon the timely payment of each payment of Base Rent including the applicable amortized portion of the deferred Base Rent, and there being no other breach or default of Lessee under this Lease at any time (collectively “Post Amendment Default”). If a Post Amendment Default occurs then Lessor, without any prior notice to Lessee of any kind will have the right to declare an immediate default of the Lease and accelerate all Base Rent and other payments due for the remaining term of the Lease and avail itself of any and all remedies it may have at law or in equity.
3. Release of Claims. Lessee and each Guarantor (if any) signing this First Amendment (collectively, “Obligors”) each hereby expressly waive, release and absolutely and forever discharge Lessor and their present and former members, managers, officers, employees, attorneys, insurers, and agents, and their heirs, personal representatives, successors and assigns, from any and all liabilities, claims, demands, actions and causes of action, whether known or unknown, liquidated or unliquidated, and whether contingent or matured, direct or indirect, that Obligors, or any of them may now have or have had prior to the date hereof, or that may hereafter arise with respect to acts, omissions or events occurring prior to the date hereof, arising out of, or in any way connected with, the Lease, and any Amendments thereto between Lessee and Lessor, or any service that is associated with the Lease or Lessee’s occupancy of the Premises or relationship with Lessor.
4. Binding Effect. Except as hereby amended by this First Amendment, the Lease shall remain in full force and effect. The Lease and this First Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.
5. Final Agreement. The persons and entities signing below (“Party”, or collectively, the “Parties”) acknowledge and agree that each Party’s execution of this First Amendment constitutes acknowledgment that such Party (i) agrees that there are no oral agreements relating to this First Amendment or the Lease, (ii) agrees that agreements will be binding upon Lessor only if in writing and signed by Lessor, and (iii) acknowledges receipt of the following Notice, and to the fullest extent allowed by law, agrees to be bound by the terms of this First Amendment and this Notice:
NOTICE: THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THIS FIRST AMENDMENT CONSTITUTE AN AMENDMENT TO THE LEASE AND REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES WITH REGARD TO AMENDING THE LEASE, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THE LEASE OR THIS FIRST AMENDMENT.
6. Counterparts. This First Amendment may be executed in several counterparts, each of which shall be deemed an original, but all of which counterparts collectively shall constitute one (1) instrument representing this First Amendment between the parties
7. Confidentiality. Lessee and its representatives, employees, agents, attorneys and assigns (collectively “Lessee Parties”) shall at all times hold in strictest confidence the existence of this First Amendment, the terms and other content hereof, the existence of any communications between Lessor and Lessee regarding this First Amendment or the Lease or Lessee’s request from Lessor for an amendment to the Lease. (“Confidential Information”). Lessee, specifically, will not communicate in any manner with any other tenant, owner or occupant of the Shopping Center, or agent or representative thereof, about any Confidential Information. In addition, except to the extent required to disclose by law, the Lessee Parties shall hold in strictest confidence the Confidential Information. Lessee will be liable to Lessor for any breach of this Section by Lessee or any Lessee Party. Lessor will have all remedies against Lessee, at law and in equity in the event of a breach of this Section by Lessee or any of the Lessee Parties and Lessor will have all remedies against Lessee at law and in equity in the event of a breach of this Section by Lessee or any of the Lessee Parties. Purchaser acknowledges that in the event of a breach or threatened breach by Lessee or any Lessee Party of this paragraph, Lessor shall be entitled to an injunction restraining Lessee or any Lessee Party from disclosing, in whole or in part, such confidential information. Nothing herein shall be construed as prohibiting Seller from pursuing any other available remedy at law or in equity for such breach or threatened breach.
8. PPP Loan. Lessee represents and warrants to Lessor that (i) it has applied for a Paycheck Protection Program Loan (“PPP Loan”) and will make a good faith effort to complete the PPP Loan process.
9. Representation and Warranty. Lessee and Guarantors (if any) have no claim, defense, setoff, or counterclaim against Lessor or any of Lessor’s officers, directors, employees, agents, or attorneys. To the extent such claims, defenses, setoffs or counterclaims exist as of the date of the Lease they are hereby waived and released by Lessee and Guarantors in consideration of Lessor executing this First Amendment.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Lease Agreement under their respective seals as of the day and year first above written.
Signed, sealed and delivered in the presence of:
| Witnesses: | LESSOR: | |||
| NARCOOSSEE ACQUISITIONS, LLC, a | ||||
| Florida limited liability company | ||||
| Name: | By: | |||
| Robert A. Yeager, Manager | ||||
| Name: | ||||
| LESSEE: | ||||
| LA ROSA REALTY, LLC, a | ||||
| Florida limited liability company | ||||
| Name: | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Name: | ||||
Exhibit “A”
Monthly Rent Payment Amounts
La Rosa Realty, LLC
| *Monthly Rent amount due 5/2020 | $ | 6,201.00 | ||
| *Monthly Rent amount due 6/2020 | $ | 6,201.00 | ||
| ***Monthly Rent amount due 7/2020 | $ | 11,483.33 | ||
| ***Monthly Rent amount due 8/2020 | $ | 11,483.33 | ||
| ***Monthly Rent amount due 9/2020 | $ | 11,483.33 | ||
| ***Monthly Rent amount due 10/2020 | $ | 11,483.33 | ||
| ***Monthly Rent amount due 11/2020 | $ | 11,483.33 | ||
| ***Monthly Rent amount due 12/2020 | $ | 11,483.33 |
| Calculation Amounts | ||||
| Monthly Base Rent: | $ | 7,475.00 | ||
| Monthly Operating Expenses | $ | 2,112.50 | ||
| Number of Months deferred: | 2 | |||
| Total amount deferred: | $ | 7,475.00 | ||
| Monthly Deferred Amount | $ | 3,737.50 | ||
| Monthly Amortized amount: (over 6 months) | $ | 1,245.83 | ||
| * | Includes FL sales Tax |
| ** | Includes Total monthly Rent plus payback amount |
Exhibit 10.137
LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into this 10th day of March 2014, by and between WCDO, LLC, whose address is 1805 W. Colonial Drive, Suite E-2, Orlando, FL 32804, hereinafter “Landlord”, and The Executive Group, whose address is 1420 Celebration Blvd., Suite 101 , Celebration, FL 34747, hereinafter “Tenant”; joined by Alexandra Schmidt, Derell and Jamie Roberson, Husband and Wife, and Reinald Zapata and Viviana Figueroa, Husband and Wife, hereinafter called “Guarantors”.
WITNESSETH:
1. Premises. Landlord, in consideration of the rents, covenants, agreements and conditions hereinafter contained, does hereby lease unto said Tenant the premises described as: Unit B-1, at 1805 W. Colonial Dr., Orlando, FL 32804, hereinafter called the “Premises” which is identified on the attached sketch.
2. Term. The Premises are leased for a term of three (3) years, commencing on the 1st day of April, 2014,_and terminating on the 31st day of March, 2017, or such earlier date as this Lease may terminate as hereinafter provided. Occupancy will not be provided until all conditions of this lease are satisfied, including: (i) Insurance as required by Paragraph 16; (ii) Landlord’s receipt of the Deposit required by Paragraph 14 and the first month’s rent.
3. Option. In addition to the original term under this Lease Agreement, the Landlord grants to the Tenant one (1) three (3) year option which may be exercised by the Tenant only upon the giving of ninety (90) days’ written notice prior to the expiration of the original term. Time is of the essence to comply with this notice requirement.
4. Base Rent. The Base Rent for each year of the original term hereof is the sum of Thirteen Thousand Two Hundred Dollars & NO/100 ($13,200.00) DOLLARS which is payable in equal monthly installments, plus sales tax, in advance on the first (1st) day of each calendar month during the term in the amount of One Thousand One Hundred Dollars & NO/100 ($1,100.00) DOLLARS, plus sales tax except the first such installment to be due on the 1st day of April, 2014. - Prepaid in advance upon execution of lease. ($1,171.50)
The Base Rent shall be increased each year during the initial term and all options and or extensions commencing on each one-year anniversary date from the commencement of the Lease by the greater of three (3%) percent of the Base Rent for the prior year or the percentage increase from the prior year in the Consumer Price Index for Urban Wage Earners and Clerical Works issued by the U.S. Department of Labor or similar index selected by Landlord if it is not available.
5. Use. Tenant shall use and occupy the premises as a professional use as a real estate office and for no other purpose. Tenant shall not make any noise, emit any odors or allow any other action which interferes with the use of any other units in the building.
6. Examination of Premises. Except for any work which Landlord agrees to perform as set forth in Exhibit A, Tenant hereby represents and warrants to Landlord that Tenant has carefully examined and fully familiarized itself with the condition of the Premises and has agreed to accept, and has in fact accepted, the same “AS IS,” “WHERE IS,” in its existing condition and state of repair and without any representation or warranty by or on behalf of Landlord as to (a) MERCHANTABILITY, (b) HABITABILITY, (c) fitness for Tenant’s intended purposes or any other particular purpose, (d) the condition or state of repair of the Premises, (e) the absence or presence of any structural or other defects or deficiencies in the Premises, or (f) any other matter or aspect pertaining to the Premises or the use or condition of either of same, and without any promise or undertaking on the part of Landlord or its agents, to make any improvement, alteration or repair to the Premises. Tenant hereby expressly covenants and agrees that Landlord shall, under no circumstances, be liable for any latent, patent or other defects or deficiencies in the Premises. Tenant acknowledges that Landlord has entered into this Lease with Tenant at the rental and upon the terms and conditions set forth herein in material reliance upon the representations, warranties and undertakings of Tenant as set forth in this section.
7. Landlord’s Work Prior to Commencement of Lease: In the event Landlord has agreed to perform any work on the Premises prior to delivery of possession to Tenant, then the work is described in Exhibit A and is checked as being applicable in Paragraph 47. If Exhibit A is not applicable, then the Landlord is not performing any work on the premises and Tenant accepts the Premises as it now exists.
