1.4             “Project:” That certain real property with two buildings located thereon, which buildings contain the total of approximately 11,673 square feet of area, commonly known as Schmitt Industries, situated at 2765 -2755 NW Nicolai Street, Portland, Oregon, as such Project may be modified by Landlord from time to time. The land on which the Project is located is legally described on Exhibit A, attached hereto and incorporated herein by reference. The Project and all buildings and appurtenances therein are as substantially shown on the Project Site Plan attached hereto as Exhibit B-1, and incorporated herein by reference.

1.5            “Building:” Building No. 2 located within the Project with a street address of 2755 NW Nicolai Street, which Building contains approximately 3,961 rentable square feet and is shown on the Building Site Plan attached hereto as Exhibit B-2, and incorporated herein by reference.

1.6            “Premises:” Suite A in the Building containing approximately 2,654 square feet and as shown on the Floor Plan attached hereto as Exhibit B-3, and incorporated herein by reference.

Tenant’s Proportionate Share (Building) and Tenant’s Proportionate Share (Project) are sometimes collectively

referred to herein as “Tenant’s Proportionate Share.”

1.9                “Common Area:” All areas and facilities outside the Premises and within the Project that are, from time to time, provided and designated by Landlord for the non-exclusive use of Landlord, Tenant and other tenants of the Project and their respective employees, guests and invitees, and as generally shown on the Project Site Plan attached hereto as Exhibit B-1.

Manufacturing, Warehousing, Storage, Shipping and other such ancillary and supporting uses

$ 3,184.80 per Month

*Tenant to receive a Base Rent credit of $6,369.60 in aggregate, to be applied to the first two months of the Lease or, if the first month of the Lease is less than a full calendar month, on a prorated basis until applied in full.

Landlord’s Agent: Mark Hush (Newmark Knight Frank) (See Section 26).

Tenant’s Agent: Aaron Watt.and Keegan Clay (Cushman & Wakefield)

If any Guarantor(s) is/are set forth above, concurrent with the execution of this Lease by Landlord and Tenant, Tenant shall arrange for all Guarantor(s) to execute and deliver to Landlord a Guaranty of this Lease, in the form attached as Exhibit E.

The following Exhibits are attached hereto and incorporated as a part of this Lease:

Exhibit “A” - Legal Description of the Project

Exhibit “B-1” – Project Site Plan

Exhibit “B-2” – Building Site Plan

Exhibit “B-3” – Floor Plan of the Floor of the Building with the Premises shown as single hatched thereon 

Exhibit “C” - Work Letter (if applicable)

Exhibit “D” – Rules and Regulations (if applicable)

Exhibit “E” – Guaranty (if applicable)

Exhibit “F” – Addendum (if applicable)

THIS BUSINESS PARK LEASE is made and entered into between Landlord and Tenant on the Date of Lease set forth in Section 1.1. The defined terms used in this Lease (“Lease Terms”) shall have the meanings and definitions given them in Section 1. The Lease Terms, the Exhibits, the Addendum or Addenda described in the Lease Terms, and this Lease agreement are and shall be construed as a single instrument and are hereinafter referred to as the “Lease.”

Now, therefore, for valuable consideration, Landlord and Tenant covenant and agree as follows:

SECTION 2. LEASE OF PREMISES.

2.1                Lease. Subject to the terms and conditions of this Lease, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises for the Term herein set forth.

2.2                Delivery of Possession; Commencement; Expiration. Landlord shall deliver the Premises to Tenant in good condition and repair with all improvements substantially completed in accordance with Exhibit C, attached hereto and incorporated herein by reference. The existence of any “punch list” type items shall not postpone the Lease Commencement Date. If Landlord fails to deliver possession of the Premises to Tenant on the Lease Commencement Date, the Term shall not commence and Tenant shall owe no Rent until the later of: (a) the date Landlord tenders possession of the Premises to Tenant or (b) the Rent Commencement Date. If Landlord fails to deliver possession of the Premises to Tenant within ninety (90) days of the Lease Commencement Date, then Tenant, as its sole remedy, may terminate this Lease by delivering written notice to Landlord within ten (10) days of the expiration of said ninety (90)-day period. If there is any delay in delivering possession of the Premises to Tenant, the Term of this Lease shall be extended by the number of days of such delay. If possession of the Premises is delivered prior to the Lease Commencement Date, Tenant shall have the right to occupy the Premises subject to all of the terms and provisions of this Lease other than the payment of Rent, which obligation shall not commence until the Rent Commencement Date. By acceptance of possession of the Premises hereunder, but subject to the completion of all improvements to be performed by Landlord in accordance with Exhibit C hereto, Tenant acknowledges that Tenant accepts the Premises “AS-IS, WHERE IS” and as suitable for Tenant’s intended use, in good and sanitary operating order, condition and repair, and without representation or warranty by Landlord as to the condition, use or occupancy which may be made thereof and that the area of the Premises is as set forth in Section 1.6 above. The Expiration Date of this Lease shall be the date stated in Section 1.12 above.

