Exhibit 10.4
DEED OF COMMERCIAL
OFFICE LEASE
THIS DEED OF COMMERCIAL OFFICE LEASE
AGREEMENT (this “Lease”) is made as of the 16
th day of May, 2005, by and between BDC Spotsylvania
LLC , hereinafter referred to as “Landlord” and
E-OIR Technologies, Inc ., a Virginia corporation,
hereinafter referred to as “Tenant”.
WITNESSETH, that for and in consideration of the rent hereafter
reserved, and the covenants contained herein, the parties hereby
agree as follows:
1.
Lease Premises.
Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord for the term identified below,
at the rental and upon the conditions set forth herein,
approximately Six Thousand Seven Hundred Fifty (6,750) rentable
square feet known as Suite 220 on the Second floor of the South
Wing (“Second Floor Premises”) and One Hundred
Fifty-One (151) rentable square feet known as Suite
190 on the First Floor of the South Wing (“First Floor
Premises”) and identified on Exhibit A attached hereto
(collectively, the “Premises”) of that certain building
located at 10300 Spotsylvania Avenue, Fredericksburg,
Virginia (the “Building”) (if there is more than one
building on Landlord’s land operated as part of a common
complex, then reference to “Building” hereunder shall
mean and refer to all such buildings) The parcel(s) of real
property on which the Building is located together with the
Building are hereinafter collectively referred to as the
“Property.” The Premises do not include exterior faces
of exterior walls and exterior window glass; anything beyond the
interior face of demising walls; or any pipes, ducts, conduits,
wires and fixtures serving other parts of the Building, except for
Tenant-specific pipes, ducts, conduits, wires and fixtures which
are wholly located within and serve only the Premises, and
measurement will be based on the BOMA standard of measurement dated
June 7, 1996 (ANSI/BOMA Z65.1-1996). Tenant may use the
common areas of the Building in common with other tenants subject
to and in accordance with the terms and conditions hereinafter set
forth. The common areas (the “Commons Areas”)
include the Building’s common lobbies, corridors, stairways,
and elevators, the common walkways and driveways necessary for
access to the Building, the common toilets, corridors and elevator
lobbies of any multi-tenant floor, and the parking area for the
Building. All use of the Common Areas shall be only upon the
terms set forth at any time by Landlord. Tenant acknowledges
and agrees that the roof of the Building is under the exclusive
control of Landlord, that Tenant shall have no access to the roof
without Landlord’s prior written consent and that Landlord
reserves the right from time to time to install or allow the
installation of telecommunications devices on the roof.
2.
Term and Possession.
2.1
Term. Subject to the terms and
conditions set forth in this Lease, the term (the
“Term”) of this Lease shall be for approximately five
(5) years, commencing on the date (the “Commencement
Date”) which is the later of (x) August 1, 2005 or (y) the
earlier of (i) the date of delivery of the Premises by Landlord to
Tenant following substantial completion of the Tenant Improvements
(hereinafter defined) as determined by the Landlord or (ii) October
15, 2005 or (iii) occupancy of the Premises by Tenant and ending on
the last day of the month in which the fifth anniversary date of
the Commencement Date occurs, and ending on the last day of the
month in which the fifth anniversary date of the Commencement Date
occurs. Substantial Completion shall mean that the Tenant
Improvements have been completed to such an extent that a
certificate of occupancy would be issued by Spotsylvania County if
timely applied for by Tenant. Landlord agrees to assist
Tenant in processing the application. Landlord may, by
telecopier or other notice, notify Tenant of the date of
delivery.
2.1.1
Extension Option. Provided that
this Lease is in full force and effect, the Tenant shall be
entitled to extend this Lease for one (1) additional term
(hereinafter referred to as “Extension Term”) of five
(5) years, commencing on the first day next succeeding the last day
of the last day of the initial Lease Term, upon the same terms and
conditions and provisions as are provided for in this Lease, except
that (i) the Basic Monthly Rent payable during the Extension Term
shall be the prevailing market rate, subject to escalation, as
determined by Landlord, (ii) Landlord has no obligation for any
tenant improvements or tenant allowances , and (iii) there
shall be no further extension; provided, however, if Tenant is in
Default hereunder at any time from Tenant’s delivery of the
Extension Notice (hereinafter defined) to the commencement of such
Extension Term, at Landlord’s option, such Extension Term
shall be null and void. Tenant shall provide Landlord with
written notice (“Extension Notice”) of its intent to
exercise the extension option not less than nine (9) months prior
to the expiration of the last day of the initial Lease Term; upon
Tenant’s failure to so provide the Extension Notice, time
being of the essence, Tenant shall have no further right to extend
the Lease. Upon receipt of Tenant’s Extension Notice,
Landlord shall advise Tenant of Landlord’s determination of
the prevailing market rate within ten (10) days of such receipt
(except if Robert Sandler is on vacation, then within five (5) days
of Robert Sandler returning from vacation). Upon receipt of
Landlord’s determination, if Tenant disagrees with
Landlord’s prevailing market rate, Tenant may negotiate with
Landlord for a period of twenty (20) days. If Tenant and
Landlord fail to agree on the prevailing market rate, Tenant shall
have the right to withdraw its Extension Notice by notice in
writing or electronically to Landlord delivered prior to the
expiration of such twenty (20)-day period, in which case Tenant
shall have no further right to extend the Lease. Reference to
the word “Term” hereunder shall mean and include the
initially stated term, as well as any extensions or renewals
thereof, including any exercised (but not rescinded) Extension
Term.