8. Tenant’s Work: Tenant agrees to pay the full cost for and perform the work to the Premises as set forth in Exhibit B and all other work subsequently approved in writing by Landlord in accordance with the construction requirements set forth in Exhibit C and the Construction Rules and Regulations set forth in Exhibit D which must be signed by each contractor who performs work for Tenant.
9. Tenant Maintenance and Repairs: Tenant shall keep and maintain at Tenant’s sole expense not to be reimbursed by Landlord the interior of the Premises, together with all fixtures and all electrical, plumbing, heating, air conditioning and all other mechanical and other installations which service the interior, all doors, and all plate glass and door and window glass, in good working order and proper repair, using materials and labor of kind and quality equal to or better than the original work, and shall surrender the Premises at the expiration or earlier termination of this Lease in as good condition as when received, excepting only and solely deterioration caused by mere ordinary wear and tear and damage by fire or other casualty of the kind actually insured against by Tenant in standard policies of fire insurance with extended coverage. Tenant shall retain the services of a licensed HVAC contractor, acceptable to the Landlord, to maintain, inspect and service the HVAC unit(s) for the Premises. The HVAC contractor shall inspect the unit(s) not less then four times per calendar year and provide a written report of each inspection to Landlord. A copy of Tenant’s HVAC maintenance agreement shall be furnished to Landlord upon Tenant possession of Premises.
10. Real Property Taxes. The Landlord shall pay all real property taxes and assessments for the Premises.
11. Landlord’s Liability: It is expressly agreed that the Tenant shall not be entitled to assert a damage claim against Landlord seeking loss of income, lost profits, lost customers or other consequential damages for any type of claim. In the event Landlord breaches this Lease and does not cure the breach within 30 days after receipt of written notice from Tenant, (or to commence to cure default if the default can not be reasonably cured within 30 days) then Tenant’s sole remedy shall be the right to terminate this Lease and to seek damages against Landlord for damages which shall be limited to the actual cost to Tenant of obtaining substantially similar premises which shall not exceed three (3) times the amount of the monthly Base Rent. Tenant waives the right to seek all other types of damages. Notwithstanding any provision contained in this Lease or elsewhere now or hereafter to the contrary, Tenant agrees and acknowledges that Tenant shall look solely and only to Landlord’s interest in the leasehold in the unit leased to Tenant in the event of any default or breach by Landlord with respect to any of the terms and provisions of this Lease on the part of the Landlord to be performed or observed; and no other assets whatsoever of Landlord shall be subject to liability, levy, execution, or other judicial process or award for the satisfaction of Tenant’s claim(s) of any kind or sort whatsoever. In the event of a sale or conveyance by Landlord of the building or a foreclosure by any creditor of Landlord, the same shall operate to release Landlord from any liability upon any of the covenants or conditions, express or implied, herein contained in favor of Tenant, and Tenant shall solely look to the new owner for any claims under this Lease.
12. Utilities and Personal Property Taxes. In addition to Base Rent, Tenant shall pay all personal property taxes and assessments which may be levied or assessed on all personal property of Tenant located in or about the Premises. It is further understood and agreed the Tenant shall be responsible for all utilities which shall be separately metered including water, electric, and sewer, and shall be responsible for the insurance requirements set forth in this Lease.
13. Rent and Late Charges. The term “rent” as used in this Lease shall mean and include Base Rent and all other sums payable hereunder to Landlord. All rent shall be paid to Landlord at the address listed herein or at such other place or to such other person as Landlord may from time to time direct in writing, or as is otherwise provided herein, in lawful money of the United States of America. In the event Tenant fails to make any such payment when the same becomes due, then in addition to all rights, powers and remedies provided herein, by law or otherwise in the case of nonpayment of rent, Landlord shall be entitled to recover from Tenant the greater of 10% of the amount due or$150.00, whichever is greater, to reimburse Landlord for its overhead and administration charges in connection with such late payment. Tenant acknowledges that these charges are fair and reasonable. Tenant will also pay to Landlord on demand, interest at the rate of 18% per annum (or the highest rate permitted by applicable law, whichever is lower) on all overdue installments of rent and on overdue amounts relating to obligations which Landlord shall have paid on behalf of Tenant, in each case from the due date thereof until paid in full. If any check tendered by Tenant in payment of any sum due pursuant to this Lease shall be returned for insufficient funds or for any other reason not the fault of Landlord, then Tenant shall pay to Landlord, a processing fee equal to the greater of: (i)$40.00; or (ii) five percent (5%) of the face amount of the returned check, not to exceed the maximum amount permitted by law. Should Tenant’s check be returned or dishonored on more than one occasion during the Term of this Lease (or any renewal or extension thereof), then, from and after the dishonor or return of the second of Tenant’s checks, all subsequent payments due hereunder during the remainder of the Term of this Lease (and all renewals and/or extensions thereof) shall, at Landlord’s option, be tendered to Landlord by certified or cashier’s check.
14. Deposit. Upon execution of this Lese, the Tenant shall pay to Landlord the first month’s rent with sales tax plus a security deposit of $1,171.50 to secure Tenant’s lease obligations under this Lease. The deposit may be deposited into Landlord’s account, commingled with Landlord’s funds and used by Landlord, in its sole discretion, to pay any of Tenant’s obligations under this Lease. If Tenant fully and timely performs its obligations under this Lease, the deposit amount shall be returned to Tenant within thirty (30) days after the termination of the Lease.
15. Waste. Tenant shall commit no act of waste and shall take good care of the Premises and the fixtures and appurtenances therein and shall, in the use and occupancy of the Premises, conform to all laws, orders, and regulations of the federal, state, and municipal governments or any of their departments. During the terms of this Lease, Tenant shall make all necessary repairs to the Premises to keep them in good condition and repair. All improvements made by Tenant to the Premises which are so attached to the Premises shall become the property of Landlord upon installation. Not later than the last day of the term, Tenant shall, at Tenant’s expense, remove all of the Tenant’s personal property and those improvements made by Tenant which have not become the property of the Landlord, including trade fixtures, cabinet work, moveable paneling, partitions, and the like; repair all injury done by or in connection with the installation or removal of such property and improvements; and surrender the premises in as good condition as they were at the beginning of the term, normal wear and tear, damage by fire, the elements, casualty, or other cause not due to the misuse, negligence, or intentional acts of Tenant or Tenant’s agents, employees, visitors, or licensees, excepted. All property of Tenant remaining on the premises after the last day of the term of this Lease shall be conclusively deemed abandoned, may be removed and destroyed by Landlord and Tenant shall reimburse Landlord for the cost of such removal and destruction. At Landlord’s option, all abandoned property shall become Landlord’s property.
16. Hazardous Waste. Tenant hereby represents and covenants that Tenant will not use, handle, store, transport or dispose of or permit the use, handling, storage, transportation or disposal of hazardous or toxic substances, as those terms may be defined or used in any local, state, or federal environmental, hazardous substance or land or water use laws or regulations onto the premises, and in the event of any use or spillage of such substance, Tenant agrees: (i) to notify Landlord immediately of any contamination, claim of contamination, loss or damage; (ii) after consultation and approval by Landlord, to clean up the contamination in full compliance with all applicable statutes, regulations, and standards; and (iii) to indemnify, defend and save harmless Landlord from and against all loss, costs, expenses, fines, penalties, reimbursement costs and damages (including attorney’s fees) arising as a result of any such contamination, claim of contamination, loss or damage or Tenant’s violation of any provision of local, state, or federal law, including common law, which prohibits or regulates the use, handling, storage, transportation or disposal of a hazardous or toxic substance or which requires removal or remedial action and the costs of removal or remedial action of such hazardous or toxic substance, including any fines levied in connection therewith, whether such costs or expenses are incurred by the Landlord or any local, state, or federal governments or by other persons and including any personal injuries suffered in connection therewith. This provision shall survive the termination of the Lease.
17. Alterations and Repairs. Tenant shall not, without first obtaining the written approval of the Landlord, make any alterations, repairs, additions, or improvements in, to, or on and about the Premises.
18. Insurance. The Tenant shall carry fire and extended coverage insurance insuring the building for its full insurable value, including Tenant’s interest in any of Tenant’s improvements in the Premises, and Tenant’s interest in Tenant’s office furniture, equipment and supplies, naming Landlord as an additional named insured. Tenant waives any right of action against Landlord for loss or damage covered by such insurance, and the policy shall permit such waiver.
In addition thereto, Tenant shall at all times during this Lease maintain in full force and effect at its sole cost and expense a broad form comprehensive general public liability insurance policy that meets the following requirements:
a. The Insurance Company shall have a minimum rating of A by A.M. Best Company. The Insurance Company referenced should have a minimum financial size “V,” which is $10 to $25 Million of U.S. dollars of reported capital, surplus and conditional reserve funds.
b. The policy minimum limits shall be One Million ($1,000,000) CSL per occurrence I Two Million ($2,000,000) per aggregate.
c. The insurance policy shall be a Comprehensive General Liability: Combined Single Limit (CSL) and shall include the following coverages:
| ● | Premises Operations |
| ● | Aggregate Per Project/Location |
| ● | Products Completed Operations |
| ● | Contractual Liability |
| ● | Broad Form Property Damage |
| ● | Personal Injury |
d. A certificate of insurance shall be provided to Landlord upon signing of the Lease. The certification of insurance shall provide that the insurance policy cannot be cancelled without thirty (30) days prior written notice to Landlord.
e. The Additional Insureds under the policy shall be WCDO, LLC, Paul and Sally Curtis Family Limited Partnership, Paul Curtis Realty, Inc., Village Property Management, Inc. and their officers, directors, members and employees and their successors and assigns.
