Exhibit 10.4

LEASE

THIS LEASE, made as of the 7th day of October, 2019, by and between SP ROCK HILL
LEGACY EAST #1, LLC, an Indiana limited liability company (“Landlord”), and
DIRTT ENVIRONMENTAL SOLUTIONS, INC., a Colorado corporation (“Tenant”);

WITNESSETH:

In consideration of the mutual covenants and agreements contained herein,
Landlord and Tenant agree as follows:

1.    Leased Premises. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the parcel of real estate located at the northeast quadrant of
Williamson Parkway and Highway 21 in Rock Hill, South Carolina that is more
particularly described on Exhibit A-1 attached hereto and incorporated herein by
this reference (the “Real Estate”) together with the building (the “Building”)
to be constructed by Landlord on the Real Estate. The Building will consist of
approximately 129,600 square feet, subject to any expansion pursuant to
Section 24 of this Lease. The Building, Real Estate and related improvements to
be constructed on the Real Estate and used in connection with the Building (the
“Improvements”) are collectively referred to as the “Leased Premises.”

2.    Lease Term and Holding Over.

(a)    Lease Term. The initial term of this Lease (the “Initial Term”) shall be
for a period commencing on the date (the “Commencement Date”) which is the
Substantial Completion Date (as defined in Section 4(b)), and ending at 11:59
p.m. on the day before the one hundred eightieth (180th) monthly anniversary of
(i) the Commencement Date if the Commencement Date is the first day of a
calendar month, or (ii) the first day of the first full calendar month following
the Commencement Date if the Commencement Date is not the first day of a
calendar month.

(b)    Renewal Terms.

(i)    Tenant is granted the option (each a “Renewal Option”) to extend the term
of this Lease for two (2) successive additional terms of five (5) years each
(each a “Renewal Term”) provided all of the following conditions (the “Renewal
Conditions”) are met with respect to each Renewal Term: (a) Tenant gives
Landlord notice (the “Renewal Notice”) at least two hundred seventy (270) days
prior to commencement of the applicable Renewal Term to which such notice
relates, that it is exercising the applicable Renewal Option, and (b) at the
date such Renewal Option is exercised, and (c) at the commencement of the
applicable Renewal Term to which such option relates, Tenant shall not be in
default hereunder, subject to Tenant’s right to cure any such default. The
Renewal Term shall commence at the expiration of the prior term. If any Renewal
Option is not exercised or if the Renewal Conditions are not met with respect to
any Renewal Term, such Renewal Option and Renewal Term shall be deemed null and
void and any subsequent Renewal Option shall be null and void. TIME IS OF THE
ESSENCE WITH RESPECT TO THE GIVING OF EACH RENEWAL NOTICE.

(ii)    Tenant’s lease of the Leased Premises during each Renewal Term, if
applicable, shall be upon and subject to the terms and conditions of this Lease,
except that the Base Rent (as defined below) for the Leased Premises during each
Renewal Term shall be set at an amount equal to the Fair Market Rental Rate (as
hereinafter defined).

(i)    For purposes of this Lease, “Fair Market Rental Rate” shall mean a rate
reasonably determined based on one hundred percent (100%) of the prevailing base
rental rate per square foot of rentable area that a willing tenant would pay and
a willing landlord would accept in an arm’s length, bona fide negotiation for
lease of the Leased Premises to be executed at the time of determination and to
commence on the

 

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commencement of the Renewal Term, taking into consideration all relevant terms
and conditions of any comparable leasing transactions in the Pertinent Market
(as hereinafter defined), including, without limitation: availability of similar
manufacturing, warehouse and distribution buildings in the Pertinent Market
taking into account leases for comparable (on the basis of factors such as, but
not limited to, size and location of space, commencement date and term of lease)
space in the sub-market area in which the Building is located which are
comparable to the Building in reputation, quality, age, size, location, tenant
creditworthiness, parking availability and level and quality of services
provided and which have reached economic stabilization and are not offering, for
any other reason, below-market rents (the foregoing factors not being exclusive
in identifying comparable buildings) (the Building, together with such
comparable buildings, if applicable, being herein referred to as the “Pertinent
Market”).

(ii)    For the period commencing on the date Tenant provides to Landlord its
Renewal Notice and continuing for thirty (30) days thereafter (“Rent Negotiation
Period”), Landlord and Tenant shall use good faith efforts to agree upon the
Fair Market Rental Rate. In the event that Landlord and Tenant fail, after good
faith efforts, to agree upon the Fair Market Rental Rate, the Fair Market Rental
Rate shall be determined by appraisal as hereinafter provided. If the Fair
Market Rental Rate is to be determined by appraisal, then Landlord and Tenant
shall each appoint within fifteen (15) days after the expiration of the Rent
Negotiation Period a qualified and impartial appraiser (a qualified appraiser
being one who has had at least ten (10) years’ experience in the evaluation of
industrial warehousing/manufacturing/ office/distribution space in the Pertinent
Market area and M.A.I. Designation). The identity and address of each such
appraiser shall be designated in writing by each party to the other. In case
either party fails to appoint an appraiser within the period set forth above,
then the appraiser appointed by the party timely providing notice hereunder
shall determine the Fair Market Rental Rate. Upon each party appointing an
appraiser, the two appraisers shall each, within ten (10) days of appointment,
submit to Landlord and Tenant in writing their respective determination of the
Fair Market Rental Rate (each a “Proposed Rate”), provided, however that until
such time as Landlord and Tenant have each received a Proposed Rate from both
appraisers, neither appraiser nor Landlord and Tenant shall disclose to either
appraiser the Proposed Rate submitted by the other appraiser (such restriction
being intended to avoid any improper influence or gamesmanship with respect to
the determination of the Fair Market Rental Rate) until Landlord and Tenant have
both confirmed receipt of the Proposed Rate from both appraisers. In case either
appraiser fails to submit to both Landlord and Tenant its Proposed Rate within
the period set forth above, then the Proposed Rate submitted by the appraiser
that made a timely submission shall be the Fair Market Rental Rate. Landlord and
Tenant will each separately pay all costs, fees and expenses of their respective
appraiser.

(iii)    If both appraisers timely submit a Proposed Rate as provided above and
if the Proposed Rates are the same or if the lesser of the Proposed Rates is an
amount not less than 90% of the greater of the Proposed Rates, then in such
event the Fair Market Rental Rate shall be the average of the two Proposed
Rates.

(iv)    If both appraisers timely submit a Proposed Rate as provided above and
if the Proposed Rates are not the same and the lesser of the Proposed Rates is
an amount less than 90% of the greater of the Proposed Rates, then the two
appraisers shall promptly agree upon and appoint a qualified and impartial
appraiser who has had at least ten (10) years’ experience in the evaluation of
industrial warehousing/manufacturing/office/distribution space in the Pertinent
Market area as a third appraiser (the “Deciding Appraiser”) and shall notify the
other parties of the identity and address of such appointee. The Deciding
Appraiser may not have any material financial or business interest in common
with either of the parties or the previously appointed appraisers. Within five
(5) business days of the appointment of the Deciding Appraiser,

 

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Landlord and Tenant will submit to the Deciding Appraiser their respective
appraiser’s determinations of the Proposed Rate and any related information.
Within fifteen (15) days of such appointment of the Deciding Appraiser, the
Deciding Appraiser will review each party’s submittal (and such other
information as the Deciding Appraiser deems necessary) and will select, in total
and without modification, the submittal presented by either Landlord or Tenant
as the Fair Market Rental Rate. Any determination of Fair Market Rental Rate
made by the Deciding Appraiser in violation of the provisions of this section
shall be beyond the scope of authority of the Deciding Appraiser and shall be
null and void. If the determination of Fair Market Rental Rate is made by a
Deciding Appraiser, Landlord and Tenant will each pay, directly to the Deciding
Appraiser, one-half (1⁄2) of all fees, costs and expenses of the Deciding
Appraiser.

(iii)    Notwithstanding the foregoing, the Base Rent (i) for the first Renewal
Term and (ii) for the second Renewal Term shall be equal to or greater than the
Base Rent for the expiring Initial Term or Renewal Term, as applicable. However,
Tenant hereby acknowledges and agrees that Tenant shall accept the Leased
Premises in its “AS-IS” condition during the applicable Renewal Term; and Tenant
hereby further acknowledges and agrees that, in connection with Tenant’s
exercise of each Renewal Option, Landlord shall have no obligation to make any
improvements, alterations or modifications to the Leased Premises, nor shall
Landlord be obligated to provide Tenant with any improvement allowances or other
allowances or payments. Upon Landlord’s request, Tenant shall execute a written
addendum to this Lease confirming Tenant’s exercise of the applicable Renewal
Option, the commencement and expiration dates of the applicable Renewal Term and
such other matters as Landlord shall reasonably request.

(iv)    If this Lease is terminated or expires for any reason, the Renewal
Options granted in this Section with respect to periods subsequent to such
termination or expiration shall be deemed null and void. The Initial Term
together with any Renewal Terms are hereinafter referred to collectively as the
“Lease Term”.

(c)    Holdover Possession. If Tenant holds over and remains in possession of
the Leased Premises after the expiration of the Lease Term or earlier
termination of this Lease, with the consent of Landlord, then such holding over
and continued possession shall create a tenancy from month to month upon and
subject to the same terms and conditions of this Lease in effect when the Lease
Term expires, except for the length of the term of this Lease and the Base Rent
amount due during any such hold over period. At any time, either party may
terminate such tenancy from month to month upon thirty (30) days written notice
delivered to the other party in accordance with Section 20. During any holdover
period, Tenant shall pay to Landlord for each day that it holds over 150% of the
Base Rent (as defined in Section 3) in effect when expiration or termination of
this Lease occurs, prorated on a daily basis during such holdover period.
Notwithstanding the foregoing, if Tenant has provided notice to Landlord at
least one hundred eighty (180) days prior to the expiration of the Lease Term,
such notice to include a time period up to three (3) calendar months (the
“Permitted Holdover Period”) in which Tenant intends to remain in possession of
the Leased Premises, and no default remains uncured as of the date of the notice
of the Permitted Holdover Period and/or the commencement of the Permitted
Holdover Period, then Tenant shall have the right to holdover possession for the
Permitted Holdover Period under the same terms and conditions as the previous
term, but at a rate of one hundred twenty-five percent (125%) of the Base Rent
in effect immediately prior to the Permitted Holdover Period, provided, however,
that Tenant shall be obligated to pay such holdover rent for the full Permitted
Holdover Period even if Tenant vacates the Leased Premises and surrenders
possession prior to the expiration thereof. If Tenant holds over and remains in
possession of the Leased Premises after the expiration of the Lease Term,
without the written consent of Landlord, then Tenant shall indemnify and hold
harmless Landlord from and against any and all claims, judgments, liabilities,
losses, costs, and expenses arising from, or in connection with, such
possession. This Section 2(c) shall in no way constitute consent by Landlord to
any holding over by Tenant upon the expiration or earlier termination of this
Lease (or a Permitted Holdover Period if applicable), nor limit Landlord’s
remedies in such event, including, without limitation, Landlord’s right to
recover from Tenant any consequential or punitive damages resulting from a
holdover by Tenant after the expiration or earlier termination of this Lease (or
a Permitted Holdover Period, if applicable). For clarification, if Tenant
exercises

 

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its right to holdover possession for the Permitted Holdover Period in strict
accordance with this Section, then Landlord’s right to seek recovery under the
foregoing indemnity or recover from Tenant any consequential or punitive damages
resulting from a holdover by Tenant shall not apply unless Tenant fails to
vacate and surrender possession of the Leased Premises on or before expiration
of the Permitted Holdover Period.

3.    Rent.

(a)    Payment of Base Rent. Subject to any adjustments in accordance with
Section 4(g) below, Tenant shall pay to Landlord annual base rent (the “Base
Rent”) for the Leased Premises in the amounts provided in the table below.

 

Period

   Monthly
Base Rent      Annual Base
Rent  

Commencement Date – End of Lease Year 1

   $ 70,956.00      $ 851,472.00  

Lease Year 2

   $ 72,552.51      $ 870,630.12  

Lease Year 3

   $ 74,184.94      $ 890,219.30  

Lease Year 4

   $ 75,854.10      $ 910,249.23  

Lease Year 5

   $ 77,560.82      $ 930,729.84  

Lease Year 6

   $ 79,305.94      $ 951,671.26  

Lease Year 7

   $ 81,090.32      $ 973,083.86  

Lease Year 8

   $ 82,914.85      $ 994,978.25  

Lease Year 9

   $ 84,780.44      $ 1,017,365.26  

Lease Year 10

   $ 86,688.00      $ 1,040,255.98  

Lease Year 11

   $ 88,638.48      $ 1,063,661.74  

Lease Year 12

   $ 90,632.84      $ 1,087,594.13  

Lease Year 13

   $ 92,672.08      $ 1,112,065.00  

Lease Year 14

   $ 94,757.21      $ 1,137,086.46  

Lease Year 15

   $ 96,889.24      $ 1,162,670.90   First Renewal Term

 

Lease Year 16

     See Section 2(b)(ii).  

Lease Year 17

Lease Year 18

Lease Year 19

Lease Year 20

Second Renewal Term

 

Lease Year 21

     See Section 2(b)(ii).  

Lease Year 22

Lease Year 23

Lease Year 24

Lease Year 25

Base Rent shall be payable in equal monthly installments and in advance (without
abatement, offset, deduction or prior demand, except as otherwise specifically
set forth herein) on or before the first day of each full and partial calendar
month during the Lease Term; provided that, if the Lease Term expires or
commences on a date other than the first day or last day of a calendar month,
then the Base Rent payable for such partial calendar month shall be an amount
equal to the monthly installment of Base Rent otherwise then in effect, divided
by the number of days in the full calendar month during which the Lease Term
expires, and multiplied by the number of days in such partial calendar.

 

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(b)    Change Order Adjustments. The Base Rent amounts listed in the table above
shall be subject to modification to account for increases in the Improvement
Costs (as defined below) due to Change Orders (as defined below) as provided in
Section 4(g) below. In the event that any adjustment in Base Rent is required,
the Monthly Base Rent and Annual Base Rent shall be recalculated in accordance
with Section 4 below and the parties shall enter into an amendment to this Lease
to confirm any such adjustment of the Base Rent hereunder.

(c)    Additional Rent. All charges payable by Tenant other than Base Rent are
called “Additional Rent’’, and Base Rent and Additional Rent are referred to
collectively as “Rent”. Unless this Lease provides otherwise, Tenant shall pay
all Additional Rent then due either to the applicable taxing authority,
insurance carrier, utility service provider or other provider, directly, or to
Landlord upon demand with the next monthly installment of Base Rent.

(d)    Past Due Payments. If any Base Rent, Additional Rent or any other sums,
charges, or payments required to be paid by Tenant to Landlord under this Lease
shall become overdue for a period in excess of ten (10) days, then such unpaid
amounts shall bear interest from the date due to the date of payment at the rate
of twelve percent (12%) per annum (the “Default Rate”). Such interest shall be
in addition to, and not in lieu of, any other right or remedy that Landlord may
have hereunder, at law, or in equity.

(e)    Place of Payments. All payments of Base Rent or any other sums, charges,
or payments to be paid by Tenant to Landlord under this Lease required to be
made, and all statements required to be delivered, by Tenant to Landlord shall
be made and delivered to Landlord at its address set forth in Section 20, or to
such other address as Landlord specifies to Tenant in accordance with that
Section.

(f)    Net Lease. The Base Rent payable hereunder shall be paid on a “triple
net” basis without abatement, deduction or offset. It is the intent of the
parties, except as is otherwise provided in this Lease, that, from and after the
Commencement Date, Tenant shall pay all costs, charges, insurance premiums,
taxes, utilities, expenses and assessments of every kind and nature incurred
for, against, or in connection with the Leased Premises, excluding however, any
of Landlord’s costs as set forth in Section 9(a) or as otherwise provided in
Section 4 in connection with Landlord’s Work and any Tenant Finish Allowance (as
defined below). All such costs, charges, insurance premiums, taxes, utilities,
expenses and assessments covering the Leased Premises shall be prorated upon the
Commencement Date and upon the expiration or earlier termination of the Lease
Term. The terms and provisions of this Section 3(f) shall survive the expiration
or earlier termination of this Lease.

4.    Landlord’s Work.

(a)    Landlord’s Work. Landlord shall, at Landlord’s sole cost and expense,
construct or cause the construction of the Building and the Improvements
(collectively, the “Landlord’s Work”), in substantial compliance with the site
plan attached hereto as Exhibit B and incorporated herein by this reference and
the project specifications attached hereto as Exhibit C and incorporated herein
by this reference (collectively the “Project Specifications”). Landlord shall:
(i) obtain all permits and approvals necessary for the completion of the
Landlord’s Work; and (ii) complete the Landlord’s Work (including all
architectural and engineering design and permitting) in compliance with all
applicable laws, statutes, ordinances, rules and regulations (including the
Americans with Disabilities Act of 1990, as amended); provided, however, that
Landlord shall have no responsibility pursuant to this sentence with respect to
any design changes and/or Change Order(s) requested by Tenant or Tenant’s
architect. Landlord will cause plans and specifications for the Landlord’s Work
to be prepared by Landlord’s architect in accordance with the Project
Specifications, and will submit the proposed preliminary plans and
specifications to Tenant for Tenant’s approval within seventy-five (75) days of
mutual execution and delivery of this Lease. Tenant will approve such plans and
specifications, or will state its reasons for disapproval in writing, within ten
(10) days after its receipt thereof from Landlord. Tenant will not withhold or
condition its approval thereof except

 

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for just and reasonable cause, and will not act in an arbitrary or capricious
manner with respect to the approval thereof. If Tenant notifies Landlord within
the aforesaid ten (10) day period of its disapproval of the proposed plans and
specifications and states its reasons for disapproval, then Landlord and Tenant
will work in good faith to resolve any item of disapproval identified in the
preliminary plans and specifications and, upon any revisions to the plans and
specifications, Landlord shall resubmit the plans and specifications to Tenant
for Tenant’s approval. If Tenant fails to provide its written approval or
disapproval, in writing, within the aforesaid ten (10) day period, then each day
thereafter until Tenant does provide its written approval or disapproval will
constitute one (1) day of Tenant Delay (as such term is defined below). Further,
if Tenant is late in responding to any plans and specifications and Landlord so
notifies Tenant, in writing, that Tenant has failed to respond within the
aforesaid ten (10) day period, then Tenant’s failure to provide such written
approval or disapproval within ten (10) days after such written notification
will constitute Tenant’s approval of the plans and specifications. The plans and
specifications for Landlord’s Work as approved, or deemed to have been approved,
by Tenant will automatically become the “Plans and Specifications” hereunder.
Anything to the contrary contained herein notwithstanding, Landlord’s Work shall
include, and the Plans and Specifications shall provide for, causing the
warehouse portion of the Building (and all other portions of the Building) to be
fully-served by a heating, ventilation, and air conditioning system that is
adequate to serve such spaces and heat and cool the same in a commercially
reasonable manner. Landlord shall not make any changes to the Project
Specifications or the Plans and Specifications (once approved or deemed approved
as set forth in this Section) without obtaining Tenant’s prior written consent,
which shall not be unreasonably withheld, conditioned or delayed. In the event
of any conflict between the approved Plans and Specifications and the initial
Project Specifications, the approved Plans and Specifications shall control. For
purposes of this Lease, the term “Improvement Costs” shall mean all “hard” and
“soft” costs and expenses incurred by Landlord to acquire the Real Estate and
design, build and complete the Landlord’s Work in accordance with this Lease
including, without limitation, the costs of labor and materials, design,
permitting and engineering fees, construction management or project management
fees, development fees, acquisition costs for the Real Estate, financing costs,
interest and other reasonable carrying costs, reasonable legal fees, brokerage
commissions, sales or other excise taxes Landlord must pay in connection with
the purchase of materials and services, other reasonable soft costs incurred by
Landlord in connection therewith and all other costs and expenses set forth in
the project budget. Anything to the contrary contained herein notwithstanding,
Landlord shall be solely responsible for all Improvement Costs related to the
Landlord’s Work.

(b)    Substantial Completion of Landlord’s Work. The Landlord’s Work shall be
deemed to be substantially completed on the date (the “Substantial Completion
Date”) that Landlord delivers to Tenant (i) a copy of an architect’s certificate
(the “Architect’s Certificate”) of substantial completion indicating that the
Landlord’s Work has been completed in accordance with the Plans and
Specifications, subject to identified “punch-list” items which do not materially
affect Tenant’s ability to use the Building and Improvements for the purpose of
conducting its normal business operations or for the purpose of completing the
installation of its fixtures and equipment (the “Punch List Items”), and (ii) a
certificate of occupancy or equivalent authorization from local governmental
authorities authorizing occupancy of the Building and Improvements for their
intended purposes (provided; however, that a project completion certificate for
the Building, a temporary certificate of occupancy, or equivalent authorization
will suffice if the remaining incomplete work or conditions are either included
in the scope of the Punch List Items or represent work that Tenant is
responsible for completing under the Lease). Subject to Tenant Delays, Force
Majeure and the other terms and conditions of this Lease, Landlord shall cause
the Substantial Completion Date to occur on or before September 1, 2020
(“Scheduled Completion Date”). For purposes of this Lease, “Tenant Delays” shall
mean any delay which is caused or contributed to by Tenant, or those acting by,
for or under Tenant, including, without limitation, any failure by Tenant to
approve proposed plans and specifications on a timely basis or any delay
resulting from any revisions that Tenant proposes to the Plans and
Specifications and/or any Change Order(s) requested by Tenant. Upon an event of
Force Majeure or any Tenant Delays, the Scheduled Completion Date shall be
extended for the period of any delay attributable to such event of Force Majeure
or Tenant Delay.

 

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(c)    Tenant Finish Work and Allowances. Tenant shall, at Tenant’s sole cost
and expense, except as set forth below with respect to the Tenant Finish
Allowance, construct or cause the construction of the tenant improvements which
are generally described in Exhibit D attached hereto and incorporated herein by
this reference (the “Tenant Finish Work”). Tenant shall pay to Landlord a
construction management fee of three percent (3%) of the total costs of the
Tenant Finish Work. Landlord shall provide an allowance for the costs of the
Tenant Finish Work in the amount of Four Hundred Thousand Dollars ($400,000)
(the “Tenant Finish Allowance”). The Tenant Finish Allowance shall be used to
construct and pay for the Tenant Finish Work, and any remaining balance of the
cost of the Tenant Finish Work above the Tenant Finish Allowance shall be
payable by Tenant directly to its contractor for the Tenant Finish Work,
pursuant to separate agreement. Landlord shall reimburse Tenant for the Tenant
Finish Allowance in accordance with Exhibit D-1. Provided, however, that
anything to the contrary contained herein notwithstanding, if Tenant does not
use the entire Tenant Finish Allowance, Tenant shall be entitled to a credit
against Base Rent for any portion of the Tenant Finish Allowance not used by
Tenant.

(d)    Construction of Tenant Finish Work. Tenant shall construct the Tenant
Finish Work in accordance with the Tenant Work Letter attached hereto as Exhibit
D-1, and the Tenant Finish Work shall not be subject to the terms and conditions
of Section 7 hereinbelow. Landlord and Tenant hereby agree that the Tenant
Finish Work shall be performed by contractor(s) selected by Tenant with
Landlord’s approval, not to be unreasonably withheld, conditioned, or delayed.

