Document:

Exhibit 10.2

 

EXECUTIVE OFFICE LEASE AGREEMENT

(September 2005 Version)

 

THIS
LEASE is entered into this 1st day of January, 2009 between PROFESSIONAL SUITES AT THE GALLERIA, INC., a Florida
corporation, (Landlord), and PROSPECT ACQUISITION
CORP., a Delaware corporation (Tenant).

 

THE
PARTIES AGREE AS FOLLOWS:

 

ARTICLE 1. AGREEMENT FOR USE AND OCCUPANCY

 

1.1.                            Lease of Premises

 

On
this day, the Landlord leases to the Tenant, and the Tenant hires and takes the
premises Suite 318 being
located at Galleria Plaza, Building A, 9130 Galleria
Court, Naples, Florida 34109 (Leased Premises) as graphically
depicted on Exhibit “A” attached hereto and made a part hereof.

 

1.1.1.                   The purpose of the floor plan attached hereto
as Exhibit A is to show the approximate location of the Premises. Landlord reserves the right at any time to relocate the common areas shown on
said floor plan. Landlord may relocate Tenant to another location in the
building at Landlord’s sole cost and expense and with Tenant’s reasonable
approval to such other location within the building.

 

1.1.2.                   COMMON AREAS. The use and occupation by the
Tenant of the Premises shall include the use of, in common with others entitled
thereto, the Common Areas including the lobby, entrances, stairs, elevator,
roads, sidewalks, parking areas and other public portions as may from time to
time be designated by the Landlord, subject however, to the terms and
conditions of this Lease and to the rules and regulations for the use
thereof as reasonably prescribed from time to time by the Landlord, and
attached hereto as Exhibit C.  All the windows and outside walls of the
Premises and any space in the Premises used for shafts, pipes, conduits, ducts,
electric or other utilities, sinks or other building facilities, and the use
thereof and access thereto through the Premises for the purpose of operation,
maintenance and repairs, are reserved to Landlord.  Landlord allows Tenant access to said areas as
may reasonably be necessary for Tenant’s permitted use. Landlord further reserves
the right to alter or change these areas as the need may arise and as Landlord
reasonably deems necessary.

 

1.2.                            Purpose of Use and Occupancy

 

The
Tenant will use and occupy the Leased Premises for General
Office Purposes as permitted by Collier County Development Services office
zoning and use regulations and for no other purposes or uses of any
kind, except as described in Paragraph 7.1. 

 

1.3.                            Receipt of Payments

 

On
execution of this lease, the Landlord acknowledges receipt of all of the
following:

 

1.3.1.                   $1,261.40 in rent for the first and last month
($630.70 & $630.70), as required under Paragraph 3.1.
Rent for any occupancy prior to the first calendar day of the month shall be
prorated, and due at Lease execution with the aforementioned first and last month
rent. Tenant shall also pay the sales tax on the rents; at the time this form
was drafted, sales tax is 6%. 

 

1.3.2.                 $595.00 in security deposit, as required under Paragraph 5.1 .

 

The
total amount that the Landlord has received is $1,856.40.

 

ARTICLE 2. TERM

 

2.1.                            Term of Lease

 

The
Tenant may possess the Leased Premises for the term of Eleven (11)
Months (“Term”), beginning the 1st day of January 2009, (“Commencement
Date”) and ending at midnight on the 30 day of November, 2009, (“Termination
Date”).

 

2.2.                            Extension of Term

 

Not
applicable.

 

ARTICLE 3. RENT

 

3.1.                            Amount and Payment of Rent

 

This
rent is payable without the Landlord’s demand on the first day of each month
during the Lease term in equal monthly installments of $595.00
per month plus applicable sales tax (currently 6%) per month and all rent
checks shall be made payable and delivered to Landlord’s manager, Professional
Suites at the Galleria., 9130 Corsea del Fontana Way, Naples, FL 34109 or at
any other place or to any other person the Landlord may from time to time
designate. If the rent is not received by the 5th day of the month, then on the
5th day the rent amount due for the month (consequently, also the applicable
annual period) is increased by $50.00 with the amount increasing by an
additional $20 for each day thereafter until the rent is paid in full,
including the additional rent amount. If this Lease commences in the middle of
the rental period, the rent will be prorated and will be due upon Lease
execution (see Section 1.3.1 above).

 

	
  Monthly Rent

  	
   

  	
  Addendum Options

  	
   

  	
  Sales Tax

  	
   

  	
  Total Per Month

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $595.00

  	
   

  	
  $N/A

  	
   

  	
  $35.70

  	
   

  	
  $630.70

  	
   

  

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 1 of 11

 

 

3.2.                            Rent Adjustments

 

The
amount of fixed annual rent under Paragraph 3.1 will be
increased in the second year (2nd) year following the date of this Lease and in
each subsequent year by an amount equal to the increase of CPI during the
twelve (12) months preceding, however the increase shall not to be less than
2.5% or greater than 5.0% in any single year. The term CPI means the Consumer
Price Index for All Urban Consumers, Southern Region, All Items (1993-95 = 100)
published by the Bureau of Labor Statistics of the U.S. Department of Labor. If
the CPI shall become unavailable the Landlord shall select a substitute index
published by any agency of the U.S.

 

ARTICLE 4. ADDITIONAL PAYMENTS

 

4.1.                            Additional Rent Payments

 

In
addition to the minimum annual rent under Paragraph 3.1,
all other payments that the Tenant makes under this Lease are considered
additional rent, regardless of whether the payments are so designated. All
additional payments plus applicable sales tax are due and payable at the time the Landlord demands payment, or at the
time the next succeeding rent installment is due, whichever occurs first.
Tenant shall pay without notice, except as may be required in this Lease, and without any deductions, setoff or
abatement, all sums, impositions, costs, rents, expenses and other payments
which Tenant is required to pay under this Lease, and fees for services
pursuant to the schedule of services and fees attached hereto as Exhibit D
and incorporated herein by reference, and in the event of any nonpayment
thereof, and Tenant’s failure to cure during any applicable grace period,
Landlord shall have (in addition to all other rights and remedies) all the
rights and remedies provided for in this Lease or by law in the instance of
nonpayment of Rent. Such charges may include, but not be limited to, Landlord’s
support services such as telephone equipment and answering. All Rent and other
charges not paid when due shall bear interest at the maximum rate of interest
permitted under the laws of Florida from and after the date said Rent and
additional charges become due, and the  same shall be regarded as Additional Rent
hereunder.

 

4.2.                            Utility or Service Charges

 

Tenant
shall be solely responsible for and promptly pay all charges for TV satellite
hookup and its monthly fee, internet hookup and its monthly fee, telephone and
its monthly fee, including interior line hookup and monthly fee or any other
utility exclusively used or consumed by Tenant. Tenant is responsible for any
installation charges or deposits that may be required from each service
provider. Tenant shall pay for all said utility charges exclusively servicing
the Premises upon occupancy of such Premises. In no event shall Landlord be
liable to Tenant for an interruption or failure in the supply or service of any
such utilities to the Premises. The Tenant may not permit or suffer any utility
facility to be overloaded. If the Tenant fails to repair any damage or
destruction to, or otherwise fails to maintain, the Leased Premises, the
Landlord may repair the damage or destruction or may conduct any maintenance
that the Landlord deems necessary in its own sole discretion. The cost of the
repair or maintenance is considered additional rent.

 

4.3.                            Additional Work

 

Any
costs that the Landlord charges to the Tenant for services or work done on the
Leased Premises at the Tenant’s request or as otherwise required under this
Lease will be considered rent due and may be included in any lien for rent
arrearages. Professional Suites offers additional courtesy services and
products (photocopies, facsimiles, word processing, clerical support, postage
and shipping and signage etc). tenant will receive a monthly invoice for these
charges.

 

4.4.                            Sales and Use Taxes

 

At
the time rental payments are made, the Tenant agrees to pay to the Landlord all
sales and use taxes that arise because of payment of rent to the Landlord.

 

4.5.                            Specific Services Provided
by Landlord.

 

Landlord
shall provide the following services at the Landlord’s expense:

 

4.5.1.                   The Receptionist/Secretary shall greet and
announce all visitors of Tenants occupying suites on the Third level.

 

4.5.2.                   The Tenant shall have the use of a conference
room for conference activities only. To insure availability, the conference
room shall be reserved beforehand with the Receptionist. To insure a quiet
atmosphere, the conference room may not be used for activities that create
noise or any disturbance. The use of the conference room is not to be booked
more than a week in advance. The use of the conference room is limited to not
more than ten (10) hours per month, subject to availability. Additional
hours are available at an additional fee.

 

4.5.3.                   The Tenant shall be provided with one standard
telephone instrument per suite but will
be responsible for the cost of the telephone
line.

 

4.5.4.                   The Tenant shall be provided signage for a
nominal fee, consisting of the Tenant’s name or business in both the downstairs
lobby of the building and outside of the Tenant’s suite.

 

4.5.5.                   The Landlord shall provide the Tenant and its
guests, exclusively, with coffee at no charge. Soft drinks and snacks are
available for a fee and are located on the Third Level.

 

4.5.6.                   A photocopy machine will be made available at
all times for a nominal charge to Tenant. A facsimile machine, located on the Third
level, will be made available to all Tenants during business hours for a
nominal charge to Tenant.

 

4.5.7.                   The Landlord shall provide heating and air
conditioning services to the Premises as required in Landlord’s reasonable judgment
for the comfortable use and occupation of the Premises.

 

4.5.8.                   Landlord shall furnish elevator service to be
used by Tenant in common with others.

 

4.5.9.                   Landlord shall provide janitorial and cleaning
services to the Premises on a weekly basis and to common areas of the building
as deemed reasonable by the Landlord, in the Landlord’s sole opinion.

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 2 of 11

 

 

4.5.10.               Landlord
shall pay real estate taxes, water, sewer, electric service, garbage dumpster
service, cornmon area maintenance and building insurance, except for contents
coverage which shall be the responsibility of Tenant.

 

4.6.         Additional
Telephones

 

Additional
telephones and installation thereof are the responsibility of the Tenant.