Tenant shall furnish Landlord, on or before Tenant takes occupancy, original policies or certificates of insurance evidencing the coverages required by this Lease. All policies required hereunder shall contain an endorsement providing that the insurer will not cancel or materially change the coverage of such policy or policies without giving ten (10) days prior written notice thereof to Landlord.
In the event Tenant fails to comply with any of the provisions of this Section of the Lease, then Landlord, in addition to all other remedies under this Lease and at law, shall be entitled to an immediate judicial injunction prohibiting Tenant from being in possession of the Premises and from conducting any business in the Premises.
19. Indemnification of Landlord. Tenant shall defend, indemnify and hold Landlord and its officers, employees and representatives harmless from all liability, costs, expenses, damages and claim for damages by reason of any injury to any person or persons, including Tenant, or property of any kind whatever and to whomsoever belonging, including Tenant’s, from any cause or causes whatsoever while in, upon or in any way connected with the Premises, adjacent sidewalks, parking, lot, building and other property of Landlord during the term of this Lease and any extension hereof or any occupancy hereunder, including all claims occasioned wholly or in part by any act or omission of Tenant, its agents, customers, invitees, principals, officers, directors or employees.
20. Accumulation of Waste or Refuse Prohibited. Tenant shall not permit the accumulation of waste or refuse matter on the premises or anywhere in or near the building. Should Tenant, in Landlord’s judgment, violate the provisions of this paragraph, Landlord may arrange for the removal of said waste or refuse matter and remit the invoice for same to Tenant. Tenant’s failure to remit full payment within seven (7) days of the amount of said invoice shall constitute a default under this Lease.
21. Destruction of Premises. If during the term hereof the building in which the Premises are situate shall be damaged or destroyed by fire, act of God, strikes, riots, or public commotion, the Tenant shall give immediate notice thereof to Landlord, and Landlord may elect to repair same, provided such repairs can be made within one hundred twenty (120) days by working in the usual and ordinary manner and under the laws and regulations of the federal, state, county or municipal authorities and are paid for by insurance proceeds, but such destruction or damage shall in no way annul or avoid this Lease, except that the Tenant shall be entitled to a proportionate reduction of rent while such repairs are being made, such proportionate reduction to be based upon the extent to which the making of such repairs shall interfere with the business carried on by the Tenant in said premises. In the event that the Landlord does not so elect to make such repairs, this Lease may be terminated by Lessor.
If, at the time Landlord shall have elected to cancel and terminate this Lease as in this section provided, and if Tenant shall not have been in default as to any terms, conditions, or agreements under this Lease, Landlord shall restore to Tenant any unearned rents paid in advance by Tenant or other money or property deposited by Tenant as security for the performance of this Lease by Tenant, less any amounts due Landlord from Tenant, whether for rent, damages, or otherwise.
22. Condemnation. If any part of the Premises shall be taken or condemned for a public or quasi-public use, and a part thereof remains which is susceptible of occupation hereunder, this Lease shall, as to the part so taken, terminate as of the date title shall vest in the condemnor, and the rent payable hereunder shall be adjusted so that the Tenant shall be required to pay for the remainder of the term only such portion of such rent as the value of the part remaining after condemnation bears to the value of the entire premises at the date of condemnation; but in such event, Landlord shall have the option to terminate this Lease as of the date when title to the part so condemned vests in the condemner. If all of the Premises, or such part thereof be taken or condemned so that there does not remain a portion susceptible for occupation hereunder, this Lease shall thereupon terminate. If a part or all of the Premises be taken or condemned, all compensation awarded upon such condemnation or taking shall go to the Landlord, and Tenant shall have no claim thereto, and the Tenant hereby irrevocably assigns and transfers to the Landlord any right to compensation or damages to which the Tenant may become entitled during the term hereof by reason of the condemnation, taking, or appropriation of all or a part of the Premises. A private sale in lieu of condemnation or taking shall constitute a taking or appropriation for purposes of this paragraph.
23. Assignment and Subletting. Tenant shall not, without first obtaining the prior written consent of Landlord which consent Landlord may withhold in its sole discretion, assign, sublet, mortgage, pledge, or encumber this Lease, in whole or in part, or sublet the premises or any part thereof. Landlord may assign the Lease. In the event that Landlord assigns the Lease, the Landlord shall be relieved of further liability under the Lease and Tenant shall look solely to the assigned party for obligations under this Lease.
24. Tenant’s Default. In the event the Tenant shall default in the payment of Base Rent, Additional Rent, or any other sums payable by the Tenant hereunder (“monetary default”) and such monetary default shall continue for a period of three (3) days, or if the Tenant shall default in the performance of any other covenants or agreements of this Lease (“non-monetary default”) and such non-monetary default shall continue for ten (10) days, or if the Tenant should become bankrupt or insolvent or any debtor proceedings be taken by or against the Tenant, then and in addition to any and all other legal remedies and rights, the Landlord may declare the entire balance of the rent for the remainder of the term to be due and payable and may collect the same by distress or otherwise, may terminate the Lease, may terminate Tenant’s right to possession without terminating the Lease or take any other remedy allowed by Florida law, and Landlord shall have a lien on the personal property of the Tenant which is located in the Premises. Landlord may, without first obtaining a distress warrant, lock up the Premises in order to protect said interest in the secured property, or the Landlord may terminate this Lease and retake possession of the Premises, or enter the Premises and relet the same without termination, in which latter event the Tenant covenants and agrees to pay any deficiency after Tenant is credited with the rent thereby obtained less all repairs and expenses (including the expenses of obtaining possession), or the Landlord may resort to any two or more of such remedies or rights, and adoption of one or more of such remedies or rights shall not prevent the enforcement of others concurrently or thereafter.
The Tenant also covenants and agrees to pay all attorney’s fees and costs and expenses of the Landlord, including court costs, if the Landlord employs an attorney to collect rent or enforce other rights of the Landlord herein in the event of any breach as aforesaid, and the same shall be payable regardless of whether collection or enforcement is effected by suit or otherwise.
25. Strict Performance. The failure of Landlord to insist on strict performance of any covenant or condition hereof or to exercise any option contained herein shall not be construed as a waiver of such covenant, condition, or option in any other instance. This Lease may not be modified or terminated except in writing signed by Landlord.
26. Liens. Tenant shall not have any authority to create any liens for labor or material on or against the Landlord’s interest in the Premises or Landlord’s building and all persons contracting with the Tenant for the destruction or the removal of any building or for the erection or for the erection, installation, alteration, or repair of any building or other improvements in, on or to the Premises; and all material men, contractors, subcontractors, sub subcontractors, mechanics, and laborers are hereby charged with notice that they must look solely and only to the Tenant’s interests only in the Premises to secure the payment of any bill for work done or material furnished during the rental period created by this Lease and, specifically, not to the Landlord or the Landlord’s Interest. Tenant agrees that it will include the language of this paragraph in any contract or agreement for any work done by Tenant in the Premises. Tenant shall, within ten (10) days after notice from Landlord, discharge any mechanic’s liens for materials or labor claimed to have been furnished to the Premises on Tenant’s behalf by posting an appropriate bond.
27. Right of Entry. Landlord may enter the Premises at any reasonable time, on reasonable notice to Tenant (except that no notice need be given in case of emergency) for the purpose of inspection or the making of such repairs, replacements, or additions in, to, or on and about the Premises or the building, as the Landlord deems necessary or desirable.
28. Amendment. No representations or promises shall be binding on the parties hereto except those representations contained herein or in a writing signed by the party making such representations or promises.
29. Covenants of Quiet Enjoyment. Landlord covenants that if, and so long as, Tenant pays the rent and any additional rent as herein provided, and performs the covenants hereof, Tenant shall peaceably and quietly have, hold, and enjoy the Premises for a term herein mentioned, subject to the provisions of this Lease.
30. Signs. The Tenant shall not place any signs or other advertising matter or material on the exterior or on the interior, where possible to be seen from the exterior, of the Premises or of the building in which the Premises are located, without the prior written consent of the Landlord which, if given, may be subsequently revoked at any time. Any lettering or signs which may be granted by Landlord in its sole discretion shall be of a type, kind, character and description to be approved by Landlord in writing.
31. Parking. Landlord shall be entitled to use a total of 4 parking spaces at the building. Landlord reserves the right to assign parking spaces to be used by Tenant and its employees, invitees and customers. Tenant shall take action to make sure that its employees, customers and invitees do not use more than the number of parking spaces assigned to Tenant by Landlord. In the event Tenant or its customers, invitees and guests violate this provision, then Tenant is subject to a fine of $25.00 per instance for each violation of this parking requirement. The payment of this fine shall not entitle Tenant to the use of additional spaces.
32. Ordinances and Regulations. The Tenant hereby covenants and agrees to promptly comply with all the rules and regulations of all governments and agencies having jurisdiction over the Premises, and with all laws, ordinances and regulations of governmental authorities wherein the Premises are located, at Tenant’s sole cost and expense.
33. Notice. Any notice required to be given hereunder shall be sufficient if given by hand delivery or overnight mail with proof of delivery, certified mail, return requested or email and fax if listed below, to the parties as follows:
| As to Landlord: | 1805 W. Colonial Drive-Ste. E-2 | |
| Orlando, FL 32804 | ||
| Fax: (407) 422-4519 | ||
| Email: clint@curtisgroupinc.com | ||
| As to Tenant: | 1420 celebration blvd | |
| Celebration, FL 34747 | ||
| Fax: 40+ 5662017 | ||
| Email: info@executivegroupfl.com |
34. Attorney’s Fees and Costs. In connection with any litigation arising out of this Lease, the prevailing party shall be entitled to recover all costs incurred, including, but not limited to, reasonable attorney’s fees and costs.
35. Radon Gas. As required by law, Landlord makes the following disclosure: “RADON GAS” - Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.