2.1.2
Termination Option. Tenant shall
have the one-time right to terminate the Lease effective as of the
end of the thirty-sixth full calendar month following the
Commencement Date, by giving written notice to the Landlord prior
to the expiration of the twenty-seventh full calendar month
following the Commencement Date (time being of the essence herein),
which notice (in order to be valid) shall be accompanied by payment
of the Termination Fee (hereinafter defined) and which notice shall
specify the termination date; provided however, if Tenant is in
Default at any time hereunder beyond any applicable cure period
(whether before or after the termination notice), at
Landlord’s option, such termination election shall be null
and void, and Landlord may use any portion of the Termination Fee
paid to offset against any amounts owed by Tenant under the Lease.
The Termination Fee is equal to the sum of (i) four (4)
months of Rent then being paid by Tenant on a monthly basis
(including without limitation estimated pass-throughs), plus (ii)
the unamortized portion of the cost of all leasehold improvements,
leasing commissions, attorney fees, rental abatements and other
concessions incurred or provided by Lessor in connection with this
Lease. Upon request, Landlord shall calculate the Termination Fee
and provide the amount thereof to Tenant. The Termination Fee
shall be calculated by Landlord by first amortizing the cost of all
leasehold improvements, leasing commissions, attorney fees, rental
abatements and other concessions in equal monthly installments over
the Term (or if incurred in connection with any Lease amendment,
amortized over the portion of the Term commencing with the
effective date for the initial full monthly payment of Rent for the
Lease amendment) at the rate of nine percent (9%) per annum
(compounded annually) and then determining the unamortized portion
thereof as of the effective date of termination. Tenant, in
addition to the Termination Fee, shall remain obligated for all
Basic Monthly Rent, Additional Rent and other sums due under the
Lease up to and including the effective date of termination, even
though such amounts may be billed subsequent to such date.
Tenant’s obligations, and Landlord’s rights and
remedies (including without limitation, the right to recover
reasonable attorneys fees as permitted by this Lease), with respect
to all such sums, any other amounts due and owing to Landlord and
any other of Tenant’s obligations or liabilities accruing
prior to the date of termination shall survive any such
termination. .
2.1.3
Right of First Notification. Prior
to Landlord’s initial leasing of space immediately adjacent
to the Premises on the 2 nd floor (as identified on
Exhibit A ) to a third party not already a tenant, Landlord
shall notify Tenant by telecopier at 703-704-1351 Attn. Bill
Elliott, that Landlord is in negotiations with a prospective tenant
for such space. Such notice shall include the rental rate
that Landlord will charge to Tenant. Landlord agrees not to
execute a lease for such space to a third party for a period of
seven (7) days following the sending of such notice to allow Tenant
to approach Landlord about leasing such space..
2.2
Possession. Landlord shall
reasonably attempt to deliver possession of the Premises within one
hundred twenty (120) days of Lease execution, the anticipated date
of commencement (the “Anticipated Commencement Date”).
If Landlord should be unable to deliver possession of the
Premises to the Tenant on the Anticipated Commencement Date or
thereafter for any reason, Landlord shall not be subject to any
liability, claims or damages for failure to give possession on said
date and this Lease shall not be terminated or terminable by reason
of such delay. Under such circumstances, the rent reserved
and covenanted to be paid herein shall not commence until the
possession of the Premises is tendered by Landlord which may be
confirmed by Landlord’s delivery of notice to Tenant that
possession has been delivered following substantial completion of
the Tenant Improvements, provided, however, that in the event any
delay in tendering possession to the Tenant or in Tenant’s
taking occupancy of the Premises beyond the Anticipated
Commencement Date is caused by any act, delay or omission of
Tenant, its employees, agents, contractors or invitees, Tenant
shall remain obligated to commence paying rent hereunder beginning
on the earlier to occur of (i) the Anticipated Commencement Date or
(ii) the date the Landlord tenders possession of the Premises to
Tenant. If permission is given to the Tenant to enter into
possession of the Premises, or to occupy space other than the
Premises prior to the Anticipated Commencement Date Tenant
covenants and agrees that such occupancy shall be deemed to be
under all the terms, covenants and conditions of the provisions of
this Lease, and that the Rent shall commence on such date. Tenant
covenants and agrees to execute and deliver such documentation as
Landlord may reasonably require confirming the Commencement Date
and such other matters as Landlord or any lender may reasonably
request. In addition, Landlord may elect to send a letter
establishing the Commencement Date (if not a specific calendared
date under Section 2.1), which shall be binding for all purposes
unless Tenant sends written notice of objection within five (5)
business days of receipt.
2.3
Early Possession for Tenant Fit-Up.
Upon written request by Tenant, Tenant shall be given access
to the Premises twenty-one (21) days prior to the Commencement Date
for the purpose of installing such equipment as may be approved by
Landlord, provided Tenant does not interfere with any work being
done by Landlord on the Premises. Tenant hereby indemnifies
Landlord for all losses, costs, damages and claims including
reasonable attorneys’ fees arising out of any delays, damages
to the Building or other matters arising out of Tenant’s
access, and shall present Landlord with satisfactory certificates
of insurance as a condition to gaining such access.
2.4
Acceptance of Premises. Tenant
acknowledges that the Premises will be delivered and accepted in
its then “as is,” “where is” condition with
no expectation that Landlord will or should perform or otherwise
contribute towards the cost of any leasehold improvements, except
that Landlord shall construct the Tenant Improvements (hereinafter
defined) for the Second Floor Premises pursuant to Exhibit D
, with the First Floor Premises being delivered and accepted
“as is”, subject to demising; provided, however that in
no event shall Landlord’s obligations for the cost of the
Tenant Improvements exceed Twenty-Five Dollars and No/100 ($25.00)
per square foot of the net rentable square footage of the Second
Floor Premises (“Landlord Contribution Cap”).