 

4.7.         Telephone
Answering Service

 

Optional
telephone answering service is available to the Tenant, payable in advance with
the payment of Rent and regarded as Rent hereunder. If the Tenant elects to pay
for this option, the Receptionist/Secretary will answer one telephone line for
the Tenant between the hours of 8:30 a.m. and 12:30 p.m., and between
1:30 p.m. and 5:00 p.m., except holidays recognized by the federal
government. For each additional telephone line that is routed through the main
switchboard, there will be an additional charge for the Receptionist/Secretary
to answer that line.

 

4.8.         Reimbursement
for Expenditures

 

The
Landlord may elect, but is not obligated, to pay money, or otherwise to perform
any act that requires the expenditure of money, because of the Tenant’s failure
or neglect to perform any Lease provision. If the Landlord pays money or
performs such an act, the Tenant agrees to reimburse the Landlord all of the
amounts expended, plus a charge of ten percent (10%) on those amounts. The
amounts and the charges are payable on the Landlord’s demand and are considered
additional rent.

 

4.9.         Reimbursement
for Collection of Damages

 

If
the Landlord pays any money or incurs any expenses in collecting damages for
any violation of any of the Tenant’s covenants, undertakings, or agreements set
forth in this Lease, the Landlord may notify the Tenant that the amount so paid
or incurred is additional rent that the Tenant must pay with the next
installment of rent to become due.

 

ARTICLE 5. SECURITY DEPOSIT

 

5.1.         Amount and
Purpose of Deposit

 

At
the time this Lease is signed, the Tenant shall deposit with the Landlord a
security deposit in the amount of $595.00 as
security for the Tenant’s faithful performance and observance of the Lease
terms, conditions, and provisions, including without limitation, surrender of
possession of the Leased Premises to the Landlord. The security deposit does
not constitute prepayment of the last month’s rent or of rent for any month
during the original or renewal terms of this Lease.

 

5.2.         Holding of
Deposit

 

The
Tenant waives irrevocably the benefit of any provision of law that requires the
security to be held in escrow or by a third party. The security is deemed to be
the Landlord’s property, and the Landlord may commingle it with the Landlord’s
own funds.

 

5.3.         Application
or Retention of Deposit

 

If
the Tenant defaults on any of the terms, conditions, or provisions of this
Lease, including but not limited to the payment of rent and additional
payments, the Landlord may apply or retain all or part of the security
deposited to the extent required to pay the delinquent rent or additional
payments or to reimburse the Landlord for all sums incurred or expended because
of the Tenant’s default. Reimbursable sums include but are not limited to any
damages or deficiencies that result from reletting the Leased Premises. Such
damages or deficiencies are reimbursable to the Landlord regardless of whether
they occur before or after the Landlord’s summary proceedings or other reentry.
If the Landlord applies or retains any part of the security deposited, the
Tenant shall deposit with the Landlord an equal amount to replace that which
has been applied or retained so that the Landlord has a full deposit at all
times during the terms of this Lease. The replacement amount is payable on the
Landlord’s demand.

 

5.4.         Return of Deposit

 

If
the Tenant complies fully with all the terms, provisions, covenants, and
conditions of this Lease, the Landlord must return the security deposit to the
Tenant after the date on which this Lease terminates and after the Tenant
delivers possession of the Leased Premises to the Landlord.

 

5.5.         Transfer of
Deposit to Third Party

 

If
the Landlord sells the interest in the Leased Premises, the Landlord may deliver
or credit the funds that the Tenant deposits under Paragraph 5.1 to the purchaser of the Landlord’s interest.
After the transfer is complete, the Landlord will be absolutely discharged from
any further liability with respect to the deposit. This paragraph applies to
the benefit of every subsequent transferee. The Tenant agrees to hold liable
solely the Landlord or its successor(s) in interest for the return of its
security deposit under the Lease terms. The Tenant may not seek the return of
the security deposit from any mortgagees who have assumed the Landlord’s
position, whether by mortgagee in possession, foreclosure, or acceptance of a
deed, unless the mortgagees first acknowledge in writing receipt of the
specific security deposit.

 

ARTICLE 6. EMPLOYMENT OF LANDLORD’S EMPLOYEES

 

The
Tenant agrees not to knowingly employ nor offer to employ any employee of the
Landlord or any of the Landlord’s affiliated companies or entities during the
Term of the Tenant’s Lease, or for a period of six (6) months after the
Tenant quits the Premises. Upon breach of this covenant, Tenant shall pay as
liquidated damages to the employer (either the Landlord or an affiliate of the
Landlord), a sum of money equal to twenty (20) percent of the employee’s annual
wages for each breach.

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 3 of 11

 

 

ARTICLE 7. USE OF PREMISES

 

7.1.         Permissible
Uses

 

The
Tenant may not use any of the Leased Premises, nor permit another person to use
the Leased Premises, for any purpose other than as permitted under Paragraph 1.2,
unless the Tenant obtains the Landlord’s prior written consent; and Tenant
shall not at any time use or occupy, or suffer or permit anyone to use or
occupy the Premises or do or permit anything to be done in the Premises which: (1) causes
or is liable to cause injury to persons, to the building or its equipment,
facilities or systems; (2) impairs or tends to impair the character,
reputation or appearance of the building as a first class office building; (3) impairs
or tends to impair the proper and economic maintenance, operation and repair of
the building or its equipment, facilities or systems; (4) increases the
rate of fire, liability or other insurance coverage for the property; or (5) annoys
or inconveniences or tends to annoy or inconvenience other tenants or occupants
of the building. Tenant shall keep the Premises at all times in good order,
condition and repair, and shall also keep the Premises in a clean, sanitary and
safe condition. Tenant agrees to comply with all requirements of law,
ordinance, order, regulation or otherwise affecting the Premises, which are now
in effect or may hereafter be enacted by any public authority. Tenant covenants
with Landlord to comply with and cause Tenant’s representatives to comply with,
the rules and regulations attached hereto as Exhibit C, and with such
reasonable modifications thereof and additions thereto as Landlord may from
time to time make to said rules and regulations.

 

7.2.         Signs
and Advertisements

 

Tenant
covenants and agrees that it will not permit or cause to be placed on the
outside of the Premises or elsewhere in the building including the inside or
outside of the windows or doors and walls, signs, notices or other media or
advertising, except only for those installed by Landlord or as approved in
writing in advance by Landlord. Tenant further agrees to maintain such sign,
decoration, lettering, advertising matter or other thing as may be approved by
Landlord in a first class condition, style and repair at all times.

 

7.3.         Surrender
of Additions, Fixtures, and Improvements

 

All
additions, fixtures, or improvements that the Tenant may make to the Leased
Premises will become the Landlord’s property, must remain as part of the Leased
Premises, and must be surrendered with the Leased Premises at the termination
of this Lease.

 

7.4.         Property
of Landlord

 

An
inventory of the items of equipment that are part of the Leased Premises and
that remain the property of the Landlord is set forth on Addendum 1, which is attached to
and made part of this Lease. The Tenant expressly agrees to maintain the items
of equipment in good repair under the terms of the security agreement attached
to them.

 

7.5.         Liability
for Personal Property

 

All
personal property placed or moved in the Leased Premises is at the risk of the
Tenant or other owner of the personal property. The Landlord is not liable for
any damage to the personal property, or for personal injuries to the Tenant or
any other person, that arise from the bursting or leaking of water, sewer or soil pipes or from any person’s act of negligence, regardless of whether
that person is an occupant of the building.

 

7.6.         Liability
for Damages or Injuries

 

The
Landlord is not liable for any damage or injury that the Tenant or any other
person may sustain. Nor is the Landlord liable for any damage or injury that
results from the carelessness, negligence, or improper conduct of any person,
including the Tenant or agents or employees of the Tenant.

 

7.7.         Waste
or Nuisance.

 

Tenant
shall permit no waste or nuisance upon or damage or injury to the Premises or
utilities supplied thereto, and at the expiration of the tenancy created
hereunder, Tenant shall surrender the Premises in as good condition and repair
as they were at the time Tenant took possession, excepting reasonable wear and
tear and loss by fire or other insured casualty.

 

7.8.         No
Pets.

 

Tenant
shall keep no domestic or other animals in or about the Premises without the
written consent of Landlord.

 

7.9.         No
Smoking is Permitted.

 

The
building is a smoke-free
building. Designated exterior smoking areas with receptacles will be
established, subject to change by Landlord at Landlord’s sole discretion.

 

7.10.       Solicitation
of Business.

 

Tenant
and its employees and agents shall not solicit business in the parking area or
other common areas adjacent to the building, nor shall Tenant or its employees
or agents distribute any handbills, circulars or other advertising matter on
vehicles parked in the parking area or other common areas without the prior
written consent of Landlord.

 

7.11.       Operation
of Concession Prohibited.

 

Tenant
shall not cause or permit any business to be operated in or from the Premises
by any concessionaire or licensee.

 

7.12.       Taxes
on Leasehold.

 

Tenant
shall be responsible for and pay before any delinquency, all municipal, county
or state taxes assessed during the Term of this Lease, against any leasehold
interest or personal property of any kind, owned by or placed in, upon or about
the Premises by the Tenant or Tenant’s agents..

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 4 of 11

 

 

ARTICLE 8. CONDITION OF PREMISES/PERMISSIBLE ALTERATIONS/RELOCATION

 

8.1.      Tenant’s Acceptance and
Maintenance of Premises

 

8.1.1.                    The Tenant acknowledges that Tenant takes
possession of the Leased Premises in “As Is” condition with no representations
or warranties on behalf of the Landlord that the Leased Premises are fit for
the Tenant’s permitted purpose and use of the Leased Premises, or that the
Leased Premises comply with building or fire codes for such permitted purpose
and use.

 

8.1.2.                    Tenant acknowledges that: (i) Tenant has
carefully inspected the Leased Premises and found them in a good state of
repair and in clean and orderly condition; (ii) no representation has been
made to Tenant concerning the suitability of the Leased Premises for Tenant’s
purposes; and (iii) no promise has been made to Tenant that Landlord will
decorate, alter, repair, or improve the Leased Premises.

 

8.1.3.                    Tenant must keep the Leased Premises in clean
and orderly condition and good state of repair at all times, and on termination
of this lease, Tenant must deliver the premises to Landlord in the same
condition they were in at the beginning of the term. The Tenant agrees to keep the exterior of the building and the parking areas
in good and clean condition.

