LEASE AGREEMENT
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, hereafter "Landlord", agrees to lease to ILX Resorts
Incorporated, an Arizona corporation, hereafter "Tenant", and Tenant agrees to
lease from Landlord, the real property situated in Maricopa County, Arizona,
more particularly described in Exhibit "A" attached hereto located at ▇▇▇▇ ▇.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, hereafter "the premises", upon the following
terms and conditions:
1. TERM: The term of this Lease shall commence on the 1st day of January, 2000
and shall terminate on the 31st day of December 2001. Tenant shall have
three options to extend the term, each for a successive additional one
calendar year period, by giving written notice thereof to Landlord at least
thirty (30) days in advance of the commencement of such extended term.
2. POSSESSION: Tenant shall take possession of the premises on January 1,
2000. Tenant shall be bound by all provisions of this Lease, including the
payment of rent, at all times Tenant is in possession of the premises.
3. RENT: Tenant agrees to pay Landlord as base rent FOUR THOUSAND DOLLARS
($4,000) per month for each month of the Lease. Rent is due on or before
the last day of each month and is payable at Landlord's offices or at such
other place as Landlord may designate in writing. Rent shall be prorated on
the basis of a thirty (30) day month for each partial month during the term
of this Lease or during which Tenant is in possession of the premises. All
other monetary obligations of Tenant under this Lease shall constitute
additional rent and shall be due as specified in each instance.
4. TAXES AND ASSESSMENTS: Tenant agrees to pay directly as additional rent
during each lease year or partial lease year of the term of this Lease, all
real estate taxes and assessments levied and assessed for any such year
upon the premises and the underlying realty. For any partial lease year of
the term hereof such amount shall be pro rated on a daily basis.
Tenant shall pay to Landlord, in addition to and along with the rental
otherwise payable hereunder, any excise, transaction, sales or privilege
tax now or hereafter imposed by any government or agency upon Landlord and
attributed to or measured by rent or prorations payable by Tenant.
5. OPERATING EXPENSES: The operating expenses of the premises shall be paid by
Tenant. The operating expenses of the Project include without limitation:
property taxes, special assessments, utilities, maintenance, supplies,
management fees, janitorial services, trash removal, fire and liability
insurance premiums, repairs and all other costs which can properly be
considered expenses of operating and maintaining the building and
surrounding property of which the premises are a part, including necessary
capital expenditures. Without limiting the generality of the foregoing,
Tenant shall at its own expense and at all times maintain the premises in
good and safe condition, including plate glass, heating and air
conditioning units, roof, exterior walls, electrical wiring, plumbing and
any other systems or equipment upon the premises. Tenant will promptly pay
when due all electric, water, gas and other similar charges directly
attributable to the premises.
6. USE OF PREMISES: Tenant shall use the premises for the purpose of
office/warehouse use and shall not use or allow the premises to be used for
any illegal or objectionable purpose. Tenant shall at its own cost and
expense obtain all licenses and permits necessary for such use. Tenant
shall use its best efforts to comply with all governmental laws, ordinances
-1-
and regulations applicable to the use of the demised premises, and shall
use its best efforts to promptly comply with all governmental orders and
directives for the correction, prevention and abatement of nuisances in or
upon, or connected with, the use of the demised premises all at Tenant's
sole expense. Tenant shall not operate its business in such manner so as to
constitute an annoyance to other tenants and shall endeavor to control its
customers so as to maintain an orderly premises. Tenant shall not do or
permit anything to be done which would increase the cost of any fire,
extended coverage or any other insurance covering the premises.
7. REPAIR: Tenant shall at its own expense keep the premises in good condition
and repair.
8. ASSIGNMENT: Tenant shall not assign or hypothecate this Lease, or enter
into a sublease relating to all or any portion of the premises, without
Landlord's prior written consent, which consent shall not be unreasonably
withheld. It is understood by Landlord that Sedona Worldwide Incorporated,
a former subsidiary of Tenant, will occupy a portion of the premises. Any
other assignment or subletting without consent shall be void. Landlord's
approval of any such assignment or sublease shall not release Tenant from
its obligations under this Lease or constitute assent to any subsequent
assignment or sublease.
9. RETURN OF PREMISES: Upon the termination of this Lease, Tenant shall return
the premises to Landlord in its original condition, ordinary wear and tear
and alterations or improvements not designated to be removed excepted.
10. INSURANCE: Tenant, during the term hereof, at its own expense, will provide
and keep in force for the benefit of Landlord and Tenant, as their
respective interests may appear, fire, comprehensive, plate glass and
general and public liability insurance protection with respect to the
premises and for claims for personal injury or death or property damage in
and about the premises with limits not less than $1,000,000 in the event of
bodily injury or death of any number of persons in any one accident and
limits of not less than $1,000,000 for damage to property, and shall
provide Landlord with a copy of the policy upon Landlord's written request.
