EXHIBIT 10.1





 


 


EXHIBIT 10.1                                                      


BEAVERTON
LEASE AGREEMENT


 


INDUSTRIAL
LEASE AGREEMENT


THIS INDUSTRIAL LEASE AGREEMENT (this “Lease”) dated for
references purposes only is made between PS, Business Parks, L.P. a California
limited partnership (“Landlord”), and Pro-Dex. Inc. a Colorado corporation
(“Tenant”), as of September 24, 2007 (the “date of this Lease”).


BASIC LEASE INFORMATION


PREMISES:      Approximately
7,482 rentable square feet commonly known as Suite B-1 15201 NW Greenbrier
Parkway, Beaverton, Oregon as depicted on Exhibit A-1.


BUILDING
& PROJECT:  Approximately 22,920 rentable square feet located at NW Greenbrier Parkway, Beaverton, OR 97006 and commonly referred to as the Ridgeview B Building, as depicted on Exhibit A-2. The Building is a part of the Project
commonly referred to as Ridgeview  and contains approximately 93,143 square
feet, as depicted and more particularly described on Exhibit A-2. The project
is part of the property commonly referred to as Cornell Oaks Corporate Center and contains approximately 688,216 square feet as depicted on Exhibit A-2.


PERMITTED USE:      General
office use and laboratory and warehouse purposes for motion control devices.


TERM:    A
period of 76 months and 0 days.  Subject to Section 1.02, the Term shall
commence on November 1, 2007 (the “Commencement Date”) and, unless terminated
early in accordance with this Lease, end on February 28, 2014 (the
“Termination Date”).


BASE RENT:


 




	
  Period
  of Term

  	
  Monthly

  Base
  Rent

  	
  Annual

  Base
  Rent

  
	
  11-01-07
  to 02-29-08

  	
  $0.00

  	
  $0.00

  
	
  03-01-08
  to 10-31-08

  	
  $6,060.00

  	
  $72,720.00

  
	
  11-01-08
  to 10-31-09

  	
  $6,242.00

  	
  $74,904,00

  
	
  11-01-09
  to 10-31-10

  	
  $6,429.00

  	
  $77,148.00

  
	
  11-01-10
  to 10-31-11

  	
  $6,622.00

  	
  $79,464,00

  
	
  11-01-11
  to 10-31-12

  	
  $6,821.00

  	
  $81,852.00

  
	
  11-01-12
  to 10-31-13

  	
  $7,026.00

  	
  $84,312.00

  
	
  11-01-13
  to 2-28-14

  	
  $7,237.00

  	
  $86,844.00

  






ESTIMATED INITIAL MONTHLY OPERATING EXPENSES: $2,244.60 per
month, subject to Exhibit D.


SECURITY DEPOSIT: $9,481.60


TENANT’S PROPORTIONATE SHARE OF BUILDING: 32.64% OF PROJECT:
8.0328% OF PROPERTY: 1.0872%


PARKING
DENSITY:        Approximately 3.4 unreserved spaces per 1,000 square feet of
the Premises, which spaces shall be in common with other tenants of the
Project, at no cost to Tenant during for the duration of the Lease.


LANDLORD’S BROKER: Trevor Kafoury 

CB Richard Ellis

 

 

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TENANT’S BROKER:       Josh Schweitz

GVA Kidder Matthews


TENANT’S SIC CODE: 384


ADDRESSES FOR

NOTICES:                          To: Tenant                                      To: 
Landlord


                                          151 E. Columbine Avenue                15455 NW  Greenbrier Parkway, Suite 245


                                          Santa Ana,  California 92707             Beaverton, Oregon 97006


                                          Attn: Jeff Ritchey                            Attn:     ___________________


                                          FAX: 714-433-7200                                  FAX:
503-629-4821 


TENANT’S BILLING ADDRESS if different from Notice Address —
same as above


LANDLORD’S
REMITTANCE ADDRESS:    PS Business Parks, Pacific NW, PO Box 39000, Dept. #33666,

  San Francisco, California 94139 


This Lease consists of the foregoing Basic Lease Information, the
following Lease provisions consisting of Sections 1 through 28 and Exhibits
A-1, A-2, B, C, D and E all of which are incorporated herein by this reference.
Defined terms used in this Lease and included in the Basic Lease Information
shall have the meanings given them in the Basic Lease information.


1.         Lease of Premises; Compliance with Laws;
Surrender.


1.01      Landlord leases to Tenant, and Tenant leases from Landlord,
the Premises, upon the terms of this Lease. The Premises are leased “AS IS”
except only for the improvements, if any, which are to be constructed by
Landlord pursuant to Exhibit B. Tenant acknowledges that neither Landlord nor
any agent of Landlord has made any representation or warranty regarding the
Premises, except as otherwise expressly provided in this Lease. By taking
possession of the Premises, Tenant agrees that the Premises are in good order
and satisfactory condition. The square footages set forth in this Lease are
approximate and agreed. For purposes of this Lease, the term “Property” means
the Building (as defined above in the Basic Lease information), the Project (as
defined above in the Basic Lease Information), and the parcel(s) of land on
which they are located and, at Landlord’s discretion, the parking facilities
and other improvements, if any, serving the Building, Project and/or the
parcel(s) of land on which they are located. if the Project is part of a larger
complex of structures, the term “Property” may include the entire complex,
where appropriate in Landlord’s reasonable discretion.

 

 

 


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1.02      If for any reason Landlord cannot deliver possession of
the Premises on the Commencement Date, Landlord will not be subject to any
liability nor will the validity of this Lease be affected in any manner.
Rather, the actual Commencement Date shall be delayed until delivery of
possession in which event the Termination Date shall be extended to include the
same number of full calendar months as set forth in the Basic Lease Information
(plus any partial first month); provided, in the event delivery of possession
is delayed by any act, omission or request of Tenant or any Tenant Entity, then
the Premises shall be deemed to have been delivered (and the actual
Commencement Date shall occur) on the earlier of the actual date of delivery or
the date delivery would have occurred absent the number of days of such delay
attributable to Tenant and the Term (as defined above in the Basic Lease
Information) shall then be for such number of full calendar months (plus any
partial first month). Upon request made by Landlord following the Commencement
Date, Tenant shall execute and deliver a commencement letter setting forth the
actual Commencement Date, the date upon which the Term shall expire, and such
other matters regarding the commencement of this Lease as Landlord shall
request. Tenant’s failure to execute and return the commencement letter, or to
provide written objection to the statements contained in the commencement
letter, within 10 days after the date of the commencement letter shall be
deemed an approval by Tenant of the statements contained therein.
Notwithstanding the foregoing, if the Commencement Date has not occurred on or
before the Outside Date (defined below) due to no fault of Tenant, Tenant, as
its sole remedy, may terminate this Lease by giving Landlord written notice of
termination on or before the Outside Date. If such a termination notice is so
given to Landlord, Landlord shall promptly refund any prepaid rent and Security
Deposit previously advanced by Tenant under this Lease so long as Tenant has
not previously defaulted under any of its obligations under this Lease or
Exhibit B (Tenant Improvements), this Lease shall be null and void and the parties
hereto shall have no further responsibilities or obligations to each other with
respect to this Lease except with respect to any such defaults and any
obligations which survive a termination of this Lease. The “Outside Date” shall
mean the date which is 90 days after the later of the date this Lease is
properly executed and delivered by Tenant, the data all prepaid rental and the
Security Deposit under this Lease is delivered to Landlord, the date the
building permit for the Tenant Improvements (as defined in Exhibit B) has been
obtained. Landlord and Tenant acknowledge and agree that the Outside Date shall
be postponed by the number of days the Commencement Date is delayed due to
Tenant Delays (defined in Exhibit B) and events of force majeure as provided in
Article 26. Notwithstanding anything herein to the contrary, if Landlord
determines in good faith that it will be unable to cause the Commencement Date
to occur by the Outside Date, Landlord shall have the right to immediately
cease its performance of the Tenant Improvements performed by Landlord and
provide Tenant with written notice (the “Completion Date Extension Notice”) of
such inability, which Completion Date Extension Notice shall set forth the date
on which Landlord reasonably believes that the Commencement Date will occur.
Upon receipt of the Completion Date Extension Notice, Tenant shall have the
right to terminate this Lease by providing written notice of termination to
Landlord within 5 business days after the date of the Completion Date Extension
Notice. If Tenant does not terminate this Lease within such 5 business day
period, the Outside Date automatically shall be amended to be the date set
forth in Landlord’s Completion Date Extension Notice. in addition, if the
Commencement Date has not occurred on or before the date that is 180 days
following the date that is the rater of the date this Lease is properly
executed and delivered by Tenant and the date all prepaid rental and the
Security Deposit under this Lease is delivered to Landlord for any reason,
Tenant, as its sole remedy, may terminate this Lease by giving Landlord written
notice of termination on or before the expiration of such 180 day period. If
such a termination notice is so given to Landlord, Landlord shall promptly
refund any prepaid rent and Security Deposit previously advanced by Tenant
under this Lease so long as Tenant has not previously defaulted under any of
its obligations under this Lease or Exhibit B (Tenant Improvements) (provided
that such funds shall be retained by Landlord to the extent required to
compensate Landlord for damage or loss sustained by Landlord in connection with
such default in accordance with Article 18 (Remedies) below), this Lease shall
be null and void and the parties hereto shall have no further responsibilities
or obligations to each other with respect to this Lease except with respect to
any such defaults and any obligations which survive a termination of this
Lease.


1.03      If Landlord elects to permit Tenant to enter upon the
Premises prior to the Commencement Date for the sole purpose of installing
furniture, equipment or other personal property or any other purpose permitted
by Landlord other than for the conduct of its business, such early entry shall
be at Tenant’s sole risk and shall be subject to all the terms and provisions
of this Lease, except that Tenant shall not be required to pay Base Rent or
Tenant’s Proportionate Share of Operating Expenses for any days of possession
before the Commencement Date during which Tenant, with the approval of
Landlord, is in possession of the Premises for the sole purpose of performing
improvements or installing furniture, equipment or other personal property. If
Tenant takes possession of the Premises before the Commencement Date for any
other purpose, such possession shall be subject to the terms and conditions of
this Lease, including without limitation, Tenant’s obligation to pay rent
hereunder, and the date Tenant takes possession of the Premises shall be deemed
to be the Commencement Date,

 