 

8.2.      Alterations - Landlord
Approval Required

 

Tenant
shall make no alterations in or additions to or improvements to the Premises nor cause to be installed any exterior
signs, floor covering, interior or exterior lighting, plumbing fixtures, or
canopies or make any changes to the mechanical or electrical system without the
prior written consent of Landlord. If Landlord gives its consent to the making
of alterations by Tenant, all such work shall be done in accordance with such
requirements and upon such conditions as Landlord, in its sole discretion, may
impose. Any review or approval by Landlord of any plans or specifications with
respect to any alteration is solely for Landlord’s benefit, and without any
representation or warranty whatsoever to Tenant with respect to the adequacy,
correctness or efficiency thereof or otherwise.

 

8.3.         Fixtures

 

Any
additions, fixtures or improvements, except stock in trade movable furniture
and equipment, shall at once become part of the realty and the property of the Landlord upon termination of this Lease and shall remain upon the
Premises; provided, nevertheless, that Landlord, within a reasonable time
following the Lease termination, may by written notice elect to require Tenant,
at Tenant’s sole cost and expense, to perform the removal of such of Tenant’s
fixtures and such of any alterations and improvements made by Tenant as are
indicated in such notice of election, together with the repair of related
damage.

 

8.4.         Maintenance
by Landlord

 

Landlord
is responsible for maintaining the roof, plumbing, electrical and HVAC systems
(including filters), exterior walls of the building, interior and exterior
common areas and general building structure (not constituting a part of the
Premises), and shall perform such repairs, replacements or maintenance with
reasonable dispatch, in a good and workmanlike manner. Landlord shall give notice
to Tenant of any repairs or work conducted on those facilities that requires
access through the Premises.

 

8.5.         Damage
to Premises

 

On
the Landlord’s demand, the Tenant shall pay for all damages to appliances,
electrical lights, fixtures, equipment, or appurtenances on the leased premises
or in the building that are caused by the act or neglect of the Tenant or any
persons in the Tenant’s employ or control. The Tenant shall repair at its own
expense all damage or destruction of any plate or window glass in the Leased
Premises.

 

8.6.         Right
to Relocate

 

The
purpose of the floor plan attached hereto as Exhibit A is to show the
approximate location of the Premises. Landlord reserves the right at any time
to relocate the common areas shown on said floorplan. Landlord may relocate
Tenant to another location in the building at Landlord’s sole cost and expense
and with Tenant’s reasonable approval to such other location within the
building.

 

8.7.         Condition
at End of Term

 

At
the earlier of the expiration of the Lease term or the termination of this
Lease, the Tenant will quit the Leased Premises and will surrender them to the
Landlord. The Leased Premises must be swept clean and must be in good order and
condition, except for ordinary wear and tear. The Tenant will remove all
personal and other property that belongs to the Tenant under this Lease and
will repair all damages to the Leased Premises caused by that removal. The
Tenant will restore the Leased Premises to the condition in which they were
before installation of the items removed.

 

ARTICLE 9. ENTRY AND INSPECTION OF PREMISES

 

9.1.         Landlord’s
Inspection and Entry Rights

 

The
Landlord, or any agent, is entitled to enter the Leased Premises during all
reasonable hours for the following reasons:

 

9.1.1.                    To examine the Leased Premises.

 

9.1.2.                    To make all repairs, additions, or alterations
that the Landlord or agent deems necessary for safety, comfort, or preservation
of the Leased Premises or of the building.

 

9.1.3.                    At any time within thirty days before the expiration
of this Lease or any subsequent renewal term, to exhibit the Leased Premises to
prospective tenants.

 

9.1.4.                    To remove signs, fixtures, alterations, or
additions that do not conform to this Lease.

 

9.1.5.                    Landlord shall have the right, without notice,
to enter the Premises in emergency situations.

 

9.2.         Liability
for Entry

 

The
Tenant has no claim or cause of action against the Landlord because of the Landlord’s entry or other action taken under Paragraph 9.1.

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 5 of 11

 

 

ARTICLE 10. INDEMNITY AND INSURANCE

 

10.1.       Tenant’s
Indemnification of Landlord.

 

Tenant
shall indemnify Landlord and save it harmless from and against any and all
claims, suits, actions, damages, liabilities, losses, costs, or expenses,
including attorneys’ fees and investigation costs (including on appeal) of any
nature whatsoever arising out of or connected with the use or occupancy of the
Premises by Tenant, the materials or things maintained or kept by Tenant, its
agents, employees, guests, invitees and contractors, in or on the Premises, or
arising or alleged to have arisen out of the acts or omission of Tenant’s
officers, agents, employees, guests, invitees and contractors.

 

10.2.       Tenant’s
Insurance Requirements

 

At
all times during the terms of this Lease, Tenant shall, at Tenant’s own
expense, keep in full force and effect personal injury liability insurance in
companies rated A- or better by AM Best company, naming both Landlord and
Tenant as insured parties, with minimum limits of One Million Dollars ($1,000,000.00)
on account of bodily injury or death of one person, and Two Million Dollars
($2,000,000.00) on account of bodily injuries or death of more than one person
arising out of any one act or omission. The insurance company issuing the same
shall not have the right of subrogation against Landlord. Tenant hereby
covenants with Landlord as follows:

 

10.2.1.              Not to allow to be conducted on the Premises
any trade or business, or anything to be done thereon, which shall increase the
rate of premiums for insurance upon the building. Notwithstanding the
foregoing, if the trade or business conducted on the Premises does increase the
rate of premiums for insurance upon the building, Tenant covenants to pay for
such increase when such premiums are due.

 

10.2.2.              That the Landlord shall not be liable for any
damage or injury by water otherwise from leaking pipes, leaking roofs, rain,
rising water, storm, wind and other acts of nature to any merchandise or
property upon the Premises, and it being the intent of the parties that the
Tenant shall assume such risk and insure against such risk.

 

10.2.3.              Tenant shall replace, at the expense of
Tenant, any and all plate and other glass and doors, including ingress and
egress doors to the Premises, damaged or broken from any cause whatsoever,
except due to the intentional misconduct or negligence of Landlord, its agents,
employees or assigns, in or about the Premises. Landlord may insure all plate
and other glass in the Premises for and in the name of Landlord

 

10.3.       Certificate
of Insurance/Renewal/Cancellation Prohibition

 

The
certificate of insurance reflecting the coverages required herein shall be
delivered to Landlord prior to Tenant’s occupancy of the Premises. The Tenant
shall deliver to the Landlord the renewal policy at least ten days before the
existing policy expires. All policies must be issued by companies of recognized
responsibility licensed to do business in Florida and must contain a provision
that prohibits cancellation unless the Landlord and any additional insured are
given at least ten days’ prior written notice of cancellation.

 

10.4.       Prohibited
Conduct Affecting Insurance

 

The
Tenant may not perform or fail to do any act with respect to the Leased
Premises, may not use or occupy the Leased Premises, nor
may conduct or operate the Tenant’s business in any manner that is
objectionable to the insurance companies, that causes them to void or suspend
any insurance, or that causes them to increase the premiums above the amounts
that would usually have been in effect for the occupancy under this Lease. Nor
may the Tenant permit or suffer another person to do so with respect to the
Leased Premises.

 

10.5.       Landlord’s
Insurance Requirements

 

Landlord
shall be responsible for maintaining insurance coverage with respect to the
building, including casualty, fire, wind and extended coverage in an amount
equal to full replacement value of the building. The insurance company issuing
said policy shall not have the right of subrogation against Tenant.

 

10.6.       Waiver of
Subrogation

 

Landlord
and Tenant and all parties claiming under them mutually release and discharge
each other from all claims and liabilities arising from or caused by any
casualty or hazard covered or required hereunder to be covered in whole or in
part by insurance on the Premises or in connection with property on or activities conducted on the Premises,
and waive any right of subrogation which might otherwise exist in or accrue to
any person or account thereof, provided that such release shall not operate in
any case where the effect is to invalidate or increase the cost of such
insurance coverage (provided, that in the case of increased cost, the other
party shall have the right, within thirty (30) days following written notice,
to pay such increased cost, thereby keeping such release and waiver in full
force and effect).

 

ARTICLE 11. LIENS AND MORTGAGES ON PROPERTY

 

11.1.       Mechanics’
Liens Incurred by Tenant

 

The
interest or estate of the Landlord will never by subject to a lien to secure
payment for any work, services, or materials furnished to the property at the
request of Tenant. The Tenant shall not subject the Landlord’s interest or
estate to any liability under any mechanics’ or other lien law. No provisions
of this Lease may be construed as to imply that the Landlord has consented to
the Tenant incurring such a lien. If any mechanics’ lien, lis pendens, or other
lien is filed against the Leased Premises or the building for any work, labor,
services, or materials that a
lienor claims to have performed
or furnished for the Tenant or any person holding through or under the Tenant,
the Tenant must cause that lien to be canceled and discharged of record within
twenty days after the Landlord gives notice to the Tenant. If such a lien is
filed, the Landlord may satisfy the lien after giving notice to the Tenant as
provided in this paragraph and without limiting the Landlord’s rights or
remedies under this Lease. The Tenant shall promptly reimburse the Landlord for
any amounts expended to satisfy the lien and for any expenses incurred in
connection with that satisfaction. The Tenant has no

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 6 of 11

 

 

right
of setoff against the Landlord. The Tenant’s failure to cancel and discharge of record any lien under to this paragraph
is a default by the Tenant under the provisions of this lease.

 

11.2.       Tenant’s
Rights Subject to Mortgage

 

The
Tenant acknowledges that the Tenant’s rights under this Lease are subject to
any existing bona fide mortgage that covers the Leased Premises and that the
Landlord may incur against the Leased Premises in the future. The Tenant agrees
to execute any instrument that the Landlord requires to give evidence of this
subordination of interests. The Tenant grants a power of attorney to the Landlord to subordinate this
lease to any future mortgage on the Leased Premises.

