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Exhibit
10.4
COMMERCIAL LEASE
AGREEMENT
This agreement is hereby
entered this the 9 th day
of August, 2000 by and between Harold J. Milholen and William F.
Milholen, (hereinafter collectively “Lessor” ), and
Biolex, Inc., a Delaware corporation (hereinafter
“Lessee.”)
WITNESSETH
WHEREAS, Lessor owns that
certain real property and improvements as described in Exhibit
“A” hereto (hereinafter “Leasehold
Premises”), same having the address of 158 Credle Street,
Pittsboro, Chatham County, North Carolina; and
WHEREAS, Lessee is in need of
various office, laboratory, and other business work areas;
and
WHEREAS, both Lessor and
Lessee will benefit from certain improvements to be made on the
building located on the Leasehold Premises; and
WHEREAS, Lessor is prepared
to finance such improvements so long as its costs in doing so may
be recouped and Lessee is prepared to reimburse Lessor for the
costs of such improvements,
DEFINITIONS
As used herein, the following
definitions will be applicable:
“New Fixtures” shall mean
any improvements, additions, or enhancements Lessor has made to the
Leasehold Premises subsequent to the execution of this lease, the
cost of which has been reimbursed to Lessor by Lessee.
“Lessor” shall mean Harold
J. Milholen and William F. Milholen, their heirs, successors and
assigns, as well as then designees.
“Lessee” shall mean the
Biolex, Inc. corporation, a Delaware corporation.
“Lessee and/or its
affiliates” shall mean Biolex, Inc., a Delaware corporation
and/or its agents, affiliates, customers, invitees, employees,
officers, directors and contractors, or any other person in or
about the Leasehold Premises other than Lessor or its
invitees.
“Leasehold Premises” shall
mean all land and the improvements located thereon, at 158 Credle
Street, Pittsboro, Chatham County, North Carolina as more fully
described in Exhibit “A” hereto.
IT IS THEREFORE agreed, for good and
valuable consideration as set out in this agreement, as
follows:
GENERAL PROVISIONS,
PAYMENTS, TERM
| 1. |
Agreement to Lease . Lessor agrees to lease the
Leasehold Premises to Lessee and Lessee agrees to lease the
Leasehold Premises from Lessor in exchange for payment of annual
rent of one hundred twenty one thousand eight hundred dollars
($121,800.00) per year, payable in equal monthly installments of
ten thousand one hundred fifty dollars ($10,150.00), said rent to
be paid in cash and to be adjusted for inflation as set out below.
The leasehold shall commence on August 1, 2000. |
| 2. |
Term of Agreement . The initial tern of this
leasehold agreement shall be five (5) years. Lessee shall have
the option to renew this agreement for one additional five
(5) year term. Lessee must exercise such option by notifying
lessor of its intention to exercise the option in writing at least
ninety (90) days before the expiration of the initial five
(5) year term of this agreement. |
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3.
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Place and Time of
Payment . All payments due under this agreement shall be
due and payable on the first day of the month. Payment shall be
made at the office of the Basic Group, in Siler City, North
Carolina. Remittance of any rental or amortization payment after
the tenth (10 th ) day of the due month shall constitute a late payment and
an additional late payment penalty of five percent (5%) shall
be added to any late payment. Payment of the rent due plus the late
payment penalty on or before the fifteenth (15 th ) day of the due month shall be
deemed to be a substantial compliance with the terms of this
agreement and shall not constitute a breach of this agreement by
Lessee, Failure to make any monthly payment due on the first of the
month, plus any applicable late fee, on or before the fifteenth (15
th
) day of the due month
shall constitute a breach of this agreement by
Lessee.
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4.
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Adjustment for
Inflation . Some rental payments due under this agreement
shall be adjusted for inflation, beginning on the first annual
anniversary date of this agreement, and annually thereafter. The
initial adjustment shall be made on August 1 st , 2001 and shall apply to the monthly
payments beginning with the August, 2001 payment. Subsequent
adjustments shall be made annually on the anniversary of the
initial adjustment. Each adjustment shall be made by multiplying
the ratio obtained by dividing the current Consumer Price Index-All
Urban Consumers (CPI-U) by the Consumer Price Index-All Urban
Consumers (CPI-U) in effect one year earlier times the rental
amount in effect one year earlier.