2.4.1 If at anytime the Landlord
determines in good faith that the cost of Tenant Improvements will
exceed the Landlord Contribution Cap, Tenant shall immediately,
upon demand (whether made prior to or after completion of the
Tenant Improvements), (i) pay to the Landlord the amount of the
excess (“Excess Costs”), as Additional Rent hereunder,
or (ii) with respect to the first Ten Dollars ($10) per square foot
of Excess Costs, elect to have such excess amortized in the Basic
Monthly Rent over the initial approximate five (5) year Term at
eight percent per annum (8%). Unless Tenant shall have paid
Landlord the first $10 p.s.f. of Excess Costs, then Tenant shall be
deemed to have elected to have such excess not exceeding $10 p.s.f.
to be amortized into the Basic Monthly Rent. Landlord shall
not be required to continue with construction of the Tenant
Improvements until Tenant has so paid the amount of the Excess
Costs, other than those being amortized into the Basic Monthly
Rent. If Tenant has elected or is deemed to have elected to
have a portion of the Excess Costs amortized into the Basic Monthly
Rent, such amortized amount shall be referred to as the
“Amortized Allowance.”
3.
Rent.
3.1
Basic Monthly Rent. Upon
Tenant’s execution of the Lease, Tenant shall prepay one full
month of Basic Monthly Rent to be applied to the first
installment(s) thereof due hereunder. Thereafter, Tenant
covenants and promises to pay to Landlord for the Premises,
commencing on the sooner of October 15, 2005 or the Commencement
Date, the Basic Monthly Rent without deduction or demand or set off
whatsoever, in lawful money of the United States of America, in
advance on the first day of each calendar month during the Term
hereof, to and at the office of Bernstein Management Corporation
(the “Agent”), 5301 Wisconsin Avenue, NW, Suite 600,
Washington, DC 20015, or at such other place as Landlord may
from time to time designate to Tenant in writing. In addition
to the Basic Monthly Rent, Tenant shall pay all Additional Rent and
other amounts payable hereunder in lawful money of the United
States of America, each without set-off, deduction, offset or
counterclaim, in accordance with the terms set forth herein.
Except as specified elsewhere in this Lease, Additional Rent
shall be paid by Tenant with the next monthly installment of Basic
Monthly Rent falling due. Rent checks shall be made payable
to Bernstein Management Corporation, or to such other party as
Landlord shall direct. Should the Commencement Date fall on a day
other than the first day of a calendar month or the Term expire on
a day other than the last day of a calendar month, the parties
agree that the monthly rental for such partial calendar month in
the Term shall be pro-rated. The basic monthly rent
(“Basic Monthly Rent”) is payable monthly as
follows:
|
Rental
Period
|
Suite
190
|
Suite
220
|
Total Rent
|
|
Lease Year 1
|
$169.88 per month
|
$10,125. 00 per month
|
$10,294.88 per month
|
|
Lease Year 2
|
$174.97 per month
|
$10,428.75 per month
|
$10,603.72 per month
|
|
Lease Year 3
|
$180.22 per month
|
$10,741.61 per month
|
$10,921.83 per month
|
|
Lease Year 4
|
$185.63 per month
|
$11,063.86 per month
|
$11,249.49 per month
|
|
Lease Year 5
|
$191.20 per month
|
$11,395.78 per month
|
$11,586.98 per month
|
The foregoing amounts of Basic Monthly
Rent are subject to modification in the event that Tenant elects to
obtain the Amortized Allowance, in which event, Tenant, upon
Landlord’s request, shall execute within five (5) days of
request a Declaration furnished by Landlord confirming the revised
Basic Monthly Rent; provided however, that in no event shall any
amount of the Amortized Allowance amortized into the Basic Monthly
Rent be abated.
For purposes of the above rent schedule,
the Lease Year 1 shall mean the period commencing on the
Commencement Date, and ending on last day of the month in
which the first anniversary date of the Commencement Date occurs,
and each subsequent Lease Year shall be the 12-month period
thereafter.
3.2
Additional Rent.
3.2.1
Tenant shall pay to Landlord, in
accordance with Section 3.2.3 below, as Additional Rent,
“Tenant’s Share” defined as the sum of
Tenant’s Separate Services (as hereinafter defined) plus
Tenant’s Pro Rata Share (as hereinafter defined) of any
increase in Landlord’s Costs (as hereinafter defined) above
the Base Costs (as hereinafter defined). All sums of any type
or kind, other than Basic Monthly Rent, required to be paid
by Tenant to Landlord hereunder shall be deemed to be Additional
Rent whether or not the same may be designated as such
herein.
3.2.2
For purposes of this Lease:
(i)
“Tenant’s Separate
Services” shall mean all Operating Expenses which are
attributable solely to Tenant’s use and occupancy of the
Premises, such as the cost of electricity consumed in the Premises
for any supplemental HVAC equipment or the like, as measured by
memorandum or sub-meters, special janitorial services or other
services provided by Landlord at Tenant’s request.
Normal electric consumption shall be included in Operating
Expenses (as hereinafter defined).
(ii)
“Tenant’s Pro Rata
Share” shall mean Four and 03/100 percent (4.03%),
representing the ratio that the rentable area of the Premises
(6,901 square feet) bears to the total rentable area of the
Building (152,501 square feet).
(iii)
“Landlord’s Costs”
shall mean Taxes and Assessments and Operating Expenses but
excluding those Operating Expenses paid by Tenant as Tenant’s
Separate Services.
(iv)
“Taxes and Assessments” shall
mean all taxes and assessments and governmental charges (including
personal property and real estate taxes), whether federal, state,
county or municipal, and whether they be assessed or levied by
taxing districts or authorities presently taxing the Property by
others subsequently created, and any other taxes and assessments
(including franchise taxes) attributable to the Property or its
operation, whether or not directly paid by Landlord, excluding,
however, federal and state taxes on income of the Landlord, unless
such income taxes replace real estate taxes. The Tenant shall
be responsible for ad valorem taxes on its personal property.