 

11.3.       Subordination
and Attornment

 

This
Lease is subject and subordinate to all existing and future mortgages that may
affect the real property of which the Leased Premises is a part, to all
existing or future advances made under all the mortgages, and to all renewals,
modifications, consolidations, and replacements of the mortgages. Although the
Tenant need not take any action to render this subordination effective, the
Tenant shall execute and deliver all further instruments that confirm this
subordination as may be desired by the mortgage holders. The Tenant irrevocably
appoints the Landlord attorney-in-fact to execute and deliver any such
instrument for the Tenant. If a mortgage holder or a purchaser at foreclosure
succeeds to the Landlord’s rights under this Lease, the Tenant agrees to attorn
to any owner, holder, purchaser, or Tenant of the real property from time to
time, at the demand of the owner of the real property, and on the executory
terms and conditions of this Lease existing at that time. On the Tenant’s
attornment, this Lease will continue in full force as, or as if it were, a
direct lease between the owner, holder, purchaser, or Tenant. This paragraph
will inure to the benefit of any owner, holder, purchaser, or Tenant, will
apply notwithstanding the foreclosure of any mortgage, and will be
self-operative on demand without the execution of any further instrument to
render it effective. From time to time, on the demand of any owner, holder,
purchaser, or Tenant, the Tenant will execute
instruments that confirm this paragraph, that satisfy any owner, holder,
purchaser, or Tenant, that acknowledge the attornment, and that set forth the
terms and conditions of the tenancy. Nothing in this paragraph may be construed
to impair any right otherwise exercisable by any owner, holder, purchaser, or
Tenant.

 

11.4.       Estoppel
Certificates

 

Landlord
reserves the right to demand and obtain from Tenant an estoppel certificate or
other document required by a lending institution or third party, and Tenant
upon demand by the Landlord for same, agrees to execute at any and all times
such instrument, it being understood that any such statement so delivered may
be relied upon in connection with any lease, mortgage or transfer of the
Premises or building.

 

ARTICLE 12. ASSIGNMENTS AND SUBLETS

 

12.1.       Permissible
Assignments and Sublets

 

The
Tenant may not assign this Lease, nor sublet, license, or grant any concession
for the use of the Leased Premises, to another person without obtaining the
Landlord’s prior written consent. The Landlord may arbitrarily withhold consent.

 

12.2.       Continued
Liability of Tenant

 

If
the Tenant makes any assignment, sublease, license, or grant of a concession
under Paragraph 12.1,
the Tenant will nevertheless remain unconditionally liable for the performance
and financial obligations of all of the terms, conditions, and covenants of
this Lease.

 

12.3.       Landlord’s
Right to Collect Rent From Any Occupant

 

If
the Tenant is in default on any payments under this Lease and any other person
is subletting or occupying the Leased Premises, or if the Tenant assigns this Lease, the Landlord may collect
rent from the assignee, subtenant, or occupant. The Landlord may apply the net
amount collected to the rent required under this Lease. The Landlord’s
collection of the rent does not waive the covenant against assignment and
subletting under Paragraph
12.1. Nor does it constitute
the Landlord’s acceptance of the assignee, subtenant, or occupant as a tenant,
nor the Landlord’s waiver of the Tenant’s further performance of the covenants
contained in this Lease.

 

12.4.       Transfer of
Landlord’s Interest

 

Landlord
may assign, in whole or in part, its rights and obligations under this Lease
and its rights and obligations in and to the property. The term “Landlord”, as
used in this Lease, as far as covenants or agreements on the part of Landlord
are concerned, shall be limited to mean and include only the owner or owners of
Landlord’s interest in this Lease at the time in question. In the event of any
transfer or transfers of Landlord’s interests in the Premises, Landlord herein
named (and in the case of any subsequent transfer, the then transferor), shall
be automatically relieved of any and all obligations and liabilities on the
part of Landlord accruing from and after the date of such transfer, and the
Transferee shall assume any and all such
obligation.

 

ARTICLE 13. REMEDIES

 

13.1.       Remedies for
Nonpayment of Rent or Additional Payments

 

The
Landlord has the same remedies for the
Tenant’s failure to pay rent as for the Tenant’s failure to make additional
payments.

 

13.2.       Accord and
Satisfaction

 

If
the Tenant pays or the Landlord receives any amount that is less than the
amount stipulated to be paid under any Lease provision, that payment is
considered to be made only on account of an earlier payment of that stipulated
amount. No endorsement or statement on any check or letter may be deemed an
accord and satisfaction. The Landlord may accept any check or payment without
prejudice to the Landlord’s right to recover the balance due or to pursue any
other available remedy.

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 7 of 11

 

 

13.3.       Abandonment of Premises or Delinquency in
Rent

 

If
the Tenant abandons or vacates the Leased Premises before the end of the Lease
term, or if the Tenant is in arrears in rent payments, the Landlord may cancel
this Lease. On cancellation, the Landlord is entitled to enter the Leased
Premises as the Tenant’s agent, whether by force or other means, to relet the
Leased Premises. The Landlord will incur no liability for the entry. As the
Tenant’s agent, the Landlord may relet the premises with or without any
furniture or personal property that may be in it, and the reletting may be made
at such price, on such terms, and for such duration as the Landlord determines
and for which the Landlord receives rent. The Landlord shall apply any rent
received from the reletting to the payment of rent due under this Lease. If
after deducting the expenses of reletting the premises, the Landlord does not
realize the full rental provided under this Lease, the Tenant shall pay any
deficiency. If the Landlord realizes more than the full rental, the Landlord
shall pay the excess to the Tenant on the Tenant’s demand.

 

13.4.       Dispossession on Default

 

If
the Tenant defaults in the performance of any covenant or condition of this
Lease, the Landlord may give the Tenant notice of that default. If the Tenant
fails to cure a default in the payment of rent or additional rent within three
days or fails to cure any other default within ten days after notice is given,
the Landlord may terminate this Lease. If the default is of such a nature that
it cannot be completely cured within ten days, the Landlord may terminate this
Lease only if the Tenant fails to proceed with reasonable diligence and in good
faith to cure the default. Termination of this Lease may occur only after the
Landlord gives not less than three days’ advance notice to the Tenant. On the
date specified in the notice, the term of this Lease will end, and the Tenant
will quit and surrender the Leased Premises to the Landlord, except that the
Tenant will remain liable as provided under this Lease. On termination of the
Lease, the Landlord may reenter the Leased Premises without notice and by force
or otherwise to dispossess the Tenant, any legal representative of the Tenant,
or any other occupant of the Leased Premises. The Landlord may retake
possession through summary proceedings or otherwise, and the Landlord will then
hold the Leased Premises as if this Lease had not been made. The Tenant waives
the requirement that the Landlord serve any notice of intention to reenter or
to institute legal proceedings for repossessing the Leased Premises.

 

13.5.       Damages on Default

 

If
the Landlord retakes possession under Paragraph 13.4, the Landlord has the following rights:

 

13.5.1.              The Landlord is entitled to the rent and
additional rent that is due and unpaid during the remainder of the Term, and
those payments will become due immediately, and will be paid up to the time of
the reentry, dispossession, or expiration, plus any expenses that the Landlord
incurs for legal expenses, attorneys’ fees, brokerage costs, returning the
Leased Premises to good order, and preparing it for re-rental, plus interest on
rent and additional rent then due at the maximum interest rate permitted by
law.

 

13.5.2.              The Landlord is entitled to relet all or any
part of the Leased Premises in the Landlord’s name or otherwise, for any
duration, on any terms, including but not limited to any provisions for
concessions or free rent, or for any amount of rent that is higher than that in
this Lease.

 

13.5.3.              The Landlord is entitled to liquidated
damages to be paid in accordance with Paragraph 13.6 by
the Tenant or the Tenant’s legal representative.

 

13.6.       Liquidated Damages on Default

 

If
the Landlord is entitled to liquidated damages under Paragraph 13.5.3,
the Tenant or the Tenant’s legal representative shall pay such damages in
installments on the day rent is payable under Paragraph 3.1. The amount of liquidated damages will be
computed as follows:

 

13.6.1.              The deficiency between the rent paid and any
net amount of the rents still to be collected under this Lease or any renewal
of this Lease for each month of the remaining Lease or renewal term.

 

13.6.2.              Plus the expenses that the Landlord incurs in
connection with reletting, such as legal expenses, court costs, attorneys’
fees, including those at trial and appellate levels, brokerage costs,
advertising expenses, maintenance costs for keeping the Leased Premises in good
order, and costs of preparing Premises for reletting.

 

The
Landlord’s failure or refusal to relet all or any part of the Leased Premises
will not release or affect the Tenant’s liability for damages. In computing the
liquidated damages, any expenses the Landlord incurs shall be added to the
deficiency. Any suit that the Landlord brings to collect the amount of the
deficiency for any month will not prejudice in any way the Landlord’s rights to
collect the deficiency for any subsequent month by a similar proceeding. In
putting the Leased Premises in good order or in preparing it for re-rental, the
Landlord may alter, repair, replace, or decorate any part of the Leased
Premises in any way that the Landlord considers advisable and necessary to relet
the Leased Premises. The Landlord’s alteration, repair, replacement, or
decoration will not release the Tenant from liability under this Lease. The
Landlord is not liable in any way for failure to relet the Leased Premises, or
if the Leased Premises are relet, for failure to collect the rent under that
reletting. The Tenant will not receive any excess of the net rents collected
from reletting over the sums payable by the Tenant to the Landlord under this
Paragraph.

 

13.7.       Security Lien

 

Tenant
pledges and assigns to the Landlord all the furniture, fixtures, goods and
chattels of the Tenant, which shall or may be brought or put on the Premises as
security for the payment of the rent herein reserved, and the Tenant agrees
that the said lien maybe enforced by distress foreclosure or otherwise at the
election of the Landlord, and does hereby agree to pay attorney’s fees, costs
and charges incurred by Landlord in such enforcement.

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 8 of 11

 

 

13.8.       Bankruptcy
or Insolvency

 

If
the Tenant becomes insolvent or if bankruptcy proceedings are begun by or
against the Tenant before the end of the Lease term, the Landlord may
immediately cancel this Lease as if the Tenant had defaulted. Without affecting
the Landlord’s rights under this Lease, the Landlord may accept rent from a
receiver, trustee, or other judicial officer who holds the property in a
fiduciary capacity. No receiver, trustee, or other judicial officer is entitled
to receive any right, title, or interest in or to the Leased Premises under
this paragraph.

 

13.9.       Destruction
or Damage to Leased Premises From Casualty

 

If
the Lease Premises is destroyed or damaged by fire or other casualty during the
Lease term and the Leased Premises are rendered untenantable, then the Landlord
shall have the right to render the Premises tenantable by repairs within ninety
days from the date on which the fire or casualty occurred. If the Premises are
not rendered tenantable within such time, either party may cancel this Lease.
On cancellation, the Tenant must pay rent only to the date on which the fire or
casualty occurred. The cancellation must be written.