SECTION 3. RENT PAYMENT.

3.1                Rent. Tenant shall pay to Landlord all Rent for the Premises without demand, deduction or offset. The term “Rent” as used in this Lease shall include Base Rent and Additional Rent (as hereinafter defined). Rent is payable by Tenant in advance on the first day of each month commencing on the Rent Commencement Date. Rent for any partial calendar month shall be prorated based on a thirty (30)-day month for the number of days during that partial month the Premises are occupied by Tenant.

3.2                Additional Rent. The term “Additional Rent” means amounts set forth under Section 5 and any other sums payable by Tenant to Landlord under this Lease.

3.4                Disputes. If Tenant disputes any charge for Additional Rent or any Rent adjustment, Tenant shall give written notice to Landlord not later than thirty (30) days after receipt of the notice from Landlord describing the charge or adjustment in question. If Tenant fails to give such notice to Landlord, the charge or adjustment by Landlord shall be conclusive and binding on Tenant. If Tenant delivers timely notice, the challenged charge or adjustment shall be conclusively resolved by an independent certified public accountant selected by the parties. Each party shall pay one-half (1/2) of the fee charged by the accountant selected to decide the matter, except that if the adjustment in favor of Tenant does not exceed five percent (5%) of the challenged amounts, Tenant shall pay:(a) the entire cost of the accountant’s fee; and (b) all reasonable out-of-pocket costs and expenses incurred by Landlord in responding to the challenge. In the alternative, if the adjustment in favor of Tenant is equal to or exceeds five percent (5%) of the challenged amounts, Landlord shall pay: (i) the entire cost of the accountant’s fee; and (ii) all reasonable out-of-pocket costs and expenses incurred by Tenant in challenging such charge or adjustment. Nothing herein shall be deemed to alter any other obligations of Tenant as required by this Lease.

3.5                Prepaid Rent. Concurrently with the mutual execution of this Lease, Tenant shall pay the Initial Base Rent for the first full month of the Term for which Rent is payable.

3.6                Security Deposit. Concurrently with the mutual execution of this Lease, Tenant shall deliver to Landlord the Security Deposit. Following written notice to Tenant, Landlord may apply the Security Deposit to pay the cost of performing any obligation which Tenant fails to perform within the time required by this Lease, but such application by Landlord shall not waive Landlord’s other remedies nor be the exclusive remedy for any Tenant default. If Landlord applies the Security Deposit as set forth herein, Tenant shall pay Landlord, on demand, all sums necessary to restore the Security Deposit to its original amount. Tenant shall not have the right to apply the Security Deposit or any part thereof to any Rent or other sums due under this Lease. If Tenant is not in default of this Lease at the expiration or termination hereof, Landlord shall return the unapplied portion of the Security Deposit to Tenant, except for any amount necessary to return the Premises to the condition set forth in Section 19. Landlord’s obligations with respect to the Security Deposit are those of a debtor and not of a trustee, and Landlord may commingle the Security Deposit with Landlord’s general funds. Landlord may immediately deposit the Security Deposit into Landlord’s account, but such immediate deposit shall not bind Landlord to the terms of this Lease. Landlord shall not be obligated to pay interest on the Security Deposit. If Landlord sells its interest in the Premises during the Term of this Lease, Landlord shall be discharged from any further liability or responsibility with respect to the Security Deposit so long as Landlord deposits with or credits to the buyer the unapplied portion of the Security Deposit.

SECTION 4. USE OF PREMISES.

