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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2026

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from            to   

      

Commission File No. 001-42493

 

BOXABL Inc.
(Exact name of registrant as specified in its charter)

 

Texas   86-2579471

(State or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification No.)

 

5345 East North Belt Road, North Las Vegas, Nevada 89115
(Address of Principal Executive Offices, including zip code)

 

702-500-9000
(Registrant’s telephone number, including area code)

 

FG Merger II Corp. 104 S. Walnut Street, Unit 1A, Itasca, Illinois 60143
(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share   BXBL   THE NASDAQ STOCK MARKET LLC

 

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 preceding 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 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

 

FGMC ceased to be a shell company as of July 17, 2026.

 

As of July 17, 2026 there were approximately 9,409,633 shares of Class A Common Stock and 232,083,710 shares of Class B Common Stock outstanding

 

 

 

 

 

 

BOXABL Inc., formerly known as FG MERGER II Corp

 

Quarterly Report on Form 10-Q

TABLE OF CONTENTS

 

  Page
PART I – FINANCIAL INFORMATION 2
Item 1. Financial Statements 2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21
Item 3. Quantitative and Qualitative Disclosures about Market Risk 26
Item 4. Controls and Procedures 26
PART II – OTHER INFORMATION 27
Item 1. Legal Proceedings 27
Item 1A. Risk Factors 27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 28
Item 3. Defaults Upon Senior Securities 28
Item 4. Mine Safety Disclosures 28
Item 5. Other Information 28
Item 6. Exhibits 29
SIGNATURES 30

 

 

 

 

EXPLANATORY NOTE

 

On July 17, 2026, subsequent to the fiscal quarter ended June 30, 2026, to which this Quarterly Report on Form 10-Q (this “Quarterly Report”) relates, FG Merger II Corp. (“FGMC” or the “Company”) consummated the previously announced business combination (the “Mergers”) with BOXABL Inc., a Nevada corporation (“Legacy BOXABL”), pursuant to the Agreement and Plan of Merger, dated as of August 4, 2025 (as amended, the “Merger Agreement”). In connection with the closing of the Mergers, the Company was renamed “BOXABL Inc.” and its Class A Common Stock began trading on the Nasdaq Stock Market under the ticker symbol “BXBL” on July 20, 2026.

 

Unless stated otherwise, this Quarterly Report contains information about the Company before the Mergers. References to the “Company,” “our,” “us” or “we” in this Quarterly Report refer to FG Merger II Corp. and its consolidated subsidiaries before the consummation of the Mergers, unless the context otherwise requires.

 

Except as otherwise expressly provided herein, the information in this Quarterly Report does not reflect the consummation of the Business Combination, which occurred subsequent to the period covered hereunder. For unaudited condensed financial statements and management’s discussion and analysis of Legacy BOXABL, see Exhibits 99.1 and 99.2 hereto.

 

1
 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

BOXABL Inc., formerly known as FG MERGER II CORP

Condensed Balance Sheets (Unaudited)

 

   June 30, 2026   December 31, 2025 
   (Unaudited)   (Audited) 
ASSETS          
Current assets          
Cash and Cash Equivalents  $86,887   $486,900 
Prepaid expenses   52,620    97,547 
Total current assets   139,507    584,447 
Cash and investments held in trust account   83,202,034    82,136,888 
TOTAL ASSETS  $83,341,541   $82,721,335 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
Current liabilities          
Accounts payable  $4,441,357   $57,171 
Tax liability   254,602    137,747 
Forward purchase agreement liability, at fair value   9,677,387    — 
TOTAL CURRENT LIABILITIES  $14,373,346   $194,918 
           
TOTAL LIABILITIES  $

14,373,346

   $

194,918 

 
           
COMMITMENTS AND CONTINGENCIES   -     -  
Common stock; $0.0001 par value, subject to possible redemption, 8,000,000 shares at redemption value  $83,202,034   $82,136,888 
           
STOCKHOLDERS’ EQUITY (DEFICIT)          
Preferred Stock, $0.0001 par value; 1,000,000 shares authorized; 0 issued and outstanding   —    — 
Common stock, $0.0001 par value; 100,000,000 shares authorized; 2,295,800 issued and outstanding (excluding 8,000,000 shares subject to possible redemption)  $259   $259 
Retained earnings (accumulated deficit)   (14,234,098)   389,270 
Total Stockholders’ Equity (Deficit)   (14,233,839)   389,529 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)  $83,341,541   $ 82,721,335 

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

2
 

 

BOXABL Inc., formerly known as FG MERGER II CORP

Condensed Statements of Operations

(Unaudited)

 

   Six Months   Six Months   Three Months   Three Months 
   Ended   Ended   Ended   Ended 
   June 30, 2026   June 30, 2025   June 30, 2026   June 30, 2025 
Operating expenses:                    
General and administrative expenses  $4,829,127   $210,395   $4,555,829   $83,539 
Loss from operations   (4,829,127)   (210,395)   (4,555,829)   (83,539)
                     
Other income & expenses:                    
Loss on initial recognition forward purchase agreement liability   (8,603,256)   -    (8,603,256)   - 
Change in fair value of forward purchase agreement liability   (1,074,131)   -    (1,074,131)   - 
Investment income on trust account   1,212,390    1,402,254    490,166    842,499 
Income tax expense   (264,099)   (294,474)   (102,935)   (176,925)
Total other income    (8,729,096)   1,107,780    (9,290,156)   665,574 
                     
Net income (loss)  $(13,558,223)  $897,385   $(13,845,985)  $582,035 
                     
Weighted average redeemable common shares outstanding basic   8,000,000    6,674,033    8,000,000    8,000,000 
Basic earnings (loss) per share, redeemable shares  $(1.287)  $0.207   $(1.335)  $0.071 
                     
Weighted average redeemable common shares outstanding diluted   8,000,000    7,341,436    8,000,000    8,800,000 
Diluted earnings (loss) per share, redeemable shares  $(1.287)  $0.186   $(1.335)  $0.065 
                     
Weighted average non-redeemable common shares outstanding basic   2,295,800    2,308,098    2,295,800    2,295,800 
Basic earnings (loss) per non-redeemable share  $(1.420)  $(0.211)  $(1.378)  $0.005 
                     
Weighted average non-redeemable common shares outstanding diluted   2,295,800    2,332,776    2,295,800    2,325,380 
Diluted earnings (loss) per non-redeemable share  $(1.420)  $(0.199)  $(1.378)  $0.005 

 

The accompanying notes are an integral part of the financial statements.

 

3
 

 

BOXABL Inc., formerly known as FG MERGER II CORP

Condensed Statements of Changes in Stockholders’ Equity (Deficit)

(Unaudited)

 

   Common   Common   Additional       Total 
   Stock   Stock   paid-in   Accumulated   Stockholders’ 
   Shares   Amount   capital   Deficit   equity 
Balance at January 1, 2025 (audited)   2,300,000   $230   $26,436   $(29,298)  $(2,632)
Sale of 8,000,000 units at $10 per unit in IPO   8,000,000    800    79,999,200    —    80,000,000 
Sale of 248,300 units in private placement   248,300    24    2,482,976    —    2,483,000 
Sale of 1,000,000 $15 strike warrants in private placement   —    —    100,000    —    100,000 
Issuance of underwriter units   40,000    4    96    —    100 
Issuance of advisor units   7,500    1    —    —    1 
Reclassification of offering costs   —    —    (1,481,032)   —    (1,481,032)
Common shares subject to possible redemption   —    (800)   (80,799,200)   —    (80,800,000)
Accretion of common shares subject to possible redemption   —    —    (297,820)   —    (297,820)
Forfeiture of founder shares due to no over-allotment exercise by underwriter   (300,000)   —    —    —    — 
Net Income   —    —    —    315,350    315,350 
Balance at March 31, 2025   10,295,800   $259   $30,656   $286,052   $316,967 
Accretion of common shares subject to possible redemption   —    —    (30,656)   (500,107)   (530,763)
Net Income   —    —    —    582,035    582,035 
Balance at June 30, 2025     10,295,800     $ 259     $ —     $ 367,980     $ 368,239  
Balance at January 1, 2026 (audited)   10,295,800   $259   $—   $389,270   $389,529 
Accretion of common shares subject to possible redemption   —    —    —    (722,224)   (722,224)
Net Income   —    —    —    287,762    287,762 
Balance at March 31, 2026   10,295,800   $259   $—   $(45,192)  $(44,933)
Accretion of common shares subject to possible redemption   —     —     —     (342,921)   (342,921)
Net Loss   —    —    —    (13,845,985)   (13,845,985)
Balance at June 30, 2026   10,295,800   $259   $—   $(14,234,098)  $(14,233,839)

 

The accompanying notes are an integral part of the financial statements

 

4
 

 

BOXABL Inc., formerly known as FG MERGER II CORP

Condensed Statements of Cash Flows

(Unaudited)

 

   Six Months   Six Months 
   Ended   Ended 
   June 30, 2026   June 30, 2025 
Cash flows from operating activities          
Net income (loss)  $(13,558,223)  $897,385 
Adjustments to reconcile net loss to net cash used in operating activities:          

Interest earned on funds held in trust account

   

(1,212,390

)   

—

 
Loss on initial recognition of forward purchase agreement   8,603,256      
Change in fair value of forward purchase agreement liability   1,074,131      
Changes in operating assets and liabilities:          
Deferred offering cost   —    (20,939)
Accounts payable   4,384,186    (21,716)
Prepaid expenses   44,928    (148,912)
Tax liability   264,099    294,474 
Interest expense   —    6,671 
Net cash provided by (used in) operating activities   (400,013)   1,006,963 
           
Cash flows from investing activities          
Investment into trust account   —    (81,628,583)
Net cash used in investing activities   —    (81,628,583)
           
Cash flows from financing activities          
Proceeds from promissory note   —    417,000 
Repayment of promissory note   —    (548,671)
Proceeds from sale of 8,000,000 units at $10 per unit in IPO net of offering cost paid at closing   —    78,641,719 
Proceeds from sale of 248,300 units to Sponsor in private placement   —    2,483,000 
Proceeds from sale of 40,000 units to underwriters in private placement   —    100 
Proceeds from sale of 1,000,000 $15 strike warrants in private placement   —    100,000 
Net cash provided by financing activities   —    81,093,148 
           
Net increase in cash   (400,013)   471,528 
Cash at beginning of period   486,900    46,285 
Cash and cash equivalents at end of period  $86,887   $517,813 

 

The accompanying notes are an integral part of the financial statements.

 

5
 

 

BOXABL Inc., formerly known as FG MERGER II CORP

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

June 30, 2026 (UNAUDITED)

 

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

 

BOXABL Inc. formerly known as FG Merger II Corp. (the “Company”) is, as of June 30, 2026, a blank check company incorporated in Nevada on September 20, 2023. The Company was formed for the purpose of merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (“Business Combination”).

 

As of June 30, 2026, the Company had not yet commenced any operations. All activity through June 30, 2026 relates to the Company’s formation and the initial public offering (“IPO”), which is described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the IPO. The Company has selected December 31 as its fiscal year end.

 

The registration statement of the Company was declared effective on January 28, 2025. On January 30, 2025, the Company consummated its IPO of 8,000,000 units at $10.00 per unit (the “Units”). Each Unit consists of one share of common stock of the Company, par value $0.0001 per shares (“Public Shares”) and one right to receive one-tenth common share (“Public Right”). The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $80,000,000.

 

Simultaneously with the closing of the IPO, the Company consummated private placement ( “Private Placement”) in which i) FG Merger Investors II LLC (the “Sponsor”) and Ramnaraine Jaigobind purchased 223,300 and 25,000 private units (the “Private Units”) respectively, at a price of $10.00 per Private Unit, generating total proceeds of $2,483,000 and ii) the Sponsor purchased in aggregate 1,000,000 $15.00 exercise price warrants (the “$15 Private Warrants”) at a price of $0.10 per $15 Private Warrant, each exercisable to purchase one shares of common stock at $15.00 per share, for an aggregate purchase price of $100,000.

 

Each Private Unit consists of one common share and one right (“Private Unit Right”). Each whole Private Unit Right entitles the holder to convert the right to one-tenth share of common stock.

 

Each $15 Private Warrant entitles the holder to purchase one share of Common Stock at an exercise price of $15.00 per each share, will be exercisable for a period of 10 years from the date of Business Combination, will be non-redeemable, and may be exercised on a cashless basis. Additionally, $15 Private Warrants and the shares issuable upon the exercise of the $15 Private Warrants are not to be transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.

 

The Company Units are listed on the National Association of Securities Dealers Automated Quotations (“Nasdaq”). The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and sale of the $15 Private Warrants, and Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. Nasdaq rules provide that the Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the net assets held in the Trust Account (as defined below) (excluding any deferred underwriting commissions and taxes payable on interest earned on the Trust Account). The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940 as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination.

 

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Following the closing of the IPO, an amount of $80,800,000 ($10.10 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of Private Placement Securities were placed in a trust account (“Trust Account”) and invested in a money market fund, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below.

 

The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the Company may seek stockholder approval of a Business Combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against the proposed Business Combination. In the event that the Company seeks stockholder approval in connection with a Business Combination, the Company will proceed with the Business Combination only if a majority of the outstanding shares voted are voted in favor of the Business Combination.

 

If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s amended and restated articles of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.

 

The holders of Public Shares are entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

 

If a stockholder vote is not required and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its amended and restated articles of incorporation, offer such redemption pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.

 

The Sponsor, officers, directors and advisors (the “Initial Stockholders”) have agreed (a) to vote their Founder Shares (as defined in Note 5) as well as any common shares underlying the Private Units, and any Public Shares purchased during or after the IPO in favor of a Business Combination, (b) not to propose an amendment to the Company’s amended and restated articles of incorporation with respect to the Company’s pre-Business Combination activities prior to the consummation of a Business Combination unless the Company provides dissenting public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to redeem any shares (including the Founder Shares as well as any common shares underlying the Private Units) into the right to receive cash from the Trust Account in connection with a stockholder vote to approve a Business Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company does not seek stockholder approval in connection therewith) or a vote to amend the provisions of the amended and restated articles of incorporation relating to stockholders’ rights of pre-Business Combination activity and (d) that the Founder Shares, the Private Units and $15 Private Warrant (including underlying securities) shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated. However, the Initial Stockholders will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased during or after the IPO if the Company fails to complete its Business Combination.

 

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The Company has until 24 months from the closing of the IPO to complete a Business Combination. If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (net of funds withdrawn for working capital purposes (not to exceed $1,000,000 annually) and taxes payable and less interest to pay dissolution expenses up to $100,000), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law. There will be no redemption rights or liquidation distribution with respect to the Company’s warrants, which will expire worthless if the Company fails to complete its initial Business Combination within the Combination period.

 

The Sponsor has agreed that it will be liable to the Company, if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below $10.10 per share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

 

Merger Agreement

 

On August 4, 2025, FGMC, Boxabl Inc. (“Target” or “BOXABL”) and FG Merger Sub II Inc., a Nevada corporation and wholly-owned subsidiary of FGMC (“Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides for a two-step merger transaction (the “Mergers”) in which, first, Merger Sub will merge with and into BOXABL (the “First Merger”), with BOXABL surviving as a wholly-owned subsidiary of FGMC, and, immediately thereafter, BOXABL (as the surviving company in the First Merger) will merge with and into FGMC (the “Second Merger”), with Company continuing as the surviving public company (the “Combined Company”). By virtue of the consummation of the Mergers, the Combined Company will change its name to BOXABL Inc. The Boards of Directors of BOXABL, Company, and Merger Sub have unanimously approved the Merger Agreement and the transactions contemplated thereby.

 

The Merger Agreement was subsequently amended on November 3, 2025 to extend the Agreement End Date from December 31, 2025 to March 31, 2026; on April 6, 2026 to further extend the Agreement End Date to July 31, 2026 and to revise certain lock-up and securities-definition terms and on May 6, 2026 to revise the forms of Company and Sponsor Lock-Up Agreements.

 

Consideration

 

The aggregate merger consideration to be received by BOXABL stockholders is equal to a combination of preferred and common shares of FGMC that equals a total of $3,500,000,000, each at a deemed value of $10 per share. There is no minimum cash required to close the Merger.

 

Closing

 

All conditions to closing of the Mergers, including approval of the transaction by the stockholders of BOXABL and FGMC at their respective special meetings held June 9, 2026, effectiveness of the Registration Statement on Form S-4, expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and approval for listing of the Combined Company Common Stock on Nasdaq, were satisfied, and the Mergers closed on July 17, 2026. See Note 8, Subsequent Events, for further discussion of the Closing and the transactions consummated in connection therewith.

 

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Certain Related Agreements

 

In connection with the execution of the Merger Agreement, the sponsor of FGMC, entered into a support agreement pursuant to which it agreed to vote its shares of FGMC in favor of the transaction and take certain other actions in support of the Mergers (the “Sponsor Support Agreement”). Certain stockholders of the BOXABL entered into a support agreement pursuant to which they agreed to vote their shares of BOXABL in favor of the transaction and take certain other actions in support of the Mergers (the “BOXABL Support Agreement”). At closing, BOXABL and FGMC will enter into lock-up agreements with certain BOXABL stockholders (the “BOXABL Lock-Up Agreements”) and with the sponsor (the “Sponsor Lock-Up Agreement”), restricting the transfer of certain shares for specified periods following the closing.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying financial statements are presented in U.S. Dollars and conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.

 

Emerging Growth Company

 

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it 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 attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its 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.

 

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 election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, 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 the Company’s 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 accounting standards used.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

 

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Cash and Cash Equivalents

 

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2026 or as of December 31,2025.

 

Cash and Investments Held in the Trust Account

 

At December 31, 2025, all the assets held in the Trust Account, totaling $82,136,888, were invested in a money market fund focused on U.S. Treasury obligations. During the six months ended June 30, 2026, the Trust Account earned interest income of $1,212,390, and the Company withdrew $147,244 from the Trust Account to pay taxes. The remaining funds in the Trust Account were subsequently moved out of the money market fund and held in cash. As a result, at June 30, 2026, the assets held in the Trust Account, totaling $83,202,034, were held in cash.

 

Equity Prepaid Forward Transaction

 

On May 28, 2026, the Company entered into an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Agreement” or “FPA”) with Atsion Opportunity Fund LLC, Series 2 (“Atsion”), pursuant to which Atsion intended, but was not obligated, to purchase and hold up to 3,000,000 shares of the Company’s common stock prior to the closing of the Mergers. Immediately after entry into the Forward Purchase Agreement, the parties entered into a Novation Agreement dated May 28, 2026, pursuant to which one-half of the Forward Purchase Agreement was novated to FG Capital Partners, LLC (“FGCP”). On June 11, 2026, Atsion assigned and novated its remaining 50% interest in the Forward Purchase Agreement to Camac Fund, LP, pursuant to an Assignment and Novation Agreement among Atsion, Camac Fund, LP, FGMC, and BOXABL.

 

The Forward Purchase Agreement provides that the seller is to be prepaid an aggregate cash amount equal to the number of shares set forth in a Pricing Date Notice multiplied by the per-share redemption price payable to redeeming shareholders in connection with the Mergers, funded directly from the Trust Account no later than the earlier of (a) one business day after the Closing Date or (b) the date any Trust Account assets are otherwise disbursed in connection with the Mergers. The Forward Purchase Agreement was not entered into to satisfy any minimum cash condition to closing; rather, it was intended to provide access to potential additional growth capital in replacement of redeemed Trust assets.

 

Following consummation of the business combination, the Forward Purchase Agreement is subject to cash settlement based principally on the daily volume-weighted average price of the underlying shares during the applicable valuation period, subject to the contractual settlement amount adjustments and other provisions of the Forward Purchase Agreement. In connection with the Closing of the Business Combination on July 17, 2026, the Company funded an aggregate Prepayment Amount of $31,078,060 to Camac Fund, LP and FGCP from the Trust Account ($15,539,030 to each counterparty). The Forward Purchase Agreement is a cash-settled equity forward that does not qualify for equity classification under ASC 815-40 given its cash-only settlement terms, and is accounted for as a derivative financial instrument recognized at fair value, with changes in fair value recognized in earnings, as further described below.

 

The Forward Purchase Agreement is accounted for as a derivative financial instrument under ASC 815 and is measured at fair value with changes in fair value recognized in earnings. The Company evaluates the derivative at each reporting date and recognizes changes in fair value in its statements of operations. During the three and six months ended June 30, 2026, the Company recorded an approximate $8.6 million loss on the initial recognition of the Forward Purchase Agreement, and an approximate $1.1 million loss on the change in fair value of the Forward Purchase Agreement, which are included in statements of operations. As of June 30, 2026, the Company recorded a derivative liability of $9.6 million related to the Forward Purchase Agreement, which is included in the accompanying balance sheets.

 

The derivative was classified as a Level 3 financial instrument within the fair value hierarchy since its valuation incorporates significant inputs that are not directly observable in the market. See Note 2 for additional detail of the fair value determination of the Forward Purchase Agreement as of May 28, 2026 and as of June 30, 2026.

 

Deferred Offering Costs

 

Deferred offering costs consist of legal, underwriter expenses and accounting expenses incurred through the balance sheet date that are directly related to the IPO and that are charged to stockholder’s equity upon the completion of the IPO. Offering cost amounting to $1,481,031 (including $750,000 of underwriting fee and $250,000 of advisor fee) were charged to shareholders’ additional paid-in capital upon the completion of the IPO on January 30, 2025.

 

Warrant and Right Instruments

 

The Company accounts for the Public Rights issued in connection with the IPO, the Private Unit Rights and the $15 Private Warrants in accordance with the guidance contained in FASB ASC 815, “Derivatives and Hedging”. Under ASC 815-40, Public Rights and the Private Unit Rights and $15 Private Warrants meet the criteria for equity treatment and as such will be recorded in shareholders’ equity. If the Public Rights, Private Unit Rights and $15 Private Warrant no longer meet the criteria for equity treatment, they will be recorded as a liability and remeasured each period with changes recorded in the statement of operations.

 

Common Stock Subject to Possible Redemption

 

The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at June 30, 2026, common stock subject to possible redemption is presented as temporary equity at redemption value, outside of the stockholders’ equity section of the Company’s balance sheet.

 

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The Company recognizes changes in redemption value using the “at redemption value” method and accordingly recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Such changes are reflected in additional paid-in-capital to the extent available; once additional paid-in-capital was reduced to zero, the remaining changes were charged against retained earnings (accumulated deficit).

 

Income Taxes

 

The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits as of June 30, 2026 and no amounts accrued for interest and penalties. 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 Company is subject to income tax examinations by major taxing authorities since inception. The company’s year-end is December 31 and no statutory tax deadline has yet occurred.

 

As of June 30, 2026, the Company has estimated $264,099 in income tax expense on the income earned in the Trust Account.

 

Reconciliation of Net Income (Loss) per Common Share

 

The Company complies with the accounting and disclosure requirements of ASC 260, Earnings Per Share. The Company utilizes a two-class methodology in calculation of earnings per share. The Company has redeemable shares that were issued in IPO and non-redeemable shares which include shares issued in Private Placement, Underwriter Units, Advisor Units and Founder Share (as described below). Income and losses are shared pro rata between the redeemable and nonredeemable common shares. Net income (loss) per share of common stock is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for the respective period. Net income from IPO until June 30, 2025, was allocated to redeemable and non-redeemable common shares. Diluted net income per share attributable to stockholders adjusts the basic net income per share attributable to stockholders and the weighted-average shares of common share outstanding for the potentially dilutive impact of outstanding warrants. As the Company reported a net loss in certain of the periods presented, all potentially dilutive securities are antidilutive and have therefore been excluded from the calculation of diluted net loss per share for those periods. Accordingly, basic and diluted net loss per share is the same when presenting a net loss.

 

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The following table reflects the calculation of basic and diluted net earnings (loss) per share of common stock for the three and six months ended June 30, 2026 and June 30, 2025:

 

Net loss from January 1, 2026, to June 30, 2026  $(13,558,223)

 

          
   For the Six months ended June 30, 2026 
   Redeemable   Non- Redeemable     
   Shares   Shares   Total 
Total number of ordinary shares – basic and diluted   8,000,000    2,295,800    10,295,800 
Ownership percentage   77.7%   22.3%   100%
Total loss allocated by class  $(10,534,739)  $(3,023,484)   (13,558,223)
Less: Accretion allocated based on ownership percentage   (827,618)   (237,528)   (1,065,146)
Plus: Accretion applicable to the redeemable class   1,065,146    —    1,065,146 
Total loss by class  $(10,297,211)  $(3,261,012)   (13,558,223)
                
Weighted average shares   8,000,000    2,295,800      
Loss per ordinary share – basic and diluted  $(1.287)  $(1.420)     

 

Net loss from January 1, 2025, to IPO date  $(106)
Net earnings from IPO date to June 30, 2025   897,491 
Total earnings from January 1, 2025 to June 30, 2025  $897,385 

 

          
   For the Six months ended June 30, 2025 
   Redeemable   Non- Redeemable     
   Shares   Shares   Total 
Total number of ordinary shares – basic   8,000,000    2,295,800    10,295,800 
Ownership percentage   78%   22%   100%
Total earnings allocated by class  $700,043   $197,342    897,385 
Less: Accretion allocated based on ownership percentage   (2,425,500)   (684,115)   (3,109,615)
Plus: Accretion applicable to the redeemable class   3,109,615    —    3,109,615 
Total earnings (loss) by class  $1,384,158   $(486,773)   897,385 
                
Weighted average shares   6,674,033    2,308,098      
Earnings (loss) per ordinary share - basic  $0.207   $(0.211)     

 

          
   For the six months ended June 30, 2025 
   Redeemable   Non- Redeemable     
   Shares   Shares   Total 
Total number of ordinary shares – diluted   8,800,000    2,325,380    11,125,380 
Ownership percentage   79%   21%   — 
Total income allocated by class  $709,018   $188,367    897,385 
Less: Accretion allocated based on ownership percentage   (2,456,596)   (653,019)   (3,109,615)
Plus: Accretion applicable to the redeemable class   3,109,615    —    3,109,615 
Total earnings (loss) by class  $1,362,037   $(464,652)   897,385 
                
Weighted average shares   7,341,436    2,332,776      
Earnings (loss) per ordinary share - diluted  $0.186   $(0.199)     

 

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Net loss from April 1, 2026, to June 30, 2026  $(13,845,985)

 

          
   For the three months ended June 30, 2026 
   Redeemable   Non- Redeemable     
   Shares   Shares   Total 
Total number of ordinary shares – basic and diluted   8,000,000    2,295,800    10,295,800 
Ownership percentage   77.7%   22.3%   — 
Total loss allocated by class  $(10,758,330)  $(3,087,655)  $(13,845,985)
Less: Accretion allocated based on ownership percentage   (266,450)   (76,472)   (342,922)
Plus: Accretion applicable to the redeemable class   342,922    —      342,922 
Total loss by class  $(10,681,858)  $(3,164,127)   (13,845,985)
                
Weighted average shares   8,000,000    2,295,800      
Loss per ordinary share – basic and diluted  $(1.335)  $(1.378)     

 

Net earnings from April 1, 2025, to June 30, 2025  $582,035 

 

          
   For the three months ended June 30, 2025 
   Redeemable   Non- Redeemable     
   Shares   Shares   Total 
Total number of ordinary shares – basic   8,000,000    2,295,800    10,295,800 
Ownership percentage   78%   22%   — 
Total earnings allocated by class  $453,987   $128,048   $582,035 
Less: Accretion allocated based on ownership percentage   (413,995)   (116,768)   (530,763)
Plus: Accretion applicable to the redeemable class   530,763    —    530,763 
Total earnings by class  $570,755   $11,280    582,035 
                
Weighted average shares   8,000,000    2,295,800      
Earnings per ordinary share - basic  $0.071   $0.005      

 

          
   For the three months ended June 30, 2025 
   Redeemable   Non- Redeemable     
   Shares   Shares   Total 
Total number of ordinary shares – diluted   8,800,000    2,325,380    11,125,380 
Ownership percentage   79%   21%   — 
Total earnings allocated by class  $459,808   $122,227   $582,035 
Less: Accretion allocated based on ownership percentage   (419,303)   (111,460)   (530,763)
Plus: Accretion applicable to the redeemable class   530,763    —    530,763 
Total earnings by class  $571,268   $10,767    582,035 
                
Weighted average shares   8,800,000    2,325,380      
Earnings per ordinary share - diluted  $0.065   $0.005      

 

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Fair Value of Financial Instruments

 

The fair value of the Company’s assets and liabilities which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement”, approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.

 

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities.

 

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

 

Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 input include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

 

Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

 

The fair value of the marketable securities held in Trust Account is determined using the level 1 input.

 

The Company applies ASC 820 in the valuation of the derivative related to the Forward Purchase Agreement for financial statement purposes. The fair value of the derivative liability was determined using a valuation model that incorporates the following: (i) the probability of the consummation of the FGMC and BOXABL merger, (ii) the expected close date; (iii) the expected post-close price at closing, (iv) the projected volatility, and (v) the risk-free rate.

 

Financial instruments measured, on a recurring basis, at fair value in accordance with ASC 820 as promulgated by the FASB as of June 30, 2026 and May 28, 2026 are as follows:

 

   Level 1   Level 2   Level 3   Total 
As of June 30, 2026:                    
Forward Purchase Agreement liability  $—   $—   $9,677,387   $9,677,387 
As of May 28, 2026:                    
Forward Purchase Agreement liability  $—   $—   $8,603,256   $8,603,256 

 

The following table presents a rollforward of the derivative liability associated with the Forward Purchase Agreement for the period from May 28, 2026 (inception) through June 30, 2026:

 

 SCHEDULE OF ROLLFORWARD OF THE DERIVATIVE LIABILITY ASSOCIATED WITH THE FORWARD PURCHASE AGREEMENT

Derivative liability – Forward Purchase Agreement at May 28, 2026  $8,603,256 
Change in fair value of derivative instrument related to Forward Purchase Agreement   1,074,131 
Derivative liability – Forward Purchase Agreement at June 30, 2026  $9,677,387 

 

Operating Segments

 

ASC Topic 280, “Segment Reporting,” establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise that engage in business activities from which it may recognize revenues and incur expenses, and for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance.

 

The Company’s chief operating decision makers (“CODMs”) have been identified as Larry G. Swets, Jr., the Company’s then-Chief Executive Officer, and Hassan R. Baqar, the Company’s then-Chief Financial Officer, who reviewed the assets, operating results, and financial metrics for the Company as a whole to make decisions about allocating resources and assessing financial performance through the Closing of the Business Combination on July 17, 2026. Following the Closing, the chief operating decision maker function was assumed by Martin Costas, the Combined Company’s Chief Financial Officer. Accordingly, management has determined that there is only one reportable segment.

 

The CODM assesses performance for the single segment and decides how to allocate resources based on net income or loss that also is reported on the statement of operations as net income or loss. The measure of segment assets is reported on the balance sheet as total assets. When evaluating the Company’s performance and making key decisions regarding resource allocation, the CODM reviews several key metrics included in net income or loss and total assets, which include the following:

 

   June 30, 2026   June 30, 2025 
General and administrative expenses  $4,829,127   $210,395 
Interest earned in the Trust Account  $1,212,390    1,402,254 

 

The CODM reviews interest earned on the Trust Account to measure and monitor stockholder value and determine the most effective strategy of investment with the Trust Account funds while maintaining compliance with the Trust Agreement.

 

General and administrative expenses are reviewed and monitored by the CODM to manage and forecast cash to ensure enough capital is available to complete a business combination or similar transaction within the business combination period. The CODM also reviews general and administrative costs to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget. General and administrative costs, as reported on the statement of operations, are the significant segment expenses provided to the CODM on a regular basis.

 

All other segment items included in net income or loss are reported on the statement of operations and described within their respective disclosures.

 

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Recently Issued Accounting Standard

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07, which is applicable to entities with a single reportable segment, will primarily require enhanced disclosures about significant segment expenses and enhanced disclosures in interim periods. The guidance in ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024, with early adoption permitted. The Company adopted this guidance for the year ended 2025. The adoption resulted in disclosure changes only.

 

In December 2023, the Financial Accounting Standards Board issued ASU 2023-09, which requires enhanced disclosures related to the effective tax rate reconciliation and income taxes paid. The guidance is intended to improve transparency regarding the nature and magnitude of factors contributing to differences between the statutory tax rate and the effective tax rate, as well as cash taxes paid by jurisdiction.

 

The Company adopted this standard effective January 1, 2025, on a prospective basis. The adoption did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows, as the amendments are disclosure-only in nature. Prior-period amounts have been recast to conform to the current-period presentation, where applicable.

 

ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits as of June 30, 2026 and no amounts accrued for interest and penalties. 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 Company is subject to income tax examinations by major taxing authorities since inception. The company’s year-end is December 31 and no statutory tax deadline has yet occurred. As of June 30, 2026, the Company has estimated $264,099 in income tax expense on the income earned in the Trust Account.

 

The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

 

NOTE 3. INITIAL PUBLIC OFFERING

 

On January 30, 2025, the Company consummated its IPO of 8,000,000 Units at $10.00 per unit. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $80,000,000.

 

NOTE 4. PRIVATE PLACEMENT

 

Simultaneously with the closing of the IPO, the Company consummated Private Placement in which i) Sponsor and Ramnaraine Jaigobind purchased 223,300 and 25,000 Private Units respectively, at a price of $10.00 per Private Unit, generating total proceeds of $2,483,000 and ii) the Sponsor purchased an aggregate of 1,000,000 $15 Private Warrants”) at a price of $0.10 per $15 Private Warrant, each exercisable to purchase one shares of common stock at $15.00 per share, for an aggregate purchase price of $100,000.

 

NOTE 5. RELATED PARTY TRANSACTIONS

 

Founder Shares

 

On October 6, 2023, the Company issued an aggregate of 2,156,250 shares of common stock (the “Founder Shares”) to the Sponsor for an aggregate purchase price of $25,000 in cash. On October 18, 2023, the Sponsor transferred an aggregate of 465,000 Founder Shares to members of the Company’s management, board of directors and senior advisors, resulting in the Sponsor holding 1,691,250 Founder Shares. The Founder Shares include an aggregate of up to 300,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the Initial Stockholders will collectively own 20% of the Company’s issued and outstanding shares after the IPO (assuming the Initial Stockholders did not purchase any Public Shares in the IPO and excluding the securities underlying the $15 Private Warrants, the Private Units).

 

On August 21, 2024, Company issued a dividend of approximately 0.066 Founder Shares for every issued and outstanding founder share resulting in our initial stockholders holding an aggregate of 2,300,000 Founder Shares, an increase of 143,750 Founder Shares compared to 2,156,250 initial Founder Shares issued.

 

On February 5, 2025, the underwriters elected to terminate their over-allotment option to purchase 1,200,000 IPO Units resulting in Sponsor to forfeit 300,000 Founder Shares. As of June 30, 2026, there were 2,000,000 Founder Shares outstanding.

 

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The Initial Stockholders have agreed not to transfer, assign or sell any of the Founder Shares (except to certain permitted transferees) until, with respect to 50% of the Founder Shares, the earlier of (i) twelve months after the date of the consummation of a Business Combination, or (ii) the date on which the closing price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after a Business Combination, with respect to the remaining 50% of the Founder Shares, 12 months after the date of the consummation of a Business Combination, or earlier, in each case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their Public Shares for cash, securities or other property. The lock-up restrictions are also subject to early release upon certain liquidation, merger, exchange, or reorganization transactions and automatically expire if the Combined Company Common Stock trades at or above $20.00 per share at any time (including intraday)

 

Promissory Notes

 

On October 6, 2023, the Company issued a promissory note to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $150,000. The Company drew $125,000 under the promissory note. On April 1, 2025, the Company paid off the entire $125,000 balance. The promissory note was noninterest bearing and payable on the consummation of the IPO.

 

On January 30, 2025, the Company issued an unsecured promissory note of $417,000 to the Sponsor. This promissory note bore interest at the rate of 12% per year and matured on January 30, 2026. As of April 1, 2025, all outstanding principal and interest under the promissory note had been paid in full

 

Administrative Services Agreement

 

The Company entered into an administrative services agreement (the “Administrative Services Agreement”) with the Sponsor whereby the Sponsor will perform certain services for the Company for a monthly fee of $15,000. Sponsor administrative fees were $45,000 and $90,000 for the three and six months ended June 30, 2026 respectively. The Administrative Services Agreement has been terminated as of July 16, 2026.

 

Larry G. Swets and Hassan R. Baqar, who served as executive officers of the company prior to the merger with BOXABL, both served as the managers of the Sponsor.

 

Forward Purchase Agreement

 

On May 28, 2026, the Company entered into an OTC Equity Prepaid Forward Transaction with Atsion Opportunity Fund LLC, Series 2, a non-related party. One-half of the Forward Purchase Agreement was subsequently novated to FG Capital Partners, LLC (‘FGCP’) pursuant to a Novation Agreement dated May 28, 2026. FGCP is affiliated with Larry G. Swets, Jr., Hassan R. Baqar, Scott D. Wollney and Richard E. Govignon, each an officer or director of the Company at the time of the transaction, making the Novation Agreement a related party transaction. See Note 8 for further discussion. Of the $9,677,387 derivative liability recognized as of June 30, 2026 related to the Forward Purchase Agreement, approximately $4,824,246 relates to the FGCP leg of the Forward Purchase Agreement, a related party.

 

Post Merger

 

Upon consummation of the Business Combination, Paolo Tiramani and Galiano Tiramani, directly and through the Austin Powers Trust and their respective family gift trusts, hold substantially all of the Company’s outstanding Class B Common Stock, which carries ten votes per share and, pursuant to the Company’s certificate of formation, may be held only by Paolo Tiramani, Galiano Tiramani and their respective permitted transferees. Paolo Tiramani beneficially owns 172,470,048 shares of Class B Common Stock (838,101 shares held directly, 86,864,301 shares held by the Austin Powers Trust, and 84,767,646 shares held by the Paolo Tiramani 2020 Family Gift Trust), representing approximately 71.42% of the Company’s outstanding common stock. Galiano Tiramani beneficially owns 59,613,662 shares of Class B Common Stock (389,629 shares held directly, 30,998,869 shares held by the Galiano Tiramani 2020 Family Gift Trust, and 28,225,164 shares held by the Shontor Asset Protection Trust), representing approximately 24.87% of the Company’s outstanding common stock. As a result, Messrs. Tiramani beneficially own approximately 96.37% of the combined voting power of the Company’s outstanding common stock, and the Company qualifies as a ‘controlled company’ under Nasdaq listing rules.

 

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NOTE 6. COMMITMENTS AND CONTINGENCIES

 

Registration Rights

 

The holders of the Founder Shares, the Private Units, the $15 Private Warrants (and their underlying securities) are entitled to registration rights pursuant to a registration rights agreement. The Company will bear the expenses incurred in connection with the filing of any registration statements pursuant to such registration rights.

 

Underwriting Agreement

 

The Company granted the underwriters a 45-day option to purchase up to 1,200,000 additional Units to cover over-allotments at the IPO price. On February 5, 2025, the underwriters elected to terminate their over-allotment option to purchase 1,200,000 Units resulting in the Sponsor forfeiting 300,000 Founder Shares.

 

The underwriters are entitled to an underwriting discount equal to the lesser of (i) 750,000 (ii) an amount equal to $750,000 plus 1% of the gross proceeds from the sale of the Over-Allotment Units. At IPO closing, the underwriters were paid $750,000.

 

Underwriters also received 40,000 private units (“Underwriter Units”) at close of IPO for a nominal price of $100.

 

Additionally, the Underwriter has agreed to defer underwriting commissions equal to 3.5% of the gross proceeds of the IPO (subject to the Company’s right, to allocate up to 50% of such fee to another financial institution in Company’s sole discretion) upon completion of the Business Combination.

 

Financial Advisor

 

Upon closing of the IPO, the Company paid $250,000 to the financial advisor and issued 25,000 private units (“Advisor Units”).

 

Equity Prepaid Forward Transaction

 

On May 26, 2026 (as amended and novated on May 28, 2026), the Company entered into OTC Equity Prepaid Forward Transactions (the “FPAs”) with Atsion Opportunity Fund LLC – Series 2 (“Atsion”) and, following a novation of 50% of the original transaction, FG Capital Partners LLC (“FGCP”). FGCP is a related party of the Company by virtue of its affiliation with the Sponsor and certain then-officers and directors of FGMC prior to the Closing.

 

On June 11, 2026, Atsion assigned and novated its remaining 50% interest in the Forward Purchase Agreement to Camac Fund, LP, pursuant to an Assignment and Novation Agreement among Atsion, Camac Fund, LP, FGMC, and BOXABL. Camac Fund, LP’s account is managed by Atsion Asset Management, LLC under a concurrent Investment Management Agreement. Following this novation, Atsion holds no remaining position under the Forward Purchase Agreement.

 

In connection with the Closing of the Business Combination on July 17, 2026, the Company funded an aggregate Prepayment Amount of $31,078,060 to Camac Fund, LP and FGCP from the Trust Account ($15,539,030 to each counterparty). The Forward Purchase Agreement is a cash-settled equity forward that does not qualify for equity classification under ASC 815-40 given its cash-only settlement terms, and is accounted for as a derivative financial instrument recognized at fair value, with changes in fair value recognized in earnings, as further described below.

 

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NOTE 7. STOCKHOLDERS’ EQUITY

 

Common Stock — The Company is authorized to issue 100,000,000 shares of common stock, par value $0.0001. On June 30, 2026 and December 31, 2025, there were 2,295,800 common shares outstanding, excluding 8,000,000 shares subject to possible redemption.

 

Rights — Public Rights will entitle the holder to receive one-tenth common share per each Public Right. On June 30, 2026, and December 31, 2025, the Company had 829,580 total rights including 800,000 Public Rights outstanding at the close of the IPO.

 

Warrants — The $15 Private Warrants entitles the holder to purchase one common share at an exercise price of $15.00 per each share, is exercisable for a period of 10 years from the date of Business Combination, is non-redeemable, and may be exercised on a cashless basis. Additionally, $15 Private Warrants and the shares issuable upon the exercise of the $15 Private Warrants are not to be transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions. The Company has 1,000,000 $15 Private Warrant outstanding at the close of the IPO. The Company had 1,000,000 $15 Private Warrants outstanding as of both June 30, 2026 and December 31, 2025.

 

The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described above, the warrants will not be adjusted for issuances of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period, the $15 Private Warrants may expire worthless.

 

NOTE 8. SUBSEQUENT EVENTS

 

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued.

 

As previously disclosed, on August 4, 2025, FG Merger II Corp., a Nevada corporation (“FGMC”), entered into an Agreement and Plan of Merger (as amended on November 3, 2025, April 6, 2026 and May 6, 2026, the “Merger Agreement”), with FG Merger Sub II Inc., a Nevada corporation and a wholly-owned subsidiary of FGMC (“Merger Sub”), and BOXABL Inc., a Nevada corporation (“BOXABL”). Terms used herein but not defined herein shall have the meanings ascribed to them in the Proxy Statement/Prospectus (as defined below).

 

On July 17, 2026 (the “Closing Date”), the parties consummated the transactions contemplated by the Merger Agreement (the “Business Combination”), as follows:

 

The Conversion

 

Prior to and in connection with the Closing, FGMC converted from a Nevada corporation to a Texas corporation (the “Conversion”) in accordance with the Nevada Revised Statutes (“NRS”) and the Texas Business Organizations Code (“TBOC”). Upon the Conversion, FGMC became a Texas corporation and each issued and outstanding security of FGMC remained outstanding and automatically represented a corresponding security of FGMC as a Texas corporation.

 

The Mergers

 

Following the Conversion and on the Closing Date, Merger Sub merged with and into BOXABL, with BOXABL surviving as a wholly-owned subsidiary of FGMC (the “First Merger”). Immediately thereafter, BOXABL merged with and into FGMC, with FGMC surviving (the “Second Merger”, and together with the First Merger, the “Mergers”). As a result of the Mergers, FGMC was renamed “BOXABL Inc.” (the “Combined Company”).

 

18
 

 

Pursuant to the terms of the Merger Agreement, at the applicable effective time, by virtue of the Mergers and without any action on the part of any party or any other person:

 

  ● each share of BOXABL’s common stock, par value $0.00001 (“BOXABL Common Stock”) (other than certain excluded shares and any shares held by stockholders who properly exercised and did not lose their dissenter’s rights under applicable Nevada law) was converted into the right to receive a number of shares of common stock of the Combined Company (“Combined Company Common Stock”), as determined by the exchange ratio set forth in the Merger Agreement (the “Common Exchange Ratio”);
     
  ● each share of BOXABL’s preferred stock, par value $0.00001 (“BOXABL Preferred Stock”) (other than any shares held by preferred stockholders who properly exercised and did not lose their dissenter’s rights under applicable Nevada law) was converted into the right to receive a number of shares of preferred stock of the Combined Company (“Combined Company Merger Preferred Stock”) as determined by the exchange ratio set forth in the Merger Agreement (the “Preferred Exchange Ratio”);
     
  ● all outstanding and unexpired BOXABL convertible securities (options and restricted stock units but excluding common stock warrants) were assumed by the Combined Company and became exercisable or convertible for Combined Company equity on the same terms, with adjustments as provided in the Merger Agreement;
     
  ● each BOXABL common stock warrant that remained outstanding was assumed by the First Merger Surviving Company and terminated at the effective time of the First Merger;
     
  ● each share of capital stock of Merger Sub issued and outstanding immediately prior to the First Merger Effective Time was automatically cancelled and converted into one share of common stock of the First Merger Surviving Company;
     
  ● all outstanding FGMC warrants and other convertible securities were assumed by the Combined Company and became exercisable for shares of Combined Company Common Stock, subject to adjustment as provided in the Merger Agreement;
     
  ● no fractional shares of Combined Company Common Stock or Combined Company Merger Preferred Stock were issued.

 

On the Closing Date, the Combined Company issued, or reserved for issuance, an aggregate of 246,524,760 shares of Combined Company Common Stock and issued 103,475,240 shares of Combined Company Merger Preferred Stock to the former BOXABL securityholders in exchange for their equity interests in BOXABL, representing aggregate merger consideration with a value of $3,500,000,000 based on a deemed value of $10.00 per share.

 

Listing of Securities

 

Prior to the Closing Date, FGMC Units, FGMC Common Stock and FGMC Rights were listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “FGMCU,” “FGMC” and “FGMCR,” respectively. In connection with the Mergers, all of the FGMC Units separated into their component parts and ceased trading on Nasdaq.

 

As of the open of trading on July 20, 2026, the Combined Company Class A Common Stock began trading on Nasdaq under the symbol “BXBL.” The Combined Company Merger Preferred Stock is not listed on Nasdaq or any other securities exchange and is not publicly traded.

 

The description of the Merger Agreement contained in this report does not purport to be complete and is qualified in its entirety by the text of the Merger Agreement, as amended, copies of which are attached as Exhibits 2.1 through 2.4 hereto and which are incorporated herein by reference.

 

The Merger Agreement is also described in detail in the definitive proxy statement/prospectus for the Mergers filed by FGMC with the Securities and Exchange Commission (the “Proxy Statement/Prospectus”).

 

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Lock-Up Agreements

 

In connection with the Mergers, on the Closing Date, the Combined Company entered into lock-up agreements (the “Lock-Up Agreements”) with the Sponsor of FGMC and certain former stockholders of BOXABL (including Paolo Tiramani and Galiano Tiramani), pursuant to which each of the parties to the Lock-Up Agreements agreed not to effect any sale or distribution of any equity securities of the Combined Company held by any of them during the lock-up period. For 50% of the lock-up shares, the lock-up period ends at the earlier of (a) 12 months after the Closing Date and (b) the date on which the closing price of the Combined Company Common Stock equals or exceeds $12.00 per share for any 20 trading days within any 30-trading-day period after the Closing Date. For the remaining 50% of the lock-up shares, the lock-up period ends 12 months after the Closing Date. The lock-up restrictions are also subject to early release upon certain liquidation, merger, exchange, or reorganization transactions and automatically expire if the Combined Company Common Stock trades at or above $20.00 per share at any time (including intraday).

 

Indemnification Agreements

 

In connection with the Mergers, on the Closing Date, the Combined Company entered into indemnification agreements (the “Indemnification Agreements”) with each of its directors and executive officers. Subject to certain exceptions, the Indemnification Agreements provide that the Combined Company will indemnify each of its directors and executive officers for certain expenses, which may include attorneys’ fees, judgments, fines and settlement amounts, incurred by a director or officer in any action or proceeding arising out of that person’s services as a director or officer of the Combined Company or of any other company or enterprise to which the person provides services at the Combined Company’s request.

 

The foregoing description of the Indemnification Agreements is qualified in its entirety by reference to the form of Indemnification Agreement, a copy of which is attached as Exhibit 10.3 hereto and is incorporated herein by reference.

 

The above-referenced agreements are described in the Proxy Statement/Prospectus.

 

Completion of Acquisition or Disposition of Assets.

 

The Mergers and each of the other proposals in the Proxy Statement/Prospectus were approved by FGMC’s stockholders and by BOXABL’s stockholders at their respective meetings. As indicated above, the Combined Company issued or reserved for issuance an aggregate of 246,524,760 shares of Combined Company Common Stock and 103,475,240 shares of Combined Company Merger Preferred Stock to the former stockholders of BOXABL on the Closing Date. In connection with the stockholder vote, an aggregate of 3,466,086 shares of FGMC Common Stock were redeemed by stockholders of FGMC resulting in the payment to such holders of an aggregate of $36,048,176.

 

As of the Closing Date and following the completion of the Business Combination, the Combined Company had approximately 241,493,343 shares of Combined Company Common Stock issued and outstanding, consisting of approximately 9,409,633 shares of Combined Company Class A Common Stock and approximately 232,083,710 shares of Combined Company Class B Common Stock, and 103,475,240 shares of Combined Company Merger Preferred Stock issued and outstanding. In addition, as of the Closing Date, the Combined Company had 1,000,000 Combined Company Warrants issued and outstanding, each entitling the holder thereof to purchase one share of Combined Company Common Stock at an exercise price of $15.00 per share.

 

OTC Forward Purchase Agreements

 

On May 26, 2026 (as amended and novated on May 28, 2026), the Company entered into OTC Equity Prepaid Forward Transactions (the “FPAs”) with Atsion Opportunity Fund LLC – Series 2 (“Atsion”) and, following a novation of 50% of the original transaction, FG Capital Partners LLC (“FGCP”). FGCP is a related party of the Company by virtue of its affiliation with the Sponsor and certain then-officers and directors of FGMC prior to the Closing.

 

On June 11, 2026, Atsion assigned and novated its remaining 50% interest in the Forward Purchase Agreement to Camac Fund, LP, pursuant to an Assignment and Novation Agreement among Atsion, Camac Fund, LP, FGMC, and BOXABL. Camac Fund, LP’s account is managed by Atsion Asset Management, LLC under a concurrent Investment Management Agreement. Following this novation, Atsion holds no remaining position under the Forward Purchase Agreement.

 

In connection with the Closing of the Business Combination on July 17, 2026, the Company funded an aggregate Prepayment Amount of $31,078,060 to Camac Fund, LP and FGCP from the Trust Account ($15,539,030 to each counterparty). The Forward Purchase Agreement is a cash-settled equity forward that does not qualify for equity classification under ASC 815-40 given its cash-only settlement terms, and is accounted for as a derivative financial instrument recognized at fair value, with changes in fair value recognized in earnings, as further described below.

 

Subsequent to the Closing, the Company received Optional Early Termination payments totaling $1,652,170: $1,182,000 from FGCP (118,200 shares, effective July 20, 2026) and $470,170 from Camac Fund, LP (47,017 shares), together representing 165,217 Recycled Shares terminated at the then-current $10.00 Reference Price. Approximately 2,822,985 Recycled Shares remain outstanding under the Forward Purchase Agreement, and the Company has not otherwise initiated settlement of the Forward Purchase Agreement as of the date these financial statements were issued.

 

Share Issuance to Vendor

 

On August 5, 2025, BOXABL Inc. entered into an investor relations consulting agreement with MZHCI, LLC. Pursuant to that agreement, Boxabl became obligated to issue Class A common stock to MZHCI, LLC following completion of the Mergers. On August 13, 2026, Boxabl issued 31,579 shares of Class A common stock to MZHCI, LLC.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to FG Merger II Corp, prior to its consummation of the Business Combination with BOXABL Inc. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to FG Merger Investors II LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report as well as:

 

·The unaudited interim consolidated financial statements of Legacy BOXABL as of and for the three and six months ended June 30, 2026 and June 30, 2025, which are included as Exhibit 99.1 hereto, and
·Management’s Discussion and Analysis of Financial Condition and Results of Operations of Legacy BOXABL for the three and six months ended June 30, 2026, which is included as Exhibit 99.2 hereto,

 

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

 

Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report includes “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 Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance, or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Registration Statement on Form S-4 (as amended) and the definitive proxy statement/prospectus relating to the Mergers filed by FGMC with the SEC, under the section titled “Risk Factors”, under Cautionary Note Regarding Forward-Looking Statements and Risk Factors. The Company’s securities filings can be accessed on the EDGAR section of the U.S. Securities and Exchange Commission’s (“SEC”) website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

 

Overview

 

FG Merger II Corp. (the “Company”) was, prior to the consummation of the Mergers, a blank check company incorporated in Nevada on September 20, 2023. The Company was formed for the purpose of merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (“Business Combination”).

 

As of June 30, 2026, the Company had not yet commenced any operations. All activity through June 30, 2026 relates to the Company’s formation and the initial public offering (“IPO”), which is described below. The Company did not reflect any operating revenues until after the completion of the Business Combination. Until the consummation of the Business Combination, discussed below, the Company generated non-operating income in the form of interest income from the proceeds derived from the IPO. The Company has selected December 31 as its fiscal year end.

 

Corporate History

 

Our IPO registration statement was declared effective on January 28, 2025. On January 30, 2025, we consummated our IPO of 8,000,000 units at $10.00 per unit (the “Units”). Each Unit consist of one share of common stock of the Company, par value $0.0001 per shares (“Public Shares”) and one right to receive one-tenth common share (“Public Right”). The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $80,000,000.

 

Simultaneously with the closing of the IPO, we consummated private placement ( “Private Placement”) in which i) FG Merger Investors II LLC (the “Sponsor”) and Ramnaraine Jaigobind purchased 223,300 and 25,000 private units ( the “Private Units”) respectively, at a price of $10.00 per Private Unit, generating total proceeds of $2,483,000 and ii) the Sponsor purchased an aggregate of 1,000,000 $15.00 exercise price warrants (the “$15 Private Warrants”) at a price of $0.10 per $15 Private Warrant, each exercisable to purchase one share of common stock at $15.00 per share, for an aggregate purchase price of $100,000.

 

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Each Private Unit consisted of one common share and one right (“Private Unit Right”). Each whole Private Unit Right entitled the holder to convert the right to one-tenth share of common stock.

 

Each $15 Private Warrant entitled the holder to purchase one share of Common Stock at an exercise price of $15.00 per each share, are exercisable for a period of 10 years from the date of the Business Combination, are non-redeemable, and may be exercised on a cashless basis. Additionally, $15 Private Warrants and the shares issuable upon the exercise of the $15 Private Warrants were not transferable, assignable, or salable until after the completion of the Business Combination, subject to certain limited exceptions.

 

Following the closing of the IPO, and amount of $80,800,000 ($10.10 per Unit) from the net proceed of the sale of the Units in the IPO and the sale of Private Placement Securities were placed in a trust account (“Trust Account”) account (“Trust Account”) and invested in a money market fund, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by us, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below.

 

Merger Agreement

 

On August 4, 2025, FGMC entered into an Agreement and Plan of Merger, as amended on November 3, 2025, April 6, 2026, and May 6, 2026, with BOXABL Inc. and FG Merger Sub II Inc. (the “Merger Agreement”). On July 17, 2026, the parties consummated the transactions contemplated by the Merger Agreement (the “Mergers”), and FGMC was renamed “BOXABL Inc.” For a full description of the Merger Agreement, the Mergers, the related agreements entered into in connection with the Closing, and the consideration paid, see Note 1 and Note 8 to the financial statements included elsewhere in this Quarterly Report.

 

Certain Related Agreements

 

Lock-up Agreements

 

At closing, BOXABL and FGMC entered into lock-up agreements with certain BOXABL stockholders (the “Company Lock-Up Agreements”) and with the sponsor (the “Sponsor Lock-Up Agreement”), restricting the transfer of certain shares for specified periods following the Closing Date.

 

Forward Purchase Agreement

 

On May 28, 2026, the Company entered into an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Agreement”) with Atsion Opportunity Fund LLC, Series 2 (“Atsion”), pursuant to which Atsion intended, but was not obligated, to purchase and hold up to 3,000,000 shares of the Company’s common stock prior to the closing of the Mergers. Immediately after entry into the Forward Purchase Agreement, the parties entered into a Novation Agreement dated May 28, 2026, pursuant to which one-half of the Forward Purchase Agreement was novated to FG Capital Partners, LLC (“FGCP”). On June 11, 2026, Atsion assigned and novated its remaining 50% interest in the Forward Purchase Agreement to Camac Fund, LP, pursuant to an Assignment and Novation Agreement among Atsion, Camac Fund, LP, FGMC, and BOXABL.

 

The Forward Purchase Agreement provides that the seller is to be prepaid an aggregate cash amount equal to the number of shares set forth in a Pricing Date Notice multiplied by the per-share redemption price payable to redeeming shareholders in connection with the Mergers, funded directly from the Trust Account no later than the earlier of (a) one business day after the Closing Date or (b) the date any Trust Account assets are otherwise disbursed in connection with the Mergers. Following consummation of the business combination, the Forward Purchase Agreement is subject to cash settlement based principally on the daily volume-weighted average price of the underlying shares during the applicable valuation period, subject to the contractual settlement amount adjustments and other provisions of the Forward Purchase Agreement.

 

Results of Operations

 

Prior to the consummation of the Mergers, we had neither engaged in any operations nor generated any revenues. Our only activities through June 30, 2026 were organizational activities, including those necessary to identifying and working with the target company for a Business Combination. During the six months ended June 30, 2026, we generated non-operating income in the form of interest income on marketable securities. We incurred expenses primarily related to expenses in connection with completing a Business Combination, as well as expenses incurred as a result of being a public company (for legal, financial reporting, accounting and auditing compliance).

 

For the three months ended June 30, 2026, the Company reported a net loss of $13,845,985, which consists of $490,166 in investment income earned in Trust Account, offset by $4,555,829 in general and administrative expenses and $102,935 income tax expense and $9,677,387 expense related to the valuation and change in fair value of the Forward Purchase Agreement. For the six months ended June 30, 2026, the Company reported a net loss of $13,558,223, which consists of $1,212,390 in investment income earned in Trust Account, offset by $4,829,127 in general and administrative expenses, $264,099 income tax expense and $9,677,387 expense related to the valuation and change in fair value of the Forward Purchase Agreement. The 2026 general and administrative expenses include legal and professional fees of $4,709,113 which were primarily related to the Mergers.

 

For the three months ended June 30, 2025, the Company reported a net income of $582,035 which consists of $842,499 in investment income earned in Trust Account, offset by $83,539 in general and administrative expenses and $176,925 in income tax expense. For the six months ended June 30, 2025, the Company reported a net income of $897,385 which consists of $1,402,254 in investment income earned in Trust Account, offset by $210,395 in general and administrative expenses and $294,474 in income tax expense.

 

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Liquidity and Capital Resources

 

As of June 30, 2026, we held a cash balance of $86,887. Prior to the IPO, our liquidity needs were satisfied through the $25,000 proceeds received from the Sponsor for purchase of Founder Shares (as defined below), as well as $125,000 loan from Sponsor under a promissory note (“Promissory Notes”) which was fully repaid on April 1, 2025.

 

On January 28, 2025, we issued an unsecured promissory note of $417,000 to the Sponsor. This promissory note bore interest at the rate of 12% per year and matured on January 30, 2026. On March 5, 2025, the company paid $257,000 in principal and $4,935 in interest. On April 1, 2025, the Company paid $160,000 in principal and $1,736 in interest. As of June 30, 2025, there was no outstanding balance under the promissory note.

 

On January 30, 2025, we consummated our IPO of 8,000,000 Units. The Units were sold at $10.00 per Unit, generating gross proceeds to the Company of $80,000,000.

 

Simultaneously with the closing of the IPO, we consummated the Private Placement of Private Units and $15 Private Warrants generating proceeds of $2,483,000 and $100,000 respectively.

 

From the proceeds of the IPO, Private Placement and the promissory note dated January 28, 2025, the Company put 80,800,000 ($10.10 per Unit) in the Trust and retained approximately $2,200,000 for working capital and payment of expenses related to IPO.

 

Pursuant to the Investment Management Trust Agreement between the Company and Continental Stock Transfer and Trust (“Trustee”) signed at IPO closing, we were allowed to withdraw up to $1,000,000 annually for working capital need from the investment income earned in the Trust Account. As of June 30, 2026, we had withdrawn $1,200,000 from the Trust Account.

 

As of June 30, 2026, the Company reported accounts payable of $4,441,357. This primarily represented legal and professional fees incurred as a result of the Mergers and were settled at the close of the Business Combination.

 

At the close of the Business Combination, the Combined Company received gross proceeds of approximately $47.2 million from the FGMC trust account, after giving effect to the actual redemption of 3,466,086 shares by FGMC’s public stockholders. Of that amount, approximately $31.1 million was applied to fund the Combined Company’s prepayment obligations under the Forward Purchase Agreement, as described in Note 8 to the financial statements included elsewhere in this Quarterly Report. A portion of the remainder was applied toward transaction costs and other closing obligations, resulting in a net increase of approximately $6.4 million in unrestricted cash. See Exhibits 99.1 and 99.2 hereto for further detail. Subsequent to the Closing, the Company received Optional Early Termination payments under the Forward Purchase Agreement totaling $1,652,170: $1,182,000 from FGCP (118,200 shares, effective July 20, 2026) and $470,170 from Camac Fund, LP (47,017 shares), together representing 165,217 Recycled Shares terminated at the then-current $10.00 Reference Price. Approximately 2,822,985 Recycled Shares remain outstanding under the Forward Purchase Agreement, which are subject to cash settlement based principally on the daily volume-weighted average price of the underlying shares during the applicable valuation period, subject to the contractual settlement amount adjustments and other provisions of the Forward Purchase Agreement. The Company has not otherwise initiated settlement of the Forward Purchase Agreement as of the date these financial statements were issued.

 

Based on the Combined Company’s average monthly cash used in operating activities of approximately $2.6 million (calculated from operating cash outflow of $15.9 million for the six months ended June 30, 2026, divided by six months as reported in Exhibit 99.1 hereto), we anticipate that our existing liquidity, together with the net proceeds received from the Mergers and cash generated from sales of our products, will be sufficient to meet our cash needs for the next twelve months.

 

However, our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of spending on sales and marketing efforts and product development, and the costs of ongoing compliance and activities following the Mergers.

 

When addressing our long-term liquidity requirements, we consider the next five years, from 2026 through 2030. We expect that funding for the Company’s operations over the longer term will be driven primarily from the sales of the Company’s products, as well as future debt or equity capital raises and proceeds from the OTC Prepaid Forward financing agreements.

 

Going Concern

 

The financial statements discussed above reflect FGMC’s results as the Company’s predecessor registrant for the period ended June 30, 2026, and do not include the results of Legacy BOXABL, which was merged into the Company upon the Closing. Legacy BOXABL’s unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2026, filed as Exhibit 99.1 hereto, disclose that substantial doubt existed about Legacy BOXABL’s ability to continue as a going concern twelve months after the financial statements are available to be issued. As described in Exhibit 99.2, Legacy BOXABL’s management depicts the net proceeds received in connection with the Mergers, together with existing liquidity and cash generated from product sales. However, there can be no assurance management’s plans will be achieved.

 

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Off-Balance Sheet Arrangement

 

We have no obligations, assets, or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2026.

 

Contractual Obligations

 

For a discussion of Legacy Boxabl’s material obligations and commitments that have been assumed by the Company following the Merger and consummation of the Business Combination, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Commitments and Contingencies” in Exhibit 99.2 hereto.

 

Registration Rights

 

The holders of the Founder Shares, the Private Units, the $15 Private Warrants (and their underlying securities) are entitled to registration rights pursuant to a registration rights agreement. We filed a registration statement on Form S-3 (File No. 333-297729) on July 27, 2026, registering for resale up to 3,310,288 shares of Class A common stock held by the selling securityholders named therein, including shares issuable upon conversion of rights and exercise of the $15 Private Warrants, in satisfaction of such registration rights. We will bear the expenses incurred in connection with the filing of this registration statement pursuant to such registration rights.

 

Underwriting Agreement

 

We granted the underwriters a 45-day option to purchase up to 1,200,000 additional Units to cover over-allotments at the IPO price. On February 5, 2025, the underwriters elected to terminate their over-allotment option to purchase 1,200,000 Units resulting in Sponsor forfeiting 300,000 Founder Shares.

 

The underwriter is entitled to an underwriting discount equal to the lesser of (i) 750,000 (ii) an amount equal to $750,000 plus 1% of the gross proceeds from the sale of the Over-Allotment Units. At IPO closing, the underwriter was paid $750,000.

 

The Underwriter also received 40,000 private units (“Underwriter Units”) at close of IPO for a nominal price of $100 The Underwriter Units are subject to registration rights under the Registration Rights Agreement, to which ThinkEquity LLC is a signatory. Additionally, the Underwriter has agreed to defer underwriting commissions equal to 3.5% of the gross proceeds of the IPO (subject to the Company’s right, to allocate up to 50% of such fee to another financial institution in Company’s sole discretion) until completion of the Mergers. The Mergers closed July 17, 2026 and ThinkEquity was paid $5,900,381 in aggregate transaction costs at Closing to settle this obligation.

 

Financial Advisor

 

Upon closing of the IPO, we paid $250,000 to our financial advisor and issued 25,000 private units (the “Advisor Units”). The Advisor Units are subject to registration rights and are included in the S-3 (File No. 333-297729); the financial advisor (EarlyBirdCapital, Inc.) and its affiliated designees are named as selling security holders therein.

 

Investor Relations Consultant

 

On August 5, 2025, BOXABL Inc. entered into an investor relations consulting agreement with MZHCI, LLC. Pursuant to that agreement, Boxabl became obligated to issue Class A common stock to MZHCI, LLC following completion of the Mergers. On August 13, 2026, Boxabl issued 31,579 shares of Class A common stock to MZHCI, LLC.

 

Related Party Transactions

 

The Company’s related party transactions, including the Founder Shares held by the Sponsor and other Initial Stockholders, the related lock-up provisions, the Promissory Notes issued to and repaid to the Sponsor, the Administrative Services Agreement (terminated in connection with the Closing), the Forward Purchase Agreement and related Novation Agreement with FG Capital Partners, and the Class B Common Stock held by Paolo Tiramani and Galiano Tiramani following the Business Combination, are described in Note 5 to the financial statements included elsewhere in this Quarterly Report.

 

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Critical Accounting Policies

 

The preparation of our financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe are reasonable, and actual results could differ from those estimates. We consider an accounting estimate to be critical if it requires us to make particularly difficult, subjective, or complex judgments about matters that are inherently uncertain, and if different estimates that we reasonably could have used, or changes in the accounting estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations. A description of our other significant accounting policies, including those discussed below, can be found in Note 2 to the financial statements included elsewhere in this Quarterly Report. Based on this definition, we have identified the following as our critical accounting estimates.

 

Common Stock Subject to Possible Redemption

 

We classify our common stock subject to possible redemption as temporary equity, at redemption value, based on management’s judgment that the redemption feature is conditioned on the occurrence of uncertain future events not solely within the Company’s control. This judgment determines whether the underlying shares are presented within temporary equity, as a liability, or within permanent stockholders’ equity, and a different conclusion regarding the Company’s control over redemption would have resulted in a materially different balance sheet presentation. In addition, once classified as temporary equity, the carrying value of the redeemable shares is remeasured each period to equal their redemption value, which is directly determined by the balance of the Trust Account. Because the Trust Account balance fluctuates with investment income earned, and (through the Closing Date) was itself sensitive to the level of stockholder redemptions, this remeasurement is a significant estimate that materially affects both temporary equity and, once additional paid-in capital is exhausted, accumulated deficit, in each reporting period presented.

 

Income Taxes

 

We are required to estimate our income tax expense on income earned within the Trust Account for each reporting period. This estimate requires judgment in applying the applicable federal statutory tax rate to trust investment income and in assessing whether any deferred tax assets or unrecognized tax benefits should be recorded. As of June 30, 2026, we estimated $264,099 of income tax expense on income earned in the Trust Account for the six months then ended. Because this estimate is based on trust investment income that is itself variable and depends on market conditions, a different assumption regarding the applicable rate or the character of trust earnings could result in a materially different income tax expense than currently estimated.

 

Forward Purchase Agreement

 

The Forward Purchase Agreement is a Level 3 derivative measured at fair value each period under ASC 815. The valuation requires significant judgment because it relies on unobservable inputs, the probability of consummation of the Business Combination, the expected closing date, the expected post-closing share price, projected volatility, and the risk-free rate, and because the instrument settles based on the volume-weighted average trading price of our common stock during the applicable valuation period. Reasonable changes in these inputs, particularly projected volatility or the expected post-closing share price, could result in a materially different fair value. Since inception on May 28, 2026, the recorded liability increased from approximately $8.6 million to approximately $9.7 million as of June 30, 2026, an increase of approximately $1.1 million, reflecting the change in fair value recognized in earnings during the period, as described in Note 2.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted 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 in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including, as of June 30, 2026, Larry G. Swets, Jr., our then-Chief Executive Officer, and Hassan R. Baqar, our then-Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Evaluation of Disclosure Controls and Procedures

 

As required by Rules 13a-15 and 15d-15 under the Exchange Act, Larry G. Swets, Jr., our then-Chief Executive Officer, and Hassan R. Baqar, our then-Chief Financial carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2026. Based upon their evaluation, our then-Chief Executive Officer and then-Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.

 

Changes in Internal Control Over Financial Reporting

 

During the six months ended June 30, 2026, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

In connection with the Mergers, the Company’s financial statements for the period ended June 30, 2026 were prepared following the Closing, utilizing personnel, processes, and systems that are now part of the Company’s combined control environment, which includes personnel and processes previously used by Legacy BOXABL. Legacy BOXABL previously disclosed material weaknesses in its internal control over financial reporting, which remain unremediated as of the date of this Quarterly Report. Because the Company’s financial statements for the period covered by this Quarterly Report were prepared using this control environment, these material weaknesses should be considered in evaluating the reliability of the financial reporting process used to prepare this Quarterly Report, notwithstanding that the reported period predates the Closing. For a description of these material weaknesses, see Item 9A of BOXABL Inc.’s most recent Annual Report on Form 10-K, filed with the SEC on March 27, 2026.

 

Control and Procedures of Legacy Boxabl

 

Management of Legacy Boxabl evaluated the effectiveness of its disclosure controls and procedures as of June 30, 2026 and concluded that Legacy Boxabl’s disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses in the design and operation of effective Information Technology General Controls (“ITGC”) over certain key financial IT systems and of certain business process controls over the preparation and timely review of financial statements and disclosures described below. Please see “Controls and Procedures” in Exhibit 99.2 hereto.

 

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PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

In the ordinary course of business, the Company is occasionally party to various legal proceedings and claims. Management believes that the probability of a material loss from any of the Company’s existing claims is remote, and there are no legal proceedings that the Company believes will have a material adverse effect on its financial position.

 

Legacy Boxabl

 

The Company has filed suit against two former employees alleging breach of contract, violations of the Computer Fraud and Abuse Act and the Defend Trade Secrets Act, conversion, and related claims arising from post-termination conduct; one matter has been settled and released, and the other remains pending, with the Company anticipating a judgment in its favor of less than $250,000. The Company also has a pending action against Brave Control Solutions, Inc. and an individual defendant seeking recovery of amounts paid under certain contracts, and a pending action against the Arizona Department of Housing seeking a declaratory judgment that the Department lacks authority to regulate the Company’s sale of park model RV units in that state.

 

The Company has received EEOC and NLRB charges from former employees alleging discrimination and interference with employee rights, and does not expect a material impact from these matters. A former Chief Operating Officer’s civil complaint against the Company and its directors was settled in March 2025 for a $105,000 payment in exchange for the surrender of 5,882,353 shares of the Company’s Series A Preferred Stock. A shareholder lawsuit brought by Leader Capital against the Company and its former transfer agent was dismissed on the Company’s motion for summary judgment, and in February 2026 the Court awarded the Company approximately $260,000 in attorneys’ fees and costs; the plaintiff’s deadline to appeal was May 15, 2026. The Company has also received claims alleging violations of California trap-and-trace and privacy laws related to social media advertising, which it does not expect to have a material impact.

 

In connection with a mining project in Arizona, Pronghorn Homes, LLC has filed suit against the Company with potential exposure of up to $250,000, which the Company is defending without having accrued a loss contingency, and a separate dispute with an RV park operator over zoning compliance for installed units remains unresolved; the Company has not accrued a loss contingency for that matter but has recorded a credit loss allowance against a related $270,000 receivable. Freeport-McMoRan Bagdad, Inc. has asserted, but not yet filed suit on, a claim of approximately $1.17 million related to units installed on its property, which the Company is negotiating to resolve.

 

The Company previously identified misconduct by a former employee involving the unauthorized sale of Company shares. In connection with that matter, the Company settled a related shareholder claim through the issuance of 218,182 shares of Series A-1 Preferred Stock and settled with a number of other affected purchasers through the issuance of an aggregate of 5,264,068 shares of Series A-1 Preferred Stock. The Company anticipates a judgment in its favor against the former employee of less than $1 million, though the investigation remains ongoing.

 

Additional information regarding these and other matters is included in the notes to Legacy BOXABL’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2026, filed as Exhibit 99.1 hereto.

 

ITEM 1A RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

 

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

Prior to the Mergers, the following equity issuances occurred, on October 6, 2023, we issued an aggregate of 2,156,250 shares of Founder Shares to the Sponsor for an aggregate purchase price of $25,000 in cash. On October 18, 2023, the Sponsor transferred an aggregate of 465,000 Founder Shares to members of the Company’s management, board of directors and senior advisors, resulting in the Sponsor holding 1,691,250 Founder Shares. The Founder Shares include an aggregate of up to 300,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the Initial Stockholders will collectively own 20% of the Company’s issued and outstanding shares after the IPO (assuming the Initial Stockholders did not purchase any Public Shares in the IPO and excluding the securities underlying the $15 Private Warrants, the Private Units).

 

On August 21, 2024, we issued a dividend of approximately 0.066 Founder Shares for every issued and outstanding founder share resulting in our initial stockholders holding an aggregate of 2,300,000 Founder Shares, an increase of 143,750 founder compared to 2,156,250 initial Founder Shares issued.

 

On February 5, 2025, the underwriters elected to terminate their over-allotment option to purchase 1,200,000 IPO Units resulting in Sponsor to forfeit 300,000 Founder Shares. As of March 31, 2025, there were 2,000,000 Founder Shares outstanding.

 

Our registration statement was declared effective on January 28, 2025. On January 30, 2025, we consummated our IPO of 8,000,000 Units at $10.00 per unit Each Unit consist of one Public Share and one Public Right to receive one-tenth common share. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $80,000,000.

 

Simultaneously with the closing of the IPO, we consummated Private Placement in which i) the Sponsor and Ramnaraine Jaigobind purchased 223,300 and 25,000 Private Units respectively, at a price of $10.00 per Private Unit, generating total proceeds of $2,483,000 and ii) the Sponsor purchased in aggregate of 1,000,000 $15 Private Warrants at a price of $0.10 per $15 Private Warrant, each exercisable to purchase one shares of common stock at $15.00 per share, for an aggregate purchase price of $100,000.

 

Each Private Unit consists of one common share and one Private Unit Right. Each whole Private Unit Right entitles the holder to convert the right to one-tenth share of common stock.

 

Each $15 Private Warrant entitles the holder to purchase one share of Common Stock at an exercise price of $15.00 per share, will be exercisable for a period of 10 years from the date of Business Combination, will be non-redeemable, and may be exercised on a cashless basis. Additionally, $15 Private Warrants and the shares issuable upon the exercise of the $15 Private Warrants are not to be transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.

 

Following the closing of the IPO, and amount of $80,800,000 ($10.10 per Unit) from the net proceed of the sale of the Units in the IPO and the sale of Private Placement Securities were placed in the Trust Account.

 

We paid a total of $750,000 and $250,000 in underwriting fee and advisor fee respectively, and approximately $482,000 for other costs and expenses related to the IPO.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

In connection with the Business Combination, the Company reincorporated in Texas and amended its Bylaws. The amended Bylaws set forth procedures for stockholder to bring business before an annual meeting, including with respect to nominees to the Company’s board of directors. For further information, please see the Company’s Bylaws filed as Exhibit 3.2 hereto and incorporated herein by reference.

 

On August 3, 2026, the Company entered into a Fifth Amendment to its Facilities Lease with respect to the Building 1 Premises (174,250 square feet) located at 5345 East North Belt Road, North Las Vegas, NV, to extend the lease term to December 31, 2031. The amendment does not extend the term of the separate lease for the Building 2 Premises (114,613 square feet) located at 5445 East North Belt Road. The amendment provides for a monthly rent of approximately $157,000 for the Building 1 Premises, increasing annually and with several monthly abatements. The terms of the Facilities Lease, as amended are detailed in Exhibit 10.10 to this quarterly report on Form 10-Q and are incorporated by reference herein.

 

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ITEM 6. EXHIBITS.

 

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.

 

No.   Description of Exhibit
     
2.1 *   Agreement and Plan of Merger, dated as of August 4, 2025, by and among FG Merger II Corp., FG Merger Sub II Inc. and BOXABL Inc. (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form S-4, as amended (File No. 333-290357)).
     
2.2   First Amendment to Agreement and Plan of Merger, dated November 3, 2025 (incorporated by reference to Exhibit 2.2 to the Registration Statement on Form S-4, as amended (File No. 333-290357)).
     
2.3   Second Amendment to Agreement and Plan of Merger, dated April 6, 2026 (incorporated by reference to Exhibit 2.3 to the Registration Statement on Form S-4, as amended (File No. 333-290357)).
     
2.4   Third Amendment to Agreement and Plan of Merger, dated May 6, 2026 (incorporated by reference to Exhibit 2.4 to the Registration Statement on Form S-4, as amended (File No. 333-290357)).
     
3.1   Certificate of Formation of BOXABL Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed July 23, 2026)
     
3.2   Bylaws of BOXABL Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K, filed July 23, 2026)
     
10.1   Form of Company Lock-Up Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed July 23, 2026)
     
10.2   Form of Sponsor Lock-Up Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed July 23, 2026)
     
10.3   Form of Indemnification Agreement (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed July 23, 2026)
     
10.4   BOXABL Inc. 2026 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed July 23, 2026)
     
10.5  

Amended 2021 BOXABL Inc. Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on October 18, 2024, by Legacy Boxabl (CIK 0001816937)

     
10.6   Form of Award for Directors
     
10.7+   Employment Agreement of Paolo Tiramani
     
10.8+   Employment Agreement of Galiano Tiramani
     
10.9   Purchase Agreement with Pronghorn Services LLC
     
10.10  

Facilities Lease Agreement, as amended

     
10.11   Lease Agreement for Second Manufacturing Facility
     
10.12   Supercar System, Inc. Services Agreement 
     
10.13   Supercar System, Inc. Lease Agreement 
     
10.14+   Martin Noe Costas Offer Letter 
     
10.15**   Restricted Stock Unit Agreement between the Company and Martin Noe Costas 
     
10.16**   Restricted Stock Unit Agreement between the Company and Martin Noe Costas 
     
10.17   Punnet Construction Purchase Contract
     
10.18   Forward Purchase Agreement dated May 28, 2026 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 29, 2026)  
     
10.19    Novation Agreement dated May 28, 2026 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on May 29, 2026)  
     
31.1   Certification of Paolo Tiramani, Co-Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2   Certification of Galiano Tiramani, Co-Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.3   Certification of Martin Noe Costas, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1   Certification of Paolo Tiramani, Co-Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
32.2   Certification of Galiano Tiramani, Co-Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
32.3   Certification of Martin Noe Costas, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
99.1  

Unaudited interim consolidated financial statements of BOXABL Inc. (Legacy BOXABL) as of and for the three and six months ended June 30, 2026 and June 30, 2025.