 

13.10.     Condemnation

 

The
Tenant waives any claim of loss or damage, and any right or claim to any part
of an award, that results from the exercise of the eminent domain power of any
governmental body, regardless of whether the loss or damage arises because of
condemnation of all or part of the Leased Premises, the parking area, or the
entrances or exits of the Leased Premises. If any eminent domain power that is
exercised interferes with the Tenant’s use of the Leased Premises, the rentals
under this Lease will be
proportionately abated. If a partial taking or condemnation renders the Leased
Premises unsuitable for the Tenant’s business, the Lease term will cease as of
the date the condemning authority requires possession. If an eminent domain
power is exercised, the Tenant has no claim against the Landlord for the value
of any unexpired term of this Lease. Tenant may pursue all available remedies
for the taking but will have no interest in the award made to the Landlord.

 

13.11.     Holdover
Tenancy

 

If the Tenant remains in possession of the Leased Premises after the Lease
expires or terminates for any reason, the Tenant will be deemed to be occupying
the Leased Premises as a Tenant from month-to-month at the sufferance of the
Landlord. The Tenant will be subject to all of the provisions of this Lease,
except that the fixed rent will be at a monthly rate equal to twice the amount
of a single monthly installment of fixed rent at the rate in effect for the
last month of the term of this Lease.

 

13.12.     Cumulative
Remedies

 

The
Landlord’s remedies contained in this Lease are in addition to the rights of
the Landlord under Florida statutes governing nonresidential landlord-tenant
relationships and to all other remedies available at law or in equity to the
Landlord.

 

13.13.     Tenant’s
Remedies Upon Landlord’s Default

 

If
Landlord fails to perform or observe any of its Lease obligations within thirty
(30) days after the receipt of Tenant’s written notice, unless the nature of
Landlord’s obligation is such that more than thirty (30) days are required for
its performance and Landlord commences performance within the thirty (30) day
period and thereafter diligently pursues cure to completion, Tenant may seek
the remedy of specific performance arising from Landlord’s failure to discharge
its obligations.

 

13.14.     Landlord
Damages/Non-Liability

 

Except
for its gross negligence or willful acts or willful omissions, Landlord shall
not be liable to Tenant, its officers, agents or employees, for any theft,
damage or injury occasioned by failure to keep the Premises heated, cooled or
in repair, or for any bodily injury or property damage done or occasioned by or
from fixtures (whether in place or otherwise), fixture failure, other materials
or parts of the building, plumbing, downspouts, gas, water, steam or other
pipes, or sewage, or the bursting, leaking, or running of any water outlet,
container or fixture, in, above, upon or about the Premises, nor for injury or
damage occasioned by wind or water, being upon or coming through the roof,
skylight, windows, stairs, doors, parking, road and sidewalk areas, or otherwise, nor for any
injury or damage arising from the omissions of any of the utilities or service
supplied or due to be supplied by Landlord hereunder, or from acts of
negligence or willfulness of co-tenants or other occupants of the building.
Tenant shall give immediate notice to Landlord in case of fire or accidents in
the leased premises or in the building of which the premises are a part, or in
the case of defects therein, or in any fixtures or equipment, and Landlord
shall use its best efforts to correct the same.

 

13.15.     Costs and
Attorneys’ Fees

 

The
prevailing party is entitled to an award of the costs and reasonable attorneys’
fees incurred in the collection of any delinquent rent or additional payments
or in the enforcement of any provision of this Lease. The fees and costs that
may be awarded include but are not limited to those incurred at trial and
appellate levels.

 

ARTICLE 14. MISCELLANEOUS PROVISIONS

 

14.1.       Binding on
Heirs, Successors, and Assigns

 

This
Lease binds the heirs, legal representatives, assigns, or successors of the
Tenant and the Landlord.

 

14.2.       Time of
Essence

 

Time
is of the essence in this Lease, and this paragraph applies to all terms and
conditions of this Lease.

 

14.3.       Deliveries
to Parties/Notice

 

The
Tenant shall promptly pay all rentals and other charges, shall render all
statements, and shall deliver all notices under this Lease to the Landlord at
the following address:

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 9 of 11

 

 

PROFESSIONAL
SUITES AT THE GALLERIA

Attn: Lori Conrad

9130 Corsea Del Fontana Way
 Naples, Florida 34109

 

The
Landlord shall promptly pay all sums, shall render all statements, and shall
deliver all notices under this Lease to the Tenant at the following address:

 

Prospect
Acquisition Corp.

9130 Galleria Court #318

Naples, Florida 34109

 

From
time to time, either party may designate in writing another person or entity
and another address for receipt of such items. Any notice to be given under
this Lease must be sent by certified mail, return receipt requested, and
postage prepaid. Any notice under this Lease is deemed to be given at the time
it is received as set forth in this paragraph, or if not accepted, at the time
it is mailed.

 

14.4.       Landlord’s Cumulative Rights

 

The
Landlord’s rights under this Lease are cumulative, and the Landlord’s failure
to exercise promptly any rights given under this Lease does not operate to
forfeit any of these rights.

 

14.5.       Indemnification of Landlord

 

At
all times, the Tenant will indemnify the Landlord from all losses, damages,
liabilities, and expenses that arise or are claimed against the Landlord and
that are in favor of any person, firm, or corporation for personal injuries or
property damages that arose about or on the premises, that resulted from the
Tenant’s use or occupancy of the premises, or that arose from the Tenant’s
failure to comply with any laws, statutes, ordinances, or regulations. The
Landlord will not be liable to the Tenant for any damages, losses, or injuries
to the Tenant’s person or property that may be caused by the acts, neglect, or
omissions of any person, firm, or corporation.

 

14.6.       No Waiver

 

The
Landlord’s or Tenant’s express or implied consent, approval, or waiver with
regard to any breach of any covenant, agreement, or obligation under this Lease
is considered to cover only that particular breach. It will not be construed to
apply to any other breach, whether of the same or of any other covenant,
agreement, or obligation under this Lease, unless the waiver or consent is
written, so states, and is signed by the party making it. Landlord’s acceptance
of rent with knowledge of Tenant’s default under the lease will not be
construed as a waiver of Landlord’s right to require Tenant to cure the
default. If Tenant fails to cure the default timely, or if the default is of
such nature that it cannot be cured, this lease may be terminated at the
election of Landlord.

 

14.7.       Quiet Enjoyment

 

The
Landlord covenants that so long as the Tenant pays the rent and additional rent
and performs the covenants under this Lease, the Tenant is entitled to peaceful
and quiet possession and enjoyment of the Leased Premises for the Lease term,
subject to the Lease provisions.

 

14.8.       Recording

 

This
Lease shall not be recorded in the public records of Collier County, Florida. A
recording of this Lease shall be deemed a default by the recording party and
entitle to the non-recording party to the remedies provided hereunder.

 

14.9.       Interpretation of Lease/Venue

 

This
Lease is governed by, and will be construed in accordance with, the Florida
laws. Venue for any proceeding in connection herewith shall be Collier County,
Florida. If any Lease provision, or its application to any person or situation,
is deemed invalid or unenforceable for any reason and to any extent, the
remainder of this Lease, or the application of that provision, will not be
affected. Rather, this Lease is to be enforced to the extent permitted by law.
The table of contents, captions, headings, and titles of this Lease are solely
for convenience of reference and are not to affect its interpretation. Each
covenant, agreement, obligation, or other provision of this Lease is to be
construed as a separate and independent covenant of the party who is bound by
or who undertakes it, and each is independent of any other provision of this
Lease unless otherwise expressly provided. All terms and words used in this
Lease, regardless of the number or gender in which they are used, are deemed to
include any other number and any other gender as the context requires.

 

14.10.     Waiver of Trial by Jury

 

It
is mutually agreed by and between Landlord and Tenant that neither party, nor
any assignee, successor, heir or legal representative of the parties shall seek a jury trial in any lawsuit, proceeding,
counterclaim or any other legal procedure on any matters arising out of or in
any way connected with the Lease.

 

14.11.     Radon Gas Disclosure

 

Florida
law requires the following disclosure: Radon is a naturally occurring radioactive
gas that, when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time. Levels of
radon that exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be
obtained from your county public health unit.

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 10 of 11

 

 

14.12.     Authority

 

If
Tenant is a business entity such as a corporation or partnership, each
individual executing this Lease on behalf of said business entity represents
and warrants that the individual is duly authorized to execute and deliver this
Lease on behalf of said business entity in accordance with its duly adopted
bylaws, regulations or agreement, that any required consents or approvals of
third parties have been obtained, and that this Lease is binding upon said
business entity in accordance with its terms. If Landlord is a business entity,
each individual executing this Lease on behalf of said business entity
represents and warrants that the individual is duly authorized to execute and
deliver this Lease on behalf of said business entity in accordance with its
duly adopted bylaws, regulations or agreement, that any required consents or
approvals of third parties have been obtained, and that this Lease is binding
upon said business entity in accordance with its terms.

 

14.13.     Joint and
Several Liability

 

If
more than one person or entity executes this Lease as Tenant, each such person
or entity shall be jointly and severally liable for the observance and
performance of each of the terms, covenants, conditions and provisions to be
observed or performed by Tenant. 

 

14.14.     Counterparts

 

This
Lease may be executed in several counterparts, all of which constitute one and
the same instrument.

 

14.15.     Complete
Agreement

 

The
parties have made no oral or written representations, agreements, arrangements,
or understandings between them that relate to the subject matter of this Lease
and that are not fully expressed in this Lease. This Lease may be modified or
terminated only by a written agreement executed by both parties.

 

14.16.     Invalidity of
Particular Provisions

 

If
any covenant, agreement or condition of this Lease or the application thereof
to any person, firm or corporation, or to any circumstance, shall to any extent
be invalid or unenforceable, the remainder of this Lease, or the application of
such covenant, agreement or condition to persons, firms, or corporations, or to
circumstances other than those as to which it is invalid or enforceable, shall
not be effected thereby. Each covenant, agreement or condition of this Lease
shall be valid and enforceable to the fullest extent permitted by law.

 

14.17.     Merger

 

All
preliminary negotiations are merged into and incorporated in this Lease. This
Lease can only be modified or amended by an agreement in writing signed by the
parties hereto.

