Local Development Finance Authority

CITY OF STERLING HEIGHTS Special Meeting of the LOCAL DEVELOPMENT FINANCE AUTHORITY 40555 UTICA ROAD 586-884-9322 CITY COUNCIL CHAMBERS January 28, 2015 8:00 AM MEETING CALLED TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL APPROVAL OF AGENDA APPROVAL OF MINUTES OF November 19, 2014 Special Meeting NEW BUSINESS 1. To approve the Lease Agreement between RayoMar Enterprises, Inc. and the Local Development Finance Authority (LDFA). 2. To approve the Lease Agreement between Warmilu and the Local Development Finance Authority (LDFA). OLD BUSINESS BOARD MEMBERS REPORT PUBLIC COMMENT ADJOURNMENT  CITY OF STERLING HEIGHTS LOCAL DEVELOPMENT FINANCE AUTHORITY Draft MINUTES OF THE SPECIAL MEETING November 19, 2014 – 8:45 a.m. 40555 Utica Road, Sterling Heights, MI 48313 586-446-2489 City Council Chambers Phil Hunsberger called the meeting to order at 8:45 a.m. Pledge of Allegiance Members present at roll call: David Corba, Stephanie Eagen, Phillip Hunsberger, Richard Kincaid, John Lamerato, John Lettang, Jill Tomyn, Orest Zachary Members absent: Steve Cassin, Lori Doughty, Laurel Johnson, Victor Martin, Paula Sorrell Also in attendance: Barry Hicks, Economic Development Manager, and Julie Gustafson, Director, Oakland University Motion to Approve the Agenda Moved by Eagen, supported by Zachary, to approve the agenda as presented. Ayes: All Nays: None Motion carried. Motion to Approve the Minutes of October 22, 2014 Special Meeting Moved by Lettang, supported by Zachary, to approve the minutes as presented. Ayes: All Nays: None Motion carried. New Business To approve the Lease Agreement between the County of Macomb through the Macomb County Department of Planning and Economic Development (“MCPED”) and the Local Development Finance Authority (LDFA). Mr. Hicks stated that this lease is for the “International Landing Zone”. The Michigan Defense Center recently moved into Velocity and is targeting the defense industry. The goal is to attract international companies at the state level that have a small presense in the United States or no presence at all but are well-established overseas. The idea is to bring them here to Macomb County through the landing zone. They would be able to utilize connections through the Michigan Defense Center and Oakland University to break into the defense industry here in the US. Ms. Gustafson stated that currently there is a lot of PR and the plan is to start bringing in companies after the first of the year. Mr. Hicks stated that this space would be part of the Michigan Defense Center, rounding out their space. Ms. Gustafson stated that the strategy is to become a soft landing zone which is a designation by the National Business Incubator Association and a lot of incubators go for this designation, allowing incubators to become more global. Mr. Hunsberger inquired as to the lease rate. Ms. Gustafson responded that this lease rate is a little higher because more effort is being put into international companies in regards to assistance with cultural changes. Ms. Gustafson offered to send Mr. Hunsberger the spreadsheet for lease rates. Mr. Hunsberger confirmed that he would like to see that. Moved by Corba, supported by Kincaid to approve the Lease Agreement between the County of Macomb through the Macomb County Department of Planning and Economic Development (“MCPED”) and the Local Development Finance Authority (LDFA). Ayes: All Nays: None Motion carried. To approve the Lease Agreement between Coliant and the Local Development Finance Authority (LDFA). Mr. Hicks stated that Coliant is currently a tenant at Velocity, leasing two spaces and this lease would then be a third space. Coliant’s work involves heated clothing technology and charging equipment. Mr. Hunsberger inquired if this still qualifies as a growth company. Mr. Hicks said yes, there may come a point in the future for a full size operation. Mr. Corba asked how long they have been at the incubator. Ms. Gustafson responded approximately 2 ½ years. Moved by Kincaid, supported by Lettang to approve the Lease Agreement between Coliant and the Local Development Finance Authority (LDFA). Ayes: All Nays: None Motion carried. To approve the Lease Termination Agreement between Bleeding Edge Networks, LLC, dba Privicee and the Local Development Finance Authority (LDFA). Mr. Hicks stated that Bleeding Edge Networks was a good fit for Velocity, however, there was a misunderstanding or miscommunication in regards to the agreement for services that are provided and what the terms are for those. There is still future potential for this company at the incubator. It was a mutual misunderstanding. Mr. Hunsberger asked if any funds were expended. Mr. Hicks responded no and they never moved in. Mr. Lettang inquired if we know specifically why they walked. Ms. Gustafson responded that they did not agree with sharing statistics with the state. Typically, the service agreement is signed prior to the lease but in this case, it was in reverse. Moved by Kincaid, supported by Lettang to approve the Lease Termination Agreement between Bleeding Edge Networks, LLC, dba Privicee and the Local Development Finance Authority (LDFA). Ayes: All Nays: None Motion carried. To discuss a potential lease for a recruitment company that places in the fields of defense and manufacturing. Ms. Gustafson stated that there are companies in the incubator looking for talent. One of the ways we have been helping them is to bring them to the career fairs at Oakland University. An earlier stage recruiting company visited the other day inquiring if they could come in as a service provider. Their focus is in the areas of manufacturing and defense. Ms. Gustafson stated that she is asking the opinion of the board. Mr. Corba asked what are the talent needs of the companies? Is it entry level or at a higher level? Ms. Gustafson stated that those looking in the