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Exhibit 10.16
B.I. SYSTEMS CORPORATION
LEASE AGREEMENT
XXX ARBOR COMMERCE PARK
ANN ARBOR, MICHIGAN
THIS LEASE is made as of the 7th day of August, 1997, by and between
HIGHLAND INDUSTRIAL PROPERTIES, L.L.C., a Michigan Partnership, the address of
which is 00000 Xxxxxxxxxxxx Xxx., Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, as
Lessor, and B.I. Systems Corporation, a Delaware corporation, the current
address of which is 000 Xxxx Xxxxx Xxxxx 00, Xxx Xxxxx, Xxxxxxxx, as Lessee.
IN CONSIDERATION OF the rents to be paid and the mutual covenants, promises
and agreements herein set forth, Lessor and Lessee agree as follows:
LESSOR hereby leases unto Lessee office and manufacturing situated in the
Township of Pittsfield, County of Washtenaw, State of Michigan, in a single
story office/industrial building located at 0000 Xxxxxxx Xxxxx Xxxxx "F" Xxx
Arbor Commerce Park (the "Building"), which development is shown on the site
plan marked Exhibit "A", attached hereto and made a part thereof, such Leased
Premises being designated by cross-hatching. The legal description of the
Building is more particularly described on Exhibit "B", attached hereto and made
a part thereof.
TO HAVE AND TO HOLD for a term of Sixty (60) months from and after the
commencement of the term as hereinafter provided.
SECTION 1
CONSTRUCTION OF BUILDING
Section 1.01: Lessor agrees, prior to commencement of the term of this
Lease, to complete construction of the Leased Premises and related improvements
on the site in accordance with the plans enumerated on Exhibit "C", attached
hereto and made a part hereof, which shall be deemed part of the Building
referred to above. The Leased Premises shall consist of an exterior of
approximately 8931 square feet on one (1) floor. No minor change from such
plans which may be necessary during construction shall affect, change, or
invalidate this Lease. If Lessor shall be in good faith delayed in construction
by any labor dispute, strike, lockout, fire, unavailability of material,
weather, or casualty or any other cause beyond its reasonable control, then the
period of delay necessarily caused thereby shall be added to the time limit
provided for such construction.
SECTION 2
POSSESSION AND COMMENCEMENT OF TERM
Section 2.01: Except as herein provided, Lessor shall deliver possession of
the Leased Premises to Lessee within ninety (90) days from Lessor's receipt of a
building permit from Pittsfield Township. The Leased Premises shall be deemed
ready for Lessee's occupancy when Lessor shall have substantially completed
construction of said Leased Premises pursuant to the plans on Exhibit "A" and
"C" and receive a temporary Certificate of Occupancy from the Township of
Pittsfield. By occupying the Leased Premises, Lessee will be deemed to have
accepted the Leased Premises and acknowledged that they are in the condition
called for hereunder. The rentals herein reserved and the term of this Lease
shall commence on the date when the Premises are delivered to Lessee as required
hereunder. Lessor will require its contractors to cooperate with Lessee's
installers of equipment trade fixtures, furnishings, and decorations attached to
the real estate improvements to the maximum extent possible, but delay of or
interference with construction caused by such installers shall not postpone the
commencement of the term or the obligation to commence paying rent. If delivery
of the Leased Premises is delayed for reasons beyond the control of Lessor or
reasons not
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caused by the Lessee, beyond February 1, 1998, the Lessee shall have the option
to cancel this Lease, upon written notice to Lessor.
Section 2.02: Except as stated in Section 2.01 above, in the event Lessor
fails to deliver the Leased Premises on the commencement date because the Leased
Premises are not then ready for occupancy, or because the previous occupant of
said Leased Premises is holding over, or for any other cause whatsoever, except
as provided in Section 1.01, Lessor shall not be liable to Lessee for damages,
as a result of Lessor's delay in delivering such promises, and Lessee shall have
no right to terminate the Lease or contest the validity of the Lease, and the
commencement date of the Lease shall be postponed until such time as the Leased
Premises are ready for Lessee's occupancy, and the termination date of this
Lease shall be extended for a period equivalent to the period of such
postponement, provided such postponed termination date shall occur on the last
day of a calendar month; if not, then such termination date shall be extended by
an additional period so as to fall on the last day of such calendar month in
which it would otherwise occur.
Section 2.03: On the commencement date, or within fifteen (15) days
thereafter upon request by Lessor, Lessee shall execute a written instrument
confirming the commencement date and the termination date of the Lease, that the
Lease is in full force and effect, the rent is paid currently without any offset
or defense thereto, the amount of rent, if any, paid in advance, and that there
are no uncured defaults by Lessor, or stating those claimed by Lessee, provided
that, such facts are accurate and ascertainable.
SECTION 3
BASIC RENTAL
Section 3.01: In consideration of the leasing aforesaid, Lessee hereby
covenants and agrees to pay Lessor, at such place as Lessor may hereafter from
time to time designate in writing, a minimum net rental payable monthly in
advance on the first day of each and every month in equal monthly installments
as follows:
Months 1 - 12: $ 9.00 per square foot or $6,698.25 per month
Months 13 - 24: $ 9.25 per square foot or $6,884.31 per month
Months 25 - 36: $ 9.50 per square foot or $7,070.38 per month
Months 37 - 48: $ 9.75 per square foot or $7,256.44 per month
Months 49 - 60: $10.00 per square foot or $7,442.50 per month
Receipt of Seven Thousand Five Hundred ($7,500.00) Dollars, representing
Security Deposit is hereby acknowledged. The rental payments shall be made by
Lessee at the office of Lessor without any prior demand therefore and without
any deductions or set-offs whatsoever.
Section 3.02: Lessor and Lessee intend that the minimum net rental shall be
net to Lessor, so that the Lease shall yield, net, to Lessor, not less than the
minimum net rent specified in Section 3.01 hereof during the term of this Lease,
and that all costs, expenses, and charges as provided in this Lease relating to
the Leased Premises which may be attributable to, or become due during the term
of this Lease, shall be paid by Lessee. Provided, however, that if the lease
term shall commence on a day other than the first day of a calendar month, then
the rental for such month shall be prorated upon a daily basis based upon a
thirty (30) day calendar month.