 

14.18.     Exhibits

 

The
following listed exhibits are attached to this Lease and incorporated herein by
reference:

 

14.18.1.
EXHIBIT A: Floor Plan of Premises

14.18.2. EXHIBIT B: Guaranty Agreement - Not Applicable

14.18.3.
EXHIBIT C: Rules and Regulations

14.18.4.
EXHIBIT D: Schedule of Services and Fees

 

IN
WITNESS WHEREOF, the parties hereto have executed this Lease, and Landlord,
Tenant, and each of them hereby, acknowledge the same to be their joint and
several obligation, the day and year first above written.

 

	
  As
  to Landlord:

  	
   

  	
  LANDLORD:

  
	
  Witness
  No. 1:

  	
   

  	
   

  	
  Professional
  Suites at the Galleria, Inc., a

  
	
  Printed
  Name:

  	
   

  	
   

  	
  Florida
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Joseph E. D’Jamoos

  
	
   

  	
   

  	
   

  	
  Joseph
  E. D’Jamoos

  
	
   

  	
   

  	
   

  	
  Its:
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  As
  to Tenant:

  	
   

  	
  TENANT:

  
	
  Witness
  No. 1:

  	
   

  	
   

  	
  Prospect
  Acquisition Corp., a

  
	
  Printed
  Name:

  	
   

  	
   

  	
  Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  James J. Cahill

  
	
   

  	
   

  	
   

  	
  James
  J. Cahill

  
	
   

  	
   

  	
   

  	
  Its:
  Chief Financial Officer

  

 

BUSINESS
LEASE AGREEMENT

(September 2005
Version)

Page 11 of 11Exhibit 10.1

 

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is
made and entered into by and between Merit Medical Systems, Inc., a Utah
corporation (the “Company”) and Fred P. Lampropoulos (the “Executive”), as of
the 31st day of December, 2008.

 

RECITALS:

 

WHEREAS,
the Executive currently serves as Chief Executive Officer and President of the
Company pursuant to an Employment Agreement dated as of April 1, 1998 (the
“Prior Agreement”); and

 

WHEREAS,
the Board of Directors of the Company (the “Board”) has determined that it is
in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change in Control (as defined below)
of the Company; and

 

WHEREAS,
the Company and the Executive desire to amend and restate the Executive’s
Employment Agreement to read as follows:

 

A G R E E M E N T :

 

NOW, THEREFORE, the Prior Agreement is hereby amended and restated to
read in its entirety as follows:

 

1.                                                                                       Certain Definitions.  For
purposes of this Agreement, the following terms shall have the following
meanings:

 

(a)                                  “Affiliated Companies” shall mean any
corporation, partnership, limited liability company or other business entity
controlled by, controlling or under common control with the Company.  One entity shall be presumed to control
another if it owns directly, or indirectly through other Affiliated Companies,
a majority of the outstanding voting equity interests of the other entity.

 

(b)                                 “Change in Control” shall mean:

 

(i)                                     The acquisition in one or more integrated
transactions by any individual, entity or group (within the meaning of Section 13(d) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) (a “Person”) of beneficial ownership (within the meaning of Rule 13d–3
promulgated under the Exchange Act) of 20% or more of either

 

(A)                              the then outstanding shares of common stock
of the Company (the “Outstanding Company Common Stock”); or

 

(B)                                the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”);

 

provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change in Control

 

(C)                                any acquisition by the Company;

 

1

 

(D)                               any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or

 

(E)                                 any acquisition by any corporation or other
entity pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this Section 1(a); or

 

(ii)                                  Individuals who, as of the date hereof,
constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or

 

(iii)                               Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), in each case, unless,
following such Business Combination,

 

(A)                              all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be;

 

(B)                                no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination; and

 

(C)                                at least a majority of the members of the
Board of Directors of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board providing for such Business
Combination; or

 

(iv)                              Approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company.

 

(c)                                  “Code” means the Internal Revenue Code
of 1986, as amended.

 

(d)                                 “Company” shall mean Merit Medical
Systems, Inc.

 

2

 

(e)                                  “Employment Period” shall mean the
period commencing on the date hereof and continuing through the effective date
of termination of Executive’s employment as provided below.

 

(f)                                    “Executive” shall mean Fred P.
Lampropoulos.

 

(g)                                 “Separation from Service” means a “separation
from service” (as defined in Treasury Regulation Section 1.409A-1(h) or
any successor provision thereto) from the Company.

 

(h)                                 “Specified Employee” means a “specified
employee” within the meaning of Code Section 409A(2)(B).  The Executive will be a Specified Employee
if, as of the Executive’s date of Separation from Service, the Executive is a “key
employee” of the Company or any Affiliated Companies.  The Executive shall be treated as a “key
employee” for the entire 12-month period beginning on each April 1 (a “Specified
Employee Effective Date”) if the Executive meets the requirements of Code Section 416(i)(1)(A)(i),
(ii), or (iii) (applied in accordance with applicable regulations
thereunder and without regard to Code Section 416(i)(5)) at any time
during the 12-month period ending on the December 31 immediately preceding
that Specified Employee Effective Date. 
In the event of corporate transactions described in Treasury Regulation Section 1.409A-1(i)6),
the identification of Specified Employees shall be determined in accordance
with the default rules described therein, unless the Employer elects to
utilize the available alternative methodology through designations made within
the timeframes specified therein.

 

2.                                                                                       Employment.  Subject to termination as
provided below, the Company hereby agrees to continue the Executive in its
employ “at will”, and the Executive hereby agrees to remain in the employ of
the Company “at will”, subject to the terms and conditions of this
Agreement.  As an “at will” employee, the
Company may terminate the Executive’s employment, and the Executive may resign
his employment with the Company, at any time and for any or no reason.

 

3.                                                                                       Terms of Employment.

 

(a)                                  Position and Duties.

 

(i)                                     During the Employment Period, the Executive’s
position shall be Chief Executive Officer and President of the Company.  Upon a Change in Control: (A) the Executive’s
position (including offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 120–day period immediately preceding the effective date of a
Change in Control; and (B) the Executive’s services shall be performed at
the location where the Executive was employed immediately preceding the
Effective Date or any office or location less than 35 miles from such location.

 

(ii)                                  During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully and efficiently
such responsibilities.  During the Employment
Period it shall not be a violation of this Agreement for the Executive to: (A) serve
on corporate, civic or charitable boards or committees, provided that the
Executive obtains the Company’s prior, written consent, which will not be
unreasonably withheld; (B) deliver lectures, fulfill speaking engagements
or teach at educational institutions; and (C) manage personal investments,
so long as such activities do not significantly interfere with the performance
of the Executive’s responsibilities as an employee of the Company in accordance
with this Agreement.  It is expressly
understood and agreed that to the extent that any 

 

3

 

such activities have been conducted by the Executive prior to the
effective date of a Change in Control, the continued conduct of such activities
(or the conduct of activities similar in nature and scope thereto) subsequent
to the effective date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the Company.

 

(b)                                 Compensation.

 

(i)                                     Base Salary.  During the Employment Period
the Executive shall receive an annual base salary (“Annual Base Salary”),
which shall be paid in equal monthly installments, at least equal to $460,000
per year or such other amount as is authorized by the Compensation Committee of
the Board of Directors of the Company; provided, however that following a
Change in Control, the Executive’s rate of Annual Base Salary for any fiscal
year of the Company following the Change in Control shall not be less than
twelve times the highest monthly base salary paid or payable (including any
base salary which has been earned but deferred) to the Executive by the Company
and its Affiliated Companies in respect of the twelve–month period immediately
preceding the month in which the Change in Control occurs.  During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary increase
or decrease applicable to the Executive and thereafter at least annually.  Any increase or decrease in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive
under this Agreement.

 

(ii)                                  Annual Bonus.  In
addition to Annual Base Salary, for each fiscal year of the Company that ends
during the Employment Period (a “Bonus Award Year”) the Executive shall be
awarded an annual bonus (the “Annual Bonus”) in cash in such amount as
the Company’s Board of Directors determines in its sole discretion; provided
that (A) no Annual Bonus shall be payable for a particular Bonus Award
Year unless the Executive is still employed by the Company on the last day of
the Bonus Award Year in question; and (B) for any Company fiscal year
ending on or after the effective date of a Change in Control, the Annual Bonus
shall be at least equal to the Executive’s average annual cash bonus for the
last three full 12-month fiscal years ending prior to the Change in Control
(annualized in the event that the Executive was not employed by the Company for
the whole of any such full 12-month Company fiscal year) (the “Average
Annual Bonus”).  Each such Annual
Bonus shall be paid to the Executive not later than the 15th day of
the third month following the calendar year in which the Annual Bonus is
earned, unless the Executive shall elect to defer the receipt of such Annual
Bonus pursuant to a non-qualified deferred compensation plan maintained by the
Company that complies with the requirements of Code Section 409A.  The Executive shall not be entitled to any
Annual Bonus for a Bonus Award Year unless the Executive remains employed by
the Company through the last day of the Bonus Award Year in question.

 

(iii)                               Stock Incentive and Retirement Plans. 
During the Employment Period, the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies and
programs applicable generally to other peer executives of the Company and its
Affiliated Companies.  In no event shall
such plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in
each case, materially less favorable, in the aggregate following the effective
date of a Change in Control, than the those provided by the Company and its
Affiliated Companies for the Executive under such plans, practices, policies
and programs as in effect at any time during the 120–day period immediately
preceding the Change in Control or if more favorable to the Executive, those
provided generally at any time after the Change in Control to other peer
executives of the Company and its Affiliated Companies.

 

4

 

(iv)                              Welfare Benefit Plans. 
During the Employment Period, the Executive shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its Affiliated
Companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs for the Executive, the Executive’s spouse and the
Executive’s qualifying dependent children ) to the extent applicable generally
to other peer executives of the Company and its Affiliated Companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits following a Change in Control which are materially less
favorable, in the aggregate, than the plans, practices, policies and programs
in effect for the Executive at any time during the 120–day period immediately
preceding the Change in Control or, if more favorable to the Executive, those
provided generally at any time after the Change in Control to other peer
executives of the Company and its Affiliated Companies.

 

(v)                                 Expenses.  During the Employment Period,
the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and its Affiliated
Companies.  In no event shall such policies,
practices and procedures be materially less favorable, in the aggregate,
following a Change in Control than the policies, practices and procedures in
effect for the Executive at any time during the 120–day period immediately
preceding the Change in Control or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its Affiliated Companies.

