Document:

Exhibit 10.1

 

ASSIGNMENT
AND ASSUMPTION OF LEASE

AND CONSENT
TO ASSIGNMENT

 

This Assignment and Assumption
of Lease and Consent to Assignment (this “Agreement”) is executed as of August 8, 2014, among 2345 Eastlake
LLC (“Landlord”), Legacy Group, Inc. (“Assignor”) and Atossa Genetics Inc., a
Delaware corporation (“Assignee”).

 

RECITALS:

 

A.           Landlord
and Assignor are parties to that certain Office Lease Agreement dated July 1, 2012 (as the same has been or may hereafter be amended,
the “Lease”) pursuant to which Assignor leases certain space in the 2345 Eastlake Avenue East Building, commonly known
as Site 201. Capitalized terms used herein but not defined shall be given the meanings assigned to them in the Lease.

 

B.           Assignor
desires to assign the Lease to Assignee, and Assignee desires to assume all of Assignor’s obligations under the Lease and
Landlord will consent to the assignment on the terms and conditions set forth herein.

 

AGREEMENTS:

 

For good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, the parties hereto agree as follows:

 

1.          Assignment
and Assumption. Effective as of December 1, 2014 (the “Effective Date”), Assignor hereby grants,
conveys and assigns to Assignee all of Assignor’s right, title and interest as tenant under the Lease so that from and
after the Effective Date Assignee shall be the “Tenant” under the Lease with all rights as the
“Tenant.” Assignor further unconditionally assigns to Assignee all of Assignor’s right to any refund of the
existing security deposit under the Lease. Assignee hereby accepts the foregoing assignment and agrees to assume, pay,
perform and discharge, as and when due, all of the agreements and obligations of Assignor under the Lease. Assignee
represents and warrants that it is in full compliance with the Lease and that there are no breaches of any representations,
warranties or covenants under the Lease and that the Lease is in full force and effect and has not been modified, assigned or
amended in any way.

 

2.          Consent.
Subject to all of the terms and conditions of this Agreement, Landlord hereby consents to the assignment and assumption of the
Lease, provided that Landlord’s consent shall not be construed as a waiver of any of the terms of the Lease nor as an agreement
to amend or modify the Lease in any manner. Assignor and Assignee each acknowledge that Assignor has assigned to Assignee all
of Assignor’s rights under the Lease including the right to any prepaid rent or security. Assignee and Assignor acknowledge
and agree that each of them have the full power and authority to enter into the Agreement, that no consents from or notices to
any third-parties are necessary and that the terms and conditions of this Agreement are reasonable and agree that they, and their
respective successors and assigns, shall be bound by the terms of this Agreement.

 

    	 

    	 

    

  

3.          Further
Assignment or Subletting. Landlord’s consent under this Agreement shall apply only to this assignment and shall not
be deemed to be a consent to any other assignment or sublease nor shall this Agreement constitute a waiver of any restriction
in the Lease concerning further subletting or assignment.

 

4.          Assumption
of Liabilities. Assignor and Assignee shall be jointly and severally liable to Landlord for all of the obligations of the
“Tenant” under the Lease; whether arising before or after the Effective Date and Landlord may enforce the same directly
against either Assignor or Assignee. Landlord’s consent under this Agreement is issued on the condition that nothing contained
in this Agreement modifies, expands or enlarges Landlord’s obligations under the Lease and Assignor is not released from
any obligations under the Lease. Assignor shall remain primarily liable for all of the tenant’s obligations under the Lease
during the Initial Term of the Lease. Assignor’s consent shall not be required for any amendments or modifications to the
Lease. Notwithstanding anything to the contrary set forth herein, Assignor shall be released from liability under the Lease upon
expiration of the Initial Term.

 

5.          Conditions.
Assignor and Assignee agree to reimburse Landlord on demand for the full amount of Landlord’s attorneys’ fees incurred
in connection with this Agreement up to an amount not to exceed $2,000. Assignee shall provide Landlord with copies of certificate(s)
of insurance satisfying all the requirements of the Lease.

 

6.          Miscellaneous.
This Agreement may be executed in any number of counterparts and each such counterpart shall be deemed to be an original, but
all of which, when taken together, shall constitute one agreement. In any suit, action or appeal therefrom, to enforce or interpret
this Agreement or any term of provision hereof, the prevailing party shall be entitled to recover its costs incurred therein,
including reasonable attorney’s fees. This Agreement shall be governed by the laws of the State of Washington and any action
with respect to this Agreement shall be brought in King County, Washington. This Agreement contains all of the agreements, understandings,
representations and warranties of the parties with respect to the subject matter hereof and may not be amended or modified except
by an instrument in writing signed by all the parties hereto.

 

EXECUTED as of the date first written above.

 

SIGNATURE PAGES TO FOLLOW

 

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ASSIGNOR:

	 	Legacy Group, Inc., a Washington corporation
	 	 	 
	 	By:	/s/ Scott Rerucha
	 	Name: 	Scott Rerucha
	 	Title:	CEO

 

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ASSIGNEE: 

	 	Atossa Genetics, a Delaware corporation
	 	 	 
	 	By:	/s/ Steven C. Quay
	 	Name: 	Steven C. Quay
	 	Title:	CEO and President

 

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	LANDLORD:	2345 Eastlake LLC, a Washington limited liability company
	 	 	 
	 	By:	 
	 	Name: 	 
	 	Title:	 

 

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2345 EASTLAKE
LLC

 

LANDLORD

 

and

 

THE LEGACY
GROUP, INC.,

 

TENANT

 

 

 

OFFICE
LEASE AGREEMENT

 

 

 

    	 

    	 

    

 

OFFICE LEASE
AGREEMENT

 

THIS
OFFICE LEASE AGREEMENT (this “Lease”) is dated as of the 1st day of July, 2012 and is entered into by and
between 2345 EASTLAKE LLC, a Washington limited liability company (“Landlord”), and THE LEGACY GROUP, INC., a Washington
Corporation (“Tenant”).

 

Landlord
and Tenant agree as follows:

 

		1.	Defined Terms; Lease Data; Exhibits.

 

1.1         Building
and Premises. The “Building” means that certain office building known as the 2345 Eastlake Building with
an address of 2345 Eastlake Avenue East, Seattle, Washington, situated on the real property (the “Property”) more
particularly described in Exhibit A attached hereto. The
Building contains approximately Thirty-two Thousand Three Hundred Seventy-nine (32,379) rentable square feet. The “Premises”
means that space consisting of Five Thousand Seven Hundred Twenty-four (5,724) rentable square feet on the second floor of the
Building and known as Suite 201, as outlined on the floor plan attached hereto as Exhibit
B. The rentable area of the Premises and Building has been determined in accordance with the “Standard Methods
for Measuring Floor Area of Office Buildings” approved in 1996 by the American Standards Institute, Inc., and the Building
Owners and Managers Association International (hereinafter “BOMA Standards”).

 

1.2         Master
Lease. “Master Lease” means that certain Ground Lease by and between Landlord, as tenant, and Hughes-Northwest,
Inc. (“Master Landlord”) dated March 1, 2001 pursuant to which Landlord leases the Property. The terms of the Master
Lease are herein incorporated by reference, and this Lease is subject to all terms and conditions of the Master Lease as if set
forth herein. In the event of a conflict between the Master Lease and the Lease, the terms of the Master Lease shall control.
During the term of this Lease and for all periods subsequent for obligations which have arisen prior to the termination of this
Lease, Tenant does hereby expressly assume and agree to perform and comply with for the benefit of Landlord and Master Landlord
each and every obligation of Landlord as tenant under the Master Lease with respect to the Premises, except as modified in this
Lease. Landlord represents and warrants that the terms and provisions of this Lease do not conflict with the Master Lease, that
Landlord has the authority to enter into this Lease and that there are no rights of the Master Landlord to terminate this Lease
early or relocate Tenant from the Premises.

 

1.3         Tenant’s
Pro Rata Share. “Tenant’s Pro Rata Share” means seventeen and sixty-eight one hundredths percent
(17.68%), calculated by dividing the total rentable square feet of the Premises by the total rentable square feet of the Building.

 

1.4         Term,
Commencement Date. The term of this Lease shall be five (5) years (the “Initial Term”), unless earlier
terminated or extended as provided herein. The Initial Term shall commence on the later of: (a) July 1, 2012, or (b) substantial
completion of Tenant Improvements (the “Commencement Date”); and shall terminate at midnight on the fifth anniversary
of the Commencement Date (the “Expiration Date”). Substantial Completion of Tenant Improvements shall not be contingent
upon conference room door completion. Tenant shall have right to Early Occupancy per the terms described in Section 5 of this
Lease.

 

    	A-1

    	 

    

 

Provided
Tenant is not in default hereunder at the time of exercise of such option or at commencement of the Extension Term, Tenant shall
have the option to extend the Initial Term for a period of five (5) years (the “Extension Term”). Tenant shall give
Landlord written notice of its intent to exercise such option at least nine (9) months prior to the end of the Initial Term. Basic
Rent for the Extension Term shall be determined as set forth in Section
3.3. As used herein, “Term” shall mean the Initial Term and any Extension Term. Notwithstanding anything
herein to the contrary, in no event shall the Term of this Lease extend beyond the term of the Master Lease, and Landlord shall
have no liability to Tenant for any termination or expiration of this Lease as a result of the termination or expiration of the
Master Lease. Landlord confirms that the Master Lease currently terminates on February 28, 2021; Landlord shall provide Tenant
with written notice of any extension or renewal of the Master Lease.

 

1.5         Rent.
Tenant shall pay to Landlord basic rent of Thirty-three Dollars ($33.00) per rentable square foot per year, adjusted
as provided in Section 3.2 (“Basic Rent”).
Tenant also shall pay as additional rent all expenses incurred by or chargeable to Tenant under this Lease as set forth in Section
7 (“Additional Rent”) (Basic Rent and Additional Rent are referred to herein as “Rent”). Tenant
shall pay no Rent for months one through four (1-4) of the first lease year, which shall commencement on the Commencement Date.
Tenant shall have an additional credit in the amount of Eight Thousand Nine Hundred Forty-Seven Dollars ($8,947.00) which shall
be applied to Basic Rent for month five (5). Tenant has deposited with Landlord on the date hereof Six Thousand Seven Hundred
Ninety-four Dollars ($6,794.00) to be applied to the balance of month five (5) of Basic Rent first coming due under this Lease.

 

1.6         Security
Deposit. Tenant has deposited with Landlord on the date hereof Seventeen Thousand Six Hundred Forty-nine Dollars ($17,649.00)
as a security deposit (the “Security Deposit”) to be held and disbursed by Landlord in accordance with Section
31.

 

1.7         Exhibits.
Landlord and Tenant agree that this Lease is further subject to the provisions of the attached exhibits, which are
listed below. The provisions of the exhibits are incorporated herein by this reference and made a part of this Lease.

 

	Exhibit A	Legal Description
	Exhibit B	Floor Plan

 

2.          Premises.
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord upon the terms and conditions set forth herein
the Premises, together with nonexclusive rights of ingress and egress over common areas in the Building. Tenant acknowledges that
neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the Premises or the Building,
or with respect to the suitability or fitness of either for the conduct of Tenant’s business or for any other purpose. The taking
of possession or use of the Premises by Tenant for any purpose shall conclusively establish that the Premises and the Building
were at such time in satisfactory condition.

 

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		3.	Rent.

 

3.1         Tenant
Payment. Basic Rent for each year shall be payable in twelve (12) equal consecutive monthly installments. Tenant shall
pay Landlord without notice Basic Rent, Additional Rent, and any other payments due hereunder (collectively, “Rent”),
from and after the Commencement Date, without deduction or offset, in lawful money of the United States of America in advance
on or before the first day of each month (or at other dates specified in this Lease) during the Term at Landlord’s address
set forth on the signature page of this Lease, or to such other party or at such other place as Landlord may hereafter from time
to time designate to Tenant in writing. Rent for any partial month at the beginning or end of the Term shall be prorated.

 

3.2         Basic
Rent Adjustment Schedule. Basic Rent shall be adjusted annually on the anniversary of the Commencement Date as follows:

 

	Lease Year	 	Basic Rent per square 
 foot per Year	 	 	Monthly 
Installment	 	 	Annual 
Installment	 
	1 
Months 1 - 4	 	 	Free	 	 	$	00.00	 	 	$	00.00	 
	1 
Month 5	 	 	33.00	 	 	 	6,794.00	 	 	 	6,794.00	 
	1 
Months 6-12	 	 	33.00	 	 	 	15,741.00	 	 	 	110,187.00	 
	2	 	 	34.00	 	 	 	16,218.00	 	 	 	194,616.00	 
	3	 	 	35.00	 	 	 	16,695.00	 	 	 	200,340.00	 
	4	 	 	36.00	 	 	 	17,172.00	 	 	 	206,064.00	 
	5	 	 	37.00	 	 	 	17,649.00	 	 	 	211,788.00	 

 

3.3         Extension
Term Rent. On the first day of the Extension Term, Basic Rent shall be adjusted to an amount equal to the Fair Market
Rent for the Premises (the “Extension Term Adjustment”). As used herein, “Fair Market Rent” shall mean
the greater of (a) the Basic Rent during the final year of the Initial Term or the first Extension Term, as applicable, or (b)
rent obtained for comparable space in comparable buildings and facilities in the City of Seattle as of the date such determination
is made, and comparable space shall mean similar sized space as the Premises, with similar tenant improvements installed (including
mechanical and electrical, improvements and systems, but excluding Tenant’s trade fixtures) and with suitable adjustments
for (i) length of lease terms, (ii) credit quality of tenants, and (iii) other relevant factors affecting comparability of various
rental rates. If Landlord and Tenant are unable to agree upon the Fair Market Rent for the Premises within thirty (30) days following
delivery of Tenant’s notice of exercise of its option for the Extension Term, then each party shall select its own Appraiser
(as defined below) and each Appraiser shall prepare and deliver to Landlord and Tenant within thirty (30) days thereafter such
Appraiser’s written opinion of the Fair Market Rent as defined herein. If the two Appraisers’ opinions of Fair Market
Rent differ by five percent (5%) or less, then they shall be added together, divided by two, and the product thereof shall be
the Fair Market Rent for the purposes of this Section 3.3.
If the two Appraisers’ opinions of Fair Market Rent differ by more than five percent (5%), then within fifteen (15) days
after the delivery of the last of the Appraisers’ decisions, the two Appraisers shall mutually select a third Appraiser
who shall determine the Fair Market Rent as defined herein. Within thirty (30) days after the appointment of the third Appraiser,
the third Appraiser shall make its determination of Fair Market Rent in a written report delivered to Landlord and Tenant and
such determination shall be final and binding on the parties. If either Landlord or Tenant shall fail to timely select its initial
Appraiser, then Fair Market Rent shall be determined by the Appraiser timely selected by the other party. If the two (2) Appraisers
selected by Landlord and Tenant should fail to timely select the third Appraiser, if required, either Landlord or Tenant shall
have the right to petition for the appointment of such Appraiser by the Presiding Judge of the Superior Court of King County.
Each party shall pay all expenses of its own Appraiser and the cost of the third Appraiser shall be split equally between Landlord
and Tenant. As used herein, the term “Appraiser” shall mean an appraiser who is a designated member of the Appraisal
Institute (or its successor), with at least ten (10) years experience in appraising commercial office properties in the Puget
Sound region

 

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4.          Parking.
Unless Tenant is in default hereunder, for the initial term Tenant shall be entitled to parking stickers and/or cards
equal to eleven (11) parking spaces (the “Parking Passes”). Each Parking Pass shall entitle the vehicle on which the
Parking Pass is presented to park in the parking garage located beneath the Building (the “Garage”) during Normal
Office Hours in a non-preferential and non-exclusive basis Tenant shall pay a monthly fee per Parking Pass in the amount of One
Hundred Thirty-five Dollars ($135.00), plus any tax or assessment imposed by any governmental authority in connection with such
parking privileges (the “Parking Fee”) The Parking Fee shall be adjusted annually on the anniversary of the Commencement
Date to the prevailing market rate for such parking, as determined by Landlord. Landlord shall provide thirty (30) days’
written notice of the adjusted Parking Fee. The amount Tenant pays for each Parking Pass is not intended to cover the costs of
repairing, maintaining and operating the Garage, which costs shall be included in Operating Expenses (as defined in Article 7).
Landlord shall have exclusive control over the day-to-day operations of the Garage. Landlord may make, modify and enforce reasonable
rules and regulations relating to the parking of vehicles in the Garage, and Tenant shall abide by such rules and regulations
and shall cause its employees and invitees to abide by such rules and regulations. In lieu of providing parking stickers or cards.
Landlord may use any reasonable alternative means of identifying and controlling vehicles authorized to be parked in the Garage.
Landlord may designate the Garage for long term or employee parking only
and Landlord may change such designations from time to time. Landlord may direct Tenant’s invitees and customers
to other parking structures or lots within a reasonable distance from the Premises with space available on a first-come, first
served non-exclusive basis in common with the general public. Landlord reserves the right to alter the size of the Garage and
the configuration of parking spaces and driveways therein. Landlord may assign any unreserved and unassigned parking spaces and/or
make all or a portion of such spaces reserved or institute any other measures, including but not limited to valet, assisted or
tandem parking, that Landlord determines are necessary or desirable for tenant requirements or orderly and efficient parking.
With the exception of the eleven (11) designated parking spaces
referenced in this Section 4, Landlord at any time may substitute for Tenant’s Parking Passes an equivalent number of parking
passes or spaces in a parking structure or subterranean parking facility or within a surface parking area located a reasonable
distance from the Premises.