36. Multiple Counterparts. This Lease Agreement and attached exhibits may be executed in any number of counterparts, each of which shall be deemed an original, and all of such counterparts shall constitute one instrument; but in making proof of this Lease, it shall not be necessary to produce or account for more than one such counterpart. A facsimile or email signature when sent to the other party shall be deemed an original signature with the same effect as if an original document and original signature had been delivered.
37. Benefit. The provisions of this Lease shall apply to, bind, and inure to the benefit of Landlord and Tenant, and their respective heirs, successors, legal representatives, and assigns as allowed by the Lease. It is understood that the term “Landlord” as used in this Lease means only the owner, a mortgagee in possession, or a term Tenant of the building, so that, in the event of any sale of the building or of any lease thereof, or if a mortgagee shall take possession of the premises, the Landlord named herein shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder accruing thereafter, and it shall be deemed without further agreement that the purchaser, the term Tenant of the building, or the mortgagee in possession has assumed and agreed to carry out any and all covenants and obligations of the Landlord hereunder.
38. Waiver of Jury Trial and Right to Counterclaim. Landlord and Tenant shall and do hereby waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matter arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises or any emergency or other statutory remedy. Tenant further agrees that it shall not interpose any counterclaim(s) in any summary proceeding or in any action based on holdover or nonpayment of rent or any other sum payable by Tenant pursuant to the terms of this Lease but rather shall assert such counterclaim in a separate action.
39. Time of Essence. Time is of the essence of this Lease, and all provisions herein relating thereto shall be strictly construed.
40. Governing Law, Jurisdiction and Lease. This Lease shall be construed and enforced in accordance with the laws of the state of Florida. The parties agree that the State Courts in Orange County, Florida and their Appellate Courts shall have exclusive jurisdiction for all lawsuits between them.
41. Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the rent or other amounts herein stipulated shall be deemed to be other than on account of the stipulated rent and amounts due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment thereof be deemed an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such amounts or pursue any other remedy provided in this Lease.
42. Entire Agreement. This Lease and the Exhibits, Riders, Addenda and Guaranty, if any, attached hereto and forming a part hereof, set forth all the covenants, promises, agreements, conditions and understandings between Landlord and Tenant concerning the Premises, and there are no covenants, promises, agreements, conditions or understandings, either oral or written, between Landlord and Tenant concerning the Premises except those herein set forth.
43. Recordation. Tenant shall not record this Lease, or a memorandum hereof, without the prior written consent of Landlord. Any such recordation in violation of this provision shall at Landlord’s option render this Lease null and void. Tenant shall, at the request of Landlord, execute, acknowledge and deliver, at any time after the date of this Lease, a short form lease or Memorandum of Lease prepared by Landlord but the provisions of this Lease shall control the rights and obligations of the parties.
44. Corporate Tenant/Tenants. In the event the Tenant hereunder is a corporation, the persons executing this Lease on behalf of the Tenant hereby covenant and warrant that: (a) the Tenant is a duly constituted corporation qualified to do business in the state in which the Premises is located; (b) all Tenant’s franchise and corporate taxes have been paid to date; (c) all future forms, reports, fees and other documents necessary for Tenant to comply with applicable laws will be filed by Tenant when due; and (d) such persons are duly authorized, by the governing body of such corporation, to execute and deliver this Lease an behalf of the corporation.
45. Conversion to Condominium. The unit being leased to Tenant is one unit of a multi-unit building. The Landlord may elect to convert the building into condominium units and to sell other units. Tenant agrees to consent to and sign all documents as requested by Landlord which are needed in order to convert the building into condominiums.
46. Guaranty. This lease agreement is conditioned upon the Guarantors personally guaranteeing Landlord’s obligations under this Lease by their execution of the Guaranty attached as Exhibit E.
47. Exhibits. The following exhibits, if checked as applicable, are attached and made a part of this Lease:
| Applicable | Not Applicable | ||||
| A | Description of Landlord’s Work | X | |||
| B | Description of Tenant’s Work | X | |||
| C | Construction Requirements | ||||
| D | Construction Rules and Regulations | ||||
| E | Guaranty | ||||
| F | Tenant Construction Allowance Rider | X |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
| Witnesses: | Landlord: | |||
| WCDO, LCC | ||||
| Printed Name: | By: | |||
| Clinton A. Curtis, Manager | ||||
| Printed Name: | Dated: | |||
| Tenant: | ||||
| Witnesses: | ||||
| By: | ||||
| Printed Name: | Print Name: | |||
| Dated: | ||||
| Printed Name: | ||||
Exhibit 10.138
| Epiphany Property Holdings, LLC | 
|
C/O Masterpiece Property Management • 5429 Satin Leaf Ct. • Sanford, FL 32771
(407) 461-4118
1. Amendment to Lease
1.1 AMENDMENT
THIS AMENDMENT TO LEASE made and enacted this 18th day of June, 2021, by and between Epiphany Property Holdings, L.L.C., hereinafter referred to as “Landlord,” and The Executive Group, Inc., hereinafter referred to as “Tenant”; joined by Reinaldo Zapata and all Personal Guarantors.
1.2 WITNESSETH:
WHEREAS, Landlord leased the premises at 1805 W. Colonial Drive, Suite B-1, Orlando, FL 32804 to Tenant pursuant to a certain Lease dated May 14, 2014, amended this 16th day of June, 2021, hereinafter referred to as the “Lease,” the premises being more particularly described therein; and WHEREAS, the Original Lease and the Personal Guaranty to Lease dated May 14, 2014 are collectively referred to herein as the “Current Lease.” WHEREAS, Landlord wishes to amend the Lease and Tenant wishes to do the same; therefore, Landlord and Tenant agree to amend the Lease as follows:
1.3 TERM:
| 1. | The Lease shall be amended as follows: the term of the lease shall be extended for a period of three (3) years, commencing September 1, 2021 and expiring August 31, 2024. Lease rates shall be amended as follows: |
| ● | September 1, 2021 thru August 31, 2022 = $1,425.00/month + Sales/Use Taxes |
| ● | September 1, 2022 thru August 31, 2023 = $1500.00/month + Sales/Use Taxes |
| ● | September 1, 2023 thru August 31, 2024 = $1575.00/month + Sales/Use Taxes |
The additional term(s) shall commence on the day immediately succeeding the expiration date of the current lease term.
1.4 RENT AND LATE FEE CHARGES:
The Lease shall be amended as follows:
The term “rent” as used in the Lease shall mean and include Base Rent and all other sums payable hereunder to Landlord. All rent shall be paid to Landlord at the address listed herein or at such other place or to such other person as Landlord may from time to time direct in writing, or as is otherwise provided herein, in lawful money of the United States of America. Rent is due on the FIRST day of each month and considered late after the THIRD day of the month. In the event Tenant fails to make any such payment when the same becomes due, then in addition to all rights, powers and remedies provided herein, by law or otherwise in the case of nonpayment of rent, Landlord shall be entitled to recover from Tenant the greater of 10% of the amount due or $150.00, whichever is greater, to reimburse Landlord for its overhead and administration charges in connection with such late payment. Tenant acknowledges that these charges are fair and reasonable. Tenant will also pay to Landlord on demand, interest at the rate of 18% per annum (or the highest rate permitted by applicable law, whichever is lower) on all overdue installments of rent and on overdue amounts relating to obligations which Landlord shall have paid on behalf of Tenant, in each case from the due date thereof until paid in full. If any check tendered by Tenant in payment of any sum due pursuant to this Lease shall be returned for insufficient funds or for any other reason not the fault of Landlord, then Tenant shall pay to Landlord, a processing fee equal to the greater of: (i) $40.00; or (ii) five percent (5%) of the face amount of the returned check, not to exceed the maximum amount permitted by law. Should Tenant’s check be returned or dishonored on more than one occasion during the Term of this Lease (or any renewal or extension thereof), the, from and after the dishonor or return of the second of Tenant’s checks, all subsequent payments due hereunder during the remainder of the Term of this Lease (and all renewals and/or extensions thereof) shall, at Landlord’s option, be tendered to Landlord by certified or cashier’s check.
1.5 NOTICE TO VACATE:
Tenant shall provide to Landlord ninety (90) days written notice prior to the expiration of this lease agreement. Time is of the essence to comply with this notice requirement.
1.6 HOLDING OVER:
If Tenant remains in possession after expiration of the term, with Landlord’s acquiescence and without any written agreement between the parties, Tenant shall be a tenant at will and such tenancy shall be subject to all the provisions hereof, except that the monthly rental shall be at 150% of the then current rental rate for the entire holdover period and there shall be no renewal of this Lease by operation of law. Nothing in this paragraph shall be construed as consent by Landlord to the possession of the premises by tenant after the expiration of the term.
1.7 LEASE PROVISIONS:
Except for the TERMS noted above in Section 1.3, the Sales and Use Taxes imposed by the State of Florida and Orange County, and the provisions noted in Sections 1.4-1.7 of this Amendment to the Lease, All other terms and provisions of the original dated May 14, 2014 shall remain in full force and effect.
1.8 ACCEPTANCE OF AMENDMENT TO LEASE:
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment to Lease as of the date first above written, each party being duly authorized to do so.
By signing below, you acknowledge and agree to the terms in Section 1.
X
Lessee
| Epiphany Property Holdings, LLC |
|
C/O Masterpiece Property Management • 5429 Satin Leaf Ct. • Sanford, FL 32771
(407) 461-4118
2. Sign and Accept
2.1 ACCEPTANCE OF LEASE
This is a legally binding document. By typing your name, you are consenting to use electronic means to (i) sign this contract (ii) accept addenda. You can access and download this contract at any time in your portal.