 

(vi)                              Fringe Benefits. 
During the Employment Period, the Executive shall be entitled to fringe
benefits, including, without limitation, tax and financial planning services,
payment of club dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the generally applicable plans, practices
and programs of the Company for its executive employees.  In no event shall such policies and programs
be materially less favorable following a Change in control than the most
favorable plans, practices, programs and policies of the Company and its
Affiliated Companies in effect for the Executive at any time during the 120–day
period immediately preceding the Change in Control or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its Affiliated Companies.

 

(vii)                           Office and Support Staff. 
During the Employment Period, the Executive shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, generally provided to
other executive officers of the Company and its Affiliated Companies.

 

(viii)                        Vacation.  During the Employment Period,
the Executive shall be entitled to paid vacation in accordance with the
generally applicable plans, practices and programs of the Company for its
executive employees.  In no event shall
such policies and programs be materially less favorable following a Change in
Control than the most favorable plans, policies, programs and practices of the
Company and its Affiliated Companies as in effect for the Executive at any time
during the 120–day period immediately preceding the Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its Affiliated Companies.

 

4.                                                                                       Termination of Employment.

 

(a)                                  Death or Disability.  The
Executive’s employment shall terminate automatically upon the Executive’s death
during the Employment Period.  If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance
with Section 10(b) of this Agreement of its intention to 

 

5

 

terminate the Executive’s employment. 
In such event, the Executive’s employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full–time
performance of the Executive’s duties. 
For purposes of this Agreement, “Disability” shall mean the
absence of the Executive from the Executive’s duties with the Company on a full–time
basis for 180 consecutive business days as a result of incapacity due to mental
or physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive’s legal representative.

 

(b)                                 By the Company for Cause.  The
Company may terminate the Executive’s employment at any time during the
Employment Period for Cause.  For
purposes of this Agreement, “Cause” shall mean:

 

(i)                                     the willful and continued failure of the
Executive to perform substantially all of the Executive’s duties with the
Company or one of its Affiliates (other than any such failure results form
incapacity due to physical mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board which
specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive’s duties,

 

(ii)                                  the willful engaging by the Executive in
illegal conduct, intentional misconduct or gross negligence which is materially
and demonstrably injurious to the Company, or

 

(iii)                               violation of written Company policies
prohibiting workplace discrimination, sexual harassment and alcohol or
substance abuse.

 

For purposes of this provision, no act or failure to act, on the part
of the Executive, shall be considered “willful” unless it is done, or omitted
to be done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based
upon the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company.  Following a
Change in Control, the cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three–quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in detail.

 

(c)                                  By the Company without Cause. The Company, acting through its Board of
Directors, may terminate the Executive’s employment with the Company at any
time “at will” for any or no reason upon written notice of termination to the
Executive.

 

(d)                                 By the Executive for Good Reason.  The Executive may terminate and resign the
Executive’s employment for Good Reason effective on or after the date of a
Change in Control upon not less than ten (10) days advance written notice
of termination to the Company.  For
purposes of this Agreement, “Good Reason” shall mean:

 

(i)                                     the Company’s assignment  to the Executive upon or within two (2) years
after a Change in Control of any duties inconsistent in any respect with the
Executive’s 

 

6

 

position (including offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4(a) of
this Agreement, or any other action by the Company upon or within two (2) years
after a Change in Control which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;

 

(ii)                                  the Company’s failure upon or within two (2) years
following a Change in Control to comply with any of the provisions of Section 4(b) of
this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;

 

(iii)                               upon or within two (2) years following a
Change in Control, the Company’s requiring the Executive to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof
or the Company’s requiring the Executive to travel on Company business to a
substantially greater extent than required immediately prior to the Effective
Date; and

 

(iv)                              any failure by the Company to comply with and
satisfy Section 9(c) of this Agreement.

 

Additionally, if the Executive resigns and terminates the Executive’s
employment with the Company on or within 30 days after the date of a Change in
Control for any other reason (as determined in the Executive’s sole
discretion), the Executive shall be deemed to have resigned and terminated the
Executive’s employment for Good Reason notwithstanding any other provision in
this Agreement.

 

(e)                                  By Executive without Good Reason.  The
Executive may resign and terminate the Executive’s employment with the Company
without Good Reason at any time “at will” upon written notice of termination to
the Company.

 

(f)                                    Notice of Termination.  Any
termination by the Company for Cause, by the Executive for Good Reason, or by
either party without Cause or Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 10(b) of
this Agreement.  For purposes of this
Agreement, a “Notice of Termination” means a written notice which

 

(i)                                     indicates the specific termination provision
in this Agreement relied upon,

 

(ii)                                  to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated, and

 

(iii)                               if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination
date (which date shall not be more than 30 days after the giving of such
notice).  The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

(e)                                  Date of Termination.  For
purposes of this Agreement the term “Date of Termination” means:

 

7

 

(i)                                     if
the Executive’s employment is terminated by the Company for Cause, or upon or
following a Change in Control by the Executive for Good Reason, the date of the
receipt of the Notice of Termination;

 

(ii)                                  if the Executive’s employment is terminated
by the Company other than for Cause, death or Disability; the Date of
Termination shall be the tenth (10th) day after the Company notifies
the Executive of such termination, provided that the Notice of Termination may
specify a later effective Date of Termination (which date shall not be more
than 30 days after the giving of such notice);

 

(iii)                               if the Executive voluntarily resigns his
employment (other than for Good Reason upon or following a Change in Control),
the Date of Termination shall be the tenth (10th) day after the
Executive notifies the Company of such resignation, provided that the Notice of
Termination may specify a later Date of Termination (which date shall not be
more than 30 days after the giving of such notice); and

 

(iv)                              if the Executive’s employment is terminated
by reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be.

 

5.                                                                                       Obligations of the Company upon Termination
of Executive’s Employment.

 

(a)                                  General.  Upon termination of the
Executive’s employment with the Company the Company shall provide the Executive
with the payments and benefits set forth in the applicable subsection of this Section 5.  The amounts payable under this Section 5
are in addition to the Company’s obligations to the Executive under the Company’s
various retirement, deferred compensation, stock option and long-term
incentive, employee stock purchase and welfare benefit plans.  The Company’s obligations under this Section 5
vary depending upon whether or not the Executive’s termination of employment is
in “Connection with a Change in Control.”  
For purposes of this Agreement, termination of the Executive’s
employment shall be deemed to be in “Connection with a Change in Control”
if and only if:

 

(i)                                     the Executive’s Date of Termination is on or
within two (2) years after the effective date of a Change in Control; or

 

(ii)                                  the Company terminates the Executive’s
employment without Cause within six (6) months prior to the date on which
a Change in Control occurs and the Executive reasonably demonstrates that such
termination of employment (A) was at the request of a third party who has
taken steps reasonably calculated to effect a Change in Control; or (B) otherwise
arose in connection with or anticipation of a Change in Control.

 

(b)                                 Termination Other Than in Connection with a
Change in Control.  If the Executive’s employment shall terminate
for any reason, voluntarily or involuntarily with or without Cause, other than
in Connection with a Change in Control, the Company shall pay to the Executive
(or if deceased to the Executive’s estate) the following amounts:

 

(i)                                     a lump sum cash payment equal to the
Executive’s Annual Base Salary earned through the Date of Termination to the
extent  not theretofore paid and any
accrued vacation pay through the Date of Termination, which lump sum shall be
paid ten (10) days after the Date of Termination;

 

(ii)                                  a lump sum cash payment equal to the
Executive’s accrued Annual Bonus earned for the last Company fiscal year ending
immediately prior to the Date of 

 

8

 

Termination to the extent not theretofore paid, which lump sum shall be
paid within the time period set forth in Section 3(b)(ii); and

 

(iii)                             such additional severance benefits, if any,
as the Board of Directors approves in its sole and absolute discretion without
reference to the amount of severance benefits, if any, paid to any other
executive officer or employee of the Company; provided, however, that no such
discretionary severance benefits shall be paid in a manner or amount that
renders such payments non-qualified deferred compensation subject to additional
tax or interest under Section 409A(a)(1)(B) of the Code.

 

(c)                                  Resignation for Good Reason or Termination
without Cause in Connection with a Change in Control.  If
the Executive resigns for Good Reason in Connection with a Change in Control
(i.e., on or within two (2) years after the date of a Change in Control)
or the Company terminates the Executive without Cause in Connection with a
Change in Control, the Company shall:

 

(i)                                    Pay to the Executive the following amounts:

 

(A)                              a lump sum cash payment equal to the
Executive’s Annual Base Salary through the Date of Termination to the extent  not theretofore paid and any accrued vacation
pay through the Date of Termination, which lump sum shall be paid ten (10) days
after the Date of Termination (on a date within that 10 day period designated
by the Company); and

 

(B)                                a lump sum cash payment equal to the
Executive’s accrued Annual Bonus, if any, for the last Company fiscal year
ending immediately prior to the Date of Termination to the extent not
theretofore paid, which lump sum shall be paid within the time period set forth
in Section 3(b)(ii).  The sum of the
amounts described in clauses (A) and (B) shall be hereinafter
referred to as the “Accrued Obligations;” and

 

(ii)                                Pay to the Executive a cash severance benefit
(the “Severance Benefit”) in an amount equal to three (3) times the
sum of: (A) the Executive’s Annual Base Salary (computed at the highest
rate in effect at any time during the 12-month period immediately preceding the
Change in Control); and (B) the Executive’s Average Annual Bonus as
defined in Section 3(b)(ii).  The Severance Benefit payable
under this Section 5(c)(ii) shall be paid:

 

(A) in a lump sum within 30 days after the date of the Executive’s
Separation from Service with the Company to the limited extent the amount so
paid (x) constitutes “separation pay” due to an “involuntary separation
from service” within the meaning and dollar limitations of Treasury Regulation Section 1.409A-1(b)(9)(iii),
or any successor regulation, and (y) as a result is excluded from the
definition of nonqualified deferred compensation subject to Code Section 409A;
and

 

(B) the balance of the Severance Benefit, in a lump sum, on the
second day of the sixth (6th) calendar month after the month of the
Executive’s Separation from Service with the Company.  The balance of the Severance Benefit payable
to Executive under this clause (B) shall bear interest from the Date of
Termination at an annual rate equal to the “prime rate” of Zions Bank, NA in
effect on the Date of Termination plus four (4) percentage points, which
interest the Company shall pay to the Executive contemporaneously with payment
of the Severance Benefit.