(e)    Early Access and Full Access. Except for the Tenant Finish Allowance,
Tenant shall be responsible for the cost and expenses of all work necessary to
complete the Tenant Finish Work and prepare the Leased Premises for initial
occupancy by Tenant that is not expressly included in Landlord’s Work.
Commencing on August 1, 2020 (as such date may be extended due to Force Majeure
or Tenant Delays) (the “Early Access Date”), Tenant shall have access to the
Leased Premises in order to commence the Tenant Finish Work. Commencing on the
Substantial Completion Date, Tenant shall have full access to the Leased
Premises for all purposes under this Lease, including without limitation for the
installation of Tenant’s trade fixtures, equipment, furniture, systems and
inventory. Notwithstanding the foregoing, Tenant agrees that (i) such early
access by Tenant shall not interfere with or delay the performance of the
Landlord’s Work in any way and shall be subject to Landlord’s prior written
consent which shall not be unreasonably withheld, delayed or conditioned;
(ii) Tenant shall indemnify Landlord from any damage or liability to the extent
caused by such early access by Tenant or Tenant’s contractors, agents or
invitees; and (iii) Tenant shall provide Landlord proof that all insurance
Tenant is required to carry under this Lease is in full force and effect on or
before the date of such early access by Tenant or Tenant’s contractors, agents
or invitees. In the event that any damage is caused to the Leased Premises by or
as a result of Tenant’s access to the Leased Premises, Tenant shall indemnify
Landlord from any liability resulting from such damage and shall reimburse
Landlord immediately for all reasonable costs incurred by Landlord to repair
same. All the terms, covenants and agreements set forth in this Lease (other
than the payment of Rent) shall apply to any such early occupancy. In the event
Tenant exercises its early entrance right under this Section 4(e) and engages a
contractor for the performance of any work that is permitted hereunder
(including, without limitation, the installation of Tenant’s material handling
system), Tenant shall cause such contractor(s), prior to commencing any such
work, to provide Landlord with evidence of commercial general liability,
professional liability, worker’s compensation and automobile liability insurance
together with any other insurance that may be required under its contract (each
a “Tenant Work Contract”) with Tenant for the performance of such work. The
commercial general liability policy shall name Landlord, Landlord’s general
contractor and (if affirmatively required under the Mortgage [as defined below])
Landlord’s Lender (as defined below), as additional insured parties. Each such
policy shall contain an agreement by the insurer that such insurance coverage
shall not be modified or canceled without delivery of written notice to the
insured party. Furthermore, Tenant shall cause each Tenant Work Contract to
require the contractor thereunder to (A) indemnify, defend and hold Tenant,
Landlord, Landlord’s general contractor and Landlord’s Lender harmless from and
against any and all losses, damages, claims, suits, actions, judgments,
liabilities and expenses, including, without limitation, environmental damages
and remediation expenses and reasonable attorneys’ fees, arising out of, or with
respect to any injury to, or death of, persons and/or any damage to, or
destruction of, property, on or about the Premises and attributable to the
negligence or misconduct of such contractor, or its officers, employees, agents,
subcontractors or invitees, and (B) maintain commercially reasonable liability
insurance policies to support its indemnification obligations under such Tenant
Work Contract (collectively, the “Indemnity and Insurance Requirements”). With
respect to any Tenant Work Contract that is entered into by and between Tenant’s
general contractor and any applicable subcontractor, Tenant shall be deemed to
have complied

 

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with its obligation to include the Indemnity and Insurance Requirements in each
such Tenant Work Contract so long as the Tenant Work Contract between Tenant and
its general contractor requires that all subcontracts provide that the
subcontractor thereunder shall comply with the Indemnity and Insurance
Requirements and Tenant otherwise makes good faith and reasonable efforts to
require compliance with the same.

(f)    Initial Condition. After the Substantial Completion Date, Tenant assumes
responsibility for inspecting the Leased Premises before accepting occupancy to
determine that: (i) the Landlord’s Work have been completed in accordance with
the Plans and Specifications and this Lease; and (ii) the Leased Premises
complies with this Lease and all applicable laws. Within fifteen (15) days after
the date of Substantial Completion, Tenant shall execute and deliver to Landlord
a certificate (“Acceptance Letter”), stating that Tenant has accepted the Leased
Premises, subject to the identified Punch List Items, or any lesser list of
items from the list of Punch List Items which remain incomplete and are
identified in the Acceptance Letter. Landlord shall promptly correct any such
remaining Punch List Items after receipt of the Acceptance Letter. Landlord
shall promptly complete any Punch List Items within sixty (60) days after the
Substantial Completion Date. Upon completion of all Punch List Items, Landlord
shall, to the extent assignable, assign to Tenant all warranties which: (i) may
be extended to Landlord by manufacturers, suppliers, or contractors in
connection with the completion of the Landlord’s Work; and (ii) cover those
parts of the Leased Premises which Tenant is obligated to maintain under
Section 9 below. Any such assignment of warranties will be made with a
reservation of rights in favor of the Landlord to afford Landlord an on-going
and continuing right to enforce performance of those warranties by the
applicable parties that issued those warranties, in pari passu with the rights
of the Tenant to enforce those warranties.

(g)    Change Orders. If Tenant, Landlord and the Construction Manager agree to
any change order(s) to the Plans and Specifications (“Change Order(s)”) which
increases the costs and expenses attributable to the Landlord’s Work, then
Tenant shall either (i) pay the amount of such increase to Landlord within ten
(10) days of execution of such Change Order or (ii) increase the rent by taking
the total cost of the overage including soft costs multiplied by eight percent
(8%) and increasing annual Base Rent for each year by such amount. All Change
Orders shall be subject to Landlord’s prior written consent, which shall not be
unreasonably withheld, conditioned or delayed. Notwithstanding anything to the
contrary in this Lease, Landlord shall have no obligation to approve any Change
Order(s), and as a condition to approving any such Change Order(s), Landlord may
condition its approval on Tenant agreement to pay the amount of such increase to
Landlord within ten (10) days of execution of such Change Order as set forth
above.

5.    Taxes.

(a)    Real Estate Taxes and Assessments. The term “Real Estate Taxes” shall
mean: (i) any fee, license fee, license tax, business license fee, commercial
rental tax, levy, charge, assessment, penalty or tax imposed by any taxing
authority against the Real Estate, the Improvements to be constructed by or for
the benefit of Tenant hereunder, all fixtures taxable as real property and all
future improvements and fixtures or any alterations or additions constructed
pursuant to Section 7, below (collectively the “Taxable Real Property”); (ii)
any tax on the Landlord’s right to receive, or the receipt of, rent or income
from the Taxable Real Property or against Landlord’s business of leasing the
Taxable Real Property (excluding Landlord’s federal or state income, franchise,
inheritance or estate taxes); (iii) any tax, assessment or charge for fire
protection, streets, sidewalks, road maintenance, refuse or other services
provided to the Taxable Real Property by any governmental agency; (iv) any tax
imposed upon this transaction or based upon a re-assessment of the Taxable Real
Property due to a change of ownership, as defined by applicable law, or other
transfer of all or part of Landlord’s interest in the Taxable Real Property; and
(v) any charge or fee replacing any tax previously included within the
definition of Real Estate Tax. In this regard, Real Estate Taxes shall include
all charges levied, assessed or imposed, whether general or special, ordinary or
extraordinary, unforeseen as well as foreseen, of any kind and nature, made,
assessed, levied or imposed upon, or which become a lien upon, the Taxable Real
Property, or any part of the Taxable Real Property, or upon this Lease, and are
due and payable during or are otherwise attributable to the Lease Term, as well
as assessments for sidewalks, streets, sewers, water, or any other public
improvements and any other improvements or benefits which shall, during the
Lease Term, be levied, assessed or imposed,

 

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or become a lien upon the Taxable Real Property, or any part of the Taxable Real
Property, or upon this Lease, and become due and payable during or are otherwise
attributable to the Lease Term. Tenant shall pay and discharge when due all Real
Estate Taxes levied, assessed, imposed, or due and payable during or otherwise
attributable to the Lease Term on, against, or with respect to the Taxable Real
Property, and Tenant shall pay all late charges, interest and penalties if any
Real Estate Taxes are not paid or discharged when required hereunder. Within ten
(10) days after any installment or payment of such Real Estate Taxes is due,
Tenant shall deliver to Landlord satisfactory evidence that the installment or
payment has been paid and discharged in full.

(b)    Landlord, at its cost and expense, shall: (i) cause the Leased Premises
to be established as a separate parcel for the purpose of the assessment of Real
Estate Taxes; and (ii) provide Tenant with all bills, statements, and invoices
for, or with respect to, Real Estate Taxes (or shall cause the same to be sent
directly to Tenant) levied, assessed, imposed or due and payable or otherwise
attributable to the Lease Term on, against, or with respect to the Leased
Premises within ten (10) business days after receipt of the same. In the event
that the Lease Term commences or expires other than on the first or last day of
a calendar year, Tenant’s obligation to pay Real Estate Taxes for such calendar
years shall be prorated based upon the number of days of the Lease Term that
occur in such calendar years. The obligations of Tenant hereunder with respect
to the payment of such Real Estate Taxes levied, assessed, imposed or due and
payable during or otherwise attributable to the final calendar year of the Lease
Term shall survive the expiration of the Lease Term or earlier termination of
this Lease.

(c)    Other Taxes and Assessments. Tenant shall pay and discharge, as and when
assessed: (i) all taxes, levies, and charges imposed on, against, or with
respect to the conduct of its business operations in, on, or from the Leased
Premises; and (ii) all taxes, levies, and charges imposed on, against, or with
respect to its trade fixtures, equipment, inventory, and other personal property
in, on, or about the Leased Premises. In addition to the foregoing, Tenant shall
pay an amount equal to any sales or use tax on all amounts classified as Base
Rent or Additional Rent which may be now or hereafter imposed by any lawful
governmental authority. Tenant also shall pay and discharge, as and when
assessed, all assessments levied or assessed or due and payable during the Lease
Term on, against, or with respect to the Leased Premises pursuant to any
applicable easements or any declaration of covenants, conditions or restrictions
(individually or collectively, the “Declaration”) encumbering the Real Estate
and/or Leased Premises (“Declaration Assessments”), and Tenant shall pay all
late charges, interest, and costs of collection under any such Declaration if
any installment or payment of Declaration Assessments is not paid or discharged
when required hereunder. Within ten (10) days after any installment or payment
of such Declaration Assessments is due, Tenant shall deliver to Landlord
satisfactory evidence that the installment or payment has been paid and
discharged in full. The obligations of Tenant hereunder with respect to the
payment of such Declaration Assessments levied during the final calendar year of
the Lease Term shall survive the termination of this Lease. In the event any
Real Estate Taxes or Declaration Assessments are assessed against the Leased
Premises as part of a larger parcel, then Landlord shall allocate a fair and
equitable amount of such assessments to the Leased Premises.

(d)    Contesting Real Estate Taxes. Tenant, at its cost and expense, shall have
the right to contest, in the manner prescribed by law, and otherwise in a
reasonable and diligent manner, the calculation of Real Estate Taxes levied on,
against, or with respect to the Taxable Real Property, or the valuation of the
Taxable Real Property for purposes of calculating such Real Estate Taxes, if:
(i) Tenant determines in good faith that such Real Estate Taxes have been
incorrectly calculated, or the Leased Premises and/or Taxable Real Property has
been materially overvalued for purposes of calculating such Real Estate Taxes
(“Tax Dispute”); (ii) Tenant delivers to Landlord a written notice describing
the Tax Dispute and the proposed contest with particularity; and (iii) Landlord
does not object to the proposed contest within ten (10) days after receipt of
such notice, which objection shall be made only on the basis that Landlord
reasonably has determined that the Tax Dispute will not result in decreased Real
Estate Taxes (or any such Tax Dispute remains subject to certain additional
conditions or requirements of any mortgage lender). Landlord shall cooperate
with Tenant in contesting any Tax Dispute, including, without limitation,
executing documents in connection therewith; provided that Tenant shall bear all
costs associated with Landlord’s cooperation. Pending resolution of the Tax
Dispute, Tenant shall pay, when required by the applicable taxing authority, the
full amount of the Real Estate Taxes levied or due and

 

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payable on, against, or with respect to the Taxable Real Property. Tenant shall
not agree to any settlement of a Tax Dispute without Landlord’s prior written
consent, which consent may be withheld only on the basis that the settlement
will result, or reasonably is anticipated by Landlord to result, in increased
Real Estate Taxes. Tenant shall indemnify and hold harmless Landlord from and
against any and all increases in Real Estate Taxes which result from a contest
commenced or conducted by Tenant. Any reduction, credit or refund of Real Estate
Taxes resulting from a contest conducted by Tenant and which were paid by Tenant
or are the obligation of Tenant to pay hereunder shall be credited or paid to
Tenant. In the event that Landlord files to contest any Real Estate Taxes and
such action was not taken upon Tenant’s request, Landlord shall notify Tenant of
the same and keep Tenant apprised of any filings or proceedings in connection
therewith, including providing Tenant with copies of any notices received by
Landlord pursuant to such contest.

(e)    Public Incentives. York County, South Carolina, a body politic and
corporate and a political subdivision of the State of South Carolina (the
“County”) has, pursuant to a resolution adopted by the York County Council, the
governing body of the County, on September 16, 2019, agreed to negotiate with
Tenant for the following incentives with respect to the Building and related
improvements (collectively, the “Project”): (i) negotiated fee in lieu of tax
incentives, (ii) special source revenue credits, and (iii) creation of a joint
county industrial or business park (herein collectively, together with any other
public incentives afforded the Project, referred to as the “Public Incentives”)
that have been sought by Tenant. In order to take advantage of the proposed
Public Incentives, the parties anticipate that the County and at Tenant’s
request, Landlord, shall enter into a Fee in Lieu of Tax and Incentive Agreement
with the County and Tenant (together with any other agreements required in
connection with the Public Incentives, the “Incentives Agreement”) establishing
the terms and conditions for the Public Incentives in exchange for the
commitment of the Landlord and Tenant, respectively, to perform certain
obligations relating to the Project. In this regard, the Tenant will be entitled
to the benefits of the Public Incentives for the duration of (i) the term of the
Incentives Agreement, or (ii) the Term of this Lease, whichever occurs earlier.
In this regard, the parties acknowledge that the Incentives Agreement has or
will be executed by the County based upon certain assumptions concerning
(i) anticipated real property capital investment from the performance and
completion of Landlord’s Work and compliance with any reporting obligations of
Landlord expressly provided for in the Incentives Agreement arising solely as a
result of either (I) a transfer of the Leased Premises by Landlord, (II) a
change in Landlord’s name, and (III) as a result of any merger, reorganization
or consolidation of Landlord (collectively, the “Landlord’s Incentives
Responsibility”); and (ii) anticipated investment in equipment and fixtures for
the Project and job creation and retention and all compliance and reporting
obligations under the Incentives Agreement other than those expressly included
in Landlord’s Incentives Responsibility (collectively, the “Tenant’s Incentives
Responsibilities”). Landlord and Tenant shall cooperate in good faith to
execute, acknowledge and deliver such further documents and, and perform such
other acts, as may be reasonably necessary to obtain or comply with the Public
Incentives, provided, however that in no event shall Landlord be obligated to
incur any costs or liabilities in connection therewith other than the Landlord’s
Incentives Responsibility. The Incentives Agreement also recognizes that certain
information concerning the Landlord’s Incentives Responsibility and the Tenant’s
Incentives Responsibilities may need to be reported to the County on a regular
basis to preserve the Public Incentives. The parties hereto acknowledge and
agree that the Landlord will exercise reasonable efforts to satisfy the
Landlord’s Incentives Responsibility and that the Tenant will exercise
reasonable efforts to satisfy the Tenant’s Incentives Responsibilities. In
addition, the parties hereto acknowledge and agree to cooperate with one another
in good faith to submit the necessary information to the County to preserve the
efficacy of the Public Incentives. If the information reported to the County is
not consistent with the threshold conditions contemplated in the Incentives
Agreement, the parties recognize that the Public Incentives may be subject to
amendment, reduction or elimination, and potentially resulting in payment
obligations or other liabilities (with any such payment obligations or other
liabilities amount being referred to herein as a “Clawback Obligations”). Any
Tenant Clawback Obligations (as hereinafter defined) that may be assessed will
be promptly paid, when due, by Tenant directly to the applicable taxing
authority. For purposes of this Lease, the term “Tenant Clawback Obligations”
will mean and refer to any Clawback Obligations that are: (i) imposed on account
of a default on the part of Tenant under the Incentives Agreement or as a result
of any default on the part of the Tenant under this Lease; (ii) imposed as a
result of any failure of the Tenant to satisfy the Tenant’s Incentives
Responsibilities; or (iii) imposed for any reason (including, without
limitation, indemnity requirements and/or costs of defending the County set
forth in the

 

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Incentives Agreement) other than solely on account of a default on the part of
the Landlord under the Incentives Agreement or solely on account of any failure
of the Landlord to satisfy the Landlord’s Incentives Responsibility. Any
Landlord Clawback Obligations (as hereinafter defined) that may be assessed will
be promptly paid, when due, by Landlord directly to the applicable taxing
authority. For purposes of this Lease, the term “Landlord Clawback Obligations”
will mean and refer to any Clawback Obligations that are imposed solely on
account of any failure of the Landlord to satisfy the Landlord’s Incentives
Responsibility.

(f)    Real Estate Tax Filings and Exemption Applications. Tenant shall file or
cause to be filed, on a timely basis, all property tax returns required in
connection with the Real Estate Taxes for the Project, including without
limitation a State of South Carolina, Property Return, Form SCDOR PT-300 or such
comparable form as the South Carolina Department of Revenue may provide from
time to time. Landlord and Tenant shall cooperate in good faith and in a timely
manner to provide any and all information reasonably necessary to make such
filings. Tenant shall provide Landlord with copies of any such filings made by
Tenant with respect to the Real Estate Taxes for the Project within thirty
(30) days of the date such filing is made with the applicable tax authority.

Reference is hereby made to Code of Laws of South Carolina 1976
Section 12-37-3135 (the “Exemption Statute”) and Code of Laws of South Carolina
1976 Section 12-43-22(e) (the “Classification Statute”). Notwithstanding
anything to the contrary in the preceding paragraph of this Section 5(f), in the
event that Landlord causes the Leased Premises to undergo an assessable transfer
of interest with respect to which the Exemption Statute allows an exemption from
Real Estate Taxes in the amount more particularly provided for in Section (B) of
the Exemption Statute, then subject to the terms and conditions set forth in
this paragraph, so long as the Leased Premises will be subject to the six
percent ratio provided pursuant to the Classification Statute, Landlord or its
agent shall provide notice (the “Exemption Notice”) to the county assessor in
accordance with Section (C) of the Exemption Statute. Tenant acknowledges and
agrees that since Tenant is a manufacturer, the Leased Premises will not be
subject to the six percent ratio provided pursuant to the Classification Statute
and therefore, Landlord shall have no obligation to provide an Exemption Notice
unless Tenant’s business operations change such that Tenant is no longer a
manufacturer and Tenant has previously provided Landlord with written notice and
certification, in form and substance reasonably acceptable to Landlord,
providing that Tenant is not a manufacturer and that therefore the Leased
Premises would be subject to the six percent ratio provided pursuant to the
Classification Statute, and Landlord shall be under no obligation to inquire
with Tenant as to whether there has been any such change. In the event Landlord
is obligated to provide an Exemption Notice hereunder and fails to do so, then
(i) Tenant shall not be obligated to pay such portion of the Real Estate Taxes
that would have been properly avoided if an Exemption Notice were properly
filed, (ii) Landlord shall be responsible for payment of such portion of the
Real Estate Taxes that would have been properly avoided if an Exemption Notice
were properly filed, and (iii) Tenant shall have no further right or remedy
against Landlord.

6.    Use of Leased Premises. The Leased Premises shall be occupied and used
solely for office, distribution, warehousing, manufacturing, employee and
customer training and as a product showroom, and ancillary uses related thereto
to the extent permitted by applicable law (collectively, the “Permitted Use”).
Tenant covenants and agrees that the Leased Premises shall not be used for any
treatment, storage or disposal of or otherwise contaminated by any Hazardous
Substances (as hereinafter defined); provided, however, that Tenant shall be
entitled to store and use such Hazardous Substances on the Leased Premises which
are incidental to and necessary for the operation of Tenant’s business so long
as Tenant complies with all local, state and federal laws, statutes, ordinances,
rules, and regulations applicable to such storage or use, and Tenant further
covenants and agrees that:

(a)    Tenant shall not permit any waste, damage or nuisance in, on or about the
Leased Premises, or use or permit the use of the Leased Premises for any
unlawful purpose;

(b)    Tenant shall conduct its business and keep the Leased Premises safe,
clean and in compliance with all guidelines, rules and regulations of the
health, fire, building, environmental and other offices and governmental
agencies having jurisdiction over Tenant’s business and/or the Leased Premises,
and shall comply with all laws, ordinances, rules, regulations, orders and
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entity or personnel now or hereafter affecting or relating to the Leased
Premises or the use thereof (including, without limitation, all applicable
zoning ordinances); provided, however, that notwithstanding the foregoing, to
the extent compliance with any such legal requirements, including the Americans
with Disabilities Act of 1990, as amended, would be necessary for occupancy of
the Premises in general and to the extent applicable to the Landlord’s Work (as
opposed to arising due to the nature of Tenant’s specific use or Tenant Finish
Work or Alterations being made by Tenant) and would necessitate that
improvements, alterations, or modifications to the Leased Premises or any
portion thereof, then Landlord shall be required to make such improvements at
its expense and the costs of such improvements, shall be reimbursed by Tenant to
Landlord upon demand as Additional Rent, provided, however that to the extent
such costs are capital in nature, then such costs shall be amortized in in equal
installments over their useful lives in accordance with generally accepted
accounting principles, consistently applied with interest at the annual rate of
seven percent (7%) (such terms for amortization being referred to herein as the
“Amortization Terms”). Notwithstanding the foregoing, to the extent such
improvements that are required solely arise as a result of Landlord’s failure to
complete the Landlord’s Work in accordance with all such legal requirements in
effect prior to the Commencement Date, Landlord shall be responsible for the
costs of such improvements and such costs shall not be payable as Additional
Rent;

(c)    Tenant shall not dump or otherwise dispose of on the Leased Premises any
chemicals, metals, garbage, trash or other industrial by-products and
incidentals to Tenant’s business and all waste removal facilities shall use
proper, leak-proof and fireproof containers and no foreign substance of any kind
shall be placed on or near the Leased Premises and the expense of any breakage,
stoppage, contamination, spillage or damage resulting from a violation of this
provision shall be borne by Tenant;

(d)    Tenant shall comply with and shall use its best efforts to cause its
agents, employees, customers, invitees, licensees and concessionaires to comply
with any Declaration, all recorded instruments encumbering the Real Estate and
all reasonable rules and regulations established by Landlord from time to time;

(e)    Tenant shall indemnify, defend and hold harmless Landlord, and any party
affiliated with Landlord, from and against any and all claims, judgments,
liabilities, losses, costs, and expenses arising from, or in connection with:
(i) any escape, storage, usage, or spillage of any Hazardous Substances by
Tenant (or its employees, agents, contractors, invitees, or licensees) in, on,
or about the Leased Premises; or (ii) any transportation of any Hazardous
Substances to or from the Leased Premises by Tenant (or its employees, agents,
contractors, invitees, or licensees), whether or not such storage, usage, or
transportation constitutes a failure of Tenant fully to observe or perform its
obligations under this Lease. The claims, judgments, liabilities, losses, costs,
and expenses from and against which Tenant has agreed to indemnify, defend and
hold harmless Landlord, and any party affiliated with Landlord, under this
Subsection shall include the following: (i) any obligation or liability of
Tenant or Landlord under any law, ordinance, rule, regulation, order or decree
to remove any Hazardous Substance, or contaminated soil or groundwater, from the
Leased Premises, “clean up” any contamination of the soil or the groundwater in,
on, or under the Leased Premises, or perform any remediation of or for the
Leased Premises; (ii) all charges, fines, or penalties imposed by governmental
authority or under any law, ordinance, rule, regulation, order or decree
governing Hazardous Substances; and (iii) all claims by, and liabilities to, any
third party;

(f)    Landlord shall indemnify, defend and hold harmless Tenant, and any party
affiliated with Tenant, from and against any and all claims, judgments,
liabilities, losses, costs, and expense arising from or in connection with
(i) any escape, storage, usage, or spillage of any Hazardous Substances by
Landlord (or its employees, agents, contractors, invitees, or licensees) in, on,
or about the Leased Premises or Real Estate during the Lease Term; or (ii) any
recognized environmental conditions existing on the Real Estate prior to the
date of Substantial Completion that are disclosed in that certain Phase I
Environmental Site Assessment dated October 30, 2015, and prepared for Scannell
Properties by Froehling & Robertson, Inc. and/or any Phase I Environmental Site
Assessment procured by Tenant after the date of Substantial Completion;
provided, however, that Landlord shall have no obligation to indemnify, defend
and hold Tenant harmless from, and Tenant shall remain liable and responsible
for all, any and all claims, judgments, liabilities, losses, costs, and expenses
arising from the exacerbation of such recognized environmental conditions by
Tenant (or its employees, agents, contractors, invitees, or licensees); and

 

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(g)    Each party hereto shall give written notice to the other of any
violation, claim, judgment, liability, loss, cost or expense that may give rise
to either party’s indemnity obligations under Section 6(e) or 6(f) above,
promptly upon discovery or knowledge thereof. The indemnifying party (the
“Indemnifying Party”) shall defend the other party (the “Indemnified Party”)
with counsel selected by the Indemnifying Party that is reasonably acceptable to
the Indemnified Party. The Indemnified Party shall have the right to retain its
own counsel, at its own cost and expense; provided however that, so long as the
Indemnifying Party diligently discharges its defense obligation, the
Indemnifying Party shall at all times have the right to lead and conduct the
defense of the respective claim or proceeding, but at all times keeping the
Indemnified Party advised of all relevant facts concerning the defense of such
claim or proceeding. The Indemnifying Party shall have the right to settle any
claims or proceedings provided that the Indemnified Party gives its prior
written consent, which shall not unreasonably be withheld, conditioned or
delayed.