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1.04      Tenant, at its sole expense, agrees to comply with all
federal, state and local laws, codes, ordinances, statutes, rules, regulations
and other legal requirements (including covenants and restrictions) applicable
to the Premises (collectively, “Laws”). Tenant agrees to cause the Premises to
comply with all Laws, including by making any changes to the Premises
necessitated by any Tenant activity, including but not limited to changes
required by (a) any Tenant Improvements or Tenant Alterations (as defined below),
or (b) any use of the Premises or Property by Tenant or any Tenant Entity. If
any activity of Tenant or any Tenant Entity necessitates changes to the Project
other than the Premises, then Landlord shall elect that Landlord accomplish the
same at Tenant’s expense or that Tenant accomplish the same at its own expense.
In the event that as a result of Tenant’s use, or intended use, of the
Premises, the Americans with Disabilities Act or any other Law requires
modifications or the construction or installation of improvements in or to the
Premises, Building, Project and/or common areas of the Property (as the same
are identified from time to time by Landlord for common use) (the “Common
Areas”), the parties agree that such modifications, construction or improvements
shall be made at Tenant’s expense. As of the date hereof, to Landlord’s actual
knowledge, Landlord has not received written notice from any governmental
agencies that the Building is in violation of any Laws (including, without
limitation, the Americans with Disability Act), which violation has not been
cured. For purposes of this Section, “Landlord’s actual knowledge” shall be
deemed to mean and limited to the current actual knowledge of Coby Holley, Vice
President, at the time of execution of this Lease and not any implied, imputed,
or constructive knowledge of said individual or of Landlord or any Landlord
Related Parties or any other party related to Landlord and without any
independent investigation or inquiry having been made or any implied duty to
investigate or make any inquiries; it being understood and agreed that such
individual shall have no personal liability in any manner whatsoever hereunder
or otherwise related to the transactions contemplated hereby.  Notwithstanding
anything to the contrary contained herein, Landlord shall be responsible for
correcting any violations of Title III of the Americans with Disabilities Act
with respect to the Premises or the Common Areas of the Building; provided that
Landlord’s obligation with respect to the Premises shall be limited to
violations that arise out of the Tenant Improvements (defined in Exhibit B)
performed by Landlord only and/or the condition of the Premises at the
execution of this Lease and prior to the installation of any furniture, equipment
and other personal property of Tenant; and provided further that Tenant, not
Landlord, shall be responsible for the correction of any violations that arise
out of or in connection with any claims brought under any provision of the
Americans with Disabilities Act other than Title III, the specific nature of
Tenant’s business in the Premises, the acts or omissions of Tenant or any
Tenant Entity, the arrangement of any furniture, equipment or other property in
the Premises, any repairs or Tenant Alterations performed by or on behalf of
Tenant (other than the Tenant Improvements performed by Landlord), requirements
of any employees of Tenant, and any design or configuration of the Premises
specifically requested by Tenant. Landlord shall have the right to contest any
alleged violation in good faith, including, without limitation, the right to
apply for and obtain a waiver or deferment of compliance, the right to assert
any and all defenses allowed by law and the right to appeal any decisions,
judgments or rulings to the fullest extent permitted by law. The cost of any
such compliance by Landlord shall constitute an Operating Expense hereunder.
Landlord or such other person(s) as Landlord may appoint shall have the
exclusive control and management of the Common Areas. Landlord shall have the
right, in Landlord’s sole discretion, from time to time, (i) to make changes to
the Common Areas, including, without limitation, changes in the location, size,
shape and number of the lobbies, windows, stairways, air shafts, elevators,
escalators, restrooms, driveways, entrances, parking spaces, parking areas,
loading and unloading areas, ingress, egress, direction of traffic, landscaped
areas, walkways and utility raceways, (ii) to close temporarily any of the
Common Areas for maintenance purposes so long as reasonable access to the
Premises remains available, (iii) to designate other land outside the
boundaries of the Property to be a part of the Common Area, (iv) to add
additional buildings and improvements to the Common Areas, and (v) and to do
and perform such other acts and make such other changes in, to or with respect
to the Common Areas and Property as Landlord may, in the exercise of sound
business judgment, deem to be appropriate; provided that such changes do not materially
and adversely interfere with the Permitted Use of the Premises.


1.05      Upon expiration or termination of this Lease, Tenant
agrees to remove all of Tenant’s personal property from the Premises and return
the Premises to Landlord in the same condition as received by Tenant (excepting
normal wear and tear) with all removal, repair, and restoration duties of
Tenant, including without limitation pursuant to Section 9.04, being fully
performed to Landlord’s reasonable satisfaction. Notwithstanding any other
provision of this Lease to the contrary, Tenant shall remove at its expense in
compliance with the National Electric Code or other applicable Law, at or prior
to the expiration or termination of this Lease, all wiring and cabling
installed at or about the Premises which shall have been installed by or on
behalf of Tenant. Such wiring and cabling shall include but not be limited to
(a) wiring and cabling above the ceiling panels, behind or within walls, and
under or within floors, and (b) wiring and cabling for voice, data, security or
other purposes. If Tenant abandons, vacates, or surrenders the Premises, or is
dispossessed by process of Law, or otherwise, any personal property belonging
to Tenant left in or about the Premises will, at the option of Landlord, be
deemed abandoned and may be disposed of by Landlord at the expense and risk of
Tenant.


1.06      Landlord has no duty to provide security for any
portion of the Property. To the extent Landlord elects to provide any security,
Landlord is not warranting the effectiveness of any security personnel,
services, procedures or equipment and Tenant shall not rely on any such
personnel, services, procedures or equipment. Landlord shall not be liable for
failure of any such security personnel, services, procedures or equipment to
prevent or control, or to apprehend anyone suspected of, personal injury or
property damage in, on or around the Property.


2.         Base Rent. On or before the first day of each
calendar month of the Term, Tenant will pay to Landlord the Base Rent for such
month. Base Rent and Additional Rent (defined below) for any first partial
month and for the first full calendar month of the Term, together with the
Security Deposit, are due and payable upon execution of this Lease.  Monthly
rent for any partial calendar month will be prorated. All sums and other
charges payable by Tenant to Landlord hereunder shall be deemed rent.  Base
Rent and all other amounts required to be paid by Tenant hereunder shall be
paid without deduction or offset and without prior notice or demand. All such
amounts shall be paid in lawful money of the United States of America and shall
be paid to Landlord at the address stated herein or to such other persons or to
such other places as Landlord may designate in writing from time to time.
Amounts payable hereunder shall be deemed paid when actually received by
Landlord.

 


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3.         Additional Rent. Unless otherwise specifically
stated in this Lease, any charge payable by Tenant under this Lease other than
Base Rent is called “Additional Rent.” The term “rent” whenever used in this
Lease means Base Rent, Additional Rent and/or any other charge, fee or monies
payable by Tenant under the terms of this Lease. Tenant shall pay Tenant’s
Proportionate Share of Operating Expenses in accordance with Exhibit D of this
Lease.


4.         Late Charges. If any sum payable by Tenant to
Landlord is not received by Landlord on the date due, Tenant shall pay a late
charge equal to the greater of (a) $50.00, or (b) 10% or the highest per annum
rate of interest permitted from time to time under applicable Law (whichever is
less) of the then delinquent amount. A $50,00 handling fee will be paid to
Landlord by Tenant for each bank returned check. In the event of a Default,
Tenant, at Landlord’s election, shall make all future payments to Landlord by
wire or electronic transfer, by cashier’s check or by an automatic payment from
Tenant’s bank account to Landlord’s account, in each case without cost to
Landlord. The acceptance of late charges and returned check charges by Landlord
will not constitute a waiver of any Tenant default nor any other rights or
remedies of Landlord.


5.         Security Deposit. Upon Tenant’s execution of this
Lease, Tenant will deposit with Landlord the Security Deposit (as defined above
in the Basic Lease Information) in the amount specified in the Basic Lease
Information as security for Tenant’s full and faithful performance of every
provision under this Lease. Landlord will not be required to keep the Security
Deposit separate from its general funds. Without limiting or impairing any
right Landlord may have or hereafter acquire under this Lease or applicable Law
with respect to the Security Deposit, Tenant hereby grants to Landlord a
security interest in the Security Deposit. The Security Deposit is not an
advance rent payment or a measure of damages under this Lease. If Tenant fails
to pay any rent due herein, or otherwise is in default of any provision of this
Lease, Landlord may, without waiver of the default or of any other right or
remedy, use, apply or retain all or any portion of the Security Deposit for the
payment of any amount due Landlord or to compensate Landlord for any loss or
damage suffered by Tenant’s default, Within 5 days after written notification
by Landlord, Tenant will restore the Security Deposit to the full amount
required under this Lease. No part of the Security Deposit shall be considered
to be held in trust, to bear interest (except when required by Law) or to be
prepayment for any monies to Landlord by Tenant under this Lease. Landlord
shall return any unapplied portion of the Security Deposit to Tenant within 45
days after the later to occur of:  (a) determination of the final rent due from
Tenant; or (b) the later to occur of the Termination Date or the date Tenant
surrenders the Premises to Landlord in compliance with this Lease. Landlord may
assign the Security Deposit to a successor or transferee and, following the
assignment, Landlord shall have no further liability for the return of the
Security Deposit.


6.         Use of Premises.


6.01      The Premises will be used and occupied only for the
Permitted Use. Tenant will, at its sole expense, comply with all conditions and
covenants of this Lease, and all Laws. Tenant will not use or permit the use of
the Premises, the Property or any part thereof, in a manner that is unlawful,
diminishes the appearance or aesthetic quality of any part of the Property,
creates waste or a nuisance, or causes damage to the Property.  Tenant shall
not permit any objectionable or unpleasant odors, smoke, dust, gas, noise or
vibrations to emanate from the Premises nor take or permit any other action in
the Premises that would endanger, unreasonably annoy, or interfere with the
operations of, Landlord or any other tenant of the Property.  Tenant shall
obtain, at its sole expense, any permit or other governmental authorization
required for Tenant to legally operate its business from the Premises.  Any
animals, excepting guide dogs, on or about the Property or any part thereof are
expressly prohibited.


6.02      In the event of any excessive trash in or outside the
Premises, as determined by Landlord in its sole discretion, Landlord will have
the right to remove such excess trash, charge all costs and expenses
attributable to its removal to Tenant and impose fines in the event Tenant
fails to remedy the situation.  Tenant will not cause, maintain or permit any
outside storage on or about the Property. In the event of any unauthorized
outside storage by Tenant or any Tenant Entity, Landlord will have the right,
without notice, in addition to such other rights and remedies it may have, to
remove any such storage at Tenant’s expense.


7.         Parking. All parking will comply with the terms
and conditions of this Lease and applicable Rules and Regulations (as defined
in Exhibit C hereto), Tenant will have a non-exclusive privilege on a
“first-come, first-served” basis to use Tenant’s Proportionate Share of those
parking spaces designated by Landlord for public parking. The parking
privileges granted to Tenant are personal to Tenant; Tenant shall not assign or
sublet parking privileges.

 


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8.         Utilities and
Services.


8.01      Tenant agrees to make all arrangements for, and to pay
directly all costs of, utility services supplied to the Premises, including but
not limited to, water, gas, heat, light, power, telephone, and sewer. In the
event it is not possible for Tenant to obtain separate utility and/or other
services, or if Landlord, in its sole discretion, elects to provide any such
utility and/or other services to Tenant, such utility and/or other services
may, at Landlord’s discretion, be obtained in Landlord’s name, and Tenant will
pay Landlord, as Additional Rent, the cost of any utility services provided by
Landlord either: (a) through inclusion in Operating Expenses (except for excess
usage, which will be paid as a separate charge by Tenant to Landlord); (b) by a
separate charge payable by Tenant to Landlord; or (c) by a separate charge
billed by the applicable utility company and payable directly by Tenant.
Landlord reserves the right to separately meter any such service at Tenant’s
expense at any time during the Term.


8.02      Landlord will not be liable or deemed in default, nor
will there be any abatement of rent, breach of any covenant of quiet enjoyment,
partial or constructive eviction or right to terminate this Lease, for (a) any
interruption or reduction of utilities, utility services or telecommunication
services, (b) any telecommunications or other company (whether selected by
Landlord or Tenant) failing to provide such utilities or services or providing
the same defectively, and/or (c) any utility interruption in the nature of
blackouts, brownouts, rolling interruptions, hurricanes, tropical storms or
other natural disasters. If the Premises, or a material portion of the
Premises, are made untenantable for a period in excess of 30 consecutive
business days as a result of any failure to furnish, or any interruption,
diminishment or termination of services due to the application of Laws, the
failure of any equipment, the performance of repairs, improvements or
alterations, utility interruptions or the occurrence of an event of Force
Majeure (collectively, a “Service Failure”) that is reasonably within the
control of Landlord to correct, then Tenant, as its sole remedy, shall be
entitled to receive an abatement of Base Rent and Tenant’s Proportionate Share
of Operating Expenses payable hereunder during the period beginning on the 31st
consecutive business day of the Service Failure and ending on the day the
service has been restored. If the entire Premises have not been rendered
untenantable by the Service Failure, the amount of abatement shall be equitably
prorated. Tenant agrees to comply with any energy conservation programs
required by Law or implemented by Landlord. Landlord reserves the right, in its
sole discretion, to designate, at any time, the utility and service providers
for Tenant’s use within the Property; no such designation shall impose
liability upon Landlord. Tenant has satisfied itself as to the adequacy of any
Landlord owned utility equipment and the quantity of telephone lines and other
service connections to the “Building’s Point of Demarcation” available for
Tenant’s use.