engineering fields are seeking more experience. Other positions are a blend of experience and requirements. Mr. Hunsberger asked if we would be paying the recruiter. Ms. Gustafson stated no, they would pay rent to stay at the incubator and any tenant who uses them would have to pay them. Mr. Zachary asked if it is a benefit to the city to have them as a tenant. Ms. Gustafson responded only if the city was in search of talent. Mr. Corba asked who the executives in residence are at the incubator. Ms. Gustaftson responded – Butzel Long, attorneys by appointment, AdviCoach, a business coaching company, Jim Ruma, a defense expert, The Mettiss Group, a human resource consulting firm, a new Assistant VP of Government Affairs Oakland University employee, and we are looking to replace the CPA firm that just vacated. All of the executives in residence have been moved to one office to open up more available rent space. Mr. Hunsberger asked what the occupancy is in the building. Ms. Gustafson stated there are four open suites. Ms. Gustafson stated that the recruiter is president of the National Association for Professional Women, the largest women’s networking organization in the country, with 300 chapters and she is the president of the local chapter. She would occupy a suite and pay rent. Mr. Lettang asked how long had she been a recruiter. Ms. Gustafson stated three years. Her current Troy office is too small and she needs to expand. Ms. Eagen inquired that Ms. Gustafson is not looking for an action today, just a discussion and then will put together a proposal in the form of a lease. Ms. Gustafson said yes that is correct. Mr. Corba stated that if she is in Troy, paying rent, we do not want to start offering existing companies cheaper rent. The goal of the incubator is for start up companies. Ms. Gustafson stated that in her discussions with the recruiter it was more a draw because of the fit rather than trying to cut a deal. Ms. Gustafson said she could put together a summary with the details. To approve the amendment of the meeting time for the Regular Meetings of the Local Development Finance Authority (LDFA) to the third Wednesday of every month at 8:00 am. Moved by Lettang, supported by Zachary to approve the amendment of the meeting time for the Regular Meetings of the Local Development Finance Authority (LDFA) to the third Wednesday of every month at 8:00 am. Old Business None Board Members Report None Public Comment None Adjournment Moved by Corba, supported by Zachary to adjourn. Ayes: All Nays: None Motion carried. The meeting adjourned at 9:20 am KQ  LDFA Business Sterling Heights, Michigan 1/28/15 AGENDA STATEMENT OMB AS03 Rev. 11/04 Item Title: To approve the Lease Agreement between RayoMar Enterprises, Inc. and the Local Development Finance Authority (LDFA) Submitted By: Barry Hicks, Economic Development Manager 586-884-9327 Executive Summary Attached for LDFA review is a February 1, 2015 to January 31, 2016 lease agreement between RayoMar Enterprises, Inc. and the LDFA. RayoMar Enterprises, Inc. has signed the standard lease agreement for space #3-I in section 3 of the building containing approximately 833 square feet of space. Monthly rent will be $694.00. The following is a summary of RayoMar Enterprises (EO)2: 1 - (EO)2® is a Patented (New & Disruptive) Fastener Technology | Patent No. 8,341,810 & Other Patents Pending 2 - (EO)2® is the ONLY "Rigid" (meaning having no discernible movement between the male & female components once coupled and secured & made of "non-flexing" materials) - that snaps on-and-off, and cannot "accidental"(through a naturally occurring motion) uncouple within its designed loads 3 - (EO)2® is totally scalable from inches to several feet, with designed holding forces from tens of pounds to tens of thousands of pounds (and an electronic model exist for the upper scale proven via FEA), with the attachment & uncoupling forces relatively very low compared to designed holding forces (for example 10-lbs for 200-lbs), and uncoupling (with specs) can only be accomplished with a directional applied mechanical motion 4 - (EO)2® can be made of various materials, such as, but not limited to Aluminums, Steels, Alloys, Magnesiums, Plastics, Composites, etc.; and can be formed with various forming technologies, such as, but not limited to Extruding, Casting, Machining, Molding, etc. (EO)2® is analogous of Velcro® - "easy-on/easy-off". Solves the same types of "pain" that Velcro® does - to make the hooks & loops fastener $100-500Million annually. (EO)2® saves Time, Money, and Lives - depending on the application. (EO)2®'s Main Market Universe is the Industrial Fastener Industry, which over $55Billion annually. Other low-lying fruit Industries, include, but are not limited to: 1 - Outdoor Recreational Sports Industries - $246Billion | Current (EO)2® SnapTop™ Carrier Products relevant to Yakima/Thule/Rola - representing the majority of $1-2Billion annually Other subsets of above include, but not limited to - Overlanding, Adventure Biking, Outdoor Motor Sports, Adventure Sports, Outdoor/Sports Photography 2 - Defense/First Responders/and Law Enforcement Markets | Main Subset - Mil-Spec Case/Containers, Mounting thereof - approximately $4-Billion cases/containers sold annually | Longterm - OEM level equipment such as, but not limited to armor, seating, electronic black boxes, weapons, etc. 3 - Consumer Electronic Markets | (EO)2® for mounting to make devices modular and multi- purpose, in assembly, for accessorizing and personalizing | TV mounts 4 - Automotive Sector | for Both OEM & Aftermarket Applications | current products applicable for aftermarket | Bigger Picture - in process, i.e. Lear's Main Power Module Cover (as presented by  them in a series of 3 meetings) - one program, which the say, "the (EO)2® would solve a lot of pain", represents approximately 900,000 units annually 5 - (EO)2® for mounting Solar PV (photovoltaic) Modules | as an example, if Topaz Solar Farm, there were almost 10,000,000 Solar Panels, (EO)2® would have potentially saved over $100Million in labor, and approximate revenues of $100-150Million (just for) the racks/fasteners to mount the panels (not including the anchors and main support beams). . Suggested Action: MOVED BY: SECONDED BY: RESOLVED: to approve the Lease Agreement between RayoMar Enterprises, Inc., and the Local Development Finance Authority (LDFA)  LDFA Business Sterling Heights, Michigan 1/28/15 AGENDA STATEMENT OMB AS03 Rev. 11/04 Item Title: To approve the Lease Agreement between Warmilu LLC and the Local Development Finance Authority (LDFA) Submitted By: Barry Hicks, Economic Development Manager 586-884-9327 Executive Summary Attached for LDFA review is a February 1, 2015 to January 31, 2016 lease agreement between Warmilu LLC and the LDFA. Warmilu LLC has signed the standard lease agreement for space #3-L in section 3 of the building containing approximately 54 square feet of space. Monthly rent will be $0.00. Warmilu LLC placed third in the Macomb Pitch Competition and their prize is a one-year lease of a cubicle at Velocity. Summary: Manufacturer and seller of nonelectric therapeutic warming technology to transform lives of preterm infants and patients diagnosed with arthritis. Incorporated March 2012 Number of Employees: 6 . Suggested Action: MOVED BY: SECONDED BY: RESOLVED: to approve the Lease Agreement between Warmilu LLC and the Local Development Finance Authority (LDFA)  LEASE AGREEMENT This Lease Agreement (“Agreement”), dated __January 15, 2015_____, is entered into between __Warmilu______, (“Tenant”), the City of Sterling Heights Local Development Financing Authority, a local development financing authority, c/o City of Sterling Heights, whose address is 40555 Utica Road, P.O. Box 8009, Sterling Heights, Michigan 48311-8009 (“Landlord”), RECITALS A. Landlord owns the building (“Building”) and property commonly known as 6633 18 Mile Road, Sterling Heights, Michigan 48314 (collectively referred to as the “Property”). B. Landlord desires to lease to Tenant, and Tenant desires to lease from Landlord, Lab # __3-L___ in Section __3_ of the Building, containing approximately __54__square feet as depicted on attached Exhibit A referred to as the “Premises”. Now therefore, in consideration of the Premises and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereby agree as follows: 1. Premises. Landlord leases to Tenant, and Tenant leases from Landlord, the Premises. Landlord also grants Tenant the non-exclusive use of common areas on the Property which include the reception area, designated conference rooms, restrooms, shipping and receiving area, hallways, driveways, roadways, parking areas, sidewalks, and exterior grounds, (the “Common Areas”). 2. Term. The term of this Agreement (the “Term”) shall commence on _February 1, 2015_____, (“Commencement Date”) and shall end on _January 31, 2016____, 3. Rent. Commencing on the Commencement Date and throughout the Term, Tenant shall pay monthly to Landlord, on or before the first day of each month, gross rent (“Rent”) in the following amount: Period Annual Rent Monthly Rental Installments 2/1/15 – 1/31/16 $ .00 $ .00 Rent shall be pro rated for any partial months at the beginning or the end of the Term. Except as specifically provided in this Agreement to the contrary, Tenant shall not be obligated to pay Landlord any other amounts in connection with its use and occupancy of the Premises; the cost of all utilities and services is included in Rent, except as specifically provided in this Agreement to the contrary. 4. Use. The Premises shall be used for office use only, except for uses specifically approved in writing by Landlord. Tenant shall not use the Premises in any manner which is in violation of any federal, state, or local law, ordinance or regulation that relate to the use of the 1 Approved by LDFA 11/17/2010 Premises. Tenant shall use the Premises in compliance with any established building and use restrictions imposed by the developer of the industrial park and any rules and regulations established by Landlord with respect to use of the Building and Property. 5. Utilities and Services. A. Services. Landlord shall operate and maintain the Building in a manner in accordance with standards customarily followed in the operation of comparable office buildings in the Sterling Heights, Michigan area. Tenant shall have access to the Premises twenty-four (24) hours per day seven (7) days per week. Landlord shall furnish services and utilities, operate the Building’s systems and have maintenance personnel available during customary business hours of the City, which are currently Monday-Friday, 8:30 a.m. - 5:00 p.m. (“Business Hours”), excluding holidays officially recognized by the City of Sterling Heights. Landlord shall provide Tenant with the following utilities and services, the cost of which shall be included in gross Rent, in accordance with the standards and specifications customarily followed in the operation of comparable buildings in the Sterling Heights, Michigan area: (i) hot and cold water for drinking, lavatories, toilets and drinking water in the Premises at all times; (ii) window washing of all windows in the Premises, outside only, weather permitting, at intervals to be determined by Landlord; (iii) parking spaces in the parking lot located adjacent to the Building; (iv) lighting of the parking lot and other Common Areas during evening hours; (v) landscaping of the exterior of Common Areas and building management services for the Premises; (vi) snow removal of parking lot and sidewalks in accordance with practices applicable to the City-owned facilities; (vii) utilities, including, but not limited to, gas, electric and other utilities necessary or appropriate for the operation of the Common Areas; (viii) heating, air-conditioning and ventilation (“HVAC”) of the Premises and Common Areas during Business Hours whenever heat or air conditioning shall be reasonably required to maintain comfortable temperature and humidity. Tenant space janitorial and cleaning services can be coordinated with the Landlord at Tenants expense. B. Tenant Services. Tenant shall be responsible for and shall pay for telephone to the Premises. Internet and data services are provided. If Tenant generates excessive amounts of trash or waste which requires special handling or disposal such as medical or other hazardous waste Tenant shall be responsible for disposal of such trash waste at its sole expense. 