The term “Hazardous Substances” means (i) any “hazardous wastes” as defined
under RCRA, (ii) any “hazardous substances” as defined under CERCLA, (iii) any
toxic pollutants as defined under the Clean Water Act, (iv) any hazardous air
pollutants as defined under the Clean Air Act, (v) any hazardous chemicals as
defined under TSCA, (vi) any hazardous substances as defined under EPCRA,
(vii) radioactive materials covered by the Atomic Energy Act, (viii) similar
wastes, substances, pollutants, chemicals regulated under analogous state and
local laws, (ix) asbestos, (x) polychlorinated biphenyls, (xi) petroleum and
petroleum products or synthetic fuels or any fraction thereof, (xii) any
substance the presence of which on the property in question is prohibited under
any applicable environmental law; (xiii) substances defined as “hazardous
substances,” “hazardous materials,” “toxic substances,” “hazardous wastes,”
“oil,” “regulated substances,” “restricted hazardous wastes,” “special wastes”
or words of similar import under any applicable state or local statutes,
ordinances and/or regulations; and (xiv) any other substance which under any
applicable environmental law requires remediation or special handling or
notification of or reporting to any federal, state or local governmental entity
in its generation, use, handling, collection, treatment, storage, recycling,
treatment, transportation, recovery, removal, discharge or disposal.

Landlord and Tenant’s indemnification obligations under this Section 6 shall
survive the expiration or earlier termination of this Lease.

7.    Condition, Alterations and Additions.

(a)    Tenant Alterations. Tenant, at its cost and expense, may install in the
Building such personal property as Tenant determines to be necessary or
appropriate to conduct its business. Tenant, at its cost and expense, also may
make non-structural alterations, improvements or additions to the interior of
the Building so long as (i) such alterations, improvements or additions do not
affect the storm water drainage serving the Leased Premises or any Building
Systems (as defined below), and (ii) the aggregate cost of such alterations,
improvements or additions in any given lease year is less than Seventy-Five
Thousand Dollars ($75,000.00) (“Non-Structural Alterations”) if: (i) Tenant
delivers to Landlord a written notice describing the proposed alteration,
improvement or addition with particularity, and provides to Landlord copies of
any plans and specifications for the proposed alteration, improvement or
addition; and (ii) upon the expiration of the Lease Term or earlier termination
of this Lease, Tenant surrenders the part of the Leased Premises altered or
improved in as good a condition as on the date that Tenant accepts the Leased
Premises, reasonable wear and tear and such Non-Structural Alterations,
excepted. Tenant shall make no alterations, improvements or additions of or to
the exterior of the Building, without the prior written consent of Landlord,
which consent shall not be unreasonable withheld, conditioned, or delayed.
Tenant shall make no structural alterations, improvements or additions of or to
any part of the Leased Premises or make any alterations, improvements or
additions that affect the storm water drainage serving the Leased Premises or
any Building Systems, in either case, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned, or
delayed. All improvements, alterations and additions to the Leased Premises,
excepting only Tenant’s unattached personal property, shall become the sole
property of Landlord upon the expiration of the Lease Term or earlier
termination of this Lease;

 

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provided, that Landlord shall have the right but if Landlord so specifies in its
consent to the same, to require Tenant to remove any such alteration,
improvement or addition upon the expiration of the Lease Term or earlier
termination of this Lease, in which event, Tenant shall repair any and all
damage to the Leased Premises resulting from such removal and shall surrender
the part of the Leased Premises altered or improved in as good a condition as on
the date that Tenant accepts the Leased Premises as set forth above; provided,
however, that Tenant shall have no obligation to remove any Non-Structural
Alterations.

(b)    Tenant Signage. Tenant may, at its cost and expense, install not more
than two (2) exterior sign(s) on the Building at locations reasonably approved
by Landlord (the “Approved Signs”); provided, that the size, content and
materials of the Approved Signs shall be subject to the prior written approval
of Landlord, not to be unreasonably withheld, conditioned, or delayed, and
installation thereof shall be the sole responsibility of Tenant, after Tenant
obtains all other required permits and approvals. Any signage must be removed at
the cost of Tenant at the expiration or termination of this Lease.

8.    Utilities. As part of the Landlord’s Work, Landlord shall procure and pay
the cost of, directly to the appropriate utility service supplier, bringing to
and the connection to the Leased Premises of all natural gas, heat, light,
power, sewer service, telephone, cable, water, refuse disposal and other
utilities and services supplied to the Leased Premises, including without
limitation, any connection and servicing fees, permit fees, inspection fees, and
fees to reserve utility capacity. From and after the Commencement Date, Tenant
shall be responsible for the payment of the cost of, directly to the appropriate
utility service supplier, all monthly service charges for all such utilities for
such utilities consumed by Tenant during the Lease Term. Landlord shall cause
electrical service reasonably sufficient for Tenant to commence Tenant’s Finish
Work to be available to the Leased Premises on or before the Early Access Date
and Tenant shall reimburse Landlord, as Additional Rent hereunder, for the cost
of any such electrical service used by Tenant, as reasonably determined by
Landlord (with due consideration to electrical service that may be utilized by
Landlord in connection with Landlord’s Work then being completed). It is
understood and agreed that, except for the foregoing as part of Landlord’s Work
and except as otherwise provided herein, Landlord shall be under no obligation
to furnish any utilities to the Leased Premises and shall not be liable for any
interruption or failure in the supply of any such utilities to the Leased
Premises, unless such interruption is caused by the gross negligence or willful
misconduct of Landlord, its employees or agents. Notwithstanding the foregoing,
if: (i) such utility service is interrupted because of the acts of Landlord, its
employees, agents or contractors; (ii) Tenant notifies Landlord of such
interruption in writing (the “Interruption Notice”); (iii) such interruption
does not arise in whole or in part as a result of an act or omission of Tenant
or any of its employees, agents, contractors, invitees, or licensees; (iv) such
interruption is not caused by a fire or other casualty; (v) the repair or
restoration of such service is reasonably within the control of Landlord; and
(vi) as a result of such interruption, the Premises or a material portion
thereof, is rendered untenantable (meaning that Tenant is unable to use the
Premises in the normal course of it business) and Tenant in fact ceases to use
the Premises, or material portion thereof, then, Tenant’s sole remedy for such
interruption shall be as follows: on the twentieth (20th) consecutive business
day following the later to occur of the date the Premises (or material portion
thereof) becomes untenantable, the date Tenant ceases to use such space and the
date Tenant provides Landlord with an Interruption Notice, the Rent payable
hereunder shall be abated on a per diem basis for each day after such twenty
(20) business day period based upon the percentage of the Premises so rendered
untenantable and not used by Tenant, and such abatement shall continue until the
date the Premises become tenantable again. If any equipment installed by Tenant
requires additional utility facilities, the costs of installing such additional
facilities shall be borne by Tenant.

9.    Maintenance and Repairs.

(a)    Maintenance by Landlord. During the Lease Term, Landlord, at its cost and
expense (and not to be charged back to Tenant as Additional Rent), shall provide
all necessary repairs and replacements to the structural elements of the
Building and the Improvements including, and limited to the foundation, exterior
and load-bearing walls (excluding painting), the floor slab, the roof structure
and membrane of the Building, subsurface and sub-slab utilities (collectively,
the “Structural Elements”), other than routine maintenance and upkeep of such
Structural Elements; provided that Landlord shall not be responsible for making
any repairs or replacements which are occasioned by: (i) any negligence,
intentional act, or willful misconduct of Tenant or its employees, contractors,
or agents; (ii) Tenant’s failure to observe

 

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or perform any term, condition, or covenant of this Lease to be observed or
performed by Tenant; (iii) installation or maintenance by Tenant of any exterior
signs, satellite dishes, antennae, communications facilities, or equipment,
lines, or cable; (iv) installation or maintenance by Tenant of any trade
fixtures, equipment, or other personal property; (v) Tenant making any
alterations or improvements to the Leased Premises; all of which repairs and
replacements shall be made promptly by Tenant at its cost and expense; or
(vi) overloading of the floor of the Building beyond its structurally rated
capacity. In addition to the foregoing, Landlord represents, warrants and
covenants that the Building Systems (as defined below) installed pursuant to the
Landlord’s Work shall be guaranteed against defects in materials or workmanship
by Landlord for one (1) year from the Substantial Completion Date (the “One Year
Building Systems Warranty”). Landlord agrees to provide, at its cost and expense
(and not to be charged back to Tenant as Additional Rent), all materials and
labor necessary to cure any breach of such One Year Building Systems Warranty so
long as Landlord is provided written notice of such breach prior to the
expiration of such One Year Building Systems Warranty.

(b)    Maintenance by Tenant. Any and all repairs, replacements, maintenance and
other care of the Leased Premises which are not expressly the responsibility and
obligation of the Landlord under Sections 9(a), 9(c), 9(d) and 9(e), will be the
responsibility of the Tenant, all of which will be performed and completed at
Tenant’s sole cost and expense all as reasonably necessary to keep and maintain
the Improvements in good order, condition, and repair including, without
limitation, all repairs, maintenance and replacement to the mechanical,
electrical and plumbing systems and equipment, utility systems, fire suppression
system, dock door equipment and the heating, ventilation, and air-conditioning
systems serving the Leased Premises (collectively, the “Building Systems”);
provided, however, that Tenant’s obligations in connection with the Building
Systems installed pursuant to the Landlord’s Work shall be subject to Landlord’s
obligations under the One Year Building Systems Warranty set forth above . In
addition, Tenant shall perform all routine maintenance and upkeep of the
Structural Elements of the Leased Premises (including, without limitation, any
painting). Without limiting the generality of the foregoing, Tenant shall
implement: (i) a janitorial program of cleaning sufficient to keep the Leased
Premises in a safe, clean, and sanitary condition at all times; (ii) a program
of grass cutting and landscape maintenance sufficient to keep all landscaped
areas in a safe, clean, and sightly condition at all times; (iii) a regularly
scheduled program of preventive maintenance and repair of the Building Systems
which complies with the requirements of the applicable manufacturers’,
suppliers’, and contractors’ warranties, and which keeps and maintains the
Building Systems in good order, condition, and repair at all times; (iv) a
regularly scheduled program of sealing, re-topping, and striping all driveways
and parking lots which complies with the requirements of the applicable
manufacturers’, suppliers’, and contractors’ warranties, and which keeps and
maintains all driveways and parking lots in a safe, clean, and sightly condition
at all times, including without limitation, (1) sweeping the all driveways and
parking lots once in the spring and once in the fall; (2) asphalt patch as
needed every 2-3 years; (3) crack fill pavement every 3-5 years; (4) striping
every 5 years or as needed due to normal wear; and (v) proper ice and snow
removal that maintains all driveways, parking lots, private drive lanes and
sidewalks in a safe condition without causing damage thereto. Tenant shall not
be responsible for making any repairs occasioned by any gross negligence,
intentional act, or willful misconduct of Landlord or its employees,
contractors, or agents, all of which repairs shall be made promptly by Landlord
at its cost and expense.

(c)    Pavement Maintenance.

(i)    Pavement Warranty. Except for any uninsured repair or replacement
necessitated by damage caused by Tenant, or its agents, employees, contractors,
subtenants, assignees or invitees, during the one-year period (the “Pavement
Warranty Period”) commencing with the Substantial Completion Date, Landlord
shall maintain, repair and replace as necessary all pavement on the Leased
Premises (including, without limitation, the truck courts, trailer storage
areas, employee parking and roadways) installed as part of Landlord’s Work (the
“Pavement”), all without pass-through to Tenant.

 

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(ii)    Pavement Repair and Replacement. Commencing on the first day following
the expiration of the Pavement Warranty Period, in the event that any material
repair and replacement of the Pavement that is capital in nature is required and
Landlord and Tenant, acting in good faith, reasonably agree that the cost
thereof will exceed Thirty Thousand Dollars Thousand and No/100ths Dollars
($30,000.00) in a calendar year, then provided that the such repair and
replacement is not due to or necessary as a result of, in whole or in part, the
acts, omissions, negligence, misuse or default of Tenant, its employees, agents,
customers or invitees and provided further that Tenant has strictly complied
with its obligations under Section 9(b), including without limitation, Tenant’s
obligation to implement (i) a regularly scheduled program of sealing,
re-topping, and striping all driveways and parking lots which complies with the
requirements of the applicable manufacturers’, suppliers’, and contractors’
warranties, and which keeps and maintains all driveways and parking lots in a
safe, clean, and sightly condition at all times; and (ii) proper ice and snow
removal that maintains all driveways, parking lots, private drive lanes and
sidewalks in a safe condition without causing damage thereto, including without
limitation, (1) sweeping the all driveways and parking lots once in the spring
and once in the fall; (2) asphalt patch as needed every 2-3 years; (3) crack
fill pavement every 3-5 years; (4) striping every 5 years or as needed due to
normal wear, Landlord shall be responsible for such repair and replacement and
the entire cost thereof provided, however that any costs so incurred by Landlord
shall be amortized in accordance with the Amortization Terms and Tenant shall
reimburse Landlord for the amortized amount on an annual basis as Additional
Rent. To the extent any such repair and replacement of the Pavement requires
repair and replacement because of the acts, omissions, negligence, misuse or
default of Tenant, its employees, agents, customers or invitees or Tenant’s
failure to comply with its obligations under Section 9(b), Tenant shall be
responsible for completing such repair and replacement solely at Tenant’s cost
and expense. As an example only and not in limitation, any damage to the
Pavement due to trailers being dropped in a location off of the dolly pads would
be a Tenant’s responsibility and would not be included in Landlord’s obligations
under this Section 9.

(d)    HVAC System Repair and Replacement. Commencing on the first day following
the expiration of the One Year Building Systems Warranty, in the event that any
material repair and replacement of the heating, ventilation, and
air-conditioning systems serving the Leased Premises and installed as part of
Landlord’s Work (“HVAC System”) that is capital in nature is required and
Landlord and Tenant, acting in good faith, reasonably agree that the cost
thereof will exceed Thirty Thousand Dollars Thousand and No/100ths Dollars
($30,000.00) in a calendar year, then provided that the such repair and
replacement is not due to or necessary as a result of, in whole or in part, the
acts, omissions, negligence, misuse or default of Tenant, its employees, agents,
customers or invitees and provided further that Tenant has strictly complied
with its obligations under Section 9(b), including without limitation, Tenant’s
obligation to implement a regularly scheduled program of preventive maintenance
and repair of the Building Systems which complies with the requirements of the
applicable manufacturers’, suppliers’, and contractors’ warranties, and which
keeps and maintains the Building Systems in good order, condition, and repair at
all times, Landlord shall be responsible for such repair and replacement and the
entire cost thereof provided, however that any costs so incurred by Landlord
shall be amortized in accordance with the Amortization Terms and Tenant shall
reimburse Landlord for the amortized amount on an annual basis as Additional
Rent. To the extent any such repair and replacement of the HVAC System requires
repair and replacement because of the acts, omissions, negligence, misuse or
default of Tenant, its employees, agents, customers or invitees or Tenant’s
failure to comply with its obligations under Section 9(b), Tenant shall be
responsible for completing such repair and replacement solely at Tenant’s cost
and expense.

(e)    Other Systems Repair and Replacement. Commencing on the first day
following the expiration of the One Year Building Systems Warranty, in the event
that any material repair and replacement of those portions of the Building
Systems installed as part of Landlord’s Work other than the HVAC System (“Other
Systems”) that is capital in nature is required, then provided that the such
repair and replacement is not due to or necessary as a result of, in whole or in
part, the acts, omissions, negligence, misuse or default of Tenant, its
employees, agents, customers or invitees and provided further that Tenant has
strictly complied with its obligations under Section 9(b), including without
limitation, Tenant’s obligation to implement a regularly scheduled program of
preventive maintenance and repair of the Building Systems which complies with
the requirements of the applicable manufacturers’, suppliers’, and contractors’
warranties, and which keeps and maintains the Building Systems in good order,
condition, and repair at all times, Landlord shall be responsible for such
repair and replacement and the cost thereof provided, however that any costs so
incurred by Landlord shall be amortized in accordance with the

 

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Amortization Terms and Tenant shall reimburse Landlord for the amortized amount
on an annual basis as Additional Rent. To the extent any such repair and
replacement of the Other Systems requires repair and replacement because of the
acts, omissions, negligence, misuse or default of Tenant, its employees, agents,
customers or invitees or Tenant’s failure to comply with its obligations under
Section 9(b), Tenant shall be responsible for completing such repair and
replacement solely at Tenant’s cost and expense.

(f)    Notwithstanding anything herein to the contrary, in no event shall
Landlord be responsible for making any repairs or replacements which are
occasioned by: (i) any negligence, intentional act, or willful misconduct of
Tenant or its employees, contractors, or agents; (ii) Tenant’s failure to
observe or perform any term, condition, or covenant of this Lease to be observed
or performed by Tenant; (iii) installation or maintenance by Tenant of any
exterior signs, satellite dishes, antennae, communications facilities, or
equipment, lines, or cable; (iv) installation or maintenance by Tenant of any
trade fixtures, equipment, or other personal property; (v) Tenant making any
alterations or improvements to the Leased Premises; all of which repairs and
replacements shall be made promptly by Tenant at its cost and expense; or
(vi) overloading of the floor of the Building beyond its structurally rated
capacity. Notwithstanding anything herein to the contrary, in no event shall
Tenant be responsible for making any repairs or replacements which are
occasioned by: (i) any negligence, intentional act, or willful misconduct of
Landlord or its employees, contractors, or agents; (ii) Landlord’s failure to
observe or perform any term, condition, or covenant of this Lease to be observed
or performed by Landlord; or (iii) Landlord making any alterations or
improvements to the Leased Premises; all of which repairs and replacements shall
be made promptly by Landlord at its cost and expense.

(g)    Notice. Tenant shall give Landlord prompt written notice of the need for
any maintenance, replacement or repairs (including notice of any breach of the
One Year Building Systems Warranty) which Landlord is obligated to make under
the foregoing Sections 9(a), 9(c), 9(d) and 9(e) above and of any material
damage to the Leased Premises or any part thereof.

10.    Assignment and Subletting.

(a)    Requirements of Landlord’s Consent. Tenant shall not assign this Lease or
any interest therein, without Landlord’s prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed. Tenant shall not
sublet the whole or any part of the Leased Premises or permit any other persons,
including concessionaires or licensees, to operate in, on or from, or occupy the
same for any purposes without Landlord’s prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed. It shall be
reasonable for Landlord to withhold its consent to any assignment or sublease if
(i) the Leased Premises are or may be in any way materially adversely affected;
(ii) the business reputation of the proposed assignee or subtenant is
unacceptable as determined by Landlord in its reasonable discretion; (iii) the
financial worth of the proposed assignee or subtenant, together with the
assigning or subleasing Tenant’s financial worth and the financial worth of any
and all other entities who are obligated for the payment and performance
obligations of Tenant under this Lease, is insufficient to meet the obligations
hereunder, or (iv) the prospective assignee or subtenant is a bona-fide
third-party prospective tenant of Landlord in a different building in the
Pertinent Market. The consent by Landlord to any assignment or subletting shall
not constitute a waiver of the requirement for such consent to any subsequent
assignment or subletting. Except as hereafter provided, upon any assignment of
this Lease or subletting of all or part of the Leased Premises, Tenant shall not
be relieved of liability for the payment of the Rent or for the timely
observance and performance of all of the terms, covenants and conditions of this
Lease on Tenant’s part to be performed or observed and any Guarantor (as defined
below) shall not be relieved of liability under any Guaranty (as defined below)
executed pursuant hereto. The foregoing notwithstanding, in the event of a
Permitted Transfer (as defined below) or in the event any other assignee of
Tenant to whom Landlord has consented in writing and such assignee on the
effective date of any such transfer, (A) has a tangible net worth after such
transfer that is not less than the aggregate tangible net worth of Tenant and
any Guarantor as of the date hereof, and (B) assumes all of the obligations and
liabilities of Tenant hereunder, Landlord shall release Tenant and any Guarantor
from all liability and obligations under this Lease arising from and after the
date of such assignment.

 

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(b)    Permitted Transfer. Notwithstanding the restrictions set for in
Section 10(a) above, Tenant shall have the right, without Landlord’s consent,
but upon ten (10) days prior notice to Landlord, to (i) sublet all or part of
the Leased Premises to any related corporation or other entity which controls
Tenant, is controlled by Tenant or is under common control with Tenant;
(ii) assign all or any part of this Lease to any related corporation or other
entity which controls Tenant, is controlled by Tenant, or is under common
control with Tenant, or to a successor entity into which or with which Tenant is
merged or consolidated or which acquires substantially all of Tenant’s assets or
property; or (iii) effectuate any public offering or exchange of Tenant’s stock
on the New York Stock Exchange or in the NASDAQ over the counter market,
provided that in the event of a transfer pursuant to this clause (b), the
successor entity shall, on the effective date of any such transfer, (A) have a
tangible net worth after such transfer that is not less than the aggregate
tangible net worth of Tenant and any Guarantor as of the date hereof, and
(B) assume all of the obligations and liabilities of Tenant hereunder (any such
entity hereinafter referred to as a “Permitted Transferee” and such transfer
described in (i) through (iii), a “Permitted Transfer”). Any assumption of this
Lease by a Permitted Transferee shall be in writing, shall include an
assumption, by the Permitted Transferee of all of Tenant’s obligations under
this Lease, and notice of any such assignment shall be given to Landlord prior
to the effective date of that assignment, together with information confirming
the satisfaction of the criteria for a Permitted Transferee. For the purpose of
this Section 10(b) “control” shall mean ownership of not less than fifty percent
(50%) of all voting stock or legal and equitable interest in such corporation or
entity, and (ii) “tangible net worth” shall mean the excess of the value of
tangible assets (i.e. assets excluding those which are intangible such as
goodwill, patents and trademarks) over liabilities. Nothing in this paragraph is
intended to nor shall permit Tenant to transfer its interest under this Lease as
part of a fraud or subterfuge to intentionally avoid its obligations under this
Lease (for example, transferring its interest to a shell corporation that
subsequently files a bankruptcy), and any such transfer shall constitute a
default hereunder. Any change in control of Tenant resulting from a merger,
consolidation, or a transfer of partnership or membership interests, a stock
transfer, or any sale of substantially all of the assets of Tenant that do not
meet the requirements of this Section 10(b) shall be deemed an assignment or
transfer that requires Landlord’s prior written consent pursuant to
Section 10(a) above.

(c)    Assignment by Operation of Law. Any transfer of this Lease by operation
of law and any change in control, merger, consolidation, liquidation or transfer
of all or substantially all of the assets of Tenant shall constitute an
assignment for purposes of this Lease.

(d)    Documentation. No assignment of this Lease by Tenant or subletting of all
or any portion of the Leased Premises shall be effective unless and until Tenant
shall deliver to Landlord (i) all information required to establish any
Permitted Transfer under Section 10(b) above, or otherwise reasonably requested
by Landlord in connection with a non-permitted transfer, and (ii) an agreement,
in form and substance reasonably satisfactory to Landlord, pursuant to which
(i) in the case of an assignment, such assignee assumes and agrees to be bound
by all of the provisions of this Lease and confirming the assignee’s agreement
to accept and be bound by all of the Tenant’s obligations under this Lease; and
(ii) in the case of a sublease, such subtenant acknowledges that its sublease is
subject and subordinate to this Lease and agrees to be bound by the Lease.

(e)    Default. In the event of a default by Tenant, Tenant shall not have the
right to request that Landlord consent to an assignment, sublet or other
transfer of this Lease until such time as said default is cured to Landlord’s
satisfaction.

(f)    Assignment by Landlord. Landlord may assign its rights under this Lease
in connection with any sale or conveyance of all or any portion of its interest
in the Leased Premises. In the event of a sale or conveyance of the Landlord’s
interest in the Leased Premises, from and after the date of such transfer, the
obligations and duties of the Tenant, excluding such obligations or duties that
occurred prior to the assignment, shall be owed to the new landlord and Tenant
shall attorn to the purchaser and recognize such purchaser as Landlord under
this Lease.

 

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11.    Access to Leased Premises. Tenant shall permit Landlord and its agents to
enter upon the Leased Premises at all reasonable times and upon no less than
forty-eight (48) hours’ prior written notice to inspect and examine the Leased
Premises and to show the Leased Premises to prospective purchasers, mortgagees
and tenants. Except in the event of an emergency, Landlord agrees to comply with
Tenant’s reasonable security requirements for accessing the Leased Premises.
Upon no less than twenty-hour (24) hours’ prior written notice, Tenant shall
permit Landlord and its agents to enter upon the Leased Premises at reasonable
times and upon reasonable notice (except in the event of an emergency) to make
such repairs (including the bringing of materials that may be required therefor
into or upon the Leased Premises) as Landlord may reasonably deem necessary
without any such act constituting any eviction of Tenant in whole or in part,
without Base Rent in any manner abating while such repairs are being made by
reason of loss or interruption of Tenant’s business in the Leased Premises.
Landlord shall take commercially reasonable measures not to materially disturb
Tenant’s business operations at the Leased Premises. Landlord’s foregoing right
of entry shall not be construed to impose upon Landlord any obligation or
liability whatsoever for the maintenance or repair of the Leased Premises except
as expressly provided in this Lease. Landlord’s liability, if any, for any
damages resulting from Landlord’s entry pursuant this paragraph shall be
governed by Section 12(i) below.