 

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Pending
availability, Landlord shall provide additional Parking Passes in the Garage on a month-to-month basis, subject to the same terms
and conditions as Tenants allotted Parking Passes. In the event Landlord is unable to provide Parking Passes in the Garage, Landlord
shall provide an equivalent number of parking passes or spaces in a parking structure within the 2300 block of Eastlake at the
then current rates.

 

5.          Construction
of Tenant Improvements. Landlord, at Landlord’s sole costs and expense, shall provide Tenant Improvements based
on the Build out Specification letter submitted by Rerucha Studio and dated May 7, 2012 with the exception of the carpet selection
which shall be modified to J+J Invision, Problem Solved (6572), 1201 super glue. Tenant’s Improvements shall be constructed
and installed in a good and workmanlike manner and all materials used shall be of a quality comparable to those in the Building.
Any additional Tenant Improvements beyond the scope of specifications noted in the May 7, 2012 letter and the modification noted
in this Section 5 shall be at the sole cost and expense
of the Tenant. All Tenant Improvements shall be and remain the property of Landlord upon termination of this Lease; except as
set forth in Section 13.

 

To
the extent that there are any additional Tenant’s Improvements to be completed by Tenant, such Tenant’s Improvements
shall be constructed and installed in a good and workmanlike manner and all materials used shall be of a quality comparable to
those in the Building. Tenant shall maintain a safe working environment, including the continuation of all fire and security protection
devices, if any, previously installed in the Premises by Landlord. All damages or injury done to the Premises or the Building
by Tenant or by any persons who may be in or upon the Premises or the Building with the express or implied consent of Tenant,
including but not limited to the cracking or breaking of any glass of windows and doors, shall be paid for by Tenant and Tenant
shall pay for all damage to the Building caused by acts or omissions of Tenant or Tenant’s officers, contractors, subcontractors,
agents, invitees, licensees, employees, successors or assigns. Landlord’s consent to or oversight of any work by Tenant, shall
not be deemed a warranty as to the adequacy of the design, workmanship or quality of materials, and Landlord hereby expressly
disclaims any responsibility or liability for the same, except with respect to Landlord’s intentional misconduct. Landlord
shall under no circumstances have any obligation to repair, maintain or replace any portion of any Tenant Improvements.

 

Tenant
has previously submitted the Plans and Specifications for Tenant Improvements (the “Plans”) to Landlord which are
approved by Landlord. Tenant will promptly notify Landlord of any changes to the Final Plans that are required by the City of
Seattle, in connection with any required permit approval, the costs of any such change shall be the sole responsibility of Tenant.
Landlord will approve or reasonably disapprove the required changes in writing within five days after receiving notice of the
same. If Landlord reasonably disapproves the changes required by the City of Seattle, Landlord and Tenant will cooperate to develop
changes to the Final Plans that are approved by both Landlord and the City of Seattle.

 

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Tenant
shall have right to access the Premises two (2) weeks prior to the Commencement Date in order to install Tenant’s furniture, fixtures
and equipment subject to the substantial completion of Tenant Improvements and must comply with and observe all terms and conditions
of this Lease and any site rules imposed by Landlord’s contractor.

 

		6.	Uses.

 

6.1         General
Use. The Premises shall be used only for a general administrative office use (“Permitted Use”) and for
no other business or other purpose without the prior written consent of Landlord, which will not be unreasonably withheld,
conditioned or delayed. No act shall be done in or about the Premises that is unlawful nor shall Tenant do any act or install
or operate any equipment in the Premises that will increase the then existing rate of insurance on the Building unless Tenant
shall pay any increased cost of insurance as a component of Rent. Tenant shall not commit or allow to be committed any waste
upon the Premises, or any public or private nuisance or other act or thing in or about the Premises that disturbs the quiet
enjoyment of any other tenant in the Building. Tenant shall not, without the prior written consent of Landlord, which may be
withheld in its sole discretion, use, operate or maintain any apparatus, machinery, equipment or device in or about the
Premises that will cause any significant noise, vibration or fumes or disturb the quiet enjoyment of any other tenant in the
Building. If any of Tenant’s office machines or equipment should disturb the quiet enjoyment of any other tenants in
the Building, then Tenant shall cease operating such equipment until it has provided adequate insulation or taken such other
action as Landlord shall require to eliminate the disturbance. Tenant shall comply with all laws and regulations relating to
its use or occupancy of the Premises, or to its Tenant Improvements or any alteration or improvement constructed by Tenant or
at Tenant’s request in the Premises, or to the common areas of the Building and shall observe such reasonable rules and
regulations concerning Tenant’s use or occupancy of the Premises or related to the common areas of the Building as may
be adopted by Landlord from time to time and made available to Tenant.

 

6.2         Hazardous
Materials. Tenant shall not use, dispose of or otherwise allow the release of any Hazardous Materials in, on or under
the Premises, the Building, the Property, or any adjacent property, or in any improvements thereto, thereon or therein, except
that the use of Hazardous Materials associated with ordinary and general office supplies, such as copier toner, liquid paper,
glue, ink and common household cleaning materials are permitted if used in accordance with applicable law. As used herein, the
term “Hazardous Materials” includes any substance, waste or material defined or designated as hazardous, toxic or
dangerous (or any similar term) by any federal, state or local statute, regulation, rule or ordinance now or hereafter in effect.
Tenant shall promptly comply with all statutes, regulations and ordinances, and with all orders, decrees or judgments of governmental
authorities or courts having jurisdiction, relating to Tenant’s, its agents’, employees’, or contractors’
use, collection, treatment, disposal, storage, control, removal or cleanup of Hazardous Materials in, on or under the Premises,
the Building, the Property or any adjacent property, or incorporated in any improvements thereto, thereon or therein, at Tenant’s
expense.

 

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After
notice to Tenant and a reasonable opportunity for Tenant to effect such compliance, Landlord may, but shall not be obligated to,
enter upon the Premises and take such actions and incur such costs and expenses to effect such compliance as it deems advisable
to protect its interest in the Premises. However, Landlord shall not be obligated to give Tenant notice and an opportunity to
effect compliance if (i) such delay might result in material adverse harm to Landlord, the Premises, the Building or the Property;
(ii) Tenant has already had actual knowledge of the situation and a reasonable opportunity to effect compliance, or (iii) Landlord
reasonably believes that an emergency exists. Whether or not Tenant has actual knowledge of the release of Hazardous Materials
on the Premises, the Building, the Property or any adjacent property as the result of Tenant’s use of the Premises, the
Building or the Property, Tenant shall reimburse Landlord for the reasonable amount of all costs and expenses incurred by Landlord
relating to such Hazardous Materials or in connection with such compliance activities. Tenant shall notify Landlord immediately
of any release of any Hazardous Materials on the Premises of which Tenant is aware.

 

Tenant
agrees to indemnify and hold harmless Landlord against any and all losses, liabilities, suits, obligations, fines, damages, judgments,
penalties, claims, charges, cleanup costs, remedial actions, costs and expenses (including, without limitation, attorneys’
and other professional fees and disbursements) that may be imposed on, incurred or paid by, or asserted against Landlord, the
Premises, the Building, or the Property by reason of, or in connection with (i) any misrepresentation, breach of warranty or other
default by Tenant under this Section 6.2; (ii) the acts
or omissions of Tenant, its officers, contractors, subcontractors, licensees, agents, servants, employees, guests, invitees or
visitors, or any assignee or sublessee or other person for whom Tenant would otherwise be liable, resulting in the release of
any Hazardous Materials; or (iii) the use, disposal or storage of any Hazardous Materials on the Premises, Property or Building
by Tenant, its agents, employees, or contractors. All of Tenant’s obligations and liabilities under this Section
6.2 shall survive expiration or other termination of this Lease and shall be separately enforceable by Landlord.

 

		7.	Additional Rent.

 

		7.1	Tenant Payment.

In addition
to Basic Rent, Tenant shall pay to Landlord as “Additional Rent”, from and after the Commencement Date in the manner
described below, an amount equal to Tenant’s Pro Rata Share any increase in Real Property Taxes over the tax base figure
included in Basic Rent for the Base Year, as provided in Section 7.2.2 and Section 7.2.5.

 

		7.2	Definitions.

 

7.2.1         INTENTIONALLY
DELETED

 

7.2.2         “Real
Property Taxes” shall mean real and personal property taxes, assessments (including local improvement or special benefit
districts), and all other governmental impositions and charges of every kind and nature, including surcharges, now or hereafter
imposed with respect to the Property and the Building, or any portion thereof, including, without limitation, all tenant improvements,
and all improvements, fixtures, and equipment to, on or in the Building, and/or the use, occupancy or possession thereof; taxes
on Property of Tenant (as defined in Section 8), which
have not been paid by Tenant directly to the taxing authority; and any taxes levied or assessed in addition to, in lieu of, or
as a substitute for, in whole or part, taxes now levied or assessed or any other tax upon owning, leasing or rents receivable
by Landlord from the Building, but excluding any federal, state or local income tax or inheritance, gift, succession or franchise
taxes imposed on Landlord.

 

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7.2.3         “Lease
Year” shall mean each 12-month period commencing January 1 and ending December 31, or any portion thereof, during the Term.

 

7.2.4         INTENTIONALLY
DELETED “

 

7.2.5         “Base
Year” shall mean the calendar year 2013.

 

7.3         Manner
of Payment. Tenant’s payment of Additional Rent shall be made as follows:

 

7.3.1         Prior
to or within a reasonable time after the commencement of each Lease Year (but in no event later than one hundred twenty (120)
days after commencement), Landlord shall furnish Tenant a written statement of the Estimated Payment for such Lease Year and a
calculation of Tenant’s monthly Additional Rent which shall be one-twelfth (1/12) of the amount of Estimated Payment. Additional
Rent shall be payable by Tenant for each month during such Lease Year at the same time and in the same manner as Basic Rent. If
at any time or times during such Lease Year it reasonably appears to Landlord that Tenant’s Pro Rata Share of Operating
Expenses and Real Property Taxes shall vary from the Estimated Payment, then Landlord by written notice to Tenant may revise the
Estimated Payment for such Lease Year and Additional Rent payments by Tenant for such Lease Year shall thereafter be equal to
one-twelfth (1/12) of the amount of such revised Estimated Payment.

 

7.3.2         Within
one hundred twenty (120) days after the end of each Lease Year, Landlord shall provide a statement (the “Statement”)
to Tenant showing: (a) the amount of Tenant’s Pro Rata Share of and the Real Property Taxes for the prior Lease Year, with
a listing of amounts for Real Property Taxes; (b) any amount paid by Tenant as Additional Rent during such prior Lease Year; and
(c) any revision to the Estimated Payment for the current Lease Year.

 

7.3.3         If
the Statement shows Tenant’s payments were less than Tenant’s Pro Rata Share the Real Property Taxes for the prior
Lease Year, then Tenant shall promptly pay to Landlord the difference. If the Statement shows an increase in the Estimated Payment
for the current Lease Year, then Tenant’s Additional Rent payments for the balance of the Lease Year shall be equal to one-twelfth
(1/12) of the amount of such increased Estimated Payment, and Tenant shall pay the difference between the new and former estimates
for the period from January 1 of the current Lease Year through the month in which the Statement is sent. Tenant shall pay any
such difference within thirty (30) days after Landlord
sends the Statement.

 

7.3.4         If
the Statement shows that Tenant’s payments exceeded the amount of Tenant’s Pro Rata Share of Operating Expenses and
Real Property Taxes, then Tenant shall receive a credit in the amount of the difference against payments of Additional Rent next
due. If the Lease Term shall have expired and no further Rent shall be due, Tenant shall receive a refund in the amount of such
difference within thirty (30) days after Landlord sends the Statement.

 

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7.3.5         So
long as Tenant’s obligations hereunder are not materially adversely affected thereby, Landlord reserves the right to reasonably
change, from time to time, the manner or timing of the foregoing payments. No delay by Landlord in providing the Statement (or
separate statements) shall be deemed a default by Landlord or a waiver of Landlord’s right to require payment of Tenant’s
obligations for actual or estimated Operating Expenses and Real Property Taxes.

 

7.4         Proration.
If the Term commences or terminates on a date other than the first or last day of a month then Additional Rent for
such first or final month shall be prorated to reflect the portion of such month(s) included in the Term. Such proration shall
be made by multiplying Tenant’s Pro Rata Share for such calendar month(s) by a fraction the numerator of which is the number
of days of the Term during such calendar month and the denominator of which is the number of days in such calendar month.

 

7.5         Landlord’s
Records. The determination of Additional Rent shall be made by Landlord. All billings by Landlord to Tenant for Additional
Rent shall be accompanied by reasonable back-up documentation or invoices evidencing expenditures made by Landlord.

 

8.          Personal
Property Taxes. Tenant shall pay, prior to delinquency, all Personal Property Taxes (as defined below) payable with
respect to all Property of Tenant (as defined below) located on the Premises or in the Building and promptly upon request of Landlord
shall provide written proof of such payment. As used herein, “Property of Tenant” shall mean and include, without
limitation, all personal property of Tenant including inventory, equipment, floor, ceiling and wall coverings, furniture and trade
fixtures kept or used on or installed in the Premises and any Tenant Improvements and other improvements to the Premises that
are owned by and separately assessed to Tenant. “Personal Property Taxes” shall include all property taxes assessed
against the Property of Tenant, whether assessed as real or personal property.

 

9.          Taxes
on Rent. The Rent provided for in this Lease is exclusive of any sales or other tax or charge upon, based upon or measured
by rents payable to Landlord hereunder, or any tax or other charge based upon or measured by the number of employees of Tenant,
or any other tax that is not currently in effect. If during the Term any such tax or other charge becomes payable by Landlord
to any governmental authority, the Rent hereunder shall be deemed increased by such amount upon thirty (30) days’ written
notice by Landlord to Tenant. The foregoing does not apply to federal, state or local income, gross receipts, inheritance, gift,
succession or franchise taxes payable by Landlord.

 

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10.       Services
by Landlord. Elevator service, Building and parking garage access through the security system, electricity, the cooling,
heating and ventilation system (HVAC), water and sewer shall be available at all times, subject to an after hours charge as set
forth below. The Building shall be open to the general public during Normal Business Hours. “Normal Business Hours”
shall be from 8:00 a.m. to 5:00 p.m., Monday through Friday, excluding legal holidays. Electricity and HVAC shall be available
to the Premises outside of Normal Business Hours at a rate of thirty dollars ($30.00) per hour (“After Hours Charge”).
The After Hours Charge shall be paid by Tenant with the installment of Basic Rent next coming due following Tenant’s use
of such after hours services. Landlord also shall provide daily (i.e.,
five days per week) janitorial service, lamp replacement for Landlord-furnished lighting, toilet room supplies and
perimeter window washing, all with reasonable frequency. Landlord shall provide security cards, keys or other appropriate access
devices that will allow Tenant access to the Premises at all times. The number of cards and/or keys issued shall be proportionate
to the total number of square feet in the Premises, up to a maximum of one (1) per two hundred (200) rental square feet. Additional,
duplicate or replacement cards and/or keys shall be the sole expense of Tenant and must be ordered from Landlord. Unless charged
to individual tenants (including Tenant) as hereinafter provided, the costs of such Landlord services described in this Section
10 shall be included as Operating Expenses and shall be paid as Additional Rent pursuant to Section
7. Landlord shall not be liable for any loss or damage caused by or resulting from any variation, interruption or failure
of such services due to any cause whatsoever, and no temporary interruption or failure of such services incident to the making
of repairs, alterations or improvements or due to accident or strike conditions shall be deemed an eviction of Tenant or relieve
Tenant from any of Tenant’s obligations hereunder.

 

If
Tenant requires electrical, mechanical, cooling, heating, ventilation, or other requirements beyond the usage by a typical tenant,
in Landlord’s reasonable judgment, then the cost of furnishing, installing, operating and maintaining the equipment and
appurtenances (including separate meters if requested by Landlord to satisfy these requirements) shall be borne by Tenant, with
Tenant cither paying directly to the utility if separately metered or paying to Landlord, as Rent, the reasonable cost of providing
such additional services, as determined by Landlord.

 

The
Building standard mechanical system is designed to accommodate heating loads generated by lights and equipment using up to 3.5
watts per square foot which costs are incorporated into the Basic Rent. Before installing lights or equipment in the Premises,
which in the aggregate exceed such amount, Tenant shall obtain the written permission of Landlord. Landlord may refuse to grant
such permission unless Tenant shall agree to pay Landlord’s costs to install supplementary air conditioning capacity or
electrical systems as necessitated by such equipment or lights or if the equipment or lights requested by Tenant will, in Landlord’s
reasonable judgment, overburden the Building’s structure or mechanical system(s) even if supplemented at Tenant’s
expense.

 

11.        Assignment
and Subletting.

 

11.1       Transfers
Requiring Consent. Tenant shall not cause or permit, directly or indirectly, voluntarily or involuntarily, any of the
following events (individually and collectively, a “Transfer”) (or any amendment to the instrument affecting the same)
without in each case first obtaining Landlord’s written consent, which consent will not be unreasonably withheld, conditioned
or delayed: (1) a sale, assignment, hypothecation, mortgage, encumbrance,
conveyance or other transfer of this Lease (or any interest therein); (2) a sublease of the Premises or any portion thereof; or
(3) the use or occupancy of the Premises or any portion thereof by anyone other than Tenant. If Tenant is a corporation, any transfer
of this Lease by merger, consolidation or liquidation, or change in the ownership of, or power to vote, its outstanding voting
stock (including redemption thereof), separately or in the aggregate, majority voting control, shall constitute a Transfer. If
Tenant is a partnership or limited liability company, any transfer of this Lease by merger, consolidation, liquidation or dissolution
of the partnership or limited liability company, or any change in the ownership of a majority of the partnership or membership
interests shall constitute a Transfer. As a condition to Landlord’s approval, any potential assignee otherwise approved
by Landlord shall assume and shall be jointly and severally liable with Tenant for all obligations of Tenant under this Lease
and any sublessee shall assume and shall be jointly and severally liable with Tenant for all obligations of Tenant under this
Lease with respect to the portion of the Premises that is subleased to such sublessee. This Lease shall not be assigned by operation
of law. Notwithstanding the provisions of this Section 11.1 to the contrary, Tenant may assign this Lease or sublet the Premises
or any portion thereof without Landlord’s consent to any entity that controls, is controlled by or is under common control with
Tenant, or to any entity resulting from a merger or consolidation with Tenant, or to any person or entity which acquires all the
assets of Tenant’s business as a going concern and the requirements of Section 11.2 shall not apply.

