LEASE AGREEMENT

 

LEASE AGREEMENT

 

THIS LEASE made this 19th day of October, 2005 by and between Pocono Development Company L.L.C., a Michigan Limited Liability Corporation, whose address is, 100 West Long Lake Road, Suite 120, Bloomfield Hills, MI 48304the Lessor, hereinafter designated as the Landlord, and Integral Vision, Inc., a Michigan Corporation, whose address is 38700 Grand River Avenue, Farmington Hills, Mi 48335 the Lessee, hereinafter designated as the Tenant.

 

ARTICLE I DESCRIPTION

 

WITNESSETH: The Landlord, in consideration of the rents to be paid and the covenants and agreements to be performed by the Tenant, does hereby lease unto the Tenant the following described premises situated in the City of Wixom, County of Oakland, State of Michigan , to wit: a light industrial building containing approximately 14,158 square feet, more commonly known as 49113 Wixom Tech Drive.

 

ARTICLE II COMPLETION OF BUILDING

 

  Section 1. The building and demised premises shall be received “as is” , with Landlord replacing the carpet only in the area listed as Open office as set forth with the Plan listed as exhibit “A” attached hereto and made a part hereof. It is understood and agreed by Tenant that any minor changes from any plans or specifications during construction of the building or demised premises shall not relieve Tenant of its obligations under this Lease Agreement. Landlord's construction work shall be pursuant to applicable ordinances, statutes, regulations and laws.

 

 

  Section 3. During the course of construction, Tenant, its employees, agents and contractors may enter upon the premises at all reasonable times for the purpose of inspection, and as soon as possible after such construction is substantially completed, and with Landlord's consent, may enter upon the premises for the purpose of installing improvements, fixtures, and other equipment upon condition that Tenant, its employees, agents and contractors will not unreasonably interfere with Landlord's employees, agents or contractors, in the pursuit of Landlord's construction. Landlord shall have no responsibility or liability whatsoever for any loss of or damage to any fixtures or other equipment installed or left upon the demised premises by Tenant.

 

 

Section 4. Landlord shall remove all tools, scaffolding, unused or discarded building materials, waste and rubbish of any sort, in, on or about the premises prior to the commencement date of this Lease.

 

ARTICLE III RENT AND TERMS

 

Section 1. This Lease shall commence on the date the building shall be completed in accordance with Section 2 of Article II hereof, and notice of such completion has been given in accordance with Section 2 of Article II, and shall continue until the first day of the month following the date of completion of the building, plus a period of Five years after the first day of such month.

 

In the event that Tenant does not pay, when due and payable, or within seven (7) days thereafter, any rent or any additional rent, Landlord may increase the rent for that month or until the rent or any additional rent is paid pursuant to Article XXXVI. This right to increase the rent by Landlord shall be an addition to any other remedies that Landlord may have under the terms of this Lease Agreement or otherwise. Rent is payable at, 100 West Long Lake Road, Suite 120, Bloomfield Hills, MI 48304 or at such other place as Landlord may give written notice to Tenant.

 

Section 3. The Tenant hereby hires the said premises for the said term as above mentioned and covenants well and truly to pay, or cause to be paid unto the Landlord at the dates and times above mentioned, the rent above reserved. (See Security Provision attached hereto and made a part of this Lease.)

 

ARTICLE IV TAXES

 

Section 1. Tenant shall pay, as additional rent, to Landlord during the term of this Lease all taxes and assessments which may be levied or assessed by any lawful authority, for each calendar year during the term hereof, against the land, building or improvements comprising the leased premises. (Such taxes and assessments being hereinafter called "Taxes".) Should the State of Michigan or any political subdivision thereof or any governmental authority having jurisdiction thereover, now or hereafter impose a tax and/or assessment of any kind or nature upon, against or with respect to the rentals payable by Tenant to Landlord or any income of Landlord derived from the leased premises or with respect to Landlord's or the individuals or entities which form the Landlord herein, ownership of the land and building or buildings comprising the leased premises, either by way of substitution for all or any part of the taxes and assessments levied or assessed against such land and such building or buildings, or in addition thereto, such tax and/or assessment shall be deemed to constitute a tax and/or assessment against such land and such building or buildings for the purpose of this paragraph and Tenant shall be obligated to pay it as provided herein. In addition, should any governmental authority having jurisdiction thereover impose a tax or surcharge of any kind or nature upon, against or with respect to the parking areas or the number of parking spaces comprising the leased premises, such tax or surcharge shall likewise be deemed a constituted tax and/or assessment against such land and such building or buildings for the purpose of this paragraph and Tenant shall be obligated to pay such tax provided herein.