12.    Insurance and Indemnification.

(a)    Builder’s Risk Insurance. During the course of the Landlord’s Work, the
Landlord, as to the Landlord’s Work, shall purchase and maintain, at its own
expense, or require its Construction Manager to purchase and maintain, property
insurance upon the entire work to be completed to the Leased Premises (a
“Builder’s Risk Policy”) for the full insurable value thereof (excluding
footers, foundations, and other subsurface improvements and also excluding paved
areas, sidewalks, curbs, aprons, mass grading and other site work), all on a
replacement cost basis. The insurance required under this Section shall cover
the interests of Landlord, Construction Manager and all other contractors,
subcontractors and lower tier subcontractors in connection with the Landlord’s
Work.

(b)    Real Property Insurance. During the Lease Term, Tenant shall, at its cost
and expense, maintain “Special Form” property insurance covering loss of or
damage to the Building (including all of the Landlord’s Work) in an amount that
is no less than the full replacement value thereof on an Agreed Value basis. The
property insurance shall be issued on an ISO CP 10 30 form, or such other form
that is reasonably acceptable to Landlord. Such policies shall provide
protection against all perils included within the classification of fire, flood,
earthquake, windstorm, tornado, extended coverage, vandalism, malicious
mischief, special extended perils (all risk), mine subsidence, sprinkler leakage
and any other perils which Landlord deems reasonably necessary (including,
without limitation, such coverages as may be required by Landlord’s mortgage
lender or lien holder). In addition, Tenant shall cause such property policy to
provide rent loss coverage for the Base Rent and Additional Rent hereunder for a
period of two (2) years to cover rental amounts that would otherwise be due
hereunder, but for a provision of this Lease affording the Tenant a right to
abate rent.

(c)    Liability Insurance: At all times during the Lease Term or any earlier
occupancy of all or any portion of the Leased Premises, Tenant shall maintain in
full force and effect a commercial general liability insurance policy for the
Leased Premises with coverage limits of at least $1,000,000 per occurrence for
bodily injury to, or death of, any persons and $2,000,000 in the aggregate,
including without limitation, terrorism and providing for “excess” or “umbrella”
liability coverage of at least $10,000,000.00. The commercial general liability
policy shall be issued on an ISO form CG 00 01, or such other form that is
reasonably acceptable to Landlord. At all times during the Lease Term or any
earlier occupancy of all or any portion of the Leased Premises, if Tenant owns,
rents, operates, borrows, or hires any automobiles or other vehicles for use on
public roads or otherwise in connection with its operations on the Leased
Premises, Tenant shall also maintain a Business Auto Policy issued on an
occurrence basis with minimum limits of coverage that are not less than
$1,000,000 per accident. The Business Auto Policy shall be written on the
current ISO edition of ISO CA 00 01 or equivalent form. This insurance shall be
primary and non-contributory, i.e., with respect to a loss covered by Tenant’s
policy, the proceeds of such policy must be exhausted before Landlord or
Landlord’s liability insurer would be liable for any payment due to such loss.

 

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(d)    Insurance on Tenant’s Property. All of Tenant’s trade fixtures,
equipment, merchandise and other personal property shall be kept at Tenant’s
sole risk and expense, and Tenant, at Tenant’s expense, shall maintain in full
force and effect throughout the Lease Term “Special Form” property insurance on
its trade fixtures, equipment, merchandise and other personal property in or
upon the Leased Premises and all alterations, additions and improvements to the
Leased Premises made by Tenant for their full insurable value on a replacement
cost basis, if obtainable, and if not obtainable, for the full amount of the
estimated cash value for such property.

(e)    Worker’s Compensation. Tenant shall comply with the provisions of the
workmen’s compensation law and shall insure its liability thereunder.

(f)    General Insurance Provisions. All insurance policies required to be
maintained by Tenant pursuant to this Section 12 will name Landlord and
Landlord’s mortgagee as an additional insureds and as loss payees. In
furtherance of the foregoing, the commercial general liability insurance policy
maintained pursuant to Section 12(c) above shall be endorsed with an ISO CG 20
11 04 13 additional insured endorsement, or such other endorsement as may be
reasonably approved by Landlord (which shall not include any language excluding
coverage for the acts or omissions of the additional insured). For each type of
insurance which Tenant is required to maintain under this Lease, Tenant shall
furnish to Landlord an endorsed copy of such insurance policy together with all
endorsements showing that each such type of insurance is in full force and
effect and may not be amended or cancelled (or materially changed) without
thirty (30) days prior written notice to Landlord. If Tenant fails to deliver
any policy, evidence of insurance or renewal to Landlord required under this
Lease within ten (10) days of written notice from the Landlord, or if any such
policy is canceled or modified during the Lease Term without Landlord’s consent,
Landlord may obtain such insurance, in which case Tenant shall reimburse
Landlord for the cost of such insurance, together with interest thereon from the
date of such payment, at the Default Rate, within fifteen (15) days after
receipt of a statement that indicates the cost of such insurance. Tenant agrees
that the payment by Landlord of any such premium shall not be deemed to waive or
release the default in the payment thereof by Tenant, or the right of the
Landlord to take such action as may be permissible hereunder, as is the case of
default in the payment of Rent. Tenant shall maintain all insurance required
under this Lease with companies reasonably satisfactory to Landlord who are
licensed to do business in the State of South Carolina and who hold a “Financial
Strength Rating” of no less than “Excellent” (A or A- Rating) as set forth in
the most current issue of “Best Key Rating Guide”. Except as otherwise provided
herein, Tenant shall pay all premiums for the insurance policies described in
this Section 12 no later than the due date. In the event of a loss or claim
covered by a policy to which Landlord or Landlord’s mortgagee is an additional
insured, Tenant shall also be liable for the payment of any deductible amount
under the applicable insurance policies maintained pursuant to this Section.
Tenant shall not do or permit anything to be done which invalidates any such
insurance policies. No deductible under each policy maintained hereunder shall
exceed $100,000, without the prior written approval of Landlord. If the forms of
policies, endorsements, certificates or evidence of insurance required by this
Section are superseded or discontinued, Landlord with have the right to require
other equivalent forms. Subject to the waiver of subrogation set forth in
Section 12(g) below, the amount and coverage of insurance maintained hereunder
shall not limit either party’s liability nor relieve either party of any other
obligation under this Lease.

(g)    Waiver of Subrogation. Each of the parties hereto hereby waives and
releases any and all rights of recovery which it might have against the other
for any business interruption, liability, loss or damage, whether or not caused
by any alleged negligence of the other party, its agents, licensees or invitees,
to the extent that such business interruption, liability, loss or damage is
covered by any insurance required to be maintained under this Lease. Each policy
of insurance required under this Lease shall contain an endorsement to such
effect. The foregoing will not, however, release or discharge any party
hereunder for or from any liability to the extent of the amount of the
deductible feature under the applicable insurance policy, to the extent that the
covered loss was caused by that party’s own negligence or willful misconduct. In
furtherance of the foregoing, the commercial general liability insurance policy
maintained pursuant to Section 12(c) above shall be endorsed with an ISO CG 29
88 10 93 Waiver of Transfer of Rights of Recovery Against Others Endorsement, or
such other endorsement as may be approved by Landlord.

 

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(h)    Tenant’s Waiver of Claims. Subject to the provisions of Section 12(i)
below, all property kept or stored in, upon or about the Leased Premises by
Tenant shall be so kept or stored at the sole risk of Tenant; and Tenant shall
hold Landlord harmless from any claims, costs or expenses, arising out of damage
thereto. Landlord shall not be liable for, and Tenant waives all claims against
Landlord for, any injuries, damages (including, but not limited to, indirect,
special or consequential damages) or losses of or to such property or otherwise,
sustained by Tenant and not covered by insurance.

(i)    Indemnification; Responsibility for Damages.

(i)    Tenant assumes all risks and responsibilities for accidents, injuries or
damages to person or property and agrees to indemnify, defend and hold harmless
Landlord from any and all claims, liabilities, losses, costs and expenses
(i) arising from or in connection with the condition of those portions of the
Leased Premises which Tenant is obligated to maintain or any other failure by
Tenant to perform any covenant required to be performed by Tenant under this
Lease, (ii) arising from or in connection with Tenant’s use or control of the
Leased Premises, (iii) arising from or in connection with the conduct of
Tenant’s business from the Leased Premises, or (iv) to the extent arising from
or in connection with any other act or omission or the negligence of Tenant, or
Tenant’s officers, directors, employees, contractors, invitees or agents. Tenant
shall be liable to Landlord for any damages to the Leased Premises and for any
act done by Tenant or any person coming on the Leased Premises by the license or
invitation of Tenant, express or implied (except Landlord, its agents or
employees).

(ii)    Landlord agrees to indemnify, defend and hold harmless Tenant from any
and all claims, liabilities, losses, costs and expenses (i) arising from or in
connection with the condition of those portions of the Leased Premises which
Landlord is obligated to maintain or any other failure by Landlord to perform
any covenant required to be performed by Landlord under this Lease, or (ii) to
the extent arising from or in connection with any other act or omission or the
negligence of Landlord, or Landlord’s officers, directors, employees,
contractors, invitees or agents.

(iii)    Nothing contained in this Section 12(i) shall limit (or be deemed to
limit) the waivers contained in Section 12(g) above. In the event of any
conflict between the provisions of Section 12(g) above and this Section 12(i),
the provisions of Section 12(g) shall prevail. This Section 12(i) shall survive
the expiration or earlier termination of this Lease.

(j)    Right to Self-Insure. Notwithstanding anything in this Section 12 or
otherwise in this Lease to the contrary, so long as the originally named Tenant,
or a Transferee (as defined below) that is a Tenant Affiliate (as defined
below), is the tenant-in-possession, Tenant may elect to self-insure some or all
of the risks covered by the insurance that it is otherwise obligated to maintain
under the terms of this Lease, and upon such election Tenant will be excused
from its obligation to obtain third-party insurance for the self-insured risks.
Tenant’s right to self-insure and to continue to self-insure is conditioned upon
and subject to: (i) Tenant’s ability to provide Landlord with a certificate, in
the form attached hereto as Exhibit G (the “Compliance Certificate”), which is
incorporated herein by reference, confirming its compliance with the financial
covenant (the “Financial Covenant”) described on Exhibit G; and (ii) Tenant
providing to Landlord an audited financial statement for itself and for the
Tenant Guarantor, prepared in accordance with generally accepted accounting
principles, prior to undertaking to self-insure, and thereafter, on an annual
basis by May 1 of every calendar year, establishing and confirming that the
Tenant and the Tenant Guarantor have satisfied the Financial Covenant. If Tenant
elects to self-insure hereunder it will, at least fifteen (15) days prior to
doing so, provide Landlord with a Compliance Certificate and audited financial
statements of Tenant and Tenant Guarantor confirming its compliance with the
Financial Covenant. Likewise, during any period of time during which Tenant has
exercised its right to self-insure hereunder, Tenant will provide Landlord with
an updated Compliance Certificate confirming its continued compliance with the
Financial Covenant on a quarterly basis. If any such Compliance Certificate
indicates that the Tenant no longer complies with the Financial Covenant, the
Tenant will submit, within ten (10) days, evidence of its procurement of one or
more policies of insurance complying with the requirements of this Lease with
deductible features reasonably acceptable to Landlord. The rights afforded
Tenant under this Section shall not apply to, or be deemed to apply to, any
permitted occupant, assignee or subtenant, other than a Tenant Affiliate,
without the prior express written consent of Landlord in each instance. Landlord
agrees that any non-public information set forth in a Compliance Certificate is
and shall remain confidential and shall not be disclosed by Landlord to any
third party without the prior written consent of Tenant, unless

 

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required by law or in connection with the prosecution or defense of any claims
made in connection with this Lease. Notwithstanding the foregoing, the Landlord
shall be entitled to provide a copy of any such Compliance Certificate and/or
information contained therein, to its mortgagee or to any prospective mortgagee
or prospective purchaser of the Leased Premises and to Landlord’s and such other
parties’ respective attorneys, accountants, brokers and other professional
advisors who have a genuine need for such information. In the event that Tenant
elects to self-insure and an event or claim occurs for which a defense and/or
coverage would have been available from the insurance company, Tenant shall:
(y) undertake the defense of any such claim, including a defense of Landlord, at
Tenant’s sole cost and expense; and (z) use its own funds to pay any claim or
replace any property or otherwise provide the funding which would have been
available from insurance proceeds, but for such election by Tenant to
self-insure. The obligations of Tenant under this Section are independent and
shall remain in full force and effect notwithstanding any breach of any
provision of the Lease by Landlord or any subsequent termination of this Lease.
Tenant’s election to self-insure shall in no event limit Tenant’s
indemnification obligations set forth in this Lease. Notwithstanding anything in
this Section 12 to the contrary, Tenant shall have the right at any time, on
reasonable prior notice to Landlord, to terminate its self-insurance program and
provide third-party insurance as otherwise required by this Section 12 so long
as evidence of such third-party policies are delivered to Landlord prior to
termination of Tenant’s self-insurance program. At any time when Tenant elects
to self-insure any required coverage, Tenant shall provide Landlord and
Landlord’s lender, if any, with certificates of self-insurance specifying the
extent of self-insurance coverage hereunder.

13.    Fire and Other Casualty. In the event of damage to, or total or partial
destruction of, the Building or any fixtures, equipment, or systems which
constitute a part of the Building by fire or other casualty (“Casualty Damage”),
subject to the terms and conditions of this Section, Landlord shall, to the
extent that insurance proceeds are available therefor, cause the prompt and
diligent repair and replacement of the Building and the Leased Premises as soon
as reasonably possible so that it is in substantially the same condition as
existed prior to the Casualty Damage; provided that Landlord shall not be
obligated to repair or replace any item which was not part of the Landlord’s
Work, including without limitation, any alterations, improvements or additions
of or to the Leased Premises made by Tenant. Notwithstanding the foregoing
provision of this Section, in the event: (a) the portions of the Leased Premises
to be restored by Landlord are so damaged or destroyed that they cannot be
restored within one hundred eighty (180) days after the date of the damage or
destruction, (b) the damage or destruction is not covered by the “Special Form”
property insurance policy to be maintained by Landlord in accordance with
Section 12 hereof and Landlord does not undertake to commence restoration of the
Leased Premises within ninety (90) days after the date of such damage or
destruction, (c) the insurance proceeds (reduced by any application thereof by
Landlord’s mortgagee to its mortgage debt) are insufficient for restoration of
the Leased Premises and Landlord does not undertake to commence such restoration
within ninety (90) days after the date of such damage or destruction, or
(d) applicable law does not permit the restoration of the Leased Premises to
substantially the same condition as at the commencement of the Lease Term; then
Landlord shall not be obligated to restore the Leased Premises and Landlord may,
within ninety (90) days following the damage or destruction, terminate and
cancel this Lease upon fifteen (15) days written notice to Tenant, and all
obligations hereunder except those due or mature shall thereupon cease and
terminate. Notwithstanding the foregoing, if Landlord fails to complete repairs
to the Premises within two hundred seventy (270) days of the date of the
casualty, subject to Force Majeure and Tenant Delays, or if Landlord ceases to
diligently pursue the repairs, then Tenant shall have the right to terminate the
Lease upon written notice delivered to Landlord at any time after such two
hundred seventy (270) day period and prior to Landlord’s Substantial Completion
of such repairs. If substantial Casualty Damage occurs during the last year of
the Lease Term, unless Tenant exercises its Renewal Option (which Tenant may
exercise at such time regardless of any time periods set forth in Section 2(b)),
then Landlord or Tenant, at their respective option, may terminate this Lease
upon ninety (90) days’ written notice to the other party, and all obligations
hereunder, except those due or mature, shall cease and terminate. Base Rent and
Additional Rent shall be abated proportionately (based upon the proportion that
the unusable space in the Building due to a Casualty Damage bears to the total
space in the Building) for each day that the Building or any part thereof is
unusable by reason of any such Casualty Damage.

 

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14.    Eminent Domain. In the event that all or a substantial part of the Leased
Premises is taken or condemned for public or quasi-public use under any statute
or by the right of eminent domain, or that in lieu thereof all or a substantial
part of the Leased Premises is sold to a public or quasi-public body under
threat of condemnation (a “Taking”), and such Taking renders the Leased Premises
unsuitable for operation of the Tenant’s business therein, this Lease shall, at
the option of either party, terminate on the date possession of all or such part
of the Leased Premises is transferred to the condemning authority. In addition,
Tenant may terminate the Lease by written notice given within thirty (30) days
of the such Taking if the portion of parking areas of the Leased Premises
remaining following such Taking plus any additional parking area provided by
Landlord in reasonable proximity to the Building shall be less than seventy
percent (70%) of the parking area immediately prior to the Taking or shall be
less than required by applicable law. All Base Rent shall be paid up to the date
of termination; and all compensation awarded or paid for the taking or sale in
lieu thereof shall belong to and be the sole property of Landlord; provided,
however, Landlord shall not be entitled to any award made to the Tenant for loss
of business or cost of removal or relocation of stock and personal property. In
the event that less than a substantial part of the Leased Premises is taken or
condemned for public or quasi-public use under any statute or by the right of
eminent domain, or that in lieu thereof a less than substantial part of the
Leased Premises is sold to a public or quasi-public body under threat of
condemnation, then the Base Rent will be equitably adjusted to reflect the
portion of the Leased Premises that has been taken or condemned, and Landlord
shall cause the prompt and diligent repair and replacement of the Building and
the Leased Premises as soon as reasonably possible to the extent feasible to
constitute a complete and tenantable Building and Leased Premises, and during
the period of such repair and replacement, Rent shall additionally abate to
reflect the portion of the Leased Premises that is so affected by the repair and
replacement such that Tenant cannot operate therein.

15.    Default and Remedies.

(a)    Events of Default. Each of the following shall be deemed a default by
Tenant:

(i)    Tenant’s failure to pay Base Rent or any other sums, charges or payments
required to be paid by Tenant to Landlord under this Lease as herein provided
when due;

(ii)    Tenant’s failure to perform any other term, condition or covenant of
this Lease to be observed by Tenant;

(iii)    Tenant shall fail to execute any instrument of subordination or
attornment or any estoppel certificate in accordance with Section 17 of this
Lease within the time periods set forth in Section 17 following Landlord’s
request for the same in accordance such Section;

(iv)    Any insurance required to be maintained by Tenant pursuant to this Lease
shall be canceled or terminated or shall expire or shall be reduced or
materially changed, except, in each case, as permitted in this Lease;

(v)    The sale of Tenant’s leasehold interest hereunder pursuant to execution;

(vi)    Tenant or any Guarantor becomes insolvent;

(vii)    The adjudication of Tenant or any Guarantor (as defined below) of this
Lease as a bankrupt;

(viii)    The making by Tenant or any Guarantor of a general assignment for the
benefit of creditors;

(ix)    The appointment of a receiver in equity for Tenant’s or any Guarantor’s
property if such appointment is not vacated or satisfied within thirty (30) days
from the date of such appointment;

 

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(x)    The appointment of a trustee or receiver for Tenant’s or any Guarantor’s
property in a reorganization, arrangement or other bankruptcy proceeding if such
appointment is not vacated or set aside within thirty (30) days from the date of
such appointment;

(xi)    Tenant’s or any Guarantor’s filing of a voluntary petition in bankruptcy
or for reorganization or arrangement; or

(xii)    Tenant’s or any Guarantor’s filing of an answer admitting bankruptcy or
agreeing to reorganization or arrangement;

(xiii)    The revocation of a Guaranty by any Guarantor or the death,
incapacity, dissolution and/or termination of any Guarantor.

(b)    Landlord’s Right Upon Tenant’s Default. In the event of any default
provided in Clause (i) of foregoing Subparagraph (a) and the continuance of such
a default for five (5) days (except that the five (5) day grace period shall not
be applicable if Tenant fails to pay Base Rent as herein provided when due on
three (3) or more occasions during the Lease Term), or in the event of any
default provided in Clause (ii) of foregoing Subparagraph (a) and the
continuance of such default for thirty (30) days following written notice from
Landlord to Tenant (except in the event such default is of a nature as not to be
reasonably susceptible to cure within said thirty (30) day period, in which case
the period of cure shall be extended so long as Tenant commences its efforts to
cure within said thirty (30) day period and thereafter diligently pursues the
same to completion) or in the event of any other default provided in foregoing
Subparagraph (a) without any demand or notice, not cured within the time periods
specified in Subparagraph (a) above, Landlord may:

(i)    elect to terminate this Lease;

(ii)    in the event that Tenant has failed to perform any of its covenants
under this Lease other than a covenant to pay Base Rent, perform the covenant or
covenants of Tenant which are in default (entering upon the Leased Premises for
such purpose, if necessary); and Landlord’s performance of any such covenant
shall not be construed as a waiver of Tenant’s default or of any other right or
remedy of Landlord in respect of such default, nor as a waiver of any covenant,
term or condition of this Lease;

(iii)    immediately re-enter upon the Leased Premises, remove all persons and
property therefrom, and store such property in a public warehouse or elsewhere
at the sole cost and for the account of Tenant, all without service of notice or
resort to legal process, without being deemed guilty of trespass or becoming
liable for any loss or damage which may be occasioned thereby, and without such
re-entry being deemed to terminate this Lease; and/or

(iv)    pursue all other rights and remedies to which Landlord may be entitled
hereunder, at law or in equity.

(c)    Re-Letting. In the event Landlord re-enters upon the Leased Premises as
provided in Clause (iii) of foregoing Subparagraph (b), or takes possession of
the Leased Premises pursuant to legal proceedings or pursuant to any notice
provided for by law, Landlord may either terminate this Lease, or from time to
time without terminating this Lease, make alterations and repairs for the
purpose of re-letting the Leased Premises and re-let the Leased Premises or any
part thereof for such term or terms (which may extend beyond the Lease Term) at
such rental and upon such other terms and conditions as Landlord reasonably
deems advisable. If Landlord fails to re-let the Leased Premises, Tenant shall
pay to Landlord the Base Rent and Additional Rent reserved in this Lease for the
balance of the Lease Term as those amounts become due in accordance with the
terms of this Lease. Upon each re-letting, all rentals received from such
re-letting shall be applied: first to payment of costs of such alterations and
repairs; second, to the payment of Base Rent, Additional Rent and any other
indebtedness due and unpaid hereunder; and the remainder, if any, shall be held
by Landlord and applied in payment of future Base Rent and Additional

 

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Rent as it becomes due and payable hereunder. If the rentals received from such
re-letting during any month are less than amounts to be paid hereunder by Tenant
during that month, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No re-entry or taking of
possession by Landlord of the Leased Premises shall be construed as an election
to terminate this Lease unless a written notice of termination is given to
Tenant. Notwithstanding any re-letting without termination, Landlord may at any
time thereafter elect to terminate this Lease for Tenant’s previous default.

(d)    Damages Upon Termination. In the event that Landlord at any time
terminates this Lease for any default by Tenant, in addition to any other
remedies Landlord may have, Landlord may recover from Tenant all damages
Landlord may incur by reason of such default, including costs of recovering the
Leased Premises, making alterations and repairs for the purpose of re-letting,
and the value at the time of such termination of the excess, if any, of the
amount of Base Rent and charge equivalent to Base Rent reserved in this Lease
for the remainder of the Lease Term over then reasonable rental value of the
Leased Premises for the remainder of the Lease Term less any reasonably
anticipated vacancy period. All such amounts shall be immediately due and
payable from Tenant to Landlord.

(e)    Mitigation of Damages. If Landlord terminates this Lease or Tenant’s
right to possession, Landlord’s duty to mitigate its damages under this Lease
shall be limited to the following: (1) Landlord shall be required to use
commercially reasonable efforts to mitigate, which shall not exceed such efforts
as Landlord or its affiliates generally uses to lease other space within the
market area where the Building is located (“Landlord’’s Other Space”), (2)
Landlord will not be deemed to have failed to mitigate if Landlord leases any
other portions of Landlord’s Other Space before reletting all or any portion of
the Leased Premises, and (3) Landlord shall not be deemed to have failed to
mitigate if it reasonably incurs costs and expenses for repairs, maintenance,
changes, alterations, and improvements to the Leased Premises (whether to
prevent damage or to prepare the Leased Premises for reletting), brokerage
commissions, advertising costs, reasonable attorneys’ fees, any economic
incentives given to replacement tenants, and costs of collecting rent from
replacement tenants. In recognition that the value of the Building depends on
the rental rates and terms of leases therein, Landlord’s rejection of a
prospective replacement tenant based on an offer of rentals substantially below
Landlord’s published rates for new leases of Landlord’s Other Space, or at
Landlord’s option, below the rates provided in this Lease, containing terms less
favorable than those contained herein, shall not give rise to a claim by Tenant
that Landlord failed to mitigate Landlord’s damages. Tenant shall bear the
burden of proving Landlord’s failure to mitigate.

(f)    Default Indemnification. Upon any default by Tenant hereunder, Tenant
shall indemnify, defend and hold harmless Landlord from and against any and all
claims, judgments, liabilities, losses, costs, and expenses incurred by Landlord
and arising from, or in connection with, a default by Tenant under this Lease or
exercising Landlord’s rights and remedies with respect to such default.

