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EXHIBIT 10.5
PORTIONS OF THIS AGREEMENT ARE SUBJECT TO ARBITRATION UNDER M.C.A. 27-5-101
ET.SEQ.
LEASE AGREEMENT
1. PARTIES. THIS LEASE AGREEMENT made this 29th day of June 2000 between
XXXXXXX XXXXX OIL CORPORATION, hereinafter referred to as LESSOR, and ILX
LIGHTWAVE CORPORATION, hereinafter referred to as LESSEE.
2. PREMISES. LESSOR hereby leases to LESSEE AND LESSEE leases from LESSOR for
the term and upon the terms and conditions hereinafter set forth, the
premises described as follows:
Tract B of Certificate of Survey No. 475B Two tracts of land
being tracts 1A and 2A of Certificate of Survey No. 475A,
located in the southeast one-quarter of section 8 and the
southwest one-quarter of section 9, township 2 south, range 6
east, M.P.M., Gallatin County, Montana.
TOGETHER WITH the building and other improvements to be constructed thereon
as hereinafter provided, and together with the right to use all adjoining
parking areas, driveways, sidewalks, roads and alleys and means of ingress
and egress, insofar as LESSOR has the power to lease or license and use
thereon.
3. CONSTRUCTION. LESSOR will construct for LESSEE, upon the agreed leased
premises, a building with the mechanicals and landscaping pertinent
thereto, in accordance with certain plans and specifications (Exhibit "A"
attached) therefore prepared by Xxxx Xxxxxxxxx Architects PC & Xxxxxx
Construction, Contractor, which bears the written approval of both LESSEE
and LESSOR (hereinafter referred to as the PHASE 2). LESSOR agrees to
complete the PHASE 2 by March, 1st 2001, strictly in accordance with the
aforesaid plans and specifications, unless LESSOR and LESSEE agree to
changes in such plans and specifications as they may occur during
construction. The LESSOR agrees to assume the cost incurred for the PHASE 2
including the cost of the land, construction of the building and required
landscaping. LESSOR further agrees
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to guarantee the quality of workmanship and other materials as provided in
the Construction Contract (see Exhibit "A") for a period of one (1) year
after completion, with the exception of those items covered by a specific
manufacturer's warranty may differ from above.
4. TERM. The primary term of this lease shall commence on March, 1st 2001,
provided that LESSOR has completed the PHASE 2 and LESSEE has accepted the
PHASE 2 and shall continue for a period of 10 (Ten) years thereafter,
unless sooner terminated or extended as hereinafter provided. LESSEE shall
have and is hereby granted a total of one (1) five (5) year option and a
one (1) four (4) year option to extend the term of this lease beyond the
initial term, upon the same covenants and conditions as herein provided,
except as hereinafter specifically set forth. If LESSEE shall elect to
exercise one or more of such options, it shall do so by giving LESSOR
written notice at least ninety (90) days prior to the expiration of the
primary term or the then current extension, and in such notice LESSEE shall
state the date which it elects to extend the term.
5. RENT. LESSEE agrees to pay to LESSOR or its designee a monthly rent of
$15,600.00, payable in monthly installments for 10 (ten) years during the
term of this lease.
(a) In the event the LESSEE shall exercise its options to extend the
primary term of this lease, the monthly rental during the first option
period shall be $17,160.00; the monthly rental during the second
option period shall be $18,020.00.
(b) All rentals provided for herein shall be paid in advance on or before
the fifth (5th) day of each month (unless such rental shall be abated
or diminished as provided hereinafter).
(c) See (addendum (1) one), attached, for PHASE 1 (one) and PHASE 2 (two)
combined rental payment.
6. UTILITIES. LESSEE agrees to pay, before delinquency, all utility charges
used by it, including but not limited to gas, electricity, and water.
7. TAXES. LESSEE agrees to be responsible for all taxes levied upon personal
property, including trade fixtures and inventory, not owned by LESSOR and
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kept on leased premises. LESSEE agrees to pay all taxes and assessments,
including RID's OR SID's, levied against the land and building and
improvements, and, upon request, agrees to furnish LESSOR with receipts
showing payment thereof. LESSEE shall have the right to direct LESSOR'S
vote for or against any new SID's or RID's.
8. MAINTENANCE. LESSEE agrees to maintain in good repair the outside walls,
roof and floor of the building and the surface of the parking area,
sidewalks and driveways, as well as the structural soundness of the
building, and all underground gas, water and sewer pipes. LESSEE agrees to
keep the inside of the building in good repair including plumbing,
electrical, wiring, air conditioning and heating equipment and those parts
of underground gas, water and sewer pipes as are contained in or are
directly beneath the floor of the building, and paint the exterior walls
and be responsible for all glass, casualty damage, reasonable wear and tear
expected.