8.03      In the event that Landlord elects, in its sole
discretion, to maintain a preventive maintenance/service contract with respect
to any heating and air conditioning systems and equipment serving the Premises,
and Tenant shall pay to Landlord as Additional Rent, the cost of such contract
and any service either as a separate charge payable by Tenant to Landlord or
through inclusion in Operating Expenses. Notwithstanding the foregoing, at
Landlord’s request at any time during the Term, Tenant shall, at its own cost
and expense, enter into a regularly scheduled preventive maintenance/service
contract with a maintenance contractor approved by Landlord for servicing all
heating and air conditioning systems and equipment serving the Premises (and a
copy thereof shall be furnished to Landlord). The service contract must include
all services suggested by the equipment manufacturer in the
operation/maintenance manual and must become effective within 30 days of the
date Landlord requires Tenant to obtain and maintain such service contract,
Should Tenant fail to do so, Landlord may, upon notice to Tenant, enter into such
service contract on behalf of Tenant or perform the work and in either case,
charge Tenant the cost thereof along with a reasonable amount for Landlord’s
overhead.


8.04      Tenant shall have access to the Building for Tenant and
its employees 24 hours per day/7 days per week, subject to the terms of this
Lease and such security or monitoring systems as Landlord may reasonably
impose, including, without limitation, sign-in procedures and/or presentation
of identification cards.


9.         Tenant
Improvements; Tenant Alterations; Mechanic’s Liens.


9.01      Any improvements to be constructed in the Premises by
Tenant prior to Tenant initially commencing use of the Premises are referred to
throughout this Lease as “Tenant Improvements.” All Tenant Improvements will be
performed in accordance with the terms and conditions outlined in Exhibit B and
also in accordance with the provisions set forth in this Lease, including this
Article 9 regarding Tenant Alterations,

 


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9.02      The following provisions apply to “Tenant Alterations”
which means and includes (a) any alterations, additions or improvements to the
Premises undertaken by or on behalf of Tenant, (b) any utility installations at
the Premises undertaken by Tenant, and (c) any repair, restoration,
replacement, or maintenance work at the Premises undertaken by or on behalf of
Tenant. Tenant shall not commence any Tenant Alteration without first obtaining
the prior written consent of Landlord in each instance.  Tenant shall submit
such information regarding the intended Tenant Alteration as Landlord may
reasonably require, and no request for consent shall be deemed complete until
such information is so delivered. The following provisions apply to all Tenant
Alterations: (i) Tenant shall hire a licensed general contractor approved by Landlord
who, in turn, shall hire only licensed subcontractors; (ii) Tenant shall obtain
all required permits and deliver a copy of the same to Landlord. Tenant shall
install all Tenant Alterations in strict compliance with all Laws, permits, any
plans approved by Landlord, and all conditions to Landlord’s approval; (iii)
Unless Landlord elects otherwise, Tenant shall remove each Tenant Alteration at
the end of this Lease or Tenant’s right of possession and restore the Premises
to its prior condition, all at Tenant’s sole expense; and (iv) Tenant shall
deliver to Landlord, within ten (10) days following installation of each Tenant
Alteration, (A) accurate, reproducible as-built plans, (B) proof of final
inspection and approval by all governmental authorities, (C) complete lien
waivers acceptable to Landlord for all costs of the Tenant Alteration, and (D)
a copy of a recorded notice of completion. Landlord’s approval of any Tenant
Improvements and Tenant Alterations and/or Landlord’s approval or designation of
any general contractor, subcontractor, supplier or other project participant
will not create any liability whatsoever on the part of Landlord. Tenant shall
reimburse Landlord for any sums paid by Landlord for third party examination of
Tenant’s plans for any Tenant Alterations and any other costs incurred by
Landlord in connection with such Tenant Alterations.


9.03      Tenant shall pay all costs of Tenant Alterations as and
when due.  Tenant shall not allow any lien to be filed. Tenant shall obtain
advance lien waivers and third-party beneficiary agreements from all
contractors, subcontractors, suppliers, and others providing equipment, labor,
materials, or services, in the form required by Landlord. If any lien is filed,
Tenant shall within 15 days remove such lien. In addition, if any such lien is
filed and not removed by Tenant as required hereunder, then, without waiver of
any other right or remedy, Landlord shall have the right to cause such lien to
be removed by any means allowed by Law. All reasonable sums expended by
Landlord in connection with such lien and/or its removal, including attorney
fees, shall be immediately due from Tenant to Landlord, together with interest
at the rate of 12% or the highest per annum rate of interest permitted from
time to time under applicable Law (whichever is less).


9.04      All Tenant Improvements and Tenant Alterations are part
of the realty and belong to Landlord. Tenant shall be solely responsible for
all taxes applicable to any Tenant Alterations, to insure all Tenant Alterations
and to restore the same following any casualty. At any time prior to the
expiration or earlier termination of this Lease, Landlord may require, upon 10
days’ prior written notice to Tenant, that Tenant remove all, or any part of
the Tenant Improvements and/or Tenant Alterations at its sole cost and expense
and repair any damage caused by such removal not later than the expiration or
earlier termination of this Lease. Notwithstanding the foregoing, Tenant shall
not be required to remove any portion of the Tenant Improvements shown on
Exhibit B hereto as of the date of this Lease. Notwithstanding anything to the
contrary contained herein, so long as Tenant’s written request for consent for
a proposed Tenant Alteration contains the following statement in large, bold
and capped font “PURSUANT TO ARTICLE 9 OF THE LEASE, IF LANDLORD CONSENTS TO
THE SUBJECT ALTERATION, LANDLORD SHALL NOTIFY TENANT IN WRITING WHETHER OR NOT
LANDLORD WILL REQUIRE SUCH ALTERATION TO BE REMOVED AT THE EXPIRATION OR
EARLIER TERMINATION OF THE LEASE.”, at the time Landlord gives its consent for
any Tenant Alterations, if it so does, Tenant shall also be notified whether or
not Landlord will require that such Tenant Alterations be removed upon the
expiration or earlier termination of this Lease. Notwithstanding anything to
the contrary contained in this Lease, at the expiration or earlier termination
of this Lease and otherwise in accordance with the terms and conditions of this
Lease, Tenant shall be required to remove all Tenant Alterations made to the
Premises except for any such Tenant Alterations which Landlord expressly
indicates or is deemed to have indicated shall not be required to be removed
from the Premises by Tenant.  If Tenant’s written notice strictly complies with
the foregoing and if Landlord fails to so notify Tenant whether Tenant shall be
required to remove the subject Tenant Alterations at the expiration or earlier
termination of this Lease, it shall be assumed that Landlord shall require the
removal of the subject Tenant Alterations. If Tenant fails to perform its
obligations in a timely manner, Landlord may perform such work at Tenant’s
expense. The provisions of this Article 9 shall survive the expiration or any
earlier termination of this Lease.

 


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10.        Repairs.


10.01    Subject to Section 10.02 below, Tenant shall, at all
times and at its sole cost and expense, keep all parts of the Premises
(including without limitation the Tenant Improvements and Tenant Alterations,
windows, glass and plate glass, doors (including, without limitation, overhead
and roll up doors), skylights, any special office entries, interior walls and
finish work, floors and floor coverings), interior and exterior, and all
equipment and facilities within or serving the Premises, in good order, condition
and repair regardless of whether the portion of the Premises requiring repairs,
or the means of repairing same, are reasonably or readily accessible, and
regardless of whether the need for such repairs or maintenance occurs as a
result of Tenant’s use, any prior use, vandalism, acts of third parties, Force
Majeure (as defined in Article 26 below) or the age of the Premises, reasonable
wear and tear excepted. The standard for comparison of condition will be the
condition of the Premises as of the original date of Landlord’s delivery of the
Premises to Tenant and failure to meet such standard shall create the need to
repair. If Tenant does not perform required maintenance or repairs, Landlord
shall have the right, without waiver of Default or of any other right or
remedy, to perform such obligations of Tenant on Tenant’s behalf, and Tenant
will reimburse Landlord for any costs incurred, together with an administrative
fee in an amount equal to 10% of the cost of the repairs, immediately upon
demand.


10.02    As the Premises constitute a portion of a multiple
occupancy Building, Landlord shall perform the repair and maintenance of the
roof, exterior walls, exterior areas, foundations and common sewage line
plumbing which are otherwise Tenant’s obligation under Section 10.01 above,
fire sprinkler system, Common Area fire alarm, utility systems serving the
Common Area, the Common Areas and any other maintenance and repair of exterior,
structural, and/or common elements which Landlord shall elect, and Tenant shall,
in lieu of the obligations set forth under Section 10.01 above with respect to
such items, be liable for its Proportionate Share of the expenses so incurred
by Landlord; provided, Tenant shall reimburse Landlord for 100% of any such
expense incurred by Landlord due to the act or omission of Tenant or any Tenant
Entity. Tenant expressly waives the benefit of any statute or other legal right
now or hereafter in effect which would otherwise afford Tenant the right to
make repairs at Landlord’s expense, whether by deduction of rent or otherwise,
or to terminate this Lease because of Landlord’s failure to keep the Property,
or any part thereof in good order, condition and repair.


11.        Insurance.

11.01    Tenant will not do or permit anything to be done within
or about the Premises or the Property which will increase the existing rate of
any insurance on any portion of the Property or cause the cancellation of any
insurance policy covering any portion of the Property (including, without
limitation, any liability coverage). Tenant will, at its sole cost and expense,
comply with any requirements of any insurer of Landlord. Tenant agrees to
maintain policies of insurance described in this Article. Landlord reserves the
right, from time to time, to require additional coverage (including, flood
insurance, if the Premises is located in a flood hazard zone), and/or to
require higher amounts of coverage. No insurance policy of Tenant shall have a
deductible greater than $5,000.00. Tenant shall maintain the following
insurance (“Tenant’s Insurance”): (a) Commercial General Liability Insurance
applicable to the Premises and its appurtenances providing, on an occurrence
basis, a minimum of $1,000,000.00, and not less than $2,000,000.00 in the
annual aggregate, covering third-party bodily injury, property damage, personal
injury and advertising injury, product/completed operations as applicable,
medical expenses and contractual liability. Defense costs will be in addition
to the limit of liability.  A combination of a General Liability policy and an
umbrella policy or excess liability policy may be used to satisfy this limit;
(b) Property/Business Interruption Insurance written on an All Risk or Special
Cause of Loss Form, including earthquake sprinkler leakage, at replacement cost
value and with a replacement cost endorsement covering all of Tenant’s business
and trade fixtures, equipment, movable partitions, furniture, merchandise and
other personal property within the Premises, including for which Tenant has
repair obligations and any Tenant Improvements and Tenant Alterations performed
by or for the benefit of Tenant, No coinsurance provision will apply; (c)
Excess Liability in the amount of $2,000,000.00; (d) Workers’ Compensation
Insurance in amounts not less than the amounts required by Law; (e) Employers
Liability Coverage of at least $1,000,000.00 per occurrence; (f) Automobile
Liability coverage of not less than $1,000,000.00 combined single limit
including property damage covering Tenant’s owned, non-owned and hired vehicles;
and (g) if Tenant uses any part of the Premises or Property to store or to
perform work on vehicles, Tenant shall maintain garage, liability insurance in
such form and amount as Landlord may require from time to time, but not less
than $2,000,000.00. Any company writing Tenant’s Insurance shall be licensed to
do business in the state in which the Premises is located and shall have an
A.M. Best rating of not less than A-VIII. Tenant will deliver to Landlord (and,
at Landlord’s request, to any Mortgagee (as defined in Article 25 below) or to
any other third party), simultaneously with its execution of this Lease and
thereafter at least 30 days prior to expiration, cancellation or change in
insurance, certificates acceptable to Landlord of insurance evidencing, at a
minimum, the coverage specified in this Section 11.01. All such certificates
shall be in form and substance satisfactory to Landlord, shall affirmatively
demonstrate all coverage and requirements set forth in this Lease, shall
contain no disclaimers of coverage, and shall include a firm and unconditional
obligation to give to Landlord at least 30 days’ prior written notice prior to
cancellation or change in any coverage. Tenant hereby assigns to Landlord all
its rights to receive any proceeds of such insurance policies attributable to
any Tenant Improvements and Tenant Alterations if this Lease is terminated due
to damage or destruction. Landlord and the Landlord Related Parties shall be
named additional insureds on Tenant’s insurance policies (excluding Workers’
Compensation Insurance); provided, however, that with respect to property
insurance covering any Tenant Improvements and Tenant Alterations, Landlord and
the Landlord Related Parties shall be loss payee thereunder (and the foregoing
designations shall be evidenced on the insurance certificates delivered to
Landlord as required hereby). All insurance to be carried by Tenant will be
primary to, and non-contributory with, Landlord’s insurance, and there will be
no exclusion for cross-liability endorsements and will in addition to the above
coverage specifically insure Landlord against any damage or loss that may
result either directly or indirectly from any default of Tenant under Article
13 (Hazardous Materials) herein, Any similar insurance carried by Landlord will
be non-contributory and considered excess insurance only.