If at any time during the Term the methods of taxation shall
be altered so that in addition to or in lieu of or as a substitute
for the whole or any part of any taxes levied, assessed or imposed
there shall be levied, assessed or imposed (i) a tax, license fee,
excise or other charge on the rents received by Landlord with
respect to the Building, or (ii) any other type of tax or other
imposition in lieu of, or as a substitute for, or in addition to,
the whole or any portion of any taxes, then the same shall be
included as taxes for the purposes hereof. A tax bill or true
copy thereof, if submitted by Landlord to Tenant, shall be
conclusive evidence of the amount of taxes assessed or levied as
well as of the items taxed. Reasonable expenses (including
without limitation contingency-based fees), including
attorneys’ fees, expert witness fees and similar costs,
incurred by Landlord in obtaining or attempting to obtain a
reduction of any taxes shall be added to and included in the amount
of any such taxes. Taxes which are being contested by Landlord
shall nevertheless be included for purposes of the computation of
the liability of Tenant hereunder, provided, however, that if
Landlord is successful in contesting any such taxes, excess taxes
paid by Tenant shall be applied as a credit toward the next
installment(s) of taxes due. Landlord shall have no
obligation to contest, object to or litigate the levying or
imposition of any taxes and may settle, compromise, consent to,
waive or otherwise determine in its discretion to abandon any
contest with respect to the amount of any taxes without consent or
approval of Tenant.
(v)
“Operating Expenses” shall
mean all of the costs and expenses paid or incurred in operating,
managing, administering, servicing, repairing and maintaining the
Building, the Property and surrounding sidewalks, alleys and
parking areas as determined by Landlord in accordance with standard
accounting practices (except that Landlord may amortize an expense
over multiple years in lieu of passing the entirety of such expense
thru in the year of its expenditure), whether paid to employees of
Landlord or independent contractors engaged by Landlord, and shall
include the following costs by way of illustration, but not
limitation: water and sewer charges, insurance premiums,
utilities, janitorial services, labor, including direct labor
overhead, air conditioning and heating, landscaping, elevator
maintenance, supplies, costs and upkeep of all parking and common
areas, supply and cleaning of uniforms and work clothes, security
for the Building, fees incurred for the management of the Building
including legal, inspection, consultation and accounting fees,
costs of repair, maintenance and replacement of exterior roofs, all
charges for repair and maintenance of all mechanical equipment and
building systems (exclusive of those Tenant is obligated to repair
and maintain hereunder) and a property management fee equal to the
generally prevailing rate consistent with the type of occupancy and
the services rendered, but not less than three percent (3%) nor
more than five percent (5%) of the total rent collected from
tenants of the Property. Operating Expenses shall not include
depreciation of the Building of which the Premises are a part or
equipment therein, mortgage loan payments, executive salaries and
any brokerage commissions but shall include amortization, with
reasonable interest, of capital items which reduce Operating
Expenses or are required by governmental authority.
(vi)
“Base Costs” shall mean
Landlord’s Costs incurred for or attributable to the 2005
calendar year.
(vii)
“Rent” shall mean Basic
Monthly Rent and Additional Rent.
3.2.3
Payment of Additional Rent. Tenant shall
remit to Landlord as Additional Rent, simultaneously with the next
installment of Basic Monthly Rent, the amount of any Tenant’s
Separate Services paid for by Landlord during the then current
month. In addition, beginning January 1, 2006 (the
“Pass-Through Commencement Date”), and continuing for
each subsequent calendar year or portion thereof during the Term,
Landlord’s Costs shall be passed through to Tenant based on
the actual increase over Base Costs. In addition, commencing with
the Pass-Through Commencement Date and thereafter simultaneously
with each monthly payment of Basic Monthly Rent hereunder for the
balance of the Term, Tenant shall pay to Landlord an estimated
amount of Additional Rent on account of Landlord’s Costs
above Base Costs. Landlord’s estimate of
Additional Rent payable for any given year shall be equal to 105%
of Landlord’s Costs above Base Costs for the immediately
preceding year provided, however, that in the event Landlord
determines during the course of any year that Landlord’s
Costs for such year shall exceed 105% of such prior year’s
costs, (i) Tenant shall, within ten (10) days of receiving a demand
therefor, pay a lump sum to Landlord equal to the excess of (a) the
amount which would have been payable by Tenant based upon such
actual higher costs from and including January 1 of such year
through the date of the notice setting forth the increase in
Landlord’s Costs beyond (b) the amount of Additional Rent
actually paid by Tenant for such period and (ii) the monthly
payments of Additional Rent for the balance of such year shall be
increased accordingly.
3.2.4
Reconciliations. Within a
reasonable time after the end of each calendar year during the
Term, Landlord will furnish to Tenant a statement setting forth the
actual amount of Tenant’s Separate Services and
Landlord’s Costs actually incurred for the immediately
preceding calendar year together with Tenant’s Share thereof
provided, however, that the failure by Landlord to provide such a
statement by any specific date shall not constitute a waiver by
Landlord of its right to require an increase in the Additional Rent
for the then current year or provide Tenant with any defense or
setoff against its obligations under this Lease. In the event
that the estimated amount paid by Tenant for such year under
Section 3.2.3 (the “Estimated Payments”) is less than
the actual amount payable by Tenant pursuant to such statement (the
“Required Amount”), Tenant shall reimburse Landlord for
such deficiency by making a lump sum payment of such deficiency
within ten (10) days following receipt of Landlord’s demand
therefor. In the event that the Estimated Payments for any
year exceeds the Required Amount for such year, the excess shall be
credited by Landlord to the next installment(s) of Additional Rent
coming due and payable or, in the event such calendar year is the
last year of the Term, remitted by Landlord to Tenant provided
Tenant is not in default of its obligations under this Lease and
there are no damages to the Premises or the remainder of the
Property caused by Tenant or its employees, agents or contractors.
