Exhibit 10.4


 


 





OFFICE SPACE LEASE
AGREEMENT


 


This Commercial Lease Agreement (“Lease”)
is made and effective October 1, 2012 , by and between Russ Hedrick dba Hedrick Group LLC (“Landlord”)
and _ Sigma Labs, Inc. (“Tenant”).


 


Landlord is the owner of land and improvements
commonly known and numbered as 100 Cienega Street, Santa Fe, New Mexico 87501 -The Hedrick Building (the “Building”):


 


Landlord makes available for lease a portion
of the Building designated as Suites C, D and E (the “Leased Premises”).


 


Landlord desires to lease the Leased Premises
to Tenant, and Tenant desires to lease the Leased Premises from Landlord for the term, at the rental and upon the covenants, conditions
and provisions herein set forth.


 


THEREFORE, in consideration of the mutual
promises herein, contained and other good and valuable consideration, it is agreed:


 


1. Term.


 


A. Landlord hereby leases the Leased Premises
to Tenant, and Tenant hereby leases the same from Landlord, for an “Initial Term” beginning October 1, 2012
and ending September, 2013.


 


B. Tenant may renew the Lease for one extended
term of 1 year. Tenant shall exercise such renewal option, if at all, by giving written notice to Landlord not less
than ninety (90) days prior to the expiration of the Initial Term. The renewal term shall be at the rental set forth below and
otherwise upon the same covenants, conditions and provisions as provided in this Lease.


 


2. Rental.


 


A. Tenant shall pay to Landlord during the
Initial Term rental of $36,000 per year, in installments of $3,000.00 per month. Each installment payment
shall be due in advance on the first day of each calendar month during the lease term to the Landlord at Barbra
Hedrick, 2888 Plaza Blanca, Santa Fe, NM 87507 or at such other place designated by written notice from Landlord or Tenant.
The rental payment amount for any partial calendar months shall be prorated on a daily basis. Tenant shall also pay to Landlord
a “Security Deposit” in the amount of 0.00 [Security Deposit].


 


B. The rental for any renewal lease term,
if created as permitted under this Lease, shall be negotiated by August 1, 2013.


 


3. Use


 


Allowed use is strictly for traditional
office activity as required by Landlord's Insurance. Tenant shall not use the Leased Premises for the purposes of storing, manufacturing
or selling any explosives, flammables or other inherently dangerous substance, chemical, thing or device.


 


4. Sublease and Assignment.


 


Tenant shall not sublease all or any part
of the Leased Premises, or assign this Lease in whole or in part without Landlord’s consent.


 


5. Repairs.


 


During the Lease term, Tenant shall make,
at Tenant’s expense, all necessary repairs to the Leased Premises. Repairs shall include such items as routine repairs of
floors, walls, ceilings, and other parts of the Leased Premises damaged or worn through normal occupancy, except for major mechanical
systems or the roof, subject to the obligations of the parties otherwise set forth in this Lease. Note: Landlord agrees to continue
to provide such repairs as performed in the past under the Sumner Lease (e.g. carpet repair / cleaning, light bulb replacement,
plumbing maintenance, etc...).


 






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6. Alterations and Improvements.


 


Any alteration or improvements to the Leased
Premises shall require Landlord's consent and shall be negotiated between Landlord and Tenant.


 


7. Property Taxes.


 


Landlord shall pay, prior to delinquency,
all general real estate taxes and installments of special assessments coming due during the Lease term on the Leased Premises,
and all personal property taxes with respect to Landlord’s personal property, if any, on the Leased Premises. Tenant shall
be responsible for paying all personal property taxes with respect to Tenant’s personal property at the Leased Premises.


 


8. Insurance.


 


A. If the Leased Premises or any other party
of the Building is damaged by fire or other casualty resulting from any act or negligence of Tenant or any of Tenant’s agents,
employees or invitees, rent shall not be diminished or a bated while such damages are under repair, and Tenant shall be responsible
for the costs of repair not covered by insurance.


 


B. Landlord shall maintain fire and extended
coverage insurance on the Building and the Leased Premises in such amounts as Landlord shall deem appropriate. Tenant shall be
responsible, at its expense, for fire and extended coverage insurance on all of its personal property, including removable trade
fixtures, located in the Leased Premises.


 


C. Tenant and Landlord shall, each at its
own expense, maintain a policy or policies of comprehensive general liability insurance with respect to the respective activities
of each in the Building with the premiums thereon fully paid on or before due date, issued by and binding upon some insurance company
approved by Landlord, such insurance to afford minimum protection of not less than $1,000,000 combined single limit coverage of
bodily injury, property damage or combination thereof. Landlord shall be listed as an additional insured on Tenant’s policy
or policies of comprehensive general liability insurance, and Tenant shall provide Landlord with current Certificates of Insurance
evidencing Tenant’s compliance with this Paragraph. Tenant shall obtain the agreement of Tenant’s insurers to notify
Landlord that a policy is due to expire at least (10) days prior to such expiration. Landlord shall not be required to maintain
insurance against thefts within the Leased Premises or the Building.