SECTION 4
TAXES, ASSESSMENTS AND UTILITIES
Section 4.01: Lessee agrees to pay lessor its proportionate share of all ad
valorem real property taxes and assessments which have been or may be levied or
assessed by any lawful
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authority, for any calendar year during the term hereof, against the land and
Leased Premises presently and/or at any time during the term of this Lease
comprising the Building. Lessee's proportionate share shall be equal to the
product obtained by multiplying such taxes and assessments by a fraction, the
numerator of which shall be the number of square feet of floor area in the
Leased Premises, and the denominator of which shall be the total number of
square feet of constructed leasable floor area in the Building. Any tax and/or
assessment of any kind or nature, but not those not related to construction of
the building or project, and not SBT or income taxes, presently or hereafter
imposed by the State of Michigan or any political subdivision thereof or any
governmental authority having jurisdiction there over upon, against or with
respect to the rentals payable by tenants in the Building to Lessor or on the
income of Lessor derived from the Building or with respect to the Lessor's, or
the individuals or entities which form the Lessor herein, ownership of the land
and buildings presently and/or at any time during the term of this Lease
comprising the Building, either by way of substitution for all or any part of
the taxes and assessments levied or assessed against such land and such
buildings shall be deemed to constitute a tax and/or assessment against such
land and such buildings for the purpose of this Section, and Lessee shall be
obligated to pay its proportionate share thereof as provided herein. In
addition, Lessee shall also be obligated to pay any sales tax imposed by any
governmental authority on the payments by Lessee or on the receipt by Lessor of
any and all payments from Lessee. If the sales tax is separately assessed, then
Lessee shall pay that amount imposed on the individual payments of Lessee; if
the sales tax is not separately assessed, the Lessee shall pay its proportionate
share monthly as provided herein.
Section 4.02: Lessee's share of all of the aforesaid taxes and assessments
levied or assessed for or during the term hereof, as determined by Lessor, shall
be paid in monthly installments on or before the first day of each calendar
month, in advance, in an amount estimated by Lessor; provided, that in the event
Lessor is required under any mortgage covering the land and improvements Leased
to Lessee to escrow real estate taxes, Lessor may, but shall not be obligated
to, use the amount required to be so escrowed as a basis for its estimate of the
monthly installments due from Lessee hereunder. Upon receipt of all tax bills
and assessment bills attributable to any calendar year during the term hereof,
Lessor shall furnish Lessee with a written statement of the actual amount of
Lessee's share of the taxes and assessments for such year. In the event no tax
xxxx is available, Lessor will compute the amount of such tax. If the total
amount paid by Lessee under this Section for any such year, as shown on such
statement, Lessee shall pay to Lessor the difference between the amount paid by
Lessee and the actual amount due, such deficiency to be paid within thirty (30)
days after demand therefore by Lessor; and if the total amount paid by Lessee
hereunder for such calendar year shall exceed such actual amount due from Lessee
for such calendar year, such excess shall be credited against the next
installment of taxes and assessments due from Lessee to Lessor hereunder. All
amounts due hereunder shall be payable to Lessor at the place where the fixed
annual rental is payable. For the calendar years in which this Lease commences
and terminates, the provisions of this Section shall apply, and Lessee's
liability for its proportionate share of any taxes and assessments for such
years shall be subject to a pro rata adjustment based on the number of days of
said calendar years during which the term of this Lease is in effect. A copy of
a tax xxxx or assessment xxxx submitted by Lessor to Lessee shall at all times
be sufficient evidence of the amount of taxes and/or assessments assessed or
levied against the property to which such xxxx relates, Prior to or at the
commencement of the term of this Lease and from time to time thereafter
throughout the term hereof, Lessor shall notify Lessee, in writing, or Lessees
estimate of Lessee's monthly installments due hereunder. Lessor's and Lessee's
obligations under this Section shall survive the expiration of the term of this
Lease. In the case of a property tax refund or rebate the Lessee will get its
proportionate share of such less the expenses the lessor incurs to accomplish
the refund or rebate.
Section 4.03: Lessee also agrees to pay all charges made against the Leased
Premises for gas, heat, electricity, and all other utilities separately metered
during the continuance of this Lease as the same shall become due.
Section 4.04: If the Lessee shall fail to pay utility payments when due,
Lessor shall have the option to set up a monthly utility escrow deposit for the
Lessee in order to insure that Lessee will pay any monthly utility costs. If
the utility payments when due, exceed the total number than in the utility
escrow account, then the Lessee shall, upon demand, pay any deficiency to
Lessor. If such
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payments by Lessee, over the term of the Lease exceed the amount of utilities
paid from the escrow, the excess shall be refunded by Lessor to the Lessee. The
utility escrow may be adjusted by the Lessor as often as necessary to provide
sufficient funds in the utility escrow account to pay current utilities due from
Lessee.
SECTION 5
USE OF PREMISES
Section 5.01: It is understood and agreed between the parties, that the
Leased Premises, during the continuance of this Lease, shall be used and
occupied for Office, Warehouse, Product development and Production and any other
lawful purpose only and for no other purpose without the prior written consent
of Lessor. Lessee agrees that it will not use or permit any person to use the
Leased Premises or any part thereof for any use or purpose in violation of the
laws of the United States, the State of Michigan, the ordinances or other
regulations of the Township of Pittsfield or of any other lawful authorities.
During the original term or any extended term, the Lessee shall keep the Leased
Premises and every part thereof and the area adjacent to the Leased Premises
(including any service areas for the Leased Premises), orderly, neat, safe, and
clean and free from rubbish and dirt, and at all times shall store all trash,
garbage, or any other material solely within the Leased Premises and Lessor
shall arrange for the regular pickup of such trash and garbage at Lessee's
expense. Lessee shall not burn any trash or garbage at any time in or about the
building. If Lessor shall provided any services or facilities for such pickup,
then Lessee shall be obligated to use the same and shall pay a proportionate
share of the actual cost thereof within ten (10) days after being billed
therefor. Lessee shall not store or leave any material outside of the building
at any time. All signs and advertising displayed in and about the Leased
Premises shall be such only as to advertise the business carried on upon the
Leased Premises, and Lessor shall control the location, character, and size
thereof. No signs shall be displayed except as approved in writing by the
Lessor; and no awning shall be installed or used on the exterior of said
building unless approved in writing by the Lessor.