6. Approvals. Tenant shall be responsible for obtaining any required approvals and paying any applicable permit fees relating to its use and occupancy of the Premises. 7. Maintenance. During the Term of this Agreement, Landlord, at Landlord’s sole cost and expense, shall perform all maintenance, repairs and replacements relating to the Common Areas, roof, building footings, foundations, walls, the building skeleton, bearing columns, interior bearing walls, floor slabs, structural elements, underground utility and sewer pipes, driveways, parking lots, fire protection sprinkler system, all exterior painting (at reasonable intervals), mechanical, plumbing, electrical, and HVAC systems serving the Premises. Landlord agrees that it will use reasonable efforts to cause any such work to be performed in a manner minimizing interference with Tenant’s business and use of the Premises. Except as provided above, Tenant shall keep and maintain the Premises in good order and repair. 2 Approved by LDFA 11/17/2010  8. Condition of Premises. Tenant acknowledges and agrees that Tenant accepts the Premises in an “as is” condition, with no obligation on the part of Landlord to improve, cause to be improved or pay Tenant to improve the Premises, or any part of them. Tenant shall not be permitted to make any improvements or alterations to the Premises during the Term. 9. Relocation of Business. In consideration of the benefits which Tenant receives as a result of its occupancy of the Leased Premises within the Building, Tenant agrees to contact the City’s Economic Development Manager not less than 45 days prior to the date that it intends to vacate the Premises to see whether the City can assist Tenant in finding a suitable location to operate its business. 10. Insurance and Indemnity. A. Indemnification. Subject to waiver of subrogation in Paragraph 17, Tenant and its respective successors and assigns agrees to defend, indemnify and hold harmless Landlord, and its respective successors and assigns, from and against any and all costs, losses, claims, liabilities, fines, expenses, penalties, and damages (including reasonable legal fees) in connection with or resulting from any injury or damage to the Premises or third parties caused by Tenant or its employees, agents or invitees during the Term. B. Landlord’s Insurance. Throughout the Term, Landlord shall, at its sole cost and expense, maintain insurance insuring: (i) the Building and other improvements located upon the parcel or parcels on which the Building is located (the “Land”), against loss or damage by fire, lightning, wind storm, hail storm, aircraft, vehicles, smoke, explosion, riot or civil commotion as provided by the Standard Fire and Extended Coverage Policy and all other risks of direct physical loss as insured against under Special Form (“all risk” coverage). The insurance coverage shall be for not less than one hundred percent (100%) of the full replacement cost of such improvements with agreed amount endorsement and building ordinance coverage; and (ii) Landlord from all claims, demands or actions made by or on behalf of any person or persons, firm or corporation and arising from, related to or connected with the Building, the Land or the Premises, for bodily injury to or personal injury to or death of any person, or more than one person, or for damage to property in an amount of not less than $2,000,000.00 combined single limit per occurrence/aggregate. Landlord may elect to satisfy this obligation through an established self-insurance program operated by the City of Sterling Heights. C. Tenant’s Insurance. Tenant shall maintain the following insurance in force at all times during the Initial Term and any Renewal Term(s) of this Lease, with an “A” rated Best insurance carrier acceptable to the Landlord. It is agreed that Tenant shall name Landlord, City of Sterling Heights including all elected and appointed officials, all of their employees and volunteers, all boards, commissions and/or authorities and board members, including employees and volunteers, as an “Additional Insured” under each separate policy of insurance scheduled below, in a form of endorsement to the policies approved by the Landlord in writing. 3 Approved by LDFA 11/17/2010 Policy Minimum Limits _____(a) Workers’ Compensation Statutory __X__(b) Commercial General Liability (1) Bodily Injury Liability $300,000 each person $300,000 each occurrence (2) Property Damage Liability $300,000 each occurrence _____(c) Business Automobile Liability (1) Bodily Injury Liability $300,000 each person $300,000 each occurrence (2) Property Damage Liability $300,000 each occurrence __X__(e) Employer’s Liability Insurance $300,000 each occurrence Note: Commercial General Liability to include, but not limited to: i) Contractual obligations; ii) Negligent hiring. These coverages and limits are to be considered minimum requirements under this Lease and shall in no way limit the liability or obligations of Tenant under this Lease. Tenant shall cause all policies to include an endorsement to the effect that the policies shall not be modified, canceled or terminated without thirty (30) days prior written notice to Landlord, as well as the requirement that the insurance carrier immediately