4.1                Permitted Use. Tenant may use the Premises for Tenant’s Permitted Use and for no other purpose without Landlord’s written consent, which will not be unreasonably withheld. Tenant shall not use the Premises in a manner that obstructs, annoys or interferes with the rights of other occupants of the Building or Project. Tenant shall not cause any nuisance nor permit any objectionable fumes, mold, electromagnetic waves, vibration, noise that is not reasonable for an industrial premises, light, or radiation to be emitted from the Premises. Tenant shall not engage in any activities that will in any manner degrade or damage the reputation of the Premises or increase Landlord’s insurance rates for any portion of the Premises.

4.2                Equipment. Tenant shall only install such equipment in the Premises as is customary for the Permitted Use and shall not overload the floors or electrical circuits of the Premises or change the wiring or plumbing of the Premises. Tenant shall obtain Landlord’s prior written consent to the location of and manner of installing any plumbing, wiring or electrical, heating, heat-generating or communication equipment or unusually heavy articles. Any equipment, cables, wiring, conduit, additional dedicated circuits and any additional air conditioning required because of any such equipment installed by Tenant shall be installed, maintained and operated at Tenant’s sole expense and in accordance with Landlord’s reasonable requirements. Tenant shall not install any equipment outside the Premises, including, without limitation, on the roof of the Building, without first having obtained the prior written consent of Landlord.

4.3                Compliance with Laws. Landlord warrants that, as of the Lease Commencement Date, the Premises complies with all applicable laws, statutes, ordinances, rules and regulations of any public authority (the “Laws”). As of the Lease Commencement Date, Tenant shall at its expense promptly comply and cause the Premises to comply with all Laws applicable to Tenant’s particular use of the Premises (as opposed to those Laws generally applicable to commercial uses of real property for which the Project is zoned).

4.4                Rules and Regulations. Landlord may make, and Tenant shall comply, with all rules and regulations of the Building and the Project (the “Rules”) as Landlord may revise and enforce the Rules from time to time in Landlord’s sole discretion. The Rules are in addition to and shall not be construed to modify or amend this Lease in any way. The Rules as of the date of this Lease are set forth in Exhibit D and are incorporated herein by reference.

4.5                Parking. Landlord grants Tenant and Tenant’s customers, suppliers, employees and invitees, a non-exclusive license to use the parking areas designated on the Project Site Plan, if any, for the parking of employee motor vehicles  and company fleet delivery vehicles during the Term of this Lease. At no time shall Tenant and its agents and visitors use more than the maximum number of parking spaces shown in Section 1.10 above. Landlord reserves the right at any time to grant similar non-exclusive rights to other tenants to use the parking areas, to promulgate rules and regulations relating to the use of such parking areas, including reasonable restrictions on parking by tenants and employees, to make changes in the parking layout from time to time, and to establish reasonable time limits on parking.. 

SECTION 5. OPERATING EXPENSES AND TAXES

5.1                Operating Expenses. For purposes of this Lease, the term “Operating Expenses” shall mean all expenses paid or incurred by Landlord (or on Landlord’s behalf) as reasonably determined by Landlord as necessary or appropriate for the operation, maintenance, repair, and management of the Project and the Common Areas thereon, including without limitation: (a) salaries, wages and benefits of employees of Landlord engaged in the repair, operation and maintenance of the Project and Common Areas thereon; (b) payroll taxes, workers’ compensation insurance, uniforms and related expenses for such employees; (c) the cost of all gas, utilities, sewer charges and other services furnished to the Project (as opposed to those furnished to any individual tenant of the Project); (d) the cost of maintaining and repairing the Project and Common Areas, including, without limitation, the parking areas and roof; (e) the cost of all comprehensive general liability and “special form” and “all risk” casualty insurance carried by Landlord, insuring the Common Areas and the Project; (f) the cost for rental of all supplies and tools necessary for the maintenance and repair of the Project and Common Areas; (g) the cost of capital improvements and remodelings of the Project, the cost of which shall be amortized (with interest on the unamortized balance at a commercially reasonable rate, as determined by Landlord) over the useful life of the improvements or remodelings and in accordance with generally accepted accounting principles as reasonably estimated by Landlord;