 

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11.2       Procedures.
Tenant shall request Landlord’s consent to any Transfer by written notice to Landlord at least sixty (60) days
prior to the proposed effective date of the Transfer. Tenant’s notice shall include the following information: (a) the identity
of the transferee, (b) the use of the Premises contemplated by the proposed transferee, (c) the proposed effective date of the
Transfer; and shall be accompanied by (x) financial information regarding the proposed transferee and (y) a copy of the proposed
transfer agreement containing the terms of the agreement between the parties. Tenant shall promptly provide Landlord with any
additional information concerning the proposed transferee (including financial information and detailed information regarding
the proposed use of the Premises) reasonably requested by Landlord. In addition to exercising its right to disapprove of the Transfer,
Landlord may elect at any time during such sixty (60) day period, (i) in the case of a Transfer for the balance of the Term, to
terminate this Lease as it relates to such space proposed to be subleased by Tenant, or (ii) in the case of a Transfer for less
than the balance of the Term, to temporarily delete such space from this Lease for the period of the proposed Transfer term only,
in which either event Basic Rent and Tenant’s Pro Rata Share shall be adjusted as appropriate. In the event Landlord chooses
not to exercise its rights under the preceding sentence and approves the Transfer under Section
11.1, then Tenant may proceed to enter into such Transfer. If Tenant transfers this Lease for more than the Rent then
payable under this Lease, Tenant shall pay to Landlord the excess amount of rent or other consideration over the Rent reserved
herein, as and when received by Tenant, as Rent hereunder. Landlord may charge Tenant a reasonable sum, to reimburse Landlord
for legal and administrative costs incurred in connection with reviewing any proposed Transfer and Tenant shall provide Landlord
with a copy of the assignment or sublease agreement. No Transfer shall relieve Tenant of any liability under this Lease. Landlord’s
consent to any Transfer shall not operate as a waiver of the necessity for consent to any subsequent Transfer.

 

11.3       Bankruptcy.
If this Lease is assigned pursuant to the provisions of the Revised Bankruptcy Act, 11 U.S.C., Section 101, et
seq., any and all consideration paid or payable in connection with such assignment shall be Landlord’s exclusive
property and paid or delivered to Landlord, and shall not constitute the property of Tenant or Tenant’s estate in bankruptcy.
Any person or entity to whom the Lease is assigned pursuant to the Revised Bankruptcy Act shall be deemed automatically to have
assumed all of Tenant’s obligations under this Lease.

 

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12.        Care
of Premises. Tenant shall keep the Premises in a neat, clean and sanitary condition and shall at all times preserve
them in good condition and repair, ordinary wear and tear or damage due to casualty or condemnation that are not the obligation
of Tenant to repair under Section 16 excepted. If Tenant
shall fail to do so, Landlord may at its option place the Premises into said condition and state of repair, and in such case Tenant
on demand shall pay or reimburse Landlord for the costs thereof. Tenant shall reimburse Landlord for the cost of replacing all
broken glass in the Premises (or the Common Areas if damage is the result of the negligence or intentional acts of Tenant, its
agents, employees, contractors or invitees) with glass of same or similar quality.

 

Tenant
shall comply with all laws, rules and regulations, including without limitation any laws, rules, or regulations related to handicapped
accessibility requirements, applicable to the Premises as a direct or indirect result of (a) Tenant’s use or occupancy of
the Premises; and (b) any modifications, alterations or improvements constructed on the Premises or the Building by Tenant or
at Tenant’s request, whether or not such modifications, alterations or improvements are approved by Landlord. Tenant shall
observe such reasonable rules and regulations concerning Tenant’s use or occupancy of the Premises or related to the Common
Areas as may be adopted by Landlord from time to time and made available to Tenant.

 

13.       Surrender
of Premises; Removal of Property. Subject to the terms of Section
16 relating to damage and destruction, upon expiration or termination of the Term, whether by lapse of time or otherwise
(including any holdover period), Tenant at its expense shall: (1) remove Tenant’s goods and effects and those of all persons claiming
under Tenant, (2) repair and restore the Premises to a condition as good as received by Tenant from Landlord or as thereafter
improved, reasonable wear and tear excepted, and (3) promptly and peacefully surrender the Premises (including surrender of all
Tenant Improvements and/or other alterations, additions or improvements installed in the Premises by Landlord or Tenant, except
Tenant’s trade fixtures that do not become part of the Building and the Required Removals as hereinafter defined) (the requirements
of this sentence referred to as the “Restoration Obligation”). On or before the ninetieth (90th) day preceding
the Expiration Date, Tenant shall notify Landlord in writing of the precise date upon which Tenant plans to surrender the premises
to Landlord. On expiration of the Term, Tenant shall remove all of Tenant’s moveable equipment, furniture, trade fixtures
and other personal property, all telecommunications and computer networking wiring and cabling serving the Premises from the Building,
unless Landlord requires such materials to be surrendered to Landlord, and any alteration or Tenant Improvement identified by
Landlord at least thirty (30) days prior to the Expiration Date (or within 30 days following the early termination of this Lease)
(collectively the Required Removals”). Any property of Tenant not removed from the Premises shall be deemed, at Landlord’s
option, to be abandoned by Tenant and Landlord may store such property in Tenant’s name at Tenant’s expense, and/or
dispose of the same in any manner permitted by law at Tenant’s expense. Tenant shall repair at its sole cost and expense,
all damage caused to the Premises or the Building by removal of the Required Removals, Improvements and Alterations as Tenant
shall be allowed or required to remove from the Premises by Landlord. If the Premises are not surrendered as of the end of the
Term in the manner and condition herein specified, Tenant shall indemnify, defend, protect and hold Landlord, its employees, agents
and contractors harmless from and against any and all damages resulting from or caused by Tenant’s delay or failure in so
surrendering the Premises, including, without limitation, any claims made by any succeeding tenant due to such delay or failure.
Tenant acknowledges that Landlord shall be attempting to lease the Premises with any such lease to be effective upon expiration
of the Term, and failure to surrender the Premises could cause Landlord to incur liability to such successor tenant for which
Tenant shall be responsible. Tenant hereby waives all claims for damages that may be reasonably caused by Landlord’s reentering
and taking possession of the Premises or removing and storing Tenant’s property as herein provided, and Tenant shall indemnify
and hold harmless Landlord therefrom. No such reentry shall be considered or construed to be a forcible entry.

 

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14.        Alterations.
Subject to installation of Tenant Improvements pursuant to Section
5, Tenant shall make no additions, changes, alterations or improvements (“Work”) to the Premises or any
electrical, mechanical or fire protection facilities pertaining to the Premises without the prior written consent of Landlord.
All Work shall be at Tenant’s sole cost and shall be performed in a good and workmanlike manner and all materials used shall
be of a quality comparable to those in the Premises and the Building and shall be in accordance with plans and specifications
approved in writing by Landlord. Landlord may require that all Work be performed under Landlord’s supervision, and Tenant
shall reimburse Landlord for any actual costs reasonably incurred as a result of such supervision which shall not be charged for
the installation of the Tenant Improvements noted in Section 5.
Tenant shall maintain a safe working environment, including the continuation of all fire and security protection devices, if any,
previously installed in the Premises by Landlord. All damages or injury done to the Premises or the Building by Tenant or by any
persons who may be in or upon the Premises or the Building with the express or implied consent of Tenant, including but not limited
to the cracking or breaking of any glass of windows and doors, shall be paid for by Tenant and Tenant shall pay for all damage
to the Building caused by acts or omissions of Tenant or Tenant’s officers, contractors, subcontractors, agents, invitees,
licensees, employees, successors or assigns. If Landlord consents to or supervises any Work by Tenant, the same shall not be deemed
a warranty as to the adequacy of the design, workmanship or quality of materials, and Landlord hereby expressly disclaims any
responsibility or liability for the same, except with respect to Landlord’s intentional misconduct. Landlord shall under
no circumstances have any obligation to repair, maintain or replace any portion of any Work. All alterations, additions and improvements
except Tenant’s trade fixtures that do not become a part of the Building shall remain in and be surrendered with the Premises
as a part thereof at the expiration or sooner termination of this Lease; provided, however, that Landlord may identify Required
Removals on Tenant’s plans. Tenant shall comply with all applicable laws, codes and regulations in connection with all Work.

 

15.        Entry
and Inspection. Landlord at all reasonable times and upon
one day’s prior notice (except in the
and at any time in case of emergency) may enter the Premises for the purpose of inspection, cleaning, repairing, altering or improving
the Premises or the Building subject to Tenant’s reasonable security requirements. Nothing in this Section
15 shall impose upon Landlord any obligation not expressly imposed elsewhere in this Lease. Landlord shall have the
right at reasonable times to enter the Premises for the purpose of showing the Premises to any fee owners, ground lessors, holders
of encumbrances on the interest of Landlord and any prospective purchasers, mortgagees, ground lessors or tenants of the Building
or a portion thereof. If during the last month of the Term Tenant shall have removed substantially all of Tenant’s property
and personnel from the Premises, Landlord may enter the Premises and repair, alter and redecorate the same without abatement of
Rent and without liability to Tenant, and such acts shall have no effect on this Lease.

 

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		16.	Damage or Destruction.

 

16.1       Damage
and Repair. In case of damage to the Premises or the Building by fire or other casualty, Tenant immediately shall notify
Landlord. If the Building is damaged by fire or any other cause to such extent that the cost of restoration, as reasonably estimated
by Landlord, will equal or exceed thirty percent (30%) of the replacement value of the Building (exclusive of foundations) just
prior to the occurrence of the damage, if insurance proceeds sufficient for full restoration are unavailable for any reason, or
if termination is required under the Master Lease or elected by the Master Landlord, then Landlord no later than the sixtieth
(60th) day following the damage may give Tenant a notice of election to terminate this Lease. In the event of such election this
Lease shall be deemed to terminate on the third (3rd) day after the giving of such notice, and Tenant shall surrender possession
of the Premises within thirty (30) days thereafter, and the Rent shall be apportioned as of the date of Tenant’s surrender
and any Rent paid for any period beyond such date shall be repaid to Tenant. If the cost of restoration as estimated by Landlord
shall amount to less than thirty percent (30%) of said replacement value of the Building and insurance proceeds sufficient for
restoration are available, or if Landlord does not elect to terminate this Lease under the second sentence of this Section
16.1. then Landlord shall restore the Building and the Premises (to the extent of the Tenant Improvements originally
provided by Landlord hereunder) with reasonable promptness, subject to delays beyond Landlord’s control and delays in the
making of insurance adjustments by Landlord, and Tenant shall have no right to terminate this Lease. To the extent that the Premises
are rendered untenantable, Rent shall proportionally abate during the period of such untenantability, unless such damage resulted
from or was contributed to directly or indirectly by the act, fault or neglect of Tenant, Tenant’s officers, contractors,
subcontractors, agents, employees, invitees or licensees, in which case Rent shall abate only to the extent Landlord receives
proceeds from any rental income insurance policy to compensate Landlord for a loss of Rent hereunder.

 

16.2       Business
Interruption. No damages, compensation or claims shall be payable by Landlord for inconvenience, loss of business or
annoyance arising from any repair or restoration of any portion of the Premises or the Building. Landlord shall use reasonable
efforts to effect any such repairs promptly.

 

16.3       Property
of Tenant. Landlord shall not carry insurance of any kind on any property of Tenant, including inventory, equipment,
floor, ceiling and wall coverings, furniture and trade fixtures, and any Tenant Improvements and other improvements to the Premises
or Work in the Premises that are paid for or performed by Tenant and Landlord shall not be obligated to repair any damage thereto
or replace the same. Tenant shall repair or restore such Tenant Improvements, Work and other Tenant property promptly following
Landlord’s restoration of the Premises.

 

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17.        Indemnification.
Tenant shall indemnify, hold harmless and defend Landlord, its agents, and employees from and against all liabilities,
damages, suits, obligations, fines, losses, claims, actions, judgments, penalties, charges, costs, or expenses, including, without
limitation, attorneys’ and other professional fees and disbursements (collectively, “Liabilities”), in conjunction
with any loss of life, personal injury and/or property damage arising out of or relating to the occupancy or use by Tenant, its
assignee, sublessee, agents, servants, employees, licensees, contractors, subcontractors, guests, visitors, or invitees of any
part of the Premises or the Building, except to the extent caused or contributed to by Landlord’s own willful acts or Landlord’s
breach of its obligations under this Lease. Landlord shall indemnify, hold harmless and defend Tenant, its agents, and employees
from and against all liabilities, damages, suits, obligations, fines, losses, claims, actions, judgments, penalties, charges,
costs, or expenses, including, without limitation, attorneys’ and other professional fees and disbursements (collectively,
“Liabilities”), in conjunction with any loss of life, personal injury and/or property damage arising out of or relating
to the negligence of Landlord, its agents, servants, employees, licensees, contractors, subcontractors, except to the extent caused
or contributed to by Tenant’s own willful acts or Landlord’s breach of its obligations under this Lease. Landlord
shall not be liable for any loss or damage to persons or property sustained by Tenant or other persons, which may be caused by
theft, or by any act or neglect of any tenant or occupant of the Building or any other third parties.

 

	LANDLORD’S INITIALS:		 	TENANT’S INITIALS: 	EB

 

		18.	Insurance.

 

18.1       Liability
Insurance. Throughout the Term Tenant, at its own expense, shall keep and maintain in full force and effect policies
of commercial general liability insurance including a contractual liability endorsement covering Tenant’s obligations under Section
17, and automobile liability insurance, insuring Tenant’s activities upon, in and about the Premises and the
Building against claims of bodily injury or death or property damage or loss with a limit of not less than Two Million Dollars
($2,000,000) combined single limit per occurrence and in the aggregate (per policy year), and One Million Dollars ($1,000,000)
each accident as respects automobile liability. In no event shall the liability deductible under such policies be in excess of
Five Thousand Dollars ($5,000).

 

18.2       Property
Insurance. Throughout the Term Tenant, at its own expense, shall keep and maintain in full force and effect what is
commonly referred to as “all risk” coverage insurance or its equivalent (but excluding earthquake and flood) on all
property of Tenant, including inventory, equipment, floor, ceiling and wall coverings, furniture and trade fixtures, and any Tenant
Improvements and other improvements or Work to the Premises that are paid for or performed by Tenant in an amount not less than
the then current One Hundred Percent (100%) replacement value thereof.

 

18.3       Workers’
Compensation Insurance. Throughout the Term Tenant, at its own expense, shall keep and maintain in full force and effect
workers’ compensation insurance in an amount equal to at least the minimum statutory amount then currently required in the
State of Washington.

 

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18.4       Insurance
Policy Requirements. All insurance required under this Section
18 shall be with companies rated A- or better in Best’s Insurance Guide (or equivalent rating if such rating
system is modified) and who are qualified to do business in the State of Washington. Tenant may, with the prior written consent
of Landlord, elect to have reasonable deductibles in connection with the policy required pursuant to Section
18.2 above. No insurance policy required under this Section
18 shall be cancelled or reduced in coverage and each insurance policy shall provide that it is not subject to cancellation
or material alteration except after thirty (30) days prior written notice to Landlord. Tenant shall deliver to Landlord prior
to the Commencement Date and from time to time thereafter, copies of policies of such insurance or certificates evidencing the
existence and amounts of same and, with the exception of the policy required under Section
18.3, naming Master Landlord and Landlord as an additional insured thereunder, and each policy or certificate shall
expressly provide that the interest of Master Landlord and Landlord therein shall not be affected by any breach by Tenant of any
provision of such policy or the policy for which such certificate evidences coverage. Further, all certificates shall expressly
provide that the coverage evidenced thereby shall be primary and that any policies carried by Master Landlord and Landlord shall
be excess and noncontributory with such primary insurance. The limits of any required insurance policy shall not limit the liability
of Tenant under this Lease.

 

18.5       Waiver
of Subrogation. Notwithstanding any other provision to the contrary herein, Landlord and Tenant release each other,
their agents and employees from liability and waive all right of recovery against each other for any loss from perils insured
against under their respective policies for damage caused by fire or other perils (including those covered by all risk extended
coverage) that are covered by insurance, regardless of any fault or negligence. Each party shall use reasonable efforts to cause
its insurance carriers to consent to the foregoing waiver of rights of subrogation against the other party. The waiver of subrogation
provided herein shall apply to the full extent, but only to the extent, that the same shall be valid and enforceable without impairment
of insurance coverage.

 

19.        Signs.
Tenant shall have right to exterior building signage with prior written consent. Landlord shall provide building standard
interior signage. Tenant shall not place on any exterior door or wall or the exterior or interior of any window thereof, or on
any part of the interior of the Premises visible from the exterior thereof, any sign or advertising matter and shall not place
any decoration, letter or other thing of any kind on the glass of any window or door of the Premises, without the prior written
consent of Landlord, which may be withheld in Landlord’s sole reasonable discretion. Notwithstanding anything to the contrary
herein. Tenant shall be granted the right to install signage on the exterior of the building in accordance with applicable codes
but subject to the Landlord’s approval which will not be unreasonably withheld. With respect to any sign or advertising
matter or decoration approved by Landlord, Tenant at its sole cost and expense shall maintain the same in good condition and repair
at all times. Landlord reserves the right to remove temporarily Tenant’s sign during any period when Landlord repairs, restores,
constructs or renovates the Premises or the Building. Upon the expiration or sooner termination of this Lease, Tenant at Landlord’s
request shall remove all signs, advertising matters or decorations at its sole cost and expense and repair any resulting damage
to the Premises and the Building.

