Document:

Exhibit
10(f)

 

LEASE

 

THIS LEASE is made on the 22nd day of September,
2005, by Gulfcoast Property No. 1, LLC, a Florida limited liability
company, (Landlord), and Peek Traffic Corporation, a Delaware corporation,
(“Tenant”).

 

ARTICLE I

Summary of Lease Provisions

 

Section 1.01                                        Basic Data.

 

	
  (a)

  	
  Landlord’s

  	
   

  
	
   

  	
  Address:

  	
  1200 1st Avenue West, Suite 200, Bradenton, FL 34205

  
	
   

  	
   

  	
   

  
	
  (b)

  	
  Tenant’s

  	
   

  
	
   

  	
  Address:

  	
  2511 Corporate Way, Palmetto, FL

  
	
   

  	
   

  	
   

  
	
  (c)

  	
  Premises Address:

  	
  2511 Corporate Way, Palmetto, FL

  
	
   

  	
   

  	
   

  
	
  (d)

  	
  Tenant’s Trade Name:

  	
  Intentionally Omitted

  
	
   

  	
   

  	
   

  
	
  (e)

  	
  Lease Term:

  	
  Thirty-nine (39) months from Commencement Date under
  Section 2.03(a), with one (1) option to renew for an additional
  term of two (2) years under Section 2.03(e).

  
	
   

  	
   

  	
   

  
	
  (f)

  	
  Permitted Use

  	
   

  
	
   

  	
  of Premises:

  	
  Offices, Light Manufacturing, Indoor Assembly, and Distribution.

  
	
   

  	
   

  	
   

  
	
  (g)

  	
  Guarantor:

  	
  Quixote, Corp., as per Guaranty Agreement attached as Exhibit D.

  
	
   

  	
   

  	
   

  
	
  (h)

  	
  Base Rent:                             For
  the term of October 1, 2005 through December 31, 2005, if any,
  Tenant shall pay Base Rent in the amount of $25,760.00 per month with the
  first installment due upon execution of this Lease and the remaining
  installments being due on the first day of each month thereafter. Commencing
  January 1, 2006, the Base Rent shall be $8.15 per square foot, resulting
  in a total base rent of $326,000.00 per annum, based upon a 40,000 square
  foot Premises as depicted in Exhibit A hereto.

  
	
   

  	
   

  
	
  (i)

  	
  Percentage Annual Adjustment to Base Rent: Starting on
  January 1, 2007, the base rent shall be increased on an annual basis on
  each January 1st thereafter by the percentage, if any, of
  increase in the Consumer Price Index as of such date of adjustment over that
  which existed one (1) year preceding the date of adjustment provided,
  however, that said increase shall not be less than three percent (3%) or more
  than five percent (5%) of the previous year’s Base Rent. Such increase shall
  be determined by Landlord who shall notify Tenant thereof. Tenant shall, upon
  notice and request by Landlord, pay the increase commencing upon the
  adjustment date. Thereafter, the increase shall be payable equally with the
  regular rental payments. In the event of a decrease in the Consumer Price
  Index, there shall be no reduction in the rent from the previous year.
  “Consumer Price Index” shall mean the Consumer Price Index as now published
  by the U.S. Bureau of Labor Statistics under the caption “United States City
  Average for Urban Wage Earners and Clerical Workers All Items” 1982-84 = 100.
  If the manner in which the Consumer Price Index as determined by the Bureau
  of Labor Statistics shall be substantially revised (including, without
  limitation, a change in the base index year) and adjustment shall be made by
  Landlord in such revised index which would produce results equivalent, as
  nearly as possible, to those which would have been obtained if the Consumer
  Price Index had not been so revised. If the Consumer Price Index shall become
  unavailable to the public because publication is discontinued or otherwise, or
  if equivalent data is not readily available to enable Landlord to make the
  adjustment referred to in the preceding sentence, Landlord will substitute
  therefore a comparable index based upon changes in the cost of living or
  purchasing

  

 

 

	
   

  	
  power of the consumer dollar published by any other governmental
  agency or if no such index shall be available, then a comparable index
  published by a major bank or other financial institution or by a University
  or a recognized financial publication.

  
	
   

  	
   

  
	
  (j)

  	
  Operating Expenses: The costs of operating, maintaining, and
  repairing the Building as more fully described in Section 3.05 and as
  initially estimated in Exhibit E hereto.

  
	
   

  	
   

  
	
  (k)

  	
  Security Deposit: Three (3) months base rent consisting of
  first, last, and one (1) additional month, plus applicable sales tax,
  for a total amount of $86,796.50 to be paid as provided in Section 6.01.

  
	
   

  	
   

  
	
  (l)

  	
  Advance Rent: None

  
	
   

  	
   

  
	
  (m)

  	
  Intentionally Omitted

  
	
   

  	
   

  
	
  (n)

  	
  Condition: Tenant is leasing the Premises in its current “AS-IS”
  condition.

  
	
   

  	
   

  
	
  (o)

  	
  Signage: Tenant shall be allowed one (1) lighted building sign.
  Tenant may install additional county approved signage on building at Tenant’s
  expense, subject to Landlord’s approval. Landlord may install signage to
  identify any 2nd floor tenant in accordance with Section 7.01
  hereof.

  

 

Section 1.02                            Exhibits and Addendum to
Lease.

 

The Exhibits listed below are an integral part of
this Lease and all of their terms are incorporated into this Lease.  Unless stated otherwise, in the event of a
conflict between the terms and provisions of an Exhibit and terms and
provisions contained within the body of this Lease, the terms and provisions of
the Exhibit shall control.

 

	
  Exhibit A -

  	
   

  	
  Site Plan of Building and Premises – Parking Layout

  
	
  Exhibit B -

  	
   

  	
  Declaration of Protective Covenants, Conditions, Easements and
  Restrictions for Gulfcoast Corporate Park (delivered to Tenant prior to
  execution hereof)

  
	
  Exhibit C -

  	
   

  	
  Rules and Regulations

  
	
  Exhibit D -

  	
   

  	
  Guaranty Agreement

  
	
  Exhibit E -

  	
   

  	
  Estimated Monthly Payments

  

 

Section 1.03                            Definitions.

 

The following defined terms, in addition to those
listed in Section 1.01, are used in this Lease.

 

(a)                                  Additional Rent.  Such
sums, charges and expenses, other than Base Rent, which are due under this
Lease from Tenant to Landlord, including but not limited to those costs
described in Article III.

 

(b)                                 Alterations.  Tenant’s work, improvements,
alterations or additions performed by Tenant.

 

(c)                                  Assessments.  Assessments due under the
terms and provisions of the Declaration of Protective Covenants, Conditions,
Easements, and Restrictions for Gulfcoast Corporate Park, which are prorated
among property owners on an acreage prorated basis as provided therein.  The current percentage portion of Assessments
attributed to the Premises (Lots 20 AND 21 of GULFCOAST CORPORATE PARK, PHASE 2
as per plat thereof recorded in Plat Book 37, Pages 82-86 of the Public
Records of Manatee County, Florida) is 4.3% of the total Assessments, for
Gulfcoast Corporate Park.

 

(d)                                 Attorney’s Fees.  All
fees and costs of attorneys, accountants, experts, paralegals and similar
persons, whether or not suit is brought, including, but not limited to,
appellate costs and expenses.

 

(e)                                  Base Rent.  The Base Rent as described in
Section 1.01(h), as adjusted pursuant to Section 3.03 and other
provisions of this Lease.

 

2

 

(f)                                    Building.  The building and related
improvements situated on Lots 20 and 21, Gulfcoast Corporate Park, Manatee
County, Florida.

 

(g)                                 Premises.  The Premises located at the
address set forth in Section 1.01(c) and consisting of Lots 20 and
21, Gulfcoast Corporate Park, Manatee County, Florida, together with all
improvements thereon.  The second floor office
space and the Common Areas in the Building shall not be part of the Premises
for purposes of the space to be occupied by Tenant, but shall be included for
purposes of Premises’ Operating Cost as provided herein.

 

(h)                                 Premises’ Operating Cost.  The
total cost and expense for the entire Building as more fully described in
Section 3.05, incurred in operating, maintaining, and repairing of the
Premises and the Building.

 

(i)                                     Effective Date.  This
instrument becomes effective as a lease upon execution and delivery by both
Landlord and Tenant.  Submission of this
instrument for examination does not constitute an offer, right of first
refusal, reservation of or option for the Premises or any other space or
premises in, on or about the Building.

 

(j)                                     Event of Default.  One
or more of the events described in Section 16.01.

 

(k)                                  Hazardous Materials.  Any
oil and petroleum products and their byproducts, asbestos, polychlorobiphenyls,
hydrocarbon products and derivatives, flammable or explosive materials,
radioactive materials, hazardous materials, hazardous wastes, biomedical
wastes, biological wastes, hazardous or toxic substances, or related materials
as defined under or regulated by any Legal Requirement, including without
limitation the following statues and regulations promulgated under their
authority; 1) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.); b) the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801 et
seq.); c) the Resource Conservation and Recovery Act of 1976 as amended (42
U.S.C. Sections 6901 et seq.); d) the Water Pollution and Control Act, as
amended (33 U.S.C. 1317 et seq.); and e) Florida Statutes 403.703.

 

(l)                                     Intentionally Omitted

 

(m)                               Lease.  This Lease, including all
Exhibits and the Addendum, and any modifications to it which may from time to
time be duly executed by the parties hereto.

 

(n)                                 Lease Term.  The term of this Lease, as
provided in Section 1.01(e), as modified by Section 2.03(d).

 

(o)                                 Lease Term Commencement Date.  The
date upon which the Lease shall commence as provided in Section 2.03(a).

 

(p)                                 Lease Year.  Consecutive twelve calendar
month periods commencing on the Lease Term Commencement Date as modified by
Section 2.04

 

(q)                                 Legal Authority.  Any
domestic or foreign federal, state, county, municipal, or other government or
governmental or quasi-governmental department, commission, board, bureau,
court, agency, or instrumentality having jurisdiction or authority over
Landlord, Tenant, and/or all or any part of the Premises.

 

(r)                                    Legal Requirement.  Any
law, statue, code, rule, regulation, ordinance, order, judgment, decree, writ,
injunction, franchise, permit, certificate, license (including any beer, wine
or liquor license), authorization, registration, or other direction or
requirement of any Legal Authority, which is now or in the future applicable to
the Premises, including those not within the present contemplation of the
parties.

 

3

 

(s)                                  Rent (or rent). 
Payments, in legal currency of the United States of America, by Tenant
to Landlord of the Base Rent, the Additional Rent, all applicable State and
local sales tax, and all other payments owed by Tenant to Landlord in
accordance with the terms and conditions of this Lease

 

ARTICLE II

Premises,
Use of Common Areas, and Lease Term

 

Section 2.01                            Lease of Premises.

 

In consideration of the rents, covenants, and
agreements of Tenant, Landlord leases the Premises to Tenant and Tenant leases
the Premises from Landlord, subject to the terms and conditions of this Lease.

 

Section 2.02                            Use of Common Areas.

 

The use and occupation by Tenant of the Premises
shall include the non-exclusive use, in common with others, of the joint use
areas of the Building (“Common Areas”) and common areas located in Gulfcoast
Corporate Park as they may exist from time to time, subject to the terms and
conditions of the Covenants, Conditions, Easements, and Restrictions, as the
same may be amended from time to time, applicable thereto.

 

Section 2.03                            Lease Term.

 

(a)                                  Commencement Date.  The
term of the Lease shall be effective October 1, 2005, unless delayed as
set forth in Section 2.03(b).

 

(b)                                 Commencement Date Delay.  The
parties hereto acknowledge that the right to occupy the Building is currently
held by Peek Holding Corporation (“Peek”). 
In the event that Peek has not surrendered its interest in the Premises
to Landlord prior to the Commencement Date, Landlord shall pursue all
reasonable legal means to evict Peek or otherwise terminate Peek’s interest, if
any, by December 31, 2005.  The
parties further acknowledge that Tenant is currently occupying the Premises
and, provided all rent payments are made as set forth in Section 1.01(h),
Landlord shall not contest Tenant’s occupancy. 
At such time as the interests of Peek are terminated, this Lease shall
commence.  By so acknowledging Tenant’s
occupancy, Landlord does not waive any rights Landlord now has or may have in
the future against Peek.  The parties
further agree to enter into a Memorandum memorializing the Commencement Date in
the event of a delay as provided in this Section.

 

(c)                                  Intentionally Omitted.

 

(d)                                 Term.  The Lease Term shall be that
provided in Section 1.01(e).  The
Lease Term shall terminate on the last day of the period provided in
Section 1.01(e) unless sooner terminated or extended as provided in
this Lease.  Should the Lease Term
Commencement Date occur on a day other than the first day of a calendar month,
the Lease Term shall include such partial month in addition to the term
described in Section 1.01(e).

 

(e)                                  Option to Renew. 
Provided Tenant is not in default hereunder beyond all applicable grace
or notice and cure periods, Tenant shall have the right and option to renew the
Lease Term (the “Renewal Option”) for one (1) two (2) year term.   The Renewal Term shall be on the same terms
and conditions as contained in this Lease; provided, however, that the Base
Rent payable by Tenant during the Renewal Term shall be equal to the then
prevailing fair market rent for the Premises as of the commencement date of
Renewal Term (the “Renewal Rent”) as determined by Landlord.  In any event, the Base Rent for the Renewal
Term shall be no less than the Base Rent being paid during the last year of the
Initial Term.  In order to exercise such
Renewal Option, Tenant shall provide written notice to Landlord of its exercise
of such Renewal Option not less than nine (9) months prior to commencement
of the Renewal Term.  Within ten
(10) days of Landlord’s receipt of written notice, Landlord shall provide
Tenant with written notice of the Renewal Rent rate.  Tenant shall then have ten (10) days
from receipt of Renewal Rent rate notice to provide written

 

4

 

notice
of its intent to cancel the Renewal Option or proceed with the Renewal Option.

 

ARTICLE III

Rent

 

Section 3.01                            Commencement of Rent.

 

Tenant’s obligation to pay Base Rent and Additional
Rent shall commence on the Lease Term Commencement Date, provided that during
the term of October 1, 2005 through December 31, 2005, Tenant shall
not be obligated to pay for association fees, insurance or Taxes, as defined
herein as Additional Rent.  Should the
Lease Term Commencement Date occur on a day other than the first day of a
calendar month, then the Rent for the period from such date to the first day of
the first full month shall be prorated on a per-diem basis and shall be paid on
the Lease Term Commencement Date.

 

Section 3.02                            Payment of Rent.

 

The Base Rent and Additional Rent shall be payable
by Tenant in equal monthly installments, together with all applicable sales
taxes, on the first day of each month, in advance, at Landlord’s address set
forth in Section 1.01(a) or at such other place designated by
Landlord from time to time, without any prior demand and without any deduction,
holdback or setoff.

 

Section 3.03                            Cost of Living Adjustment to
Base Rent.

 

Commencing as of January 1, 2007, and each
January 1st thereafter during the Lease Term, the Base Rent shall be
increased by the amount that is obtained by multiplying the Base Rent for the
immediately preceding Calendar year by the percentages set forth in
Section 1.01(i).

 

Section 3.04                            Real Estate Taxes and
Improvement Assessments.

 

Subject to reimbursement as set forth in
Section 3.05, Landlord shall pay all Taxes (as defined below) on or before
the same become delinquent.  “Taxes”
means all ad valorem and real
property taxes, assessments or similar charges levied or assessed by any Legal
Authority against all interest in real property which are now or hereafter
becomes a part of the Premises, and such other costs and fees incurred by
Landlord in contesting any such taxes, assessments, or charges and/or
negotiating with any such Legal Authority with respect thereto.  In the event any Legal Authority shall levy any
general or special assessment for public improvements applicable to the
Building (“Improvement Assessments”), Landlord shall also pay such Improvement
Assessments on or before the date same become delinquent; provided, however,
that (i) Landlord shall be required to take the benefit of any statute or
ordinance permitting any such assessment for public betterments or improvements
to be paid over a period of time; (ii) Landlord shall promptly pay any
assessments and taxes such that Tenant shall have no liability for late charges
or penalties; (iii) Premises’ Operating Costs shall only include the
payment of such installments as shall fall due prior to the expiration of the
Lease Term; and (iv) Tenant’s liability hereunder shall be limited to the
first Seven Thousand Five Hundred Dollars ($7,500.00) of assessment per acre on
a cumulative basis over any five (5) year period and Landlord shall pay
any assessments in excess of said sum, per acre (which excess amount shall not
be included in Premises’ Operating Cost).

 

Section 3.05                            Tenant to Bear Premises’
Operating Cost.

 

This is to be a triple net lease and therefore from
and after January 1, 2006, the Tenant shall pay, and be responsible for,
all of Premises’ Operating Cost.  The
items and charges comprising the Premises’ Operating Cost shall include, without limitation, lighting;
sewer and water charges; Taxes and Assessments; non-ad valorem taxes; sanitary
control; removal of trash, rubbish, garbage, and other refuse; cost of
security; and all other charges, costs, and expenses which arise from the
operation, maintenance, and repair of the Building, as described in
Section 1.01(j).  Notwithstanding
anything contained in this Section 3.05 to the contrary, Operating
Expenses and Premises’ Operating Costs shall not include: (i) cost for
which Landlord is

 

5

 

reimbursed
by insurance or otherwise actually compensated; (ii) except for
replacement of capital items under Section 8.01, costs which are to be
capitalized in accordance with generally accepted accounting principals
consistently applied (“GAAP”) except that non-capitalized expenses which have
been capitalized by Landlord may be included in Common Area Maintenance Costs;
(iii) repairs necessitated by the gross negligent acts or omissions of
Landlord or Landlord’s agents, representatives, employees or contractors, or of
any second floor tenant, its agents, representatives, employees and
contractors; (iv) depreciation; (v) amounts paid for services not available
to Tenant; (vi) Landlord’s general overhead; (vii) Landlord’s costs
of repairs, alterations, additions, improvements or replacements made to
rectify or correct any defect in the design, materials or workmanship of the
Premises, Building or Common Areas; (viii) repairs or replacements which
are the responsibility of Landlord under this Lease; (ix) executive
salaries or salaries of service personnel to the extent that the salaries do
not relate to the management, operation, repair or maintenance of the Premises
or Common Areas; (x) charges for electricity consumption on second floor if
space is leased (Tenant shall be reimbursed actual cost if separately metered
or $1.20 per sq. foot of occupied space if not separately metered, said
reimbursement to be paid to Tenant within ten (10) days of presentation of
paid utility bill to Landlord); and; (xi) housekeeping service for any 2nd
floor tenant; (xii) any other expenses which, in accordance with GAAP, would
not normally be treated as operating costs by landlords of comparable buildings
in the area in which the Building is located. 
Landlord and Tenant intend that Premises’ Operating Costs paid by Tenant
under this Lease shall reimburse Landlord for only actual costs incurred by Landlord
but not provide a profit to Landlord.

 

Section 3.06                            Payment of Additional Rent.