 

 

Section 2. At the option of Landlord, Tenant shall pay all taxes within ten (10) days of presenting the tax bill, or the taxes shall be paid in monthly installments on or before the first day of each calendar month, in advance, in an amount estimated by Landlord. Upon receipt of all tax bills and assessment bills attributable to any calendar year during the term hereof, Landlord shall furnish Tenant with a written statement of the actual amount of Tenant's share of the premises taxes of such calendar year. In the event the total amount of monthly installments paid by Tenant pursuant to this Article does not equal the sum due from Tenant as shown on such statement, then Tenant shall pay to Landlord the deficiency within ten (10) days after demand therefor by Landlord; or Landlord shall credit such excess to the next installment of rent due from Tenant, as the case may be. A copy of a tax bill or assessment bill submitted by Landlord to Tenant shall at all times be sufficient evidence of the amount of taxes against the property to which such bill relates. Prior to, or at the commencement of the term of this Lease and from time to time thereafter throughout the term hereof, Landlord shall notify Tenant in writing of Landlord's estimate of Tenant's monthly installments due hereunder. Landlord's and Tenant's obligation under this Lease shall survive the expiration and/or termination of this Lease.

 

Section 3. Notwithstanding anything in this Article to the contrary, all costs and expenses incurred by Landlord during negotiations for or contests of the amount of taxes shall be the cost of the landlord, if the landlord contests the taxes and is successful then the cost of the contest shall be paid by the tenant to the extent that the Tenant shall receive the benefit of such contest. However should the tenant request that the taxes be contested the sole cost of the contest shall be paid by the tenant. In the event a refund is obtained, Landlord shall credit a portion thereof to the next installment of rent due from Tenant, such portion to be based upon the percentage of the original taxes paid by Tenant from which the refund was derived.

 

Section 4. Tenant, at all times shall be responsible for and shall pay, before delinquent, all taxes levied, assessed or unpaid on any leasehold interest, any right of occupancy, any investment of Tenant in the premises, or any personal property of any kind owned, installed or used by Tenant including Tenant's leasehold improvements or on Tenant's right to occupy the premises.

 

Section 5. Tenant shall, in addition to the foregoing, pay any new tax of a nature not presently in effect but which may be hereafter be levied, assessed, or imposed upon the Landlord or the demised premises, if such tax shall be based on or arise out of the ownership, use or operation of the leased premises. For the purpose of computing Tenant's liability for such new type of tax, the leased premises shall be deemed the only property of Landlord. However Tenant shall not be liable for any income driven tax levied on the Landlord.

 

ARTICLE V INSURANCE AND INDEMNITY

 

Section 1. Tenant, at its own expense, shall maintain for the mutual benefit of Landlord and Tenant, insurance of the following character:

 

 

A)   Comprehensive General Liability; insurance against claims for bodily injury, personal

 

B) If Tenant purchases a "Claims Made" policy then Tenant agrees to purchase what is commonly referred to as a "Tail". Which said "Tail" shall meet with Landlord's

requirements stated above in Section B and said "Tail" shall survive the expiration and/or termination of this Lease Agreement.

 

 

 

E)   Plate Glass; Tenant shall provide plate glass insurance, if applicable.

 

F)   Additional Named Insured: Landlord, along with any desired mortgagee if required, are to be named as additional named insureds under the policies.

 

Section 2. Landlord shall provide insurance of the following character and Tenant shall reimburse Landlord for all costs and expenses incurred by Landlord under this Article.

 

 

 

At the option of Landlord, Tenant shall reimburse Landlord for all costs and expenses for the insurance provided by Landlord in this Article IV, Section 2, A through B, within ten (10) days of presenting the insurance bill or before the first day of each calendar month, in advance, if required by Landlord's lender, or financial institution, in an amount estimated by Landlord, or at the option of the Landlord, Tenant shall pay insurance in monthly installments, on or before the first day of each calendar month, in advance, in an amount estimated by Landlord, or as required by Landlord's mortgagor.

 

Section 3. All insurance policies required under this Article IV shall be issued by companies of recognized financial standing, rated at least A VII by Best's Insurance Guide and duly licensed to do business under the laws of the State of Michigan. Every policy which Tenant is obligated to carry under the provisions of this Section shall contain an agreement by the insurer that it will not cancel or materially modify such policy except after thirty (30) days prior written notice to Landlord. Tenant shall deliver to Landlord, upon delivery of its occupancy of the demised premises, the original or duplicate policies or certificates of the insurers, evidencing all of the insurance which is required to be maintained by Tenant hereunder, and Tenant shall, within thirty (30) days prior to the expiration of any such insurance deliver other original or duplicate policies or other certificates of the insurers evidencing the renewal of such insurance. If Tenant fails to effect, maintain, or renew any insurance provided for in this Section, or to pay the premium therefor, or to deliver to Landlord any of such policies or certificates, then in any of said events, Landlord, at its option, but without obligation so to do, may upon five (5) days notice to Tenant, procure such insurance. Any sums expended by Landlord to procure such insurance shall be additional rent hereunder and shall be repaid by Tenant within five (5) days following the date on which expenditures shall be made by Landlord.