 


9. Utilities.


 


Landlord shall pay all charges for water,
sewer, gas, and electricity, Tenant shall pay for all other services. Tenant acknowledges that the Leased Premises are designed
to provide standard office use electrical facilities and standard office lighting. Tenant shall not use any equipment or devices
that utilize excessive electrical energy or which may, in Landlord’s reasonable opinion, overload the wiring or interfere
with electrical services to other tenants.


 


10. Signs.


 


Tenant shall not place any sign on the Building
without Landlord's consent. Landlord shall pay for a sign in the Tenant's name in front of the Tenant's assigned Parking Space.


 


11. Entry.


 


Landlord shall have the right to enter upon
the Leased Premises at reasonable hours to inspect the same, provided Landlord shall not thereby unreasonably interfere with Tenant’s
business on the Leased Premises.


 


12. Parking.


 


During the term of this Lease, Tenant shall
have four exclusively assigned parking spaces (four spaces from north of parking area). Building parking assignments are strictly
enforced, and cooperation with other Tenants is required. Any use of the assigned parking space by clients, associates and friends
and family of the Tenant shall be closely monitored by the Tenant. Landlord shall have shared use of the most northern parking
space when he is in Santa Fe.


 






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13. Building Rules.


 


Tenant will comply with the rules of the
Building adopted and altered by Landlord from time to time and will cause all of its agents, employees, invitees and visitors to
do so; all changes to such rules will be sent by Landlord to Tenant in writing. There shall be no whining.


 


14. Damage and Destruction.


 


Subject to Section 8 A. above, if the Leased
Premises or any part thereof or any appurtenance thereto is so damaged by fire, casualty or structural defects that the same cannot
be used for Tenant’s purposes, then Tenant shall have the right within ninety (90) days following damage to elect by notice
to Landlord to terminate this Lease as of the date of such damage. In the event of minor damage to any part of the Leased Premises,
and if such damage does not render the Leased Premises unusable for Tenant’s purposes, Landlord shall promptly repair such
damage at the cost of the Landlord. In making the repairs called for in this paragraph, Landlord shall not be liable for any delays
resulting from strikes, governmental restrictions, inability to obtain necessary materials or labor or other matters which are
beyond the reasonable control of Landlord. Tenant shall be relieved from paying rent and other charges during any portion of the
Lease term that the Leased Premises are inoperable or unfit for occupancy, or use, in whole or in part, for Tenant’s purposes.
Rentals and other charges paid in advance for any such periods shall be credited on the next ensuing payments, if any, but if no
further payments are to be made, any such advance payments shall be refunded to Tenant. The provisions of this paragraph extend
not only to the matters aforesaid, but also to any occurrence which is beyond Tenant’s reasonable control and which renders
the Leased Premises, or any appurtenance thereto, inoperable or unfit for occupancy or use, in whole or in part, for Tenant’s
purposes.


 


15. Default.


 


If default shall at any time be made by
Tenant in the payment of rent when due to Landlord as herein provided, and if said default shall continue for fifteen (15) days
after written notice thereof shall have been given to Tenant by Landlord, or if default shall be made in any of the other covenants
or conditions to be kept, observed and performed by Tenant, and such default shall continue for thirty (30) days after notice thereof
in writing to Tenant by Landlord without correction thereof then having been commenced and thereafter diligently prosecuted, Landlord
may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of
the Leased Premises is not surrendered, Landlord may reenter said premises. Landlord shall have, in addition to the remedy above
provided, any other right or remedy available to Landlord on account of any Tenant default, either in law or equity. Landlord shall
use reasonable efforts to mitigate its damages.


 


16. Quiet Possession.


 


Landlord shall provide Tenant with Quiet
Possession in accordance with the laws New Mexico.


 


17. Condemnation.


 


If any legally, constituted authority condemns
the Building or such part thereof which shall make the Leased Premises unsuitable for leasing, this Lease shall cease when the
public authority takes possession, and Landlord and Ten ant shall account for rental as of that date. Such termination shall be
without prejudice to the rights of either party to recover compensation from the condemning authority for any loss or damage caused
by the condemnation. Neither party shall have any rights in or to any award made to the other by the condemning authority.


 


18. Subordination. 


 


Tenant accepts this Lease subject and subordinate
to any mortgage, deed of trust or other lien presently existing or hereafter arising upon the Leased Premises, or upon the Building
and to any renewals, refinancing and extensions thereof, but Tenant agrees that any such mortgagee shall have the right at any
time to subordinate such mortgage, deed of trust or other lien to this Lease on such terms and subject to such conditions as such
mortgagee may deem appropriate in its discretion. Landlord is hereby irrevocably vested with full power and authority to subordinate
this Lease to any mortgage, deed of trust or other lien now existing or hereafter placed upon the Leased Premises of the Building,
and Tenant agrees upon demand to execute such further instruments subordinating this Lease or attorning to the holder of any such
liens as Landlord may request. In the event that Tenant should fail to execute any instrument of subordination herein require d
to be executed by Tenant promptly as requested, Tenant hereby irrevocably constitutes Landlord as its attorney-in-fact to execute
such instrument in Tenant’s name, place and stead, it being agreed that such power is one coupled with an interest. Tenant
agrees that it will from time to time upon request by Landlord execute and deliver to such persons as Landlord shall request a
statement in recordable form certifying that this Lease is unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as so modified), stating the dates to which rent and other charges payable under this
Lease have been paid, stating that Landlord is not in default hereunder (or if Tenant alleges a default stating the nature of such
alleged default) and further stating such other matters as Landlord shall reasonably require.