 


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11.02    Tenant will name Landlord (and, at Landlord’s request,
any Mortgagee (as defined in Article 25 below) and Landlord’s agents as
additional insureds on all insurance policies required of Tenant under this
Lease, other than Worker’s Compensation, Employer’s Liability, and Fire and
Extended coverage (except on Tenant Improvements or Tenant Alterations to the
Premises for which Landlord shall be named loss payee) insuring Landlord and
such other additional insureds regardless of any defenses the insurer may have
against Tenant and regardless of whether the subject claim is also made against
Tenant. All insurance policies carried by Tenant will permit the insured, prior
to any loss, to agree with a third party to waive any claim it might have
against said third party without invalidating the coverage under the insurance
policy, and will release Landlord and the Landlord Related Parties (as defined
in Article 24 below), from any claims for damage to any person, to the Property
of which the Premises are a part, any existing improvements, Tenant
Improvements and Tenant Alterations to the Premises, and to any furniture,
fixtures, equipment, installations and any other personal property of Tenant
caused by or resulting from, risks which are to be insured against by Tenant
under this Lease, regardless of cause. The foregoing shall be evidenced in
Tenant’s certificate of insurance,


11.03    Landlord will secure and maintain insurance coverage in
such limits as Landlord may deem reasonable in its sole judgment to afford
Landlord adequate protection. The premiums for such coverage are “Insurance
Premiums” under Exhibit D to this Lease. Any proceeds of such insurance shall
be the sole property of Landlord to use as Landlord determines. Tenant will
provide, at its own expense, all insurance as Tenant deems adequate to protect
its interests.


11.04    Without limiting the effect of any other waiver of or
limitation on the liability of Landlord set forth herein, and except as
provided in Article 12 below, Landlord and Tenant hereby waive and shall cause
their respective insurance carriers to waive any and all rights of recovery,
claims, actions or causes of action against the other for any loss or damage with
respect to Tenant’s personal property, fixtures and equipment, any Tenant
Improvements or Tenant Alterations, the Building, the Premises, or any contents
thereof, including rights, claims, actions and causes of action based on
negligence, which loss or damage is (or would have been, had the insurance
required by this Lease been carried) covered by insurance. For the purposes of
this waiver, any deductible with respect to a party’s insurance shall be deemed
covered by and recoverable by such party under valid and collectable policies
of insurance. For purposes of this Section 11.04, “Landlord” shall include the
Landlord Related Parties.


11.05    Whenever Tenant shall undertake any alterations,
additions or improvements in, to or about the Premises, including, without
limitation, any Tenant Improvements and/or Tenant Alterations (“Work”) the
aforesaid insurance protection must extend to and include injuries to persons
and damage to property arising in connection with such Work, without limitation
including liability under any applicable structural work act, and such other
insurance as Landlord shall reasonably require; and the policies of or
certificates evidencing such insurance must be delivered to Landlord prior to
the commencement of any such Work.

 

 


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12.        Waiver of Claims; Indemnification. Except as may
otherwise be expressly provided in this Lease, Tenant waives all claims against
Landlord and the Landlord Related Parties for any damage to any property in or
about the Property, for any loss of business or income, and for injury to or
death of any persons, regardless of the cause of any such loss or event
(including negligence) or time of occurrence. Except to the extent caused by
the gross negligence or willful misconduct of Landlord, Tenant will indemnify,
protect, defend and hold harmless Landlord and the Landlord Related Parties
from and against all claims, losses, damages, causes of action, costs, expenses
and liabilities, including, legal fees, arising out of Tenant’s occupancy of
the Premises or presence on the Property, the conduct of Tenant’s business, any
default by Tenant, and/or any act, omission or neglect (including violations of
Law) of Tenant or its agents, contractors, employees, suppliers, licensees or
invitees, successors or assigns (each a “Tenant Entity” and collectively, the
“Tenant Entities”). Landlord shall indemnify and hold Tenant harmless from and
against any and all claims, liabilities, losses, costs, damages, injuries or
expenses, including reasonable attorneys’ and consultants’ fees and court
costs, demands, causes of action, or judgments to the extent arising out of or
relating to the gross negligence or willful misconduct of Landlord or
Landlord’s agents, employees or invitees (subject to the provisions of Section
11.04) However, notwithstanding anything to the contrary contained herein,
Landlord shall in no event be liable for (I) injury to Tenant’s business or any
loss of income or profit therefrom or for consequential damages or events of
Force Majeure (as defined in Article 26), or (ii) sums up to the amount of
insurance proceeds received by Tenant (or which would have been received by
Tenant under any insurance coverage required to be maintained by Tenant
hereunder) for any loss.  The foregoing indemnity by Landlord shall also not be
applicable to claims to the extent arising from the negligence or willful
misconduct of Tenant or any Tenant Entity. The provisions of this Article 12
shall survive the expiration or earlier termination of this Lease.


13.        Hazardous
Materials.


13.01    “Hazardous Materials” will mean any substance commonly
referred to, or defined in any Law, as a hazardous material or hazardous
substance (or other similar term), including but not be limited to, chemicals,
solvents, petroleum products, flammable materials, explosives, asbestos, urea
formaldehyde, PCB’s, chlorofluorocarbons, freon or radioactive materials.
Tenant will not cause or permit any Hazardous Materials to be brought upon,
kept, stored, discharged, released or used in, under or about any portion of
the Property by Tenant, or its agents without the prior written consent of
Landlord, which consent may be withheld or conditioned in Landlord’s sole
discretion; provided, Tenant may bring into the Premises small amounts of
Hazardous Materials (such as cleaning products and copy toner) which are
readily available to Tenant by unregulated retail purchase if the same are
necessary in Tenant’s normal business operations. If Tenant or any Tenant
Entity brings any Hazardous Materials to the Premises or Property, with or
without the prior written consent of Landlord (without waiver of the
requirement of prior written consent), and in executing this Lease Tenant
acknowledges and agrees that by its direct or indirect involvement in the
introduction of any Hazardous Materials to the Premises or Property, with or
without the consent of the Landlord, that Tenant accepts full and complete
responsibility for such Hazardous Materials and henceforth on will be
considered the Responsible Party as defined by any applicable governmental
authority and/or Law. Further, Tenant shall: (a) use such Hazardous Material
only as is reasonably necessary to Tenant’s business, in small, properly
labeled quantities; (b) handle, use, keep, store, and dispose of such Hazardous
Material using the highest accepted industry standards and in compliance with
all applicable Laws; (c) maintain at all times with Landlord a copy of the most
current MSDS sheet for each such Hazardous Material; and (d) comply with such
other reasonable rules and requirements Landlord may from time to time impose,
or with any definition of Hazardous Waste or Law as it may be implemented or
modified during or after the term of this Lease. Upon expiration or earlier
termination of this Lease, Tenant will, at Tenant’s sole cost and expense,
cause all Hazardous Materials brought to the Premises or the Property by Tenant
or any Tenant Entity, to be removed from the Property in compliance with any
and all applicable Laws. Notwithstanding the foregoing, Landlord shall be
responsible for Hazardous Materials which exist on, under or within the
Property or are located on the Property as of the date Landlord delivers
possession of the Premises to Tenant (“Pre-Existing Hazardous Materials”),
including without limitation the responsibility for removing, remediating or
otherwise mitigating the effects of such Hazardous Materials as may be required
by Laws to protect health and safety, or comply with the directions of
governmental agencies administering applicable environmental Laws. In addition,
Landlord shall comply with all Laws pertaining to and governing the existence,
removal, remediation, exposure to and use of Hazardous Materials by Landlord or
Landlord’s agents, contractors or employees at the Property; provided, however,
that nothing in this Section shall impose upon Landlord any responsibility for
the acts or omissions of tenants or any other third parties that occur
following the date Landlord delivers possession of the Premises to Tenant or
for any existing Hazardous Materials disturbed or exacerbated by Tenant or any
Tenant Entity.

 


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13.02    If Tenant or any Tenant Entity violates the provisions
of this Article 13, or perform any act or omission which contaminates or
expands the scope of contamination of the Premises, the Property, or any part
thereof, the underlying groundwater, or any property adjacent to the Property,
or violates or allegedly violates any applicable Law, then Tenant will
promptly, at Tenant’s expense, take all investigatory and/or remedial action
(collectively called “Remediation”), as directed or required by any
governmental authority that is necessary to fully clean up, remove and dispose
of such Hazardous Materials and any contamination so caused and shall do so in
compliance with any applicable Laws. Tenant will also repair any damage to the
Premises and any other affected portion(s) of the Property caused by such
contamination and Remediation.


13.03    Tenant shall immediately provide to Landlord written
notice of any investigation or claim arising out of the use by Tenant or any
Tenant Entity of Hazardous Materials at the Property or the violation of any
provision of this Article 13, or alleged violation of any Law and shall keep
Landlord fully advised regarding the same. Tenant shall provide to Landlord all
reports regarding the use of Hazardous Materials by Tenant or any Tenant Entity
at the Property and any incidents regarding the same, regardless of whether any
such documentation is considered by Tenant to be confidential. Landlord retains
the right to participate in any Remediation and/or legal actions affecting the
Property involving Hazardous Materials arising from Tenant’s actual or alleged
violation of any provision of this Article 13 or Law.


13.04    Tenant will indemnify, protect, defend and forever hold
Landlord, its lenders and ground lessor if any, the Landlord Related Parties,
the Premises, the Property, or any portion thereof, harmless from any and all
damages, causes of action, fines, losses, liabilities, judgments, penalties,
claims, and other costs, including, but not limited to, any Landlord Related
Parties’ costs incurred during its participation in any Remediation and/or
legal actions as specified in 13.03, to the extent arising out of any failure
of Tenant or Tenant Entity to observe any covenants of this Article 13.  All
provisions of this Article 13 shall survive the expiration of this Lease and
any termination of this Lease or of Tenant’s right of possession. Tenant shall
not be liable for any cost or expense related to removal, cleaning, abatement
or remediation of Hazardous Materials existing in the Premises prior to the
date Landlord tenders possession of the Premises to Tenant, including, without
limitation, Hazardous Materials in the ground water or soil, except to the
extent that any of the foregoing results directly or indirectly from any act or
omission by Tenant or any or any Hazardous Materials disturbed, distributed or
exacerbated by Tenant or any Tenant Entity.