 

Section 5(c)(ii)(A) shall be interpreted and applied to
permit the payment of Severance Benefits prior to the second day of the sixth
(6th) month after the Executive’s Separation from Service with the
Company only to the extent such payments would not thereby constitute a
deferral of compensation subject to Code Section 409A.

 

9

 

(iii)                              To the extent permitted by law and the
Company’s applicable insurance policies, for three (3) years after the
Executive’s Date of Termination, continue benefits to the Executive and/or the
Executive’s eligible spouse and dependent children at least equal to those
which would have been provided to them in accordance with the welfare plans,
programs, practices and policies described in Section 3 of this Agreement
if the Executive’s employment had not been terminated or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its Affiliated Companies and their
families, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility.

 

(iv)                             Provide at the Company’s sole expense the
Executive with outplacement services the scope and provider of which shall be
selected by the Executive in his sole discretion; and

 

(v)                                To the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or contract or
agreement of the Company and its Affiliated Companies (such other amounts and
benefits shall be hereinafter referred to as the “Other Benefits”) in
accordance with the terms of such other plans, programs, policies or practices.

 

(d)                                 Death on or after Change in Control.  If
the Executive’s employment is terminated by reason of the Executive’s death on
or after the date of a Change in Control, this Agreement shall terminate
without further obligations to the Executive’s legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits.  Accrued
Obligations shall be paid to the Executive’s estate or beneficiary, as
applicable, in cash in the manner and within the time frames set forth in Section 5(b)(i) and
(ii), as applicable.  With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section 5(d) shall
include, without limitation, and the Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and Affiliated Companies to the estates and
beneficiaries of peer executives of the Company and such Affiliated Companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120–day period immediately preceding the
Effective Date of a Change in Control, or, if more favorable to the Executive’s
estate and/or the Executive’s beneficiaries, as in effect on the date of the
Executive’s death with respect to other peer executives of the Company and its
Affiliated Companies and their beneficiaries.

 

(e)                                  Disability on or after Change in Control.  If
the Executive’s employment is terminated by reason of the Executive’s
Disability on or after the date of a Change in Control, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other
Benefits.  Accrued Obligations shall be
paid to the Executive in cash in the manner and within the time frames set
forth in Section 5(b)(i) and (ii), as applicable. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section 5(e) shall
include, and the Executive shall be entitled after the Disability Effective
Date to receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its Affiliated
Companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at
any time during the 120–day period immediately preceding the Effective Date of
a Change in Control, or, if more favorable to the Executive and/or the 

 

10

 

Executive’s family, as in effect at any time thereafter generally with
respect to other peer executives of the Company and its Affiliated Companies
and their families.

 

(f)                                    Termination for Cause or Resignation Other
than for Good Reason on or after a Change in Control.  If
the Company terminates the Executive’s for Cause on or after the date of a
Change in Control, this Agreement shall terminate without further obligations
to the Executive hereunder other than the obligation to pay to the Executive (i) his
Annual Base Salary and accrued vacation through the Date of Termination, and (ii) Other
Benefits, in each case to the extent theretofore unpaid.  If the Executive voluntarily terminates
employment upon or following a Change in Control (excluding a resignation for
Good Reason in Connection with a Change in Control) this Agreement shall
terminate without further obligations to the Executive under, other than for
Accrued Obligations and timely payment or provision of Other Benefits.  In such case, all Accrued Obligations shall
be paid to the Executive in cash in the manner and within the time frames set
forth in Section 5(b)(i) and (ii), as applicable.

 

(g)                                 Golden Parachute Payments.  Any
provision of this Agreement to the contrary notwithstanding, if any amount
otherwise payable to the Executive under this Agreement would, when added to
all other “parachute payments” to the Executive within the meaning of Section 280G
of the Code, as amended (the “Code”), result in the payment of an “excess
parachute payment” to the Executive within the meaning of Section 280G and
4999 of the Code, then:

 

(i)                                     the cash payments otherwise owed to the
Executive hereunder shall be reduced by the minimum amount necessary to avoid
imposition of an excise or penalty tax on the Executive under Code Section 4999
(or any successor provision thereto) provided the amount of such reduction in
payments does not exceed one thousand dollars ($1,000.00); or

 

(ii)                                  in all other cases, the Company shall pay to
the Executive an additional amount (on a fully-grossed-up, after-tax basis)
sufficient to place the Executive in the same after-tax position that the
Executive would have been in had the payments under this Agreement not been
subject to the excise tax under Code Section 4999 (or any successor provision
thereto).  Such additional payment to the
Executive shall include the amount of the excise tax payable under Code Section 4999
and all income, employment and additional excise taxes on the amount payable
under this paragraph (ii).

 

Unless the Company and the Executive otherwise agree in writing, the
determination of the amount of reduction required under Section 5(g)(i) or
the additional amount required to be paid under Section 5(g)(ii), as
applicable, shall be made in writing by the Company’s independent auditors who
are primarily used by the Company immediately prior to the Change in Control
(the “Accountants”).  For purposes of
making the calculations required by this Section, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on good faith interpretations concerning the application of Sections 280G
and 4999 of the Code.  The Company and
the Executive shall furnish to the Accountants such information and documents
as the Accountants may reasonably request in order to make a determination
under this Section 5(g).  Company
shall bear all reasonable costs and expenses incurred in connection with the
performance of the calculations contemplated by this Section 5(g). The
Company shall pay any amount due under this Section 5(g)(ii) to the
Executive as soon as reasonably practicable after the calculation of the amount
of tax gross-up payment due and in no event later than the close of the
calendar year following the calendar year in which the Executive remits the
underlying Code Section 4999 excise tax to the Internal Revenue Service.

 

6.                                                                                       Non–exclusivity of Rights. 
Nothing in this Agreement shall prevent or limit the Executive’s
continuing or future participation in any plan, program, policy or practice
provided by the Company or any of its Affiliated Companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its Affiliated Companies. 
Amounts which are 

 

11

 

vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its Affiliated Companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.

 

7.                                                                                       Full Settlement.  In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.

 

8.                                                                                       Confidential Information. 
Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its Affiliated Companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive’s employment by the company or any of its Affiliated Companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this
Agreement).  After termination of the
Executive’s employment with the Company, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it.  In no event shall an asserted violation of
the provisions of this Section 8 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.

 

9.                                                                                       Successors.

 

(a)                                  This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution.  This Agreement shall inure
to the benefit of and be enforceable by the Executive’s legal representatives.

 

(b)                                 This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.

 

(c)                                  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
success had taken place.  As used in this
Agreement, “Company” shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumed and
agrees to perform this Agreement by operation of law, or otherwise.

 

10.                                                                                 Miscellaneous.

 

(a)                                  This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah, without reference
to principles of conflict of laws.  The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect.  This Agreement may
not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal
representatives.  No waiver of any party’s
rights or benefits under this Agreement shall be effective unless such party
signs a written waiver of its rights or benefits.

 

12

 

(b)                                 All notices and other communications
hereunder shall be writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

 

If to the Executive:

 

Fred P. Lampropoulos

 

 

 

If to the Company:

 

Merit Medical Systems, Inc.

1600 West Merit Parkway

South Jordan, Utah  84095

Attention:  General Counsel

 

or to such other address as either party shall have furnished to the
other in writing in accordance herewith. 
Notice and communications shall be effective when actually received by
the addressee.

 

(c)                                  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

 

(d)                                 The Company may withhold from any amounts
payable under this Agreement such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or
regulation.  The Company makes no
representation or warranty to the Executive regarding the tax consequences of
any payment or benefit under this Agreement, including any representation as to
the application of Code Section 409A to such payments.

 

(e)                                  The Executive’s or the Company’s failure
to insist upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a waiver of such
provision or right of this Agreement.

 

(f)                                    This Agreement constitutes the entire
agreement between the parties with respect to the Executive’s employment by the
Company and supersedes and replaces all other agreements, oral or written,
between the parties with respect to the subject matter hereof including without
limitation the Prior Agreement between the Company and the Executive.

 

(g)                                 The Company and the Executive irrevocably: (i) agree
that any claim, law suit, cause of action or dispute arising under or with
respect to this Agreement or the Executive’s employment hereunder (a “Claim”)
shall be adjudicated solely in the United States Federal District Court or Utah
State Courts situated in Salt Lake City, Utah (collectively the “Utah Courts”);
(ii) consent and submit to the personal jurisdiction of the Utah Courts
with respect to any Claim; (iii) agree that the Utah Courts shall have
exclusive subject matter jurisdiction over any such Claims and that venue with
respect to any such Claims is proper and most convenient in the Utah Courts;
and (iv) agree and covenant not to assert any objection to personal
jurisdiction, subject matter jurisdiction or venue in the Utah Courts with
respect to any Claim. TO THE FULLEST EXTENT PERMITTED BY LAW, THE COMPANY AND
THE EXECUTIVE IRREVOCABLY WAIVE AND RELEASE ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY CLAIM ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT OR THE
EXECUTIVE’S EMPLOYMENT BY THE COMPANY.

 

13

 

(h)                                 If the Executive or the Company retains legal
counsel and/or incurs other costs and expenses in connection with the
enforcement of any or all of the provisions of this Agreement, the prevailing
party shall be entitled to recover from the other party reasonable attorneys’
fees, costs, and expenses incurred by the prevailing party in connection with
the enforcement of this Agreement. 
Notwithstanding the foregoing, in the event that following a Change in
Control the Executive engages legal counsel to enforce the Executive’s rights
or seek a determination under this Agreement, the Company shall pay the
expenses of such legal counsel regardless of the outcome of any legal
proceeding resulting therefrom; provided that such claim is not determined by a
trier of fact to be frivolous or in bad faith.

 

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

 

 

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s
hand, pursuant to the authorization from its Board of Directors, the Company
has caused these presents to be executed in it name on its behalf, all as of
the date and year first above written.

 

 

	
  EXECUTIVE:

  	
   

  	
  /s/
  Fred P. Lampropoulos

  

 

 

	
  COMPANY:

  	
   

  	
  MERIT
  MEDICAL SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/
  Fred P. Lampropoulos

  
	
   

  	
   

  	
  Its

  	
  President
  and CEO

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