notify Landlord when fifty percent (50%) of any aggregate limits on any of the above-require policies have been reached. In case of termination of coverage, Tenant shall provide evidence of new insurance at the earliest possible date, but not later than ten (10) days prior to the termination of the original policy. Tenant shall provide the insurance before the commencement of the Term of this Lease and prior to the beginning of each lease renewal term. Moreover, Tenant agrees to notify Landlord immediately of any claim arising pursuant to such policies. Tenant shall not commence operations under this Lease until Tenant has obtained all insurance stated in these requirements, all insurance has been reviewed by Landlord, and certificates of such insurance have been made available to Landlord. D. Form of Insurance. All of the aforesaid insurance policies shall be issued by companies with a Best financial quality rating of A- or better and a financial size rating of XII or better. Certificates of the insurance for the policies required to be carried under the Lease on City Form 2021, together with satisfactory evidence of payment of the premiums thereon, shall be deposited by Tenant with the Landlord. 11. Casualty and Condemnation. In the event any part of the Premises is damaged by fire or other casualty or taken under the power of eminent domain by any legally constituted authority (each a “Taking Event”), then Landlord and Tenant shall each have the right to 4 Approved by LDFA 11/17/2010 terminate this Agreement. Such termination shall be without prejudice to the rights of Landlord to recover compensation from the condemning authority for any loss or damage caused by such condemnation. Tenant shall have the right to make its own claim for any separate award that may be made by the condemning authority for Tenant’s loss of business or on account of any costs or loss Tenant may sustain in the removal of Tenant’s trade fixtures, equipment, or other removable personal property. In the event this Agreement is not terminated in accordance with this Paragraph, then Landlord shall restore the Premises to its substantial condition existing prior to the Taking Event with reasonable dispatch by and at the sole cost and expense of Landlord, provided, however, that Landlord shall not be obligated to expend any funds beyond the amount of the insurance or condemnation proceeds received as a result of such Taking Event. During the period beginning as of the date of the Taking Event and ending on the date of substantial completion of Landlord’s restoration of the Premises, Rent shall be abated proportionately based on the portion of the Premises rendered unfit for Tenant’s use. 12. Assignment and Subletting. Tenant shall have no right to sublet the Premises or assign its interest in this Agreement or in the Premises. Notwithstanding the foregoing, Tenant may, without Landlord’s consent, assign this Lease all or any portion of Premises to any business entities directly or indirectly, controlling, controlled by or under common control with Tenant, or to successors to Tenant by merger, consolidation, realignment, reorganization or purchase of Tenant, or to a purchaser of all or substantially all of the assets of Tenant used in the operation of Tenant’s business at the Premises. 13. Default. If any default, breach or failure of performance by Tenant of any agreement, covenant, condition, provision or warranty contained herein continues after written notice by the Landlord, (a) in case of failure to pay Rent, additional rent or other payments required hereunder for more then ten (10) days, or (b) in any other case for more than thirty (30) days; or if Tenant abandons the Leased premises during the term hereof; or if Tenant makes any assignment for the benefit of creditors, or files a petition under any bankruptcy or insolvency law now or hereafter in effect and if such a petition filed against Tenant is not dismissed within sixty (60) days, or if such leasehold is taken on execution or other process of law in any action against Tenant, then in any such case, whether or not the term shall have begun, the Landlord may immediately, or at any time while such default exists and without further notice, terminate this Lease by notice to Tenant, specifying a date not less than ten (10) days after the giving of such notice on which this Lease shall terminate and this were the date herein originally fixed for the expiration of the Term, and Tenant will then quit and surrender the Leased premises to the Landlord, but the Tenant shall remain liable as hereinafter provided. In the event that this Lease is terminated under any of provisions contained in section 13, the Tenant covenants after any such ending to immediately pay to the Landlord an amount equal to the rent due for the remainder of the Lease term. Nothing contained in this Lease shall, however, limit or prejudice the right of the Landlord to prove for and obtain in proceedings for bankruptcy or insolvency by reason of the termination of this Lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be provided, whether or not the amount be greater, equal to, or less than the amount of the loss or damages referred to above. 5 Approved by LDFA 11/17/2010  14. Surrender. On or before the expiration of the term of this Lease, Tenant shall vacate and deliver possession of the Premises to Landlord, in good order and condition, reasonable wear and tear, damage by casualty, condemnation and the acts and omissions of Landlord and Landlord’s employees, agents and contractors excepted. 