     
99.2   Management’s Discussion and Analysis of Financial Condition and Results of Operations of BOXABL Inc. (Legacy BOXABL) for the three and six months ended June 30, 2026.
     
101.INS   XBRL Instance Document
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.SCH   XBRL Taxonomy Extension Schema Document
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   XBRL Taxonomy Extension Labels Linkbase Document
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document
     
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.

 

+ Management contract or compensatory plan or arrangement.

* Schedule and exhibits to this Exhibit omitted pursuant to Regulation S-K Item 601(b)(2). The Combined Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

** Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

 

29
 

 

SIGNATURES

 

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  BOXABL INC.
   
Date: August 21, 2026 By: /s/ Paolo Tiramani
  Name: Paolo Tiramani
  Title: Co-Chief Executive Officer
     
Date: August 21, 2026 By: /s/ Galiano Tiramani
  Name: Galiano Tiramani
  Title: Co-Chief Executive Officer
     
Date: August 21, 2026 By: /s/ Martin Noe Costas
  Name: Martin Noe Costas
  Title: Chief Financial Officer and Principal Accounting Officer

 

30

 

 

Exhibit 10.6

 

Brownstein Draft

December 17, 2015

 

Special RSU Form for Directors

 

RESTRICTED STOCK UNIT AGREEMENT

UNDER THE

BOXABL INC. 2021 STOCK INCENTIVE PLAN

 

Name of Grantee: [____________] (the “Grantee”)
   
No. of Shares Subject to Award: 40,000 Restricted Stock Units (the “RSUs”)
   
Grant Date: __________, 202____ (the “Grant Date”)

 

[Note to Form: The Grant Date is the date the grant is approved by the Compensation Committee. The Grant Date cannot be retroactive.]

 

THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is entered into by and between Boxabl Inc., a Nevada corporation (the “Company”), and the Grantee named above, as of the Grant Date noted above, pursuant to the Boxabl Inc. 2021 Stock Incentive Plan, as amended from time to time (the “Plan”).

 

WHEREAS, the Company recognizes that the Grantee’s services are uniquely valuable to the Company and wishes to grant Restricted Stock Units to the Grantee in accordance with the Plan and this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Grantee agree as follows:

 

AGREEMENT

 

1. DEFINITIONS. To the extent not specifically defined in this Agreement, all capitalized terms used in this Agreement shall have the meaning set forth in the Plan.

 

2. GRANT OF RESTRICTED STOCK UNITS. Subject to the terms of this Agreement and Article 8 of the Plan, the Company grants to the Grantee the number of Restricted Stock Units set forth above (collectively referred to herein as the “RSUs”).

 

3. VESTING. The RSUs vest based on the satisfaction of the conditions set forth in Sections ‎3(a) and ‎3(b) below. The failure to satisfy the vesting conditions in either Section ‎3(a) or Section ‎3(b) below will result in the forfeiture of any unvested RSUs.

 

(a) TIME-BASED VESTING CONDITION.

 

(1) Subject to the other provisions of this Agreement and the Plan, including Sections ‎3(b) and ‎4 below, the RSUs, all of which are unvested as of the Grant Date, shall become eligible to vest in accordance with Section ‎3(b) subject to the satisfaction of the following conditions:

 

The RSUs shall become eligible to vest in four (4) equal installments as follows: twenty-five percent (25%) of the RSUs shall become eligible to vest on each three-month anniversary of the Grant Date (each such date, an “Anniversary Date”), subject in each case to the Grantee continuously providing services as a director of the Company from the Grant Date through the applicable Anniversary Date; provided, however, if the Company’s next annual meeting of stockholders occurs prior to the time that all RSUs become eligible to vest, the RSUs which are not eligible to vest as of the date of such annual meeting of stockholders shall immediately become eligible to vest on the date of such annual meeting, subject to the Grantee continuously providing services as a director of the Company from the Grant Date through such annual meeting date.

 

 
 

 

(2) Notwithstanding the foregoing, if the Grantee’s service as a director of the Company terminates by reason of the death or Disability of the Grantee prior to the Vesting Date (as defined below), the portion of the RSUs that have not yet become eligible to vest as of the date of such termination shall immediately become eligible to vest.

 

(b) VESTING OF RESTRICTED STOCK UNITS. Subject to the other provisions of this Agreement and the Plan, RSUs that become eligible to vest in accordance with Section ‎3(a) shall vest upon the earliest of (i) the date on which the Grantee’s service as a director of the Company terminates due to the Grantee’s death or Disability, (ii) the date of the closing of a transaction (or series of transactions) that results in a Change of Control provided that such transaction (or series of transactions) constitutes a “change in control event” as define in Section 409A of the Code and the regulations thereunder, and (iii) the first trading day that is on or after the expiration of the “lock up” period after the effective date of the initial underwritten sale of the Company’s equity securities to the public on an established securities market, subject in each case to the Grantee continuously providing services to the Company as a director from the Grant Date through the applicable date (the earliest of such dates, the “Vesting Date” and each RSU that becomes vested pursuant to this Section ‎3(b), a “Vested RSU”).

 

4. TERMINATION AND FORFEITURE OF UNVESTED RESTRICTED STOCK UNIT AWARD. If, prior to the Vesting Date, the Grantee’s service as a director terminates for any reason other than the Grantee’s death or Disability, the Grantee will forfeit all RSUs, including all RSUs that have become eligible to vest pursuant to Section ‎3(a), this Agreement shall be cancelled by the Company, and Grantee shall promptly return this Agreement to the Company for cancellation. Grantee further agrees to execute any document required by the Company in connection with such forfeiture, and such cancellation shall be effective regardless of whether Grantee returns this Agreement.

 

5. SETTLEMENT OF VESTED RESTRICTED STOCK UNITS. Vested RSUs shall be settled after the Vesting Date and on or prior to the date which is the earlier of (i) five (5) business days following the date on which the Grantee ceases to be a director of the Company due to the Grantee’s death or Disability and such cessation of director services constitutes a Separation from Service with respect to the Grantee and (ii) 30 days after the date in Section ‎3(b)(ii) (the applicable date of such settlement, the “Distribution Date”). On the Distribution Date, one share of Stock shall be issued to the Grantee for each Vested RSU, subject to the terms and conditions of the Plan and this Agreement; provided that, in its sole discretion, the Board or its duly authorized delegate may elect to settle any vested RSUs in fully vested shares of Stock, cash, or a combination thereof with an aggregate value equal to the value, as of the date on which the Distribution Date occurs, of the Stock that the Grantee would have received.

 

6. SECURITIES ACT.

 

(a) Registration. The Company has the right, but not the obligation, to cause the issuance and sale of the Stock issued pursuant to this Agreement, if any, or the resale thereof, to be registered under the Securities Act.

 

(b) Condition on Delivery of Stock. The Company shall not be required to deliver any shares of Stock on settlement of this RSU if, in the opinion of counsel for the Company, the issuance would violate the Securities Act or any other applicable federal or state securities laws or regulations. The Company may require the Grantee, prior to or after the issuance of any Stock hereunder, to sign and deliver to the Company a written statement, in form and content acceptable to the Company in its sole discretion, that the Grantee: (i) shall not sell any of such Stock or any other Stock of the Company that the Grantee may then own or hereafter acquire except with the prior written approval of the Company, and (ii) shall comply with the Securities Act, the Exchange Act, and all other applicable federal and state securities laws or regulations.

 

2
 

 

(c) Legends. In addition to any other legend that may be required by the Company from time to time or pursuant to applicable law, certificates representing any Stock shall bear a legend restricting the transferability of such Stock in substantially the following form:

 

“The transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including repurchase, right of first refusal, and restrictions against transfers) contained in a Restricted Stock Unit Agreement between the Company and the holder of this certificate (a copy of which is available at the offices of the Company for examination).

 

The shares represented by this certificate have not been registered under the Securities Act of 1933 or the securities laws of any state. The shares may not be sold or transferred in the absence of such registration or an exemption from registration.”

 

7. ACKNOWLEDGEMENTS AND REPRESENTATIONS OF GRANTEE. In connection with the delivery of any Stock, the Grantee hereby warrants and acknowledges the following:

 

(a) Further Limitations on Disposition. The Grantee understands and acknowledges that the RSUs and the shares of Stock subject to the RSUs are not registered under the Securities Act or any applicable state securities laws and may not be sold, assigned, transferred, or disposed of (including transfer by gift or operation of law) except in accordance with this Agreement. Further, the Grantee agrees to make no sale, assignment, transfer or other disposition of all or any portion of the RSUs or related Stock unless there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement, or the Grantee has obtained an opinion of counsel satisfactory to the Company that such disposition does not require registration under the Securities Act. The Company may request a copy of any such opinion and, upon such request, the Grantee shall promptly provide such copy to the Company. The Company shall not be required to permit the Grantee’s proposed assignment, transfer or other disposition unless such opinion is satisfactory (in form and substance) to the Company, as determined by the Company in its sole discretion.

 

(b) Investment Representations. The Grantee hereby represents and warrants to the Company as follows: (i) the Grantee is acquiring the Stock, if any, for the Grantee’s own account for investment only, and not for the resale or with a view to the distribution thereof; (ii) the Grantee has had such an opportunity as he or she has deemed adequate to obtain from the Company such information as is necessary to permit the Grantee to evaluate the merits and risks of the Grantee’s investment in the Company and has consulted with the Grantee’s own advisers with respect to the Grantee’s investment in the Company; (iii) the Grantee is an employee or Consultant of the Company or one of its Affiliates and/or the Grantee has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the acquisition of the Stock and to make an informed investment decision with respect to such acquisition; (iv) the Grantee can afford a complete loss of the value of the RSUs (and any related Stock) and is able to bear the economic risk of holding such Stock for an indefinite period; and (v) this Agreement constitutes the legal, valid and binding obligation of the Grantee, enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Grantee do not and shall not conflict with, violate, or cause a breach of any other agreement, contract or instrument to which the Grantee is a party or any judgment, order or decree to which the Grantee is subject.

 

3
 

 

8. LOCKUP PROVISION; MARKET STAND-OFF AGREEMENT. The Grantee agrees that he or she will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of shares of its Stock and ending on the date specified by the Company and the managing underwriter selected by the Company (such period not to exceed 180 days) or, if required by such underwriter and permitted by applicable law, such longer period of time as is necessary to accommodate regulatory restrictions: (a) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any securities of the Company held immediately prior to the effectiveness of the registration statement; or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any securities of the Company, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Stock or other securities of the Company, in cash or otherwise. The underwriters in connection with such registration are intended third party beneficiaries of this Section ‎8 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. The Grantee further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 8 or that are necessary to give further effect thereto.

 

9. RIGHTS OF GRANTEE. The Grantee shall have no rights as a stockholder of the Company with respect to the RSUs until actual shares of Stock are delivered to Grantee pursuant to this Agreement. Subject to this Agreement, upon the delivery of Stock, the Grantee shall be considered the record owner of the Stock and shall be entitled to vote the Stock and receive any dividends and any other distributions declared and paid by the Company with respect to the Stock, provided and only to the extent that the Grantee actually holds such Stock as of the applicable record date for any such dividend. The Grantee acknowledges that the Company is under no duty to declare any such dividends or to make any such distributions.

 

10. CONTINUED SERVICE. This Agreement shall not be construed to confer upon the Grantee any right to continued directorship or service with the Company and shall not limit the right of the Company or Stockholders, in their sole and absolute discretion, to terminate the Grantee’s directorship or service at any time.

 

11. ADMINISTRATION. This Agreement shall at all times be subject to the terms and conditions of the Plan, and the Plan shall in all respects be administered by the Committee in accordance with the terms of and as provided in the Plan. The Committee shall have the sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of the Committee with respect thereto and to this Agreement shall be final and binding upon the Grantee and the Company. In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of the Plan shall control.

 

12. Plan; ENTIRE AGREEMENT. This Agreement and all rights of the Grantee under this Agreement are subject to all of the terms and conditions of the Plan, which are incorporated herein by reference, including without limitation Section 10.6 of the Plan. In the event of a conflict or inconsistency between the terms and conditions of this Agreement and the Plan, the terms and conditions of the Plan shall govern. The Grantee agrees to be bound by the terms of the Plan and this Agreement. The Grantee acknowledges having read and understood the Plan and this Agreement. This Agreement and the Plan constitutes the entire, final, and complete agreement between the parties hereto with respect to the subject matter hereof and supersede all prior agreements, promises, understandings, negotiations, representations, and commitments, both written and oral, between the parties hereto with respect to the subject matter hereof.

 

4
 

 

13. TAX WITHHOLDING; TAX ADVICE. As described in Section 13.3 of the Plan, the Company shall have the right to deduct or withhold from any payments made by Company to the Grantee, or to require that the Grantee remit to Company, an amount sufficient to satisfy any federal, state or local taxes of any kind as are required by law to be withheld with respect to the settlement of the RSUs granted hereunder. The Grantee hereby acknowledges that neither the Company nor any of its representatives has provided to the Grantee any tax-related advice with respect to the matters covered by this Agreement. The Grantee understands and acknowledges that the Grantee is solely responsible for obtaining his or her own tax advice with respect to the matters covered by this Agreement.

 

14. ADJUSTMENTS. The number of shares of Stock subject to these RSUs shall be adjusted by the Committee as described in Section 11.1 of the Plan in the event of a change in the Company’s capital structure.

 

15. AMENDMENT. Except as otherwise provided in the Plan, this Agreement may only be amended with the written approval of the Grantee and the Company. The provisions of this Agreement may not be waived or modified unless such waiver or modification is in writing and signed by a representative of the Committee.

 

16. GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Nevada without regard to conflict of law principles that would require the application of any other law.

 

17. SEVERABILITY. If any provision of this Agreement, or the application of any such provision to any person or circumstance, is held to be unenforceable or invalid by any court of competent jurisdiction or under any applicable law, the parties hereto shall negotiate an equitable adjustment to the provisions of this Agreement with the view to effecting, to the greatest extent possible, the original purpose and intent of this Agreement, and in any event, the validity and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

 

18. ASSIGNMENT BY COMPANY. The Company’s Right of First Refusal may be assigned in whole or in part to any stockholder(s) of the Company.

 

19. CLAWBACK. Pursuant to Section 10.1 of the Plan, every Award issued pursuant to the Plan is subject to potential forfeiture or “clawback” to the fullest extent called for by applicable federal or state law, rules of any national securities exchange on which the Stock may be listed, or any policy of the Company. By accepting this Award, Grantee agrees to be bound by, and comply with, the terms of any such forfeiture or “clawback” provision imposed by applicable federal or state law, rules of any national securities exchange on which the Stock may be listed, or prescribed by any policy of the Company.

 

20. SHAREHOLDERS AGREEMENT; RESTRICTIVE COVENANTS; OTHER AGREEMENTS. If requested by the Company, Grantee agrees to be bound by, comply with, and become a party to, any current shareholders agreement or stockholders agreement, voting agreement, investors’ rights agreement, or similar agreement adopted by the Company in the future. Similarly, the Grantee agrees and acknowledges that he or she is subject to a Board Participation Agreement with the Company.

 

21. SECTION 409A COMPLIANCE. Neither the time nor the schedule of the payment of the RSUs may be accelerated or subject to further deferral except as permitted pursuant to Section 409A of the Code and the applicable regulations. Payment of the RSUs may be delayed only in accordance with Section 409A of the Code and the applicable regulations and the Grantee may not make any election regarding the time or the form of the payment of the RSUs. This Agreement shall be administered in compliance with Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A of the Code or an exception thereto. Nevertheless, the Company does not and cannot guarantee any particular tax effect or treatment of amounts due under this Agreement. Except for the Company’s responsibility to withhold applicable income and employment taxes, if any, the Company will not be responsible for the payment of any applicable taxes on compensation paid or provided pursuant to this Agreement.

 

22. ACCEPTANCE. This Award must be accepted by the Grantee within a period of 30 days after the Grant Date by executing this Agreement. Subject to the Committee’s discretion, if the Award is not accepted within this time period, all RSUs purported to be granted hereunder will be immediately forfeited.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

5
 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative and the Grantee has signed this Agreement, in each case as of the day and year first written above.

 

  BOXABL INC.
                     
  By:  
  Name:  
  Its:  
     
  GRANTEE:
     
  By:  
  Name:  

  Electronic mail Address:  
  Home Address:  
   

 

[Signature page to Restricted Stock Unit Agreement for Director.]

 

 

 

 

Exhibit 10.7

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of January 1, 2023, (the “Effective Date”) by and between Boxabl Inc (the “Company”), and Paolo Tiramani (“Executive”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

 

R E C I T A L S

 

WHEREAS, the Company desires to employ Executive as its Chief Executive Officer/Founder, and to enter into an agreement embodying the terms of such employment;

 

WHEREAS, Executive desires to accept such employment and enter into such an agreement.

 

A G R E E M E N T

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the Parties agree as follows:

 

Duties and Scope of Employment.

 

Positions and Duties. As of the Effective Date, Executive will serve as Chief Executive Officer/Founder of the Company. Executive will render such business and professional services in the performance of Executive’s duties, consistent with Executive’s position within the Company, as shall reasonably be assigned to Executive by the Company’s Board of Directors (the “Board”). The period of Executive’s at-will employment under the terms of this Agreement is referred to herein as the “Employment Term.”

 

During the Employment Term, Executive will serve as a member of the Board, subject to any required Board approval.

 

Obligations. During the Employment Term, Executive will perform Executive’s duties faithfully and to the best of Executive’s ability.

 

At-Will Employment. The parties agree that Executive’s employment with the Company will be “at-will” employment and may be terminated at any time with or without cause or notice, for any reason or no reason. Executive understands and agrees that neither Executive’s job performance nor promotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of Executive’s employment with the Company.

 

Compensation.

 

Base Salary. During the Employment Term, the Company will pay Executive as compensation for Executive’s services a base salary at a rate of $595,000 per year, as modified from time to time at the discretion of the Board (the “Base Salary”). The Base Salary will be paid in regular installments in accordance with the Company’s normal payroll practices (subject to required withholding). Any increase or decrease in Base Salary (together with the then existing Base Salary) shall serve as the “Base Salary” for future employment under this Agreement. The first and last payment will be adjusted, if necessary, to reflect a commencement or termination date other than the first or last working day of a pay period.

 

Annual Bonus. Executive will also be eligible to earn an annual discretionary bonus. The amount of this bonus, if any, will be determined in the sole discretion of the Board and based, in part, on Executive’s performance and the performance of the Company during the calendar year. The bonus is not earned until paid and no pro-rated amount will be paid if Executive’s employment terminates for any reason prior to the payment date.

 

Employee Benefits. During the Employment Term, Executive will be eligible to participate in the employee benefit plans currently and hereafter maintained by the Company of general applicability to other senior executives of the Company, including, without limitation, the Company’s group medical, dental, vision, disability, life insurance, and flexible-spending account plans, if and when any such benefits are provided by the Company. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time. 

 

Page 1 of 4

 

 

Vacation. The total amount and timing of vacation will depend upon the Executive’s discretion, which shall be taken subject to the demands of the Company’s business and Executive’s obligations as an employee of the Company with a substantial degree of responsibility.

 

Business Expenses. During the Employment Term, the Company will reimburse Executive for reasonable business travel, entertainment or other business expenses incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time.

 

Security. During the Employment Term, the Company will fund and organize a security plan for the Executive that provides for the personal security of the Executive, the Executive’s immediate family, and the Executive’s personal home. This shall include provision of digital security assets, including but not limited to, video surveillance at the personal home and the office of the Executive, as well as security personnel assigned to accompany the Executive and/or the Executive’s immediate family.

 

Vehicles. The Company will provide an automobile for the Executive’s personal and business use. The Company shall pay for the costs, maintenance, insurance, and gas for the vehicle. Separately, the Executive will have access to the Company town car/SUV that is used to transport Company clients, to use in relation to personal and business functions.

 

Product Testing. The Company shall allow the Executive to field test Company products and product components at the Executive’s personal home in the course of determining the suitability of each such item for its intended use. This testing, however, is not the sole, exclusive means through which such testing shall be conducted, and the Company shall not expect that such testing serves as a regular or reliable method of evaluating any product as to its fitness for its intended use.

 

Personal Services. To the extent that the Executive utilizes the time of a Boxabl employee in the performance of tasks that are outside the course and scope of the Boxabl employee’s employment with Boxabl, the Executive will reimburse Boxabl for the value of the Boxabl employee’s then-applicable hourly rate for all time spent engaged in such tasks, as well as for the fair market value of any goods or materials consumed in the course of performing said tasks.

 

Termination on Death or Disability.

 

Effectiveness. Executive’s employment will terminate automatically upon Executive’s Death or, upon fourteen (14) days prior written notice from the Company, in the event of Disability.

 

Effect of Termination. Upon any termination for death or Disability, Executive shall be entitled to: (i) Executive’s Base Salary through the effective date of termination; (ii) the right to continue health care benefits under Title X of the Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”), at Executive’s cost, to the extent required and available by law; (iii) reimbursement of expenses for which Executive is entitled to be reimbursed, but for which Executive has not yet been reimbursed; and (iv) no other severance or benefits of any kind, unless required by law or pursuant to any other written Company plans or policies, as then in effect.

 

Company Matters.

 

Resignation on Termination. On termination of Executive’s employment, regardless of the reason for such termination, Executive shall immediately (and with contemporaneous effect) resign any directorships, offices or other positions that Executive may hold in the Company or any affiliate, unless otherwise agreed in writing by the Parties.

 

Notification of New Employer. In the event that Executive leaves the employ of the Company, Executive grants consent to notification by the Company to Executive’s new employer about Executive’s rights and obligations under this Agreement.

 

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Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

Notices. All notices, requests, demands and other communications called for under this Agreement shall be in writing and shall be delivered via e-mail, personally by hand or by courier, mailed by United States first-class mail, postage prepaid, or sent by facsimile directed to the Party to be notified at the address or facsimile number indicated for such Party on the signature page to this Agreement, or at such other address or facsimile number as such Party may designate by ten (10) days’ advance written notice to the other Parties hereto. All such notices and other communications shall be deemed given upon personal delivery, three (3) days after the date of mailing, or upon confirmation of facsimile transfer or e-mail. Notices sent via e-mail under this Section shall be sent to either the e-mail address in this Agreement, or for e-mails sent by the Company to Executive, to the last e-mail address on file with the Company.

 

Severability. If any provision of this Agreement is found by a court or arbitral authority of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, or enforceable only if modified, such finding shall not affect the validity of the remainder of this Agreement, which shall remain in full force and effect and continue to be binding on the Parties.

 

The Parties further agree that any such court or arbitral authority is expressly authorized to modify any such invalid, illegal, or unenforceable provision of this Agreement instead of severing the provision from this Agreement in its entirety, whether by rewriting, deleting, or adding to the offending provision, or by making such other modifications as it deems necessary to carry out the intent and agreement of the Parties as embodied in this Agreement to the maximum extent permitted by law.

 

Any such modification shall become a part of and treated as though originally set forth in this Agreement. If such provision or provisions are not modified, this Agreement shall be construed as if such invalid, illegal, or unenforceable provisions had not been set forth in it. The Parties expressly agree that this Agreement as so modified by the court or arbitral authority shall be binding on and enforceable against each of them.

 

Integration. This Agreement represents the entire agreement and understanding between the parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral. No waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless in writing and signed by duly authorized representatives of the parties hereto.

 

Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

 

Waiver. No Party shall be deemed to have waived any right, power or privilege under this Agreement or any provisions hereof unless such waiver shall have been duly executed in writing and acknowledged by the Party to be charged with such waiver. The failure of any Party at any time to insist on performance of any of the provisions of this Agreement shall in no way be construed to be a waiver of such provisions, nor in any way to affect the validity of this Agreement or any part hereof. No waiver of any breach of this Agreement shall be held to be a waiver of any other subsequent breach

 

Governing Law. This Agreement will be governed by the laws of the State of Nevada (with the exception of its conflict of laws provisions).

 

Acknowledgment. Executive acknowledges that Executive has had the opportunity to discuss this matter with and obtain advice from Executive’s legal counsel, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.

 

Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original, and all such counterparts shall constitute but one instrument.

  

Effect of Headings. The section and subsection headings contained herein are for convenience only and shall not affect the construction hereof.

 

Construction of Agreement. This Agreement has been negotiated by the respective Parties, and the language shall not be construed for or against either Party.

 

[Remainder of page is intentionally blank; Signature page follows]

 

Page 3 of 4

 

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement as of the day and year first above written. 

 

“COMPANY”

 

Boxabl Inc.
By:

 

Address:

5345 E North Belt Rd. Las Vegas, NV 89115

  

 

 

Attn:

galiano tiramani

Fax Number:

na

Email:

 

 

 

“EXECUTIVE”

 

 

 

Paolo Tiramani
Executive Name

 

 

 

Address:

5345 E North Belt Rd. Las Vegas, NV 89115

 

 

Fax Number:

No fax

Email:

 

 

Boxabl Inc.

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

SIGNATURE PAGE

 

Page 4 of 4

 

 

Exhibit 10.8

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of January 1, 2023, (the “Effective Date”) by and between Boxabl Inc (the “Company”), and Galiano Tiramani (“Executive”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

 

R E C I T A L S

 

WHEREAS, the Company desires to employ Executive as its Director of Marketing/Founder, and to enter into an agreement embodying the terms of such employment;

 

WHEREAS, Executive desires to accept such employment and enter into such an agreement.

 

A G R E E M E N T

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the Parties agree as follows:

 

Duties and Scope of Employment.

 

Positions and Duties. As of the Effective Date, Executive will serve as Director of Marketing/Founder of the Company. Executive will render such business and professional services in the performance of Executive’s duties, consistent with Executive’s position within the Company, as shall reasonably be assigned to Executive by the Company’s Chief Executive Officer or Board of Directors (the “Board”). The period of Executive’s at-will employment under the terms of this Agreement is referred to herein as the “Employment Term.”

 

During the Employment Term, Executive will serve as a member of the Board, subject to any required Board approval.

 

Obligations. During the Employment Term, Executive will perform Executive’s duties faithfully and to the best of Executive’s ability.

 

At-Will Employment. The parties agree that Executive’s employment with the Company will be “at-will” employment and may be terminated at any time with or without cause or notice, for any reason or no reason. Executive understands and agrees that neither Executive’s job performance nor promotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of Executive’s employment with the Company.

 

Compensation.

 

Base Salary. During the Employment Term, the Company will pay Executive as compensation for Executive’s services a base salary at a rate of $595,000 per year, as modified from time to time at the discretion of the Board (the “Base Salary”). The Base Salary will be paid in regular installments in accordance with the Company’s normal payroll practices (subject to required withholding). Any increase or decrease in Base Salary (together with the then existing Base Salary) shall serve as the “Base Salary” for future employment under this Agreement. The first and last payment will be adjusted, if necessary, to reflect a commencement or termination date other than the first or last working day of a pay period.

 

Annual Bonus. Executive will also be eligible to earn an annual discretionary bonus. The amount of this bonus, if any, will be determined in the sole discretion of the Board and based, in part, on Executive’s performance and the performance of the Company during the calendar year. The bonus is not earned until paid and no pro-rated amount will be paid if Executive’s employment terminates for any reason prior to the payment date.

 

Employee Benefits. During the Employment Term, Executive will be eligible to participate in the employee benefit plans currently and hereafter maintained by the Company of general applicability to other senior executives of the Company, including, without limitation, the Company’s group medical, dental, vision, disability, life insurance, and flexible-spending account plans, if and when any such benefits are provided by the Company. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time. 

 

Page 1 of 4

 

 

Vacation. The total amount and timing of vacation will depend upon the Executive’s discretion, which shall be taken subject to the demands of the Company’s business and Executive’s obligations as an employee of the Company with a substantial degree of responsibility.

 

Business Expenses. During the Employment Term, the Company will reimburse Executive for reasonable business travel, entertainment or other business expenses incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time.

 

Security. During the Employment Term, the Company will fund and organize a security plan for the Executive that provides for the personal security of the Executive, the Executive’s immediate family, and the Executive’s personal home. This shall include provision of digital security assets, including but not limited to, video surveillance at the personal home and the office of the Executive, as well as security personnel assigned to accompany the Executive and/or the Executive’s immediate family.

 

Vehicles. During the Employment Term, the Company will provide an automobile for the Executive’s personal and business use. The Company shall pay for the costs, maintenance, insurance, and gas for the vehicle. Separately, the Executive will have access to the Company town car/SUV that is used to transport Company clients, to use in relation to personal and business functions.

 

Product Testing. The Company shall allow the Executive to field test Company products and product components at the Executive’s personal home in the course of determining the suitability of each such item for its intended use. This testing, however, is not the sole, exclusive means through which such testing shall be conducted, and the Company shall not expect that such testing serves as a regular or reliable method of evaluating any product as to its fitness for its intended use.

 

Personal Services. To the extent that the Executive utilizes the time of a Boxabl employee in the performance of tasks that are outside the course and scope of the Boxabl employee’s employment with Boxabl, the Executive will reimburse Boxabl for the value of the Boxabl employee’s then-applicable hourly rate for all time spent engaged in such tasks, as well as for the fair market value of any goods or materials consumed in the course of performing said tasks.

 

Termination on Death or Disability.

 

Effectiveness. Executive’s employment will terminate automatically upon Executive’s Death or, upon fourteen (14) days prior written notice from the Company, in the event of Disability.

 

Effect of Termination. Upon any termination for death or Disability, Executive shall be entitled to: (i) Executive’s Base Salary through the effective date of termination; (ii) the right to continue health care benefits under Title X of the Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”), at Executive’s cost, to the extent required and available by law; (iii) reimbursement of expenses for which Executive is entitled to be reimbursed, but for which Executive has not yet been reimbursed; and (iv) no other severance or benefits of any kind, unless required by law or pursuant to any other written Company plans or policies, as then in effect.

 

Company Matters.

 

Resignation on Termination. On termination of Executive’s employment, regardless of the reason for such termination, Executive shall immediately (and with contemporaneous effect) resign any directorships, offices or other positions that Executive may hold in the Company or any affiliate, unless otherwise agreed in writing by the Parties.

 

Notification of New Employer. In the event that Executive leaves the employ of the Company, Executive grants consent to notification by the Company to Executive’s new employer about Executive’s rights and obligations under this Agreement.

 

Page 2 of 4

 

 

Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

Notices. All notices, requests, demands and other communications called for under this Agreement shall be in writing and shall be delivered via e-mail, personally by hand or by courier, mailed by United States first-class mail, postage prepaid, or sent by facsimile directed to the Party to be notified at the address or facsimile number indicated for such Party on the signature page to this Agreement, or at such other address or facsimile number as such Party may designate by ten (10) days’ advance written notice to the other Parties hereto. All such notices and other communications shall be deemed given upon personal delivery, three (3) days after the date of mailing, or upon confirmation of facsimile transfer or e-mail. Notices sent via e-mail under this Section shall be sent to either the e-mail address in this Agreement, or for e-mails sent by the Company to Executive, to the last e-mail address on file with the Company.

 

Severability. If any provision of this Agreement is found by a court or arbitral authority of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, or enforceable only if modified, such finding shall not affect the validity of the remainder of this Agreement, which shall remain in full force and effect and continue to be binding on the Parties.

 

The Parties further agree that any such court or arbitral authority is expressly authorized to modify any such invalid, illegal, or unenforceable provision of this Agreement instead of severing the provision from this Agreement in its entirety, whether by rewriting, deleting, or adding to the offending provision, or by making such other modifications as it deems necessary to carry out the intent and agreement of the Parties as embodied in this Agreement to the maximum extent permitted by law.

 

Any such modification shall become a part of and treated as though originally set forth in this Agreement. If such provision or provisions are not modified, this Agreement shall be construed as if such invalid, illegal, or unenforceable provisions had not been set forth in it. The Parties expressly agree that this Agreement as so modified by the court or arbitral authority shall be binding on and enforceable against each of them.

 

Integration. This Agreement represents the entire agreement and understanding between the parties as to the subject matter herein and supersedes all prior or contemporaneous agreements whether written or oral. No waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless in writing and signed by duly authorized representatives of the parties hereto.

 

Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

 

Waiver. No Party shall be deemed to have waived any right, power or privilege under this Agreement or any provisions hereof unless such waiver shall have been duly executed in writing and acknowledged by the Party to be charged with such waiver. The failure of any Party at any time to insist on performance of any of the provisions of this Agreement shall in no way be construed to be a waiver of such provisions, nor in any way to affect the validity of this Agreement or any part hereof. No waiver of any breach of this Agreement shall be held to be a waiver of any other subsequent breach

 

Governing Law. This Agreement will be governed by the laws of the State of Nevada (with the exception of its conflict of laws provisions).

 

Acknowledgment. Executive acknowledges that Executive has had the opportunity to discuss this matter with and obtain advice from Executive’s legal counsel, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.

 

Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original, and all such counterparts shall constitute but one instrument.

 

Effect of Headings. The section and subsection headings contained herein are for convenience only and shall not affect the construction hereof.

 

Construction of Agreement. This Agreement has been negotiated by the respective Parties, and the language shall not be construed for or against either Party.

 

[Remainder of page is intentionally blank; Signature page follows]

 

Page 3 of 4

 

 

IN WITNESS WHEREOF, each of the Parties has executed this Agreement as of the day and year first above written.

 

“COMPANY”

 

Boxabl Inc.
By:

 

Address:

5345 E North Belt Rd. Las Vegas, NV 89115

 

 

Attn:

 

Fax Number:

 

Email:

 

 

 

“EXECUTIVE”

 

Galiano Tiramani
Executive Name

 

Address:

5345 E North Belt Rd. Las Vegas, NV 89115

 

 

 

 

 

 

Fax Number:

 

Email:

 

 

Boxabl Inc.

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

SIGNATURE PAGE

 

Page 4 of 4

 

 

 

 

Exhibit 10.9

 

Purchase Agreement

 

This Purchase Agreement (“Purchase Agreement”) effective September 6, 2022, is between Boxabl Inc., a Nevada Corporation having an address of 5345 East North Belt Road, North Las Vegas, NV 89115 USA (“Boxabl”) and Pronghorn Services LLC., 7400 Pronghorn Ranch Parkway, Prescott Valley, AZ 86315 (“Buyer”). In this Purchase Agreement, Boxabl and Buyer are sometimes individually referred to as a “Party” and collectively as the “Parties” to this Purchase Agreement.

 

In consideration of the provisions of this Purchase Agreement, including the Purchase Price (defined below) payable by Buyer to Boxabl, the Parties agree as follows:

 

1. Agreement to Purchase. Boxabl agrees to sell, and Buyer agrees to purchase, the Order Amount of Units for the specified Unit Prices set forth in the Purchase Specifications attached as Exhibit A. Options, features, or hardware released or changed by Boxabl after Buyer executes this Purchase Agreement may not be included in or available for the Units.

 

2. Deposit. Boxabl acknowledges receipt of $1,070,800 (“Deposit”), which will be credited against the total Purchase Price of the Order Amount in the manner specified in paragraph 6 below.

 

3. Buyer Acknowledgments. Buyer is purchasing the Order Amount of Units with a full and complete understanding of the conditions and circumstances precedent to the utilization of the Units, which are set forth in this paragraph.

 

(a) Government Approvals. As between Boxabl and Buyer, Buyer will be responsible for all governmental permits and inspections required for the placement of the Units at their intended sites and for occupancy of the Units, including utility service, wastewater and occupancy permits, as well as all site work and Unit finishing operations that are necessary to comply with all statutes, regulations, ordinances and building and zoning codes applicable thereto, including but not limited to wind ratings, snow loads, earthquake and anchoring requirements. The Units are manufactured in compliance with the standards of the RV Industry Association and meet or exceed all applicable ANSI No. A119.5 Standards. Buyer further acknowledges that the Units may not currently have any manufactured home or modular housing certification.

 

(b) Site Preparation. As between Boxabl and Buyer, it is Buyer’s responsibility to select such sites for the Units, and to perform such additional work as is required at the sites and to the Units, as is appropriate for the safe utilization and habitation of the Units. Boxabl will not be performing any site preparation for receiving the Units, including but not limited to foundation preparation, utility line routing, well, town water, plumbing or septic field preparation, driveway construction, deck, steps, walkway, driveway installation, grading and landscaping. Buyer is responsible for installation of the Units at their intended sites (which requires a crane or forklift), and utility, water and waste water hook-ups.

 

(c) Unit Deployment. The operations associated with the deployment of the folded floor, wall and roof portions of the Units are inherently dangerous and can lead to injury or death to those personnel involved in the deployment operations. Boxabl will not provide personnel for supervising or conducting the deployment operation. Boxabl will provide unpacking instructions which must be followed during Unit deployment. A crane is required for Unit deployment, and it is Buyer’s responsibility to make appropriate arrangements for having the crane available at the site or sites chosen for Unit deployment.

 

1

 

 

(d) Unit Finishing. The Units are not fully finished dwellings and will require finishing operations after deployment and prior to occupancy, such as but not limited to roof framing, roof decking and shingling, gutter installation, TPO roof installation or other weather sealing as Buyer desires, all of which will incur additional costs beyond the Purchase Price.

 

(e) Governmental Assessments. Boxabl will have no responsibility for any state or local property or other taxes or assessments arising from the placement of the Units at their intended sites.

 

4. Sales Taxes. The Purchase Price is exclusive of sales and use taxes. Buyer is responsible for any sales or use tax, or other governmental fee, that may be owed, either in Boxabl’s or Buyer’s jurisdiction and which arise out of the sale or use of any of the Order Amount of Units. The absence of any sales or use tax charged by Boxabl does not absolve Buyer of any obligation to pay such taxes under applicable law. In the event that any governmental authority holds or seeks to hold Boxabl liable for any fee in the nature of a sales or use tax arising from Buyer’s purchase of any of the Order Amounts, Buyer agrees to pay the tax on Boxabl’s behalf, or reimburse Boxabl for paying the tax, if Boxabl elects to make payment.

 

5. Shipment. The Order Amount of Units is sold ex-factory. Boxabl does not provide any shipping services or arrangements for the transport of the Order Amount of Units from Boxabl’s factory. Buyer is responsible for shipment of the Order Amount of Units from Boxabl’s factory to Buyer’s desired location(s).

 

6. Order Process; Cancellation; Changes. After Buyer’s execution of this Purchase Agreement, Boxabl will schedule and take appropriate steps to prepare for the manufacture of the Order Amount of Units, at which point the Deposit will be deemed to have been earned. Prior to issuance of any Delivery Invoice (defined below), any delivery dates for Buyer’s Order Amount of Units which Boxabl may provide are only good faith estimates; Boxabl does not guarantee the date(s) when the Order Amount of Units will actually be manufactured or delivered. Buyer will notify Seller when each Unit of the Order Amount will be available for pick-up (“Delivery Date”) in a Delivery Invoice. In addition to a Delivery Date, the Delivery Invoice will also set forth the balance due for the Unit, which will be the Unit Price less a pro rata amount of the Deposit (“Balance Due”). Where multiple Units will be available for shipment within the same week, Boxabl may for convenience combine them into one Delivery Invoice.

 

In the event Buyer buyer seeks to cancel all or any part of its order following execution of this Purchase Agreement (or if Buyer breaches this Agreement following which Boxabl cancels the order), then at Boxabl’s election, in lieu of pursuing such remedies as may be accorded it under law, Boxabl may retain the Deposit as liquidated damages, prorated to the extent of the cancellation and as not otherwise prohibited by law. Buyer acknowledges that the Deposit is a fair and reasonable estimate of the actual damages that Boxabl may incur in storing, remarketing and reselling the Order Amount of Units, costs that are otherwise impracticable or extremely difficult to determine. If Boxabl does not elect to retain the Deposit as liquidated damages, then Boxabl shall have the full right to pursue such remedies against Buyer for Buyer’s cancellation (or breach) as are accorded it under law.

 

2

 

 

Any Buyer-requested changes to design, or to specifications relating to the Order Amount of Units, including changes to features of the Units that Buyer had previously specified, must be approved by Boxabl in writing, and are subject to price adjustments in the Purchase Price and/or the Balance Due.

 

7. Delivery; Transfer of Title.

 

(a) Balance Due Payment. The amount shown on each Delivery Invoice is due on or before the Delivery Date. If Buyer does not pay in full the Balance Due on the Delivery Date set forth in the Delivery Invoice, then Boxabl shall have the right to hold back the affected Unit(s) and any remaining Units of the Order Amount until payment is made by Buyer for all remaining Units of the Order Amount. Further, Boxabl shall have the right to treat Buyer’s failure to pay in full the Balance Due as a cancellation of the remaining undelivered Order Amount, subject to Boxabl’s remedies set forth in paragraph 6 above.

 

Under no circumstances will any undelivered portion of the Order Amount of Units be made available for delivery to Buyer if any Balance Due is not fully paid.

 

(b) Delivery Dates. Buyer agrees to take delivery of the Order Amount of Units on the Delivery Date specified in the applicable Delivery Invoice. If Buyer fails to take delivery within seven (7) days of the specified delivery date, then Boxabl shall have the right to charge Buyer a daily storage fee for the affected portions of the Order Amount of Units. If Buyer does not take delivery of the affected portions of the Order Amount of Units within a reasonable time of the specified Delivery Date, then Boxabl shall have the option to treat Buyer’s failure to take delivery as a cancellation of the remaining undelivered Order Amount, subject to Boxabl’s remedies set forth in paragraph 6 above.

 

(b) Legal Title. Legal title to each of the Order Amount of Units passes from Boxabl to Buyer, when Buyer picks up each of the Order Amount of Units at Boxabl’s manufacturing facility in North Las Vegas, Nevada.

 

(c) Force Majeure. Delivery by Boxabl of any portion or all of the Order Amount of Units is subject to variables out of Boxabl’s control, including acts of God or public enemy, acts of governmental authorities in either its or their sovereign or contractual capacity, fires, power outages, floods, epidemics, pandemics, quarantine restrictions, strikes, labor unrest, unusually severe weather and civil unrest.

 

8. Disclaimer and Exclusion of Warranties. The Limited Warranty applicable to the Order Amount of Units is set forth in Exhibit B hereto. Except if and then only to the extent that is set forth in that Limited Warranty, THE UNITS ARE SOLD TO BUYER ON AN “AS IS” BASIS WITHOUT GUARANTEES OR WARRANTIES OF ANY KIND OR NATURE. BOXABL HEREBY DISCLAIMS AND EXCLUDES ALL IMPLIED OR EXPRESS WARRANTIES RELATING TO THE STRUCTURE, ITS FABRICATION OR THE MATERIALS USED THEREIN, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND WARRANTIES OF HABITABILITY AND WORKMANSHIP. BOXABL EXPRESSLY DISCLAIMS ANY WARRANTY THAT THE UNITS ARE IN COMPLIANCE WITH STATE, LOCAL OR TRADE ORGANIZATION OR ASSOCIATION BUILDING CODES, OR SATISFY ANY CONDITIONS REQUIRED FOR ISSUANCE OF CERTIFICATES OF HABITABILITY, OCCUPANCY OR THE LIKE BY ANY GOVERNMENTAL AUTHORITY. Some States, Territories and Countries do not allow certain liability exclusions, so to that extent the above disclaimer and exclusions may not apply to Buyer.

 

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9. Disclaimer of liability, Limitation on Damages. BOXABL SHALL NOT BE LIABLE TO BUYER IN RESPECT OF ANY CLAIM, DEMAND OR ACTION, IRRESPECTIVE OF THE NATURE OF THE CAUSE OF THE CLAIM, DEMAND OR ACTION ALLEGING ANY LOSS, INJURY OR DAMAGES, DIRECT OR INDIRECT, WHICH MAY RESULT FROM THE OCCUPANCY, USE OR POSSESSION OF THE STRUCTURE; OR FOR ANY DAMAGES OR LOSS, WHETHER DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL, ARISING OUT OF THE OCCUPANCY, USE OR POSSESSION OF THE UNITS, OR ANY INABILITY TO OCCUPY, USE OR POSSESS THE UNITS, OR ANY DEFECT IN THE STRUCTURE, OR OTHERWISE, EVEN IF BUYER HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE MAXIMUM AGGREGATE AMOUNT OF MONEY DAMAGES FOR WHICH BOXABL MAY BE LIABLE TO PAY UNDER THIS AGREEMENT, RESULTING FROM ANY CAUSE WHATSOEVER, SHALL BE LIMITED TO THE AMOUNTS ACTUALLY PAID BY BUYER TO BOXABL UNDER THIS AGREEMENT. Some States, Territories and Countries do not allow certain liability exclusions or damages limitations, so to that extent the above may not apply to Buyer.

 

10. Resolution of Disputes.

 

(a) Resolution Period. In the event of any dispute between the Parties, the aggrieved Party shall first send a written notice to the other Party describing the nature of the dispute and the desired resolution. Following such written notice, the Parties agree to discuss the matter for a period of sixty days (“Resolution Period”) in a good faith effort to resolve the dispute to their mutual satisfaction, which period can be extended by mutual written agreement of the Parties.

 

(b) Arbitration. In the event that any dispute between the Parties cannot be resolved within the Resolution Period, the aggrieved Party may seek resolution by commencing an arbitration. Any dispute between the Parties that cannot be resolved in accordance with the procedures set forth in paragraph 6 (a), and for the avoidance of doubt, any and all disputes between Boxabl and Buyer, including controversies arising out of the interpretation or enforcement of the Purchase Agreement, will be resolved by arbitration before a single arbitrator to be administered under the auspices of the American Arbitration Association (AAA) in Clark County, Nevada. The Parties hereby agree to irrevocably waive adjudication, in any and all municipal, state, federal or other governmental courts or administrative agencies, of any dispute between them, including by trial by jury. For avoidance of doubt, this agreement to arbitrate disputes between the Parties includes claims arising before this Agreement, such as claims related to statements about Boxabl’s products.

 

(c) Limitations on Arbitration. The arbitrator may only resolve disputes between the Parties, and may not consolidate such disputes with the claims of other parties. The arbitrator cannot hear class or representative claims or requests for relief on behalf of others purchasing or leasing Boxabl products. If a court or arbitrator decides that any part of this agreement to arbitrate cannot be enforced as to a particular claim for relief or remedy, then only that claim or remedy (and only that claim or remedy) can be brought in court and any other claims must be arbitrated.

 

11. Notices. All notices may be given by email to the email addresses given below, if confirmed by regular U.S. mail, postage prepaid, sent to the addresses of the Parties, with Boxabl’s address being 5345 East North Belt Road North Las Vegas NV 89115 USA; and Buyer’s address being set forth above.

 

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12. Governing Law. This Purchase Agreement, and all matters arising out of or relating to this Agreement, shall be governed by and construed in accordance with the internal laws of the State of Nevada without giving effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction).

 

13. Waiver. The failure of either Boxabl or Buyer at any time to demand strict performance by the other of any terms, covenants or conditions set forth herein, shall not be constructed as a continuing waiver or relinquishment thereof, and either Party may, at any time, demand strict and complete performance by the other of said terms, covenants or conditions.

 

14. Severability. In the event that any of the terms of this Purchase Agreement are held to be partially or wholly invalid or unenforceable for any reason whatsoever, such holdings shall not affect, alter, modify or impair in any manner whatsoever, any of the other terms, or the remaining portion of any term, held to be partially invalid or unenforceable.

 

15. Entire Agreement. This Purchase Agreement constitutes the entire agreement between the Parties, and contains all of the agreements between the Parties with respect to the subject matter hereof. This Purchase Agreement supersedes any and all other agreements, either oral or in writing, between the Parties hereto with respect to the subject matter hereof. No change or modification of this Purchase Agreement shall be valid unless the same shall be in writing and signed by Boxabl and Buyer. No waiver of any provision of this Purchase Agreement shall be valid unless in writing and signed by the Party against whom charged.

 

16. Invalid Provision. The invalidity or unenforceability of any other particular provision of this Purchase Agreement shall not affect the other provisions hereof, and this Purchase Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

 

17. Execution. This Purchase Agreement may be executed by hand or by mutually acceptable electronic means, and any electronic image that has been duly executed, or displays indicia of due execution by both Parties thereon, shall be given the same effect or be deemed an original.

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement effective the date and year first above written.

 

BOXABL INC.   BUYER
         
By     By  
Date     Date  
Email     Email  

 

(220831)

 

6

 

 

Exhibit A

 

Purchase Specifications

 

Units  Order Amount  Unit Price  Total
Unit B   89   $60,000   $5,340,000 
Unite   44   $60,000   $2,640,000 
Unit D   44   $62,000   $2,728,000 
Total Order Amount   177           
Total Purchase Price            $10,708,000 

 

Unit B is a Boxabl Casita having the following specifications: See Exhibit C

 

Unit C is a Boxabl Casita having the following specifications: See Exhibit D.

 

Unit D is a Boxabl Casita having the following specifications: See Exhibit E.

 

Inclusions:

 

The following items are part of Buyer’s order:

 

  1. Appliances: refrigerator, microwave, washer/dryer combo unit, dishwasher, range
  2. All electrical is installed except for the following: interior pendant light, smoke detector, refrigerator, washer/dryer combo unit, and exterior sconce. All Boxabl units come with a distribution panel, but for avoidance of doubt Boxabl does not install meter panels, as the requirements vary by jurisdiction. 
  3. All interior house plumbing, finishing, lighting, cabinetry, countertops & fit-out hardware such as towel racks, TP holder etc. 
  4. All hardware necessary to erect each of the Units, as well as to connect it to a foundation or lower story unit, if applicable. 
  5. Indoor HVAC unit installed, Outdoor HVAC unit is inside the unit ready for site install. 
  6. Hide boxes & conduit for 1st floor units only to hide exterior electrical & HVAC lines. 
  7. Flooring & fixed section baseboard. 
  8. All necessary trim such as baseboard, exterior skirtboards & roof flashing is provided but not installed. 
  9. TPO roofing membrane is provided (but not installed). 
  10.  

 

Exclusions:

 

Any item not expressly stated as included is not part of Buyer’s order. For clarity and not limiting the scope of the foregoing exclusion, Buyer’s order does not include any of items and matters the set forth in Paragraph 3 of this Agreement (Buyer Acknowledgments), and does not include any of the following:

 

  1. Any site work/supervision/inspection from Boxabl (to be quoted separately).
  2. Boxabl will not connect any units to foundations or utilities including installation of the Outdoor HVAC unit. 
  3. Hide boxes & conduit for 2nd floor units to hide exterior electrical & HVAC lines 
  4. Any hide boxes/lines to hide exterior plumbing or electrical service connections. 
  5. Perimeter lumber for sill plates between the first floor and foundation or between the 1st and second floor. 
  6. Flashing between 1st and second story connections. 
  7. 2nd story unit distribution panels, electrical conduit & HVAC line hide are not installed, however the distribution panels for the 2nd story units are provided. 
  8. Installation of the breakfast bar, bathroom door, interior pendant light & smoke detector, exterior sconce(s). 
  9. Touch up & site finish work due to normal damages caused by shipping/unfolding of the units. 
  10.  Flooring center cover installation (necessary materials & hardware provided). 
  11. Installation of the refrigerator, washer dryer unit (provided). 
  12. Installation of the cabinet above the refrigerator & refrigerator cover panel (provided). 
  13. A roofing system other than the flat TPO membrane system which may not meet code depending on the jurisdiction. 
  14. Foundation tie down hardware.

 

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Exhibit B

 

Limited Warranty

 

  1. Boxabl warrants, that for a Warranty Period of ten (10) years following the date of delivery of each Unit to Buyer, the Unit purchased by Buyer will be free from substantial defects in material or workmanship (“Covered Defect”). 
     
  2. To make a claim under this Limited Warranty, the Covered Defect must arise during the Warranty Period, and the Buyer must notify the Boxabl either within the Warranty Period or within ten days following the end of the Warranty Period. 
     
  3. Following receipt of a timely claim, Boxabl will have the right to have the Unit inspected to confirm the presence of a Covered Defect and assist in determining an appropriate remedy. Buyer agrees to grant Boxabl or its authorized representative access to the Unit on receiving notice of an intention to inspect. 
     
  4. Boxabl’s obligation under this Limited Warranty with respect to any undisputed Covered Defect of which it is timely notified is to repair or replace the affected portions of the Unit. If in the case of replacement the identical portion is not available, Boxabl will install a similar portion of a quality and finish equal to or greater than the portion being replaced. Buyer agrees that any replaced portions become the property of the Boxabl. The determination of whether to repair or replace the affected portions of the Unit will be made solely by the Boxabl. Any replacement portion will be covered by the balance of the Warranty Period remaining from the replaced portion, but no longer. 
     
  5. The appliances, heating and air conditioning equipment and certain other accessories delivered with the Unit are not covered by this Limited Warranty, but rather by the terms of any warranties provided by their manufacturers. Any written warranty terms provided by those manufacturers will be included with the Unit as purchased by Buyer. Buyer can contact Boxabl to assist in obtaining appliance manufacturer warranty service. 
     
  6. Except for Covered Defects, this Limited Warranty does not apply to any other conditions or defects. The following list describes some of the conditions or defects not covered by this Limited Warranty.

 

  ● Damage to the Unit which may occur in the course of transit, delivery and placement of the Unit.
  ● Conditions or defects caused by or arising from site location or site preparation for the Unit, including but not limited to inadequate foundation, settling, shifting soil and ground water flow, ponding or drainage
  ● Damage to the Unit caused by or arising as a result of improper deployment of floor portions, walls or wall portions, or roof portions. 
  ● Conditions resulting from alterations or improvements to the Unit, or installation of equipment or appurtenances, or repairs to the Unit or to appliances, heating and air conditioning equipment, done by anyone after delivery of the Unit to Buyer, other than the Boxabl. 
  ● Improper utility service, such as excessively high water pressure, excessive voltage or current spikes and malfunctioning waste water connections. 
  ● Normal wear and tear.
  ● Governmental use, including all military, police and emergency shelter dispositions, as well as commercial use. 
  ● Noncompliance of the Unit with any statutes, regulations, ordinances and building and zoning codes applicable thereto, including but not limited to wind ratings, snow loads, earthquake and anchoring requirements, as well as noncompliance of the Unit with any specifications required for issuance of a certificate of habitability, occupancy and the like.

 

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Exhibit 10.10

 

M U L T I – T E N A N T

C O M M E R C I A L / I N D U S T R I A L L E A S E ( N N N )

 

5345-5445 E. Centennial Parkway

North Las Vegas, Nevada

 

LANDLORD:

 

CRPF IV CENTENNIAL, LLC,

a Delaware limited liability company

 

TENANT:

 

BOXABL INC.,

a Nevada corporation

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE 1 - LEASE SUMMARY AND PROPERTY SPECIFIC PROVISIONS 1
   
ARTICLE 2 – LEASE 10
   
ARTICLE 3 – PREMISES 10
   
ARTICLE 4 - TERM AND POSSESSION 10
   
ARTICLE 5 – RENT 11
   
ARTICLE 6 - SECURITY DEPOSIT 11
   
ARTICLE 7 - OPERATING EXPENSES/UTILITIES/SERVICES 12
   
ARTICLE 8 - MAINTENANCE AND REPAIR 12
   
ARTICLE 9 – USE 13
   
ARTICLE 10 - HAZARDOUS MATERIALS 13
   
ARTICLE 11 – PARKING 14
   
ARTICLE 12 - TENANT SIGNS 14
   
ARTICLE 13 – ALTERATIONS 14
   
ARTICLE 14 - TENANT’S INSURANCE 16
   
ARTICLE 15 - LANDLORD’S INSURANCE 18
   
ARTICLE 16 - INDEMNIFICATION AND EXCULPATION 18
   
ARTICLE 17 - CASUALTY DAMAGE/DESTRUCTION 19
   
ARTICLE 18 – CONDEMNATION 21
   
ARTICLE 19 - WAIVER OF CLAIMS; WAIVER OF SUBROGATION 22
   
ARTICLE 20 - ASSIGNMENT AND SUBLETTING 22
   
ARTICLE 21 - SURRENDER AND HOLDING OVER 24
   
ARTICLE 22 – DEFAULTS 25
   
ARTICLE 23 - REMEDIES OF LANDLORD 26
   
ARTICLE 24 - ENTRY BY LANDLORD 27
   
ARTICLE 25 - LIMITATION ON LANDLORD’S LIABILITY 27
   
ARTICLE 26 – SUBORDINATION 27
   
ARTICLE 27 - ESTOPPEL CERTIFICATE 28
   
ARTICLE 28 - RELOCATION OF PREMISES 28
   
ARTICLE 29 - MORTGAGEE PROTECTION 28
   
ARTICLE 30 - QUIET ENJOYMENT 28
   
ARTICLE 31 - MISCELLANEOUS PROVISIONS 28

 

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EXHIBITS:

 

Exhibit A Premises Floor Plan

 

Exhibit B Site Plan

 

Exhibit C Work Letter

 

Exhibit D Notice of Lease Term Dates

 

Exhibit E Rules and Regulations

 

Exhibit F Estoppel Certificate

 

Exhibit G Environmental Questionnaire and Disclosure Statement

 

Exhibit H Landlord’s Sign Criteria

 

RIDERS:

 

Rider No. 1 Extension Option

 

Rider No. 2 Fair Market Rental Rate

 

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This MULTI-TENANT COMMERCIAL/INDUSTRIAL LEASE (NNN) (“Lease”), entered into as of this 29th day of December, 2020 (the “Effective Date”), is by and between CRPF IV CENTENNIAL, LLC, a Delaware limited liability company, hereinafter referred to as “Landlord”, and BOXABL INC., a Nevada corporation, hereinafter referred to as “Tenant”.

 

ARTICLE 1 - LEASE SUMMARY AND PROPERTY SPECIFIC PROVISIONS

 

     

Landlord’s Address:CRPF IV CENTENNIAL, LLC

1300 Dove Street, #200

Newport Beach, CA 92660

Attn: Patrick Daniels, CEO

Telephone: 949.342.8000 ext 102

       
1.2 Tenant’s Address:    
       
  (before Commencement Date)   6120 Hollywood Blvd Suite 104
      Las Vegas, NV 89115
       
      Attn:
      Telephone: (530) 500-0005
      E-mail: accounts@boxabl.com
       
  (after Commencement Date)   Boxabl
      5345 E Centennial Pkwy Building 1
      North Las Vegas, NV 89115
      Attn:
      Telephone: (530) 500-0005
      E-mail: accounts@boxabl.com
       
  Tenant Billing Address:   Boxabl
      5345 E Centennial Pkwy Building 1
      North Las Vegas, NV 89115

 

1.3 Building; Property: The building commonly known as Building 1 located at 5345 East Centennial Parkway, North Las Vegas, Nevada 89115 (the “Building”). The Building, together with all other buildings, improvements and facilities, now or subsequently located upon the land (the “Site”) as shown on the Site Plan attached hereto as Exhibit B (as such area may be expanded or reduced from time to time) is referred to herein as the “Property”. The Property is commonly known as the CapRock Interchange Industrial Center. Landlord and Tenant stipulate and agree that the Property contains 683,436 rentable square feet in the aggregate and the Building contains 173,720 rentable square feet, for all purposes of this Lease.

 

1.4 Premises: The entire Building, as outlined on the Premises Floor Plan attached hereto as Exhibit A. Landlord and Tenant stipulate and agree that the Premises contains 173,720 rentable square feet, for all purposes of this Lease.

 

1.5 City: The City of North Las Vegas, County of Clark, State of Nevada.

 

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1.6 Commencement Date: April 1, 2021.

 

1.7 Term: Sixty-five (65) months, commencing on the Commencement Date and ending August 31, 2026 (“Expiration Date”).

 

1.8 Monthly Base Rent:

 

Lease Months   Monthly Base Rent
01 - 12   $87,728.60*
13 - 24   $90,360.46
25 - 36   $93,071.27
37 - 48   $95,863.41
49 - 60   $98,739.31
61 - 65   $101,701.49

 

*Notwithstanding the foregoing, provided Tenant is not in default under this Lease beyond any applicable notice and cure period, Landlord hereby agrees to abate Tenant’s obligation to pay Monthly Base Rent and Tenant’s Percentage of Operating Expenses during the first five (5) full calendar months of the initial Term (such total amount of abated Monthly Base Rent being hereinafter referred to as the “Abated Amount”). During such abatement period, Tenant will still be responsible for the payment of all other monetary obligations under the Lease, including, without limitation, and Utilities Costs. Tenant acknowledges that any uncured default by Tenant under this Lease will cause Landlord to incur costs not contemplated hereunder, the exact amount of such costs being extremely difficult and impracticable to ascertain, therefore, should Tenant at any time during the Term be in default after having been given notice and opportunity to cure, then the total unamortized sum of such Abated Amount (amortized on a straight line basis over the initial Term of this Lease) so conditionally excused shall become immediately due and payable by Tenant to Landlord; provided, however, Tenant acknowledges and agrees that nothing in this subparagraph is intended to limit any other remedies available to Landlord at law or in equity under applicable law, in the event Tenant defaults under this Lease beyond any applicable notice and cure period. Upon reasonable notice to Tenant at any time prior to application of the entire Abated Amount, Landlord shall have the right to purchase from Tenant any and all then remaining Abated Amount as it applies to one or more of the remaining abatement months by paying to Tenant an amount equal to the unused balance of the Abated Amount that Landlord elects to purchase back from Tenant (the “Abated Amount Purchase Price”). Upon Landlord’s payment to Tenant of the Abated Amount Purchase Price with respect to the applicable remaining abatement months, Tenant shall thereupon be required to pay Monthly Base Rent during such months in an amount equal to the Abated Amount that Tenant would have been entitled to receive but for Landlord’s payment to Tenant of the Abated Amount Purchase Price.

 

Accordingly, Tenant shall deliver the following amounts to Landlord upon its execution of this Lease (pursuant to Sections 4.2 and 5.1 of the Standard Provisions):

 

(a)Monthly Base Rent:$ 87,728.60 for Month 6.

 

(b)Tenant’s Percentage

 

of Operating Expenses (est.):$ 19,109.20 for Month 6.

 

(c)Security Deposit:$525,000.00 (See Section 1.9 below).

 

Total due upon execution of this Lease:$631,837.80.

 

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1.9 Security Deposit: $525,000.00.

 

1.10 Permitted Use: General office and administration with assembly/manufacturing, warehousing, storage, distribution, and sales of modular homes and all related uses, subject to the provisions set forth in this Lease and as permitted by law.

 

1.11 Parking: One hundred four (104) unreserved parking spaces, subject to the terms of Article 11 of the Standard Lease Provisions.

 

1.12 Brokers: Jones Lang LaSalle Brokerage, Inc.

 

1.13 Interest Rate: The lesser of: (a) Five percent (5%) or (b) the maximum rate permitted by law in the State where the Property is located.

 

1.14 Insurance Amounts:

 

a. Commercial General Liability Insurance: General liability of not less than One Million Dollars ($1,000,000.00) per occurrence and Two Million Dollars ($2,000,000.00) in the aggregate.

 

b. Commercial Automobile Liability Insurance: Limit of liability of not less than One Million Dollars ($1,000,000.00) per accident.

 

c. Worker’s Compensation and Employers Liability Insurance: With limits as mandated pursuant to the laws in the State in which the Property is located, or One Million Dollars ($1,000,000.00) per person, disease and accident, whichever is greater.

 

d. Umbrella Liability Insurance: Limits of not less than Three Million Dollars ($3,000,000.00) per occurrence.

 

e. Loss of Income, Extra Expense and Business Interruption Insurance: In such amounts as will reimburse Tenant for 12 months of 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, Tenant’s parking areas or to the Building as a result of such perils.

 

f. If Tenant’s business includes professional services, Professional Liability (also known as errors and omissions insurance): Not less than the minimum limits required by law for Tenant’s profession, and in any event, not less than One Million Dollars ($1,000,000.00) per occurrence.

 

1.15 Tenant Improvements: The improvements previously installed in the Premises, if any, and the tenant improvements to be installed in the Premises by Landlord as described in the Work Letter attached hereto as Exhibit C (the “Work Letter”).

 

1.16 Tenant’s Percentage. 25.42%, which is the ratio that the rentable square footage of the Premises bears to the rentable square footage of the Property.

 

1.17 Common Areas; Definitions; Tenant’s Rights. During the Term, Tenant shall have the non-exclusive right to use, in common with other tenants in the Property, and subject to the Rules and Regulations referred to in Article 9 of the Standard Lease Provisions, those portions of the Property (the “Common Areas”) not leased or designated for lease to tenants that are provided for use in common by Landlord, Tenant and any other tenants of the Property (or by the sublessees, agents, employees, customers invitees, guests or licensees of any such party), whether or not those areas are open to the general public. The Common Areas shall include, without limitation, all other buildings on the Property exclusive of areas maintained and repaired by tenants, and all parking areas (subject to Article 11 of the Standard Lease Provisions), loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways and landscaped areas appurtenant to the Building, fixtures, systems, decor, facilities and landscaping contained, maintained or used in connection with those areas, and shall be deemed to include any city sidewalks adjacent to the Property, any pedestrian walkway system, park or other facilities located on the Site and open to the general public. If Tenant is leasing the entire Building, then all elements of the Building shall constitute part of the Premises and all references to Common Areas contained in this Lease shall mean and refer to those elements of the Property outside of the Premises.

 

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1.18 Operating Expenses.

 

a. Triple Net Lease. Except as otherwise provided herein, all Rent (as that term is defined under Section 5.2 of the Standard Lease Provisions) shall be absolutely net to Landlord so that this Lease shall yield net to Landlord the Rent to be paid each month during the Term of this Lease. Accordingly, and except as otherwise provided in this Lease, all costs, expenses and obligations of every kind or nature whatsoever relating to the Premises which may arise or become due during the Term of this Lease including, without limitation, all costs and expenses of operation, maintenance and repairs, Insurance Costs and Taxes relating to the Premises, shall be paid by Tenant. Nothing herein contained shall be deemed to require Tenant to pay or discharge any liens or mortgages of any character whatsoever which may exist or hereafter be placed upon the Premises by an affirmative act or omission of Landlord.

 

b. Operating Expenses. In addition to the Monthly Base Rent, Tenant shall pay to Landlord Tenant’s Percentage of Operating Expenses, in the manner and at the times set forth in the following provisions of this Section 1.18. “Operating Expenses” shall consist of all costs and expenses of operation, maintenance and repair of the Common Areas of the Property as determined by standard accounting practices and calculated assuming the Property is at least ninety-five percent (95%) occupied. Operating Expenses include the following costs by way of illustration but not limitation: (i) any and all assessments imposed with respect to the Property pursuant to any covenants, conditions and restrictions affecting the Property; (ii) costs, levies or assessments resulting from statutes or regulations promulgated by any government authority in connection with the use or occupancy of the Property; (iii) all costs of utilities serving the Common Areas and any costs of utilities for the Premises which are not separately metered; (iv) all Taxes and Insurance Costs as defined in the Standard Lease Provisions; (v) waste disposal; (vi) security, if any; (vii) costs incurred in the management of the Property, including, without limitation: (1) supplies, materials, equipment and tools, (2) wages, salaries, benefits, pension payments, and fringe benefits (and payroll taxes, insurance and similar governmental charges related thereto) of employees used in the operation and maintenance of the Property, (3) the rental of personal property used by Landlord’s personnel in the maintenance, repair and operation of the Property, (4) accounting fees, legal fees and real estate consultant’s fees, and (5) a management/administrative fee; (viii) repair and maintenance of all portions of the Building and all buildings on the Property other than such portions as are maintained by Tenant or any other tenants, including the elevators (if any), restrooms (if any), structural and non-structural portions of the Building and all other buildings on the Property, and the plumbing, heating, ventilating, air-conditioning and electrical systems installed or furnished by Landlord and not maintained by Tenant pursuant to Section 8.2 of the Standard Provisions; (ix) maintenance, costs and upkeep of all parking and Common Areas; (x) amortization on a straight-line basis over the useful life together with interest at the Interest Rate (as defined in Section 1.13 of the Lease Summary) on the unamortized balance of all costs of a capital nature (including, without limitation, capital improvements, capital replacements, capital repairs, capital equipment and capital tools): (1) reasonably intended to produce a reduction in operating charges or energy consumption; or (2) required after the date of this Lease under any Law that was not applicable to the Building at the time it was originally constructed; or (3) for repair or replacement of any equipment or improvements needed to operate and/or maintain the Property at the same quality levels as prior to the repair or replacement; (xi) costs and expenses of gardening and landscaping; (xii) maintenance of signs (other than signs of tenants of the Property); (xiii) personal property taxes levied on or attributable to personal property used in connection with the Property; and (xiv) costs and expenses of repairs, resurfacing, repairing, maintenance, painting, lighting and similar items, including appropriate reserves. Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Expenses among different tenants and/or different buildings and/or different premises of the Property based upon differing levels of use, demand, risk or other distinctions among such parties, premises or Buildings (the “Cost Pools”). Such Cost Pools may include, for example, all office space tenants or industrial/R&D space tenants in the Property and may be modified to take into account the addition of any additional buildings within the Property. Accordingly, in the event of such allocations into Cost Pools, Tenant’s Percentage shall be appropriately adjusted to reflect such allocation. In addition, if Landlord does not furnish a particular service or work (the cost of which, if furnished by Landlord would be included in Operating Expenses) to a tenant (other than Tenant) that has undertaken to perform such service or work in lieu of receiving it from Landlord, then Operating Expenses shall be considered to be increased by an amount equal to the additional Operating Expenses that Landlord would reasonably have incurred had Landlord furnished such service or work to that tenant.

 

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c. Exclusions from Operating Expenses. Notwithstanding anything to the contrary contained elsewhere in this Section 1.18, the following items shall be excluded from Operating Expenses: (i) Costs of decorating, redecorating, or special cleaning or other services provided to certain tenants and not provided on a regular basis to all tenants of the Property; (ii) Any charge for depreciation of the Property or equipment and any interest or other financing charge; (iii) All costs relating to activities for the marketing, solicitation, negotiation and execution of leases of space in the Property, including without limitation, costs of tenant improvements; (iv) All costs for which Tenant or any other tenant in the Property is being charged other than pursuant to the operating expense clauses of leases for space in the Property; (v) The cost of correcting defects in the construction of the Building or any other building in the Property or in the building equipment, except that conditions (not occasioned by construction defects) resulting from ordinary wear and tear will not be deemed defects for the purpose of this category; (vi) To the extent Landlord is reimbursed by third parties, the cost of repair made by Landlord because of the total or partial destruction of the Property or the condemnation of a portion of the Building or any other building in the Property; (vii) The cost of any items for which Landlord is reimbursed by insurance or otherwise compensated by parties other than tenants of the Building or any other building in the Property pursuant to clauses similar to this paragraph; (viii) Any operating expense representing an amount paid to a related corporation, entity, or person which is in excess of the amount which would be paid in the absence of such relationship; (ix) The cost of any work or service performed for or facilities furnished to any tenant of the Building or any other building in the Property to a greater extent or in a manner more favorable to such tenant than that performed for or furnished to Tenant; (x) The cost of alterations of space in the Building or any other building in the Property which is leased to other tenants; (xi) Ground rent or similar payments to a ground lessor; (xii) Legal fees and related expenses incurred by Landlord (together with any damages awarded against Landlord) due to other tenants, including without limitation with eviction actions against other tenants, and/or the negligence or willful misconduct of Landlord, its agents, employees or contractors; (xiii) Costs arising from the presence of any Hazardous Materials within, upon or beneath the Property regardless of how the same was introduced to the Property and/or whether such introduction was in violation of Environmental Law applicable as of the date of such introduction, unless the presence is caused by the acts or omissions of Tenant or Tenant’s Parties; (xiv) Salaries and compensation of ownership and management personnel to the extent that such persons provide services to properties other than the Property; (xv) Costs of selling or financing the Property, the Building or any portions thereof; and (xvi) All interest and penalties incurred as a result of Landlord’s negligently failing to pay any bill as the same shall become due.

 

d. Estimate Statement and Payment of Tenant’s Percentage of Operating Expenses. By the first day of April (or as soon as practicable thereafter) of each calendar year during the Term, Landlord shall deliver to Tenant a statement (“Estimate Statement”) estimating Tenant’s Percentage of any Operating Expenses payable by Tenant, along with Insurance Costs and Taxes, for the current calendar year pro rated into monthly installments. If at any time during the Term, but not more often than annually, Landlord reasonably determines that the estimated amount of Tenant’s Percentage of Operating Expenses, Insurance Costs and/or Taxes payable by Tenant for the current calendar year will be greater or less 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 sixty (60) days after 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 Operating Expenses, Insurance Costs and Taxes 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. Tenant’s Percentage of Operating Expenses shown on the Estimate Statement (or revised Estimate Statement, as applicable) shall be divided into twelve (12) equal monthly installments, and Tenant shall pay to Landlord, concurrently with the regular monthly Rent payment next due following the receipt of the Estimate Statement (or revised Estimate Statement, as applicable), an amount equal to one (1) monthly installment of such Tenant’s Percentage of Operating Expenses multiplied by the number of months from January in the calendar year in which such statement is submitted to the month of such payment, both months inclusive (less any amounts previously paid by Tenant with respect to any previously delivered Estimate Statement or revised Estimate Statement for such calendar year). Subsequent installments shall be paid concurrently with the regular monthly Rent payments for the balance of the calendar year and shall continue until the next calendar year’s Estimate Statement (or current calendar year’s revised Estimate Statement) is received.

 

e. Actual Statement. By the first day of June (or as soon as practicable thereafter) of each subsequent calendar year during the Term, Landlord shall deliver to Tenant a statement (“Actual Statement”) which states Tenant’s Percentage of the actual Operating Expenses, Insurance Costs and Taxes payable by Tenant for the immediately preceding calendar year. If the Actual Statement reveals that Tenant’s Percentage of the actual amount of Operating Expenses, Insurance Costs and/or Taxes were more than Tenant’s Percentage of estimated Operating Expenses, Insurance Costs and/or Taxes actually paid by Tenant with respect to the preceding calendar year, Tenant agrees to pay Landlord the difference in a lump sum within sixty (60) days after receipt of the Actual Statement. If the Actual Statement reveals that Tenant’s Percentage of the actual amount of Operating Expenses, Insurance Costs and/or Taxes were less than the corresponding costs actually paid by Tenant with respect to the preceding calendar year, Landlord will credit any overpayment toward the next monthly installment(s) of Rent due from Tenant. Prior to the expiration or sooner termination of the Term and Landlord’s acceptance of Tenant’s surrender of the Premises, Landlord will have the right to estimate Tenant’s Percentage of the actual amount of Operating Expenses, Insurance Costs and Taxes, to the extent not directly paid by Tenant, for the then current calendar year and to collect from Tenant prior to Tenant’s surrender of the Premises, any excess of Tenant’s Percentage of such actual amount of such Operating Expenses, Insurance Costs and Taxes over Tenant’s Percentage of such corresponding costs actually paid by Tenant in such calendar year.

 

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f. No Release. Any delay or failure by Landlord in delivering any Estimate Statement or Actual Statement pursuant to this Section 1.18 shall not constitute a waiver of its right to receive Tenant’s payment of Tenant’s Percentage of Operating Expenses, nor shall it relieve Tenant of its obligations to pay Operating Expenses pursuant to this Section 1.18, except that Tenant shall not be obligated to make any payments based on such Estimate or Actual Statement until thirty (30) days after receipt of such statement.

 

g. Review. Within ninety (90) days after receiving Landlord’s Actual Statement, Tenant may, upon advance written notice to Landlord and during reasonable business hours, cause a review of Landlord’s books and records with respect to the preceding calendar year only to determine the accuracy of Landlord’s Actual Statement. Landlord shall make all records available for review that are reasonably necessary for Tenant to conduct its review. If any records are maintained at a location other than the office of the Building, Tenant may either review the records at such other location or pay for the reasonable cost of copying and shipping the records. If Tenant retains an agent, at Tenant’s sole cost and expense, to review Landlord’s records, the agent shall be an independent accountant of national standing which is reasonably acceptable to Landlord, is not compensated on a contingency basis and is also subject to a confidentiality agreement. Within sixty (60) days after the records are made available to Tenant, Tenant shall have the right to give Landlord written notice (an “Objection Notice”) stating in reasonable detail any objection to the Actual Statement of Operating Expenses for that year. If Tenant provides Landlord with a timely Objection Notice, Landlord and Tenant shall work together in good faith to resolve any issues raised in Tenant’s Objection Notice. If Tenant fails to provide Landlord with a timely Objection Notice, Landlord’s Actual Statement shall be deemed final and binding, and Tenant shall have no further right to review or object to such statement. If Landlord and Tenant determine that Operating Expenses for the calendar year are less than reported, Landlord shall provide Tenant with a credit against the next installment of Rent in the amount of the overpayment by Tenant and Landlord shall reimburse Tenant for any reasonable expense incurred in connection with its review. Likewise, if Landlord and Tenant determine that Operating Expenses for the calendar year are greater than reported, Tenant shall pay Landlord the amount of any underpayment within thirty (30) days after such determination. The records obtained by Tenant shall be treated as confidential. In no event shall Tenant be permitted to review Landlord’s records or to dispute any statement of Operating Expenses unless Tenant has paid and continues to pay all Rent when due.

 

1.19 Utilities and Services, and Additional Maintenance Obligations.

 

a. Utilities and Services. As used in this Lease, “Utilities Costs” shall mean all actual charges for utilities for the Premises of any kind, including but not limited to water, sewer and electricity, telecommunications and cable service, and the costs of heating, ventilating and air conditioning and other utilities as well as related fees, assessments and surcharges. Tenant shall contract directly for all utilities services for the Premises and shall pay all Utilities Costs directly to the various utility service providers providing such utility services to the Premises. Should Landlord elect to supply any or all of such utilities, Tenant agrees to purchase and pay for the same as Additional Rent. 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 or other services to Tenant. In no event shall any Rent owed Landlord under this Lease be abated by reason of the failure to furnish, delay in furnishing, unavailability or diminution in quality or quantity of any such utility or other services or interference with Tenant’s business operations as a result of any such occurrence; nor shall any such occurrence constitute an actual or constructive eviction of Tenant or a breach of an implied warranty by Landlord.

 

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b. Maintenance/Janitorial/Service Contracts. Tenant shall, at its sole cost and expense, enter into maintenance/service contracts to perform landscaping, roof-cleaning, and regularly scheduled preventative maintenance and repair all hot water, heating and air conditioning systems and equipment (“HVAC”) within the Premises, or which serve the Premises exclusively, including, without limitation, any rooftop package, HVAC units, distribution lines and internal venting systems. Such repair and maintenance shall include any and all services required to conform and maintain the HVAC units in compliance with current ASHRAE Standards. As used herein, “ASHRAE Standards” shall mean those standards established by the American Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc. (ASHRAE) and Air Conditioning Contractors of America (ACCA) Standard Practice for Inspection and Maintenance of Commercial Building HVAC Systems, ANSI/ASHRAE/ACCA Standard 180-2008, as the same may be amended from time to time. All cleaning and janitorial services, including regular removal of trash and debris, for the Premises shall be performed and obtained, at Tenant’s sole cost and expense, exclusively by or through Tenant or Tenant’s janitorial contractors. The maintenance contractors and janitorial contractor and the contracts for same must be approved in writing by Landlord in advance. All maintenance/service contracts shall include all services recommended by the equipment manufacturer within the operation/maintenance manual all services required to conform and maintain the HVAC in compliance with current ASHRAE Standards, and shall become effective (and a copy thereof delivered to Landlord) within thirty (30) days following the date Tenant takes possession of the Premises. Landlord reserves the right, upon notice to Tenant, to procure and maintain any or all of such service contracts, and if Landlord so elects, Tenant shall reimburse Landlord, as Additional Rent, upon demand, for the cost therefor. Additionally, Tenant hereby consents to any applicable utility company providing utility consumption information for the Premises to Landlord, and if requested, shall promptly sign any documentation requested by the utility company to evidence such consent.