SECTION 6
OPERATION AND MAINTENANCE OF COMMON AREAS
Section 6.01: Lessor agrees, at Lessor's sole cost and expense, to construct
the building and hard surface, to properly drain, landscape, and light a parking
area or parking areas, all substantially as shown on Exhibit "A". Lessor further
agrees to cause to be operated, managed, and maintained during the term of this
Lease, all parking areas, roads, sidewalks, landscaping, drainage, and common
area lighting facilities in the Building. The manner in which such areas and
facilities shall be maintained and operated, shall be reasonably clean, safe,
and professional, and the expenditures therefore, shall be at the discretion of
the Lessor, but same shall be at competitive rates for comparable services
provided by the Lessor, subject to reasonable regulations as Lessor shall make
from time to time.
Section 6.02: Lessee agrees to pay to Lessor in the manner hereinafter
provided, but not more often than once each month, Lessee's proportionate share
of all costs and expenses of every kind and nature paid or incurred by Lessor in
operating, policing and protecting, lighting, insuring, repairing, and
maintaining the common areas of the Building. Such costs and expenses shall
include, but not be limited to, illumination and maintenance of the Building
signs, cleaning, lighting, line painting and landscaping, premiums liability and
property insurance. Any utilities furnished or supplied to common areas of the
Building which are not separately metered shall be considered a cost to maintain
the common areas and shall be included as part of such cost. For the purpose
hereof, any charges for utilities contained in the foregoing costs and expenses
shall be at the same rates as the rates for comparable service from the
applicable utility company serving the area in which the building is located.
The proportionate share to be paid by Lessee shall be computed on the basis that
the total number of square feet of floor area in the Leased Premises bears to
the total number of square feet of the Building.
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Lessee's proportionate share of such costs and expenses for each Lease year
and partial Lease year shall be paid in monthly installments on the first day of
each month, in advance, in an amount established by Lessor. Within one hundred
eighty (180) days after the end of each Lease year or partial Lease year Lessor
shall furnish Lessee with a statement of the actual amount of Lessee's
proportionate share of such costs and expenses for such period. If the total
amount paid by Lessee under this Section for any calendar year shall be less
than the actual amount due from Lessee for such year as shown on such statement,
Lessee shall pay to lessor the difference between the amount paid by Lessee and
the actual amount due, such deficiency to be paid within thirty (30) days after
the furnishing of each such statement, and if the total amount paid by Lessee
hereunder for any such calendar year shall exceed such actual amount due from
Lessee for such calendar year, such excess shall be credited against the
installment due from Lessee to Lessor under this Section 6.02. The Lessee will
have the right to audit Lessor's books to determine and/or verify the expenses
incurred and charged back to Lessee pursuant to this Lease Agreement. Lessee
shall give Lessor advance notice of Lessee's intent to audit and any and all
audits shall be at Lessee's sole expense. Attached hereto is Exhibit "C", a list
of expenses which will not be included in any chargebacks to Lessee pursuant to
this Lease.
SECTION 7
MAINTENANCE AND REPAIRS OF LEASED PREMISES
Section 7.01: Lessor shall keep and maintain the foundation, exterior walls,
and roof of the Building in which the Leased Premises are located and the
structural portions of the Leased Premises which were originally installed by
Lessor, exclusive of door, door frames, door checks, windows, and exclusive of
window frames located in exterior building walls, in good repair, except that
Lessor shall not be called upon to make any such repairs occasioned by the act
or negligence of Lessee, its agents, employees, invitees, licensees, or
contractors, except to the extent that Lessor is reimbursed therefore under any
policy of insurance permitting waiver of subrogation in advance of loss. Lessor
shall not be called upon to make any other improvements or repairs of any kind
upon said Premises and appurtenances, except as may be required under Section 11
and 12 hereof.
Section 7.02: Except as provided in Section 7.01 of this Lease, Lessee shall
keep and maintain in good order, condition and repair (including replacement of
parts and equipment if necessary) the Leased Premises (as defined herein and in
Section 6 hereof and every part thereof and all appurtenances thereto wherever
located, including, but without limitation, the exterior and interior portion of
all doors, door checks, windows, plate windows, store front, all plumbing and
sewage facilities within the Leased Premises, including free flow up to the main
sewer line, fixtures, heating and air conditioning, and electrical systems,
sprinkler system, interior walls, floor coverings, and ceilings. The plumbing
and sewage facilities shall not be used for any other purpose than that for
which they are constructed, and no foreign substance of any kind shall be
introduced therein. Lessee hereby agrees to be responsible for any expenses
incurred in connection with any breakage, stoppage, or damage resulting from a
violation of this provision by Lessee, its agents, employees, invitees,
licensees, or contractors.
Lessor shall be responsible for all costs, as long as such costs are not due
to the negligence of Lessee, related to the following: (1) replacement of the
main electrical distribution panel if such panel cannot be repaired but rather
needs complete replacement; (2) the roof-top H.V.A.C. units, if such components
cannot be repaired but rather such H.V.A.C. units need complete replacement; and
(3) if the underground sewer or water system shall burst or break. The Lessor
will also be responsible for enforcing its warranties for the HVAC systems, and
electrical systems.
Lessee shall keep and maintain the Leased Premises as defined herein, in a
clean, sanitary, and safe condition in accordance with the laws of the State of
Michigan and in accordance with all direction, rules, and regulations of the
health office, fire xxxxxxxx, building inspector, or other proper officials of
the governmental agencies having jurisdiction, at the sole cost and expense of
Lessee, and Lessee shall comply with all requirements of law, ordinance, and
otherwise, affecting and resulting from the Lessee's particular use of the
Leased Premises. If Lessee refuses or neglects to commence or complete repairs
required by Section 7.02 hereof promptly and adequately, Lessor
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may, but shall not be required to do so, make all or any part of said repairs,
and Lessee shall pay the cost thereof to Lessor upon demand, non-payment of
which shall entitle Lessor to exercise any remedy available to it in the event
of the non-payment by Lessee of rental or any other charge due to Lessor under
this Lease. At the time of the expiration of the tenancy created herein, Lessee
shall surrender the Premises in good condition, reasonable wear and tear, loss
by fire, or other casualty excepted.