 

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		20.	Insolvency and Liens.

 

20.1       Insolvency.
If Tenant becomes insolvent or voluntarily or involuntarily bankrupt, or if a receiver, trustee or other liquidating
officer is appointed for the business of Tenant, Landlord at its option may terminate this Lease and Tenant’s right of possession
under this Lease and in no event shall this Lease or any rights or privileges hereunder be an asset of Tenant in any bankruptcy,
insolvency or reorganization proceeding, or Landlord may treat such insolvency as a default under Section
22 of this Lease and invoke any and all remedies available thereunder. In the event of an assumption or assignment
by operation of law under the Federal Bankruptcy Code or any state bankruptcy or insolvency law and Landlord elects not to terminate
this Lease (or is otherwise prevented from electing to terminate this Lease), the trustee in assuming this Lease or any assignee
thereof shall: (a) remedy Tenant’s prior default under this Lease, (b) be bound by and assume all of the terms and conditions
of this Lease, and (c) provide adequate assurances of future performance of all the terms, conditions and covenants of this Lease,
which shall include making the following express covenants to the Landlord: (1) there is sufficient capital to pay all Rent due
under the Lease for the entire Term, (2) assumption of the Lease by any assignee will not cause Landlord to be in violation or
breach of any provision of any other lease, finance agreement, security instrument or operating agreement concerning the Building
or the Property, and (3) such assumption or assignment by the assignee will not substantially disrupt or impair any existing tenant
mix or development plans for the Building or the Property.

 

20.2       Liens.
Tenant shall not permit any lien to be filed against the Premises, the Building or the Property by reason of obligations
incurred by or on behalf of Tenant. Tenant hereby indemnifies and holds Landlord harmless from any liability from any such lien.
If any lien is filed against the Premises, the Building or the Property by any person claiming by, through or under Tenant, Tenant
shall, at Tenant’s expense, promptly cause such lien to be released, or, furnish to Landlord a bond in form and amount and
issued by a surety reasonably satisfactory to Landlord, indemnifying Landlord, the Building and the Property against all liability,
costs and expenses, including attorneys’ fees, which Landlord may incur as a result thereof. Provided that such bond has
been furnished to Landlord, Tenant, at its sole cost and expense and after written notice to Landlord, may contest, by appropriate
proceedings conducted in good faith and with due diligence, any lien, encumbrance or charge against the Premises arising from
work done or materials provided to and for Tenant, if, and only if, such proceedings suspend the collection thereof from Landlord,
Tenant and the Premises, and neither the Premises, the Building, the Property nor any part thereof or interest therein is or will
be in any danger of being sold, forfeited or lost.

 

		21.	Condemnation.

 

21.1       Entire
Taking. If all of the Premises or the Building or such portions of the Building as may be required for the reasonable
use of the Premises in Landlord’s reasonable opinion, are taken by eminent domain or conveyance in lieu thereof, this Lease
shall automatically terminate as of the date title vests in the condemning authority and all Rent shall be paid to that date.

 

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21.2       Partial
Taking. In the event of a taking of a part of the Building other than the Premises or of a portion of the Property,
and if Landlord determines that the Building should be restored in such a way as to alter the Premises materially, or if the Master
Lease so requires, Landlord may terminate this Lease and the term and estate hereby granted by notifying Tenant of such termination
within sixty (60) days following the date of vesting of title; and this Lease and the term and estate hereby granted shall expire
on the date specified in the notice of termination, not less than sixty (60) days after the giving of such notice, as fully and
completely as if such date were the date hereinbefore set forth for the expiration of the Term, and the Rent hereunder shall be
apportioned as of such date. Subject to the foregoing provisions of this Section
21.2, in case of taking of a part of the Premises, or a portion of the Building or the Property not required for the
reasonable use of the Premises, then this Lease shall continue in full force and effect and the Rent shall be equitably reduced
based on the proportion by which the net rentable area of the Premises is reduced (or if none of the Premises is taken, based
on the proportion by which the use of the Premises is materially reduced), such Rent reduction to be effective as of the date
title to such portion vests in the condemning authority.

 

21.3       Awards
and Damages. Landlord reserves all rights to damages to the Premises for any partial or entire taking by eminent domain,
and Tenant hereby assigns to Landlord any right Tenant may have to such damages or award (except for Property of Tenant as defined
in Section 8), and Tenant shall make no claim against Landlord
or the condemning authority for damages for termination of the leasehold interest. Tenant shall have the right however, to claim
and recover from the condemning authority compensation for any loss to which Tenant may be put for Tenant’s moving expenses,
business interruption or taking of Property of Tenant (not including Tenant’s leasehold interest) and other damages, but
only to the extent that such loss is awarded separately in the eminent domain proceeding and not out of or as part of the damages
recoverable by Landlord.

 

		22.	Default; Remedies.

 

22.1       Events
of Default. Each of the following shall be deemed a default by Tenant and a material breach of this Lease:

 

22.1.1      Failure
by Tenant to pay when due any Rent hereunder after three (3) days notice from Landlord of Teant’s faiure to pay; or

 

22.1.2      Failure
by Tenant to perform or observe any of the other terms, covenants, conditions, agreements or provisions of this Lease if such
failure shall continue for a period of fifteen (15) days after written notice thereof has been given to Tenant; provided,
however, that if any such failure cannot reasonably be cured within such fifteen (15) day period, then Tenant shall
not be deemed to be in default if Tenant commences to cure such failure within such fifteen (15) day period for as long as Tenant
is diligently prosecuting the cure thereof up to a total of forty-five (45) days after the notice from Landlord has been given;
or

 

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22.1.3      Any
misrepresentation or material omission of information made by Tenant orally to Landlord or in any documents or other materials
provided by Tenant to Landlord in connection with this Lease;

 

22.1.4      Any
vacation or abandonment by Tenant of the Premises. As used herein “vacation” shall mean a prolonged absence from the
Premises, and “abandonment” shall mean an absence from the Premises of five (5) days or more while Tenant is in default;
and

 

22.1.5      Tenant’s
failure to restore the Security Deposit to the amount required hereunder within the time required under Section 31.

 

22.2       Landlord
Remedies for Tenant Default. If any default occurs hereunder. Landlord may, at any time thereafter and without waiving
any other rights hereunder, do one or more of the following:

 

22.2.1      Landlord’s
Reentry. At its option, Landlord may enter the Premises or any part thereof, either with or without process of law,
and expel, remove or put out Tenant or any other persons who may be thereon, together with all personal property found therein;
and Landlord may terminate this Lease, or it may from time to time, without terminating this Lease and as agent of Tenant, relet
the Premises or any part thereof for such term or terms (which may be for a term less than or extending beyond the term hereof),
and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable,
with the right to repair, renovate, remodel, redecorate, alter and change the Premises, Tenant remaining liable for any deficiency
computed as hereinafter set forth. In the case of any default reentry and/or disposition by summary proceedings or otherwise,
all Rent shall become due thereupon and be paid up to the time of such reentry or dispossession together with such expenses as
Landlord may incur for attorneys’ fees, advertising expenses, brokerage fees and/or putting the Premises in good order or
preparing the same for rerental, together with interest thereon as provided in Section
22.5 hereof, accruing from the date of any such expenditure by Landlord. No such reentry or taking possession of the
Premises 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.

 

22.2.2      Reletting
of Premises. At the option of Landlord, any rents received by Landlord from any reletting as described in Section
22.2.1 shall be applied first to the payment of any indebtedness from Tenant to Landlord other than Rent; second, to
the payment of any costs and expenses of such reletting and including, but not limited to, attorneys’ fees, advertising
fees and brokerage fees, and to the payment of any repairs, renovations, remodeling, redecoration, alterations and changes in
the Premises; third, to the payment of Rent due and to become due hereunder, and, if after so applying said rents there is any
deficiency in the Rent to be paid by Tenant under this Lease, Tenant shall pay any deficiency to Landlord monthly on the dates
specified herein and any payment made or suits brought to collect the amount of the deficiency for any months shall not prejudice
in any way the right of Landlord to collect the deficiency for any subsequent month. The failure or refusal of Landlord to relet
the Premises or any part or parts thereof shall not release or affect Tenant’s liability hereunder, nor shall Landlord be
liable for failure to relet, or in the event of reletting, for failure to collect the rent thereof, but Landlord shall attempt
to mitigate its damages to the extent required by law (including the use of good faith efforts to relet the Premises), and in
no event shall Tenant be entitled to receive any excess of net rents collected over sums payable by Tenant to Landlord hereunder.

 

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22.2.3      Termination.
Notwithstanding any reletting without termination as described in Section
22.2.1, Landlord may at any time elect to terminate this Lease for such previous breach and default. Should Landlord
at any time terminate this Lease by reason of any default, in addition to any other remedies it may have, Landlord may recover
from Tenant the present value of the entire amount of Rent reserved by this Lease for the balance of the Term, as it may have
been extended, over the then fair market rental value of the Premises for the same period, plus all reasonable expenses, including
court costs and attorneys’ fees, incurred by Landlord in the collection of the same.

 

22.3       Cumulative
Remedies. All rights and remedies of Landlord herein enumerated shall be cumulative, and none shall exclude any other
right or remedy allowed by law.

 

22.4       Right
to Perform. If Tenant shall fail to pay any sum of money, required to be paid by Tenant to a person or entity other
than Landlord or shall fail to perform any other act to be performed by Tenant hereunder, and such failure shall continue for
twenty (20) days after notice thereof by Landlord, Landlord may, but shall not be obligated so to do, and without waiving or releasing
Tenant from any obligations of Tenant, make any such payment or perform any such other act on Tenant’s part to be made or
performed as provided in this Lease. Notwithstanding any other provision hereof, Landlord may undertake repairs in an emergency
or to prevent further damage to the Building or the Premises without delivery of notice and expiration of the cure period. Tenant
shall promptly on demand reimburse Landlord for any such payment or the cost of performing any such act, and shall pay Landlord
interest thereon at the rate provided in Section 22.5.

 

22.5       Late
Payments. All Rent not paid within three (3) days of the due date hereunder shall bear interest from the date due at
the rate of twelve percent (12%) per annum or the maximum permitted by law, whichever is less. In addition to any interest that
may be charged hereunder, if Tenant has been late in any payment more than once in any twelve (12) month period, then Landlord,
at its option, may collect from Tenant a service charge for the collection of any subsequent payment during that twelve (12) month
period that is not made within three (3) days of the due date in the amount equal to four percent (4%) of the amount due.

 

22.6       Waiver
of Redemption Rights. Tenant, for itself and on behalf of any and all persons claiming through or under it, including
creditors of all kinds, does hereby waive and surrender all right and privilege, which they or any of them may have under or by
reason of any present or future law, to redeem the Premises or have a continuance of this Lease for the term hereof, as it may
have been extended, after having been dispossessed or ejected therefrom by process of law or under the terms of this Lease or
after the termination of this Lease as herein provided.

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23.        Subordination
to Mortgage. This Lease is and shall be subordinate to any mortgage or deed of trust placed at any time on the Building
or the Property by Landlord and to any and all advances to be made thereunder and to interest thereon and all modifications, renewals
and replacements or extensions thereof (“Landlord’s Mortgage”), and Tenant shall attorn to the holder of any
Landlord’s Mortgage or any person or persons purchasing or otherwise acquiring the Building, the Property or the Premises
at any sale or other proceeding under any Landlord’s Mortgage; provided, however, that so long as Tenant is not in default
hereunder, Tenant’s possession of the Premises shall not be disturbed and all other rights of Tenant under this Lease shall
be recognized; provided, further, that Tenant’s attornment shall be deemed to occur automatically without further agreement
of Tenant. If the holder or prospective holder of any Landlord’s Mortgage wishes to have this Lease as a prior lien to the
Landlord’s Mortgage, it shall be so deemed upon the holder thereof so notifying Tenant. Tenant shall properly execute and
deliver within ten (10) business days after written notice any documents Landlord or the holder of any Landlord’s Mortgage
may require to carry out the provisions of this section. If, in connection with obtaining financing for the Property or the Building,
any holder of a Landlord’s Mortgage shall request modifications in this Lease as a condition to such financing, Tenant shall
not withhold, delay or defer its consent thereto, provided that such modifications do not materially increase the obligations
of Tenant hereunder or materially adversely affect the leasehold interest hereby created.

 

24.        Holdover.
If Tenant shall, with the written consent of Landlord, hold over beyond the expiration of the Term, which hold over
shall include Tenant’s failure to complete its Restoration Obligation, or if Landlord shall so notify Tenant at any time
upon or after the expiration of the Term, such tenancy shall be deemed a month-to-month tenancy that may be terminated as provided
by applicable state law. During such tenancy Tenant shall be bound by all the terms, covenants and conditions as herein specified
as far as applicable, except rental, which shall be One Hundred Fifty Percent (150%) of the Rent due prior to the expiration of
the Term.

 

25.        Notices.
All notices under this Lease shall be in writing and delivered in person or sent by registered or certified mail, return
receipt requested, postage prepaid, or sent by overnight courier to Landlord and to Tenant at the addresses set forth on the signature
page of this Lease (except that, after the Lease commences, any such notice may be so mailed or delivered by hand to Tenant at
the Premises), and to the holder of any Landlord’s Mortgage at such place as such holder shall specify to Tenant in writing;
or to such other addresses as may from time to time be designated by any such party in writing. Notices mailed as aforesaid shall
be deemed given at the earlier of three (3) days after the date of such mailing or upon the date of receipt.

 

26.        Costs
and Attorneys’ Fees. If Landlord employs attorneys in connection with the enforcement of this Lease, then Tenant
shall promptly reimburse Landlord for all reasonable attorneys’ fees (including court costs and disbursements) so incurred,
regardless of whether suit is commenced. If Tenant or Landlord shall bring any action arising out of this Lease, the losing party
shall reimburse the prevailing party for all reasonable attorneys’ fees (including court costs and disbursements) incurred
in such suit, at trial and on appeal, and such attorneys’ fees shall be deemed to have accrued on the commencement of such
action.

 

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27.        Estoppel
Certificates. Tenant, shall, from time to time, upon written request of Landlord, execute, acknowledge and deliver
to Landlord or its designee a written statement stating: the date this Lease was executed and the date it expires; the Commencement
Date and the date Tenant accepted the Premises; the amount of Basic Rent and any then applicable Additional Rent and any other
sums payable under the Lease and date to which such rent and/or other sums have been paid; and certifying to the best of its knowledge:
that this Lease is in full force and effect and has not been assigned, ratified, supplemented or amended in any way (or specifying
the date and terms of any agreement so affecting this Lease); that this Lease represents the entire agreement between the parties
as to this tenancy (or specifying the date and terms of any other agreements as to this tenancy); that all conditions under this
Lease to be performed by the Landlord have been satisfied (or specifying any such unsatisfied conditions and the extent to which
such conditions are unsatisfied); that all required contributions by Landlord to Tenant on account of the Tenant Improvements
have been received (or specifying the nature and amount of any such contributions that have not been received); that on this date
there are no existing claims, defenses or offsets that the Tenant has against the enforcement of this Lease by the Landlord (or
specifying the nature and amount of any such claims, defenses or offsets); that no Rent has been paid more than one month in advance
(or specifying the amount and payment dates of any Rent that has been so paid); the amount of the Security Deposit held by Landlord
(if any); and any other information or items reasonably requested by Landlord. It is intended that any such statement delivered
pursuant to this Section 27 may be relied upon by Landlord
and any prospective purchaser of or prospective holder of any mortgage upon Landlord’s interest in the Building and/or the
Property. If Tenant shall fail to provide such estoppel certificate within ten (10) business days of receipt by Tenant of a written
request by Landlord as herein provided, Tenant shall be deemed to have given such certificate as above provided without modification
and shall be deemed to have admitted the accuracy of any information supplied by Landlord to any prospective purchaser or mortgagee
and to have certified that this Lease is in full force and effect, that there are no uncured defaults in Landlord’s performance,
that the Security Deposit is as stated in the Lease, and that not more than one month’s Rent has been paid in advance.

 

28.        Transfer
of Landlord’s Interest; Limitation of Liability. In the event of any transfer or transfers of Landlord’s
interest in the Premises or in the Building, other than a transfer for security purposes only, the transferor shall be automatically
relieved of any and all obligations and liabilities on the part of Landlord accruing from and after the date of such transfer.
Tenant agrees to attorn to the transferee, such attornment shall be deemed to occur automatically without further agreement of
Tenant. Notwithstanding any other Lease provision, all covenants, undertakings and agreements herein made on the part of Landlord
are made and intended not as personal covenants, undertakings and agreements for the purpose of binding Landlord personally or
the assets of Landlord except Landlord’s interest in the Building and the Property, but are made and intended for the purpose
of binding only the Landlord’s interest in the Building and the Property, as the same may from time to time be encumbered.
No personal liability or personal responsibility is assumed by, nor shall at any time be asserted or enforceable against Landlord
or its partners, members, shareholders, directors and officers or their respective heirs, legal representatives, successors or
assigns on account of this Lease or on account of any covenant, undertaking or agreement of Landlord contained in this Lease.