X
Lessee
X
Lessor
3
Exhibit 10.139
| Epiphany Property Holdings, LLC |
|
C/O Masterpiece Property Management • 5429 Satin Leaf Ct. • Sanford, FL 32771
(407) 461-4118
1. Amendment to Lease
1.1 AMENDMENT
THIS AMENDMENT TO LEASE made and enacted this 18th day of June, 2021, by and between Epiphany Property Holdings, L.L.C., hereinafter referred to as “Landlord,” and The Executive Group, Inc., hereinafter referred to as “Tenant”; joined by Reinaldo Zapata and all Personal Guarantors.
1.2 WITNESSETH:
WHEREAS, Landlord leased the premises at 1805 W. Colonial Drive, Suite B-2, Orlando, FL 32804 to Tenant pursuant to a certain Lease dated June 21, 2016, amended this 16th day of June, 2021, hereinafter referred to as the “Lease,” the premises being more particularly described therein; and WHEREAS, the Original Lease and the Personal Guaranty to Lease dated June 21, 2016 are collectively referred to herein as the “Current Lease.” WHEREAS, Landlord wishes to amend the Lease and Tenant wishes to do the same; therefore, Landlord and Tenant agree to amend the Lease as follows:
1.3 TERM:
| 1. | The Lease shall be amended as follows: the term of the lease shall be extended for a period of three (3) years, commencing September 1, 2021 and expiring August 31, 2024. Lease rates shall be amended as follows: |
| ● | September 1, 2021 thru August 31, 2022 = $1,050.00/month + Sales/Use Taxes |
| ● | September 1, 2022 thru August 31, 2023 = $1080.00/month + Sales/Use Taxes |
| ● | September 1, 2023 thru August 31, 2024 = $1120.00/month + Sales/Use Taxes |
The additional term(s) shall commence on the day immediately succeeding the expiration date of the current lease term.
1.4 RENT AND LATE FEE CHARGES:
The Lease shall be amended as follows:
The term "rent" as used in the Lease shall mean and include Base Rent and all other sums payable hereunder to Landlord. All rent shall be paid to Landlord at the address listed herein or at such other place or to such other person as Landlord may from time to time direct in writing, or as is otherwise provided herein, in lawful money of the United States of America. Rent is due on the FIRST day of each month and considered late after the THIRD day of the month. In the event Tenant fails to make any such payment when the same becomes due, then in addition to all rights, powers and remedies provided herein, by law or otherwise in the case of nonpayment of rent, Landlord shall be entitled to recover from Tenant the greater of 10% of the amount due or $150.00, whichever is greater, to reimburse Landlord for its overhead and administration charges in connection with such late payment. Tenant acknowledges that these charges are fair and reasonable. Tenant will also pay to Landlord on demand, interest at the rate of 18% per annum (or the highest rate permitted by applicable law, whichever is lower) on all overdue installments of rent and on overdue amounts relating to obligations which Landlord shall have paid on behalf of Tenant, in each case from the due date thereof until paid in full. If any check tendered by Tenant in payment of any sum due pursuant to this Lease shall be returned for insufficient funds or for any other reason not the fault of Landlord, then Tenant shall pay to Landlord, a processing fee equal to the greater of: (i) $40.00; or (ii) five percent (5%) of the face amount of the returned check, not to exceed the maximum amount permitted by law. Should Tenant's check be returned or dishonored on more than one occasion during the Term of this Lease (or any renewal or extension thereof), the, from and after the dishonor or return of the second of Tenant's checks, all subsequent payments due hereunder during the remainder of the Term of this Lease (and all renewals and/or extensions thereof) shall, at Landlord's option, be tendered to Landlord by certified or cashier's check.
1.5 NOTICE TO VACATE:
Tenant shall provide to Landlord ninety (90) days written notice prior to the expiration of this lease agreement. Time is of the essence to comply with this notice requirement.
1.6 HOLDING OVER:
If Tenant remains in possession after expiration of the term, with Landlord's acquiescence and without any written agreement between the parties, Tenant shall be a tenant at will and such tenancy shall be subject to all the provisions hereof, except that the monthly rental shall be at 150% of the then current rental rate for the entire holdover period and there shall be no renewal of this Lease by operation of law. Nothing in this paragraph shall be construed as consent by Landlord to the possession of the premises by tenant after the expiration of the term.
1.7 LEASE PROVISIONS:
Except for the TERMS noted above in Section 1.3, the Sales and Use Taxes imposed by the State of Florida and Orange County, and the provisions noted in Sections 1.4-1.7 of this Amendment to the Lease, All other terms and provisions of the original dated June 16, 2016 shall remain in full force and effect.
1.8 ACCEPTANCE OF AMENDMENT TO LEASE:
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment to Lease as of the date first above written, each party being duly authorized to do so.
By signing below, you acknowledge and agree to the terms in Section 1.
X
Lessee
| Epiphany Property Holdings, LLC |
|
C/O Masterpiece Property Management • 5429 Satin Leaf Ct. • Sanford, FL 32771
(407) 461-4118
2. Sign and Accept
2.1 ACCEPTANCE OF LEASE
This is a legally binding document. By typing your name, you are consenting to use electronic means to (i) sign this contract (ii) accept addenda. You can access and download this contract at any time in your portal.
X
Lessee
X
Lessor
3
Exhibit 10.140
Narcoossee Acquisitions, LLC
March 14, 2022
Joseph La Rosa
La Rosa Realty, LLC
1420 Celebration Blvd. Suite 100
Celebration, FL 34747
Norkis Fernandez
La Rosa Realty, LLC
8236 Lee Vista Blvd. Suite D
Orlando, FL 32829
| Re: | Renewal Option of Lease dated March 22, 2017 |
This letter will acknowledge your exercise of the option to renew per section 67 of the terms of the Lease.
Per the Terms of the Lease, your Base Rental rate will be as follows:
Starting October 31, 2022 - $25.30 psf or $8,222.50 per month for Base Rent plus sales tax.
Additional Rent/CAM charges are currently estimated at $7.80 psf plus sales tax for 2022.
If you agree to these terms, please sign below acknowledging the exercise of the option and send this document back to our office.
| Signed: | /s/ Joseph La Rosa | Date: | 3/15/22 | ||
| Joseph La Rosa | |||||
| La Rosa Realty, LLC | |||||
| A Florida limited liability company |
Sincerely,
Narcoossee Acquisition, LLC
Jeri Killian
130 S. Orange Avenue #300 ● Orlando, Florida 32801
Telephone ● 407/425-6623 FAX ● 407/422-1924
Exhibit 19.1
LA ROSA HOLDINGS CORP.
INSIDER TRADING POLICY
Dated: August 17, 2022
Purpose
This Insider Trading Policy (the “Policy”) provides guidelines with respect to transactions in the securities of La Rosa Holdings Corp. (the “Company”) and the handling of confidential information about the Company and the companies with which the Company does business.
The Company’s Board of Directors has adopted this Policy to promote compliance with federal, state and foreign securities laws that prohibit certain persons who are aware of material nonpublic information about a company from: (i) trading in securities of that company; or (ii) providing material nonpublic information to other persons who may trade on the basis of that information.
Persons Subject to the Policy
This Policy applies to all officers of the Company and its subsidiaries, all members of the Company’s Board of Directors and all employees of the Company and its subsidiaries.
The Company may also determine that other persons should be subject to this Policy, such as contractors or consultants who have access to material nonpublic information.
This Policy also applies to family members, other members of a person’s household and entities controlled by a person covered by this Policy, as described below.
Transactions Subject to the Policy
This Policy applies to transactions in the Company’s securities (collectively referred to in this Policy as “Company Securities”), including the Company’s common stock, options to purchase common stock, or any other type of securities that the Company may issue, including (but not limited to) preferred stock, convertible debentures and warrants, as well as derivative securities that are not issued by the Company, such as exchange-traded put or call options or swaps relating to the Company’s Securities.
Individual Responsibility
Persons subject to this Policy have ethical and legal obligations to maintain the confidentiality of information about the Company and to not engage in transactions in Company Securities while in possession of material nonpublic information.
Persons subject to this policy must not engage in illegal trading and must avoid the appearance of improper trading.
Each individual is responsible for making sure that he or she complies with this Policy, and that any family member, household member or entity whose transactions are subject to this Policy, as discussed below, also comply with this Policy.
| La Rosa Holdings Corp. – Insider Trading Policy |
|
In all cases, the responsibility for determining whether an individual is in possession of material nonpublic information rests with that individual, and any action on the part of the Company, the Compliance Officer or any other employee or director pursuant to this Policy (or otherwise) does not in any way constitute legal advice or insulate an individual from liability under applicable securities laws.
You could be subject to severe legal penalties and disciplinary action by the Company for any conduct prohibited by this Policy or applicable securities laws, as described below in more detail under the heading “Consequences of Violations.”
Administration of the Policy
Mr. Douglas L. Hein shall serve as the Compliance Officer for the purposes of this Policy, and in his absence, Mr. Mark Gracy or another employee designated by the Compliance Officer shall be responsible for administration of this Policy. The Compliance Officer is authorized to consult with the Company’s securities counsel without notice and at such times as he may deem necessary or appropriate at the expense of the Company. All determinations and interpretations by the Compliance Officer shall be final and not subject to further review.
Statement of Policy
It is the policy of the Company that no director, officer or other employee of the Company (or any other person designated by this Policy or by the Compliance Officer as subject to this Policy) who is aware of material nonpublic information relating to the Company may, directly, or indirectly through family members or other persons or entities:
1. Engage in transactions in Company Securities, except as otherwise specified in this Policy under the headings “Transactions Under Company Plans,” “Transactions Not Involving a Purchase or Sale” and “Rule 10b5-1 Plans;”
2. Recommend the purchase or sale of any Company Securities;
3. Disclose material nonpublic information to persons within the Company whose jobs do not require them to have that information, or outside of the Company to other persons, including, but not limited to, family, friends, business associates, investors and expert consulting firms, unless any such disclosure is made in accordance with the Company’s policies regarding the protection or authorized external disclosure of information regarding the Company; or,
4. Assist anyone engaged in the above activities.
In addition, it is the policy of the Company that no director, officer or other employee of the Company (or any other person designated as subject to this Policy) who, in the course of working for the Company, learns of material nonpublic information about a company with which the Company does business, including a customer or supplier of the Company, may trade in that company’s securities until the information becomes public or is no longer material.