 

(a)                                  Landlord shall estimate the Taxes and the
Premises’ Operating Costs not directly paid by Tenant (e.g., Assessments and
Insurance costs), and Tenant shall pay one-twelfth (1/12) thereof monthly in
advance, together with each monthly payment of Base Rent.  Landlord shall estimate and account for
Premises’ Operating Costs on a calendar-year basis and shall provide notice and
reasonable documentation of prior years’ actual expenses and the estimate of
the then-current calendar year’s Premises’ Operating Costs no later than
May 1 of each year with the change in estimated payment to be effective
with the June Rent payment each year. 
If at any time during any Lease Year Landlord determines that the actual
Premises’ Operating Costs have changed over the estimated costs by an
identifiable amount (e.g. an increase or decrease in insurance cost or Regular
or Special Assessments), the Landlord shall provide Tenant notice and
reasonable documentation of said change and the estimated monthly Additional
Rent shall be adjusted effective with the next following Rent Payment, but in
no event less than twenty (20) days following Landlord’s notice.  Within ninety (90) days following the end of
each calendar year, Landlord shall furnish Tenant statements of the actual
Taxes and the actual Premises’ Operating Cost not directly paid by Tenant for
that year, and there shall be an adjustment between Landlord and Tenant, with
payment to Landlord or credit to Tenant against future Rent (or payment to
Tenant if at the end of the Term hereof), as the case may require.  Landlord’s failure to provide notice within
such time shall not relieve Tenant of its obligations to pay the entire amount
due from Tenant for such period.  Tenant
covenants and agrees that Tenant shall remain liable to and shall pay the Taxes
and the Premises’ Operating Cost not directly paid by Tenant in the amounts and
times as set forth herein, notwithstanding any termination of this Lease by
reason of any default of Tenant; this covenant shall survive any such
termination.

 

(b)                                 Tenant shall pay, as Additional Rent, all
sales, use, and other taxes imposed by any governmental authorities upon the
manufacture, sale, use, transmission, distribution or other process necessary
or incidental to the furnishing of utilities or other services to the
Premises.  Tenant shall pay before
delinquency all personal property taxes and assessments on the property of
Tenant located on the Premises and on additions and improvements on the Premises
belonging to Tenant.  Tenant shall also
pay, as Additional Rent, all sales taxes assessed by governmental authority
against the Base Rent and Additional Rent and other payments to be made
pursuant to this Lease, even though the taxing statute or ordinance may purport
to impose such sales tax against Landlord. 
The payment of all sales tax shall be made by Tenant to Landlord on a
monthly basis, concurrently with payment of the Base Rent.

 

(c)                                  Tenant shall have the right to audit
Landlord’s books and records to determine the accuracy of the Premises’
Operating Costs and Tenant’s share thereof. 
In the event that the Tenant’s audit reveals that the Tenant was
overcharged for Premises’ Operating Costs, then Landlord shall, within thirty
(30) days

 

6

 

of
filing Tenant’s written demand, provide additional documentation supporting the
prior year’s Premises’ Operating Costs or shall reimburse Tenant for the
overpayment.  To the extent that such
overpayment is greater than or equal to five percent (5%) of Tenant’s Premises’
Operating Costs for the year in question then Landlord shall also reimburse
Tenant for Tenant’s costs.

 

Section 3.07                            Additional Rent.

 

Any and all sums of money or charges required to be
paid by Tenant under this Lease other than Base Rent shall be considered
“Additional Rent” whether or not the same be so designated and Landlord shall
have all rights to enforce due and timely payment by Tenant of Additional Rent
as are available to Landlord with regard to Base Rent.

 

ARTICLE IV

 

Intentionally Omitted

 

ARTICLE V

Conduct of
Business and Use of Premises by Tenant

 

Section 5.01                            Use of Premises.

 

Tenant shall occupy the Premises without delay upon
the Lease Term Commencement Date.  Except
as otherwise specifically provided herein, Tenant shall, continuously and
without interruption, use the Premises solely and exclusively for the Permitted
Use as shown in Section 1.01 (f) of this Lease.  Tenant shall not use, permit or suffer the
use of the Premises for any other business or purpose, nor by any other party.

 

Section 5.02                            Waste or Nuisance.

 

Tenant shall not commit or suffer to be committed
any waste upon the Premises or any nuisance or other act or thing which may
adversely affect Landlord’s interest in the Premises.

 

Section 5.03                            Governmental Regulations.

 

Tenant shall, at Tenant’s sole cost and expense,
comply with all Legal Requirements of all Legal Authorities regulating Tenant’s
use and occupancy of the Premises, including but not limited to those regarding
building and zoning codes, Hazardous Materials, Americans with Disabilities
Act, and all similar matters, now in force or which may hereafter be in
force.  Tenant shall cooperate with
Landlord in Tenant’s observance of all such matters.  Tenant shall indemnify, defend and save
Landlord harmless form penalties, fines, costs, expenses, suits, claims,
damages and attorneys’ fees and costs resulting from Tenant’s failure to
perform its obligations in this Section or otherwise resulting from Tenant’s
occupancy of the Premises.  The
provisions of this Section shall survive the expiration or termination of
this Lease.

 

Section 5.04                            Hazardous Materials.

 

(a)                                  Tenant shall not cause or permit any
Hazardous Materials to be brought upon, kept, used, generated or disposed of in
or about the Premises.  Except to the
extent that the same shall have occurred as a result of any act or omission of
the Landlord, its agents or employees, if during the Term of this Lease the
Premises becomes contaminated in any manner caused by Tenant, Tenant shall
indemnify and hold harmless Landlord from any and all claims, damages, fines,
judgments, losses or liabilities, investigation, cleanup, removal or
restoration mandated by or related to a federal, state or local agency, or political
subdivision, and any and all sums payable for settlement of claims, attorneys’
fees, consultant and expert fees) arising from, growing out of or related to
Hazardous Materials as described or anticipated in this Section.  Tenant shall comply with all terms set forth
in the Hazardous Materials Prevention Contamination, if

 

7

 

any,
and Response Plan for the Gulfcoast Corporate Park and the applicable
requirements of the Manatee County Land Development Code, as amended, which
pertain to Hazardous Materials.

 

(b)                                 If Tenant causes or permits the discharge of
any Hazardous Material on the Premises, Tenant shall promptly at its sole
expense take all reasonable or necessary actions to return the Premises to the
condition existing prior to the presence of the Hazardous Materials, after
first obtaining Landlord’s approval for such remedial action.  Tenant’s remedial action hereunder shall
comply with all Legal Requirements and Landlord’s approval shall not be required
for remedial actions required under any Legal Requirement.  If Tenant does not promptly initiate and
diligently pursue full remediation in compliance with Legal Requirements,
Landlord may, following reasonable notice to Tenant, do so and Tenant shall reimburse
Landlord, as Additional Rent.

 

(c)                                  The provisions of this Section 5.04
shall survive the expiration or termination of this Lease.

 

(d)                                 Notwithstanding the provisions of
Section 5.04(b), Tenant may introduce and store within the Premises,
chemicals, compounds, solvents and similar materials ordinarily used in
Tenant’s business operations, which may constitute Hazardous Materials,
provided that such materials are stored and utilized in accordance with all
Legal Requirements.  Tenant shall be
liable under Section 5.04(c) for any discharge or mishandling of
materials permitted on the Premises pursuant to this Section.

 

Section 5.05                            Radon.

 

The following statement is made to conform with
Florida Statutes:

 

Radon Gas: 
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.

 

ARTICLE VI

Security
Deposit

 

Section 6.01                            Amount of Deposit.

 

Upon execution of this Lease, Tenant shall deposit
with Landlord the Security Deposit as provided in Section 1.01(k).  This sum may be co-mingled with other funds
of Landlord, and Landlord shall have no liability for the accrual or payment of
any interest thereon.  In the event of
the failure of Tenant to keep and perform any of the terms, covenants and
conditions of this Lease, then Landlord, at its option and upon written notice
to Tenant, may apply the Security Deposit, or as much thereof as Landlord may
deem necessary, to compensate Landlord for all loss or damage sustained or
suffered by Landlord due to such default or failure on the part of Tenant.  Should any portion of the Security Deposit be
so applied by Landlord, then Tenant shall, upon the written demand of Landlord,
remit to Landlord a sufficient amount in cash to restore the Security Deposit
to the original sum deposited, and Tenant’s failure to do so within fifteen
(15) days after receipt of such demand shall constitute an Event of Default
under this Lease.  Should Tenant comply
with all terms, covenants and conditions and promptly pay all the Base Rent and
Additional Rent as it falls due, and all other sums payable by Tenant to
Landlord, the Security Deposit (to the extent not attributed to the first or
last month’s Base Rent) shall be returned in full to Tenant within forty-five (45)
days of the expiration of the Lease Term, as it may be extended pursuant to the
terms of this Lease.

 

Section 6.02                            Transfer of Deposit.

 

Landlord may deliver the Security Deposit to the
purchaser of Landlord’s interest in the Premises, in the event that such
interest is sold, and, provided such purchaser has assumed in writing the
obligations of Landlord hereunder, thereupon Landlord shall be discharged from
any further liability with respect to the Security Deposit.

 

8

 

ARTICLE VII

Signs,
Fixtures and Alterations

 

Section 7.01                            Installation by Tenant and
Landlord.

 

Tenant will not place or permit to be placed or
maintained on any exterior door, wall or window of the Premises any sign,
awning or canopy, or advertising matter or other thing of any kind, and will
not place or maintain any decoration, letter of advertising matter on the glass
of any window or door, nor will any illuminated sign be placed in the window
display area of the Premises without first obtaining Landlord’s written
approval and consent, which consent will not be unreasonably withheld;
provided, however, the Landlord may give consideration to the aesthetic effect
of any such sign when compared to other signage located within Gulfcoast Corporate
Park.  Tenant may erect a sign within the
area designated by Landlord, which sign shall be subject to the prior written
approval of Landlord, which shall be subject to the same aesthetic standards
set forth in the previous sentence. 
Notwithstanding the foregoing, Landlord hereby approves the existing
signage on and in the Building.  Tenant
further agrees that such signs, awning, canopy, decoration, lettering,
advertising matter or other thing as may be approved shall be maintained in
good condition and repair at all times. 
Landlord may also approve and install signage for any 2nd
Floor Tenant, to be placed in the joint use entry area, consistent with
approvals as set forth above.

 

Section 7.02                            Responsibility of Tenant
Regarding Alterations.

 

Tenant shall make no Alterations in or to the
Premises without the written consent of Landlord, which consent may be given or
withheld in Landlord’s reasonable discretion and may be predicated on, among
other things, Tenant’s use of contractors acceptable to Landlord, Tenant’s
furnishing plans acceptable to Landlord, Tenant’s obtaining acceptable payment
and performance bonds for any Alterations. 
Tenant’s obtaining the consents, if required, of Landlord’s
mortgagee(s), and Tenant’s obtaining all appropriate governmental permits and
approvals at Tenant’s expense prior to the beginning of the work.  All Alterations to the Premises remaining at
the end of the Lease Term shall remain the property of Landlord.  In no event shall Tenant remove such
Alterations without the prior written consent of Landlord.  Upon expiration of the Term of this Lease or
early termination hereof, if Landlord notified Tenant at the time of Landlord’s
approval of such alterations that Landlord requires that such Alterations be
removed, Tenant shall remove such Alterations within five (5) days of
Landlord’s written demand for such removal and shall restore the Premises to
the condition that existed prior to the Alterations, ordinary wear and tear,
casualty loss, and condemnation excepted.

 

In accordance with the applicable provisions of the
Florida Construction Lien Law, Florida Statutes 713.10, no interest of
Landlord, whether personally or in the Building, or the Premises, shall be
subject to liens for improvements made by Tenant or caused to be made by Tenant
under this Lease.  Further, Tenant
acknowledges that Tenant, with respect to improvements or alterations made or
caused to be made by Tenant under this Lease, shall promptly notify the
contractor making such improvements to the Premises of this provision
exculpating Landlord’s liability for such liens.  In the event that a claim of lien is filed
against the Building or the Premises in connection with any work performed by
or on behalf of Tenant, Tenant shall satisfy such claim within thirty (30) days
from the date of filing.  In the event
that Tenant fails to satisfy such claim within such thirty (30) day period,
Landlord may thereafter charge Tenant, as Additional Rent, all costs incurred
by Landlord in connection with the satisfaction of such claim, including
attorneys’ fees.  Further, Tenant agrees
to indemnify, defend and save Landlord harmless from and against any damages or
loss incurred by Landlord as a result of any such claim of lien.  If so requested by Landlord, Tenant shall
execute a short form or memorandum of this Lease which may, in Landlord’s
discretion, be recorded in the Public Records for the purpose of protecting
Landlord’s estate from claims of lien, as provided in the Florida
Statutes.  Nothing contained in this
Lease shall be construed as a consent on the part of the Landlord to subject
the estate of Landlord to liability under the Mechanic’s Lien Law of the State
of Florida; it being expressly understood that the Landlord’s estate shall not
be subject to such liability.

 

9

 

Section 7.03                            Tenant Property Removal.

 

Notwithstanding any contrary provision of this
Lease, upon expiration of the term of this Lease or its earlier termination,
Tenant shall promptly at its sole cost and expense remove its furniture,
fixtures and equipment from the Premises. 
For the purposes hereof, Tenant’s furniture, fixtures and equipment
shall include without limitation the following: furniture, furnishings, art
work, computer systems (excluding wiring), telephone systems (excluding
wiring), modular furnishings and work stations (“cubicles”), tools, jigs,
assembly tables, air compressors, and similar personal property acquired by
Tenant with Tenant’s funds and installed upon the Premises by Tenant or at
Tenant’s direction.  In no event shall
the personal property to be removed by Tenant hereunder include any personal
property constructed or originally provided by Landlord, including but not
limited to, floor coverings, wall coverings, lighting fixtures, ceiling fans,
refrigerators, dishwasher, plumbing fixtures, or heating, ventilation and air
conditioning equipment.  In the event any
of the personal property to be removed by Tenant hereunder is attached to the
Premises, Tenant shall promptly repair any damage to the Premises caused by
such removal at its sole expense.

 

ARTICLE VIII

Repairs and
Maintenance of Premises

 

Section 8.01                            Tenant’s Responsibility.

 

In the performance of its responsibilities under
Section 3.05, Tenant agrees to repair and maintain the Premises in good
order and condition, ordinary wear and tear, casualty loss, and condemnation
excepted, which maintenance and replacement, if necessary, shall be
accomplished in such manner and with such materials as shall maintain the same
quality of construction of the improvements as existed upon delivery to the
Tenant and which shall include, maintenance, repair, and replacement of all
portions of the Premises except those portions to be maintained by Landlord
under Section 8.02, including without limitation:  (i) repair or replacement of broken
plate or window glass (excluding damage caused by settling or structural
defect); (ii) repair of damage caused by Tenant, its employees, agents,
contractors, customers, licensees, or invitees; (iii) interior repainting
and redecoration; (iv) repair and maintenance of all doors, including
overhead doors; (v) all janitorial work within the improvements located
upon the Premises; (vi) gardening and landscaping; (vii)  resurfacing
of paving upon the Premises and line painting; (viii) lighting fixtures
and electrical system (as limited herein); (ix) sign maintenance; (x)
plumbing fixtures and plumbing system (as limited herein); (xi) heating
ventilation and air conditioning equipment and system (“HVAC System”) (as limited
herein); (xii) irrigation system (including any pump and well on the Premises
dedicated solely to irrigation of the Premises); (xiii) exterior painting;
(xiv) security system; and (xv) maintenance and cleaning of roof drains.  Landlord shall not be liable for any damages
caused by or growing out of any breakage or leakage of the electrical wiring,
air conditioning or heating pipes and equipment, water closets, plumbing,
appliances, other equipment, or facilities serving the Premises, except as provided
in Section 8.02. Tenant’s responsibility for repair and replacement of the
plumbing system shall be limited to: 
(i) the first Two Thousand Dollars ($2,000.00) of repair expenses
for said system in any calendar year, wherever located, and, after payment of
Two Thousand Dollars ($2,000.00) for such expenses, (ii) only those
components of said system located to the exterior of any finished wall, floor
or ceiling including but not limited to fixtures, piping and valves.  Tenant’s responsibility for repair and
replacement of the electrical system shall be limited to (i) the first Two
Thousand Dollars ($2,000.00) of repair expenses for said systems in any
calendar year, where ever located, and, after payment of Two Thousand Dollars
($2,000.00) for such expenses, (ii) only those components of said system
located to the exterior of any finished wall, floor or ceiling or within a
junction box (switch or outlet box) or circuit breaker panel accessible at a
finished wall, floor or ceiling including but not limited to fixtures,
switches, outlets, and circuit breakers. 
In no event shall Landlord be liable for damages or injuries arising
from failure to make repairs, nor shall Landlord be liable for damages or
injuries arising from defective workmanship or materials in making any such
repairs.  Tenant’s responsibility for
maintenance and repair of the HVAC System shall be limited to maintaining a
service contract for routine inspection, servicing and maintenance of the
System with a reasonably qualified HVAC service company and performing any
repair or replacement of components of the HVAC System the cost of which on a
per occurrence basis is equal to or less than the “maximum repair expense”
(defined as follows.)  Tenant’s “maximum
repair expense” shall be $500.00 per occurrence of repair during the first
Lease Year

 

10

 

and
shall increase by $25.00 during each subsequent Lease Year. The Tenant’s
service contract for the HVAC System shall include as a minimum quarterly inspections
of the System, replacement of filters, cleaning of coils, checking and
refilling of coolant, and related services. Such repair or maintenance
obligations of Tenant shall be considered Tenant’s responsibility for Premises’
Operating Cost or replacement.  Tenant
shall provide Landlord with any and all service contracts maintained with
regard to the Premises and improvements upon the Premises.

 

Section 8.02                            Landlord’s Responsibilities.

 

The Landlord’s responsibility for maintenance and
repair of the Premises and the Building shall be limited to the structural
components of the Premises and Building, including specifically foundation and
concrete slabs, walls, exterior windows, doors, and seals, roof structure,
roofing system, defective paving, the electrical system (except items
maintained by Tenant under Section 8.01), the plumbing system (except
items maintained by Tenant under Section 8.01), HVAC System (except items
maintained by Tenant under Section 8.01). 
Landlord shall also be responsible for maintenance and repair of the
interior 2nd floor space and elevator serving same.  In the event of repairs to the HVAC System
the cost of which exceed the “maximum repair expense” on any occurrence, the
Landlord shall bear the entire cost of such repair.  In the event Tenant incurs a repetitive
“maximum repair expense” on the same compressor within any calendar year period
and Tenant reasonably believes a replacement versus a repair is required,
Landlord shall make such replacement or pay the entire cost (Tenant shall not
pay the “maximum repair expense”) for ongoing repair on the particular
compressor.  In the event Landlord leases
the 2nd floor space, Landlord shall pay to modify access security
system for the building.  This shall
eliminate the Tenant’s security into the joint use entrance and replace it with
a coded access and timer system to control access during non business hours.

 

Section 8.03                            Emergency Repairs.