9. HAZARDOUS SUBSTANCE. Except those as currently in use as listed in Exhibit
"B" Hazardous Chemical List, and those considered as common cleaning
products commercially available, LESSEE shall not use any hazardous or
toxic substances without prior written notice to LESSOR. Said notice shall
identify the substance to be used, the area in which the substance is to be
used, the manner in which the substance is to be stored and applied, and
the plans to dispose of any excess. LESSOR has the option of refusing to
consent to such use, storage or disposal of toxic substances, and LESSEE's
failure to comply with such decision shall constitute a default by LESSEE.
All hazardous or toxic materials shall be used strictly in accordance with
all applicable laws, rules and ordinances, and LESSEE shall not allow any
hazardous or toxic waste into the air, ground or water that is not in
compliance with said laws or regulations. LESSEE shall indemnify and hold
LESSOR harmless from any claims, liability, loss, cost or expense
(including but without limitation, attorney fees) resulting from hazardous
or toxic wastes placed on the property by LESSEE.
10. ALTERATIONS. LESSEE shall not make any alterations involving structural
changes after the initial construction of the improvements on the property,
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without securing LESSOR'S written consent, which shall not be unreasonably
withheld. Other alterations or additions, such as to signage and
non-weightbearing partitions, may be made by LESSEE in good workmanlike
manner without cost to LESSOR and without LESSOR'S permission. LESSEE shall
permit no liens to attach to the premises by virtue of alterations or
additions by LESSEE.
11. TRADE OR OTHER FIXTURES. LESSEE may install or cause to be installed such
equipment as reasonably necessary for the operation of its business. Such
equipment may be installed prior to acceptance of the improvements and
shall remain personal property, and title hereto shall continue in the
owner thereof, regardless of the manner in which same may be attached or
affixed to the premises. In the event such equipment is subject to a lien
or title retention instrument, the holder of such liens or title retention
instrument, shall have the right and be able to enforce the same as stated
therein.
12. BUILDING EXPANSION. The entire acreage described in paragraph 2 is reserved
for the present or future use of the LESSEE. Without the written consent of
the LESSEE the LESSOR shall not subdivide the property during the term of
this lease or any extension thereof. Should the LESSOR be unable or
unwilling to construct additional facilities as requested by the LESSEE
during the initial term of this lease or any extension thereof, LESSEE may
exercise an option to purchase the property as provided in paragraph 21.
13. CASUALTY DAMAGE AND INSURANCE. With respect to the building to be erected
on the leased premises, the LESSEE shall procure and maintain in force, at
LESSEE'S expense, a standard fire and extended coverage insurance policy of
the type then commonly purchased by the owners of commercial buildings in
the same area in which the leased premises are situated, in an amount not
less than $3,500,000 for Phase 1 (one) and Phase 2 (two) buildings
combined. In the event of loss by reason of the perils covered under such
insurance, proceeds of any insurance allowance of settlement shall be made
available to the LESSEE for the use for the purpose of repairing, restoring
and/or replacing such damaged building to the extent of such insurance
proceeds. If the building cannot be used during such repairing, restoring
or
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replacing, the rentals reserved to the LESSOR shall be temporarily abated
and the LESSEE shall cause the required repairing, restoring or replacing
to be completed as expeditiously as possible. In the event of loss by
reason of perils covered by said insurance in excess of the face amount of
said insurance policy or of a loss from perils not covered by said
insurance, LESSOR shall have the option of receiving any insurance proceeds
and, at LESSOR'S expense, repairing and restoring said premises to its
original condition, or leaving the premises unrepaired. If the LESSOR
elects not to so repair and restore said premises, then the LESSEE shall
have the option to receive the insurance proceeds, if any, and so repair
and restore the premises at the LESSEE'S expense. In the event that neither
the LESSOR nor the LESSEE elect to repair and report the premises as
aforesaid, then the insurance proceeds shall be payable to the LESSOR and
this lease shall thereupon terminate. The LESSEE agrees to have such
insurance as is required to be procured and maintained by the LESSEE issued
in the name of the LESSOR with LESSEE as an additional insured, with a loss
payable to any mortgages designated by the LESSOR, and to deliver to the
LESSOR and the LESSOR'S mortgagor, if any, appropriate evidence of the
existence of such insurance, together with the said premium receipts
therefore, and to keep the same in effect and in full force and effect
throughout the entire term of this lease or extension or renewal thereof.