The obligations of Landlord and Tenant under this subsection shall
survive the expiration or termination of this Lease.
3.2.5
Pro-Rata Calculation. Should this
Lease commence or terminate at any time other than the first (1st)
day of a calendar year, the cost adjustment referred to in
Subsections 3.2.1, 3.2.2, 3.2.3 and 3.2.4 shall be calculated for
the commencement or termination year on a pro rata basis, based
upon the number of calendar days during which Tenant leases or is
deemed to lease the Premises.
3.2.6
Tenant’s Right to Audit. Each
statement provided by Landlord pursuant to this Section 3.2 shall
be conclusive and binding upon Tenant unless fifteen (15) days
after receipt of the statement, Tenant shall notify Landlord that
it disputes the correctness of the statement, specifying the
respects in which the statement is claimed to be incorrect.
If Landlord and Tenant are unable to resolve the dispute,
Tenant shall then have the right to request that Landlord provide,
at Tenant’s expense, an audit of its books and records
relating to the statement. Pending determination of the
dispute, Tenant shall pay within ten (10) days from notice any
amounts due from Tenant in accordance with the statement, but such
payment shall be without prejudice to Tenant’s position.
If the dispute shall be resolved in Landlord’s favor,
Tenant shall pay to Landlord upon demand all other costs and
expenses incurred by Landlord in connection therewith.
3.2.7
Adjustments to Costs.
Notwithstanding any other provisions herein to the contrary:
(i) in the event the Building is not fully occupied during the
year, an adjustment shall be made in computing the Operating
Expenses for such year so that the costs shall be computed for such
year as though the Building had been ninety-five percent
(95%)occupied during such year; and (ii) the Landlord shall have
the right, in its reasonable judgment (and upon reasonable
substantiation of such allocation to the Tenant), to allocate
Operating Expenses to the Tenant, or to other tenants of the
Building, in a manner which deviates from the exact Tenant’s
Pro Rata Share, or those of such other tenants, as may be necessary
to more accurately reflect accountability for unusual or extra
costs resulting from excessive usage, the manner of layout or
finishes requiring special maintenance, or the like. The
terms of this Subsection shall be solely for the benefit of the
Landlord and may not be relied upon nor construed for the benefit
of the Tenant, other tenants in the Building, or any other person.
3.3
Late Charge. Tenant hereby
recognizes and acknowledges that if rental payments are not
received within ten (10) days of when due, Landlord will suffer
damages and additional expenses thereby and Tenant therefore agrees
that a late charge equal to five percent (5%) of the Basic Monthly
Rent and any additional rent or payments hereunder may be assessed
by Landlord or Agent as additional rental. Furthermore,
Landlord or Agent shall have the right to require that all rental
payments be made by certified or cashier’s check, in the
event (i) any of Tenant’s checks are “bounced”,
dishonored or returned for any reason, or (ii) Tenant monetarily
defaults two or more times. All bank service charges
resulting from any checks of Tenant which are dishonored or
returned for any reason shall be borne by Tenant.
4.
Security Deposit.
4.1
Delivery of Security Deposit.
Tenant shall deposit with Landlord, upon execution hereof,
Twenty Thousand Five Hundred Eighty-Nine Dollars and 76/100
($20,589.76) as security for the faithful performance of
Tenant’s obligations hereunder (the “Security
Deposit”). Tenant shall earn no interest on the
Security Deposit held by Landlord.
4.2
Use of Security Deposit. The
Security Deposit shall be held by Landlord as security for the
faithful performance and observance by Tenant of the terms,
provisions and conditions of this Lease. Landlord may use,
apply or retain all or any portion of the Security Deposit for the
payment of any past due rent or for the payment of any other sum to
which Landlord may become entitled under this Lease or by law by
reason of Tenant’s default or to compensate Landlord for any
direct loss or damage which Landlord may suffer including, without
limitation, the cost of replacing or repairing any equipment
damaged or removed from the Premises and the cost of repairing any
damage to the Premises or the Building. Tenant shall have no
right to apply the Security Deposit or any portion thereof to any
rent hereunder, but the Security Deposit may be so applied, at
Landlord’s option, from time to time. If Landlord so
uses or applies all or any portion of the Security Deposit, Tenant
shall within ten (10) days after written demand therefor, deposit
cash with Landlord in the amount sufficient to restore the Security
Deposit to the full amount of the Security Deposit and
Tenant’s failure to do so shall be a Default under this
Lease. Landlord’s application of any portion of the
Security Deposit shall not cure any Default hereunder and Landlord
shall be free to exercise such other rights and remedies as
provided hereunder, at law or in equity. Provided Tenant is
not in default of its obligations under this Lease and there are no
damages to the Premises or the remainder of the Property caused by
Tenant or its employees, agents or contractors, the Security
Deposit (or so much thereof as has not theretofore been applied by
Landlord or returned to Tenant), shall be returned to Tenant within
forty-five (45) days after the expiration of the Term and after
Tenant has vacated the Premises.
Upon written request made by Tenant to
Landlord sent after the expiration of the first twelve (12) full
calendar months for which Tenant is obligated to pay Basic Monthly
Rent hereunder, the Tenant shall be entitled to the return of Ten
Thousand Two Hundred Ninety-Four Dollars and 88/100 ($10,294.88)
out of the Security Deposit; provided however, that if Tenant is or
is then in monetary default (no notice required) or non-monetary
Default (after notice and cure period), or during the Term has been
in monetary Default (if applicable, after notice and cure period)
for more than twenty (20) consecutive days, as of the date of
Landlord’s receipt of the timely-given request notice, then
Tenant shall not be so entitled to the return of such portion of
the Security Deposit.