There are no exceptions to this Policy, except as specifically noted herein. Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure), or small transactions, are not excepted from this Policy. The securities laws do not recognize any mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for adhering to the highest standards of conduct.
| La Rosa Holdings Corp. – Insider Trading Policy |
|
Definition of Material Nonpublic Information
Material Information. Information is considered “material” if a reasonable investor would consider that information important in making a decision to buy, hold or sell securities. Any information that could be expected to affect a company’s stock price, whether it is positive or negative, should be considered material. There is no bright-line standard for assessing materiality; rather, materiality is based on an assessment of all of the facts and circumstances and is often evaluated by enforcement authorities with the benefit of hindsight. While it is not possible to define all categories of material information, some examples of information that ordinarily would be regarded as material are:
| ● | Projections of future earnings or losses, or other earnings guidance; |
| ● | Changes to previously announced earnings guidance, or decisions to suspend earnings guidance; |
| ● | A pending or proposed merger, acquisition or tender offer; |
| ● | A pending or proposed acquisition or disposition of a significant asset; |
| ● | A pending or proposed joint venture; |
| ● | A Company restructuring; |
| ● | Significant related party transactions; |
| ● | A change in dividend policy, the declaration of a stock split or an offering of additional securities; |
| ● | Bank borrowings or other financing transactions out of the ordinary course of business; |
| ● | The establishment of a repurchase program for Company Securities; |
| ● | A change in the Company’s pricing or cost structure; |
| ● | Major marketing changes; |
| ● | A change in management; |
| ● | A change in auditors or notification that the auditor’s report may no longer be relied upon; |
| ● | Development of a significant new product, process or service; |
| ● | Pending or threatened significant litigation, or the resolution of such litigation; |
| ● | Impending bankruptcy or the existence of severe liquidity problems; |
| ● | The gain or loss of a significant customer or supplier; |
| ● | The results of clinical trials or testing of the Company’s products or services; |
| ● | A significant cybersecurity incident, such as a data breach, or any other significant disruption in the Company’s operations or loss, potential loss, breach or unauthorized access of its property or assets, whether at its facilities or through its information technology infrastructure; or |
| ● | The imposition of an event-specific restriction on trading in the Company’s Securities or the securities of another company or the extension or termination of such restriction. |
When Information is Considered Public. Information that has not been disclosed to the public is generally considered to be nonpublic information. In order to establish that the information has been disclosed to the public, it may be necessary to demonstrate that the information has been widely disseminated. Information generally would be considered widely disseminated if it has been disclosed through the Dow Jones “broad tape,” newswire services, Nasdaq Market Watch, a broadcast on widely-available radio or television programs, publication in a widely-available newspaper, magazine or news website, or public disclosure documents filed with the SEC that are available on the SEC’s website, or subject to the Compliance Officer’s determination, disclosure on the Company’s website or through a social media.
| La Rosa Holdings Corp. – Insider Trading Policy |
|
By contrast, information would likely not be considered widely disseminated if it is available only to the Company’s employees, or if it is only available to a select group of analysts, brokers and institutional investors.
Once information is widely disseminated, it is still necessary to provide the investing public with sufficient time to absorb the information. As a general rule, information should not be considered fully absorbed by the marketplace until after the second business day after the day on which the information is released. If, for example, the Company were to make an announcement on a Monday, you should not trade in Company Securities until Thursday. Depending on the particular circumstances, the Company may determine that a longer or shorter period should apply to the release of specific material nonpublic information. For purposes of this Policy, a “business day” is any day that the Nasdaq Capital Market is open for regular way day trading.
Transactions by Family Members and Others
This Policy applies to your family members who reside with you (including a spouse, a child, a child away at college, stepchildren, grandchildren, parents, stepparents, grandparents, siblings and in-laws), anyone else who lives in your household, and any family members who do not live in your household but whose transactions in Company Securities are directed by you or are subject to your influence or control, such as parents or children who consult with you before they trade in Company Securities (collectively referred to as “Family Members”).
You are responsible for the transactions of these other persons and therefore should make them aware of the need to confer with you before they trade in Company Securities, and you should treat all such transactions for the purposes of this Policy and applicable securities laws as if the transactions were for your own account.
This Policy does not, however, apply to personal securities transactions of Family Members where the purchase or sale decision is made by a third party not controlled by, influenced by or related to you or your Family Members.
Transactions by Entities that You Influence or Control
This Policy applies to any entities that you influence or control, including any corporations, partnerships or trusts (collectively referred to as “Controlled Entities”), and transactions by these Controlled Entities should be treated for the purposes of this Policy and applicable securities laws as if they were for your own account.
Transactions Under Company Plans
This Policy does not apply in the case of the following transactions, if currently applicable, except as specifically noted:
Stock Option Exercises. This Policy does not apply to the exercise of an employee stock option acquired pursuant to the Company’s plans, or to the exercise of a tax withholding right pursuant to which a person has elected to have the Company withhold shares subject to an option to satisfy tax withholding requirements. This Policy does apply, however, to any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
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Restricted Stock Awards. This Policy does not apply to the vesting of restricted stock, or the exercise of a tax withholding right pursuant to which you elect to have the Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock. The Policy does apply, however, to any market sale of restricted stock.
401(k) Plan. This Policy does not apply to purchases of Company Securities in the Company’s 401(k) plan resulting from your periodic contribution of money to the plan pursuant to your payroll deduction election.
This Policy does apply, however, to certain elections you may make under the 401(k) plan, including: (a) an election to increase or decrease the percentage of your periodic contributions that will be allocated to the Company stock fund; (b) an election to make an intra-plan transfer of an existing account balance into or out of the Company stock fund; (c) an election to borrow money against your 401(k) plan account if the loan will result in a liquidation of some or all of your Company stock fund balance; and (d) an election to pre-pay a plan loan if the pre-payment will result in allocation of loan proceeds to the Company stock fund. It should be noted that sales of Company Securities from a 401(k) account are also subject to Rule 144, and therefore affiliates should ensure that a Form 144 is filed when required.
Employee Stock Purchase Plan. This Policy does not apply to purchases of Company Securities in the employee stock purchase plan resulting from your periodic contribution of money to the plan pursuant to the election you made at the time of your enrollment in the plan. This Policy also does not apply to purchases of Company Securities resulting from lump sum contributions to the plan, provided that you elected to participate by lump sum payment at the beginning of the applicable enrollment period.
This Policy does apply, however, to your election to participate in the plan for any enrollment period, and to your sales of Company Securities purchased pursuant to the plan.
Dividend Reinvestment Plan. This Policy does not apply to purchases of Company Securities under the Company’s dividend reinvestment plan resulting from your reinvestment of dividends paid on Company Securities.
This Policy does apply, however, to voluntary purchases of Company Securities resulting from additional contributions you choose to make to the dividend reinvestment plan, and to your election to participate in the plan or increase your level of participation in the plan. This Policy also applies to your sale of any Company Securities purchased pursuant to the plan.
Other Similar Transactions. Any other purchase of Company Securities from the Company or sales of Company Securities to the Company are not subject to this Policy.
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Transactions Not Involving a Purchase or Sale
Bona fide gifts are not transactions subject to this Policy, unless the person making the gift has reason to believe that the recipient intends to sell the Company Securities while the officer, employee or director is aware of material nonpublic information, or the person making the gift is subject to the trading restrictions specified below under the heading “Additional Procedures” and the sales by the recipient of the Company Securities occur during a blackout period.
Further, transactions in mutual funds that are invested in Company Securities are not transactions subject to this Policy.
Special and Prohibited Transactions
Certain transactions are of concern not only because of insider trading considerations, but also because of the appearance created by the transaction and the potential repercussions that the transaction may have with investors, regulators and others.
Accordingly, the Company has determined that there is a heightened legal risk and/or the appearance of improper or inappropriate conduct if the persons subject to this Policy engage in certain types of transactions. It therefore is the Company’s policy that any persons covered by this Policy may not engage in any of the following transactions, or should otherwise consider the Company’s preferences as described below:
Short-Term Trading. Short-term trading of Company Securities may be distracting to the person and may unduly focus the person on the Company’s short-term stock market performance instead of the Company’s long-term business objectives. For these reasons, any director, officer or other employee of the Company who purchases Company Securities in the open market may not sell any Company Securities of the same class during the six months following the purchase (or vice versa). Directors and officers should note the short-term trading restrictions of Section 16(b) of the Securities Exchange Act of 1934 (“Exchange Act”).
Short Sales. Short sales of Company Securities (i.e., the sale of a security that the seller does not own) may evidence an expectation on the part of the seller that the securities will decline in value, and therefore have the potential to signal to the market that the seller lacks confidence in the Company’s prospects. In addition, short sales may reduce a seller’s incentive to seek to improve the Company’s performance. For these reasons, short sales of Company Securities are prohibited. In addition, Section 16(c) of the Exchange Act prohibits officers and directors from engaging in short sales. (Short sales arising from certain types of hedging transactions are governed by the paragraph below captioned “Hedging Transactions.”)
Publicly-Traded Options. Given the relatively short term of publicly-traded options, transactions in options may create the appearance that a director, officer or employee is trading based on material nonpublic information and focus a director’s, officer’s or other employee’s attention on short-term performance at the expense of the Company’s long-term objectives. Accordingly, transactions in put options, call options or other derivative securities, on an exchange or in any other organized market, are prohibited by this Policy. (Option positions arising from certain types of hedging transactions are governed by the next paragraph below.)