(h) alterations and improvements to the Project and Common Areas (as opposed to those provided for the exclusive benefit of any individual tenant of the Project) made by reason of laws and requirements of any public authority or the requirements of any insurance body, but excluding any such alteration or improvement that is included in Landlord’s obligation to deliver the Premises, Building, Common Areas and Project in compliance with law, as set forth in Section 4.3 above; (i) management fees paid to a third party, or if no managing agent is employed by Landlord, Landlord shall be entitled to charge a reasonable management fee which is not in excess of five percent (5%) of the total of Gross Rent; (j) reasonable legal, accounting and other professional fees incurred in connection with the operation, maintenance and management of the Project, Common Areas and Building; (k) the cost of landscape and parking area maintenance, repair; (l) janitorial and cleaning supplies and services; and (m) all other charges properly allocable to the operation, repair, maintenance, management, and replacement of the Project, Common Areas and Building in accordance with generally accepted accounting principles.

5.2                Taxes. The term “Taxes” shall include: (a) all real and personal property taxes, charges, rates, duties and assessments (including local improvement district assessments) levied or imposed by any governmental authority with respect to the Project or any portion thereof, and any improvements, fixtures and equipment located therein or thereon, and with respect to all other property of Landlord, real or personal, located in or on the Project or any portion thereof, and used in connection with the operation of the Project or any portion thereof; (b) any tax in lieu of or in addition to, or substitution of a real property tax; and (c) any tax or excise levied or assessed by any governmental authority on the Rent payable under this Lease or Rent accruing from the use of the Project or any portion thereof, provided that this shall not include federal or state, corporate or personal income taxes. If Landlord receives a refund of Taxes, then Landlord shall credit such refund, net of any professional fees and costs incurred by Landlord to obtain the same, against the Taxes for the Lease Year to which the refund is applicable or the current Lease Year, at Landlord’s option. Notwithstanding the foregoing, Tenant shall pay before delinquency all taxes, assessments, licenses, fees and charges assessed, imposed or levied on: (i) Tenant’s business operations; (ii) all trade fixtures; (iii) leasehold improvements; (iv) merchandise; and (v) other personal property in or about the Premises.

5.3                Written Statement of Estimate. Prior to the Lease Commencement Date, Landlord shall furnish Tenant with a written statement setting forth Landlord’s estimate of the cost of Operating Expenses and Taxes and Tenant’s Proportionate Share thereof for the first Lease Year. Thereafter, prior to the commencement of each Lease Year after the first Lease Year or as soon thereafter as reasonably possible (but in no event later than 90 days after the commencement of the Lease Year), Landlord shall furnish Tenant with a written statement setting forth the estimated cost of Operating Expenses and Taxes and Tenant’s Proportionate Share thereof for the next Lease Year. Tenant shall pay to Landlord as Additional Rent commencing on the Lease Commencement Date, and thereafter on the first day of each calendar month, an amount equal to one-twelfth (1/12th) of the amount of Tenant’s Proportionate Share of the estimated cost of Operating Expenses and Taxes, as shown in Landlord’s written statement for that Lease Year. In the event Landlord fails to deliver said written estimate, Tenant shall continue to pay to Landlord an amount equal to one-twelfth (1/12th) of Tenant’s Proportionate Share of the estimated cost of Operating Expenses and Taxes for the immediately preceding Lease Year until Landlord does furnish the written estimate. Upon receipt of such written estimate, Tenant shall pay an amount equal to the difference between Tenant’s Proportionate Share of the estimated cost of Operating Expenses and Taxes for the expired portion of the current Lease Year and Tenant’s actual payments during such time, and any payments by Tenant in excess of Tenant’s Proportionate Share of the estimated cost of Operating Expenses, Taxes and Insurance shall be credited to the next due payment of Rent from Tenant. Landlord reserves the right, from time to time, to adjust the estimated cost of Operating Expenses and Taxes, and Tenant shall commence payment of one- twelfth (1/12th) of such revised estimate on the first (1st) day of the month following receipt of the revised estimate.