(g)    Landlord Default and Remedies. Except as otherwise provided in this
Lease, Landlord shall be in default under this Lease if Landlord fails to
perform any of its obligations hereunder and such failure continues for a period
of thirty (30) days after written notice from Tenant to Landlord, or such longer
period as may be reasonably required to complete such cure so long as Landlord
has commenced curing that default within that thirty (30) day period, and
thereafter, diligently pursues such cure to completion. Upon the occurrence of
any such default, Tenant may sue for injunctive relief or to recover damages for
any loss directly resulting from the breach; provided, however, in no event
shall Landlord be liable for any consequential, exemplary, or punitive damages
or lost profits as a result of a Landlord default hereunder, and Tenant shall
not be entitled to terminate this Lease or withhold, offset, or abate any sums
due hereunder, except as expressly provided below:

(i)    With respect to any repairs or replacements required to be performed by
Landlord under this Lease that are not made following the notice and cure period
provided above, and if the completion of such repairs is within Landlord’s
reasonable control, then (A) the Base Rent then due shall abate for the period
from the date that is five (5) business days after Landlord receives notice that
such default or failure to perform has prevented Tenant from carrying on its
business in the Leased Premises until Landlord has completed the cure of the
default to a point that allows Tenant to commence or otherwise resume the
conduct of its business on the Leased Premises, and (B) Tenant may proceed to
exercise certain self-help remedies only in accordance with the following:

 

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(i)    Tenant shall give Landlord a written notice (a “Self Help Notice”) of
Tenant’s intention to perform self-help for such item (a “Self Help Item”) on
Landlord’s behalf. If Landlord fails within three (3) business days after its
receipt of such Self Help Notice to commence (and thereafter continue to
diligently perform) the cure of such Self Help Item, then Tenant shall have the
right, but not the obligation, to commence and thereafter diligently prosecute
the cure of such Self Help Item in accordance with the provisions of this
Section at any time thereafter, but prior to the date on which Landlord
commences to cure such Self Help Item. Tenant may perform such work and Landlord
shall reimburse Tenant as required herein; provided, however, that if Landlord,
acting reasonably and in good faith and not just as a means to delay
reimbursement, delivers a notice to Tenant disputing Tenant’s right to perform
such work (a “Dispute Notice”), Landlord shall reimburse Tenant for the portion
of the work performed by Tenant that is not reasonably and in good faith in
dispute, and may submit any disputed portion of such costs to arbitration as
provided below. In the event Tenant commences the cure of a Self Help Item,
Tenant shall be entitled to complete such cure and receive reimbursement as
provided in Section 15(f)(i)(ii) below. If Tenant is performing any work on the
roof of the Building in performing any Self Help Item, Tenant shall do so using
Landlord’s roofing contractor (or another contractor approved by the
then-current issuer of Landlord’s roof warranty) and in a manner that shall not
void or materially and adversely affect the coverage under Landlord’s roof
warranty. The extent of the work performed by Tenant in curing any such Self
Help Item shall not exceed the work that is reasonably necessary to effectuate
such remedy and the cost of such work shall be reasonably prudent and economical
under the circumstances. The self-help procedure provided herein shall not apply
to Landlord’s failure to complete the Landlord’s Work in accordance with the
terms of this Lease, which shall be governed by Section 4 above.

(ii)    Landlord shall reimburse Tenant in the amount of all actual and
reasonable out-of-pocket expenses incurred by Tenant in performing such Self
Help Items within thirty (30) days after receipt of written demand together with
interest thereon at the rate provided in Section 3.04 from the date of written
demand. If Landlord fails to pay any such sum within such thirty (30) day
period, Tenant shall have the right to offset such amount against one or more
installments of Base Rent hereunder, subject to the Offset Limitation (as
defined below). As used herein, the “Offset Limitation” shall mean, for any
given calendar year, an offset of up to Sixty Thousand and No/100 Dollars
($60,000.00) against Minimum Annual Rent at a rate not to exceed Five Thousand
and No/100 Dollars ($5,000.00) per month, unless such matter is submitted to
arbitration as provided below and it is determined that such amount is owed to
Tenant under this Lease; and, in the event of a decision in favor of Tenant,
Tenant may offset such amounts awarded to Tenant and any amounts due against
Minimum Annual Rent at a rate not to exceed Ten Thousand and No/100 Dollars
($10,000.00) per month until such amounts are paid to Tenant in full.

(iii)    For any Self Help Item that is in dispute under this Section where the
Lease provides for a resolution by arbitration, either party may first require
mediation and if mediation is unsuccessful (with both parties agreeing to act
reasonable and in good faith), either party may request arbitration to be
administered by the Arbitration Administrator pursuant to the Arbitration Rules
of such Arbitration Administrator, in which case, except as provided to the
contrary elsewhere in this Lease, the following procedures shall apply:

(1)    The party desiring such arbitration shall give written notice to the
other party. If the parties shall not have agreed on a choice of an Arbitrator
to resolve such dispute within ten (10) business days after the service of such
notice, then each party shall, within five (5) business days thereafter appoint
an

 

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Arbitrator, and advise the other party of the Arbitrator so appointed. A third
Arbitrator shall, within five (5) business days following the appointment of the
two (2) Arbitrators, be appointed by the two Arbitrators so appointed or by the
Arbitration Administrator, if the two Arbitrators are unable, within such five
(5) business day period, to agree on the third Arbitrator. If either party fails
to appoint an Arbitrator (herein called the “Failing Party”), the other party
shall provide an additional written notice to the Failing Party requiring the
Failing Party’s appointment of an Arbitrator within five (5) business days after
the Failing Party’s receipt thereof. If the Failing Party fails to notify the
other party of the appointment of its Arbitrator within such five (5) business
day period, the appointment of the second Arbitrator shall be made by
Arbitration Administrator in the same manner as hereinabove provided for the
appointment of a third Arbitrator in a case where the two Arbitrators appointed
hereunder are unable to agree upon such appointment. The three (3) Arbitrators
shall render a resolution of said dispute or make the determination in question.
In the event of the absence, failure, refusal or inability of an Arbitrator to
act, a successor shall be appointed within five (5) business days as provided
above.

(2)    Any Arbitrator acting under this Section in connection with any matter
shall be experienced in the issue with which the arbitration is concerned and
shall have been actively engaged in such field for a period of at least ten
(10) years before the date of his appointment as Arbitrator hereunder. Prior to
undertaking an appointment as an Arbitrator, each Arbitrator chosen or appointed
pursuant to this Section shall be sworn fairly and impartially to perform their
respective duties as such Arbitrator.

(3)    Within thirty (30) days after the appointment of the Arbitrators, the
Arbitrators shall determine the matter which is the subject of the arbitration
and shall issue a written opinion. The decision of the Arbitrators shall be
conclusively binding upon the Landlord and Tenant, and judgment upon the
decision may be entered in any court having jurisdiction. Landlord and Tenant
shall each pay (i) the fees and expenses of the Arbitrator selected by it, and
(ii) fifty percent (50%) of the fees and expenses of the Arbitrator appointed by
the Arbitration Administrator, provided, however that such Arbitrator appointed
by the Arbitration Administrator may require that all such fees and expenses be
paid by the non-prevailing party. Each Party shall have a right to present
evidence to the Arbitrators, produce witnesses or experts to be heard by the
Arbitrators, and provide such other information that may be relevant in
connection with the arbitration.

(4)    Landlord and Tenant agree to sign all documents and to do all other
things necessary to submit any such matter to arbitration and further agree to,
and hereby do waive, any and all rights they or either of them may at any time
have to revoke their agreement hereunder to submit to arbitration in connection
with the exercise of any Self Help Rights and to abide by the decision rendered
thereunder.

(5)    Arbitration hearings hereunder shall be held in a location approved by
Landlord and Tenant, within the State of South Carolina (“Agreed Location”). The
Arbitrators shall, in rendering any decision pursuant to this Section, answer
only the specific question or questions presented to them. In answering such
question or questions (and rendering their decision), the Arbitrators shall be
bound by the provisions of this Lease, and shall not add to, subtract from or
otherwise modify such provisions. Judgment may be had on the decision and award
of an Arbitrator rendered pursuant to the provisions of this Section and may be
enforced in accordance with the laws of the State of South Carolina.

(6)    For purposes of this Lease, the following definitions shall apply:

 

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a.    “Arbitration Administrator” shall mean the American Arbitration
Association (or any entity that is a successor to the American Arbitration
Association), and if the American Arbitration Association (or any entity that is
a successor to the American Arbitration Association) no longer exists or
provides arbitration services, another recognized independent third-party
organization then providing such services in connection with commercial disputes
in the greater Agreed Location.

b.    “Arbitration Rules” means (A) where the American Arbitration Association
is the Arbitration Administrator, the rules then in effect under which the
American Arbitration Association administers commercial arbitrations, and
(B) where any other entity is the Arbitration Administrator, the commercial
arbitration rules then in effect under which the Arbitration Administrator
administers arbitration proceedings.

c.    “Arbitrator” means the individual or individuals appointed pursuant to the
procedures set forth in this Section and the applicable Arbitration Rules. No
individual shall be qualified to be appointed as an Arbitrator for purposes of
disputes or claims arising out of or related to this Section unless that
individual shall (A) be a disinterested and impartial individual of recognized
standing and experience in the area of commercial arbitration; (B) not be an
employee or past employee of Landlord or Tenant or of any other person that is
an affiliate of or otherwise controls, is controlled by or is under common
control with Landlord or Tenant; and (C) in the case of the third Arbitrator,
never have represented or been retained for any reason whatsoever by Landlord or
Tenant or any other person that is an affiliate of or otherwise controls, is
controlled by or is under common control with Landlord or Tenant. If requested
by either Landlord or Tenant, any individual appointed or proposed for
appointment under the Arbitration Rules must disclose any and all circumstances,
prior or ongoing family or direct or indirect ownership, financial or
contractual relationships with either Landlord, Tenant or their respective
counsel or any interest in the result of the arbitration likely to affect such
individual’s impartiality. Upon the request of either Landlord or Tenant, any
individual appointed to act as an Arbitrator shall be obligated to affirm under
oath either the lack of or existence of any such circumstances or relationships
prior to accepting any appointment. Any party objecting to the appointment of
any Arbitrator based on such information shall notify the other party and the
Arbitration Administrator of such objection. Upon receipt of notice of such
objection, the Arbitration Administrator is hereby authorized to determine,
which determination shall be conclusive and binding on the parties, whether the
individual should be disqualified and if so, shall appoint a replacement
individual meeting the requirements of the Arbitrator he or she is appointed to
replace.

(ii)    Notwithstanding anything to the contrary herein, Tenant shall use
commercially reasonable efforts to mitigate its damages as a result of any
default by Landlord.

(h)    Consequential and Punitive Damages. Notwithstanding any provision to the
contrary in this Lease or otherwise, in no event shall Tenant be liable for any
consequential, exemplary, or punitive damages or lost profits as a result of a
Tenant default hereunder, except as provided in connection with Section 2(c)
above.

 

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16.    Surrender. Upon the expiration of the Lease Term or earlier termination
of this Lease, Tenant shall quit and surrender to Landlord the Leased Premises,
broom clean and in good order, condition and repair and otherwise in the
condition and in a state of repair consistent with the requirements specified in
Section 9(b) above, ordinary wear and tear and acts of Casualty Damage which
Landlord is obligated to repair or replace excepted; provided, that Tenant shall
remove its personal property and any property affixed to the Leased Premises or
improvements, additions or alterations to the Leased Premises which Landlord
directs Tenant to remove and repair any damage to the Building caused by such
removal. If Tenant shall fail to remove any property or improvements, additions
or alterations that it is obligated to remove, Landlord may cause all or any
item of such property or improvements, additions or alteration to be removed at
Tenant’s expense. Tenant hereby agrees to pay all costs and expenses of any
removal and of the repair of any damage to the Leased Premises caused by such
removal. On the expiration or earlier termination of this Lease, Tenant shall,
in addition to the foregoing, deliver to Landlord all keys and combinations to
locks, safes and vaults. Any and all property remaining on the Leased Premises
after the expiration of the Lease Term or earlier termination of this Lease
shall, at the option of Landlord, become the property of Landlord and Landlord
may dispose of and/or remove any such property without any liability whatsoever
to Tenant. Tenant’s obligation to observe and perform these covenants shall
survive the expiration of the Lease Term or earlier termination of this Lease.

17.    Subordination and Estoppel.

(a)    SNDA. This Lease is and shall be subordinate to the lien of any mortgage,
deed to secure debt or any other method of financing or refinancing now or
hereafter encumbering the Leased Premises (the “Mortgage Lien”), and to all
advances made, or hereafter to be made, upon the security thereof; provided
that, upon request by Landlord, Tenant shall within twenty (20) days after such
written request execute and deliver a subordination, nondisturbance and
attornment agreement (an “SNDA”) in form and substance as Exhibit E attached
hereto and incorporated herein by this reference, or in any other form or
substance reasonably requested by Landlord or any mortgage lender or lien
holder, if such SNDA provides that the rights of Tenant under this Lease, and
the possession of the Leased Premises by Tenant, shall not be disturbed so long
as Tenant is not in default hereunder. If any proceedings are brought for the
foreclosure of any Mortgage Lien, then Tenant shall: (a) attorn to the purchaser
upon any sale resulting directly or indirectly from such proceedings; and
(b) recognize the purchaser as Landlord hereunder. Notwithstanding the
foregoing, the subordination of this Lease to future Mortgages shall be subject
to Tenant’s receipt of an SNDA in the form attached hereto and incorporated
herein as Exhibit E with any changes reasonably acceptable to Tenant which
provides in substance that so long as Tenant is not in default under the Lease
past applicable cure periods, its use and occupancy of the Premises shall not be
disturbed notwithstanding any default of Landlord under such Mortgage, and
Landlord shall, within thirty (30) days of the execution of this Lease, obtain
from its existing mortgagee, if any, an SNDA reasonably acceptable to Tenant
which provides in substance that so long as Tenant is not in default under the
Lease past applicable cure periods, its use and occupancy of the Premises shall
not be disturbed notwithstanding any default of Landlord under such Mortgage.
Except as expressly provided in the form of SNDA attached hereto as Exhibit E,
in no event shall any SNDA require Tenant to agree to any increase in its
financial obligations under this Lease or materially increase Tenant’s
obligations under this Lease.

(b)    Estoppel. Upon request by Landlord, Tenant shall within twenty (20) days
after such written request execute and deliver an estoppel certificate in form
and substance as Exhibit F attached hereto and incorporated herein by this
reference, or in any other form or substance that may be reasonably requested by
Landlord or that may be reasonably requested by any purchaser, mortgage lender,
or lien holder. Except as expressly provided in the form of estoppel certificate
attached hereto as Exhibit F, in no event shall any estoppel certificate require
Tenant to agree to any increase in its financial obligations under this Lease or
materially increase Tenant’s obligations under this Lease.

(c)    Late Delivery. Notwithstanding anything to the contrary set forth in this
Section 17, Tenant, acting in good faith, shall be permitted to request and
negotiate for reasonable changes to any form of SNDA and Estoppel that Tenant is
requested to execute and deliver (including without limitation, any changes to
an SNDA and Estoppel in the form of Exhibits E and F, respectively), provided,
however that if any such requested changes or negotiations are not resolved
within twenty (20) days following Landlord’s initial request for the SNDA or
Estoppel, as applicable, then Tenant shall executed and deliver an SNDA or
Estoppel, as applicable, in the form of Exhibits E and F, respectively, within
five (5) business days following expiration of such twenty (20) day period.

 

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18.    Covenant of Quiet Enjoyment. Landlord agrees that if Tenant performs all
the covenants and agreements herein provided to be performed by Tenant, Tenant
shall, at all times during the Lease Term, have the peaceable and quiet
enjoyment of possession of the Leased Premises without any manner of hindrance
from Landlord or any persons claiming under Landlord, subject, nevertheless, to
the terms and conditions of this Lease.

19.    Mechanic’s Liens. Tenant shall not suffer or give cause for the filing of
any mechanic’s lien or other lien or encumbrance against the Leased Premises. In
the event any mechanic’s lien or other lien or encumbrance is filed against the
Leased Premises or any part thereof for work claimed to have been done for, or
material claimed to have been furnished to, the Tenant, Tenant shall cause such
mechanic’s lien or other lien or encumbrance to be discharged of record within
sixty (60) days after filing by bonding or as provided or required by law or in
any other lawful manner or shall provide evidence that the lien or encumbrance
is being contested by proceedings adequate to prevent foreclosure of the lien or
encumbrance, together with satisfactory indemnity (in an amount not less than
one hundred fifty percent (150%) of the claimed lien or encumbrance) to Landlord
within thirty (30) days after the filing thereof. Tenant shall indemnify, defend
and hold harmless Landlord from all claims, judgments, liabilities, losses,
costs, and expenses incurred by Landlord as a result of, or in connection with,
any such mechanic’s lien or other lien or encumbrance. All liens suffered or
caused by Tenant shall attach to Tenant’s interest only. Nothing in this Lease
shall be deemed or construed to constitute consent to, or request of, any party
for the performance of any work for, or the furnishing of any materials to,
Tenant, nor as giving Tenant the right or authority to contract for, authorize,
or permit the performance of any work or the furnishing of any materials that
would permit the attaching of a mechanic’s lien or other lien or encumbrance.

20.    Notices. Unless otherwise specifically provided in this Lease or by law,
all notices or other communications required or permitted by this Lease or by
law shall be in writing and shall be personally delivered or sent by certified
mail, return receipt requested, postage prepaid, or sent for overnight delivery
by a nationally recognized courier such as Federal Express, addressed to the
other party as follows:

 

Landlord:

SP Rock Hill Legacy East #1, LLC

c/o Scannell Development Company

8801 River Crossing Blvd., Suite 300

Indianapolis, Indiana 46240

Attention:    Marc D. Pfleging

 

Tenant:

DIRTT Environmental Solutions, Inc.

7303 30th St SE

Calgary, AM T2C 1N6

Attention:    General Counsel

Any party may change its address for notice from time to time by serving notice
on the other party as provided above. The date of service of any notice served
by mail shall be the date upon which such notice is deposited in a post office
of the United States Postal Service.

21.    Miscellaneous Provisions.

(a)    Memorandum of Lease. The parties hereto shall not record this Lease, but
each party shall execute upon request of the other a “memorandum of lease”
suitable for recording. All costs and expenses associated with preparing,
executing, and recording a “memorandum of lease” shall be borne by the party
requesting execution of such document, and such party shall pay any documentary
transfer tax or other special tax or assessment associated with, or triggered
by, such recording.

 

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(b)    Relationship of Parties. Nothing contained herein shall be deemed or
construed by the parties hereto, or by any third party, as creating between the
parties hereto the relationship of principal and agent, partnership, joint
venture, or any relationship other than the relationship of landlord and tenant.

(c)    Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a
lesser amount than the Base Rent, Additional Rent or other amount due hereunder
shall be deemed to be other than on account of the Base Rent, Additional Rent or
other amount first due hereunder. No endorsement or statement on any check or
letter accompanying any check or payment of Base Rent, Additional Rent or other
amount shall be deemed to be an accord and satisfaction, and Landlord may accept
any such check or payment without prejudice to the right of Landlord to recover
the balance of such Base Rent, Additional Rent or other amount or to pursue any
other right or remedy.

(d)    Severability. The invalidity or unenforceability of any particular
provision of this Lease shall not affect the other provisions, and this Lease
shall be construed in all respects as if such invalid or unenforceable provision
had not been contained herein.

(e)    Authority. Each person executing this Lease represents and warrants that
he or she has been duly authorized to execute and deliver this Lease by the
entity for which he or she is signing, and this Lease is the valid and binding
agreement of such entity, enforceable in accordance with its terms.

(f)    Waivers. No waiver of any covenant or condition or the breach of any
covenant or condition of this Lease shall be deemed to constitute a waiver of
any subsequent breach of such covenant or condition or justify or authorize a
non-observance upon any occasion of such covenant or condition or any other
covenant or condition. The acceptance of Base Rent, Additional Rent or any other
payment or amount by Landlord at any time when Tenant is in default of any
covenant or condition shall not be construed as a waiver of such default or
Landlord’s right to terminate this Lease on account of such default.

(g)    Remedies Cumulative. Subject to the limitations set forth in
Section 15(g) above, the remedies of Landlord and Tenant hereunder shall be
cumulative, and no one of them shall be construed as exclusive of any other of
any remedy provided by law or in equity. The exercise of any one such right or
remedy by the Landlord or Tenant shall not impair its standing to exercise any
other such right or remedy.

(h)    Severability. The invalidity or unenforceability of any particular
provision of this Lease shall not affect the other provisions, and this Lease
shall be construed in all respects as if such invalid or unenforceable provision
had not been contained herein.

(i)    Benefit of Persons Affected. Subject to the provisions of Section 10,
this Lease and all of the terms and provisions hereof shall inure to the benefit
of and be binding upon the respective heirs, executors, administrators,
successors and assigns of Landlord and Tenant except as otherwise expressly
provided herein.

(j)    Construction. Whenever in this Lease a singular word is used, it shall
also include the plural wherever required by the context and vice versa. All
references in this Lease to periods of days shall be construed to refer to
calendar, not business, days. All indemnities set forth herein shall survive the
expiration or earlier termination of this Lease. The captions of this Lease are
for convenience only and do not in any way limit or alter the terms and
conditions of this Lease. All references in this Lease to periods of days shall
be construed to refer to calendar, not business, days, unless business days are
specified. Notwithstanding anything to the contrary anything set forth herein,
if Landlord is delayed in, or prevented from, completing the Landlord’s Work or
Landlord or Tenant is otherwise observing or performing any of its covenants
hereunder or satisfying any condition or requirement hereunder as the result of
an act or omission of the other party or any other cause which is not within the
reasonable control of the performing party including, without limitation,
inclement weather, earthquakes, floods, tornados, hurricanes, tropical storms,
acts of God, acts of civil or military authorities, riots, insurrections, acts
of government, acts of any public enemy, the unavailability of materials,
equipment, services or labor, fires, explosions, strikes, failure of
transportation, and utility or energy shortages or acts or omissions of public
utility providers (“Force Majeure”), then such completion, correction,
observation, performance, or satisfaction shall be excused for the period of
days that such completion, correction, observation, performance, or satisfaction
is delayed or prevented, and the dates and deadlines for completion,
observation, performance, and satisfaction set forth herein, as applicable,
shall be extended for the same period.

 

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(k)    Entire Agreement; Amendments. This instrument contains the entire
agreement between the parties hereto with respect to the subject matter hereof.
All representations, promises and prior or contemporaneous undertakings between
such parties are merged into and expressed in this instrument, and any and all
prior agreements between such parties are hereby cancelled. The agreements
contained in this instrument shall not be amended, modified, or supplemented
except by a written agreement duly executed by both Landlord and Tenant.

(l)    [Intentionally omitted.]

(m)    Attorneys’ Fees. In the event that any proceeding or litigation is
commenced by either party to enforce the terms of this Lease, then the
prevailing party shall be entitled to an award of its reasonable attorneys’ fees
and court costs incurred in connection with such proceeding or litigation.

(n)    Financial Statements. During the Lease Term, and to the extent that the
same are not otherwise readily available as a result of public filings, Tenant
shall provide to Landlord on an annual basis, a copy of Tenant’s and any
Guarantor’s most recent financial statements prepared as of the end of Tenant’s
(or such Guarantor’s) fiscal year within thirty (30) days after the completion
thereof. Such financial statements shall be signed by Tenant (or the applicable
Guarantor), who shall attest to the truth and accuracy of the information set
forth in each such financial statement. All financial statements shall be
prepared in conformity with generally accepted accounting principles,
consistently applied. Landlord agrees that any non-public information set forth
in a statement delivered pursuant to this paragraph is and shall remain
confidential and shall not be disclosed by Landlord to any third party without
the prior written consent of Tenant, unless required by law or in connection
with the prosecution or defense of any claims made in connection with this
Lease. Notwithstanding the foregoing, the Landlord shall be entitled to provide
a copy of any such statement and/or information contained therein, to its
mortgagee or to any prospective mortgagee or prospective purchaser of the Leased
Premises, and to Landlord’s and such other parties’ respective attorneys,
accountants, brokers and other professional advisors who have a genuine need for
such information.

(o)    Governing Law. This Lease shall be governed by and construed in
accordance with the internal laws of the State of South Carolina.

(p)    Counterparts. This Lease may be executed in separate counterparts, each
of which when so executed shall be an original; but all of such counterparts
shall together constitute but one and the same instrument.

(q)    Indemnification for Leasing Commissions. The parties hereby represent and
warrant that there was no real estate broker, other than Colliers International
(“Landlord’s Broker”) representing Landlord, involved in the negotiation and
execution of this Lease and that no party, other than Landlord’s Broker and
Tenant’s consultant, Brent Bradshaw of Underflow Investments Inc. (“Tenant’s
Consultant”) is entitled, as a result of the actions of the respective party, to
a commission or other fee resulting from the execution of this Lease. Each party
shall indemnify the other from any and all liability for the breach of this
representation and warranty on its part and shall pay any compensation to any
other broker or person who may be entitled thereto, other than Landlord’s Broker
and Tenant’s Consultant. Landlord shall pay a commission to Landlord’s Broker
and Tenant’s Consultant pursuant to the terms and provisions of a separate
agreement.