 

In the event that any portion of the Premises or a
component thereof requires emergency repair to prevent further damage to the
Premises or Tenant’s personal property therein, either party may take such
minimum steps as reasonably required to stabilize the damaged or defective
condition and the party responsible for such repair under Section 8.01 or
8.02 shall promptly reimburse the party performing the repair upon notice of
the repair and reasonable evidence of the cost thereof.  In all events the party identifying the need
for emergency repair shall reasonably attempt to notify the party responsible
for said repair under Section 8.01 or 8.02 prior to undertaking any
repair, and provide written notice promptly following any such repair
describing the extent and nature of the emergency repair.

 

Section 8.04                            Return of Premises.

 

Landlord shall not be obligated or required to make
or conduct any other maintenance or repairs, and the Premises shall be kept in
good repair and condition by Tenant, ordinary wear and tear, casualty loss, and
condemnation excepted.  At the end of the
Lease Term, Tenant shall deliver the Premises to Landlord in good repair and
condition, reasonable wear arising from Tenant’s permitted use of the Premises,
casualty loss, and condemnation excepted.

 

ARTICLE IX

Insurance
and Indemnity

 

Section 9.01                            Liability Insurance.

 

Tenant shall, during the entire term hereof, keep in
full force and effect; commercial general liability insurance providing bodily
injury and property damage and liability insurance in an amount not less than
One Million Dollars ($1,000,000.00) per one occurrence, and worker’s
compensation insurance in the maximum amount permitted under Florida law.  The policy shall name Landlord and Landlord’s
mortgagee(s) as an additional insured and Tenant as insured, and shall contain a
clause that the insurer will not cancel or change the insurance without first
giving Landlord thirty (30) days’ prior written notice.  The insurance shall be with an insurance
company licensed to do business in Florida, and at least A-rated in the most current

 

11

 

edition
of Best’s Insurance Reports and acceptable to Landlord and a copy of the policy
and a certificate of insurance shall be delivered to Landlord prior to the
commencement of the Lease Term.  In no
event shall the limits of said insurance policies be considered as limit the
liability of Tenant under this Lease.  In
the event that Tenant shall fail to obtain or maintain in full force and effect
any insurance coverage required to be obtained by Tenant under this Lease,
Landlord may procure same from such insurance carriers as Landlord may deem
proper and Tenant shall pay, as Additional Rent, any and all premiums, costs,
charges and expenses incurred or expended by Landlord in obtaining such
insurance.  Notwithstanding the foregoing
sentence, Tenant shall nevertheless hold Landlord harmless from any loss or
damage incurred or suffered by Landlord from Tenant’s failure to maintain such
insurance, and this provision shall survive the expiration or termination of
this Lease.

 

Section 9.02                            Fire and Extended Coverage
Insurance.

 

At all times during the Lease Term, Landlord shall
maintain in effect policies of insurance covering the Premises and the Building
in an amount not less than its full insurable value, providing protection
against any peril included within the standard classification of “Fire and
Extended Coverage,” together with insurance against vandalism, theft and
malicious mischief and insurance covering replacement of all the plate glass of
the Premises (provided such coverage is conventionally available).  The proceeds of such insurance shall be used
to repair or replace the Premises so insured. 
All property, including without limitation stock, inventory, fixtures
and equipment belonging to Tenant shall be on the Premises at the risk of
Tenant and shall be fully insured by Tenant, and Landlord shall not be liable
for damage, theft or misappropriation of such property of Tenant except as
results solely from the gross negligence or intentional misconduct of Landlord
or its agents, employees, or contractors. 
The Landlord’s cost of providing insurance coverages hereunder shall be
paid by Tenant as an element of Premise’s Operating Cost.

 

Section 9.03                            Prohibited Articles.

 

Tenant shall not keep, use, sell or offer for sale
in or upon the Premises any article which may be prohibited by the
standard form of fire and extended risk insurance policy.  Tenant agrees to promptly make, at Tenant’s
cost, any repairs, alterations, changes and/or improvements to fixtures and
equipment in the Premises required by the company issuing Landlord’s fire
insurance on the Premises so as to avoid the cancellation of such
insurance.  Landlord confirms that the
articles currently used, sold, or offered for sale in or upon the Premises by
Tenant do not contravene the provisions of this Section 9.03.

 

Section 9.04                            Indemnification of Landlord

 

Tenant shall indemnify, defend and save Landlord
harmless from and against any and all claims, actions, damages, arising out of
any occurrence during the term of this Lease in, upon or at the Premises, or
the occupancy or use by Tenant of the Premises or any part thereof, or
occasioned wholly or in part by any act or omission of Tenant, its agents,
contractors, employees, servants, lessees or any third party, except such claims,
actions or damages resulting from any act or omission of: (i) Landlord,
its agents, contractors, employees or servants; and (ii) any other tenants
in the Building and their respective agents, contractors, employees, servants,
or invitees.  Tenant shall protect and
hold Landlord harmless and shall pay all costs and attorneys’ fees incurred by
Landlord in connection with such litigation, and any appeals thereof or
collections related thereto under this indemnity provision.  Landlord shall provide prompt notice to
Tenant of any potential claim or damage which may be subject to Tenant’s
indemnification hereunder and in no event shall Landlord settle or compromise
any claim which Tenant may indemnify hereunder without notice of the terms of
settlement to Tenant, and Tenant’s approval is not to be unreasonably withheld.
The provisions of this Section shall survive the expiration or termination
of this lease.

 

Section 9.05                            Intentionally Omitted.

 

12

 

Section 9.06                            Waiver of Subrogation.

 

Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each hereby waives any and all rights of
recovery, claim, action, or cause of action against the other (and against any
assignee of Landlord and assignee or subtenant of Tenant) for any loss or
damage that may occur to the Building or Premises or any improvements thereto,
or any personal property of Landlord or Tenant, arising from any cause that:
(i) is customarily insured against under the terms of special form
(all-risk) property insurance; or (ii) is insured against under the terms
of any property insurance actually carried. 
The foregoing waiver shall apply regardless of the cause or origin of
the claim, including, but not limited to, the negligence of a party or that
party’s agents, officers, employees, or contractors.  The parties hereto, as between themselves,
hereby waive the right to seek or collect punitive or consequential damages.

 

ARTICLE X

Utilities 

 

Section 10.01                     Payment and Metering.

 

Tenant shall be solely responsible for and promptly
pay directly to the utility or other provider of such service all charges for
gas, electricity or any other utility (including water and sewer) used or
consumed in the Premises (and the 2nd floor space, in accordance
with the terms of Section 3.05), including hookup and connection fees
charged by the provider for the commencement and delivery of utility services,
but in all events excluding utility impact fees, if any, to be paid with
respect to the Premises.  If any such
charges are not paid when due, Landlord may, at its option, pay the same, and
any amount so paid by Landlord shall be due to Landlord from Tenant as
Additional Rent.

 

ARTICLE XI

Subordination
and Attornment, Estoppel Certificate

 

Section 11.01                     Subordination and Attornment.

 

Tenant subordinates its rights under this Lease to
the lien of any mortgages, or the lien resulting from any other method of
financing or refinancing, now or hereafter in force against the Premises or the
Building, and to all advances made or hereafter to be made upon the security
thereof; provided, however, that any such subordination shall be understood to
include a commercially reasonable non-disturbance clause which will permit the
Tenant to remain in possession of the Premises under the terms of this Lease so
long as the Tenant is not in default hereunder; and provided, further, that any
subordination provisions contained in a mortgage constituting a lien upon the
Premises shall not in any way modify or amend any of the terms of this
Lease.  This section shall be
self-operative and no further instrument of subordination shall be necessary,
but Tenant shall within ten (10) days following written request by
Landlord execute and deliver any and all documents evidencing such subordination
and failure to do so shall constitute an Event of Default under this
Lease.  In the event any proceedings are
brought for the foreclosure of, or in the event of exercise of the power of
sale under, any mortgage made by the Landlord covering the Premises or in the
event a deed is given in lieu of foreclosure of any such mortgage, upon receipt
of notice thereof and assumption of the obligations of Landlord hereunder by
the purchaser or grantee in lieu of foreclosure, Tenant shall attorn to the
purchaser, or grantee in lieu of foreclosure, upon any such foreclosure or
sale, and shall recognize such purchaser, or grantee in lieu of foreclosure, as
the Landlord under this Lease.

 

Section 11.02                     Estoppel Certificate.

 

Tenant shall within ten (10) days following
written request by Landlord, or any mortgagee of Landlord, execute, acknowledge
and deliver to Landlord or such mortgagee a statement in writing certifying
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that the same is in full force and effect and stating the
modifications), and the date to which the Base Rent and any other

 

13

 

payments
due from Tenant have been paid in advance, if any, and stating whether or not
there are defenses or offsets claimed by Tenant and Whether or not to the best
of Tenant’s knowledge Landlord is in default in performance of any covenant,
agreement or condition contained in this Lease, and if so, specifying each such
default.  The failure of Tenant to
execute, acknowledge and deliver a statement in accordance with the provisions
of this Section within said ten (10) day period shall constitute an
Event of Default under this Lease.

 

ARTICLE XII

Assignment
and Subletting

 

Section 12.01                     No Assignment.

 

Except as provided in Section 12.06, Tenant may
not assign this Lease in whole or in part, nor sublet all or any portion of the
Premises, nor grant occupancy rights to anyone other than Tenant, nor mortgage
or lien all or a portion of the Premises (collectively and individually, a
“transfer”), without the prior written consent of Landlord in each
instance.  The consent by Landlord to any
transfer shall not constitute a waiver of the necessity for such consent to any
subsequent transfer.  Landlord may refuse
to grant consent to any transfer by Tenant with or without cause and without
stating the reasons for its refusal.  If
Landlord in its sole discretion consents to the transfer, any assignee or
subtenant or occupant or mortgagee or lienor, collectively and individually,
(“transferee”), shall assume all obligations under this Lease and Tenant shall
not be released from and shall remain fully liable for the performance of all
provisions of this Lease except as provided in Section 12.06.

 

Section 12.02                     Proposal to Sublease or
Assign.

 

Except as provided in Section 12.06, if Tenant
desires to effect a transfer to a transferee, Tenant shall submit to Landlord a
written request for the consent of Landlord to such transfer, which request
shall be accompanied by the name and address of the proposed transfer, a
description identifying the space to be sublet or occupied, a copy of the fully
executed transfer agreement or contract therefore, conditioned only upon
approval of Landlord, the nature and character of the business of the proposed
transferee, and its proposed use of the Premises, current financial information
on the proposed transferee, and such other information as Landlord may
reasonably request.  Landlord shall have
the option within thirty (30) days of receipt of such notice and information to
approve or disapprove the proposed transferee, in its sole and arbitrary
discretion.

 

Section 12.03                     Transfer of Lease.

 

Tenant shall not have (a) advertised or
publicized in any way the availability of all or part of the Premises without
prior notice to and consent by Landlord, or (b) publicly advertised the
Premises for subletting whether through a broker, agent, representative, or
otherwise at a rental rate less than that for which space in the Building is
being offered for rent by Landlord. 
Because Landlord has entered into this Lease with Tenant, and because
the terms of this Lease are particular to Tenant, as it exists at time of
execution of this Lease and as Landlord projects it will exist during the Lease
Term, Landlord may require modifications in one or more terms of this Lease
(including but not limited to Base Rent, Additional Rent, Lease Term, option or
renewal clauses, if any) before Landlord consents to any transfer, except for
transfers pursuant to Section 12.06.

 

Section 12.04                     Results of Transfers.

 

If Landlord in its sole discretion permits a
transfer, the following results shall be automatically effectuated:

 

(a)                                  the transfer shall be deemed to contain a
provision making such transfer subject to the terms and conditions of this
Lease;

 

14

 

(b)                                 except as provided in Section 12.06, the
transfer shall not release Tenant from the due, prompt and punctual performance
of all the terms, covenants and conditions contained in this Lease on its part
to be performed or observed including the payment of any Rent due and to become
due under this Lease; and

 

(c)                                  the consent of Landlord to the proposed
transfer shall not constitute a waiver of any provision of this Lease and,
except for permitted transfers under Section 12.06, no further transfer
shall be made without Landlord’s prior consent in writing; the transferee shall
not further transfer the Premises without Landlord’s prior written consent and
then only upon compliance with all the provisions contained in this
Article XII.

 

Section 12.05                     Events Deemed Assignment.

 

Except in connection with a permitted transfer under
Section 12.06, if there shall occur any change, or cumulative changes, in
the ownership of and/or power to vote the majority of the outstanding capital
stock of Tenant, whether such change or ownership is by sale, assignment,
bequest, inheritance, operation of law or otherwise, then such change or
changes shall be deemed an assignment subject to the provisions of this
Article XII, i.e., the Tenant shall provide the Landlord with all of the
information required to be delivered to Landlord under Section 12.02.

 

Section 12.06                     Permitted Transfer.

 

Notwithstanding anything contained in this Lease to
the contrary, Tenant shall be entitled to transfer, sublease or assign the
entire Premises without the Landlord’s consent to: (i) any entity whose
shares are regularly and publicly traded on a National Securities Exchange as
defined in the Securities Act of 1934, as amended; or (ii) to any entity
that purchases or acquires substantially all the assets of the Tenant or
forty-nine percent (49%) or more of the voting common stock of Tenant (through
a merger, consolidation, acquisition, combination or otherwise), whether or not
such resulting entity remains in Tenant’s name or continues to operate Tenant’s
business on the Premises; (iii) to a parent, subsidiary, or affiliate of
Tenant, or to a successor of Tenant (collectively “Permitted Transferees”).  In all events, such transferee shall
specifically assume and agree to be bound by Tenant’s obligations under this
Lease.  No transfer, assignment or
sub-lease hereunder shall be effective until Landlord has received:  (i) notice of the Permitted Transferees’
complete name, and address for notices under this Lease, the nature of the
business operations to be conducted upon the Premises by the Permitted
Transferees, and a statement whether the underlying transaction is an asset
sale or a stock transfer and (ii) only in the event of an asset sale
transaction, the Permitted Transferee’s written assumption of the obligations
under this Lease, assignment or sub-lease hereunder.  The effective date of any permitted transfer
hereunder, shall in no event be earlier than fifteen (15) days after Landlord’s
receipt of the required notice. 
Permitted transfers hereunder shall not release Tenant from liability
under this Lease unless such permitted transferee then possesses a net worth
(as determined in accordance with generally accepted accounting principals
consistently applied) greater than or equal to the net worth of the Tenant so
determined as of the date of such transfer, assignment or sub-lease.  In the event Tenant desires to be released
from liability under this Section, reasonable evidence of the proposed
transferee’s net worth shall be provided to Landlord at the time the notice
required under this Section is provided to the Landlord.  Notwithstanding any Permitted Transfer,
assignment or subletting, the Guarantor shall remain liable under its Guaranty
Agreement attached as Exhibit “D.”

 

ARTICLE XIII

Rules and
Regulations

 

Section 13.01                     Rules and Regulations.

 

The Protective Covenants, Conditions, Easements, and
Restrictions of Gulfcoast Corporate Park attached as Exhibit “B” are a
part of this Lease, and Tenant agrees to comply with and abide by same.  Tenant’s failure to keep and observe said
rules and regulations shall constitute an Event of Default under

 

15

 

this
Lease.  The Protective Covenants,
Conditions, Easements, and Restrictions of Gulfcoast Corporate Park may, from
time to time, be amended and, as so amended, will supplement the rules and
regulations, and such revised rules and regulations shall automatically
become a part of this Lease.  Provided,
however, Tenant shall not be required to comply with any revised Rules and
Regulations which may conflict with the obligations of the parties under this
Lease.

 

ARTICLE XIV

Destruction
of Premises

 

Section 14.01                     Total or Partial
Destruction.

 

If the Premises shall be damaged by fire, the
elements, unavoidable accident or other casualty, without the fault of Tenant,
but are not thereby rendered untenantable in whole or in part, Landlord shall,
to the extent of available insurance proceeds, cause such damages, except to
Tenant’s equipment and trade fixtures, to be repaired, and the Rent and other
charges payable by Tenant hereunder shall not be abated.  If by reason of such occurrence, the Premises
shall be rendered untenantable only in part, Landlord shall, to the extent of
available insurance proceeds, cause the damage, except to Tenant’s equipment
and trade fixtures, to be repaired, and the Base Rent meanwhile shall be abated
proportionately as to the portion of the Premises rendered untenantable.  With respect to partial destruction, Landlord
shall promptly procure necessary plans and materials necessary to obtain a
building permit to complete reconstruction, apply for and obtain such building
permit, and commence construction within one hundred eighty (180) days
following the date of partial destruction, subject to a reasonable extension in
the event the building permit is delayed due to the action or inaction of the
issuing agency and shall complete repairs and restoration of the Premises to a
condition substantially the same as the condition of the Premises prior to the
damage within one hundred eighty (180) days after commencement.  If the Premises shall be rendered wholly
untenantable by reason of such occurrence, Landlord shall at its own expense
cause such damage, except to Tenant’s equipment and trade fixtures, to be
repaired and the Base Rent meanwhile shall be abated in whole.  Landlord’s obligations to repair pursuant to
this Section apply and extend only to the extent of Landlord’s original
obligation to construct, as defined in this Lease.  If fifty percent (50%) of more of the
Premises are rendered untenantable, then Landlord shall have the right, to be
exercised by notice in writing delivered to Tenant within sixty (60) days after
said occurrence, to elect not to reconstruct the destroyed Premises, and in
such event this Lease and the tenancy hereby created shall cease as of the date
of the said occurrence.  During any
period that Base Rent is abated in whole or part under this Section or
Section 15.01, Additional Rent shall likewise be abated. If this Lease is
terminated under this Section, all Deposits and other sums due under this Lease
shall be promptly refunded to Tenant after payment of all accrued but unpaid
rents, if any.  For purposes of the Article XIV and
Article XV below, the term “untenantable” shall mean a condition under
which Tenant cannot use the area in question in substantially the same manner
and to substantially the same extent as Tenant used such area prior to the
damage or taking, respectively.

 

Section 14.02                     Damage Near End of Term.

 

If the Premises are destroyed or materially damaged
during the last twelve (12) months of the Lease Term and the estimated time for
repair exceeds ninety (90) days (from commencement of construction), Landlord
may at its option cancel and terminate this Lease as of the date of occurrence
of such damage by giving written notice to Tenant of its election to do so
within thirty (30) days after the date of occurrence of such damage.  For the purpose hereof, the ninety (90) day
repair period shall be determined based upon a written report/ time estimate
prepared by an independent licensed general contractor obtained by Landlord.

 

Section 14.03                     Reconstruction of
Improvements.

 

Any reconstruction of the Premises under this
Section shall be in substantial conformity with the improvements as they
existed prior to the casualty.  Tenant,
at its sole cost and expense, shall be responsible for the repair and
restoration of all Tenant improvements and the replacement of its stock in
trade, trade fixtures, furniture, furnishings and equipment.  Tenant shall commence the installation of
fixtures,

 

16

 

equipment,
and merchandise promptly upon delivery to it of possession of the
Premises.  Landlord shall have no repair
obligations if the damage of destruction is due to Tenant’s negligence or
malfeasance.