Lessee, at its own expense, shall maintain fire extinguishers and other fire
protection devices to be placed in or on the Leased Premises as may be required
from time to time by any agency having jurisdiction thereof and the insurance
underwriters insuring the building in which the Leased Premises are located.
Section 7.03: All damages or injury done to the Leased Premises by the
Lessee, or by any person who may be in or upon the Leased Premises with the
consent, invitation or license of the Lessee, shall be repaired and paid for by
the Lessee.
SECTION 8
ALTERATIONS
Section 8.01: With the exception of decorating and/or minor alterations,
Lessee agrees that the Leased Premises shall not be altered, improved, or
changed without the written consent of Lessor, and that unless otherwise
provided by written agreement, all alterations, improvements, and changes which
may be desired by the Lessee and so consented to by the Lessor shall be done
either by or under the direction of the Lessor, but at the cost of Lessee. All
alterations, additions, and improvements made in or to the Building or the
Leased Premises, except movable office furniture put in at the expense of the
Lessee and removable without defacing or injuring the building or Leased
Premises, shall, unless otherwise provided by written agreement, be the property
of Lessor and remain upon and be surrendered with the Leased Premises; provided,
however, as long as written notice is given at the time of approval the Lessor
will designate by written notice to Lessee those alterations, additions, and
improvements which shall be removed by Lessee at the expiration or termination
of the Lease, and Lessee shall promptly remove the same and repair any damage to
the Leased Premises caused by such removal.
SECTION 9
LIENS
Section 9.01: Lessee shall keep the Leased Premises free from any and all
liens arising out of any work performed, materials furnished, or obligations
incurred by or for Lessee, and agrees to bond against or discharge any
mechanic's or material-men's lien within ten (10) days after written request
therefore by Lessor. Lessee shall reimburse Lessor for any and all costs and
expenses which may be incurred by Lessor by reason of the filing of any such
liens and/or the removal of same, such reimbursement to be made within ten (10)
days after receipt by Lessee from Lessor of a statement setting forth the amount
of such costs and expenses. The failure of Lessee to pay any such amount to
Lessor within said ten (10) day period shall carry with it the same consequences
as failure to pay any installment of rental.
SECTION 10
INSURANCE AND INDEMNITY
Section 10.01A: Lessee shall, during the entire term hereof, keep in full
force and effect a policy of public liability and property damage insurance with
respect to the Leased Premises, and the business operated by Lessee and any
subtenants of Lessee in the Leased Premises, including steam boiler insurance if
applicable, in which the limits of public liability shall be not less than One
Million Dollars ($ 1,000,000.00) per occurrence, and in which the limit of
property damage liability shall be not less than Five Hundred Thousand Dollars
($500,000.00). The policy shall name Lessor,
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any other parties in interest designed by Lessor, and Lessee as insured, and
shall contain a clause that the insurer will not cancel or change the insurance
without first giving the Lessor thirty (30) days prior written notice. Such
insurance may be furnished by Lessee under any blanket policy carried by it or
under a separate policy therefor. The insurance shall be with an insurance
company approved by Lessor and a copy of the paid-up policy evidencing such
insurance or a certificate of insurer certifying to the issuance of such policy
shall be delivered to Lessor prior to commencement of Lease Term and upon
renewals not less than thirty (30) days prior to the expiration of such
coverage.
Section 10.01B: Lessee shall, during the term hereof, keep in full force and
effect a policy of public liability and property damage insurance with respect
to the common area, in which the limits of public liability and property
liability shall be not less the one million dollars ($ 1,000,000.00) per
occurrence, and in which the limit of property damage liability shall be not
less than five hundred thousand dollars ($500,000.00) per occurrence.
Section 10.02: Lessor agrees, during the term hereof, to carry insurance
against fire, vandalism, malicious mischief, and such other perils as are from
time to time included in a standard extended coverage endorsement and, at
Lessor's option, special extended coverage endorsements including rental
interruption insurance equal to twelve (12) full months of rental and tax
obligations, insuring the improvements of the Building in an amount determined
solely by Lessor, but not less than one hundred percent (100%) of the full
replacement cost, if available, and with or without reasonable deductible not to
exceed $ , at the option of Lessor. Lessee agrees, from time to time,
to pay Lessor, Lessee's proportionate share of the cost of such insurance, such
payment to be made within ten (10) days after receipt of a written statement
from Lessor setting forth such cost. The proportionate share to be paid by
Lessee shall be computed on the basis that the total number of square feet of
floor area in the Leased Premises bears to the total number of square feet of
constructed leasable floor area in the Building.
Lessee shall not carry any stock of goods or do anything in or about said
Leased Premises which will in any way tend to increase the insurance rates on
said Leased Premises and/or the Building of which they are a part. If Lessee
installs any electrical equipment that overloads the lines in the Leased
Premises, Lessee shall, at its own expense, make whatever changes are necessary
to comply with the requirements of the insurance underwriters and governmental
authorities having jurisdiction.
Section 10.03: Lessee covenants to indemnify Lessor, and save it harmless
(except for loss or damage resulting from the negligence of Lessor, its agents,
or employees) from and against any and all claims, action, damages, liability,
and expense, including attorney's 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 Lessee of the
Leased Premises or any part thereof, or arising from or out of Lessee's failure
to comply with Section 7.02 hereof, or occasioned wholly or in part by any act
or omission of Lessee, its agents, contractors, employees, servants, customers,
or licensees. For the purpose hereof, the Leased Premises shall include the
service areas adjoining the same and the loading platform area allocated to the
use of Lessee. In case Lessor shall, without fault on its part, be made a party
to any litigation commenced by or against Lessee, then Lessee shall protect and
hold Lessor harmless, and shall pay all costs, expenses, and reasonable
attorneys' fees incurred or paid by Lessor in connection with such litigation.
Lessee shall also pay all of Lessor's costs, expenses, and reasonable attorneys'
fees that may be incurred by Lessor in enforcing the Lessee's covenants and
agreements in this Lease.