14. LIABILITY INSURANCE. LESSEE agrees at LESSEE'S expense to maintain in force
continuously throughout the term of this lease and any extension thereof
public liability insurance covering the leased premises, with limits of ONE
MILLION DOLLARS ($1,000,000.00) for death or injury to one person; FIVE
HUNDRED THOUSAND DOLLARS ($500,000.00) for death or injury to more than one
person; and FIFTY THOUSAND DOLLARS ($50,000.00) for property damage with a
$2,000,000.00 COMBINED SINGLE LIMIT, and shall upon written request of
LESSOR, furnish LESSOR a certificate by the insurer that such insurance is
in force. The LESSOR shall be named as an additional insured in such
policies of insurance.
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15. COMPLIANCE'S WITH LAWS. LESSEE will promptly comply with all applicable and
valid laws, ordinances, and regulations of Federal, State, County,
Municipal or other lawful authority pertaining to the use and occupancy of
the leased premises.
16. BANKRUPTCY. Should LESSEE make an assignment for the benefit of creditors,
or be adjudicated bankrupt, such action shall constitute a breach of this
lease for which LESSOR, at its option, may terminate all rights of LESSEE
or its successors in interest under this lease.
17. EMINENT DOMAIN. If all of the leased premises is taken under the power of
eminent domain or conveyed under threat of condemnation proceedings, or if
only a part of such premises is so taken or conveyed and LESSEE shall
determine that the remainder is inadequate or unsatisfactory for its
purposes, which determination shall not be arbitrarily or capriciously
made, then in either event, this lease shall terminate effective as of the
date LESSEE is required to give up the right to occupy or use any part of
the leased premises. The termination of this lease as above provided shall
not operate to deprive LESSEE of the right to make claim against the
condemning authority for any damage suffered by LESSEE, but LESSEE shall
have no right to make any claim against LESSOR because of any such
termination. If this lease is not terminated as above provided, LESSOR and
LESSEE shall agree upon an equitable reduction of the rental.
17a. ARBITRATION. If the parties fail to agree upon such reduction within sixty
(60) days from the date of the final award or payment for the part of the
leased premises so taken or conveyed, LESSOR and LESSEE shall each choose
one arbitrator and the two arbitrators so chosen shall choose a third
arbitrator. The decision of any two of the arbitrators as to the rental
reduction, if any, shall be binding on LESSEE and LESSOR and any expense of
the arbitration shall be divided equally between LESSEE and LESSOR.
18. ATTORNEY'S FEES. If suit is brought to enforce any covenant herein
contained, the parties hereto agree that the losing party shall pay the
prevailing party a reasonable attorney's fee, which shall be fixed by the
court, and court costs.
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19. DEFAULT. In the event LESSEE shall default in the payment of the monthly
rent as provided herein, LESSOR shall promptly so notify LESSEE in writing,
and failure of LESSEE to cure such default within twenty (20) days after
receipt of such notice shall, at the option of the LESSOR, work as a
forfeiture of this lease, or LESSOR may enforce performance in any manner
provided by law, and LESSOR'S agent or attorney shall have the right
without further notice or demand to re-enter and remove all persons from
LESSOR'S property without being deemed guilty of any manner of trespass and
without prejudice to any remedies for arrears of rent or breach of
covenant, or LESSOR'S agent or attorney may resume possession of the
property and relet the same for the remainder of the term at the best
rental such agent or attorney can obtain for the account of LESSEE, who
shall pay any deficiency, and LESSOR shall have a lien as security for such
rental upon the fixtures and equipment belonging to LESSEE which are on the
demised premises. In the event LESSEE shall default in the performance of
any of the terms or provisions of this lease other than the payment of
monthly rent, LESSOR shall promptly so notify LESSEE in writing. If LESSEE
shall fail to cure default within twenty (20) days after receipt of such
notice, or if the default is one of such character as to require more than
twenty (20) days to cure and LESSEE shall fail to commence to do so within
twenty (20) days after receipt of such notice and thereafter diligently
proceed to cure such default, then in either such event, LESSOR may cure
such default and such expense shall be added to the rent otherwise due, but
any such default shall not work as a forfeiture of this lease.
In the event LESSOR shall default in the performance of any of the terms or
provisions of this lease, LESSEE shall so promptly notify LESSOR in
writing. If LESSOR shall fail to cure such default within twenty (20) days
after receipt of such notice, or if the default is of such character as to
require more than twenty (20) days to cure and LESSOR shall fail to
commence to do so within twenty (20) days after receipt of such notice and
thereafter diligently proceed to cure such default, then, in either such
event LESSEE may cure such default
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and such expense shall be deducted from the rent otherwise due or cancel
and terminate this lease.