Hedging Transactions. Hedging or monetization transactions can be accomplished through a number of possible mechanisms, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. Such transactions may permit a director, officer or employee to continue to own Company Securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of ownership. When that occurs, the director, officer or employee may no longer have the same objectives as the Company’s other shareholders. Therefore, directors, officers and employees are prohibited from engaging in any such transactions.
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Margin Accounts and Pledged Securities. Securities held in a margin account as collateral for a margin loan may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in Company Securities, directors, officers and other employees are prohibited from holding Company Securities in a margin account and are strongly discouraged from pledging Company Securities as collateral for a loan. Any person wishing to enter into a legitimate loan pledge arrangement must first submit the proposed transaction in writing for approval by the Compliance Officer at least two weeks prior to the proposed execution of documents evidencing the proposed transaction and must set forth a justification for the proposed transaction and clearly demonstrate the financial capacity to repay the loan without resorting to the pledged securities. The person making the request shall have no other contact with the Compliance Officer on that matter and the Compliance Officer’s decision shall be final and binding. (Pledges of Company Securities arising from certain types of hedging transactions are governed by the paragraph above captioned “Hedging Transactions.”)
Standing and Limit Orders. Standing and limit orders (except standing and limit orders under approved Rule 10b5-1 Plans, as described below) create heightened risks for insider trading violations similar to the use of margin accounts. There is no control over the timing of purchases or sales that result from standing instructions to a broker, and as a result the broker could execute a transaction when a director, officer or other employee is in possession of material nonpublic information. The Company therefore discourages placing standing or limit orders on Company Securities. If a person subject to this Policy determines that they must use a standing order or limit order, the order should be limited to short duration and should otherwise comply with the restrictions and procedures outlined below under the heading “Additional Procedures.”
Additional Procedures
The Company has established additional procedures in order to assist the Company in the administration of this Policy, to facilitate compliance with laws prohibiting insider trading while in possession of material nonpublic information, and to avoid the appearance of any impropriety. These additional procedures are applicable only to those individuals described below.
Pre-Clearance Procedures. The persons designated by the Compliance Officer as being subject to these procedures, as well as the Family Members and Controlled Entities of such persons, may not engage in any transaction in Company Securities without first obtaining pre-clearance of the transaction from the Compliance Officer.
A written request for pre-clearance should be submitted to the Compliance Officer at least two business days in advance of the proposed transaction. The Compliance Officer is under no obligation to approve a transaction submitted for pre-clearance, and may determine not to permit the transaction. If a person seeks preclearance and permission to engage in the transaction is denied, then he or she should refrain from initiating any transaction in Company Securities, and should not inform any other person of the restriction.
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When a request for pre-clearance is made, the requestor should carefully consider whether he or she may be aware of any material nonpublic information about the Company, and should describe fully those circumstances to the Compliance Officer. The requestor should also indicate whether he or she has effected any non-exempt “opposite-way” transactions within the past six months, and should be prepared to report the proposed transaction on an appropriate Form 4 or Form 5. The requestor should also be prepared to comply with SEC Rule 144 and file Form 144, if necessary, at the time of any sale.
All pre-cleared trades must be effected within five business days of receipt of pre-clearance unless an exception is granted. Transactions not effected within the time limit are subject to pre-clearance again. Within three business days after the execution of the transaction, the requestor shall notify the Compliance Officer of the date and size of the transaction.
Quarterly Trading Restrictions. The persons designated by the Compliance Officer as subject to this restriction, as well as their Family Members or Controlled Entities, may not conduct any transactions involving the Company’s Securities (other than as specified by this Policy), during a “Blackout Period” beginning 21 days prior to the end of each fiscal quarter and ending on the 10th business day following the date of the public release of the Company’s earnings results for that quarter. In other words, these persons may only conduct transactions in Company Securities during the “Window Period” beginning on the 11th business day following the public release of the Company’s quarterly earnings and ending 22 days prior to the close of the next fiscal quarter.
Under certain very limited circumstances, a person subject to this restriction may be permitted to trade during a Blackout Period, but only if the Compliance Officer, with the advice of securities counsel if requested by the Compliance Officer, concludes that the person does not in fact possess material nonpublic information and may otherwise trade. Persons wishing to trade during a Blackout Period must make such request in writing to the Compliance Officer for approval at least three business days in advance of any proposed transaction involving Company Securities. All such trades are subject to the pre-clearance procedures set forth above under “Pre-Clearance Procedures.”
Event-Specific Trading Restriction Periods. From time to time, an event may occur that is material to the Company and is known by only a few directors, officers and/or employees. The involved directors or officers shall promptly notify the Compliance Officer of such event. So long as the event remains material and nonpublic, the persons designated by the Compliance Officer may not trade Company Securities.
In addition, the Company’s financial results may be sufficiently material in a particular fiscal quarter that, in the judgment of the Compliance Officer, designated persons should refrain from trading in Company Securities even sooner than the typical Blackout Period described above.
In either event, the Compliance Officer may notify these persons that they should not trade in the Company’s Securities, without disclosing the reason for the restriction. The existence of an event-specific trading restriction period or extension of a Blackout Period will not be announced to the Company as a whole, and should not be communicated to any other person. If you know of the event, then even if the Compliance Officer has not designated you as a person who should not trade due to an event-specific restriction, you should not trade while you are aware of material nonpublic information. Exceptions will not be granted during an event-specific trading restriction period.
Exceptions. The quarterly trading restrictions and event-specific trading restrictions do not apply to those transactions to which this Policy does not apply, as described above under the headings “Transactions Under Company Plans” and “Transactions Not Involving a Purchase or Sale.” Further, the requirement for pre-clearance, the quarterly trading restrictions and event-specific trading restrictions do not apply to transactions conducted pursuant to approved Rule 10b5-1 plans, described under the heading “Rule 10b5-1 Plans.”
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Rule 10b5-1 Plans
Rule 10b5-1 under the Exchange Act provides a defense from insider trading liability under Rule 10b-5. In order to be eligible to rely on this defense, a person subject to this Policy must enter into a Rule 10b5-1 plan for transactions in Company Securities that meets certain conditions specified in the Rule (a “Rule 10b5-1 Plan”). If the plan meets the requirements of Rule 10b5-1, Company Securities may be purchased or sold without regard to certain insider trading restrictions.
To comply with the Policy, a Rule 10b5-1 Plan must be approved by the Compliance Officer and meet the requirements of Rule 10b5-1 and the Company’s “Guidelines for Rule 10b5-1 Plans,” which may be obtained from the Compliance Officer. In general, a Rule 10b5-1 Plan must be entered into at a time when the person entering into the plan is not aware of material nonpublic information. Once the plan is adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade. The plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on these matters to an independent third party.
Any Rule 10b5-1 Plan must be submitted in writing for approval by the Compliance Officer no less than five business days prior to the entry into the Rule 10b5-1 Plan. No further pre-approval of transactions conducted pursuant to the Rule 10b5-1 Plan will be required.
Post-Termination Transactions
This Policy continues to apply to transactions in Company Securities even after termination of service to the Company. If an individual is in possession of material nonpublic information when his or her service terminates, that individual may not trade in Company Securities until that information has become public or is no longer material.
Consequences of Violations
The purchase or sale of securities while aware of material nonpublic information, or the disclosure of material nonpublic information to others who then trade in the Company’s Securities, is prohibited by the federal and state laws. Insider trading violations are pursued vigorously by the Securities and Exchange Commission (“SEC”), U.S. Attorneys and state enforcement authorities as well as the laws of foreign jurisdictions.
Punishment for insider trading violations is severe, and could include significant fines and imprisonment. While the regulatory authorities concentrate their efforts on the individuals who trade, or who tip inside information to others who trade, the federal securities laws also impose potential liability on companies and other “controlling persons” if they fail to take reasonable steps to prevent insider trading by company personnel.
In addition, an individual’s failure to comply with this Policy may subject the individual to Company-imposed sanctions, including dismissal for cause, whether or not the employee’s failure to comply results in a violation of law. Needless to say, a violation of law, or even an SEC investigation that does not result in prosecution, can tarnish a person’s reputation and irreparably damage a career.
Company Assistance
Any person who has a question about this Policy or its application to any proposed transaction may obtain additional guidance from the Compliance Officer, who can be reached by telephone at 321-250-1799 or via e-mail at doug@larosarealtycorp.com.
Certification
All persons subject to this Policy must certify their understanding of, and intent to comply with, this Policy.
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CERTIFICATION
I certify that:
1. I have read and understand the Insider Trading Policy of La Rosa Holdings Corp. (the “Policy”).
2. Since the date the Policy became effective, or such shorter period of time that I have been an employee/officer/director/individual contractor of the Company and its subsidiaries, I have complied with the Policy.
3. I will continue to comply with the Policy for as long as I am subject to the Policy.
Print Name: _______________________________
Signature: _________________________________
Date: _____________________________________
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Exhibit 21.1
List of Subsidiaries of La Rosa Holdings Corp.
| 1. | La Rosa Realty, LLC |
| 2. | La Rosa Coaching, LLC |
| 3. | La Rosa CRE, LLC |
| 4. | La Rosa Franchising, LLC |
| 5. | La Rosa Property Management, LLC |
| 6. | La Rosa Realty Premier, LLC |
| 7. | La Rosa Realty CW Properties, LLC |
| 8. | La Rosa Realty North Florida, LLC |
| 9. | La Rosa Realty Orlando, LLC |
| 10. | Nona Legacy Powered By La Rosa Realty, Inc. (formerly, La Rosa Realty Lake Nona Inc.) |
| 11. | Horeb Kissimmee Realty, LLC |
| 12. | La Rosa Realty Winter Garden, LLC |
| 13. | La Rosa Realty Texas, LLC |
| 14. | La Rosa Realty Georgia, LLC |
| 15. | La Rosa Realty California |
Exhibit 23.1
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT
We consent to the incorporation by reference in the Registration Statement of La Rosa Holdings Corp. and Subsidiaries on Form S-1 (File No. 333-264372) and Form S-8 (File No. 333-275118) of our report dated April 16, 2024, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audits of the consolidated financial statements of La Rosa Holdings Corp. and Subsidiaries as of December 31, 2023 and 2022 and for each of the two years in the period ended December 31, 2023, which report is included in this Annual Report on Form 10-K of La Rosa Holdings Corp. and Subsidiaries for the year ended December 31, 2023.