(r)    Anti-Terrorism Certification. Landlord and Tenant each represents and
warrants that; (i) it is not listed on the Special Designated Nationals and
Blocked Persons list as maintained and updated by the United States Treasury
Department Office of Foreign Asset Control, (ii) it is not an entity with whom
Anti-Terrorism Laws (as hereinafter defined) would prohibit one from doing
business, (iii) it will

 

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not violate Anti-Terrorism Laws, and (iv) it is not and will not do business
with any person or entity that would violate Anti-Terrorism Laws. Landlord and
Tenant each covenants that it shall indemnify, hold harmless and defend the
other party from and against any and all claims, losses, damages, costs and
expenses arising out of or in any way relating to the violation of any
Anti-Terrorism Laws regardless of whether such violation constitutes a breach of
the representations, warranties, covenants and agreements set forth in this
paragraph including, but not limited to: (a) claims of third parties (including
governmental agencies) for damages, penalties, response costs, or other relief;
and (b) any and all expenses or obligations incurred at, before and after any
trial or appeal therefrom, including without limitation, reasonable attorneys’
fees and other expenses. “Anti-Terrorism Laws” for purposes hereof, shall mean,
collectively, (a) the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law
107-56) (the “USA Patriot Act”), (b) Executive Order No. 13224: Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism, effective September 24, 2001, (c) the
International Emergency Economic Power Act, 50 U.S.C. § 1701 et. seq., and
(d) any other legal requirements relating to money laundering or terrorism.

22.    Security Deposit. Upon execution and delivery of this Lease by Tenant,
Tenant shall deposit a security deposit in an amount equal to Ninety-Six
Thousand Eight Hundred Eighty-Nine and 24/100 Dollars ($96,889.24) (the
“Security Deposit”) with Landlord as security for the performance by Tenant of
all of Tenant’s obligations contained in this Lease. In the event of a default
by Tenant, Landlord may apply all or any part of the Security Deposit to cure
all or any part of such default; provided, however, that any such application by
Landlord shall not be or be deemed to be an election of remedies by Landlord or
considered or deemed to be liquidated damages. Tenant agrees promptly, upon
demand, to deposit such additional sum with Landlord as may be required to
maintain the full amount of the Security Deposit. All sums held by Landlord
pursuant to this Section 22 shall be without interest and may be commingled by
Landlord. At the end of the Lease Term, provided that there is then no uncured
default or any repairs required to be made by Tenant pursuant to Section 7 or
Section 16 above, Landlord shall return the Security Deposit to Tenant. In the
event of a sale or any other transfer of the Building, Landlord shall transfer
the Security Deposit to its purchaser and upon such transfer, Landlord shall
thereupon be released by Tenant from all responsibility for the return of the
Security Deposit; and Tenant agrees to look solely to such purchaser for the
return of the Security Deposit.

23.    Limitation of Liability. The term “Landlord” as used in this Lease, as
far as the covenants and agreements of Landlord in this Lease are concerned,
shall be construed to mean only the holder or holders of Landlord’s interest in
this Lease at the time in question. In the event of any transfer of Landlord’s
interest under this Lease or in the Leased Premises, then the Landlord herein
named (and in case of any subsequent transfer, the then transferor) shall be
automatically freed and relieved, of all liability of Landlord hereunder
accruing subsequent to such transfer of this Lease and as to occurrences after
the date of such transfer, from all duties and obligations relating to the
performance of any covenants or agreements on the part of Landlord to be
performed or observed after such transfer, provided that the transferee assumes
all obligations of the holder of the Landlord’s interest in this Lease accruing
after such transfer. Notwithstanding anything to the contrary provided in this
Lease, no officer, official, director, partner, agent, trustee, beneficiary, or
employee of Landlord shall be personally liable for the performance or
nonperformance of any agreement, covenant or obligation of Landlord hereunder,
and Tenant’s remedies shall not include a personal money judgment against
Landlord or against any of the foregoing persons. Tenant’s sole and exclusive
remedy at law or in equity shall be to proceed against and foreclose the
interest and title of Landlord (or such successor in interest) in and to the
Leased Premises (and the proceeds from the sale of such interest and title as to
any liability for a default not cured or satisfied in full) and Landlord’s
interest in any proceeds from the Leased Premises, for the satisfaction of each
and every remedy of Tenant in the event of any breach by Landlord (or by such
successor in interest) of any of Landlord’s obligations hereunder.

 

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24.    Expansion Right.

(a)    Provided Tenant is not in default under the terms of this Lease, no
condition exists that with the giving of notice or passage of time would
constitute a default under the terms of this Lease, and there has been no
material adverse change in the financial wherewithal of Tenant, Tenant shall
have the exclusive right during the Initial Lease Term or any Renewal Term (the
“Expansion Space Period”) to expand the Leased Premises to add an Improvement
consisting of at least Seventy-Five Thousand (75,000) square feet but not to
exceed One Hundred Forty-Four Thousand (144,000) square feet in the approximate
location identified on the Site Plan attached hereto as Exhibit B as the
expansion space (the “Expansion Space”), and Landlord agrees to hold available
for Tenant during the Expansion Space Period the building expansion land located
adjacent to the Leased Premises as shown on Exhibit B, on the terms and
conditions of this Section. Tenant may exercise its option by delivery to
Landlord of written notice of its exercise of the option (“Exercise Notice”) to
cause the Building to be expanded on or before the expiration of the Expansion
Space Period. Tenant’s Exercise Notice shall state the approximate square
footage of Improvements that Tenant desires for the Expansion Space. Tenant’s
rights pursuant to this Section for the Expansion Space are personal to Tenant
and may not be assigned or transferred except to a Permitted Transferee, and
will not benefit any subtenant.

(b)    Within sixty (60) days following Tenant’s exercise of such option,
Landlord shall provide Tenant with: (i) plans and specifications for the
expansion of the Building and related improvements in a manner similar to the
original Leased Premises (the “Expansion Plans”) which Expansion Plans shall be
generally consistent in scope and content to the Plans and Specifications; and
(ii) the cost of the expansion construction of the Expansion Space including,
without limitation, all hard costs, and all soft costs, including, without
limitation, cost of labor and materials, design, permitting and engineering
costs, permitting fees, financing fees, development fees, commissions,
construction management or project management fees, financing costs and interest
during the construction period, and legal fees (the “Expansion Cost” and
together with the Expansion Plans, the “Expansion Documents”). Landlord shall
competitively bid the construction of the Expansion Space with at least three
(3) contractors that are reasonably acceptable to Landlord. If Tenant desires to
proceed with the expansion of the Leased Premises, Tenant shall deliver its
acceptance within thirty (30) days after its receipt of the Expansion Documents,
and Landlord and Tenant shall promptly memorialize such agreement by amendment
to this Lease (the “Expansion Amendment”) setting forth the terms and conditions
of construction of the Expansion Space and incorporating the Base Rent for the
Expansion Space as calculated in accordance with this Section. In the event
Tenant does not deliver its acceptance within such thirty (30) day period, then
Tenant shall be deemed to have rescinded Tenant’s exercise of its option to
expand the Leased Premises and the Tenant’s rights under this Section shall
continue through the end of the Lease Term. Upon Tenant’s rescission of its
exercise of the option to expand the Leased Premises, Tenant shall be
responsible and shall reimburse Landlord, for the actual cost and expenses
incurred by Landlord in preparing the Expansion Documents. Tenant shall be
responsible for the cost and expenses of all work necessary to prepare the
Expansion Space for initial occupancy by Tenant that is not expressly included
in the Expansion Plans.

(c)    The actual Expansion Cost, as determined upon completion of the Expansion
Space, will be utilized to establish the Base Rent for the Expansion Space
utilizing the formula set forth below. The Base Rent for the Expansion Space to
be set forth in the Expansion Amendment will be initially determined based upon
the estimated Expansion Cost, but will be adjusted as provided herein. In this
regard, the parties agree that the Base Rent for the Expansion Space will be an
amount equal to the actual Expansion Cost multiplied by the Expansion Rent
Constant (as herein defined). For these purposes, the term “Expansion Rent
Constant” will be the lesser of: (i) an amount calculated by adding the Treasury
Rate Factor (as defined herein) to Base Rental Rate Constant (as defined
herein), or (ii) the Market Rental Rate Constant (as defined herein).

For purposes of this Section, the “Base Rental Rate Constant” shall be seven and
four-tenths percent (7.40%). For these purposes, the term “Treasury Rate Factor”
will mean and refer to 0.70 times the increase (if any) in the current Treasury
Rate (as herein defined) at the time that the Expansion Amendment is executed by
Landlord and Tenant, over the Treasury Rate (which the parties have agreed to be
1.515% in effect on the date of execution of this Lease. As used herein, the
term “Treasury Rate” will mean and refer to the applicable ten (10) year
Treasury Constant Maturities Rate published by the Federal Reserve Board based
on the average yield of a range of Treasury securities, all adjusted to the
equivalent of a 10-year maturity.

 

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As used herein, the term “Market Rental Rate Constant” shall mean (i) a rental
rate constant mutually agreed upon by Landlord and Tenant on or before thirty
(30) days after Tenant’s delivery of the Expansion Notice, or (ii) a rental rate
constant that is determined in accordance with the following paragraph that is
mutually acceptable to Landlord and Tenant. The parties shall have thirty
(30) days after Landlord’s receipt of an Exercise Notice to mutually agree upon
the Market Rental Rate Constant. If they fail to agree for any reason, then
within ten (10) days of the expiration of that time period, the Landlord and
Tenant shall each engage a disinterested third-party commercial/industrial
broker with at least five (5) years’ experience within the greater Charlotte
metropolitan area and notify the other in writing of the broker’s name and the
engagement date. The brokers shall deliver their respective determination to
both parties within forty-five (45) days of the latest engagement date. If such
brokers shall agree on the Market Rental Rate Constant (and for purposes hereof,
if such brokers shall determine such Market Rental Rate Constant and the higher
determination is no more than .5% of the lower determination, then said brokers
shall be deemed to have agreed upon a Market Rental Rate Constant equal to the
average of such determinations), then the agreement of the brokers shall be
deemed to be the Market Rental Rate Constant. If the brokers do not agree upon
such Market Rental Rate Constant, then the brokers shall together promptly
appoint a third disinterested broker (from a firm other than those with which
the initial brokers are associated) and the determination of the third broker
shall be deemed to be the Market Rental Rate Constant of the Premises (but in no
event shall such determination be less than the lower amount, or more than the
higher amount, of the determinations of the initial two (2) brokers). Any
broker-related fees and costs shall be paid by the party designating such
broker, and shared equally by Landlord and Tenant for any third broker, if
necessary. Any determination of the Market Rental Rate Constant by an
third-party broker shall take into account all relevant factors, including,
without limitation, (i) the type, use and quality of the Building (inclusive of
the proposed Expansion Space); (ii) the lease term for the Expansion Space;
(iv) annual rent escalations; (v) the current credit rating of Tenant and any
guarantor of the Lease, (vi) the geographical area of the Premises (which for
these purposes shall be the greater Charlotte metropolitan area), and (vii) any
other relevant and generally applicable considerations affecting the proper
determination of such rental rate constant.

Notwithstanding anything in this Section 26 to the contrary, the determination
of the Market Rental Rate Constant in accordance with the foregoing paragraph
shall be non-binding on Landlord and Tenant and neither party shall be required
to agree to such Market Rental Rate Constant for purposes of the Expansion. In
the event that, Landlord and Tenant fail to agree upon the Market Rental Rate
Constant or accept the Expansion Rent Constant determined by adding the Treasury
Rate Factor to the Base Rental Rate Constant, or otherwise mutually agree upon
an acceptable Expansion Rent Contact, neither Tenant nor Landlord shall have any
further obligations to proceed with the Expansion pursuant hereto.

As an example, and solely for illustrative purposes (in the event that Expansion
Rent Constant is determined by adding the Treasury Rate Factor to Base Rental
Rate), if the current Treasury Rate, as of the date of execution of this Lease,
is 2.15% and the Treasury Rate, at the time that the Expansion Amendment is
agreed upon, is 3.55% then the Treasury Rate Factor would be:

(3.55% – 2.15%) x 0.70 = 0.98%

In this example, and again, solely for illustrative purposes, the Expansion Rent
Constant would be:

(.071 + 0.0098) = .0808

As a result, and in furtherance of the example set forth above, if the Expansion
Cost is determined to be $5,000,000, then the initial annual Base Rent for the
Expansion Space would be:

($5,000,000 x .0808) = $404,000.00

In this regard, the Base Rent for the Expansion Space would be added to the Base
Rent for the original Premises, and the Base Rent for the Expansion Space and
the Premises would thereafter be increased at the end of each lease year for the
remainder of the Term (as the same may be extended as provided below) by
multiplying the collective amount of Base Rent for the Premises and Expansion
Space by 1.02.

 

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(d)    In the event Tenant exercises the option to expand the Leased Premises as
provided herein, the commencement of Tenant’s lease of the Expansion Space (and
the payment of Rent) shall be deemed to occur upon the substantial completion
and delivery of possession to Tenant of the Expansion Space in accordance with
the requirements of Section 4(b) above for the original Leased Premises (the
“Expansion Space Commencement Date”). Tenant shall be required to lease the
Expansion Space (along with the Leased Premises) for a minimum term of ten
(10) years, such that if less than ten (10) years remains in the Lease Term upon
the Expansion Space Commencement Date, the Initial Term for the original Leased
Premises shall be automatically extended to expire on the last day of the one
hundred twentieth (120th) full calendar month following the Expansion Space
Commencement Date, the Lease Term for the original Leased Premises and Expansion
Space shall become coterminous and all other terms and conditions of the Lease
shall remain the same, including the annual Base Rent escalations for the
Expansion Space and original Leased Premises. Upon expiration of that ten
(10) year term, the Tenant will continue to have any remaining, unexercised
Renewal Options as contemplated in Section 2(b) of this Lease. Following the
Expansion Space Commencement Date, the Expansion Space shall be considered part
of the Leased Premises.

25.    Option to Terminate. Tenant shall have the right to terminate the Lease
with respect to the original Premises only (the “Termination Option”), effective
commencing as of the date (the “Termination Date”) that is the one hundred
twentieth (120th) monthly anniversary of (i) the Commencement Date if the
Commencement Date is the first day of a calendar month, or (ii) the first day of
the first full calendar month following the Commencement Date if the
Commencement Date is not the first day of a calendar month, upon and subject to
the following terms, conditions and limitations:

(a)    Irrevocable written notice must be given by Tenant to Landlord at least
nine (9) months (but no more than twelve [12] months) prior to the Termination
Date;

(b)    The termination must be effective on the Termination Date, and no earlier
or later date;

(c)    There must not be a default by Tenant at the time of exercise of the
Termination Option or on the Termination Date;

(d)    Prior to the Termination Date, Tenant must pay Landlord (A) all unpaid
Rent and any other unpaid costs and charges under this Lease for the period up
to and including the Termination Date; plus (B) a termination fee (“Termination
Fee”) in an amount equal to Six Hundred Seventy-Three Thousand Nine Hundred
Seventy-One Dollars ($673,971);

(e)    Without limiting the foregoing, any obligations and liabilities of Tenant
accruing under this Lease with respect to the original Premises prior to the
Termination Date shall survive the Termination Date and any such exercise of the
Termination Option, as shall any provisions of the Lease that are expressly
stated in the Lease to survive its expiration or sooner termination;

(f)    The Termination Option shall automatically terminate and become null and
void upon the earliest to occur of (i) the assignment of this Lease by Tenant,
in whole or in part, to any party other than a Permitted Transferee, (ii) the
sublease by Tenant of all or any portion of the Premises to any party other than
a Permitted Transferee, (iii) the failure by Tenant to timely and properly
exercise the Termination Option, (iv) the failure by Tenant to pay to Landlord,
in full, the Termination Fee and any other amounts described in subsection
(d) above prior to the Termination Date, or (v) Tenant exercises its rights
pursuant to Section 24 for the Expansion Space; and

(g)    If Tenant timely and properly exercises the Termination Option, Tenant
shall surrender full and complete possession of the original Premises to
Landlord on or before the Termination Date in accordance with the requirements
of this Lease.

 

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26.    Landlord’s Representations and Warranties. Anything to the contrary
contained herein notwithstanding, Landlord hereby represents and warrants to
Tenant the following:

(a)    Electrical service reasonably sufficient for Tenant to commence Tenant’s
Finish Work to be available to the Leased Premises on or before the Early Access
Date, either connecting directly to the Premises through public right-of-ways or
through perpetual easement areas intended to provide for such utility
connections;

(b)    The Leased Premises shall on or before the Early Access Date and at all
times during the Lease Term, have vehicular and pedestrian access either
(i) directly to the Leased Premises by paved public roadway adjacent to,
abutting, and connecting to the Real Estate or (ii) directly to the Leased
Premises through a perpetual easement area intended to provide access over a
paved private roadway through and over any privately owned lands all the way to
connect to a public roadway, in either instance together with appropriate curb
cuts onto such roadways to provide reasonable vehicular access to and from the
Tenant;

(c)    Landowner (as defined below) currently has fee simple title to the Real
Estate as of the date of this Lease, and following the Subdivision (as defined
below) and the conveyance of the Building Lot (as defined below) to Landlord, as
contemplated in Section 28 of this Lease, Landlord shall have fee simple title
to the Real Estate;

(d)    No consent of any third party is required (or if required, will be
obtained by Landlord prior to the Commencement Date) in connection with
Landlord’s lease of the Leased Premises hereunder;

(e)    As of the date hereof, Landlord has no knowledge of any current, pending
or threatened condemnation, annexation, or similar proceeding affecting the
Leased Premises or any portion thereof, nor has Landlord knowledge that any such
actions are presently contemplated;

(f)    To the best of Landlord’s actual knowledge, there are no easements,
restrictive covenants or declarations that impact the Leased Premises that
prohibit in any way the making of this Lease or the Permitted Use contemplated
under this Lease;

(g)    The Real Estate may be used for the Permitted Use under applicable zoning
and land use laws, ordinances, planned unit development or similar guidelines;
and

(h)    The Building and the Leased Premises shall, as of the Commencement Date,
be (i) water-tight, (ii) free of mold, pests, and insects, (iii) in compliance
with the Plans and Specifications and all applicable laws, ordinances,
regulations, decrees, rules or conditions of any federal, state, county,
municipal or other governmental or quasi-governmental authorities or agencies
(including without limitation, those pertaining to building, zoning,
subdivision, land use, environmental and health, having jurisdiction over the
Premises (“Applicable Requirements”); and (iv) compliant with the Americans with
Disabilities Act of 1990, as amended.

27.    Guarantor. Simultaneously with the execution of this Lease, Tenant shall
cause DIRTT ENVIRONMENTAL SOLUTIONS LTD. (the “Guarantor”), to execute and
deliver to and for the benefit of Landlord a Guaranty of Tenant’s obligations
under and with respect to this Lease in a form acceptable to Landlord (the
“Guaranty”). Tenant acknowledges and agrees that Landlord’s willingness to enter
into this Lease with Tenant is expressly contingent upon the execution and
delivery by Guarantor of the Guaranty to and for the benefit of Landlord.

28.    Subdivision and Plat. Notwithstanding anything herein to the contrary,
Tenant hereby acknowledges that (i) SP Rock Hill Legacy East I, LLC, an Indiana
limited liability company (“Landowner”) currently owns the Real Estate,
(ii) that Landowner intends to subdivide the Real Estate into two (2) lots (the
“Subdivision”), as shown on Exhibit A-2 attached hereto and incorporated herein
(“Preliminary Plat”), and (iii) that upon completion of the Subdivision,
Landowner intends to convey that

 

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portion of the Real Estate shown as Lot 1 on the Preliminary Plat (the “Building
Lot”). Following such conveyance, Landlord and Tenant shall, promptly upon
request by either party, enter into an amendment to this Lease substantially in
the form attached hereto as Exhibit A-3 (“First Amendment to Lease”), pursuant
to which the “Real Estate” will be amended to consist of only the Building
Lot. Landowner and Landlord shall have the right, subject to the terms set forth
below, to cause to be recorded against the Real Estate a subdivision plat (the
“Subdivision Plat”) with lot lines as depicted on the Preliminary Plat and such
other matters that do not have a material adverse impact on the Building
Lot. Landlord agrees to provide Tenant with a copy of the recorded Subdivision
Plat upon request therefor. Landowner, by its execution of the below joinder to
this Lease, hereby confirms its agreement to cause the Subdivision and to convey
the Building Lot to Landlord. Tenant acknowledges and agrees that Landowner
shall have no further obligations under this Lease and upon completion of such
conveyance of the Building Lot to Landlord, Landowner shall automatically be
deemed released of any and all obligations and liability hereunder.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK;

SIGNATURE PAGE FOLLOWS]

 

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SIGNATURE PAGE TO LEASE

IN WITNESS WHEREOF, the parties have executed or caused the execution of this
Lease by their respective officers duly authorized as of the day and year first
above written.

LANDLORD:

SP ROCK HILL LEGACY EAST #1, LLC, an Indiana limited liability company

 

By:   /s/ Mark Pfleging

 

Printed:   Mark Pfleging

 

Title:   Manager

TENANT:

DIRTT ENVIRONMENTAL SOLUTIONS, Inc., a Colorado corporation

 

By:   /s/ Kevin O’Meara

 

Printed:   Kevin O’Meara

 

Title:   President & Chief Executive Officer

JOINDER BY LANDOWNER

Landowner hereby joins in the execution of this Lease as of the day and year
first above written, solely for purposes of confirming Landowner’s obligations
expressly set forth under Section 28 of the Lease. Landowner shall have no
further obligations under this Lease.

LANDOWNER:

SP ROCK HILL LEGACY EAST I, LLC, an Indiana limited liability company

 

By:   /s/ Mark Pfleging

 

Printed:   Mark Pfleging

 

Title:   Manager

 

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LIST OF EXHIBITS

Exhibit A-1 – Legal Description of Real Estate

Exhibit A-2 – Preliminary Plat

Exhibit A-3 – First Amendment to Lease

Exhibit B – Site Plan

Exhibit C – Project Specifications

Exhibit D – Tenant Finish Work

Exhibit D-1 – Tenant Work Letter

Exhibit E – Subordination, Non-Disturbance and Attornment Agreement

Exhibit F – Estoppel

Exhibit G – Form of Compliance Certificate

 

 

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EXHIBIT A-1

(Real Estate)

ALL THAT CERTAIN PIECE, PARCEL, LOT OR TRACT OF LAND LYING, BEING AND SITUATE IN
YORK COUNTY, SOUTH CAROLINA AND BEING SHOWN AND DESCRIBED AS “LEGACY PARK EAST
PHASE II,” 34.66 ACRES AS SHOWN ON ENTITLED RECOMBINATION/SUBDIVISION PLAT OF
SURVEY FOR LEGACY PARK EAST PHASE II BY KECK & WOOD, INC., DATED APRIL 1, 2018,
RECORED IN PLAT BOOK 158 AT PAGE 31, IN THE OFFICE OF THE REGISTER OF DEEDS OFOR
YORK COUNTY, SOUTH CAROLINA.

 

Exhibit A-1  |  Page 1

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EXHIBIT A-2

(Preliminary Plat)

 

LOGO [g810587g32o02.jpg]

 

Exhibit A-2  |  Page 1

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EXHIBIT A-3

(First Amendment to Lease Form)

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (this “Amendment”) is made as of the             
day of                     , 20         (the “Effective Date”), by and between
SP ROCK HILL LEGACY EAST #1, LLC, an Indiana limited liability company
(“Landlord”), and DIRTT ENVIRONMENTAL SOLUTIONS, INC., a Colorado corporation
(“Tenant”).

RECITALS

A.    Landlord and Tenant entered into that certain Lease Agreement, dated
                     (the “Original Lease”) covering the parcel of real estate
located at the northeast quadrant of Williamson Parkway and Highway 21 in Rock
Hill, South Carolina that is more particularly described in the Original Lease,
upon which a building consisting of approximately 129,600 square feet is to be
built.

B.    The Original Lease provides for the legal description of the Real Estate
to be revised following recording of the Subdivision Plat (as defined in the
Original Lease).

C.    Landowner (as defined in the Original Lease) completed the Subdivision
pursuant to that certain Subdivision Plat of
                                         dated                     , filed
                     as Document #                     in the Real Property
Records of                      County, South Carolina and conveyed the Building
Lot (as defined in the Original lease) to Landlord.

D.    Landlord and Tenant now desire to amend the Original Lease all in
accordance with the terms and conditions set forth below.

AGREEMENT

In consideration of the mutual covenants contained in the Lease and this
Amendment and other good and valuable consideration, the receipt and sufficiency
of which are acknowledged, Landlord and Tenant agree as follows:

1.    Definitions. All defined terms appearing in this Amendment that are not
otherwise defined shall have the respective meanings given those terms in the
Original Lease. The term “Lease” where used in the Original Lease and this
Amendment shall hereafter refer to the Original Lease, as amended hereby.