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| 5. |
Condition of Leasehold Premises . The Lessee has
examined the Leasehold Premises, knows the present condition
thereof and the equipment thereon and the Lessee agrees to accept
the Leasehold Premises in its existing condition as of the
execution of this agreement, subject to all matters unrecorded as
well as of record and to all applicable zoning, municipal, county.
and state laws, ordinances, rules and regulations governing and
regulating use of the Leasehold Premises, and accepts this
agreement subject thereto. Except as stated below, no
representation has been made to the Lessee concerning the condition
of the premises or any particular use that can be made thereof.
Lessor shall be under no duty to instruct Lessee or others as to
the use of any |
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equipment on the Leasehold
Premises. Lessor hereby represents and warrants that to its
knowledge, the Leasehold Premises are in compliance with all
applicable laws, including without limitation the Americans With
Disabilities Act of 1990. Should it be determined during the term
of this agreement that the Leasehold Premises are not in material
and substantial compliance with applicable law, such noncompliance
shall not, in and of itself, constitute a breach of this agreement
by Lessor. Instead, Lessor warrants that it will, upon reasonable
notice of, such noncompliance, take timely and reasonable action to
correct such noncompliance, Lessor further represents ,and warrants
that each of the Heating, Ventilating and Air Conditioning
(“HVAC”), plumbing and electrical systems located in
the office portion of the Leasehold Premises are in good working
order and repair and the Lessor knows of no problem that currently
needs repair with respect to any of these systems. Lessor hereby
agrees to make any and all repairs necessary to the HVAC system in
the office portion of the Leasehold Premises for the first six
months of this agreement.
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MAINTENANCE, INSURANCE,
UTILITIES AND TAXES
| 6. |
Maintenance Responsibilities and Utilities. Lessee is to be
responsible for all maintenance of the Leasehold Premises, interior
walls, underground pipes, roof and building exterior excluded and
shall keep same in good repair during the term of this agreement.
Lessor will maintain responsibility for the interior walls, roof,
underground pipes, and building exterior, and shall keep the same
in good repair during the term of this agreement, assuming normal
wear and tear. Notwithstanding Lessor’s obligation hereunder,
should damage be caused to the interior walls, roof, underground
pipes or building exterior by the acts of Lessee or its affiliates,
normal wear and tear excluded, Lessee shall be responsible for
repair of such damage. Other than maintenance of the interior
walls, roof, underground pipes and building exterior, Lessor shall
incur no expense nor have any obligations of any kind whatsoever,
other than as set out elsewhere in this agreement or as otherwise
provided by applicable law. Lessee is responsible for and shall pay
promptly when due all charges for utilities including but not
limited to water, sewer, electricity, telephone, and fuel consumed
on the Leasehold Premises, and any and all applicable taxes
thereon. |
| 7. |
Notification . Lessee, being present on the
Leasehold Premises, shall have an affirmative and continuing
reasonable duty to notify Lessor promptly of any problems with,
damage to, or unusual conditions involving the interior walls,
roof, underground pipes and building exterior of the Leasehold
Premises which require or might require maintenance or repair by
Lessor. Failure of Lessee to so notify Lessor, where such
notification would have allowed Lessor to prevent harm or damage
related thereto, either to the Leasehold Premises or to the
property of Lessee, in addition to any other rights of Lessor under
applicable law, shall relieve Lessor of any obligation under this
agreement to reimburse, indemnify or hold harmless Lessee for any
costs, damages, claims, causes of action, or attorney’s fees
which may arise pursuant to said damage. |
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| 8. |
Insurance . Lessee shall be responsible for
maintaining liability and casualty insurance as set forth below.
All insurance to be carried under the terms of this agreement shall
be written by insurers authorized to write insurance in the State
of North Carolina, which insurers shall be rated AAA or higher by
Best’s Key Rating Guide-Property Liability at the time of
issuance or renewal of each policy. The Lessee shall cause its
insurers to furnish to Lessor certificates of insurance which shall
be furnished on an annual basis, and which shall in addition state
that no policy change or cancellation will be made without giving
thirty (30) days written notice to the Lessor or its designee.