/s/ Marcum llp
Marcum llp
New York, NY
April 16, 2024
Exhibit 31.1
CERTIFICATION
I, Joseph La Rosa, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2023 of La Rosa Holdings Corp. (the “registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Omitted; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: April 16, 2024 | /s/ Joseph La Rosa |
| Joseph La Rosa | |
| Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Kent Metzroth, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2023 of La Rosa Holdings Corp. (the “registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Omitted; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: April 16, 2024 | /s/ Kent Metzroth |
| Kent Metzroth | |
| Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of La Rosa Holdings Corp. (the “Company”) on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph La Rosa, Chief Executive Officer (Principal Executive Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 16, 2024 | /s/ Joseph La Rosa |
| Joseph La Rosa | |
| Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of La Rosa Holdings Corp. (the “Company”) on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kent Metzroth, Chief Financial Officer (Principal Financial Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 16, 2024 | /s/ Kent Metzroth |
| Kent Metzroth | |
| Chief Financial Officer (Principal Financial Officer) |
Exhibit 97.1
LA ROSA HOLDINGS CORP.
CLAWBACK POLICY
Introduction
The Board of Directors (“Board”) of La Rosa Holdings Corp. (the “Company”) believes that it is in the best interests of the Company and its shareholders to adopt this policy which provides for the recoupment of certain executive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws (the “Policy”). This Policy is designed to comply with Section 10D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rule 10D-1 promulgated under the Exchange Act (“Rule 10D-1”) and Listing Rule 5608 of The Nasdaq Stock Market LLC (“Nasdaq”).
Administration
This Policy shall be administered by the Board or, if so designated by the Board, the Compensation Committee of the Board (the “Compensation Committee”) or the Audit Committee of the Board (the “Audit Committee”), or any special committee comprised of members of the Compensation Committee or Audit Committee (the “Administrator”). Any determinations made by the Administrator shall be final and binding on all affected individuals. Subject to any limitation at applicable law, the Administrator may authorize and empower any officer or employee of the Company to take any and all actions necessary or appropriate to carry out the purpose and intent of this Policy (other than with respect to any recovery under this Policy involving such officer or employee).
Covered Executives
This Policy applies to the Company’s current and former executive officers, as determined by the Administrator in accordance with Section 10D of the Exchange Act and the listing standards of the national securities exchange on which the Company’s securities are listed, and such other senior executives/employees who may from time to time be deemed subject to the Policy by the Administrator (each, a “Covered Executive”).
For the purposes of this Policy, “executive officers” shall include persons subject to reporting and short-swing liability provisions of Section 16 under the Exchange Act. This shall include the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice president in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company and any person identified under Regulation S-K Rule 401(b) in the Company’s annual reports and proxy statements. Executive officers of a parent or subsidiary are deemed executive officers of the listed company if they perform such policy-making functions for the listed company or such parent or subsidiary. The policy-making function is not intended to include policy-making functions that are not significant.
Recoupment; Accounting Restatement
In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, the Administrator will require, as promptly as it reasonably can, reimbursement or forfeiture of any Incentive Compensation, as defined below, received by any Covered Executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement (the “Restatement Date”), so long as the Incentive Compensation received by such Covered Executive is in excess of what would have been awarded or vested after giving effect to the accounting restatement. The amount to be recovered will be the excess of Incentive Compensation paid to the Covered Executive based on the erroneous data in the original financial statements over the Incentive Compensation that would have been paid to the Covered Executive had it been based on the restated results, without respect to any taxes paid.
The Restatement Date is defined as the earlier of (i) the date the Board, a Board committee, or management (if no Board action is required) concludes, or reasonably should have concluded, that the Company is required to prepare an accounting restatement or (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare an accounting restatement.
Incentive Compensation
For purposes of this Policy, “Incentive Compensation” means any of the following; provided that, such compensation is granted, earned, or vested based wholly or in part on the attainment of a financial reporting measure:
| ● | Annual bonuses and other short- and long-term cash incentives. |
| ● | Stock options. |
| ● | Stock appreciation rights. |
| ● | Restricted stock. |
| ● | Restricted stock units. |
| ● | Performance shares. |
| ● | Performance units. |
| ● | Non-equity incentive plan awards. |
Financial reporting measures include any measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in-part from such measure. The following examples (and any measures derived therefrom) are non-exhaustive:
| ● | Company stock price. |
| ● | Total shareholder return. |
| ● | Revenues. |
| ● | Net income. |
| ● | Operating income. |
| ● | Earnings before interest, taxes, depreciation, and amortization (EBITDA). |
| ● | Cash flows from operations and adjusted cash flows from operations. |
| ● | Liquidity measures such as working capital or operating cash flow. |
| ● | Return measures such as return on invested capital or return on assets. |
| ● | Earnings measures such as earnings per share. |
| ● | Profitability of one or more reportable segments. |
| ● | Financial Ratios such as accounts receivable turnover. |
| ● | Cost to acquire a customer (agent), where cost is subject to any accounting restatement. |
| ● | Any of such financial reporting measures relative to a peer group, where the Company’s financial reporting measure is subject to an accounting restatement; and tax basis income. |
| ● | Capital raised through debt or equity financing. |
For the avoidance of doubt, Incentive Compensation does not include annual salary, compensation awarded based on completion of a specified period of service, or compensation awarded based on subjective standards, strategic measures, or operational measures.
Incentive Compensation includes incentive-based compensation received by a person:
| ● | after beginning service as an executive officer; |
| ● | who serves as an executive officer at any time during the performance period for the incentive-based compensation; |
| ● | who served as an executive officer while the Company has a class of securities listed on a national securities exchange; and |
| ● | who serves as an executive officer during the three fiscal years preceding the Restatement Date. |
For the avoidance of doubt, subsequent changes in a Covered Executive’s employment status, including retirement or termination of employment, do not affect the Company’s rights to recover Incentive-Based Compensation pursuant to this Policy.
Excess Incentive Compensation: Amount Subject to Recovery
The amount to be recovered will be the excess of the Incentive Compensation paid to the Covered Executive based on the erroneous data over the Incentive Compensation that would have been paid to the Covered Executive had it been based on the restated results, as determined by the Administrator. Incentive Compensation is deemed “received” during the fiscal period during which the financial reporting measure specified in the incentive-based compensation award is attained, even if payment or grant of the Incentive Compensation occurs after the end of the period.
If the Administrator cannot determine the amount of excess Incentive Compensation received by the Covered Executive directly from the information in the accounting restatement, then it will make its determination based on a reasonable estimate of the effect of the accounting restatement.
Method of Recoupment
The Administrator will determine, in its sole discretion, the method for recouping excess Incentive Compensation hereunder, which may include, without limitation:
(a) requiring reimbursement of cash Incentive Compensation previously paid;
(b) seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards;
(c) offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive;
(d) cancelling outstanding vested or unvested equity awards; and/or
(e) taking any other remedial and recovery action permitted by law, as determined by the Administrator.
No Indemnification of Covered Executives
The Company shall not indemnify any current or former Covered Executive against the loss of any incorrectly awarded Incentive Compensation, and shall not pay, or reimburse any Covered Executive for premiums for any insurance policy to fund such executive’s potential recovery obligations.
Indemnification of the Administrator
Any members of the Administrator who assist in the administration of this Policy, shall not be personally liable for any action, determination, or interpretation made with respect to this Policy and shall be fully indemnified by the Company to the fullest extent under applicable law and Company policy with respect to any such action, determination or interpretation. The foregoing sentence shall not limit any other rights to indemnification of the Administrator under applicable law or Company policy.
Interpretation
The Administrator is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of Section 10D of the Exchange Act, Rule 10D-1, Nasdaq Listing Rule 5608, and any other applicable rules or standards adopted by the Securities and Exchange Commission or any national securities exchange on which the Company’s securities are then listed.
Effective Date
This Policy shall be effective as of the date it is adopted by the Administrator (the “Effective Date”) and shall apply to Incentive Compensation that is approved, awarded, or granted to any Covered Executive on or after that date.
Amendment; Termination
The Board may amend this Policy from time to time in its discretion and shall amend this Policy as it deems necessary to reflect final regulations adopted by the Securities and Exchange Commission under Section 10D of the Exchange Act, Rule 10D-1 and Nasdaq Listing Rule 5608 and to comply with any other rules or standards adopted by a national securities exchange on which the Company’s securities are then listed. The Board may terminate this Policy at any time.
Other Recoupment Rights
The Administrator intends that this Policy will be applied to the fullest extent of the law. The Administrator may require that any employment agreement, equity award agreement, or similar agreement entered into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require a Covered Executive to agree to abide by the terms of this Policy. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any similar policy in any employment agreement, equity award agreement, or similar agreement and any other legal remedies available to the Company.
Impracticability
The Administrator shall recover any excess Incentive Compensation in accordance with this Policy unless such recovery would be impracticable, as determined by the Administrator in accordance with Rule 10D-1 of the Exchange Act and the listing standards of the national securities exchange on which the Company’s securities are listed.
Successors
This Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or other legal representatives.
Exhibit Filing Requirement
A copy of this Policy and any amendments thereto shall be posted on the Company’s website and filed as an exhibit to the Company’s Annual Report on Form 10-K.
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