4.3
Letter of Credit. The Security
Deposit may be made in the form of a letter of credit if the issuer
thereof is approved by Landlord in advance and the form thereof (i)
is approved in advance by the Landlord; (ii) provides that it is
automatically renewable for a term of no less than one (1) year
unless the issuer gives Landlord at least 45 days advance prior
notice of non-renewal; (iii) provides that it is expressly
transferable and assignable by the then current beneficiary without
the consent or joinder of Tenant and without payment of a transfer
fee; (iv) has as an attachment all required transfer and assignment
documentation; and (v) provides that the sole condition to the draw
is the presentation of the letter of credit (which may be by
overnight delivery and can be made via a copy thereof in lieu of
the original in the event of a partial draw) and an affidavit to
the effect that “default has occurred under this Lease and
the person requesting the draw is authorized on behalf of the then
current beneficiary to make the draw and receive the
proceeds.” If the Security Deposit is made in the form
of a letter of credit, it shall be an immediate default hereunder
with no notice or cure period required, if less than thirty (30)
days shall remain until the expiry date (or until the expiration of
the initial or renewal term of the letter of credit) of any letter
of credit posted hereunder, and Tenant shall not have renewed or
replaced (in accordance with the foregoing) such letter of credit
for the longer period of (x) the resolution of any then pending
litigation, injunctive action or proceeding (including without
limitation, bankruptcy proceeding) having the effect of prohibiting
a draw on the Security Deposit letter of credit, plus two months,
or (y) an additional one (1)-year period. In such event,
Landlord may immediately draw down on the letter of credit, and
hold the proceeds thereof as a cash security deposit or apply in
accordance with the terms hereof. In the event that the
letter of credit Security Deposit is lost or destroyed, Tenant
shall upon request by the then current beneficiary, cause a
replacement letter of credit to be issued (provided proper
affidavit by the beneficiary is made regarding the loss or
destruction of the letter of credit).
5.
Tenant’s Use and Covenants.
5.1
Subject to Section 5.2, the Premises
shall be used and occupied by the Tenant only for office use under
the business name of E-OIR Technologies, Inc. and for no other
use.
5.2
Prohibited Uses; Covenants of Tenant.
Tenant shall not use, or permit the use of, all or any part
of the Premises for any disorderly, illegal or hazardous purpose
and will not manufacture any commodity therein other than computer
software. Tenant shall not use, or permit the use of, all or
any part of the Premises for any purpose that interferes with the
use or enjoyment by other tenants of any portion of the Building,
nor which, in Landlord’s opinion, impairs, or might impair,
the reputation or value of the Property. Tenant shall not use
utility services in excess of amounts reasonably determined by
Landlord to be within the normal range of demand for general office
use. Tenant shall not obstruct any of the Common Areas or any
portion of the Property outside the Premises, and shall not place
or permit any signs, curtains, blinds, shades, awnings, aerials or
flagpoles, or the like, visible from outside the Premises.
Tenant shall keep the Premises in a neat and clean condition.
Tenant shall pay before delinquency any and all taxes,
assessments and public charges levied, assessed or imposed upon
Tenant’s business, upon the leasehold estate created by this
Lease or upon the Tenant’s fixtures, furnishings or equipment
in the Premises. Tenant shall not strip, overload, damage or
deface the Premises, or the hallways, stairways, elevators, parking
facilities or other public areas of the Building, or the fixtures
therein or used therewith, nor permit any hole to be made in any of
the same. Tenant shall not install any equipment of any kind or
nature which will or may necessitate any changes, replacements or
additions to, or in the use of, the water system, heating system,
plumbing system, air conditioning system or electrical system of
the Premises or the Building, without first obtaining the written
consent of Landlord to be withheld in Landlord’s sole
discretion, except if the additions relate to the HVAC or
electrical system in connection with partitioning or creating new
office areas, and the building systems are not adversely affected,
then Landlord’s consent shall not be unreasonably withheld.
Tenant shall comply with the Requirements (as hereinafter
defined). Tenant will not use or occupy the Premises in
violation of any Requirement. If any governmental authority,
quasi-governmental authority, mortgagee or insurance company shall
contend or declare that the Premises are being used for a purpose
which is in violation of any Requirement, then Tenant shall, upon
five (5) days’ notice from Landlord, immediately discontinue
such use of the Premises, unless such use is of such a nature that,
in Landlord’s reasonable judgment, a more expeditious
discontinuance is required, in which case Tenant shall immediately
discontinue such use. If thereafter the party asserting such
violation threatens, commences or continues criminal or civil
proceedings against Landlord for Tenant’s failure to
discontinue such use, in addition to any and all rights, privileges
and remedies given to Landlord under this Lease for default herein,
Landlord shall have the right to terminate this Lease forthwith.
Tenant shall indemnify and hold Landlord harmless from and
against any and all liability for such violation or violations,
which obligation shall survive the expiration or termination of
this Lease.
The term “Requirements” as
used herein shall mean all laws, statutes, ordinances, orders,
rules, building codes, regulations and requirements of all federal,
state and municipal governments, and the appropriate agencies,
offices, departments, boards and commissions thereof, and the board
of fire underwriters and/or the fire insurance rating organization
or similar organization performing the same or similar functions,
whether now or hereafter in force, applicable to the Building or
any part thereof and/or the Premises, including, but not limited
to, all those relating to environmental or trash disposal,
hazardous waste and sorting, and Americans with Disabilities Act
requirements. The Requirements shall also include all requirements
of any present or future mortgagee or ground lessor of Landlord as
to the manner of use, occupancy, maintenance, repair or condition
of the Premises and/or the Building, and the requirements of the
carriers of all fire insurance policies maintained by Landlord on
the Building as well as the Landlord’s Rules and Regulations
attached hereto as Exhibit C .
