1.0 Recitals
Berg ("lessor") desires to lease a parcel of real property ("property") to Hudesman ("lessee") for a period of 99 years, commencing October 19, 1959 and terminating October 18, 2058. The parties anticipate that lessee will demolish a residence currently located on the property and construct a commercial building on and sublease the property. Rental payments under this lease are structured to permit lessee to amortize costs of construction and thereafter to permit lessor to share equally with lessee in rental income derived from the property and are also structured to reflect anticipated changes in the purchasing price of the U.S. dollar.
2.0 Definitions
2.1. Gross rentals: All amounts payable to lessee from subtenants for possession and use of some or all of the property, other than amounts payable as reimbursement for common area maintenance expenses incurred by lessee.
2.2. Net rentals: Gross rentals less depreciation taken by lessee for the property for income tax purposes and less payments made by lessee for taxes and assessments relating to the property, for insurance on the property, for management fees relating to the property, and for real estate commissions in connection with any sublease of the property. For purposes of this definition, management fees to be subtracted from gross rentals shall not exceed 5% of gross rentals per year and real estate commissions to be subtracted from gross rentals shall not exceed: (i) For the first 10 years of a sublease, 5% of the gross rentals from the tenant under such sublease; and (ii) for the balance of any sublease, 2.5% of the gross rentals from the tenant under such sublease.
2.3. Common area maintenance expenses: Common areas are all areas of the property used for vehicle access and parking, for pedestrian traffic between structures, and other open space between structures, up to curbs on city streets. Expenses for maintaining common areas include those incurred for landscape maintenance, watering, and replacement, as necessary, for trash collection and janitorial services, for lighting, and for repairing, resurfacing and restripping paved areas and sidewalks as necessary.