 

Section  4. Such insurance may be by so-called "blanket" policy coverage, provided, however, that such "blanket" policy coverage allocates a satisfactory amount of insurance to the demised premises, that this amount is not subject to deduction because of coinsurance, and that adjustment in payment of the insurance so allocated will be in the amounts specified in the Lease. Further, said blanket coverage shall not be subject to invalidation as to the demised premises because of any act or omission by the Tenant.

 

Section 5. Tenant covenants to indemnify Landlord, and save it harmless from and against any and all claims, actions, damages, liability and expense, including attorney fees, in connection with loss of life, personal injury and/or damage to property arising from or out of any occurrence in, upon or at the leased premises or the occupancy or use by Tenant of the leased premises or any part thereof, arising from or out of Tenant's failure to comply with any provisions of this Lease or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, customers or licensees. For the purpose hereof, the leased premises shall include service areas adjoining the same, including the parking areas, and the loading platform areas. In case Landlord shall, without fault on its part, be made a party to any litigation commenced by or against Tenant, then Tenant shall protect and hold it harmless and shall pay all costs, expenses and reasonable attorney fees incurred or paid by Landlord in connection with such litigation. Tenant shall also pay all costs, expenses and reasonable attorney fees that may be incurred in enforcing the Tenant's covenants and agreements in this Lease.

 

Section 6. Tenant further agrees that if insurance premiums for the entire premises are increased due to the nature of the Tenant's use of the demised premises, then the entire increase shall be the sole responsibility of Tenant.

 

 

ARTICLE VI PAYMENT BY LANDLORD

 

If the Tenant shall default in any payment or expenditure other than rent required to be paid or expended by the Tenant under the terms hereof, the Landlord may at its option make such payment or expenditure, in which event the amount thereof shall be payable as rental to the Landlord by the Tenant on the next ensuing rent day, together with interest at fifteen (15%) percent per annum from the date of such payment or expenditure by the Landlord and on default in such payment the landlord shall have the same remedies as on default in payment of rent.

 

ARTICLE VII ASSIGNMENT

 

Section 1. Tenant agrees not to assign or in any manner transfer this Lease or any estate or interest therein, and not to lease or sublet the leased premises or any part or parts thereof or any right or privilege appurtenant thereto, and not to allow anyone to conduct business at, upon or from the leased premises or to come in, by, through or under it, in all cases either by voluntary or involuntary act of Tenant or by operation of law or otherwise, without the written consent of Landlord. The sale, issuance or transfer of any voting stock of Tenant or Tenant's Guarantor, if any, which results in a change in the voting control of Tenant, or Tenant's Guarantor, if any , shall be deemed to be an assignment of this Lease within the meaning of this Article. Any such prohibited act by Tenant (or any attempt at same) either voluntarily or involuntarily or by operation of law or otherwise, shall at Landlord's option, terminate this Lease and any such purported act shall be null and void, however sales of stock in the open market is not a violation of this provision of non-assignability

 

ARTICLE VIII ALTERATIONS

 

Section 1. Tenant shall not make or cause to be made any alteration, additions or improvements to the leased premises without the prior written approval of Landlord. Tenant shall present to Landlord plans and specifications for such work at the time approval is sought.

 

Section 2. All alterations, decorations, additions and improvements made by Tenant shall be deemed to have attached to the leasehold and to have become the property of Landlord upon such attachment; upon expiration of this Lease or any renewal term thereof, Tenant shall not remove any of such alterations, decorations, additions and improvements, except that trade fixtures installed by Tenant may be removed, if all rents and other charges due herein are paid in full and Tenant is not otherwise in default hereunder; provided, however, that Landlord may designate by written notice to Tenant those alterations and additions which shall be removed by Tenant at the expiration or termination of the Lease and Tenant shall promptly remove the same and repair any damages to the leased premises caused by such removal or shall reimburse Landlord for the cost of repairing such damage.