 

ARTICLE XV

Eminent
Domain

 

Section 15.01                     Total and Partial
Condemnation.

 

If the entire Premises shall be appropriated or
taken under the power or threat of eminent domain by any public or quasi-public
authority, then this Lease shall terminate and expire as of the date of the
vesting of title thereto in such authority, and Landlord and Tenant shall
thereupon be released from any further liability or obligation hereunder
(except for any liability which has accrued prior to the date of such
termination).  If any part of the Leased
Premises shall be taken as aforesaid and such partial taking shall render that
portion not so taken untenantable, then this Lease shall terminate and expire
as aforesaid.  In addition, if more than
fifty percent (50%) of the net space in the Premises shall be taken as
aforesaid, Landlord or Tenant may, by written notice to the other party,
terminate this Lease, such termination to be effective as aforesaid.

 

If such partial taking is not so extensive as to
render the part of the Premises not so taken untenantable, then this Lease
shall continue in full force and effect except for the portion of the Premises
taken, except that the Rent and all other sums due hereunder by Tenant shall be
reduced in the same proportion that the net rentable square feet of space
contained in the part of the Premises taken bears to the original net rentable
square feet contained within the Premises leased to Tenant hereunder.  In such event, Landlord shall, upon receipt
of the award in condemnation, make all necessary repairs or alterations to the
building in which the Premises are contained so as to constitute the portion of
such building not taken as a complete architectural unit.  For the purposes hereof, the amount received
by Landlord shall mean that part of the award in condemnation for the value of
the diminished fee which is free and clear to Landlord of any collection by any
mortgagee, ground or underlying lessor or other party to any financing or
refinancing of the Premises.

 

Tenant shall have the right to claim from the
condemning authority, but not from Landlord, such compensation as may be
recoverable by Tenant in its own right for damage to Tenant’s business,
fixtures and improvements installed by Tenant at its own cost and expense
provided same does not reduce the amount to be paid to Landlord.

 

Whenever the Rent Payment shall be abated pursuant
to this Section 15.01, such abatement shall continue until the date which
shall be the first to occur of: (i) fifteen (15) days after Landlord
notifies Tenant that the Premises have been substantially repaired and restored;
or (ii) the date Tenant’s business operations are restored in the
Premises, as modified, if applicable.

 

Section 15.02                     Damages

 

In the event of any condemnation or taking as
provided above, whether whole or partial, Tenant shall not be entitled to any
part of the award, as damages or otherwise, for such condemnation.  Landlord shall receive the full amount of
such award, and Tenant hereby expressly waives any right or claim to any part
thereof.  Although all damages in the
event of any condemnation shall belong to Landlord, whether such damages are
awarded as compensation for diminution in value of the leasehold or the fee of
the Premises, Tenant shall have the right to claim and recover from the
condemning authority, but not from Landlord, such compensation as may be
separately awarded or recoverable by Tenant in Tenant’s own right on account of
any damage or loss to Tenant’s business by reason of the condemnation and for
or on account of any cost or loss of Tenant in removing Tenant’s merchandise,
furniture, fixtures, leasehold improvements and equipment from the Premises.

 

17

 

Section 15.03                     Sale Under Threat of
Condemnation.

 

A sale by Landlord to any authority having the power
of eminent domain, either under threat of condemnation or while condemnation
proceedings are pending, shall be deemed a taking under the power of eminent
domain for all purposes under this Article XV.

 

ARTICLE XVI

Default

 

Section 16.01                     Tenant’s Events of Default.

 

Upon the occurrence of one or more of the following
Events of Default, Landlord shall have any and all rights and remedies set
forth in this Lease:

 

(a)                                  In the event Tenant should fail to pay any
one or more monthly installments of Base Rent, or any other sums required to be
paid as Additional Rent, as and when they become due; provided that Tenant
shall receive written notice of payment default and have five (5) days
following said notice to pay the monthly installment (together with any
additional sums due under Section 16.02, if any) in full as to the first
of such occurrences of such payment default during any calendar year.  If Landlord provides one (1) payment
default notice in any calendar year no subsequent payment default during that
calendar year shall require notice nor be subject to any grace period.

 

(b)                                 In the event a petition in bankruptcy under
any present or future bankruptcy laws (including but not limited to
reorganization proceedings) be filed by or against Tenant or any guarantor of
this Lease and such petition is not dismissed within thirty (30) days from the
filing thereof, or in the event an order for relief under Title II, U.S.C. is
entered with respect to Tenant or any guarantor of this Lease is adjudged to be
bankrupt.

 

(c)                                  In the event an assignment for the benefit of
creditors is made by Tenant or any Guarantor of this Lease;

 

(d)                                 In the event of an appointment by any court
of a receiver or other court officer of the property of Tenant or of any
Guarantor of this Lease, and such receivership is not dismissed within thirty
(30) days from such appointment;

 

(e)                                  In the event Tenant removes, attempts to
remove, or permits to be removed from the Premises, except in the usual course
of trade, the goods, furniture, effects or other property of Tenant brought
thereon;

 

(f)                                    In the event Tenant, before the expiration of
the Lease Term, substantially vacates or abandons the Premises, i.e., fails to
occupy and use the Premises for thirty (30) days or more for causes other than
fire casualty or force majeure;

 

(g)                                 In the event Tenant uses the Premises for any
purpose other than the Permitted Use of Premises, or ceases to use the Premises
for the Permitted Use of the Premises;

 

(h)                                 In the event an execution or other legal
process is levied upon the goods, furniture, effects or other property of
Tenant brought on the Premises, or upon the interest of Tenant in this Lease,
and the same is not satisfied or dismissed within ten (10) days from such
levy;

 

(i)                                     In the event Tenant violates any other term,
condition or covenant on the part of Tenant to be performed hereunder, and
fails to commence the remedy of the same within ten (10) days after
written notice thereof is given by Landlord to Tenant and complete such remedy
within thirty (30) consecutive days after such written notice; provided,
however, that if such violation is not curable within thirty (30) days, then

 

18

 

the
Tenant shall be required to have commenced such remedy within such ten
(10) days subsequent to such notice and continuously pursues such cure
thereafter until completed.

 

Section 16.02                     Remedies of Landlord.

 

(a)                                  In the event of the occurrence of an Event of
Default by Tenant, Landlord, at Landlord’s option, may elect to do one or more
of the following:

 

1.             Accelerate all of the remaining Rent for the
Lease Term, in which event all Rent shall become immediately due and payable.

 

2.             Terminate this Lease and re-enter the
Premises and remove all persons and property from the Premises, either by
summary proceedings or by any other suitable action or proceeding at law, or
otherwise; or

 

3.             Without terminating this Lease, re-enter the
Premises and remove all persons and property from the Premises, either by
summary proceedings or by any other suitable action or proceeding at law, or
otherwise, and relet all or any part of the Premises.

 

4.             With respect to Tenant’s default under
provisions of Section 16.01(i), Landlord may undertake to cure such
event of default in a commercially reasonable manner and Tenant shall be liable
for Landlord’s expenses incurred in curing such event of default together with
interest at the rate of eighteen percent (18%) per annum, all of which shall be
due and payable as Additional Rent hereunder. 
Provided however, Landlord shall prior to incurring any expense
hereunder provide notice to Tenant of the planned curative action and
Landlord’s estimate of costs for such curative action and Tenant shall have ten
(10) days after receipt of such notice to undertake appropriate curative
action, failing which Landlord may do so as provided herein.

 

(b)                                 If Landlord elects to terminate this Lease:

 

1.             Landlord shall give written notice of such
termination, which shall take effect ten (10) days after such notice is
given, or such greater number of days as is set forth in such notice, fully and
completely as if the effective date of such termination were the date
originally set forth in this lease for the expiration of the Least Term;

 

2.             Tenant shall quit and peacefully surrender
the Premises to Landlord, without any payment by Landlord for doing so, on a
before the effective date of termination; and

 

3.             All Rent, including accelerated Rent, shall
become due and shall be paid up to the effective date of termination, together
with such expenses, including attorneys’ fees, as Landlord shall incur in
connection with such termination.

 

(c)                                  No receipt of monies by Landlord from Tenant
after termination of this Lease shall reinstate, continue, or extend the Lease
Term, affect any notice previously given by Landlord to Tenant, or operate as a
waiver of the right of Landlord to enforce the payment of Rent.

 

(d)                                 If Landlord terminates this Lease, Landlord
shall be entitled to retain, free of trust, all sums then held by Landlord
pursuant to any of the previous provisions of this Lease.  In the interim following such termination
until the retention of such sums by Landlord free of trust, such sums shall be
available to Landlord, but not to Tenant, pursuant to and for the purposes
provided by the terms and conditions of this Lease.

 

(e)                                  If Tenant does not pay rent by the fifth (5th)
day after it is due, a late charge of five percent (5%) of the delinquent
payment shall be due, effective as of the first day payment was to have been
made.  If the Landlord does not receive
the rent due by the fifth (5th) day after it is due, the Landlord,
at the Landlord’s

 

19

 

option,
may give written notice of late payment to the Tenant; provided, however, that
if such late payment notice is given, a late charge of ten percent (10%) of the
delinquent payment shall be due effective as of the first day payment was to
have been made.  If the Tenant does not
pay rent plus the late charge by the fifteenth (15th) day after the
due date, interest on the outstanding amount due shall accrue at the rate of
eighteen percent (18%) per annum on the total amount due and amounts
outstanding until the same, plus all accrued interest thereon, is paid in
full.  In the event any check, bank draft
or negotiable instrument given for any payment under this Lease shall be
dishonored at any time for any reason whatsoever not attributable to Landlord,
Landlord shall be entitled, in addition to any other remedy that may be
available, to an administrative charge of Two Hundred Dollars ($200.00).

 

(f)                                    In the event of any re-entry and/or
dispossession by summary proceedings or otherwise without termination of this
Lease:

 

1.                                       All Rent shall become due and shall be paid
up to the time of such re-entry and/or dispossession, together with such
expenses, including attorney’s fees, as Landlord shall incur in connection with
such re-entry and/or dispossession by summary proceedings or otherwise; and

 

2.                                       All Rent for the remainder of the Lease Term
may be accelerated and due in full, the collection of such sums being subject
to the provisions of Subsection 16.02(f), below; and

 

3.                                       Landlord may relet all or any part of the
Premises, either in the name of Landlord or otherwise, for a term or terms
which may, at Landlord’s option, be equal to, less than, or greater than the
period which would otherwise have constituted the balance of the Lease
Term.  In connection with such reletting:

 

(i)            Tenant or Tenant’s representative shall pay,
as Additional Rent, to Landlord, as they are incurred by Landlord, such
reasonable expenses as Landlord may incur in connection with reletting,
including, without limitation, legal expenses, attorneys’ fees, brokerage
commissions and expenses incurred in altering, repairing, and putting the
Premises in good order and condition and in preparing the Premises for
reletting;

 

(ii)           Tenant or Tenant’s representative shall pay
to Landlord, in monthly installments on the due dates for Rent payments for
each month of the balance of the Term, the amount by which any Rent payment
exceeds the net amount, if any, of the rents for such period collected on
account of the reletting of the Premises; any suit brought to collect such
amount for any month or months shall not prejudice in any way the rights of
Landlord to collect the deficiency for any subsequent month or months by a
similar action or proceeding;

 

(iii)          At Landlord’s option exercised at any time,
Landlord shall be entitled to recover immediately from Tenant, in addition to
any other proper claims, but in lieu of and not in addition to any amount which
would thereafter become payable under the preceding subsection, a sum equal to
the amount by which the sum of the Rent for the balance of the Lease Term,
discounted based upon the prime rate less two percent (2%) to its then-present
value, exceeds the net rental value of the Premises, discounted at the same
annual rate to its then-present value, for the balance of the Lease Term.  In determining such net rental value of the
Premises, the rent realized by any reletting of the Premises, if such reletting
is upon terms generally comparable to the terms of this Lease, shall be deemed
to be such net rental value;

 

20

 

(iv)          At Landlord’s option, Landlord may make such
commercially reasonable alterations in or upon the Premises as Landlord, in
Landlord’s sole judgment, considers advisable and necessary for the purpose of
reletting the Premises to an identifiable prospective tenant.  The making of such alterations shall not
operate or be construed to release Tenant from liability under this
Section 16.02.  The cost of all such
alterations and/or decorations shall be paid by Tenant to Landlord as
Additional Rent;

 

(v)           Landlord shall have, receive, and enjoy as
Landlord’s sole and absolute property, any and all sums collected by Landlord
as Rent or otherwise on reletting the Premises after Landlord shall resume
possession of the Premises as provided by this Lease, including, without
limitation, any amounts by which the sum or sums so collected shall exceed the
continuing liability of Tenant under this Lease.  If Landlord shall have accelerated Rent
payments and collected same from Tenant, and subsequently shall have relet the
Premises, then Landlord, after deducting all costs related to reletting,
including, but not limited to, those described or anticipated in this
Section 16.02, shall pay to Tenant the amount remaining which is collected
as Rent for each month, to the extent Landlord shall have previously received
the Rent for such month from Tenant.

 

(vi)          Landlord and Tenant agree that after the
commencement of suit for possession of the Premises or after final order or
judgment for the possession of the Premises, Landlord may demand, receive, and
collect any monies due or coming due without in any manner affecting such suit,
order, or judgment.  All such monies
collected shall be deemed to be payments on account of the use and occupation
of the Premises, or, at the election of Landlord, on account of Tenant’s
liability under this Lease;

 

(vii)         The words “re-enter” and “re-entry”, as used
in this Section 16.02, are not and shall not be restricted to their
technical legal meaning, but are used in the broadest sense;

 

(viii)        Landlord, in addition to other rights and
remedies it may have, shall have the right to (a) keep in place and use
all of the furniture, fixtures, and equipment in the Premises, including that
which is owned by or leased to Tenant, and (b) to remove all or any part
of Tenant’s property from the Premises and any property removed may, at
Landlord’s option be stored in any public warehouse or elsewhere at the cost of
and for the account of Tenant.  Landlord
shall not be responsible for the care or safekeeping of such property, whether
in transport, storage or otherwise. 
Tenant waives any and all claim against Landlord for loss, destruction
and/or damage or injury which may be occasioned by any of the aforesaid
acts.  Tenant shall be liable to Landlord
for costs incurred by Landlord in connection with any storage, transport or
other acts anticipated in this Section 16.02 and shall not harmless and
indemnify Landlord from all loss, damage, cost, expenses and liability in
connection therewith.  Landlord shall
also have the right to relinquish possession of all or any portion of such
furniture, fixtures, equipment and other property to any person (“Claimant”)
claiming to be entitled to possession of such property, and who presents to
Landlord a copy of any instrument represented to Landlord by Claimant to have
been executed by Tenant (or any predecessor of Tenant) granting Claimant the
right under various circumstances to take possession of such furniture,
fixtures, equipment or other property, without the necessity on the part of
Landlord to inquire into the authenticity of Tenant’s or Tenant’s predecessor’s
signature thereon and without the necessity of Landlord

 

21

 

making any nature of investigation or inquiry as to
the validity of the factual or legal basis upon which the Claimant purports to
act.  Tenant agrees to indemnify and hold
Landlord harmless from all cost, expense, loss, damage and liability incident
to Landlord’s relinquishment of possession of all or any portion of such
furniture, fixtures, equipment or other property to Claimant.  No re-entry or taking possession of the
Premises by Landlord shall be construed as an election on Landlord’s part to
terminate this Lease unless a written notice of such intention is given to
Tenant.  Notwithstanding any such
re-letting without termination, Landlord may at all times thereafter elect to
terminate this Lease for such previous default. 
Any such re-entry shall be allowed by Tenant without hindrance, and
Landlord shall not be liable in damages for any such re-entry, or guilty of
trespass or forcible entry; and

 

(ix)           Landlord shall be entitled to the issuance of
pre-judgment writs of replevin, pre-judgment distress writs, attachment writs,
break open orders, orders authorizing the locking of the Premises to protect
Landlord’s lien on personal property, fixtures and equipment, and such other
orders as may be issued by a court of law or equity without waiving any right
or remedy under Florida law.  Landlord
shall have the right to take possession as allowed under Chapter 78, Florida
Statutes.  The remedies described in this
Article XVI are cumulative and in addition to and without waiver of all
remedies allowed Landlord by this Lease or by case law, common law and statute
now or hereinafter in effect.  Tenant
agrees that the rights and remedies granted Landlord in this Article XVI
are commercially reasonable.

 

Section 16.03                     Waiver, Accord and
Satisfaction.

 

The waiver by Landlord or Tenant of any default of
any term, condition or covenant shall not be a waiver of any subsequent default
of the same or any other term, condition or covenant.  The consent or approval by Landlord to or of
any act by Tenant requiring Landlord’s consent or approval shall not be deemed
to waive or render unnecessary Landlord’s consent to or approval of any
subsequent similar act by Tenant.  No
re-entry hereunder shall bar the recovery of Rent or damages for the default of
any of the terms, conditions or covenants of Tenant.  The receipt of Rent after default or
condition broken, or delay on the part of Landlord to enforce any right under
this Lease shall not be deemed a waiver of any preceding default by Tenant of
any term, covenant or condition of this Lease, or a waiver of the right of
Landlord to terminate this Lease or to re-enter or to re-let the Premises.  No payment by Tenant or receipt by Landlord
of a lesser amount than the Rent herein stipulated to be paid shall be deemed
to be other than on account of the earliest stipulated Rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment as Rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord’s right to recover the
balance of such Rent or pursue any other remedy provided in this Lease or by
law or equity.  Any waiver of rights by
either party shall be deemed not only to be a waiver of such rights by such
party but also a waiver of such rights for and on behalf of such party’s
successors and assigns.

 

Section 16.04                     Tenant Claims.

 

If at any time Tenant shall claim Landlord is in
default, or assert any defense to payment of Base Rent, Additional Rent or
other sums due under this Lease, other than the defense of complete previous
payment, Tenant may not withhold any payments under this Lease but must, as a
condition precedent to the making of any such claim or defense either
(a) pay all disputed sums to Landlord, or (b) deposit all disputed
sums with the Manatee County Circuit Court. 
This provision is a material inducement to Landlord to execute this
Lease.

 

22

 

Section 16.05                     Liability of Landlord.

 

Tenant shall look solely to the estate and property
of Landlord in the Premises for the collection of any judgment, or in
connection with any other judicial process, requiring the payment of money by
Landlord in the event of any default by Landlord with respect to any of the
terms, covenants and conditions of this Lease to be observed and performed by
Landlord.  Landlord shall have no personal
liability in regard to the covenants, obligations, representations or
provisions of this Lease.  No other
property or estates of Landlord shall be subject to levy, execution or other
enforcement procedures for the satisfaction of Tenant’s remedies and rights
under this Lease.  Landlord shall not be
deemed in default with respect to failure to perform any of the terms,
covenants and conditions of this Lease if such failure to perform shall be due
to any strike, lockout, civil commotion, war-like operations, invasion,
rebellion, military power, sabotage, government regulations or controls,
inability to obtain any material or utilities, hurricane, windstorm, Act of
God, termination of underlying lease or any other cause beyond the control of
Landlord.

 

Section 16.06                     Legal Expense.