20. RIGHT OF FIRST REFUSAL. If during the term of this lease, or any extension
thereof, LESSOR shall receive a bona fide offer to purchase the demised
premises, which offer is acceptable to LESSOR, LESSOR agrees that LESSEE
shall have and is hereby granted an option to purchase the demised property
upon the same terms and provisions. LESSOR agrees immediately after receipt
of such an offer to give LESSEE notice in writing of the terms and
provisions thereof, and that LESSEE may exercise its option to purchase
said property at any time within twenty (20) days after such notice is
received by LESSEE. If LESSEE shall elect to exercise such option it shall
do so by giving written notice to LESSOR within such twenty (20) day period
and a contract of sale shall be executed by the parties and title closed
within a reasonable time thereafter. The failure of LESSEE to exercise the
option provided in this article shall in no way relieve or release LESSOR
or its assigns from the terms and effect of the option granted in paragraph
21.
21. OPTION TO PURCHASE. Any time after the tenth (10th) lease year, or earlier
as provided in paragraph 12, by notification to LESSOR of LESSEE'S
intentions, LESSEE may exercise an option to purchase the property at a
price to be determined by the average of two MAI appraisals, but in no
event may the purchase price be less than eleven (11) times the annual
rental at the time the option is exercised; provided, however, that written
notice of the exercise of said option, accompanied by an xxxxxxx money
deposit of 10% must be given to LESSOR within sixty (60) days of exercise
of the option. Upon receipt of said notice and xxxxxxx money by LESSOR, the
parties shall execute an agreement to consummate said sale and the sale
shall be closed within a reasonable time thereafter, but, in all events,
not later than one hundred twenty (120) days of the notice of exercise of
the option. Rent is to be apportioned to date of closing.
22. LESSOR'S COVENANTS. LESSOR covenants that it has good and marketable title
to the demised premises in fee simple absolute. In the event LESSEE
exercises its option to purchase as described above, LESSOR shall convey
the
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premises free and clear of all encumbrances except right-of-way, federal
patents and mineral reservations, easements, and building and use
restrictions of record.
23. QUIET ENJOYMENT. That LESSEE upon paying the rent and performing the
covenants and agreements of this lease shall quietly have, hold and enjoy
the demised premises and all rights granted LESSEE in this lease during the
term thereof and extensions thereto, if any.
24. SUBORDINATION. LESSEE hereby agrees that its lease-hold interest hereunder
is subordinate to any mortgages now on, or hereafter to be placed on the
premises leased hereunder; provided, as a condition precedent to such
subordination, each such mortgage shall expressly covenant or each mortgage
shall expressly provide that so long as the LESSEE is not in default under
said LEASE AGREEMENT, the LESSEE'S quiet possession of the portion of the
premises leased hereunder shall remain undisturbed, on the terms and
conditions stated herein, whether or not the mortgage is in default and
notwithstanding and foreclosure or other action brought by the holder of
the mortgage in connection therewith.
25. ASSIGNMENT AND SUBLETTING. LESSEE shall have the right to assign or
sublease the whole or any part of the demised premises, provided that any
assignment or sublease shall be subject to all of the terms and conditions
of this lease and that LESSEE shall remain primarily liable for the payment
of the rent and the performance of the terms and conditions of this lease,
unless LESSOR shall agree otherwise.
26. NOTICES. Any notices required or permitted hereunder shall be in writing
and delivered either in person to the other party or under other party's
authorized agent, or by the United States Certified Mail, Return Receipt
Requested, postage fully prepaid or by fax follow-up by regular mail, to
the addresses set forth hereinafter, or to such other addresses as either
party may designate in writing and deliver as herein provided.
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LESSOR: XXXXXXX XXXXX OIL CORPORATION
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
LESSEE: ILX LIGHTWAVE CORPORATION / Attn: Xxxxxxx X. Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000
27. RECORDATION. This lease agreement shall not be filed for public record by
any party hereto, but when the construction of the building and other
improvements is completed as herein provided LESSOR and LESSEE shall
execute and acknowledge a memorandum or short form lease setting forth the
parties, description of the leases premises, term of the lease, options for
extension of the term, if any and other provision hereof, the inclusion of
which shall be mutually agreed upon by LESSOR and LESSEE, which memorandum
of short form lease may be filed for public record by any party hereto.
However, at the option of either party a short form memorandum of lease may
be filed by either party at any time after the execution of this lease
agreement.
28. COMPLETE AGREEMENT. This lease contains a complete expression of the
agreement between the parties and there are no promises, representation or
inducements except such as are herein provided.
This lease agreement shall inure to be benefit of and be binding upon the
parties hereto and their respective heirs, legal representatives,
successors and assigns.
EXECUTED BY LESSOR this 12th day of July, 2000
XXXXXXX XXXXX OIL CORPORATION, by
-----------------------------------------
Xxxxxx X. Xxxxx, President
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EXECUTED BY LESSEE this 11th day of August, 2000
ILX LIGHTWAVE CORPORATION, by
-----------------------------------------
Xxxxxxxx X. Xxxxxxx, President/CEO