5.3
Tenant’s Maintenance. Tenant,
at Tenant’s sole expense, shall repair, maintain and replace
any and all Supplemental (hereinafter defined) heating, ventilating
and air conditioning equipment; Supplemental plumbing facilities,
including without limitation, toilets, faucets and the like
(exclusive of the incoming main water lines); any other
Supplemental standard mechanical equipment; Supplemental electrical
system; Supplemental lighting system, including without limitation,
bulbs; Tenant’s telephone system; and any Supplemental access
control or security system. “Supplemental” shall
mean any above building standard equipment or system, or any
supplemental or stand alone equipment or system installed by or on
behalf of Tenant or a former tenant serving the Premises;
Supplemental shall specifically exclude the building-standard
common area bathrooms. Tenant shall maintain a service
contract with a licensed and bondable mechanical contractor
approved by Landlord, with a scope of service acceptable to
Landlord, for all of the HVAC equipment and systems Tenant is
obligated to maintain hereunder, and shall provide a copy of the
same to Landlord upon the execution thereof and any renewal
thereof.
5.4
Floor Load; Prevention of Vibration and
Noise. Tenant shall not place a load upon the floor of the
Premises exceeding the [100] pounds per square foot such floor was
designed to carry, as determined by Landlord or its structural
engineer. Partitions shall be considered as part of the load.
Landlord may prescribe the weight and position of all safes,
files and heavy equipment that Tenant desires to place in the
Premises, so as to properly distribute their weight.
Tenant’s business machines and mechanical equipment
shall be installed and maintained so as not to transmit noise or
vibration to the Building structure or to any other space in the
Building. Tenant shall be responsible for the cost of all
structural engineering required to determine structural load and
all acoustical engineering required to address any noise or
vibration caused by Tenant.
6.
Services Furnished by
Landlord.
Landlord shall furnish services,
utilities, facilities and supplies as shown on the Landlord
Services list attached as Exhibit B . If Landlord
furnishes any additional services at Tenant’s request, such
services shall be charged at reasonable rates established by
Landlord, which shall be considered additional rent.
6.1
Repairs and Maintenance. Landlord
shall repair and maintain the Common Areas and structural portions
of the Building and the basic (i.e., non-Supplemental) plumbing,
electrical, mechanical and heating, ventilating, and
air-conditioning and sprinkler (if any) systems therein, including
the roof and windows, the costs of all of which shall be Operating
Expenses. In the event, however, that any such repairs
are necessitated by reason of any act or omission by Tenant, its
employees, agents, licensees, invitees, contractors or anyone
entering the Premises by force, Tenant agrees to promptly, upon
demand, reimburse Landlord for the full costs thereof. It is
expressly understood that Landlord has no obligations hereunder
except for those which are expressly stated herein or which are
non-waivable under applicable law. Except as expressly set
forth above, all other repairs and maintenance to the Premises
shall be the responsibility of Tenant.
6.2
Quiet Enjoyment. Upon
Tenant’s paying the Rent and performing its other obligations
hereunder, Landlord gives the covenant of quiet enjoyment of the
Premises to Tenant, subject to the provisions hereof and the terms
of any mortgage, deed of trust or ground lease to which this Lease
is subordinate.
6.3
Insurance. Landlord shall insure
the Property, including the Building (with limits no less than
eighty percent of the actual replacement cost of same) against
damage by fire and standard extended coverage perils, and shall
carry public liability insurance, all in such reasonable amounts
with such reasonable deductibles as would be carried by a prudent
owner of a similar Building in the area. Landlord may carry
any other forms of insurance as it or its mortgagee may deem
advisable. Tenant shall have no right to any proceeds from
such policies. Landlord shall not carry any insurance on any of
Tenant’s property, and shall not be obligated to repair or
replace any of Tenant’s property.
6.4
Changes by Landlord. Landlord may
at any time make any changes, additions, improvements, repairs or
replacements to the Property, including the Common Areas, that it
considers desirable. In so doing, Landlord may use or
temporarily close or reconfigure any of the Common Areas, or
permanently change their configuration. Landlord shall use
reasonable efforts to minimize interference with Tenant’s
normal activities, but no such interference shall constitute
constructive eviction or give rise to any abatement of rent or
liability of Landlord to Tenant. Landlord may also
discontinue any facilities or services provided as part of the
Common Areas or as common facilities if such areas or facilities
are not described in Building services in Exhibit B
.
6.5
Failure to Provide Services and
Repairs. Landlord shall not be liable for any failure to
perform any act or provide any service required hereunder unless
Tenant shall have given written notice of such failure, and
provided such failure is susceptible to being cured and such
failure continues for at least thirty days thereafter.
Notwithstanding the foregoing, in the event of interruption
or termination of utility services to the Premises or the Building
or Landlord’s failure to provide any other required service
hereunder, which failure is caused by factors beyond
Landlord’s reasonable control, then Landlord shall not be
liable to Tenant in any such event, and such event shall not
constitute constructive eviction or give rise to any rental
abatement or reduction or any other liability of Landlord to
Tenant. Tenant hereby waives any right to make repairs or
provide maintenance at Landlord’s expense under any law or
ordinance. If because of such interruption or termination of
services required to be provided by Landlord hereunder the Premises
remain untenantable for reasons other than (i) force majeure or
(ii) any act or omission of Tenant or its employees, agents,
contractors or invitees for a period of more than ten (10)
consecutive business days, rent shall thereafter abate on an
equitable basis during the period of untenantability.
7.
Alterations.
Tenant shall not make or permit to be
made any alterations, additions, modifications or improvements to
the Premises (including without limitation painting and carpeting)
without the prior written consent of Landlord, which consent will
not be unreasonably withheld, provided that such alterations,
additions, modifications or improvements are not structural or
involve Building systems in which case Landlord’s consent may
be withheld in Landlord’s sole discretion. If Tenant
desires to make any such alterations, additions, modifications or
improvements, a duplicate set of plans for the same shall first be
submitted to and approved by Landlord and Landlord shall have the
right to request reasonable revisions and corrections to the plans,
all of which corrections and revisions shall be incorporated by
Tenant (with revised duplicate sets delivered to Landlord).