SECTION 11
DESTRUCTION OF LEASED PREMISES
Section 11.01: In the event the Leased Premises shall be partially or
totally destroyed by fire or other casualty insured under the insurance carried
by Lessor pursuant to Section 10.02 of this Lease, as to become partially or
totally untenantable, the damage to the Leased Premises shall promptly be
repaired by Lessor, to the extent of any proceeds received from any insurance,
unless
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Lessor shall elect not to rebuild as hereinafter provided, and a just and
proportionate part of the fixed minimum rental and all other charges shall be
abated, annually, until so repaired. The obligation of Lessor hereunder shall be
limited to reconstruction of the Leased Premises in accordance with the initial
plans and specifications for the construction of the Leased Premises. In no
event shall Lessor be required to repair or replace Lessee's merchandise, trade
fixtures, furnishings, or equipment. If more than thirty-five (35%) percent of
the Leased Premises or more than thirty-five (35%) of the floor area of the
Building in which the Leased Premises are located shall be destroyed by fire or
other casualty, then Lessor may elect either to repair or rebuild the Leased
Premises or the Building of which the Leased Premises are a part, as the case
may be, or to terminate this Lease by giving written notice to Lessee of its
election to so terminate, such notice to be given within sixty (60) days after
the occurrence of such damage or destruction. If Lessor elects to restore the
Leased Premises, Lessor shall do so within one hundred eighty (180) days after
giving notice to Lessee of such election. If Lessor fails to tender possession
to Lessee after the one hundred eighty (180) days, Lessee shall have the option
of terminating this Lease by sending notice on the one hundred eightieth
(180th) day to Lessor. Such notice shall inform Lessor of Lessee's election to
terminate.
Section 11.01B: If more then thirty five (35%) percent of the Leased
Premises or more than thirty five (35%) of the floor area of the building in
which the Leased Premises are located shall be destroyed by fire or other
casualty, or if Lessor can't provide a certificate from an architect or
contractor showing reasonable expectations that the restoration can be completed
within 180 days, then such notice to be given within sixty (60) days after the
occurrence of such damage or destruction.
Section 11.02: Each party hereto does hereby remise, release, and discharge
the other party hereto and any officer, agent, employee, or representative of
such party, of and from any liability whatsoever hereafter arising from loss,
damage, or injury caused by fire or other casualty from which insurance
(permitting waiver of liability and containing a waiver of subrogation) is
carried by the injured party at the time of such loss, damage, or injury to the
extent of any recovery by the injured party under such insurance. Both parties
are hereby obligated to submit waiver of subrogation documentation to their
respective insurance companies.
SECTION 12
EMINENT DOMAIN
Section 12.01: In the event, during the term of this Lease, proceedings
shall be instituted under the power of eminent domain which shall result in the
taking of any part of the Leased Premises or the floor area of the Building in
which the Leased Premises are a part, or the taking of a material portion of the
parking area so that the number of spaces is thereby reduced to such an extent
that Lessee's business is significantly and adversely affected, and which shall
result in an eviction total or partial of the Lessee therefrom, then at the time
of such eviction, this Lease shall be void and the term above demised shall
cease and terminate; and if Lessee shall thereafter continue in possession of
the Leased Premises or any part thereof, it shall be a Lease from month to month
and for no longer term, anything in this instrument to the contrary
notwithstanding. If there is only a partial taking, not including a portion of
the Building but reducing the parking to the extent described in the previous
sentence, the Lessor shall restore the parking to the extent necessary to permit
Lessee to continue the use of the premises and there shall be no reduction in
the monthly rental. Provided, further, that the whole of any award for any
portion of the Building taken by reason of said condemnation proceedings shall
be the sole property of, and be payable to, the Lessor, and provided, further,
that the whole of any award for loss of business and for removal and relocation
expenses in any condemnation proceedings shall be the sole property of, and be
payable to, the Lessee. It is further agreed that in any such condemnation
proceedings, the Lessor and Lessee shall each seek its own award at its own
expense.
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SECTION 13
ASSIGNMENT
Section 13.01: Lessee shall not assign or sublet the Leased Premises or any
part thereof without first obtaining the Lessor's written consent, except that
the Lessee may, without Lessor's consent, assign or sublet all or any of the
part of the Premises to wholly or substantially owned subsidiaries of other
affiliates of Lessee, or to a party who has purchased all or substantially all
of the assets of the Lessee of this Lease, the Lessee, for a use permitted
pursuant to Section 5.01 hereof, and provided that Lessee is not at such time in
default hereunder, and provided further that such successor shall execute an
instrument in writing assuming all of the obligations and liabilities to the
Lessor, and provided further that such assignment or subletting shall not
operate to release Lessee from any of its obligations under the Lease.
SECTION 14
INSPECTION OF PREMISES
Section 14.01: Lessee agrees to permit Lessor and the authorized
representatives of Lessor to enter the Leased Premises at all reasonable times
during business hours for the purpose of inspecting the same.
SECTION 15
FIXTURES AND EQUIPMENT
Section 15.01: All fixtures and equipment paid for by the Lessor and all
fixtures and equipment which may be paid for and placed on the Leased Premises
by the Lessee from time to time, but which are so incorporated and affixed to
the Building that their removal would involve damage or structural change to the
Building, shall be and remain the property of the Lessor.
Section 15.02: All furnishings, equipment, and fixtures other than those
specified in Section 15.01, which are paid for and placed on the Leased
Premises by Lessee from time to time (other than those which are replacements
for fixtures originally paid for by Lessor) shall remain the property of the
Lessee.
SECTION 16
NOTICE OR DEMANDS
Section 16.01: All notices to or demands upon Lessor or Lessee desired or
required to be given under any of the provisions hereof shall be in writing. Any
notices or demands from Lessor to Lessee shall be deemed to have been duly and
sufficiently given if a copy thereof has been sent by overnight delivery, fax
or mailed by United States mail in an envelope properly stamped and addressed to
Lessee at the address of the Leased Premises, or at such other address as Lessee
may have last furnished in writing to Lessor for such purpose, and any notices
or demands from Lessee to Lessor shall be deemed to have been duly and
sufficiently given if mailed by United States mail in an envelope properly
stamped and addressed to Lessor at the address last furnished by written notice
from Lessor to Lessee. The effective date of such notice shall be one (1)
business day following the delivery of the same to the United States Post Office
for mailing.