 

If either Landlord or Tenant employs the services of
any attorney to enforce any of its rights under this Lease or to collect any
sums due to it under this Lease or to remedy the breach of any covenant of this
Lease, regardless of whether suit be brought, the non-prevailing party shall
pay to the prevailing party reasonable attorney’s fees and costs for such
services.  Should suit be brought for the
recovery of possession of the Premises, or for Rent or any other sum due under this
Lease, or should Landlord or Tenant bring suit because of the default of any of
the other’s covenants under this Lease, the prevailing party’s reasonable
attorney’s fees and costs shall be paid by the non-prevailing party.

 

Section 16.07                     Landlord’s Default.

 

Landlord shall be in default under this Lease if
Landlord fails to comply with all terms and conditions of this Lease and such
failure shall continue for a period of thirty (30) days after Landlord’s
receipt of written notice thereof from Tenant, but if such failure shall be of
a type which cannot reasonably be cured within thirty (30) days, Landlord shall
not be in default provided that it has mobilized reasonable efforts to cure
such default within the initial thirty (30) day period and thereafter
diligently and continuously pursues completion of the remedial action to cure
such default.  In all events hereunder,
Tenant’s notice to Landlord of Landlord’s default shall declare with
specificity, Landlord’s alleged failure of performance.

 

Upon occurrence of any default by Landlord under this
Lease, Tenant shall have the option to pursue any one or more of the following
remedies:

 

(a)                                  Cure such default of Landlord, if applicable,
in which event Tenant may charge Landlord all costs and expenses incurred by
Tenant in connection with such cure including reasonable attorney’s fees and
costs and default interest at the rate of eighteen percent (18%) per annum on
any sums owed by Landlord to Tenant resulting from Tenant’s cure of Landlord’s
default (provided, however, before Tenant incurs any expense under the security
provision, Tenant shall provide written notice to Landlord of Tenant’s intended
curative actions, and estimate of Tenant’s costs associated therewith including
specifically any third party estimates for services to be provided to cure such
event of default and Landlord shall have ten (10) days from receipt of
such notice to undertake reasonable curative efforts, failing which Tenant may
complete its curative action as provided herein); or

 

(b)                                 Take such other action available to Tenant at
law or in equity, including but not limited to, the right to recover damages
incurred by Tenant as a result of Landlord’s default.  Tenant may off-set against any Rent,
Additional Rent, Premise Operating Cost or other sums of money due to Landlord
under the terms and provisions of this Lease, the amount of any damages, costs,
fees or expenses, including attorney’s fees and expenses awarded to Tenant by a
court of competent jurisdiction as a result of Landlord’s default.

 

23

 

ARTICLE XVII

Access by
Landlord

 

Section 17.01                     Right of Entry.

 

Upon twenty-four (24) hours’ advance notice,
Landlord and Landlord’s agents shall have the right to enter the Premises at
all times during normal business hours to examine the same, and to show them to
prospective purchasers or lessees of the Premises, and to make such repairs,
alterations, improvements or additions as Landlord may deem necessary or
desirable.  Prior to the expiration of
the then-current Lease Term, Landlord may exhibit the Premises to prospective
tenants or purchasers, and place upon the Premises the usual notices, ‘‘To Let”
or “For Sale,” or similar notices, which notices Tenant shall permit to remain
thereon without molestation.  In the
event of emergency, if Tenant shall not be personally present to open and
permit entry into the Premises and entry shall be necessary to deal with such
emergency, Landlord or Landlord’s agent may enter without in any manner
affecting the obligations and covenants of this Lease.  Landlord or its agent may enter the Premises
to make inspections, repairs, alterations or additions in or to the
Premises.  Landlord retains an easement
over and access to the unimproved portions of the Premises to install, use and
maintain pipes, lines and conduits in and through the Premises provided
Tenant’s use and occupancy is not unreasonably disturbed.  Notwithstanding the foregoing, Landlord may
access the joint use entryway at any time and without notice to Tenant for
further access to the 2nd floor.

 

ARTICLE XVIII

Holding
Over, Successors

 

Section 18.01                     Holding Over.

 

(a)                                  In the event Tenant remains in possession of
the Premises after the expiration of the Lease Term, and without the execution
of a new Lease or Lease modification and renewal, Tenant, at the option of
Landlord, shall be deemed to be occupying the Premises as a tenant at
sufferance at a monthly rental rate equal to two (2) times the Base Rent
payable during the last month of the Lease Term (the “Holdover Rent.”)  In addition to the Holdover Rent, Tenant
agrees to pay monthly all installments of Additional Rent as provided for in
this Lease.  Such tenancy shall be
subject to all the other conditions, provisions and obligations of this Lease.

 

(b)                                 Tenant and any present or future Guarantor
acknowledge that if Tenant or any other tenant shall fail to surrender the
Premises upon termination of the Lease Term (including but not limited to any
tenancy by sufferance described in Section 18.01(a). and any early
termination of either this Lease or of Tenant’s right to possession of the
Premises in the event of an Event of Default as described in Article XVI
or in the event of the termination of the underlying lease), then Tenant and
Guarantor(s), jointly and severally, shall be liable for all damages, actual
and consequential, arising from, growing out of or related to any such failure
to surrender the Premises, as well as for all other remedies in
Article XVI and elsewhere in this Lease.

 

Section 18.02                     Successors.

 

All rights and liabilities herein given to, or
imposed upon, the respective parties hereto shall extend to and bind the
several respective heirs, executors, administrators, successors, and permitted
assigns of said parties; and if there shall be more than one Tenant, they shall
be bound jointly and severally by the terms, covenants and agreements
herein.  In the event Landlord conveys
its interest in the Building and the purchaser assumes Landlords’ obligations
and covenants, Landlord shall thereupon be relieved of all further obligations
hereunder without alteration to the Lease terms.  The terms Landlord and Tenant in this Lease
include any successors to or assigns of the original Landlord and Tenant.

 

24

 

ARTICLE XIX

Quiet
Enjoyment

 

Section 19.01                     Landlord’s Covenant.

 

Landlord hereby represents and warrants to the
Tenant that it is the owner of fee simple title to the Premises and that it has
the right and authority to enter into this lease without the joinder or
approval of any person or entity. 
Landlord covenants and agrees that so long as the Tenant pays all Rent
due hereunder and performs and observes all the covenants and provisions
hereof, Tenant shall peaceably and quietly enjoy the full possession and use of
the Premises, without any hindrance or molestation from the Landlord or any
other party claiming by or through the Landlord.  Landlord further represents and warrants to
Tenant that as of the date of Tenant’s occupancy of the Premises under this
Lease, there shall exist unobstructed and adequate means of ingress and egress
to the Premises from an abutting public right-of-way and that the Premises are
as of the date hereof, free from all encumbrances, liens, defects in title,
tenancies, restrictions, easements or agreements which would prohibit or
restrict the use of all or a material part of the Premises for the use
contemplated herein.   The Landlord
further warrants to Tenant that Landlord has no knowledge of any planned or
commenced improvements which have resulted or which may result in a special
assessment or otherwise adversely or materially affect the Premises.

 

ARTICLE XX

Miscellaneous

 

Section 20.01                     Entire Agreement.

 

This Lease with all its Exhibits and Addendum,
constitutes all agreements, conditions and understandings between Landlord and
Tenant concerning the Premises and the Building.  All representations, either oral or written,
shall be deemed to be merged into this Lease Agreement.  Except as herein otherwise provided, no
subsequent alteration, waiver, change or addition to this Lease shall be
binding upon Landlord or Tenant unless reduced to writing and signed by them.

 

Section 20.02                     Relation of Parties.

 

Nothing in this Lease shall be construed as creating
a partnership or joint venture between Landlord and Tenant or any other party,
or to cause Landlord or Tenant to be responsible in any way for the debts or
obligations of Tenant or Landlord, respectively, or of any other party.

 

Section 20.03                     Successors and Assigns.

 

The terms and conditions of this Lease shall bind
the parties and their respective successors and assigns, and shall inure to the
benefit of the parties and their respective permitted successors and
assigns.  No rights, however, shall inure
to the benefit of Tenant unless the assignment to such assignee has been
approved by Landlord in writing as provided in Article XII hereof, if such
approval is required thereunder.  Nothing
contained in this Lease shall in any manner restrict Landlord’s right to assign
or encumber this Lease and in the event Landlord sells or transfers its
interest in the Premises and the purchaser or transferee assumes Landlord’s
obligations under this Lease, Landlord shall thereupon be relieved from all
further obligations under this Lease.

 

Section 20.04                     Notices.

 

(a)                                  Any notices by Tenant to Landlord shall be
served by certified mail, return receipt requested, or by nationally recognized
overnight delivery service, addressed to Landlord at the address specified in
Section 1.01 (a), and/or at such other addresses as Landlord may designate
by written notice.

 

25

 

(b)                                 Any notice by Landlord to Tenant shall be
served by certified mail, return receipt requested, or by nationally recognized
overnight delivery service, addressed to Tenant at the Premises or at such
address specified in Section 1.01 (b) or by delivery by Landlord to
the Premises or to such other address.

 

(c)                                  All notices given under this Lease shall be
in writing, and shall be effective and deemed to have been given only upon
receipt by the party to which notice is being given, said receipt being deemed
to have occurred upon hand delivery (or by posting if to Tenant’s Premises), or
upon such date as the postal authorities or overnight delivery service shall
show the notice to have been delivered or refused, or undeliverable at the last
address given by due notice to the party giving notice, as evidenced by the
return receipt.

 

Section 20.05                     Recording.

 

Tenant shall not record this Lease, or any
memorandum or short form thereof, without the written consent and joinder of
Landlord.  However, this Lease may be
recorded by Landlord at Landlord’s option. 
If this Lease is recorded by the Tenant without written consent of the
Landlord, then this Lease may, at any time, without notice and whenever the
Landlord so elects, be declared null and void.

 

Section 20.06                     Waiver of Jury Trial;
Counterclaims; Mediation.

 

LANDLORD AND TENANT, AND ANY GUARANTOR OF THIS
LEASE, WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY
EITHER OF THEM AGAINST THE OTHER ON ANY MATTERS ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, AND
TENANT’S USE OR OCCUPANCY OF THE PREMISES. 
Tenant, and any Guarantor, further agrees that it shall not interpose
any counterclaim or counterclaims, except compulsory counterclaims, in a
summary proceeds or in any action based upon nonpayment of rent or any other
payment required of Tenant, or any Guarantor, hereunder.  Upon Landlord’s, Tenant’s, or any Guarantor’s
request, Landlord, Tenant, and/or any Guarantor, shall participate in mediation
of a dispute between Landlord and Tenant, or any Guarantor.  The cost of a mediator shall be borne equally
by Landlord and Tenant, and/or Guarantor.

 

Section 20.07                     Time of Essence.

 

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

 

Section 20.08                     Rights Cumulative.

 

Any and all rights, remedies and options given in
this lease to Landlord and/or Tenant shall be cumulative and in addition to and
without waiver of any right or remedy given under any law (common law, case
law, statute, ordinance, regulation or other act of a Legal Authority) now or
hereafter in effect.  Landlord and/or
Tenant shall have, to the fullest extent permitted by law, the right to enforce
any rights or remedies separately and to pursue any lawful action or
proceedings to exercise or enforce any right or remedy without thereby waiving
or being barred or estopped from exercising and enforcing any other rights and
remedies by appropriate action or proceedings.

 

Section 20.09                     Authority.

 

Each party represents to the other that it has full
legal right, power, and authority to enter into, execute and perform this
Lease, and the parties executing this Lease have the full power and authority
to do so.

 

Section 20.10                     Intentionally Omitted.

 

26

 

Section 20.11                     Governing Law; Venue.

 

This Lease shall be construed in accordance with the
laws of the State of Florida.  The venue
of any litigation arising out of this Lease shall be Manatee County, Florida.

 

Section 20.12                     Terms and Headings.

 

The terms Landlord and Tenant as herein contained
shall include singular and/or plural, masculine, feminine and/or neuter, heirs,
successors, executors, administrators, personal representatives and/or assigns
wherever the context so requires or admits. 
The terms, provisions, covenants and conditions of this Lease are expressed
in the total language of this Lease Agreement and the section headings are
solely for the convenience of the reader and are not intended to be all
inclusive.  Any exhibit or attachment or
formally executed addendum or modification of this Lease shall be expressly
deemed incorporated by reference herein unless a contrary intention is clearly
stated therein.

 

Section 20.13                     Force Majeure.

 

Landlord and/or Tenant shall not be required to
perform any term, condition, or covenant in this Lease so long as such
performance is delayed or prevented by force
majeure, which shall mean acts of God, labor disputes (whether
lawful or not), material or labor shortages, restrictions or delays by any
governmental authority, civil riots, floods, adverse weather conditions not
reasonably anticipatable, unavoidable casualties and any other cause not
reasonably within the control of Landlord and/or Tenant and which by the
exercise of due diligence Landlord and/or Tenant is unable, wholly or in part,
to prevent or overcome.  Lack of money
shall not be deemed force majeure.  Any party claiming a force majeure delay hereunder shall
provide written notice to the opposing party within seven (7) days after
commencement of said delay specifying the cause and extent of delay.

 

Section 20.14                     No Waiver.

 

No waiver by either party of any breach by the other
party of any term or condition of this Lease, and no failure by either party to
exercise any right or remedy in respect of any such breach, shall constitute a
waiver or relinquishment for the future, or bar any right or remedy of such
party in respect of, any other breach of such term or condition or any breach
of any other term or condition of this Lease. 
No payment by Tenant or receipt of payment by Landlord of an amount less
than the full amount then due Landlord under this Lease shall be construed as
anything other than a partial payment of such sum then due and owing.  No endorsement or statement on any check or
letter or any form of payment of accompanying document shall be deemed to be an
accord or satisfaction or other form of settlement; Landlord may accept any
such payment without prejudice to its rights to recover the balance of sums due
and owing under this Lease or to pursue any other remedy permitted under this
Lease.

 

Section 20.15                     Survival.

 

All obligations of Tenant which are or may be
intended by their nature to be performed and/or complied with after the
expiration or earlier termination of this Lease shall survive such expiration
or termination.  Express provisions in
this Lease which require or permit survival in specific instances, or as to
specific obligations, shall not be deemed a limitation upon the generality of
this survival clause.

 

Section 20.16                     Provisions Severable.

 

Every provision of this Lease shall be valid and be
enforced to the fullest extent permitted by law.  If any provision of this Lease, or the
application of such provision to any person or circumstance, shall be
determined by appropriate judicial authority to be illegal, invalid, or
unenforceable to any extent, such provision shall, only to such extent, be
deemed stricken from this Lease as if never included.  The remainder of this Lease, and the
application of such provision to persons or circumstances other than those as
to which such provision is held illegal, invalid, or unenforceable, shall not
be affected.

 

27

 

Section 20. 17                  Mortgagee Protection.

 

Tenant agrees to give any mortgagees, by registered
mail, a copy of any Notice of Default served upon the Landlord, provided that
prior to such Notice, Tenant has been notified, in writing (by way of Notice of
Assignment of Rents and Leases, or otherwise), of the addresses of such
mortgagees.  Tenant further agrees that
if Landlord shall have failed to cure such default within the time provided for
in this Lease, then the mortgagees shall have thirty (30) days from receipt of
notice from Tenant within which to cure such default, or if such default cannot
be cured within that time, then such additional time as may be necessary if
within such thirty (30) days any mortgagee has commenced and is diligently
pursuing the remedies necessary to cure such default (including, but not
limited to, commencement of foreclosure proceedings, if necessary to effect
such cure), in which event this Lease shall not be terminated while such
remedies are being so diligently pursued.

 

Section 20.18                     Joint Obligation.

 

If there is more than one Tenant, the obligations
hereunder imposed upon Tenant shall be joint and several.  The individuals executing this Lease in their
representative capacities shall have no personal liability hereunder.

 

LANDLORD AND TENANT have executed this Lease, or have caused it
to be executed, as of the day and year designated on page one.

 

	 
	
  Signed, sealed and delivered

  	
  Landlord:

  	
  Gulfcoast Property No. 1, LLC, a

  	 

	 
	
  In the presence of:

  	
   

  	
  Florida limited liability company,

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
  By:

  	
   

  	
  /s/Hugh Miller

  	
   

  	 

	 
	
   

  	
   

  	
   

  	
   

  	
  Hugh Miller

  	
   

  	 

	 
	
   

  	
  Its:

  	
   

  	
  Managing Member

  	
   

  	 

	 
	
   

  	
  /s/Michael Hobbs

  	
   

  	
   

  	 

	 
	
  Print Name:

  	
   

  	
  Michael Hobbs

  	
   

  	
   

  	 

	 
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	 
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	 
	
  Print Name

  	
   

  	
   

  	
   

  	
   

  	 

	 
	
   

  	
   

  	 

	 
	
  (As to Landlord)

  	
   

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
  TENANT:

  	
  Peek Traffic Corp., a Delaware corporation

  	 

	
   

  	
   

  	
   

  
	 
	
   

  	
   

  	 

	 
	
   

  	
  /s/Michael Hobbs

  	
   

  	
  By:

  	
   

  	
  /s/Timothy O’Leary

  	
   

  	 

	 
	
  Print Name:

  	
   

  	
  Michael Hobbs

  	
   

  	
   

  	
   

  	
   

  	
  Timothy O’Leary

  	
   

  	 

	 
	
   

  	
  Its:

  	
   

  	
   

  	
  President

  	
   

  	 

	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	 
	
  Print Name:

  	
   

  	
   

  	
   

  	
   

  	 

	 
	
   

  	
   

  	
   

  	
   

  	
   

  	 

	 
	
  (As to Tenant)

  	
   

  	
   

  	 

																			

 

28

 

Exhibit D

 

GUARANTY
AGREEMENT

 

IN CONSIDERATION OF, and as an inducement for the
granting, execution and delivery of the foregoing Lease dated
September 22nd, 2005 (hereinafter called the “Lease”), by GULFCOAST
PROPERTY NO. 1, LLC, a Florida Limited Liability Company, the Landlord therein
named (hereinafter called the “Landlord”) to, PEEK TRAFFIC CORP., a Delaware
corporation, the Tenant therein named (hereinafter called the “Tenant”), and in
further consideration of the sum of Ten Dollars ($10.00) and other good and
valuable considerations paid by the Landlord to the undersigned, the receipt
and sufficiency of which is hereby acknowledged, the undersigned QUIXOTE
CORPORATION, a Delaware Corporation, (hereinafter called the “Guarantor”),
hereby guarantees to the Landlord the full and prompt payment of rent,
including, but not limited to, the fixed minimum rent, percentage rent, common
area charges, additional rent, and any and all other sums and charges payable
by the Tenant under said Lease and any extension or renewal thereof, and hereby
guarantees the full and timely performance and observance of all the covenants,
terms, conditions and agreements therein provided to be performed and observed
by the Tenant; and the Guarantor hereby covenants and agrees to and with the
Landlord that, if default shall at any time be made by the Tenant in the
payment of any such fixed minimum rent, percentage rent, common area charge,
additional rent, or any other such sums and charges payable by the Tenant under
said Lease, or if Tenant should default in the performance and observance of
any of the terms, covenants, provisions or conditions contained in said Lease,
the Guarantor shall and will forthwith pay such rent and other such sums and
charges to the Landlord and any arrears thereof, and shall and will forthwith
faithfully perform and fulfill all of such terms, covenants, conditions and
provisions, and will forthwith pay to the Landlord all damages that may arise
in consequence of any default by the Tenant under said Lease, including,
without limitation, all reasonable attorneys’ fees and disbursements incurred
by the Landlord or caused by any such default and/or by the enforcement of this
Guaranty.