 

c. Tenant’s Additional Repair Obligations. Tenant shall at all times and at Tenant’s sole cost and expense, keep, maintain, clean, repair, renovate, retrofit, replace and preserve the Premises and all parts thereof, including, without limitation, utility meters, plumbing, pipes and conduits, all heating, ventilating and air conditioning systems located within the Premises, all windows, restrooms, ceilings, interior walls, roof, skylights, interior and demising walls, doors, electrical and lighting equipment, sprinkler systems, parking areas, driveways, walkways, parking lots, loading dock areas and doors, rail spur areas, fences, signs, lawns and landscaping, if any, any Tenant Improvements, Alterations or other alterations, additions and other property and/or fixtures located within and upon the Premises in good condition and repair, reasonable wear and tear excepted. Tenant’s repair and maintenance obligations shall include, but not be limited to, slurry coating the parking areas every thirty (30) months; parking area and driveway sweeping and repairing; and responsibility for painting. Tenant shall at all times during the Term make all structural and non-structural changes, repairs and improvements to the Premises of every kind and nature, whether ordinary or extraordinary, foreseen or unforeseen, which may be required by any Laws (including, without limitation, the Americans with Disabilities Act), or for the safety of the Premises. Such maintenance and repairs shall be performed with due diligence, lien-free and in a good 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, provided, Landlord reserves the right to require Tenant to utilize Landlord’s preferred contractors, subcontractors and vendors for certain work performed within the Premises or as to systems serving the Premises such as for fire/life safety, HVAC controls, architectural and engineering services. Notwithstanding the terms of this Lease, including Section 8.1 to the contrary, Landlord has no obligation whatsoever to alter, remodel, improve, repair, renovate, retrofit, replace, redecorate or paint all or any part of the Premises, however, Tenant shall be assigned any right or benefit of any warranties on any of the Tenant Improvements.

 

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d. Landlord’s Additional Repair Obligations. Notwithstanding Tenant’s obligations to maintain and repair the Premises, Landlord, as part of Operating Expenses, shall repair, maintain and replace as necessary, the foundation and structural elements of the Building (including structural load bearing walls and roof structure); the utility meters, electrical lines, pipes and conduits serving the Premises; the exterior walls (excluding windows, glass or plate glass, doors, dock bumpers or dock plates, special store fronts or office entries); and the Common Areas; provided, however, to the extent such maintenance, repairs or replacements are required as a result of any act, neglect, fault or omission of Tenant or any of Tenant’s Parties, Tenant shall pay to Landlord, as Additional Rent, the costs of such maintenance, repairs and replacements.

 

1.20 Additional Hazardous Materials Requirements. In addition to Tenant’s obligations under Article 10 of the Standard Provisions, Tenant shall comply with the following provisions with respect to Hazardous Materials (as that term is defined in Article 10):

 

a. Environmental Questionnaire; Disclosure. Prior to the execution of this Lease, Tenant shall complete, execute and deliver to Landlord an Environmental Questionnaire and Disclosure Statement (the “Environmental Questionnaire”) in the form of Exhibit G, and Tenant shall certify to Landlord all information contained in the Environmental Questionnaire as true and correct to the best of Tenant’s knowledge and belief. The completed Environmental Questionnaire shall be deemed incorporated into this Lease for all purposes, and Landlord shall be entitled to rely fully on the information contained therein. On each anniversary of the Commencement Date (each such date is hereinafter referred to as a “Disclosure Date”), until and including the first Disclosure Date occurring after the expiration or sooner termination of this Lease, Tenant shall disclose to Landlord in writing the names and amounts of all Hazardous Materials, or any combination thereof, that were stored, generated, used or disposed of on, under or about the Premises for the twelve (12) month period prior to each Disclosure Date, and that Tenant intends to store, generate, use or dispose of on, under or about the Premises through the next Disclosure Date. At Landlord’s request, Tenant’s disclosure obligations under this Section 1.20 shall include a requirement that Tenant update, execute and deliver to Landlord the Environmental Questionnaire, as the same may be reasonably modified by Landlord from time to time; provided, however, Tenant shall not be required to update the Environmental Questionnaire more than once per year unless an environmental event of default has occurred or Tenant has materially changed its business. In addition to the foregoing, Tenant shall promptly notify Landlord of, and shall promptly provide Landlord with true, correct, complete and legible copies of, all of the following environmental items relating to the Premises: reports filed pursuant to any self reporting requirements; reports filed pursuant to any Environmental Laws or this Lease; all permit applications, permits, monitoring reports, workplace exposure and community exposure warnings or notices, and all other reports, disclosures, plans or documents (even those that may be characterized as confidential) relating to water discharges, air pollution, waste generation or disposal, underground storage tanks or Hazardous Materials; all orders, reports, notices, listings and correspondence (even those that may be considered confidential) of or concerning the release, investigation, compliance, clean up, remedial and corrective actions, and abatement of Hazardous Materials whether or not required by Environmental Laws; and all complaints, pleadings and other legal documents filed against Tenant related to Tenant’s use, handling, storage or disposal of Hazardous Materials.

 

b. Inspection; Compliance. Landlord and Landlord Parties (as that term is defined in Article 10) shall have the right, but not the obligation, to inspect, investigate, sample and/or monitor the Premises, including any air, soil, water, groundwater or other sampling, and any other testing, digging, drilling or analyses, at any time to determine whether Tenant is complying with the terms of this Section 1.20 and Article 10, and in connection therewith, Tenant shall provide Landlord with access to all relevant facilities, records and personnel. If Tenant is not in compliance with any of the provisions of this Section 1.20 and Article 10, or in the event of a release of any Hazardous Materials on, under, from or about the Premises, Landlord and Landlord Parties shall have the right, but not the obligation, without limitation on any of Landlord’s other rights and remedies under this Lease, to immediately enter upon the Premises and to discharge Tenant’s obligations under this Section 1.20 and Article 10 at Tenant’s expense, including without limitation the taking of emergency or long term remedial action. Landlord and Landlord Parties shall endeavor to minimize interference with Tenant’s business but shall not be liable for any such interference. In addition, Landlord, at Tenant’s sole cost and expense, shall have the right, but not the obligation, to join and participate in any legal proceedings or actions initiated in connection with any claims or causes of action arising out of the storage, generation, use or disposal by Tenant or Tenant’s Parties of Hazardous Materials on, under, from or about the Premises. All sums reasonably disbursed, deposited or incurred by Landlord in connection herewith, including, but not limited to, all costs, expenses and actual attorneys’ fees, shall be due and payable by Tenant to Landlord, as an item of Additional Rent, on demand by Landlord, together with interest thereon at the Interest Rate from the date of such demand until paid by Tenant. Landlord agrees that if any testing proves that the Tenant or Tenant’s Parties have no responsibility for the presence of said Hazardous Materials, Tenant shall not be liable for any costs or expenses in connection with such inspection, testing and monitoring.

 

c. Tenant Obligations. If the presence of any Hazardous Materials on, under or about the Premises caused or permitted by Tenant or Tenant’s Parties results in (i) injury to any person, (ii) injury to or contamination of the Premises, or (iii) injury to or contamination of any real or personal property wherever situated, Tenant, at its sole cost and expense, shall promptly take all actions necessary to return the Premises to the condition existing prior to the introduction of such Hazardous Materials to the Premises and to remedy or repair any such injury or contamination. Without limiting any other rights or remedies of Landlord under this Lease, Tenant shall pay the cost of any cleanup work performed on, under or about the Premises as required by this Lease or any Environmental Laws in connection with the removal, disposal, neutralization or other treatment of such Hazardous Materials caused or permitted by Tenant or Tenant’s Parties. If Landlord has reason to believe that Tenant or Tenant’s Parties may have caused or permitted the release of any Hazardous Materials on, under, from or about the Premises, then Landlord may require Tenant, at Tenant’s sole cost and expense, to conduct monitoring activities on or about the Premises satisfactory to Landlord, in its sole and absolute judgment, concerning such release of Hazardous Materials on, under, from or about the Premises. Notwithstanding anything to the contrary contained in the foregoing, Tenant shall not, without Landlord’s prior written consent, take any remedial action in response to the presence of any Hazardous Materials on, under or about the Premises, or enter into any settlement agreement, consent decree or other compromise with any governmental agency with respect to any Hazardous Materials claims; provided, however, Landlord’s prior written consent shall not be necessary in the event that the presence of Hazardous Materials on, under or about the Premises (i) poses an immediate threat to the health, safety or welfare of any individual, or (ii) is of such a nature that an immediate remedial response is necessary and it is not possible to obtain Landlord’s consent before taking such action. Tenant’s failure to timely comply with this Section 1.20 shall constitute an event of default under this Lease.

 

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d. Tenant’s Responsibility at Conclusion of Lease. Promptly upon the expiration or sooner termination of this Lease, Tenant shall represent to Landlord in writing that (i) Tenant has made a diligent effort to determine whether any Hazardous Materials are on, under or about the Premises, as a result of any acts or omissions of Tenant or Tenant’s Parties and (ii) no such Hazardous Materials exist on, under or about the Premises, other than as specifically identified to Landlord by Tenant in writing. If Tenant discloses the existence of Hazardous Materials on, under or about the Premises or if Landlord at any time discovers that Tenant or Tenant’s Parties caused or permitted the release of any Hazardous Materials on, under, from or about the Premises, Tenant shall, at Landlord’s request, immediately prepare and submit to Landlord within thirty (30) days after such request a comprehensive plan, subject to Landlord’s approval, specifying the actions to be taken by Tenant to return the Premises to the condition existing prior to the introduction of such Hazardous Materials. Upon Landlord’s approval of such clean up plan, Tenant shall, at Tenant’s sole cost and expense, without limitation on any rights and remedies of Landlord under this Lease or at law or in equity, immediately implement such plan and proceed to clean up such Hazardous Materials in accordance with all Environmental Laws and as required by such plan and this Lease.

 

1.21 Additional Sign Rights. Notwithstanding the terms of Article 12 of the Standard Lease Provisions, subject to Landlord’s prior approval as to location and Tenant’s plans and specifications, compliance with Landlord’s Sign Criteria attached hereto as Exhibit H, and Tenant’s compliance with all applicable Laws, including the requirement that Tenant obtain all permits and approvals required by the City, Tenant shall be entitled to the following exterior signs: (i) large logo signage on Building facing highway frontage on both sides of the Building exterior (as depicted on Exhibit H); (ii) exterior Building signage; and (iii) identity signage on any sign monument existing or constructed by Landlord on the Premises, if any. Tenant shall have the exclusive right to install identity signage within the Building without Landlord consent. Tenant shall have no right to place any other sign elsewhere on the Premises. Tenant shall have no right to conduct any auction in, on or about the Premises. Tenant shall be responsible, at its sole cost and expense, for all costs associated with the design, fabrication, permitting, installation, repair, maintenance, replacement, and removal of all Tenant’s signs and the repair of any damage to the Building or monument resulting from the removal of such signage. The sign rights granted herein are personal to the original Tenant executing this Lease and may not be assigned, voluntarily or involuntarily, by any person or entity other than the original Tenant executing this Lease or a Permitted Transferee or any Transferee of the original Tenant’s interest under this Lease approved by Landlord; provided, however, that the name of such Permitted Transferee or Transferee is not an Objectionable Name. The sign rights granted to the original Tenant hereunder are not assignable separate and apart from the Lease, nor may any sign right granted herein be separated from the Lease in any manner, either by reservation or otherwise without Landlord’s consent or as otherwise expressly permitted in this Lease. “Objectionable Name” shall mean any name which relates to an entity which is of a character or reputation, or is associated with a political orientation or faction, which is inconsistent with the quality of the Building, or which would otherwise reasonably offend landlords of comparable buildings in the vicinity of the Building.

 

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STANDARD LEASE PROVISIONS

 

ARTICLE 2 - LEASE

 

2.1 Lease Elements; Definitions; Exhibits. The Lease is comprised of the Lease Summary and Property Specific Provisions (the “Summary”), these Standard Lease Provisions (“Standard Provisions”) and all exhibits, and riders attached hereto (collectively, “Exhibits”), all of which are incorporated together as part of one and the same instrument. All references in any such documents and instruments to “Lease” means the Summary, these Standard Provisions and all Exhibits attached hereto. All terms used in this Lease shall have the meanings ascribed to such terms in the Summary, these Standard Provisions and any Exhibits. To the extent of any inconsistency between the terms and conditions of the Summary, these Standard Provisions, or any Exhibits attached hereto, the Summary and any Exhibits attached hereto shall control over these Standard Provisions.

 

ARTICLE 3 - PREMISES

 

3.1 Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises, upon and subject to, the terms, covenants and conditions of this Lease. Each party covenants and agrees, as a material part of the consideration for this Lease, to keep and perform their respective obligations under this Lease.

 

3.2 Landlord’s Reserved Rights. Landlord reserves the right from time to time to do any of the following: (a) expand the Building and construct or alter other buildings or improvements on the Property as long as Tenant’s parking ratio is not substantially or adversely impacted; (b) make any changes, additions, improvements, maintenance, repairs or replacements in or to the Property, Common Areas and/or the Building (including the Premises) if required to do so by any applicable Laws or to the extent necessary in conjunction with any improvements to the Property, Common Areas and/or the Building (including the Premises), provided that Tenant’s use of the Premises is not materially and adversely affected), and the fixtures and equipment thereof, including, without limitation: (i) maintenance, replacement and relocation of pipes, ducts, conduits, wires and meters and equipment above the ceiling surfaces, below the floor surfaces and within the walls of the Building; and (ii) changes in the location, size, shape and number of driveways, entrances, stairways, elevators, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas and walkways, easements, parking spaces and parking areas as long as Tenant’s parking ratio is not substantially and adversely impacted; (c) close temporarily any of the Property while engaged in making repairs, improvements or alterations to the Property; and (d) perform such other acts and make such other changes with respect to the Property, as Landlord may, in the exercise of good faith business judgment, deem to be appropriate. If Landlord is required to reconfigure the Premises as a result of Landlord’s exercise of its rights under this Section 3.2, Landlord shall provide Tenant with reasonable advance written notice of the construction schedule to the extent that the Premises are affected, and Landlord shall minimize, as reasonably practicable, the interference with Tenant’s business as a result of any such construction. To the extent Tenant’s business is materially interfered with as a result of Landlord’s interference Tenant shall be entitled to an abatement of Rent to be determined in good faith by Landlord and Tenant. All measurements of rentable area in this Lease shall be deemed to be correct.

 

ARTICLE 4 - TERM AND POSSESSION

 

4.1 Term; Notice of Lease Dates. The Term shall be for the period designated in the Summary commencing on the Commencement Date and ending on the Expiration Date, unless the Term is sooner terminated or extended as provided in this Lease. If the Commencement Date falls on any day other than the first day of a calendar month then the Term 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 reasonably objects thereto in writing within such ten (10) day period.

 

4.2Possession. Landlord shall deliver possession of the Premises to Tenant as provided in the Work Letter, subject to the provisions of Section 4.3 below. Notwithstanding the foregoing, Landlord will not be obligated to deliver possession of 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/or Letter of Credit required hereunder and the first installment of Monthly Base Rent and Additional Rent due under this Lease; and (iii) copies of Tenant’s insurance certificates as required hereunder.

 

4.3 Condition of Premises. Tenant acknowledges that, except as otherwise expressly set forth in this Lease and the Work Letter, (i) neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Premises, or with respect to the condition and/or suitability thereof for the conduct of Tenant’s business, and Tenant shall accept the Premises in its then as-is condition on delivery by Landlord, and (ii) the acceptance of possession of the Premises by Tenant shall establish that the Premises were at such time complete and in good, sanitary and satisfactory condition and repair with all work required to be performed by Landlord pursuant to the Work Letter completed and without any obligation on Landlord’s part to make any further alterations, upgrades or improvements thereto, subject only to completion of minor punch-list items identified by the parties to be corrected by Landlord, if any, as provided in the Work Letter.

 

4.4 Early Access. So long as Landlord has received from Tenant the sixth (6th) month’s Monthly Base Rent due pursuant to Section 5.1 of this Lease, certificates satisfactory to Landlord evidencing the insurance required to be carried by Tenant under this Lease, and the Security Deposit and/or Letter of Credit required hereunder, and so long as the Tenant and its contractors and employees do not interfere with the completion of the Tenant Improvements, Landlord shall use reasonable efforts to give Tenant’s designated contractors access to the Premises on the Effective Date (the “Early Access Period”) for purposes of installing Tenant’s furniture, fixtures, and equipment (“Tenant’s Work”). Tenant’s Work shall be performed by Tenant at Tenant’s sole cost and expense. Tenant’s access to the Premises during the Early Access Period shall be subject to all terms and conditions of this Lease, except that Tenant shall not be obligated to pay Monthly Base Rent or Tenant’s Percentage of Operating Expenses during the Early Access Period until the Commencement Date; provided, however, Tenant shall pay the Utilities Costs. Tenant agrees to provide Landlord with prior notice of any such intended early access and to cooperate with Landlord during the period of any such early access so as not to interfere with Landlord in the completion of the Tenant Improvements.

 

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ARTICLE 5 - RENT

 

5.1 Monthly Base Rent. Tenant agrees to pay Landlord, the Monthly Base Rent as designated in the Summary. Monthly Base Rent and recurring monthly charges of Additional Rent (defined below) shall be paid by Tenant in advance on the first day of each and every calendar month (“Due Date”) during the Term, except that the sixth (6th) full month’s Monthly Base Rent and sixth (6th) full month’s Additional Rent shall be paid upon Tenant’s execution and delivery of this Lease to Landlord. Monthly Base 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.

 

5.2 Additional Rent. All amounts and charges payable by Tenant under this Lease in addition to Monthly Base Rent, if any, including, without limitation, payments for Operating Expenses, Taxes, Insurance Costs and Utilities Costs to the extent payable by Tenant under this Lease shall be considered “Additional Rent”, and the word “Rent” in this Lease shall include Monthly Base Rent and all such Additional Rent unless the context specifically states or clearly implies that only Monthly Base Rent is referenced. Rent shall be paid to Landlord, without any prior notice or demand therefor and without any notice, deduction or offset, in lawful money of the United States of America.

 

5.3 Late Charges & Interest Rate. If Landlord does not receive Rent or any other payment due from Tenant on the Due Date, Tenant shall pay to Landlord a late charge equal to five percent (5%) of such past due Rent or other payment. Tenant agrees that this late charge represents a fair and reasonable estimate of the cost Landlord will incur by reason of Tenant’s late payment. Accepting any late charge shall not constitute a waiver by Landlord of Tenant’s default with respect to any overdue amount nor prevent Landlord from exercising any other rights or remedies available to Landlord. If any installment of Monthly Base Rent or Additional Rent, or any other amount payable by Tenant hereunder is not received by Landlord by the Due Date, it shall bear interest at the Interest Rate set forth in the Summary from the Due Date until paid. All interest, and any late charges imposed pursuant to this Section 5.3, shall be considered Additional Rent due from Tenant to Landlord under the terms of this Lease.

 

ARTICLE 6 - SECURITY DEPOSIT

 

6.1 General Provisions. Concurrently with Tenant’s execution and delivery of this Lease to Landlord, Tenant shall deposit with Landlord the Security Deposit, if any, designated in 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. 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 Monthly Base Rent, Additional 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 Term, provided that Landlord may retain the Security Deposit until such time as any amount due from Tenant in accordance with this Lease has been determined and paid in full. If Landlord sells its interest in the Building during the Term and if Landlord deposits with or credits to the purchaser the Security Deposit (or balance thereof), then, upon such sale, Landlord shall be discharged from any further liability with respect to the Security Deposit.

 

6.2Reduction. Subject to the remaining terms of this Section 6.2, and provided that during the Term of this Lease preceding the effective date of any reduction of the Security Deposit described herein, Tenant has not been in Default under this Lease, Tenant shall have the right to reduce the Security Deposit as follows: (a) to $425,000.00 as of the second (2nd) anniversary of the Commencement Date (the “First Security Reduction Date”), (b) to $325,000.00 as of the third (3rd) anniversary of the Commencement Date (the “Second Security Reduction Date”), and (c) to $225,000.00 as of the fourth (4th) anniversary of the Commencement Date (the “Third Security Reduction Date,” and collectively with the First Security Reduction Date and the Second Security Reduction Date, the “Security Reduction Date(s)”). Notwithstanding anything to the contrary contained herein, if a materially uncured Tenant Default has occurred under this Lease at any time prior to a Security Reduction Date, then Tenant shall have no right to reduce the Security Deposit as described herein. Tenant shall provide Landlord with written notice requesting that the Security Deposit be reduced as provided above (each, a “Security Reduction Notice”). If Tenant provides Landlord with a Security Reduction Notice, and Tenant is entitled to reduce the Security Deposit as provided herein, Landlord shall refund the applicable portion of the Security Deposit to Tenant within ten (10) days after the later to occur of (i) Landlord’s receipt of the Security Reduction Notice, or (ii) the Security Reduction Date. In no event shall the Security Deposit ever be less than $225,000.00.

 

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ARTICLE 7 - OPERATING EXPENSES/UTILITIES/SERVICES

 

7.1 Operating Expenses. Tenant shall contribute to the costs of all Operating Expenses associated with the operation, maintenance, repair and replacement of the Premises as provided in the Summary.

 

7.2 Utilities and Services. Utilities and services to the Premises and the Property are described in the Summary.

 

7.3 Taxes. As used in this Lease, the term “Taxes” means: all real property taxes and assessments, possessory interest taxes, sales taxes, personal property taxes, business or license taxes or fees, gross receipts taxes, license or use fees, excises, transit charges, and other impositions of any kind (including fees “in-lieu” or in substitution of any such tax or assessment) which are now or hereafter assessed, levied, charged or imposed by any public authority upon the Building, Property and/or Premises or any portion thereof, its operations or the Rent derived therefrom (or any portion or component thereof, or the ownership, operation, or transfer thereof), and any and all costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred in attempting to protest, reduce or minimize the same. Taxes shall not include inheritance or estate taxes imposed upon or assessed against the interest of Landlord, gift taxes, excess profit taxes, franchise taxes, or similar taxes on Landlord’s business or any other taxes computed upon the basis of the net income of Landlord. If it shall not be lawful for Tenant to reimburse Landlord for any such Taxes, the Monthly Base Rent payable to Landlord under this Lease shall be revised to net Landlord the same net rent after imposition of any such Taxes by Landlord as would have been payable to Landlord prior to the payment of any such Taxes. Tenant shall pay for or contribute to Taxes as part of Operating Expenses as provided in the Summary. Notwithstanding anything herein to the contrary, Tenant shall be liable for all taxes levied or assessed against personal property, furniture, fixtures, above-standard Tenant Improvements and alterations, additions or improvements placed by or for Tenant in the Premises. Furthermore, Tenant shall pay prior to delinquency any (i) rent tax or sales tax, service tax, transfer tax or value added tax, or any other applicable tax on the rent or services provided herein or otherwise respecting this Lease; (ii) taxes assessed upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion of the Property; or (iii) taxes assessed upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.

 

7.4 Insurance Costs. As used in this Lease, “Insurance Costs” means the cost of insurance obtained by Landlord pursuant to Article 15 (including self-insured amounts and deductibles, if any). Tenant shall pay for or contribute to Insurance Costs as part of Operating Expenses as provided in the Summary.

 

7.5 Interruption of Utilities. Landlord shall have no liability to Tenant for any interruption in utilities or services to be provided to the Premises when such failure is caused by all or any of the following: (a) accident, breakage or repairs; (b) strikes, lockouts or other labor disturbances or labor disputes of any such character; (c) governmental regulation, moratorium or other governmental action; (d) inability, despite the exercise of reasonable diligence, to obtain electricity, water or fuel; (e) service interruptions or any other unavailability of utilities resulting from causes beyond Landlord’s control including without limitation, any electrical power “brown-out” or “black-out”; or (f) any other cause beyond Landlord’s reasonable control. In addition, in the event of any such interruption in utilities or services, Tenant shall not be entitled to any abatement or reduction of Rent (except as expressly provided in Articles 17 and 18 if such failure is a result of any casualty damage or taking described therein), no eviction of Tenant shall result, and Tenant shall not be relieved from the performance of any covenant or agreement in this Lease. In the event of any stoppage or interruption of services or utilities which are not obtained directly by Tenant, Landlord shall diligently attempt to resume such services or utilities as promptly as practicable. Nothing in the foregoing shall relieve Landlord of liability for any interruption in utilities or services provided to the Premises when such failure is caused by the negligence or intentional action of Landlord or its agents.

 

ARTICLE 8 - MAINTENANCE AND REPAIR

 

8.1 Landlord’s Repair Obligations. Landlord shall maintain and repair the Building, Common Areas and other portions of the Property as provided in the Summary. 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. All other repair and maintenance of the Premises, Building and Property to be performed by Landlord, if any, shall be as provided in the Summary.

 

8.2 Tenant’s Repair Obligations. Except for Landlord’s obligations specifically set forth elsewhere in this Lease and in Section 8.1 above and in the Summary, Tenant shall at all times and at Tenant’s sole cost and expense, keep, maintain, clean, repair, preserve and replace, as necessary, the interior of the Premises and all parts thereof including, without limitation, all Tenant Improvements, Alterations, and all furniture, fixtures and equipment, including, without limitation, all computer, telephone and data cabling and equipment, Tenant’s signs, if any, door locks, closing devices, security devices, interior of windows, window sashes, casements and frames, floors and floor coverings, shelving, kitchen, restroom facilities and/or appliances of any kind located within the Premises, if any, custom lighting, and any additions and other property located within the Premises, so as to keep all of the foregoing elements of the Premises in good condition and repair, reasonable wear and tear and casualty damage 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 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) that are selected by Tenant and approved by Landlord, which approval Landlord shall not unreasonably withhold or delay. All other repair and maintenance of the Premises, Building and Property to be performed by Tenant, if any, shall be as provided in the Summary. If Tenant refuses or neglects to repair and maintain the Premises properly as required hereunder to the reasonable satisfaction of Landlord, then at any time following ten (10) days from the date on which Landlord makes a written demand on

 

Tenant to effect such repair and maintenance, Landlord may enter upon the Premises and make such repairs and/or maintenance, and upon completion thereof, Tenant agrees to pay to Landlord as Additional Rent, Landlord’s costs for making such repairs plus an amount not to exceed ten percent (10%) of such costs for overhead, within ten (10) days after receipt from Landlord of a written itemized bill therefor. Any amounts not reimbursed by Tenant within such ten (10) day period will bear interest at the Interest Rate until paid by Tenant.

 

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ARTICLE 9 - USE

 

Tenant shall procure, at its sole cost and expense, any and all permits required by applicable Law for Tenant’s use and occupancy of the Premises. Tenant shall use the Premises solely for the Permitted Use specified in the Summary, and shall not use or permit the Premises to be used for any other use or purpose whatsoever without Landlord’s prior written approval. Tenant shall observe and comply with the Rules and Regulations attached hereto as Exhibit E, as the same may be modified by Landlord from time to time, 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 any such Rules and Regulations. Tenant shall, at its sole cost and expense, observe and comply with all Laws and all requirements of any board of fire underwriters or similar body relating to the Premises now or hereafter in force relating to or affecting the condition, use, occupancy, alteration or improvement of the Premises (whether, except as otherwise provided herein, structural or nonstructural, including unforeseen and/or extraordinary alterations and/or improvements to the Premises and regardless of the period of time remaining in the Term). Tenant shall not use or allow the Premises to be used for any improper, immoral, unlawful or reasonably objectionable purpose. Tenant shall not do or permit to be done anything that will obstruct or interfere with the rights of other tenants or occupants of the Building or the Property, if any, or injure or annoy them. Tenant shall not cause, maintain or permit any nuisance in, on or about the Premises, the Building or the Property, nor commit or suffer to be committed any waste in, on or about the Premises. Without limiting the foregoing, Tenant agrees that the Premises shall not be used for the use, growing, producing, processing, storing (short or long term), distributing, transporting, or selling of marijuana, cannabis, cannabis derivatives, or any cannabis containing substances (“Cannabis”), or any office uses related to the same, nor shall Tenant permit, allow or suffer, any of Tenant’s officers, employees, agents, servants, licensees, subtenants, concessionaires, contractors and invitees to bring onto the Premises, any Cannabis. The prohibitions in this paragraph shall apply to all Cannabis, whether such Cannabis is legal for any purpose whatsoever under state or federal law or both. Any failure by Tenant to comply with each of the terms, covenants, conditions and provisions related to Cannabis shall automatically and without the requirement of any notice be a Default that is not subject to cure, and Tenant agrees that upon the occurrence of any such Default, Landlord may elect, in its sole discretion, to exercise all of its rights and remedies under this Lease, at law or in equity with respect to such Default. Furthermore, Tenant is prohibited from engaging or permitting others to engage in any activity which would be a violation of any state and/or federal laws relating to the use, sale, possession, cultivation and/or distribution of any controlled substances (whether for commercial or personal purposes) regulated under any applicable law relating to the medicinal use and/or distribution of Cannabis.

 

ARTICLE 10 - HAZARDOUS MATERIALS

 

As used in this Lease, the term “Environmental Law(s)” means any past, present or future federal, state or local Law relating to (a) the environment, human health or safety, including, without limitation, emissions, discharges, releases or threatened releases of Hazardous Materials (as defined below) into the environment (including, without limitation, air, surface water, groundwater or land), or (b) the manufacture, generation, refining, processing, distribution, use, sale, treatment, receipt, storage, disposal, transport, arranging for transport, or handling of Hazardous Materials. As used in this Lease, the term “Hazardous Materials” means and includes any hazardous or toxic materials, substances or wastes as now or hereafter designated or regulated under any Environmental Laws including, without limitation, asbestos, petroleum, petroleum hydrocarbons and petroleum based products, urea formaldehyde foam insulation, polychlorinated biphenyls (“PCBs”), and freon and other chlorofluorocarbons. Except for ordinary and general office supplies, such as copier toner, liquid paper, glue, ink and common household cleaning materials, and motor vehicle fuel stored in fuel tanks of motor vehicles used on site in compliance with all Environmental Laws (some or all of which may constitute Hazardous Materials), 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 Property by Tenant, its agents, officers, directors, shareholders, members, managers, partners, 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 Property, 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 Property 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 members, shareholders, partners, officers, directors, managers, employees, agents, contractors, successors and assigns (collectively, “Landlord 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 Property and which are caused or permitted by Tenant or any of Tenant’s Parties. The provisions of this Article 10 will survive the expiration or earlier termination of this Lease. Tenant shall give Landlord written notice of any evidence of Mold, water leaks or water infiltration in the Premises promptly upon discovery of same. At its expense, Tenant shall investigate, clean up and remediate any Mold in the Premises. 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, microbial matter, mycotoxins and microbiological organic compounds.

 

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ARTICLE 11 - PARKING

 

During the Term, Tenant shall be entitled to utilize the number and type of parking spaces specified in the Summary within the parking areas for the Property as designated by Landlord from time to time. Landlord shall at all times have the right to establish and modify the nature and extent of the parking areas for the Premises, the Building and Property (including whether such areas shall be surface, underground and/or other structures). In addition, if Tenant is not the sole occupant of the Property, Landlord may, in its discretion, designate any unreserved parking spaces as reserved parking The terms and conditions for parking at the Property shall be as specified in the Summary and in the Rules and Regulations regarding parking as contained in Exhibit E attached hereto, as may be established by Landlord from time to time. Tenant shall not use more parking spaces than its allotment and shall not use any parking spaces specifically assigned by Landlord to other tenants, if any, or for such other uses such as visitor, handicapped or other special purpose parking. Tenant’s visitors shall be entitled to access to the parking areas on the Property designated for visitor use, subject to availability of spaces and the terms of the Summary.

 

ARTICLE 12 - TENANT SIGNS

 

Tenant shall have the right to have a signage vendor approved by Landlord to install and maintain, at Tenant’s sole cost and expense, one (1) Building standard entry sign (restricted solely to Tenant’s name) on the exterior of the Building above the main entrance doorway to the Premises or at such other location as may be reasonably determined by Landlord, and a sign facing southwest on the exterior of the Building, subject to the provisions of this Article 12. Subsequent changes to Tenant’s sign and/or any additional signs, to the extent permitted by Landlord herein, shall be made or installed at Tenant’s sole cost and expense. All aspects of any such signs shall be subject to the prior written consent of Landlord (which shall not be unreasonably withheld), and shall be per Landlord’s standard specifications and materials, as revised by Landlord from time to time. Tenant shall have no right to install or maintain any other signs, banners, advertising, notices, displays, stickers, decals or any other logo or identification of any person, product or service whatsoever, in any location on or in the Property except as (i) shall have been expressly approved by Landlord in writing prior to the installation thereof (which approval may be granted or withheld in Landlord’s sole and absolute discretion), (ii) shall not violate any signage restrictions or exclusive sign rights contained in any then existing leases with other tenants of the Property, if any, and (iii) are consistent and compatible with all applicable Laws, and the design, signage and graphics program from time to time implemented by Landlord with respect to the Property, if any. Landlord shall have the right to remove any signs or signage material installed without Landlord’s permission, without being liable to Tenant by reason of such removal, and to charge the cost of removal to Tenant as Additional Rent hereunder, payable within ten (10) days after written demand by Landlord. Notwithstanding anything contained in the foregoing to the contrary, Landlord acknowledges and agrees that Tenant’s signage rights include those rights set forth and specified in Section 1.21 above. Any additional sign rights of Tenant, if any, shall be as provided in the Summary.

 

ARTICLE 13 - ALTERATIONS

 

13.1 Alterations. After installation of the initial Tenant Improvements for the Premises, Tenant may, at its sole cost and expense, make alterations, additions, improvements and decorations to the Premises (“Alteration(s)”) subject to and upon the following terms and conditions:

 

a. Tenant shall not make any Alterations which: (i) affect any area outside the Premises including the outside appearance, character or use of any portions of the Building or other portions of the Property; (ii) affect the Building’s roof, roof membrane, any structural component or any base Building equipment, services or systems (including fire and life/safety systems), or the proper functioning thereof, or Landlord’s access thereto; (iii) in the reasonable opinion of Landlord, lessen the value of the Building or the Property; (iv) will violate or require a change in any occupancy certificate applicable to the Premises; or (v) would trigger a legal requirement which would require Landlord to make any alteration or improvement to the Premises, Building or other aspect of the Property.

 

b. Tenant shall not make any Alterations not prohibited by Section 13.1(a), unless Tenant first obtains Landlord’s prior written consent, which consent Landlord shall not unreasonably withhold, provided Landlord’s prior approval shall not be required for any Alterations that is not prohibited by Section 13.1(a) above and is of a cosmetic nature that satisfies all of the following conditions (hereinafter a “Pre-Approved Alteration”): (i) the costs of such Alterations do not exceed One Dollar ($1.00) per rentable square foot of the Premises in the aggregate in any calendar year; (ii) to the extent reasonably required by Landlord or by law due to the nature of the work being performed, Tenant delivers to Landlord final plans, specifications, working drawings, permits and approvals for such Alterations at least ten (10) days prior to commencement of the work thereof; (iii) Tenant and such Alterations otherwise satisfy all other conditions set forth in this Section 13.1; and (iv) the making of such Alterations will not otherwise cause a default by Tenant under any provision of this Lease. Tenant shall provide Landlord with ten (10) days’ prior written notice before commencing any Alterations. In addition, before proceeding with any Alteration, Tenant’s contractors shall obtain, on behalf of Tenant and at Tenant’s sole cost and expense: (A) all necessary governmental permits and approvals for the commencement and completion of such Alterations, and (B) if the cost of such Alterations exceeds $75,000.00, a completion and lien indemnity bond, or other surety satisfactory to Landlord for such Alterations. Landlord’s approval of any plans, contractor(s) and subcontractor(s) of Tenant shall not release Tenant or any such contractor(s) and/or subcontractor(s) from any liability with respect to such Alterations and will create no liability or responsibility on Landlord’s part concerning the completeness of such Alterations or their design sufficiency or compliance with Laws.

 

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c. All Alterations shall be performed: (i) in accordance with the approved plans, specifications and working drawings, if any; (ii) lien-free and in a first-class workmanlike manner; (iii) in compliance with all building codes and Laws; (iv) in such a manner so as not to impose any additional expense upon nor delay Landlord in the maintenance and operation of the Building; (v) by licensed and bondable contractors, subcontractors and vendors selected by Tenant and reasonably approved by Landlord (provided Landlord reserves the right to require Tenant to utilize Landlord’s preferred contractors, subcontractors and vendors for certain work performed within the Premises or as to systems serving the Premises as approved by Landlord such as for fire/life safety, HVAC control work, architectural and engineering services); and (vi) at such times, in such manner and subject to such rules and regulations as Landlord may from time to time reasonably designate. Tenant shall pay to Landlord, within ten (10) days after written demand, the costs of any increased insurance premiums incurred by Landlord to include such Alterations in the causes of loss – special form property insurance obtained by Landlord pursuant to this Lease, if Landlord elects in writing to insure such Alterations; provided, however, Landlord shall not be required to include the Alterations under such insurance. If the Alterations are not included in Landlord’s insurance, Tenant shall insure the Alterations under its causes of loss-special form property insurance pursuant to this Lease.

 

d. Tenant shall pay to Landlord, as Additional Rent, the reasonable costs of Landlord’s engineers and other consultants for review of all plans, specifications and working drawings for the Alterations, within ten (10) business days after Tenant’s receipt of invoices either from Landlord or such consultants. In addition to such costs, Tenant shall pay to Landlord, within ten (10) business days after completion of any Alterations, a construction supervision fee equal to one and one-half percent (1.5%) of the total cost of the Alterations and the actual, reasonable costs incurred by Landlord for any services rendered by Landlord’s management personnel and engineers to coordinate and/or supervise any of the Alterations to the extent such services are provided in excess of or after the normal on-site hours of such engineers and management personnel.

 

e. 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 insurance provisions of this Lease.

 

13.2 Removal of Alterations. 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; provided, however, Landlord may, by written notice delivered to Tenant within thirty (30) days after Landlord’s receipt of plans for any Alterations identify those Alterations which Landlord shall require Tenant to remove at the end of the Term. If Landlord requires Tenant to remove any such Alterations, 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 to its original condition (or, at Landlord’s option, Tenant shall pay to Landlord all of Landlord’s costs of such removal and repair).

 

13.3 Liens. Tenant shall not permit any mechanic’s, materialmen’s or other liens to be filed against all or any part of the Property 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 of Tenant’s Parties. If any such liens are filed, Tenant shall, at its sole cost, immediately cause such liens to be released of record or bonded so that such lien(s) no longer affect(s) title to the Property, the Building or the Premises. If Tenant fails to cause any such lien to be released or bonded within ten (10) days after filing thereof, Landlord may 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, and Tenant shall reimburse Landlord within five (5) business 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.

 

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ARTICLE 14 - TENANT’S INSURANCE

 

14.1 Tenant’s Insurance. On or before the earlier of any Early Access Period, the Commencement Date or the date Tenant commences or causes to be commenced any work of any type in the Premises, and continuing during the entire Term, Tenant shall obtain and keep in full force and effect, the following insurance with limits of coverage as set forth in Section 1.14 of the Summary:

 

a. Special Form (formerly known as “all risk”) insurance, including fire and extended coverage, sprinkler leakage (including earthquake sprinkler leakage), vandalism, malicious mischief plus earthquake and flood coverage upon property of every description and kind owned by Tenant and located in or on 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 any Alterations (but excluding the initial Tenant Improvements previously existing or installed in the Premises), in an amount not less than 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 on an occurrence basis, 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), liquor liability (if Tenant serves alcohol on the Premises), products and completed operations liability. The limits of liability of such commercial general liability insurance may be increased every three (3) years during the Term upon reasonable prior notice by Landlord to an amount reasonably required by Landlord and appropriate for tenants of buildings comparable to the Building.

 

c. Commercial Automobile Liability covering all owned, hired and non-owned automobiles.

 

d. Worker’s compensation, in statutory amounts and employers liability, covering all persons employed in connection with any work done in, on or about the Premises for which claims for death, bodily injury or illness could be asserted against Landlord, Tenant or the Premises.

 

e. Umbrella liability insurance on an occurrence basis, in excess of and following the form of the underlying insurance described in Section 14.1.b. and 14.1.c. and the employer’s liability coverage in Section 14.1.d. which is at least as broad as each and every area of the underlying policies. Such umbrella liability insurance shall include pay on behalf of wording, concurrency of effective dates with primary policies, blanket contractual liability, application of primary policy aggregates, and shall provide that if the underlying aggregate is exhausted, the excess coverage will drop down as primary insurance, subject to customary commercially reasonable deductible amounts imposed on umbrella policies.

 

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f. If Tenant’s business includes professional services, Tenant shall, at Tenant’s expense, maintain in full force and effect professional liability (also known as errors and omissions insurance), covering Tenant and Tenant’s employees from work related negligence and liability in trade.

 

g. Loss of income, extra expense and business interruption insurance in such amounts as will reimburse Tenant for 12 months of 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, Tenant’s parking areas or to the Building as a result of such perils.

 

h. Any other form or forms of insurance as Tenant or Landlord or the Mortgagees of Landlord may reasonably require from time to time, in form, amounts and for insurance risks against which a prudent tenant of a building similar to the Building would protect itself, but only to the extent such risks and amounts are available in the insurance market at commercially reasonable costs.

 

14.2 Requirements. Each policy required to be obtained by Tenant hereunder shall: (a) be issued by insurers which are approved by Landlord and/or Landlord’s Mortgagees and are authorized to do business in the state in which the Premises are located and rated not less than Financial Size X, and with a Financial Strength rating of 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 14.1.a. and 14.1.g. above); (b) be in form reasonably satisfactory from time to time to Landlord; (c) name Tenant as named insured thereunder and shall name Landlord and, at Landlord’s request, such other persons or entities of which Tenant has been informed in writing, as additional insureds thereunder, all as their respective interests may appear; (d) not have a deductible amount exceeding Five Thousand Dollars ($5,000.00), which deductible amount shall be deemed self-insured with full waiver of subrogation; (e) specifically provide that the insurance afforded by such policy for the benefit of Landlord and any other additional insureds shall be primary, and any insurance carried by Landlord or any other additional insureds shall be excess and non-contributing; (f) contain an endorsement that the insurer waives its right to subrogation; (g) require the insurer to notify Landlord and any other additional insureds in writing not less than thirty (30) days prior to any material change, reduction in coverage, cancellation or other termination thereof; (h) contain a cross liability or severability of interest endorsement; and (i) be in amounts sufficient at all times to satisfy any coinsurance requirements thereof. Tenant agrees to deliver to Landlord, as soon as practicable after the placing of the required insurance, but in no event later than the date Tenant is required to obtain such insurance as set forth in Section 14.1 above, certificates from the insurance company evidencing the existence of such insurance and Tenant’s compliance with the foregoing provisions of this Article 14. Tenant shall cause replacement certificates to be delivered to Landlord not less than ten (10) 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, Landlord shall have the right, but not the obligation, to procure such policies and certificates at Tenant’s expense.

 

14.3 Effect on Insurance. Tenant shall not do or permit to be done anything which will (a) violate or invalidate any insurance policy or coverage maintained by Landlord or Tenant hereunder, or (b) increase the costs of any insurance policy maintained by Landlord. 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 Property, Tenant shall either discontinue the activities affecting the insurance or 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 this Lease or otherwise with respect to the Building or the Property shall be cancelled or reduced (or cancellation or reduction thereof shall be threatened) by reason of the use or occupancy of the Premises other than as allowed by the Permitted Use by Tenant or by anyone permitted by Tenant to be upon the Premises, and if Tenant fails to remedy such condition within five (5) business days after notice thereof, Tenant shall be deemed to be in default under this Lease 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.

 

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ARTICLE 15 - LANDLORD’S INSURANCE

 

During the Term, Landlord shall maintain property insurance written on a Special Form (formerly known as “all risk”) basis covering the Property and the Building, including the initial Tenant Improvements (excluding, however, Tenant’s furniture, equipment and other personal property and Alterations, unless Landlord otherwise elects to insure the Alterations pursuant to Section 13.1 above) 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 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 that 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 form 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 Article 15 (including self-insured amounts and deductibles) shall be included in Insurance Costs, except that any increase in the premium for the property insurance attributable to the replacement cost of the Tenant Improvements shall not be included as Insurance Costs, but shall be paid by Tenant within thirty (30) days after invoice from Landlord.

 

ARTICLE 16 - INDEMNIFICATION AND EXCULPATION

 

16.1 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/or except to the extent such matter is attributable to the gross negligence or willful misconduct of Landlord or Landlord’s agents, contractors or employees, Landlord shall not be liable to Tenant, or any of Tenant’s Parties 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 ceiling tiles masonry, 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, (iv) any such damage caused by other tenants or persons in the Premises, occupants of any other portions of the Property, or the public, or caused by operations in construction of any private, public or quasi-public work, or (v) any interruption of utilities and services. Landlord shall in no event be liable to Tenant or any other person 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. Notwithstanding anything to the contrary contained in this Section 16.1, all property of Tenant and Tenant’s Parties kept or stored on the Premises, whether leased or owned by any such parties, 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. Landlord or its agents shall not be liable for interference with light or other intangible rights.

 

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16.2 Tenant’s Indemnification. Tenant shall be liable for, and shall indemnify, defend, protect and hold Landlord and the Landlord Parties harmless from and against, any and all claims, damages, judgments, suits, causes of action, losses, liabilities and expenses, including, without limitation, attorneys’ fees and court costs (collectively, “Indemnified Claims”), arising or resulting from (a) any occurrence in the Premises following the date Landlord delivers possession of all or any portion of the Premises to Tenant, except to the extent caused by the gross negligence or willful misconduct of Landlord or Landlord’s agents, contractors or employees; (b) any act or omission of Tenant or any of Tenant’s Parties; (c) the use of the Premises, the Building and the Property and conduct of Tenant’s business by Tenant or any of Tenant’s Parties, or any other activity, work or thing done, permitted or suffered by Tenant or any of Tenant’s Parties, in or about the Premises, the Building or elsewhere on the Property; and/or (d) any default by Tenant as to any obligations on Tenant’s part to be performed under the terms of this Lease or the terms of any contract or agreement to which Tenant is a party or by which it is bound, affecting this Lease or the Premises. The foregoing indemnification shall include, but not be limited to, any injury to, or death of, any person, or any loss of, or damage to, any property on the Premises, or on adjoining sidewalks, streets or ways, or connected with the use, condition or occupancy thereof, whether or not Landlord or any Landlord Parties has or should have knowledge or notice of the defect or conditions causing or contributing to such injury, death, loss or damage. In case any action or proceeding is brought against Landlord or any Landlord 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. Tenant’s indemnification obligations under this Section 16.2 and elsewhere in this Lease shall survive the expiration or earlier termination of this Lease. Tenant’s covenants, agreements and indemnification in Section 16.1 and this Section 16.2 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.

 

ARTICLE 17 - CASUALTY DAMAGE/DESTRUCTION

 

17.1 Landlord’s Rights and Obligations. If the Premises or the Building is damaged by fire or other casualty not caused by the negligence or willful misconduct of Tenant (“Casualty”) to an extent not exceeding twenty-five percent (25%) of the full replacement cost thereof, and Landlord’s contractor estimates in writing delivered to the parties that the damage thereto is such that the Building and/or 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 this Lease), 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 or the Building is 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 from the date of Casualty, 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 or Building damaged by such Casualty (including the Tenant Improvements, the Alterations that Landlord elects to insure pursuant to Section 13.1 and, to the extent of insurance proceeds received from Tenant, the Alterations that Tenant is required to insure pursuant to Section 13.1), in which case this Lease shall continue in full force and effect; or (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 17.1, 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 or, as applicable, thirty (30) days after Landlord receives approval from Landlord’s Mortgagee to rebuild.

 

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17.2 Tenant’s Costs and Insurance Proceeds. In the event of any damage or destruction of all or any part of 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 (to the extent such items are not covered by Landlord’s casualty insurance obtained by Landlord pursuant to this Lease) and with respect to Alterations in the Premises that Tenant is required to insure pursuant to Section 13.1, excluding proceeds for Tenant’s furniture and other personal property, whether or not this Lease is terminated as permitted in Section 17.1, 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 Section 13.1 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.

 

17.3 Abatement of Rent. If as a result of any such damage, repair, reconstruction and/or restoration of the Premises or the Building, Tenant is prevented from using, and does not use, the Premises or any portion thereof, then 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 of Tenant’s 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 from Landlord.

 

17.4 Inability to Complete. Notwithstanding anything to the contrary contained in this Article 17, if Landlord is obligated or elects to repair, reconstruct and/or restore the damaged portion of the Building or Premises pursuant to Section 17.1 above, but is delayed from completing such repair, reconstruction and/or restoration beyond the date which is three (3) months after the date estimated by Landlord’s contractor for completion thereof pursuant to Section 17.1, by reason of any causes beyond the reasonable control of Landlord (including, without limitation, delays due to Force Majeure, and delays caused by Tenant or any of Tenant’s Parties), then Landlord may elect to terminate this Lease upon thirty (30) days’ prior written notice to Tenant.

 

17.5 Damage to the Property. If there is a total destruction of the improvements on the Property or partial destruction of such improvements, the cost of restoration of which would exceed one-third (1/3) of the then replacement value of all improvements on the Property, by any cause whatsoever, whether or not insured against and whether or not the Premises are partially or totally destroyed, Landlord may within a period of one hundred eighty (180) days after the occurrence of such destruction, notify Tenant in writing that it elects not to so reconstruct or restore such improvements, in which event this Lease shall cease and terminate as of the date of such destruction.

 

17.6 Damage Near End of Term. In addition to its termination rights in Sections 17.1, 17.4 and 17.5 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 and Landlord’s contractor estimates in 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 Term, or (b) sixty (60) days after the date of such Casualty.

 

17.7 Tenant’s Termination Right. In the event of any damage or destruction which affects Tenant’s use and enjoyment of the Premises which is not caused by Tenant or any of Tenant’s Parties, if Tenant’s possession and use of the Premises cannot be restored by Landlord within one hundred eighty (180) days for reasons other than delays caused by Tenant or any of Tenant’s Parties, Tenant shall have the right to terminate this Lease upon written notice to Landlord given within thirty (30) days after the expiration of said 180-day period, unless Landlord completes the restoration within said 30-day notice period, in which case this Lease shall continue in full force and effect.

 

17.8 Intentionally Deleted.

 

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ARTICLE 18 - CONDEMNATION

 

18.1 Substantial or Partial Taking. Subject to the provisions of Section 18.3 below, either party may terminate this Lease if any material part of the Premises is taken or condemned for any public or quasi-public use under law, by eminent domain or private purchase in lieu thereof (a “Taking”). Landlord shall also have the right to terminate this Lease if there is a Taking of any portion of the Building or the Property which would have a material adverse effect on Landlord’s ability to profitably operate the remainder of the Building and/or the Property. The terminating party shall provide written notice of termination to the other party within thirty (30) days after it first receives notice of the Taking. The termination shall be effective as of the effective date of any order granting possession to, or vesting legal title in, the condemning authority. If this Lease is not terminated, Base Rent and all other elements of this Lease which are dependent upon the area of the Premises, the Building or the Property shall be appropriately adjusted to account for any reduction in the square footage of the Premises, Building or Property, as applicable. All compensation awarded for a Taking shall be the property of Landlord. The right to receive compensation or proceeds are expressly waived by Tenant, however, Tenant may file a separate claim for Tenant’s furniture, fixtures, equipment and other personal property, loss of goodwill and Tenant’s reasonable relocation expenses, provided the filing of the claim does not diminish the amount of Landlord’s award.

 

18.2 Condemnation Award. Subject to the provisions of Section 18.3 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.

 

18.3 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 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 18.3, a temporary taking shall be defined as a taking for a period of two hundred seventy (270) days or less.

 

18.4 Waiver. Tenant hereby waives any rights it may have pursuant to any applicable Laws and agrees that the provisions hereof shall govern the parties’ rights in the event of any Taking.

 

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ARTICLE 19 - WAIVER OF CLAIMS; WAIVER OF SUBROGATION

 

19.1 Tenant Waiver. Tenant hereby waives its rights against Landlord for any claims or damages or losses, including any deductibles and self-insured amounts, which are caused by or result from (a) any occurrence insured under any property insurance policy carried by Tenant, or (b) any occurrence which would have been covered under any property insurance required to be obtained and maintained by Tenant under this Lease had such insurance been obtained and maintained as required. The foregoing waiver shall be in addition to, and not a limitation of, any other waivers or releases contained in this Lease.

 

19.2Waiver of Insurers. Tenant shall cause each property insurance policy carried by Tenant to provide that the insurer waives all rights of recovery by way of subrogation against Landlord, in connection with any claims, losses and damages covered by such policy. If Tenant fails to maintain insurance for an insurable loss, such loss shall be deemed to be self-insured with a deemed full waiver of subrogation as set forth in the immediately preceding sentence.

 

ARTICLE 20 - ASSIGNMENT AND SUBLETTING

 

20.1 Restriction on Transfer. Except with respect to a Permitted Transfer pursuant to Section 20.6 below, Tenant shall not, without the prior written consent of Landlord, which consent Landlord will not unreasonably withhold, assign this Lease or any interest herein or sublet the Premises or any part thereof, or permit the use or occupancy of the Premises by any party other than Tenant (any such assignment, encumbrance, sublease, license or the like being sometimes referred to as a “Transfer”). In no event may Tenant encumber or hypothecate this Lease or the Premises. This prohibition against Transfers shall be construed to include a prohibition against any assignment or subletting by operation of law. Any Transfer without Landlord’s consent (except for a Permitted Transfer pursuant to Section 20.6 below) shall constitute a default by Tenant under this Lease, and in addition to all of Landlord’s other remedies at law, in equity or under this Lease, such Transfer shall be voidable at Landlord’s election. For purposes of this Article 20, other than with respect to a Permitted Transfer under Section 20.6 and transfers of stock of Tenant if Tenant is a publicly-held corporation and such stock is transferred publicly over a recognized security exchange or over-the-counter market, if Tenant is a corporation, partnership or other entity, any transfer, assignment, encumbrance or hypothecation of fifty percent (50%) or more (individually or in the aggregate) of any stock or other ownership interest in such entity, and/or any transfer, assignment, hypothecation or encumbrance of any controlling ownership or voting interest in such entity, shall be deemed an assignment of this Lease and shall be subject to all of the restrictions and provisions contained in this Article 20.

 

20.2 Landlord’s Options. 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 shall deliver to Landlord written notice (“Transfer Notice”) setting forth the terms and conditions of the proposed Transfer and the identity of the proposed assignee, sublessee or other transferee (sometimes referred to hereinafter as a “Transferee”). Tenant shall also deliver to Landlord with the Transfer Notice, a current financial statement and such evidence of financial responsibility and standing as Landlord may reasonably require of the Transferee which have been certified or audited by a reputable independent accounting firm acceptable to Landlord, and such other information concerning the business background and financial condition of the proposed Transferee as Landlord may reasonably request. Except with respect to a Permitted Transfer, within fifteen (15) business days after Landlord’s receipt of any Transfer Notice, and any additional information requested by Landlord pursuant to this Section 20.2, Landlord will notify Tenant of its election to do one of the following: (a) consent to the proposed Transfer subject to such reasonable conditions as Landlord may impose in providing such consent; (b) refuse such consent, which refusal shall be on reasonable grounds; or (c) 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, which termination shall be effective as of the proposed Transfer Date. If Landlord exercises its option to terminate this Lease with respect to only a portion of the Premises following Tenant’s request for Landlord’s approval of the proposed sublease of such space, Landlord shall be responsible for the construction of any demising wall which Landlord reasonably deems necessary to separate such space from the remainder of the Premises.

 

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20.3 Additional Conditions; Excess Rent. A condition to Landlord’s consent to any Transfer 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, an original of Landlord’s standard consent form executed by both Tenant and the proposed Transferee, and an affirmation of guaranty in form satisfactory to Landlord executed by each guarantor of this Lease, if any. 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 Five Hundred Dollars ($500.00), plus Landlord’s reasonable attorneys’ and paralegal fees and other costs incurred by Landlord in reviewing such proposed assignment or sublease (whether attributable to Landlord’s in-house attorneys or paralegals or otherwise) not to exceed $1,000. Acceptance of the Five Hundred Dollar ($500.00) administrative fee and/or reimbursement of Landlord’s attorneys’ and/or paralegal fees shall in no event obligate Landlord to consent to any proposed Transfer.

 

20.4 Reasonable Disapproval. Without limiting in any way 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 a Transfer if, in Landlord’s reasonable opinion: (a) proposed Transfer would result in more than two subleases of portions of the Premises being in effect at any one time during the Term; (b) the net worth or financial capabilities of a proposed assignee is less than that of Tenant and each guarantor of this Lease, if any, or the proposed assignee or subtenant does not have the financial capability to fulfill the obligations imposed by the Transfer; (c) the proposed Transferee is an existing tenant of the Property or is negotiating with Landlord (or has negotiated with Landlord in the last six (6) months) for space in the Property; (d) the proposed Transferee is a governmental entity; (e) the portion of the Premises to be sublet or assigned is irregular in shape with inadequate means of ingress and egress; (f) the proposed Transfer involves a change of use of the Premises or would violate any exclusive use covenant to which Landlord is bound; (g) the Transfer would likely result in significant increase in the use of the parking areas by the Transferee’s employees or visitors, and/or significantly increase the demand upon utilities and services to be provided by Landlord to the Premises; or (h) the Transferee is not in Landlord’s reasonable opinion of reputable or good character or consistent with Landlord’s desired tenant mix for the Property.

 

20.5 No Release. No Transfer, occupancy or collection of rent from any proposed Transferee shall be deemed a waiver on the part of Landlord, or the acceptance of the Transferee as Tenant and no Transfer shall release Tenant of Tenant’s obligations under this Lease or alter the primary liability of Tenant to pay 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, and each sublease shall provide that if Landlord gives said sublessee written notice that Tenant is in default under this Lease, said sublessee will thereafter make all payments due under the sublease directly to or as directed by Landlord, which payments will be credited against any payments due under this Lease. Tenant hereby irrevocably and unconditionally assigns to Landlord all rents and other sums payable under any sublease of the Premises; provided, however, that Landlord hereby grants Tenant a license to collect all such rents and other sums so long as Tenant is not in default under this Lease. Consent by Landlord to one Transfer shall 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. Landlord may consent to subsequent assignments of this Lease or sublettings or amendments or modifications to this Lease with assignees of Tenant, without notifying Tenant, or any successor of Tenant, and without obtaining its or their consent thereto and any such actions shall not relieve Tenant of liability under this Lease.

 

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20.6 Permitted Transfers. Notwithstanding the provisions of Section 20.1 above to the contrary, provided that Tenant is not then in default, Tenant may assign this Lease or sublet the Premises or any portion thereof (herein, a “Permitted Transfer”), without Landlord’s consent to any entity that controls, is controlled by or is under common control with Tenant, or to any entity resulting from a merger or consolidation with Tenant, or to any person or entity which acquires all the assets of Tenant’s business as a going concern (each, a “Permitted Transferee”), provided that: (a) at least thirty (30) days prior to such assignment or sublease, Tenant delivers to Landlord a reasonably detailed description of the proposed Transfer and the financial statements and other financial and background information of the assignee or sublessee described in Section 20.2 above; (b) in the case of an assignment, the assignee assumes, in full, the obligations of Tenant under this Lease (or in the case of a sublease, the sublessee of a portion of the Premises or Term assumes, in full, the obligations of Tenant with respect to such portion) pursuant to an assignment and assumption agreement (or a sublease, as applicable) reasonably acceptable to Landlord, a fully executed copy of which is delivered to Landlord within thirty (30) days following the effective date of such assignment or subletting; (c) each guarantor of this Lease executes a reaffirmation of its guaranty in form satisfactory to Landlord; (d) the tangible net worth of the assignee or sublessee equals or exceeds that of Tenant as of (i) the date of execution of this Lease, or (ii) the date immediately preceding the proposed Transfer, whichever is greater; (e) Tenant remains fully liable under this Lease; (f) the use of the Premises is pursuant to Section 1.10 of this Lease; (g) such transaction is not entered into as a subterfuge to avoid the restrictions and provisions of this Article 20 and will not violate any exclusive use covenant to which Landlord is bound; (h) with respect to a subletting only, Tenant and such Permitted Transferee execute Landlord’s standard consent to sublease form; and (i) Tenant is not in default under this Lease.

 

ARTICLE 21 - SURRENDER AND HOLDING OVER

 

21.1 Surrender of Premises. Upon the expiration or sooner termination of this Lease, Tenant shall surrender all keys for the Premises and exclusive possession of the Premises to Landlord broom clean and in good condition and repair, reasonable wear and tear excepted (and casualty damage excepted), with all of Tenant’s personal property, electronic, fiber, phone and data cabling and related equipment that is installed by or for the exclusive benefit of Tenant (to be removed in accordance with the National Electric Code and other applicable Laws) and those items, if any, of Alterations identified by Landlord pursuant to Section 13.2, removed therefrom and all damage caused by such removal repaired. If Tenant fails to remove by the expiration or sooner termination of this Lease all of its personal property and Alterations identified by Landlord for removal pursuant to Section 13.2, 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.

 

21.2 Holding Over. Tenant will not be permitted to hold over possession of the Premises after the expiration or earlier termination of the Term without the express written consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion. If Tenant holds over after the expiration or earlier termination of the Term with or without the express written consent of Landlord, then, in addition to all other remedies available to Landlord, 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 Additional Rent under this Lease), but at a Monthly Base Rent equal to one hundred twenty-five percent (125%) of the Monthly Base Rent applicable to the Premises immediately prior to the date of such expiration or earlier termination. Any such holdover Rent shall be paid on a per month basis without reduction for partial months during the holdover. Acceptance by Landlord of Rent after such expiration or earlier termination shall not constitute consent to a hold over hereunder or result in an extension of this Lease. This Section 21.2 shall not be construed to create any express or implied right to holdover beyond the expiration of the Term or any extension thereof. Tenant shall be liable, and shall pay to Landlord within ten (10) days after demand, for all losses incurred by Landlord as a result of such holdover, and shall indemnify, defend and hold Landlord and the Landlord Parties harmless from and against all liabilities, damages, losses, claims, suits, costs and expenses (including reasonable attorneys’ fees and costs) arising from or relating to any such holdover tenancy, including without limitation, any claim for damages made by a succeeding tenant. Tenant’s indemnification obligation hereunder shall survive the expiration or earlier termination of this Lease. The foregoing provisions of this Section 21.2 are in addition to, and do not affect, Landlord’s right of re-entry or any other rights of Landlord hereunder or otherwise at law or in equity.

 

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ARTICLE 22 - DEFAULTS

 

22.1 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 fifteen (15) 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, Additional Rent or any other payment required to be made by Tenant hereunder, where such failure continues for ten (10) days after written notice thereof from Landlord that such payment was not received when due; provided that if Landlord provides two (2) or more notices of late payment within any twelve (12) month period, then the third failure of Tenant to make any payment of Rent or any other payment required to be made by Tenant hereunder when due in the twelve (12) month period following the second (2nd) such notice shall be an automatic Default without notice from Landlord;

 

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 22.1(a) or (b) above, where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant’s default is such that it may be cured but 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 thirty (30) 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; or

 

d. A general assignment by Tenant or any guarantor or surety of Tenant’s obligations hereunder (“Guarantor”) for the benefit of creditors;

 

e. The filing of a voluntary petition in bankruptcy by Tenant or any Guarantor, the filing by Tenant or any Guarantor of a voluntary petition for an arrangement, the filing by or against Tenant or any Guarantor of a petition, voluntary or involuntary, for reorganization, or the filing of an involuntary petition by the creditors of Tenant or any Guarantor, said involuntary petition remaining undischarged for a period of one hundred twenty (120) days;

 

f. Receivership, attachment, or other judicial seizure of substantially all of Tenant’s assets on the Premises, such attachment or other seizure remaining undismissed or undischarged for a period of thirty (30) days after the levy thereof; Any notice sent by Landlord to Tenant pursuant to this Section 22.1 shall be in lieu of, and not in addition to, any notice required under any applicable Law.

 

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ARTICLE 23 - REMEDIES OF LANDLORD

 

23.1 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 and to re-enter the Premises and remove all persons and property from the Premises; such property may be removed, stored and/or disposed of as permitted by applicable Law. If 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 time of the award of the amount by which the unpaid Rent which would have been earned after termination until the time of 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: the total unamortized sum of any Abated Amount (amortized on a straight line basis over the initial Term of this Lease), tenant improvement costs; attorneys’ fees; brokers’ commissions; any costs required to return the Premises to the condition required at the end of the Term; the costs of refurbishment, alterations, renovation and repair of 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; plus (e) all other monetary damages allowed under applicable Law.

 

As used in Sections 23.1(a) and 23.1(b) above, the “worth at the time of award” is computed by allowing interest at the Interest Rate set forth in the Summary. As used in Section 23.1(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%).

 

23.2 Landlord’s Remedies; Continuation of Lease; 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 to (a) continue this Lease in effect after Tenant’s breach and abandonment and recover Rent as it becomes due, and (b) 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 as permitted by applicable Law. No re-entry or taking possession of the Premises by Landlord pursuant to this Section 23.2, 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. No notice from Landlord or notice given under a forcible entry and detainer statute or similar Laws will constitute an election by Landlord to terminate this Lease unless such notice specifically so states. Notwithstanding any reletting without termination by Landlord because of any Default, Landlord may at any time after such reletting elect to terminate this Lease for any such Default.

 

23.3 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. In the event of any Default by Tenant, Landlord may, without waiving or releasing Tenant from any of Tenant’s obligations, make such payment or perform such other act as required to cure such Default 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 ten (10) days after demand therefor as Additional Rent.

 

23.4 Rights and Remedies Cumulative. All rights, options and remedies of Landlord contained in this Article 23 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 Article 23 shall be deemed to limit or otherwise affect Tenant’s indemnification of Landlord pursuant to any provision of this Lease.

 

23.5Costs Upon Default and Litigation. Tenant shall pay to Landlord and its Mortgagees as Additional Rent all the expenses incurred by Landlord or its Mortgagees in connection with any default by Tenant hereunder or the exercise of any remedy by reason of any default by Tenant hereunder, including reasonable attorneys’ fees and expenses. If Landlord or its Mortgagees shall be made a party to any litigation commenced against Tenant or any litigation pertaining to this Lease or the Premises, at the option of Landlord and/or its Mortgagees, Tenant, at its expense, shall provide Landlord and/or its Mortgagees with counsel approved by Landlord and/or its Mortgagees and shall pay all costs incurred or paid by Landlord and/or its Mortgagees in connection with such litigation.

 

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ARTICLE 24 - ENTRY BY LANDLORD

 

Landlord and its employees and agents shall at all reasonable times, upon not less than 48 hours prior notice to Tenant, 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 or during any default by Tenant, 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 or Property, 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, to the extent reasonably practicable, the interference with Tenant’s business, and shall provide Tenant with reasonable advance notice (oral or written) of such entry (except in emergency situations and for scheduled services). For each of the foregoing 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 and safes, and Landlord shall have the means which Landlord may deem proper to open said doors in an emergency in order to obtain entry to the Premises. 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, 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.

 

ARTICLE 25 - LIMITATION ON LANDLORD’S LIABILITY

 

Notwithstanding anything contained in this Lease to the contrary, the obligations of Landlord under this Lease (including as to any actual or alleged breach or default by Landlord) do not constitute personal obligations of the individual members, managers, investors, partners, directors, officers, or shareholders of Landlord or Landlord’s members or partners, and Tenant shall not seek recourse against the individual members, managers, investors, partners, directors, officers, or shareholders of Landlord or Landlord’s members or partners or any other persons or entities having any interest in Landlord, 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 Building, and no other assets of Landlord. 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 Property. 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. 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 Premises, the Building, the Property 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.

 

ARTICLE 26 - SUBORDINATION

 

Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or subsequently arising upon the Premises, the Building or the Property, and to renewals, modifications, refinancings and extensions thereof (collectively referred to as a “Mortgage”). This clause shall be self-operative, but no later than ten (10) business days after written request from Landlord or any holder of a Mortgage (each, a “Mortgagee” and collectively, “Mortgagees”), Tenant shall execute a commercially reasonable subordination agreement. As an alternative, a Mortgagee shall have the right at any time to subordinate its Mortgage to this Lease. No later than ten (10) business days after written request by Landlord or any Mortgagee, Tenant shall, without charge, attorn to any successor to Landlord’s interest in this Lease. 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. Should Tenant fail to sign and return any such documents within said ten (10) business day period, Tenant shall be in default hereunder.

 

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ARTICLE 27 - ESTOPPEL CERTIFICATE

 

Within ten (10) business 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. Any such estoppel certificate delivered pursuant to this Article 27 may be relied upon by any mortgagee, beneficiary, purchaser or prospective purchaser of any portion of the Property, as well as their assignees. Tenant’s failure to deliver such estoppel certificate following an additional two (2) business day cure period after notice shall constitute a default hereunder. Tenant’s failure to deliver such certificate within such time shall be conclusive upon Tenant that this Lease is in full force and effect, without modification except as may be represented by Landlord, that there are no uncured defaults in Landlord’s performance, and that not more than one (1) month’s Rent has been paid in advance.

 

ARTICLE 28 - RELOCATION OF PREMISES

 

Intentionally Omitted.

 

ARTICLE 29 - MORTGAGEE PROTECTION

 

If, in connection with Landlord’s obtaining or entering into any financing or ground lease for any portion of the Building or Property, the lender or ground lessor shall request modifications to this Lease, Tenant shall, within thirty (30) 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. 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).

 

ARTICLE 30 - 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 have the right to use and occupy the Premises in accordance with and subject to the terms and conditions of this Lease as against all persons claiming by, through or under Landlord. This covenant shall be binding upon Landlord and its successors only during its or their respective periods of ownership of the Building.

 

ARTICLE 31 - MISCELLANEOUS PROVISIONS

 

31.1 Broker. Tenant represents that it has not had any dealings with any real estate broker, finder or intermediary with respect to this Lease, other than the Brokers specified in the Summary. 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.

 

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31.2 Governing Law. This Lease shall be governed by, and construed pursuant to, the laws of the state in which the Premises are located. Venue for any litigation between the parties hereto concerning this Lease or the occupancy of the Premises shall be initiated in the county in which the Premises are located. Tenant shall comply with all governmental and quasi-governmental laws, ordinances and regulations applicable to the Building, Property and/or the Premises, and all rules and regulations adopted pursuant thereto and all covenants, conditions and restrictions applicable to and/or of record against the Building, Property and/or the Premises (individually, a “Law” and collectively, the “Laws”).

 

31.3 Successors and Assigns. Subject to the provisions of Article 25 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 Article 20, 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.

 

31.4 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.

 

31.5 Professional Fees. If either Landlord or Tenant should bring suit (or alternate dispute resolution proceedings) against the other with respect to this Lease, including for unlawful detainer, forcible entry and detainer, or any other relief against the other hereunder, then all 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), shall be paid by the other party, including any and all costs incurred in enforcing, perfecting and executing such judgment and all reasonable costs and attorneys’ fees associated with any appeal. Further, if for any reason Landlord consults legal counsel or otherwise incurs any costs or expenses as a result of its proper attempt to enforce the provisions of this Lease against Tenant, even though no litigation is commenced, or if commenced is not pursued to final judgment, Tenant shall be obligated to pay to Landlord, in addition to all other amounts for which Tenant is obligated hereunder, all of Landlord’s reasonable costs and expenses incurred in connection with any such acts, including attorneys’ fees incurred associated with any appeal.

 

31.6 Waiver. The waiver by either party of any breach by the other party of 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.

 

31.7 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 Article and 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. Any deletion of language from this Lease prior to its execution by Landlord and Tenant shall not be construed to raise any presumption, canon of construction or implication, including, without limitation, any implication that the parties intended thereby to state the converse of the deleted language. The parties hereto acknowledge and agree that each has participated in the negotiation and drafting of this Lease; therefore, in the event of an ambiguity in, or dispute regarding the interpretation of, this Lease, the interpretation of this Lease shall not be resolved by any rule of interpretation providing for interpretation against the party who caused the uncertainty to exist or against the draftsman.

 

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31.8 Time. Time is of the essence with respect to performance of every provision of this Lease in which time or performance is a factor.

 

31.9 Business Day. A “business day” is Monday through Friday, excluding holidays observed by the United States Postal Service and reference to 5:00 p.m. is to the time zone of the recipient. Whenever action must be taken (including the giving of notice or the delivery of documents) under this Lease during a certain period of time (or by a particular date) that ends (or occurs) on a non-business day, then such period (or date) shall be extended until the immediately following business day.

 

31.10 Payments and Notices. All Rent and other sums payable by Tenant to Landlord hereunder shall be paid to Landlord at the address designated in 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), or by registered or certified mail, postage prepaid, return receipt requested, addressed to Tenant at the address(es) designated in the Summary, or to Landlord at the address(es) designated in the Summary. Either party may, by written notice to the other, specify a different address for notice purposes. Notice given in the foregoing manner shall be deemed given (i) upon confirmed transmission if sent by e-mail transmission, provided such transmission is prior to 5:00 p.m. on a business day (if such transmission is after 5:00 p.m. on a business day or is on a non-business day, such notice will be deemed given on the following business day), (ii) when actually received or refused by the party to whom sent if delivered by a carrier or personally served or (iii) if mailed, on the day of actual delivery or refusal as shown by the certified mail return receipt or the expiration of three (3) business days after the day of mailing, whichever first occurs.

 

31.11 Prior Agreements; Amendments. This Lease, including the Summary and all Exhibits 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.

 

31.12 Separability. The invalidity or unenforceability of any provision of this Lease 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.

 

31.13 Recording. Neither Landlord nor Tenant shall record this Lease or a short form memorandum of this Lease.

 

31.14 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.

 

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31.15 Intentionally Deleted

 

31.16 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.

 

31.17 Force Majeure. If 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, without limitation, failure, refusal or delay in issuing permits, approvals and/or authorizations), injunction or court order, riots, insurrection, war, terrorism, bioterrorism, fire, earthquake, inclement weather including rain, flood, pandemic, 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, “Force Majeure Delay(s)”), then performance of such act shall be excused for the period of such Force Majeure Delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. The provisions of this Section 31.17 shall not apply to nor operate to excuse Tenant from the payment of Monthly Base Rent, or any Additional Rent or any other payments strictly in accordance with the terms of this Lease.

 

31.18 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. Signatures and initials required in this document may be executed via “wet” original handwritten signature or initials, or via electronic signature or mark, which shall be binding on the parties as originals, and the executed signature pages may be delivered using pdf or similar file type transmitted via electronic mail, cloud based server, e-signature technology or other similar electronic means, and any such transmittal shall constitute delivery of the executed document for all purposes of this Lease.

 

31.19 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, shareholders, members, managers, 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 Property, 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.

 

31.20 Tenant’s Authority. If Tenant executes this Lease as a partnership, corporation or limited liability company, then Tenant and the persons and/or entities executing this Lease on behalf of Tenant represent and warrant that: (a) Tenant is a duly organized and existing partnership, corporation or limited liability company, as the case may be, and is qualified to do business in the state in which the Premises are located; (b) such persons and/or entities executing this Lease are duly authorized to execute and deliver this Lease on Tenant’s behalf; and (c) this Lease is binding upon Tenant in accordance with its terms. Tenant shall provide to Landlord a copy of any documents reasonably requested by Landlord evidencing such qualification, organization, existence and authorization within ten (10) days after Landlord’s request. Tenant represents and warrants to Landlord that Tenant is not, and the entities or individuals constituting Tenant or which may own or control Tenant or which may be owned or controlled by Tenant are not, (i) in violation of any Laws relating to terrorism or money laundering, or (ii) among the individuals or entities 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 official website, http://www.treas.gov/ofac/tllsdn.pdf or any replacement website or other replacement official publication of such list.

 

31.21 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 entities 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.

 

31.22 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.

 

31.23 Options and Rights in General. Any option (each an “Option” and collectively, the “Options”), including without limitation, any option to extend, option to terminate, option to expand, right to lease, right of first offer, and/or right of first refusal, granted to Tenant is personal to the original Tenant executing this Lease or a Permitted Transferee and may be exercised only by the original Tenant executing this Lease while occupying the entire Premises and without the intent of thereafter assigning this Lease or subletting the Premises or a Permitted Transferee and may not be exercised or be assigned, voluntarily or involuntarily, by any person or entity other than the original Tenant executing this Lease or a Permitted Transferee. The Options, if any, granted to Tenant under this Lease are not assignable separate and apart from this Lease, nor may any Option be separated from this Lease in any manner, either by reservation or otherwise. Tenant will have no right to exercise any Option, notwithstanding any provision of the grant of option to the contrary, and Tenant’s exercise of any Option may be nullified by Landlord and deemed of no further force or effect, if (i) Tenant is in default under the terms of this Lease (or if Tenant would be in such default under this Lease but for the passage of time or the giving of notice, or both) as of Tenant’s exercise of the Option in question or at any time after the exercise of any such Option and prior to the commencement of the Option event, (ii) Tenant has sublet all or any portion of the Premises except pursuant to a Permitted Transfer, (iii) Landlord has given Tenant two (2) or more notices of default, whether or not such defaults are subsequently cured, during any twelve (12) consecutive month period of this Lease, or (iv) if in Landlord’s determination Tenant’s financial condition is not equal to or greater than Tenant’s financial condition as reported by Tenant to Landlord in connection with and as of the execution date of this Lease by Tenant. Each Option granted to Tenant, if any, is hereby deemed an economic term which Landlord, in its sole and absolute discretion, may or may not offer in conjunction with any future extensions of the Term.

 

[NO FURTHER TEXT ON THIS PAGE; SIGNATURES ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed the date first above written.

 

Tenant:  
     
BOXABL INC.,  
a Nevada corporation  
     
     
By: /s/ Paolo Tiramani  
Name: Paolo Tiramani  
Title: CEO  
     
Landlord:  
     
CRPF IV CENTENNIAL, LLC,  
a Delaware limited liability company  
     
     
By: /s/ Patrick Daniels  
Name: Patrick Daniels  
Title: CEO  

 

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EXHIBIT A

 

PREMISES FLOOR PLAN

 

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EXHIBIT B

 

SITE PLAN

 

 

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EXHIBIT C

 

WORK LETTER

 

1. TENANT IMPROVEMENTS. Landlord shall construct and, except as provided below to the contrary, pay for the entire cost of constructing the tenant improvements (“Tenant Improvements”) described by the plans and specifications identified in Schedule “1” attached hereto (the “Plans”). Tenant may request changes to the Plans provided that (a) the changes shall not be of a lesser quality than Landlord’s standard specifications for tenant improvements for the Building, as the same may be changed from time to time by Landlord (the “Standards”); (b) the changes conform to applicable governmental regulations and necessary governmental permits and approvals can be secured; (c) the changes do not require building service beyond the levels normally provided to other tenants in the Property; (d) the changes do not have any adverse effect on the structural integrity or systems of the Building; (e) the changes will not, in Landlord’s opinion, unreasonably delay construction of the Tenant Improvements; and (f) Landlord has determined in its sole discretion that the changes are of a nature and quality consistent with the overall objectives of Landlord for the Property. If Landlord approves a change requested by Tenant, then, as a condition to the effectiveness of Landlord’s approval, Tenant shall pay to Landlord upon demand by Landlord the increased cost attributable to such change, as reasonably determined by Landlord. To the extent any such change results in a delay of completion of construction of the Tenant Improvements, then such delay shall constitute a delay caused by Tenant as described below.

 

2. CONSTRUCTION OF TENANT IMPROVEMENTS. Upon Tenant’s payment to Landlord of the total amount of the cost of any changes to the Plans, if any, Landlord’s contractor shall commence and diligently proceed with the construction of the Tenant Improvements, subject to Tenant Delays (as described in Section 4 below) and Force Majeure Delays (as described in Section 5 below). Promptly upon the commencement of the Tenant Improvements, Landlord shall furnish Tenant with a construction schedule letter setting forth the projected completion dates therefor and showing the deadlines for any actions required to be taken by Tenant during such construction, and Landlord may from time to time during construction of the Tenant Improvements modify such schedule.

 

3. SUBSTANTIAL COMPLETION.

 

(a)Substantial Completion; Punch-List. The Tenant Improvements shall be deemed to be “substantially completed” when Landlord: (a) is able to provide Tenant reasonable access to the Premises; (b) has substantially completed the Tenant Improvements in accordance with the Plans, other than decoration and minor “punch-list” type items and adjustments which do not materially interfere with Tenant’s access to or use of the Premises; and (c) has obtained a temporary certificate of occupancy or other required equivalent approval from the local governmental authority permitting occupancy of the Premises. Within ten (10) days after such substantial completion, Tenant shall conduct a walk-through inspection of the Premises with Landlord and provide to Landlord a written punch-list specifying those decoration and other punch-list items which require completion, which items Landlord shall thereafter diligently complete; provided, however, that Tenant shall be responsible, at Tenant’s sole cost and expense, for the remediation of any items on the punch-list caused by Tenant’s acts or omissions.