 

ARTICLE IX EMINENT DOMAIN

 

If the whole or more than fifty (50%) percent of the leased premises shall be taken by any public authority under the power of eminent domain or sold to public authority under threat or in lieu of such a taking, then the term of this Lease shall cease on the part so taken, as of the day possession shall be taken by such public authority, and the rent shall be paid up to that date. Landlord or Tenant may, by written notice to the other, within thirty (30) days from the date possession is taken by public authority, terminate this Lease. In the event that neither Landlord or Tenant terminates this Lease, all of the terms herein provided shall continue in effect, except that as of the date possession is taken by public authority, the rent and other charges payable by Tenant to Landlord shall be reduced in proportion to the floor area of the leased premises taken and Landlord shall, at its expense, make all necessary repairs or alterations to the basic building, so as to constitute the remaining leased premises a complete architectural unit, and Tenant, at Tenant's sole cost, shall similarly act with respect to Tenant's improvements, trade fixtures, furnishings and equipment. All damages awarded for such taking under the power of eminent domain or sale under threat or in lieu of such taking, whether for the whole or a part of the leased premises, shall belong to and be the property of Landlord, irrespective of whether such damages shall be awarded as compensation for diminution in value to the leasehold or to the fee of the leased premises, and Tenant shall have no claim against either Landlord or the condemning authority with respect thereto; provided, however, that Landlord shall not be entitled to any award specifically designated as compensation for, depreciation to, and cost of removal of Tenant's stock and fixtures.

 

 

ARTICLE X MAINTENANCE AND REPAIRS

 

Section 1. Landlord shall, at its own expense, make all necessary repairs to the roof, outer walls, footing and foundation of the premises which repairs are occasioned by structural defects. Tenant shall, at its expense, take care of the demised premises both inside and out and keep the same and all parts thereof, by way of illustration, but not limitation, landscaping and parking areas, together with any and all alterations, additions and improvements therein or thereto, in good order and condition, suffering no waste or injury, and shall promptly make all needed repairs and replacements, in and to any building or structure or equipment now or hereafter erected upon the demised premises, including vaults, sidewalks, water, sewer and gas connections, pipes and mains, and all other fixtures, machinery and equipment now or hereafter belonging to or connected with said premises or used in their operation. All such repairs and replacements shall be of first class quality sufficient for the proper maintenance and operation of the demised premises. The Tenant shall not allow the accumulation of waste or refuse matter, not permit anything to be done upon the demised premises which would invalidate or prevent the procurement of any insurance policies which may at any time be required pursuant to the provisions of Article V hereof. The Tenant shall not obstruct or permit the obstruction of the street or sidewalk and shall keep the sidewalk and curb adjoining the demised premises clean and free of snow and ice.

 

Section 2. The Tenant shall at its own expense under penalty of forfeiture and damages promptly comply with all lawful laws, orders, regulations or ordinances of all municipal, County and State authorities affecting the premises hereby leased and the cleanliness, safety, occupation and use of same.

 

Section 3. The Landlord shall have the right to enter upon the leased premises at all reasonable hours for the purpose of inspecting the same. If the Landlord deems any repairs necessary, he may demand that the Tenant make the same and if the Tenant refuses or neglects forthwith to commence such repairs and complete the same with reasonable dispatch, the Landlord may make or cause to be made such repairs and shall not be responsible to the Tenant for any loss or damage that may accrue to its stock or business by reason thereof, and if the Landlord makes or causes to be made such repairs, the Tenant agrees that it will forthwith on demand pay to the Landlord the cost thereof with interest at Fifteen (15%) percent per annum, and if it shall make default in such payment, the Landlord shall have the remedies provided in Paragraph 6 hereof.

 

Section 4. The Landlord reserves the right of free access at all times to the roof of said leased premises. The Tenant shall not erect any structures for storage or any aerial, or use the roof for any purpose without the consent in writing of the Landlord.

 

 

ARTICLE XI RIGHT TO ERECT SIGNS

 

Tenant is hereby granted the right to erect signs on the exterior of the building which shall be constructed in conformity with all requirements of local law and shall be subject to the prior written approval of Landlord, which approval will not be unreasonably withheld. Tenant agrees to hold Landlord harmless from any liability arising out of or in connection with the erection or maintenance of such signs.

 

Landlord covenants that it will not allow any other Tenant to erect signs on the face of the building in which the demised premises are located.