 

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29.        Nonwaiver.
Waiver by Landlord of any term, covenant or condition herein contained or any breach thereof shall not be deemed to
be a waiver of such term, covenant, or condition or of any subsequent breach of the same or any other term, covenant or condition
herein contained. The subsequent acceptance of any Rent hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular Rent
so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such Rent.

 

30.        Quiet
Possession. Landlord warrants that so long as Tenant is not in default under this Lease beyond any applicable cure
period and so long as this Lease has not been terminated, Tenant’s quiet possession of the Premises during the Term shall
not be disturbed by Landlord or others claiming through Landlord.

 

31.        Application
of Security Deposit. As security for the full and faithful performance of every covenant and condition of this Lease
to be performed by Tenant, Tenant has paid to Landlord the Security Deposit specified in Section
1.6, receipt of which is hereby acknowledged. If Tenant shall default with respect to any covenant or condition of
this Lease, including but not limited to the payment of Rent, then Landlord may apply all or any part of the Security Deposit
to the payment of any sum in default or any sum which Landlord may be required to spend or incur by reason of Tenant’s default
or any other sum which Landlord may in its reasonable discretion deem necessary to spend or incur by reason of Tenant’s
default. In such event, Tenant within five (5) days of written demand therefor by Landlord shall deposit with Landlord the amount
so applied. If Tenant shall have fully complied with all covenants and conditions of this Lease, but not otherwise, the amount
of the Security Deposit then held by Landlord shall be repaid to Tenant (or at Landlord’s option, to the last assignee of
Tenant’s interest hereunder) within thirty (30) days after the expiration or sooner termination of this Lease. In the event
of Tenant’s default, Landlord’s rights to retain the Security Deposit shall be deemed to be in addition to any and
all other rights and remedies at law or in equity available to Landlord for Tenant’s default under this Lease. Landlord
shall not be required to keep any Security Deposit separate from its general funds and Tenant shall not be entitled to any interest
thereon.

 

		32.	General.

 

32.1       Headings.
Titles or captions to sections of this Lease are not a part of this Lease and shall have no effect upon the construction
or interpretation of any part hereof.

 

32.2       Successors
and Assigns. All of the covenants, agreements, terms and conditions contained in this Lease shall inure to and be binding
upon Landlord and Tenant and their respective heirs, executors, administrators, successors and permitted assigns.

 

32.3       No
Brokers. Tenant represents and warrants to Landlord that it has not engaged any broker, finder or other person who
would be entitled to any commission or fees from Landlord in respect of the negotiation, execution or delivery of this Lease,
except for Cushman & Wakefield Commerce, and Tenant shall indemnify and hold Landlord harmless from and against any loss,
cost, liability or expense incurred by Landlord as a result of any claim asserted by any other broker, finder or other person
based on any arrangements or agreements made or alleged to have been made by or on behalf of Tenant. The provisions of this Section
32.3 shall not apply to brokers with whom Landlord has an express written brokerage agreement.

 

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32.4       Entire
Agreement. This Lease contains all covenants and agreements between Landlord and Tenant relating in any manner to the
leasing, use and occupancy of the Premises and Tenant’s use of the Building and the Property and other matters set forth
in this Lease. No prior agreements or understandings pertaining to the same shall be valid or of any force or effect and the covenants
and agreements of this Lease shall not be altered, modified or added to except in writing signed by Landlord and Tenant.

 

32.5       Severability.
Any provision of this Lease that shall prove to be invalid, void or illegal shall in no way affect, impair or invalidate
any other provision hereof and the remaining provisions hereof shall remain in full force and effect.

 

32.6       Patriot
Act Compliance. Tenant certifies to Landlord, with the understanding that Landlord intends to and will rely upon this
certification, that:

 

(i)           Tenant
is not acting for or on behalf of, directly or indirectly, any person, entity, group or nation named or identified by any Executive
Order or United State Department of the Treasury as a terrorist, “Specially Designated National and Blocker Person,”
or any other banned or blocked person, entity, group or nation pursuant to any law, order, rule or regulation enforced or administered
by the Office of Foreign Assets Control;

 

(ii)          Tenant
is not instigating, facilitating or engaging in this transaction, directly or indirectly, for or on behalf of, any such person,
entity, group or nation; and

 

(iii)         Tenant
is acting for and on behalf of itself only, and not for any undisclosed principal(s).

 

Tenant
shall indemnify, hold harmless and defend Landlord from and against any and all civil, criminal and administrative claims, damages,
losses, risks, liabilities and expenses (including attorney’s fees and costs) arising from, or otherwise related to, any
breach of this certification.

 

32.7       Force
Majeure. Time periods for Landlord’s performance under any provisions of this Lease shall be extended for periods
of time during which Landlord’s performance is prevented due to circumstances beyond Landlord’s control, including
without limitation, strikes, embargoes, shortages of labor or materials, governmental regulations, acts of God, war or other strife.

 

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32.8       Changes
to Building. Landlord may at its option make any repairs, alterations, additions or improvements that Landlord may
deem necessary or advisable for the preservation, safety or improvement of the Building, so long as Tenant has reasonable access
to the Premises. Landlord shall have the right from time to time without thereby creating an actual or constructive eviction or
incurring any liability to Tenant, to renovate, repair, replace, and/or change the arrangement or location of any of the following:
sidewalks, terraces, landscaping, loading and/or delivery areas, parking areas, lobbies, entrances, passageways, doors and doorways,
corridors, stairs, toilets and other common areas of the Building, mechanical, cooling, heating, ventilation, security, electrical,
lighting, plumbing and other systems servicing the Building, and other similar common service portions of the Building. Landlord
may change the name of the Building at any time.

 

32.9       Building
Directory. Landlord shall maintain in the Building or on the Property a directory that shall include the name of the
Tenant.

 

32.10    Governing
Law. This Lease shall be governed by and construed in accordance with the laws of the State of Washington. Venue shall
be in King County Superior Court.

 

32.11    Authority.
If Tenant is a corporation, the individual executing this Lease on behalf of Tenant represents and warrants that he/she
is duly authorized to execute and deliver this Lease on behalf of the Tenant in accordance with a duly adopted resolution of the
board of directors of Tenant and in accordance with Tenant’s bylaws, and that this Lease is binding upon Tenant in accordance
with its terms. At Landlord’s request, Tenant shall, within thirty (30) days after execution of this Lease, deliver to Landlord
a certified copy of a resolution of the board of directors of Tenant authorizing or ratifying the execution of this Lease or provide
other evidence of Tenant’s authority reasonably satisfactory to Landlord.

 

32.12    Waiver
of Jury Trial. The parties hereto waive any right to a trial by jury in any action or proceeding based upon, or related
to, the subject matter of this Lease. This waiver is knowingly, intentionally and voluntarily made by Tenant, and Tenant acknowledges
that neither Landlord nor any person acting on behalf of Landlord has made any representations of fact to induce this waiver of
trial by jury or in any way to modify or nullify its effect. Tenant further acknowledges that Tenant has been represented (or
has had the opportunity to be represented) in the signing of this Lease and in the making of this waiver by independent legal
counsel, selected of Tenant’s own free will, and that Tenant has had the opportunity to discuss this waiver with counsel.
Tenant further acknowledges that Tenant has read and understands the meaning and ramifications of this waiver provision, and,
as evidence of this fact, signs his initials.

 

	 	TENANT’S INITIALS:	EB

 

32.13    Time
of Essence. Time is of the essence of this Lease.

 

32.14    Execution
in Counterparts. This Lease may be executed in two or more counterparts, each of which shall constitute an original
and all of which shall be one and the same agreement.

 

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32.15    No
Recording. Neither this Lease nor any memorandum hereof shall be recorded in the real property records of the county
wherein the Property is located.

 

32.16    Computation
of Time. The word “day” means “calendar day” herein and the computation of time shall include
all Saturdays, Sundays and holidays for purposes of determining time periods specified herein.

 

32.17    Joint
and Several Liability. If more than one person executes this Lease as Tenant, then (i) each of them is jointly and
severally liable for the keeping, observing and performing of all of the terms, covenants, conditions, provisions and agreements
of this Lease to be kept, observed and performed by Tenant, and (ii) the term “Tenant” as used in this Lease shall
mean and include each of them jointly and severally and any act of or notice from, or notice or refund to, or signature of, any
one or more of them, with respect to the tenancy of this Lease, including without limitation any renewal, extension, expiration,
termination or modification of this Lease, shall be binding upon each and all of the persons executing this Lease as Tenant with
the same force and effect as if each and all of them had so acted or so given or received such notice or refund or so signed.

 

    	26

    	 

    

  

IN
WITNESS WHEREOF, the Landlord and the Tenant have signed their name and affixed their seals the day and year first above written.

 

	LANDLORD:	2345 EASTLAKE LLC
	 	a
    Washington limited liability company
	 	 
	 	Address:    2323 Eastlake Avenue East, 4th Floor
	 	Seattle,
    WA 98102-3305
	 	 
	 	/s/ Christopher
    R. Hughes
	 	Christopher
    R. Hughes, Manager
	 	 
	TENANT:	THE LEGACY GROUP, INC.
	 	a
    Washington Corporation
	 	 
	 	Address:    10500 NE 8th Street, Suite 1125
	 	Bellevue,
    WA 98004
	 	 
	 	By	
	 	Its	CFO

 

    	27

    	 

    

 

EXHIBITS:

 

		A	LEGAL DESCRIPTION

		B	FLOOR PLAN

 

    	28

    	 

    

 

Landlord’s
Acknowledgement

 

	STATE OF WASHINGTON	)
	 	) ss.
	COUNTY OF KING	)

 

On
this 22nd day of June, 2012, before me, a Notary Public in and for the State of Washington, personally
appeared Christopher R. Hughes, personally known to me (or proved to me on the basis of satisfactory evidence) to be the
persons who executed this instrument, on oath stated that he/she was authorized to execute the instrument, and acknowledged it
as the Lease Agreement of 2345 EASTLAKE LLC, a Washington limited liability company, to be the free and voluntary act and
deed of said company for the uses and purposes mentioned in the instrument.

 

IN
WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

 

		 	
	 	NOTARY PUBLIC in and for the State of
	 	Washington, residing at  Kirkland, WA                     
	 	My appointment expires 8-26-12                               

 

 

    	29

    	 

    

 

Tenant’s Acknowledgement

 

	STATE OF WASHINGTON	)
	 	) ss.
	COUNTY OF King	)

 

On
this 20th day of June, 2012, before me, a Notary Public in and for the State of Washington, personally
appeared Ed Baehtdd, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who
executed this instrument, on oath stated that he/she was authorized to execute the instrument, and acknowledged it as the Lease
agreement of the Legacy Group Inc., to be the free and voluntary act and deed of said Company for the uses and
purposes mentioned in the instrument.

 

IN
WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

 

		 	
	NOTARY PUBLIC in and
    for the State of
	Washington, residing
    at  Bothell, WA                           
	My appointment expires
     01-09-2015                            

 

 

 

    	30

    	 

    

  

MASTER
LANDLORD CONSENT

 

The
undersigned, Landlord under the Master Lease, hereby consents to the subleasing of the Premises described herein. This consent
shall apply only to this Sublease and shall not be deemed to be a consent to any other assignment or sublease.

 

	MASTER LANDLORD:	Hughes-Northwest, Inc.,
	 	a Washington
    corporation
	 	 
	 	/s/ Christopher R. Hughes
	 	Christopher R.
    Hughes, President

 

Master
Landlord Acknowledgement

 

	STATE OF WASHINGTON	)
	 	) ss.
	COUNTY OF KING	)

 

On this 22nd
 day of June, 2012, before me, a Notary Public in and for the State of Washington, personally appeared Christopher
R. Hughes, personally known to me (or proved to me on the basis of satisfactory evidence) to be the persons who executed this
instrument, on oath stated that he/she was authorized to execute the instrument, and acknowledged it as the Lease Agreement
of HUGHES-NORTHWEST, INC., a Washington corporation, to be the free and voluntary act and deed of said company for the uses
and purposes mentioned in the instrument.

 

IN
WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written.

 

		 	
	NOTARY PUBLIC in and
    for the State of
	Washington, residing
    at  Kirkland, WA                       
	My appointment expires
     8-26-12                                 

 

 

 

    	31LOAN AGREEMENT

This Agreement dated as of September 5, 2013, is between Bank of America, N.A. (the "Bank") and Nu Skin Enterprises, Inc. (the "Borrower").

1.            FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS

1.1            Line of Credit Amount.

	(a)	During the availability period described below the Bank will provide a line of credit to the Borrower. The amount of the line of credit (the "Facility No. 1 Commitment") is Fifty Million Dollars ($50,000,000).

	(b)	This is a revolving line of credit. During the availability period, the Borrower may repay principal amounts and reborrow them.

	(c)	The Borrower agrees not to permit the principal balance outstanding to exceed the Facility No. 1 Commitment. If the Borrower exceeds this limit, the Borrower will immediately pay the excess to the Bank upon the Bank's demand.

1.2          Availability Period.

The line of credit is available between the date of this Agreement and September 4, 2014, or such earlier date as the availability may terminate as provided in this Agreement (the "Facility No. 1 Expiration Date").

The availability period for this line of credit will be considered renewed if and only if the Bank has sent to the Borrower a written notice of renewal for the line of credit no less than fifteen (15) days prior to the then-current Facility No. 1 Expiration Date (the "Renewal Notice") and the Borrower has not provided written notice of termination of this Agreement.   If this line of credit is renewed, it will continue to be subject to all the terms and conditions set forth in this Agreement except as modified by the Renewal Notice. If this line of credit is renewed, the term "Facility No. 1 Expiration Date" shall mean the date set forth in the Renewal Notice as the Facility No. 1 Expiration Date and the same process for renewal will apply to any subsequent renewal of this line of credit.  A renewal fee may be charged at the Bank's option; provided that the amount of the renewal fee must be specified in the Renewal Notice.

1.3          Repayment Terms.

	(a)	The Borrower will pay interest on September 30, 2013, and then on the last day of each quarter thereafter until payment in full of any principal outstanding under this facility; provided that with respect to  amounts bearing interest  at an  optional interest  rate (as described  below),  the Borrower will pay interest at the end of each applicable interest period.

	(b)	The Borrower will repay in full any principal, interest or other charges outstanding under this facility no later than the Facility No. 1 Expiration Date. Any interest period for an optional interest rate shall expire no later than the Facility No. 1 Expiration Date.

	(c)	The Borrower may prepay the loan in full or in part at any time. The prepayment will be applied to the outstanding amounts under the loan as directed by the Borrower.

1.4            Interest Rate.

(a)       The interest rate is a rate per year equal to the Bank's Prime Rate plus zero percentage points.

(b)       The Prime Rate is the rate of interest publicly announced from time to time by the Bank as its Prime Rate. The Prime Rate is set by the Bank based on various factors, including the Bank's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans. The Bank may price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Bank's Prime Rate.

 

1.5      Optional Interest Rates.

Instead of the interest rate based on the rate stated in the paragraph entitled "Interest Rate" above, the Borrower may elect the optional interest rates listed below for this Facility No. 1 during interest periods agreed to by the Bank and the Borrower. The optional interest rates shall be subject to the terms and conditions described later in this Agreement. Any principal amount bearing interest at an optional rate under this Agreement is referred to as a "Portion."  The following optional interest rates are available:

(a)       The LIBOR Rate plus 0.425 percentage points.

2.        OPTIONAL INTEREST RATES

2.1      Optional Rates.

Each optional interest rate is a rate per year.   Interest will be paid on the last day of each applicable interest period until payment in full of any principal outstanding under this Agreement. No Portion will be converted to a different interest rate during the applicable interest period.   Upon the occurrence of an event of default under this Agreement, the Bank may terminate the availability of optional interest rates for interest periods commencing after the default occurs. At the end of any interest period, the interest rate will revert to the rate stated in the paragraph(s) entitled "Interest Rate" above, unless the Borrower has designated another optional interest rate for the Portion.

2.2      LIBOR Rate.

The election of LIBOR Rates shall be subject to the following terms and requirements:

		(a)	The interest period during which the LIBOR Rate will be in effect will be one, two, or three months. The first day of the interest period must be a day other than a Saturday or a Sunday on which banks are open for business in New York and London and dealing in offshore dollars (a "LIBOR Banking Day"). The last day of the interest period and the actual number of days during the interest period will be determined by the Bank using the practices of the London inter-bank market.

(b)       Each LIBOR Rate Portion will be for an amount not less than One Hundred Thousand Dollars ($100,000).

	(c)	A LIBOR Rate may be elected only for the entire principal amount outstanding under the applicable facility.

		(d)	The "LIBOR Rate" means the interest rate determined by the following formula. (All amounts in the calculation will be determined by the Bank as of the first day of the interest period.)

LIBOR Rate =  London Inter-Bank Offered Rate

(1.00 - Reserve Percentage)

Where,

		(i)	"London Inter-Bank Offered Rate" means, for any applicable interest period, the rate per annum equal to the British Bankers Association LIBOR Rate (or any successor thereto approved by the Bank if the British Bankers Association is no longer making a LIBOR rate available), as published by Reuters (or other commercially available source providing quotations of such rate as selected by the Bank from time to time) at approximately 11:00 a.m. London  time two (2) London Banking Days before the commencement of the interest period, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a term equivalent to such interest period. If such rate is not available at such time for any reason, then the rate for that interest period will be determined by such alternate method as reasonably selected by the Bank. A "London Banking Day" is a day on which banks in London are open for business and dealing in offshore dollars.

 

 

 

  

		(ii)	"Reserve Percentage" means the total of the maximum reserve percentages for determining the reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency Liabilities, as defined in Federal Reserve Board Regulation D, rounded upward to the nearest 1/100 of one percent. The percentage will be expressed as a decimal, and will include, but not be limited to, marginal, emergency, supplemental, special, and other reserve percentages.