SECTION 17
BANKRUPTCY
Section 17.01: Lessee covenants and agrees that if any one or more of the
following events occur, namely:
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(a) Lessee shall be adjudged a bankrupt or insolvent or trustee shall be
appointed for Lessee after a petition has been filed for Lessee's reorganization
or arrangement under the Federal Bankruptcy Laws, as now or hereafter amended,
or under the laws of any State, and any such adjudication or appointment shall
not have been vacated or stayed or set aside within thirty (30) days from the
date of the entry or granted thereof; or
(b) Lessee shall file, or consent to any petition in bankruptcy or
arrangement under the Federal Bankruptcy Laws, as not or hereafter amended, or
under the laws of any State; or
(c) A decree or order appointing a receiver of the property of Lessee shall
be made and such decree or order shall not have been vacated, stayed or set
aside within thirty (30) days from the date of the entry or granted thereof, or
Lessee shall apply for or consent to the appointment of a receiver for Lessee;
or
(d) Lessee shall make any assignment for the benefit or credits;
then it shall be lawful for Lessor, at his election, to declare a default as
hereinafter defined and the term of the Lease ended.
SECTION 18
DEFAULT, RE-ENTRY, AND DAMAGES
Section 18.01: In case any rent or other payments required to be made by
Lessee shall be due and remain unpaid for more than ten (10) days after written
notice, or if default be made in any of the other covenants, agreements,
stipulations, or conditions herein contained and such default shall continue for
a period of thirty (30) days after written notice of such default, or if the
Leased Premises shall be deserted, or vacated, or if Lessee is declared bankrupt
or insolvent as detailed in Section 17.01 herein, Lessor, in addition to other
rights or remedies it may have, shall have the immediate right of re-entry and
may remove all persons and property from the Leased Premises pursuant to
applicable Michigan law, such property may be removed and stored in any other
place in the Building in which the Leased Premises are situated, or in any other
place, for the account of, and at the expense and at the risk of Lessee. Lessee
hereby waives all claims for damages which may be caused by the re-entry of
Lessor pursuant to a Court Order or other process of law, and taking possession
of the Leased Premises or removing or storing of furniture and property as
herein provided, and will hold Lessor harmless from any and all losses, costs,
or damages occasioned Lessor thereby, and no such re-entry shall be considered
or construed to be a forcible entry.
Notwithstanding the foregoing, in the event of a non-monetary default by
Lessee, Lessor will give Lessee a reasonable opportunity to cure any
non-monetary default prior to declaring a default hereunder. Lessee agrees to
cure any non-monetary default within fifteen (15) days of Lessor's notice of
same, unless the default is of the nature the warrants a longer cure period,
whereby Lessee agrees to use continued due diligence to cure same.
Section 18.02: Except that the Lessor agrees to make reasonable effort to
mitigate damages. Should Lessor elect to re-enter as herein provided, or should
it take possession pursuant to legal proceedings or pursuant to any notice
provided for by law, it may either terminate this Lease or it may, from time to
time, without terminating this Lease, re-let the Leased Premises or any part
thereof for such term or terms and at such rental or rentals and upon such other
terms and conditions as Lessor, in its sole discretion, may deem advisable, with
the right to make alterations and repairs to the Leased Premises. Rentals
received by Lessor from such re-letting shall be applied as follows:
First, to the payment of any indebtedness, other than rent due hereunder
from Lessee to Lessor, including all damages sustained by Lessor as a result of
the default of Lessee;
Second, to the payment of rent or other payments required of Lessee for
taxes, insurance, or utilities due and unpaid hereunder;
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Third, to the payment of any other sum specified in Section 3.02 hereof;
Fourth, to the payment of any cost of such re-letting;
Fifth, to the payment of the cost of any alterations or repairs to the
Leased Premises;
and the residue, if any, shall be held by Lessor and applied in payment of
further rent, as the same may become due and payable hereunder. Should such
rentals received from such re-letting during any month be less than the amount
agreed to be paid that month by Lessee hereunder, the Lessee shall pay such
deficiency to Lessor. Such deficiency shall be calculated and paid monthly.
No such re-entry or taking possession of the Leased Premises by Lessor shall
be construed as an election on its part to terminate this Lease unless a written
notice of such intention be given to Lessee or unless the termination thereof be
decreed by a court of competent jurisdiction. Notwithstanding any such
re-letting without termination, Lessor may, at any time thereafter, elect to
terminate this Lease for such previous breach. Should Lessor, at any time,
terminate this Lease for any breach, in addition to any other remedy, it may
recover, from Lessee all damages it may incur by reason of such breach,
including the cost of recovering the Leased Premises.
SECTION 19
SURRENDER OF PREMISES ON TERMINATION
Section 19.01: Whenever this Lease shall be terminated, whether by lapse of
time, forfeiture, or in any other way, Lessee will yield and deliver up the
Leased Premises, including the Building and improvements thereon and the
fixtures and equipment belonging to lessor therein contained, peaceably to
Lessor in as good repair as when taken, except for reasonable and normal wear
and tear and casualty and condemnation.
SECTION 20
PERFORMANCE BY LESSOR OF THE COVENANTS OF LESSEE
Section 20.01: Only after fifteen (15) days written notice, except in case
of emergency, Should Lessee at any time fail to do any of the things required to
be done by it under the provisions of this Lease, Lessor, at its option and in
addition to any and all other rights and remedies of Lessor in such event, may
(but shall not be required to) do the same or cause the same to be done, and the
reasonable amount of any money expended by Lessor in connection therewith shall
be due from Lessee to Lessor as additional rent on or before the next rental due
date, bearing interest at the rate of ten (10%) percent per Year from the date
of payment until the repayment thereof to Lessor by Lessee. On default of such
payment, Lessor shall have the same remedies as on default in the payment of
rent.
SECTION 21
RIGHTS TO MORTGAGE
Section 21.01: Lessor reserves the right to subject and subordinate this
Lease, at all times, to the lien of any mortgage or mortgages now or hereafter
placed upon Lessor's interest in the said Leased Premises and on the land and
Buildings of which the said Leased Premises are a part or upon any Buildings
hereafter placed upon the land of which the Leased Premises form a part. Lessee
covenants and agreed to execute and deliver, upon demand, such further
instrument or instruments subordinating this Lease to the lien of any such
mortgage or mortgages as shall be desired by Lessor and any mortgagees or
proposed mortgage, and hereby irrevocably appoints Lessor the attorney-in-fact
of Lessee to execute in compliance with this Section 21.01 and deliver any such
instrument or instruments for and in the name of Lessee. Lessor acknowledges
that Lessee shall be permitted to remain in possession of the Premises under the
terms of this Lease as long as Lessee is not in default under the terms of this
Lease or any subordination.