 






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19. Security Deposit.


 


The Security Deposit shall be held by Landlord
without liability for interest and as security for the performance by Tenant of Tenant’s covenants and obligations under
this Lease, it being expressly understood that the Security Deposit shall not be considered an advance payment of rental or a measure
of Landlord’s damages in case of default by Tenant. Unless otherwise provided by mandatory non-waivable law or regulation,
Landlord may commingle the Security Deposit with Landlord’s other funds. Landlord may, from time to time, without prejudice
to any other remedy, use the Security Deposit to the extent necessary to make good any arrearages of rent or to satisfy any other
covenant or obligation of Tenant hereunder. Following any such application of the Security Deposit, Tenant shall pay to Landlord
on demand the amount so applied in order to restore the Security Deposit to its original amount. If Tenant is not in default at
the termination of this Lease, the balance of the Security Deposit remaining after any such application shall be returned by Landlord
to Tenant. If Landlord transfers its interest in the Premises during the term of this Lease, Landlord may assign the Security Deposit
to the transferee and thereafter shall have no further liability for the return of such Security Deposit.


 


20. Notice.


 


Any notice required or permitted under this
Lease shall be deemed sufficiently given or served if sent by United States certified mail, return receipt requested, addressed
as follows:


 


If to Landlord to:


Russ Hedrick, Hedrick Group LLC


P.O Box 2185


Santa Fe, New Mexico 87504-2185


 


If to Tenant to:


 


Mark Cola


Sigma Labs, Inc.


100 Cienega Street Ste D


Santa Fe, NM 87501


 


 


Landlord and Tenant shall each have the
right from time to time to change the place notice is to be given under this paragraph by written notice thereof to the other party.


 


21. Brokers.


 


Tenant represents that Tenant was not shown
the Premises by any real estate broker or agent and that Tenant has not otherwise engaged in, any activity which could form the
basis for a claim for real estate commission, brokerage fee, finder’s fee or other similar charge, in connection with this
Lease.


 


22. Waiver.


 


No waiver of any default of Landlord or
Tenant hereunder shall be implied from any omission to take any action on account of such default if such default persists or is
repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for
the time and to the extent therein stated. One or more waivers by Landlord or Tenant shall not be construed as a waiver of a subsequent
breach of the same covenant, term or condition.


 


23. Memorandum of Lease.


 


The parties hereto contemplate that this
Lease should not and shall not be filed for record, but in lieu thereof, at the request of either party, Landlord and Tenant shall
execute a Memorandum of Lease to be recorded for the purpose of giving record notice of the appropriate provisions of this Lease.


 


24. Headings.


 


The headings used in this Lease are for
convenience of the parties only and shall not be considered in interpreting the meaning of any provision of this Lease.


 






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25. Successors.


 


The provisions of this Lease shall extend
to and be binding upon Landlord and Tenant and their respective legal representatives, successors and assigns.


 


26. Consent.


 


Landlord shall not unreasonably withhold
or delay its consent with respect to any matter for which Landlord’s consent is required or desirable under this Lease.


 


27. Performance.


 


If there is a default with respect to any
of Landlord’s covenants, warranties or representations under this Lease, and if the default continues more than fifteen (15)
days after notice in writing from Tenant to Landlord specifying the default, Tenant may, at its option and without affecting any
other remedy hereunder, cure such default and deduct the cost thereof from the next accruing installment or installments of rent
payable hereunder until Tenant shall have been fully reimbursed for such expenditures, together with interest thereon at a rate
equal to the lesser of twelve percent (12%) per annum or the then highest lawful rate. If this Lease terminates prior to Tenant’s
receiving full reimbursement, Landlord shall pay the unreimbursed balance plus accrued interest to Tenant on demand.


 


28. Compliance with Law.


 


Tenant shall comply with all laws, orders,
ordinances and other public requirements now or hereafter pertaining to Tenant’s use of the Leased Premises. Landlord shall
comply with all laws, orders, ordinances and other public requirements now or hereafter affecting the Leased Premises.


 


29. Final Agreement.


 


This Agreement terminates and supersedes
all prior understandings or agreements on the subject matter hereof. This Agreement may be modified only by a further writing that
is duly executed by both parties.


 


30. Governing Law.


 


This Agreement shall be governed, construed
and interpreted by, through and under the Laws of the State of New Mexico.


 


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


 


	/s/ Russ Hedrick 	 
	Russ Hedrick, Landlord	 
	 	 
	/s/ Mark Cola 	 
	Mark Cola	 
	President	 
	Sigma Labs, Inc.	 
	 	 




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