Tenant shall name Landlord as an additional insured under the policy and
provide Landlord a certificate of insurance. The insurance shall be primary
insurance and shall provide that any right of subrogation against Landlord
is waived. The policy shall further provide that no act or omission by
Tenant shall impair the rights of the insured to receive the proceeds of
the policy and that the policy shall not be canceled except upon thirty
(30) days prior written notice to each named insured.
11. INDEMNIFICATION: Tenant shall indemnify, defend and hold Landlord harmless
from all actions, claims, demands, penalties or liabilities arising out of
events occurring in or about the premises or caused in whole or in part by
Tenant or Tenant's agents, servants, employees or invitees, except for
matters attributable to Landlord's willful misconduct or gross negligence.
This indemnification shall include all costs and expenses and reasonable
attorney's fees which Landlord may expend in connection with any of the
foregoing.
12. LIMITATION OF LIABILITY: Landlord shall not be liable to Tenant for damages
nor shall Tenant be entitled to a reduction in rent by reason of any of the
following: (i) Landlord's failure to provide utilities or services when
such failure is caused by accident, repairs, strikes, disturbances or any
other cause beyond the reasonable control of Landlord; (ii) disruption to
Tenant's business caused by Landlord's repairs or improvements to the
-2-
project; (iii) damages to the premises or Tenant's property unless caused
by Landlord's gross negligence or willful misconduct.
13. NOTICE: All notices or demands under this Lease or required to be given by
law are to be made in writing by registered or certified mail, return
receipt requested, and are deemed given when deposited in the United States
mail postage prepaid and addressed to Landlord or Tenant at the addresses
set forth on the signature page of this Lease. Each party shall have the
right, from time to time, to designate a different address to which notices
and demands are to be sent by giving notice in the manner provided for
above except that Landlord may in any event use the premises as Tenant's
address for notice purposes.
14. ENTRY BY LANDLORD: Landlord shall have the right to enter the premises at
all reasonable times for the purposes of inspecting, repairing or
maintaining the premises, determining whether the terms of the Lease are
being complied with, posting such notices as Landlord deems advisable for
its protection, and showing the premises to prospective tenants, purchasers
or lenders. Landlord may at any time within ninety (90) days prior to the
expiration of this Lease place upon the premises any customary "For Lease"
signs, and reasonably permit persons desiring to lease the same to inspect
the premises.
15. DEFAULT & REMEDIES:
(a) The occurrence of one or more of the following events shall constitute
a default of this Lease by Tenant:
(1) The abandonment of the premises by Tenant or absence of Tenant
from premises for thirty (30) days or longer while failing to
comply with any provision of this Lease.
(2) The failure by Tenant to make any payment of rent or other
payment required to be made by Tenant under this Lease when due.
(3) The failure by Tenant to observe or perform any provision of this
Lease other than the payment of money where such failure
continues for a period of thirty (30) days after written notice
thereof from Landlord to Tenant. This notice shall be in lieu of,
and not in addition to, any notice required under Arizona law.
(4) (i) The making by Tenant of any general assignment for the
benefit of creditors; (ii) the filing by or against Tenant of a
petition under the United States Bankruptcy Code unless dismissed
within thirty (30) days; (iii) the appointment of a receiver or
trustee to take possession of substantially all of Tenant's
assets located at the premises or of this Lease where possession
is not restored to Tenant within thirty (30) days; (iv) the
attachment, execution or other judicial seizure of substantially
all of Tenant's assets located on the premises where such seizure
is not discharged within thirty (30) days.
(b) In the event of any default by Tenant as defined above, Landlord may
exercise one or more of the following remedies in addition to any
remedy provided for at law or equity:
(1) With or without notice or process of law and using such force as
Landlord may deem reasonably necessary under the circumstances,
and without terminating this Lease or relieving Tenant of any
-3-
obligation hereunder, Landlord may re-enter and take possession
of the premises and of all property located therein. Under no
circumstances shall Landlord be liable in damages or otherwise by
reason of the exercise by Landlord of any such re-entry or
eviction, or by reason of the exercise by Landlord of any other
remedy provided in this subparagraph (b).
(2) In the event that Landlord recovers possession of the premises
without termination of this Lease, Tenant shall pay to Landlord
all sums due under this Lease on the dates due as if Tenant
remained in possession-of the premises.
(3) Landlord may recover from Tenant, and Tenant shall pay upon
demand, all expenses incurred in recovering possession of the
premises, repairing and altering the premises for reletting, and
attempting to relet the premises, including commissions and
attorney fees.
(c) The remedies described in subparagraph (b) are cumulative and in
addition to any remedy at law or in equity. The filing of an action by
Landlord against Tenant requesting under one or more remedies shall
not be deemed an election of that remedy or remedies to the exclusion
of all others.
(d) Landlord shall be under no obligation to observe or perform any duty
imposed by this Lease which accrues after the date of any default by
Tenant.
(e) The failure or delay of Landlord in exercising any right or remedy
shall not be construed as a waiver of any such right or remedy or of
any default by Tenant.