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SECTION 22
COVENANTS OF QUIET ENJOYMENT
Section 22.01: Lessor covenants and agrees to and with Lessee that, at all
times when Lessee is not in default under the terms of and during the term of
this Lease, Lessee's quiet and peaceable enjoyment of the Leased Premises shall
not be disturbed or interfered with by Lessor or any person claiming by,
through, or under Lessor.
SECTION 23
SECURITY DEPOSIT
Section 23.01: Pursuant to Section 3.01 hereof, Lessee shall deposit the sum
of Seven Thousand Five Hundred Dollars ($7,500.00 ) which Lessor agrees to
retain as security for the faithful performance of all of the covenants,
conditions, and agreements of this Lease, but in no event shall the Lessor be
obliged to apply the same upon rents or other charges in arrears, or upon
damages for the Lessee's failure to perform the said covenants, conditions, and
agreements; the Lessor may so apply the security at its option; and the Lessor's
right to the possession of the Premises for nonpayment of rent or for any other
reason shall not in any event be affected by reason of the fact that the Lessor
holds this security. The said sum, if not applied toward the payment of rent or
other charges in arrears, or toward the payment of damages suffered by Lessor by
reason of the Lessee's breach of the covenants, conditions, and agreements of
this Lease, shall be returned to the Lessee when this Lease is terminated,
according to these terms, and in no event is the said security to be returned
until the Lessee has vacated the Premises, delivered possession to the Lessor,
and Lessor has inspected said Premises.
In the event that the Lessor repossesses itself of the said Premises because
of the Lessee's default or because of the Lessee's failure to carry out the
covenants, conditions, and agreements of the Lease, the Lessor may apply the
said security upon all damages suffered to the date of said repossession and may
retain the said security to apply upon such damages as may be suffered or shall
accrue thereafter by reason of the Lessee's default or breach. The Lessor shall
not be obliged to keep the said security as a separate fund, but may mix the
said security with its own funds and there shall be paid no interest on said
security deposit.
SECTION 24
HOLDING OVER
Section 24.01: In the event of Lessee herein holding over after the
termination of this Lease, thereafter the tenancy shall be from month to month
in the absence of a written agreement to the contrary subject to all the
conditions, provisions and obligations of this Lease insofar as the same are
applicable to a month to month tenancy, but at a monthly rental of one hundred
Twenty Five percent (125%) of the monthly rental stipulated in Section 3.
SECTION 25
REMEDIES NOT EXCLUSIVE; WAIVER
Section 25.01: Each and every of the rights, remedies, and benefits provided
by this Lease shall be cumulative, and shall not be exclusive of any other of
said rights, remedies and benefits, or of any other rights, remedies, and
benefits allowed by law.
Section 25.02: One or more waivers of any covenant or condition by Lessor
shall not be construed as a waiver of a further or subsequent breach of the same
covenant of condition, and the consent or approval by Lessor to or of any act by
Lessee requiring Lessor's consent or approval shall not be deemed to waive or
render unnecessary Lessor's consent or approval to or of subsequent similar act
by Lessee.
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One or more waivers of any covenant or condition by Lessee shall not be
construed as a waiver of a further or subsequent breach of the same covenant of
condition, and the consent or approval by Lessee to or of any act by Lessor
requiring Lessee's consent or approval shall not be deemed to waive or render
unnecessary Lessee's consent or approval to or of any subsequent similar act by
Lessor.
SECTION 26
RIGHT TO SHOW PREMISES
Section 26.01: The Lessee hereby agrees that, for a period commencing one
hundred eighty (180) days prior to the termination of this Lease, the Lessor may
show the Leased Premises and building to prospective Lessees, and one hundred
eighty (180) days prior to the termination of this Lease, Lessor may display
about said Leased Premises the usual and ordinary "For Lease" signs.
SECTION 27
LESSEE'S PROPERTY
Section 27.01: Lessee shall be responsible for and shall pay before
delinquency all municipal, county, state, and federal taxes assessed during the
term of this Lease against any leasehold interest or personal property of any
kind, owned by or placed in, upon, or about the Leased Premises by the Lessee.
Section 27.02: The Lessor shall not be responsible or liable to the Lessee
for any loss or damage that may be occasioned by or through the acts or
omissions of persons occupying adjoining Premises, or any part of the Leased
Premises adjacent to or connected with the Leased Premises hereby Leased, or any
part of the Building of which the Leased Premises are a part, or for any loss or
damage resulting to the Lessee or its property from bursting, stoppage, or
leaking of water, gas, sewer, or steam pipes, or for any damage or loss of
property on or within the Leased Premises from any cause whatsoever.
SECTION 28
OPTION TO RENEW
Section 28.01: As long as the Lessee is not in default under this Lease, The
Lessee will have the option to renew this Lease for one additional two (2) year
term, on the same terms and conditions as herein provided for the initial Lease
Term, except that the rental for said renewal term shall be set at fair market
value. The Lessee must execute this option to renew by delivering written notice
thereof to Lessor not less than one hundred and twenty (120) days prior to the
expiration date of the original Lease Term.
SECTION 29
EXPANSION
Section 29.01: Lessor shall make all reasonable efforts to accommodate
Lessee's request for expansion within the Xxx Arbor Commerce Park. Lessee agrees
to give Lessor as much notice as possible concerning Lessee's expansion plans,
so that Lessor can take reasonable steps to determine if the expansion can be
accommodated.
SECTION 30
MISCELLANEOUS
Section 30.01: This Lease shall be governed by and construed in accordance
with the laws
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of the State of Michigan. If any provisions of this Lease or the application
thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Lease shall not be affected thereby, and
each provision of the Lease shall be valid and enforceable to the fullest extent
permitted by the law.
Section 30.02: The captions of this Lease are for convenience only, and are
not to be construed as part of this Lease, and shall not be construed as
defining or limiting, in any way, the scope of intent of the provisions hereof.