 

This Guaranty is an absolute and unconditional Guaranty
of payment and of performance. It shall be enforceable against the Guarantor
without the necessity for any suit or proceedings on the Landlord’s part of any
kind or nature whatsoever against the Tenant and without the necessity of any
notice of non-payment, non-performance or non-observance or of any notice of
acceptance of this Guaranty or of any other notice or demand to which the
Guarantor hereby expressly waives; and, the Guarantor hereby expressly agrees
that the validity of this Guaranty and the obligations of the Guarantor
hereunder shall in no wise be terminated, affected, diminished or impaired by
reason of the assertion, or the failure to assert, by the Landlord against the
Tenant any of the rights or remedies reserved to the Landlord pursuant to the
provisions of the said Lease.

 

This Guaranty shall be a continuing Guaranty, and
the liability of the Guarantor hereunder shall in no way be affected, modified
or diminished by reason of any assignment, renewal, modification or extension
of the Lease or by reason of any modification or waiver of or change in any of
the terms, covenants, conditions or provisions of said Lease, or by reason of
any extension of time that may be granted by the Landlord to the Tenant or by
reason of any dealings or transactions or matter or thing occurring between the
Landlord and the Tenant whether or not notice thereof is given to the
Guarantor.

 

All of the Landlord’s rights and remedies under the
said Lease or under this Guaranty are intended to be distinct, separate and
cumulative and no such right and remedy therein or herein mentioned is intended
to be in exclusion of, or a waiver of, any of the others.

 

Guarantor warrants and represents that the
undersigned has a direct financial interest in the making of said Lease.

 

This Guaranty, and all the terms, covenants,
conditions, agreements, and provisions hereof, shall be binding upon, and shall
inure to the benefit of the respective heirs, executors, personal
representatives, successors, and assigns of the Landlord, Tenant and Guarantor.
Words of any gender used in the Lease shall be construed to include any other
gender; words in the singular number shall be construed to include the plural;
words in the plural number shall be construed to include the singular; and Tenant
and Landlord shall be construed to mean Lessee and Lessor, when the context or
sense of this Guaranty requires. Whenever the words Landlord, Tenant, or
Guarantor are used herein, they shall be construed to mean, and

 

29

 

the
terms, covenants, conditions, agreements, and provisions shall be binding upon,
not only the named Landlord, Tenant, and Guarantor, but also the respective
heirs, executors, personal representatives, successors, and assigns of the Landlord,
Tenant and Guarantor.

 

IN WITNESS WHEREOF, the Guarantor has executed this
Agreement on the day and year first above written.

 

	
  IN THE PRESENCE OF:

  	
  GUARANTOR:

  	 

	 
	
   

  	
  QUIXOTE CORPORATION

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	
   

  	
  /s/Erika Lopez

  	
   

  	
  By:

  	
   

  	
  /s/Joan R. Riley

  	
   

  	 

	
   

  	
  Its: 

  	
   

  	
  Vice President & General Counsel

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  /s/Leslie Jezuit

  	
   

  	
   

  	 

										

 

STATE
OF ILLINOIS

COUNTY
OF COOK

 

The foregoing instrument was acknowledged before me
this 19th day of September, 2005, by Joan R. Riley, as Vice President and
General Counsel of QUIXOTE CORPORATION, who is personally known to me.

 

 

	
   

  	
   

  	
  /s/Charlotte M. Castine

  	
   

  
	
   

  	
  Notary Public, State of Florida

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “OFFICIAL SEAL”

  
	
   

  	
  CHARLOTTE M. CASTINE

  
	
   

  	
  NOTARY PUBLIC, STATE OF ILLINOIS

  
	
   

  	
  MY COMMISSION EXPIRES 01-05-09

  

 

30

 

Exhibit E

 

Estimated Monthly Payments

 

	
  Monthly Rent:

  	
   

  	
  $

  	
  27,167

  	
   

  
	
  Insurance:

  	
   

  	
  $

  	
  1,232

  	
   

  
	
  Property
  Tax:

  	
   

  	
  $

  	
  6,026

  	
   

  
	
  Association
  Fees:

  	
   

  	
  $

  	
  226

  	
   

  
	
  Sub-Total

  	
   

  	
  $

  	
  34,651

  	
   

  
	
  Tax:
  6.5%

  	
   

  	
  $

  	
  2,252

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL Rent Per Month

  	
   

  	
  $

  	
  36,903

  	
   

  

 

Note:  Insurance and Assoc. Fees based
on May 2005 actuals.

 

31Exhibit 10.1

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF
THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.  CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXCLUSIVE LICENSE
AND MARKETING AGREEMENT

 

This Exclusive License and Marketing Agreement is made
and entered into this 21st day of July, 2005, by and between Depomed, Inc.
(“Depomed”), a California corporation having an address at 1360 O’Brien
Drive, Menlo Park, California 94025, and Esprit Pharma, Inc., (“Esprit”),
a Delaware  corporation having an address
at 2 Tower Center Boulevard, East Brunswick, New Jersey  08816.

 

RECITALS

 

A.                                   Depomed
is the owner of original processes, patents and know-how for the development
and manufacture of, and has marketing rights in the Territory (as defined
below) to, the Licensed Product (as defined below).

 

B.                                     Esprit
is engaged in the business of distributing and marketing pharmaceutical
products.

 

C.                                     Esprit
desires to obtain rights to market and sell the Licensed Product in the
Territory.

 

It is therefore agreed as follows:

 

1.                                       Definitions.

 

The terms defined in this Article 1 shall, for
all purposes of this Agreement, have the following meanings:

 

“Active Ingredient” means the chemical compound
known as ciprofloxacin hydrochloride.

 

“Affiliate” means any corporation or other
entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the designated Party
but only for so long as such relationship exists.  For the purposes of this section, “Control”
mean ownership of at least fifty percent (or such lesser percent as may be the
maximum that may be owned by foreign interests pursuant to the laws of the
country of incorporation) of the shares of stock entitled to vote for directors
in the case of a corporation and at least fifty percent (or such lesser percent
as may be the maximum that may be owned by foreign interests pursuant to the
laws of the country of domicile) of the interests in profits in the case of a
business entity other than a corporation.

 

“Call” means a face-to-face contact between a member of
Esprit’s sales force and a prescriber or potential prescriber of Licensed
Product during which relevant characteristics of Licensed Product are described
by the member of Esprit’s sales force.

 

 

“Distribute” or “Distribution” means the
distribution of, and fulfillment of customer orders for, Licensed Product.

 

“Effective Date” means the date first referred
to above.

 

“Esprit Change of Control” means (i) the
acquisition by any person or group (as defined in Section 13(d)(3) or
14(d)(2) of the Securities and Exchange Act of 1934, as amended) of direct
or beneficial ownership (as defined in Rule 13d-3 under the Securities and
Exchange Act of 1934, as amended) of more than fifty percent of the voting
stock of Esprit; (ii) any merger, amalgamation or consolidation of Esprit
or an Affiliate of Esprit with another corporation or other entity in which the
stockholders of Esprit, immediately prior to such amalgamation, consolidation,
or merger, own less than fifty percent of the voting stock of the surviving
corporation immediately after such transaction; or (iii) the sale or
exclusive license of substantially all of the assets of Esprit.

 

“FDA” means the United States Food and Drug
Administration or any successor United States governmental agency performing
similar functions with respect to pharmaceutical products.

 

“First Commercial Sale”
means the date of the first commercial sale of Licensed Product in the
Territory.

 

“GR System” means
Depomed’s delivery system designed to be retained in the stomach for an
extended period of time while that delivery system delivers the incorporated
drug or drugs, as described in the Patent Rights.

 

“IND” means an Investigational New Drug
Application filed with the FDA.

 

“Know-How” means all inventions, discoveries,
trade secrets, improvements and information not in the public domain, whether
or not patented or patentable (but excluding Patent Rights), together with all
experience, data, formulas, procedures and results, and improvements thereon,
now or hereafter developed or acquired by and proprietary or licensed with
right to sublicense to Depomed on the Effective Date or which are developed or
acquired during the term of and in connection with this Agreement, which relate
to or are used in conjunction with the development, manufacture or use of the
Licensed Product.

 

“Licensed Product” means the extended release
ciprofloxacin HCl pharmaceutical product known as ProquinTM XR
comprised of the GR System and the Active Ingredient.

 

“Market” means to promote, Distribute, market,
advertise, sell or offer to sell.

 

“NDA” means a New Drug Application or
application for approval to market submitted to the FDA.

 

“Net Sales” means the actual gross amount
invoiced on sales of the Licensed Product in the Territory by Esprit, its
Affiliates, sublicensees and assigns to independent, unrelated Third
Parties during a calendar year in bona fide arms length transactions, less the
following deductions 

 

2

 

allowed and taken by Third Parties and not otherwise
recovered by or reimbursed to Esprit, its Affiliates, sublicensees or assigns: (a) freight,
insurance and other transportation charges to the extent added to the
sales price and set forth separately as such on the total amount invoiced;
(b) any sales, use, value-added, excise taxes and/or duties or allowances
on the selling price of the Licensed Product which fall due and are paid as a
consequence of such sale; (c) chargebacks, trade, quantity and cash
discounts and rebates actually allowed and taken to the extent customary in the
trade, including, without limitation, governmental rebates; (d) allowances
or credits, including but not limited to, allowances or credits to customers on
account of rejection, defects or returns of the Licensed Product or
because of a retroactive price reduction, and such other deductions (including without
limitation shortage deductions) actually taken by customers that are customary
in the trade; and (e) bad debt. Net Sales shall not include a sale or
transfer to an Affiliate, sublicensee and assign or if done for clinical,
regulatory or governmental purposes where no consideration is received but the
resale by such Affiliate, sublicensee, or assign shall be considered a sale of
such Licensed Product.

 

“Party” means Depomed or Esprit, and “Parties”
means both Depomed and Esprit and their Affiliates.

 

“Patent Rights” mean any patent application or
issued patent relating to the Licensed Product or improvement thereof or to
methods for making or using Licensed Product or improvement thereof, which
rights are owned or acquired by or licensed to Depomed as of the Effective Date
or which are developed or acquired by Depomed during the term of this
Agreement, in the United States, including any addition, continuation,
continuation-in-part, or division thereof or any substitute application
thereof, any reissue or extension of any such patent, and any confirmation
patent, registration patent revalidation patent, or patent of addition based on
any such patent.  All United States
patents and patent applications currently within this definition and applicable
to this Agreement are set forth in Exhibit A, which Exhibit shall
be amended as necessary to reflect changes or additions to the Patent Rights.

 

“Primary Care Market” means the market for the
Product in the Territory, excluding the Urology Market.

 

“Primary Position Detail Call” means a Call in
which (i) Licensed
Product is the first product detailed during the Call, (ii) a majority of
the total time of the Call is spent on the presentation of Licensed Product,
and (iii) key Licensed Product attributes are presented.

 

“Proprietary Information” means any and all
scientific, clinical, regulatory, marketing, financial and commercial
information or data, whether communicated in writing, orally or by any other
means, which is owned and under the protection of one Party and is provided by
that Party to the other Party in connection with this Agreement.

 

“Regulatory Approval” means the permission or
consent granted by the FDA for the Marketing of the Licensed Product in the
Territory.

 

“Regulatory Data” means data including, but not
limited to, medical, toxicological, pharmacological and clinical data to the
extent necessary to, required for, or included in any 

 

3

 

governmental regulatory filing to obtain or maintain
Regulatory Approval to Market the Licensed Product, including post-approval
reports, filings and submissions.

 

“Secondary Position
Detail Call” means a Call in which key Licensed Product attributes are
presented after a detail of another product.

 

“Supply Agreement” means the Supply Agreement,
dated as the date of this Agreement, by and between Depomed and Esprit related
to the supply of Licensed Product by Depomed to Esprit.

 

“Territory” means the United States, Puerto
Rico and the possessions of the United States.

 

“Third Party(ies)” means a person or entity who
or which is neither a Party nor an Affiliate of a Party.

 

“Trademark(s)” means
the Proquin® XR trademark,
for which Depomed has filed an application for federal registration with the
United States Patent and Trademark Office (Ser. No. 78/356,939, which was
approved for registration on April 22, 2005), and all related domain names
identified on Exhibit A, and other common law trademark rights related
thereto.

 

“Urology Market” means the market for the
Licensed Product comprising all urologists in the Territory.

 

“Valid Claim” mean a claim of an unexpired
issued patent falling within Patent Rights which shall not have been withdrawn,
canceled, or disclaimed nor held invalid by a court, tribunal, arbitrator or
governmental agency of competent jurisdiction in a final or unappealed or
unappealable decision.

 

2.                                       License Grant and Royalties.

 

2.1                                 License Grant. 
Depomed hereby grants to Esprit an exclusive license in the Territory
under the Patent Rights, with the right to grant sublicenses, to Market the
Licensed Product.

 

2.2                                 Trademarks.  Esprit shall
have the right to Market the Licensed Product under the Trademark.  Except as set forth in the preceding
sentence, nothing herein shall be deemed to give either Party any rights to the
trademarks of the other Party, provided that Esprit may freely refer to the
trademark “GR System” with respect to the Licensed Product so long as it is
used in a form that protects the proprietary interests of Depomed in such
trademark.

 

2.3                                 Royalties.

 

(a)                                  In consideration for the licenses granted
herein, Esprit will pay to Depomed an earned royalty of:

 

4

 

(i)                                     fifteen percent (15%) of the first Twenty
Million Dollars ($20,000,000) of aggregate Net Sales of Licensed Product in the
Territory in each calendar year;

 

(ii)                                  seventeen and one-half (17.5%) of the
next Twenty Million Dollars ($20,000,000) of aggregate Net Sales of Licensed
Product in the Territory in each calendar year;

 

(iii)                               twenty percent (20%) of the next Forty Million Dollars
($40,000,000) of aggregate Net Sales of Licensed Product in the Territory in
each calendar year; and

 

(iv)                              twenty-five percent (25%) of aggregate
Net Sales of Licensed Product in the Territory in excess of Eighty Million
Dollars ($80,000,000) in each calendar year.

 

(b)                                 Notwithstanding the foregoing provisions
of Section 2.3(a), Depomed will be entitled to the minimum royalty
payments set forth on Exhibit B (each, a “Minimum Annual Royalty
Amount”) for each calendar year of the term of this Agreement beginning on
or after January 1, 2006); provided, however, that any minimum annual
royalty payment payable pursuant to this Section 2.3(b) shall be
pro-rated for any portion of any calendar year of the term of this Agreement
during which Depomed fails to meet its supply obligations to Esprit pursuant to
the Supply Agreement.

 

(c)                                  Esprit shall pay earned royalties in each
case for the greater of ten years from
the First Commercial Sale of the Licensed Product or until the Licensed Product
is no longer covered by a Valid Claim of an issued patent included in Patent
Rights.  If the Licensed Product was not
or is no longer covered by a Valid Claim but the ten-year period has not expired, then the aggregate annual Net
Sales that are subject to payment of earned royalty shall be reduced to one-half of such actual Net Sales (on
a pro rated basis for any partial year during which such reduced royalty rate
is in effect).  Upon the expiration of
such period as provided in this Section 2.3, Esprit shall have a fully
paid-up nonexclusive license to Market the Licensed Product in the Territory.

 

2.4                                 Payment of Royalties. 
Earned royalty payments under Section 2.3 shall be made, to the
extent permitted by law, within thirty days following the end of each calendar
quarter, and each payment shall include royalties which shall have accrued
during said calendar quarter.  The
quarterly payment for the fourth quarter of each calendar year beginning on January 1,
2006 shall be accompanied by a payment equal to the excess of the Minimum
Annual Royalty Amount applicable to such calendar year over the aggregate
amount of earned royalty payments for such calendar year otherwise payable
under Section 2.3.  Such quarterly
payments shall be accompanied by a report setting forth separately the Net
Sales of Licensed Product sold during said calendar quarter and the calculation
of royalties payable for such calendar quarter.

 

2.5                                 No Multiple Royalties. 
No multiple royalties shall be payable because the Licensed Product, its
manufacture, use or sale is or shall be covered by more than one Patent Right.

 

5

 

2.6                                 Records.  Esprit and
its Affiliates, sublicensees and assigns shall keep and maintain records of Net
Sales.  Such records shall be open to
inspection at any mutually agreeable time during normal business hours within
three years after the royalty period to which such records relate by an
independent certified public accountant reasonably acceptable to Esprit but
selected by Depomed.  Said accountant
shall have the right to examine the records kept pursuant to this Agreement and
report findings of said examination of records to Depomed only insofar as it is
necessary to evidence any error on the part of Esprit.  This right of inspection shall be exercised
only once for any calendar year.  The
cost of such inspection shall be borne by Depomed unless the result of such
examination is the determination that Net Sales have been understated by at
least three percent for any calendar year, in which event Esprit shall bear the
reasonable cost of such inspection.

 

2.7                                 Licensed Product Derivatives. 
Any product that is sold by Esprit or an Affiliate, sublicensee or
assign of Esprit which is a derivative, analogue or modification of the
Licensed Product or which is included in the Patent Rights shall be considered
to be Licensed Product, on the Net Sales of which Esprit shall owe Depomed
royalties as set forth in Section 2.3.

 

2.8                                 Judgments.  In the event
of a judgment in any suit arising from or related to the Patent Rights or the
Trademark requiring Esprit to pay damages or a royalty to, grant a sublicense
to, or enter into a cross-licensing arrangement with, a Third Party or in the
event of a settlement of such suit consented to by Depomed (which consent shall
not be unreasonably withheld) requiring damages or royalty payments to be made,
sublicenses to be granted, or cross-licenses to be entered into, the future
royalty payments due to Depomed from the applicable Net Sales under this Agreement
(and the amount of any Minimum Annual Royalty Payment applicable pursuant to Section 2.3)
shall be correspondingly reduced by the amounts due under the requirement of
such judgment or under the terms of such settlement but not by more than fifty
percent thereof.

 

2.9                                 No Inconsistent License Grant. 
Except as expressly permitted, and only to the extent permitted, under Section 5.3(a) of
this Agreement, during the term of this Agreement, Depomed shall not grant to
any Third Party a license in the Territory under the Patent Rights to Market
the Licensed Product.

 

3.                                       License Fees.

 

Esprit shall make the following license fee payments
to Depomed:

 

(a)                                  Five Million Dollars ($5,000,000) on the
Effective Date;

 

(b)                                 Twenty-Five Million Dollars ($25,000,000)
on or before the fifteenth day after the Effective Date;

 

(c)                                  Ten Million Dollars ($10,000,000) on the
first anniversary of the Effective Date; and

 

(d)                                 Ten Million Dollars ($10,000,000) on the
second anniversary of the Effective Date.