5.4                Final Written Statement. Within one hundred twenty (120) days after the close of each Lease Year during the Term, Landlord shall deliver to Tenant a written statement (the “Operating Statement”) setting forth Tenant’s Proportionate Share of the actual cost of Operating Expenses and Taxes for the Project for the preceding Lease Year for each such item. In the event Tenant’s Proportionate Share of the actual cost of Operating Expenses and Taxes for the preceding Lease Year is greater than the amount paid by Tenant for such Operating Expenses and Taxes, Tenant shall pay the amount due to Landlord as Additional Rent within thirty (30) days after receipt by Tenant of such statement. In the event Tenant’s Proportionate Share of the actual cost of Operating Expenses and Taxes for the preceding Lease Year is less than the amount paid by Tenant for such Operating Expenses and Taxes, then Landlord shall, at Landlord’s election, either: (a) pay the amount of Tenant’s overpayment to Tenant within thirty (30) days following the date of such statement; or (b) apply such overpayment to Tenant’s next Rent payment, reimbursing only the excess over such next Rent payment, if any. If a Lease Year ends after the expiration or termination of this Lease, any Additional Rent in respect thereof that is payable under this Section shall be paid by Tenant within ten (10) days of its receipt of the Operating Statement for such Lease Year, and any Additional Rent paid by Tenant in excess of the amount due under this Lease for the portion of the Lease Year after expiration or termination of this Lease shall be refunded by Landlord to Tenant within ten (10) days of the expiration of that Lease Year. The late delivery of any written statement by Landlord shall not constitute a waiver of Tenant’s obligation to pay Tenant’s Proportionate Share of Operating Expenses and Taxes, but Landlord shall use reasonable efforts to deliver such written statements as soon as reasonably possible after the commencement of each Lease Year.

5.5                Tenant Examination. The Operating Statement shall contain sufficient detail to enable Tenant to verify the calculation of Operating Expenses and Taxes for the Premises. In addition, Tenant, upon at least five (5) days advance written notice to Landlord and during business hours, may examine any records used to support the figures shown on the Operating Statement, provided however, that Tenant shall only be entitled to make such an examination once in each Lease Year for the immediately preceding calendar year, which request must be delivered within ninety (90) days after the date Landlord’s annual Operating Statement is delivered to Tenant (and if Tenant fails to object in writing to specific Operating Expenses and Taxes within such 90-day period, Tenant shall be deemed to have approved the same and to have waived the right to object to such calculations). Such Tenant examination shall not be conducted by anyone who is engaged on a contingent fee basis to represent Tenant. If a Tenant examination discloses that Tenant has overpaid Tenant’s share of Operating Expenses, Landlord shall give Tenant credit against the next payment(s) of Operating Expenses due in such amount, or if the Lease is at the end of the Term, refund such amount to Tenant. Tenant shall pay all costs and expenses of the examination unless the examination discloses that Landlord has overcharged Operating Expenses by more than five percent (5%), in which case Landlord shall pay the costs and expenses of the examination. Tenant hereby agrees to: (a) keep the results of any such audit confidential, except that Tenant may disclose such information to its accountants, legal advisors or as otherwise required by law; and (b) require Tenant’s auditor and its employees and each of their respective attorneys and advisors likewise to keep the results of such audit confidential.

5.6                Tenant’s Proportionate Share. The area of the Premises provided for in Section 1.6, above, is deemed accurate, and Tenant shall not be authorized to cause any re-measurement of such area. With respect to Operating Expenses and Taxes that Landlord allocates to the Building, Tenant’s Proportionate Share (Building) shall be the percentage set forth in Section 1.7, as adjusted by Landlord from time to time resulting from a re- measurement of or changes in the physical size of the Building, whether such changes in size are due to an addition to or a sale or conveyance of a portion of the Building or otherwise. With respect to Operating Expenses and Taxes which Landlord allocates to the Project or any portion thereof, Tenant’s Proportionate Share (Project) shall be with respect to Operating Expenses and Taxes that Landlord allocates to the Project or any portion thereof, the percentage set forth in Section 1.8 and as adjusted by Landlord from time to time resulting from a re-measurement of or changes in the physical size of the Project, whether such changes in size are due to an addition to or a sale or conveyance of a portion of the Project or otherwise. Notwithstanding the foregoing, Landlord may equitably adjust Tenant’s Proportionate Share for all or part of any item of expense or cost reimbursable by Tenant that relates to an operation, maintenance, repair, management or service that benefits only the Premises or only a portion of the Building and/or the Project or that varies with the occupancy with the Building and/or the Project.

SECTION 6. MAINTENANCE AND REPAIR.