 

(b) Delivery of Possession. Landlord agrees to deliver possession of the Premises to Tenant when the Tenant Improvements have been substantially completed in accordance with Section (a) above. The parties estimate that Landlord will deliver possession of the Premises to Tenant and the Term of this Lease will commence on or before the Commencement Date set forth in Section 1.6 of the Summary. Tenant agrees that if Landlord is unable to deliver possession of the Premises to Tenant on or prior to the Commencement Date specified in Section 1.6 of the Summary, the Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom. Notwithstanding anything contained in the foregoing to the contrary, in the event Landlord is unable to deliver possession of the Premises to Tenant with substantially completed Improvements within forty-five (45) days of the Commencement Date specified in Section 1.6 of the Summary, Tenant shall have the option of terminating this Lease rendering it null and void.

 

4. TENANT DELAYS. For purposes of this Work Letter, “Tenant Delays” shall mean any delay in the completion of the Tenant Improvements resulting from any or all of the following: (a) Tenant’s failure to timely perform any of its obligations pursuant to this Work Letter, including any failure to complete, on or before the due date therefor, any action item which is Tenant’s responsibility pursuant to the Work Schedule or any schedule delivered by Landlord to Tenant pursuant to this Work Letter; (b) Tenant’s changes to the Plans; (c) Tenant’s request for materials, finishes, or installations which are not readily available or which are incompatible with the Standards; (d) any delay of Tenant in making payment to Landlord for Tenant’s share of any costs in excess of the cost of the Tenant Improvements as described in the Plans; or (e) any other act or failure to act by Tenant, Tenant’s employees, agents, architects, independent contractors, consultants and/or any other person performing or required to perform services on behalf of Tenant.

 

5. FORCE MAJEURE DELAYS. For purposes of this Work Letter, “Force Majeure Delays” shall mean any actual delay beyond the reasonable control of Landlord in the construction of the Tenant Improvements, which is not a Tenant Delay and which is caused by any of the causes described in Section 31.17 of the Standard Provisions.

 

6. CONTRACTOR’S WARRANTIES/COMPLIANCE WITH LAWS. Landlord shall obtain and enforce for the benefit of Tenant one (1) year contractor’s warranties for the Tenant Improvements. Landlord shall complete the Tenant Improvements in compliance with all applicable current building codes and ADA requirements then in effect as of the date plans for the Tenant Improvements are approved by applicable governmental authorities.

 

7. ALLOWANCE.

 

(a) In addition, Landlord shall provide to Tenant an allowance of up to $50,000.00 (the “Allowance”) to be used by Tenant to design and complete electrical improvements and distribution for the Premises with a minimum 2000 Amps of 277/480 3-phase power (the “Electrical Improvements”) in accordance with and subject to the terms and conditions of Article 13 of the Lease with respect to Alterations, including, without limitation, the requirement that Tenant obtain Landlord’s prior written approval for the Electrical Improvements. Landlord shall reimburse the Allowance after the completion of the Electrical Improvements and within thirty (30) days after Landlord’s receipt of (i) paid invoices from all of the contractors and/or subcontractors (“Tenant Contractors”) for labor rendered and materials delivered to the Premises, (ii) executed unconditional mechanic’s lien releases from all Tenant Contractors to whom payment is included in the Allowance, and (iii) all other information reasonably requested by Landlord.

 

(b) The Allowance is applicable only to the Electrical Improvements, and shall not be used for any other purpose, such as, but not limited to, the purchase or installation of furniture, trade fixtures, or personal property. If all or any portion of the Allowance shall not be used by December 31, 2021, Landlord shall be entitled to the savings and Tenant shall receive no credit therefor. Notwithstanding anything in the Lease to the contrary, Landlord shall not be obligated to disburse any portion of the Allowance during the continuance of an uncured default under the Lease.

 

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SCHEDULE 1

 

PLANS

 

1. Approximately 3,000 square feet of office space based on a mutually acceptable office floor plan.

 

2. Five (5) forklift charging stations to code including ventilation.

 

3. Six (6) 35,000 lbs dock levelers in mutually acceptable locations, with full dock packages including lights, seals/cushions, stop/go lights, and power box.

 

4. Twenty (20) overhead 4-plex power drops at column positions throughout warehouse in mutually acceptable locations.

 

5. Evaporative cooled warehouse.

 

6. LED warehouse lighting with motion sensors.

 

7. Four (4) industrial ceiling fans in the warehouse in mutually acceptable locations.

 

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EXHIBIT D

 

NOTICE OF LEASE TERM DATES

 

Date:

 

To:

 

Re:___________ dated ___________ (“Lease”) by and between ________________, a ______________________ (“Landlord”), and _________________________, a _______________________ (“Tenant”) for the premises commonly known as, ______________________________(“Premises”).

 

Dear :

 

In accordance with the above-referenced Lease, we wish to advise and/or confirm as follows:

 

●That Tenant has accepted and is in possession of the Premises and acknowledges the following:

 

●Term of the Lease:

 

●Commencement Date:

 

●Expiration Date:

 

●Rentable Square Feet:

 

●That in accordance with the Lease, rental payments will/has commence(d) on _________ and rent is payable in accordance with the following schedule:

 

Months   Monthly Base Rent
00/00/0000 – 00/00/0000   $00,000.00
00/00/0000 – 00/00/0000   $00,000.00
00/00/0000 – 00/00/0000   $00,000.00

 

●Rent is due and payable in advance on the first day of each and every month during the Term of the Lease.

 

●Your rent checks should be made payable to:

 

ACCEPTED AND AGREED

 

TENANT:   LANDLORD:

 

a,

  

 

a,

     

By:

 

Print Name:

 

Its:

   By:

 

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EXHIBIT E

 

RULES AND REGULATIONS

 

1. 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 Building. No awnings or other projection shall be attached to the outside walls of the Building without the prior written consent of Landlord. No curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with, any window or door of the Building, other than Building standard materials, without the prior written consent of Landlord.

 

2. Tenant shall not cause any unnecessary janitorial labor by carelessness or indifference to the good order and cleanliness of the Premises. Landlord shall not in any way be responsible to Tenant for loss of property on the Premises, however occurring, or for any damage to Tenant’s property by any janitors or any other employee or any other person.

 

3. Landlord will furnish Tenant, free of charge, with two keys to each door lock in the Building. Landlord may impose a reasonable charge for any additional keys. Tenant may not make or have made additional keys, and Tenant shall not alter any lock or install a new additional lock or bolt on any door or window of the Building. 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, and, in the event of loss of any keys, shall pay Landlord the cost of replacing the same or of changing the lock or locks opened by such lost key if Landlord shall deem it necessary to make such change.

 

4. Landlord will not be responsible for loss of, or damage to, any such equipment or other property from any cause, and all damage done to the Building by maintaining or moving such equipment or other property shall be repaired at the expense of Tenant.

 

5. 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. 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 by reason of noise, odors or vibrations, nor shall Tenant bring into or keep in or about the Premises any birds or animals.

 

6. Tenant shall not use any method of heating or air-conditioning other than that supplied to the Building by Landlord.

 

7. Landlord reserves the right from time to time, in Landlord’s sole and absolute discretion, exercisable without prior notice and without liability to Tenant, to change the address of the Premises, and/or install, replace or change any signs in, on or about the Premises (except for Tenant’s signs, if any, which are expressly permitted by the Lease).

 

8. Landlord shall not be liable for damages for any error with regard to the admission to or exclusion from the Building of any person.

 

9. 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.

 

10. Except as expressly permitted in the Lease, Tenant shall not mark, drive nails, screw or drill into the partitions, window mullions, woodwork or drywall, or in any way deface the Building or any part thereof, except to install normal wall hangings. Tenant shall repair any damage resulting from noncompliance under this rule.

 

11. Tenant shall store all its trash and garbage within the trash receptacles for the Premises. 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.

 

12. Other than as permitted elsewhere in the Lease, the Premises shall not be used for lodging of any kind. No cooking shall be done or permitted by Tenant on the Premises, except that use by Tenant of Underwriters’ Laboratory-approved equipment for brewing coffee, tea, hot chocolate and similar beverages shall be permitted and the use of a microwave shall be permitted, provided that such equipment and use is in accordance with all applicable federal, state, county and city laws, codes, ordinances, rules and regulations.

 

38

 

 

13. Tenant shall not use the name of the Building, if any, in connection with, or in promoting or advertising, the business of Tenant, except for Tenant’s address.

 

14. 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 employee to represent Tenant in all matters pertaining to such fire or security regulations. Tenant shall cooperate fully with Landlord in all matters concerning fire and other emergency procedures.

 

15. Tenant assumes any and all responsibility for protecting the Premises from theft, robbery and pilferage. Such responsibility shall include keeping doors locked and other means of entry to the Premises closed.

 

16. Landlord reserves the right to make such other and reasonable non-discriminatory Rules and Regulations as, in its judgment, may from time to time be needed for safety, security, care and cleanliness of the Building or Property and for the preservation of good order therein. Tenant agrees to abide by all such Rules and Regulations hereinabove stated and any additional rules and regulations which are adopted.

 

17. Tenant shall be responsible for the observance of all of the foregoing rules by Tenant’s Parties.

 

18. Tenant shall not lay linoleum, tile, carpet or other similar floor covering so that the same shall be affixed to the floor of the Building in any manner except by a paste, or other material which may easily be removed with water, the use of cement or other similar adhesive materials being expressly prohibited. The method of affixing any such linoleum, tile, carpet or other similar floor covering shall be subject to the approval of Landlord. The expense of repairing any damage resulting from a violation of this rule shall be borne by Tenant.

 

19. Tenant shall not without Landlord’s consent, which may be given or withheld in Landlord’s sole and absolute discretion, receive, store, discharge, or transport firearms, ammunition, or weapons or explosives of any kind or nature at, on or from the Premises.

 

20. No vehicle or equipment of any kind shall be dismantled, repaired or serviced on the Common Area.

 

21. Signs will conform to sign standards and criteria established from time to time by Landlord. No other signs, placards, pictures, advertisements, names or notices shall be inscribed, displayed or printed or affixed on or to any part of the outside or inside of the building without the written consent of Landlord and Landlord shall have the right to remove any such non-conforming signs, placards, pictures, advertisements, names or notices without notice to and at the expense of Tenant.

 

22. No antenna, aerial, discs, dishes or other such device shall be erected on the roof or exterior walls of the Premises, or on the grounds, without the written consent of the Landlord in each instance. Any device so installed without such written consent shall be subject to removal without notice at any time.

 

23. No loud speakers, televisions, phonographs, radios or other devices shall be used in a manner so as to be heard or seen outside of the Premises without the prior written consent of the Landlord.

 

24. The outside areas immediately adjoining the Premises shall be kept clean and free from dirt and rubbish by the Tenant to the satisfaction of Landlord and Tenant shall not place or permit any obstruction or materials in such areas or permit any work to be performed outside the Premises.

 

25. No open storage shall be permitted in the Property. Notwithstanding the immediately foregoing, Tenant shall be permitted to store its modular home product in an open fashion, which may be stored within the dock apron adjacent to the Premises and along the area of the truck court adjacent to the trailer parking stalls reserved for other tenants. Tenant’s modular home product shall be stored in a single-file fashion, and shall not obstruct fire lane access around the Building or through the truck court as may be required by law. The foregoing provision shall not be amended or modified by the Landlord without the written consent of Tenant, which consent may be withheld in Tenant’s discretion.

 

39

 

 

26. All garbage and refuse shall be placed in containers placed at the location designated for refuse collection, in the manner specified by Landlord.

 

27. No vending machine or machines of any description shall be installed, maintained or operated upon the Common Area except for the use of Tenant’s employees.

 

28. Tenant shall not disturb, solicit, or canvass any occupant of the building and shall cooperate to prevent same.

 

29. No noxious or offensive trade or activity shall be carried on upon any units or any part of the Common Area nor shall anything be done thereon which would in any way interfere with the quiet enjoyment of each of the other tenants of the Project.

 

30. Landlord reserves the right to make such amendments to these rules and regulations from time to time as are nondiscriminatory and not inconsistent with the Lease.

 

PARKING RULES AND REGULATIONS

 

In addition to any parking provisions contained in the Lease, the following rules and regulations shall apply with respect to the use of the Property’s parking facilities.

 

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 shall not park or permit its employees to park in any parking areas designated by Landlord as areas for parking by visitors to the Property. 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. Parking stickers or any other device or form of identification supplied by Landlord as a condition of use of the parking facilities shall remain the property of Landlord. Such parking identification device must be displayed as requested and may not be mutilated in any manner. The serial number of the parking identification device may not be obliterated. Devices are not transferable and any device in the possession of an unauthorized holder will be void.

 

4. No extended term storage of vehicles shall be permitted.

 

5. Vehicles must be parked entirely within painted stall lines of a single parking stall.

 

6. All directional signs and arrows must be observed.

 

7. The speed limit within all parking areas shall be five (5) miles per hour.

 

8. Parking is prohibited: (a) in areas not striped for parking; (b) in aisles; (c) where “no parking” signs are posted; (d) on ramps; (e) in cross-hatched areas; and (f) in reserved spaces and in such other areas as may be designated by Landlord or Landlord’s parking operator.

 

9. Loss or theft of parking identification devices, if any, must be reported to Landlord’s property manager immediately, and a lost or stolen report must be filed by the Tenant or user of such parking identification device at the time. Landlord has the right to exclude any vehicle from the parking facilities that does not have an identification device.

 

10. Any parking identification devices reported lost or stolen found on any unauthorized car will be confiscated and the illegal holder will be subject to prosecution.

 

11. Washing, waxing, cleaning or servicing of any vehicle in any area not specifically reserved for such purpose is prohibited.

 

12. The parking operators, managers or attendants, if any, are not authorized to make or allow any exceptions to these rules and regulations.

 

13. If the Lease terminates for any reason whatsoever or if Tenant’s right of possession of the Premises is terminated after a Default, Tenant’s right to park in the parking facilities shall terminate concurrently therewith.

 

14. Landlord reserves the right to modify and/or adopt such other reasonable and non-discriminatory rules and regulations for the parking facilities as it deems necessary for the operation of the parking facilities. Landlord may refuse to permit any person who violates these rules to park in the parking facilities, and any violation of the rules shall subject the vehicle to removal, at such vehicle owner’s expense.

 

15. Tenant shall not permit any parking by its employees, agents, subtenants, customers, invitees, concessionaires or visitors on the streets surrounding the Premises in violation of any ordinances or postings by any public authorities having jurisdiction.

 

16. Tenant’s parking spaces shall be used only for parking by vehicles no larger than normally sized passenger automobiles, vans and sport utility vehicles. Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant’s employees, suppliers, shippers, customers or invitees to be loaded, unloaded, or parked in areas other than those designated by Landlord for such activities. If Tenant permits or allows any of the prohibited activities described herein, then Landlord shall have the right, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost thereof to Tenant, which cost shall be payable by Tenant upon demand by Landlord.

 

40

 

 

EXHIBIT F

 

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 Lease dated ________________, between Landlord and Tenant (the “Lease”), for the premises commonly known as ____________________________________ (the “Premises”). 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 ________________, __.

 

3. The term of the Lease is currently scheduled to expire on ________________, __.

 

4. Tenant has no option to renew or extend the Term of the Lease except: .

 

5. Tenant has no preferential right to purchase the Premises or any portion of the Building/Premises 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 Base Rent is $________; and current monthly parking charges are $_______.

 

9. The amount of security deposit (if any) is $______________. No other security deposits have been made.

 

10. 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.

 

11. 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 except __________________________.

 

12. As of the date hereof, Tenant is not aware of any defaults on the part of Landlord under the Lease except __________________________.

 

13. As of the date hereof, there are no defaults on the part of Tenant under the Lease.

 

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 bankruptcy, 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: _________________, ___.

 

 “TENANT”
   
 By:               
 Print Name:
 Its: 

 

41

 

 

EXHIBIT G

 

ENVIRONMENTAL QUESTIONNAIRE AND DISCLOSURE STATEMENT

 

The purpose of this form is to obtain information regarding the use or proposed use of hazardous materials at the premises. Prospective tenants should answer the questions in light of their proposed operations at the premises. Existing tenants should answer the questions as they relate to ongoing operations at the premises and should update any information previously submitted. If additional space is needed to answer the questions, you may attach separate sheets of paper to this form.

 

Your cooperation in this matter is appreciated.

 

1. GENERAL INFORMATION

 

Name of Responding Company:

 

Check the Applicable Status:Prospective Tenant _____Existing Tenant _____

 

Mailing Address:

 

Contact Person and Title:

 

Telephone Number: (_____) ________________________

 

Address of Leased Premises:

 

Length of Term:

 

Describe the proposed operations to take place on the premises, including principal products manufactured or services to be conducted. Existing tenants should describe any proposed changes to ongoing operations.

 

2. STORAGE OF HAZARDOUS MATERIALS

 

2.1 Will any hazardous materials be used or stored on-site?

 

Wastes Yes _____No _____

 

Chemical Products Yes _____No _____

 

2.2 Attach a list of any hazardous materials to be used or stored, the quantities that will be on-site at any given time, and the location and method of storage (e.g., 55-gallon drums on concrete pad).

 

3. STORAGE TANKS AND SUMPS

 

3.1 Is any above or below ground storage of gasoline, diesel or other hazardous substances in tanks or sumps proposed or currently conducted at the premises?

 

Yes ______No _____

 

If yes, describe the materials to be stored, and the type, size and construction of the sump or tank. Attach copies of any permits obtained for the storage of such substances.

 

42

 

 

3.2 Have any of the tanks or sumps been inspected or tested for leakage?

 

Yes ______No _____

 

If so, attach the results.

 

3.3 Have any spills or leaks occurred from such tanks or sumps?

 

Yes ______No _____

 

If so, describe.

 

3.4 Were any regulatory agencies notified of the spill or leak?

 

Yes ______No _____

 

If so, attach copies of any spill reports filed, any clearance letters or other correspondence from regulatory agencies relating to the spill or leak.

 

3.5 Have any underground storage tanks or sumps been taken out of service or removed?

 

Yes ______No _____

 

If yes, attach copies of any closure permits and clearance obtained from regulatory agencies relating to closure and removal of such tanks.

 

4. SPILLS

 

4.1 During the past year, have any spills occurred at the premises?

 

Yes ______No _____

 

If yes, please describe the location of the spill.

 

4.2 Were any agencies notified in connection with such spills?

 

Yes ______No _____

 

If yes, attach copies of any spill reports or other correspondence with regulatory agencies.

 

4.3 Were any clean-up actions undertaken in connection with the spills?

 

Yes ______No _____

 

Attach copies of any clearance letters obtained from any regulatory agencies involved and the results of any final soil or groundwater sampling done upon completion of the clean-up work.

 

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5. WASTE MANAGEMENT

 

5.1 Has your company been issued an EPA Hazardous Waste Generator I. D. Number?

 

Yes ______No _____

 

5.2 Has your company filed a biennial report as a hazardous waste generator?

 

Yes ______No _____

 

If so, attach a copy of the most recent report filed.

 

5.3 Attach a list of the hazardous wastes, if any, generated or to be generated at the premises, its hazard class and the quantity generated on a monthly basis.

 

5.4 Describe the method(s) of disposal for each waste. Indicate where and how often disposal will take place.

 

_____On-site treatment or recovery

 

_____Discharged to sewer

 

_____Transported and disposed of off-site

 

_____Incinerator

 

5.5 Indicate the name of the person(s) responsible for maintaining copies of hazardous waste manifests completed for off-site shipments of hazardous waste.

 

5.6 Is any treatment of processing of hazardous wastes currently conducted or proposed to be conducted at the premises:

 

Yes ______No _____

 

If yes, please describe any existing or proposed treatment methods.

 

5.7 Attach copies of any hazardous waste permits or licenses issued to your company with respect to its operations at the premises.

 

6. WASTEWATER TREATMENT/DISCHARGE

 

6.1 Do you discharge wastewater to:

 

_____ storm drain?_____ sewer?

 

_____ surface water?_____ no industrial discharge

 

6.2 Is your wastewater treated before discharge?

 

Yes ______No _____

 

If yes, describe the type of treatment conducted.

 

6.3 Attach copies of any wastewater discharge permits issued to your company with respect to its operations at the premises.

 

44

 

 

7. AIR DISCHARGES

 

7.1 Do you have any filtration systems or stacks that discharge into the air?

 

Yes ______No _____

 

7.2 Do you operate any of the following types of equipment or any other equipment requiring an air emissions permit?

 

_____Spray booth

 

_____Dip tank

 

_____Drying oven

 

_____Incinerator

 

_____Other (please describe)

 

_____No equipment requiring air permits

 

7.3 Are air emissions from your operations monitored?

 

Yes ______No _____

 

If so, indicate the frequency of monitoring and a description of the monitoring results.

 

7.4 Attach copies of any air emissions permits pertaining to your operations at the premises.

 

8. HAZARDOUS MATERIALS DISCLOSURES

 

8.1 Does your company handle hazardous materials in a quantity equal to or exceeding an aggregate of 500 pounds, 55 gallons, or 200 cubic feet per month?

 

Yes ______No _____

 

8.2 Has your company prepared a hazardous materials management plan pursuant to any applicable requirements of a local fire department or governmental agency?

 

Yes ______No _____

 

If so, attach a copy of the business plan.

 

8.3 Has your company adopted any voluntary environmental, health or safety program?

 

 

Yes _____No _____

 

If so, attach a copy of the program.

 

9. ENFORCEMENT ACTIONS, COMPLAINTS

 

9.1 Has your company ever been subject to any agency enforcement actions, administrative orders, or consent decrees?

 

Yes ______No _____

 

If so, describe the actions and any continuing compliance obligations imposed as a result of these actions.

 

9.2 Has your company ever received requests for information, notice or demand letters, or any other inquiries regarding its operations?

 

Yes ______No _____

 

9.3 Have there ever been, or are there now pending, any lawsuits against the company regarding any environmental or health and safety concerns?

 

Yes ______No _____

 

9.4 Has an environmental audit ever been conducted at your company’s current facility?

 

Yes ______No _____

 

If so, identify who conducted the audit and when it was conducted.

 

Tenant:  
    
By:           
Its:   

 

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EXHIBIT H

 

TENANTS’ SIGNS

 

EXTENSION OPTION

 

RIDER NO. 1 TO LEASE

 

This Rider No. 1 is made and entered into by and between CRPF IV CENTENNIAL, LLC, a Delaware limited liability company (“Landlord”), and BOXABL INC., a Nevada corporation (“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 Rider to the “Lease” shall be construed to mean the Lease (and all Exhibits and Riders 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.

 

1. Landlord hereby grants to Tenant two (2) options (collectively, the “Extension Options”, and each, an “Extension Option”) to extend the Term of the Lease for two (2) additional periods of five (5) years each (collectively, the “Option Terms”, and each, an “Option Term”), on the same terms, covenants and conditions as provided for in the Lease during the initial Term, except for the Monthly Base Rent, which shall initially be equal to the greater of: (a) the Monthly Base Rent payable by Tenant during the last month of the then current Term immediately preceding the applicable Option Term, increased by three percent (3%), or (b) the “fair market rental rate” for the Premises for the Option Term as defined and determined in accordance with the provisions of the Fair Market Rental Rate Rider attached to the Lease as Rider No. 2, subject to fair market annual rent adjustments during the Option Term. If Landlord determines that the Monthly Base Rent for the Option Term is to be the Monthly Base Rent payable pursuant to Section 1(a) above, such determination shall be conclusive, Tenant shall have no right to object thereto, and the Landlord and Tenant shall avoid the formal fair market value determination process. If, however, Landlord determines that the Monthly Base Rent for the applicable Option Term is to be the fair market rental rate, then such fair market rental rate shall be determined in accordance with the Fair Market Rental Rate Rider attached to the Lease as Rider No. 2.

 

2. An Extension Option must be exercised, if at all, by written notice (“Extension Notice”) delivered by Tenant to Landlord no sooner than that date which is twelve (12) months and no later than that date which is six (6) months prior to the expiration of the then current Term of the Lease. Provided Tenant has properly and timely exercised an Extension Option, the then current Term of the Lease shall be extended by the Option Term, and all terms, covenants and conditions of the Lease shall remain unmodified and in full force and effect, except that the Monthly Base Rent shall be as set forth above, and except that the number of remaining Extension Options (if any) shall be reduced by one.

 

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FAIR MARKET RENTAL RATE

 

RIDER NO. 2 TO LEASE

 

This Rider No. 2 is made and entered into by and between CRPF IV CENTENNIAL, LLC, a Delaware limited liability company (“Landlord”), and BOXABL INC., a Nevada corporation (“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 Rider to the “Lease” shall be construed to mean the Lease (and all Exhibits and Riders 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.

 

1. The term “fair market rental rate” as used in this Rider and any Rider attached to the Lease means the annual amount per square foot, projected for each year of the Option Term (including annual adjustments), that a willing, non-equity tenant (excluding sublease and assignment transactions) would pay, and a willing landlord of a comparable quality building located in the North Las Vegas, Nevada area would accept, in an arm’s length transaction (what Landlord is accepting in then current transactions for the Building may be used for purposes of projecting rent for the Option Term), for space of comparable size, quality and ceiling height as the Premises, taking into account the age, quality and layout of the existing improvements in the Premises, and taking into account items that professional real estate brokers or professional real estate appraisers customarily consider, including, but not limited to, rental rates, space availability, tenant size, tenant improvement allowances, parking charges and any other lease considerations, if any, then being charged or granted by Landlord or the lessors of such similar buildings. All economic terms other than Monthly Base Rent, such as tenant improvement allowance amounts, if any, operating expenses, parking charges, etc., will be established by Landlord and will be factored into the determination of the fair market rental rate for the Option Term. Accordingly, the fair market rental rate will be an effective rate, not specifically including, but accounting for, the appropriate economic considerations described above.

 

2. If Landlord determines that the Option Term’s initial Monthly Base Rent is to be based on the fair market rental rate for the Premises, the Landlord shall provide written notice of Landlord’s determination of the fair market rental rate not later than sixty (60) days after the last day upon which Tenant may timely exercise the right giving rise to the necessity for such fair market rental rate determination. Tenant shall have thirty (30) days (“Tenant’s Review Period”) after receipt of Landlord’s notice of the fair market rental rate within which to accept such fair market rental rate or to reasonably object thereto in writing. Failure of Tenant to so object to the fair market rental rate submitted by Landlord in writing within Tenant’s Review Period shall conclusively be deemed Tenant’s approval and acceptance thereof. If within Tenant’s Review Period Tenant reasonably objects to or is deemed to have disapproved the fair market rental rate submitted by Landlord, Landlord and Tenant will meet together with their respective legal counsel to present and discuss their individual determinations of the fair market rental rate for the Premises under the parameters set forth in Paragraph 1 above and shall diligently and in good faith attempt to negotiate a rental rate on the basis of such individual determinations. Such meeting shall occur no later than ten (10) days after the expiration of Tenant’s Review Period. The parties shall each provide the other with such supporting information and documentation as they deem appropriate. At such meeting if Landlord and Tenant are unable to agree upon the fair market rental rate, they shall each submit to the other their respective best and final offer as to the fair market rental rate. If Landlord and Tenant fail to reach agreement on such fair market rental rate within five (5) business days following such a meeting (the “Outside Agreement Date”), Tenant’s Extension Option will be deemed null and void unless Tenant demands appraisal, in which event each party’s determination shall be submitted to appraisal in accordance with the provisions of Section 3 below.

 

3.(a) Landlord and Tenant shall each appoint one (1) independent appraiser who shall by profession be an M. A. I. certified real estate appraiser who shall have been active over the five (5) year period ending on the date of such appointment in the leasing of commercial (including industrial) properties in the North Las Vegas, Nevada. The determination of the appraisers shall be limited solely to the issue of whether Landlord’s or Tenant’s last proposed (as of the Outside Agreement Date) best and final fair market rental rate for the Premises is the closest to the actual fair market rental rate for the Premises as determined by the appraisers, taking into account the requirements specified in Section 1 above. Each such appraiser shall be appointed within ten (10) business days after the Outside Agreement Date.

 

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(b) The two (2) appraisers so appointed shall within ten (10) business days after the date of the appointment of the last appointed appraiser agree upon and appoint a third appraiser who shall be qualified under the same criteria set forth hereinabove for qualification of the initial two (2) appraisers.

 

(c) The three (3) appraisers shall within ten (10) business days after the appointment of the third appraiser reach a decision as to whether the parties shall use Landlord’s or Tenant’s submitted best and final fair market rental rate, and shall notify Landlord and Tenant thereof. During such ten (10) business day period, Landlord and Tenant may submit to the appraisers such information and documentation to support their respective positions as they shall deem reasonably relevant and Landlord and Tenant may each appear before the appraisers jointly to question and respond to questions from the appraisers.

 

(d) The decision of the majority of the three (3) appraisers shall be binding upon Landlord and Tenant and neither party shall have the right to reject the decision or to undo the exercise of the applicable Option. If either Landlord or Tenant fails to appoint an appraiser within the time period specified in Section 3(a) hereinabove, the appraiser appointed by one of them shall within ten (10) business days following the date on which the party failing to appoint an appraiser could have last appointed such appraiser reach a decision based upon the same procedures as set forth above (i.e., by selecting either Landlord’s or Tenant’s submitted best and final fair market rental rate), and shall notify Landlord and Tenant thereof, and such appraiser’s decision shall be binding upon Landlord and Tenant and neither party shall have the right to reject the decision or to undo the exercise of the applicable Option.

 

(e) If the two (2) appraisers fail to agree upon and appoint a third appraiser, either party, upon ten (10) days written notice to the other party, can apply to the Presiding Judge of the State Court of Nevada, Clark County to appoint a third appraiser meeting the qualifications set forth herein. The third appraiser, however, selected shall be a person who has not previously acted in any capacity for either party.

 

(f) The cost of each party’s appraiser shall be the responsibility of the party selecting such appraiser, and the cost of the third appraiser (or arbitration, if necessary) shall be shared equally by Landlord and Tenant.

 

(g) If the process described hereinabove has not resulted in a selection of either Landlord’s or Tenant’s submitted best and final fair market rental rate by the commencement of the applicable Option Term, then the fair market rental rate estimated by Landlord will be used until the appraiser(s) reach a decision, with an appropriate rental credit and other adjustments for any overpayments of Monthly Base Rent or other amounts if the appraisers select Tenant’s submitted best and final estimate of the fair market rental rate. The parties shall enter into an amendment to this Lease confirming the terms of the decision.

 

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FIRST AMENDMENT TO MULTI-TENANT COMMERCIAL/INDUSTRIAL LEASE (NNN)

 

This FIRST AMENDMENT TO MULTI-TENANT COMMERCIAL/INDUSTRIAL LEASE (NNN) (“Amendment”) is made as of April                , 2021, by and between CRP/CAPROCK INTERCHANGE INDUSTRIAL OWNER, L.L.C., a Delaware limited liability company (“Landlord”), and BOXABL, INC., a Nevada corporation (“Tenant”), with reference to the facts set forth in the Recitals below.

 

R E C I T A L S:

 

A. Landlord (as successor-in-interest to CRPF IV CENTENNIAL, LLC, a Delaware limited liability company) and Tenant are parties to that certain Multi-Tenant Commercial/Industrial Lease (NNN) dated December , 2020 (the “Lease”), whereby Tenant currently leases from Landlord certain Premises, as more particularly described in the Lease, as amended hereby.

 

B. The parties desire to amend the Lease in order to: (i) correct the Landlord entity name (erroneously identified in the Lease); (ii) update the address of the Building and correct the square footage of the Premises; (iii) correct the Expiration Date as set forth below; (iv) modify the scope of the Tenant Improvements and make other related changes; and (v) make such other modifications to the Lease as set forth herein.

 

C. Defined terms which are used in this Amendment without definition have the meanings given to them in the Lease.

 

W I T N E S S E T H:

 

NOW, THEREFORE, in consideration of the above Recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1. Landlord Identity. Tenant acknowledges and agrees that Landlord’s name was erroneously identified in the Lease as “CRPF IV CENTENNIAL, LLC, a Delaware limited liability company” and is hereby corrected to “CRP/CAPROCK INTERCHANGE INDUSTRIAL OWNER, L.L.C., a Delaware limited liability company”. As of the date hereof, all references herein and in the Lease to “Landlord” shall mean and refer to CRP/CAPROCK INTERCHANGE INDUSTRIAL OWNER, L.L.C., a Delaware limited liability company”.

 

2. Expiration Date. The Expiration Date of the Lease was erroneously identified as August 31, 2026, and Landlord and Tenant hereby agree that the Expiration Date is September 30, 2026 for all purposes under the Lease.

 

3. Building Address. The address of the Building has been updated to 5345 E North Belt Road, North Las Vegas, NV 89115, and Landlord and Tenant hereby agree that all references to “East Centennial Parkway” in the Lease are hereby amended to mean “E North Belt Road.”

 

4. Rentable Area of the Premises. The rentable area of the Premises was erroneously identified as 173,720 rentable square feet, and Landlord and Tenant hereby agree that the Premises consists of approximately 174,250 rentable square feet.

 

5. Rentable Area of the Project. The rentable area of the Project was erroneously identified as 683,436 rentable square feet, and Landlord and Tenant hereby agree that the Project consists of approximately 684,589 rentable square feet. Accordingly, Tenant’s Percentage is hereby amended to be 25.45%, and Tenant’s monthly Percentage of Operating Expenses is estimated to be $19,167.50.

 

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6. Monthly Base Rent. The table set forth in Section 1.8 of the Lease is hereby deleted in its entirety and is replaced with the following:

 

Lease Months  Monthly Base Rent
01-12  $87,996.25*
13-24  $90,636.14 
25-36  $93,355.22 
37-48  $96,155.88 
49-60  $99,040.55 
61-65  $102,011.77 

 

*See Section 1.8 of the Lease.

 

7. Tenant Improvements. The Tenant Improvements, as defined in the Work Letter and described in the Plans attached thereto as Schedule “1” are hereby amended to mean the work more particularly described in: (a) Lee Sakahara construction documents dated February 11, 2021 and the Lee Sakahara equipment package dated February 22, 2021, as may be amended, supplemented or otherwise modified from time to time, and (b) that certain Standard Form of Agreement Between Owner and Contractor dated April 1, 2021 by and between Landlord and Martin Harris Construction, LLC (“MH”), as may be amended, supplemented or otherwise modified from time to time by amendment, change order or otherwise. All references to the Tenant Improvements contained in the Lease are hereby amended to mean the Tenant Improvements described herein.

 

8. Outside Date. The “Outside Date” as defined in Section 3(b) of the Work Letter is hereby amended to mean October 31, 2021.

 

9. Tenant Delays. The term “Tenant Delays” as defined in Section 4 of the Work Letter is hereby amended to include Tenant’s failure to fund any sums required by the Escrow Amendment (as defined below).

 

10. Tenant Allowance. Section 7 of the Work Letter is hereby deleted in its entirety.

 

11. Construction Escrow Agreement. Landlord and Tenant hereby agree that the change in the scope of the Tenant Improvements, as described in Section 6 hereof, will result in additional costs that were not originally contemplated by the Lease. The parties have agreed to allocate the costs and to deposit certain funds into a construction escrow account, all in accordance with an amendment to that certain Construction Loan Disbursing Agreement dated as of October 31, 2019, by and among First American Title Insurance Company - NCS, BMO Harris Bank N.A., Landlord and MH (the “Escrow Amendment”), the form of which is attached hereto as Exhibit “A.” Concurrently with the execution of this Amendment, Landlord and Tenant shall execute and deliver the Escrow Amendment, and shall, within two (2) business days thereafter, fund into the escrow account established thereby such amounts as are set forth therein.

 

12. Authority. Each signatory of this Amendment represents hereby that he or she has the authority to execute and deliver the same on behalf of the party hereto for which such signatory is acting.

 

13. Successors and Assigns. This Amendment shall extend to, be binding upon, and inure to the benefit of, the respective successors and permitted assigns and beneficiaries of the parties hereto.

 

14. No Other Modifications. Except as modified in this Amendment, all other terms and conditions of the Lease shall remain unchanged and in full force and effect. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one in the same Amendment. To the extent of a conflict between the terms of the Lease and this Amendment, this Amendment shall prevail. For purposes of this Amendment, signatures by facsimile or electronic PDF shall be binding to the same extent as original signatures.

 

[Remainder of page left intentionally blank. Signatures follow.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

 

TENANT:  
     
BOXABL, INC.,  
a Nevada corporation  
     
By:                
Name:  
Title:  

 

LANDLORD:

 

CRP/CAPROCK INTERCHANGE INDUSTRIAL OWNER, L.L.C.,

a Delaware limited liability company

 

By: CRP/CapRock Interchange Industrial Venture, L.L.C., a

Delaware limited liability company,

its sole member

 

By: CRPF IV Centennial, LLC,

a Delaware limited liability company,

its authorized member

 

  By:                
  Name:  
  Title:  

 

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EXHIBIT “A”

 

CONSTRUCTION ESCROW AMENDMENT/AGREEMENT

 

(See attached.)

 

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FIRST AMENDMENT TO

CONSTRUCTION LOAN DISBURSING AGREEMENT

 

This FIRST AMENDMENT TO CONSTRUCTION LOAN DISBURSING AGREEMENT (this “Amendment”) is entered into as of April 27, 2021 (the “Effective Date”) by and among First American Title Insurance Company - NCS (“Escrow Agent”), BMO Harris Bank N.A. (“Lender”), CRP/CapRock Interchange industrial Owner, L.L.C. (“Owner”), Martin Harris Construction (“MH”), and Boxabl, Inc. (“Tenant”), with reference to NCS File# (the “Escrow”). Escrow Agent, Lender, MH, Owner and Tenant may be referred to individually herein as a “Party” and collectively, as the “Parties.”

 

RECITALS

 

A. Escrow Agent, Lender, Owner and MH are parties to that certain Construction Loan Disbursing Agreement dated as of October 31, 2019 (the “Escrow Agreement”). Capitalized terms used without definition herein shall have the meaning ascribed to such terms in the Escrow Agreement.

 

B. Pursuant to the Escrow Agreement, Lender is, and has been, funding certain Advances to the Escrow to fund construction of the Project pursuant to the Construction Loan Agreement.

 

C. Owner and Tenant are parties to that certain Multi-Tenant Commercial/Industrial Lease (NNN) dated December 29, 2020 (as may be amended from time to time, the “Lease”), whereby Tenant leases from Owner a portion of the Project, as more particularly described in the Lease (the “Premises”).

 

D. Pursuant to the Lease, Owner has agreed to cause ce1tain tenant improvements to be constructed on or about the Premises (the “Tenant Improvements”). In furtherance thereof, Owner has entered into that certain Standard Form of Agreement Between Owner and Contractor dated April 1, 2021 with MH, pursuant to which MH has been, and will continue to, construct the Tenant Improvements.

 

E. A portion of the Tenant Improvements will be funded with proceeds of the Construction Loan, and a portion of the Tenant Improvements will be funded with additional capital to be contributed by Owner and Tenant.

 

F. Accordingly, the Parties wish to establish a sub-escrow account (the “Sub-Escrow”) to fund the Tenant Improvements, which Sub-Escrow shall be administered in accordance with the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

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AGREEMENT

 

1. Sub-Escrow: Initial Funding.

 

(a) Concurrently with the Effective Date, Escrow Agent shall establish the Sub-Escrow, which is being established to segregate the funds required for the Tenant Improvements (the “TI Funds”) from the Advances for the balance of the Project under the Escrow Agreement.

 

(b) Within two (2) business days following the Effective Date, Owner shall deposit into the Sub- Escrow the amount of Five Hundred Thirty-Six Thousand Seven Hundred Ninety-Four and 80/100 Dollars ($536,794.80) (the “Owner Funds”), and Tenant shall deposit into the Sub-Escrow the amount of One Million Five Hundred Seventy Five Thousand Four Hundred Thirty Four and 21/100 Dollars ($1,575,434.21) (the “Tenant Funds”).

 

2. Order of Disbursement: Additional Construction Loan Advances. It is the intent of the Parties that the Tenant Improvements shall be funded first from the Construction Loan, in an amount not to exceed One Million Three Hundred Fifty-One Thousand Five Hundred Forty-One and 60/100 Dollars ($1,351,541.60) (the “Lender Funds”) in the aggregate, second from the Owner Funds and third from the Tenant Funds. Accordingly, at the request of Owner and subject to Owner’s satisfaction of all terms, conditions, requirements and provisions of the Construction Loan Agreement, including, without limitation, Section 10 of Schedule 2.1 of the Construction Loan Agreement, and upon satisfaction of the conditions for disbursement set forth below, and otherwise in accordance with the Escrow Agreement, Lender shall fund Advances to the Sub-Escrow as needed to pay for the Tenant Improvements. Notwithstanding anything to the contrary, Lender shall be under no obligation to deposit any proceeds of the Construction Loan into the Sub-Escrow unless all requirements of the Construction Loan Agreement, including, without limitation, Schedule 2.1 of the Construction Loan Agreement, shall have been satisfied and Lender shall only be required to disburse proceeds in the manner and frequency contemplated by the Construction Loan Agreement. At such time as the Lender Funds have been depleted, disbursements shall thereafter be made from the Owner Funds, until such time as the Owner Funds have been depleted, and thereafter disbursements shall be made from Tenant Funds.

 

3. Change Orders. In the event a change order is requested, Tenant shall deposit additional funds into the Sub-Escrow in an amount sufficient to cover the incremental change in the cost of the Tenant Improvements resulting from such change order (the “Additional Tenant Funds”). Tenant’s depositing of the Additional Tenant Funds shall be a further condition to any disbursement of TI Funds, and any Additional Tenant Funds shall be deemed part of the Tenant Funds.

 

4. Conditions of Disbursement. The TI Funds shall be disbursed in accordance with the Escrow Agreement, including, without limitation Section 4 thereof.

 

5. Fees. Escrow Agent’s fees in connection with this Sub-Escrow shall include a one-time $500 file set up fee and, to the extent (a) the $750 draw fee is not otherwise being charged pursuant to the Escrow Agreement and (b) a disbursement is being made only from Owner Funds and/or Tenant Funds, a $500 draw fee (each, a “Sub-Escrow Draw Fee”). At the conclusion of any draw which incurs a Sub-Escrow Draw Fee hereunder, Escrow Agent shall invoice Owner for payment of the applicable Sub-Escrow Draw Fee, and following Owner’s payment of the applicable Sub-Escrow Draw Fee, Tenant shall promptly reimburse Owner for fifty percent (50%) of each such Sub-Escrow Draw Fee.

 

6. Full Force and Effect. The Escrow Agreement, as modified by this Amendment, shall constitute the entire agreement of the parties with respect to the subject matter of this agreement. The Escrow Agreement, as amended by this Amendment, shall remain unchanged and continue in full force and effect. Except as modified by this Amendment, the remaining terms of the Escrow Agreement shall remain in full force and effect.

 

7. Counterparts: Execution by Facsimile. This Amendment may be signed by the parties in two or more counterparts which, when taken together, shall constitute one and the same instrument. This Amendment may also be delivered via facsimile or electronic transmission with the same force and effect as if originally executed copies of this Amendment were delivered to all parties.

 

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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first above written.

 

 

 

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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first above written.

 

 

 

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SECOND AMENDMENT TO MULTI-TENANT COMMERCIAL/INDUSTRIAL LEASE (NNN)

 

This SECOND AMENDMENT TO MULTI-TENANT COMMERCIAL/INDUSTRIAL LEASE (NNN) (“Amendment”) is made as of December 20, 2021 (the “Effective Date”), by and between CRP/CAPROCK INTERCHANGE INDUSTRIAL OWNER, L.L.C., a Delaware limited liability company (“Landlord”), and BOXABL INC., a Nevada corporation (“Tenant”), with reference to the facts set forth in the Recitals below.

 

R E C I T A L S:

 

ALandlord (as successor-in-interest to CRPF IV CENTENNIAL, LLC, a Delaware limited liability company) and Tenant are parties to that certain Multi-Tenant Commercial/Industrial Lease (NNN) dated December 28, 2020 (the “Original Lease”), as amended by that certain First Amendment to Multi- Tenant Commercial/Industrial Lease (NNN) dated April 28, 2021 (collectively, the “Lease”), whereby Tenant currently leases from Landlord that certain Building 1 located at 5345 E North Belt Road, North Las Vegas, Nevada 89115 (“Building”), consisting of approximately 174,250 rentable square feet (the “Premises”), as more particularly described in the Lease.

 

B. Tenant has asserted claims against Landlord relating to Landlord’s obligations under the Lease to pay for certain portions of the Tenant Improvements (the “Dispute”) in that certain Notice of Breach, Demand For Payment and Offer of Settlement on behalf of Tenant, to Landlord on December 7, 2021 (the “Dispute Letter”), which contains an offer to permanently settle the dispute over such obligations by Landlord paying to Tenant $180,191.34. The Dispute Letter is attached to this Amendment as Exhibit A.

 

C. The parties desire to settle the Dispute pursuant to the terms and conditions of this Amendment, as further detailed below.

 

D. This Amendment is entered into without admission or adjudication regarding the parties’ views of the facts, or the law, as they pertain to the Dispute.

 

E. Defined terms which are used in this Amendment without definition have the meanings given to them in the Lease.

 

W I T N E S S E T H:

 

NOW, THEREFORE, in consideration of the above Recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1. Settlement Payment to Tenant. Landlord hereby agrees to pay to Tenant, and Tenant hereby agrees to accept from Landlord, $143,521.52 in full settlement and satisfaction of the Dispute and all claims related thereto (the “Settlement Payment”), within five (5) business days following the Effective Date.

 

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2. Release of Claims. Except for the rights created by this Agreement, the Landlord and Tenant, on behalf of themselves and their respective successors, affiliates and assigns, and all other persons or entities claiming through them (collectively, the “Releasing Parties”), do hereby release each other and their respective successors, affiliates, assigns, partners, officers, shareholders, agents, property managers, contractors, representatives, employees and attorneys (collectively, the “Released Parties”), now and for all times in the future, of and from any and all claims, demands, disputes, damages, liabilities, obligations, controversies, debts, costs, expenses, lawsuits, actions, causes of action and other rights to relief, based upon any actual or alleged facts, events, affairs, circumstances, occurrences or conditions arising at any time on or before the Effective Date, both legal and equitable, whether now known or unknown, suspected or unsuspected, continuing or ended, pursued or waived, contingent or fixed, including all claims alleged in the Dispute Letter and relating to the Dispute, including without limitation such claims asserting breach of the Lease based on or arising from or related to any alleged failure by Landlord to fulfill its obligation to pay for all the construction costs of the Tenant Improvements and (collectively, the “Released Claims”).

 

3. Estoppel Certificate. Within two (2) business days following Landlord’s payment to Tenant of the Settlement Payment, Tenant shall execute and deliver to Landlord an estoppel certificate for the Lease in the form attached hereto as Exhibit B, without modification, asserting that all statements set forth in the estoppel certificate are true.

 

4. Authority/Amendment is Legally Binding. Each signatory of this Amendment represents hereby that he or she has the authority to execute and deliver the same, and to fully and finally settle the Dispute, on behalf of the party hereto for which such signatory is acting.

 

5. No Admission. Landlord and Tenant each hereby acknowledge and agree that this Amendment represents a compromise and final settlement of the Dispute and agree that the performance of the conditions and provisions of this Agreement, including the payment and acceptance of the Settlement Payment, is not to be construed as an admission or adjudication of any liability or wrongdoing whatsoever by Landlord and Tenant nor regarding Landlord’s and Tenant’s views of the facts, or the law, as they pertain to the Dispute.

 

6. Successors and Assigns. This Amendment shall extend to, be binding upon, and inure to the benefit of, the respective successors and permitted assigns and beneficiaries of the parties hereto.

 

7. Entire Agreement / No Other Modifications. This Amendment, including the recitals, constitutes the entire agreement and understanding of Landlord and Tenant and supersedes all prior negotiations and/or agreements, proposed or otherwise, written or oral, concerning the Dispute and the settlement and compromise contained herein. Landlord and Tenant each acknowledges that in entering into this Amendment, it has not relied on any promise, representation, or warranty not contained in this Amendment. Except as modified in this Amendment, all other terms and conditions of the Lease shall remain unchanged and in full force and effect. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one in the same Amendment. To the extent of a conflict between the terms of the Lease and this Amendment, this Amendment shall prevail. For purposes of this Amendment, signatures by facsimile or electronic PDF shall be binding to the same extent as original signatures.

 

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8. Interpretation, Severability, and Enforcement.

 

a. Interpretation. The headings in this Amendment are purely for convenience and are not to be used as an aid in interpreting its terms. Landlord and Tenant each agree that they participated equally in drafting and negotiating the terms of this Amendment and that this Amendment shall not be construed against either party as the author or drafter of the Agreement.

 

b. Severability. Should any provision of this Amendment be declared or be determined by any court to be illegal, invalid, or unenforceable, the validity of the remaining parts, terms, or provisions shall not be affected thereby and the illegal, invalid, or unenforceable part, term, or provision shall be deemed not to be a part of this Amendment.

 

c. Enforcement. Nothing in this Amendment shall be construed as, or constitute, a release of either party’s right to enforce the terms of this Amendment. Should either party sue to enforce this Amendment, the prevailing party shall be entitled to recover costs and expenses, including attorneys’ fees, incurred in the litigation.

 

9. Choice of Law and Choice of Forum.

 

a. Choice of Law. This Amendment and all related documents, and all matters arising out of or relating to this Amendment, whether sounding in contract, tort, or statute are governed by, and construed in accordance with, the laws of the State of Nevada (including its statutes of limitation), without giving effect to the conflict of laws provisions thereof to the extent such principles or rules would require or permit the application of the laws of any jurisdiction other than those of the State of Nevada.

 

b. Choice of Forum. Landlord and Tenant each irrevocably and unconditionally agree it will not commence any action, litigation, or proceeding of any kind whatsoever against Landlord or Tenant in any way arising from or relating to this Amendment and all contemplated transactions, including, but not limited to, contract, equity, tort, fraud, and statutory claims, in any forum other than the state or federal courts of Nevada located in Clark County. Each party irrevocably and unconditionally submits to the exclusive jurisdiction of such courts. Each party agrees that a final judgment in any such action, litigation, or proceeding is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

EACH OF THE PARTIES CERTIFIES THAT IT HAS READ ALL OF THIS AGREEMENT AND FULLY UNDERSTANDS AND AGREES TO EACH OF THE ABOVE TERMS, CONDITIONS, AND PROVISIONS, INCLUDING WITHOUT LIMITATION THE RELEASES OF ALL KNOWN AND UNKNOWN CLAIMS.

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.

 

 

60

 

 

THIRD AMENDMENT TO MULTI-TENANT

COMMERCIAL/INDUSTRIAL LEASE (NNN)

 

THIS THIRD AMENDMENT TO MULTI-TENANT COMMERCIAL/INDUSTRIAL LEASE (NNN) (this “Amendment”) is made and entered into effective as of May 2 , 2023 (the “Effective Date”), by and between NV INTERCHANGE INDUSTRIAL CENTER LLC, a Delaware limited liability company (“Landlord”), and BOXABL INC., a Nevada corporation (“Tenant”).

 

R E C I T A L S

 

A. Landlord’s predecessor-in-interest, CRPF IV Centennial, LLC, and Tenant entered into that certain Multi-Tenant Commercial/Industrial Lease dated December 29, 2020 (the “Original Lease”), as amended by that certain First Amendment to Multi-Tenant Commercial/Industrial Lease (NNN) dated April 28, 2021 (the “First Amendment”) and that certain Second Amendment to Multi-Tenant Commercial/Industrial Lease (NNN) dated December 20, 2021 (collectively, the “Lease”), pursuant to which Tenant has leased from Landlord certain premises containing approximately 174,250 rentable square feet of space consisting of the entire commercial building known as Building 1 (“Building 1”) and located at 5345 East North Belt Road, North Las Vegas, NV 89115 (the “Existing Premises”).

 

B. Landlord is the current owner of the Property (defined in Section 1.3 of the Original Lease) known as the CapRock Interchange Industrial Center, which Property consists of Building 1, together with an additional commercial building owned by Landlord containing approximately 515,206 rentable square feet of space and located at 5445 East North Belt Road, North Las Vegas, NV 89115 (“Building 2”).

 

C. In addition to the Existing Premises, Landlord now wishes to lease to Tenant, and Tenant wishes to lease from Landlord, the Expansion Premises (as defined in Section 1 below), and the parties wish to further amend the Lease, subject to the terms and conditions set forth below.

 

AGREEMENT

 

In consideration of the mutual covenants contained in this Amendment and the Lease, Landlord and Tenant hereby agree as follows:

 

1. Demise of Expansion Premises. Commencing upon June 1, 2023 (the “Expansion Premises Commencement Date”), and continuing until May 31, 2027 unless sooner terminated or extended pursuant to the Original Lease, as amended by this Amendment (the “Expansion Premises Term”), Landlord hereby leases to Tenant and Tenant hereby leases from Landlord certain premises known as Suite 100 in Building 2 containing approximately 114,613 rentable square feet of space (the “Expansion Premises”), which Expansion Premises are generally depicted on Exhibit A attached hereto and incorporated herein by this reference.

 

Subject to this Amendment, the demise of the Expansion Premises shall be subject to each and every term, provision and condition as set forth in the Lease as if the Expansion Premises were originally demised thereunder. Beginning on the Expansion Premises Commencement Date, the “Premises,” as that term is defined in the Lease, shall be amended to include both the Existing Premises and the Expansion Premises, for a total of 288,863 rentable square feet of space.

 

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2. Tenant Improvements. Subject to the terms and conditions contained herein, and the terms and conditions of the Lease, the Expansion Premises are hereby accepted by Tenant in their “as-is” condition on the Expansion Premises Commencement Date, and Tenant is not entitled to any alterations or improvements thereto by Landlord or to any other allowance or credit from Landlord for improvements thereto. Tenant acknowledges that neither Landlord nor its agents or employees have made any representations or warranties as to the suitability or fitness of the Premises (including the Existing Premises and the Expansion Premises) for the conduct of Tenant’s business or for any other purpose from and after the Effective Date and during the current Term for the Existing Premises and the Expansion Premises Term for the Expansion Premises.

 

3. The Property. The Site Plan of the Property attached to the Original Lease as Exhibit B is hereby deleted in its entirety and replaced with the Exhibit B attached hereto and incorporated herein by this reference.

 

4. Terms and Conditions.

 

a. Existing Premises. From and after the Effective Date and continuing during the current Term of the Lease for the Existing Premises, all of the terms and conditions of the Lease (as amended by this Amendment, where applicable) shall continue to apply to the lease of the Existing Premises, including Tenant’s obligation to pay Monthly Base Rent as set forth in Section 6 of the First Amendment, through the expiration date of September 30, 2026 as set forth in Section 2 of the First Amendment.

 

i. Tenant’s Percentage of Operating Expenses. From and after the Effective Date and continuing during the current Term of the Lease for the Existing Premises, Tenant shall continue to pay Tenant’s Percentage of Operating Expenses for the Existing Premises in accordance with the provisions contained in the Lease (as amended by this Amendment). Tenant’s Percentage of the Property for the Existing Premises shall be equal to 25.27%, which is the percentage obtained by dividing (1) the number of rentable square feet in the Existing Premises (174,250) by (2) the number of rentable square feet in the Property (689,456). Notwithstanding the foregoing, with respect to Operating Expenses which Landlord allocates only to Building 1 pursuant to certain Cost Pools (as defined in Section 1.18.b. of the Original Lease) or otherwise, Tenant’s Percentage for the Existing Premises shall be 100%.

 

ii. Security Deposit. Landlord acknowledges that it currently holds a security deposit from Tenant with respect to the Existing Premises in the amount of $525,000. 00 (the “Existing Security Deposit”), which shall continue to be held, applied and/or returned in accordance with the provisions contained in the Lease.

 

b. Expansion Premises. From and after the Expansion Premises Commencement Date and continuing during the Expansion Premises Term, the lease of the Expansion Premises is subject to the following terms and conditions:

 

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i. Monthly Base Rent for the Expansion Premises. From and after the Expansion Premises Commencement Date and continuing during the Expansion Premises Term, Base Rent for the Expansion Premises only shall be payable according to the following table:

 

 

Time Period  Annual Base
Rent		  Monthly Base
Rent		  Monthly Base
Rent per SF
06/01/23 – 05/31/24  $1,389,109.56   $115,759.13   $1.010 
06/01/24 – 05/31/25  $1,444,674,00   $120,389.50   $1.050 
06/01/25 – 05/31/26  $1,502,460.96   $125,205.08   $1.092 
06/01/26 – 05/31/27  $1,562,559.36   $130,213.28   $1.136 

 

ii. Tenant’s Percentage of Operating Expenses. From and after the Expansion Premises Commencement Date and continuing during the Expansion Premises Term, Tenant shall pay Tenant’s Percentage of Operating Expenses for the Expansion Premises in accordance with the provisions contained in the Lease (as amended by this Amendment). Tenant’s Percentage of the Property for the Expansion Premises shall be equal to 16.62%, which is the percentage obtained by dividing (1) the number of rentable square feet in the Expansion Premises (114,613) by (2) the number of rentable square feet in the Project (689,456). Notwithstanding the foregoing, with respect to Operating Expenses which Landlord allocates only to Building 2 pursuant to certain Cost Pools or otherwise, Tenant’s Percentage for the Expansion Premises shall be equal to 22.24%, which is the percentage obtained by dividing (A) the number of rentable square feet in the Expansion Premises (114,613) by (B) the number of rentable square feet in Building 2 (515,206).

 

c. Security Deposit; Letter of Credit. As a condition to the lease of the Expansion Premises by Landlord to Tenant, Tenant shall be required to deliver to Landlord prior to the Expansion Premises Commencement Date (or the commencement of the Move-In Period, as defined in Section 5 below, if earlier), a letter of credit in the amount of $3,714,190.00 (the “Expansion Premises Letter of Credit”). The Expansion Premises Letter of Credit shall be subject to all of the terms and conditions set forth in Section 6.3 of the Original Lease as if the Expansion Premises Letter of Credit is the Letter of Credit described therein, except that (i) the amount of such Expansion Premises Letter of Credit shall be in the amount set forth above, and (ii) Section

 

6.3.e. of the Original Lease shall not apply.

 

d. Existing Equipment. Tenant acknowledges that the prior tenant in the Expansion Premises left certain manufacturing equipment in the Expansion Premises, which has been deemed abandoned property (the “Existing Equipment”). Landlord agrees that it shall use commercially reasonable efforts to remove the same from the Expansion Premises, but in no event shall Landlord be required, or have any liability for the failure, to remove the same. In the event the Existing Equipment has not been removed by Landlord within two (2) months after the Expansion Premises Commencement Date, Tenant shall have the right to remove and dispose of the same at Tenant’s cost, and Landlord shall have no liability with respect to the same.

 

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5. Early Access. Notwithstanding any provision to the contrary contained herein, so long as Landlord has received the Expansion Premises Letter of Credit, Landlord agrees that Tenant may occupy the Expansion Premises from and after the Effective Date and continuing until the Expansion Premises Commencement Date (the “Move-In Period”), for the sole purpose of the installation of Tenant’s furniture, fixtures and equipment therein. During the Move-In Period, (a) Tenant shall have no obligation to pay Rent, but all other terms of the Lease (as amended by this Amendment), including but not limited to the obligation to indemnify Landlord and carry the insurance required in the Lease, shall be in effect, (b) Tenant shall be responsible for all utilities used in the Expansion Premises during the Move-In Period, (c) any entry by Tenant shall be at Tenant’s sole risk, (d) Tenant shall not unreasonably interfere with Landlord, Landlord’s contractors or any construction schedule established in connection with any work being performed by Landlord or any other tenant at the Property, (e) prior to any entry upon the Expansion Premises by Tenant, Tenant agrees to pay for and provide to Landlord certificates evidencing the existence and amounts of insurance carried by Tenant with respect to the Expansion Premises, which coverage must comply with the provisions of the Lease relating to insurance, (f) Tenant and its employees, agents and contractors agree to comply with all Laws applicable to its use and occupancy of the Expansion Premises, (g) Landlord shall not be responsible nor have any liability whatsoever at any time for loss or damage to the furniture, fixtures, phone, cabling or equipment or other property of Tenant installed or placed by Tenant on the Expansion Premises, unless such loss or damage is caused by the gross negligence or willful misconduct of Landlord or its employees, agents or contractors, and (h) Tenant agrees to indemnify, protect, defend and save Landlord, the property manager, any mortgagee of Landlord, and each of their respective officers, directors, members, managers, partners, affiliates, employees, agents and representatives, harmless from and against any and all liens, liabilities, losses, damages, costs, expenses, demands, actions, causes of action and claims (including, without limitation, reasonable attorneys’ fees and legal costs) arising out of the early entry, use, construction, or occupancy of the Expansion Premises by Tenant or its agents, employees or contractors, except to the extent any of the foregoing arises out of the gross negligence or willful misconduct of Landlord, its employees, agents or contractors.

 

6. Parking. From and after the Expansion Premises Commencement Date, in addition to the parking spaces specified in Section 1.11 of the Original Lease, Tenant shall have a license to: (a) the non-exclusive use of 58 unreserved parking spaces in connection with the lease of the Expansion Premises, in accordance with Article 11 of the Original Lease, and (b) the exclusive use of 20 truck parking spaces in the location depicted on Exhibit C attached hereto and incorporated herein by this reference (the “Exclusive Truck and Auto Parking Spaces”). Any storage located in the Exclusive Truck Parking Spaces shall strictly comply with the provisions contained in Section 1.10 of the Original Lease relating to the Permitted Use (and applicable to both the Existing Premises and the Expansion Premises), which limits any outside storage only to final modular home product and shipping containers located on trailers, and under no circumstances may Tenant store any components or raw materials outside of the Premises.

 

7. Extension Option. Tenant shall have the right to extend the Expansion Premises Term with respect to the Expansion Premises in accordance with Rider No. 1 and Rider No. 2 to the Original Lease, it being agreed that Tenant may exercise the Extension Options described in Rider No 1. for either the Existing Premises, or the Expansion Premises, or both, so long as the exercise of the applicable Extension Option is made with respect to the applicable Premises pursuant to the provisions contained in Rider No. 1. In the event Tenant fails to timely exercise an Extension Option with respect to the Existing Premises and/or the Expansion Premises, Tenant’s applicable Extension Option shall expire and be of no further force and effect.

 

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8. Rules and Regulations.

 

(1) The Rules and Regulations attached to the Original Lease as Exhibit E shall remain in full force and effect from and after the Effective Date and continuing through the Term for the Existing Premises and the Expansion Premises Term for the Expansion Premises. The Rules and Regulations expressly prohibit, without limitation: disturbances to other tenants, noxious or offensive activities on any part of the Common Area, erecting of devices on the roof, exterior of the Premises or other portions of the Property, dismantling of vehicles or equipment of any kind on the Common Area, and placing or permitting obstructions or materials outside of the Premises.

 

(2) In addition, Tenant will obtain prior Landlord approval in advance of any event at the Premises, such approval shall not be unreasonably withheld, conditioned, or delayed.

 

(3) Tenant has been notified that certain actions taken by Tenant prior to the Effective Date, while not retroactively constituting violations of the Permitted Use and/or the Rules and Regulations entitling Landlord to remedies under the Lease or this Amendment, shall constitute violations of the Permitted Use and/or the Rules and Regulations if such actions are taken after the Effective Date, such as: (a) the manufacturing of casitas in the parking areas, (b) the storage of materials such as support beams in the parking areas, (c) the display of a blow-up Santa Claus decoration in the Common Area in a manner contrary to the terms of this Amendment, (d) the installation of a ramp in the parking area used to jump dirt bikes, and (e) the discharge of a Tesla battery in a container full of salt water in the parking area.

 

(4) Notwithstanding the foregoing, Landlord agrees that Tenant shall have the right to place a blow-up Santa Claus on the Premises at the same location as Tenant has placed the blow-up Santa Claus for the preceding two (2) years, provided that (a) Tenant does not have the right to place the blow-up Santa Claus at any other location on the Premises or Common Area, (b) Tenant does not place any other exterior holiday decorations on the Premises or Common Area, (c) Tenant places the Santa Claus no earlier than December 15 and removes such Santa Claus no later than January 15 of the following year (e.g. December 15, 2023 – January 15, 2024); and (d) such display does not violate any laws, prevent fire department or other emergency personnel access, or impact access or use of the Common Area or the Building by other tenants or occupants of the Property.

 

(5) Notwithstanding any provision to the contrary contained in the Lease or this Amendment, in the event Tenant violates the Permitted Use or the Rules and Regulations and receives written notice of the same violation from Landlord on three (3) occasions or more after the Effective Date, Landlord shall have the right to charge Tenant a $10,000.00 fee for such third violation, which fee shall be payable promptly upon receipt of written notice from Landlord, provided that: (a) multiple notices for an ongoing violation shall be treated as having provided notice for one (1) singular occasion (e.g. if Tenant continuously stored raw materials outside the Premises between June 1 and June 15, 2023 and Landlord sent written notices of the violation on June 2, and June 7, 2023, such notices and such violation shall be treated as only one (1) singular occasion; and (b) if, after sending any notice of an alleged violation, it is determined (whether by agreement of the parties, any court of appropriate jurisdiction, any arbitrator, or any other neutral third-party appointed to investigate the violation) that no such violation occurred, such notice and alleged violation shall not be considered as an occasion for the purposes of this Section 8(5).

 

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9. Brokers. Tenant hereby represents and warrants to Landlord that Tenant has not engaged or dealt with any broker, finder, or agent in connection with the negotiation and/or execution of this Amendment, other than Xavier Wasiak at Jones Lang LaSalle, as Tenant’s exclusive agent (“Broker”), and Tenant and Landlord agrees to indemnify and save the other party harmless from any claim, demand, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees) paid or incurred by the other party as a result of any claim for brokerage or other commissions or fees made by any broker, finder, or agent (other than Broker), whether or not meritorious, employed or engaged or claiming employment or engagement by, through, or under Tenant or Landlord, as applicable. Landlord shall not be required to pay a commission to Broker with respect to the lease of the Existing Premises, but Landlord shall be required to pay a commission to Broker with respect to the Expansion Premises pursuant to a separate written agreement.

 

10. Status of Lease Obligations. Tenant acknowledges and certifies that as of the Effective Date of this Amendment, Landlord has performed all covenants and obligations on the part of Landlord to be performed under the Lease and that Tenant has no claims or right of offset against Landlord. Landlord acknowledges and certifies that as of the Effective Date of this Amendment, to Landlord’s actual knowledge, Tenant has performed all covenants and obligations on the part of Tenant to be performed under the Lease and that Landlord has no claims or right of offset against Tenant.

 

11. Full Force and Effect. Except as expressly modified herein, all of the terms and provisions of the Lease shall remain in full force and effect and binding upon the parties thereto, and Tenant hereby ratifies and confirms the Lease as modified herein. All references in the Lease to “this Lease” shall be deemed to refer to the Lease as amended by this Amendment.

 

12. Legal Fees. In the event either party brings an action or files a suit to enforce or interpret this Amendment or any provisions contained herein, the party substantially prevailing in such action shall recover from the non-prevailing party, in addition to all other remedies or damages, reasonable legal fees and court costs incurred by such substantially prevailing party in such action or suit.

 

13. Capitalized Terms. Capitalized terms used herein that also appear in the Lease shall have the same meaning as in the Lease unless otherwise defined herein.

 

14. Conflicts. In the event of any conflict between the terms and provisions of the Lease and the terms and provisions of this Amendment, the terms and provisions of this Amendment shall control.

 

15. No Option. The submission of an unsigned copy of this Amendment to Tenant shall not constitute an offer or option with respect to the matters contained herein. This Amendment shall become effective and binding only upon execution and delivery by both Landlord and Tenant.

 

16. Time. Time is of the essence with respect to each of Landlord’s and Tenant’s obligations under this Amendment.

 

17. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of such counterparts shall constitute one document. To facilitate execution of this Amendment, the parties may execute and exchange, by telephone facsimile or electronic mail PDF, counterparts of the signature pages. Signature pages may be detached from the counterparts and attached to a single copy of this Amendment to physically form one document.

 

[Signature page follows]

 

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SIGNATURE PAGE FOR

THIRD AMENDMENT TO MULTI-TENANT

COMMERCIAL/INDUSTRIAL LEASE (NNN)

BETWEEN

NV INTERCHANGE INDUSTRIAL CENTER LLC AND

BOXABLE INC.

 

The parties have executed this Third Amendment to Multi-Tenant Commercial/Industrial Lease (NNN) as of the Effective Date, the execution and delivery thereof having been duly authorized.

 

LANDLORD:

 

NV INTERCHANGE INDUSTRIAL CENTER LLC,

 

a Delaware limited liability company

 

     
By:    
Name: Andrew Sturno  
Title: Authorized Signatory  
     
TENANT:  
   
BOXABL INC.,  
a Nevada corporation  
     
By:    
Name: Paolo Tiramani  
Title: CEO  

 

THE COMPANY AGREES TO FURNISH SUPPLEMENTALLY A COPY OF ANY OMITTED SCHEDULE TO THE COMMISSION UPON REQUEST.

 

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EXHIBIT A

 

Depiction of Expansion Premises

 

A-1

 

 

EXHIBIT B

 

Site Plan of the Property

 

B-1

 

 

EXHIBIT C

 

Depiction of Exclusive Truck and Non-Exclusive Auto Parking Spaces

 

C-1

 

 

FOURTH AMENDMENT TO MULTI-TENANT

COMMERCIAL/INDUSTRIAL LEASE (NNN)

 

THIS FOURTH AMENDMENT TO MULTI-TENANT COMMERCIAL/INDUSTRIAL LEASE (NNN) (this “Amendment”) is made and entered into effective as of January 16, 2024 (the “Effective Date”), by and between NV INTERCHANGE INDUSTRIAL CENTER LLC, a Delaware limited liability company (“Landlord”), and BOXABL INC., a Nevada corporation (“Tenant”).

 

R E C I T A L S

 

A. Landlord’s predecessor-in-interest, CRPF IV Centennial, LLC, and Tenant entered into that certain Multi-Tenant Commercial/Industrial Lease dated December 29, 2020 (the “Original Lease”), as amended by that certain First Amendment to Multi-Tenant Commercial/Industrial Lease (NNN) dated April 28, 2021, that certain Second Amendment to Multi-Tenant Commercial/Industrial Lease (NNN) dated December 20, 2021, and that certain Third Amendment to Multi-Tenant Commercial/Industrial Lease dated May 2, 2023 (collectively, the “Lease”), pursuant to which Tenant has leased from Landlord certain premises containing approximately 174,250 rentable square feet of space consisting of the entire commercial building known as Building 1 (the “Building 1 Premises”) and located at 5345 East North Belt Road, North Las Vegas, NV 89115, together with certain premises known as Suite 100 containing approximately 114,613 rentable square feet of space and located at 5445 East North Belt Road, North Las Vegas, NV 89115 (the “Building 2 Premises”) (collectively, the “Premises”).

 

B. Tenant wishes to install certain improvements in the Building 1 Premises, and the parties wish to further amend the Lease, subject to the terms and conditions set forth below.

 

AGREEMENT

 

In consideration of the mutual covenants contained in this Amendment and the Lease, Landlord and Tenant hereby agree as follows:

 

1. Tenant Improvements. Tenant wishes to install certain improvements in the Building 1 Premises, including the installation of certain pits and cranes, as more particularly described and/or depicted on Exhibit A attached hereto (the “Tenant Improvements”). Landlord hereby approves the construction of the Tenant Improvements by Tenant at Tenant’s sole cost and expense, subject to the terms and conditions contained herein, and the terms and conditions of the Lease, including, without limitation, Article 13 of the Original Lease, it being agreed that the Tenant Improvement shall constitute Alterations pursuant to the Original Lease. Notwithstanding the foregoing, Tenant shall be required to remove the Tenant Improvements from the Premises and restore the same to the condition existing before such installation on or before the expiration or earlier termination of the Lease, and repair any damage to the Premises caused by such removal and restoration. If Tenant fails to comply with its removal and restoration obligations with respect to the Tenant Improvements, Landlord may perform such obligations on behalf of Tenant and at Landlord’s option, Tenant shall either reimburse Landlord for the cost of the same, or Landlord shall be entitled to deduct such costs from the Security Deposit (as defined in Section 2 below).

 

1

 

 

2. Security Deposit. Landlord acknowledges that it currently holds a cash security deposit from Tenant with respect to the Building 1 Premises in the amount of $525,000.00 (the “Existing Security Deposit”), as well as an Expansion Premises Letter of Credit with respect to the Building 2 Premises. In connection with Landlord’s consent to the Tenant Improvements, Tenant shall be required to deliver an additional cash security deposit to Landlord prior to commencement of construction of the Tenant Improvements in the amount of $258,450.00 (the “Additional Security Deposit” and together with the Existing Security Deposit, the “Security Deposit”), which Security Deposit shall continue to be held, applied and/or returned in accordance with the provisions contained in the Lease. Notwithstanding the foregoing, the provisions in Section 6.2 of the Original Lease relating to various reductions in the Existing Security Deposit shall continue to apply to the Existing Security Deposit only, but in no event shall Section 6.2 of the Original Lease apply to the Additional Security Deposit and such Additional Security Deposit shall not be subject to any reduction.

 

3. Brokers. Tenant hereby represents and warrants to Landlord that Tenant has not engaged or dealt with any broker, finder, or agent in connection with the negotiation and/or execution of this Amendment, and Tenant and Landlord agrees to indemnify and save the other party harmless from any claim, demand, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees) paid or incurred by the other party as a result of any claim for brokerage or other commissions or fees made by any broker, finder, or agent, whether or not meritorious, employed or engaged or claiming employment or engagement by, through, or under Tenant or Landlord, as applicable.

 

4. Status of Lease Obligations. Tenant acknowledges and certifies that as of the Effective Date of this Amendment, Landlord has performed all covenants and obligations on the part of Landlord to be performed under the Lease and that Tenant has no claims or right of offset against Landlord. Landlord acknowledges and certifies that as of the Effective Date of this Amendment, to Landlord’s actual knowledge, Tenant has performed all covenants and obligations on the part of Tenant to be performed under the Lease and that Landlord has no claims or right of offset against Tenant.

 

5. Full Force and Effect. Except as expressly modified herein, all of the terms and provisions of the Lease shall remain in full force and effect and binding upon the parties thereto, and Tenant hereby ratifies and confirms the Lease as modified herein. All references in the Lease to “this Lease” shall be deemed to refer to the Lease as amended by this Amendment.

 

6. Legal Fees. In the event either party brings an action or files a suit to enforce or interpret this Amendment or any provisions contained herein, the party substantially prevailing in such action shall recover from the non-prevailing party, in addition to all other remedies or damages, reasonable legal fees and court costs incurred by such substantially prevailing party in such action or suit.

 

7. Capitalized Terms. Capitalized terms used herein that also appear in the Lease shall have the same meaning as in the Lease unless otherwise defined herein.

 

8. Conflicts. In the event of any conflict between the terms and provisions of the Lease and the terms and provisions of this Amendment, the terms and provisions of this Amendment shall control.

 

9. No Option. The submission of an unsigned copy of this Amendment to Tenant shall not constitute an offer or option with respect to the matters contained herein. This Amendment shall become effective and binding only upon execution and delivery by both Landlord and Tenant.

 

10. Time. Time is of the essence with respect to each of Landlord’s and Tenant’s obligations under this Amendment.

 

11. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of such counterparts shall constitute one document. To facilitate execution of this Amendment, the parties may execute and exchange, by telephone facsimile or electronic mail PDF, counterparts of the signature pages. Signature pages may be detached from the counterparts and attached to a single copy of this Amendment to physically form one document.

 

[Signature page follows]

 

2

 

 

SIGNATURE PAGE FOR

FOURTH AMENDMENT TO MULTI-TENANT

COMMERCIAL/INDUSTRIAL LEASE (NNN)

BETWEEN

NV INTERCHANGE INDUSTRIAL CENTER LLC

AND

BOXABLE INC.

 

The parties have executed this Fourth Amendment to Multi-Tenant Commercial/Industrial Lease (NNN) as of the Effective Date, the execution and delivery thereof having been duly authorized.

 

LANDLORD:
 
NV INTERCHANGE INDUSTRIAL CENTER LLC,
a Delaware limited liability company
     
By: /s/ Adam Barbour  
Name: Adam Barbour  
Title: Director  

 

TENANT:
 
BOXABL INC.,
a Nevada corporation
     
By: /s/ Paolo Tiramani  
Name: Paolo Tiramani  
Title: CEO  

 

3

 

 

FIFTH AMENDMENT TO MULTI-TENANT COMMERCIAL/INDUSTRIAL LEASE (NNN)

 

THIS FIFTH AMENDMENT TO MULTI-TENANT COMMERCIAL/INDUSTRIAL LEASE (NNN) (this “Amendment”) is made and entered into effective as of August 3 r d , 2026 (the “Effective Date”), by and between NV INTERCHANGE INDUSTRIAL CENTER LLC, a Delaware limited liability company (“Landlord”), and BOXABL INC., a Texas corporation (“Tenant”).

 

R E C I T A L S

 

A. Landlord’s predecessor-in-interest, CRPF IV Centennial, LLC, and Tenant entered into that certain Multi-Tenant Commercial/Industrial Lease dated December 29, 2020 (the “Original Lease”), as amended by that certain First Amendment to Multi-Tenant Commercial/Industrial Lease (NNN) dated April 28, 2021, that certain Second Amendment to Multi-Tenant Commercial/Industrial Lease (NNN) dated December 20, 2021, that certain Third Amendment to Multi-Tenant Commercial/Industrial Lease dated May 2, 2023 (the “Third Amendment”), and that certain Fourth Amendment to Multi-Tenant Commercial/Industrial Lease (the “Fourth Amendment”) dated January 16, 2024 (collectively, the “Lease”), pursuant to which Tenant has leased from Landlord certain premises containing approximately 174,250 rentable square feet of space consisting of the entire commercial building known as Building 1 (the “Building 1 Premises”) and located at 5345 East North Belt Road, North Las Vegas, NV 89115, together with certain premises known as Suite 100 containing approximately 114,613 rentable square feet of space and located at 5445 East North Belt Road, North Las Vegas, NV 89115 (the “Building 2 Premises”) (collectively, the “Premises”).

 

B. Landlord and Tenant wish to extend the Term of the Lease of the Building 1 Premises for the Extension Term (as defined in Section 1 below), and the parties wish to further amend the Lease, subject to the terms and conditions set forth below.

 

AGREEMENT

 

In consideration of the mutual covenants contained in this Amendment and the Lease, Landlord and Tenant hereby agree as follows:

 

1. Extension of Lease Term. Subject to and upon the terms and conditions set forth herein, the Term of the Lease of the Building 1 Premises is hereby extended for a period of 63 months, commencing on October 1, 2026 (the “Extension Term Commencement Date”) and expiring on December 31, 2031 (the “Building 1 Extension Term”). All references in the Lease to the “Lease Term”, “term”, or “Term”, with respect to the Building 1 Premises, shall be amended as of the Effective Date to include the Building 1 Extension Term.

 

 1 

 

 

2. Terms and Conditions. From and after the Extension Term Commencement Date and continuing during the Building 1 Extension Term, the following provisions shall apply:

 

a. Base Rent for the Building 1 Premises. From and after the Extension Term Commencement Date and continuing during the Building 1 Extension Term, Base Rent for the Building 1 Premises only shall be payable according to the following table:

 

Time Period  Annual Base Rent   Monthly Base Rent   Monthly Base Rent per SF 
10/01/26–09/30/27*  $1,881,900.00   $156,825.00*  $0.900 
10/01/27–09/30/28*  $1,947,766.56   $162,313.88*  $0.932 
10/01/28 – 09/30/29  $2,015,938.32   $167,994.86   $0.964 
10/01/29 – 09/30/30  $2,086,496.16   $173,874.68   $0.998 
10/01/30 – 09/30/31  $2,159,523.48   $179,960.29   $1.033 
10/01/31 – 12/31/31  $2,235,106.80   $186,258.90   $1.069 

 

*Landlord hereby abates Base Rent (but not Tenant’s Percentage of Operating Expenses) for the Building 1 Premises for the following Months: October and November, 2026, and October 2027. In the event Tenant defaults under the Lease (as amended by this Amendment) beyond any applicable period of notice and cure, such abatement shall cease as of the date of such default, and Tenant shall promptly repay to Landlord all sums previously abated hereunder.