 

6

 

4.                                       Distribution; Supply; Non-competition.

 

4.1                                 Distribution in the Territory. 
Esprit shall be responsible for the Distribution of Licensed Product in
the Territory.

 

4.2                                 Supply.  Esprit shall
purchase from Depomed, on the terms and subject to the conditions set forth in
the Supply Agreement, all of Esprit’s requirements of the Licensed Product.

 

4.3                                 Order Entry.  Esprit or its third party contractor shall
provide all order entry, customer service, reimbursement management, warehousing,
physical distribution, invoicing, credit and collections and other related
facilities and services for the Distribution of Licensed Product in the
Territory.  Esprit or its third party
contractor shall be exclusively responsible for accepting and filling purchase
orders for Licensed Product and for processing billing and returns with respect
to Product.

 

4.4           Non-competition.  During the Term of this Agreement, neither
Esprit nor Depomed shall, whether for its own account or for the account or benefit
of any Third Party, offer for sale, sell, distribute or otherwise commercialize
in the Territory any product that includes the Active Ingredient, except as
contemplated by this Agreement.

 

5.                                       Diligence Obligations and Covenants of
Esprit.

 

5.1                                 Diligence Obligations of Esprit. 
Throughout the term of the Agreement, Esprit shall use its commercially
reasonable efforts to develop an active market for, and to Market, the Licensed
Product in the Territory.  In connection
with such obligations, and not intended as a limitation on the range of
obligations of the foregoing sentence, Esprit shall use its commercially
reasonable efforts to:

 

(a)                                  cause the First Commercial Sale to occur
no later than November 1, 2005 or, if later, within 15 days after Licensed
Product is available in commercial quantities pursuant to the terms of the
Supply Agreement;

 

(b)                                 provide a professional field sales force
sufficient to cover the Primary Care Market in the Territory from and after the
date that is six months after the First Commercial Sale (which sales force
shall consist of at least [***]
full-time representatives);

 

(c)                                  provide a professional field sales force
sufficient to cover urologists responsible for at least ninety percent of
ciprofloxacin HCl prescriptions written in the United States (which sales force
shall consist of at least [***]
full-time representatives from and after November 1, 2005 or, if later,
within 15 days after Licensed Product is available in commercial quantities
pursuant to the terms of the Supply Agreement);

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF
THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.  CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

7

 

(d)                                 build an active and continuous marketing
and sales program capable of addressing the market opportunity for the Licensed
Product in the Territory;

 

(e)                                  accept, and Distribute in response to,
customer orders and requests for Licensed Product in the Territory so as not to
result in shortages of Licensed Product in the Territory;

 

(f)                                    carry adequate inventories of Products to
service all accounts within the Territory;

 

(g)                                 provide a dedicated product specialist,
customer support and technical support for the Licensed Product at a level
reasonably calculated to assure sales performance, customer satisfaction
(including without limitation (A) establish and maintain a sufficiently
detailed tracking system to permit successful tracking of Products in the event
of a recall and (B) keep a record of all customer complaints and
communicate promptly to Depomed all such complaints);

 

(h)                                 provide reasonable and adequate
advertising and promotion capable of addressing the market opportunity for the
Licensed Product in the Territory (and, with respect to the period beginning on
the Effective Date and ending on December 31, 2006, consistent with the
marketing budget attached hereto as Exhibit C); and

 

(i)                                     provide sufficient samples of Licensed
Product for its field sales force.

 

5.2                                 Compliance with Regulations. 
Esprit shall perform its obligations in respect of the Distribution of
Licensed Product in the Territory and the Marketing of Licensed Product in the
Territory (a) only in a manner which is consistent with FDA and all other
applicable regulatory approvals or requirements which are then in effect with
respect to the Licensed Product and (b) in compliance with all applicable
laws, restrictions and regulations of the FDA, the Department of Commerce and
any other United States, state, local, or applicable agency or authority.  Esprit shall (a) limit
its claims of efficacy and safety for Licensed Product to those that are
consistent with approved promotional materials and FDA-approved prescribing
information for Licensed Product in the Territory, (b) not add, delete or
modify claims of efficacy and safety in the Marketing of Licensed Product under
this Agreement from those claims of efficacy and safety that are consistent
with the FDA-approved prescribing information and applicable law and (c) Market
the Licensed Product in adherence to applicable laws and in compliance with the
then current Pharmaceutical Research and Manufacturers of America Code on
Interactions with Healthcare Professionals.

 

8

 

5.3                                 Sales Force.

 

(a)                                  Establishment
of Primary Care Sales Force.  In the event that Esprit fails to provide a professional field sales force
of at least [***] representatives
to cover the Primary Care Market in the Territory within six months after the
First Commercial Sale as required pursuant to Section 5.1(b), then Esprit
shall present to Depomed a plan of action to provide such a sales force of at
least [***] representatives within
nine months after the First Commercial Sale. 
If, as of the nine-month anniversary of the First Commercial Sale,
Esprit has not established and maintained a professional field sales force of
at least [***] representatives to
cover the Primary Care Market in the Territory, then, in Depomed’s sole
discretion, Depomed may, but shall have no obligation to, elect to either (i) convert
the license granted pursuant to Section 2.1 into a non-exclusive license
with respect to the Primary Care Market (in which event the license shall
remain exclusive with respect to the Urology Market), or (ii) terminate
the license granted pursuant to Section 2.1 with respect to the Primary
Care Market.  Either such election shall
take effect immediately upon written notice from Depomed to Esprit.  In the event that Depomed makes either such
election, the Parties shall negotiate in good faith any necessary or desirable
modifications to this Agreement (including without limitation modifications
with respect to the Distribution of the Licensed Product and the elimination of
Depomed’s non-competition obligations set forth in Section 4.4 above with
respect to the Primary Care Market) to ensure that Depomed receives the royalty
payment required pursuant to Section 2.3 with respect to Net Sales within
the Urology Market and that Esprit is reasonably compensated for any
Distribution of Licensed Product in respect of sales of Licensed Product not
made by Esprit or its sublicensees.

 

(b)                                 Maintenance of Sales Force. 
The parties acknowledge and agree that Depomed shall have the right to
terminate this Agreement for “Cause” pursuant to Section 15.2 with respect
to a breach by Esprit of its obligation to (i) maintain a sales force of
at least [***] representatives
(after the nine month anniversary of the First Commercial Sale) to cover the
Primary Care Market as required by Section 5.1(b) or (ii) maintain
a sales force of at least [***]
representatives to cover the Urology Market only after Depomed notifies Esprit
of such breach pursuant to Section 15.2 and Esprit fails to cure such breach
within sixty days after such notice from Depomed, as contemplated by Section 15.2.

 

5.4                                 Details Following an Esprit Change of
Control.  From and after the occurrence of an Esprit
Change of Control or any assignment of this Agreement by Esprit pursuant to Article 17,
during each calendar year of the term of this agreement, Esprit (or its
successor in interest or assignee, as applicable) shall provide the following
number of minimum Calls: (a) [***];
(b) [***]; (c) [***]; and (d) [***].  The foregoing minimum call obligations shall
be pro-rated for the calendar year in which the Esprit Change of Control or
assignment occurs, or any other partial calendar year of the term of this
Agreement.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF
THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.  CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

9

 

6.                                       Promotional Materials.

 

Esprit shall limit its statements, discussions and
claims regarding the Licensed Product, including those as to safety and
efficacy, to those which are consistent with the Licensed Product labeling and
the promotional materials related to the Licensed Product.

 

7.                                       Manufacturing.

 

Nothing in this Agreement
is intended to grant to Esprit any rights to manufacture, have manufactured by
any Third Party, or otherwise produce Licensed Product.  Any such rights shall be granted only
pursuant to the Supply Agreement.

 

8.                                       Confidentiality.

 

Except as specifically authorized by this Agreement,
each Party shall, for the term of this Agreement and for five years after the
expiration or termination of this Agreement, keep confidential, not disclose to
others and use only for the purposes authorized herein all Proprietary
Information provided by the other under this Agreement; provided, however, that
the foregoing obligations of confidentiality shall not apply to the extent that
any such information is (i) already known to the recipient at the time of
disclosure as evidenced by its prior written records; (ii) published or
publicly known prior to or after disclosure other than through unauthorized
acts or omissions of the recipient; (iii) disclosed in good faith to the
recipient by a Third Party entitled to make such disclosure; or (iv) independently
developed by or on behalf of the recipient without recourse to the disclosure
herein as documented in writing. 
Notwithstanding the aforesaid, the recipient may disclose Proprietary
Information to governmental agencies as required by law, and to vendors and
clinical investigators having a need to know and as may be necessary for the
recipient to perform its obligations hereunder, but only if such disclosure to
vendors and, where practicable, to clinical investigators is in accordance with
a written agreement imposing essentially the same obligation of confidentiality
on such Party as is imposed upon the recipient hereunder.

 

9.                                       Regulatory Affairs

 

9.1                                 Regulatory Responsibility. 
Effective as of thirty days after the Effective Date, and thereafter
during the term of this Agreement, Esprit shall have full control and
authority, with full responsibility over, commercialization of Licensed Product
in the Territory, and all such activity shall be undertaken at Esprit’s expense.
Esprit will use commercially reasonable efforts in undertaking investigations
and actions required to maintain appropriate governmental approvals to market
Licensed Product in the Territory. 
During the thirty day period beginning on the Effective Date, Depomed
will cooperate with Esprit to transfer to Esprit such materials and
documentation reasonably requested by Esprit, and provide Esprit with such
other assistance as may be reasonably requested by Esprit, to facilitate the
transfer to Esprit of the responsibilities set forth in this Section 9.1.

 

9.2                                 Transfer of NDA. 
Within twenty days after receiving Esprit’s written request, Depomed
shall provide Esprit with a letter addressed to FDA authorizing and requesting
that 

 

10

 

each of the NDA and IND owned by Depomed and
pertaining to Licensed Product in the Territory be transferred, in its
entirety, to the name of Esprit.  Depomed
shall provide Esprit with a copy of the letter and Esprit shall immediately
send a letter to FDA accepting the NDA and IND. 
Depomed will be entitled to copy and reference the NDA and IND, and any
safety database or other safety information related to the Licensed Product,
outside the Territory freely as it determines. Each Party will notify the other
immediately by telephone (with prompt written follow-up) of any inquiry,
contact or communication received from any governmental regulatory agency or
other official body (within or outside of the Territory) which relates to
Licensed Product or any component or ingredient thereof, and will promptly
furnish the other party with copies of all written communications relating
thereto sent to or received from such regulatory agency.  Esprit shall consult with Depomed prior to
making a material modification to the NDA or IND pertaining to the Licensed
Product, and shall consider in good faith Depomed’s views with respect to the
impact any such modification may have on the marketing and commercialization of
the Licensed Product outside of the Territory. 
Esprit shall provide, at Depomed’s expense, such cooperation as may be
reasonably necessary to assist Depomed in referencing the NDA or IND pertaining
to Licensed Product or safety information related to Licensed Product in
connection with regulatory applications and approvals for Licensed Product
outside of the Territory made by Depomed or Depomed’s licensees; provided that,
in Esprit’s reasonable judgment, such assistance is not unduly burdensome to
Esprit’s senior management.  In furtherance
and not in limitation of the immediately preceding sentence, Depomed may
request that Esprit supplement, at Depomed’s expense, the NDA related to the
Licensed Product (e.g., to include additional data related to the Licensed
Product) in connection with regulatory applications and approvals for Licensed
Product outside of the Territory, which modifications will be subject to the
written approval of Esprit, not to be unreasonably withheld.

 

9.3                                 Maintenance of NDA. 
Esprit shall bear responsibility for, and shall bear all costs related
thereto, to take such actions as may be necessary, in accordance with accepted
business practices and legal requirements, to obtain and maintain the
authorization and/or ability to Market the Licensed Product in the Territory.  Any required Phase IV studies related to the
Licensed Product shall be conducted by Esprit.

 

9.4                                 Communications with Regulatory
Authorities.  Esprit shall have the responsibility, and
shall bear all costs related to, communications with any government agencies to
satisfy its requirements regarding the authorization and/or continued
authorization to Market the Licensed Product in commercial quantities in the
Territory.  Depomed shall promptly notify
Esprit of any inquiry or other communication that it receives from the FDA
concerning the Licensed Product.  Esprit
shall handle all communications with the FDA concerning the Licensed Product
(other than any such communications by or on behalf of Depomed required to be
made in connection with the manufacture of Licensed Product by or on behalf of
Depomed), including but not limited to reporting adverse reactions and
responding to any inquiries concerning advertising or promotional materials,
and shall provide copies of all such communication to Depomed.  Depomed, however shall be able to communicate
with such governmental agency regarding the Licensed Product if:

 

(a)                                  Such communication is necessary to comply
with the terms of this Agreement or the requirements of any law, governmental
order or regulation; or

 

11

 

(b)                                 Depomed, if practical, made a request of
such agency to communicate with Esprit instead, and such agency refused such
request;

 

(c)                                  Such communication relates to the CMC Section of
the NDA for the Licensed Product, manufacturing specifications related to the
Licensed Product, or the GR System generally (and not specifically to the
Licensed Product);

 

(d)                                 provided, however, that before making any
communication under (a), (b) or (c) of this Section, Depomed shall
give Esprit notice as soon as possible of Depomed’s intention to make such
communication, and Esprit shall be permitted to accompany Depomed, take part in
any such communications and receive copies of all such communications.

 

9.5                                 Medical Inquiries.  Esprit shall respond to medical questions or
inquiries relating to the Licensed Product and shall instruct its sales force
to direct medical inquiries either to its own medical personnel or to the
Esprit toll-free number referred to in Section 9.6, within a reasonable
time from the Effective Date.  Esprit
shall designate an individual to serve as medical liaison in order to ensure
consistency in the handling of medical inquiries.  The medical liaison will regularly review
Licensed Product inquiries and responses and will also be available for
responding to non-routine inquiries should these arise.

 

9.6                                 Toll-Free Number. 
Esprit shall maintain a toll-free telephone number to provide
information in response to inquiries from health care professionals and consumers.  This number shall be noted in all appropriate
advertising and promotional materials, except that Depomed may, at its option,
use a different number in advertising and promotional materials that it
develops for use outside of the Territory.

 

9.7                                 Adverse Reactions; Recalls. 
Except as otherwise set forth in the Supply Agreement, Esprit shall be
responsible for handling all complaints from customers in the Territory
relating to adverse reaction reports, adverse events, and recall activities
with respect the Licensed Product. 
Depomed shall promptly transfer and notify Esprit of any such
complaints, and shall cooperate with Esprit as necessary to resolve or address
the situation, including, without limitation, by providing detailed
distribution records to Esprit.

 

9.8                                 NDC Number.  The Parties acknowledge and agree that (a) the
Licensed Product may be distributed initially for a limited period under the
National Drug Code number for the Licensed Product assigned to Depomed and (b) Esprit
shall be responsible, at its expense, for complying with on Depomed’s behalf,
or assisting Depomed in its compliance, with all FDA and other obligations and
requirements (including without limitation adverse reaction reports, adverse
events, and recall activities) applicable to Depomed as a result of any and all
distribution of the Licensed Product under the National Drug Code number for
the Licensed Product assigned to Depomed.

 

9.9                                 Withdrawal of NDA. 
The Parties acknowledge and agree that “Cause” shall be deemed to exist pursuant
to Section 15.2 of this Agreement upon any breach of the provisions of
this Agreement (including without limitation this Article 9) by Esprit
that results in the 

 

12

 

withdrawal of the NDA pertaining to Licensed Product,
or any material interruption in the supply of Licensed Product.

 

10.                                 Ownership of Technology; Third Party
Infringement.

 

10.1                           Ownership.  Depomed shall
(i) have and retain all right, title and interest in or Control over, as
applicable, all Depomed Patents, inventions, discoveries, and Know-How
concerning the Licensed Product, including formulations thereof, or methods of
making or using same which have been made, conceived, reduced to practice or
generated by its employees, agents, or other persons acting under its authority
prior to the Effective Date and (ii) have and retain all rights, title and
interest in all inventions, discoveries and Know-How relating to the Licensed
Product including formulations thereof, or methods of making or using same, or
Improvements thereof, which are made, conceived, reduced to practice or
generated, (A) solely by Depomed’s employees, agents, or other persons
acting under its authority, (B) solely by Esprit’ employees, agents, or
other persons acting under its authority or (C) jointly by Depomed’s
employees, agents, or other persons acting under Depomed’s authority and Esprit’s
employees, agents, or other persons acting under Esprit’s authority
(collectively, “Inventions”). 
Esprit shall make available to Depomed all information in its possession
necessary or expedient for the filing of patent applications arising out of or
related to Inventions.

 

10.2                           Third Party Infringement. 
If in the opinion of either Party any issued patent contained in the
Patent Rights has been infringed by a product in competition with Licensed
Product, such Party shall give to the other party notice of such alleged
infringement, in which event Depomed may at its discretion take such steps as
it may consider necessary to prosecute such infringement.  If Depomed, after such notice, elects to
bring suit, it shall be entitled to all damages recovered as a result of said
infringement.  Esprit shall have the right,
at its own expense, to be represented by counsel in any such litigation.  In addition, in any such litigation, Esprit
may elect by notice to Depomed to share equally with Depomed the costs of such
litigation in exchange for the right to share equally with Depomed in any
recovery of damages resulting from such litigation. Such election by Esprit
shall be made not later than 60 days from the date such litigation is
commenced.  If Depomed, after such notice
from Esprit, elects not to bring suit, it shall notify Esprit of such election
within thirty days after receipt of such notice and Esprit shall then have the
right to bring suit at its own expense. 
Esprit shall also have the right to bring suit if Depomed fails to
institute suit within six months from the date of the original notice of infringement
by Esprit.  In addition, in any such
litigation, Depomed may elect by notice to Esprit to share equally with Esprit
the costs of such litigation in exchange for the right to share equally with
Esprit in any recovery of damages resulting from such litigation. Such election
by Depomed shall be made not later than 60 days from the date such litigation
is commenced.  In any litigation brought
by Esprit, Esprit shall have the right to use and sue in Depomed’s name, and
Depomed shall have the right, at its own expense, to be represented by counsel.  Any recovery or damages received by Esprit
shall be retained by Esprit.

 

11.                                 Representations and Warranties.

 

11.1                           Representations and Warranties of Depomed. 
Depomed expressly warrants and represents to Esprit that:

 

13

 

(a)                                  to its knowledge, it has full right,
title, and interest in and to or the right to practice all presently existing
Patent Rights and Know-How relating to the Licensed Product or the GR System;
that there are no outstanding written or oral agreements inconsistent with this
Agreement; that it has all necessary corporate power and authority to enter
into this Agreement and grant the license provided herein without burdens,
encumbrances, restraints, or limitations of any kind which could adversely
affect the rights of Esprit under this Agreement; that, as of the Effective
Date, it has all necessary corporate power and authority to grant the right of
first refusal granted to Esprit under Article 13; and that, as of the
Effective Date, there are no written or oral agreements inconsistent with the
right of first refusal granted to Esprit under Article 13.