2.    Legal Description of the Real Estate. The legal description of the Real
Estate attached as Exhibit A-1 to the Original Lease is deleted, and the legal
description attached as Exhibit A-1 to this Amendment is substituted in its
place as the legal description of the Real Estate.

3.    Authority. Each party represents to the other that it has full power,
capacity, authority and legal right to execute and deliver this Amendment and to
perform all of its obligations hereunder.

4.    General. Except as amended by this Amendment, the Original Lease shall
continue in full force and effect and is ratified and affirmed. In the event of
a conflict between the terms and conditions of the Original Lease and the terms
and conditions of this Amendment, the terms of this Amendment shall prevail.
This Amendment may be executed in several counterparts, all of which are
identical and all of which counterparts together shall constitute one and the
same instrument. To facilitate execution of this Amendment, the parties may
execute and exchange counterparts of the signature pages of this Amendment by
electronic transmission.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK;

SIGNATURE PAGE FOLLOWS]

 

Exhibit A-3  |  Page 1

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SIGNATURE PAGE TO FIRST AMENDMENT TO LEASE

IN WITNESS WHEREOF, the parties have executed or caused the execution of this
Amendment by their respective officers duly authorized as of the day and year
first above written.

LANDLORD:

SP ROCK HILL LEGACY EAST #1, LLC, an Indiana limited liability company

 

By:     Printed:     Title:    

TENANT:

DIRTT ENVIRONMENTAL SOLUTIONS, Inc., a Colorado corporation

 

By:     Printed:     Title:    

 

Exhibit A-3  |  Page 2

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EXHIBIT A-1 TO FIRST AMENDMENT TO LEASE

LEGAL DESCRIPTION OF REAL ESTATE

[To be completed.]

 

Exhibit A-3  |  Page 3

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EXHIBIT B

(Site Plan)

 

LOGO [g810587g65b99.jpg]

 

Exhibit B  |  Page 1

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EXHIBIT C

(Project Specifications for Landlord’s Work)

Site Development and Shell Description

PROJECT SUMMARY

 

•  Location:    Rock Hill, SC •  Site Acreage:    13 Gross Acres
•  Square Footage:    129,600 Square Feet expandable to 259,000 square feet
•  Dimensions:    180’ X 720’ •  Bay Sizes:    Typical bays – approximately 50’
X 50’ •  Clear height:    30’ •  Auto Parking:    118 spaces expandable to 173
spaces •  Trailer Parking:    N/A •  Truck Court:    130’ •  Exterior Walls:   
Load Bearing Concrete Wall Panels •  Structural Steel:    Gray tube steel
columns and joists supporting white roofdeck •  Slab Construction:    6”
unreinforced, 4,000psi concrete 5” aggregate base •  Dock Doors:    Fourteen
(14) 9’ x 10’ manual overhead doors •  Overhead Doors    Two (2) 12’ x 14’
Motorized Roll Up Door •  Dock Equipment:    Ten (10) 35000# Mechanical Dock
Levelers, bumpers, z-guards, lights •  Roofing:    Mechanically attached .45 mil
TPO with R-20 insulation •  HVAC:    Heat and A/C in the production area
•  Fire Protection:    ESFR for protection of Class I-IV Commodities
•  Electrical Service:    480V/277 3-Phase; 2000-amp service •  Lighting:    LED
High Bay Fixtures at 25 FC •  Gas:    Natural gas available at park to be
coordinated with utility company

 

Exhibit C  |  Page 1

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  •  

GENERAL OUTLINE

Architectural and Engineering Services

Scannell Properties shall employ the services of a civil engineering firm
licensed in the State of South Carolina for the design and engineering of all
civil and landscaping specifications. General Contractor is responsible for all
architectural, structural, mechanical, plumbing, electrical, fire alarm, and
fire protection design, drawings, permits and specifications. The building will
be designed to meet or exceed all local code requirements.

Schedule

It is anticipated that construction of the shell project will take approximately
8.5 months from start of construction.

Quality Control

Scannell Properties shall retain an Independent Testing Agency to perform
various field and laboratory tests to verify compliance with project
requirements. These tests will include soil compaction testing, concrete
material strength testing, concrete placement, inspection of structural steel
connections, window leakage testing and periodic roof inspections during roof
system installation.

SITEWORK

Site Grading & Earthwork

Sedimentation and erosion control measures, tree protection, site clearing and
preparation will be provided to accommodate all paving areas, building pad, and
landscape areas. An engineered building pad and parking sub-grade shall be
provided in compliance with the recommendations of the Geotechnical Engineer
regarding existing soils to within ± 0.1 of a foot. The building elevation will
be established to allow for drainage, which may be handled by means of catch
basins, storm sewers, swales and surface runoff as specific site conditions
dictate. Future building pad will be cleared and graded as required for Phase 1
of this project.

Site Utilities

All utilities shall extend to the building and final connections made for
electric, domestic water, gas, sanitary service and telephone/data service.
Underground fire main and hydrants will be provided per municipal requirements.

Pavement

The heavy-duty pavement sections (8”+2”+2”) will be provided in truck access and
fire lanes, and light duty pavement sections (6”+2.5”) will be provided in
parking areas and vehicle drive lanes within parking areas. All pavement
sections shall be provided per the recommendations of the Geotechnical Report
and the civil drawings.

A total of 118 auto parking spaces will be provided. All paving will be striped
to indicate parking stalls, handicapped parking locations, fire lanes and
traffic control features in accordance with the site design. Traffic control and
handicapped parking signage will be provided in accordance with the site design
and code requirements.

Truck courts in the shipping/receiving areas shall be 135’ deep consisting of
60’ concrete apron 6”, 4,000psi unreinforced concrete on 6” aggregate base and
75’ of HD asphalt paving. Concrete paving joints will be caulked. A 10” stone
fire lane is included around East side of building.

Landscaping and Irrigation

Landscaping and irrigation including trees, plants, grass, mulch, and soil
preparation as needed to meet city minimum zoning requirements. Landscaping and
irrigation will be an allowance of $108K.

 

Exhibit C  |  Page 2

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Signage

Building and Monument Signage will be an allowance of $20K.

CONCRETE

Foundations

The building foundation system is a combination of shallow foundations for
interior columns and a continuous perimeter foundation to support the concrete
wallpanels. Foundations will be constructed with 3,000 psi concrete with depths
to be a minimum of 1’-6” below finished floor, assuming an allowable bearing
capacity of 3,000 psf.

Floor Slab

The warehouse floor shall be six inches (6”) thick unreinforced concrete on a 5”
stone aggregate base. This concrete will achieve a 28-day compressive strength
of 4,000 psi. Floor flatness and levelness tolerances shall meet overall values
of FF=35 and FL=25. Control joints shall be saw cut in order to minimize
shrinkage cracking. Dowels or keyways shall be utilized at construction joints.
A 10-mil polyethylene vapor barrier will be provided underneath the entire slab
on grade. Dowel baskets will be installed at dock bays.

Concrete Wall Panels

Site cast, load bearing tilt up or precast concrete wall panels shall be
utilized for the building exterior. The walls shall utilize appropriate
reinforcing for anticipated reactions and shall not be insulated.

STRUCTURAL STEEL AND MISCELLANEOUS METALS

Building Frame

A structural steel system with steel tube columns, open web joists and joist
girders shall be used for the building’s structural steel system. Roof decking
will be prime painted white. All components shall conform with the Steel Deck
Institute and erected to meet code requirements.

Steel structure will conform to these dimensions:

 

•  Clear Height:    30’ •  Overall Dimensions:    720’ X 180’ •  Typical Bays:
   50’ x 50’ •  Loading Bay:    60’ X 60’

Metal stairs in loading dock will be installed to meet all applicable codes. All
exterior metals to be painted. A single roof access ladder with ladder guard
shall be installed for access to the roof.

Building structure shall not contain x-bracing.

 

Exhibit C  |  Page 3

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CARPENTRY

Plywood backboard will be provided for incoming phone service. Rough blocking
will be provided as required at parapets, curbs, coping, etc. and shall be fire
treated where required by code.

THERMAL AND MOISTURE PROTECTION

Roofing

The roof system shall be a single-ply 45 mil mechanically fastened TPO membrane
roof over rigid cell polyisocyanurate roof insulation mechanically attached to
the roof decking. Insulation thickness shall be adequate to provide a roof
insulation value of R-20. The roof shall carry the manufacturer’s standard
fifteen (15) year NDL membrane warranty.

Roof flashings at all known roof penetrations are included. No allowances have
been made for additional roof penetrations required for undefined Tenant
requirements.

Collector heads and exposed downspouts will be provided on the front of the
building to remove storm water from the roof. The roof will be sloped at 1/4”
per foot to each (truck court) side of the building.

All required sheet metal and flashing work shall be provided to ensure a
watertight roof system installation. All sheet metal collectors, downspouts,
copings and flashings shall be 24-gauge prefinished metal with a factory applied
standard finish.

Dock Canopy/Entrance Canopy

Bullnose dock canopies will be provided in the truck loading docks. Entrance
canopy will be an allowance of $25K.

Caulking and Sealants

Joint sealants shall consist of a multi-part non-sag urethane sealant on both
the exterior and interior of the concrete wall panel joints as well as where the
window system meets the precast. A 5-year warranty is included for all exterior
caulking.

Exposed floor joints in the production area will be caulked with semi rigid
epoxy or polyurea. One coat of Ashford sealer or equivalent shall be applied to
the floor within warehouse area.

DOORS AND WINDOWS

Doors, Frames and Hardware

Exterior man doors shall be 3’-0” x 7’-0” x 1-3/4”, insulated hollow metal doors
and frames as required for egress per code. The building shell be keyed with
interchangeable cores.

Overhead Doors

Fourteen (14) dock positions will be equipped with a manually operated,
insulated, 24-gauge flush steel face, 9’ x 10’ dock door complete with metal
track, single vision panel, and hardware. Two (2) 12’ X 14’ motor operated
drive-in doors are included.

Aluminum Storefront and Entrances

Aluminum storefront is at included at one (1) Main Entrance, 1,000 sf of
storefront windows are included. This storefront shall have clear anodized
aluminum framing with 1” insulated tinted glass. A manually operated aluminum
entrance double door will be provided at the entry, with medium stiles, rails
and bottoms with manufacturer’s standard hardware. Aluminum storefront framing
shall be YKK, Vistawall, Kawneer, orequal.

 

Exhibit C  |  Page 4

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Clerestory Windows

Ten (10) clerestory windows, 4’ X 8’ are included.

FINISHES

Painting

All hollow metal doors and frames, pipe bollards, roof ladder and downspout
guards shall receive one (1) coat of primer and two (2) coats of acrylic
semi-gloss exterior paint.

The exterior of the tilt-up concrete wall panels shall receive a tinted primer
coat and one (1) coat of textured latex paint. Prior to painting, the exterior
face of the tilt-up concrete wall panels will be power-washed to remove
releasing agents and dirt.

MISCELLANEOUS

Building address signage will be an allowance and shall be provided per
municipal requirements.

DOCK EQUIPMENT

Ten (10) dock positions will be equipped with 35000# mechanical dock levelers,
bumpers, z-guards and dock lights.

FIRE PROTECTION

Fire protection for the building shall be provided by a fully operational ESFR
sprinkler system. The fire main shall be extended to the facility and connection
made to the building fire protection system. The system shall include K-17
sprinkler heads and all necessary components to provide a complete system that
complies with all governmental and fire department agencies. An electric fire
pump has been included.

HEATING, VENTILATION AND AIR CONDITIONING

Conditioned Air

An alternate to provide conditioned air in the production space has been
accepted. The building will be heated and conditioned via DX rooftop units
(total of 160 tons) will allow us to maintain 78 degrees with a 55% relative
humidity in during the cooling season. The temperature is a +/- 3 degrees and
the humidity level is +/- 10%. The humidity level during the winter months could
drop below 30 % during cold dry weather days.

PLUMBING

Domestic Water

Domestic water service shall be provided into the building with connection made
to the city water main. Backflow preventers and necessary drains, valves, etc,
shall be provided at the entry point.

One (1) hose bib shall be provided at grade level.

 

Exhibit C  |  Page 5

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Sanitary Sewer

Sanitary sewer service shall be provided into the building with connection made
to the sewer main.

Gas

Gas service shall be provided into the building with connection made to the gas
meter furnished by the local utility service provider. The gas line shall extend
to all required HVAC equipment.

ELECTRICAL

Service and Distribution

One (1), 480/277V transformer shall be installed by the utility company. One
(1), 2000 amp service shall be provided for tenant. Distribution panels will be
provided for the shell building.

Site Lighting

Exterior lighting shall be provided via a combination of pole lights and
building mounted wall pack fixtures. All exterior lighting shall be controlled
via photo cell control.

The exterior lighting shall be designed to provide an average maintained 1 1⁄2
foot-candle over all paved areas. Pole lights shall be installed and leased from
the utility provider.

Interior Lighting

Lighting of the warehouse shall be provided with LED high-bay fixtures to
achieve 25 FC @ 36” AFF. High bay lights are furnished with individual motion
sensors.

Emergency lighting and exit signage shall be installed as required by code for
the warehouse area based on an open floor plan.

Telephone and Data

Two (2) 4” conduit with pull strings shall be provided from each electrical room
to property line for telephone and data service.

Power Requirements

Power shall be provided to all fire protection, H.V.A.C. equipment and all other
required building components as outlined in this Building Description.

Fire Alarm Systems

A fire alarm system shall be provided for monitoring of building fire protection
system.

 

Exhibit C  |  Page 6

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EXHIBIT D

(Tenant Finish Work)

Design and construction of approximately 5,000 square feet of office and
breakroom space.

Notwithstanding anything set forth in the Project Specifications and/or the
Plans and Specifications to the contrary, the above referenced items shall
constitute Tenant Finish Work and shall not be included in the definition of
Landlord’s Work under the Lease.

 

Exhibit D  |  Page 1

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EXHIBIT D-1

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the
construction of the Tenant Finish Work in the Building. Capitalized terms used
in the Work Letter and not otherwise defined herein shall have the meaning set
forth in the foregoing Lease. The improvements to be initially installed in the
Building shall be designed and constructed by Tenant pursuant to this Tenant
Work Letter.

1.    TENANT FINISH WORK. As used in the Lease and this Tenant Work Letter, the
term “Tenant Finish Work” means those items of general tenant improvement
construction shown on the Final Plans (described in Section 4 below).

2    CONSTRUCTION REPRESENTATIVES. Lessor hereby appoints the following
person(s) as Landlord’s representative (“Landlord’s Representative”) to act for
Landlord in all matters covered by this Landlord Work Letter: Kip Wanser. Tenant
hereby appoints the following person(s) as Tenant’s representative (“Tenant’s
Representative”) to act for Tenant in all matters covered by this Tenant Work
Letter: Jeff Calkins. All communications with respect to the matters covered by
this Tenant Work Letter are to be made to Landlord’s Representative or Tenant’s
Representative, as the case may be, in writing in compliance with the notice
provisions of the Lease. Either party may change its representative under this
Tenant Work Letter at any time by written notice to the other party in
compliance with the notice provisions of the Lease.

3    IMPROVEMENT ALLOWANCE. Tenant shall be entitled to a one-time improvement
allowance in the amount of $400,000.00 (the “Tenant Finish Allowance”) for the
costs relating to the initial design and construction of the Tenant Finish Work;
provided, however, that if Tenant does not use the entire Tenant Finish
Allowance, Tenant shall be entitled to a credit against Base Rent for any
portion of the Tenant Finish Allowance not used by Tenant, or at Landlord’s
option, Landlord shall pay Tenant an amount equal to the portion of the Tenant
Finish Allowance not used by Tenant in one lump sum.

4.    TENANT FINISH WORK PLANS.

(a)    Preparation of Space Plans. Landlord agrees to meet with Tenant’s
architect and/or space planner for the purpose of promptly preparing preliminary
plans for the layout of the Tenant Finish Work (“Space Plans”). The Space Plans
are to be sufficient to convey the architectural design of the and layout of the
Tenant Finish Work therein and are to be submitted to Landlord for Landlord’s
approval, which approval shall not be unreasonably withheld, conditioned, or
delayed, and which approval or disapproval Landlord shall provide within ten
(10) days of Tenant’s submission of the same. If Landlord reasonably disapproves
any aspect of the Space Plans, Landlord will advise Tenant in writing of such
disapproval and the reasons therefor. Tenant will then submit to Landlord for
Landlord’s approval a redesign of the Space Plans incorporating the revisions
reasonably required by Landlord, which approval or disapproval Landlord shall
provide within three (3) business days of Tenant’s submission of the same. Such
approval process for the Space Plans shall continue until such time as Landlord
has approved of the Space Plans.

(b)    Preparation of Final Plans. Based on the approved Space Plans, Tenant’s
architect will prepare complete architectural plans, drawings and specifications
and complete engineered mechanical, structural and electrical working drawings
for all of the Tenant Finish Work for the Leased Premises (collectively, the
“Final Plans”). Within one hundred eighty (180) days following the Effective
Date, Tenant shall submit the proposed Final Plans to Landlord for approval. If
Landlord reasonably disapproves any aspect of the Final Plans based on any
inconsistency with the Space Plans, Landlord agrees to advise Tenant in writing
of such disapproval and the reasons therefor within ten (10) days of Tenant’s
submission of the same. Tenant will, subject to Section 4(c) below, then cause
Tenant’s architect to redesign the Final Plans incorporating the revisions
reasonably requested by Landlord so as to make the Final Plans consistent with
the Space Plans and submit the same to Landlord for approval or disapproval,
which approval or disapproval Landlord shall provide within five (5) business
days of Tenant’s submission of the same. Such approval process for the Final
Plans shall continue until such time as Landlord has approved of the Space
Plans.

 

Exhibit D-1  |  Page 1

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(c)    Requirements of Lessee’s Final Plans. Tenant’s Final Plans will include
locations and complete dimensions, and the Tenant Finish Work, as shown on the
Final Plans, as revised, will comply with all applicable laws, ordinances, rules
and regulations of all governmental authorities having jurisdiction, and all
applicable insurance regulations.

(d)    Submittal of Final Plans. Once approved by Landlord and Tenant, Tenant’s
architect will promptly (and in any event within two hundred forty (240) days
after the Effective Date) submit the Final Plans to the appropriate governmental
agencies for plan checking and the issuance of a building permit. Tenant’s
architect, with Landlord’s cooperation, will make any changes to the Final Plans
which are requested by the applicable governmental authorities to obtain the
building permit. Anything to the contrary contained herein notwithstanding and
utilizing the Tenant Finish Allowance, Tenant shall cause the Tenant Finish Work
to be in compliance with all Applicable Laws. After approval of the Final Plans
no further changes may be made without the prior written approval of both
Landlord and Tenant, and then only after agreement by Tenant to pay any costs
resulting from the design and/or construction of such changes in excess of the
Tenant Finish Allowance. Tenant hereby acknowledges that any such changes will
be subject to the terms of Sections 5(c) below. Landlord’s approval of the Final
Plans shall create no liability or responsibility on the part of Landlord for
the completeness of such plans or their design sufficiency or compliance with
applicable laws, ordinances, rules and regulations of all governmental
authorities having jurisdiction.

5.    PAYMENT FOR THE LESSEE IMPROVEMENTS.

(a)    Tenant Finish Allowance. Landlord hereby grants to Tenant the Tenant
Finish Allowance as referenced in Section 3 hereinabove. The Tenant Finish
Allowance is to be used for:

(i)    Payment of the cost of preparing the Space Plans and the Final Plans,
including mechanical, electrical, plumbing and structural drawings and of all
other aspects necessary to complete the Final Plans.

(ii)    The payment of plan check, permit and license fees relating to
construction of the Tenant Finish Work.

(iii)    All costs of construction of the Tenant Finish Work, including, without
limitation, the following:

(aa)    Construction and installation within the Building of all partitioning,
doors, floor coverings, ceilings, wall coverings and painting, millwork and
similar items;

(bb)    All electrical wiring, lighting fixtures, outlets and switches, and
other electrical work necessary for the Building;

(cc)    The furnishing and installation of all duct work, terminal boxes,
diffusers and accessories necessary for the heating, ventilation and air
conditioning systems within the Building, including the cost of meter and key
control for after-hour air conditioning;

(dd)    Any additional improvements to the Leased Premises required for Tenant’s
use of the Building including, but not limited to, odor control, special
heating, ventilation and air conditioning, noise or vibration control or other
special systems or improvements;

(ee)    All fire and life safety control systems such as fire walls, sprinklers,
halon, fire alarms, including piping, wiring and accessories, necessary for the
Building;

 

Exhibit D-1  |  Page 2

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(ff)    All plumbing, fixtures, pipes and accessories necessary for the
Building;

(gg)    Testing and inspection costs;

(hh)    Fees for the general contractor including, but not limited to, fees and
costs attributable to general conditions associated with the construction of the
Tenant Finish Work;

(ii)    All other costs and fees associated with the construction and
installation of the Tenant Finish Work, but specifically excluding any of
Tenant’s furniture, fixtures and equipment.

(b)    Excess Costs. The cost of each item referenced in Section 5(a) above
shall be charged against the Tenant Finish Allowance. If the Work Cost exceeds
the Tenant Finish Allowance, Tenant shall be solely responsible for payment of
all excess costs (“Tenant’s Work Cost Responsibility”).

(c)    Changes. If, after the Final Plans have been prepared, Tenant requires
any changes or substitutions to the Final Plans, any additional costs related
thereto shall be the responsibility of Tenant, subject to application of the
Tenant Finish Allowance. Any changes to the Final Plans will be approved by
Landlord and Tenant in the manner set forth in Section 4 above.

(d)    Disbursement of the Allowance. Landlord shall disburse the Tenant Finish
Allowance to Tenant for the actual construction costs which Tenant incurs in
connection with the construction of the Tenant Finish Work in one lump sum
(provided, however that Landlord may elect to pay the Tenant Finish Allowance
directly to Tenant’s contractor for the construction of the Tenant Finish Work
(“Tenant’s Contractor”)) and in accordance with this Work Letter. Upon
completion of the Tenant Finish Work, Tenant shall submit “Evidence of
Completion and Payment” (hereafter defined) to Landlord. As used herein, the
“Evidence of Completion and Payment” shall mean:

(i)    Tenant has delivered to Landlord a draw request (“Draw Request”) in a
form reasonably satisfactory to Landlord and Landlord’s lender, signed by
Tenant’s architect certifying that the Tenant Finish Work has been completed in
accordance with the Final Plans,

(ii)    Tenant has delivered to Landlord reasonably acceptable evidence of
payment by Tenant of all costs with respect to the Tenant Finish Work;

(iii)    Tenant has delivered to Landlord evidence of the absence of any liens
generated by such portions of the Tenant’s Work in the form of lien releases
conditional upon receipt of such payment; and

(iv)    Landlord has inspected the Tenant Finish Work and is satisfied that the
Tenant Finish Work has been completed in a good and workmanlike manner in
accordance with this Work Letter.

6.    CONSTRUCTION OF THE TENANT FINISH WORK. Following Landlord’s approval of
the Final Plans described in Section 4 above, Tenant shall use diligent efforts
to cause Tenant’s contractor to complete the Tenant Finish Work in a good and
workmanlike manner in accordance with the Final Plans and in compliance with all
applicable laws, statutes, ordinances, rules and regulations (including the
Americans with Disabilities Act of 1990, as amended) and other applicable
requirements. Tenant agrees to use diligent efforts to cause construction of the
Tenant Finish Work to commence promptly following the issuance of a building
permit for the Tenant Finish Work. Landlord shall have the right to enter upon
the Leased Premises to inspect Tenant’s construction activities following
reasonable advance notice to Tenant. Subject to Force Majeure, Tenant shall
complete the Tenant Finish Work within one hundred eighty (180) days following
the Substantial Completion Date.

 

Exhibit D-1  |  Page 3

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7.    MISCELLANEOUS CONSTRUCTION COVENANTS

(a)    Cooperation. Landlord and Tenant shall cooperate with one another during
the performance of Tenant’s Finish Work to effectuate such work in a timely and
compatible manner. Without limiting the generality of the foregoing, Landlord
and Tenant acknowledge and agree that from the Early Access Date until the
Substantial Completion Date, Landlord and Tenant and their respective employees,
agents, contractors, invitees, or licensees, shall be working simultaneously
within the Building and the Leased Premises to complete the Landlord’s Work and
the Tenant’s Finish Work, respectively, and shall cooperate and work together in
good faith so as not to materially interfere or impede the completion of the
Landlord’s Work or the Tenant Finish Work.

(b)    Landlord Delay. Notwithstanding anything to the contrary contained in the
Lease, upon the occurrence of a Landlord Delay, the Commencement Date shall be
delayed for the same number of days of delay caused by the Landlord Delay. The
term “Landlord Delay” shall mean any delay in completion of the Tenant Finish
Work which is caused or contributed to by Landlord, or those acting by, for or
under Landlord, including, without limitation, any failure by Landlord to
approve proposed plans and specifications on a timely basis or any delay due to
Landlord’s failure to meet any Landlord’s performance deadlines set forth in
this Lease, including without limitation the construction of the Landlord’s
Work. Notwithstanding anything to the contrary contained herein, a Landlord
Delay shall not include any of the foregoing delays to the extent caused by the
acts, omissions, or misconduct of Tenant or any of the Tenant’s employees,
agents, contractors, invitees, or licensees.