 

b. Tenant’s Percentage of Operating Expenses. From and after the Extension Term Commencement Date and continuing during the Building 1 Extension Term, Tenant shall continue to pay Tenant’s Percentage of Operating Expenses for the Building 1 Premises in accordance with the provisions contained in the Lease (as amended by this Amendment). Tenant’s Percentage of the Property for the Building 1 Premises shall remain equal to 25.27%, which is the percentage obtained by dividing (1) the number of rentable square feet in the Building 1 Premises (174,250) by (2) the number of rentable square feet in the Property (689,456). Notwithstanding the foregoing, with respect to Operating Expenses which Landlord allocates only to Building 1 pursuant to certain Cost Pools (as defined in Section 1.18.b. of the Original Lease) or otherwise, Tenant’s Percentage for the Building 1 Premises shall be 100%.

 

3. Security Deposit; Letter of Credit. Landlord acknowledges that it currently holds a cash security deposit from Tenant with respect to the Building 1 Premises in the amount of $225,000.00 (the “Original Security Deposit”), as well as: (a) the Expansion Premises Letter of Credit (as defined in the Third Amendment) with respect to the Building 2 Premises, and (b) the Additional Security Deposit (as defined in the Fourth Amendment) with respect to the Building 1 Premises in the amount of $258,450.00, for total cash Security Deposit for the Building 1 Premises of $483,450.00 (the “Security Deposit”). On the Extension Term Commencement Date, Tenant shall be entitled to reduce the Expansion Premises Letter of Credit to $550,000.00, and deliver an amended or replacement Letter of Credit to Landlord in connection therewith. Fifty percent (50%) of the Additional Security Deposit in the amount of $129,225.00 shall be returned to Tenant within thirty (30) days after the full execution of this Fifth Amendment to Lease, thereby reducing the Additional Security Deposit being held by Landlord to $129,225.00. The Security Deposit shall continue to be held during the Extension Term, applied and/or returned in accordance with the provisions contained in the Lease.

 

 2 

 

 

4. Tenant Improvements. The Building 1 Premises are hereby accepted by Tenant in their “as-is” and “where-is” condition as of the Effective Date and for the Extension Term, and Tenant is not entitled to any alterations or improvements thereto by Landlord or to any other allowance or credit from Landlord for improvements therein. Tenant acknowledges that neither Landlord nor its agents or employees have made any representations or warranties as to the suitability or fitness of the Building 1 Premises for the conduct of Tenant’s business or for any other purpose from and after the Effective Date and during the Extension Term.

 

5. Extension Option. Landlord and Tenant acknowledge and agree that the Building 1 Extension Term described in this Amendment shall be deemed to be the first Extension Option exercised under Rider No. 1 to the Original Lease with respect to the Building 1 Premises. As a result, Tenant shall have the right to exercise the second and final Extension Option with respect to the Building 1 Premises (to commence immediately following the Building 1 Extension Term) in accordance with, and pursuant to the terms and provisions contained in, Rider No. 1 and Rider No. 2 to the Original Lease. In addition, Tenant shall continue to have two Extension Options with respect to the Building 2 Premises to be exercised in accordance with, and pursuant to the terms and provisions contained in, Rider No. 1 and Rider No. 2 to the Original Lease. For clarification, Tenant may exercise the remaining above described Extension Options for either the Building 1 Premises, or the Building 2 Premises, or both, so long as the exercise of the applicable Extension Option is made with respect to the applicable Premises pursuant to the provisions contained in Rider No. 1 and Rider No. 2 to the Original Lease. In the event Tenant fails to timely exercise an Extension Option with respect to the Building 1 Premises and/or the Building 2 Premises, Tenant’s applicable Extension Option(s) shall expire and be of no further force and effect.

 

6. Brokers. Tenant hereby represents and warrants to Landlord that Tenant has not engaged or dealt with any broker, finder, or agent in connection with the negotiation and/or execution of this Amendment, other than Cushman & Wakefield, as Landlord’s exclusive agent, and Cresa, as Tenant’s exclusive agent (collectively, “Brokers”), and Tenant and Landlord agrees to indemnify and save the other party harmless from any claim, demand, damage, liability, cost or expense (including, without limitation, reasonable attorneys’ fees) paid or incurred by the other party as a result of any claim for brokerage or other commissions or fees made by any broker, finder, or agent (other than Brokers), whether or not meritorious, employed or engaged or claiming employment or engagement by, through, or under Tenant or Landlord, as applicable. If applicable, Landlord shall pay a commission to Brokers in accordance with a separate written agreement.

 

7. Status of Lease Obligations. Tenant acknowledges and certifies that as of the Effective Date of this Amendment, Landlord has performed all covenants and obligations on the part of Landlord to be performed under the Lease and that Tenant has no claims or right of offset against Landlord. Landlord acknowledges and certifies that as of the Effective Date of this Amendment, to Landlord’s actual knowledge, Tenant has performed all covenants and obligations on the part of Tenant to be performed under the Lease and that Landlord has no claims or right of offset against Tenant.

 

8. Full Force and Effect. Except as expressly modified herein, all of the terms and provisions of the Lease shall remain in full force and effect and binding upon the parties thereto, and Tenant hereby ratifies and confirms the Lease as modified herein. All references in the Lease to “this Lease” shall be deemed to refer to the Lease as amended by this Amendment.

 

9. Legal Fees. In the event either party brings an action or files a suit to enforce or interpret this Amendment or any provisions contained herein, the party substantially prevailing in such action shall recover from the non-prevailing party, in addition to all other remedies or damages, reasonable legal fees and court costs incurred by such substantially prevailing party in such action or suit.

 

10. Capitalized Terms. Capitalized terms used herein that also appear in the Lease shall have the same meaning as in the Lease unless otherwise defined herein.

 

11. Conflicts. In the event of any conflict between the terms and provisions of the Lease and the terms and provisions of this Amendment, the terms and provisions of this Amendment shall control.

 

12. No Option. The submission of an unsigned copy of this Amendment to Tenant shall not constitute an offer or option with respect to the matters contained herein. This Amendment shall become effective and binding only upon execution and delivery by both Landlord and Tenant.

 

13. Time. Time is of the essence with respect to each of Landlord’s and Tenant’s obligations under this Amendment.

 

14. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of such counterparts shall constitute one document. To facilitate execution of this Amendment, the parties may execute and exchange, by telephone facsimile or electronic mail PDF, counterparts of the signature pages. Signature pages may be detached from the counterparts and attached to a single copy of this Amendment to physically form one document.

 

[Signature page follows]

 

 3 

 

 

SIGNATURE PAGE FOR

FIFTH AMENDMENT TO MULTI-TENANT

COMMERCIAL/INDUSTRIAL LEASE (NNN) BETWEEN

NV INTERCHANGE INDUSTRIAL CENTER LLC

AND

BOXABL INC.

 

The parties have executed this Fifth Amendment to Multi-Tenant Commercial/Industrial Lease (NNN) as of the Effective Date, the execution and delivery thereof having been duly authorized.

 

LANDLORD:

 

NV INTERCHANGE INDUSTRIAL CENTER LLC,

a Delaware limited liability company

 

By:

 

  
Name: Adam Barbour  
Title: Signatory  

 

TENANT:

 

BOXABL INC.,

a Texas corporation

 

By:    
Name: Paolo Tiramani  
Title: CEO  

 

 4 

 

 

Exhibit 10.11

 

MOSAIC COMMERCE CENTER

LEASE AGREEMENT

 

THIS MOSAIC COMMERCE CENTER LEASE AGREEMENT (“Lease”) dated June 10, 2022 (“Effective Date”), is entered into by and between Mosaic Commerce Center, LLC, a Nevada limited liability company (“Landlord”) and Boxabl Inc., a Nevada corporation (“Tenant”).

 

1. LEASE PROVISIONS

 

  A.DESCRIPTION OF PROJECT, BUILDING AND PREMISES

 

  Project Name: Mosaic Commerce Center
  Suite Number(s): All suites - entire space, the “Premises,” located in the Building
  Address: 5553 North Belt Road, the “Building,” as shown on Exhibit A
  City: North Las Vegas
  State, Zip: Nevada 89115
  County: Clark

 

B.LEASED AREA OF PREMISES AND BUILDING

 

Rentable Area of the Premises stipulated to be 132,960 square feet.

Rentable Area of the Building stipulated to be 132,960 square feet.

 

C.RESERVED.

 

D.LEASE TERM

 

Initial Lease Term: Seventy-Three (73) full calendar months.

 

Lease Commencement Date: The earlier of: (a) thirty (30) days after substantial completion by Landlord of the Tenant Improvements included in Exhibit C, or (b) upon Tenant commencing operations within the Premises.

 

Expiration Date: The last calendar day of the seventy-third (73rd) full calendar month following the Lease Commencement Date.

 

Option to Extend: Subject to Clause 5.2 [Option to Extend], Landlord shall provide Tenant with one (1) five (5) year option to extend the Lease. Base Rent during the first year of option term shall be the greater of (i) continued 4% annual escalations, or (ii) the then current prevailing market rent at the option commencement, with 4% annual escalations thereafter.

 

E.RENT

 

1.Subject to Clause 8 [Rent and Sales/Use Tax], the Monthly Rent for the first year of the Initial Lease Term is estimated to be (estimates only and subject to adjustment to actual costs according to the provisions of this Lease):  

 

Initial Monthly Base Rent:  $103,708.80 
Estimated Monthly Operating Expenses:  $18,614.40 
Total Initial Monthly Rent:  $122,323.20 

 

 
 

 

2.

 

Months
of Term		  Annual Rate Per Square Foot   Annual Base Rent   Monthly Base Rent 
01 - 12*  $9.36   $1,244,505.60   $103,708.80 
13 - 24  $9.73   $1,294,285.82   $107,857.15 
25 - 36  $10.12   $1,346,057.26   $112,171.44 
37 - 48  $10.53   $1,399,899.55   $116,658.30 
49 - 60  $10.95   $1,455,895.53   $121,324.63 
61 - 72  $11.39   $1,514,131.35   $126,177.61 
73+  $11.84   $1,574,696.60   $131,224.72 

 

* Subject to Clause 59, Tenant shall not be responsible for the payment of Monthly Base Rent during the 2nd month of the Lease Term (the “Deferred Rent Period”); provided, however, Tenant shall remain obligated for the payment of Estimated Monthly Operating Expenses during such time periods. Tenant shall remain responsible for the Estimated NNN fees during the month of abated Base Rent.

 

Amount of Prepaid Rent: $122,323.20 due upon Lease execution, to be applied to the first full calendar month following the Lease Commencement Date.

 

F.SECURITY DEPOSIT

 

$611,616.00. Equal to FIVE (5) months of Base Rent and Estimated Operating Expenses. Landlord shall credit Tenant with one-fifth (1/5th) of the original Security Deposit to the Rent then due during month fourteen (14) of the Lease Term, one-fifth (1/5th) of the original Security Deposit to the Rent then due during month twenty-five (25), one-fifth (1/5th) of the original Security Deposit to the Rent then due during (37) of the Lease Term, and one-fifth (1/5th) of the original Security Deposit to the Rent then due during month forty-nine (49) of the Lease Term.

 

G.PERMITTED USE

 

Subject to Clause 6, solely for (a) research, development, manufacturing, assembly, warehousing, storage, marketing, licensing, distribution, lease, sales and service of (i) transportable homes, transportable buildings, trailers and vehicles, including research and development of construction, manufacturing, automotive and mechanical technology relating thereto (so long as all automotive and vehicular waste, byproducts, parts and portions thereof are properly disposed of in compliance with all applicable laws, including all Environmental Laws); (ii) raw materials, ingredients, equipment, components, parts and sub-assemblies utilizable in connection with any of the foregoing or the transport, delivery, assembly, deployment and erection thereof; (b) general business office purposes, and (c) any and all uses related or incidental thereto, but for no other purpose. In no event shall Tenant use all or any part of the Premises for the production, processing, sale or distribution of marijuana, cannabis or CBD related uses.

 

 
 

 

H.LANDLORD PAYMENT ADDRESS

 

  VIA ACH ONLY:   Bank Name:   To be provided by Landlord
      ABA Number:   To be provided by Landlord
      Acct Number:   To be provided by Landlord
      Acct Name:   To be provided by Landlord

 

I.NOTICE ADDRESSES

 

  Landlord: Mosaic Commerce Center, LLC
  Address: 9930 W. Flamingo Road, Suite 110
  City/State/Zip: Las Vegas, NV 89147
    Attn: Vincent T. Schettler
     
  Copy to: Kaempfer Crowell, Ltd.
     
  Address: 1980 Festival Plaza Drive, Suite 650
  City/State/Zip: Las Vegas, NV 89135
    Attn: John M. Sullivan
     
  Tenant: Boxabl Inc.
  Address: 5345 East North Belt Road #100
  City/State/Zip: Las Vegas, NV 89115
    Attn:________________
    Phone: (702) 500-9000
    Email: _______________
     
  Copy to: Sylvester & Polednak, Ltd.
  Address: 1731 Village Center Cir.
  City/State/Zip: Las Vegas, NV 89134
    Attn: Donald T. Polednak, Esq.
  Phone:  
  Email:  
     

 

J. BROKER

 

  Landlord’s: RealComm Advisors - Mike DeLew
  Tenant’s: Jones Lang LaSalle - Xavier Wasiak, SIOR

 

K.GUARANTORS(S): None.

 

L.CERTAIN DEFINITIONS

 

Building: means the Building and/or any improvements, equipment, furnishings and appurtenances thereto.
   
Claims: means all claims, losses, charges, liabilities, obligations, penalties, fines, causes of action, actions, suits, proceedings, liens, judgments, encumbrances, demands, damages, debts, assessments, costs and expenses, including reasonable attorneys’ fees (including without limitation any appellate action), costs of investigation and enforcement, court costs, defense costs and the reasonable fees of other third-party professionals.

 

 
 

 

Common Area: means all improvements, equipment, signs and areas (as the same may be enlarged, reduced, replaced, removed or otherwise altered by Landlord), from time to time, owned or controlled by Landlord, provided by Landlord for the common or joint use and benefit of tenants, occupants and users of the Project, and their respective employees, agents, subtenants, licensees, customers and invitees, or any of them.
   
Consumer
Price Index
(CPI):		 shall mean the Consumer Price index for Urban Consumers (All Items) U.S. Cities Average [1982-4=100], presently published by the United States Department of Labor. In the event such index shall hereafter be converted to a different standard reference base or otherwise revised or is unavailable, Landlord shall select a comparable substitute index based upon changes in the cost of living or purchasing power of the consumer dollar published by any other governmental agency, or, if no such index shall then be available, a comparable index published by a major bank or other financial institution or by a university or a recognized financial publication.
   
Expiration
Date:		 is described in Clause 1.D [Lease Term].
   
Interest: means interest at the lesser of (i) 12% per year or (ii) the maximum rate permitted by Law.
   
Interim
Possession
Period: 		means the period, if permitted by Landlord, when Tenant takes possession of the Premises prior to the Commencement Date for fixturing purposes, including communication infrastructure, cabling, and security that does not penetrate the roof, prior to the Commencement Date and for no other purpose (“Pre-Term Occupancy”). Except for the payment of Monthly Base Rent and Operating Expenses under this Lease, all other terms and conditions, rules, regulations and obligations of Tenant as set forth in this Lease shall apply during the Pre-Term Occupancy period. Any such Pre-Term Occupancy in the Premises shall be subject to Landlord’s receipt from Tenant of (i) the Lease executed by Tenant, (ii) payment of the installment as set forth in Clause 1.E [Prepaid Rent], and (iii) satisfactory evidence of Tenant’s compliance with Tenant’s insurance requirements under this Lease.
   
Land: means the real property more particularly described on Exhibit B hereto.
   
Landlord: means Mosaic Commerce Center, LLC, a Nevada limited liability company, and shall include, when applicable, any assignees, successors and transferees.
   
Landlord’s
Work:		 means the work, if any, that Landlord is obligated to perform to the Premises pursuant to a separate Work Letter Agreement, if any, attached as Exhibit C.
   
Landlord
Parties:		 means Landlord, its Mortgagee, affiliates, parent and subsidiaries, and their respective trustees, directors, officers, members, principals, beneficiaries, managers, ventures, partners, shareholders, agents, contractors, representatives, property managers, lenders, successors, assignees, affiliates and employees.
   
Laws: means all federal, state, county and local governmental and municipal laws (including, but not limited to, common laws), covenants and restrictions, statutes, ordinances, rules, regulations, building and zoning codes, judgements, decrees, orders, conditions of approval, licenses, permits and other such requirements (including, but not limited to, the Americans with Disabilities Act), and applicable judgments, injunctions, writs or like action of any court, arbitrator or other administrative or judicial organization or agency of competent jurisdiction, all as may be amended and supplemented from time to time, including, without limitation, all legal requirements that pertain to the Premises and/or Project.
   
Lease: means this Lease and all Exhibits and Schedules attached hereto.

 

 
 

 

Lease Year: means the successive twelve (12) month period, the first Lease Year commencing on the Lease Commencement Date, if the Lease Commencement Date is the first day of a calendar month, and otherwise on the first day of the first full calendar month following the Lease Commencement Date. Each succeeding Lease Year shall commence on the anniversary date of the first Lease Year. Any portion of the Term which is less than a Lease Year shall be deemed a “Partial Lease Year”, except that if the Lease Commencement Date occurs on a date other than the first day of a calendar month, then the period commencing on the Lease Commencement Date and ending on the last day of the calendar month in which the Lease Commencement Date occurs shall be included in the first Lease Year.
   
Mortgage: means (i) any present and future ground or underlying lease involving all or any part of the Project; or (ii) any mortgage, deed of trust or other security instrument now or hereafter affecting the Premises, the Building or the Project; or (iii) any renewal, modification, replacement, consolidation or extension of or participation in those transactions evidenced by documents referred to in (i) and (ii) above, whether the same shall be in existence on the date hereof or created hereafter.
   
Mortgagee: means the person or persons having the benefit of a Mortgage.
   
Possession
Date:		 means the date Landlord tenders possession of the Premises to Tenant.
   
Premises: means the space in the Building shown on Exhibit A.
   
Project: means the Building and the parcel(s) of land on which it is located and, at Landlord’s discretion, other improvements serving the Project, if any, and the parcel(s) of land on which they are located, as legally described on Exhibit B.
   
Rent: means all sums listed in Clause 1.E [Rent] and as they may be adjusted from time to time plus any and all other sums due under this Lease.
   
Substantial
Completion:		 means the date that the Landlord’s Work is substantially complete, pursuant to the plans and specifications and other terms of the Work Letter Agreement, and the applicable governing authority has issued a Certificate of Occupancy, Temporary Certificate of Occupancy or other documentation from the applicable governmental authority indicating that the Premises is legal to occupy with respect to Landlord’s work in the Premises. In the event that any work being performed by Tenant during any Interim Possession Period delays the issuance of such described documentation by the applicable governing authority, such governmental issuance delay caused by Tenant’s work shall not cause a deferral of the Commencement Date beyond what it otherwise would have been.
   
Tenant: means Boxabl Inc., a Nevada corporation, and shall include its permitted assignees, successors, transferees and sublessees.
   
Tenant
Parties:		 means Tenant, its affiliates, parents, subsidiaries, and their respective trustees, principals, beneficiaries, partners, members, managers, ventures, officers, directors, shareholders, assignees, sublessees, agents, contractors, representatives, employees and invitees.
   
Tenant’s
Work:		 means the work, if any, that Tenant is obligated to perform to the Premises to open and operate for the Permitted Uses, excepting only Landlord’s Work, if any, attached as Exhibit C.

 

 
 

 

Tenant’s
Share		 means the percentage of the cost of Operating Expenses for which Tenant is obligated to reimburse Landlord pursuant to this Lease: Landlord shall have the right to determine Tenant’s Share of the cost of Operating Expenses using any one of the following methods or any combination of the following methods, and Tenant hereby agrees that the following methods of allocation are reasonable: (a) by multiplying the cost of all Operating Expenses by a fraction, the numerator of which is the number of square feet of leasable space in the Premises and the denominator of which is the number of square feet of leasable space in all buildings available for lease/sale in the Project; or (b) with respect to an Operating Expense attributable solely to the Building in which the Premises is located, requiring Tenant to pay that portion of the cost of the Operating Expense that is obtained by multiplying such cost by a fraction, the numerator of which is the number of square feet of leasable space in the Premises and the denominator of which is the number of square feet of leasable space in the Building in which the Premises is located.
   
Term: means the Initial Lease Term described in Clause 1.D [Lease Term].

 

2. GRANTING CLAUSE: Landlord leases to Tenant and Tenant takes from Landlord the Premises in the Building at the Project, to be used exclusively by Tenant, subject to the terms, covenants and conditions contained in this Lease. The depiction of the Project on Exhibit A is not a representation, warranty or covenant of any kind by Landlord that all or any part of the Project is, will be, or will continue to be configured as indicated on Exhibit A.

 

3. COMMON AREAS: Tenant shall have the non-exclusive right in common with others to use the Common Areas (as the same may exist from time to time), but such right shall at all times be subject to the exclusive control and management by Landlord and such reasonable rules and regulations as Landlord may, from time to time, impose.

 

4. POSSESSION: Upon taking possession of the Premises, it shall be conclusive evidence (a) that Tenant has inspected the Premises, (b) that Tenant has accepted the Premises in “AS IS” condition, subject to completion of Landlord’s work as herein defined, on such date, (c) except for those express warranties contained within this Lease, that Tenant has waived any warranty, express or implied, as to the habitability, suitability, quality, condition or fitness of the Premises or Building, and (d) that the physical condition of the Premises comply fully with Landlord’s covenants and obligations under the Lease with respect to Landlord’s Work, except for any punch list items agreed to in writing by Landlord and Tenant with respect to same. Except as expressly set forth herein, Landlord shall not have any obligation for any defects in the Premises or any limitation on its use. If Tenant takes possession during the Interim Possession Period, all terms and conditions of the Lease shall be in full force and effect, including Tenant’s obligation to pay for the cost of utilities and services, but excluding Tenant’s obligation to pay Base Rent and Tenant’s Share of Operating Expenses. Tenant shall not, during the Interim Possession Period, interfere with the performance of Landlord’s Work. Except for Landlord’s gross negligence or willful misconduct, Landlord shall not be liable in any way for any injury, loss or damage which may occur to any of Tenant’s Work and/or to property placed in the Premises prior to the Lease Commencement Date and thereafter, the same being at Tenant’s sole risk.

 

Notwithstanding anything contained herein to the contrary but subject to Tenant’s maintenance obligations in Section 14 hereof, Landlord represents and warrants that as of the Lease Commencement Date, the plumbing, electrical, roll- up doors and other mechanical components exclusively serving the Premises shall be in good working order and repair, and Landlord shall warrant such systems for a period of three-hundred sixty (360) days following the Commencement Date, and further shall warrant the roof for a period of the first ten (10) years of the Term; provided, however, such warranties shall not be effective for any maintenance, repairs or replacements necessitated due to the misuse of, or damages caused by, Tenant or Tenant Parties.

 

 
 

 

5. TERM: The Term shall begin on the Lease Commencement Date and end on the Expiration Date. Upon the establishment of the Lease Commencement Date by Landlord, the parties will execute a Lease Confirmation Certificate in the form attached hereto as Exhibit E.

 

5.1. DELAYED POSSESSION. Notwithstanding anything to the contrary contained in this Lease, Landlord shall not be obligated to tender possession of any portion of the Premises that is currently occupied by a tenant or other occupant or that is subject to the rights of any other tenant or occupant, nor shall Landlord have any other obligations to Tenant under this Lease until the date Landlord (i) recaptures such space from such existing tenant or occupant and (ii) regains the legal right to possession thereof (the date on which both of the conditions set forth in the immediately preceding clauses (i) and (ii) are satisfied is called the “Recover Date”). In the event the Recover Date has not occurred within two (2) months after the date of this Lease, then, until such time as the Recover Date occurs, either Landlord or Tenant may terminate this Lease upon written notice to the other.

 

5.2 OPTION TO EXTEND. Landlord grants to Tenant, the right and option (“Extension Option”) to extend this Lease for one (1) additional period of five (5) years (“Extension Term”). The Extension Option must be exercised by giving Landlord written notice of the exercise not less than six (6) months before the end of the then current Lease Term, and Tenant must not be in default under this Lease beyond the expiration of any applicable cure period from the date of its exercise through the commencement of that Extension Term. The initial Lease Term plus any applicable exercised Extension Term shall be hereafter referred to collectively as the “Term”. Tenant’s occupancy of the Premises during any Extension Term shall be on the same terms and conditions as are in effect immediately prior to the commencement of such Extension Term, except that Base Rent for the first year of the Extension Term shall be increased to be the greater of (i) 104% of the annual Base Rent in affect for the month prior to the start of the Extension Term, or (ii) the then current prevailing market rent at the option term commencement. Thereafter, the Base Rent shall have 4% annual escalations for the remainder of the Extension term.

 

6. USE: Subject to the limitations in this Clause 6, Tenant shall use the Premises solely for (x) research, development, manufacturing, assembly, warehousing, storage, marketing, licensing, distribution, lease, sales and service of (i) transportable homes, transportable buildings, trailers and vehicles, including research and development of construction, manufacturing, automotive and mechanical technology relating thereto (so long as all automotive and vehicular waste, byproducts, parts and portions thereof are properly disposed of in compliance with all applicable laws, including all Environmental Laws); (ii) raw materials, ingredients, equipment, components, parts and sub- assemblies utilizable in connection with any of the foregoing or the transport, delivery, assembly, deployment and erection thereof; (y) general business office purposes, and (z) any and all uses related or incidental thereto (“Permitted Uses”), but for no other purpose. In no event shall Tenant use all or any part of the Premises for the production, processing, sale or distribution of marijuana, cannabis or CBD related uses. Landlord has made no representation or warranty as to the suitability of the Premises for the conduct of Tenant’s business, and Tenant waives any implied warranty that the Premises are suitable for Tenant’s intended purposes or approved for Tenants intended use.

 

Tenant shall not initiate, submit an application for, or otherwise request, any land use approvals or entitlements with respect to the Premises or any other portion of the Project, including, without limitation, any variance, conditional use permit or rezoning, without first obtaining Landlord’s prior written consent, which may be given or withheld in Landlord’s sole discretion. Tenant shall not use or permit such use in any manner which: (a) is unlawful; (b) may be dangerous; (c) may invalidate or increase the cost of any insurance policy held by Landlord affecting the Project; (d) may create a nuisance or may disturb, endanger or unreasonably interfere with other tenants of the Project or the occupants of neighboring property; (e) violates the “Rules and Regulations” of the Project; (f) would or may constitute in any manner a “Pill Mill” (i.e. used for the production and distribution of any pill, drugs narcotics or other medical substances); or (g) would be offensive to the Project or the occupants of neighboring property by reason of odor, smoke, dust, gas, fumes, noise, vibrations, pests, or traffic except to the extent consistent with any Permitted Uses (as clarified in the paragraph below). Tenant has verified that its use is permitted by all governmental authorities that have jurisdiction and that no condition at the Project in any way limits the ability of Tenant to operate its business.

 

 
 

 

For avoidance of doubt, the performance of any and all dust collection, gas use, gas exhaust, cutting, gluing, painting and welding operations, and the installation and operation of any and all equipment for carrying out any of the foregoing operations, in connection with any Permitted Use, shall be conclusively deemed within the Scope of the Permitted Use insofar as (i) permitted by applicable law, and (ii) not violative of the subsection (c) insurance limitations.

 

Outside storage, including, without limitation, storage of trucks and other vehicles, is prohibited without Landlord’s prior written consent. Subject to Tenant’s obligations to maintain the area in a safe and clean manner, compliant with all applicable laws, Landlord hereby consents to the outside storage of raw materials, ingredients, equipment, components, parts and sub-assemblies utilized in connection with any Permitted Use, and any transportable homes, transportable buildings, trailers, containers and vehicles by Tenant during the Term only in the outside area(s) depicted on Exhibit K attached hereto.

 

7.COMPLIANCE WITH LAWS:

 

7.1 TENANT OBLIGATIONS. Tenant shall, at Tenant’s sole cost and expense, comply with and shall cause the Premises and all Tenant Parties to comply with all Laws affecting the Premises (including without limitation all accessibility and occupational safety and health Laws) or any part or the use thereof, and promptly shall comply with all governmental orders and directives for the correction, prevention and abatement of violations in or upon, or connected with, the Premises. Tenant acknowledges that it will be responsible for complying with current and future laws and regulations even though such compliance requires Tenant to make substantial repairs or modifications (including structural modifications) to the Premises and even though the application of the law or regulation is unrelated to Tenant’s specific use of the Premises (except where such modifications, alterations, or repairs are expressly made the responsibility of Landlord under the terms of this Lease). Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the Premises, or take any other action that would constitute a nuisance, create a dangerous situation, or would disturb, unreasonably interfere with or endanger Landlord or any other tenants of the Project, it being recognized that the performance of any and all dust collection, gas use, gas exhaust, cutting, gluing, painting and welding operations, and the installation and operation of any and all equipment for carrying out any of the foregoing operations, in connection with any Permitted Use, insofar as permitted by applicable law and not violative of the Clause 6(c) insurance limitations, shall not be deemed objectionable, unpleasant, or a nuisance under this section. Tenant shall obtain, at its sole expense, any permit or other governmental authorization required to operate its business from the Premises. Landlord shall not be liable for the failure of any other tenant or person to abide by the requirements of this section or to otherwise comply with applicable laws and regulations, and Tenant shall not be excused from the performance of its obligations under this Lease due to such a failure.

 

7.2 LANDLORD OBLIGATIONS. Landlord shall comply with all Laws with respect to the construction of the Common Areas of the Project and the Base Building. As used herein, “Base Building” shall mean the structural elements of the roof (excluding membrane) and exterior walls, and the structural soundness of the foundation of the Building.

 

8. RENT AND SALES/USE TAX: Rent shall commence on the Lease Commencement Date. Rent is due in advance on the first day of each month of the Term and will be delinquent if not paid accordingly. Unless another time shall be expressly provided for payment, any additional Rent shall be due and payable on demand or together with the next succeeding installment of Monthly Base Rent, whichever shall first occur. Rent shall be paid without notice or demand and without any setoff or deduction whatsoever, at the times set forth in this Lease in lawful money of the United States and immediately available funds. Tenant agrees to pay to Landlord all Rent at the address specified in Clause 1.H or at any other place designated in writing by Landlord. Rent for any partial month or partial year, as applicable, shall be prorated based on the number of days in such calendar month or such calendar year, as applicable. Tenant’s obligation to pay Rent shall be independent of every other covenant or obligation under the Lease. If Tenant fails to pay any Rent to Landlord when due, Landlord shall be entitled to (a) Interest on the unpaid Rent from the date due until paid and (b) a late charge of five percent (5%) per instance. Acceptance of such late charge by 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. If Landlord receives two (2) or more checks from Tenant which are returned by Tenant’s bank for insufficient funds, Tenant agrees that all future checks shall be either bank certified or cashiers’ checks. Tenant shall pay a service charge for each returned check equal to the greater of (i) $250.00 and (ii) the amount of all bank service charges resulting from such returned check.

 

 
 

 

In addition to the Rent, Tenant shall pay to Landlord any sales, use, excise or other tax now or hereafter imposed upon Rent due to Landlord under this Lease.

 

Except if expressly made the obligation of Landlord under this Lease, it is the intention of the parties that this Lease shall be triple net to Landlord and that Tenant shall pay on its own account, to the complete exoneration of Landlord all costs and expenses affecting the Premises and the business carried on therein, as well as all other charges, expenses and amounts as are set forth in the Lease.

 

9.OPERATING EXPENSES AND REAL ESTATE TAXES:

 

9.1GENERAL:

 

In addition to Monthly Base Rent, beginning on the Lease Commencement Date, Tenant shall pay Tenant’s Share of the Operating Expenses (defined below);

 

(a) As used in this Lease, the term “Operating Expenses” means, without limiting the generality of the following:

 

(i) Taxes. Taxes shall include, without limitation, all taxes, assessments and governmental charges (herein collectively referred to as “Tax” or “Taxes”) accrued against the Project during the Lease Term or the rents collected by Landlord therefrom (other than inheritance, personal income or estate taxes). If the Project or Landlord is assessed with a Tax which Landlord, in Landlord’s sole and absolute discretion, deems excessive, Landlord may challenge said Tax and/or may defer compliance therewith to the extent legally permitted; and, in the event thereof, Tenant shall be liable for Tenant’s Share of all reasonable costs in connection with such challenge. If the Project or Tenant is assessed with a Tax which Tenant, in Tenant’s commercially reasonable discretion, deems excessive, Tenant may challenge said Tax and/or may defer compliance therewith to the extent legally permitted; and, in the event thereof, Tenant shall be liable for all reasonable costs in connection with such challenge. If any Tax is levied or assessed directly against Tenant, then Tenant shall be responsible for and shall pay the same at such times and in such manner as the taxing authority shall require. If any tax, excise or other imposition is levied or assessed by any taxing authority on account of Tenant’s interest in this Lease, the Rent, Tenant’s inventory, Tenant property, or Tenant’s investment or business operation in the Premises, then Tenant shall be responsible therefor and shall pay the same before delinquency. Notwithstanding anything herein to the contrary, in the event the usage, improvements and/or installations of equipment and fixture of Tenant increase the assessment/value ascribed to the Project, and this appreciation results in an increase in real estate taxes (the “Property Tax Increase”), the Tenant shall be required to directly pay for such Property Tax Increase. In such case, Landlord shall provide Tenant with a copy of the real estate tax bill for the period prior to Tenant’s possession, and a copy of the new increased tax bill, and Tenant shall pay to Landlord the Property Tax Increase within thirty (30) days after receipt of such bill.

 

(ii) Insurance. Insurance shall include, without limitation, Landlord’s insurance costs for property, liability/casualty, environmental and any and all other insurance costs, fees and charges which Landlord deems necessary to carry on, for or in connection with the Project, as well as all deductibles relating claims attributable Tenant’s or Tenant Parties’ possession, use or occupancy of the Premises (herein collectively referred to as “Insurance”). The Project and/or Building may be included in a blanket policy. In addition, in the event of an increase in any of Landlord’s Insurance costs as a result of any Tenant-related reason, Tenant shall pay to Landlord, upon demand, an amount equal to such increase in Insurance.

 

(iii) Common Area Maintenance. Except as otherwise expressly excluded herein, common area maintenance charges (“CAM”) shall mean any and all costs, expenses and obligations incurred by Landlord in connection with the operation, ownership, management, repair and replacement of the Project. Any capital expenditures that are a part of CAM shall be amortized on a straight-line basis over a period equal to the lesser of the useful life thereof or 10 years.

 

 
 

 

(A) CAM Inclusions. CAM consists of the cost of providing, maintaining, managing, repairing, and replacing the Project, including without limitation the following:

 

(1) downspouts, gutters and non-structural portions of the roof (including, without limitation, membrane, skylights, if any);

 

(2) access road, driveways, parking lot and sidewalk sweeping, common area trash removal, cleaning, maintenance, restriping, sealing, and resurfacing;

 

(3) common utilities and exterior lighting;

 

(4) mowing and landscaping;

 

(5) snow and ice removal;

 

(6) fire suppression and sprinkler systems, storm drainage systems and other utility systems, facilities and related equipment servicing the Project, including without limitation fire protection and hydrant charges;

 

(7) exterior painting of the Building and any interior painting of the common areas of the Project;

 

(8) mechanical, electrical, plumbing and other related Building systems which are not Tenant’s sole responsibility under Clause 14.2 of this Lease;

 

(9) amounts paid to contractors and subcontractors for work or services performed in connection with any of the foregoing;

 

(10) charges or assessments of any association to which the Project is subject;

 

(11) management fees payable to a property manager, including any affiliate of Landlord; such management fees shall not be more than three percent (3%) of gross Rental charges, inclusive of al Base Rent and additional Rent charges;

 

(12) security services, if any;

 

(13) the cost of all licenses, permits and other governmental charges pertaining to the ownership, operation and/or maintenance of the Project or any portion thereof; legal fees, central accounting costs and other professional services associated with the operation and maintenance of the Project;

 

(14) signage ( other than those maintained by individual tenants); and

 

(15) additions or alterations made by Landlord to the Project or the Building AFTER Lease Commencement Date in order to comply with legal requirements (other than those expressly required herein due to a Tenant-related reason).

 

(B) CAM Exclusions. Notwithstanding the foregoing, CAM expressly excludes the following:

 

(1) costs, expenses, depreciation or amortization for capital structural repairs and capital structural replacements which are, pursuant to the terms of this Lease, the sole cost and responsibility of Landlord;

 

(2) debt service under any mortgages;

 

 
 

 

(3) ground rent pursuant to any ground leases;

 

(4) costs of restoration to the extent of net insurance proceeds received by Landlord with respect thereto;

 

(5) leasing commissions; or

 

(6) the costs of renovating space for tenants.

 

(b) Operating Expenses shall not include cost to repair the structural soundness of the roof (however, the cost to repair the roof membrane and roof decking shall be included in Operating Expenses), the structural soundness of the foundation, and the structural soundness of the exterior walls of the Building; income taxes personal to Landlord; or the cost of construction of new gross leasable floor space and new Common Area floor space constructed in conjunction therewith in the Project.

 

9.2 ESTIMATED PAYMENTS: Tenant shall pay to Landlord in advance on the first day of each month during the Term, one-twelfth (1/12) of Tenant’s Share of Estimated Operating Expenses charged during the subject calendar year or partial calendar year. The Estimated Operating Expenses are subject to revision according to the further provisions of this Clause 9.2 and Clause 9.3. Prior to December 31st of each calendar year during the Term, as practicable, Landlord will give Tenant written notice of Landlord’s reasonable estimate of the amounts payable under Clause 9.1 for the ensuing calendar year (the “Estimated Operating Expenses”). On or before the first day of each month during the ensuing calendar year, Tenant shall pay to Landlord in advance one-twelfth (1/12) of such estimated amount; however, if such notice is not given, Tenant shall continue to pay on the basis of the prior year’s estimate until the month after such notice is given. In the month Tenant first pays Landlord’s new estimate, Tenant shall pay to Landlord the difference between the new estimate and the amount payable under the prior year’s estimate for each month, which has elapsed since the end of the prior year. If at any time or times it reasonably appears to Landlord that the amount payable under Clause 9.1 for the current calendar year will vary from Landlord’s estimate, Landlord may, by written notice to Tenant including a statement providing reasonable explanation of change, revise Landlord’s estimate for such year, and subsequent payments by Tenant for such year shall be based upon Landlord’s revised estimate.

 

9.3 ANNUAL SETTLEMENT: For each calendar year, Landlord will deliver to Tenant a detail statement of amounts payable under Clause 9.1. Such statement shall be final and binding upon Tenant unless Tenant objects to it in writing to Landlord within ninety (90) days after it is delivered to Tenant. If such statement shows Tenant’s total payments of Operating Expenses for any year are less than Tenant’s Share of actual Operating Expenses for such year, Tenant shall pay the deficiency to Landlord within thirty (30) days after the delivery of such statement; and if more, then Landlord shall either, at Landlord’s option, retain such excess and credit it against Tenant’s next Rent payments or pay such refund to Tenant (or, if such adjustment is at the end of the Term, pay Tenant, after deducting any amounts then due and owing to Landlord). During the ninety (90) day window after delivery of such statement, Tenant may, after reasonable notice to Landlord and during normal business hours, inspect, at Landlord’s offices, Landlord’s books and records that relate to Common Area Maintenance Costs, taxes and insurance for the period represented by such statement; provided, however, that Tenant shall maintain all information contained in Landlord’s books and records in strict confidence; provided, however, that to the extent necessary, Tenant shall be entitled to show such information to Tenant’s accountants and attorneys. If, after such inspection, Tenant disputes the amount of Common Area Maintenance Costs set forth in the statement, a certification as to the proper amount shall be made (at Tenant’s expense, except as provided below) by an independent certified public accountant selected by Tenant and reasonably approved by Landlord. Such certification shall be completed not later than one hundred eighty (180) days after the statement of amounts was first delivered to Tenant. If such certification discloses that Landlord, in such statement, has overstated the amount of Tenant’s share of additional Rent by more than 5%, then the reasonable cost of such certification shall be paid by Landlord (excluding travel and lodging costs). At the expiration of such 90- day period (or the 180 day period in the event of certification), Tenant shall not be entitled to question the accuracy of any such statement.

 

 
 

 

10. RULES AND REGULATIONS: Tenant shall comply with and shall cause all Tenant Parties to comply with, at all times during the Term, all rules and regulations at any time or from time to time established by Landlord covering use of the Premises and the Project. The current Project rules and regulations are attached hereto as Exhibit D. In the event of any direct conflict between said rules and regulations and the provisions of this Lease, the terms and provisions of this Lease shall control. Landlord shall not have any liability or obligation for the breach of any rules or regulations by other tenants in the Project.

 

11. SIGNS: Except as provided in Exhibit F, Tenant shall not make any changes to the exterior of the Premises or the Building, install any exterior lights, decorations, balloons, flags, pennants, banners, or painting, or erect or install any signs, windows or door lettering, placards, decorations, or advertising media of any type which can be viewed from the exterior of the Premises, without Landlord’s prior written consent, which consent may not be unreasonably withheld. Except as provided in Exhibit F, Tenant shall place no signs or advertising matter on the exterior of the Building or at any other location on the Project other than within the Premises and only visible therein, without Landlord’s prior written consent, which may not be unreasonably withheld. Tenant must abide by the Sign Criteria set forth in Exhibit F for the installation of any signs approved by Landlord. Upon surrender or vacation of the Premises, Tenant shall have removed all signs and repair, paint, and/or replace the building facia surface to which its signs are attached. Tenant shall obtain all applicable governmental permits and approvals for sign and exterior treatments. All signs, awnings, canopies, decorations, lettering, advertising matter or other items used by Tenant shall be insured and maintained at all times by Tenant in good condition, operating order and repair.

 

12. UTILITIES: Tenant shall pay all utility deposits and fees and all monthly service charges for water, electricity, heat, light, sprinkler, telephone, sewage, oil, gas, refuse and trash collection and any other utility or service furnished to the Premises and the improvements on the Premises, together with any taxes, penalties, surcharges or the like pertaining to Tenant’s use of the Premises, however supplied, when the same become due. Tenant’s responsibility for said utilities shall commence upon the Possession Date. If any such services are not separately metered or billed to Tenant but rather are billed to and paid by Landlord, Tenant shall pay to Landlord Tenant’s portion of the cost of such services, as additional Rent, in accordance with the proportion that the Premises bear to the total area serviced by said meter, or alternatively it shall be apportioned based on Tenant’s use reasonably estimated by Landlord. Failure by Tenant to pay utility charges promptly as provided in this Lease shall result in Landlord having the right to suspend the service. None of the Landlord Parties shall be liable to Tenant in damages or otherwise for the quality, quantity, failure, unavailability, discontinuance, diminishment or disruption of any utility or service (including any discontinuance pursuant to the immediately preceding sentence) and the same shall not (i) constitute a termination of this Lease; (ii) constitute an actual or constructive eviction of Tenant; or (iii) entitle Tenant to an abatement of Rent or other charges (except as specifically set forth herein); provided that the foregoing shall not be construed to release Landlord from its common area maintenance and repair obligations under this Lease.

 

 
 

 

13. ALTERATIONS: Any alterations, additions, or improvements made by or on behalf of Tenant to the Premises (“Tenant-Made Alterations”) shall be subject to Landlord’s prior written consent, which may not be unreasonably withheld. Landlord shall have a reasonable obligation to approve minor alterations (interior, non- structural alterations that are less than $50,000 in cost) in or to the Premises requested by Tenant. Tenant shall cause, at its expense, all Tenant-Made Alterations to comply with Landlord’s insurance requirements and with Laws and shall construct at its expense any alteration or modification required by Laws as a result of any Tenant-Made Alterations. All Tenant-Made Alterations shall be constructed in a good and workmanlike manner by contractors reasonably acceptable to Landlord and only good grades of materials shall be used. Such contractors shall be required, at a minimum, to carry and maintain insurance in accordance with the standards and requirements set forth in Exhibit I attached hereto, and Tenant shall provide certificates of insurance evidencing compliance with such insurance requirements. Landlord has been apprised of and approves the following Tenant-Made Alteration concepts: installation of crane footings, additional toilets, paint booths, temperature-controlled rooms, charging stations and security cameras, however the plans and specifications for the same have not been provided to Landlord, and must still be reviewed and approved by Landlord before Landlord’s prior written consent shall be deemed provided, which approval shall not be unreasonably withheld. (it being acknowledged that Landlord’s rejection for changes that affect the building’s structural components shall never be deemed unreasonable). Whenever plans and specifications are required to be submitted to Landlord for approval, these plans and specifications must be (i) hand delivered to Landlord in plan sets with minimum sizing of 20” x 36” and, (ii) delivered digitally as well. Landlord shall have fifteen (15) days from the date of receipt of the plans and specifications to review the same and notify Tenant whether Landlord has approved or rejected the plans and specifications, provided (A) if Landlord rejects any such plans and specifications, Landlord shall provide Tenant with specific comments as to the elements of the plan or specifications that Landlord found objectionable, and (B) if Landlord does not provide any written notice within the fifteen (15) day period, Landlord shall be deemed to have approved the plans and specifications. Landlord may monitor construction of the Tenant-Made Alterations. Tenant shall reimburse Landlord for its reasonable out-of-pocket costs in reviewing plans and specifications and in monitoring construction. Landlord’s right to review plans and specifications and to monitor construction shall be solely for its own benefit, and notwithstanding anything to the contrary contained herein, Landlord’s approval of any plans and specifications submitted by Tenant pursuant to this Clause 13 or otherwise is not intended and shall not be deemed to constitute a representation, warranty or assurance of any kind that such plans and specifications and the Tenant-Made Alterations shown thereon comply with applicable Laws or that the same are structurally sound and Tenant shall be solely responsible for causing such compliance and for the quality and structural integrity of any Tenant-Made Alterations and Tenant acknowledges that it is not relying on any of the Landlord Parties for the same. Tenant shall provide Landlord with the identities and mailing addresses of all persons performing work or supplying materials, prior to beginning such work, and Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable Law. Tenant shall furnish security or make other arrangements satisfactory to Landlord to assure payment for the completion of all work free and clear of liens and shall provide certificates of insurance with types of coverage and amounts reasonably required by Landlord, including a waiver of subrogation in favor of the Landlord Parties, from an insurance company satisfactory to Landlord, including a provision of additional insured status for the Landlord Parties, protecting Landlord against liability for all Claims including, but not limited to, personal injury or property damage during construction. Upon completion of any Tenant-Made Alterations, Tenant shall deliver to Landlord sworn statements setting forth the names of all contractors and subcontractors who did work on the Tenant-Made Alterations and final lien waivers from all such contractors and subcontractors in compliance with Nevada law. Upon surrender of the Premises, all Tenant-Made Alterations and any leasehold improvements constructed by Landlord shall remain on the Premises as Landlord’s property without compensation to Tenant, except to the extent Landlord requires removal at Tenant’s expense of any such items or Landlord and Tenant have otherwise agreed in writing in connection with Landlord’s consent to any Tenant-Made Alterations. Tenant shall repair any damage caused by the removal of such Tenant-Made Alterations upon surrender of the Premises, provided that if Tenant’s removal and restoration work would damage or otherwise affect the structure of the Premises or the Building, Landlord may, at its option, elect to perform such removal restoration work, at Tenant’s sole cost and expense, in which case Tenant shall reimburse Landlord therefor upon demand.

 

14.MAINTENANCE AND REPAIRS:

 

14.1 LANDLORD OBLIGATIONS. Landlord shall repair, at its expense and without pass through as an Operating Expense, the structural soundness of the roof (which does not include the roof membrane and roof decking, the costs of which will be included in Operating Expenses), the structural soundness of the foundation, and the structural soundness of the exterior walls of the Building (the term “exterior walls” as used in this section shall not include windows, glass or plate glass, doors or overhead doors, special store fronts, dock bumpers, dock plates or levelers, or office entries) in good repair, reasonable wear and tear excluded. Tenant shall promptly give Landlord written notice of any repair required by Landlord pursuant to this Clause 14.1, after which Landlord shall have a reasonable opportunity to repair. Notwithstanding anything to the contrary contained herein, if the need for any repair referenced herein results from the negligence or intentional misconduct of any Tenant Party, following Landlord’s completion of such repairs, Tenant agrees to reimburse Landlord for the reasonable, out-of-pocket costs of such repairs upon demand therefor.

 

14.2 TENANT OBLIGATIONS. Except as expressly assumed by Landlord in this Lease, Tenant assumes all obligations to repair, maintain and replace the Premises. Subject to Landlord’s obligation in Clause 14.1 and subject to Clause 16 [Destruction of Premises], Tenant, at its expense, shall repair, replace and maintain in good condition and repair all portions of the Premises and all areas, improvements and systems exclusively serving the Premises including, without limitation, dock and loading areas, truck doors, plumbing, water and sewer lines up to points of common connection, entries, doors, locks and closing devices, ceilings, window sashes, casements, frames and glass, interior walls, and the interior side of demising walls, and heating, ventilation and air conditioning systems, pest control, lighting, floors (excluding structural foundation), and all other equipment of every kind and nature attached to or exclusively serving the Premises. Such repair and replacements include capital expenditures and repairs whose benefit may extend beyond the Term. If Tenant fails to keep the Premises in good condition and repair, Landlord may, but shall not be obligated to, make any necessary repairs or replacements. If Landlord makes such repairs or replacements, Landlord may bill Tenant for the cost of the repairs plus a 10% administrative fee as additional Rent, and said additional Rent shall be payable by Tenant within ten (10) days after demand by Landlord.

 

 
 

 

14.3 HVAC. Tenant shall enter annual, written maintenance contracts with competent, licensed contractors reasonably approved or designated by Landlord. Such contracts shall include, and Tenant shall require that such contractors provide: (i) inspection, cleaning and testing at least monthly for HVAC units and semi-annually for other systems and equipment (or more frequently if required by applicable Law or if reasonably required by Landlord), (ii) any servicing, maintenance, repairs and replacements of filters, belts or other items determined to be necessary or appropriate as a result of such inspections and tests, or by the manufacturers’ warranty, service manual or technical bulletins, or otherwise required to ensure proper and efficient operation, including emergency work, (iii) all other work as shall be reasonably required by Tenant, Landlord or Landlord’s insurance carriers, (iv) a detailed record of all services performed, and (v) an annual service report at the end of each calendar year. In accordance with standard manufacture recommendations, the preventative maintenance procedures for HVAC and related equipment (if applicable) shall include, but not be limited to, the services listed on Exhibit G attached hereto and made a part hereof. Not later than thirty (30) days prior to the Lease Commencement Date and annually thereafter, Tenant shall provide Landlord with a copy of all maintenance contracts required hereunder, and written evidence reasonably satisfactory to Landlord that the annual fees therefor have been paid. Alternatively, Landlord may at its option secure its own annual service contract to perform periodic inspections of the HVAC systems serving the Premises, and to perform any necessary work, maintenance, or repair of them. In that event, Tenant shall reimburse Landlord upon demand for all amounts paid by Landlord in connection with such contract.

 

15. RIGHT OF ENTRY: Landlord, its agents, employees and contractors shall have the right, at all reasonable times during the Term and following reasonable notice, to enter and inspect the Premises, to perform any obligation required of, or right permitted to, Landlord under this Lease, to post notices of non-responsibility or other notices which Landlord may deem necessary for its protection, and for any purpose permitted by Law, with reasonable notice except in cases of an emergency, in which event no prior notice shall be required. Landlord has the right to show the Premises to prospective purchasers, lenders, tenants and/or brokers and post “for lease” signs within or outside the Premises during the last six (6) months of the Term.

 

16. DESTRUCTION OF PREMISES: If at any time during the Term the Premises are damaged by a fire or other casualty (“Casualty”), Landlord shall notify Tenant within sixty (60) days after such damage as to the amount of time Landlord reasonably estimates it will take to restore the Premises (“Completion Estimate”).

 

16.1 TERMINATION. If the Completion Estimate states that Landlord’s initial estimate of the time needed for to repair the Premises exceeds one hundred eighty (180) days, either Landlord or Tenant may elect to terminate this Lease as of the date of the Casualty by notice to the other party. Notice of Landlord’s or Tenant’s election to terminate the Lease pursuant to this Clause 16.1 must be given within thirty (30) days after the date of the Completion Estimate. Either party may terminate this Lease if the Casualty occurs within the last six (6) months of the Term if Landlord’s estimate of the time needed to repair the damage caused by the Casualty exceeds more than 20% of the then remaining Term. Tenant’s termination right described in this Clause 16.1 shall not apply if the damage was caused by the negligent or intentional acts of any Tenant Parties. Failure of Tenant to exercise said election within said thirty (30) day period shall constitute Tenant’s agreement to accept delivery of the Premises under this Lease whenever tendered by Landlord, provided Landlord thereafter pursues reconstruction or restoration diligently to completion, subject to delays caused by Force Majeure events.

 

16.2 RESTORATION. If neither party elects to terminate this Lease or if Landlord estimates that restoration will take 180 days or less, then, subject to Landlord’s ability to obtain the necessary permits therefor and receipt of sufficient insurance proceeds, Landlord shall promptly restore the Premises to substantially the same condition as existed immediately prior to the Casualty, excluding the improvements installed by Landlord and paid by Tenant or Tenant-Made Alterations, subject to delays arising from the collection of insurance proceeds or from Force Majeure events. Tenant at Tenant’s expense shall promptly perform, subject to delays arising from the collection of insurance proceeds, or from Force Majeure events, all repairs or restoration not required to be done by Landlord to restore the Premises to substantially the same condition as existed immediately prior to the Casualty and shall promptly re-enter the Premises and commence doing business in accordance with this Lease, provided that prior to commencement of repairs, Landlord shall provide Tenant with any insurance proceeds attributable to the Premises remaining, after the completion of Landlord’s repairs, that have been received by Landlord for any such improvements to be repaired by Tenant under this section.

 

 
 

 

16.3 ABATEMENT. In the event that Tenant is prevented from using, and does not use, the Premises or any portion thereof, for ten (10) consecutive business days (the “Eligibility Period”) as a result of damage to the Premises, and the damage was not caused by the negligence or intentional acts of any Tenant Parties, then Tenant’s Base Rent and Tenant’s Share of Operating Expenses shall be abated or reduced, as the case may be, after expiration of the Eligibility Period for the sooner of such time that (i) Tenant continues to be so prevented from using, and does not use, the Premises or a portion thereof, or (ii) Landlord has substantially completed the restoration required in Clause 16.2, in the proportion that the leasable area of the portion of the Premises that Tenant is prevented from using, and does not use, bears to the total leasable area of the Premises. If Landlord makes other space available to Tenant, rent for the substitute premises shall be payable on an equitable basis as reasonably determined by Landlord.

 

16.4 TENANT’S ACTS. If such damage or destruction occurs as a result of the negligence or the intentional acts of any Tenant Parties, and the proceeds of insurance which are actually received by Landlord are not sufficient to pay for the repair of all of the damage, Tenant shall pay, at Tenant’s sole cost and expense, to Landlord upon demand, the difference between the cost of repairing the damage and the insurance proceeds received by Landlord.

 

16.5 TENANT’S PROPERTY. Landlord shall not be liable to any Tenant Parties or customers for loss or damage to merchandise, tenant improvements, fixtures, automobiles, furniture, equipment, computers, files or other property (hereinafter collectively “Tenant’s property”) located at the Project. Tenant shall repair or replace all of Tenant’s property at Tenant’s sole cost and expense. Tenant acknowledges that it is Tenant’s sole responsibility to obtain adequate insurance coverage to compensate Tenant for damage to Tenant’s property.

 

16.6 WAIVER. Landlord and Tenant hereby waive the provisions of any Law relating to the matters addressed in this Clause 16 and agree that their respective rights for damage to or destruction of the Premises shall be those specifically provided in this Lease.

 

17. CONDEMNATION: If all or part of the Project is taken or condemned by any authority for any public use or purpose (including a deed given in lieu of condemnation), which renders the Building or the Premises not suitable for its intended purpose in Landlord or Tenant’s reasonable opinion, this Lease shall terminate as of the date title vests in such authority, and the Rent shall be apportioned as of such date. Otherwise, this Lease shall continue in full force and effect, except the Rent shall abate for that part of the Premises which is rendered untenantable and not occupied by Tenant on a per diem and proportionate area basis from the date when that part of the Premises is no longer available for the use of the Tenant. Landlord, upon receipt and to the extent of the award in condemnation or proceeds of sale which is allocable to the Premises, shall make necessary repairs and restoration (exclusive of Tenant-Made Alterations and personal property installed by Tenant) to restore the Premises remaining to as near their former condition as circumstances will permit and to the extent necessary to constitute the portion not so taken or condemned as complete. Landlord shall be entitled to receive the entire award from any sale, taking or condemnation without any payment to Tenant. Tenant shall have the right separately to pursue against the condemning authority, an award in respect of Tenant’s business damages and relocation expenses. Under no circumstances shall Tenant seek or be entitled to any compensation for the value of its leasehold estate which Tenant hereby assigns to Landlord. Landlord and Tenant hereby waive the provisions of any Law relating to the matters addressed in this Clause 17 and agree that their respective rights for damage to or destruction of the Premises shall be those specifically provided in this Lease.

 

18.TRANSFERS:

 

18.1 PROHIBITION. Tenant shall not, without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed, assign this Lease or sublet the Premises, or transfer or permit the transfer of this Lease or the interest of Tenant in the Lease, in whole or in part, or mortgage, pledge, or hypothecate its leasehold interest or grant any concession or license within the Premises, or otherwise permit the occupancy or use of the Premises or any part thereof by any persons other than Tenant (any such subletting, assignment or other transfer shall be referred to as a “Transfer,” and the person to whom Tenant’s interest is transferred shall be referred to as a “Transferee”). If Tenant is a privately-held corporation, or is an unincorporated association, limited liability company or partnership, the cumulative or aggregate transfer, assignment or hypothecation of thirty-three percent (33%) or more of the total stock, or the legal or beneficial interest, in such corporation, association, company or partnership, whether in a single transaction or a series of related or unrelated transactions, and whether on a direct or indirect basis, shall be deemed a Transfer. Any attempt by Tenant to effect a Transfer without such consent of Landlord shall be voidable by Landlord and, at Landlord’s election, shall constitute an incurable default under this Lease.

 

 
 

 

18.2 PROCEDURE. If Tenant desires to effect a Transfer, Tenant shall deliver written notice of such intent to Landlord at least thirty (30) days prior to the proposed effective date of the Transfer (“Transfer Request”). Each Transfer Request must contain, or be accompanied with, each of the following: (i) a copy of the proposed Transfer documents; (ii) a detailed description of the proposed Transferee’s business to be conducted upon the Premises and certification that it is a Permitted Use; (iii) the business resume of the principals of the Transferee; (iv) the latest audited and the latest unaudited quarterly financial statements of the proposed Transferee; (v) the economic terms and consideration for the transaction; and (vi) any other documentation and information reasonably required by Landlord. Within thirty (30) days after Landlord’s receipt of the Transfer Request and all of the information required pursuant to this Clause 18.2, Landlord shall notify Tenant in writing that Landlord has elected to (1) consent to such proposed Transfer (subject to the provisions hereof), or (2) withhold consent to such proposed Transfer.

 

18.3 STANDARDS FOR APPROVAL/DISAPPROVAL. In determining whether to grant or withhold its consent to a proposed Transfer, Landlord may consider any reasonable factor. Without limiting the conditions that may be construed as a reasonable factor, it is deemed reasonable that Landlord’s consent shall not be considered unreasonably withheld if: (a) The proposed Transferee does not have sufficient financial worth to fully and timely discharge all of the then remaining obligations of Tenant under this Lease, (b) in Landlord’s commercially reasonable discretion, the proposed Transferee is not of sound business reputation, (c) the use of the Premises by the proposed Transferee will not be a Permitted Use, (d) the proposed Transferee does not have sufficient experience to successfully undertake its business at the Premises, (e) the proposed Transferee occupies premises in the Project, (f) the proposed Transferee has delivered a letter of intent to Landlord or Landlord’s agent to lease space in the Project and (g) the proposed Transferee is actively negotiating with Landlord or Landlord’s agent to lease space in the Project, (h) the Transferee intends to use the Premises for purposes which are not permitted under this Lease or would result in a violation of another tenant’s rights or of an agreement by which Landlord is bound, (i) any portion of the Project or Premises would likely become subject to additional or different Laws as a consequence of the proposed Transfer, (j) Landlord is not able to obtain the consent of any third parties having approval rights, or (k) Landlord has had prior unsatisfactory dealings with the proposed Transferee. Furthermore, if Tenant is then in default of any obligation of Tenant under this Lease, it shall be reasonable for Landlord to elect, in its sole discretion, to deny its consent to such proposed Transfer so long as such default exists.

 

18.4 REQUIRED DOCUMENTATION. Each and every assignment instrument and subletting instrument shall contain such terms and conditions as are described in the Transfer Request and be expressly subject and subordinate to each and every provision contained in this Lease. Each Transferee shall expressly assume in writing for the benefit of Landlord the obligations of Tenant under this Lease and shall be liable jointly and severally with Tenant for the payment of the Rent and the performance of all the terms, covenants, conditions and agreements herein contained on Tenant’s part to be performed for the Term. If Landlord approves the proposed Transfer, Landlord shall prepare and deliver to Tenant, for execution by Tenant and the proposed Transferee, counterparts of Landlord’s reasonable and customary consent instrument, and Tenant shall have thirty (30) days to cause the same to be executed, without modification, by both Tenant and the proposed Transferee and delivered to Landlord, together with all required attachments thereto.

 

18.5 TRANSFER FEES. If said Transfer requires the consent of Landlord pursuant to this Clause 18, Tenant shall pay to Landlord upon demand as Rent an amount equal to the greater of (a) Landlord’s reasonable attorneys’ fees and administrative expenses incurred in connection with any Transfer and (b) Three Thousand and no/100 Dollars ($3,000.00).

 

18.6 MISCELLANEOUS. The consent by Landlord to a Transfer shall not relieve Tenant from obtaining Landlord’s prior written consent in writing to any further Transfer. Any approved Transfer shall be expressly subject to the terms and conditions of this Lease. In the event of any approved Transfer, Tenant and Guarantor shall not be released or discharged from any liability, whether past, present or future, under this Lease, including any Renewal Term of this Lease. If Tenant requests Landlord’s consent in connection with a proposed Transfer and Landlord fails or refuses to give such consent, Tenant shall not be entitled to any damages for any withholding by Landlord of its consent, it being intended that Tenant’s sole remedy shall be an action for specific performance or injunction, and that such remedy shall be available only in those cases where this Lease provides that Landlord shall not unreasonably withhold its consent. If this Lease be assigned or if the Premises be subleased (whether in whole or in part) or in the event of the mortgage, pledge, or hypothecation of Tenant’s leasehold interest or grant of any concession or license within the Premises or if the Premises be occupied in whole or in part by anyone other than Tenant, then upon a default by Tenant hereunder Landlord may collect rent from the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold interest was hypothecated, concessionee or licensee or other occupant and apply the amount collected to the next rent payable hereunder; and all such rentals collected by Tenant shall be held in trust for Landlord and immediately forwarded to Landlord. No such transaction or collection of rent or application thereof by Landlord, however, shall be deemed a waiver of these provisions or a release of Tenant from the further performance by Tenant of its covenants, duties, or obligations hereunder.

 

 
 

 

18.7 PERMITTED TRANSFERS. Notwithstanding the foregoing, Tenant may assign this Lease or sublease the entire Premises to an entity controlled by, controlling or under common control with Tenant (as used herein, “control” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities or rights, by contract, or otherwise) provided that, in any of such events, in each instance, each and every one of the following requirements has been satisfied: (a) the successor of Tenant has the financial ability to satisfy Tenant’s obligations and responsibilities under the Lease, and proof reasonably satisfactory to Landlord of such net worth shall be delivered to Landlord at least ten (10) days prior to the proposed Transfer date; (b) any such Transfer shall be subject to all of the terms and provisions of this Lease, and such Transferee shall assume, in a written document reasonably satisfactory to Landlord and delivered to Landlord prior to the effective date of such Transfer, all the obligations of Tenant under this Lease; and (c) Tenant is not in default under this Lease.

 

19. SUBORDINATION, ATTORNMENT: This Lease and the rights of Tenant are expressly subject and subordinate to the lien and provisions of any Mortgage. This provision will be self-operative, and no further instrument of subordination will be required in order to effect it. However, Tenant shall, within ten (10) days after receipt of written notice by Landlord, execute and deliver such further instruments, in such form as may be required by Landlord or any Mortgagee of a proposed or existing Mortgage, subordinating this Lease to the lien of any such Mortgage. Within sixty (60) days after (i) the execution of this Lease, and (ii) any future date that Landlord enters into any new security device after the execution of this Lease, Landlord shall use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of such Security Device which is secured by the Premises which provides that Tenant’s possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises, but the failure to obtain same shall not constitute a default by Landlord.

 

In the event of the foreclosure of any such Mortgage by voluntary agreement or otherwise, or the commencement of any judicial action seeking such foreclosure, Tenant, at the request of the then Landlord, shall attorn to such Mortgagee or purchaser in foreclosure or the party who, but for this Lease, would be entitled to possession of the Premises. Tenant shall, within ten (10) days after receipt of written notice by Landlord or such Mortgagee, purchaser, or their successors, execute and deliver any instrument in such form as may be required by Landlord or such Mortgagee, purchaser, or their successors, to further evidence such attornment. This provision will be self-operative, and no further instrument of attornment will be required in order to effect it. Notwithstanding such subordination, Tenant’s right to quiet possession of the Premises shall not be disturbed if Tenant is not in default and so long as Tenant shall pay the rent and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms.

 

If Tenant fails to execute and deliver any requested Subordination and Non-Disturbance Agreement or any requested attornment agreement within the time periods required herein, Tenant shall have irrevocably appointed Landlord as Tenant’s attorney-in-fact to execute such instrument in Tenant’s name.

 

Tenant shall send to the Mortgagee (after notification of the identity of such Mortgagee and the mailing address thereof) copies of all notices that Tenant sends to Landlord; such notices to said Mortgagee shall be sent concurrently with the sending of the notices to Landlord and in the same manner as notices are required to be sent pursuant to Clause 33 [Notices] hereof. Tenant will accept performance of any provision of this Lease by such Mortgagee as performance by, and with the same force and effect as though performed by, Landlord. If any act or omission of Landlord would give Tenant the right, immediately or after lapse of a period of time, to cancel or terminate this Lease, or to claim a partial or total eviction, Tenant shall not exercise such right until (a) Tenant gives notice of such act or omission to Landlord and to each such Mortgagee, and (b) a reasonable period of time for remedying such act or omission elapses following the time when such Mortgagee becomes entitled under such Mortgage to remedy same (which reasonable period shall in no event be less than the period to which Landlord is entitled under this Lease or otherwise, after similar notice, to effect such remedy and which reasonable period shall take into account such time as shall be required to institute and complete any foreclosure proceedings).

 

 
 

 

20. ESTOPPEL: Tenant shall, within ten (10) days of receipt of written notice by Landlord and without cost to Landlord, deliver to Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect, or, if there have been modifications, that this Lease, as modified, is in full force and effect; providing a true, correct and complete copy of the Lease and any and all modifications of the Lease; the amount of each item of the Rent then payable under this Lease and the date to which the Rent has been paid; that Landlord is not in default under this Lease or, if in default, a detailed description of such default; that Tenant is or is not in possession of the Premises, as the case may be; and containing such other information and agreement as may be reasonably requested. In the event that Tenant does not execute and return the same to Landlord within such 10-day period, Tenant shall be deemed to have certified all information contained therein. The truth and accuracy of the certifications contained herein may be relied upon by (i) Landlord, (ii) any potential purchaser of the Project, or its assignee (“Purchaser”), (iii) each lender (“Lender”) of Landlord or Purchaser (or any of their respective direct or indirect owners), and its successors, participants, assigns and transferees, (iv) any rating agency or trustee involved in a securitization of one or more loans made by a Lender, and (v) any servicer of any such loan (collectively, the “Reliance Parties”), and said certifications shall be binding upon Tenant and its successors and assigns, and inure to the benefit of the Reliance Parties.

 

21. QUIET ENJOYMENT: Landlord agrees with Tenant that so long as Tenant pays the Rent and observes and performs all the terms and conditions of this Lease, Tenant may, subject to the terms of this Lease, peaceably and quietly enjoy the Premises against any person claiming by, through or under Landlord.

 

22.INDEMNIFICATION:

 

22.1 BY TENANT. Except for Claims to the extent resulting from the gross negligence or intentional misconduct of any of the Landlord Parties, and subject to the provisions of Clause 23.4 [Waiver of Subrogation], Tenant shall indemnify, defend and hold the Landlord Parties and Landlord’s property manager harmless against and from all Claims which may be imposed upon, incurred by, or asserted against any of the Landlord Parties and/or Landlord’s property manager and arising, directly or indirectly, out of or in connection with the use or occupancy or maintenance of the Premises by, through or under any Tenant Parties, and (without limiting the generality of the foregoing) any of the following occurring during the Term: (i) any work or thing done in, on or about the Premises or any part thereof by any of the Tenant Parties; (ii) any use, non-use, possession, occupation, condition, operation, maintenance or management of the Premises or any part thereof; (iii) any act or omission of any of the Tenant Parties; (iv) any injury or damage to any person or property occurring in, on or about the Premises or any part thereof; or (v) any failure on the part of Tenant to perform or comply with any of the covenants, agreements, terms or conditions contained in this Lease with which Tenant, on its part, must comply or perform. In case any action or proceeding is brought against any of the Landlord Parties by reason of any of the foregoing, Tenant shall, at Tenant’s sole cost and expense, resist or defend such action or proceeding by counsel approved by Landlord, which approval shall not be unreasonably withheld.

 

22.2 BY LANDLORD. Except for Claims to the extent resulting from the gross negligence or intentional misconduct of any of the Tenant Parties, and subject to the provisions of Clause 23.4 [Waiver of Subrogation], Landlord shall indemnify, defend and hold the Tenant Parties harmless against and from all Claims which may be imposed upon, incurred by, or asserted against any of the Tenant Parties and arising, directly or indirectly, out of or in connection with any of the following occurring during the Term: (i) any work or thing done in, on or about the Premises or any part thereof by any of the Landlord Parties; (ii) any negligence or intentional misconduct of any of the Landlord Parties; or (iii) any failure on the part of Landlord to perform or comply with any of the covenants, agreements, terms or conditions contained in this Lease with which Landlord, on its part, must comply or perform. In case any action or proceeding is brought against any of the Tenant Parties by reason of any of the foregoing, Landlord shall, at Landlord’s sole cost and expense, resist or defend such action or proceeding by counsel approved by Tenant, which approval shall not be unreasonably withheld.

 

 
 

 

23.INSURANCE:

 

23.1 TENANT’S INSURANCE. At all times, commencing on and after the earlier to occur (“Insurance Date”) of (i) the Possession Date, (ii) the Lease Commencement Date, or (iii) the date Tenant enters the Premises for any purpose, Tenant shall carry and maintain, at Tenant’s expense, the following insurance, in the amounts specified below or such other amounts as Landlord may from time-to-time request:

 

(a) Commercial General Liability Insurance covering bodily injury, personal injury and for damage to property in an amount of not less than $3 million per occurrence, with a General Aggregate limit per location of at least $5 million with an “Additional Insured-Managers and Landlords of Premises Endorsement” and contain the “Amendment of the Pollution Exclusion” for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an “insured contract” for the performance of Tenant’s indemnity obligations under this Lease.

 

(b) Causes of Loss - Special Form extended coverage (formerly known as “all risk”) property insurance in an amount equal to one hundred percent (100%) of full replacement value covering Tenant’s Work, Tenant’s property and Tenant-Made Alterations located in the Premises, against fire and other risks. By way of example, and not limitation, such policies shall provide protection against any peril included within the classification “fire and extended coverage,” against vandalism and malicious mischief, theft and sprinkler leakage. Tenant’s policy shall include endorsements to insure Tenant against losses to valuable papers, records and computer equipment and to compensate Tenant for the cost of recovering lost data. To the extent that Tenant’s policy covers tenant improvements to the Premises, Landlord shall be a loss payee on such policy. Tenant shall also obtain earthquake insurance, and if the Project is in Flood Zone A or V, Tenant shall obtain flood insurance, and the terms of such insurance policies shall be reasonably acceptable to Landlord.

 

(c) Tenant’s Legal Liability Insurance which pertains to the care custody and control of the Premises in the amount of not less than for the full value of the property of its customers as determined by the warehouse contract between Tenant and its customer.

 

(d) Worker’s Compensation Insurance insuring against and satisfying Tenant’s obligations and liabilities under the worker’s compensation Laws of the State in which the Project is located, and Employer’s Liability Insurance in the limits required by the Laws of the State in which the Project is located, but in an amount not less than $1,000, 000 each accident, $1,000,000 disease - policy limit, $1,000,000 disease - each employee;

 

(e) Product and Completed Operations Liability Insurance sufficient to indemnify and protect Landlord from any Claims related thereto.

 

(f) Umbrella Liability Insurance in excess of the underlying coverage listed in Subclauses (a), (b), (c) and (d) above, with limits of not less than $3 million per occurrence/$3 million aggregate.

 

(g) Business automobile liability insurance covering all owned, non-owned and hired or borrowed vehicles of any of the Tenant Parties used in connection with the operation of its business from the Premises, with limits of not less than One Million Dollars ($1,000,000.00) per occurrence combined single limit, insuring for bodily injury, death and property damage.

 

(h) Business Interruption Insurance with a limit of liability representing loss of at least approximately six (6) months of income.

 

(i) Should the activities of Tenant pose an environmental risk to the Project, Landlord may require Environmental Insurance from Tenant in amounts sufficient to cover the risk as determined by Landlord Such other insurance in such amounts and increases in the limits of the coverage required above, as Landlord or its Mortgagee may require of Tenant upon thirty (30) days’ prior written notice.

 

 
 

 

All the above types of insurance will be written on the most current occurrence ISO forms including without limitation, personal injury and contractual liability coverage for the performance by Tenant of the indemnity agreements set forth in this Lease.

 

23.2 POLICY REQUIREMENTS. All policies of insurance which Tenant is obligated to maintain according to this Lease (other than any policy of Worker’s Compensation Insurance) shall name the Landlord Parties and such other persons or entities as Landlord specifies from time to time as additional insured, or loss payee as appropriate, and shall be in a form acceptable to Landlord, without modification. Certificates of Insurance naming the Landlord Parties and any others specified by Landlord as additional insured and evidence of the payment of all premiums of such policies satisfactory to Landlord shall be delivered to Landlord prior to the Insurance Date and upon renewals at least thirty (30) calendar days prior to the expiration of the term of any such insurance coverage. Any company writing any insurance which Tenant is required to maintain or cause to be maintained pursuant to Clause 23 shall have a Best Rating of at least “A-” and be assigned a financial size category of at least “Class VIII” as rated in the most recent edition of “Best’s Key Rating Guide” for insurance companies and each such company shall be licensed and qualified to do business in the state in which the Premises are located. All insurance obtained by Tenant shall be primary to and not contributory with any similar insurance carried by Landlord, whose insurance shall be considered excess insurance only. All such policies maintained by Tenant shall contain endorsements that the insurer will give Landlord at least thirty (30) calendar days’ advance written notice of any termination or amendment. No insurance required to be maintained by Tenant by Clause 23 shall be subject to more than a $5000 deductible limit without Landlord’s prior written consent. The policy shall be written on an “occurrence” basis and not on a “claims made” basis and shall be endorsed to provide that it is primary to and not contributory to any policies carried by Landlord. The limits of Tenant’s insurance shall in no event limit Tenant’s liability under this Lease, at law or in equity. Tenant assumes all risk of damage of Tenant’s property within the Project, including any loss or damage caused by water leakage, fire, windstorm, explosion, theft, act of any other tenant, or other cause.

 

23.3 TENANT ACTS. None of the Tenant Parties shall do or fail to do anything which will (i) violate the terms of or increase the rate of, any of Landlord’s or any other tenant or occupant’s insurance policies; (ii) prevent Landlord from obtaining such policies of insurance acceptable to Landlord or any Mortgagee; or (iii) contravene the rules, regulations and recommendations of Landlord’s insurance companies, the Fire Insurance Rating Organization or any similar body having jurisdiction over the Premises or the National Board of Fire Underwriters or any similar body exercising similar functions in connection with the prevention of fire or the correction of hazardous conditions. In the event of the occurrence of any of the events set forth in this Clause 23.3, Tenant shall pay Landlord upon demand, as additional Rent, the cost of the amount of any increase in any such insurance premium.

 

23.4 WAIVER OF SUBROGATION. Without affecting any other rights or remedies, Tenant and Landlord each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein, provided this Clause 23.4 shall be inapplicable if it would have the effect, but only to the extent it would have the effect, of invalidating any insurance coverage of Landlord or Tenant. For the purpose of the foregoing waiver, the amount of any deductible applicable to any loss or damage shall be deemed covered by and recoverable by the insured under the insurance policy to which such deductible relates.

 

24.RELOCATION. Reserved.

 

25. TENANT DEFAULT AND LANDLORD REMEDIES:

 

25.1 TENANT DEFAULT. Each of the following shall constitute an event of default by Tenant (“Default”): (1) Tenant fails to pay any installment of Rent within five (5) days after the date on which the Rent is due; (2) Tenant fails to observe or perform any of the terms and conditions of this Lease (other than those specifically referred to in this Clause 25 or elsewhere in the Lease) after written notice from Landlord and fails to cure the default within thirty (30) days, except where the nature of the default is such that more than thirty (30) days are reasonably required for its cure, then it shall not be deemed to be a breach if Tenant commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion; (3) a petition is filed by or against Tenant to declare Tenant bankrupt or to seek relief from Tenant under any chapter of the Bankruptcy Code, as amended, or under any other Law imposing a moratorium on, or granting debtor’s relief with respect to, the rights of creditors; (4) Tenant becomes or is declared insolvent by Law or Tenant makes an assignment for the benefit of creditors; (5) a receiver is appointed for Tenant or Tenant’s property; (6) interest of Tenant in this Lease is levied upon under execution or other legal process; (7) Tenant fails to strictly comply with the Use of the Premises, as per Clause 6 [Use]; or (8) Tenant shall not occupy or shall vacate the Premises. Any notice periods provided for under Clause 25 shall run concurrently with any statutory notice periods and any notice given hereunder may be given simultaneously with or incorporated into any such statutory notice.

 

 
 

 

25.2 LANDLORD REMEDIES. Upon the occurrence of an event of Default by Tenant, Landlord shall have all of the rights and remedies provided in this Lease, in addition to all other rights and remedies provided at law or in equity (all remedies provided herein being non-exclusive and cumulative), and Landlord may, with or without notice or demand, do any one or more of the following:

 

(a) Landlord may, at its election, by any lawful means, terminate this Lease or terminate Tenant’s right to possession only, without terminating the Lease.

 

(b) Upon any termination of this Lease or upon any termination of Tenant’s right to possession without termination of the Lease and without prejudice to any other remedy which Landlord may have for possession of the Premises or arrearage in Rent, remove any and all persons and property from the Premises, with or without legal process, and pursuant to such rights and remedies as the laws of the State of Nevada shall then provide or permit, but Landlord shall not be obligated to effect such removal. Said property may, at Landlord’s option be stored or otherwise dealt with as such laws may then provide or permit, including, but not limited to, the right of Landlord to store the same, or any part thereof, in a warehouse or elsewhere at the expense and risk of and for the account of Tenant.

 

(c) Upon any termination of this Lease Landlord shall be entitled to recover as damages, all Rent, including any amounts treated as additional Rent under this Lease, and other sums due and payable by Tenant on the date of termination, plus as liquidated damages and not as a penalty, an amount equal to the sum of: (i) the worth at the time of award of the unpaid rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; (iii) 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 have been reasonably avoided; and (iv) any other amount necessary to compensate Landlord for all detriment proximately caused by Tenant’s failure to perform its obligations under the Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of recovering possession of the Premises, expenses of releasing, including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, any real estate commissions actually paid by Landlord and the unamortized value of any free rent, reduced rent, tenant improvement allowance or other economic concessions provided by Landlord. The “worth at time of award” of the amounts referred to in Clause 25.2(c)(i) and (ii) shall be computed by allowing interest at the lesser of ten percent (10%) per annum or the maximum interest rate permitted by applicable law. The worth at the time of award of the amount referred to in Clause 25.2(c)(iii) shall be 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%). For purposes of this Clause 25.2, “rent” shall be deemed to be all monetary obligations required to be paid by Tenant pursuant to the terms of this Lease (it being conclusively presumed that the additional Rent paid by Tenant in the last Lease Year prior to the termination of this Lease shall have been paid by Tenant for the balance of the Term).