Section 30.03: Whenever herein the singular member is used, the same shall
include the plural, and the masculine gender shall include the feminine and
neuter genders.
Section 30.04: This Lease shall constitute the entire agreement of the
parties hereto; all prior agreements between the parties, whether written or
oral, are merged herein and shall be of no force and effect. This Lease cannot
be changed, modified, or discharged orally, but only by an agreement in writing,
signed by the party against whom enforcement of the change, modification, or
discharge is sought.
Section 30.05: If Lessor shall fail to perform any covenant, term, or
condition of this Lease upon Lessor's part to be performed, and if as a
consequence of such default Lessee shall recover a money judgment against
Lessor, such judgment shall be satisfied only out of the proceeds of sale
received upon execution of such judgment and levied thereon against the right,
title, and interest of Lessor in the Building and property of which the Leased
Premises are a part and out of the rents or other income from such property
receivable by Lessor, and neither Lessor nor any of the members comprising the
limited liability corporation which is the Lessor herein shall be liable for any
deficiency.
Section 30.06: In the event any proceedings are brought for the foreclosure
of or in the event of exercise of the power of sale under any mortgage made by
Lessor covering the Leased Premises, Lessee shall, at the option and request of
Purchaser, attorn to the Purchaser upon any such foreclosure or sale and
recognize such Purchaser as the Lessor under this Lease.
Section 30.07: In the event of any transfer or transfers of Lessor's
interest in the Premises, the transferor shall be automatically relieved of any
and all obligations and liabilities on the part of Lessor accruing from and
after the date of such transfer. Lessor acknowledges that the obligation of the
Lessor under this Lease shall be transferred to the party receiving the interest
of Lessor, as long as the transferee assumes the Lessor's obligations under this
Lease in writing and the Lessee is given written notice.
Section 30.08: All rights and liabilities herein given to or imposed upon
the respective parties hereto shall extend to and bind the several respective
heirs, executors, administrators, successors, and assigns of the said parties;
and if there shall be more than one Lessee, they shall all be bound jointly and
severally by the terms, covenants, and agreements herein. No rights, however,
shall inure to the benefit of any assignee of Lessee unless the assignment to
such assignee has been approved by Lessor, in writing, as provided in Section
13.01 hereof.
Section 30.09: This agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective heirs, administrators, executors,
representatives, successors, and permitted assigns.
Section 30.10: No payment by Lessee or receipt by Lessor of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
on any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Lessor shall accept such check or payment
without prejudice to Lessor's right to recover the balance of such rent or
pursue and other remedy in this Lease.
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Section 30.11: The submission of this Lease for examination does not
constitute a reservation of or option for the Leased Premises. This Lease shall
become effective only upon execution and delivery thereof by Lessor to Lessee.
SECTION 31
ENVIRONMENTAL
Section 31.01 Lessee shall neither generate, store, discharge nor bury any
toxic or hazardous waste or substance or material or any chemicals or substances
which are either toxic or hazardous at or upon the Leased Premises and Building,
as the terms "toxic" or "hazardous" are defined under all currently existing or
future applicable federal, state or local environmental laws, Lessor and Lessee
understand and acknowledge, however, that Lessee may utilize certain substances
or materials in the Leased Premises incidental to its operations which are or
may be classified as hazardous or toxic substances, such as cleaning solvents,
degreasing agents, adhesives, greases, oils and lubricants, and the like. All
such substances may be utilized and stored in proper containers only temporarily
on the Leased Premises and shall be properly disposed of and transported off the
Leased Premises in compliance with all applicable environmental and other laws
and ordinances. All other substances which are non-toxic or non-hazardous shall
be stored in proper containers. No substances or materials shall be stored
outside of the Building which constitutes the Leased Premises without Landlord's
prior written approval. Tenant shall forever indemnify and hold harmless and
defend Landlord, its successors and assigns and any mortgagee from and against
all loss, damage, claim and expense, including attorney's fees, incurred in
connection with the generation, burial, storage or disposal by Tenant of said
hazardous or toxic substances upon the Premises, and such indemnification shall
survive the expiration or termination of this Lease or any extensions.
Section 31.02: The Lessee is not responsible for any hazards that exist as
of the date of the Lease commencement as long as same is not caused by Lessee
and/or Lessee's agents or anything that Lessor or its agents or contractors may
cause thereafter.
SECTION 32
ADA AND BARRIER FREE STANDARDS
Section 32.01: To the best of Lessor's knowledge, the building and Leased
Premises does meet local and state barrier free standards and codes and Lessor
has obtained all the required permits so that Lessee can lawfully occupy
the Leased Premises.
SECTION 33
LESSOR CONSTRUCTION
Section 33.01: Lessor agrees to finish the interior of the Leased Premises
as detailed on Exhibit "C" and including the following list of improvements:
This Lease is contingent upon Lessee's approval of final construction
drawings.
OFFICE AREA
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Approx. 6706 square feet
100% heated and air conditioned
Wall and door layout per Exhibit "C"
Up-graded carpet in conference room, reception area and demo room
9" ceiling
Wet lab room (17'x16') with 34 feet of building standard counter
top, upper and lower cabinets, and one sink.
Two (2) additional exterior standard windows on west side
building.
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Optics lab (17'x 15') with 110 and 220 volt power, sink and single
oversize door into manufacturing area and stub water and drain
lines. Vertical blinds on windows.
6' walls as per Exhibit "C"
Two handicap restrooms to code
Kitchen with nine feet of upper and lower cabinets, counter top
and sink, and area from tenant supplied dishwash (with power).
MANUFACTURING AREA
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Approx. 2225 square feet
100 % heated and air conditioned
No ceiling
One grade level overhead doors
One Thermo-shield for one overhead door
400 watt metal halide lighting
Utility sink
IN WITNESS WHEREOF, the Lessor and Lessee have executed this Lease as of
the date set forth at the outset hereof.
WITNESS: LESSOR:
HIGHLAND INDUSTRIAL PROPERTIES,
L.L.C., a Michigan Partnership
By: /s/
----------------------------- ------------------------------
Its:
-----------------------------
LESSEE:
B.I. SYSTEMS CORPORATION
a Delaware Corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------- ------------------------------
Its: President and CEO
-----------------------------
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