 

(b)                                 it is presently aware of no patents or
patent applications owned by a Third Party and not licensed to Depomed which
would be infringed by the practice of the presently existing Patent Rights or
Know-How related to the Licensed Product or the GR System nor has Depomed
received, or is aware of, any claims by Third Parties, either asserted or
unasserted, with respect to such matters.

 

(c)                                  As of the Effective Date, Depomed is not
conducting any research or development with respect to any product or product
candidate containing the Active Ingredient, other than the Licensed Product.

 

11.2                           Mutual Representations and Warranties. 
Each Party hereby represents and warrants to the other Party as follows:

 

(a)                                  It is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation.  It has all requisite
power and authority to carry on its business and to own and operate its
properties and assets.  The execution,
delivery and performance of this Agreement have been duly authorized by its
Board of Directors.  Such Party has
obtained all authorizations, consents and approvals, governmental or otherwise,
necessary for the execution and delivery of this Agreement, and to otherwise
perform such Party’s obligations under this Agreement.

 

(b)                                 There is no pending or, to its knowledge,
threatened litigation involving it which would have any material adverse effect
on this Agreement or on its ability to perform its obligations hereunder.

 

(c)                                  There is no indenture, contract, or
agreement to which it is a Party or by which it is bound which prohibits or
would prohibit the execution and delivery by it of this Agreement or the
performance or observance by it of any material term or condition of this
Agreement.

 

12.                                 Indemnification; Insurance.

 

12.1                           Indemnification. 
Each Party will defend, at its own expense, indemnify and hold harmless
the other Party and its Affiliates from and against any and all damages,
liabilities, losses, costs, and expenses, including attorneys fees, arising out
of any claim, suit or proceeding brought against the other Party to the extent
such claim, suit, or proceeding is based upon a claim 

 

14

 

arising out of or relating to (i) any breach or
violation of, or failure to perform, any covenant or agreement made by such
indemnifying Party in this Agreement, unless waived in writing by the
indemnified Party; (ii) any breach of the representations or warranties
made by such indemnifying Party in this Agreement; or (iii) the negligence
or willful misconduct of the indemnifying Party, except (under any of (i) and
(ii)) to the extent arising out of the breach, violation, failure, negligence
or willful misconduct of the indemnified Party. 
Each Party agrees that it shall promptly notify the other in writing of
any such claim or action and give the indemnifying Party full information and
assistance in connection therewith.  The
indemnifying Party shall have the sole right to control the defense if any such
claim or action and the sole right to settle or compromise any such claim or
action, except that the prior written consent of the other Party shall be
required in connection with any settlement or compromise which could (i) place
any obligation on or require any action of such other Party; (ii) admit or
imply any liability or wrongdoing of such other Party; or (iii) adversely
affect the goodwill or public image of such other Party.  Notwithstanding the foregoing, the
indemnified Party may participate therein through counsel of its choice, but
the cost of such counsel shall be borne solely by the indemnified Party.

 

12.2                           Insurance.  Esprit shall maintain, commencing as of the
First Commercial Sale and for a period of [***]
after any expiration of termination of this Agreement, a Commercial General
Liability Insurance policy or policies with minimum limits of [***] in the aggregate.  Upon request Esprit shall provide
certificates of insurance to Depomed evidencing the coverage specified herein.
Except as expressly stated herein, Esprit’s liability to Depomed is in no way
limited to the extent Esprit’s insurance coverage.

 

13.                                 Right of First Refusal.

 

If at any time during the term of this Agreement,
Depomed receives a bona fide proposal from a Third Party requesting to enter
into a license to Market Licensed Product in Canada (a “Canadian License”),
then Depomed shall so notify Esprit and shall provide to Esprit a summary of
the terms of the proposed Canadian License (a “Canadian License Notice”).  Esprit may, but shall not be obliged to,
deliver to Depomed within fifteen days after the delivery of the Canadian
License Notice, a notice advising Depomed that Esprit wishes to enter into a
Canadian License on substantially the terms set forth in the Canadian License
Notice.  During the thirty day period
following the delivery of any notice by Esprit pursuant to the immediately
preceding sentence, Depomed and Esprit shall diligently negotiate in good faith
modifications to this Agreement necessary to provide for the Marketing of
Licensed Product within Canada by Esprit pursuant to this Agreement (which
modifications shall include, among others, that Esprit shall be responsible for
obtaining and maintaining any regulatory approval necessary to Market Licensed
Product in Canada).  During the sixty day
period following the expiration of such thirty day period, Depomed shall be
free to negotiate and conclude with a Third Party a Canadian License on terms
no less favorable to Depomed, taken as a whole, than those reflected in the
Canadian License Notice.  Nothing herein
shall obligate either Party to agree to or enter into a Canadian License.

 

THE SYMBOL [***] IS USED TO INDICATE THAT A PORTION OF
THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.  CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

15

 

14.                                 Term.

 

Unless sooner terminated as herein provided, this
Agreement shall become effective on the Effective Date and shall continue in
effect thereafter until expiration or termination in accordance with the terms
of this Agreement.

 

15.                                 Expiry and Termination.

 

15.1                           Termination. 
Unless earlier terminated pursuant to Section 15.2 below, this
Agreement shall expire upon the expiration of the payment term for the license
grant as set forth in Section 2.3. 
Notwithstanding the foregoing, the last sentence of Section 2.3
shall survive any such expiration of this Agreement.

 

15.2                           Termination for Cause. 
At any time prior to the expiration of this Agreement, either Esprit or
Depomed may terminate this Agreement forthwith for cause, as “Cause” is
described below, by giving written notice to the other Party.  “Cause” for termination by one Party of this
Agreement shall be deemed to exist (i) if the other Party is in material
breach or default in the performance or observance of any of the provisions of
this Agreement applicable to it, and such breach or default is not cured within
sixty days (or thirty days in the case of failure to make license fee or
royalty payments) after the giving of notice by the Party specifying such
breach or default, or (ii) if, with respect to the other Party:

 

(a)                                  (i) a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect shall be instituted by such Party, or such Party shall consent to the
entry of any order for relief in an involuntary case under any such law; (ii) a
general assignment for the benefit of creditors shall be made by such Party; (iii) such
Party shall consent to the appointment of or possession by a receiver,
liquidation, trustee, custodian, sequestrator or similar official of the property
of such Party or of any substantial part of its property; or (iv) such
Party shall adopt a directors resolution in furtherance of any of the foregoing
actions specified in this subparagraph (a); or

 

(b)                                 a decree or order for relief by a court
of competent jurisdiction shall be entered in respect of such Party in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, trustee,
sequestrator or other similar official of such Party to wind up or liquidate
its affairs, and any such decree or order shall remain unstayed or undischarged
and in effect for a period of sixty days.

 

15.3                           Termination by Depomed. 
Depomed shall be entitled to terminate this Agreement immediately upon
notice to Esprit in the event that Esprit fails to make to Depomed the
$25,000,000 license fee payment required pursuant to Section 3(b) on
or before the thirtieth day after the Effective Date.

 

15.4                           Termination by
Esprit.  Beginning on the Effective Date and ending at 5:00 p.m.,
New York time, on the fourth business day after the Effective Date (the “Patent
Diligence Period”), Esprit shall be permitted to conduct a freedom to
operate analysis with respect to the 

 

16

 

Patent Rights (the “Freedom to Operate Analysis”).  The Freedom to Operate Analysis shall be
conducted on Esprit’s behalf by outside patent counsel to Esprit.  If, as a result of the Freedom to Operate
Analysis, such outside patent counsel provides Esprit with a written opinion to
the effect that Esprit’s ability to Market the Licensed Product in the
Territory will be materially and adversely affected by the valid, issued claims
of a United States patent owned by a Third Party, then (i) Esprit shall so
notify Depomed and, upon the request of Depomed, shall immediately provide such
written opinion to Depomed; and (ii) as Esprit’s sole and exclusive remedy
for any breach or default of this Agreement by Depomed, if any, Esprit shall be
entitled to terminate this Agreement immediately upon notice to Depomed at any
time prior to the expiration of the Patent Diligence Period.  Within three business days after any
termination of this Agreement by Esprit pursuant to this Section 15.4,
Depomed shall return to Esprit the $5,000,000 payment made by Esprit to Depomed
on the Effective Date.  Esprit may waive
any termination right under this Section 15.4 by written notice to
Depomed.

 

15.5                           Payment Obligations. 
Termination of this Agreement shall not terminate the obligations of
Esprit to make any payments then owing through the date of termination or the
obligations of confidentiality imposed on either Party.

 

15.6                           Transfer of NDA and IND. 
In the event of any termination of this Agreement, (a) Esprit shall
within three days prepare and send an executed letter to FDA authorizing the
transfer of the NDA and the IND for the Licensed Product to Depomed, and Esprit
shall also transfer to Depomed all regulatory documents, a chronology of
discussions with FDA, and other information necessary to maintain compliance
with the US regulatory authorities, and (b) Esprit will continue to
provide Depomed with assistance, at Depomed’s expense during the six month
period beginning on the termination date (or such longer period as may be
reasonably required), ensuring the orderly transition of the Licensed Product
and its corresponding regulatory approvals to Depomed.  If so requested by Depomed, in connection
with the transfer of the NDA and the IND for the Licensed Product to Depomed as
contemplated by this Section 15.6, Esprit shall also (a) assign to
Depomed any or all assignable customer contracts, customer orders, sublicenses
and distribution agreements related to the Licensed Product, if so requested by
Depomed and (b) provide to Depomed any and all sales, promotional and
training material in Esprit’s possession at the time of such transfer.

 

16.                                 Publicity.

 

Neither Party will originate any publicity, news
release, public comment or other public announcement, written or oral, whether
to the press, to stockholders, or otherwise, relating to this Agreement,
without the consent of the other Party, except for such announcement which, in
accordance with the advice of legal counsel to the Party making such
announcement, is required by law; provided, however, that each Party shall be
entitled to refer publicly to the relationship of the Parties reflected in this
Agreement (i.e., Depomed as the developer of the Licensed Product and Esprit as
the exclusive distributor of the Licensed Product in the Territory and Depomed’s
exclusive licensee of Marketing rights in the Territory) in a manner that is
not damaging to the business or reputation of the other Party.  Except as otherwise permitted pursuant to the
immediately preceding sentence, any Party making any announcement which is
required by law will, unless prohibited by law, give the other Party an
opportunity to review the form and content 

 

17

 

of such announcement and comment before it is
made.  Either Party shall have the right
to make such filings with governmental agencies, including without limitation
the United States Securities and Exchange Commission, as to the contents and
existence of this Agreement as it shall reasonably deem necessary or
appropriate.  The Parties have agreed
upon the form and content of a joint press release to be issued by the Parties
promptly following the execution of this Agreement.

 

17.                                 Assignability.

 

17.1                           Assignment.  This
Agreement may be assigned by either Party to an Affiliate without the consent
of the other Party.  This Agreement may
not otherwise be assigned by either Party without the prior written consent of
the other Party, which consent shall not be unreasonably withheld or delayed.

 

17.2                           Liability.  No assignment
permitted by this Article 17 shall serve to release either Party from
liability for the performance of its obligations hereunder.

 

18.                                 Notices.

 

18.1                           Notices.  All
notifications, demands, approvals and communications required to be made under
this Agreement shall be given in writing and shall be effective when either
personally delivered or sent by facsimile if followed by prepaid air express
addressed as set forth below.  The
Parties hereto shall have the right to notify each other of changes of address
during the life of this Agreement.

 

DEPOMED, INC.

1360 O’Brien Drive

Menlo Park, California 
94025

Attention: 
President

Facsimile:  650-462-9991

 

With a copy to:

 

Heller Ehrman LLP

275 Middlefield Road

Menlo Park, California 
94025

Attention: 
Matthew M. Gosling

Facsimile:  650-324-0638

 

ESPRIT PHARMA, INC.

 

2 Tower Center Boulevard

East Brunswick, NJ 
08816

Attn:  Steve
Bosacki, General Counsel

Facsimile: 
(732) 828-9954

 

18

 

18.2                           Receipt.  Any such
notice mailed as aforesaid shall be deemed to have been received by and given
to the addressee on the date specified on the notice of receipt and delivery
evidenced to the sender.

 

19.                                 Force Majeure.

 

19.1                           Force Majeure Event. 
In the event of any failure or delay in the performance by a Party of
any provision of this Agreement due to acts beyond the reasonable control of
such Party (such as, for example, fire, explosion, strike or other difficulty
with workmen, shortage of transportation equipment, accident, act of God, or
compliance with or other action taken to carry out the intent or purpose of any
law or regulation), then such Party shall have such additional time to perform
as shall be reasonably necessary under the circumstances.  In the event of such failure or delay, the
affected Party will use its diligent efforts, consistent with sound business
judgment and to the extent permitted by law, to correct such failure or delay
as expeditiously as possible.

 

19.2                           Performance. 
In the event that a Party is unable to perform by a reason described in Section 19.1
above, its obligation to perform under the affected provision of this Agreement
shall be suspended during such time of nonperformance.

 

20.                                 Miscellaneous.

 

20.1                           Enforceability. 
It is the desire and intent of the Parties that the provisions of this
Agreement shall be enforced to the extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought.  Accordingly, if any particular provision of
this Agreement which substantially affects the commercial basis of this
Agreement shall be determined to be invalid or unenforceable, such provision
shall be amended as hereinafter provided to delete therefrom or revise the
portion thus determined to be invalid or unenforceable, such amendment to apply
only with respect to the operation of such provision of this Agreement in the
particular jurisdiction for which such determination is made.  In such event, the Parties agree to use
reasonable efforts to agree on substitute provisions, which, while valid, will
achieve as closely as possible the same economic effects or commercial basis as
the invalid provisions, and this Agreement otherwise shall continue in full
force and effect.  If the Parties cannot
agree to such revision within sixty days after such invalidity or
unenforceability is established, the matter may be submitted by either Party to
arbitration as provided in this Agreement to finalize such revision.

 

20.2                           Entire Agreement. 
This Agreement and the Supply Agreement represent the entire agreement
between the Parties concerning the subject matter herein (except as
specifically noted herein) and supersedes all prior or contemporaneous oral or
written agreements of the Parties; except that information disclosed pursuant
to the confidentiality agreement between the Parties dated June 22, 2005
shall continue to be subject to the terms of that agreement until the effective
date of this Agreement, from which date it will be treated as Proprietary
Information pursuant to Article 8 of this Agreement.  This agreement may be modified, amended or
changed 

 

19

 

only by a written instrument signed and delivered by
the Parties, with clear intent to modify, amend or change the provisions
hereof.

 

20.3                           Waiver.  The waiver by
a Party of any single default or breach or succession of defaults or breaches
by the other shall not deprive either Party of any right under this Agreement
arising out of any subsequent default or breach.

 

20.4                           Governing Law. 
All matters affecting the interpretation, validity, and performance of
this Agreement shall be governed by the laws of the State of California without
regard to that state’s conflict of laws rules or principles.

 

20.5                           Independent Contractors. 
Nothing in this Agreement authorizes either Party to act as agent for
the other Party as to any matter.  The
relationship between Depomed and Esprit is that of independent contractors.

 

20.6                           Survival.  The
provisions of Articles 8, 10, 12, 14, 15, 16, 17, 18, 19 and 20 shall survive
any termination of this Agreement.

 

20.7                           Counterparts. 
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original.

 

20.8                           Arbitration. 
Any and all disputes between the Parties relating in any way to the
entering into of this Agreement and/or the validity, construction, meaning,
enforceability, or performance of this Agreement or any of its provisions, or
the intent of the Parties in entering into this Agreement, or any of its
provisions, or any dispute relating to patent validity or infringement arising
under this Agreement shall be settled by arbitration.  Such arbitration shall be conducted in San
Francisco, California (if brought by Esprit) or Newark, New Jersey (if brought
by Depomed) in accordance with the rules then pertaining of the American
Arbitration Association with a panel of three arbitrators.  (Each Party shall select one arbitrator and
the two selected arbitrators shall select the third arbitrator.  If the two selected arbitrators cannot agree
on a third arbitrator then the American Arbitration Association shall select
said arbitrator from the National Panel of Arbitrators.)  Reasonable discovery as determined by the
Arbitrators shall apply to the arbitration proceeding.  The law of the State of California shall
apply to the arbitration proceedings. 
Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. 
The successful Party in such arbitration, in addition to all other
relief provided, shall be entitled to an award of all its reasonable costs and
expenses including attorney costs.  Both
Parties agree to waive, and the Arbitrators shall have no right to award, punitive
damages in connection with an arbitration proceeding hereunder.

 

20.9                           Co-Promotion. 
Esprit will consider any proposal by Depomed to co-promote the Licensed
Product within the Territory.  Esprit may
accept or reject any such proposal in its sole discretion.  The terms of any such co-promotion
arrangement will be set forth in a separate, mutually agreeable contract
between the Parties.

 

[signature page follows]

 

20

 

IN WITNESS WHEREOF, the undersigned have caused this
Agreement to be duly executed by their duly authorized officers on the date
first above written.

 

	
  DEPOMED, INC.

  
	
   

  
	
  By:

  	
  /s/ John W.
  Fara

  	
   

  
	
  Name:

  	
  John W.
  Fara

  	
   

  
	
  Title:

  	
  President &
  CEO

  	
   

  
	
   

  
	
  ESPRIT PHARMA,
  INC.

  
	
   

  
	
  By:

  	
  /s/ John T.
  Spitznagel

  	
   

  
	
  Name:

  	
  John T.
  Spitznagel

  	
   

  
	
  Title:

  	
  Chairman &
  CEO

  	
   

  
								

 

21

 

Exhibit A

 

Depomed Patents and Registered
Intellectual Property

 

United States Patents

 

[***]

 

United
States Patent Applications:

 

[***]

 

United States Trademarks

 

ProquinTM

FluroquinTM

 

Domain Names

 

proquinxr.com

proquinxr.net

proquinxr.org

proquinxr.us

proquinxr.biz

proquinxr.info

proquin.com

proquin.net

proquin.org

proquin.us

proquin.biz

proquin.info

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.  CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.

 

22

 

Exhibit B

 

Minimum
Royalty Payments

 

	
  Calendar Year

  	
   

  	
  Minimum
  Annual Royalty

  Amount ($ )

  	
   

  
	
  2006

  	
   

  	
  4,600,000

  	
   

  
	
  2007

  	
   

  	
  5,000,000

  	
   

  
	
  2008 - end of term

  	
   

  	
   

  	
  *

  

 

 * Beginning in 2008, the applicable Minimum
Annual Royalty shall increase annually from the prior year to reflect any
increase in the United States Bureau of Labor Statistics Consumer Price Index — All Commodities (or
any successor index) for such year (measured as of the first day of such
year relative to the first day of the prior year).

 

 

Exhibit C

 

Initial
Marketing Budget

 

Esprit plans to spend [***]
on Licensed Product marketing between the Effective Date and December 31,
2006.

 

THE SYMBOL [***] IS USED
TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. 
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED
PORTION.

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