 

(d) Upon any termination of Tenant’s right to possession only without termination of the Lease:

 

1. Neither such termination of Tenant’s right to possession nor Landlord’s taking and holding possession thereof as provided in Subsection (b) shall terminate the Lease or release Tenant, on whole or in part, from any obligation, including Tenant’s obligation to pay the rent, including any amounts treated as additional rent, under this Lease for the full Term, and if Landlord so elects Tenant shall continue to pay to Landlord the entire amount of the rent as and when it becomes due, including any amounts treated as additional rent under this Lease, for the remainder of the Term plus any other sums provided in this Lease to be paid by Tenant for the remainder of the Term.

 

 
 

 

2. Until such time as Landlord shall elect to terminate the Lease and shall thereupon be entitled to recover the amounts specified in such case in Subsection (c), Landlord may enforce all of Landlord’s rights and remedies under this Lease, including the right to recover all rent, including any amounts treated as additional rent under this Lease and other sums reserved in this Lease for the remaining Term, together with the costs of repairs, alterations, additions, redecorating and Landlord’s expenses of reletting and the collection of the rent accruing therefrom (including reasonable attorneys’ fees and brokers’ commissions), as the same shall then be due or become due from time to time, less only such consideration as Landlord may have received from any reletting of the Premises, and Tenant agrees that Landlord may file suits from time to time to recover any sums falling due under Clause 25 as they become due. Any proceeds of reletting by Landlord in excess of the amount then owed by Tenant to Landlord from time to time shall be credited against Tenant’s future obligations under this Lease but shall not otherwise be refunded to Tenant or inure to Tenant’s benefit.

 

3. If Tenant at any time fails to perform any of its obligations under this Lease in a manner satisfactory to Landlord, Landlord shall have the right but not the obligation, with two (2) calendar days prior notice after Tenant’s time to cure has expired (except in the case of any dangerous condition or emergency, in which case no notice shall be required) to perform or cause to be performed such obligations on behalf and at the expense of Tenant. In such event, Landlord’s costs and expenses incurred with respect thereto shall, upon demand, be paid for by Tenant as additional Rent. The performance by Landlord of any such obligation shall not constitute a release or waiver of any of Tenant’s obligations under this Lease.

 

4. Landlord shall use commercially reasonable efforts to relet the Premises or portions thereof. Landlord and Tenant agree that nevertheless Landlord shall at most be required to use only the same efforts Landlord then uses to lease premises in the Building generally and that in any case that Landlord shall not be required to give any preference or priority to the showing or leasing of the Premises of portions thereof over any other space that Landlord may be leasing or have available and may place a suitable prospective tenant in any such other space regardless of when such other space becomes available and that Landlord shall have the right to relet the Premises for a greater or lesser term than that remaining under this Lease, the right to relet only a portion of the Premises, or a portion of the Premises or the entire Premises as a part of a larger area, and the right to change the character or use of the Premises. In connection with or in preparation for any reletting, Landlord may, but shall not be required to, make repairs, alterations and additions in or to the Premises and redecorate the same to the extent Landlord deems necessary or desirable, and Tenant shall pay the cost thereof, together with Landlord’s expenses or reletting, including, without limitation, any commission incurred by Landlord, within five (5) days of Landlord’s demand. Landlord shall not be required to observe any instruction given by Tenant about any reletting or accept any tenant offered by Tenant unless such offered tenant has a credit-worthiness acceptable to Landlord and leases the entire Premises upon terms and conditions including a rate of rent (after giving effect to all expenditures by Landlord for tenant improvements, brokers’ commissions and other leasing costs) all no less favorable to Landlord than as called for in this Lease, nor shall Landlord be required to make or permit any assignment or sublease for more than the current term or which Landlord would not be required to permit under the provisions of Clause 18 [Transfers].

 

(e) Intentionally Deleted.

 

(f) TENANT, ITS SUCCESSORS, SUBTENANTS AND ASSIGNS EXPRESSLY WAIVE ANY RIGHT TO: (A) TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE OR TENANT’S USE OR OCCUPANCY OF THE PREMISES; (B) SERVICE OF ANY NOTICE REQUIRED BY ANY PRESENT OR FUTURE LAW OR ORDINANCE APPLICABLE TO LANDLORDS OR TENANTS BUT NOT REQUIRED BY THE TERMS OF THE LEASE; (C) REDEMPTION AND ALL RIGHTS TO RELIEF FROM FORFEITURE GRANTED BY OR UNDER ANY APPLICABLE LAW; AND (D) FILE ANY COUNTERCLAIMS OR CROSS-CLAIMS OTHER THAN COMPULSORY COUNTERCLAIMS OR CROSS-CLAIMS IN ANY ACTION OR PROCEEDING BROUGHT BY LANDLORD AGAINST TENANT FOR ANY DEFAULT.

 

(g) Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other remedies provided in this Lease or any other remedies provided by Law (all such remedies being cumulative), nor shall pursuit of any remedy provided in this Lease constitute a forfeiture or waiver of any rent due to Landlord under this Lease or of any damages accruing to Landlord by reason of the violation of any of the terms, provisions and covenants contained in this Lease.

 

 
 

 

(h) No act or thing done by Landlord or its agents during the Term shall be deemed a termination of this Lease or an acceptance of the surrender of the Premises, and no agreement to terminate this Lease or accept a surrender of said Premises shall be valid, unless in writing signed by Landlord.

 

(i) If (i) Tenant fails to make any payment under this Lease when due, (ii) Landlord performs or causes the performance of any obligation of Tenant under this Lease, or (iii) Landlord incurs any costs or expenses as a result of Tenant’s default under this Lease, then Tenant shall pay, upon demand, the amount due under (i), or the amount of such costs and expenses incurred under (ii) or (iii) above, plus Interest from the date such payment was due or from the date Landlord incurs such costs or expenses, plus Landlord’s administrative costs in connection therewith.

 

26. LANDLORD’S DEFAULT: Landlord shall not be in default hereunder unless Landlord fails to perform any of its obligations hereunder within thirty (30) days after receipt of notice from Tenant specifying such failure (unless such performance will, due to the nature of the obligation, require a period of time in excess of 30 days, then after such period of time as is reasonably necessary); failing which, Tenant shall have the right to seek judgment from a court of competent jurisdiction for actual damages and/or an injunction. In addition, In the event that neither Landlord nor Mortgagee cures said breach within thirty (30) days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Tenant may elect to cure said breach at Tenant’s expense. Landlord shall be obligated to reimburse Tenant, for all documented out-of-pocket costs of said cure incurred by Tenant with thirty (30) days following Tenant’s demand with the copies of all paid invoices. In the event Landlord does not reimburse Tenant within said thirty (30) days, Tenant shall have the right to offset all documented out-of- pocket costs of said cure incurred by Tenant against Rent, beginning with the first installment of Rent after the expiration of such 30-day period and continuing until Tenant has been reimbursed in full. In the event of a default by Landlord under the Lease, Tenant shall use reasonable efforts to mitigate its damages and losses arising from any such default. Notwithstanding anything in this Lease to the contrary, none of the Landlord Parties shall be liable under any circumstances, in each case, however occurring, for injury or damage to, or interference with, Tenant’s business, including but not limited to, any fines or penalties, loss of good will, loss of business, business opportunity or profits or other direct, special, incidental, indirect or consequential damages or for punitive or special damages of any kind, whether in contract, tort or otherwise.

 

27. SURRENDER OF PREMISES: Upon the Expiration Date, termination, or Default of the Lease in which Tenant’s right to possession is terminated, Tenant shall surrender and vacate the Premises immediately and deliver vacant possession to Landlord in a clean, good, and tenantable condition, except for reasonable use and ordinary wear and tear, and generally in the condition described on Exhibit H attached hereto. Movable trade fixtures and personal property shall be removed from the Premises if Tenant has fulfilled all Lease obligations, unless instructed otherwise by Landlord. All telephone, communication and data lines, cables, electrical equipment, HVAC or other upgrades owned, installed or caused to be installed by Tenant in the Premises or in the plenum of the Building shall not be removed by Tenant unless otherwise required by Landlord. Upon Tenant vacating the Premises, Tenant agrees at Landlord’s option to leave all wiring properly identified. All items authorized to be removed but subsequently not removed shall, at Landlord’s option but subject to Nevada law, be presumed to have been abandoned by Tenant, and title thereto shall pass to Landlord, or Landlord may, at its option, either store or dispose of these items at Tenant’s expense, and Tenant waives all Claims against Landlord for any damages resulting from Landlord’s retention and disposition of such property. If any Tenant-Made Alterations have been made by Tenant, with or without Landlord’s approval, Tenant shall, at its expense, and upon request of Landlord, restore the Premises to their original condition. Tenant shall repair any damage caused by the removal of Tenant’s movable trade fixtures and personal property and such Tenant-Made Alterations upon surrender of the Premises; provided that if Tenant’s removal and restoration work would damage or otherwise affect the structure of the Premises or the Building, Landlord may, at its option, elect to perform such removal and restoration work, at Tenant’s sole cost and expense, in which case Tenant shall reimburse Landlord therefor upon demand. Tenant shall also deliver all keys for the Premises as specified by Landlord, and inform Landlord of all combinations on locks, safes and any vaults in the Premises.

 

28. HOLDING OVER: If Tenant shall continue to occupy the Premises after the termination of this Lease without the prior written consent of Landlord, such tenancy shall be a month-to-month tenancy at sufferance. The period of any hold over tenancy by Tenant shall be subject to all the terms and provisions of this Lease (other than any provisions for allowances, abatements or other financial concessions, Landlord’s Work, or optional rights of Tenant requiring Tenant to exercise the same by written notice, such as any options to extend the Term or to expand the Premises), except that Tenant shall pay Landlord from time to time, upon demand, as Base Rent for the holdover period, an amount equal to One Hundred Fifty Percent (150%) of the Rent in effect on the termination date, computed on a monthly basis for each month or part thereof during such holding over. In addition, Tenant shall be liable to Landlord for and shall indemnify, defend (with counsel acceptable to Landlord) and hold harmless Landlord against all loss, cost, liability and damages suffered or incurred by Landlord as a result of Tenant’s holding over including, without limitation, (i) any payment or rent concession which Landlord may be contractually required to make to any tenant obtained by Landlord for all or any part of the Premises (a “New Tenant”) by reason of the late delivery of space to the New Tenant as a result of Tenant’s holding over or in order to induce such New Tenant not to terminate its lease by reason of the holding over by Tenant, and (ii) the loss of the benefit of the bargain if any New Tenant shall terminate its lease by reason of the holding over by Tenant. Acceptance by Landlord of any Rent after termination shall not constitute a renewal of this Lease or consent to such hold over occupancy, nor shall it waive Landlord’s right of re-entry or any other right contained in this Lease or provided by Law.

 

 
 

 

29. SECURITY DEPOSIT: (a) As security for the performance of its obligations under this Lease, Tenant upon its execution of this Lease shall pay to Landlord the Security Deposit in the amount stated in Clause 1.F. Landlord may use all or any part of the Security Deposit for the payment of any Rent or other sums as to which Tenant may be in default hereunder, or for any sum which Landlord may expend to cure any default of Tenant or by reason of Tenant’s default. Upon notice by Landlord of such application, Tenant shall replenish the Security Deposit in full by promptly paying to Landlord the amount so applied within thirty (30) days after written demand therefore. The Security Deposit shall not be deemed an advance payment of Rent or a measure of damages for any Default by Tenant under this Lease, nor shall it be deemed a bar or defense to any action which Landlord may at any time commence against Tenant. Landlord shall not be required to segregate the Security Deposit from its other funds and may commingle the Security Deposit with its other funds. Landlord’s obligation respecting the Security Deposit is that of a debtor, not a trustee; no interest shall accrue thereon. Upon termination of the Lease and so long as all of Tenant’s obligations under terms and conditions of this Lease have been fulfilled, Landlord will return Tenant’s Security Deposit within thirty (30) days following the later of (a) the expiration or termination of the Lease Term; or (b) the date that Tenant vacates the Premises in the manner required by this Lease and performs all of the covenants required to be performed by Tenant hereunder. In the event this Lease is terminated by or upon the default of Tenant, the Security Deposit shall be retained by Landlord and applied to Landlord’s damages until all such damages are determined, and the balance, if any, shall thereupon be refunded to Tenant. Should the Project be sold or transferred, the Security Deposit will be assigned to the Purchaser or transferee upon which Landlord shall be released from all responsibilities as they relate to the Security Deposit.

 

30. LIMITATION OF LIABILITY: No entity or person holding Landlord’s interest under this Lease (whether or not such entity or person is named as “Landlord”) shall have any liability for any claims, damages, or causes of action arising or accruing after such entity or person ceases to hold such interest. No principal, officer, employee, or partner (general or limited) of Landlord shall have any personal liability under any provision of this Lease. If Landlord defaults in the performance of any of its obligations under this Lease or otherwise, Tenant shall look solely to Landlord’s interest in the Building and not to the other assets of Landlord or the assets, interest, or rights of any principal, officer, employee or partner (general or limited) for satisfaction of Tenant’s remedies.

 

31. NO RECORDING: Neither this Lease nor any memorandum nor notice shall be recorded in any official public records, without Landlord’s written consent.

 

32. SUPERIOR AGREEMENTS; TITLE: Tenant shall comply, at Tenant’s sole cost and expense, with the requirements of all deed restrictions, restrictive covenants and other covenants, conditions and restrictions affecting the Building and/or the Project, as the same may be modified, amended and supplemented from time-to-time (collectively, “Superior Agreements”). Tenant shall not register nor record any document that will encumber Landlord’s title to the Project in any way at any time throughout the Term. Upon request of Landlord, Tenant shall promptly release, or cause to be released at Tenant’s expense, any such encumbrance.

 

33. NOTICES: Whenever any demand, request, approval, consent or notice (“notice”) shall or may be given to either of the parties by the other, each such notice shall be in writing and shall be served by hand delivery (with an acknowledging signature or receipt) or by overnight delivery, addressed to the other party at the address in Clause 1.I or such other addresses designated in writing by Landlord or Tenant, except that if Tenant has vacated the Premises (or if the Notice Address for Tenant is other than the Premises, and Tenant has vacated such address) without providing Landlord a new Notice Address, Landlord may serve notice in any manner described in this Clause or in any other manner permitted by Law. Any notice shall be effective when delivered. Refusal to accept any notice shall be considered receipt of notice. Any notices from Landlord shall be deemed duly given if given by Landlord’s attorney or property manager. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given forty-eight (48) hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed given twenty-four (24) hours after delivery of the same to the Postal Service or courier.

 

 
 

 

34. PARKING. Tenant shall be entitled to park in common with other tenants of the Project in those areas designated for unreserved parking. Tenant shall be responsible for all vehicles owned, rented or used by Tenant and/or Tenant Parties in or about the Project. Notwithstanding the aforesaid, in the event the Premises has access to a loading dock which exclusively services the Premises, then Tenant shall have the right to park its operable trucks overnight in front of such loading dock; provided, however, such operable trucks shall not block or restrict access to and from the Building and the parking lot. Tenant shall not park or store any motor vehicles within the Premises for any reason apart from a Permitted Use. In the event the Premises has access to a loading dock which does not exclusively service the Premises, Tenant shall not park its trucks in the dock area longer than the time it takes to reasonably load or unload its trucks. In no event shall Tenant park any vehicle in or about a loading dock which exclusively services another tenant in, on, or about the Project, or in a thoroughfare, driveway, street, or other area not specifically designated for parking. Landlord reserves the right to update the rules and regulations set forth on Exhibit D from time to time to include uniform rules and regulations for the loading and unloading of trucks upon the Project, which rules may include the right to designate specific parking spaces for tenants’ use. Upon request by Landlord, Tenant shall move its trucks and vehicles if, in Landlord’s reasonable opinion, said vehicles are in violation of any of the above restrictions.

 

35. INTENTIONALLY DELETED

 

36. SUCCESSOR AND ASSIGNS: Subject to any provision hereof restricting assignment or subletting by Tenant, this Lease shall bind and inure to the benefit of the successors, assigns, heirs, executors, administrators, and legal representatives of the Parties. In the event of the sale, assignment, or transfer by Landlord of its interest in the Project or in this Lease (other than a collateral assignment to secure a debt of Landlord prior to enforcement) to a successor in interest who expressly assumes the obligations of Landlord, Landlord shall be released and discharged from all of its covenants and obligations, and Tenant agrees to look solely to such successor of Landlord for performance of such covenants and obligations. Landlord’s assignment of the Lease or of any or all of its rights shall in no manner affect Tenant’s obligations. Landlord shall have the right to freely sell, assign or otherwise transfer its interest in the Project and/or this Lease.

 

37. NO OFFER: This Lease is submitted to Tenant on the understanding that it will not be considered an offer by Landlord and will not bind Landlord in any way until (a) Tenant has duly executed and delivered four (4) duplicate originals to Landlord and (b) Landlord has executed and delivered one of such originals to Tenant.

 

38. JOINT AND SEVERAL LIABILITY: If there is more than one signatory to this Lease those signatories will be jointly and severally liable for the faithful performance of all the terms and conditions of this Lease throughout the Term. All notices, payments, and agreements given or made by, with or to any one of such persons or entities shall be deemed to have been given or made by, with or to all of them.

 

39. TIME IS OF THE ESSENCE: Time is of the essence for each and every provision of this Lease.

 

 

 

 

40.NO WAIVER OR ACCORD AND SATISFACTION:

 

(a) No waiver by Landlord of any breach or Default of the Tenant under this Lease shall constitute a continuing waiver and Landlord may at any time insist on compliance by the Tenant. Landlord shall not be deemed to have waived any breach by Tenant of any term, covenant, or condition herein contained unless the same has been specifically waived by Landlord in writing.

 

(b) Acceptance by Landlord of Rent or other amounts due, in whole or in part, following a Default will not be deemed to be a waiver of any existing or preceding Default by Tenant of any term or condition of this Lease, regardless of Landlord’s knowledge of such preceding Default at the time of acceptance of such Rent or other payment.

 

(c) No payment by Tenant or receipt by Landlord of a lesser amount than the full amount of any installment or payment of Rent or other amount due, shall be deemed to be anything other than a payment on account of the amount due, and no endorsement or statement on any check or payment of Rent or related to it shall 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 installment or payment of Rent or pursue any other remedies available to Landlord.

 

41. ATTORNEY FEES: If either party brings action for relief against the other, declaratory or otherwise, arising out of this Lease, including any suit by Landlord for the recovery of Rent or possession of the Premises, the non-prevailing party shall pay the prevailing party its reasonable costs, fees and expenses incurred in connection with and in preparation for said action, including its reasonable attorneys’ fees. “Prevailing party” shall be the party whose position is substantially upheld in the final judgment rendered in such action. Where neither party achieves a complete victory on all claims, it is within the discretion of the trial court to determine which party, if either, “prevailed” for the purpose of awarding attorneys’ fees.

 

42. BROKERS: Landlord and Tenant respectively represent and warrant to each other that neither of them has consulted or negotiated with any broker or finder with regard to the Premises except the Broker(s) named in Clause 1.J, if any. Landlord and Tenant each shall indemnify, defend and hold the other harmless from any Claims from anyone with whom either of them has consulted or negotiated with regard to the Premises. Landlord will pay any fees or commissions due only to the Brokers named in Clause 1.J as Landlord’s Broker, unless Landlord shall expressly agree to be obligated to another broker.

 

43. FORCE MAJEURE: Landlord shall not be held responsible for delays in the performance of its obligations hereunder when caused by fire, earthquake, weather delays or other acts of God, strikes, lockouts, boycotts, labor disputes, war, riot, insurrection, embargoes, shortages of equipment, labor or materials, delays in issuance of governmental permits or approvals, epidemic, pandemic or disease outbreak (including, without limitation, the COVID-19 virus) or any other cause beyond the reasonable control of Landlord (“Force Majeure”).

 

 

 

 

44. AUTHORIZATION: If Tenant is a corporation, a partnership or limited liability company, the person(s) executing this Lease on behalf of Tenant hereby covenant and warrant that: Tenant is a duly formed corporation or limited liability company or a duly created partnership (as the case may be) in good standing, qualified to do business in the state in which the Project is located; such persons are duly authorized by such corporation, partnership or limited liability company to execute and deliver this Lease on behalf of such corporation, partnership or limited liability company; and this Lease constitutes a valid and binding agreement of Tenant in accordance with the terms hereof.

 

45. RELATIONS OF PARTIES: The parties agree that they intend hereby to create only the relationship of Landlord and Tenant. No provision hereof, or act of either party hereunder, shall be construed as creating the relationship of principal or agent, or as creating a partnership, joint venture or other enterprise, or render either party liable for any of the debts or obligations of the other party.

 

46. SURVIVAL OF OBLIGATIONS: Notwithstanding anything to the contrary contained in this Lease, the expiration of the Term of the Lease, whether by lapse of time or otherwise, shall not relieve Tenant from its obligations accruing during or attributable to any portion of the Term.

 

47. FINANCIAL REPORTS: Throughout the Term, within thirty (30) days after Landlord’s request, Tenant shall furnish a current audited annual and unaudited quarterly financial statements to Landlord, prepared by an independent Certified Public Accountant (quarterly reports can be prepared internally), in each case with a certification by the Chief Financial Officer or another Executive of Tenant that such items are true, correct and complete. Landlord shall have the right to disclose Tenant’s financial statements to lenders or prospective purchasers of the Project.

 

48. PATRIOT ACT COMPLIANCE. Tenant represents to Landlord that Tenant is not a person or entity described by Section 1 of the Executive Order (No. 13224) Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism, 66 Fed. Reg. 49,079 (September 24, 2001), and does not engage in any dealings or transactions, and is not otherwise associated, with any such persons or entities or any forbidden entity. A “forbidden entity” is defined as (a) the governments of Cuba, Iran, North Korea, Myanmar, Syria and Sudan (each, a “Prohibited Country”) and any of their agencies, including but not limited to, political units and subdivisions (each, a “Prohibited Government”); (b) any company that (i) is wholly or partially managed or controlled by a Prohibited Government, (ii) is established, organized under or whose principal place of business is in any Prohibited Country, (iii) has failed to submit an affidavit following request therefor averring that it does not own or control any property or asset in and has not and does not transact business with any Prohibited Country; and (c) to Tenant’s knowledge, any publicly traded company identified by an independent researcher specializing in global security as (i) owning or controlling property or assets or having employees or facilities located in, (ii) providing goods or services to or obtaining goods or services from, (iii) having distribution agreements with, issuing credits or loans to or purchasing bonds or commercial paper issued by, or (iv) investing in any Prohibited Country or any company domiciled in any Prohibited Country. For purposes of this Paragraph, a “company” is any entity whether publicly traded or privately owned capable of affecting commerce, including but not limited to, a government, government agency, natural person, legal person, sole proprietorship, partnership, firm, corporation, subsidiary, affiliate, franchisor, franchisee, joint venture, trade association, financial institution, utility, public franchise, provider of financial services, trust, or enterprise and any association thereof.

 

 

 

 

49. HAZARDOUS MATERIALS:
 

49.1 PROHIBITION. Tenant shall not, nor shall Tenant allow any person to, manufacture, use, generate, produce, store, handle, transport, dispose of or Release any Hazardous Materials on, under, about or from the Premises, the Building or the Project, except for Hazardous Materials contained in products customarily used in the Permitted Uses to be undertaken in the Premises under Clause 6 [Use], provided: (a) such substances shall be used and maintained only in in de minimis quantities as are reasonably necessary for such Permitted Uses and the ordinary course of Tenant’s business therein, strictly in accordance with all applicable Environmental Laws and manufacturer’s instructions therefor, in their original, sealed, and unopened containers, such as for ordinary cleaning (purchased in a container not larger than one (1) gallon) and office purposes, and propane used in Tenant’s forklifts in the normal course of its business, and products containing Hazardous Materials that are stored and/or distributed during Tenant’s normal course of business, (b) such substances shall not be disposed of, Released or discharged in the Building or Project, and shall be transported to and from the Premises in compliance with all applicable Environmental Laws and as Landlord shall reasonably require; (c) if any applicable Environmental Law or Landlord’s trash removal contractor requires that any such substances shall be disposed of separately from ordinary trash, Tenant shall make arrangements at Tenant’s expense for such disposal with a qualified and licensed company at a lawful disposal site; (d) for purposes of removal and disposal of any such substances, Tenant shall be named as the owner and generator, execute all permit applications, manifests, documents and any other required forms, and in addition, Tenant shall execute affidavits, representations and the like from time to time a Landlord’s request concerning Tenant’s best knowledge and belief regarding the presence of Hazardous Materials on the Premises; and (e) if a material safety data sheet is required under applicable Laws to accompany the Hazardous Materials, a copy of such current material safety data sheet is provided to Landlord. If any lender or governmental agency shall ever require testing to ascertain whether or not there has been any Release of Hazardous Materials by Tenant, then the reasonable costs thereof shall be reimbursed by Tenant to Landlord upon demand as additional Rent if such requirement applies to the Premises.

 

49.2 COMPLIANCE. Tenant covenants and agrees that Tenant shall, at all times during the Term and at its sole cost and expense, comply with and assume responsibility and liability under all Environmental Laws applicable to occupancy or use of or operations at the Premises by the Tenant Parties.

 

49.3 NOTIFICATION. Tenant shall notify Landlord upon (a) Tenant’s receipt of all reports, citations, notices and other writings regarding any Hazardous Materials on, under, about or migrating from the Premises, the Building or the Project (or if written by Tenant, upon its writing) and provide a copy of same to Landlord; and (b) any violation of Environmental Laws relating to the Premises or the activities of any Tenant Party, or (c) the Release or threatened release of any Hazardous Materials in, on, under or about the Premises, the Building or the Project.

 

49.4 REMEDIATION. In the event there is a Release of Hazardous Materials at the Premises, the Building or the Project, by Tenant or the Tenant Parties, Tenant shall notify Landlord of the method, time and procedure for Tenant’s clean-up and removal of such Hazardous Materials; and, Landlord shall have the right to require reasonable changes in such method, time or procedure. In the event of any breach of Clause 49 by any Tenant Party, Tenant shall pay all costs for the removal or abatement or clean-up of any Hazardous Materials at the Premises, the Building and the Project.

 

 

 

 

49.5 INDEMNITY. Tenant shall, at its sole cost and expense, protect, defend, indemnify, save and hold the Landlord Parties harmless from and against any and all Claims arising directly or indirectly, in whole or in part, (except to the extent caused by the gross negligence or willful misconduct of Landlord) out of (a) any Tenant Caused Environmental Condition and (b) any failure on the part of any Tenant Party to comply with the provisions of Clause 49.

 

49.6 DEFINITIONS. For purposes of this Lease, “Hazardous Materials” shall mean hazardous or toxic chemicals or any materials containing hazardous or toxic chemicals at levels or content which cause such materials to be classified as hazardous or toxic as then prescribed by the highest industry standards or by the then current levels or content as set from time to time by the U.S. Environmental Protection Agency (“EPA”) or the U.S. Occupational Safety and Health Administration (“OSHA”) or as defined under 29 CFR 1910 or 29 CFR 1925 or other applicable Laws. “Release” shall mean the release or the threatened release of any Hazardous Materials into or upon any land or water or air, or otherwise into the environment, including, without limitation, by means of burial, disposal, discharge, emission, injection, spillage, leakage, seepage, leaching, dumping, pumping, escaping, emptying, placement and the like. “Tenant Caused Environmental Condition” shall mean the presence of Hazardous Materials in, on, under or about the Premises, the Building or the Project, or other violation of Environmental Laws which arose out of or resulted from (a) the negligence or intentional misconduct of any of the Tenant Parties or (b) the use, generation, manufacture, production, transportation, storage, treatment, removal, Release or disposal of Hazardous Materials or products containing Hazardous Materials by any of the Tenant Parties. “Environmental Laws” shall mean any and all Laws and policies, and any and all judicial or administrative interpretations thereof by governmental authorities, as now in effect or hereinafter amended or enacted, relating to: (a) pollution or protection of the environment, natural resources or health and safety; including, without limitation, those regulating, relating to, or imposing liability for Releases or threatened Releases of Hazardous Materials into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, Release, transport or handling of Hazardous Materials; and (b) the use of chemical, electrical, radiological or nuclear processes, radiation, sophisticated electrical and/or mechanical equipment, sonar and sound equipment, lasers, and laboratory analysis and materials.

 

50. LIENS: Except to the extent contracted for by Landlord, the interest of Landlord in the Project shall not be subject in any way to any liens, including real estate sales commission liens and construction liens for improvements to or other work performed by or on behalf of Tenant or anyone claiming by, through or under Tenant. Tenant shall give Landlord at least ten (10) business days’ prior written notice of the expected date of commencement of any work to be performed by or on behalf of Tenant. Landlord shall have the right at all times to keep posted on the Premises any notices permitted or required by Law, or which Landlord shall deem proper, for the protection of Landlord, the Premises, the Project and any other party having any interest therein, against mechanics’ and materialmen’s liens. Tenant promptly shall pay for any labor, services, materials, supplies or equipment furnished to Tenant in or about the Premises. Tenant shall keep the Premises and the Project free from any liens arising out of any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to Tenant. Tenant shall take all steps permitted by Law in order to avoid the imposition of any such lien. Should any such lien or notice of such lien be filed against the Premises or the Project, Tenant shall fully discharge the same by bonding or otherwise within thirty (30) days after Tenant has notice that the lien or claim is filed regardless of the validity of such lien or claim.

 

 

 

 

If a lien or encumbrance is placed on all or part of the Project arising out of work performed by or on behalf of Tenant, Landlord may at its option discharge the lien or encumbrance by paying the amount claimed directly to the creditor or to the court without inquiring as to the validity of any such lien. Tenant shall reimburse Landlord for any amount paid by Landlord to bond or insure over the lien or discharge the lien, including, without limitation, reasonable attorneys’ fees (if and to the extent permitted by Law) within 30 days after receipt of an invoice from Landlord.

 

51. GOVERNING AUTHORITY; VENUE: The Lease shall be interpreted, construed and governed in accordance with the Laws of the State in which the Nevada. Landlord and Tenant also agree that the venue of any such action, proceeding or counterclaim shall be in the state and federal courts located in Clark County, Nevada.

 

52. CAPTIONS: The captions in this Lease are for convenience only and in no way define, limit, construe or describe the scope or intent of the provisions of this Lease, unless otherwise determined by Landlord. None of the provisions of this Lease Agreement shall be construed against or interpreted to the disadvantage of the party that prepared the document.

 

53. CONFIDENTIALITY: Tenant acknowledges that the terms and conditions of this Lease and all related documents are to remain confidential and shall not be disclosed by any Tenant Party to any persons or entity, directly or indirectly, without Landlord’s prior written consent which may not be unreasonably withheld (the “Confidential Information”). Except as required by Court Order and/or Subpoena, Tenant shall not make any of the Confidential Information available, nor disclose any of Confidential Information; provided, however, that the Confidential Information, may be disclosed to Tenant’s counsel, accountants, financial advisors, lenders, tax professionals retained by them, any federal, state, or local governmental taxing or regulatory authority, (all of whom are collectively referred to as “Related Parties”) who, in Tenant’s considered judgment, need to know such information for the purpose of assisting Tenant. These Related Parties shall be informed by the Tenant of the confidential nature of such information and shall be directed by Tenant to keep all such information in the strictest confidence in accordance with this Lease. The Confidential Information in this paragraph shall not include information that (i) is or becomes generally available to the public other than as a result of any violation of this agreement or other wrongful act by Tenant, a Related Party or any of their respective representatives, (ii) has been approved for release by the Landlord, (iii) has been received on a non- confidential basis from a source other than Tenant, a Related Party or any of their respective representatives, provided that such source is not known to the Tenant, after due inquiry, to be subject to a contractual, legal, fiduciary, or other obligation of confidentiality with respect to such information. The consent by Landlord to any disclosure shall not be deemed to be a waiver on the part of Landlord of any prohibition against any future disclosure. Tenant shall indemnify, defend upon request, and hold the Landlord Parties harmless from and against all Claims suffered or claimed by any Landlord Party, based in whole or in part upon the breach of this Clause by any Tenant Party. The obligation within this section shall survive the expiration or early termination of this Lease Agreement.

 

54. ENTIRE AGREEMENT; AMENDMENT: This Lease contains the entire agreement between Landlord and Tenant and there are no other agreements, either oral or written, and no prior agreement, negotiations, brochures, arrangements, or understanding pertaining to any such matter shall be effective for any purpose. This Lease shall not be modified or amended except by a written document signed by Landlord and Tenant which specifically refers to this Lease.

 

 

 

 

55. COUNTERPARTS: This Lease may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of such counterparts shall constitute one Lease. Execution copies of this Lease may be delivered by electronic means, and the parties hereto agree to accept and be bound by such electronic signatures transmitted via email or other electronic means (including pdf or any electronic signature complying with the United States federal ESIGN Act of 2000, e.g., www.docusign.com, or NRS 719 Uniform Electronic Transaction Act), and any such electronic signature shall be deemed valid and effective for all purposes, having the same binding effect as an original signature on an original Lease. At the request of either party, any facsimile document or scanned document transmitted via email shall be re-executed and delivered in original form to the requesting party. Neither party may raise the use of an electronic document or the fact that any signature was transmitted through the use of electronic means, as a defense to the enforcement of this Lease.

 

56. SEVERABILITY: If any provision of this Lease is held to be invalid or unenforceable in any instance by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision, and every other provision of this Lease shall be valid and enforced to the fullest extent permitted by Law.

 

57. EXHIBITS: All Exhibits, Schedules and addenda contained or attached to this Lease shall be deemed to be a part of and are incorporated in this Lease by reference. In the event of any conflict between such Exhibits, Schedules and addenda and the terms of this Lease, such Exhibits, Schedules and addenda shall control except as otherwise stated herein.

 

58. RESERVATION OF RIGHTS: Landlord reserves the following rights for itself, and its agents, representatives, employees and contractors, which may be exercised without notice (except as otherwise expressly provided below) and without liability to Tenant for damage or injury to property, person or business, and the same shall not constitute a termination of this Lease, or constitute an actual or constructive eviction or disturbance of Tenant’s use or possession of the Premises, or entitle Tenant to any claim for setoff or abatement of Rent or relieve Tenant from the performance of any of Tenant’s obligations under this Lease:

 

(a) To change the name and street address of the Building, and to change the arrangement and location of entrances or passageways, doors, and doorways, corridors, elevators, stairs, restrooms or other public parts of the Building, except where such construction significantly impairs or interferes with Tenant’s ability to conduct its business or Tenant’s access to a material portion of the Premises.

 

(b) To retain at all times and to use in appropriate instances and on reasonable notice (except in emergencies) pass keys to the Premises;

 

(c) To grant to anyone the right to conduct any business or render any service in the Building, whether or not it is the same as or similar to the use expressly permitted to Tenant in Clause 6 [Use] above;

 

(d) To take such measures as Landlord deems advisable for the security of the Building and its occupants; Landlord shall have no obligation to provide any safety or security devices, services or programs for Tenant or the Building and shall have no liability for failure to provide the same or for inadequacy of any measures provided. However, Landlord may institute or continue such safety or security devices, services and programs as Landlord in its sole discretion deems necessary. The costs and expenses of instituting and maintaining such devices, services and programs shall be borne by Tenant as a part of Operating Expenses, or as a separate, additional charge to Tenant based on Tenant’s Share or such other reasonable factors as Landlord shall determine. The parties acknowledge that safety and security devices, services and programs provided by Landlord, if any, while intended to deter crime and enhance safety, may not in given instances prevent theft or other injurious acts or ensure safety of parties or property. The risk that any safety or security device, service or program may not be effective, or may malfunction, or be circumvented, is assumed by Tenant with respect to Tenant’s property and interests, and Tenant shall obtain insurance coverage to the extent Tenant desires protection against such acts and other losses. Tenant agrees to cooperate in any safety or security program developed by Landlord or required by Law;

 

 

 

 

(e) Except where such use is necessary for Tenant to fulfill its maintenance obligations, the exclusive use of roofs; telephone, utility, communication and janitorial closets; equipment rooms, Building risers or similar areas that are used by Landlord for the provision of Building services; rights to the land and improvements below the floor of the Premises (including, without limitation, any cellars, vaults, vault space or area); the improvements and air rights above the Premises; the improvements and air rights outside the demising walls of the Premises; and the areas within the Premises used for the installation of utility lines and other installations serving occupants of the Building;

 

(f) Exclusive use of the Building name (and/or any other trade names and/or marks of Landlord or any affiliate of Landlord) and the goodwill associated therewith (collectively, the “Trademark”) and all rights with respect to the Trademark. None of the Tenant Parties shall use the Trademark or any pictures, illustrations or likenesses of the Building or any symbol, design, mark or insignia adopted by Landlord for the Building, in Tenant’s advertising or other publicity or for any purpose other than as the address of the business to be conducted by Tenant in the Premises, without the prior written consent of Landlord; and

 

(g) To alter, modify, demolish, change, renovate and repair any portion of the Project, Building and the Common Areas, and may add to or reduce or otherwise modify Common Areas at any time. Tenant consents to the performance of all work deemed appropriate by Landlord to accomplish the foregoing. Landlord shall use commercially reasonable efforts to minimize the interference with Tenant’s business in the Premises in connection therewith.

 

59. DEFERRED RENT: The Monthly Base Rent for the second (2nd) month of the Initial Lease Term shall be deferred (“Deferred Rent”), and if Tenant fully and faithfully complies with all terms and conditions of this Lease throughout the Term, the Deferred Rent shall be, after the expiration of this Lease, forgiven. However, Tenant shall pay all additional Rent, other costs and expenses due by Tenant under the Lease. If Tenant shall default under any term and condition of this Lease and such default is not cured within the applicable period, if any, then the Deferred Rent shall, without further notice, immediately become due and payable as Rent.

 

  Exhibit A The Project Leasing Plan
  Exhibit B Legal Description of the land
  Exhibit C Work Letter Agreement
  Exhibit D Rules and Regulations
  Exhibit E Lease Confirmation Certificate
  Exhibit F Sign Criteria
  Exhibit G Preventative Maintenance Procedures
  Exhibit H Move Out Conditions
  Exhibit I Insurance Requirements for Contractors
  Exhibit J Intentionally omitted.
  Exhibit K Tenant’s Outside Storage

 

THE PROVISIONS CONTAINED IN Clauses 1 through 59, and Exhibits A through K are incorporated into and become a part of this Lease by reference.

 

The Company agrees to furnish supplementally a copy

of any omitted schedule to the Commission upon request.

 

[Signatures on following page.]

 

 

 

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year written below.

 

LANDLORD:   TENANT:
Mosaic Commerce Center, LLC,   Boxabl Inc.,
a Nevada limited liability company,   a Nevada corporation
         
By: Mosaic CC MGR, LLC,   By:
  a Nevada limited liability company,   Name:  Paolo Tiramani
  its Manager,   Title: President and secretary
      Date: 6/13/2022
By: Mosaic Development LLC,      
  a Nevada limited liability company,      
  its Manager,      
         
By: ND Holdings LLC,      
  a Nevada limited liability company,      
  its Manager,      
         
By: ND Administrative Trust,      
  its Manager      
         
By:      
  Name: Vincent T. Schettler      
  Title: Trustee      
Date:  6/13/2022      

 

 

 

Exhibit 10.12

 

Picture 1

 

SERVICES AGREEMENT

 

This Services Agreement (“Agreement”) is dated as of [ 01/01/2023               ] (“Effective Date”), between Boxabl Inc., a Nevada corporation (“Company”), and Supercar System, Inc., a Nevada corporation (“SC”). Company and SC may from time to time each be referred to herein as a “Party” and collectively as the “Parties” to this Agreement.

 

RECITALS

 

WHEREAS, SC wishes to utilize Company to provide the services set forth in Article 2 of this Agreement (the “Services”) in the conduct of the business of SC; and

 

WHEREAS, Company is willing to provide SC with the Services on the terms and conditions set forth in this Agreement.

 

Now therefore, for good and valuable consideration, the Parties agree as follows:

 

ARTICLE 1.
DEFINITIONS

 

Section 1.1. Definitions. The following terms shall have the respective meanings set forth below throughout this Agreement:

 

“Confidential Information” of a Party means any and all nonpublic information of or concerning such Party and its affiliates, including but not limited to technical and financial information, customer and vendor lists, accounting data, trade secrets, know how, product designs, business development plans, product development plans and any and all other nonpublic business information.

 

ARTICLE 2.
SERVICES

 

Section 2.1. Services. In accordance with the terms and conditions of this Agreement, and upon the request of SC, Company agrees to provide to SC, or, agrees to cause third parties to provide to SC, the Services as described herein in connection with the conduct of the business of SC. Company agrees to give reasonable consideration to any request by SC for any services, insofar as they are reasonably related to the business of SC and within the scope of Company’s capabilities. Company will not be in breach of this Agreement if it declines to provide a requested service for any good faith reason. Any such services that Company agrees to provide hereunder shall constitute Services hereunder and be subject in all respects to the provisions of this Agreement.

 

1
 

 

Picture 1

 

ARTICLE 3
PAYMENTS

 

Section 3.1. Fee. When a Boxabl employee renders Services for SC pursuant to this Agreement, SC shall reimburse Boxabl for the value of that portion of time spent by the Boxabl employee, in the given Boxabl pay period, performing Services for SC. (“Service Fee”). The Service Fee shall be based on the employee’s wages at Boxabl, and shall reflect the value of the percent of the employee’s time spent in the given pay period performing Services for SC.

 

The Service Fee shall be due and payable on the first day of each calendar month following the performance of said services during the Term. All costs and expenses for which SC is responsible shall be separately invoiced by Boxabl to SC as incurred, and shall be paid within ten (10) business days of the date of each invoice.

 

ARTICLE 4
CONFIDENTIAL INFORMATION

 

Section 4.1. Treatment of Confidential Information. Each Party agrees to protect the Confidential Information of the other Party to which it is given access, or to which it is exposed, with at least the same degree of care that the Party uses to protect its own confidential or proprietary information of like character, but in any event not less than a reasonable degree of care. Neither Party shall use the other Party’s Confidential Information other than to perform Services pursuant to this Agreement, absent written consent of the disclosing Party. Company may disclose SC’s Confidential to its affiliates, contractors, and agents as necessary in connection with its performance of the Services provided that such persons are informed of the confidential nature of such information and are bound by comparable confidentiality obligations. The obligation of confidentiality imposed on each Party hereunder shall not apply to information that (i) was already in the possession of the Party without restriction on its use or disclosure prior to the receipt of the information from the other Party, (ii) is or becomes available to the general public through no act or fault of the Party, (iii) is rightfully disclosed to the Party by a third party without restriction on its use or disclosure, (iv) is independently developed by employees and/or consultants of the Party who have not had access to the other Party’s Confidential Information, or (v) is required to be disclosed pursuant to judicial or governmental decree or order, provided that the disclosing Party is, where permitted, given prompt written notice of and the opportunity to defend against disclosure pursuant to such decree or order.

 

Section 4.2 Return of Confidential Information. Upon any termination or expiration of this Agreement, at the written request of the other Party, each Party shall deliver to the other Party all records and data embodying or containing the Confidential Information of the other Party that are within its possession or under its control, or to confirm in writing that it has destroyed all such records and data.

 

Section 4.3. Injunctive Relief. Without limiting any other remedies that may be available, a Party shall be entitled to seek an injunction to prevent actual or threatened breaches of this Agreement based upon the unauthorized disclosure of its Confidential Information by the other Party, in addition to any other remedy to which they are entitled at law or in equity, in any court having competent jurisdiction and without any obligation to post a bond or other security.

 

2
 

 

 

ARTICLE 5
TERM AND TERMINATION

 

Section 5.1. Term; Termination on Notice. This Agreement shall commence on the Effective Date and shall have a term (the “Term”) that continues in effect thereafter until terminated, either by written notice of termination from either of the Parties to the other, which notice shall be effective thirty (30) days from the date thereof, or in accordance with the provisions of Section 5.2 below.

 

Section 5.2. Default. Any one or more of the following events shall constitute an event of default hereunder:

 

(a) SC’s failure to pay amounts when due under Article 3; or 

 

(b) the failure of either Party to perform any other material obligation required of it to be performed hereunder; or 

 

(c) either Party becoming insolvent or becoming the subject of any proceeding under any bankruptcy, insolvency or liquidation law.

 

Section 5.3. Termination on Default. Upon the occurrence of any event of default set forth in Section 5.2(a) or 5.2(b), the non-defaulting Party may deliver to the defaulting Party written notice of intent to terminate specifying in reasonable detail the nature of such default, whereupon this Agreement shall terminate thirty (30) days after the defaulting Party’s receipt of the notice, unless the event of default is cured within such period. Upon the occurrence of any event of default set forth in Section 5.2(c), the non-defaulting Party may deliver to the defaulting Party written notice of same, whereupon this Agreement shall terminate immediately upon Licensee’s receipt of the notice.

 

ARTICLE 6
MISCELLANEOUS

 

Section 6.1. Authority. The Services are provided by Company as an independent contractor. Neither Party, nor any employee, agent, representative or other individual or entity acting on behalf of either Party, shall be deemed to be a servant, employee, agent, partner, or joint venturer of the other Party. Neither of the Parties nor its respective employees or agents may bind or purport to bind the other of the Party, including by entering into any agreement (oral or written), contracts, leases, licenses or other documents (including the signing of checks, notes, bills of exchange or any other document, or accessing any funds from any bank accounts) on behalf of the other Party, unless expressly authorized by the other Party.

 

3
 

 

Picture 1

 

Section 6.2. Governing Law. This Agreement shall be construed in accordance with the laws of the State of Nevada.

 

Section 6.3. Entire Agreement; Amendments. This Agreement constitutes the entire agreement between the Parties, and contains all of the agreements between the Parties, with respect to the subject matter hereof. This Agreement supersedes any and all other prior and contemporaneous agreements, either oral or in writing, between the Parties hereto with respect to the subject matter hereof. No change or modification of this Agreement shall be valid unless the same shall be in writing and signed by both of the Parties.

 

Section 6.4. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

[Signature page to follow]

 

4
 

 

Picture 1

 

IN WITNESS WHEREOF, the Parties hereto have duly executed this Services Agreement as of the dates indicated below.

 

  Company:
     
  BOXABL INC.
     
  /s/ Paolo Tiramani
  Name: Paolo Tiramani
  Title: CEO
     
  Dated: 1/1/2023
     
  SC:  
     
  SUPERCAR SYSTEM, INC.
     
  /s/ Paolo Tiramani
  Name: Paolo Tiramani
  Title: CEO
     
  Dated: 1/1/2023

 

5

 

 

Exhibit 10.13

 

LEASE AGREEMENT

 

THIS LEASE, DATED April    12   , 2023 BUT EFFECTIVE AS OF January 1, 2023, IS EXECUTED BY AND BETWEEN BOXABL, INC., a Nevada corporation, whose principal place of business is 5345 E N Belt Road, North Las Vegas 89115, (hereinafter referred to as the “Landlord”) and SUPERCAR SYSTEM, INC., a Delaware corporation (hereinafter referred to as the “Tenant”). In consideration of the mutual promises and covenants exchanged between the Landlord and the Tenant, it is hereby agreed as follows:

 

1. PREMISES:  The Landlord herein agrees to lease to the Tenant, and the Tenant herein agrees to lease from the Landlord, upon all of the conditions set forth herein, four (4) of the support squares located within the real property located at 5435 E. N. Belt Road, in the County of Clark, in the State of Nevada and ZIP code of 89115 (the “Property”), including any land and any improvements thereon, shall hereinafter be referred to as the “Premises.” The Premises shall also include reasonable use of the shipping department, at the sole discretion of Landlord.

 

2. TERM: The term of this Lease shall be for a period of three years, commencing on January 1, 2023 and terminating on December 31, 2026, unless otherwise amended by the parties in writing. Notwithstanding the foregoing, the parties agree that Landlord has the right to terminate the Lease Agreement at any time by providing Tenant with thirty (30) days advance written notice.

 

3. DELAY IN COMMENCEMENT OF LEASE: In the event that the Landlord is not able to deliver possession of the Premises to the Tenant on the aforementioned commencement date, the Tenant shall not therefore be held liable, nor shall such failure affect the validity of this lease or obligations of the Lease hereunder or extend the term thereof, but in such case as a delay in commencement should occur, the Tenant shall not be obligated to pay any rent until such time as the Tenant takes possession of the Premises.

 

However, in the event that the Landlord does not deliver possession of said Premises to the Tenant within sixty (60) days from the aforementioned commencement date, the Tenant may at their sole discretion, by way of written notice to the Landlord, cancel this Lease, and at which time the parties shall be discharged and released from any and all obligations associated with this Lease.

 

4. MONTHLY LEASE AMOUNT: The Tenant shall pay to the Landlord a monthly rental amount of SEVEN THOUSAND FOUR HUNDRED AND NINE DOLLARS AND TWENTY THREE CENTS ($7,409.23) on the FIRST (1st) day of each month for the duration of this lease term. Upon the signing of this Lease Agreement, the Tenant shall pay to the Landlord the first month’s rent in advance.

 

All future monthly payments shall be sent shall be mailed or hand delivered to the Landlord at the aforementioned address in paragraph one (1) or to such other person or place as the Landlord may designate in writing.

 

5. USE OF PREMISES: The Tenant shall have complete use and control of the Premises for the duration of the Lease Agreement, until such time as the Lease expires. Subject to the foregoing, Landlord may, by providing Tenant with advance written notice, store a reasonable amount of materials in the supercar racks and trailers upon the Premises. Landlord shall ensure all materials, equipment, trailers or other items stored on the Premises are adequately insured and shall indemnify, defend and hold Tenant harmless from any and all claims arising from or resulting from Landlord’s use of the Premises for such storage.

 

1

 

 

6. CONDITION OF PREMISES: The Tenant acknowledges that the premises are in good repair and in safe and clean condition.

 

7. WASTE, NUISANCE OR UNLAWFUL USE:  The Tenant shall not cause or allow waste on the Premises, or maintain or permit to be maintained a nuisance on the Premises, or use or permit the Premises to be used in an unlawful manner.

 

8. ATTORNEY’S FEES:  In the event that of a breach of this agreement or should legal recourse be deemed necessary by either party to this Lease Agreement, the parties herein agree that if the Landlord should be the prevailing the party that the Landlord shall have the right to recover as part of the judgment reasonable attorney’s fees, filing fees and/or court costs.

 

9. REDECORATION OR ALTERATIONS: The Tenant shall not redecorate or make any alterations to the Premises, in any way, that would constitute the making of alterations, or repaint the walls or woodwork, without first obtaining Landlord’s prior written consent to the alterations or redecoration.

 

10. NO ASSIGNMENT OR SUBLETTING: Tenant shall not assign, sell, mortgage, pledge or in any manner transfer this Lease or any interest herein, or the term or estate granted hereby or the rentals hereunder, or sublet the Premises or any part thereof, or grant any concession or license or otherwise permit occupancy of all or any part of the Premises by any person, without the prior written consent of Landlord, which may be withheld for any reason.

 

11. BINDING EFFECT: This Lease Agreement shall inure to the benefit of and be binding on the heirs, successors, executors, administrators and assignees of the parties.

 

12. GOVERNING LAW: This Agreement shall be governed, construed and interpreted by, through and under the Laws of the State of Nevada.

 

2

 

 

The undersigned have read the foregoing Lease prior to execution and hereby acknowledge receipt of a copy of this Lease Agreement.

 

 

LANDLORD:

 

 

 

 

 

BOXABL, INC.,

 

a Nevada corporation

 

 

 

 

By:

/s/ Galiano Tiramani

 

 

 

 

Name:

Galiano Tiramani

 

 

 

 

Title:

Director

 

 

 

 

 

 

 

TENANT:

 

 

 

 

 

SUPERCAR SYSTEM INC.,

 

a Nevada corporation

 

 

 

 

By:

/s/ Paolo Tiramani

 

 

 

 

Name:

Paolo Tiramani

 

 

 

 

Title:

CEO

 

3

 

Exhibit 10.14

 

 

 

THURSDAY, AUGUST 31, 2023

 

 

Welcome to Boxabl!!

 

Dear Martin Costas:

 

We are pleased to offer you employment with Boxabl at 5345 E North Belt Road Suite 115, North Las Vegas, NV 89115. We would like you to join our team as a CFO. A job description outlining the responsibilities of this position is enclosed for your review.

 

You will report to: Paolo Tiramani

 

Upon your acceptance of this offer, your tentative start date will be: October 2, 2023 which is contingent on passing a background check.

 

This is a Full-Time position and you will be classified as a exempt employee with a salary of $325,000.00 per year, payable every other week as per the standard payroll practices of the company. Your earnings are subject to deductions for taxes and other withholdings as required by law or company policy.

 

Stock Grant: $5,000,000 stock grant subject to vesting period and other terms and conditions; contract will be provided after start date.

 

Relocation Benefit: As part of your employment offer, you will receive a lump sum relocation benefit of $27,500, which will be included in your first paycheck. Please note that the IRS considers relocation expenses paid by an employer as taxable income.

 

Kindly be aware that if you voluntarily terminate your employment before completing one year from your hire date, you will be responsible for reimbursing the full amount of the relocation benefit.

 

Employee Benefits: Our employee benefits package includes paid time off and medical, dental, and vision benefits. Our Company provides group carrier health, dental and vision insurance plans to all full-time employees. Coverage is offered either on an individual, employee and spouse, employee and dependents or family plan. Boxabl will pay up to 50% of the employee’s health benefit costs and the employee pays the 50% percent of the monthly premium through payroll deductions. Employee must sign up for benefit coverage within the first 45 days of employment. Insurance coverage begins on the first day of the first month following 60 days of full-time employment. Your insurance will begin the first of the month after 60 days of employment on December 1, 2023. Your benefit contribution payment will be designated by a monthly sum that is divided between bi-weekly paychecks.

 

PTO: You can earn up to a maximum of 120 hours of PTO per year, which begins to accrue after your first day and is equivalent to approximately three weeks on an annual basis which is available for use after 90 days of employment with Boxabl.

 

 

 

 

Holiday: After 90 days of full-time employment, you will be eligible for the following paid holidays: New Year’s Day, Memorial Day, Independence Day (July 4th), Labor Day, Thanksgiving, and Christmas.

 

Introductory Period: As an employee, after the completion of your 90-day introductory period, you will be eligible to receive certain employee benefits including paid time off and paid holidays.

 

Please Note: During the introductory period you will be evaluated on your performance, attendance, and any key metrics the company deems fit for your role. You should note that the company may modify job titles, salaries, and benefits from time to time as it deems necessary.

 

At-Will Employment: We are excited about your joining our team and look forward to a beneficial and productive relationship. Nevertheless, you should be aware that your employment with Boxabl constitutes at-will employment. As a result, you are free to resign at any time, for any reason or for no reason. Similarly, the company is free to conclude its employment relationship with you at any time, with or without cause, and with or without notice. We request that, in the event of resignation, you give the company at least two weeks’ notice.

 

Boxabl reserves the right to conduct background checks and/or reference checks on all its potential employees. Your job offer is contingent upon clearance of a background check and/or reference check if any.

 

For purposes of federal immigration law, you will be required to provide to Boxabl documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your date of hire, or our employment relationship with you may be terminated.

 

By accepting this offer, you also agree that throughout your employment, you will observe all Company rules governing the conduct of our business and employees, including any policies protecting employees from illegal discrimination and harassment.

 

As a company employee, you will be expected to abide by the company’s rules and standards and code of conduct policy. During your onboarding orientation, you will be requested to sign acknowledgment and understanding of these important company policies.

 

During your employment, you may have access to trade secrets and confidential business information belonging to the company, including client lists, financial information, marketing plans, and other confidential materials. By accepting this offer of employment, you agree to sign the company’s standard “Confidential Information Agreement”, if you have not already done so.

 

This letter, along with any agreements relating to proprietary rights between you and Boxabl set forth the terms of your employment with the company and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews, or pre-employment negotiations, whether written or oral. This letter, including, but not limited to, it is at-will employment provision, may not be modified or amended except by a written agreement signed by the Company and you.

 

You acknowledge that this offer letter represents the entire agreement between you and Boxabl and that no verbal or written agreements, promises or representations that are not specifically stated in this offer, are or will be binding upon Boxabl.

 

If you are in agreement with the above outline, please sign below. This offer is in effect for three business days and offer of employment may terminate if it is not accepted, signed, and returned by September 4, 2023. If you have any questions regarding this offer, please contact human resource department.

 

We look forward to you joining the Boxabl team.

 

Sincerely,

 

 

 

 

 

Porsha Jackson

 

Human Resources Manager

Date: August 31, 2023

 

 

 

 

Enclosures:

Job Description

 

Offer Letter Acceptance

 

I have read and accept this offer of employment:

 

/s/ Martin Costas

 

09/05/2023

 

Martin Costas

 

Date

 

 

 

 

 

Exhibit 10.15

 

[XXX] INDICATES CERTAIN IDENTIFIED INFORMATION THAT HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE OF INFORMATION THE COMPANY TREATS AS PRIVATE AND CONFIDENTIAL

 

RESTRICTED STOCK UNIT AGREEMENT UNDER THE

BOXABL INC. 2021 STOCK INCENTIVE PLAN

 

Name of Grantee:

Martin Costas

(the “Grantee”)

 

 

 

No. of Shares Subject to Award:

7,142,857

(the “RSUs”)

 

 

 

Grant Date:

10/2/2023

(the “Grant Date”)

 

 

 

Date of Vesting1:

10/2/2026

(the “Vesting Date”)

 

THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is entered into by and between Boxabl Inc., a Nevada corporation (the “Company”), and the Grantee named above, as of the Grant Date noted above, pursuant to the Boxabl Inc. 2021 Stock Incentive Plan (the “Plan”).

 

WHEREAS, the Company recognizes that the Grantee’s services are uniquely valuable to the Company and wishes to grant Restricted Stock Units to the Grantee in accordance with the Plan and this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Grantee agree as follows:

 

AGREEMENT

 

1. DEFINITIONS. To the extent not specifically defined in this Agreement, all capitalized terms used in this Agreement shall have the meaning set forth in the Plan.

 

2. GRANT OF RESTRICTED STOCK UNITS. Subject to the terms of this Agreement and Article 8 of the Plan, the Company grants to the Grantee the number of Restricted Stock Units set forth above.

 

3. VESTING OF RESTRICTED STOCK UNITS. Subject to the other provisions of this Agreement and the Plan, the RSUs shall vest as of the Vesting Date and shall become fully vested and subject to monetization upon the first to occur of: (i) a time at which the Company tenders for and successfully acquires the RSUs, (ii) the date of the closing of a transaction (or series of transactions) that results in a Change of Control as long as such transaction (or series of transactions) constitutes a “change in control event” as define in Section 409A of the Code and the regulations thereunder; or (iii) the first trading day that is on or after the expiration of the “lock up” period after the effective date of the initial underwritten sale of the Company’s equity securities to the public on an established securities market (collectively, a “Qualifying Transaction”). If Grantee’s employment terminates for any reason prior to a Qualifying Transaction, such termination shall result in the immediate cancellation and lapse of the RSUs, which means you will not be entitled to any payment pursuant to this Agreement.

 

4. PAYMENT FOR RESTRICTED STOCK UNITS. The Restricted Stock Units that vest pursuant to Section 3, if any, will be paid to the Grantee in Stock in a single sum within fifteen (15) business days after the closing of the Qualifying Transaction. For the avoidance of doubt, no payment will be made pursuant to this Agreement prior to the closing of a Qualifying Transaction.

 

 

1 Vesting subject to additional terms and conditions set forth herein.

 

1

 

 

5. NO PAYMENT UPON TERMINATION FOR CAUSE FOLLOWING QUALIFYING TRANSACTION. Notwithstanding anything in this Agreement to the contrary, no payment will be made pursuant to this Agreement if the Grantee’s employment is terminated for Cause after a Qualifying Transaction but prior to the date on which payment is made pursuant to Section 4, above. 

 

6. SECURITIES ACT. 

 

(a) Registration. The Company has the right, but not the obligation, to cause the issuance and sale of the Stock issued pursuant to this Agreement, if any, or the resale thereof, to be registered under the Securities Act. 

 

(b) Condition on Delivery of Stock. The Company shall not be required to deliver any shares of Stock on settlement of this RSU if, in the opinion of counsel for the Company, the issuance would violate the Securities Act or any other applicable federal or state securities laws or regulations. The Company may require the Grantee, prior to or after the issuance of any Stock hereunder, to sign and deliver to the Company a written statement, in form and content acceptable to the Company in its sole discretion, that the Grantee: (i) shall not sell any of such Stock or any other Stock of the Company that the Grantee may then own or hereafter acquire except with the prior written approval of the Company, and (ii) shall comply with the Securities Act, the Exchange Act, and all other applicable federal and state securities laws or regulations. 

 

(c) Legends. In addition to any other legend that may be required by the Company from time to time or pursuant to applicable law, certificates representing any Stock shall bear a legend restricting the transferability of such Stock in substantially the following form: 

 

“The transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including repurchase, right of first refusal, and restrictions against transfers) contained in a Restricted Stock Unit Agreement between the Company and the holder of this certificate (a copy of which is available at the offices of the Company for examination).

 

The shares represented by this certificate have not been registered under the Securities Act of 1933 or the securities laws of any state. The shares may not be sold or transferred in the absence of such registration or an exemption from registration.”

 

7. ACKNOWLEDGEMENTS AND REPRESENTATIONS OF GRANTEE. In connection with the delivery of any Stock, the Grantee hereby warrants and acknowledges the following: 

 

(a) Further Limitations on Disposition. The Grantee understands and acknowledges that the RSUs and the shares of Stock subject to the RSUs are not registered under the Securities Act or any applicable state securities laws and may not be sold, assigned, transferred, or disposed of (including transfer by gift or operation of law) except in accordance with this Agreement. Further, the Grantee agrees to make no sale, assignment, transfer or other disposition of all or any portion of the RSUs or related Stock unless there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement, or the Grantee has obtained an opinion of counsel satisfactory to the Company that such disposition does not require registration under the Securities Act. The Company may request a copy of any such opinion and, upon such request, the Grantee shall promptly provide such copy to the Company. The Company shall not be required to permit the Grantee’s proposed assignment, transfer or other disposition unless such opinion is satisfactory (in form and substance) to the Company, as determined by the Company in its sole discretion.

 

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(b) Investment Representations. The Grantee hereby represents and warrants to the Company as follows: (i) the Grantee is acquiring the Stock, if any, for the Grantee’s own account for investment only, and not for the resale or with a view to the distribution thereof; (ii) the Grantee has had such an opportunity as he or she has deemed adequate to obtain from the Company such information as is necessary to permit the Grantee to evaluate the merits and risks of the Grantee’s investment in the Company and has consulted with the Grantee’s own advisers with respect to the Grantee’s investment in the Company; (iii) the Grantee is an employee or Consultant of the Company or one of its Affiliates and/or the Grantee has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the acquisition of the Stock and to make an informed investment decision with respect to such acquisition; (iv) the Grantee can afford a complete loss of the value of the RSUs (and any related Stock) and is able to bear the economic risk of holding such Stock for an indefinite period; and (v) this Agreement constitutes the legal, valid and binding obligation of the Grantee, enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Grantee do not and shall not conflict with, violate, or cause a breach of any other agreement, contract or instrument to which the Grantee is a party or any judgment, order or decree to which the Grantee is subject.

 

8. LOCKUP PROVISION; MARKET STAND-OFF AGREEMENT. The Grantee agrees that he or she will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of shares of its Stock and ending on the date specified by the Company and the managing underwriter selected by the Company (such period not to exceed 180 days) or, if required by such underwriter and permitted by applicable law, such longer period of time as is necessary to accommodate regulatory restrictions: (a) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any securities of the Company held immediately prior to the effectiveness of the registration statement; or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any securities of the Company, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Stock or other securities of the Company, in cash or otherwise. The underwriters in connection with such registration are intended third party beneficiaries of this Section 8 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. The Grantee further agrees to execute such agreements as may be  reasonably requested by the underwriters in connection with such registration that are consistent with this Section 8 or that are necessary to give further effect thereto. 

 

9. RIGHTS OF GRANTEE. The Grantee shall have no rights as a stockholder of the Company with respect to the RSUs until actual shares of Stock are delivered to Grantee pursuant to this Agreement. Subject to this Agreement, upon the delivery of Stock, the Grantee shall be considered the record owner of the Stock and shall be entitled to vote the Stock and receive any dividends and any other distributions declared and paid by the Company with respect to the Stock, provided and only to the extent that the Grantee actually holds such Stock as of the applicable record date for any such dividend. The Grantee acknowledges that the Company is under no duty to declare any such dividends or to make any such distributions. 

 

10. CONTINUED SERVICE. This Agreement shall not be construed to confer upon the Grantee any right to continued employment or service with the Company and shall not limit the right of the Company, in its sole and absolute discretion, to terminate the Grantee’s employment or service at any time. 

 

3

 

  

11. ADMINISTRATION. This Agreement shall at all times be subject to the terms and conditions of the Plan and the Plan shall in all respects be administered by the Committee in accordance with the terms of and as provided in the Plan. The Committee shall have the sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of the Committee with respect thereto and to this Agreement shall be final and binding upon the Grantee and the Company. In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of the Plan shall control. 

 

12. PLAN; ENTIRE AGREEMENT. This Agreement and all rights of the Grantee under this Agreement are subject to all of the terms and conditions of the Plan, which are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and conditions of this Agreement and the Plan, the terms and conditions of the Plan shall govern. The Grantee agrees to be bound by the terms of the Plan and this Agreement. The Grantee acknowledges having read and understood the Plan and this Agreement. This Agreement and the Plan constitutes the entire, final, and complete agreement between the parties hereto with respect to the subject matter hereof and supersede all prior agreements, promises, understandings, negotiations, representations, and commitments, both written and oral, between the parties hereto with respect to the subject matter hereof. 

 

13. TAX WITHHOLDING; TAX ADVICE. As described in Section 13.3 of the Plan, the Company shall have the right to deduct or withhold from any payments made by Company to the Grantee, or to require that the Grantee remit to Company, an amount sufficient to satisfy any federal, state or local taxes of any kind as are required by law to be withheld with respect to the settlement of the RSUs granted hereunder. The Grantee hereby acknowledges that neither the Company nor any of its representatives has provided to the Grantee any tax-related advice with respect to the matters covered by this Agreement. The Grantee understands and acknowledges that the Grantee is solely responsible for obtaining his or her own tax advice with respect to the matters covered by this Agreement. 

 

14. ADJUSTMENTS. The number of shares Stock subject to these RSUs shall be adjusted by the Committee as described in Section 11.1 of the Plan in the event of a change in the Company’s capital structure. 

 

15. AMENDMENT. Except as otherwise provided in the Plan, this Agreement may only be amended with the written approval of the Grantee and the Company. The provisions of this Agreement may not be waived or modified unless such waiver or modification is in writing and signed by a representative of the Committee. 

 

16. GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Nevada without regard to conflict of law principles that would require the application of any other law. 

 

17. SEVERABILITY. If any provision of this Agreement, or the application of any such provision to any person or circumstance, is held to be unenforceable or invalid by any court of competent jurisdiction or under any applicable law, the parties hereto shall negotiate an equitable adjustment to the provisions of this Agreement with the view to effecting, to the greatest extent possible, the original purpose and intent of this Agreement, and in any event, the validity and enforceability of the remaining provisions of this Agreement shall not be affected thereby. 

 

18. ASSIGNMENT BY COMPANY. The Company’s Right of First Refusal may be assigned in whole or in part to any stockholder(s) of the Company. 

 

4

 

 

19. CLAWBACK. Pursuant to Section 10.1 of the Plan, every Award issued pursuant to the Plan is subject to potential forfeiture or “clawback” to the fullest extent called for by applicable federal or state law, rules of any national securities exchange on which the Stock may be listed, or any policy of the Company. By accepting this Award, Grantee agrees to be bound by, and comply with, the terms of any such forfeiture or “clawback” provision imposed by applicable federal or state law, rules of any national securities exchange on which the Stock may be listed, or prescribed by any policy of the Company. 

 

20. SHAREHOLDERS AGREEMENT; RESTRICTIVE COVENANTS; OTHER AGREEMENTS. If requested by the Company, Grantee agrees to be bound by, comply with, and become a party to, any current shareholders agreement or stockholders agreement, voting agreement, investors’ rights agreement, or similar agreement adopted by the Company in the future. Similarly, by signing this Agreement, Grantee consents to the confidentiality, non-competition, non-solicitation and similar provisions set forth in Exhibit A attached hereto. 

 

21. SECTION 409A COMPLIANCE. Neither the time nor the schedule of the payment of the RSUs may be accelerated or subject to further deferral except as permitted pursuant to Section 409A of the Code and the applicable regulations. Payment of the RSUs may be delayed only in accordance with Section 409A of the Code and the applicable regulations and the Grantee may not make any election regarding the time or the form of the payment of the RSUs. This Agreement shall be administered in compliance with Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A of the Code or an exception thereto. Nevertheless, the Company does not and cannot guarantee any particular tax effect or treatment of amounts due under this Agreement. Except for the Company’s responsibility to withhold applicable income and employment taxes, the Company will not be responsible for the payment of any applicable taxes on compensation paid or provided pursuant to this Agreement. 

 

22. ACCEPTANCE. This Award must be accepted by the Grantee within a period of 30 days after the Grant Date by executing this Agreement. Subject to the Committee’s discretion, if the Award is not accepted within this time period, all RSUs purported to be granted hereunder will be immediately forfeited. 

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

5

 

  

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative and the Grantee has signed this Agreement, in each case as of the day and year first written above.

 

 

BOXABL INC.

 

 

 

 

By:

/s/ Galiano Tiramani

 

Name:

Galiano Tiramani

 

Its:

Co-Founder & Director

 

 

 

 

GRANTEE:

 

 

 

 

By:

/s/ Martin Noe Costas

 

Name:

Martin Noe Costas

 

Electronic mail Address: XXXXXXXXXXXX

 

Home Address: XXXXXXXXXXXX

 

6

 

 

EXHIBIT A

 

Restrictive Covenants

 

In consideration of the Company’s entering into the attached Restricted Stock Unit Agreement and the Company’s obligations thereunder and other good and valuable consideration and as a condition to the receipt of the Restricted Stock Units pursuant to the Restricted Stock Unit Agreement, and as a necessary measure to protect the legitimate business interests of the Company, by signing the attached Restricted Stock Unit Agreement, you agree to the following additional terms and conditions:

 

1. Confidential Information Defined.

 

1.1 For purposes of this Exhibit A, “Confidential Information” includes, but is not limited to, all Company (or the Company’s affiliated entities, officers, directors, employees, stockholders, representatives or agents hereinafter “Company Group”) information not generally known to the public, in spoken, printed, electronic or any other form or medium, relating directly or indirectly to: business processes, practices, methods, policies, plans, publications, documents, research, operations, services, strategies, techniques, agreements, contracts, terms of agreements, transactions, potential transactions, negotiations, pending negotiations, know-how, trade secrets, computer programs, computer software, applications, operating systems, software design, web design, work-in-process, databases, manuals, records, articles, systems, material, sources of material, supplier information, vendor information, financial information, results, accounting information, accounting records, legal information, marketing information, advertising information, pricing information, credit information, design information, payroll information, staffing information, personnel information, employee lists, supplier lists, vendor lists, developments, reports, internal controls, security procedures, graphics, drawings, sketches, market studies, sales information, revenue, costs, formulae, notes, communications, algorithms, product plans, designs, styles, models, ideas, audiovisual programs, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information, customer lists, manufacturing information, factory lists, distributor lists, and buyer lists of the Company Group or its businesses or any existing or prospective customer, supplier, investor or other associated third party, or of any other person or entity that has entrusted information to the Company Group in confidence. 

 

The Grantee understands that the above list is not exhaustive, and that Confidential Information also includes other information that is marked or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used. The Grantee understands and agrees that Confidential Information includes information developed by the Grantee in the course of his employment by the Company as if the Company furnished the same Confidential Information to the Grantee in the first instance. Confidential Information shall not include information that is generally available to and known by the public at the time of disclosure to the Grantee; provided that, such disclosure is through no direct or indirect fault of the Grantee or person(s) acting on the Grantee’s behalf.

 

1.2 Company Creation and Use of Confidential Information; Disclosure and Use Restrictions.

 

The Grantee understands and acknowledges that the Company Group has invested, and continues to invest, substantial time, money, and specialized knowledge into developing its resources, creating a customer base, generating customer and potential customer lists, training its employees, and improving its offerings in the field of modular building construction. The Grantee understands and acknowledges that as a result of these efforts, the Company Group has created, and continues to use and create Confidential Information. This Confidential Information provides the Company Group with a competitive advantage over others in the marketplace.

 

A-1

 

 

The Grantee agrees and covenants: (i) to treat all Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish, communicate, or make available Confidential Information, or allow it to be disclosed, published, communicated, or made available, in whole or part, to any entity or person whatsoever (including other employees of the Company Group) not having a need to know and authority to know and use the Confidential Information in connection with the business of the Company Group and, in any event, not to anyone outside of the direct employ of the Company Group except as required in the performance of the Grantee’s authorized employment duties to the Company or with the prior consent of the CEO acting on behalf of the Company Group in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent); and (iii) not to access or use any Confidential Information, and not to copy any documents, records, files, media, or other resources containing any Confidential Information, or remove any such documents, records, files, media, or other resources from the premises or control of the Company Group, except as required in the performance of the Grantee’s authorized employment duties to the Company or with the prior consent of CEO acting on behalf of the Company Group in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent). Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation, or order. The Grantee shall promptly provide written notice of any such order to CEO.

 

1.3 Notice of Immunity Under the Economic Espionage Act of 1996, as amended by the Defend Trade Secrets Act of 2016 (“DTSA”). Notwithstanding any other provision of this Exhibit A:

 

(i) The Grantee will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed under seal in a lawsuit or other proceeding.

 

(ii) If the Grantee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Grantee may disclose the Company’s trade secrets to the Grantee’s attorney and use the trade secret information in the court proceeding if the Grantee: (A) files any document containing trade secrets under seal; and (B) does not disclose trade secrets, except pursuant to court order.

 

The Grantee understands and acknowledges that his obligations under this Exhibit A with regard to any particular Confidential Information shall commence immediately upon the Grantee first having access to such Confidential Information (whether before or after the Grantee begins employment by the Company) and shall continue during and after his employment by the Company until such time as such Confidential Information has become public knowledge other than as a result of the Grantee’s breach of this Exhibit A or breach by those acting in concert with the Grantee or on the Grantee’s behalf.

 

2. Restrictive Covenants.

 

2.1 Acknowledgement. The Grantee understands that the nature of the Grantee’s position gives the Grantee access to and knowledge of Confidential Information and places the Grantee in a position of trust and confidence with the Company Group. The Grantee understands and acknowledges that the intellectual or artistic services the Grantee provides to the Company Group are unique, special, or extraordinary because of the specialty business area and specialized knowledge. The Grantee further understands and acknowledges that the Company Group’s ability to reserve these for the exclusive knowledge and use of the Company Group is of great competitive importance and commercial value to the Company Group, and that improper use or disclosure by the Grantee is likely to result in unfair or unlawful competitive activity.

 

A-2

 

 

2.2 Non-Competition. Because of the Company Group’s legitimate business interest as described herein and the good and valuable consideration offered to the Grantee, during the term of employment and for the one (1) year, to run consecutively, beginning on the last day of the Grantee’s employment with the Company, for any reason or no reason and whether employment is terminated at the option of the Grantee or the Company, the Grantee agrees and covenants not to engage in Prohibited Activity within (a) all counties in the States of Nevada; (b) all other states of the United States of America from which the Company derived revenue or conducted business at any time during the term of employment; and (c) any other countries from which the Company derived revenue or conducted business at any time during the term of employment. For purposes of this Section 2, “Prohibited Activity” is activity in which the Grantee contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner, director, stockholder, officer, volunteer, intern, or any other similar capacity to an entity engaged in the same or similar business as the Company Group, including those engaged in the business of modular building construction. Prohibited Activity also includes activity that may require or inevitably requires disclosure of trade secrets, proprietary information, or Confidential Information. Nothing herein shall prohibit the Grantee from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Grantee is not a controlling person of, or a member of a group that controls, such corporation. This Exhibit A does not, in any way, restrict or impede the Grantee from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Grantee shall promptly provide written notice of any such order to the CEO.

 

2.3 Non-Solicitation of Employees. The Grantee agrees and covenants not to directly or indirectly solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment of any employee of the Company Group for one (1) year, to run consecutively, beginning on the last day of the Grantee’s employment with the Company.

 

2.4 Non-Solicitation of Customers. The Grantee understands and acknowledges that because of the Grantee’s experience with and relationship to the Company Group, he will have access to and learn about much or all of the Company Group’s customer information. “Customer Information” includes, but is not limited to, names, phone numbers, addresses, e-mail addresses, order history, order preferences, chain of command, pricing information, and other information identifying facts and circumstances specific to the customer and relevant to sales or services. The Grantee understands and acknowledges that loss of this customer relationship and/or goodwill will cause significant and irreparable harm. The Grantee agrees and covenants, for one (1) year, to run consecutively, beginning on the last day of the Grantee’s employment with the Company, not to directly or indirectly solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact, or meet with the Company’s current, former or prospective customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company.

 

3. Non-Disparagement. The Grantee agrees and covenants that the Grantee will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Company Group or its businesses, or any of its employees, officers, and existing and prospective customers, suppliers, investors and other associated third parties. This Exhibit A does not, in any way, restrict or impede the Grantee from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Grantee shall promptly provide written notice of any such order to the CEO.

 

4. Acknowledgement. The Grantee acknowledges and agrees that the services to be rendered by the Grantee to the Company are of a special and unique character; that the Grantee will obtain knowledge and skill relevant to the Company’s industry, methods of doing business and marketing strategies by virtue of the Grantee’s employment; and that the restrictive covenants and other terms and conditions of this Exhibit A are reasonable and reasonably necessary to protect the legitimate business interest of the Company Group.

 

5. Remedies. In the event of a breach or threatened breach by the Grantee of this Exhibit A, the Grantee hereby consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages, or other available forms of relief.

 

6. Proprietary Rights.

 

6.1 Work Product. The Grantee acknowledges and agrees that all right, title, and interest in and to all writings, works of authorship, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals, materials, and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived, or reduced to practice by the Grantee individually or jointly with others during the period of his employment by the Company and relate in any way to the business or contemplated business, products, activities, research, or development of the Company or result from any work performed by the Grantee for the Company (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same), all rights and claims related to the foregoing, and all printed, physical and electronic copies, and other tangible embodiments thereof (collectively, “Work Product”), as well as any and all rights in and to US and foreign (a) patents, patent disclosures and inventions (whether patentable or not), (b) trademarks, service marks, trade dress, trade names, logos, corporate names, and domain names, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing, (c) copyrights and copyrightable works (including computer programs), mask works, and rights in data and databases, (d) trade secrets, know-how, and other confidential information, and (e) all other intellectual property rights, in each case whether registered or unregistered and including all registrations and applications for, and renewals and extensions of, such rights, all improvements thereto and all similar or equivalent rights or forms of protection in any part of the world (collectively, “Intellectual Property Rights”), shall be the sole and exclusive property of the Company.

 

For purposes of this Exhibit A, Work Product also includes, but is not limited to, Company Group information, including plans, publications, research, strategies, techniques, agreements, documents, contracts, terms of agreements, negotiations, know-how, computer programs, computer applications, software design, web design, work in process, databases, manuals, results, developments, reports, graphics, drawings, sketches, market studies, formulae, notes, communications, algorithms, product plans, product designs, styles, models, audiovisual programs, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information, client information, customer lists, client lists, manufacturing information, marketing information, advertising information, and sales information.