 

ARTICLE XII LANDLORD'S RIGHT TO CURE TENANT'S DEFAULT

 

Landlord may, without notice, if in the opinion of Landlord an emergency exists, perform any covenant or condition of this Lease for the Tenant's account and at the Tenant's expense, in the event that the Tenant shall default in the performance of any such covenant or condition. Tenant shall reimburse Landlord for all costs and expenses of Landlord, including reasonable attorney fees, thereby incurred within ten (10) days after receipt by Tenant from Landlord of a statement setting forth the amount of such costs and expenses. The failure by Tenant to so reimburse Landlord within such ten (10) day period shall constitute a default by Tenant under this Lease and shall carry with it the same consequences as failure to pay any installment of rental. Landlord's rights and remedies pursuant to this Article shall be an addition to any and all other rights and remedies provided under this Lease or at law and shall survive the termination of this Lease.

 

ARTICLE XIII DEFAULT

 

Section 1. If any one or more of the following events (herein sometimes called "events of default": shall happen:

 

A)   If default shall be made in the due and punctual payment of any rent, or in the payment of any other sums of money required to be paid by Tenant under this Lease or any part thereof, when and as the same shall become due and payable, and such default shall continue for a period of seven (7) days after notice from Landlord to Tenant specifying the items in default; or

 

B) In the event Tenant shall be in default in the performance of any other covenants, terms, conditions, provisions, rules and regulations of this Lease excepting those items listed in the above Section (A) and if such default is not cured within twenty (20) days after written notice thereof given by the Landlord, excepting such defaults that cannot be cured completely within such twenty (20) day period, provided that the Tenant shall within such twenty (20) day period, promptly commence and proceed with reasonable diligence and in good faith to remedy such default;

 

then and in any such event Landlord at any time thereafter may give written notice to Tenant specifying such event of default or events of default and stating that this Lease and the term hereby demised shall expire and terminate on the date specified in such notice, which shall be at least seven (7) days after the giving of such notice, and upon the date specified in such notice this Lease and the term hereby demised and all rights of Tenant under this Lease, including any renewal privileges, whether or not exercised, shall expire and terminate, and Tenant shall remain liable as hereinafter provided.

 

 

Section 2. Upon any such expiration or termination of this Lease, Tenant shall quit and peacefully surrender the demised premises to Landlord, and Landlord, upon or at any such expiration or termination, may without further notice, enter upon and reenter the demised premises and possess and repossess itself thereof, by force, summary proceedings, ejectment or otherwise, and may dispossess Tenant and remove Tenant and all other persons and property from the demised premises and may have, hold and enjoy the demised premises and the right to receive all rental of and from the same. In the event that the Landlord shall, during the period covered by this Lease, obtain possession of said premises by reentry, summary proceedings, or otherwise, the Tenant hereby agrees to pay the Landlord the expense incurred in obtaining possession of said premises and also all expenses and commissions which may be paid in and about the letting of the same, and all other damages.

 

Section 3. If this Lease shall terminate pursuant to this Article, or by summary proceedings or otherwise, or if the demised premises or any part thereof shall be abandoned by Tenant, or shall become vacant during the term hereof, Landlord may in its own name, but as agent for Tenant if this lease not be terminated, or if this lease be terminated, in its own behalf, relet the demised premises or any part thereof, or said premises, with additional premises for such term or terms, (which may be greater or less than the period which would otherwise have constituted the balance of the term of this Lease) and on such conditions (which may include concessions or free rent and alterations of the demised premises) as Landlord, in its uncontrolled discretion, may determine and may collect and receive the rents therefor. Landlord shall in no way be responsible or liable for any failure to relet the demised premises or any part thereof, or of any failure to collect any rent due upon such reletting.

 

Section 4. No such expiration or termination of this Lease, or summary proceedings, abandonment or vacancy shall relieve Tenant of its liability and obligation under this Lease, whether or not the demised premises shall be relet. In any such event Tenant shall pay Landlord the rent and all other charges required to be paid by Tenant up to the time of such event. Thereafter:

 

A)            1. Tenant, until the end of the term of this Lease, or what would have been such term in the absence of any such event, shall be liable to Landlord as damages for Tenant's default, the equivalent of the amount of the rent and other charges which would be payable under this Lease by Tenant if this Lease were still in effect, less the net proceeds of any reletting effected pursuant to the provisions above, after deducting all Landlord's expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage and management commissions, operating expenses, legal expenses, reasonable attorneys' fees, alteration costs, expenses of preparation for such reletting.

 

2. Tenant shall pay such current damages (herein called "deficiency") to Landlord monthly on the days on which the rent would have been payable under this Lease if this Lease were still in effect, and Landlord shall be entitled to recover from Tenant each monthly deficiency as the same shall arise.

 

3. At any time after the expiration or termination of this Lease pursuant to this Article, in lieu of collecting any further monthly deficiencies as aforesaid, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand, as damages, in addition to the damages provided for in Section 8, damages computed in the manner set forth in this Section B, minus any such monthly deficiencies previously re