13.05    As of the date hereof, to Landlord’s actual knowledge,
Landlord has not received written notice from any governmental agencies that
the Building is in violation of any Laws with respect to Hazardous Materials at
the Building or Property. For purposes of this Section, “Landlord’s actual
knowledge” shall be deemed to mean and limited to the current actual knowledge
of Coby Holley, Vice President, at the time of execution of this Lease and not
any implied, imputed, or constructive knowledge of said individual or of
Landlord or any Landlord Related Parties or any other party related to Landlord
and without any independent investigation or inquiry having been made or any
implied duty to investigate or make any inquiries; it being understood and
agreed that such individual shall have no personal liability in any manner
whatsoever hereunder or otherwise related to the transactions contemplated
hereby.


13.06    Landlord will indemnify and hold harmless Tenant from
and against any and all fines and reasonable costs and expenses (including
reasonable attorneys’ fees) that Tenant may incur due to (a) a clean up,
removal, remediation or other response required of Tenant by an appropriate
governmental authority to the extent of any Pre-Existing Hazardous Materials at
the Premises, or (b) any third party claims that are not insured or required to
be insured hereunder by Tenant to the extent resulting from a breach of
Landlord’s obligations pursuant to this Article 13 and/or from the
introduction, production, use, generation, storage, treatment, disposal,
discharge, release or other handling or disposition of any Hazardous Materials
on or about the Building and/or the Property by Landlord or its agents,
contractors or employees. However, this indemnity provision will not apply to
the acts and omissions of Tenant or any Tenant Entity, or any Hazardous Materials
introduced to, produced, stored or generated by Tenant or any Tenant Entity at
the Building, the Premises and/or the Property, or disturbed, distributed or
exacerbated by Tenant or any Tenant Entity.

 


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14.        Landlord’s Access. Landlord, its agents, contractors,
consultants and employees, will have the right to enter the Premises at any
time in the case of an emergency, and otherwise at reasonable times upon
reasonable notice to Tenant to examine the Premises, perform work in the
Premises, inspect any Tenant Alterations and/or any Tenant Improvements, show
the Premises to prospective Tenants (during the last nine months of the Term)
or to lenders, purchasers or other parties, to exercise any right or remedy, or
for any other purpose. If reasonably necessary, Landlord may temporarily close
all or a portion of the Premises to perform repairs, alterations and additions
and Tenant shall not have any right to terminate this Lease or abate rent or
assert a claim of partial or constructive eviction because of any such
closure.  For each of these purposes, Landlord will at all times have and
retain any necessary keys. Tenant will not alter any lock or install new or
additional locks or bolts on any door in or about the Premises without
obtaining Landlord’s prior written approval and will, in each event, furnish
Landlord with a new key. Access by Landlord will not give Tenant the right to
terminate this Lease, and will be without abatement of rent or liability on the
part of Landlord or any Landlord Related Parties. Notwithstanding the
foregoing, if Landlord temporarily closes the Premises in connection with any
such entry by Landlord, for a period in excess of 10 consecutive day(s),
Tenant, as its sole remedy, shall be entitled to receive a per diem abatement
of Base Rent during the period beginning on the 11th consecutive day of closure
and ending on the date on which the Premises are returned to Tenant in a
tenantable condition. Tenant, however, shall not be entitled to any abatement
if the work to be performed is required of Tenant under the terms of this Lease
or if the work to be performed or the inspection is required as a result of the
acts or omissions of Tenant or any Tenant Entity, including, without
limitation, a default by Tenant in its maintenance and repair obligations under
this Lease.


15.        Damage or
Destruction.


15.01    If the Premises is damaged or destroyed by fire or other
casualty, Tenant will immediately give written notice to Landlord of the
casualty. Landlord will have the right to terminate this Lease following a
casualty if any of the following occur: (a) insurance proceeds actually paid to
Landlord and available for use are not sufficient to pay the full cost to fully
repair the damage; (b) Landlord determines that the Premises or the Building
cannot be fully repaired within 180 days from the date restoration commences;
(c) the Premises are damaged or destroyed within the last 12 months of the
Term; (d) Tenant is in default of this Lease at the time of the casualty; (e)
Landlord would be required under this Lease to abate or reduce Tenant’s rent
for a period in excess of 6 months if the repairs were undertaken; or (f) the
Property, or the Building in which the Premises is located, is damaged such
that the cost of repair of the same would exceed 10% of the replacement cost of
the same. If Landlord elects to terminate this Lease, Landlord will be entitled
to retain all applicable Tenant insurance proceeds and Tenant shall assign or
endorse over to Landlord (or to any party designated by Landlord) all property
insurance proceeds payable to Tenant under Tenant’s insurance, excepting those
attributable to Tenant’s furniture, fixtures, equipment, and any other personal
property.


15.02    If this Lease is not terminated pursuant to Section
15.01, Landlord will repair the Premises and this Lease shall continue. The
repair obligation of Landlord shall be limited to repair of the Premises
excluding any Tenant Improvements, Tenant Alterations, and any personal
property and trade fixtures of Tenant. During the period of repair, rent will
be abated or reduced in proportion to the degree to which Tenant’s use of the
Premises is impaired, as determined by Landlord, not to exceed the total amount
of rent loss insurance proceeds, directly attributable to Tenant’s Premises, Landlord
has received. However, rent will not be abated if Tenant or any of its agents
is the cause of the casualty.


15.03    In addition to Landlord’s right to terminate as provided
herein, Tenant shall have the right to terminate this Lease if: (a) a substantial
portion of the Premises has been damaged by fire or other casualty and such
damage cannot reasonably be repaired (as reasonably determined by Landlord)
within 60 days after Landlord’s receipt of all required permits to restore the
Premises; (b) there is less than 1 year of the Term remaining on the date of
such casualty; (c) the casualty was not caused by the negligence or willful
misconduct of Tenant or its agents, employees or contractors; and (d) Tenant
provides Landlord with written notice of its intent to terminate within 30 days
after the date of the fire or other casualty.


16.        Assignment and
Subletting.

 

 


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16.01    Tenant will not, voluntarily or by operation of law,
assign, sell, convey, sublet or otherwise transfer all or any part of Tenant’s
right or interest in this Lease, or allow any other person or entity to occupy
or use all or any part of the Premises (collectively called “Transfer”) without
first obtaining the written consent of Landlord, which consent shall not be
unreasonably withheld. Any Transfer without the prior written consent of
Landlord shall be void. Without limiting the generality of the definition of
“Transfer,” it is agreed that each of the following shall be deemed a
“Transfer” for purposes of this Article 16: (a) an entity other than Tenant
becoming the tenant hereunder by merger, consolidation, or other
reorganization; and (b) a transfer of any ownership interest in Tenant (unless
Tenant is an entity whose stock is publicly traded). Tenant shall provide to
Landlord all information requested by Landlord concerning a Transfer. In no
event shall Tenant mortgage, encumber, pledge or assign for security purposes
all or any part of its interest in this Lease.  Regardless of whether consent
by Landlord is granted in connection with any Transfer, no Transfer shall
release Tenant from any obligation or liability hereunder; Tenant shall remain
primarily liable to pay all rent and other sums due hereunder to Landlord and
to perform all other obligations hereunder.  Similarly, no Transfer, with or
without the consent of Landlord, shall release any guarantor from its
obligations under its guaranty. Upon any assignment or sublease, any rights,
options or opportunities granted to Tenant hereunder to extend or renew the
Term, to shorten the Term, or to lease additional space shall be null and void.
A Transfer to an Affiliate (defined below) in accordance with the following
provisions of this Article 16 shall constitute a “Permitted Transfer”
hereunder. An “Affiliate” means any entity that (i) controls, is controlled by,
or is under common control with Tenant, (ii) results from the transfer of all
or substantially all of Tenant’s assets or stock, or (iii) results from the
merger or consolidation of Tenant with another entity. “Control” means the
direct or indirect ownership of more than 50% of the voting securities of an
entity or possession of the right to vote more than 50% of the voting interest
in the ordinary direction of the entity’s affairs. Notwithstanding anything to
the contrary contained in this Lease, Landlord’s consent is not required for
any assignment of this Lease or sublease of all or a portion of the Premises to
an Affiliate so long as the following conditions are met: (A) at least 30 days
before any such assignment or sublease, Landlord receives written notice of
such assignment or sublease (as well as any documents or information reasonably
requested by Landlord regarding the proposed Transfer and the transferee); (B)
Tenant is not in monetary or material non-monetary default under this Lease;
(C) if the Transfer is an assignment or any other Transfer to an Affiliate
other than a sublease, the intended assignee assumes in writing all of Tenant’s
obligations under this Lease relating to the Premises in form satisfactory to
Landlord or, if the Transfer is a sublease, the intended sublessee accepts the
sublease in form satisfactory to Landlord; (D) the intended transferee has a
tangible net worth, as evidenced by financial statements delivered to Landlord
and certified by an independent certified public accountant in accordance with
generally accepted accounting principles that are consistently applied, at
least equal to the greater of Tenant’s net worth at the date of this Lease or
Tenant’s net worth as of the day prior to the proposed Transfer; (E) the
Premises shall continue to be operated solely for the Permitted Use; and (F)
Tenant shall pay to Landlord the fee set forth above for approving assignments
and subleases and all costs reasonably incurred by Landlord or any Mortgagee
(as defined in Article 25 of this Lease) for such assignment or subletting,
including, without limitation, reasonable attorneys’ fees. No Transfer to an
Affiliate in accordance with this subparagraph shall relieve the Tenant named
herein of any obligation under this Lease or alter the primary liability of
Tenant named herein for the payment of rent or for the performance of any other
obligation to be performed by Tenant, including the obligations of any
guarantor.


16.02    In the event Landlord consents to a Transfer, the
Transfer will not be effective until Landlord receives a fully executed
agreement regarding the Transfer, in a form and of substance acceptable to
Landlord, any documents or information required by such agreement (including
any estoppel certificate and any subordination agreement required by any lender
of Landlord), an amount equal to all reasonable attorneys’ fees incurred by
Landlord (regardless of whether such consent is granted and regardless of
whether the Transfer is consummated) and other reasonable expenses of Landlord
incurred in connection with the Transfer, and a Transfer fee in the amount of
$250.00.


16.03    Any consideration paid to Tenant for assignment of this
Lease, less any reasonable brokerage commissions, legal fees and construction
costs paid by Tenant with respect to such assignment, shall be immediately paid
to Landlord. In the event of a sublease of all or a portion of the Premises,
all rents payable by the subtenant in excess of rents payable hereunder
(allocated on a per square foot basis in the event of a partial sublease) shall
be immediately due and payable to Landlord; provided, excess rental shall be
calculated taking into account straight-line amortization, without interest, of
any reasonable brokerage commissions, legal fees and construction costs paid by
Tenant in connection with the subject sublease transaction.


16.04    Intentionally Omitted.]


16.05    Upon the occurrence of a Default, if the Premises or any
portion thereof are sublet, Landlord may, at its option and in addition and
without prejudice to any other remedies herein provided or provided by Law,
collect directly from the sublessee(s) all rentals becoming due Tenant and
apply such rentals against other sums due hereunder to Landlord.


17.        Default.


Time is of the essence in the performance of all covenants of
Tenant. A “Default” is defined as a failure by the Tenant to comply with or
perform any of the terms, covenants, conditions or Rules and Regulations under
this Lease, including, without limitation, the following:

 


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17.01    Tenant’s failure to make any payment of Base Rent,
Additional Rent or any other amount due and payable hereunder when said payment
is due, such failure continuing for 5 days after written notice of such
failure, as to which time is of the essence, provided that Landlord shall not
be required to provide such notice more than twice during the 12 month period
commencing with the date of the first such notice. The third failure to pay any
such amount within 5 days after said payment is due during such 12-month period
shall be a Default hereunder without notice. Such notice shall replace rather
than supplement any required statutory notice.


17.02    Landlord discovers that any representation or warranty
made by Tenant or any guarantor was materially false when made or that any
financial statement of Tenant or of any guarantor of this Lease given to
Landlord was materially false.