 

A-3

 

 

6.2 Work Made for Hire; Assignment. The Grantee acknowledges that, by reason of being employed by the Company at the relevant times, to the extent permitted by law, all of the Work Product consisting of copyrightable subject matter is “work made for hire” as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Company. To the extent that the foregoing does not apply, the Grantee hereby irrevocably assigns to the Company, for no additional consideration, the Grantee’s entire right, title, and interest in and to all Work Product and Intellectual Property Rights therein, including the right to sue, counterclaim, and recover for all past, present, and future infringement, misappropriation, or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Exhibit A shall be construed to reduce or limit the Company’s rights, title, or interest in any Work Product or Intellectual Property Rights so as to be less in any respect than that the Company would have had in the absence of this Exhibit A.

 

6.3 Further Assurances; Power of Attorney. During and after his employment, the Grantee agrees to reasonably cooperate with the Company to (a) apply for, obtain, perfect, and transfer to the Company the Work Product as well as any and all Intellectual Property Rights in the Work Product in any jurisdiction in the world; and (b) maintain, protect and enforce the same, including, without limitation, giving testimony and executing and delivering to the Company any and all applications, oaths, declarations, affidavits, waivers, assignments, and other documents and instruments as shall be requested by the Company. The Grantee hereby irrevocably grants the Company power of attorney to execute and deliver any such documents on the Grantee’s behalf in his name and to do all other lawfully permitted acts to transfer the Work Product to the Company and further the transfer, prosecution, issuance, and maintenance of all Intellectual Property Rights therein, to the full extent permitted by law, if the Grantee does not promptly cooperate with the Company’s request (without limiting the rights the Company shall have in such circumstances by operation of law). The power of attorney is coupled with an interest and shall not be affected by the Grantee’s subsequent incapacity.

 

6.4 No License. The Grantee understands that this Exhibit A does not, and shall not be construed to, grant the Grantee any license or right of any nature with respect to any Work Product or Intellectual Property Rights or any Confidential Information, materials, software, or other tools made available to the Grantee by the Company.

 

A-4

 

 

Exhibit 10.16

 

[XXX] INDICATES CERTAIN IDENTIFIED INFORMATION THAT HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE OF INFORMATION THE COMPANY TREATS AS PRIVATE AND CONFIDENTIAL

 

RESTRICTED STOCK UNIT AGREEMENT UNDER THE

 

BOXABL INC. 2021 STOCK INCENTIVE PLAN

 

 

Name of Grantee: Martin Costas (the “Grantee”)
No. of Shares Subject to Award: 5,237,655 (the “RSUs”)
Grant Date: October 18, 2024 (the “Grant Date”)
Date of Vesting1: October 2, 2026 (the “Vesting Date”)

 

THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is entered into by and between Boxabl Inc., a Nevada corporation (the “Company”), and the Grantee named above, as of the Grant Date noted above, pursuant to the Boxabl Inc. 2021 Stock Incentive Plan (the “Plan”).

 

WHEREAS, the Company previously issued a Restrictive Stock Unit Agreement to the Grantee with a Grant Date of October 2, 2023 (the “Prior Grant” and the referenced Restrictive Stock Unit Agreement, the “Prior Grant Agreement”);

 

WHEREAS, the Prior Grant was for 7,142,857 Restricted Stock Units; however, there was not sufficient shares of Stock available under the Plan at the time the Prior Grant was approved by the Board to cover 5,237,655 of the RSUs granted under the Prior Grant (the “Void RSUs”), and, consequently, the Void RSUs under the Prior Grant and the Prior Grant Agreement with respect to the Void RSUs were null and void from their inception; and

 

WHEREAS, the Company recognizes that the Grantee’s services are uniquely valuable to the Company and wishes to grant Restricted Stock Units to the Grantee in accordance with the Plan and this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Grantee agree as follows:

 

AGREEMENT

 

1. DEFINITIONS. To the extent not specifically defined in this Agreement, all capitalized terms used in this Agreement shall have the meaning set forth in the Plan.

 

2. ACKNOWLEDGEMENT AND AGREEMENT REGARDING THE VOID RSUs. The RSUs granted under this Agreement are conditioned on the Grantee executing the First Amendment of the Restricted Stock Unit Agreement under the Boxabl Inc. 2021 Stock Incentive Plan attached hereto as Exhibit A (the “Prior Grant Agreement Amendment”), reflecting the amendment of the Prior Grant Agreement to reduce the number of Restricted Stock Units granted under the Prior Grant Agreement by the number of Void RSUs. By accepting the Restricted Stock Units granted under this Agreement, the Grantee acknowledges and agrees that the Void RSUs under the Prior Grant and the Prior Grant Agreement with respect to the Void RSUs were null and void from their inception and that the Grantee has no rights and the Company has no obligations to the Grantee with respect to the Void RSUs under the Prior Grant and under the Prior Grant Agreement with respect to the Void RSUs.

 

 

1 Vesting subject to additional terms and conditions set forth herein.

 

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3. GRANT OF RESTRICTED STOCK UNITS. Subject to the terms of this Agreement and Article 8 of the Plan, the Company grants to the Grantee the number of Restricted Stock Units set forth above.

 

4. VESTING OF RESTRICTED STOCK UNITS. Subject to the other provisions of this Agreement and the Plan, the RSUs shall vest as of the Vesting Date and shall become fully vested and subject to monetization upon the first to occur of: (i) a time at which the Company tenders for and successfully acquires the RSUs, (ii) the date of the closing of a transaction (or series of transactions) that results in a Change of Control as long as such transaction (or series of transactions) constitutes a “change in control event” as define in Section 409A of the Code and the regulations thereunder; or (iii) the first trading day that is on or after the expiration of the “lock up” period after the effective date of the initial underwritten sale of the Company’s equity securities to the public on an established securities market (collectively, a “Qualifying Transaction”). If a Qualifying Transaction occurs prior to the Vesting Date above, the RSUs shall fully (100%) vest effective immediately prior to and contingent upon the Qualifying Transaction. Notwithstanding the foregoing, if the Grantee’s employment by the Company terminates for any reason prior to a Qualifying Transaction, such termination shall result in the immediate forfeiture and cancellation of the RSUs, which means the Grantee will not be entitled to any payment pursuant to this Agreement after the date of such termination.

 

5. PAYMENT FOR RESTRICTED STOCK UNITS. The Restricted Stock Units that vest pursuant to Section 3 of this Agreement, if any, will be paid to the Grantee in Stock within fifteen (15) business days after the closing of the Qualifying Transaction; provided that, in its sole discretion, the Board or its duly authorized delegate may elect to settle any vested Restricted Stock Unit in fully vested shares of Stock, cash, or a combination thereof with an aggregate value equal to the value, as of the date on which the closing of the Qualifying Transaction occurs, of the Stock that the Grantee would have received. For the avoidance of doubt, no payment will be made pursuant to this Agreement prior to the closing of a Qualifying Transaction.

 

6. NO PAYMENT UPON TERMINATION FOR CAUSE FOLLOWING QUALIFYING TRANSACTION. Notwithstanding anything in this Agreement to the contrary, no payment will be made pursuant to this Agreement if the Grantee’s employment is terminated for Cause after a Qualifying Transaction but prior to the date on which payment is made pursuant to Section 4, above.

 

7. SECURITIES ACT.

 

(a) Registration. The Company has the right, but not the obligation, to cause the issuance and sale of the Stock issued pursuant to this Agreement, if any, or the resale thereof, to be registered under the Securities Act.

 

(b) Condition on Delivery of Stock. The Company shall not be required to deliver any shares of Stock on settlement of this RSU if, in the opinion of counsel for the Company, the issuance would violate the Securities Act or any other applicable federal or state securities laws or regulations. The Company may require the Grantee, prior to or after the issuance of any Stock hereunder, to sign and deliver to the Company a written statement, in form and content acceptable to the Company in its sole discretion, that the Grantee: (i) shall not sell any of such Stock or any other Stock of the Company that the Grantee may then own or hereafter acquire except with the prior written approval of the Company, and (ii) shall comply with the Securities Act, the Exchange Act, and all other applicable federal and state securities laws or regulations.

 

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(c) Legends. In addition to any other legend that may be required by the Company from time to time or pursuant to applicable law, certificates representing any Stock shall bear a legend restricting the transferability of such Stock in substantially the following form:

 

“The transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including repurchase, right of first refusal, and restrictions against transfers) contained in a Restricted Stock Unit Agreement between the Company and the holder of this certificate (a copy of which is available at the offices of the Company for examination).

 

The shares represented by this certificate have not been registered under the Securities Act of 1933 or the securities laws of any state. The shares may not be sold or transferred in the absence of such registration or an exemption from registration.”

 

8. ACKNOWLEDGEMENTS AND REPRESENTATIONS OF GRANTEE. In connection with the delivery of any Stock, the Grantee hereby warrants and acknowledges the following:

 

(a) Further Limitations on Disposition. The Grantee understands and acknowledges that the RSUs and the shares of Stock subject to the RSUs are not registered under the Securities Act or any applicable state securities laws and may not be sold, assigned, transferred, or disposed of (including transfer by gift or operation of law) except in accordance with this Agreement. Further, the Grantee agrees to make no sale, assignment, transfer or other disposition of all or any portion of the RSUs or related Stock unless there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement, or the Grantee has obtained an opinion of counsel satisfactory to the Company that such disposition does not require registration under the Securities Act. The Company may request a copy of any such opinion and, upon such request, the Grantee shall promptly provide such copy to the Company. The Company shall not be required to permit the Grantee’s proposed assignment, transfer or other disposition unless such opinion is satisfactory (in form and substance) to the Company, as determined by the Company in its sole discretion.

 

(b) Investment Representations. The Grantee hereby represents and warrants to the Company as follows: (i) the Grantee is acquiring the Stock, if any, for the Grantee’s own account for investment only, and not for the resale or with a view to the distribution thereof; (ii) the Grantee has had such an opportunity as the Grantee has deemed adequate to obtain from the Company such information as is necessary to permit the Grantee to evaluate the merits and risks of the Grantee’s investment in the Company and has consulted with the Grantee’s own advisers with respect to the Grantee’s investment in the Company; (iii) the Grantee is an employee or Consultant of the Company or one of its Affiliates and/or the Grantee has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the acquisition of the Stock and to make an informed investment decision with respect to such acquisition; (iv) the Grantee can afford a complete loss of the value of the RSUs (and any related Stock) and is able to bear the economic risk of holding such Stock for an indefinite period; and (v) this Agreement constitutes the legal, valid and binding obligation of the Grantee, enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Grantee do not and shall not conflict with, violate, or cause a breach of any other agreement, contract or instrument to which the Grantee is a party or any judgment, order or decree to which the Grantee is subject.

 

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9. LOCKUP PROVISION; MARKET STAND-OFF AGREEMENT. The Grantee agrees that the Grantee will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of shares of its Stock and ending on the date specified by the Company and the managing underwriter selected by the Company (such period not to exceed 180 days) or, if required by such underwriter and permitted by applicable law, such longer period of time as is necessary to accommodate regulatory restrictions: (a) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any securities of the Company held immediately prior to the effectiveness of the registration statement; or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any securities of the Company, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Stock or other securities of the Company, in cash or otherwise. The underwriters in connection with such registration are intended third party beneficiaries of this Section 8 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. The Grantee further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 8 or that are necessary to give further effect thereto.

 

10. RIGHTS OF GRANTEE. The Grantee shall have no rights as a stockholder of the Company with respect to the RSUs until actual shares of Stock are delivered to the Grantee pursuant to this Agreement. Subject to this Agreement, upon the delivery of Stock, the Grantee shall be considered the record owner of the Stock and shall be entitled to vote the Stock and receive any dividends and any other distributions declared and paid by the Company with respect to the Stock, provided and only to the extent that the Grantee actually holds such Stock as of the applicable record date for any such dividend. The Grantee acknowledges that the Company is under no duty to declare any such dividends or to make any such distributions.

 

11. CONTINUED SERVICE. This Agreement shall not be construed to confer upon the Grantee any right to continued employment or service with the Company and shall not limit the right of the Company, in its sole and absolute discretion, to terminate the Grantee’s employment or service at any time.

 

12. ADMINISTRATION. This Agreement shall at all times be subject to the terms and conditions of the Plan and the Plan shall in all respects be administered by the Committee in accordance with the terms of and as provided in the Plan. The Committee shall have the sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of the Committee with respect thereto and to this Agreement shall be final and binding upon the Grantee and the Company. In the event of any conflict between the terms and conditions of this Agreement and the Plan, the provisions of the Plan shall control.

 

13. PLAN; ENTIRE AGREEMENT. This Agreement and all rights of the Grantee under this Agreement are subject to all of the terms and conditions of the Plan, which are incorporated herein by reference. In the event of a conflict or inconsistency between the terms and conditions of this Agreement and the Plan, the terms and conditions of the Plan shall govern. The Grantee agrees to be bound by the terms of the Plan and this Agreement. The Grantee acknowledges having read and understood the Plan and this Agreement. This Agreement and the Plan constitutes the entire, final, and complete agreement between the parties hereto with respect to the subject matter hereof and supersede all prior agreements, promises, understandings, negotiations, representations, and commitments, both written and oral, between the parties hereto with respect to the subject matter hereof.

 

14. TAX WITHHOLDING; TAX ADVICE. As described in Section 13.3 of the Plan, the Company shall have the right to deduct or withhold from any payments made by the Company to the Grantee, or to require that the Grantee remit to the Company, an amount sufficient to satisfy any federal, state or local taxes of any kind as are required by law to be withheld with respect to the settlement of the RSUs granted hereunder. The Grantee hereby acknowledges that neither the Company nor any of its representatives has provided to the Grantee any tax-related advice with respect to the matters covered by this Agreement. The Grantee understands and acknowledges that the Grantee is solely responsible for obtaining his or her own tax advice with respect to the matters covered by this Agreement.

 

15. ADJUSTMENTS. The number of shares Stock subject to these RSUs shall be adjusted by the Committee as described in Section 11.1 of the Plan in the event of a change in the Company’s capital structure.

 

4
 

 

16. AMENDMENT. Except as otherwise provided in the Plan, this Agreement may only be amended with the written approval of the Grantee and the Company. The provisions of this Agreement may not be waived or modified unless such waiver or modification is in writing and signed by a representative of the Committee.

 

17. GOVERNING LAW. This Agreement, including the terms of Exhibit B, shall be construed in accordance with and governed by the laws of the State of Texas without regard to conflict of law principles that would require the application of any other law.

 

18. SEVERABILITY. If any provision of this Agreement, or the application of any such provision to any person or circumstance, is held to be unenforceable or invalid by any court of competent jurisdiction or under any applicable law, the parties hereto shall negotiate an equitable adjustment to the provisions of this Agreement with the view to effecting, to the greatest extent possible, the original purpose and intent of this Agreement, and in any event, the validity and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

 

19. ASSIGNMENT BY THE COMPANY. The Company’s Right of First Refusal may be assigned in whole or in part to any stockholder(s) of the Company.

 

20. CLAWBACK. Pursuant to Section 10.1 of the Plan, every Award issued pursuant to the Plan is subject to potential forfeiture or “clawback” to the fullest extent called for by applicable federal or state law, rules of any national securities exchange on which the Stock may be listed, or any policy of the Company. By accepting this Award, the Grantee agrees to be bound by, and comply with, the terms of any such forfeiture or “clawback” provision imposed by applicable federal or state law, rules of any national securities exchange on which the Stock may be listed, or prescribed by any policy of the Company.

 

21. SHAREHOLDERS AGREEMENT; RESTRICTIVE COVENANTS; OTHER AGREEMENTS. If requested by the Company, the Grantee agrees to be bound by, comply with, and become a party to, any current shareholders agreement or stockholders agreement, voting agreement, investors’ rights agreement, or similar agreement adopted by the Company in the future. Similarly, by signing this Agreement, the Grantee consents to the confidentiality, non-competition, non-solicitation and similar provisions set forth in Exhibit B attached hereto.

 

22. SECTION 409A COMPLIANCE. Neither the time nor the schedule of the payment of the RSUs may be accelerated or subject to further deferral except as permitted pursuant to Section 409A of the Code and the applicable regulations. Payment of the RSUs may be delayed only in accordance with Section 409A of the Code and the applicable regulations and the Grantee may not make any election regarding the time or the form of the payment of the RSUs. This Agreement shall be administered in compliance with Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A of the Code or an exception thereto. Nevertheless, the Company does not and cannot guarantee any particular tax effect or treatment of amounts due under this Agreement. Except for the Company’s responsibility to withhold applicable income and employment taxes, the Company will not be responsible for the payment of any applicable taxes on compensation paid or provided pursuant to this Agreement.

 

23. ACCEPTANCE. This Award must be accepted by the Grantee within a period of 30 days after the Grant Date by executing this Agreement. Subject to the Committee’s discretion, if the Award is not accepted within this time period, all RSUs purported to be granted hereunder will be immediately forfeited.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

5
 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative and the Grantee has signed this Agreement, in each case as of the day and year first written above.

 

  BOXABL INC.  
     
  By: /s/ Paolo Tiramani
  Name: Paolo Tiramani
  Its: Chief Executive Officer
     
  GRANTEE:  
     
  By: /s/ Martin Costas
  Name: Martin Costas
  Electronic e-mail Address: XXX
  Home Address: XXX

 

6
 

 

EXHIBIT A

 

Prior Grant Agreement Amendment

 

FIRST AMENDMENT TO THE

RESTRICTED STOCK UNIT AGREEMENT

UNDER THE

BOXABL INC. 2021 STOCK INCENTIVE PLAN

 

THIS AMENDMENT (this “Amendment”) is effective October 2, 2023 (the “Effective Date”), by Boxabl Inc., a Nevada corporation (the “Company”) and Martin Costas (“Grantee”), to amend the Restricted Stock Unit Agreement under the Boxabl Inc. 2021 Stock Incentive Plan (the “Grant Agreement,” and the plan, as amended from time to time, the “Plan”) dated October 2, 2023 between the Company and the Grantee (the “Prior Grant,” and the Restricted Stock Units referenced therein, the “RSUs”).

 

RECITALS

 

WHEREAS, any capitalized terms used but not defined herein shall have the meanings given to such terms in the Plan;

 

WHEREAS, the Prior Grant was for 7,142,857 RSUs; however, there was not sufficient shares of Stock available under the Plan at the time the Prior Grant was approved by the Committee (as defined in the Plan) to cover 5,237,655 of the RSUs granted under the Prior Grant (the “Void RSUs”), and, consequently, the Void RSUs under the Prior Grant and the Grant Agreement with respect to the Void RSUs were null and void from their inception;

 

WHEREAS, pursuant to the authority provided under Section 3.1 of the Plan and effective on July 2, 2024, the Board duly delegated to the Compensation Committee of the Company (the “Committee”) the authority to administer the Plan; and

 

WHEREAS, pursuant to the authority under the Plan and the Action by Written Consent of the Compensation Committee, dated October 18, 2024, the Committee authorized the amendment of the Grant Agreement, effective as of the Effective Date, to reduce the number of RSUs specified in the Grant Agreement by the number of Void RSUs, as set forth below.

 

AMENDMENT

 

1. The number of RSUs in the “No. of Shares Subject to Award” section of the Grant Agreement is hereby amended in its entirety to read, “1,905,202”.
   
2. Any inconsistent provisions of the Grant Agreement shall be read consistent with this Amendment.
   
3. Except as amended above, each and every other provision of the Grant Agreement shall remain in full force and effect without change or modification.
   
4. By executing this Amendment, the Grantee acknowledges and agrees that the Void RSUs under the Prior Grant and the Grant Agreement with respect to the Void RSUs were null and void from their inception and that the Grantee has no rights and the Company has no obligations to the Grantee with respect to the Void RSUs under the Prior Grant and under the Grant Agreement with respect to the Void RSUs.

 

[signature page follows]

 

7
 

 

IN WITNESS WHEREOF, the undersigned have duly executed this Amendment, effective as of the Effective Date set forth above.

 

  BOXABL INC.
     
  By: /s/ Paolo Tiramani
  Name: Paolo Tiramani
  Title: CEO
  Date:  

 

GRANTEE  
   
/s/ Martin Costas  
Martin Costas  
Date: 11/19/2024  

 

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EXHIBIT B

 

Restrictive Covenant Agreement

 

In consideration of the Company’s entering into the attached Restricted Stock Unit Agreement and the Company’s obligations thereunder and other good and valuable consideration and as a condition to the receipt of the Restricted Stock Units pursuant to the Restricted Stock Unit Agreement, and as a necessary measure to protect the legitimate business interests of the Company, by signing the attached Restricted Stock Unit Agreement, the Grantee agrees to the following additional terms and conditions of this Restrictive Covenant Agreement (the “Agreement”):

 

1. Confidential Information Defined.

 

1.1 The Grantee understands and acknowledges that his employment by the Company creates a relationship of confidence and trust with respect to the Company’s Confidential Information and that the Company has a protectable interest therein. For purposes of this Exhibit A, “Confidential Information” includes, but is not limited to, all of the Company’s (or the Company’s affiliated entities, officers, directors, employees, stockholders, representatives or agents hereinafter the “Company Group”) information not generally known to the public, in spoken, printed, electronic or any other form or medium, relating directly or indirectly to: business processes, practices, methods, policies, plans, publications, documents, research, operations, services, strategies, techniques, agreements, contracts, terms of agreements, transactions, potential transactions, negotiations, pending negotiations, know-how, trade secrets, computer programs, computer software, applications, operating systems, software design, web design, work-in-process, databases, manuals, records, articles, systems, material, sources of material, supplier information, vendor information, financial information, results, accounting information, accounting records, legal information, marketing information, advertising information, pricing information, credit information, design information, payroll information, staffing information, personnel information, employee lists, supplier lists, vendor lists, developments, reports, internal controls, security procedures, graphics, drawings, sketches, market studies, sales information, revenue, costs, formulae, notes, communications, algorithms, product plans, designs, styles, models, ideas, audiovisual programs, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information, customer lists, manufacturing information, factory lists, distributor lists, and buyer lists of the Company Group or its businesses or any existing or prospective customer, supplier, investor or other associated third party, or of any other person or entity that has entrusted information to the Company Group in confidence.

 

The Grantee understands that the above list is not exhaustive, and that Confidential Information also includes other information that is marked or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used. The Grantee understands and agrees that Confidential Information includes information developed by the Grantee in the course of his employment by the Company as if the Company furnished the same Confidential Information to the Grantee in the first instance. Confidential Information shall not include information that is generally available to and known by the public at the time of disclosure to the Grantee; provided that, such disclosure is through no direct or indirect fault of the Grantee or person(s) acting on the Grantee’s behalf.

 

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1.2 Company Creation and Use of Confidential Information; Disclosure and Use Restrictions.

 

The Grantee understands and acknowledges that the Company Group has invested, and continues to invest, substantial time, money, and specialized knowledge into developing its resources, creating a customer base, generating customer and potential customer lists, training its employees, and improving its offerings in the field of modular building construction. The Grantee understands and acknowledges that as a result of these efforts, the Company Group has created, and continues to use and create Confidential Information. This Confidential Information provides the Company Group with a competitive advantage over others in the marketplace.

 

The Grantee agrees and covenants: (i) to treat all Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish, communicate, or make available Confidential Information, or allow it to be disclosed, published, communicated, or made available, in whole or part, to any entity or person whatsoever (including other employees of the Company Group) not having a need to know and authority to know and use the Confidential Information in connection with the business of the Company Group and, in any event, not to anyone outside of the direct employ of the Company Group except as required in the performance of the Grantee’s authorized employment duties to the Company or with the prior consent of the CEO acting on behalf of the Company Group in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent); and (iii) not to access or use any Confidential Information, and not to copy any documents, records, files, media, or other resources containing any Confidential Information, or remove any such documents, records, files, media, or other resources from the premises or control of the Company Group, except as required in the performance of the Grantee’s authorized employment duties to the Company or with the prior consent of CEO acting on behalf of the Company Group in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent). Further, the Grantee hereby assigns to the Company Group any rights the Grantee may have or acquire in such Confidential Information and recognizes that all Confidential Information will be the sole and exclusive property of the Company Group. Notwithstanding the foregoing, it is understood that, at all such times, the Grantee is free to use information which was known to the Grantee prior to the Grantee’s affiliation with the Company or which is generally known in the trade or industry through no direct or indirect breach of this Agreement or other act or omission by the Grantee. Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation, or order. The Grantee shall promptly provide written notice of any such order to CEO. Further, nothing herein will limit the Grantee’s right to discuss his employment or report possible violations of law or regulation with the Equal Employment Opportunity Commission, United States Department of Labor, the National Labor Relations Board, the Securities and Exchange Commission, or other federal government agency or similar state or local agency or to discuss the terms and conditions of his employment with others to the extent expressly permitted by Section 7 of the National Labor Relations Act or to the extent that such disclosure is protected under the applicable provisions of law or regulation, including but not limited to “whistleblower” statutes or other similar provisions that protect such disclosure.

 

The Grantee agrees not to improperly use or disclose confidential information or trade secrets, if any, of any former employer or any other person to whom the Grantee has an obligation of confidentiality, and the Grantee will not bring onto the premises of the Company any unpublished documents or any property belonging to any former employer or any other person to whom the Grantee has an obligation of confidentiality unless consented to in writing by that former employer or person.

 

1.3 Notice of Immunity Under the Economic Espionage Act of 1996, as amended by the Defend Trade Secrets Act of 2016 (“DTSA”). Notwithstanding any other provision of this Exhibit A:

 

(i) The Grantee will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that: (A) is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed under seal in a lawsuit or other proceeding.

 

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(ii) If the Grantee files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Grantee may disclose the Company’s trade secrets to the Grantee’s attorney and use the trade secret information in the court proceeding if the Grantee: (A) files any document containing trade secrets under seal; and (B) does not disclose trade secrets, except pursuant to court order.

 

The Grantee understands and acknowledges that his obligations under this Exhibit A with regard to any particular Confidential Information shall commence immediately upon the Grantee first having access to such Confidential Information (whether before or after the Grantee begins employment by the Company) and shall continue during and after his employment by the Company until such time as such Confidential Information has become public knowledge other than as a result of the Grantee’s breach of this Exhibit A or breach by those acting in concert with the Grantee or on the Grantee’s behalf.

 

2. Restrictive Covenants.

 

2.1 Acknowledgement. The Grantee understands that the nature of the Grantee’s position gives the Grantee access to and knowledge of Confidential Information and places the Grantee in a position of trust and confidence with the Company Group. The Grantee understands and acknowledges that the intellectual or artistic services the Grantee provides to the Company Group are unique, special, or extraordinary because of the specialty business area and specialized knowledge. The Grantee further understands and acknowledges that the Company Group’s ability to reserve these for the exclusive knowledge and use of the Company Group is of great competitive importance and commercial value to the Company Group, and that improper use or disclosure by the Grantee is likely to result in unfair or unlawful competitive activity.

 

2.2 Non-Competition. Because of the Company Group’s legitimate business interest as described herein and the good and valuable consideration offered to the Grantee, during the term of employment and for the one (1) year, to run consecutively, beginning on the last day of the Grantee’s employment with the Company, for any reason or no reason and whether employment is terminated at the option of the Grantee or the Company, the Grantee agrees and covenants not to engage in Prohibited Activity within (a) all counties in the State of Texas; (b) all other states of the United States of America from which the Company derived revenue or conducted business with which the Grantee was involved at any time during the term of employment; and (c) any other countries from which the Company derived revenue or conducted business with which the Grantee was involved at any time during the term of employment. For purposes of this Section 2, “Prohibited Activity” is activity in which the Grantee contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner, director, stockholder, officer, volunteer, intern, or any other similar capacity to an entity engaged in the same or similar business as the Company Group, including those engaged in the business of modular building construction. Prohibited Activity also includes activity that may require or inevitably requires disclosure of trade secrets, proprietary information, or Confidential Information. Nothing herein shall prohibit the Grantee from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Grantee is not a controlling person of, or a member of a group that controls, such corporation..

 

2.3 Non-Solicitation of Employees, Consultants, and Independent Contractors. The Grantee agrees and covenants not to directly or indirectly solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment or other relationship with the Company of any person known to the Grantee to be an employee, consultant, or independent contractor of the Company Group for one (1) year, to run consecutively, beginning on the last day of the Grantee’s employment with the Company.

 

2.4 Non-Solicitation of Customers. The Grantee understands and acknowledges that because of the Grantee’s experience with and relationship to the Company Group, the Grantee will have access to and learn about much or all of the Company Group’s customer information. “Customer Information” includes, but is not limited to, names, phone numbers, addresses, e-mail addresses, order history, order preferences, chain of command, pricing information, and other information identifying facts and circumstances specific to the customer and relevant to sales or services. The Grantee understands and acknowledges that loss of this customer relationship and/or goodwill will cause significant and irreparable harm. The Grantee agrees and covenants, for one (1) year, to run consecutively, beginning on the last day of the Grantee’s employment with the Company, not to directly or indirectly solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact, or meet with the Company’s current, former or prospective customers with whom the Grantee had material contact in the previous 12 months for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company.

 

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3. Non-Disparagement. The Grantee agrees and covenants that the Grantee will not at any time make, publish or communicate, directly or indirectly, to any person or entity or in any public forum any remarks, comments, or statements that disparage or damage the reputation, goodwill, or standing in the community of the Company Group or its employees, officers, directors, managers, equityholders, products or services, or their prospective customers, suppliers, investors or other associated third parties. This Section 3 does not prohibit the Grantee from (i) responding truthfully to subpoenas or other similar forms of legal process as issued by a court of law or governmental entity having jurisdiction over the matter or responding truthfully to any inquiry initiated and made by any governmental entity having authority to initiate and make an inquiry, in each case after reasonable consultation with legal counsel; (ii) reporting violations of applicable law; (iii) engaging in protected concerted activity or other conduct which by applicable law cannot be subject to such a covenant not to disparage; (iv) making any statements or communications that are internal to the Company; or (v) exercising or enforcing the Grantee’s rights under, or otherwise in connection with any claims by or against any the Grantee relating to this Agreement.

 

4. Reasonableness of Restrictions.

 

4.1 The Grantee acknowledges and agrees that the services to be rendered by the Grantee to the Company are of a special and unique character; that the Grantee will obtain knowledge and skill relevant to the Company’s industry, methods of doing business and marketing strategies by virtue of the Grantee’s employment; and that the restrictive covenants and other terms and conditions of this Exhibit A are reasonable and reasonably necessary to protect the legitimate business interest of the Company Group.

 

4.2 The Grantee agrees that the Grantee has read this entire Agreement and understands it. Grantee agrees that this Agreement does not prevent him from earning a living or pursuing my career. The Grantee agree that the restrictions contained in this Agreement are reasonable, proper, and necessitated by the Company’s legitimate business interests. The Grantee represents and agrees that the Grantee is entering into this Agreement freely and with knowledge of its contents with the intent to be bound by the Agreement and the restrictions contained in it.

 

4.3 In the event that a court finds this Agreement, or any of its restrictions, to be ambiguous, unenforceable, or invalid, the Grantee and the Company agree that the court will read the Agreement as a whole and interpret the restriction(s) at issue to be enforceable and valid to the maximum extent allowed by law.

 

4.4 If the court declines to enforce this Agreement in the manner provided in Section 4.3, the Company and the Grantee agree that this Agreement will be automatically modified to provide the Company with the maximum protection of its business interests allowed by law, and the Grantee agrees to be bound by this Agreement as modified.

 

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5. Remedies. In the event of a breach or threatened breach by the Grantee of this Exhibit A, the Grantee hereby consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages, or other available forms of relief. The Grantee agrees that if the Company is successful in whole or in part in any legal or equitable action against him under this Agreement, the Company will be entitled to payment of all costs, including reasonable attorney’s fees, from the Grantee.

 

6. Proprietary Rights.

 

6.1 Work Product. The Grantee acknowledges and agrees that all right, title, and interest in and to all writings, works of authorship, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals, materials, and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived, or reduced to practice by the Grantee individually or jointly with others during the period of his employment by the Company and relate in any way to the business or contemplated business, products, activities, research, or development of the Company or result from any work performed by the Grantee for the Company (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same), all rights and claims related to the foregoing, and all printed, physical and electronic copies, and other tangible embodiments thereof (collectively, “Work Product”), as well as any and all rights in and to US and foreign (a) patents, patent disclosures and inventions (whether patentable or not), (b) trademarks, service marks, trade dress, trade names, logos, corporate names, and domain names, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing, (c) copyrights and copyrightable works (including computer programs), mask works, and rights in data and databases, (d) trade secrets, know-how, and other confidential information, and (e) all other intellectual property rights, in each case whether registered or unregistered and including all registrations and applications for, and renewals and extensions of, such rights, all improvements thereto and all similar or equivalent rights or forms of protection in any part of the world (collectively, “Intellectual Property Rights”), shall be the sole and exclusive property of the Company.

 

For purposes of this Exhibit A, Work Product also includes, but is not limited to, Company Group information, including plans, publications, research, strategies, techniques, agreements, documents, contracts, terms of agreements, negotiations, know-how, computer programs, computer applications, software design, web design, work in process, databases, manuals, results, developments, reports, graphics, drawings, sketches, market studies, formulae, notes, communications, algorithms, product plans, product designs, styles, models, audiovisual programs, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information, client information, customer lists, client lists, manufacturing information, marketing information, advertising information, and sales information.

 

6.2 Work Made for Hire; Assignment. The Grantee acknowledges that, by reason of being employed by the Company at the relevant times, to the extent permitted by law, all of the Work Product consisting of copyrightable subject matter is “work made for hire” as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Company. To the extent that the foregoing does not apply, the Grantee hereby irrevocably assigns to the Company, for no additional consideration, the Grantee’s entire right, title, and interest in and to all Work Product and Intellectual Property Rights therein, including the right to sue, counterclaim, and recover for all past, present, and future infringement, misappropriation, or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Exhibit A shall be construed to reduce or limit the Company’s rights, title, or interest in any Work Product or Intellectual Property Rights so as to be less in any respect than that the Company would have had in the absence of this Exhibit A.

 

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6.3 Further Assurances; Power of Attorney. During and after his employment, the Grantee agrees to reasonably cooperate with the Company to (a) apply for, obtain, perfect, and transfer to the Company the Work Product as well as any and all Intellectual Property Rights in the Work Product in any jurisdiction in the world; and (b) maintain, protect and enforce the same, including, without limitation, giving testimony and executing and delivering to the Company any and all applications, oaths, declarations, affidavits, waivers, assignments, and other documents and instruments as shall be requested by the Company. The Grantee hereby irrevocably grants the Company power of attorney to execute and deliver any such documents on the Grantee’s behalf in his name and to do all other lawfully permitted acts to transfer the Work Product to the Company and further the transfer, prosecution, issuance, and maintenance of all Intellectual Property Rights therein, to the full extent permitted by law, if the Grantee does not promptly cooperate with the Company’s request (without limiting the rights the Company shall have in such circumstances by operation of law). The power of attorney is coupled with an interest and shall not be affected by the Grantee’s subsequent incapacity.

 

6.4 No License. The Grantee understands that this Exhibit A does not, and shall not be construed to, grant the Grantee any license or right of any nature with respect to any Work Product or Intellectual Property Rights or any Confidential Information, materials, software, or other tools made available to the Grantee by the Company.

 

7. General Provisions.

 

7.1 Successors and Assigns. This Agreement is for the Grantee’s benefit and the benefit of the Company, its successors, assigns, parent corporations, subsidiaries, affiliates, and purchasers, and will be binding upon my heirs, executors, administrators and other legal representatives.

 

7.2 Survival. This Agreement will survive the termination of the Grantee’s employment, regardless of the reason, and the assignment of this Agreement by the Company to any successor in interest or other assignee.

 

7.3 Waiver. No waiver by the Company of any breach of this Agreement will be a waiver of any preceding or succeeding breach. No waiver by the Company of any right under this Agreement will be construed as a waiver of any other right. The Company will not be required to give notice to enforce strict adherence to all terms of this Agreement.

 

7.4 Advice of Counsel. THE GRANTEE ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, THE GRANTEE HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTANDS ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT WILL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION OF THIS AGREEMENT.

 

7.5 Entire Agreement. This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter of this Agreement and supersedes and merges all prior discussions. No modification of or amendment to this Agreement will be effective unless in writing and signed by the party to be charged.

 

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The Grantee has read this Agreement carefully and understands its terms.

 

  GRANTEE:
     
  By: /s/ Martin Costas
  Name: Martin Costas
  Electronic e-mail Address: XXX
  Home Address:  XXX

 

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Exhibit 10.17

 

 

Stillwater

 

Purchase Agreement

 

This Purchase Agreement (“Purchase Agreement”) effective 7/10/2023 ______________, is between Boxabl Inc., a Nevada Corporation having an address of 5345 East North Belt Road, North Las Vegas, NV 89115 USA (“Boxabl”) __and Bedz, LLC ___________________, having an address of _______ 13535 Tarrasa Ct. W, Jacksonville, FL 32225 _________________________ (“Buyer”). In this Purchase Agreement, Boxabl and Buyer are sometimes individually referred to as a “Party” and collectively as the “Parties” to this Purchase Agreement.

 

In consideration of the provisions of this Purchase Agreement, including the Purchase Price (defined below) payable by Buyer to Boxabl, the Parties agree as follows:

 

1. Agreement to Purchase. Boxabl agrees to sell, and Buyer agrees to purchase, the Order Amount of Units for the specified Unit Prices set forth in the Sales Order attached as Exhibit A. Options, features, or hardware released or changed by Boxabl after Buyer executes this Purchase Agreement may not be included in or available for the Units.

 

2. Deposit. A deposit of $_725,605 _______(“Deposit”) is due and payable at the time Buyer executes this Agreement. The Deposit will be credited against the total Purchase Price of the Order Amount in the manner specified in paragraph 6 below.

 

3. Buyer Acknowledgments. Buyer is purchasing the Order Amount of Units with a full and complete understanding of the conditions and circumstances precedent to the utilization of the Units, which are set forth in this paragraph.

 

(a) Government Approvals. As between Boxabl and Buyer, Buyer will be responsible for all governmental permits and inspections required for the placement of the Units at their intended sites and for occupancy of the Units, including utility service, wastewater and occupancy permits, as well as all site work and Unit finishing operations that are necessary to comply with all statutes, regulations, ordinances and building and zoning codes applicable thereto, including but not limited to wind ratings, snow loads, earthquake and anchoring requirements. The Units have been constructed to comply with worldwide-accepted building codes and, where applicable, the governing state’s requirements for modular and/or factory-built buildings. Notwithstanding the foregoing, depending on the authority having jurisdiction (“AHJ”), sections within the different international and national codes with standards to which the Units have been designed to comply may lend themselves to differing interpretations. Buyer acknowledges that, whether or not the local jurisdiction currently has or does not have a state- specific or modular housing certification, compliance with the specific construction and installation requirements of Buyer’s locality’s AHJ is the responsibility of Buyer, including, where applicable, or in conjunction with, Buyer’s locality-licensed general contractor.

 

(b) Site Preparation. Buyer is responsible for installation of the Units at their intended sites (which requires a crane or forklift), and utility, water and waste water hook-ups. It is Buyer’s responsibility to select such sites for the Units, and to perform site preparation for receiving the Units, including but not limited to foundation preparation, utility-line routing, well, town water, plumbing or septic field preparation, driveway construction, deck, steps, walkway, driveway installation, grading and landscaping, as is appropriate for the safe utilization and habitation of the Units.

 

Stillwater Project

 

 
 

 

(c) Unit Deployment. A crane is required for Unit deployment, and it is Buyer’s responsibility to make appropriate arrangements for having the crane available at the site or sites chosen for Unit deployment. The operations associated with the deployment of the folded floor, wall and roof portions of the Units are inherently dangerous and can lead to injury or death to those personnel involved in the deployment operations. Boxabl will provide unpacking instructions which must be followed during Unit deployment. For an additional fee, Boxabl will provide a deployment advisor to oversee and consult on the unpacking and installment operations. This does not relieve Buyer of its responsibilities under this agreement including, but not limited to, obtaining government approvals, preparing the site, procuring a general contractor, unpacking and installing the Unit, and obtaining a government assessment.

 

(d) Unit Finishing. The Units are not finished dwellings and will require finishing operations after deployment and prior to occupancy, such as but not limited to roof framing, roof decking and shingling, gutter installation, TPO roof installation or other weather sealing as Buyer desires, all of which will incur additional costs beyond the Purchase Price.

 

(e) Governmental Assessments. Boxabl will have no responsibility for any state, county, municipal, village or other local property taxes or assessments arising from the placement of the Units at their intended sites.

 

(f) Legal Purpose. Buyer represents that its intention to use the Units is for the legal purpose as reflected by Buyer’s insertion in Exhibit “B”, “Statement of Intended Use”.

 

4. Sales Taxes. The Purchase Price is inclusive of sales and use taxes as shown in a separate line item on the Purchase Invoice and corresponding with the jurisdiction of the shipment’s destination. Buyer is responsible for any additional tax, or other governmental fee, that may be owed, either in Boxabl’s or Buyer’s jurisdiction and which may arise out of the sale or use of any of the Order Amount of Units.

 

5. Shipment. The Order Amount of Units is to be shipped f.o.b. Boxabl’s factory in North Las Vegas, Nevada. Buyer is responsible for any risk to the Order Amount of Units from Boxabl’s factory to Buyer’s desired location(s).

 

6. Order Process; Cancellation; Changes. (a) After Buyer’s execution of this Purchase Agreement, Boxabl will schedule and take appropriate steps to prepare for the manufacture of the Order Amount of Units, at which point the Deposit will be deemed to have been earned. Prior to issuance of any Shipment Invoice (defined below), any shipment dates for Buyer’s Order Amount of Units that Boxabl may provide are only good faith estimates; Boxabl does not guarantee the date(s) when the Order Amount of Units will actually be manufactured or delivered. Boxabl will notify Buyer when each Unit of the Order Amount will be available for pick-up or, at Buyer’s option, shipment (“Shipment Date”) in a Shipment Invoice. In addition to a Shipment Date, the Shipment Invoice will also set forth the balance due for the Unit, which will be the Unit Price less a pro rata amount of the Deposit (“Balance Due”). Where multiple Units will be available for shipment within the same week, Boxabl may for convenience combine them into one.

 

 
 

 

(b) In the event Buyer seeks to cancel all or any part of its order following execution of this Purchase Agreement (or if Buyer breaches this Agreement following which Boxabl cancels the order), then at Boxabl’s election, in lieu of pursuing such remedies as may be accorded it under law, Boxabl may retain the Deposit as liquidated damages, prorated to the extent of the cancellation and as not otherwise prohibited by law. Buyer acknowledges that the Deposit is a fair and reasonable estimate of the actual damages that Boxabl may incur in storing, remarketing and reselling the Order Amount of Units, costs that are otherwise impracticable or extremely difficult to determine. If Boxabl does not elect to retain the Deposit as liquidated damages, then Boxabl shall have the full right to pursue such remedies against Buyer for Buyer’s cancellation (or breach) as are accorded it under law.

 

(c) Any Buyer-requested changes to design, or to specifications relating to the Order Amount of Units, including changes to features of the Units that Buyer had previously specified, must be approved by Boxabl in writing, and are subject to price adjustments in the Purchase Price and/or the Balance Due.

 

7. Shipment.

 

(a) Balance Due Payment. The amount shown on each Shipment Invoice is due on or before the Shipment Date. If Buyer does not pay in full the Balance Due by or on the Shipment Date set forth in the Shipment Invoice, then Boxabl shall have the right to hold back the affected Unit(s) and any remaining Units of the Order Amount until payment is made by Buyer for all remaining Units of the Order Amount. Further, Boxabl shall have the right to treat Buyer’s failure to pay in full the Balance Due as a cancellation of the remaining undelivered Order Amount, subject to Boxabl’s remedies set forth in paragraph 6 above. Under no circumstances will any undelivered portion of the Order Amount of Units be made available for shipment to Buyer if any Balance Due is not fully paid.

 

(b) Legal Title. Legal title to, or, as the case may be, Certificate of Origin of, each of the Order Amount of Units passes from Boxabl to Buyer when Boxabl ships each of the Order Amount of Units from Boxabl’s manufacturing facility in North Las Vegas, Nevada.

 

(c) Force Majeure. Shipment by Boxabl of any portion or all of the Order Amount of Units is subject to variables out of Boxabl’s control, including acts of God or public enemy, acts of governmental authorities in either its or their sovereign or contractual capacity, fires, power outages, floods, epidemics, pandemics, quarantine restrictions, strikes, labor unrest, unusually severe weather and civil unrest.

 

8. Disclaimer and Exclusion of Warranties.

 

(a) Boxabl warrants that its Unit(s) will be manufactured in accordance with the specifications provided in Exhibit “A”, and will be free from substantial defects in material or workmanship (“Covered Defect”), on the Shipment Date and for a period of the greater of (a) one year following the Shipment Date, or (b) the duration of any warranty applicable to the Unit(s) under governing law (“Limited Warranty”).

 

(b) To make a claim under Boxabl’s Limited Warranty, the Covered Defect must arise within the timeframe set forth in Section 8(a), above, and Buyer must notify Boxabl in writing within fourteen (14) days after discovery of the subject Covered Defect.

 

 
 

 

(c) Following receipt of a proper claim under the Limited Warranty, Boxabl has the right to inspect the Unit(s). Buyer agrees to grant Boxabl or its authorized representative access to the Unit(s) upon receiving notice of Boxabl’s intention to inspect.

 

(d) The Limited Warranty does not apply to any alleged conditions or defects aside from Covered Defects. The following list describes, without limitation, certain types of conditions or defects, and/or causes of conditions or defects, not covered by the Limited Warranty:

 

●Acts of God, accident or casualty;
●Failure to use the Unit(s) for its/their intended purpose;
●Failure to maintain adequate internal climate;
●Failure to perform customary routine maintenance;
●Defective or poor workmanship in the Unit(s)’ installation;
●Damage to the Unit(s) which may occur during the course of transport, delivery, and/or placement of the Unit(s);
●Conditions or defects caused by or arising from site location or site preparation for the Unit(s), including but not limited to inadequate foundation, settling, shifting soil and ground water flow, ponding or drainage;
●Damage to the Unit(s) caused by or arising as a result of improper deployment of floor portions, walls or wall portions, or roof portions;
●Conditions resulting from alterations or improvements to the Unit(s) performed by any person or entity other than Boxabl following the Shipment Date;
●Conditions resulting from installation of equipment or appurtenances performed by any person or entity other than Boxabl following the Shipment Date;
●Conditions resulting from repairs to the Unit(s) or appliances, and/or heating and air conditioning equipment performed by any person or entity other than Boxabl following the Shipment Date;
●Improper utility service, such as excessively high water pressure, excessive voltage or current spikes and/or malfunctioning waste water connections;
●Normal wear and tear;
●Governmental use, including all military, police and emergency shelter dispositions;
●Commercial use;
●Noncompliance of the Unit(s) with any location-specific statutes, regulations, ordinances, and/or building and zoning codes applicable thereto, including but not limited to wind ratings, snow loads, and earthquake and anchoring requirements, unless contrary to applicable law; and
●Noncompliance of the Unit(s) with any specifications required for the issuance of a certificate of habitability, certificate of occupancy, and the like.

 

(e) Boxabl’s obligations under its Limited Warranty are limited to repair or replacement, at Boxabl’s option. In the case of replacement, if the identical relevant Unit component is not available, Boxabl will install a similar component of an equal or greater quality/finish than the component being replaced. Buyer agrees that any removed and replaced component becomes the property of Boxabl. Boxabl’s actions, in the form of repair or replacement pursuant to the Limited Warranty, shall not extend the limitations period applicable to the Limited Warranty set forth in Section 8(a), above. For the avoidance of doubt, Unit component(s) repaired or replaced pursuant to the Limited Warranty shall be subject to the same limitations period applicable to the relevant Unit as a whole.

 

 
 

 

(f) Boxabl disclaims and excludes from this Purchase Agreement all warranty obligations, express or implied, of merchantability or fitness for a particular purpose, or that otherwise exceed the legal warranties required by applicable law, as well as warranties for any installed system or appliance that are assigned to Buyer. Buyer acknowledges that all warranties of the Unit(s), express or implied, that are not assumed by Boxabl are waived and excluded, unless contrary to applicable law.

 

(g) Any warranty owed by Boxabl extends only to Buyer and is not transferable to any subsequent owner, unless contrary to applicable law.

 

9. Disclaimer of Liability, Limitation on Damages. BOXABL SHALL NOT BE LIABLE TO BUYER IN RESPECT OF ANY CLAIM, DEMAND OR ACTION, IRRESPECTIVE OF THE NATURE OF THE CAUSE OR THE CLAIM, DEMAND OR ACTION, ALLEGING ANY LOSS, INJURY OR DAMAGES, WHETHER DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL, ARISING OUT OF THE MOVEMENT, SITING, DEPLOYMENT, FINISHING, OCCUPANCY, USE OR POSSESSION OF THE UNITS, OR ANY INABILITY TO OCCUPY, USE OR POSSESS THE UNITS. BUYER WAIVES ALL SPECIAL OR CONSEQUENTIAL DAMAGES DUE TO DEFECTS IN THE UNITS TO THE EXTENT PERMITTED BY APPLICABLE LAW. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE MAXIMUM AGGREGATE AMOUNT OF MONEY DAMAGES FOR WHICH BOXABL MAY BE LIABLE TO PAY UNDER THIS AGREEMENT, RESULTING FROM ANY CAUSE WHATSOEVER, SHALL BE LIMITED TO THE AMOUNTS ACTUALLY PAID BY BUYER TO BOXABL UNDER THIS AGREEMENT. Some States, Territories and Countries do not allow certain liability exclusions or damages limitations, so to that extent the above may not apply to Buyer.

 

10. Insurance, Risk of Loss and Indemnification. Unless a charge is included in this Purchase Agreement for general liability or property damage insurance, payment for such coverage is not provided by Boxabl. Buyer must coordinate any insurance coverage of the Unit(s). Buyer assumes the risk of loss for the Unit(s) and components immediately upon shipment. Boxabl shall bear the risk of loss or damage to the Unit(s) prior to shipment thereof. In the event of substantial damage to the Unit(s) prior to the Shipment Date, and if the Unit(s) cannot be restored, this Purchase Agreement shall be null and void, although, within ten (10) days after receiving any such notice from Boxabl, Buyer will have right to complete the closing and receive any insurance proceeds regardless of the extent of the damage. Buyer waives claims against Boxabl relating to risk or loss after it is assumed by Buyer, even if Buyer’s insurance is not yet effective. Buyer agrees to indemnify Boxabl from claims arising from transport and installation of the Unit(s), and/or Buyer’s ownership of the real estate and personal property, after the Shipment Date.

 

11. Resolution of Disputes.

 

(a) Resolution Period. In the event of any dispute between the Parties, the aggrieved Party shall first send a written notice to the other Party describing the nature of the dispute and the desired resolution. Following such written notice, the Parties agree to discuss the matter for a period of sixty days (“Resolution Period”) in a good faith effort to resolve the dispute to their mutual satisfaction, which period can be extended by mutual written agreement of the Parties.

 

 
 

 

(b) Arbitration. In the event that any dispute between the Parties cannot be resolved within the Resolution Period, the Parties choose to proceed exclusively with binding arbitration for any claim or dispute arising out of or relating to this Agreement, in a proceeding before a single arbitrator to be administered in accordance with the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association (AAA) in New York, New York, to the exclusion of all other jurisdictions, to the extent permitted by law. EACH PARTY WAIVES THEIR RIGHT TO BE HEARD IN A COURT OF LAW, with or without a jury. Buyer acknowledges and understands that this waiver and consent is a material inducement to Boxabl to enter into this Purchase Agreement. For avoidance of doubt, this agreement to arbitrate disputes between the Parties includes claims arising before this Agreement, such as claims related to statements about Boxabl’s products.

 

(c) Limitations on Arbitration. The arbitrator may only resolve disputes between the Parties, and may not consolidate such disputes with the claims of other parties. The arbitrator cannot hear class or representative claims or requests for relief on behalf of others purchasing or leasing Boxabl products. If a court or arbitrator decides that any part of this agreement to arbitrate cannot be enforced as to a particular claim for relief or remedy, then that claim or remedy (and only that claim or remedy) can be brought in court and any other claims must be arbitrated. The Parties irrevocably agree that any legal action or proceeding contemplated by this paragraph 11(c) must be brought and determined in a New York State or Federal Court sitting in the Borough of Manhattan in the City of New York. The Parties hereby irrevocably submit to the exclusive jurisdiction of the aforementioned courts and agree not to commence any action, suit or proceeding except in such courts.

 

12. Notices. All notices may be given by email to the email addresses given below, if confirmed by regular U.S. mail, postage prepaid, sent to the addresses of the Parties, with Boxabl’s address being 5345 East North Belt Road, North Las Vegas, NV 89115 USA; and Buyer’s address being set forth above.

 

13. Governing Law. This Purchase Agreement, and all matters arising out of or relating to this Agreement, shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any choice or conflict of law provision or rule.

 

14. Waiver. Unless otherwise provided, the failure of either Boxabl or Buyer at any time to demand strict performance by the other of any terms, covenants or conditions set forth herein, shall not be constructed as a continuing waiver or relinquishment thereof, and either Party may, at any time, demand strict and complete performance by the other of said terms, covenants or conditions.

 

15. Severability. In the event that any of the terms of this Purchase Agreement are held to be partially or wholly invalid or unenforceable for any reason whatsoever, such holdings shall not affect, alter, modify or impair in any manner whatsoever, any of the other terms, or the remaining portion of any term, held to be partially invalid or unenforceable.

 

16. Entire Agreement. This Purchase Agreement constitutes the entire agreement between the Parties, and ONLY THOSE TERMS IN WRITING MAY BE ENFORCEABLE AND NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN PURCHASE AGREEMENT MAY BE LEGALLY ENFORCEABLE. No change or modification of this Purchase Agreement shall be valid unless the same shall be in writing and signed by Boxabl and Buyer. No waiver of any provision of this Purchase Agreement shall be valid unless in writing and signed by the Party against whom charged.

 

 
 

 

17. NOTICE TO BUYER: (A) DO NOT SIGN THE PURCHASE AGREEMENT BEFORE YOU READ IT OR IF IT CONTAINS ANY BLANK SPACES TO BE FILLED IN, other than, where applicable, the identification number or identifying marks of the final, constructed Unit; and (B) YOU ARE ENTITLED TO A COMPLETED FILLED- IN COPY OF THE PURCHASE AGREEMENT AND, IF PURCHASING A PRODUCT OR COMPONENTS COVERED BY WARRANTY, A COPY OF THE WARRANTY. Complaints concerning the purchase of a factory-built building shall be referred to Boxabl. If not resolved, the complaint may be referred to the governing state agency. RECEIPT OF A FILLED IN COPY OF THIS PURCHASE AGREEMENT IS HEREBY ACKNOWLEDGED BY THE BUYER.

 

18. Execution. This Purchase Agreement may be executed by hand or by mutually acceptable electronic means, and any electronic image that has been duly executed, or displays indicia of due execution by both Parties thereon, shall be given the same effect or be deemed an original. IMPORTANT: BUYER ACKNOWLEDGES HAVING READ AND UNDERSTOOD THE TERMS AND CONDITIONS CONTAINED IN THIS PURCHASE AGREEMENT BEFORE SIGNING IT. BUYER ACKNOWLEDGES RECEIVING A COPY OF THIS PURCHASE AGREEMENT AT THE TIME IT WAS SIGNED.

 

IN WITNESS WHEREOF, the Parties have executed this Agreement effective the date and year first above written. 

 

BOXABL INC.   BUYER
       
By (Printed) Galiano tiramani   By (Printed) David Punnett
By (Signature) /s/ Galiano tiramani   By (Signature) /s/ David Punnett
Title Director   Date 07/14/2023
Date 07/14/2023   Email punnettd@assurancecs.com
Email G@boxabl.com  

 

 
 

 

Exhibit A

 

Boxabl Inc.

5345 E N Belt Road

N Las Vegas NV

89115

 Sales Order
  #S021
United States 7/13/2023

 

Bill To

David Punnett

13535 Tarrasa ct W

Jacksonville FL 32225

United States

Ship To

David Punnett 7209

South Perkins Rd

Stillwater OK 74074

United States

TOTAL

$1,451,209.00

 

Payment Method  PO#  Shipping Method  Ship Date     
         7/13/2023     
Quantity  Item     Rate   Amount 
24  BXB-000002 Front Door Studio Casita (Unit B)     $60,000.00   $1,440,000.00 
   Front Door Studio Casita (Unit B)             
24 

Discount On Sale of Casita

10% Discount

     $(6,000.00)  $(144,000.00)
   Freight     $88,826.00   $88,826.00 
          

 

Subtotal

   $1,384,826.00 
          Tax (5.122%)   $66,383.06 
          Total   $1,451,209.06 

 

Memo

SO% Due Upon Signing, 50% Due Prior to Shipment

 

 

Signature of Buyer /s/ David Punnett

Date: 07/14/2023

 

 
 

 

Exhibit B

 

 

STATEMENT OF INTENDED USE

 

Job site: Project/Building Permit: Stillwater Project
  Address: 7209 South Perkins Rd
  City/County/State: Stillwater, OK 74074

 

I/we as owner/s of the above-described property, do hereby certify that the Boxabl Casita(s) will be used for the following:

 

(Give specific details on the intended use of the building):

 

I understand that any alternate use and non-compliance with this statement may result in the Boxabl Casita not being covered under the Limited Warranty per the Purchase Agreement.

 

Property Owner’s Signature*: /s/ David Punnett   Date: 07/14/2023
         
Boxabl’s Acceptance of Use Signature*: /s/ Galiano Tiramani   Date: 07/14/2023

 

Please be advised that any statement will be used to determine consistency with all applicable land use regulations. Permits from the Local Authority having Jurisdiction (LAJ) - will be required for any electrical, mechanical, foundation or plumbing installations.

 

5345 E. North Belt Road North las Vegas, NV 89115 (702) 500-9000

 

 

 

 

Exhibit 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Paolo Tiramani, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of BOXABL Inc. (formerly FG Merger II Corp.)
     
  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)) for the registrant 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, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and
     
  b) 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
     
  c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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: August 21, 2026  
  /s/ Paolo Tiramani
  Paolo Tiramani
  Co-Chief Executive Officer

 

 

 

 

Exhibit 31.2

 

CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Galiano Tiramani, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of BOXABL Inc. (formerly FG Merger II Corp.);
     
  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)) for the registrant 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, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and
     
  b) 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
     
  c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) 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(s) 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: August 21, 2026  
  /s/ Galiano Tiramani
  Galiano Tiramani
  Co-Chief Executive Officer

 

 

 

 

Exhibit 31.3

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Martin Noe Costas, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of BOXABL Inc. (formerly FG Merger II Corp.);
     
  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)) for the registrant 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, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and
     
  b) 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
     
  c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) 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 officers 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: August 21, 2026  
  /s/ Martin Noe Costas
  Martin Noe Costas
  Chief Financial Officer and Principal Accounting 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

 

I, Paolo Tiramani, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge the Quarterly Report on Form 10-Q of BOXABL Inc. for the quarterly period ended June 30, 2026, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of BOXABL Inc. for the periods presented therein.

 

Date: August 21, 2026  
  /s/ Paolo Tiramani
  Paolo Tiramani
  Co-Chief 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

 

I, Galiano Tiramani, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge the Quarterly Report on Form 10-Q of BOXABL Inc. for the quarterly period ended June 30, 2026, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of BOXABL Inc. for the periods presented therein.

 

Date: August 21, 2026  
  /s/ Galiano Tiramani
  Galiano Tiramani
  Co-Chief Executive Officer

 

 

 

 

Exhibit 32.3

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Martin Noe Costas, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge the Quarterly Report on Form 10-Q of BOXABL Inc. for the quarterly period ended June 30, 2026, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of BOXABL Inc. for the periods presented therein.

 

Date: August 21, 2026  
  /s/ Martin Noe Costas
  Martin Noe Costas
  Chief Financial Officer and Principal Accounting Officer

 

 

 

 

EXHIBIT 99.1

 

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF BOXABL INC. AS OF AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND JUNE 30, 2025

 

BOXABL INC.

Unaudited CONDENSED CONSOLIDATED BALANCE  SHEETS

 

   As of 
(In Thousands)  June 30, 2026   December 31, 2025 
   (Unaudited)   (Audited) 
ASSETS          
Current assets:          
Cash and cash equivalents  $14,687   $29,022 
Accounts receivable   334    41 
Loan receivable – current   -    20 
Escrow receivable   -    135 
Inventories, net   17,871    18,848 
Other current assets   1,546    798 
Total current assets   34,438    48,864 
           
Non-current assets:          
Restricted cash   4,006    3,968 
Property and equipment, net   6,407    7,335 
Digital assets   598    893 
Intangible assets, net   370    498 
Right of use assets, net   4,888    6,646 
Deposits on equipment   259    93 
Loan receivable - non-current   -    20 
Security deposits   732    854 
Other long-term assets   18    88 
Total non-current assets   17,278    20,395 
Total assets  $51,716   $69,259 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable   940    984 
Customer deposits   3,466    3,551 
Deferred revenue   1,604    1,548 
Lease liability- current   2,933    3,520 
Accrued expenses and other current liabilities   2,332    1,991 
Total current liabilities   11,275    11,594 
           
Long-term liabilities:          
Lease liability - non-current   2,366    3,648 
Total liabilities  $13,641   $15,242 
           
Commitments and contingencies – See Note 13   -    - 
           
Stockholders’ equity:          
Series A Preferred Stock $0.00001 par, 0.25 billion shares authorized, 188,540 and 188,540 thousand shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively   2,566    2,566 
Series A-1 Preferred Stock $0.00001 par, 1.10 billion shares authorized, 855,320 and 855,869 thousand shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively   634,072    634,479 
Series A-2 Preferred Stock $0.00001 par, 2.05 billion shares authorized, 174,324 and 174,324 thousand shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively   101,004    101,003 
Series A-3 Preferred Stock $0.00001 par, 8.75 billion shares authorized 109,854 and 109,209 thousand shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively   78,419    76,649 
Common Stock $0.00001 par, 17.8 billion shares authorized, 3,000,048 and 3,000,000 thousand shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively   30    30 
Additional paid-in capital   15,150    15,274 
Accumulated deficit   (793,166)   (775,984)
Total stockholders’ equity   38,075    54,017 
Total liabilities and stockholders’ equity  $51,716   $69,259 

 

See accompanying notes to unaudited interim condensed consolidated financial statements

 

 
 

 

BOXABL INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED Statements of COMPREHENSIVE LOSS

 

   For the Six Months Ended   For The Three Months Ended 
(In Thousands, except per share amounts)  June 30, 2026   June 30, 2025   June 30, 2026   June 30, 2025 
Revenues  $2,051   $402   $495   $279 
Cost of goods sold   9,263    11,841    4,354    9,723 
Gross loss   (7,212)   (11,439)   (3,859)   (9,444)
                     
Operating expenses:                    
General and administrative   6,683    7,745    3,494    5,938 
Sales and marketing   2,547    21,492    2,022    15,142 
Research and development   840    1,259    274    676 
Impairment loss   -    -    -    - 
Total operating expenses   10,070    30,496    5,790    21,756 
                     
Loss from operations   (17,282)   (41,935)   (9,649)   (31,200)
                     
Other income (expense):                    
Interest income   364    653    155    351 
Realized loss on disposal of assets   (78)   -    (78)   - 
Marked-to-market adjustment on digital assets   (295)   -    (98)   - 
Other income   109    219    67    49 
Total other income:   100    872    46    400 
Net loss attributed to common stockholders  $(17,182)  $(41,063)  $(9,603)  $(30,800)
                     
Weighted average common shares outstanding - basic and diluted   3,000,048    3,000,000    3,000,096    3,000,000 
Net loss per common share - basic and diluted   (0.01)  $(0.01)  $(0.01)  $(0.00)
                     
Comprehensive Loss                    
Net Loss  $(17,182)  $(41,063)  $(9,603)  $(30,800)
Unrealized net loss on investments   -    (170)   -    (135)
Comprehensive Loss  $(17,182)  $(41,233)  $(9,603)  $(30,935)

 

See accompanying notes to unaudited interim condensed consolidated financial statements

 

 
 

 

BOXABL INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED statements of stockholders’ equity

 

  

Series A-3

Preferred Stock

   Series A-2
Preferred Stock		   Series A-1
Preferred Stock		   Series A
Preferred Stock		   Common Stock   Paid-in   Accumulated   Accumulated Other Comprehensive   Stockholders’ 
(In Thousands)  Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Income (Loss)   Equity 
Balance as of March 31, 2025   47,679   $31,864    174,278   $100,969    844,723   $630,160    194,423   $2,671    3,000,000   $30   $16,379   $(728,698)   135   $53,510 
Issuance of preferred stock   51,417    40,080    44    36    3,399    2,718    -    -    -    -    -    -    -    42,834 
Offering costs        (1,660)   -    (2)   -    -    -    -    -    -    -    -         (1,662)
Stock based compensation   -    -    -    -    -    -    -    -    -    -    (613)   -    -    (613)
Net Loss   -    -    -    -    -    -    -    -    -    -    -    (30,800)   -    (30,800)
Net Loss on Investments   -    -    -    -    -    -    -    -    -    -    -    -    (135)   (135)
Balance as of June 30, 2025   99,096   $70,284    174,322   $101,003    848,122   $632,878    194,423   $2,671    3,000,000   $30   $15,766   $(759,498)   -   $63,134 
                                                                       
Balance as of March 31, 2026   109,854   $77,165    174,324   $101,003    855,869   $634,479    188,540   $2,566    3,000,000   $30   $15,058   $(783,563)   -   $46,738 
Issuance of preferred stock   -    -    -    1    (549)   (407)   -    -    549    -    407    -    -    1 
Offering Costs   -    1,254    -    -    -    -    -    -    -    -    -    -    -    1,254 
Stock based compensation   -    -    -    -    -    -    -    -    -    -    (315)   -    -    (315)
Net loss                                                          (9,603)        (9,603)
Balance as of June 30, 2026   109,854   $78,419    174,324   $101,004    855,320   $634,072    188,540   $2,566    3,000,549   $30   $15,150   $(793,166)   -   $38,075 
                                                                       

Balance as of January 1, 2025

   31,973   $20,443    174,278   $100,969    850,605   $630,265    194,423   $2,671    3,000,000   $30   $19,322   $(718,435)  $170   $55,435 
Issuance of preferred stock   67,127    52,279    44    36    3,399    2,718    -    -    -    -    -    -   $-    55,033 
Shares retired   (4)   (3)             (5,882)   (105)   -    -    -    -    -    -    -    (110)
Offering costs   -    (2,435)   -    (2)   -    -    -    -    -    -    -    -    -    (2,435)
Stock based compensation   -    -    -    -    -    -    -    -    -    -    (3,556)   -    -    (3,556)
Net loss                                                          (41,063)        (41,063)
Net loss on investments                                                               (170)   (170)

Balance as of June 30, 2025

   99,096   $70,284    174,322   $101,003    848,122   $632,878    194,423   $2,671   $3,000,000   $30   $15,766    (759,498)   -   $63,134 
                                                                      

Balance as of January 1, 2026

   109,209   $76,649    174,324   $101,003    855,869   $634,479    188,540   $2,566    3,000,000   $30   $15,274   $(775,984)   -   $54,017 
Issuance of preferred stock   645    516    -    1    (549)   (407)   -    -    549    -    407    -    -    517 
Offering costs   -    1,254    -    -    -    -    -    -    -    -    -    -    -    1,254 
Stock based compensation   -    -    -    -    -    -    -    -    -    -    (531)   -    -    (531)
Net loss   -    -    -    -    -    -    -    -    -    -    -    (17,182)   -    (17,182)

Balance as of June 30, 2026

   109,854   $78,419    174,324   $101,004    855,320   $634,072    188,540   $2,566    3,000,549   $30   $15,150   $(793,166)   -   $38,075 

 

See accompanying notes to unaudited interim condensed consolidated financial statements

 

 
 

 

BOXABL INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED statements of cash flows

 

   For the Six Months Ended 
(In Thousands)  June 30, 2026   June 30, 2025 
Cash flows from operating activities:          
Net loss  $(17,182)  $(41,063)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   542    933 
Share settlements   -    2,613 
Stock based compensation net recapture   (531)   (3,556)
Provision for credit losses (recoveries)   (89)   375 
Realized gain on investments   -    7 
Marked-to-market adjustment on digital assets   295    - 
Inventory valuation adjustments   4,883    11,794 
Reserve for inventory obsolescence   1,803    - 
Changes in operating assets and liabilities:          
Accounts receivable   (173)   (1)
Escrow receivable   134    (2,311)
Inventories   (5,158)   (4,054)
Other current assets   (748)   (1,881)
Loan receivable   10    141 
Accounts payable   (44)   (71)
Deferred revenue   56    446 
Customer deposits   (85)   (185)
Security deposits   122    246 
Other long-term assets   70    (34)
Accrued expenses and other current liabilities   341    656 
Right of use assets and liabilities   (111)   (36)
Net cash used in operating activities   (15,865)   (35,981)
           
Cash flows (used in) provided by investing activities:          
Purchase of property and equipment   (22)   (108)
Deposits on equipment   (166)   - 
Purchase of intangible assets   (15)   (16)
Gross proceeds from sale and maturities of investments   -    13,750 
Gross purchase of investments   -    (1,078)
Net cash (used in) provided by investing activities   (203)   12,548 
           
Cash flows provided by financing activities:          
Proceeds from sale of preferred stock and exercise of warrants, net of offering costs and escrows   1,771    33,129 
Settlements of subscription liability        (626)
Net cash and cash equivalents provided by financing activities   1,771    32,503 
           
Change in cash, cash equivalents, and restricted cash   (14,297)   9,070 
Cash, cash equivalents, and restricted cash beginning of year   32,990    9,630 
Cash, cash equivalents, and restricted cash end of the period  $18,693   $18,700 
           
Non-cash investing and financing activities:          
Unrealized losses in OCI  $-   $(170)
Purchase of Series A-1 Preferred Stock   407    - 
Investments held in escrow  $-   $19,057 

 

The following table provides a reconciliation of cash, cash equivalents and restricted cash to the amounts recorded on the Company’s unaudited interim consolidated balance sheets

 

   June 30, 
(In Thousands)  2026   2025 
Cash and cash equivalents  $14,687   $14,776 
Restricted cash   4,006    3,924 
Cash, cash equivalents, and restricted cash end of the period  $18,693   $18,700 

 

See accompanying notes to unaudited interim condensed consolidated financial statements

 

 
 

 

BOXABL INC.

notes to UNAUDITED INTERIM CONDENSED CONSOLIDATED financial statements

(Unaudited, all figures in thousands, except per share amounts and unit quantities unless otherwise indicated)

 

NOTE 1 – INCORPORATION AND NATURE OF OPERATIONS

 

Description of Business

 

BOXABL Inc. is a Nevada corporation originally organized as a Nevada limited liability company on December 2, 2017, and converted to a corporation on June 16, 2020. The Company’s subsidiaries include BOXABL NV Dealer, LLC (Nevada), Build IP LLC (Nevada), and BOXABL Developer, LLC (Texas). These unaudited interim condensed consolidated financial statements include the results of all subsidiaries and have been prepared in accordance with GAAP. The Company’s headquarters are in Las Vegas, Nevada.

 

BOXABL Inc. has developed a modular building system using advanced manufacturing processes and automotive-industry technology. Its products, referred to as “Casitas” or “Boxes,” are sustainable, high-quality buildings that benefit from mass-production practices. The Company has also developed patented folding and shipping technology enabling transport over existing roadways.

 

The Company’s Casitas can be configured for sale as a Park Model RV under ANSI A119.5 in the majority of U.S. states, and as a modular home in New Mexico, Nevada, California, Texas, and South Carolina, as well as in certain jurisdictions without a state-regulated modular program.

 

Business Combination

 

On August 4, 2025, the Company entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with FG Merger II Corp., a Nevada corporation (“FGMC”), and FG Merger Sub II Inc., a wholly-owned FGMC subsidiary (“Merger Sub”), providing for a business combination transaction (the “Business Combination”). On July 17, 2026, the Business Combination was completed: Merger Sub merged with and into the Company, with the Company surviving as a wholly-owned subsidiary of FGMC, and immediately thereafter the Company merged with and into FGMC, with FGMC continuing as the surviving public company and changing its name to BOXABL Inc. For further information regarding the Business Combination, including the merger consideration, exchange ratios, and pro forma financial information, see the Current Report on Form 8-K filed July 23, 2026, by the Combined Company.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information. They do not include all information and footnotes required for complete annual financial statements. In the opinion of management, all adjustments necessary for a fair statement have been included. All intercompany transactions and balances have been eliminated in consolidation. Operating results for the three months ended June 30, 2026 are not necessarily indicative of results for the full year ending December 31, 2026. Amounts are expressed in U.S. dollars, rounded to the nearest thousand. The Company’s fiscal year ends December 31.

 

These financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2026.

 

The Company is an “emerging growth company” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, (the “Exchange Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 13(a) of the Exchange Act for complying with new or revised accounting standards. The Company has elected to take advantage of this extended transition period and accordingly is not required to adopt new or revised accounting standards on the effective dates as they apply to public companies.

 

 
 

 

Correction of Immaterial Error

 

Management identified an immaterial error related to 2025 Series A-3 offering costs, resulting from incomplete and inconsistent information received from the third-party escrow agent. The error understated equity and current assets by approximately $1.2 million. Management concluded the error was not material to any previously issued financial statements and recorded the correction as an out-of-period adjustment, reflected within Series A-3 offering costs on the statement of equity only. The Company has evaluated and concluded that this misstatement as not material, either individually, nor in the aggregate, to its previously issued consolidated financial statements. Accordingly, management believes that the recording an out of period adjustment in the three and six months ended June 30, 2026 is appropriate and that restatement of previously issued financial statements is not required.

 

Prior Period Reclassification

 

Certain prior period amounts have been reclassified to conform to the current period presentation.

 

Use of Estimates

 

The preparation of these financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures. These estimates are based on information available as of the date of the financial statements, including historical information and various assumptions that management believes are reasonable. Actual results could differ materially from these estimates.

 

Risks and Uncertainties

 

The Company’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide, along with local, state, and federal governmental policy decisions. Adverse conditions, including recession, economic downturn, or governmental policy changes, could affect the Company’s financial condition, results of operations, and cash flows.

 

Fair Value of Financial Instruments

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the following hierarchy:

 

Level 1 – Quoted prices for identical assets and liabilities in active markets. The Company’s investments in U.S. Treasury securities and digital assets (Bitcoin) are Level 1 instruments.

Level 2 – Observable inputs other than quoted prices included in Level 1.

Level 3 – Unobservable inputs based on the Company’s own assumptions. The Company values employee stock options (NQSOs, ISOs) and RSUs at grant date fair value using Level 3 inputs. See Note 12.

 

Restricted Cash and Deposits

 

On June 1, 2023, the Company deposited $3,714 thousand as a facility lease security deposit held in restricted cash. As of June 30, 2026, and December 31, 2025, the Company held $4,006 thousand and $3,968 thousand, respectively, as restricted cash.

 

Accounts Receivable

 

Accounts receivable consists of amounts due from customers for Casita sales and services. The portion estimated to be uncollectible is recorded as a credit loss provision, a contra receivable balance, in accordance with ASC 326 (ASU 2016-13), Current Expected Credit Losses (“CECL”). As of June 30, 2026 and December 31, 2025, the allowance for credit losses associated with accounts receivable was $71 thousand and $189 thousand, respectively.

 

Investments in Marketable Debt Securities

 

When held, the Company classifies its U.S. Treasury bill and note investments as available-for-sale debt securities, reported at fair value with unrealized gains and losses recorded in other comprehensive income (loss). As of June 30, 2026 and December 31, 2025, the Company held no short-term treasury investments.

 

Inventories, net

 

Inventories consist of raw materials, in-bound freight and duties, work-in-progress, consignment, and finished goods. Inventories available for sale are valued at the lower of cost or net realizable value. Cost is determined using an allocation methodology, which approximates actual cost. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, bulk sales, and the expected recoverable values for each disposition category.

 

The Company maintains a slow-movement inventory policy under which an allowance for inventory obsolescence is established as a percentage of net realizable value based on the age of inventory units.

 

 
 

 

Inventory items that the Company deems to have no foreseeable use or are physically damaged are subject to a 100% allowance upon identification. The evaluation and classification of such items is reviewed and approved by the Company’s Controller and CFO prior to recording the allowance.

 

Inventory items are classified as having no foreseeable use or as physically damaged based on a formal evaluation performed in conjunction with the Company’s quarterly physical inventory count.

 

No foreseeable use is determined when inventory units have no current or anticipated production application, have been superseded by updated component specifications or design changes, are in excess of any reasonably foreseeable production demand based on current backlog and sales pipeline, or relate to discontinued product configurations or supplier relationships. Such determinations are made by production and engineering personnel in coordination with purchasing and are documented at the time of the quarterly count.

 

Physically damaged inventory is identified through direct inspection during the quarterly physical count process. Units are classified as physically damaged when they exhibit structural defects, material degradation, or other conditions that render them unsuitable for incorporation into finished goods or resale. Damaged units are tagged, segregated from usable inventory, and documented in the Company’s inventory management system with a description of the damage observed.

 

The allowance for slow-moving or obsolete inventory is recorded as a reduction to inventory with a corresponding charge to cost of goods sold. As of June 30, 2026, and December 31, 2025, the allowance for inventory obsolescence established under this slow-movement policy was $1,803 thousand and $0, respectively, and inventories are presented net of the aggregate allowance on the consolidated balance sheet. This policy was adopted effective January 1, 2026.

 

On an ongoing basis, the Company performs cycle counts of its inventory and records an inventory valuation allowance for specific inventory items that have become obsolete or have a cost basis in excess of expected net realizable value. The book value of obsolete inventory items is netted against the Company’s allowance for slow moving inventories, and any differences between cost and estimated realizable value is recognized as an expense.

 

Loan Receivables, net

 

Loan receivables consist of formal credit arrangements with customers, where a portion of the sales proceeds consist of an interest-bearing loan originated by the Company. Loan receivables are classified as current or non-current based on contractual term. A credit loss allowance is recorded in accordance with ASC 326 (CECL). To mitigate credit losses, the Company reviews the borrower’s creditworthiness and generally requires an unlimited personal guarantee from the borrower’s sponsor and ensures the loan is secured by the underlying Casita asset.

 

Property and Equipment, net

 

Property and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance, repairs, and minor improvements are charged to expense as incurred. When property and equipment is retired or disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Major improvements with economic lives greater than one year are capitalized. Leasehold improvements are depreciated over the lesser of the lease term or estimated useful life. Depreciation is computed using the straight-line method over the following estimated useful lives:

 

Computers and other peripheral equipment  3 years
Furniture and fixtures  7 years
Machinery and equipment  5-15 years
Tenant improvements  2-5 years
Vehicles  5 years
Casita fixed assets  25 years

 

 
 

 

Digital Assets

 

The Company adopted a Bitcoin (“BTC”) treasury reserve strategy in May 2025. The Company accounts for its digital assets, which are comprised solely of BTC, under ASU 2023-08 (Intangibles – Goodwill and Other – Crypto Assets, Subtopic 350-60), which requires BTC to be measured at fair value each reporting period with gains and losses recognized in net income. The Company determines the fair value of its BTC based on quoted prices on the Coinbase exchange, the active exchange that the Company has determined is its principal market for BTC (Level 1 input). Changes in fair value are recognized within other income (expense) in the statements of comprehensive loss. The Company’s BTC is initially recorded at cost, inclusive of transaction costs and fees, and subsequently remeasured at fair value. The Company establishes a deferred tax liability if the BTC fair value at the reporting date exceeds its average cost basis.

 

The following table summarizes the Company’s digital asset purchases, gains (losses) on digital assets, for the six months ended June 30, 2026:

 

(In Thousands, except number of Bitcoins)    
Digital asset carrying value at January 1, 2025   - 
Bitcoins Purchased   10 
Digital asset purchases  $1,100 
Mark to market   (207)
Digital asset carrying value at December 31, 2025  $893 
Bitcoins Purchased   - 
Digital asset purchases  $- 
Mark to market   (295)
Digital asset carrying value at June 30, 2026  $598 

 

As of June 30, 2026, the Company held 10 Bitcoin with an aggregate cost basis of $1,100 thousand and a fair value of $598 thousand, resulting in a cumulative unrealized loss of $502 thousand. The Company did not sell any of its Bitcoins during the six months ended June 30, 2026.