16. ATTORNEY'S FEES: In the event any action or proceeding is brought by either
party against the other under this Lease, the prevailing party shall be
entitled to recover from the other party its reasonable costs, expenses and
attorneys' fees.
17. WAIVER: The waiver by Landlord of Tenant's breach by any provision of this
Lease shall not constitute a continuing waiver of any subsequent breach by
Tenant of the same or other provision.
18. DEFAULT BY LANDLORD: Landlord shall not be in default unless Landlord fails
to perform its obligations under this Lease within thirty (30) days after
written notice by Tenant to Landlord specifying the obligations which the
Landlord has failed to perform. If an obligation is such that it cannot
reasonably be completed within such thirty (30) day period, Landlord shall
not be in default if Landlord commences performance within thirty (30) days
and thereafter diligently prosecutes the same to completion.
19. SURRENDER OF PREMISES: The surrender of this Lease by Tenant to Landlord
shall not work a merger and shall, at the option of Landlord, operate as an
assignment to it of any subleases affecting the premises.
20. ESTOPPEL CERTIFICATE:
(a) Tenant shall upon not less than five (5) days prior written notice
from Landlord execute, acknowledge and deliver to Landlord a statement
in writing (i) certifying that this Lease is unmodified and in full
force and effect and if modified, stating the nature of such
modification and certifying that this Lease as modified is in full
-4-
force and effect; (ii) specifying the dates to which rental and other
charges are paid in advance; and (iii) acknowledging that there are no
uncured defaults on the part of Landlord or specifying such defaults
if any are claimed. Any such statement may be relied upon by any
prospective purchaser or encumbrancer of the real property of which
the premises are a part.
(b) Tenant's failure to deliver such a statement within the time specified
above shall be conclusive upon Tenant (i) that this Lease is in full
force and effect and without modification except as may be represented
by Landlord; and (ii) that there are no uncured defaults by Landlord.
21. CONDITION OF PREMISES: Tenant acknowledges that neither the Landlord nor
any of the Landlord's agents has made any representation or warranty with
respect to the premises or building or with respect to the suitability of
either for the conduct of Tenant's business. Taking possession of the
premises by Tenant shall conclusively establish that the premises and
building were in good, sanitary order, condition and repair at such time.
22. DESTRUCTION OF PREMISES: In the event that the premises or the building of
which the premises are a part are destroyed in whole or in part by fire or
other casualty, Landlord may terminate this Lease at its option. If
Landlord does not terminate this Lease and elects to repair the damage,
this Lease shall remain in full force and effect.
23. CONDEMNATION: If all or a portion of the leased premises are appropriated
by a public or quasi-public authority under the power of eminent domain or
are transferred by Landlord in lieu thereof, Landlord may terminate this
Lease without liability to Tenant for any unexpired term of this Lease. If
this Lease is not terminated as a result of such appropriation or transfer,
base rent shall be equitably reduced. In either event, Landlord shall be
entitled to the entire condemnation award or settlement except that Tenant
shall be entitled to any award made by such authority specifically to
Tenant for moving expenses or damages for disruption to Tenant's business.
24. LATE CHARGES: All sums due under this Lease not paid by Tenant within ten
(10) days from the date such payment is due shall be subject to a late
charge of the greater of Twenty Dollars ($20.00) or Five Percent (5%) of
the amount due and shall bear interest at a rate of Eighteen Percent (18%)
per annum until paid.
25. SALE BY LANDLORD: In the event of a sale or conveyance by Landlord of the
premises, the same shall operate to release Landlord from any future
liability upon any of the covenants or conditions, express or implied,
herein contained in favor of Tenant (so long as the purchaser expressly
assumes such liability), and in such event Tenant agrees to look solely to
the responsibility of the successor in interest of Landlord in and to this
Lease. This Lease shall not be affected by any such sale, and Tenant agrees
to attorn to the purchaser or assignee.
26. LANDLORD'S CONSENT: Except as otherwise provided herein, where Landlord's
consent is required under this Lease, such consent shall not be
unreasonably withheld.
27. APPLICABLE LAW: This Lease shall be governed by the laws of the State of
Arizona.
-5-
28. TIME OF ESSENCE: Time is of the essence with respect to the performance of
every provision of this Lease in which time of performance is a factor.
INTENDING TO BE LEGALLY BOUND, the parties have executed this Lease agreement
effective as of the 1st day of January, 2000.
LANDLORD: TENANT:
ILX Resorts Incorporated
/s/ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------- By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ---------------------------------
Its: Chairman
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
-6-
EXHIBIT "A"
LEGAL DESCRIPTION OF PREMISES
The North 106 feet of Lots 4 and 5, of DUNDEE SUBDIVISION, according to the plat
of record in the office of the County Recorder of Maricopa County, Arizona,
recorded in Book 10 of Maps, Page 5.
EXCEPT the East 7 feet of the North 106 feet of Lot 5.
-7-