17.03    Tenant makes any general arrangement or assignment for
the benefit of creditors, becomes a “debtor” in a bankruptcy proceeding, is unable
to pay its debts or obligations as they occur, or has an attachment, execution
or other seizure of substantially all of its assets located at the Property or
its interest in this Lease, or any guarantor becomes insolvent, becomes a
“debtor” in a bankruptcy proceeding, fails to perform any obligation under its
guaranty, or attempts to revoke its guaranty.


17.04    Tenant shall fail to comply with any term, provision or
covenant of this Lease other than as specified above in this Article 17 and
shall not cure such failure as soon as reasonably possible, but in any event
within twenty (20) days (forthwith, if the failure involves a hazardous
condition) after written notice of such failure to Tenant provided, however,
that such failure shall not be an event of default if such failure could not
reasonably be cured during such twenty (20) day period, but Tenant has
commenced the cure within such twenty (20) day period and thereafter is
diligently pursuing such cure to completion, provided that the total aggregate cure
period shall not exceed sixty (60) days. Notwithstanding the foregoing, if
Tenant fails to comply with any term, provision or covenant of this Lease more
than once during the Term, any subsequent failure to comply with the same term,
provision or covenant shall be deemed an event of default if Tenant fails to
cure such default within five (5) business days after written notice (rather
than the twenty (20) day period provided immediately above); provided, however,
that if such failure shall not be an event of default if such failure cannot
reasonably be cured during such five (5) business day period, if Tenant has
commenced the cure within such five (5) business day period and thereafter is
diligently pursuing such cure to completion, but the total aggregate cure
period shall not exceed sixty (60) days. The foregoing Tenant cure periods
shall in no event apply to any of the following: Tenant’s (i) failure to
provide an estoppel certificate when and as required under Section 20 of this
Lease, which failure is not cured within 5 days following written notice; (ii)
failure to maintain insurance required under Article 11 of the Lease; (iii)
failure to vacate the Premises upon the expiration or earlier termination of
the Lease; (iv) failure to comply with any obligation under the Lease
pertaining to Hazardous Materials; (v) failure to provide a subordination
agreement when and as required under Section 25 of this Lease, which failure is
not cured within 5 days following written notice; (vi) any other matter provided
for in another subparagraph of this Article 17 for which another time limit is
provided elsewhere in the Lease.


18.        Remedies of
Landlord.


18.01    If Tenant fails to perform any duty or obligation of
Tenant under this Lease, Landlord may at its option, without waiver of Default
nor any other right or remedy, perform any such duty or obligation on Tenant’s
behalf. The costs and expenses of any such performance by Landlord will be
immediately due and payable by Tenant upon receipt from Landlord of the reimbursement
amount required.


18.02    Upon a Default, with or without notice or demand, and
without limiting any other of Landlord’s rights or remedies, Landlord may:


(a)           Terminate this Lease, in which case Tenant
shall immediately surrender the Premises to Landlord. If Tenant fails to
surrender the Premises, Landlord, in compliance with Law, may enter upon and
take possession of the Premises and remove Tenant, Tenant’s Property and any
party occupying the Premises. Tenant shall pay Landlord, on demand, all past due
Rent and other losses and damages Landlord suffers as a result of Tenant’s
Default, including, without limitation, all Costs of Reletting (defined below)
and any deficiency that may arise from reletting or the failure to relet the
Premises. “Costs of Reletting” shall include all reasonable costs and expenses
incurred by Landlord in reletting or attempting to relet the Premises,
including, without limitation, legal fees, brokerage commissions, the cost of
alterations and the value of other concessions or allowances granted to a new
tenant.

 


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(b)           Terminate Tenant’s right to possession of
the Premises and, in compliance with Law, remove Tenant, Tenant’s Property and
any parties occupying the Premises. Landlord may (but shall not be obligated
to) relet all or any part of the Premises, without notice to Tenant, for such
period of time and on such terms and conditions (which may include concessions,
free rent and work allowances) as Landlord in its absolute discretion shall
determine. Landlord may collect and receive all rents and other income from the
reletting. Tenant shall pay Landlord on demand all past due Rent, all Costs of
Reletting and any deficiency arising from the reletting or failure to relet the
Premises.  The re-entry or taking of possession of the Premises shall not be
construed as an election by Landlord to terminate this Lease


(c)           Pursue any other remedy now or hereafter
available to Landlord under the laws or judicial decisions of the state wherein
the Premises is located.


18.03    In lieu of calculating damages under Section 18.02,
Landlord may elect to receive as damages the sum of (a) all rent accrued
through the date of termination of this Lease or Tenant’s right to possession,
and (b) an amount equal to the total rent that Tenant would have been required
to pay for the remainder of the Term discounted to present value at the Prime
Rate (defined below) then in effect, minus the then present fair rental value
of the Premises for the remainder of the Term, similarly discounted, after
deducting all anticipated Costs of Reletting. “Prime Rate” shall be the per
annum interest rate publicly announced as its prime or base rate by a federally
insured bank selected by Landlord in the state in which the Building is
located.


18,04    If Tenant is in Default of any of its non-monetary
obligations under this Lease, Landlord shall have the right to perform such
obligations. Tenant shall reimburse Landlord for the cost of such performance
upon demand together with an administrative charge equal to 10°A of the cost of
the work performed by Landlord.  The repossession or re-entering of all or any
part of the Premises shall not relieve Tenant of its liabilities and
obligations under this Lease.  No right or remedy conferred upon or reserved to
Landlord in this Lease is intended to be exclusive of any right or remedy
granted to Landlord by statute or common law, and each and every such right and
remedy will be cumulative and in addition to any other right and remedy now or
subsequently available to Landlord at Law or in equity.


18.05    In the event of Default, Landlord agrees to use
reasonable efforts to mitigate damages, provided that those efforts shall not
require Landlord to relet the Premises in preference to any other space in the
Building or to relet the Premises to any party that Landlord could reasonably
reject as a transferee pursuant to Article 16.


19.        Condemnation. If the Premises or any portion
thereof are taken under the power of eminent domain or sold under the threat of
the exercise of said power (collectively, “Condemnation”), this Lease shall
terminate as to the part taken as of the date the condemning authority takes
title or possession, whichever first occurs. If all or a material portion of
the rentable area of the Premises are taken by Condemnation, Tenant may, at
Tenant’s option, to be exercised in writing within 15 days after Landlord shall
have given Tenant written notice of such taking (or in the absence of such
notice, within 15 days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession.  Landlord shall also have the right to terminate this Lease if
there is a taking by Condemnation of any portion of the Building or Property
which would have a material adverse effect on Landlord’s ability to profitably
operate the remainder of the Building. lf neither party terminates this Lease
in accordance with the foregoing, this Lease shall remain in full force and
effect as to the portion of the Premises remaining, except that the Base Rent
shall be reduced in proportion to the reduction in utility of the Premises
caused by such Condemnation. Condemnation awards and/or payments shall be the
property of Landlord, whether such award shall be made as compensation for
diminution in value of the leasehold, the value of the part taken or for
severance damages. Notwithstanding anything to the contrary in this Article 19,
Tenant shall have the right to claim separately from the condemning authority
such compensation as may be recoverable by Tenant in its own right for the
amortized value of leasehold improvements paid for solely by Tenant (except for
those Tenant Alterations or Tenant Improvements approved by Landlord and which
will become the property of Landlord upon the expiration or termination of this
Lease), for Tenant’s personal property and trade fixtures, and for relocation
and restoration costs incurred by Tenant, so long as it does not prejudice or
reduce Landlord’s claim against or award from the condemning authority.


20.        Estoppel
Certificates; Financial Statements.

 


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20.01    Tenant will execute and deliver to Landlord, within 10
days after written request from Landlord, a commercially reasonable estoppel
certificate to those parties as are reasonably requested by Landlord (including
a Mortgagee or prospective purchaser). Without limitation, such estoppel
certificate may include a certification as to the status of this Lease, the
existence of any default and the amount of rent that is due and payable. Any
such estoppel certificate may be relied upon by Landlord and by any actual or
prospective buyer or lender of the Property and any other third party
designated by Landlord, If Tenant fails to execute and deliver such estoppel
certificate within such 10 day period, such estoppel certificate shall be
binding on Tenant as prepared.


20.02    Within 10 days after written request from Landlord,
Tenant shall deliver to Landlord such financial statements as Landlord
reasonably requests regarding Tenant or any assignee, subtenant, or guarantor
of Tenant. Tenant represents and warrants to Landlord that each financial
statement is a true and accurate statement in all material respects. At
Tenant’s request, Landlord shall enter into Landlord’s standard form of
confidentiality agreement with Tenant covering confidential financial
information provided by Tenant to Landlord.


21.        Notices. All communications and notices required
under this Lease shall be in writing and shall be addressed to the respective
address of the receiving party. All notices to Tenant shall be given by
reputable overnight courier, U. S. registered or certified mail (return receipt
required, postage prepaid), or hand delivery, and shall be deemed received on
the date of delivery (or attempted delivery) as evidenced by return receipt. Any
notice to Tenant may also be given by posting at the Premises in accordance
with the requirements of applicable Laws and shall be effective upon such
posting.  At any time during the Term, Landlord or Tenant may specify a
different Notice Address (excluding post office boxes) by providing written
notification to the other,


22.        Holdover. If Tenant remains in possession of all
or any part of the Premises with Landlord’s prior written consent after the
expiration or termination of this Lease or of Tenant’s right to possession,
such possession will constitute a month-to-month tenancy which may be
terminated by either Landlord or Tenant upon 30 days written notice and will
not constitute a renewal or extension of the Term.  If Tenant fails to
surrender all or any part of the Premises at the termination of this Lease,
occupancy of the Premises after termination shall be that of a tenancy at
sufferance. Tenant’s occupancy shall be subject to all the terms and provisions
of this Lease, and during the first 3 months of any such holdover, Tenant shall
pay an amount equal to the sum of 150% of the Base Rent and 100% of the
Additional Rent due for the period immediately preceding the holdover,
calculated and payable on a per calendar month basis without reduction for partial
calendar months. Thereafter, commencing on the first day of the fourth month of
any such holdover, Tenant shall pay an amount (on a per calendar month basis
without reduction for partial calendar months during the remainder of the
holdover) equal to the sum of 200% of the Base Rent and 100% of the Additional
Rent due for the period immediately preceding the holdover. No holdover by
Tenant or payment by Tenant after the termination of this Lease shall be
construed to extend the Term or prevent Landlord from immediate recovery of
possession of the Premises by summary proceedings or otherwise. If Landlord is
unable to deliver possession of the Premises to a new tenant or to perform
improvements for a new tenant as a result of Tenant’s holdover, Tenant shall be
liable for all damages (including, without limitation, consequential, indirect
and special) that Landlord suffers from the holdover.