15. Notices. All notices or demands required or permitted to be given or served pursuant to this Lease shall be in writing (except as otherwise expressly provided herein) and shall be deemed to have been given or served when received or refused, if sent by United States registered or certified mail, postage prepaid, or by nationally recognized overnight courier, and addressed to either party at the following addresses: Landlord: Sterling Heights Local Development Authority City of Sterling Heights 40555 Utica Rd. Sterling Heights, MI 48311-8009 Attn: Denice A. Gerstenberg, Business Development Manager with a copy to: O’Reilly Rancilio P.C. 12900 Hall Rd., Ste. 350 Sterling Heights, MI 48313 Attn: Clark A. Andrews, Esq. Tenant: _Grace Hsia_____________ _Warmilu______________ _6633 18 Mile Road_____ Sterling Heights, MI 48314 Attn: _____________ Telephone: ____________ Email: ______________ Such addresses may be changed from time to time by either party by serving notice as above provided. 16. Bankruptcy. If Tenant shall file a petition in voluntary bankruptcy or be voluntarily or involuntarily adjudicated bankrupt or insolvent, or shall make an offer of composition to its creditors, or shall make an assignment for the benefit of creditors, or shall file a petition or answer seeking reorganization or readjustment under the federal bankruptcy laws or any other law or statute of the United States or any state thereof, or if a receiver or trustee shall be appointed for Tenant or for all or a substantial part of the property of Tenant and Tenant is not released from such receiver or trustee within thirty (30) days after appointment, or if an order 6 Approved by LDFA 11/17/2010 shall be entered approving the reorganization of Tenant or the readjustment of Tenant’s debts or obligations under the federal bankruptcy laws or any other law or statute of the United States or any state thereof, then any of such events shall be deemed to be a breach, default and anticipatory breach of this Lease. In any of such events and whenever and as often as any such failure, default, breach or anticipatory breach shall occur, the term hereof, at the option of Landlord, shall cease and determine and from thenceforth it shall be lawful for Landlord to re- enter into and repossess the Leased Premises situated thereon and Tenant and each and every occupant to remove and put out and to relet said Leased Premises for his own benefit; but reserving to Landlord all such rights as he may have for damages or otherwise because of said default, breach or anticipatory breach of Tenant. 17. Waiver of Subrogation. Notwithstanding anything in this Lease to the contrary, whenever (a) any loss, cost, damage or expense resulting from fire, explosion or any other casualty or occurrence is incurred by either of the parties to this Lease, or anyone claiming by, through, or under it in connection with the Premises and (b) such party is then covered in whole or in part by insurance with respect to such loss, cost, damage or expense or would have been covered if such party carried the insurance required under this Lease, then the party so insured or insurable releases the other party from any liability said other party may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance (or which could have been recovered had such insurance been carried) and waives any right of subrogation which might otherwise exist in or accrue to any person on account thereof. 18. Indemnification. Except to the extent caused by the willful negligence or willful misconduct of the Landlord, Tenant shall indemnify, defend and hold Landlord, its members, the City of Sterling Heights, its elected and appointed officials, their administrators, employees, agents, volunteers and invitees harmless from and against any and all claims, counter-claims, suits, debts, demands, actions, judgments, liens, liabilities, costs, expenses, including actual attorneys fees and actual expert witness fees, arising out of or in connection with Tenant’s use and occupancy of the Leased Premises, from the acts or omissions of Tenant, its agents, representatives, employees, tenants, licensees, invitees, and/or from Tenant’s violation of any of the terms of this Lease. 19. Environmental Warranty and Indemnification. Tenant represents, warrants and covenants to Landlord that Tenant’s use of the Leased Premises and its activities on the Leased Premises shall comply with all “Environmental Laws,” which, for purposes of this lease, shall mean all federal, state and local environmental laws, including, but not limited to, the Hazardous Materials Transportation Act, (47 USC §§ 1801 et seq.), Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.) (“Clean Water Act”), the Resource Conservation & Recovery Act (42 U.S.C. §§ 6901 et seq.) (“RCRA”), Safe Drinking Water Act (42 U.S.C. §§ 300f-j-26), Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.) (“CERCLA”), the Emergency Planning and Community Right to Know Act, 42 U.S.C. §§ 11001 et seq. (“EPCRA”), the Michigan Natural Resources and Environmental Protection Act (MCL § 324.101 et seq.) the administrative rules and regulations promulgated under such statutes, or any other similar federal, state or local law or administrative rule or 7 Approved by LDFA 11/17/2010 regulation of similar effect, each as amended and as in effect and as adopted as of the date of execution of this Lease. Tenant shall immediately and promptly notify Landlord of any release, discharge, spill or emission of Hazardous Substances on, to or from the Leased Premises, and any complaint, summons, citation, notice, directive, order, claim, litigation, judicial or administrative proceeding, inquiry or investigation judgment, letter or other communication from any governmental agency, department, bureau, office or other authority, or any third party involving violations of Environmental Laws with respect to the Leased Premises. Tenant agrees to indemnify, defend and hold harmless Landlord, its successors, assigns, the City of Sterling Heights, its elected and appointed officials, administrators, employees, agents, from and against any and all fines, charges, penalties, losses, costs, damages, liabilities, cleanup or response activity costs