		(e)	The Borrower shall irrevocably request a LIBOR Rate Portion no later than 12:00 noon Nevada time on the LIBOR Banking Day preceding the day on which the London Inter-Bank Offered Rate will be set, as specified above.  For example, if there are no intervening holidays or weekend days in any of the relevant locations, the request must be made at least three days before the LIBOR Rate takes effect.

		(f)	The Bank will have no obligation to accept an election for a LIBOR Rate Portion if any of the following described events has occurred and is continuing:

(i)        Dollar deposits in the principal amount, and for periods equal to the interest period, of a LIBOR Rate Portion are not available in the London inter-bank market;

(ii)       the LIBOR Rate does not accurately reflect the cost of a LIBOR Rate Portion; or

		(iii)	adequate and reasonable means do not exist for determining the LIBOR Rate for any requested Interest Period.

		(g)	Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of acceleration or otherwise, will be accompanied by the amount of accrued interest on the amount prepaid and a prepayment fee as described below. A "prepayment" is a payment of an amount on a date earlier than the scheduled payment date for such amount as required by this Agreement.

		(h)	The prepayment fee is intended to compensate the Bank for the funding costs of the prepaid credit, if any. The prepayment fee will be determined by calculating the funding costs incurred by the Bank, based on the cost of funds at the time the interest rate was fixed, and subtracting the interest  income which can be  earned by  the  Bank  by reinvesting the prepaid funds at the Reinvestment Rate. The calculation is defined more fully below.

		(i)	The "Fixed Interest Rate Period" is the period during which the interest rate in effect at the time of the prepayment does not change. If the Fixed Interest Rate Period does not extend for the entire remaining life of the credit, then the following rules will apply:

		(i)	For any portion of the prepaid principal for which the scheduled payment date is after the end of the Fixed Interest Rate Period, the prepayment fee for that portion shall be calculated based only on the period through the end of the Fixed Interest Rate Period, as described below.

		(ii)	If a prepayment is made on a date on which the interest rate resets, then there will be no prepayment fee.

 

 

 

  

		(j)	The prepayment fee calculation is made separately for each Prepaid Installment.  A "Prepaid Installment" is the amount of the prepaid principal that would have been due on a particular scheduled payment date (the "Scheduled Payment Date").  However, as explained in the preceding paragraph, all amounts of the credit which would have been paid after the end of the Fixed Interest Rate Period shall be considered a single Prepaid Installment with a Scheduled Payment Date (for the purposes of this calculation) equal to the last day of the Fixed Interest Rate Period.

(k)       The prepayment fee for a particular Prepaid Installment will be calculated as follows:

		(i)	Calculate the monthly interest payments that would have accrued on the Prepaid Installment through the applicable Scheduled Payment Date, if the prepayment had not been made. The interest payments will be calculated using the Original Cost of Funds Rate.

		(ii)	Next, calculate the monthly interest income which could be earned on the Prepaid Installment if it were reinvested by the Bank at the Reinvestment Rate through the Scheduled Payment Date.

		(iii)	Calculate the monthly differences of the amounts calculated in (i) minus the amounts calculated in (ii).

		(iv)	If the remaining term of the Fixed Interest Rate Period is greater than one year, calculate the present value of the amounts calculated in (iii), using the Reinvestment Rate. The result of the present value calculation is the prepayment fee for the Prepaid Installment.

		(l)	Finally, the prepayment fees for all of the Prepaid Installments are added together. The sum, if greater than zero, is the total prepayment fee due to the Bank.

(m)      The following definitions will apply to the calculation of the prepayment fee:

		(i)	"Original Cost of Funds Rate" means the fixed interest rate per annum, determined solely by the Bank, at which the Bank would be able to borrow funds in the Bank Funding Markets for the duration of the Fixed Interest Rate Period in the amount of the prepaid principal and with a term, interest payment frequency, and principal repayment schedule matching the prepaid principal.

		(ii)	"Bank Funding Markets" means one or more wholesale funding markets available to the Bank, including the LIBOR, Eurodollar, and SWAP markets as applicable and available, or such other appropriate money market as determined by the Bank in its sole discretion.

		(iii)	"Reinvestment Rate" means the fixed rate per annum, determined solely by the Bank, as the rate at which the Bank would be able to reinvest funds in the amount of the Prepaid Installment in the Bank Funding Markets on the date of prepayment for a period of time approximating the period  starting on  the date of  prepayment  and ending on the Scheduled Payment Date.

		(n)	The Original Cost of Funds Rate and the Reinvestment Rate are the Bank's estimates only and the Bank is under no obligation to actually purchase or match funds for any transaction or reinvest any prepayment. The Bank may adjust the Original Cost of Funds Rate and the Reinvestment Rate to reflect the compounding, accrual basis, or other costs of the prepaid amount. The rates shall include adjustments for reserve requirements, federal deposit insurance and any other similar adjustment which the Bank deems appropriate. These rates are not fixed by or related in any way to any rate the Bank quotes or pays for deposits accepted through its branch system.

 

 

 

  

3.        FEES AND EXPENSES

3.1      Fees.

(a)       Unused Commitment Fee.   The Borrower agrees to pay a fee on any difference between the Facility No. 1 Commitment and the amount of credit it actually uses, determined by the daily amount of credit outstanding during the specified period.  The fee will be calculated at 0.175% per year.

This fee is due on September 30, 2013, and on the last day of each following quarter until the expiration of the availability period.

		(b)	Waiver Fee. If the Bank, at its discretion, agrees to waive or amend any terms of this Agreement, the Borrower will, at the Bank's option, pay the Bank a fee for each waiver or amendment in an amount advised by the Bank at the time the Borrower requests the waiver or amendment. Nothing in this paragraph shall imply that the Bank is obligated to agree to any waiver or amendment requested by the Borrower.   The Bank may impose additional requirements as a condition to any waiver or amendment.

3.2      Expenses.

The Borrower agrees to immediately repay the Bank for expenses that include, but are not limited to, filing, recording and search fees, appraisal fees, title report fees, and documentation fees.

3.3      Reimbursement Costs.

		(a)	The Borrower agrees to reimburse the Bank for any reasonable out-of-pocket expenses it incurs in the preparation of this Agreement  and any agreement or instrument required by this Agreement.  Expenses include, but are not limited to, reasonable out-of-pocket attorneys' fees.

		(b)	Unless specifically stated otherwise in this Agreement, including without limitation Sections 7.16 and 8.4, the Borrower agrees to reimburse the Bank for the cost of periodic field examinations of the Borrower's properties, books and records, at such intervals as the Bank may reasonably require. The actions described in this paragraph may be performed by employees of the Bank or by independent examiners.

4.        DISBURSEMENTS, PAYMENTS AND COSTS

4.1      Disbursements and Payments.

		(a)	Each payment by the Borrower will be made in U.S. Dollars and immediately available funds, without setoff or counterclaim.  Payments will be made by debit to a deposit account, if direct debit is provided for in this Agreement or is otherwise authorized by the Borrower. For payments not made by direct debit, payments will be made by mail to the address shown on the Borrower's statement, or by such other method as may be permitted by the Bank.

		(b)	For any payment under this Agreement made by debit to a deposit account, the Borrower will maintain sufficient immediately available funds in the deposit account to cover each debit.  If there are insufficient immediately available funds in the deposit account on the date the Bank enters any such debit authorized by this Agreement, the Bank may reverse the debit.

		(c)	Each disbursement by the Bank and each payment by the Borrower will be evidenced by records kept by the Bank. In addition, the Bank may, at its discretion, require the Borrower to sign one or more promissory notes.

 

 

 

 

  

		(d)	Prior to the date each payment of principal and interest and any fees from the Borrower becomes due (the "Due Date"), the Bank will send to the Borrower a statement of the amounts that will be due on that Due Date (the "Billed Amount").   The calculations in the bill will be made on the assumption that no new extensions of credit or payments will be made between the date of the billing statement and the Due Date, and that there will be no changes in the applicable interest rate.   If the Billed Amount differs from the actual amount due on the Due Date (the "Accrued Amount"), the discrepancy will be treated as follows:

		(i)	If the Billed Amount is less than the Accrued Amount, the Billed Amount for the following Due Date will be increased by the amount of the discrepancy. The Borrower will not be in default by reason of any such discrepancy.

(ii)       If the Billed Amount is more than the Accrued Amount, the Billed Amount for the following Due Date will be decreased by the amount of the discrepancy.

Regardless of any such discrepancy, interest will continue to accrue based on the actual amount of principal outstanding without compounding.  The Bank will not pay the Borrower interest on any overpayment.

4.2      Borrower's Instructions.

		(a)	The Bank may honor instructions for advances or repayments given by the Borrower (if an individual), or by any one of the individuals authorized to sign loan agreements on behalf of the Borrower, or any other individual designated by any one of such authorized signers (each an "Authorized Individual"). Any Authorized Individual may also provide instructions to the Bank for the designation of optional interest rates and/or the issuance of letters of credit, if such features are provided under this Agreement. The Bank may honor any such instructions made by any one of the Authorized Individuals, whether such instructions are given in writing or by telephone, telefax  or  Internet  and  intranet  websites  designated  by  the  Bank  with  respect  to  separate products or services offered by the Bank. The Bank's obligation to act on such instructions is subject to the terms, conditions and procedures stated elsewhere in this Agreement.

		(b)	Except as specified elsewhere in this Agreement, in following instructions from an Authorized Individual for advances or repayments, the Bank shall have the right, but not the obligation, to require that any advances be deposited in and repayments be withdrawn from a deposit account owned by the Borrower and held at the Bank.  The Bank may require additional written authorization from the Borrower before processing advances or repayments except as provided in this subparagraph.

		(c)	The Borrower will indemnify and hold the Bank harmless from all liability, loss, and costs in connection with any act resulting from instructions the Bank reasonably believes are made by any Authorized Individual, whether such instructions are given in writing or by telephone, telefax or electronic communications (including e-mail, Internet and intranet websites). This paragraph will survive this Agreement's termination, and will benefit the Bank and its officers, employees, and agents.

4.3      Direct Debit.

The Borrower agrees that on the Due Date the Bank will debit the Billed Amount from the Borrower's deposit account(s) with the Bank as designated in writing by the Borrower (the "Designated Account").

4.4      Banking Days.

Unless otherwise provided in this Agreement, a banking day is a day other than a Saturday, Sunday or other day on which commercial banks are authorized to close, or are in fact closed, in the state where the Bank's lending office is located, and, if such day relates to amounts bearing interest at an offshore rate (if any), means any such day on which dealings in dollar deposits are conducted among banks in the offshore dollar interbank market. All payments and disbursements which would be due on a day which is not a banking day will be due on the next banking day. All payments received on a day which is not a banking day will be applied to the credit on the next banking day.

 

 

  

4.5      Interest Calculation.

Except as otherwise stated in this Agreement, all interest and fees, if any, will be computed on the basis of a 360-day year and the actual number of days elapsed. This results in more interest or a higher fee than if a 365-day year is used.   Installments of principal which are not paid when due under this Agreement shall continue to bear interest until paid.

4.6      Default Rate.

Upon the occurrence of any default or after maturity or after judgment has been rendered on any obligation under this Agreement, all amounts outstanding under this Agreement, including any unpaid interest, fees, or costs, will at the option of the Bank bear interest at a rate which is 2.0 percentage point(s) higher than the rate of interest otherwise provided under this Agreement.   This may result in compounding of interest. This will not constitute a waiver of any default.

4.7      Taxes.

If any payments to the Bank under this Agreement are made from outside the United States, the Borrower will not deduct any foreign taxes from any payments it makes to the Bank. If any such taxes are imposed on  any payments made  by the Borrower (including payments under this paragraph), the Borrower will pay the taxes and will also pay to the Bank, at the time interest is paid, any additional amount which the Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such taxes had not been imposed. The Borrower will confirm that it has paid the taxes by giving the Bank official tax receipts (or notarized copies) within thirty (30) days after the due date.

4.8      Additional Costs.

The Borrower will pay the Bank, on demand, for the Bank's costs or losses arising from any Change in Law  which are allocated  to this Agreement or any credit outstanding under this Agreement.   The allocation will be made as determined by the Bank, using any reasonable method. The costs include, without limitation, the following:

		(a)	any reserve or deposit requirements (excluding any reserve requirement already reflected in the calculation of the interest rate in this Agreement); and

(b)       any capital requirements relating to the Bank's assets and commitments for credit.

"Change in Law" means the occurrence, after the date of this Agreement, of the adoption or taking effect of any new or changed law, rule, regulation or treaty, or the issuance of any request, rule, guideline or directive (whether or not having the force of law) by any governmental authority; provided that (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives issued in connection with that Act, and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a "Change in Law," regardless of the date enacted, adopted or issued.

5.        CONDITIONS

Before the Bank is required to extend the initial credit to the Borrower under this Agreement, it must receive any documents and other items it may reasonably require, in form and content acceptable to the Bank, including any items specifically listed below and before the Bank is required to extend any other credit to the Borrower under this Agreement, the representations and warranties of Borrower set forth in this Agreement shall be true and correct as of the date of such extension of credit.

5.1      Authorizations.

Evidence that the execution, delivery and performance by the Borrower of this Agreement and any instrument or agreement required under this Agreement have been duly authorized.

5.2      Governing Documents.

If required by the Bank, a copy of the Borrower's organizational documents.

5.3      Payment of Fees.

Payment of all fees and other amounts due and owing to the Bank, including without limitation payment of all accrued and unpaid expenses incurred by the Bank as required by the paragraph entitled "Reimbursement Costs."

5.4      Good Standing.

Certificates of good standing for the Borrower from its state of formation and from any other state in which the Borrower is required to qualify to conduct its business.

5.5      Legal Opinion.

A written opinion from the Borrower's legal counsel, covering such matters as the Bank may require. The legal counsel and the terms of the opinion must be acceptable to the Bank.

5.6      Insurance.

Evidence of insurance coverage, as required in the "Covenants" section of this Agreement.

6.        REPRESENTATIONS AND WARRANTIES

When the Borrower signs this Agreement, and until the Bank is repaid in full, the Borrower makes the following representations and warranties. Each request for an extension of credit constitutes a renewal of these representations and warranties as of the date of the request:

6.1      Formation.

Borrower is duly formed and validly existing under the laws of the state or other jurisdiction where organized.

6.2      Authorization.

This Agreement, and any instrument or agreement required hereunder, are within the Borrower's powers, have been duly authorized, and do not conflict with any of its organizational papers.

 

 

6.3      Enforceable Agreement.

This Agreement is  a legal, valid and  binding agreement  of the Borrower, enforceable  against the Borrower in accordance with its terms, and any instrument or agreement required hereunder, when executed and delivered, will be similarly legal, valid, binding and enforceable.

6.4      Good Standing.

In each state in which the Borrower does business, it is properly licensed, in good standing, and, where required, in compliance with fictitious name statutes, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

"Material Adverse Effect" means a material adverse effect on  (a) the business, operations, affairs, financial condition, assets or properties of the Borrower and its subsidiaries taken as a whole, or (b) the ability of the Borrower to perform its obligations under this Agreement or any and all other documents executed in connection herewith, or (c) the validity or enforceability of this Agreement or any and all other documents executed in connection herewith, or (d) the material rights or remedies of the Bank under this Agreement or any and all other documents executed in connection herewith.

6.5      No Conflicts.

This Agreement does not conflict with any law, agreement, or obligation by which the Borrower or any of its direct or indirect subsidiaries is bound, except where such conflict, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

6.6      Financial Information.

The financial statements (including any related notes) contained in the documents filed with the U.S. Securities and Exchange Commission (the "SEC"), as of the date filed:   (x) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto; (y) where applicable, were prepared in accordance with generally accepted accounting principles in the United States applied on a consistent basis throughout the periods covered (except that the unaudited financial statements may not contain footnotes); and (z) fairly present the consolidated financial position of the Borrower and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of operations and cash flows of the Borrower and its consolidated subsidiaries for the periods covered thereby. Since the date of the most recent financial statement provided (or deemed to be provided) to the Bank, there has been no material adverse change in the consolidated business condition (financial or otherwise), operations or properties of the Borrower.

6.7      Lawsuits.

There is no lawsuit, tax claim or other dispute pending or threatened against the Borrower or any of its direct or indirect subsidiaries which, if lost, would likely result in a Material Adverse Effect, except as have been disclosed in writing to the Bank.

6.8      Permits, Franchises.

The Borrower and each of  its  direct and  indirect subsidiaries possesses all permits, memberships, franchises, contracts and licenses required and all trademark rights, trade name rights, patent rights, copyrights, and fictitious name rights necessary to enable it to conduct the business in which it is now engaged, except where such failure to possess, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

 

6.9      Funded Obligations.

Neither the Borrower nor any of its direct or indirect subsidiaries is in default on any outstanding indebtedness for borrowed money of $2,000,000 or more, except as have been disclosed in writing to the Bank.

6.10    Tax Matters.

The Borrower has no knowledge of any assertion of any claim for taxes reasonably likely to require a payment in excess of $1,000,000 over the amount of reserves maintained on the books of the Borrower in accordance with generally accepted accounting principles, consistently applied, except as have been disclosed in writing to the Bank.

6.11    No Event of Default.

There is no event which is, or with notice or lapse of time or both would be, a default under this Agreement.

6.12   Insurance.

The Borrower has obtained, and maintained in effect, the insurance coverage required in the "Covenants" section of this Agreement.

6.13    ERISA Plans.

		(a)	Each Plan (other than a multiemployer plan) is in compliance in all material respects with ERISA, the Code and other federal or state law, including all applicable minimum funding standards and there have been no prohibited transactions with respect to any Plan (other than a multiemployer plan), which has resulted or could reasonably be expected to result in a material adverse effect.