23.        Relocation of the
Premises. [Intentionally Omitted.]

24.        Limitation of Liability. NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD (AND OF ANY
SUCCESSOR LANDLORD) SHALL BE LIMITED TO THE LESSER OF (A) THE INTEREST OF
LANDLORD IN THE PROPERTY, OR (B) THE EQUITY INTEREST LANDLORD WOULD HAVE IN THE
PROPERTY IF THE PROPERTY WERE ENCUMBERED BY THIRD PARTY DEBT IN AN AMOUNT EQUAL
TO 80% OF THE VALUE OF THE PROPERTY (CALCULATIONS OF EQUITY SHALL BE MADE AS OF
THE INITIAL DATE TENANT NOTIFIES LANDLORD OF THE ACTUAL OR ALLEGED DEFAULT OR
OTHER CLAIM). TENANT SHALL LOOK SOLELY TO LANDLORD’S INTEREST IN THE PROPERTY
FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST LANDLORD OR ANY OF LANDLORD’S
TRUSTEES, MEMBERS, PRINCIPALS, BENEFICIARIES, PARTNERS, OFFICERS, DIRECTORS,
EMPLOYEES, MORTGAGEES (AS DEFINED IN ARTICLE 26 BELOW) OR OTHER SECURED PARTIES
AND AGENTS (EACH A “LANDLORD RELATED PARTY”). NEITHER LANDLORD NOR ANY LANDLORD
RELATED PARTY SHALL BE PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY, AND IN
NO EVENT SHALL LANDLORD OR ANY LANDLORD RELATED PARTY BE LIABLE TO TENANT FOR
ANY LOST PROFIT, DAMAGE TO OR LOSS OF BUSINESS OR ANY FORM OF SPECIAL, INDIRECT
OR CONSEQUENTIAL DAMAGE. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD,
TENANT SHALL GIVE LANDLORD AND ANY MORTGAGEE(S) WHOM TENANT HAS BEEN NOTIFIED
HOLD MORTGAGES OR OTHER ENCUMBRANCES ON THE PROPERTY, NOTICE AND REASONABLE
TIME TO CURE THE ALLEGED DEFAULT, FOR PURPOSES HEREOF, “INTEREST OF LANDLORD IN
THE PROPERTY” SHALL INCLUDE PROCEEDS FROM THE ARMS-LENGTH SALE OF THE PROPERTY
TO A THIRD PARTY (LESS ANY SUMS PAYABLE TO SATISFY ANY MORTGAGES OR OTHER LIENS
AGAINST THE PROPERTY), RENTS DUE FROM TENANTS, INSURANCE PROCEEDS AND PROCEEDS
FROM CONDEMNATION OR EMINENT DOMAIN PROCEEDINGS (PRIOR TO THE DISTRIBUTION OF
SAME TO ANY PARTNER OR SHAREHOLDER OF LANDLORD OR ANY OTHER THIRD PARTY).


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25.        Subordination. Tenant accepts this Lease subject
and subordinate to any mortgage(s), deed(s) of trust, ground lease(s) or other
lien(s) now or subsequently arising upon the Premises, the Building or the
Property, and to renewals, modifications, refinancings and extensions thereof
(collectively referred to as a “Mortgage”). The party having the benefit of a
Mortgage shall be referred to as a “Mortgagee”, This clause shall be
self-operative, but upon request from a Mortgagee, Tenant shall, within ten
(10) days of request therefor, execute a commercially reasonable subordination
agreement in favor of the Mortgagee. As an alternative, a Mortgagee shall have
the right at any time to subordinate its Mortgage to this Lease. Upon request,
Tenant, without charge, shall attorn to any successor to Landlord’s interest in
this Lease. Notwithstanding the foregoing, upon written request by Tenant,
Landlord will use reasonable efforts to obtain a non-disturbance, subordination
and attornment agreement from Landlord’s then current Mortgagee on such
Mortgagee’s then current standard form of agreement.  “Reasonable efforts” of
Landlord shall not require Landlord to incur any cost, expense or liability to
obtain such agreement, it being agreed that Tenant shall be responsible for any
fee or review costs charged by the Mortgagee. Upon request of Landlord, Tenant
will execute the Mortgagee’s form of non-disturbance, subordination and
attornment agreement and return the same to Landlord for execution by the
Mortgagee. Landlord’s failure to obtain a non-disturbance, subordination and
attornment agreement for Tenant shall have no effect on the rights, obligations
and liabilities of Landlord and Tenant or be considered to be a default by
Landlord hereunder.


26.        Force Majeure. Whenever a period of time is
prescribed for the taking of an action by Landlord or Tenant (other than the
payment of the Security Deposit or rent), the period of time for the
performance of such action shall be extended by the number of days that the performance
is actually delayed due to strikes, acts of God, shortages of labor or
materials, war, terrorist acts, civil disturbances and other causes beyond the
reasonable control of the performing party (“Force Majeure”).


27.        Miscellaneous
Provisions.


27.01    Whenever the context of this Lease requires, the word
“person” shall include any entity, and the singular shall include the plural
and the plural shall include the singular. If more than one person or entity is
Tenant, the obligations of each such person or entity under this Lease will be
joint and several. The terms, conditions and provisions of this Lease will
apply to and bind the heirs, successors, executors, administrators and assigns
of Landlord and Tenant. No remedy or election hereunder shall be deemed
exclusive but shall, whenever possible, be cumulative with all other remedies
at law or in equity. Time is of the essence for the performance of each term,
condition and covenant of this Lease.


27.02    The captions and headings of this Lease are used for the
purpose of convenience only. This Lease contains all of the agreements and
conditions made between Landlord and Tenant and may not be modified in any
manner other than by a written agreement signed by both Landlord and Tenant.
Any statements, promises, agreements, warranties or representations, whether
oral or written, not expressly contained herein will in no way bind Landlord
and Tenant expressly waives all claims for damages by reason of any statements,
promises, agreements, warranties or representations, if any, not contained in
this Lease. No provision of this Lease shall be deemed to have been waived by
Landlord unless such waiver is in writing signed by a regional vice president
or higher title of Landlord or of Landlord’s management company, and no custom
or practice which may develop between the parties during the Term shall waive
or diminish the Landlord’s right to enforce strict performance by Tenant of any
terms of this Lease. Additionally, regardless of Landlord’s knowledge of a
default at the time of such acceptance, the acceptance of rent or any other
payment by Landlord will not constitute a waiver by Landlord of any default by
Tenant. This Lease is governed and construed in accordance with the laws of the
state in which the Premises are located, and venue of any legal action will be
in the county where the Premises are located.

 


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27.03    This Lease has been fully reviewed by both parties and
shall not be strictly or adversely construed against the drafter. If any
provision contained herein is determined to be invalid, illegal or
unenforceable in any respect, then (a) such provision shall be enforced to the
fullest extent allowed, and (b) such invalidity, illegality, or
unenforceability will not affect any other provision of this Lease.


27.04    Except as required under Articles 20 and/or 25 of this
Lease, Tenant hereby agrees not to disclose any terms of this Lease without the
prior written consent of Landlord. Tenant shall not record this Lease or any
short form memorandum hereof.


27.05    All obligations of Tenant under this Lease not fully
performed as of the expiration or earlier termination of the Term shall survive
the expiration or earlier termination of this Lease.


27.06    Landlord and Tenant each warrant to the other that it
has not dealt with any broker or agent in connection with this Lease, other
than the person(s) listed in the Basic Lease Information. Landlord and Tenant
each agree to indemnify the other against all costs, expenses, legal fees and
other liability for commissions or other compensation claimed by any other
broker or agent by reason of the act or agreement of the indemnifying party.
The provisions of this Section 27.06 shall survive the expiration or earlier
termination of this Lease.


27.07    The grant of any consent or approval required from
Landlord under this Lease shall be proved only by proof of a written document
signed and delivered by Landlord expressly setting forth such consent or
approval. Unless otherwise specified herein, any such consent or approval may
be withheld in Landlord’s sole discretion. Notwithstanding any other provision
of this Lease, the sole and exclusive remedy of Tenant for any alleged or
actual improper withholding, delaying or conditioning of any consent or
approval by Landlord shall be the right to specifically enforce any right of
Tenant to require issuance of such consent or approval on conditions allowed by
this Lease,


27.08    Tenant agrees to abide by, keep and observe, and shall
cause its employees, suppliers, shippers, customers, agents, contractors and
invitees to so abide by, keep and observe, all Rules and Regulations set forth
in Exhibit C (the “Rules and Regulations”) and all additions and amendments to
the same of which Landlord provides written notice to Tenant. Landlord will not
be responsible to Tenant for any nonperformance by any other tenant, occupant
or invitee of the Property of any said Rules and Regulations. If there is a
conflict between this Lease and any rules and regulations enacted after the
date of this Lease, the terms of this Lease shall control,


27.09    Tenant will not place any signage on or about the
Property, or on any part thereof, without the prior written consent of Landlord
which Landlord may withhold or condition in its sole discretion.
Notwithstanding the foregoing, Tenant shall be allowed to have standard
monument and suite signage, subject to all applicable Laws, in a location
mutually agreeable to Landlord and Tenant at Tenant’s sole cost, All Tenant
signage will comply with the terms and conditions of this Lease, the all
applicable Laws, and sign criteria for the Building as promulgated by Landlord
from time to time and the Rules and Regulations and/or other criteria which
Landlord may establish from time to time. Landlord shall provide directory
signage within the Project at Landlord’s sole cost.


27.10    If, on account of any breach or default by Tenant in
Tenant’s obligations under the terms and conditions of this Lease, it shall
become necessary or appropriate for Landlord to employ or consult with an
attorney or collection agency concerning or to enforce or defend any of
Landlord’s rights or remedies arising under this Lease or to collect any sums
due from Tenant, Tenant agrees to pay all costs and fees so incurred by
Landlord, including, without limitation, reasonable attorneys’ fees and costs.
If either party institutes a suit against the other for violation of or to
enforce any covenant, term or condition of this Lease, the prevailing party
shall be entitled to reimbursement of all of its costs and expenses, including,
without limitation, reasonable attorneys’ fees.


27.11    Tenant represents and warrants to Landlord that each
individual executing this Lease on behalf of Tenant is authorized to do so on
behalf of Tenant and that Tenant is not, and the entities or individuals
constituting Tenant or which may own or control Tenant or which may be owned or
controlled by Tenant are not, (i) in violation of any laws relating to
terrorism or money laundering, or (ii) among the individuals or entities
identified on any list compiled pursuant to Executive Order 13224 for the
purpose of identifying suspected terrorists or on the most current list
published by the U.S. Treasury Department Office of Foreign Assets Control at
its official website, http://www.treas.gov/ofac/tllsdn.pdf or any replacement
website or other replacement official publication of such list.

 


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27.12    Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE
PROPERTY OR ARISING OUT OF THIS LEASE.


27.13    Solely for the purpose of effectuating Tenant’s
indemnification obligations under this Lease, and not the benefit of any third
parties (including but not limited to employees of Tenant), Tenant specifically
and expressly waives any immunity that it may be granted under applicable
federal, state or local Worker Compensation Acts, Disability Benefit Acts or
other employee benefit acts. Furthermore, the indemnification obligations under
this Lease shall not be limited in any way by any limitation on the amount or
type of damages, compensation or benefits payable to or for any third party
under Worker Compensation Acts, Disability Benefit Acts or other employee
benefit acts. The parties acknowledge that the foregoing provisions of this
Section have been specifically and mutually negotiated between the parties.


27.14    Landlord represents and warrants that it has full right
and authority to enter into this Lease and to perform all of Landlord’s
obligations hereunder and that all persons signing this Lease on its behalf are
authorized to do so.


28.        Additional
Provisions.


28.1      Option To Renew.


(a)        Provided this Lease is in full force and effect and
Tenant is not in monetary or material non-monetary default under any of the
other terms and conditions of this Lease at the time of notification or
commencement, Tenant shall have one (1) option to renew (the “Renewal Option”)
the Term of this Lease for a term of five (5) years (the “Renewal Term”), for
the portion of the Premises being leased by Tenant as of the date the Renewal
Term is to commence, on the same terms and conditions set forth in this Lease,
except as modified by the terms, covenants and conditions as set forth below:


(i)            If Tenant elects to exercise the Renewal Option,
then Tenant shall provide Landlord with written notice no earlier than the date
which is 180 days prior to the expiration of the initial Term of this Lease but
no later than the date which is 60 days prior to the expiration of the initial
Term of this Lease. If Tenant fails to provide such notice, Tenant shall have
no further or additional right to extend or renew the Term of this Lease.


(ii)           The Base Rent in effect at the expiration of the
then current Term of this Lease shall be changed to reflect the Prevailing
Market (as defined in Section 28.1(d) below) rate. Landlord shall advise Tenant
of the new Base Rent for the Premises no later than 30 days after receipt of
Tenant’s written request therefor. Said request shall be made no earlier than
30 days prior to the first date on which Tenant may exercise its Renewal Option
under this Section 28.1.  Said notification of the new Base Rent may include a
provision for its escalation to provide for a change in the Prevailing Market
rate between the time of notification and the commencement of the Renewal Term.