and/or expenses (including reasonable attorneys’ fees and actual consultants’ fees) incurred by Landlord as a result of any claims, demands, actions, causes of action, suits, proceedings, investigations, assessments and audits, whether of law or in equity (collectively “Claims”) attributable to (a) any third party claim or demand in connection with any Hazardous Substances generated, stored, leaked, spilled, discharged, emitted, or otherwise disbursed, in, on, under, above or about the Leased Premises or the Property, or violation of any Environmental Laws, from and after the date of this Lease; (b) injuries sustained or other tort actions brought for Claims arising out of or related to any Hazardous Substances; (c) the presence, disposal (including off-site disposal), escape, leakage, discharge, emission, release or threatened release of any Hazardous Substances in, on, under, above, from or about the Leased Premises or the Property; and (d) compliance with any administrative notice, order, request or demand relative to any Hazardous Substances on the Leased Premises or violation of any Environmental Laws. Tenant’s indemnification described above specifically includes, but is not limited to, the direct obligation of the Tenant to promptly perform any remedial or other activities required or ordered by any administrative agency or government official, or are otherwise necessary to avoid injury or liability to any person or property, to prevent the spread of any pollution and/or contamination, or to permit the continued safe use of the Leased Premises. 20. Mechanics’ Liens. Tenant shall keep the Building, its improvements, and the Property, or addition of equipment or fixtures free and clear of all mechanics’ liens resulting from any approved construction done by or for Tenant. 21. Holding Over. Any holding over by Tenant after the expiration or termination of this Lease, without the written consent of Landlord, shall be construed to be a tenancy from month to month and the Rent and Additional Rent to be paid by Tenant shall be at 2.5 times the Rent then in effect, as determined by Landlord in it sole discretion. Acceptance by Landlord of such payments after such expiration or termination shall not constitute a renewal of this Lease. This provision shall not operate as a waiver of Landlord’s right to re-entry or any other right of Landlord, and Tenant shall be a Tenant at sufferance only during the period of any such holding over without the consent of Landlord. 8 Approved by LDFA 11/17/2010  22. Taxes and Special Assessments. If the Leased Premises, Building, Property or Equipment are placed on the tax assessment rolls based upon Tenant’s usage, then any real estate taxes, personal property taxes, other applicable taxes and/or special assessments assessed or levied against the Premises, Building, Property or equipment during the Term of this Lease shall be solely borne by Tenant as further Additional Rent. 23. No Waiver. The failure of either party to enforce any covenant or condition of this Lease shall not be deemed a waiver thereof or of the right of either party to enforce each and every covenant and condition of this Lease. No provision of this Lease shall be deemed to have been waived unless such waiver is in writing. 24. Prohibitions. The following general types of activities shall be prohibited within the Building or on the Property: A. When the purpose of such use is to promote activities subversive to the laws of the United States or any subdivision thereof, or to overthrow the government of the United States, or supporting doctrines of violence, hatred, and/or discrimination. B. Any activity that may violate the canons of good morals, manners or taste, or be injurious to the buildings, facilities, grounds or equipment, or interfere with the programs, activities or operations of the Landlord. C. Any political forum that is not made available to all sides of an issue on an equitable basis and political campaign activities such as collection and/or solicitation of campaign funds, solicitations for campaign workers, and distribution of political campaign advertisement. D. No alcoholic beverages (unless an Alcohol Beverage Agreement has been executed for a specific event), illegal drugs, or controlled substances are permitted in or around the Building or upon any Landlord property. E. Activities that block fire doors, means of egress, block or tamper with any fire protection apparatus. F. Smoking or use of tobacco products in the Building is prohibited. Smoking shall also be prohibited on any city-owned property within 25 feet of entries, outdoor air intakes, and operable window. G. The Leased Premises are made available with the understanding that direct payment to Landlord employees is not permitted. Employees shall not accept under any circumstances direct payments in lieu of fees, labor charges, or other services. H. Guns, weapons or guard dogs (except dog guides assisting blind individuals) are not allowed in the Building or upon the Property without prior written permission from the City of Sterling Heights City Manager, or their designees. (Governmental law enforcement officers are exempt; private security guards are not exempt.) 9 Approved by LDFA 11/17/2010  I. Signs or other materials may not be posted without the approval of the Landlord. J. Subleasing or shared used (not authorized by Landlord in writing) is prohibited. 25. Miscellaneous Provisions. The following miscellaneous provisions shall form a part of this Lease: A. Tenant agrees to supervise its employees during use of the Building and/or Leased Premises. B. Tenant agrees to adhere to energy conservation practices adopted by Landlord or the City of Sterling Heights. C. The parties to this Lease agree that no employees, volunteers, agents and personnel of either party shall be considered to be employees of the other, and acknowledge that this Lease does not create a partnership or joint venture between them. D. This Lease shall be construed and interpreted in accordance with the laws of the State of Michigan. E. This Lease contains all of the agreements of the parties and cannot be amended or modified except by a mutual written agreement. F. The captions of this Lease shall have no effect on its interpretation. 