(b)       With respect to any Plan subject to Title IV of ERISA:

(i)        No reportable event has occurred under Section 4043(c) of ERISA which requires notice.

(ii)       No action by the Borrower or any ERISA Affiliate to terminate or withdraw from any Plan has been taken and no notice of intent to terminate a Plan has been filed under Section 4041 or 4042 of ERISA.

		(c)	The following terms have the meanings indicated for purposes of this Agreement:

		(i)	"Code" means the Internal Revenue Code of 1986, as amended.

(ii)       "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

		(iii)	"ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code.

		(iv)	"Plan" means a plan within the meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate, including any multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.

 

 

 

  

7.        COVENANTS

The Borrower agrees, on a consolidated basis with its direct and indirect subsidiaries, as applicable, so long as credit is available under this Agreement and until the Bank is repaid in full:

7.1      Use of Proceeds.

		(a)	To use the proceeds of Facility No. 1 only for working capital and other general corporate purposes and, in  compliance  with applicable  law and  this Agreement, for the  purchase, redemption or other acquisition of its then-outstanding stock or membership interests.

		(b)	The proceeds of the credit extended under this Agreement may not be used directly or indirectly to purchase or carry any "margin stock" as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System, or extend credit to or invest in other parties for the purpose of  purchasing  or carrying  any such "margin stock," or to reduce  or retire any indebtedness incurred for such purpose.

7.2      Financial Information.

To provide the following financial information and statements in form and content acceptable to the Bank, and such additional information as requested by the Bank from time to time. The Bank reserves the right, upon written  notice to the Borrower,  to require  the Borrower to deliver financial information and statements to the Bank more frequently than otherwise provided below, and to use such additional information and statements to measure any applicable financial covenants in this Agreement.

		(a)	Within 90 days of the fiscal year end, the annual financial statements of the Borrower. These financial statements must be audited (with an opinion satisfactory to the Bank) by a Certified Public Accountant acceptable to the Bank. The statements shall be prepared on a consolidated basis.

		(b)	Within 60 days after each period's end (excluding the last period in each fiscal year), quarterly financial statements of the Borrower, certified and dated by an authorized financial officer. These financial statements may be company-prepared.  The statements shall be prepared on a consolidated basis.

		(c)	Promptly, upon sending or receipt, copies of any management letters and correspondence relating to management letters, sent or received by the Borrower to or from the Borrower's auditor. If no management letter is prepared, the Bank may, in its discretion, request a letter from such auditor stating that no deficiencies were noted that would otherwise be addressed in a management letter.

		(d)	Together with each of the annual and quarterly financial statements delivered hereunder, a compliance certificate of the Borrower, signed by an authorized financial officer and setting forth (i) the information and computations (in sufficient detail) to establish compliance with all financial covenants at the end of the period covered by the financial statements then being furnished and (ii) whether there existed as of the date of such financial statements and whether there exists as of the date of the certificate, any default under this Agreement applicable to the party submitting the information and, if any such default exists, specifying the nature thereof and the action the party is taking and proposes to take with respect thereto.

		(e)	Promptly upon the Bank's request, such other books, records, statements, lists of property and accounts, budgets, forecasts or reports as to the Borrower and as to each guarantor of the Borrower's obligations to the Bank as the Bank may request. Documents required to be delivered pursuant to paragraphs (a) and (b) of this Section 7.2 shall be deemed to have been delivered on the date on which such documents are filed for public availability on the SEC's Electronic Data Gathering and Retrieval System.

 

 

 

  

7.3      Funded Debt to EBITDA Ratio.

As of the last day of each quarterly reporting period for which the Bank requires financial statements, using the results of the twelve-month period ending with that reporting period, the consolidated basis a ratio of Funded Debt to EBITDA ("Funded Debt to EBITDA Ratio") shall not exceed 2.0:1.0.

"Funded Debt" means all outstanding liabilities for borrowed money and other interest-bearing liabilities, including current and long term debt.

"EBITDA" means net income, less income or plus loss from discontinued operations and extraordinary items, plus income taxes, plus interest expense, plus depreciation, depletion, and amortization, plus non- cash stock-based compensation expense.

7.4      Dividends and Distributions.

Not to declare or pay any dividends, or purchase, redeem, or otherwise acquire any  of its then- outstanding stock or membership interests, or declare or pay distributions and withdrawals (as applicable) to its owners (except (i) dividends payable in capital stock or (ii) payments and distributions made by a subsidiary of the Borrower to the Borrower or to another wholly-owned subsidiary of the Borrower) if, both before and immediately after giving effect thereto:

		(a)	Any event of default, or any event which, with notice or lapse of time or both, would constitute an event of default, exists under this Agreement; or

(b)       Borrower's consolidated Funded Debt to EBITDA Ratio would exceed 2.00:1.0.

7.5      Other Debts.

Not to have outstanding or incur any direct or contingent liabilities or lease obligations (other than those to the Bank or to any affiliate of the Bank), or become liable for the liabilities of others, without the Bank's written consent. This does not prohibit:

(a)       Acquiring goods, supplies, or merchandise on normal trade credit.

(b)       Endorsing negotiable instruments received in the usual course of business.

		(c)	Workers' compensation claims, self-insurance obligations, performance bonds, surety, appeal or similar bonds and completion or other financial guarantees provided by the Borrower in the usual course of business.

		(d)	Liabilities in existence on the date of this Agreement disclosed in the Borrower's most recent financial statement.

		(e)	Additional debts and capital lease obligations for the acquisition of fixed assets, to the extent permitted elsewhere in this Agreement.

		(f)	Indebtedness of any entity that becomes a subsidiary or Borrower or is merged into or consolidated with the Borrower or any subsidiary or any indebtedness assumed in connection with the acquisition of any such assets or secured by a lien on any such assets prior to the acquisition thereof; provided that such indebtedness exists at the time such entity becomes a subsidiary and is not created in contemplation of or in connection with such entity becoming a subsidiary.

 

 

 

 

  

		(g)	Intercompany indebtedness and guarantees by the Borrower of indebtedness of its subsidiaries.

		(h)	Extensions, renewals, refinancings and replacements of any of the foregoing indebtedness that do not increase the outstanding principal amount thereof (other than by the amount of any fees or expenses incurred in the extensions, renewals, refinancings and replacements thereof) or result in an earlier maturity date.

		(i)	Indebtedness under interest rate, commodities and foreign currency exchange protection agreements entered into in the ordinary course of business to manage existing or anticipated risks and not for speculative purposes.

(j)        Securitization Debt in connection with any Permitted Securitization Program.

		(k)	Additional debts and capital lease obligations which, together with the Facility No. 1 Commitment and the debts permitted under subparagraphs (d), (e), (f), (h) and (j), above, both before and immediately after giving effect thereto, do not result in Borrower's consolidated Funded Debt to EBITDA Ratio to exceed 2.0:1.0.

7.6      Other Liens.

Not to create, assume, or allow any security interest or lien (including judicial liens) on property the Borrower now or later owns, except:

(a)       Liens and security interests in favor of the Bank or any affiliate of the Bank.

(b)       Liens for taxes not yet due or contested in good faith by the Borrower.

		(c)	Liens outstanding on the date of this Agreement and disclosed in the Borrower's most recent financial statement, provided that the total principal amount of debts secured by such liens does not exceed Fifty Million Dollars ($50,000,000), and all extensions, renewals, refinancings and replacements of such indebtedness permitted pursuant to Section 7.5(h).

		(d)	Liens and security interests with respect to indebtedness permitted pursuant to Section 7.5(e) and all extensions, renewals, refinancings and replacements of such indebtedness permitted pursuant to Section 7.5(h).

		(e)	Liens on receivables of the Borrower or any direct or indirect subsidiary and the related assets of the type specified in clauses (i) through (iv) in the definition of "Permitted Securitization Program" in connection with any Permitted Securitization Program.

"Permitted Securitization Program" means any transaction or series of transactions that may be entered into by the Borrower or any direct or indirect subsidiary pursuant to which the Borrower or any direct or indirect subsidiary may sell, convey or otherwise transfer to (a) a Securitization Entity (in the case of a transfer by the Borrower or any direct or indirect subsidiary) and (b) any other Person (in the case of a transfer by a Securitization Entity), or may grant a security interest in, any receivables (whether now existing or arising or acquired in the future) of the Borrower or any direct or indirect subsidiary, and any assets related thereto including (i) all collateral securing such receivables, (ii) all contracts and contract rights and all guarantees or other obligations in respect of such receivables, (iii) proceeds of such receivables, and (iv) other assets (including contract rights) that are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving receivables; provided that the resultant Securitization Debt, together with all other Priority Indebtedness then outstanding, shall not exceed $200,000,000.

 

 

 

"Person" means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization or government (or an agency or political subdivision thereof).

"Priority Indebtedness" means (without duplication) the sum of (a) unsecured indebtedness of the Borrower's direct and indirect subsidiaries other than indebtedness owed to the Borrower or any other subsidiary of the Borrower, (b) indebtedness of the Borrower and its direct and indirect subsidiaries secured by a lien not permitted by subparagraphs (a) through (e) of this Section 7.6 and (c) Securitization Debt.

"Securitization Debt" for the Borrower and its direct and indirect subsidiaries means, in connection with any Permitted Securitization Program, (a) any amount as to which any Securitization Entity or other Person has recourse to the Borrower or any direct or indirect subsidiary with respect to such Permitted Securitization Program by way of any guaranty thereof and (b) the amount of any reserve account or similar account or asset shown as an asset of the Borrower or a direct or indirect subsidiary under generally accepted accounting principles, consistently applied, that has been pledged to any Securitization Entity or any other Person in connection with such Permitted Securitization Program.

"Securitization Entity" means a wholly-owned subsidiary of the Borrower (or another Person in which the Borrower or any of its direct or indirect subsidiaries makes an investment and to which the Borrower or any of its direct or indirect subsidiaries transfers receivables and related assets) that engages in no activities other than in connection with the financing of receivables and that is designated by the Board of Directors of the Borrower (as provided below) as a Securitization Entity (a) no portion of the indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Borrower or any of its direct or indirect subsidiaries (excluding guarantees of obligations (other than the principal of, and interest on, indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Borrower or any of its direct or indirect subsidiaries in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Borrower or any other direct or indirect subsidiaries of the Borrower, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with which neither the Borrower nor any of its direct or indirect subsidiaries has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Borrower or such direct or indirect subsidiary than those that might be obtained at the time from Persons that are not affiliates of the Borrower, other than fees payable in the ordinary course of business in connection with servicing receivables of such entity, and (c) to which neither the Borrower nor any of its direct or indirect subsidiaries has any obligation to maintain or preserve such entity's financial condition or cause such entity to achieve certain levels of operating results.

"Standard Securitization Undertakings" means representations, warranties, covenants, indemnities, repurchase obligations, performance guarantees and similar agreements entered into by the Borrower or any of its direct or indirect subsidiaries that are reasonably customary in a receivables securitization transaction.

7.7      Maintenance of Assets.

		(a)	Not to sell, assign, lease, transfer or otherwise dispose of any part of the Borrower's business or the Borrower's assets except (i) in the ordinary course of the Borrower's business, (ii) not in the ordinary course of the Borrower's business in an aggregate amount not exceeding Fifty Million Dollars ($50,000,000) in any fiscal year or (iii) in connection with any transaction or series of transactions pursuant to which direct and indirect subsidiaries of Borrower are converted, restructured or reorganized for tax or corporate planning, whether by (1) transfer, (2) acquisition, (3) contribution, (4) merger, (5) consolidation, (6) voluntary dissolution, (7) liquidation, (8) recapitalization, (9) change in identity, form, or place of organization, or (10) otherwise, in each case the result of which may cause a direct or indirect sale, assignment or transfer of equity interests and/or other assets between and among Borrower and/or various subsidiaries of Borrower, provided, both before and immediately after giving effect thereto:

 

 

 

  

		(i)	No event of default, or any event which, with notice or lapse of time or both, would constitute an event of default, shall exist under this Agreement; or

(ii)       Borrower's consolidated Funded Debt to EBITDA Ratio shall not exceed 2.00:1.0.

		(b)	Not to sell, assign, lease, transfer or otherwise dispose of any assets for less than fair market value, as reasonably determined in good faith by the Borrower, or enter into any agreement to do so.

		(c)	To maintain and preserve all rights, privileges, and franchises the Borrower now has, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

		(d)	To make any repairs, renewals, or replacements to keep the Borrower's properties in good working condition, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

7.8      Investments.

Not to have any existing, or make any new, investments in any individual or entity, or make any capital contributions or other transfers of assets to any individual or entity, except for:

(a)       Existing investments disclosed to the Bank in writing.

(b)       Investments in the Borrower's direct and indirect subsidiaries.

(c)       Investments in any of the following:

(i)        certificates of deposit;

(ii)       U.S. treasury bills and other obligations of the federal government;

		(iii)	readily marketable securities (including commercial paper, but excluding restricted stock and stock subject to the provisions of Rule 144 of the Securities and Exchange Commission).

		(d)	The purchase, redemption or other acquisition of its then-outstanding stock or membership interests to the extent permitted under Section 7.4 hereof.

		(e)	Investments consisting of any acquisition permitted pursuant to Section 7.11(b) hereof.

(f)            Investments consisting of any loan permitted pursuant to Section 7.9 hereof.

(g)       Other investments that do not exceed an aggregate amount of Twenty-Five Million Dollars ($25,000,000) outstanding at any one time.

 

 

 

7.9      Loans.

Not to make any loans, advances or other extensions of credit to any individual or entity, except for:

(a)       Existing extensions of credit disclosed to the Bank in writing.

(b)       Extensions of credit to the Borrower's current subsidiaries.

		(c)	Extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business to non-affiliated entities.

		(d)	Loans that do not exceed an aggregate amount of Ten Million Dollars ($10,000,000) outstanding at any one time.

7.10    Change of Ownership.

Not to cause, permit, or suffer any change in capital ownership such that there is a change of more than thirty percent (30%) in the direct or indirect capital ownership of the Borrower.

7.11    Additional Negative Covenants.

Not to, without the Bank's written consent:

		(a)	Enter into any consolidation, merger, or other combination, or become a partner in a partnership, a member of a joint venture, or a member of a limited liability company.

		(b)	Acquire or purchase a business or its assets if, both before and immediately after giving effect thereto, (i) any event of default, or any event which, with notice or lapse of time or both, would constitute an event of default, exists under this Agreement; or (ii) the Borrower's consolidated Funded Debt to EBITDA Ratio exceeds 2.00:1.0.   Before making any such acquisition, the Borrower must obtain the prior, effective written consent or approval of the board of directors or equivalent governing body of the business being acquired.

		(c)	Engage in any business activities substantially different from the Borrower's present business and businesses reasonably related to or complementary extensions of such business.

(d)       Liquidate or dissolve the Borrower's business.

7.12    Notices to Bank.

To promptly notify the Bank in writing of:

		(a)	Any substantial dispute between any governmental authority and the Borrower, which individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

		(b)	Any event of default under this Agreement, or any event which, with notice or lapse of time or both, would constitute an event of default.

		(c)	Any material adverse change in the Borrower's business condition (financial or otherwise), operations, properties or prospects, or ability to repay the credit.

		(d)	Any change in the Borrower's name, legal structure, state of registration (for a registered entity), place of business, or chief executive office if the Borrower has more than one place of business.

 

 

 

  

		(e)	Any event or condition relating to health, safety, the environment, or any hazardous substances with regard to the Borrower's property, activities, or operations which could reasonably be expected to result in liability of the Borrower in excess of Ten Million Dollars ($10,000,000) in the aggregate.

7.13    Insurance.

		(a)	General Business Insurance. To maintain insurance as is usual for the business it is in, which may include self-insurance (whether by a captive insurance company or otherwise),  as determined by the Borrower exercising reasonable discretion.

		(b)	Evidence of Insurance.  Upon the request of the Bank, to deliver to the Bank a copy of each insurance policy, or, if permitted by the Bank, a certificate of insurance listing all insurance in force.

7.14     Compliance with Laws.

To comply with the laws (including any fictitious or trade name statute), regulations, and orders of any government body with authority over the Borrower's business. The Bank shall have no obligation to make any advance to the Borrower except in compliance with all applicable laws and regulations and the Borrower shall fully cooperate with the Bank in complying with all such applicable laws and regulations.

7.15    Books and Records.

To maintain adequate books and records.

7.16    Audits.

To allow the Bank and its agents to inspect the Borrower's properties and examine, audit, and make copies of books and records at any time upon reasonable prior notice to the Borrower.   If any of the Borrower's properties, books or records are in the possession of a third party, the Borrower authorizes that third party to permit the Bank or its agents to have access to perform inspections or audits and to respond to the Bank's requests for information concerning such properties, books and records. As long as no event of default, or any event which, with notice or lapse of time or both, would constitute an event of default, under this Agreement has occurred and is continuing, the Bank shall pay all costs and expenses of such audits and inspections and, if an event of default, or any event which, with notice or lapse of time or both, would constitute an event of default, under this Agreement has occurred and is continuing, then the Borrower shall pay all costs and expenses of such audits and inspections.

7.17    Cooperation.

To take any action reasonably requested by the Bank to carry out the intent of this Agreement.

8.        HAZARDOUS SUBSTANCES

8.1      Indemnity Regarding Hazardous Substances.

The Borrower will indemnify and hold harmless the Bank from any loss or liability the Bank incurs in connection with or as a result of this Agreement, which directly or indirectly arises out of the use, generation, manufacture, production, storage, release, threatened release, discharge, disposal or presence of a hazardous substance. This indemnity will apply whether the hazardous substance is on, under or about the Borrower's property or operations or property leased to the Borrower. The indemnity includes but is not limited to out-of-pocket attorneys' fees. The indemnity extends to the Bank, its parent, subsidiaries and all of their directors, officers, employees, agents, successors, attorneys and assigns.