(iii)          If Tenant and Landlord are unable to agree on a
mutually acceptable rental rate for the Renewal Term not later than 60 days
prior to the expiration of the then current Term, then Landlord and Tenant,
within 5 days after such date, shall each simultaneously submit to the other,
in a sealed envelope, its good faith estimate of the Prevailing Market rate for
the Premises during the Renewal Term (collectively referred to as the
“Estimates”). If the higher of such Estimates is not more than 105% of the
lower of such Estimates, then the Prevailing Market rate shall be the average
of the two Estimates. If the Prevailing Market rate is not established by the
exchange of Estimates, then, within 7 days after the exchange of Estimates,
Landlord and Tenant shall each select an appraiser to determine which of the
two Estimates most closely reflects the Prevailing Market rate for the Premises
during the Renewal Term. Each appraiser so selected shall be certified as an
MAI appraiser or as an ASA appraiser and shall have had at least 5 years
experience within the previous 10 years as a real estate appraiser working in
Beaverton, Oregon, with working knowledge of current rental rates and
practices. For purposes hereof, an “MAI” appraiser means an individual who
holds an MAI designation conferred by, and is an independent member of, the
American Institute of Real Estate Appraisers (or its successor organization, or
in the event there is no successor organization, the organization and
designation most similar), and an “ASA” appraiser means an individual who holds
the Senior Member designation conferred by, and is an independent member of,
the American Society of Appraisers (or its successor organization, or, in the
event there is no successor organization, the organization and designation most
similar).

 

 


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(iv)          Upon selection, Landlord’s and Tenant’s appraisers
shall work together in good faith to agree upon which of the two Estimates most
closely reflects the Prevailing Market rate for the Premises. The Estimate
chosen by such appraisers shall be binding on both Landlord and Tenant, If
either Landlord or Tenant fails to appoint an appraiser within the 7 day period
referred to above, the appraiser appointed by the other party shall be the sole
appraiser for the purposes hereof, If the two appraisers cannot agree upon
which of the two Estimates most closely reflects the Prevailing Market rate
within 20 days after their appointment, then, within 10 days after the
expiration of such 20 day period, the two appraisers shall select a third
appraiser meeting the aforementioned criteria. Once the third appraiser (i.e.,
the arbitrator) has been selected as provided for above, then, as soon
thereafter as practicable but in any case within 14 days, the arbitrator shall
make his or her determination of which of the two Estimates most closely
reflects the Prevailing Market rate and such Estimate shall be binding on both
Landlord and Tenant as the Prevailing Market rate for the Premises. If the
arbitrator believes that expert advice would materially assist him or her, he
or she may retain one or more qualified persons to provide such expert advice.
The parties shall share equally in the costs of the arbitrator and of any
experts retained by the arbitrator. Any fees of any appraiser, counsel or
experts engaged directly by Landlord or Tenant, however, shall be borne by the
party retaining such appraiser, counsel or expert.


(v)           If the Prevailing Market rate has not been
determined by the commencement date of the Renewal Term, Tenant shall pay Base
Rent upon the terms and conditions in effect during the last month of the
initial Term until such time as the Prevailing Market rate has been determined.
Upon such determination, the Base Rent for the Premises shall be retroactively
adjusted to the commencement of such Renewal Term for the Premises.


(b)        If Tenant is entitled to and properly exercises its
Renewal Option, Landlord shall prepare an amendment (the “Renewal Amendment”)
to reflect changes in the Base Rent, Term, Termination Date and other
appropriate terms. Tenant shall execute and return the Renewal Amendment to
Landlord within 15 days after Tenant’s receipt of same, but an otherwise valid
exercise of the Renewal Option shall be fully effective whether or not the
Renewal Amendment is executed.


(c)        Except with respect to a Permitted Transfer, the
Renewal Option is not transferable; the parties hereto acknowledge and agree
that they intend that the Renewal Option shall be “personal” to Tenant as set
forth above and that in no event will any assignee or sublessee have any rights
to exercise the Renewal Option.  If the Renewal Option is validly exercised or
if Tenant fails to validly exercise the Renewal Option, Tenant shall have no
further right to extend the Term of this Lease.


(d)        For purposes of this Renewal Option, “Prevailing
Market” shall mean the arms length fair market annual rental rate per rentable
square foot under leases and renewal and expansion amendments entered into on
or about the date on which the Prevailing Market is being determined hereunder
for space comparable to the Premises in the Building and buildings comparable
to the Building in the 158th Avenue district of the Beaverton, Oregon area as
of the date the Renewal Term is to commence, taking into account the specific
provisions of this Lease which will remain constant, and may, if applicable,
include parking charges. The determination of Prevailing Market shall take into
account any material economic differences between the terms of this Lease and
any comparison lease or amendment, such as rent abatements, construction costs
and other concessions and the manner, if any, in which the landlord under any
such lease is reimbursed for operating expenses and taxes,


(e)        Notwithstanding anything herein to the contrary, the Renewal
Option is subject and subordinate to the expansion rights (whether such rights
are designated as a right of first offer, right of first refusal, expansion
option or otherwise) of any tenant of the Building existing on the date hereof.


28.2      Right of First
Offer.


(a)        Provided there exists no monetary or material
non-monetary default under the terms, covenants and conditions of this Lease,
Tenant shall have the one time right of offer (the “Offer Right”) to lease the
approximately 5,316 rentable square feet of space commonly known as Suite B-2
on the first floor of the Building and shown on the demising plan attached
hereto as Exhibit E. Tenant’s Offer Right shall be exercised as follows: at any
time after Landlord has determined that the existing tenant in the subject
portion of the Offer Space will not extend or renew the term of its lease for
such Offer Space (but prior to leasing such Offer Space to a party other than
the existing tenant), Landlord shall advise Tenant (the “Advice”) of the terms
under which Landlord is prepared to lease such Offer Space to Tenant for the
remainder of the Term, which terms shall reflect the Fair Market (hereinafter
defined) rate for such Offer Space as reasonably determined by Landlord, Tenant
may lease such Offer Space in its entirety only, under such terms, by
delivering written notice of exercise to Landlord (the “Notice of Exercise”)
within 7 days after the date of the Advice.

 

 


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(b)        Notwithstanding the foregoing, Tenant shall have no
Offer Right with respect to the Offer Space and Landlord need not provide
Tenant with an Advice, if: (i) Tenant is in monetary or material non-monetary
default under this Lease at the time that Landlord would otherwise deliver an
Advice; (ii) the Premises, or any portion thereof, is sublet at the time
Landlord would otherwise deliver an Advice; (iii) this Lease has been assigned
prior to the date Landlord would otherwise deliver an Advice; (iv) Tenant is
not occupying the Premises on the date Landlord would otherwise deliver an
Advice; (v) the Offer Space is not intended for the exclusive use of Tenant
during the Term; or (vi) the existing tenant in the Offer Space is interested
in extending or renewing its lease for the Offer Space or entering into a new
lease for the Offer Space.


(c)        The term for the Offer Space shall commence upon the
commencement date stated in the Advice and thereupon the Offer Space shall be
considered a part of the Premises, provided that all of the terms stated in the
Advice shall govern Tenant’s leasing of such Offer Space and only to the extent
that they do not conflict with the Advice, the terms and conditions of this
Lease shall apply to such Offer Space. Tenant shall pay Base Rent and
Additional Rent for the Offer Space in accordance with the terms and conditions
of the Advice, which terms and conditions shall reflect the Fair Market rate
for the Offer Space as determined in Landlord’s reasonable judgment.


(d)        The Offer Space (including improvements and
personalty, if any) shall be accepted by Tenant in its condition and as-built
configuration existing on the earlier of the date Tenant takes possession of
such Offer Space or as of the date the term for such Offer Space commences,
unless the Advice specifies any work to be performed by Landlord in such Offer
Space, in which case Landlord shall perform such work in such Offer Space. If
Landlord is delayed delivering possession of the Offer Space due to the
holdover or unlawful possession of such space by any party, Landlord shall use
reasonable efforts to obtain possession of the space, and the commencement of
the term for such Offer Space shall be postponed until the date Landlord
delivers possession of such Offer Space to Tenant free from occupancy by any
party.


(e)        The rights of Tenant hereunder with respect to the Offer
Space shall terminate on the earlier to occur of:  (i) 12 calendar months prior
to the expiration of the initial Term of this Lease (ii) the date Landlord
would have provided Tenant written notice of the Offer Right as described
herein above if Tenant had not been in violation of one or more of the
conditions set forth in subparagraph (b) above; and (iii) Tenant’s failure to
exercise its Offer Right within the 5 day period provided in subparagraph (a)
above.


(f)        Notwithstanding anything herein to the contrary,
Tenant’s Offer Right is subject and subordinate to the expansion rights
(whether such rights are designated as a right of first offer, right of first
refusal, expansion option or otherwise) of any tenant of the Building existing
on the date hereof.


(g)        For purposes of this Offer Right, “Fair Market” shall
mean the annual rental rate per square foot for space comparable to the Offer
Space in the Building and office buildings comparable to the Building in the
158th Avenue district of the Beaverton, Oregon area under leases and renewal
and expansion amendments being entered into at or about the time that
Prevailing Market is being determined, giving appropriate consideration to
tenant concessions, brokerage commissions, tenant improvement allowances, existing
improvements in the space in question, and the method of allocating operating
expenses and taxes. Notwithstanding the foregoing, space leased under any of
the following circumstances shall not be considered to be comparable for
purposes hereof: (i) the lease term is for less than the lease term of the
Offer Space, (ii) the space is encumbered by the option rights of another
tenant, or (iii) the space has a lack of windows and/or an awkward or unusual
shape or configuration. The foregoing is not intended to be an exclusive list
of space that will not be considered to be comparable.


28.3      Landlord Default. Landlord’s failure to perform any of
its obligations under this Lease shall constitute a default under this Lease if
such failure is actually a failure of an express obligation of Landlord under
this Lease (as reasonably and mutually determined by Landlord and Tenant) and
continues for 30 days after written notice of such failure, provided that if
such failure is not capable of being cured within such 30 day period through no
fault of Landlord, such failure shall not constitute an event of default by
Landlord hereunder so long as Landlord undertakes to cure the failure within
such 30 day period and thereafter diligently attempts to complete the cure as soon
as reasonably possible, Landlord shall notify Tenant in writing if Landlord
objects to Tenant’s claim of a Landlord default and such notification shall
provide reasonable detail of Landlord’s objection.


[SIGNATURE PAGE TO
FOLLOW]

 


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Submission of this Lease for examination and signature by Tenant
is not an offer to lease and does not create a reservation or option to lease.
This Lease will become effective and binding only upon full execution and
delivery by both Tenant and Landlord. THIS LEASE, WHETHER OR NOT EXECUTED BY
TENANT, IS SUBJECT TO ACCEPTANCE BY LANDLORD, ACTING BY ITSELF OR BY ITS AGENT
BY THE SIGNATURE ON THIS LEASE OF ITS SENIOR VICE PRESIDENT, ASSISTANT VICE
PRESIDENT OR REGIONAL MANAGER AND DELIVERY OF AN ORIGINAL OF SUCH, SIGNATURE TO
TENANT,


Landlord and Tenant have executed this Lease as of the day and
year first above written.


LANDLORD:


PS
Business Parks L.P.


a California limited partnership


By PS
Business Parks, Inc., its general partner


By:       /s/ Coby
Holley                                     


      
Coby Holley, Vice President


 


Date:                                                    


        
EXECUTION DATE


            Landlord
Fed. ID #95-4609260


 


TENANT:


Pro-Dex, Inc. a Colorado corporation,


a Colorado corporation 


 


By:       /s/
 Jeff Ritchey                                      


 


Name: Jeff Ritchey

Title:  CFO


Tax ID Number (SSN or
FEIN):


84-1261240

 

 

 


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