26. Brokers. Landlord and Tenant hereby represent and warrant to one another that neither party nor their respective managers, officers or agents nor anyone acting on their behalf has dealt with any real estate broker in the negotiation or making of this Lease, and both Landlord and Tenant agree to indemnify and hold one another harmless from the claim or claims of any broker or brokers claiming to have caused the parties to enter into this Lease. 27. Binding Effect. This Lease shall be binding upon and shall inure to the benefit of the parties and their respective beneficiaries, successors and assigns. 28. Governing Law. This Lease shall be governed by and construed under the laws of the State of Michigan. 29. Arbitration. Any controversy or claim between the parties arising out of or relating to this Lease or a breach thereof (other than a dispute regarding or a claim for non- payment of Rent) shall be settled by arbitration in Macomb County, Michigan under the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) and shall be administered by the AAA. In no such event shall a demand for arbitration be made after the date when legal or equitable proceedings based upon such controversy or claim would be barred by the applicable statute of limitations. Any arbitration hearing conducted pursuant to this Agreement shall be held in Macomb County, Michigan. The arbitrator(s) shall issue a written statement specifying the reasons for the award, which shall be final and binding on both parties, 10 Approved by LDFA 11/17/2010 and in such format that judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof. The arbitrator(s) (a) shall have the authority to award injunction relief or to direct specific performance, if warranted, and (b) shall not have the authority to award punitive or consequential damages. Each party shall bear its own attorneys’ fees, witness fees, and other costs in preparing and presenting its position at arbitration. The fee of the arbitrator, however, shall be borne and paid by the party not substantially prevailing in the matter arbitrated, as specifically so determined by the arbitrator. 30. Subordination; Landlord’s Lien Waiver. This Lease shall be subordinate to any mortgage, deed of trust, hypothecation or other security device which encumbers the Building or any ground or underlying lease which is intended to be superior to this Lease (“Security Device”) provided that Landlord provides to Tenant from the holder of such Security Device a subordination, non-disturbance and attornment agreement reasonably acceptable to Tenant. Landlord hereby waives and releases all liens, right of distraint or security interests (whether arising by statute or at common law) in all property, chattels or merchandise which may be placed in the Premises and also upon all proceeds of insurance which may accrue to Tenant by reason of damage to or destruction of any such property, chattels or merchandise. 31. Quiet Enjoyment; Entry into the Premises. Landlord covenants that so long as Tenant is not in default hereunder after the expiration of any applicable cure periods under this Lease, Tenant shall have quiet and peaceful possession and enjoyment of the Premises and shall not be interfered with by Landlord, or any party claiming by, through or under Landlord or any party claiming title superior to Landlord. Notwithstanding the foregoing, Landlord and Landlord’s representatives shall be permitted to enter the Premises during Business Hours and upon forty-eight (48) hours prior oral notice (except in the case of emergency, in which case notice reasonable under the circumstances shall suffice). During any entry into the Premises by Landlord or Landlord’s representatives (except in case of emergency), at Tenant’s option, a representative of Tenant shall accompany Landlord and/or Landlord’s representatives through the Premises at all times. 32. Attorneys’ Fees. All reasonable attorneys’ fees, including actual expenses and court costs, incurred by the prevailing party to enforce the terms of this Lease against the non- prevailing party shall be paid by the non-prevailing party. 33. Counterparts. This Lease may be executed in any number of counterparts and by each of the undersigned on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 34. Option. Provided Tenant is not then in default, Tenant shall have and is granted two options to extend the term of the Lease for a period of one (1) year at a mutually agreeable rental rate. The option granted by this provision shall be exercised by notice by Tenant in writing to the Landlord not less than thirty (30) days prior to the expiration of the then current term and agreement in writing as to a rental rate. All of the terms and conditions of the original lease shall remain in full force and effect during such extended term except for the rental rate. 11 Approved by LDFA 11/17/2010 [Signatures follow on next page] 12 Approved by LDFA 11/17/2010  The parties have duly executed this Agreement pursuant to proper authority duly granted, as of the dates set forth below. LANDLORD: City of Sterling Heights Local Development Financing Authority By: _________________________________ Its: Dated: ______________________ TENANT: ____________________________________ By: _________________________________ Its: _________________________________ Dated: ______________________ 13 Approved by LDFA 11/17/2010  EXHIBIT A Location of the Premises (Floor Plan) 14 Approved by LDFA 11/17/2010 15 Approved by LDFA 11/17/2010 16 Approved by LDFA 11/17/2010