The Lessee shall not do, or permit to be done, any thing which may
invalidate the insurance policies required hereunder. Should Lessor
be forced to procure any insurance policy as a result of
Lessee’s failure to procure said policy hereunder, the cost
of such policy shall be chargeable to the Lessee, and shall be paid
by Lessee to the Lessor within fifteen (15) days of receipt of
a copy of the invoice for same. |
| 9. |
Liability Insurance . The Lessee, at its sole
expense, shall obtain and keep in force during the entire term of
this agreement, including any extension hereunder, an occurrence
policy of comprehensive public liability insurance insuring the
Lessor and the Lessee against any liability arising out of the
ownership, use, occupancy, or maintenance of the Leasehold Premises
and any equipment located thereon. Such insurance shall be in an
amount of not less than one million ($1,000,000.00) for any injury
to, or death of, more than one person in any one accident or
occurrence. Such insurance shall further insure the Lessor and
Lessee against liability for property damage in an amount of one
hundred thousand dollars ($100,000.00). In no event shall a
“claims-made” liability insurance policy be deemed to
meet the requirements of this paragraph unless agreed to, in
writing, by the Lessor. Should Lessee fail to procure said
insurance, Lessor may, at its option, procure and maintain said
insurance, at the sole expense of Lessee as set out
above. |
| 10. |
Casualty Insurance . The Lessee, as its sole
expense, shall obtain and keep in force during the entire term of
the agreement, including any extension hereunder, a policy or
policies of insurance covering loss or damage to the contents of
the Leasehold Premises for and against all perils included within
the classification of fire, extended coverage, vandalism, and
malicious mischief. The insurance policies provided for in this
section shall include an inflation guard endorsement. If the Lessor
shall fail to procure and maintain said insurance, Lessor may
procure and maintain same at the sole expense of Lessee as set out
above. |
| 11. |
Property of Lessor . Except as otherwise provided
for herein, all insurance proceeds in the hands of Lessor or its
permanent lender or lenders at the time of the termination of this
agreement, and all insurance proceeds thereafter received by Lessor
or its permanent lender or lenders under any policy or insurance
required to be procured and maintained by Lessor pursuant to the
terms of this agreement, shall be the sole and exclusive property
of the Lessor, subject to the rights of the Lessor’s
permanent lender or lenders. |
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| 12. |
Taxes . Lessee shall also be responsible for
payment of all real and personal property taxes imposed by any
governmental agency having taxing authority over the Leasehold
Premises and its contents during the term of this agreement, which
amount shall be pro-rated for the first and last years of this
agreement. All such tax payments shall be made at least thirty days
prior to the delinquency date of said payments. Failure to make
such timely tax payments shall constitute a material breach of this
agreement. |
IMPROVEMENTS/MODIFICATIONS
TO LEASEHOLD PREMISES
| 13. |
Leasehold Premises Improvements/Modifications .
Upon commencement of this agreement, Lessee shall retain the
services of a competent licensed professional engineer to formulate
a design plan that incorporates all related Heating/Ventilation/Air
Conditioning, electrical, plumbing, and similar structural
improvements/modifications necessary for Lessee’s intended
use of the Leasehold Premises. Upon submission of those plans to
Lessor, and subject to the other provisions contained herein,
Lessor will obtain competitive bids from appropriate contractors,
negotiate a contract price and award the contract, subsequent to
approval by Lessee. Such approval shall not be unreasonably
withheld, conditioned or delayed by Lessee. After award of the
contract, Lessee shall designate an internal project manager to
supervise the day to day construction. Any changes to the initial
plans may be made only after written approval by Lessor, which
approval will not be unreasonably withheld, conditioned or delayed.