 

 

8.2      Compliance Regarding Hazardous Substances.

The Borrower represents and warrants that the Borrower has complied with all current and future laws, regulations and ordinances or other requirements of any governmental authority relating to or imposing liability or standards of conduct concerning protection of health or the environment or hazardous substances.

8.3      Notices Regarding Hazardous Substances.

Until full repayment of the loan, the Borrower will promptly notify the Bank in writing of any threatened or pending investigation of the Borrower or its operations by any governmental agency under any current or future law, regulation or ordinance pertaining to any hazardous substance.

8.4      Site Visits, Observations and Testing.

The Bank and its agents and representatives will have the right at any reasonable time, after giving reasonable notice to the Borrower, to enter and visit any locations of the Borrower or its subsidiaries for the purposes of taking and removing environmental samples and conducting tests.   Notwithstanding anything to the contrary in this Agreement, as long as no event of default, or any event which, with notice or lapse of time or both, would constitute an event of default, under this Agreement has occurred and is continuing, the Bank shall pay all costs and expenses of such environmental investigation and testing and, if an event of default, or any event which, with notice or lapse of time or both, would constitute an event of default, under this Agreement has occurred and is continuing, then the Borrower shall pay all costs and expenses of such environmental investigation and testing.   The Bank will make reasonable efforts during any  site visit, observation or testing conducted  pursuant to  this paragraph to  avoid interfering with the Borrower's operations. The Bank is under no duty to conduct tests, and any such acts by the Bank will be solely for the purposes of preserving the Bank's rights under this Agreement. No site visit, observation or testing or any report or findings made as a result thereof ("Environmental Report") (i) will result in a waiver of any default of the Borrower; (ii) impose any liability on the Bank; or (iii) be a representation or warranty of any kind regarding the Environmental Report (including its accuracy or completeness). In the event the Bank has a duty or obligation under applicable laws, regulations or other requirements to disclose an Environmental Report to the Borrower or any other party, the Borrower authorizes the Bank to make such a disclosure. The Bank may also disclose an Environmental Report to any regulatory authority, and to any other parties as necessary or appropriate in the Bank's judgment. The Borrower further understands and agrees that any Environmental Report or other information regarding a site visit, observation or testing that is disclosed to the Borrower by the Bank or its agents and representatives is to be evaluated (including any reporting or other disclosure obligations of the Borrower) by the Borrower without advice or assistance from the Bank.

8.5      Definition of Hazardous Substances.

"Hazardous substances" means any substance, material or waste that is or becomes designated or regulated as "toxic," "hazardous," "pollutant," or "contaminant" or a similar designation or regulation under any current or future federal, state or local law (whether under common law, statute, regulation or otherwise) or judicial or administrative interpretation of such, including without limitation petroleum or natural gas.

8.6      Continuing Obligation.

The Borrower's obligations to the Bank under this Article, except the obligation to give notices to the Bank, shall survive termination of this Agreement and repayment of the Borrower's obligations to the Bank under this Agreement.

 

 

9.        DEFAULT AND REMEDIES

If any of the following events of default occurs, the Bank may do one or more of the following: declare the Borrower in default, stop making any additional credit available to the Borrower, and require the Borrower to repay its entire debt immediately and without prior notice. If an event which, with notice or the passage of time, will constitute an event of default has occurred and is continuing, the Bank has no obligation to make advances or extend additional credit under this Agreement.   In addition, if any event of default occurs, the Bank shall have all rights, powers and remedies available under any instruments and agreements required by or executed in connection with this Agreement, as well as all rights and remedies available at law or in equity.   If an event of default occurs under the paragraph entitled "Bankruptcy," below, with respect to the Borrower, then the entire debt outstanding under this Agreement will automatically be due immediately.

9.1      Failure to Pay.

The Borrower fails to make a payment of principal under this Agreement when due, or fails to make a payment of interest, any fee or other sum under this Agreement within five (5) days after the date when due.

9.2      Other Bank Agreements.

Any default occurs under any other agreement the Borrower or any of the Borrower's related entities or affiliates has with the Bank or any affiliate of the Bank.

9.3      Cross-default.

Any default occurs under any agreement in connection with any credit the Borrower or any of the Borrower's related entities or affiliates has obtained from anyone else or which the Borrower or any of the Borrower's related entities or affiliates has guaranteed in the amount of Seven Million Five Hundred Thousand Dollars ($7,500,000) or more in the aggregate.

9.4      False Information.

The Borrower has given the Bank materially false or misleading information or representations.

9.5      Bankruptcy.

The Borrower or any direct or indirect subsidiary of the Borrower files a bankruptcy petition, a bankruptcy petition is filed against any of the foregoing parties, or the Borrower or any direct or indirect subsidiary of the Borrower makes a general assignment for the benefit of creditors.

9.6      Receivers.

A receiver or similar official is appointed for a substantial portion of the Borrower's (on a consolidated basis) business, or the business is terminated or the Borrower is liquidated or dissolved.

9.7      Judgments.

Any judgments or arbitration awards are entered against the Borrower or any direct or indirect subsidiary of the Borrower, or the Borrower or any direct or indirect subsidiary of the Borrower enters into any settlement agreements with respect to any litigation or arbitration, in an aggregate amount not covered by insurance of Ten Million Dollars ($10,000,000) or more.

 

 

9.8      Material Adverse Change.

A material adverse change occurs in the Borrower's consolidated business condition (financial or otherwise), operations, properties or prospects, or ability to repay the loan.

9.9      Government Action.

Any government authority takes action that materially adversely affects the Borrower's consolidated financial condition or ability to repay the loan.

9.10    Default under Related Documents.

Any default occurs under any document required by or delivered in connection with this Agreement or any such document is no longer in effect.

9.11    ERISA Plans.

Any one or more of the following events occurs with respect to a Plan subject to Title IV of ERISA, provided such event or events could reasonably be expected, in the judgment of the Bank, to have a material adverse effect:

(a)       A reportable event shall occur under Section 4043(c) of ERISA.

		(b)	Any Plan termination (or commencement of proceedings to terminate a Plan) or the full or partial withdrawal from a Plan under Section 4041 or 4042 of ERISA.

9.12    Other Breach Under Agreement.

A default occurs under any other term or condition of this Agreement not specifically referred to in this Article. This includes any failure or anticipated failure by the Borrower (or any other party named in the Covenants section) to comply with any financial covenants set forth in this Agreement, whether such failure is evidenced by financial statements delivered to the Bank or is otherwise known to the Borrower or the Bank.

10.      ENFORCING THIS AGREEMENT; MISCELLANEOUS

10.1    GAAP.

Except as otherwise stated in this Agreement, all financial information provided to the Bank and all financial covenants will be made under generally accepted accounting principles, consistently applied.

10.2    Governing Law.

This Agreement is governed by and shall be interpreted according to federal law and the laws of the State of Utah. If state or local law and federal law are inconsistent, or if state or local law is preempted by federal law, federal law governs. If the Bank has greater rights or remedies under federal law, whether as a national bank or otherwise, this paragraph shall not be deemed to deprive the Bank of such rights and remedies as may be available under federal law.

10.3    Successors and Assigns.

This Agreement is binding on the Borrower's and the Bank's successors and assignees. The Borrower agrees that it may not assign this Agreement without the Bank's prior consent.   The Bank may sell participations in or assign this loan, and may exchange information about the Borrower (including, without limitation, any information regarding any hazardous substances) with actual or potential participants or assignees. If a participation is sold or the loan is assigned, the purchaser will have the right of set-off against the Borrower.

 

  

10.4    Dispute Resolution Provision.

This paragraph, including the subparagraphs below, is referred to as the "Dispute Resolution Provision." This Dispute Resolution Provision is a material inducement for the parties entering into this agreement.

		(a)	This Dispute Resolution Provision concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this agreement (including any renewals, extensions or modifications); or (ii) any document related to this agreement (collectively a "Claim").   For the purposes of this Dispute Resolution Provision only, the term "parties" shall include any parent corporation, subsidiary or affiliate of the Bank involved in the servicing, management or administration of any obligation described or evidenced by this agreement.

		(b)	At the request of any party to this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the "Act"). The Act will apply even though this agreement provides that it is governed by the law of a specified state.

		(c)	Arbitration proceedings will be determined in accordance with the Act, the then-current rules and procedures for the  arbitration of financial  services disputes  of the American  Arbitration Association or any successor thereof ("AAA"), and the terms of this Dispute Resolution Provision. In the event of any inconsistency, the terms of this Dispute Resolution Provision shall control. If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration clause, the Bank may designate another arbitration organization with similar procedures to serve as the provider of arbitration.

		(d)	The arbitration shall be administered by AAA and conducted, unless otherwise required by law, in any U.S. state where real or tangible personal property collateral for this credit is located or if there is no such collateral, in the state specified in the governing law section of this agreement. All Claims shall be determined by one arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided by three arbitrators. All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty (30) days of the close of the hearing. However, the arbitrator(s), upon a showing of good cause, may extend the commencement of the hearing for up to an additional sixty (60) days. The arbitrator(s) shall provide a concise written statement of reasons for the award. The arbitration award may be submitted to any court having jurisdiction to be confirmed and have judgment entered and enforced.

		(e)	The arbitrator(s) will give effect to statutes of limitation in determining any Claim and shall dismiss the arbitration if the Claim is barred under the applicable statutes of limitation. For purposes of the application of any statutes of limitation, the service on AAA under applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit.   Any dispute concerning this arbitration provision or whether a Claim is arbitrable shall be determined by the arbitrator(s), except as set forth at subparagraph (h) of this Dispute Resolution Provision. The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this agreement.

		(f)	This paragraph does not limit the right of any party to: (i) exercise self-help remedies, such as but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies.

 

		(g)	The filing of a court action is not intended to constitute a waiver of the right of any party, including the suing party, thereafter to require submittal of the Claim to arbitration.

		(h)	Any arbitration or court trial (whether before a judge or jury) of any Claim will take place on an individual basis without resort to any form of class or representative action (the "Class Action Waiver"). The Class Action Waiver precludes any party from participating in or being represented in any class or representative action regarding a Claim.   Regardless of anything else in this Dispute Resolution Provision, the validity and effect of the Class Action  Waiver may be determined only by a court and not by an arbitrator. The parties to this agreement acknowledge that the Class Action Waiver is material and essential to the arbitration of any disputes between the parties and is nonseverable from the agreement to arbitrate Claims. If the Class Action Waiver is limited, voided or found unenforceable, then the parties' agreement to arbitrate shall be null and void with respect to such proceeding, subject to the right to appeal the limitation or invalidation of the Class Action Waiver. The Parties acknowledge and agree that under no circumstances will a class action be arbitrated.

(i)        By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim. Furthermore, without intending in any way to limit this agreement to arbitrate, to  the extent any  Claim  is not arbitrated, the parties  irrevocably  and voluntarily waive any right they may have to a trial by jury in respect of such Claim. This waiver of jury trial shall remain in effect even if the Class Action Waiver is limited, voided or found unenforceable. WHETHER THE CLAIM IS DECIDED BY ARBITRATION OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.

10.5    Severability; Waivers.

If any part of this Agreement is not enforceable, the rest of the Agreement may be enforced. The Bank retains all rights, even if it makes a loan after default. If the Bank waives a default, it may enforce a later default.  Any consent or waiver under this Agreement must be in writing.

10.6    Attorneys' Fees.

The Borrower shall reimburse the Bank for any reasonable out-of-pocket costs and attorneys' fees incurred by the Bank in connection with the enforcement or preservation of any rights or remedies under this Agreement and any other documents executed in connection with this Agreement, and in connection with any amendment, waiver, "workout" or restructuring under this Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing party is entitled to recover costs and reasonable out-of-pocket attorneys' fees incurred in connection with the lawsuit or arbitration proceeding, as determined by the court or arbitrator.   In the event that any case is commenced by or against the Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar or successor statute, the Bank is entitled to recover out-of-pocket costs and reasonable attorneys' fees incurred by the Bank related to the preservation, protection, or enforcement of any rights of the Bank in such a case.

10.7    Set-Off.

		(a)	In addition to any rights and remedies of the Bank provided by law, upon the occurrence and during the continuance of any event of default under this Agreement, the Bank is authorized, at any time, to set off and apply any and all Deposits of the Borrower held by the Bank or its affiliates against any and all Obligations owing to the Bank. The set-off may be made irrespective of whether or not the Bank shall have made demand under this Agreement, and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable Deposits and without regard for the availability or adequacy of other collateral. Any Deposits may be converted, sold or otherwise liquidated at prevailing market prices in order to effect such set-off.

 

 

 

 

  

		(b)	The set-off may be made without prior notice to the Borrower or any other party, any such notice being waived by the Borrower to the fullest extent permitted by law. The Bank agrees promptly to notify the Borrower after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

		(c)	For the purposes of this paragraph, "Deposits" means any deposits (general or special, time or demand, provisional or final, individual or joint) as well as any money, instruments, securities, credits, claims, demands, income or other property, rights or interests owned by the Borrower which come into the possession or custody or under the control of the Bank or its affiliates. "Obligations" means all obligations, now or hereafter existing, of the Borrower to the Bank under this Agreement and under any other agreement or instrument executed in connection with this Agreement.

10.8    One Agreement.

This Agreement and any related security or other agreements required by this Agreement, collectively:

		(a)	represent the sum of the understandings and agreements between the Bank and the Borrower concerning this credit;

		(b)	replace any prior oral or written agreements between the Bank and the Borrower concerning this credit; and

		(c)	are intended by the Bank and the Borrower as the final, complete and exclusive statement of the terms agreed to by them.

In the event of any conflict between  this Agreement and any other agreements required by this Agreement, this Agreement will prevail. Any reference in any related document to a "promissory note" or a "note" executed by the Borrower and dated as of the date of this Agreement shall be deemed to refer to this Agreement, as now in effect or as hereafter amended, renewed, or restated.

10.9    Indemnification.

The Borrower will indemnify and hold the Bank harmless from any loss, liability, damages, judgments, and costs of any kind relating to or arising directly or indirectly out of (a) this Agreement or any document required hereunder, (b) any credit extended or committed by the Bank to the Borrower hereunder, and (c) any litigation or proceeding related to or arising out of this Agreement, any such document, or any such credit. This indemnity includes but is not limited to out-of-pocket attorneys' fees. This indemnity extends to the Bank, its parent, subsidiaries, affiliates and all of their directors, officers, employees, agents, successors, attorneys, and assigns. This indemnity will survive repayment of the Borrower's obligations to the Bank. All sums due to the Bank hereunder shall be obligations of the Borrower, due and payable promptly upon demand.

10.10  Notices.

Unless otherwise provided in this Agreement or in another  agreement between the Bank  and  the Borrower, all notices required under this Agreement shall be personally delivered or sent by first class mail, postage prepaid, or by overnight courier, to the addresses on the signature page of this Agreement, or sent by facsimile to the fax numbers listed on the signature page, or to such other addresses as the Bank and the Borrower may specify from time to time in writing. Notices and other communications shall be effective (i) if mailed, upon the earlier of receipt or five (5) days after deposit in the U.S. mail, first class, postage prepaid, (ii) if telecopied, when transmitted, or (iii) if hand-delivered, by courier or otherwise (including telegram, lettergram or mailgram), when delivered.

 

 

10.11  Headings.

Article and paragraph headings are for reference only and shall not affect the interpretation or meaning of any provisions of this Agreement.

10.12  Counterparts.

This Agreement may be executed in as many counterparts as necessary or convenient, and by the different parties on separate counterparts each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same agreement.   Delivery of an executed counterpart of this Agreement (or of any agreement or document required by this Agreement and any amendment to this Agreement) by telecopy or other electronic imaging means shall be as effective as delivery of a manually executed counterpart of this Agreement; provided, however, that the telecopy or other electronic image shall be promptly followed by an original if required by the Bank.

10.13  Borrower Information; Reporting to Credit Bureaus.

The Borrower authorizes the Bank at any time to verify or check any information given by the Borrower to the Bank, check the Borrower's credit references, verify employment, and obtain credit reports.   The Borrower agrees that the Bank shall have the right at all times to disclose and report to credit reporting agencies and credit rating agencies such information pertaining to the Borrower and/or all guarantors as is consistent with the Bank's policies and practices from time to time in effect.

 

 

 

  

This Agreement is executed as of the date stated at the top of the first page.

Nu Skin Enterprises,  Inc.

 

By:                     /s/ Ritch N. Wood

Name:              Ritch N. Wood

Title:                  Chief Financial Officer

 

Address where notices to the Borrower are to be sent:

 

Nu Skin Enterprises,  Inc.

75 West Center Street

Provo, UT 84601

Attention: Treasurer

Telephone: 801-345-5000

Facsimile:  801-345-3899

 

 

 

Bank of America, NA   

                                          

By:                      /s/David R. Barney

Name:               David R. Barney

Title:                   Senior Vice  President

Address where notices to the Bank are to be sent:

Bank of America, NA

300 South Fourth Street, 2nd Floor

Las Vegas, NV 89101

Attention: Brian D. Call, Senior Vice President

Facsimile: 702-824-9065

 

 

 

 

Federal law requires Bank of America, N.A. (the "Bank") to provide the following notice. The notice is not part of the foregoing agreement or instrument and may not be altered. Please read the notice carefully.

USA PATRIOT ACT NOTICE

Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account or obtains a loan. The Bank will ask for the Borrower's legal name, address, tax ID number or social security number and other identifying information. The Bank may also ask for additional information or documentation or take other actions reasonably necessary to verify the identity of the Borrower, quarantors or other related persons.

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