(c)    Coordination with Lease. Nothing herein contained shall be construed as
(i) constituting Tenant or Tenant’s agent as Landlord or Landlord’s agent for
any purpose whatsoever, or (ii) a waiver by Landlord or Tenant of any of the
terms or provisions of the Lease. Any default by Landlord or Tenant following
the giving of notice and the passage of any applicable cure period with respect
to any portion of this Tenant Work Letter shall be deemed a breach of the Lease
for which the non-breaching party shall have all the rights and remedies as in
the case of a breach of said Lease.

 

Exhibit D-1  |  Page 4

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EXHIBIT E

(Subordination Agreement)

SUBORDINATION, NONDISTURBANCE, AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NONDISTURBANCE, AND ATTORNMENT AGREEMENT (“Agreement”) is
made as of the          day of                     ,             , by and among
                    ,                                          (“Landlord”),
                    , a                      corporation,
                                         (“Tenant”), and                     ,
                                         (“Mortgagee).

Recitals:

A.    Mortgagee has made a loan to Landlord in the principal amount of $
                     (the “Loan”); and said Loan is secured by the lien of a
Mortgage or Deed of Trust dated as of                      (the “Mortgage”)
recorded with                                          as Document No.
                    , encumbering among other things, the property, and all
improvements thereon described on Exhibit A attached hereto and made a part
hereof (collectively the “Property”).

B.    Tenant has entered into a Lease Agreement dated             ,             
(“Lease”), with Landlord pursuant to which Landlord has leased all or a portion
of the Property to Tenant (the “Premises”) to Tenant on the terms and conditions
set forth in the Lease.

C.    The parties desire to agree upon the terms and conditions of: (i) the
priority of their respective interests in the Premises; (ii) the subordination
of Tenant’s rights under the Lease to the lien of the Mortgage; (iii) Tenant’s
attornment; and (iv) Tenant’s right to continued use and possession of the
Premises pursuant to the terms and conditions of the Lease.

NOW THEREFORE, in consideration of the mutual covenants and agreements of the
parties, and intending to be legally bound, the parties do hereby covenant and
agree as follows:

1.    Definitions. The following terms shall have the following meanings for
purposes of this Agreement:

(a) “Foreclosure Event” means (i) foreclosure under the Mortgage; (ii) any other
exercise by Mortgagee of rights and remedies (whether under the Mortgage or
under applicable law, including bankruptcy law) as holder of the Mortgage or any
other remedy available to Mortgagee under the documents evidencing and/or
securing the Loan or applicable law pursuant, as a result of which a Successor
Landlord becomes the owner of the Property; or (iii) delivery of a deed or other
conveyance of Landlord’s interest in the Property in lieu of any of the
foregoing.

(b) “Successor Landlord” means any party that becomes the owner of the Property
as the result of a Foreclosure Event, including without limitation, Mortgagee.

2.    Subordination of Lease.    The parties agree that, subject to the terms
and conditions of the Lease and this Agreement, the Lease is and shall be
subject and subordinate to the lien of the Mortgage, and to all renewals,
modifications, consolidations, replacements, and extensions of the Mortgage, to
the full extent of the principal sum and all other amounts secured thereby, and
interest thereon.

 

Exhibit E  |  Page 1

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3.    Non-disturbance.

(a) Non-disturbance By Mortgagee. Mortgagee hereby consents to the Lease and
upon the occurrence of any Foreclosure Event, so long as the Lease is in full
force and effect and there is no ongoing default of Tenant under the Lease
beyond any applicable cure period, Mortgagee shall not name or join Tenant as a
defendant or otherwise in any exercise of Mortgagee’s rights and remedies
arising under the Mortgage, unless applicable law requires that Tenant be made a
party thereto as a condition to proceeding against Landlord. In the latter case,
Mortgagee may join Tenant in such action only for such limited purpose, and not
to terminate the Lease, or to terminate Tenant’s possession of the Premises, or
to otherwise adversely affect Tenant’s rights under the Lease or this Agreement
in such action. Additionally, upon the occurrence of any Foreclosure Event, so
long as the Lease is in full force and effect, and there is no ongoing default
of Tenant under the Lease beyond any applicable cure period, Mortgagee shall not
terminate the Lease nor disturb Tenant’s possession of the Premises under the
Lease, except in accordance with the terms of the Lease and this Agreement. So
long as the Lease is in full force and effect and there is no ongoing default of
Tenant under the Lease beyond any applicable cure period To the fullest extent
permitted under applicable law, no foreclosure of the lien of the Mortgage or
other proceeding in respect thereof shall divest, impair, modify, abrogate, or
otherwise adversely affect any interest or rights whatsoever of Tenant under the
Lease, and in the event of such adverse effect Mortgagee or other purchaser or
transferee of the Property and Tenant shall enter into a new lease upon the same
terms as the Lease.

(b) Non-disturbance by Successor Landlord.    When any Successor Landlord takes
title to the Property, so long as the Lease is in full force and effect and
there is no ongoing default of Tenant under the Lease beyond any applicable cure
period, Successor Landlord shall not terminate or disturb Tenant’s possession of
the Premises under the Lease, except in accordance with the terms of the Lease
and this Agreement.

(c) Effect of Foreclosure Event. Upon a Foreclosure Event, the Lease (as
modified by this Agreement) shall continue in full force and effect as though
the default giving rise to such action had not occurred. Subject to the terms of
Section 5 hereof, Successor Landlord shall recognize all of the rights and
interest of Tenant under the Lease, and shall perform all of the duties and
responsibilities of the Landlord under the Lease, with the same force and effect
and with the same priority in right as if the Lease were directly made between
Successor Landlord and Tenant, so long as Tenant is not in default thereunder
beyond any applicable cure period available to Tenant by law, in equity or by
the terms of the Lease.

4.    Attornment. If any Successor Landlord shall succeed to the interest of the
Landlord under the Lease, and the Lease shall not have expired or been
terminated in accordance with the terms of the Lease or this Agreement,
Successor Landlord shall be bound to Tenant under all terms and conditions of
the Lease (except as provided in this Agreement); Tenant shall recognize and
attorn to Successor Landlord; and the Lease shall continue in full force and
effect as a direct lease, in accordance with its terms; and the relationship of
landlord and tenant shall exist between Successor Landlord and Tenant, subject
to Section 5 hereinbelow. Such attornment shall be effective and self-operative
without the execution of any further instrument on the part of the parties
hereto, provided that Tenant shall be under no obligation to pay rent to
Successor Landlord until Tenant receives written notice pursuant to paragraph 10
hereof, from Successor Landlord that it has succeeded to the interest of the
Landlord under the Lease. In such case, Landlord hereby irrevocably authorizes
Tenant to make any required payments to Successor Landlord and releases and
discharges Tenant of, and from, any liability to Landlord on account of any such
payments, even if such payments are made to Successor Landlord in error. Tenant
agrees, however, to execute and deliver at any time and from time to time, upon
the request of Successor Landlord, any instrument or certificate reasonably
necessary to evidence such attornment.

5.    Rights and Obligations of Successor Landlord under Lease. In the event of
attornment, Successor Landlord shall have the same remedies in the event of any
default of Tenant under the Lease (beyond any period given Tenant to cure such
default) in the payment of rent or additional rent or in the performance of any
of the terms, covenants, and conditions of the Lease on Tenant’s part to be
performed that are available to Landlord under the Lease. Tenant shall have the
same remedies against Successor Landlord for the breach of an agreement
contained in the Lease that Tenant might have had against Landlord if Successor
Landlord had not succeeded to the interest of Landlord; provided, however, that
Successor Landlord shall not be:

 

Exhibit E  |  Page 2

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(a) liable for any act or omission of, or any claims against any prior landlord
(including Landlord) unless Mortgagee had written notice of and an opportunity
to cure the same prior to a Foreclosure Event; or

(b) subject to any offsets or defenses which Tenant might have against any prior
landlord (including Landlord) unless Mortgagee had received written notice of
same prior to a Foreclosure Event and a reasonable opportunity to cure the same,
following receipt of a Default Notice under Section 7, below; or

(c) bound by any rent or additional rent which Tenant might have paid for more
than the thirty (30) days in advance to any prior landlord (including Landlord)
unless such payments were actually delivered to Successor Landlord; or

(d) bound by any amendment or modification of a material term, provision and/or
conditions of the Lease, or waiver of any of its terms, made without its
consent, which consent shall not be unreasonably withheld, delayed or
conditioned, which results in reduction of rent or other sums due under the
Lease or that would adversely affect the economic terms of the Lease, decreases
the economic benefits of the Lease for Successor Landlord, or increases the
Successor Landlord’s obligations unless, in any such instances, the amendment or
modification is affected through the exercise of a right expressly accorded to
Tenant under the Lease; or

(e) liable for any sum that any prior landlord (including Landlord) owed to
Tenant, including without limitation any security deposit, unless the amount
owed was actually delivered to Successor Landlord; or

(f) bound by any cancellation, termination or surrender of the Lease, except as
expressly provided under the Lease or otherwise approved in writing by Successor
Landlord; or

(g) bound by any assignment of the Lease or sublet of any portion of the
Premises, except as expressly provided under the Lease or otherwise approved in
writing by Successor Landlord.

6.    Exculpation of Successor Landlord.    Notwithstanding anything to the
contrary in this Agreement or the Lease, upon any attornment pursuant to this
Agreement, Successor Landlord’s obligations and liability under the Lease shall
not extend beyond Successor Landlord’s (or its successors’ or assigns’) interest
in the Property, including insurance and condemnation proceeds; and Successor
Landlord’s interest in the Lease (collectively, “Successor Landlord’s
Interest”). Tenant shall look exclusively to Successor Landlord’s Interest (or
that of its successors and assigns) for payment or discharge of any obligations
of Successor Landlord under the Lease as amended or affected by this Agreement.

7.    Mortgagee’s Right to Cure.

(a) Notice to Mortgagee. Notwithstanding anything to the contrary in the Lease
or this Agreement, before exercising any remedies under the Lease, Tenant shall
provide Mortgagee with notice of the breach or default by Landlord giving rise
to same (“Default Notice”) and, thereafter, the opportunity to cure such breach
or default as provided for below.

(b) Mortgagee’s Cure Period. After Mortgagee receives a Default Notice,
Mortgagee shall have a period of fifteen (15) days after the date of receipt of
any such Default Notice or (subject to the provisions of Section 12, below) such
longer period as is otherwise available to the Landlord under the Lease, in
which to cure the breach or default by Landlord. Mortgagee shall have no
obligation to cure any such breach or default by Landlord, unless and until
Mortgagee holds legal title or possession of the Property, at which point
Mortgagee will have such additional time as would have been available to
Landlord under the Lease as if it received a Default Notice on the date that
Mortgagee acquires legal title to or possession of the Property. Notwithstanding
anything to the contrary contained herein, in the event Landlord or Mortgagee
does not cure such default within the time period provided to Landlord under the
Lease and the nature of the default threatens Tenant’s ability to conduct its
daily business or threatens to materially or adversely damage Tenant’s property
located in the Premises, then Tenant may be permitted to exercise its rights and
remedies under the Lease.

 

Exhibit E  |  Page 3

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8.    Miscellaneous.

(a) Successors and Assigns. This Agreement shall bind and benefit the parties,
their successors and assigns, any Successor Landlord, and its successors and
assigns. If Mortgagee assigns the Mortgage, then upon delivery to Tenant of
written notice thereof accompanied by the assignee’s written assumption of all
obligations under this Agreement, all liability of the assignor shall terminate.

(b) Entire Agreement. This Agreement constitutes the entire agreement among
Mortgagee, Landlord, and Tenant regarding the rights and obligations of Tenant,
Landlord, and Mortgagee as to the subject matter of this Agreement.

(c) Conflict Between Lease and Agreement. If this Agreement conflicts with the
Lease, then this Agreement shall govern as between the parties and any Successor
Landlord.

(d) Interpretation; Governing Law. The interpretation, validity, and enforcement
of this Agreement shall be governed by and construed under the internal laws of
the state or commonwealth where the Property is located, excluding its
principles of conflicts of law.

(e) Amendments. This Agreement may be amended only by a written instrument
executed by all parties, which amendment shall be effective only when a duly
executed original or copy is delivered to each party.

(f) Counterparts and Electronic Signatures. This Agreement may be executed in
several counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument. In addition, this Agreement may
contain more than one counterparts of the signature page, and this Agreement may
be executed by the affixing of the signatures of each of the parties to one of
such counterparts. All of such counterparts shall be read as though one, and
they shall have the same force and effect as though all the signers had signed a
single page. The delivery of a copy of a counterpart of a signature page of this
Agreement, bearing an original signature, by facsimile or by electronic mail in
“pdf”, or “portable document format” form, or by any other “read only”
electronic means which shall preserve the original graphic appearance of such
signature page and such signature, will have the same effect as the physical
delivery of the paper version of said signature page to this Agreement bearing
the original signature.

(g) Notice by Landlord to Tenant. Landlord hereby agrees to notify Tenant in
writing of any release, satisfaction or termination of the Mortgage.

10.    Notices.    Any notice or other communication to the parties shall be
sent to the addresses set forth in the caption to this Agreement, or such other
addresses as a party may from time to time specify by notice in writing to any
other party. Any such notice or other communication shall be in writing, and
shall be given by certified mail, return receipt requested, postage prepaid; or
by nationally recognized private, overnight courier. Notice will be deemed given
(i) five (5) days after deposit in the U.S. Mail or on such earlier date as same
is actually received; or (ii) one (1) business day after deposit with a
nationally recognized overnight courier.

11.    Rent Payments. If Landlord defaults in the performance of its obligations
under the Mortgage, Tenant will recognize any assignment of rents Landlord made
to Mortgagee and will pay to Mortgagee as assignee all rents that become due
under the terms of the Lease after the date of Tenant’s receipt of (i) a written
demand from Mortgagee (accompanied by a fully executed copy of this Agreement),
indicating that Landlord is in default under the terms of the Mortgage; (ii) the
Assignment Agreement or other legal documentation verifying the right of
Mortgagee to receive rent and other payments under the Lease; and (iii) an IRS
Form W-9 (Request for Taxpayer Identification Number and Certification) from

 

Exhibit E  |  Page 4

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Mortgagee. Tenant shall have no obligation to verify the existence of any
default alleged by Mortgagee. Landlord acknowledges that it has assigned the
rents due under the Lease to Mortgagee and authorizes Tenant to accept
Mortgagee’s direction and waives all claims against Tenant for any sums so paid
at Mortgagee’s direction. Mortgagee acknowledges, however, that Tenant will be
making payments of rent to Landlord by means of computer-generated checks or
other electronic payment and that Tenant will require a period of time within
which to re-program its accounts payable computer system to reflect Tenant’s
receipt of Mortgagee’s direction. Consequently, Tenant will have no liability to
Mortgagee for any regularly scheduled installment of rent remitted to Landlord
during the period that begins on the date of Tenant’s receipt of Mortgagee’s
direction and that ends thirty (30) days after that date. Landlord shall
indemnify, defend and hold harmless Tenant, its agents, servants and employees,
from and against any and all claims, actions, liabilities, damages and expenses
(including reasonable attorneys’ fees and costs) arising out of or related to
Tenant’s compliance with Mortgagee’s instructions pursuant to this paragraph 11,
even if such instructions were given, and payments made, in error. Tenant’s
payment of rents to Mortgagee in accordance with the foregoing will continue
until the first to occur of the following:

(a) no further rent is due or payable under the terms of the Lease; or

(b) Mortgagee gives Tenant notice that Landlord has cured the default that
existed under the Mortgage and instructs Tenant to make subsequent remittances
of the rent to Landlord; or

(c) a transfer of the Property occurs and the purchaser and Mortgagee give
Tenant notice of such transfer, together with the legal documents giving
evidence to such transfer, IRS Form W-9, and other information required by
Tenant to change its accounts payable system. The purchaser will automatically
succeed to Landlord’s interest under the terms of the Lease, after which time
the rents and other benefits accruing in favor of Landlord under the terms of
the Lease will be payable to the purchaser as the owner of the Premises.

12.    Copy of Agreement.    No provision of this Agreement shall be binding
upon Tenant unless and until Landlord and Mortgagee shall have also duly
executed this Agreement and a duplicate original of this Agreement has been
provided to Tenant at the address set forth in the caption to this Agreement.

[Remainder of Page Intentionally Left Blank;

Signature and Notary Pages to Follow]

 

Exhibit E  |  Page 5

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused the execution of this
Subordination, Non-Disturbance, and Attornment agreement as of the day and year
first above written.

SIGNED, SEALED, AND DELIVERED

IN THE PRESENCE OF:

TENANT:   By:     Printed:     Its:     Date:    

 

STATE OF           )         )  SS: COUNTY OF           )

Before me, a Notary Public in and for said County and State, personally appeared
the above-named                                         , by
                            , its                              who acknowledged
that he did sign the foregoing instrument on behalf of
                            , the Tenant, and that the same is the free act and
deed of the corporation and his free act and deed as such officer and as an
individual.

IN WITNESS WHEREOF, I hereunto have set my hand and seal at
                                        ,                              this
             day of                                 , 20        .

 

  Notary Public Print name:    

My commission expires:    

 

Exhibit E  |  Page 6

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused the execution of this
Subordination, Non-Disturbance, and Attornment agreement as of the day and year
first above written.

SIGNED, SEALED, AND DELIVERED

IN THE PRESENCE OF:

LANDLORD:   By:     Printed:     Its:     Date:    

 

STATE OF           )         )  SS: COUNTY OF           )

Before me, a Notary Public in and for said County and State, personally appeared
the above-named                                         , by
                            , its                              who acknowledged
that he did sign the foregoing instrument on behalf of
                            , the Landlord, and that the same is the free act
and deed of the corporation and his free act and deed as such officer and as an
individual.

IN WITNESS WHEREOF, I hereunto have set my hand and seal at
                                        ,                              this
             day of                                 , 20        .

 

  Notary Public Print name:    

My commission expires:    

 

Exhibit E  |  Page 7

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused the execution of this
Subordination, Non-Disturbance, and Attornment agreement as of the day and year
first above written.

SIGNED, SEALED, AND DELIVERED

IN THE PRESENCE OF:

MORTGAGEE:   By:     Printed:     Its:     Date:    

 

STATE OF           )         )  SS: COUNTY OF           )

Before me, a Notary Public in and for said County and State, personally appeared
the above-named                                         , by
                            , its                              who acknowledged
that he did sign the foregoing instrument on behalf of
                            , the Mortgagee, and that the same is the free act
and deed of the corporation and his free act and deed as such officer and as an
individual.

IN WITNESS WHEREOF, I hereunto have set my hand and seal at
                                        ,                              this
             day of                                 , 20        .

 

  Notary Public Print Name:    

My commission expires:    

 

Exhibit E  |  Page 8

--------------------------------------------------------------------------------

SNDA EXHIBIT A

PROPERTY

 

Exhibit E  |  Page 9

--------------------------------------------------------------------------------

EXHIBIT F

TENANT ESTOPPEL CERTIFICATE

[INSERT ADDRESS OF RECIPIENTS]

 

RE:

[INSERT SITE ADDRESS]

Ladies and Gentleman:

For the purpose of providing information regarding the premises commonly known
as                      (the “Premises”), in which
                                                             , a
                                         corporation, is a tenant (“Tenant”) and
                                                              is the landlord
(“Landlord”) under that certain lease (the “Lease”), dated
                                        , 20        , to the best of its
information, knowledge and belief, Tenant does hereby certify to
                                         as of the date hereof, the following:

 

1.        (a)    Date of Amendments      or Modifications:   (b)    Date of
Assignment:   (c)    Primary Term of Lease:      Rent Commencement Date:     
Lease Expiration Date:   (d)    Remaining Extension Options:      First Renewal
Term:      Second Renewal Term:   (e)    Monthly Base Rent:   (f)    Monthly
Base Rent Escalations:      First Renewal Term:      Second Renewal Term:   (g)
   Security Deposit:   (h)    Outstanding Allowance:   (i)    Expansion Option:

 

2.

The Lease is the legal, valid and binding obligation of Tenant enforceable
against Tenant according to its terms and has not been modified either orally or
in writing, except as disclosed in section 1(a) above, and the Lease is in full
force and effect. The Lease constitutes the entire agreement between Tenant and
Landlord.

 

Exhibit F, Page 1

--------------------------------------------------------------------------------

3.

The Lease is in full force and effect and except as set forth on Exhibit “A”
attached hereto (i) neither Landlord nor Tenant has issued a notice of default
and to Tenant’s actual knowledge without investigation there are no events that
with the passage of time or notice would constitute a default by Landlord or
Tenant under the Lease, and (ii) to Tenant’s actual knowledge without
investigation Landlord is in full compliance with all of the terms, conditions
and covenants of the Lease.

 

4.

Landlord has completed all construction obligations, if any, except as set forth
on Exhibit “A” attached hereto, and has made any contribution to work to be
performed by Tenant that was required under the Lease, except
                                        . [IF ALLOWANCE NOT RECONCILED INSERT
THE FOLLOWING LANGUAGE: the Allowance has not yet been reconciled and
$                     remains outstanding. IF NOT, END THE SENTENCE AFTER THE
WORD LEASE].

 

5.

Tenant has no contract to acquire, purchase option or right of first refusal
with respect to the Premises or any part thereof, and no right to terminate the
Lease prior to its scheduled expiration, except as specifically set forth in the
Lease.

 

6.

All rent, charges and other payments due Landlord, under the Lease have been
paid as of the date of this Certificate and no rent has been paid more than
thirty (30) days in advance.

 

7.

Tenant does not have or hold any claim or defense against Landlord which might
be offset or credited against future rents or any other obligation accruing
under the Lease, except                                          
                   .[IF THERE ARE SUCH CLAIMS OR DEFENSES, INSERT THE SAME WITH
THE SECTION REFERENCE; IF NOT, END THE SENTENCE AFTER THE WORD LEASE]

 

8.

Tenant is entitled to no claims, counterclaims, defenses or setoffs against
Landlord, arising from the Lease, nor is Tenant entitled to any concessions,
rebate, allowance, abatement (subject to Section 13 of the Lease) or free rent
for any period after the date of this certification, except
                                                             .[IF THERE ARE SUCH
CLAIMS OR DEFENSES, INSERT THE SAME WITH THE SECTION REFERENCE; IF NOT, END THE
SENTENCE AFTER THE WORD LEASE]

 

9.

Tenant has no actual knowledge of any prior sale, transfer, assignment,
hypothecation, or pledge of the Premises, the Lease, or the rents payable
thereunder and Tenant has not assigned its interest in the Lease or sublet any
of the Premises.

 

10.

To Tenant’s actual knowledge without investigation, there are no actions,
whether voluntary or otherwise, pending against the Tenant or any guarantor of
the Lease under the bankruptcy or insolvency laws of the United States or any
state thereof, related to the Lease.

 

TENANT: By:     Printed:     Its:     Date:                                   ,
20        

 

Exhibit F, Page 2

--------------------------------------------------------------------------------

Estoppel Exhibit “A”

Incomplete Construction Obligations

 

Exhibit F, Page 3

--------------------------------------------------------------------------------

EXHIBIT G

FORM OF COMPLIANCE CERTIFICATE

COMPLIANCE CERTIFICATE

The undersigned, being the Chief Financial Officer of                      (the
“Tenant”) is delivering this Compliance Certificate, for and on behalf of the
Tenant, in accordance with the provisions of that certain Lease Agreement dated
                             , 20         (the “Lease”) by and between
                     (the “Landlord”) and Tenant, confirming the Tenant’s
compliance with the Financial Covenant (as defined herein).

For purposes of the Lease, the term “Financial Covenant” shall mean that the
Tenant (i) has and maintains a tangible net worth, determined in accordance with
generally accepted accounting principles, of no less than One Hundred Million
Dollars ($100,000,000.00); (ii) working capital, determined in accordance with
generally accepted accounting principles, of at least Ten Million Dollars
($10,000,000.00); and (iii) loss reserves for the amount of Tenant’s
self-insurance obligations under the Lease, the amounts of which are actuarially
derived in accordance with accepted standards of the insurance industry and
accrued (i.e., charged against earnings) or otherwise funded.

By execution of this Compliance Certificate, Tenant acknowledges and agrees that
its undertaking to self-insure the risks that would be otherwise covered by the
insurance required in the Lease does not and will not affect, alter or otherwise
modify the indemnity obligations of Tenant under the Lease or those terms of
this Lease which provide for the waiver and/or release of certain claims as
against the Landlord.

The undersigned, for and on behalf of Tenant, hereby represents, warrants and
certifies that the information contained in this Compliance Certificate is true
and accurate as of this          day of                     .

 

                     By:     Printed:     Title:   Chief Financial Officer

 

Exhibit G, Page 1