All such work shall be done by Tenant, at its own expense,
and Tenant agrees that all such work shall be done in a good and
workmanlike manner (Landlord having the right to approve all
contractors, all of whom shall be bonded and properly licensed) in
accordance with the approved plans therefor and all applicable
Requirements, that the structural integrity of the Building shall
not be impaired, that no liens shall attach to the Premises or the
Property by reason therefor, and that Tenant will secure all
necessary permits pertaining to the aforementioned alterations,
additions, modifications or improvements. Tenant shall
reimburse Landlord upon demand therefor for all reasonable costs
and expenses incurred by Landlord in connection with its review of
such plans and the inspection of the work contemplated thereby.
Tenant has no authority or power, express or implied, to
create or cause to be created or to consent to any lien, charge or
encumbrance of any kind against the Premises or the Property.
Tenant shall pay before delinquency all costs for work done
or caused to be done by Tenant in the Premises which could result
in any lien or encumbrance on Landlord’s interest in the
Property or any part thereof, shall keep the title to the Property
and every part thereof free and clear of any lien or encumbrance
with respect to such work and shall indemnify and hold harmless
Landlord against any claim, loss, lien, cost, demand or legal or
other expense, whether in respect of any lien, injury to person or
property (including the Building) or otherwise, arising out of the
work performed or to be performed at the Premises or the supply of
material, services or labor for such work. Tenant shall
immediately notify Landlord of any such lien, claim of lien or
other action of which it has knowledge and which affects the title
to the Property or any part thereof and shall cause the same to be
removed within ten (10) days, failing which Landlord may take such
action as Landlord deems necessary to remove the same and the cost
thereof (including reasonable attorneys’ fees) shall be
immediately due and payable by Tenant to Landlord. All
alterations, additions, improvements and fixtures (other than
Tenant’s personal property, provided the same are installed
at no cost or expense to Landlord) which may be made or installed
by either party upon the Premises shall be and remain the property
of Landlord and shall remain upon and be surrendered with the
Premises, unless Landlord requests their removal, in which event
Tenant shall remove the same and restore the Premises to its
original condition, taking into account normal wear and tear, at
Tenant’s sole cost and expense and Tenant shall pay the
entire cost of such removal. If Tenant fails to remove such
property and restore the Premises as aforesaid, Landlord may do so
and Tenant shall pay the entire cost thereof to Landlord within ten
(10) days after Tenant’s receipt of Landlord’s written
demand therefor. In connection with the installation of any
alterations, additions, modifications and improvements, including
without limitation, any described in Article 2 hereof, Tenant shall
be responsible for and pay any construction management fee charged
by the property manager, provided the fee does not exceed ten
percent (10%) of the sum of hard costs, soft costs and permit fees
of any such installation of alterations, additions, modifications
or improvements; provided, however, that the construction
management fee shall not exceed five percent (5%) with respect to
the initial Tenant Improvements described in Section
2.4.
8.
Hazardous Substances and Environmental
Issues.
8.1
Hazardous Substances. Tenant (a)
shall not use, process, release, discharge, generate, treat, store,
transport or dispose of any Hazardous Substances on, in, under or
through the Premises or Property (other than substances necessary
for the proper operation of business machines ( e.g. ,
photocopying machines and printers)), and (b) shall prohibit its
employees, licensees, subtenants, invitees and third party
contractors from using, processing, releasing, discharging,
generating, treating, storing or disposing of any Hazardous
Substances on, in, under or through the Premises or Property, in
either case in quantities or concentrations or in a manner which
would violate any applicable Requirement. In addition to any
other obligation or liability that Tenant may have hereunder or
under applicable law, if Tenant or any of Tenant’s employees,
licensees, subtenants, invitees or third party contractors uses,
processes, releases, discharges, treats, generates, stores,
transports or disposes of any Hazardous Substance on, in, under or
through the Premises or the Property in violation of the terms of
this Lease or applicable law, then Tenant upon discovering same or
upon notice from Landlord or any governmental authority shall
immediately remove such Hazardous Substance from the Premises and
the Property at Tenant’s sole cost and expense in accordance
with all applicable Requirements. Tenant hereby indemnifies
and holds Landlord harmless from any loss, cost, claim, damage or
expense including reasonable attorneys’ fees arising out of a
breach by Tenant of its obligations under this Section, which
indemnification obligation shall survive the expiration or
termination of this Lease. For purposes hereof the term
“Hazardous Substances” shall mean any and all
substances (whether liquid, solid or gas) defined, listed or
otherwise classified as pollutants, hazardous wastes, hazardous
substances, hazardous materials, extremely hazardous wastes, or
words or terms of similar regulatory effect under any present or
future Requirement or that may have a negative impact on human
health, safety or the environment, including, but not limited to,
petroleum and petroleum products, asbestos and asbestos-containing
materials, polychlorinated biphenyls, lead, lead-based paints,
radon, radioactive materials, flammables and explosives.
8.2
Conservation and Environmental Policies
and Programs. Tenant shall comply with all conservation and
environmental protection programs and policies implemented by
Landlord to comply with any mandatory or reasonable voluntary
conservation or environmental protection program or policy
promulgated by any governmental or quasi-governmental authority.
Landlord shall have no liability to Tenant and Tenant shall
not, except as expressly provided in the last sentence of Section
6.5 above, be entitled to any rebate or offset against Rent nor
shall the same constitute constructive eviction if Landlord is
unable to provide any of the services provided for in Article 6
because of Landlord’s compliance with any such mandatory
program or policy.
9.
Insurance.
9.1
Fire Insurance. Tenant agrees, in
addition to the provisions of Article 8, that it will not do
anything that will cause Landlord’s insurance against loss by
fire or other hazards, as