Lessor and the contractor shall not amend such contract after
approval by Lessee unless such amendments are approved by Lessee,
such approval not to be unreasonably withheld, conditioned or
delayed. |
| 14. |
Lessor’s Right to Disapprove
Improvements/Modifications . Lessor shall have the right,
upon receiving the design plan referenced in item fifteen
(15) above, to review such plan and to reject and disapprove
any modifications contained therein which, in Lessor’s
reasonable discretion, will uniquely benefit Lessee’s
particular business needs and do not contribute to the overall
value of the Leasehold Premises. |
| 15. |
Lessor to Pay Initial Cost of Approved
Improvements/Modifications . After Lessor enters the
contact for the approved modifications to the Leasehold Premises,
Lessor shall be responsible for making all payments due under the
contract, notwithstanding that such payments are subject to
reimbursement by Lessee as set out elsewhere in this
agreement. |
| 16. |
Improvements/Modifications to Become Fixtures .
All improvements/modifications made to the Leasehold Premises
pursuant to the provisions of items twelve (12) through
fifteen (15) above shall adhere to and become fixtures of the
Leasehold Premises and shall become the sole property of Lessor
upon the termination of this agreement. |
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| 17. |
Lessee’s Right to Make Additional
Improvements/Modifications . Lessee may, at its sole
expense, and subject to approval by Lessor, make
improvements/modifications to the premises even though those
modifications may have been disapproved by Lessor under item
fourteen (14) above. Such improvements/modifications may be
undertaken only with written approval of Lessor, such approval not
to be unreasonably withheld. Lessor reserves the right to approve
such improvements/modifications subject to Lessee’s agreement
to dismantle or otherwise reverse such modifications resulting in
restoration of the Leasehold Premises to its condition prior to
those improvements/modifications, normal wear and tear excepted.
Failure of Lessor to approve any such modification specifically
does not constitute a breach of this agreement. Unless otherwise
directed by Lessor at the time of approval of any modifications
made pursuant to this section, any such improvements/modifications
completed by Lessee shall adhere to and become fixtures of the
Leasehold Premises and shall become the sole property of Lessor
upon the termination of this agreement. |
| 18. |
Reimbursement for Improvements/Modifications .
Lessor shall maintain records of all expenditures incurred as a
result of the contract for improvements/modifications set out in
paragraph twelve (12) above. Upon completion of the
improvements/modifications as per that contract, Lessor shall send
written notification to Lessee of the total cost of those
improvements/modifications, hereinafter the “Upfit
Amount.” Lessee shall begin to reimburse Lessor for the costs
of said improvements/modifications beginning on the first day of
the next month following notification. Such reimbursement shall be
in cash and computed in accordance with Exhibit A hereto. Such
payment shall be made along with the rental payment each month
until fully amortized. Should this leasehold end prior to the frill
amortization, such payments shall continue to be payable in the
same manner and on the same due date as a rental payment. Lessee
shall be permitted to prepay any portion or all of the Upfit Amount
without penalty. |
INDEMNIFICATION
| 19. |
Lessee to Comply with Laws/Indemnify Lessor .
During the term of this agreement, Lessee and/or its affiliates do
hereby agree and covenant that they will materially and
substantially comply with all local, State and Federal laws, rules
and regulations during all of its dealings on and affecting the
Leasehold Premises. Lessee does hereby agree and covenant to
indemnify and hold Lessor harmless from and against any and all
loss, damage and expense (including but not limited to reasonable
attorneys’ fees) arising out of or in connection with or
incurred by reason of any violation of any local, State or Federal
law, rule or regulation by Lessee. |
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| 20. |
Lessee to Indemnify Lessor, Civil Liability .
During the term of this agreement, Lessee does hereby agree and
covenant that it will indemnify and hold Lessor harmless from and
against any and all loss, damage and expense (including but not
limited to reasonable attorneys’ fees) arising out of or in
connection with or incurred by reason of any negligence, action,
inaction or other activity or inactivity conducted or omitted by
Lessee and/or its affiliates that does or may result in any claim
or cause of action against, or liability of any kind against
Lessor, including but not limited to any claim or liability for
Federal, State or local taxes, whether accrued, contingent, or
arising out of or with respect to any transaction, matter or thing
or action by Lessee occurring during this leasehold. Lessee shall
also indemnify and hold harmless Lessor from and against any and
all claims arising from Lessee and/or its affiliates’ use,
possession, maintenance, and improvement of the Leasehold Premises,
or from the conduct of Lessee and/or its
affiliates’ |
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