 

The Company did not hold any Bitcoin during the three months ended June 30, 2025.

 

Intangible Assets

 

The Company has intangible assets amortized over their respective estimated lives on a straight-line basis, and reviewed for impairment whenever events or circumstances indicate the carrying amount may not be recoverable. The Company’s intangible assets include intellectual property associated with Patents and Trademarks (amortized over 14 years or the stated expiration date, whichever is more determinable), implementation costs for cloud computing and hosting arrangements for SaaS arrangements (amortized over economic or legal life, whichever is shorter), and domain names. The Company applies the following useful lives:

 

Intellectual property   14 years
Software   1-3 years
Domain   5 years

 

Software development costs for software being developed for sale or external use are recognized in research and development expenses until the software has reached technological feasibility.

 

 
 

 

Revenue Recognition

 

Revenue is recognized under ASC 606 when performance obligations are satisfied. Control of casitas generally transfers upon shipment. Occasionally, performance obligations may also include delivery, installation, or other services. Customer payments received prior to the delivery are recorded as deferred revenue and recognized when the performance obligation is satisfied. Revenue is measured at the transaction price, net of estimated returns, discounts, and amounts collected on behalf of third parties.

 

Cost of Goods Sold

 

Cost of goods sold includes material costs, inbound and outbound freight, direct labor, and allocated overhead. Inventory write-downs or slow-moving inventory allowances are charged to cost of goods sold.

 

Advertising Costs

 

Advertising and promotional costs are expensed as incurred. Marketing costs attributable to equity issuances are recorded as a reduction of offering proceeds.

 

Research and Development

 

Research and development costs consisting of design, materials, and consultants related to prototype and process improvements and developments are expensed as incurred.

 

Concentration of Credit Risk

 

Cash and Cash Equivalents:

 

Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash and cash equivalents. The Company classifies all highly liquid instruments with an original maturity of three months or less as cash equivalents. Due to the short maturity of these cash equivalents, the carrying amounts of these instruments approximate their fair values. Cash and cash equivalents are maintained at high quality financial institutions. As of June 30, 2026, and December 31, 2025, the Company’s deposits exceeded the Federal Deposit Insurance Corporation (FDIC) limit. The Company has not experienced any losses with respect to its cash balances.

 

Based upon assessment of the financial condition of these institutions, management considers that the risk of loss of any uninsured balances does not have a significant impact on the Company’s operations.

 

Customers:

 

During the three months ended June 30, 2026, revenues from four customers made up 91% of the Company’s revenues. During the six months ended June 30, 2026, revenues from two customers made up 67% of the Company’s revenues. During the three months ended June 30, 2025, revenues from four customers made up 89% of the Company’s revenues. During the six months ended June 30, 2025, revenues from four customers made up 77% of the Company’s revenues.

 

As of June 30, 2026 and December 31, 2025, loan receivables from 2 customers represented 89% and 89% of the Company’s loan receivable. As of June 30, 2026 Accounts Receivable from 1 customer represented 86% of the Company’s accounts receivable. As of December 31, 2025, there were no customers with significant concentrations of accounts receivable.

 

Stock-Based Compensation

 

The Company applies ASC 718 to all stock-based awards. Stock options are valued at the fair value on the date of the grant is issued using Black-Scholes and recognized on a straight-line basis over the vesting period. Effective October 18, 2024, RSUs are subject to a performance condition (a monetization event); no RSU compensation is recognized until such event becomes probable.

 

 
 

 

See Note 12 – Stockholders’ Equity – Preferred and Common Stock for a description of the amendments to the Company’s articles of incorporation and Note 12 – Stockholders’ Equity – Stock-based Compensation for a description of our amended and restated Plan, each of which became effective October 18, 2024.

 

Determining the grant date fair value of options using the Black-Scholes option-pricing model requires management to make assumptions and judgments. These estimates involve inherent uncertainties and, if different assumptions had been used, stock-based compensation expense could have been materially different from the amounts recorded.

 

The 2026 Omnibus Incentive Plan is designed to support the Company’s growth and profitability by providing short- and long-term incentives aligned with its objectives, reward strong individual performance, promote teamwork, and enhance the Company’s ability to attract and retain key employees, directors, and consultants. The Company has not issued any grants nor has recognized any forfeitures under this plan.

 

Income Taxes

 

The Company accounts for income taxes under ASC 740 using the asset and liability method. Deferred tax assets are reduced by a valuation allowance when it is more likely than not they will not be realized.

 

Contingencies

 

The Company is involved in lawsuits, claims, and proceedings, which arise in the ordinary course of business. In accordance with the FASB ASC Topic 450 Contingencies, the Company shall make a provision for a liability when it is both probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

 

Basic and Diluted Net Loss Per Share

 

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. Diluted net loss per share reflects the actual weighted average of common shares issued and outstanding during the period plus potential common shares. Stock options and convertible instruments are considered potential common shares and are included in the calculation of diluted net loss per share when their effect is dilutive. As all potentially dilutive securities are anti-dilutive for the periods presented as a result of the net loss, diluted net loss per share is the same as basic net loss per share for each period.

 

The following table summarizes potentially dilutive securities and the resulting common share equivalents outstanding as of June 30, 2026 and December 31, 2025, respectively, that were excluded from the diluted share computation:

 

   Balance as of 
(In Thousands)  June 30, 2026   December 31, 2025 
Stock options   43,641    43,817 
Restricted stock units   119,226    127,936 
Warrants   -    18,573 
Preferred stock   1,328,038    1,327,942 
Potentially dilutive shares   1,490,905    1,518,268 

 

Leases

 

The Company accounts for operating leases under ASC 842. Right-of-Use (“ROU”) assets and lease liabilities are recognized at the present value of future minimum lease payments. The Company has no finance leases.

 

 
 

 

Warranty Provision

 

The Company generally offers its customers a manufacturer’s warranty on Casita products sold for a period of one year. Management records an expense to cost of goods sold for the costs of warranty repairs at the time of sale. Management’s estimate for warranties is based on sales levels and historical costs of providing warranties. As of June 30, 2026, and December 31, 2025, respectively, the Company’s reserve for warranty totaled $20 thousand and $11 thousand.

 

Recent Accounting Pronouncements

 

Accounting Standards Update No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. Effective for the Company for annual and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments shall be applied on a prospective basis to costs incurred on or after the date of adoption, with an option to apply to projects in process. The Company adopted ASU 2025-06 on a prospective basis effective January 1, 2026. The adoption did not have a material impact on the Company’s consolidated financial statements.

 

Accounting Standards Update 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. Effective for annual and interim periods beginning after December 15, 2025. The Company adopted this standard effective January 1, 2025. The adoption did not have a material impact on the financial statements.

 

Accounting Standards Update 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. Effective for annual periods beginning after January 1, 2026. The Company adopted ASU 2025-04 on a modified retrospective basis, effective January 1, 2026. The adoption did not have a material impact on the Company’s consolidated financial statements.

 

Accounting Standards Update 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest. Effective for annual periods beginning after December 31, 2026. In connection with the Business Combination with FG Merger II Corp., which closed on July 17, 2026, the Company determined that BOXABL was the accounting acquirer under ASC 805, notwithstanding that FGMC was the legal acquirer, consistent with the guidance in ASU 2025-03. The Company will adopt this standard on its effective date and does not expect it to have a material impact on its consolidated financial statements, as the accounting acquirer determination for the Business Combination has already been made.

 

 
 

 

Accounting Standards Update 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. Effective for the Company for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the potential impact of this update on its consolidated financial statements in conjunction with Accounting Standards Update 2024-03, discussed below.

 

Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. Effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the potential impact of this update on its consolidated financial statements. The adoption of ASU 2025-01 together with ASU 2024-03 is not expected to have a material impact on the Company’s results of operations, financial position, or cash flows, as the amendments affect disclosures only, such as expanded expense-disaggregation disclosures designed to provide users of the financial statements with more transparency into the nature of the Company’s expenses and cost structure.

 

Accounting Standards Update No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. Effective for public entities for interim periods within fiscal years beginning after Dec. 15, 2027, with early adoption permitted. The company is evaluating this standard.

 

Management does not believe any other recently issued but not yet effective accounting standards will have a material impact on these financial statements.

 

NOTE 3 – GOING CONCERN

 

These unaudited interim condensed consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. Substantial doubt about the Company’s ability to continue as a going concern exists. For the six months ended June 30, 2026, the Company reported a net loss of $17,182 thousand and operating cash outflow of $15,865 thousand. At June 30, 2026, the Company had an accumulated deficit of $793,166 thousand, compared to $775,984 thousand at December 31, 2025. Absent additional action, the Company will require additional liquidity to continue operations over the next 12 months.

 

Management’s plan to address this uncertainty includes: (a) continued tight controls over operating costs; (b) accelerating Casitas deliveries and sales; and (c) raising capital through equity financing. Subsequent to June 30, 2026, on July 17, 2026, the Company completed the Business Combination with FG Merger Corp. II (“FGMC”). In connection with the closing, holders of 3,466,086 FGMC public shares elected to redeem their shares, resulting in a net trust balance of approximately $47.2 million released to the combined company. Of that amount, approximately $31.1 million was applied to fund the Combined Company’s prepayment obligations under the Forward Purchase Agreement described in Note 16 — Subsequent Events, with a portion of the remainder applied toward transaction costs and other closing obligations, resulting in a net increase of approximately $6.4 million in unrestricted cash. See the Company’s Current Report on Form 8-K filed July 23, 2026 for further detail. Management has evaluated the Company’s ability to continue as a going concern through the date these financial statements are issued, taking into account the actual net proceeds realized upon closing described above, together with capital on hand and expected future funding, including expected growth in product sales. However, there can be no assurance management’s plans will be achieved.

 

NOTE 4 – INVESTMENTS

 

As of June 30, 2026, and December 31, 2025, the Company held no investments in U.S. Treasury securities ($0 and $0, respectively).

 

For the three and six months ended June 30, 2025, the Company held U.S. Treasury securities classified as available-for-sale. Unrealized loss on investments for the three and six months ended June 30, 2025, were $135 thousand and $170 thousand, respectively, recognized in other comprehensive loss.

 

 
 

 

NOTE 5 – INVENTORIES, NET

 

As of June 30, 2026, and December 31, 2025, inventories consist of the following:

 

   Balance as of 
   June 30,   December 31, 
(In Thousands)  2026   2025 
Raw material  $2,642   $2,497 
Inventory in-transit   241    - 
Work-in progress   6,554    6,683 
Consignment   29    29 
Finished goods   10,208    9,639 
Reserve for slow moving inventory   (1,803)   - 
Total inventory  $17,871   $18,848 

 

For the six months ended June 30, 2026, the Company recognized an expense of $1,803 thousand within cost of goods sold on the unaudited interim consolidated statement of comprehensive loss to align our slow-moving and obsolete inventory allowance as per the policy described in Note 2. For the six months ended June 30, 2025, the Company recorded $8,430 thousand related to obsolete and damaged inventory within cost of goods sold on the unaudited interim consolidated statements of comprehensive loss. The June 30, 2025 inventory valuation adjustment followed an inventory slow movement analysis, whereby the Company wrote down 68 units that had been held in inventory for an extended time period and for which the Company determined that it was not cost effective to rework.

 

For the three months ended June 30, 2026 and 2025, the Company recorded expenses of $839 and $8,346 thousand, respectively, related to obsolete and damaged inventory within cost of goods sold on the unaudited interim consolidated statements of comprehensive loss.

 

For the six months ended June 30, 2026 and 2025, the Company recorded inventory valuation adjustments of $4,883 thousand and $3,364 thousand, respectively, within cost of goods sold on the unaudited interim consolidated statements of comprehensive loss to reduce the carrying value of finished goods inventory to net realizable value.

 

For the three months ended June 30, 2026 and 2025, the Company recorded inventory valuation adjustments of $2,986 thousand and $1,300 thousand, respectively, within cost of goods sold on the unaudited interim consolidated statements of comprehensive loss to reduce the carrying value of finished goods inventory to net realizable value.

 

NOTE 6 – LOAN RECEIVABLES, NET

 

As of June 30, 2026 and December 31, 2025, gross loan receivables totaled $1,246 thousand and $1,275 thousand, respectively. The Company has determined that the expected credit losses on these loan receivables are substantially equal to their gross carrying amount based on the borrowers’ historical payment patterns, the underlying collateral value, and management’s assessment of collectability. Accordingly, the Company has established an allowance for credit losses under ASC 326 of $1,246 thousand and $1,217 thousand as of June 30, 2026 and December 31, 2025, respectively.

 

 
 

 

The following table presents the roll forward of the CECL allowance for the six months ended June 30, 2026:

 

   For the Six Months Ended June 30, 2026 
Allowance for Credit Losses  Current Loan
Receivable		   Non- Current
Loan Receivable		   Accounts
Receivable		 
Balance as of December 31, 2025  $379   $838   $189 
Provision for credit losses   20    20    - 
Write-offs   -    -    - 
Recoveries   (11)   -    (118)
Balance as of June 30, 2026  $388   $858   $71 

 

NOTE 7 – PROPERTY AND EQUIPMENT, NET

 

The Company’s property and equipment consists of the following amounts as of June 30, 2026, and December 31, 2025:

 

   Balance as of 
(In Thousands) 

June 30,

2026

  

December 31,

2025

 
Computers and other peripheral equipment  $409   $409 
Furniture and fixtures   182    182 
Machinery and equipment   7,998    7,998 
Tenant improvements   2,847    2,847 
Vehicles   564    588 
Land   58    58 
Casita fixed assets   834    834 
    12,892    12,916 
Less: Accumulated depreciation   (6,485)   (5,581)
Property, plant and equipment - net  $6,407   $7,335 

 

Depreciation

 

During the six months ended June 30, 2026, and 2025, the Company recognized $399 thousand and $901 thousand, respectively, in depreciation expense. During the three months ended June 30, 2026 and 2025, the Company recognized $240 thousand and $435 thousand, respectively, in depreciation expense.

 

Deposits on Equipment

 

As of June 30, 2026, and December 31, 2025, the Company recorded $259 thousand and $93 thousand, respectively, for deposits on equipment which is reported within “Deposits on equipment” on the consolidated balance sheets.

 

NOTE 8 – INTANGIBLE ASSETS, NET

 

The Company held the following intangible assets as of June 30, 2026, and December 31, 2025:

 

   Balance as of 
   June 30,   December 31, 
(In thousands)  2026   2025 
Asset          
Intellectual property  $442   $426 
Software   261    261 
Domain   50    50 
    753    737 
Less: Accumulated amortization   (383)   (240)
Total  $370   $497 

 

 
 

 

During the six months ended June 30, 2026, and 2025, the Company recognized $143 thousand and $26 thousand in amortization expense, respectively. During the three months ended June 30, 2026 and 2025, the Company recognized $24 thousand and $13 thousand, respectively, in amortization expense.

 

NOTE 9 – CURRENT LIABILITIES

 

Accounts Payable

 

Accounts payable as of June 30, 2026, and December 31, 2025 consisted of the following:

 

   Balance as of 
(In thousands)  June 30, 2026   December 31, 2025 
Outstanding vendor bills  $731   $811 
Sales tax payable   102   $88 
Credit card balances   107    85 
Total  $940   $984 

 

Customer Deposits

 

As of June 30, 2026, and December 31, 2025, customer deposits were $3,466 thousand and $3,551 thousand, respectively, consisting of pre-order deposits from customers.

 

Deferred Revenue

 

Deferred revenue is comprised of prepayments on unfulfilled purchase orders. Deferred revenue consisted of the following as of June 30, 2026, and December 31, 2025:

 

   As of 
(In Thousands)  June 30, 2026   December 31, 2025 
Deferred revenue, beginning of period  $1,548   $2,286 
Add: Payments received in advance of delivery   1,293    2,024 
Less: Revenue recognized from beginning balance   (145)   (945)
Less: Adjustments   (1,092)   (1,817)
Deferred revenue, end of period  $1,604   $1,548 

 

NOTE 10 –LEASES

 

On December 29, 2020, the Company signed a 65-month lease for its 173,000 sq. ft. factory facility, commencing on May 1, 2021. As of December 31, 2020, a $525 thousand security deposit, first month’s rent, $87 thousand, and first-month’s Tenant’s Percentage of Operating Expense Fees (“CAM”) $19 thousand, had been paid to the landlord. The monthly CAM varies from month to month.

 

After December 31, 2022, the Company amended the lease agreement to obtain additional space in a neighboring warehouse for four years, with the first month’s base rent of $116 thousand, increasing by 4% annually. During the year ended December 31, 2025, the Company performed improvements to the leased facility. In connection with these improvements, the Company made an additional security deposit of $259 thousand to the landlord.

 

 
 

 

On June 10, 2022, the Company signed a 73-month lease for a 132,960 sq. ft warehouse, commencing the earlier of (a) 30 days after substantial completion of tenant work by the landlord or (b) tenant commencing operation in the building. The lease commencement date was determined to be February 1, 2023. The initial base rent is $104 thousand and will increase 4% every year.

 

In accordance with the company’s lease contracts, in 2023 the company received a partial refund of its security deposit for $100 thousand. Additionally, in 2025 the Company received additional partial refunds of its security deposits for $445 thousand. As of December 31, 2025 the Company has a total of $854 thousand on record for leased space security deposits.

 

The Company recognizes lease expense for its operating leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term. The Company has determined that it was reasonably certain that the renewal options would be exercised based on previous history and knowledge, current understanding of future business needs and the level of investment in leasehold improvements, among other considerations. The incremental borrowing rate used in the calculation of the lease liability is based on the rate available to the Company. The depreciable life of assets and leasehold improvements are limited by the expected lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain subsidiaries of the Company rent or sublease certain office space to/from other subsidiaries of the Company.

 

As of June 30, 2026 and December 31, 2025, Right of Use Assets, net, were $4,888 thousand and $6,646 thousand, respectively, current operating lease liabilities were $2,933 thousand and $3,520 thousand, respectively, and non-current operating lease liabilities were $2,366 thousand and $3,648 thousand, respectively.

 

The following table presents the maturity of operating lease liabilities as of June 30, 2026:

 

Remaining lease payments  Fiscal year 
2026   1,787 
2027   2,102 
2028   1,509 
Thereafter   258 
Total lease payments  $5,656 
Less: Imputed interest   (356)
Total lease liability  $5,300 

 

As of June 30, 2026 and December 31, 2025, the weighted average remaining lease term was 2.1 years and 2.4 years, respectively. As of June 30, 2026 and December 31, 2025, the weighted average incremental borrowing rate was 5.9% and 5.7%, respectively.

 

NOTE 11 – RELATED PARTY TRANSACTIONS

 

The Company had the following transactions with related parties:

 

   Six Months Ended June 30,   Three Months Ended June 30, 
(In Thousands)  2026   2025   2026   2025 
Consolidated Statement of Comprehensive Loss                    
Rental income (1)  $44   $44   $22   $22 

 

 
 

 

   Balance as of 
(In Thousands) 

June 30,

2026

  

December 31,

2025

 
Consolidated Balance Sheets          
Preferred Stock (2)  $1,719   $1,719 

 

(1) The Company has a contract with the majority shareholder and Co-CEO to share certain costs related to office space, support staff, and consultancy services. Refer to Exhibit 10.15 for details of lease to Supercar System. In addition, under the services agreement between the Company and Supercar System, effective January 1, 2023, the Company receives reimbursements for the Company’s employees who provide services to Supercar System’s business. Supercar System is controlled by the Company’s Co-CEO, Paolo Tiramani. As of June 30, 2026 and December 31, 2025, Supercar System had a balance due to BOXABL of $0 and $5.7 thousand, respectively, related to payroll costs funded by the Company, that were included in Accounts Receivable.

 

(2) As of June 30, 2026 and December 31, 2025, the Company had 26,726 thousand shares outstanding of Series A Preferred Stock, representing an initial cost of $427 thousand held by certain related parties including the spouse and in-laws to the Co-Chief Executive Officer and Chief Marketing and Strategy Officer. As of June 30, 2026 and December 31, 2025, the Company had 5,884 thousand shares outstanding of Series A-1 Preferred Stock, representing an initial cost of $372 thousand held by certain related parties including the in-laws to the Co-Chief Executive Officer and Chief Marketing and Strategy Officer and a former Director of the Company. As of June 30, 2026 and December 31, 2025, the Company had 12,834 thousand Nonqualified Stock Options representing an initial grant date fair value of $920 thousand held by certain related parties including the spouse to the Co-Chief Executive Officer and Chief Marketing and Strategy Officer of the Company. See Note 12 – Stockholders’ Equity.

 

NOTE 12 – STOCKHOLDERS’ EQUITY

 

Preferred and Common Stock

 

Effective October 21, 2024, the Company filed an amendment to the articles of incorporation which increased the authorized Common Stock from 6.6 billion shares to 17.8 billion shares of Common Stock, $0.00001 par value per share, and increased the authorized Preferred Stock from 13.4 billion shares to 14.4 billion shares of Preferred Stock, $0.00001 par value per share. The number of authorized Preferred Stock designated as Non-Voting Series A, A-1, A-2, and A-3 did not change, but the undesignated Preferred Stock of 1.25 billion shares increased to an authorized 2.25 billion shares of undesignated Preferred Stock, $0.00001 par value per share.

 

Preferred Stock Liquidation Preference

 

The following table summarizes the liquidation preferences as of June 30, 2026, in order of liquidation:

 

(In Thousands) 

Shares

Authorized

  

Shares Issued and

Outstanding

  

Liquidation

Preference

Balance

 
Series A-3 Preferred Stock   8,750,000    109,854    87,883 
Series A-2 Preferred Stock   2,050,000    174,324    139,459 
Series A-1 Preferred Stock   1,100,000    855,320    67,570 
Series A Preferred Stock   250,000    188,540    3,205 
Non-classified Preferred Stock   2,250,000    -    - 
Total Series A Preferred Stock   14,400,000    1,328,038   $298,117 

 

 
 

 

Sales of Preferred Stock

 

During the six months ended June 30, 2026 and 2025, the Company issued 645 thousand and 67,126 thousand shares of Series A-3 Preferred Stock for gross proceeds of $516 thousand and $49,844 thousand, respectively.

 

Specifically, during the six months ended June 30, 2025, the Company issued:

 

  - 60,347,168 shares of Series A-3 Preferred Stock for gross proceeds of $47,178 thousand through Regulation A.
  - 6,778,832 shares of Series A-3 Preferred Stock for gross proceeds of $5,101 thousand through Regulation D.
  - 44,250 shares of Series A-2 Preferred Stock for gross proceeds of $35 thousand.

 

Warrants

 

In connection with the issuance of certain A-3 shares, as of June 30, 2026 and December 31, 2025, respectively, the Company has issued 0 and 18,573 thousand warrants, respectively, that are exercisable at a price of $0.80 per share. Warrants are exercisable for three years from the date of purchase (the “Exercise Period”); provided, however, that the Company may call the warrants, in its sole discretion, at any time upon 30 days written notice to the Shareholders. Each warrant could be exercised by the holder for one share of A-3 Preferred Stock. All unexercised warrants expired on March 1, 2026. During the six months ended June 30, 2026, 645,250 warrants were exercised, for which the Company issued 645,250 shares of Series A-3 Preferred Stock and recognized gross proceeds of $516,200. No warrants were exercised during the three months ended June 30, 2026.

 

Escrow Receivable

 

As of June 30, 2026 and December 31, 2025, the Company recorded $0 thousand and $135 thousand, respectively, of investment holdbacks in escrow receivable on its consolidated balance sheets. These amounts represent cash balances held by third party custodians on behalf of the broker-dealer associated with the Company’s equity offerings, for the benefit of BOXABL. For share sales that have closed during the quarter, Company accrues an escrow receivable to account for the gross proceeds of the equity offering that are held by the third-party custodian. This escrow receivable is settled when cash is received by the Company.

 

Offering Costs and Deferred Offering Costs

 

As of June 30, 2026 and December 31, 2025, the Company incurred offering costs of $0 thousand and $888 thousand, respectively. These costs included legal fees, targeted marketing and other deferred costs related directly to the open offerings

 

Stock-based Compensation

 

On August 12, 2024, the Company amended and restated the Amended 2021 Stock Incentive Plan (“Plan”) to increase the number of shares of Common Stock reserved for issuance under the Plan to 550 million shares (previously 150 million shares were reserved for issuance under the 2021 Stock Incentive Plan), as well as certain other amendments, subject to stockholder approval and notice. The Plan, as amended and restated, became effective on October 18, 2024.

 

Administration:

 

The Board of Directors delegated to the Compensation Committee of the Board of Directors the authority to administer the Plan (the “Plan Administrator”), which includes the authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan, to provide for conditions and assurances deemed necessary or advisable to protect the interest of the Company, and to make all other determinations necessary for the administration of the Plan to the extent not contrary to the express provisions of the Plan.

 

 
 

 

Eligibility:

 

Eligible participants in this Plan include the employees of, non-employee directors of, and consultants to the Company. To the extent permitted by applicable law, awards may also be granted to prospective employees and non-employee members of the Board, but no portion of any such award shall vest, become exercisable, be issued or become effective prior to the date on which such individual begins providing services to the Company.

 

The Plan Administrator has the sole discretion to determine which participants will receive an award, including the determination of whether an award to an eligible participant will further the Plan’s purposes of providing incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the Company’s success by offering them an opportunity to participate in the Company’s future performance through the grant of awards, as well as the type of any award to be granted, the number of shares of Common Stock subject to any award, and the terms and conditions of any award.

 

Awards:

 

As of June 30, 2026, only Stock Options and Restricted Stock Units (“RSUs”) were outstanding under the Plan.

 

The Plan permits the following types of awards:

 

Stock Appreciation Rights:

 

Stock Appreciation Rights (“SARs”) may be granted to Participants and shall have a per-share base value equal to the Fair Market Value of a share of Common Stock on the Grant Date. SARs may be settled at such times, and subject to restrictions and conditions, which need not be the same for all Participants; provided that no SAR shall settle later than ten (10) years from the Grant Date. Upon settlement, the Participant shall be entitled to receive payment of an amount determined by multiplying (a) the difference, if any, between the Fair Market Value of one share of Common Stock on the date of settlement and the base value of one share of Common Stock on the Grant Date; and (b) the number of shares of Common Stock with respect to which the SAR is settled. Payment for SARs shall be in cash, shares of Common Stock of equivalent value, or in a combination thereof. As of June 30, 2026, the Company has not issued any SARs.

 

Restricted Stock Unit:

 

Restricted Stock Unit awards may be subject to transfer and other restrictions including, without limitation, continued employment, performance conditions, or limitations on voting and/or dividend rights. Restricted Stock awards will be forfeited if the restrictions imposed on the Grant Date have not expired at the time of termination of employment or service in the case of a non-employee director or consultant. As of June 30, 2026, and December 31, 2025, the Company had granted (net of forfeitures) 119,225,633 and 127,936,350 Restricted Stock Units, respectively, which are subject to time and performance vesting conditions.

 

Stock Grant Awards:

 

Stock Grant Awards grant the Participant the right to receive (or purchase at such price as previously determined in the award) a designated number of shares of Common Stock free of any vesting restrictions. The purchase price, if any, shall be payable in cash or other form of consideration. Stock Grant Awards may be granted or sold in respect of past services or other valid consideration, or in lieu of any cash compensation due to the Participant. As of June 30, 2026 and December 31, 2025, respectively, the Company has not issued any Stock Grant Awards.

 

 
 

 

Stock Options:

 

Under the Plan, Stock Options may be granted to Eligible Participants at a per-share exercise no less than 100% of the Fair Market Value of one share of Common Stock as of the Grant Date. The Administrator shall determine when the Stock Option may be exercised, including any performance, vesting or other conditions, provided the term does not exceed ten (10) years from the Grant Date. If the Participant’s employment or service is terminated for cause, their unexercised Stock Options immediately lapse, including any vested Stock Options. Incentive Stock Options (“ISOs”) may only be granted to Participants who are also employees. The exercise price of ISOs shall equal the Fair Market Value of one share of Common Stock as of the Grant Date and shall expire upon the earlier of ten (10) years from the Grant Date (unless a shorter time is set in the Participant’s award agreement), provided that, ISOs granted to an employee who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company must have a per-share exercise price of no less than 110% of the Fair Market Value of one share of Common Stock as of the Grant Date and cannot have a term exceeding five (5) years from the Grant Date. The vested portion of a Stock Option lapses three (3) months following the effective date of the Participant’s termination of employment or twelve (12) months following the effective date of the Participant’s termination of employment due to death or disability, as defined in the Plan (in each case, unless a shorter time is set in the Participant’s award agreement) but in no event later than the expiration of the Stock Option.

 

A summary of Stock Option activity as of June 30, 2026 and December 31, 2025 is as follows:

 

   Weighted Average Exercise Price per Share 
(In Thousands except for per share price)  Stock Options  

Exercise Price

per Share

   Term (in years) 
Outstanding as of December 31,2024   50,196   $0.17    7.65 
Granted   -    -    - 
Exercised   -    -    - 
Forfeited/cancelled   (6,379)   0.33      
Outstanding as of December 31, 2025   43,817   $0.44    6.45 
Granted   -    -      
Exercised   -    -      
Forfeited/cancelled   (176)   0.44      
Outstanding as of June 30, 2026   43,641    0.44    6.20 
Exercisable as of June 30, 2026   43,641   $0.44    6.20 

 

The Company accounts for share-based compensation arrangements using a fair value method which requires the recognition of compensation expense for costs related to all share-based payments, including stock options. The fair value method requires the Company to estimate the fair value of share-based payment awards on the date of grant using an option pricing model. The Company uses the Black-Scholes pricing model to estimate the fair value of Stock Options granted that are then expensed on a straight-line basis over the vesting period. The Company accounts for forfeitures as they occur in the year of forfeiture and share-based compensation expense adjusted accordingly. Option valuation models, including the Black-Scholes option-pricing model, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the grant-date fair value of an award. These assumptions include the risk-free rate of interest, expected dividend yield, expected volatility, and the expected life of the award.

 

The Company uses the Black-Scholes option pricing model to estimate the fair value of the Stock Options on the date of grant under the following assumptions:

 

Expected life (years) (1)     5.0 - 6.5  
Risk-free interest rate (2)     1.03 - 4.34 %
Expected volatility (3)     50.3 - 54.9 %
Annual dividend yield (4)     0 %
Weighted average fair value of options granted   $ 0.14  

 

(1) In accordance with SAB Topic 14, the expected life of employee stock options was estimated using the “simplified method,” as the Company has no historical information to develop reasonable expectations about future exercise patterns and employment duration for its stock option grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. The Company believes the use of the simplified method is appropriate due to the employee stock options qualifying as “plain-vanilla” options under the criteria established by SAB Topic 14.

 

 
 

 

(2) The risk-free rate was based on the United States bond yield rate at the time of grant of the award, whose term is consistent with expected life of the stock options.
(3) Based on historical experience over a term consistent with the expected life of the stock options.
(4) Expected annual rate of dividends is reported as 0% as the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

 

Share-based compensation expense is not adjusted for estimated forfeitures but instead adjusted upon an actual forfeiture of a stock option. Amounts recorded for forfeited or expired unexercised options are accounted for in the year of forfeiture.

 

Restricted Stock Units:

 

Restricted Stock Units (“RSUs”) grant the Participant the right to receive a certain number of shares of Common Stock, a cash payment equal to the Fair Market Value of that number of shares of Common Stock (determined as of a specified date), or a combination thereof, based on the terms and conditions of the award, as determined by the Plan Administrator. Upon termination of employment (or service as a non-employee director or consultant), unvested RSUs shall be forfeited.

 

RSUs represent a right to receive a single common share. Vesting of RSU awards is generally subject to a 3-year service period and effective October 18, 2024, also subject to a performance condition. Accordingly, stock-based compensation is recognized upon satisfaction of the service and performance condition.

 

The Company granted 312,500 and 5,562,000 RSUs during the six months ended June 30, 2026 and 2025, respectively.

 

A summary of RSU activity as of June 30, 2026 and December 31, 2025 is as follows:

 

          

 Weighted-Average

Grant Date  

 
(In Thousands except for per share amounts)    RSU’s      Fair Value per Share    
Outstanding as of December 31, 2024   173,572   $0.79 
Awarded   14,003    0.80 
Vested   -         
Cancelled   (59,639)   0.80 
Outstanding as of December 31, 2025   127,936   $0.79 
Awarded   312    0.80 
Vested   -    - 
Cancelled   (9,022)   0.80 
Outstanding as of June 30, 2026   119,226   $0.80 

 

 
 

 

During the three and six months ended June 30, 2026 and 2025, respectively, the Company recognized stock compensation expense (recapture) related to stock options and RSU’s, as follows:

 

  

For the Six Months

Ended June 30

  

For the Three Months

Ended June 30,

 
(In Thousands)  2026   2025   2026   2025 
Cost of Goods Sold  $-   $(187)  $-   $(128)
General and Administrative   (531)   (1,398)   (315)   (221)
Sales and Marketing   -    (1,116)   -    (233)
Research and Development   -    (855)   -    (31)
Total Stock-Based Compensation Expense  $(531)  $(3,556)  $(315)  $(613)

 

The expected life of employee stock options was estimated using the “simplified method,” as the Company has no historical information to develop reasonable expectations about future exercise patterns and employment duration for its stock option grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. The expected life of awards that vest immediately use the contractual maturity since they are vested when issued. For stock price volatility, the Company uses public company compatibles as a basis for its expected volatility to calculate the fair value of option grants. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option at the grant-date.

 

The Company recognizes stock option forfeitures as they occur as there is insufficient historical data to accurately determine an estimate of future forfeiture rates.

 

During the six and three months ended June 30, 2026, no new expense was recognized for RSU awards based on the Company’s conclusion that the performance condition for the RSUs was not probable of being satisfied at such time, as discussed below. However, forfeitures of previously granted Stock Options and RSUs resulted in a recapture of $531 thousand, and $8 thousand in stock-based compensation expense for the six months ended June 30, 2026. Forfeitures of previously granted Stock Options and RSUs resulted in a recapture of $315 thousand for the three months ended June 30, 2026. The amount of future stock-based compensation expense may be impacted by additional option or RSU grants, or further forfeitures.

 

Stock-based compensation expense for all stock-based awards, including stock options and restricted stock units (“RSUs”), is measured at fair value on the date of grant. The fair value of stock options is estimated on the date of grant using a Black-Scholes option-pricing model. The fair value of RSUs is estimated on the date of grant based on the fair value of the underlying common stock.

 

The Company has elected to recognize compensation expense for stock options granted to employees on a straight-line basis over the requisite service period, which is generally the vesting period. Compensation expense for RSUs is amortized using the accelerated attribution approach over the requisite service period as long as the performance condition in the form of a specified liquidity event is probable to occur.

 

The fair value of stock options granted to non-employees is calculated at each grant date and re-measured at each reporting date using the Black-Scholes option-pricing model and the resulting change in value, if any, is recognized in the consolidated statements of operations and comprehensive loss for the periods in which the related services are rendered.

 

The Company has granted Restricted Stock Units (RSUs) that vest upon the satisfaction of both a service-based and a performance-based requirement. The service condition is a stated service period generally requiring 36 months of service, with the total number of RSUs awarded vesting on a cliff basis after the 36-month anniversary date of the grant. The performance-based condition is an event-based criteria that will be satisfied as to any then-outstanding RSUs on the first to occur of a ‘Qualifying Transaction” defined as: (1) the closing date of a transaction resulting in a change in control; or (2) the effective date of an IPO.

 

The RSUs vest on the date upon which both the service-based and performance-based requirements are satisfied. If a Qualifying Transaction occurs prior to the Vesting Date, the RSUs shall fully (100%) vest effective immediately prior to and contingent upon the Qualifying Transaction. If the Grantee’s employment by the Company terminates for any reason prior to a Qualifying Transaction, such termination shall result in the immediate forfeiture and cancellation of the RSUs, which means the Grantee will not be entitled to any payment after the date of such termination. If the RSUs vest, the Company will deliver one share of common stock for each vested RSU on the settlement date. The unvested RSUs expire ten years from the grant date.

 

 
 

 

As of June 30, 2026 and December 31, 2025, respectively, the Company concluded that the performance condition described above for the RSUs was not probable of being satisfied at such time. As a result, the Company has not recognized any compensation cost to date for any RSUs outstanding. In the period in which the performance-based condition is achieved, the Company will accelerate all vesting and record the stock-based compensation expense using the accelerated attribution method, based on the grant date fair value of the RSUs.

 

(In Thousands) 

Number of

Units

  

Grant Date

Fair Value

 
Outstanding and unvested at December 31, 2025   127,936   $89,331 
RSUs Granted   312   $250 
RSUs Forfeited   (9,022)  $(7,218)
Outstanding and unvested at June 30, 2026   119,226   $82,363 

 

As of June 30, 2026 and December 31, 2025, respectively, all stock-based compensation expenses related to the Company’s RSUs remained unrecognized because the performance-based condition was not satisfied. No RSUs had met their service-based vesting condition as of December 31, 2025; also, no RSUs had met the performance vesting condition as of December 31, 2025 or June 30, 2026.

 

If the performance vesting condition had been satisfied on June 30, 2026, the Company would have recorded $82.4 million of stock-based compensation expense using the accelerated attribution method related to RSUs. Due to the nature of the acceleration clause, upon a Qualified Transaction, 100% of the stock-based compensation expense on these RSUs will be recognized.

 

NOTE 13 – COMMITMENTS AND CONTINGENCIES

 

In the ordinary course of business, the Company enters into contractual agreements with third parties that include non-cancelable payment obligations, for which it is liable in future periods. These arrangements can include terms binding the Company to minimum payments and/or penalties if it terminates the agreement for any reason other than an event of default as described in the agreement.

 

In the ordinary course of business, the Company is occasionally party to various legal proceedings and claims. A liability will be accrued when a loss is both probable and can be reasonably estimated. Management believes that the probability of a material loss from any of these existing claims is remote. However, litigation is inherently uncertain, and it is not possible to predict the ultimate disposition of these proceedings. There are no legal proceedings which the Company believes will have a material adverse effect on the Company’s financial position.

 

Legal Proceedings

 

Claims filed by the Company

 

  (i) The Company initiated legal action against former employees who violated their agreements post-termination. Specifically, the Company filed two lawsuits against former employees alleging claims including breach of contract, violations of the Computer Fraud & Abuse Act, violations of the Defend Trade Secrets Act, conversion, unjust enrichment, breach of covenant of good faith and fair dealing, and demand for temporary and permanent injunctive relief. One of these litigation matters remain pending, and the other matter reached a mutual settlement and release. Management does not anticipate the remaining matters will have a material impact on the Company’s results of operations or financial condition. Quantifying the resulting harm is complex and ongoing. The Company anticipates that judgment will be entered in its favor for a sum less than $250 thousand.
     
  (ii) On April 30, 2024, the Company filed a lawsuit against Brave Control Solutions, Inc. and individual Brent McPhail in US District Court. The Company seeks damages equal to all amounts paid under the contracts, among other relief, to recover from these breaches and misrepresentations. The Company anticipates a judgment in its favor, but recovery of these assets is uncertain.
     
  (iii) In September 2025, the Company filed suit against the State of Arizona Department of Housing seeking a declaration from the Court that the Department of Housing has no authority to regulate or interfere with BOXABL’s sale of PMRV units in the State of Arizona. The lawsuit is pending.

 

 
 

 

Claims filed against the Company

 

  (i) The Company received notifications of employment-related charges filed by former employees with the Equal Employment Opportunity Commission (“EEOC”) and the National Labor Relations Board (“NLRB”). The allegations involve various issues such as discrimination and interference with employee rights. The Company provided responses to both agencies and is awaiting further developments. The Company does not expect a material impact to its financial position.
     
  (ii) The Company’s former Chief Operating Officer, terminated for cause after seven months of employment, filed a civil complaint in Nevada alleging various claims against the Company and its directors. The Company settled this matter in March 2025 without a material impact to its financial position. The Company paid $105 thousand to this former employee in exchange for the surrender of 5,882,353 shares of the Company’s Series A Preferred Stock.
     
  (iii) Leader Capital is a shareholder of the Company and has filed suit against the Company and its previous transfer agent, Transfer Online, Inc. After the Company filed its motion for summary judgement, Leader dismissed all claims against the Company. In February 2026, the Court granted the Company’s motion for attorneys’ fees awarding the Company $279,900 in fees and costs. The Company received the settlement in July 2026.
     
  (iv) The Company has received claims from various parties alleging that BOXABL violated certain California Laws, including the Trap and Trace Law and California Privacy Laws relating to its Facebook postings. The Company does not expect a material impact to its financial position.
     
  (v) Pronghorn Homes, LLC, a party to the Arizona mining project, filed a lawsuit against the Company in the State of Arizona, which has a potential loss exposure of up to $250 thousand. The Company denies liability and intends to defend against this claim. Accordingly, the Company has not accrued a loss contingency for this matter.
     
  (vi) The Company entered into an agreement with an RV Park for the sale of certain PMRV units. It appears that the RV Park did not obtain required zoning and land use permits to install and use the units at their site in Arizona. The State of Arizona ‘red tagged’ the units and the RV Park asserted claims against the Company, demanding that the Company immediately remove the units. The Company has denied all liability and is negotiating a resolution of the dispute with the RV Park. The Company also has an outstanding receivable from the RV Park in the amount of $270,000. The Company has not accrued a loss contingency for this legal matter, but has recorded a CECL credit loss allowance for the outstanding receivable balance.

 

Other Matters

 

The Company uncovered potential misconduct by a former employee related to a stock scheme, the impact of which is challenging to measure. The Company anticipates that judgment will be entered in its favor for a sum less than $1 million against the former employee, but the investigation and extent of damages is ongoing. After discovering the misconduct, the Company was named as a defendant in a lawsuit by a plaintiff that purchased fraudulent shares of the Company’s stock from the former employee of the Company, at a discounted price, incurring a loss of approximately $144 thousand. The Plaintiff claims that he purchased shares by writing a check to an entity that was controlled by the former employee and alleges negligence and violations of Nevada Revised Statute (NRS) 90.9570. The Company denied liability and the claim was recently settled by the Company’s issuance of 218,182 shares of Preferred A-1 stock to the plaintiff. The Company subsequently and proactively entered into settlement agreements with a number of other individuals that had purchased shares from the former employee, resulting in the issuance of 5,264,068 shares of Series A-1 Preferred Stock.

 

 
 

 

In September 2025, Freeport-McMoRan Bagdad, Inc., a party to the Arizona mining project, asserted a claim against the Company (not yet in suit) for payment under a certain settlement agreement between the parties relating to the sale of certain units to Pronghorn Homes, LLC, which were installed upon Freeport’s property. Freeport has demanded $1.17 million from the Company. The Company is in the process of negotiating a resolution with Freeport. No lawsuit has been filed.

 

In 2025, the U.S. government implemented new tariff measures affecting a broad range of imported materials. The Company has evaluated the potential impact of these actions on its operations and supply chain and does not expect them to have a material impact on its financial position or results of operations in the near term. The Company’s operations are currently supported by a substantial inventory of completed units manufactured prior to the effective dates of the tariff adjustments, which reduces our near-term exposure to increased costs associated with imported materials. Additionally, as the Company transitions into the next phase of its product development, including Phase 2, its sourcing strategy reflects a greater emphasis on domestic procurement. This shift is expected to further mitigate exposure to international trade disruptions and tariff-related cost volatility. The Company will continue to monitor developments in U.S. trade policy and adjust its supply chain strategy as necessary.

 

NOTE 14 – INCOME TAXES

 

For the six and three months ended June 30, 2026 and 2025, the Company incurred insignificant amounts for an income tax provision. The U.S. federal and California deferred tax assets generated from the Company’s net operating losses have been fully reserved, as the Company believes it is not more likely than not that the benefit will be realized.

 

On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (“OBBBA”) of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system, including the allowance of 100% expensing of qualified asset expenditures, immediate expensing of qualifying domestic research and development expenses and permanent extensions of certain other provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for 2025, beginning January 19, 2025. We are evaluating the impact of these tax law changes on our financial statements.

 

Deferred Tax Assets and Liabilities

 

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

 

A valuation allowance is required to be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. A full review of all positive and negative evidence needs to be considered. The Company has established a full valuation allowance against the net deferred tax assets as of June 30, 2026 and December 31, 2025 due to historical losses and uncertainty surrounding the use of such assets.

 

As of June 30, 2026, the fair value of the Company’s Bitcoin holdings ($598 thousand) is below the average cost basis ($1,100 thousand); accordingly, no deferred tax liability related to digital assets has been established as of June 30, 2026.

 

NOTE 15 - SEGMENTS

 

The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its Chief Financial Officer. The CFO is responsible for assessing performance and allocating resources across the Company’s single operating segment, including approval of the annual budget, review of monthly operating results, and authorization of capital expenditures. The Co-Chief Executive Officers focus on product development and commercial strategy, while resource allocation decisions are centralized within the CFO function.

 

The Company has no significant long-lived assets recognized on the Consolidated Balance Sheets outside of the US jurisdiction.

 

 
 

 

The Company’s consolidated statements of comprehensive loss for the six month ended June 30, 2026 and 2025, are shown below. The specific line items that the CODM reviews are marked as Significant in the income statement below.

 

   For Six Months Ended 
(In Thousands, except per share amounts)  June 30, 2026   June 30, 2025 
Revenues (Significant)  $2,051   $402 
Cost of goods sold (Significant)   9,263    11,841 
Gross loss   (7,212)   (11,439)
           
Operating expenses:          
General and administrative (Significant)   6,683    7,745 
Sales and marketing (Significant)   2,547    21,492 
Research and development (Significant)   840    1,259 
Impairment loss   -    - 
Total operating expenses   10,070    30,496 
           
Loss from operations (Significant)  $(17,282)  $(41,935)
           
Other income:          
Interest income   364    653 
Other income   (264)   219 
Total other income:   100    872 
Net loss attributed to common stockholders  $(17,182)  $(41,063)
           
Weighted average common shares outstanding -basic and diluted   3,000,000    3,000,000 
Net loss per common share - basic and diluted  $(0.01)  $(0.01)
Net Loss  $(17,182)  $(41,063)
Unrealized loss (gain) on investments  $-   $(170)
Comprehensive Loss  $(17,182)  $(41,233)

 

General and administrative, sales and marketing, and research and development costs are all considered significant in the aggregate. There are no specific line items within these categories that the CODM considers significant and regularly reviews. However, for cost of goods sold (COGS), the CODM specifically reviews one of the expenses within this category, rather than COGS as an aggregate- this significant expense is the Cost of Casitas Sold. See the disclosure below:

 

   For The Periods Ended 
   June 30, 2026   June 30, 2025 
Cost of Casitas Sold (Significant)   1,540    1,505 
All other line items within COGS (1)   7,723    10,336 
COGS   9,263    11,841 

 

  (1) All other line items within COGS include obsolete inventory, inventory adjustment, scrapped inventory, warranty expense, and allocations to COGS such as stock-based compensation expense.

 

NOTE 16– SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events from June 30, 2026 through the issuance date of these unaudited interim condensed consolidated financial statements.

 

Sales Activity

 

Between June 30, 2026 and August 14, 2026, the Company shipped 7 units. As of August 14, 2026, there are currently 341 units that are under contract.

 

 
 

 

Leases

 

On August 3, 2026, the Combined Company entered into an extended lease agreement with NV Interchange Industrial Center, LLC for approximately 174,250 square feet of office/warehouse space located at 5345 East North Belt Road, North Las Vegas, NV 89115. The lease has an initial term of 63 months, with the first month’s base rent of $156,825 commencing in October 2026 and increasing 3.5% annually.

 

Equity Events

 

On July 16, 2026, the Company entered into a purchase agreement, pursuant to which the Company agreed to purchase 628,740 shares of Series A-1 Preferred Stock in exchange for 628,740 shares of Common Stock.

  

The Conversion

 

Prior to and in connection with the Closing, FGMC converted from a Nevada corporation to a Texas corporation (the “Conversion”) in accordance with the Nevada Revised Statutes (“NRS”) and the Texas Business Organizations Code(“TBOC”). Upon the Conversion, FGMC became a Texas corporation and each issued and outstanding security of FGMC remained outstanding and automatically represented a corresponding security of FGMC as a Texas corporation.

 

Merger

 

See Note 1 for a description of the Business Combination completed on July 17, 2026. In connection with the Closing, holders of 3,466,086 FGMC public shares elected to redeem their shares for an aggregate redemption amount of approximately $36.0 million, leaving a net trust balance of approximately $47.2 million released to the combined Company at Closing.

 

Of the approximately $47.2 million net trust balance released at Closing, approximately $31.1 million was disbursed to Camac Fund, LP and FGCP as the Prepayment Amount under the Forward Purchase Agreement and Novation Agreement described below, and approximately $5.9 million and $3.7 million were disbursed for transaction costs and D&O insurance premiums, respectively, also incurred in connection with the Closing. After giving effect to these disbursements, the Business Combination resulted in a net increase of approximately $6.4 million in unrestricted cash available to the Company. See the Company’s Current Report on Form 8-K filed July 23, 2026 for further detail, and see Note 3 for the impact of these amounts on the Company’s evaluation of its ability to continue as a going concern.

 

Equity Prepaid Forward Transaction

 

On May 28, 2026, FGMC entered into an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Agreement”) with Atsion Opportunity Fund LLC, Series 2 (“Atsion”), pursuant to which Atsion intended, but was not obligated, to purchase and hold up to 3,000,000 shares of the FGMC’s common stock prior to the closing of the Mergers Immediately after entry into the Forward Purchase Agreement, the parties entered into a Novation Agreement dated May 28, 2026, pursuant to which one-half of the Forward Purchase Agreement was novated to FG Capital Partners, LLC (“FGCP”). On June 11, 2026, Atsion assigned and novated its remaining 50% interest in the Forward Purchase Agreement to Camac Fund, LP, pursuant to an Assignment and Novation Agreement among Atsion, Camac Fund, LP, FGMC, and BOXABL. The Forward Purchase Agreement provides that the seller is to be prepaid an aggregate cash amount equal to the number of shares set forth in a Pricing Date Notice multiplied by the per-share redemption price payable to redeeming shareholders in connection with the Mergers, funded directly from the Trust Account no later than the earlier of (a) one business day after the Closing Date or (b) the date any Trust Account assets are otherwise disbursed in connection with the Mergers. The Forward Purchase Agreement was not entered into to satisfy any minimum cash condition to closing; rather, it was intended to provide access to potential additional growth capital in replacement of redeemed Trust assets.

 

Following consummation of the business combination, the Forward Purchase Agreement is subject to cash settlement based principally on the daily volume-weighted average price of the underlying shares during the applicable valuation period, subject to the contractual settlement amount adjustments and other provisions of the Forward Purchase Agreement. In connection with the Closing of the Business Combination on July 17, 2026, FGMC funded an aggregate Prepayment Amount of $31,078,060 to Camac Fund, LP and FGCP from the Trust Account ($15,539,030 to each counterparty). The Forward Purchase Agreement is a cash-settled equity forward that does not qualify for equity classification under ASC 815-40 given its cash-only settlement terms, and is accounted for as a derivative financial instrument recognized at fair value, with changes in fair value recognized in earnings, as further described below.

 

Subsequent to the Closing, the Combined Company received Optional Early Termination payments totaling $1,652,170 ($1,182,000 from FGCP, 118,200 shares; $470,170 from Camac Fund, LP, 47,017 shares), representing 165,217 Recycled Shares terminated at the then-current $10.00 Reference Price, leaving approximately 2,822,985 Recycled Shares outstanding under the Forward Purchase Agreement. See Note 8 to the FG Merger II Corp. financial statements included elsewhere in this Quarterly Report for additional detail.

 

The Forward Purchase Agreement is accounted for as a derivative financial instrument under ASC 815 and is measured at fair value with changes in fair value recognized in earnings. FGMC evaluates the derivative at each reporting date and recognizes changes in fair value in its consolidated statement of operations. During the three and six months ended June 30, 2026, FGMC recorded an $8.6 million loss on the initial recognition of the Forward Purchase Agreement, and a $1.1 million loss on the change in fair value of the Forward Purchase Agreement, which are included in statements of operations. As of June 30, 2026, FGMC recorded a derivative liability of $9.6 million related to the Forward Purchase Agreement, which is included in the accompanying balance sheet. The derivative was classified as a Level 3 financial instrument within the fair value hierarchy since its valuation incorporates significant inputs that are not directly observable in the market. See Note 2 for additional detail of the fair value determination of the Forward Purchase Agreement as of May 28, 2026 and as of June 30, 2026.

 

 

 

 

EXHIBIT 99.2

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF BOXABL INC. FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026, COMPARED TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2025

 

Unless expressly indicated or the context requires otherwise, the terms “BOXABL,” “the Company,” “we,” “us,” and “our” in this document refer to BOXABL Inc., a Nevada corporation and, where appropriate, its subsidiaries, prior to the consummation of the Business Combination, as discussed below, and the term “Combined Company” refers to BOXABL Inc., a Texas corporation, the surviving entity following the consummation of the Business Combination.

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes included as Exhibit 99.1 herein and our audited consolidated financial statements and related notes for the year ended December 31, 2025 included as Exhibit 99.2 to the Current Report on Form 8-K of the Combined Company filed with the SEC on July 23, 2026 (as amended, the “Super 8-K”). Terms used herein but not defined herein shall have the meanings ascribed to them in the Super 8-K. The condensed consolidated financial statements of the Company appearing in Exhibit 99.1 are unaudited, and may not include year-end adjustments necessary to make those financial statements comparable to audited results, although, in the opinion of management, all adjustments and disclosures necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. The results of operations for the six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the full year.

 

Unless otherwise indicated, dollar amounts above $1,000 in this Report have been rounded to the nearest thousand, million or billion, as applicable.

 

In addition to our consolidated financial statements, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements” in the Super 8-K.

 

Overview

 

General

 

For a description of our business, products, and state regulatory approval history, see the comparable section in Exhibit 99.4 to the Super 8-K. There have been no material changes to this information during the six months ended June 30, 2026, except as set forth below.

 

●In 2025, we developed one-bedroom and two-bedroom Casita configurations, connecting two Casita Boxes. In November 2025, the Company obtained California statewide approval for the two-bedroom Casita model and, in April 2026, we received approval to sell the 1-bedroom Casita model in California.
●In April 2026, the Company received certification to manufacture the Casita boxes in Texas.
●In June 2026, the Company was reinstated and certified to manufacture the Casita boxes in Arizona.

 

New sales within recently approved states and jurisdictions may continue to face delays due to the time needed for site preparation, arranging funding for the project the purchaser, and other preparatory steps that are required to arrange delivery and installation of the units.

 

 

 

 

Merger Agreement

 

On July 17, 2026, the Company completed its previously announced Business Combination with FG Merger II Corp. (‘FGMC’), pursuant to which FGMC converted from a Nevada corporation to a Texas corporation, Merger Sub merged with and into BOXABL, with BOXABL surviving as a wholly-owned subsidiary of FGMC, and then BOXABL merged with and into FGMC, with FGMC surviving. In connection with the Business Combination, FGMC was renamed BOXABL Inc. For further information regarding the Business Combination, see the Super 8-K.

 

Related Agreements

 

In connection with the Business Combination, the Company, FGMC, and certain of their respective stockholders entered into support and lock-up agreements, the terms of which are described in the Super 8-K.

 

Trend Information

 

From the period of July 16, 2026 through August 21, 2026, the combined company had manufactured 846 Casitas and completed deliveries of 335 Casitas across 10 states, including 511 units manufactured. As of August 21, 2026, there were currently 341 units that are under contract.

 

Leveraging insights from our regulatory journey and evolving market dynamics, Legacy BOXABL refined its go-to-market strategy to concentrate resources on the highest-value near-term opportunities. The Combined Company’s primary focus is the B2C segment, with an emphasis on the Accessory Dwelling Unit (“ADU”) market in California, where Legacy BOXABL obtained statewide modular approvals across all climate zones and hold a Commercial Modular Manufacturer license. To improve sales efficiency and lead quality, Legacy BOXABL made targeted investments in its sales infrastructure during the six months ended June 30, 2026, including enhancements to its customer relationship management system, upgrades to its consumer-facing website with improved lead qualification tools and expanded financing resources for prospective buyers, and the addition of sales personnel to support direct customer engagement.

 

The Combined Company continues to selectively pursue small community and multi-unit residential opportunities where the Casita product is well-suited, including faith-based organizations, attainable communities, and workforce housing developments. Legacy BOXABL introduced its Phase 2 Modular Building System and the Combined Company continues to engage in discussions with developers and builders. Phase 2 comprises larger Box modules, including 20’ x 30’ and 20’ x 40’ configurations, that can be stacked and connected to create a range of building types, including single-family homes and townhomes, addressing demand for larger residential floor plans that extend beyond the Casita’s ADU format.

 

Additionally, the Combined Company continues to selectively pursue commercial modular opportunities, leveraging its Commercial Modular Manufacturer license in California and its established manufacturing capabilities to serve institutional and commercial customers where the Combined Company’s factory-built building system offers meaningful advantages over traditional construction methods.

 

Tariffs and Inflation

 

For tariff-related risks and trends, see the comparable section in Exhibit 99.4 to the Super 8-K.

 

Results of Operations

 

Revenues

 

Our revenues for the six months ended June 30, 2026 and 2025 were $2.1 million and $402,000, respectively. Revenue was generated by the sale of 27 Casitas delivered to 11 customers during the six months ended June 30, 2026. This is in comparison to the sale of 5 Casitas delivered to 5 customers during the six months ended June 30, 2025. The increase in revenues year-over-year was driven by these increased unit deliveries and expanded state modular approvals, partially offset by delays associated with customer site preparation and the transition of the Company’s go-to-market strategy to re-focus on the broader installation process. The City of Henderson, and Hideaway Inn represented approximately 54% and 13% of revenues, respectively, for the six months ended June 30, 2026. For the three months ended June 30, 2026 and 2025, revenues were $495,000 and $279,000, respectively. Revenue for these periods was generated by the sales of 7 Casitas delivered to 4 customers in 2026, and 4 Casitas delivered to 4 customers in 2025.

 

 

 

 

Beginning in April 2026, the Company began offering an all-inclusive pricing model that bundles the Casita unit with installation-related services (such as land and site preparation, foundation work, and utility connections) under a single customer contract, in addition to continuing to offer unit-only sales. Since launching this all-inclusive pricing model, approximately 9% of Casita units under contract have been under this pricing model.

 

Cost of Goods Sold

 

Cost of goods sold consists primarily of the cost of products used in the production of the Company’s finished products, inbound and outbound shipping costs, related labor and indirect overhead costs associated with that production. Cost of goods sold were $9.3 million and $11.8 million for the six months ended June 30, 2026 and 2025, respectively. Cost of goods sold were $4.4 million and $9.7 million for the three months ended June 30, 2026 and 2025, respectively. The decrease in cost of goods sold for the three and six months ended June 30, 2026, compared to the same periods in 2025, was primarily driven by the absence of a one-time inventory write-down of $8,346 thousand recognized during the three and six months ended June 30, 2025. This is reflected in the decline in inventory adjustments, which decreased by $6,829 thousand for the three months ended June 30, 2026, and by $6,996 thousand for the six months ended June 30, 2026, as compared to the same periods in 2025

 

Cost of goods sold for the six months ended June 30 2026 and 2025, consist of the following:

 

   Six months ended June 30, 
(In Thousands)  2026   2025 
Direct material/shipping  $907   $170 
Direct labor   882    145 
Manufacturing overhead   788    (353)
Inventory adjustments   4,883    11,879 
Allowance for Slow-Moving and Obsolete Inventory   1,803    - 
Cost of goods sold  $9,263   $11,841 

 

Cost of goods sold for the three months ended June 20, 2026 and 2025, consist of the following:

 

   Three months ended June 30, 
(In Thousands)  2026   2025 
Direct material/shipping  $133   $136 
Direct labor   213    116 
Manufacturing overhead   183    (344)
Inventory adjustments   2,986    9,815 
Allowance for Slow-Moving and Obsolete Inventory   839    - 
Cost of goods sold  $4,354   $9,723 

 

We produced 41 and 35 casitas in the six months ended June 30, 2026 and 2025, respectively. We produced 15 and 25 casitas in the three months ended June 30, 2026 and 2025, respectively. We continue to work to align production activity with delivery schedules.

 

Inventory-related adjustments represented a significant portion of cost of goods sold for the three and six months ended June 30, 2026. The Company recorded $4,883 thousand in inventory valuation adjustments to reduce the carrying value of finished goods inventory to net realizable value, compared to $3,364 thousand for the same period in 2025. The Company also recorded $1,803 thousand related to its allowance for slow-moving and obsolete inventory, compared to $8,430 thousand in direct write-offs for the same period in 2025, which reflected a one-time write-down of 68 units determined to be obsolete following an inventory slow-movement analysis. Together, these adjustments represented approximately 72% of total cost of goods sold for the six months ended June 30, 2026, and management continues to closely monitor inventory carrying values given the significance of these adjustments to reported cost of goods sold.

 

Manufacturing overhead reflects the allocation of indirect labor, rent and lease expense, indirect supplies, scrap material, maintenance costs and depreciation of machinery and equipment.

 

Cost of goods sold in each of the three and six months ended June 30, 2026 did not reflect any stock-based compensation expense or recapture resulting from terminations, whereas the company recognized approximately $1.2 million of net recapture of stock-based compensation expense within cost of goods sold in each of the three and six months ended June 30, 2025.

 

 

 

 

Operating Expenses

 

Operating expenses for the six months ended June 30, 2026 and 2025, consisted of the following:

 

   Six months ended June 30, 
(In Thousands)  2026   2025 
General and administrative  $6,683   $7,745 
Sales and marketing   2,547    21,492 
Research and development   840    1,259 
Total Operating expenses  $10,070   $30,496 

 

Operating expenses for the three months ended June 30, 2026 and 2025, consisted of the following:

 

   Three months ended June 30, 
(In Thousands)  2026   2025 
General and administrative  $3,494   $5,938 
Sales and marketing   2,022    15,142 
Research and development   274    676 
Total Operating expenses  $5,790   $21,756 

 

General and administrative expenses consist of compensation and benefits for employees across administration, finance, legal, and investor relations functions, as well as rent, shop supplies, and utilities. General and administrative expenses decreased by $1.1 million, or approximately 14%, for the six months ending June 30, 2026 compared to the same period in 2025. The decrease is primarily due to the non-recurrence of a $2.7 million stock-settlement charge incurred in 2025 to resolve a claim against the Company, partially offset by a $1.1 million increase in legal fees and reorganization costs in 2026.

 

Sales and marketing expenses decreased by $18.9 million, or approximately 88%, for the six months ending June 30, 2026 compared to the same period in 2025. The decrease reflects a significant increase in advertising for our Regulation A and Regulation D offerings in 2025 leading up to the close of the offerings in June 2025, which were not incurred in the 2026 period. The Company has refocused its sales and marketing efforts on targeted B2C outreach, principally in the California ADU market, and has made selective investments in its sales infrastructure, including CRM enhancements and improved lead qualification tools, which carry a substantially lower cost profile than broad advertising campaigns.

 

Research and development expenses declined to $840,000 for the six months ending June 30, 2026, compared to $1.3 million for the same period in 2025. The decrease reflects cost control measures implemented by the Company and the application of lessons learned from its prior product development and testing efforts, resulting in a more efficient research and development process. Research and development activities are focused on product testing, obtaining regulatory permits and approvals, and developing next-generation building systems. During the first six months of 2026, research and development efforts shifted toward advancing the Company’s Phase 2 Modular Building System, which includes larger 20’ × 30’ and 20’ × 40’ Box configurations designed for multi-unit residential applications.

 

The decreases in general and administrative, sales and marketing, and research and development expenses for the three months ended June 30, 2026 as compared to the same period in 2025 were driven by the same factors described above and were directionally consistent with the six-month change. 

 

 

 

 

Stock-based Compensation Expense

 

The Company recognizes stock-based compensation expense based on fair value on the date of grant and recognized over the associated vesting periods. The fair value of RSU awards is determined based on the fair market value of the Company’s common stock on the date of grant. Vesting of RSU awards is generally subject to a 3-year service period and, for most outstanding awards, is also subject to a performance condition. Accordingly, stock-based compensation is recognized upon satisfaction of the service condition and when the performance condition is probable. The Company has determined that the performance condition in its outstanding RSUs is not probable of being satisfied. The consummation of the Business Combination did not constitute a triggering event under the terms of these RSU awards; accordingly, this determination remains unchanged following the Closing. Based on its review of the terms of these RSU awards, the Company does not believe the consummation of the Business Combination constituted a triggering event under such terms; accordingly, the Company’s determination that the performance condition is not probable of being satisfied remains unchanged following the Closing. Stock-based compensation expense associated with the cancelled awards will continue to be excluded from the Company’s results of operations until the performance condition applicable to those awards, or the vesting terms of any replacement awards, are satisfied or deemed probable. In the case of options, the Company uses the Black-Scholes pricing model to estimate the fair value of options on the date of grant that are then expensed on a straight-line basis over the vesting period. The Company accounts for forfeitures as they occur in the year of forfeiture and share-based compensation expense is adjusted accordingly.

 

For the six months ended June 30, 2026 and 2025, the Company recaptured $531 thousand and $3.6 million in stock-based compensation, respectively. The decrease in recapture is attributable to fewer employee forfeitures upon terminations in the first quarter of 2026 compared to the same period in 2025, offset by the vesting of stock options under the Company’s Amended 2021 Stock Incentive Plan. See “Note 12. Stockholders’ Equity – Stock-based Compensation” for further discussion.

 

For the three months ended June 30, 2026 and 2025, the Company recaptured $315 thousand and $613 thousand in stock-based compensation, respectively. The decrease in recapture is attributable to fewer employee forfeitures upon terminations in the second quarter of 2026 compared to the same period in 2025.

 

Total Other Income

 

For the six months ended June 30, 2026, our total other income decreased significantly to $100,000, as compared to $872,000 for the six months ended June 30, 2025, due to a decline in the valuation of the Company’s holdings in Bitcoin as well as lower balances of interest-bearing investments.

 

For the three months ended June 30, 2026 and 2025, the Company reported total other income of $46 thousand and $400 thousand, respectively, due to a decline in the valuation of the Company’s holdings in Bitcoin, as well as lower balances of interest-bearing investments.

 

Liquidity and Capital Resources

 

Going Concern

 

The Company’s unaudited interim condensed consolidated financial statements were prepared under the assumption that the Company will be able to continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Prior to the consummation of the Business Combination, substantial doubt about the Company’s ability to continue as a going concern exists. For the six months ended June 30, 2026, the Company reported a net loss of $17.2 million and operating cash outflow of $15.9 million. At June 30, 2026, the Company had an accumulated deficit of $793.2 million, compared to $776.0 million at December 31, 2025. Absent additional action, the Company will require additional liquidity to continue operations over the next 12 months. For the Combined Company’s consolidated liquidity discussion following the Closing, see the Quarterly Report on Form 10-Q of the Combined Company for the quarterly period ended June 30, 2026, of which this Exhibit is a part.

 

Sources of Liquidity

 

To date and through the consummation of the Business Combination, our operations were financed by our exempt offerings of securities made in reliance on Regulation A, Regulation CF and both Rule 506(c) and Rule 506(b) of Regulation D in the United States and exempt offering regulations in Canada. For details regarding our securities offerings, see below Sales of Securities.

 

At June 30, 2026, our principal source of liquidity was our unrestricted cash and cash, which we achieved through our offerings of securities as discussed above. As of June 30, 2026, the Company held $14.7 million in unrestricted cash and cash equivalents, compared to $29.0 million in cash and cash equivalents as of December 31, 2025.

 

 

 

 

On July 17, 2026, the Company consummated the Business Combination and merged with FGMC, which was renamed BOXABL Inc. The Business Combination provided an increase in unrestricted cash of $6.4 million at the closing of the transaction to the Combined Company. The Company was also a party to an OTC Equity Prepaid Forward Transaction (FPA) entered into by FGMC on May 28, 2026 with Atsion Opportunity Fund LLC, Series 2, one-half of which was subsequently novated to FG Capital Partners, LLC and the other half of which was subsequently novated to Camac Fund, LP. In connection with the closing of the Business Combination on July 17, 2026, the Combined Company funded an aggregate Prepayment Amount of $31,078,060 to Camac Fund, LP and FGCP from the Trust Account ($15,539,030 to each counterparty).

 

The Forward Purchase Agreement has been recognized as a derivative liability at fair value, with changes in fair value recognized in earnings, as outlined in Note 16 – Subsequent Events – Equity Prepaid Forward Transaction. Subsequent to the Closing, the Combined Company received Optional Early Termination payments totaling $1,652,170 from FGCP and Camac Fund, LP, as further described in Note 16 above.

 

Please see the Quarterly Report on Form 10-Q filed by the Combined Company, of which this Exhibit is a part, for management’s discussion and analysis of the Combined Company’s future liquidity needs and sources of liquidity and capital resources. See ‘Commitments and Contingencies’ below for a discussion of the Company’s material obligations and commitments.

 

Historical Cash Flows

 

   Six Months Ended June 30, 
(In Thousands)  2026   2025 
         
Net cash used in operating activities  $(15,865)  $(35,981)
Net cash provided by (used in) investing activities  $(203)  $12,548 
Net cash provided by financing activities  $1,771   $32,503 

 

Operating Activities

 

Cash used in operating activities included net loss adjusted for several non-cash items such as depreciation and amortization, stock-based compensation, inventory valuation, and other non-cash expenses. The decline in net cash used in operating activities above generally reflects the decrease in net loss to a loss of $17.2 million in the six months ended June 30, 2026 from $41.1 million in the six months ended June 30, 2025, for the reasons discussed above. The decline is also due to a lower non-cash stock-based recapture in the 2026 period as compared to the 2025 period.

 

Additionally, at June 30, 2025, the company recognized a non-recurring write down of finished goods inventory for $8.4 million. As a non-cash adjustment to the Company’s net loss for the period, this adjustment was a significant addition to net loss used to calculate the net cash used in operations.

 

Investing Activities

 

Primary investing activities during the six months ended June 30, 2026, amounting to $203,000, include deposits on equipment purchases and expenditures related to manufacturing patents. During the same period ending June 30, 2025, the company recognized a cash inflow of $12.5 million mostly attributed to the proceeds received for the sale and maturities of investments which did not recur in the 2026 period.

 

Financing Activities

 

Primary sources of cash from our financing activities generally includes net proceeds from issuance and sales of Preferred Stock. For the six month period ending June 30, 2026, the company recognized $1.8 million in net proceeds from warrants exercised and overstated offering costs referenced in Note 2, compared to $33 million for the same period in 2025. The decline in the 2026 period above reflects our termination of our offerings under Regulation A, Regulation D in June 2025.

 

Inventory

 

Our physical assets decreased with inventory of $17.9 million as of June 30, 2026, related to 376 inventory units, which is primarily comprised of $10 million related to 189 Casitas in finished goods and $5.9 million related to 187 work-in-process units. This compares to $18.8 million in inventory as of December 31, 2025, primarily comprised of 175 Casitas classified as finished goods and 192 work-in-process units. During 2025, the Company decided to rework certain of its existing units to meet California modular specifications so that these units are able to be sold in California. In the second quarter of 2025, approximately $7.1 million of inventory was reclassified from finished goods to work-in-process on the consolidated balance sheet.

 

 

 

 

During the period ending June 30, 2026, the Company fulfilled orders for 27 Casita units. During the same period, the Company also produced 41 new units and completed the re-work on 5 units previously classified as work-in-process, resulting in 46 new units classified as finished goods.

 

Property, Plant and Equipment

 

Property, Plant and Equipment decreased to $6.4 million as of June 30, 2026 compared to $7.3 million as of December 31, 2025, primarily resulting from depreciation of machinery and equipment at our manufacturing facility.

 

Sales of Securities

 

In connection with the issuance of shares of Series A-3 Preferred Stock in 2024 and 2023, the Company had issued warrants that are exercisable for shares of Series A-3 Preferred Stock at a price of $0.80 per share. Under the terms of the warrants, the Company had a right to terminate the warrants, in its sole discretion, at any time upon 30 days written notice to the holders. On January 30, 2026, the Company sent a notice to the holders that the warrants, if not exercised, would expire on March 1, 2026. Following the notice, warrants representing 645,250 shares of Series A-3 Preferred Stock were exercised, which represents gross proceeds of $516,200, with the remaining warrants expiring effective March 1, 2026.

 

Material Commitments and Obligations

 

Expense Commitments

 

As of June 30, 2026, we reported current lease liabilities of $2.9 million compared to $3.5 million as of December 31, 2025. Our long-term lease liability decreased to $2.4 million as of June 30, 2026, from $3.6 million as of December 31, 2025, due to the passage of time. On August 3, 2026, the Combined Company entered into an extension to its lease agreement with NV Interchange Industrial Center, LLC related to its existing 174,250 square foot facility (the Building 1 Premises); the lease term for its separate 114,613 square foot facility (the Building 2 Premises) was not extended. The Building 1 Premises extension has a term of 63 months, with the first month’s base rent of $156,825 commencing in October 2026 and increasing annually.

 

Customer Deposits

 

Our main non-lease liability is the Company’s obligation to customers who have placed deposits on the purchase of our products. As of June 30, 2026, the Company held customer deposits in the amount of $3.5 million, which was slightly lower compared to $3.6 million as of December 31, 2025, with new deposits generally offsetting refunds and/or the application of customer deposits to customer orders fulfilled during 2026.

 

Deferred Revenue

 

As of June 30, 2026, our balance sheet carried $1.6 million of deferred revenue related primarily to advance payments received from customers, with 2 customers, each representing 10% or more of these deferred revenues, constituting approximately 32% of total deferred revenue. This compares to $1.5 million of deferred revenue as of December 31, 2025.

 

Deferred revenue arises from two distinct types of customer arrangements. For sales of a Casita unit alone, the Company generally requires payment in full prior to shipment. Amounts collected prior to shipment are recorded as deferred revenue and recognized as revenue at the point in time the unit ships to the customer, which is when control of the unit transfers to the customer under ASC 606.

 

 

 

 

Off-Balance Sheet Arrangements

 

The Company did not have any off-balance sheet arrangements as of June 30, 2026 or December 31, 2025.

 

Critical Accounting Policies and Estimates

 

Inventory Valuation

 

Inventories consist of raw materials, in-bound freight and duties, work in progress, and finished goods. Inventories are stated at the lower of cost or net realizable value, with cost determined using an allocation methodology, which approximates actual cost. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, bulk sales, and the expected recoverable values for each disposition category.

 

On a periodic basis, the Company performs a physical count of its inventory and records an inventory adjustment for inventory that has become obsolete or inventory that has a cost basis in excess of the expected net realizable value. Damaged and obsolete inventory items are valued based on specific identification and management’s estimate of net realizable value, including consideration of whether the items are usable in current or future production. These items are charged against the allowance for slow moving and obsolete inventory. Any difference between cost and estimated realizable value is recognized as an expense.

 

This valuation methodology requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, bulk sales, and the expected recoverable values for each disposition category.

 

The Company adopted, effective January 1, 2026, a slow-movement inventory policy under which an allowance for inventory obsolescence is established as a percentage of net realizable value based on the age of inventory units.

The allowance is recorded as a reduction to inventory with a corresponding charge to cost of goods sold and inventories are presented net of the aggregate allowance on the consolidated balance sheet.

 

Stock-Based Compensation

 

The Company applies ASC 718, Stock-Based Compensation for all stock-based awards, including stock options and restricted stock units, that are measured at fair value on the date of grant and recognized over the associated vesting periods. The fair value of stock options is estimated on the date of grant using a Black-Scholes model. The fair value of restricted stock awards is estimated on the date of the grant based on the fair value of the Company’s underlying common stock. The Company recognizes compensation expense for stock options on a straight-line basis over the associated service or vesting periods. Effective October 18, 2024, restricted stock unit awards became subject to a performance condition, which defers vesting of restricted stock awards until a monetization event. Accordingly, the Company does not recognize stock-based compensation from restricted stock unit awards until a monetization event becomes probable.

 

Determining the grant date fair value of stock options using the Black-Scholes option-pricing model requires management to make assumptions and judgments. These estimates involve inherent uncertainties and, if different assumptions had been used, stock-based compensation expense could have been materially different from the amounts recorded.

 

 

 

 

CONTROLS AND PROCEDURES

 

Limitations on Effectiveness of Disclosure Controls and Procedures

 

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits 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 a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact there are resource constraints and management are required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

Evaluation of Disclosure Controls and Procedures

 

Management, with the participation of our Co-Chief Executive Officers and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026. Based on the evaluation of our disclosure controls and procedures as of June 30, 2026, our Co-Chief Executive Officers and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses in the design and operation of effective Information Technology General Controls (“ITGC”) over certain key financial IT systems and of certain business process controls over the preparation and timely review of financial statements and disclosures described below. This will require remediation in order to be effective at the reasonable assurance level.

 

Evaluation of Information Technology General Controls (ITGCs)

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

 

The Company identified a material weakness related to the design and operation of ITGCs over certain systems that are critical to the Company’s financial reporting process. Specifically, the Company had ineffective design and operation of controls over certain information technology general controls (ITGCs), including user segregation of incompatible duties, program change management, and user access controls to ensure: (i) that access to applications and data, and the ability to perform program changes, were adequately restricted to appropriate personnel and (ii) that the activities of individuals with access to modify data and make program changes were appropriately monitored and restricted. Automated process-level and manual controls that are dependent upon the information derived from such financially relevant systems were also determined to be ineffective as a result of such deficiency.

 

The Company identified a material weakness related to the design and operation of, as well as a lack of proper segregation of duties for, certain business process controls over the preparation and timely review of financial statements and disclosures, journal entries, reconciliations, schedules, and roll-forwards supporting financial statement account balances. In addition, the Company experienced continued personnel turnover and did not maintain a sufficient complement of personnel with the appropriate level of knowledge, experience, and training in certain areas important to financial reporting. Furthermore, the Company should have reconciled general ledger accounts to supporting documentation on a monthly basis, and retained documentation for transactions and evidence of review.

 

During 2024, the year ended December 31, 2025, three months ended March 31, 2026, and six months ended June 30, 2026, significant turnover in the Company’s personnel across the Finance, IT, Legal, and Investor Relations departments contributed to these deficiencies.

 

Notwithstanding the material weaknesses in our internal control over financial reporting, management has concluded that our consolidated financial statements and related notes included in this Report are prepared in accordance with generally accepted accounting principles.

 

Management’s Plan for Remediation of the Material Weakness

 

Management, with the oversight of the Audit Committee of the Board of Directors, is committed to maintaining a strong internal control environment. Since the material weakness was identified, the Company has made significant progress on its remediation efforts and continues to strengthen its internal control environment. These efforts include implementing and documenting user access controls and segregation of duties over systems that are critical to the Company’s financial reporting, including the Company’s Enterprise Resource Planning (“ERP”) and payroll systems, as well as implementing specific control improvements and change management policies. The Company has maintained comprehensive documentation of its remediation efforts, which is being reviewed and tested by CBIZ as part of the Company’s ongoing evaluation of internal controls.

 

The Company has also engaged third-party consultants to assist with the remediation efforts, including enhancing its risk assessment, and continues to hire additional and more experienced Accounting, IT, Legal, and Investor Relations personnel. In October 2025, the Company engaged the services of a fractional Chief Technology Officer (“CTO”) and Chief Information Security Officer (“CISO”) to guide the Company’s technology strategy and help remediate the aforementioned material weakness, and in February 2026, the Company hired a full-time CTO. The Company also continues to implement selective system migration for improved system-level controls.

 

As a result of these actions, the Company implemented more formalized user access review procedures and strengthened oversight of ITGC-related processes during the quarter. These changes are expected to contribute to the remediation of the previously identified material weaknesses; however, the material weaknesses have not yet been fully remediated as of June 30, 2026.

 

The Company believes that these actions, when fully implemented, will remediate the material weakness. However, the material weakness will not be considered fully remediated until management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. As the Company continues to evaluate operating effectiveness and monitor improvements to our internal control over financial reporting, we may take additional measures to address control deficiencies or modify the remediation plan described above.

 

Changes in Internal Control Over Financial Reporting

 

Except as described above, there were no other changes in the Company’s internal control over financial reporting during the six months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.