6.1                Landlord Repairs. Landlord shall repair, maintain and/or replace, where necessary, the Common Areas and the structural components of the Building including, without limitation, the foundations, exterior walls, roof structure and membrane, as well as the downspouts and gutters, and all systems serving the Premises and the Building such as mechanical, electrical, storm sewer, plumbing, sanitary sewer and the HVAC system serving the Building (excluding therefrom the exterior and interior windows, doors, plate glass and storefronts and, except for reasonable wear and tear, any damage thereto caused by any negligent or intentional act or omission of Tenant or its employees, agents, invitees, licensees, contractors or subtenants, damage or destruction caused by any casualty not required to be repaired under Section 11 and any condemnation or taking of the Building, the Project or any portion of or interest therein governed by Section 12) and costs and expenses related thereto shall be deemed an Operating Expense . Except in the event of an emergency, Tenant expressly waives the benefits of any statute now or later in effect that would otherwise give Tenant the right to make repairs at Landlord’s expense and deduct that cost from Rent owing to Landlord.

(a)                  Maintain all portions of the Premises and fixtures situated within the Premises in good order and repair;

(b)                  Maintain, repair and replace, if necessary, all special equipment, and decorative treatments installed by or at Tenant’s request and that serve the Premises;

(c)                 Make all necessary repairs and replacements to all portions of the Premises and pay Landlord upon demand for the repairs or replacements to the Premises, Building and/or the Project to the extent that such repairs or replacements are required as a result of the negligent or intentional acts or omissions or any breach of this Lease by Tenant, its employees, contractors, agents, or invitees; and

6.3                Liability. Landlord shall not be liable for any failure to maintain and repair the Premises as required under Section 6.1 unless Tenant delivers written notice of such failure to Landlord and Landlord fails to perform such maintenance or repair in a commercially reasonable time and manner. Landlord may erect scaffolding and other apparatus necessary to make repairs or alterations to the Premises. So long as Landlord uses commercially reasonable efforts to minimize interference with Tenant’s business, Tenant shall have no claim against Landlord for any interruption or reduction of services or interference with Tenant’s occupancy because of repairs or maintenance performed by Landlord to the Premises.

SECTION 7. ALTERATIONS.

Without first having obtained Landlord’s prior written consent, which will not be unreasonably withheld, Tenant shall not make any alterations, additions, or improvements to the Premises: (a) for which any governmental permit is required; or (b) that modify any structural, mechanical, electrical, roofing, or plumbing component of the Building; or (c) that cost more than $10,000. If Landlord consents in writing to any proposed alteration of the Premises, Tenant shall: (i) only contract with a Landlord-approved contractor for the performance of such alterations, which approval will not be unreasonably withheld; (ii) comply with all applicable Laws and obtain all necessary governmental permits and approvals and deliver copies thereof to Landlord; and (iii) cause all alterations to be completed promptly in compliance with Landlord-approved plans and specifications with all due diligence in a good and workmanlike manner. Except for removable machinery and unattached movable trade fixtures, all improvements, alterations, wiring, cables or conduit installed by Tenant shall immediately become part of the Premises, with title vested in Landlord. If stated in writing at the time Landlord approves the installation, Landlord may require that Tenant remove any such improvements, alterations, wiring, cables or conduit installed by or for Tenant and restore the Premises to good condition and repair upon expiration or earlier termination of this Lease. Landlord may post notices of nonresponsibility in connection with any work being performed in the Premises by or at the request of Tenant. Tenant shall not permit any liens to attach to the Building or Tenant’s interest in the Premises as a result of any work performed by or at Tenant’s request.

SECTION 8. UTILITIES AND SERVICES.

8.1                General. Tenant shall comply with all Laws concerning the use or reduction of use of utilities in the Premises. Tenant shall pay all charges for electricity, water, gas, telephone and other utility services furnished to the Premises during the Term and for all inspections, governmental fees and other like charges associated therewith. Landlord makes no representation or warranty whatsoever as to the types, quantities, availability or costs of any and all utility services for the Building. 

8.2                Interruption of Service. Unless caused by the active negligence or willful misconduct of Landlord, interruption of any service or utility shall not render Landlord liable to Tenant for damages, relieve Tenant from performance of Tenant’s obligations under this Lease or be deemed an eviction or disturbance of Tenant’s use and possession of the Premises. Notwithstanding the foregoing, Landlord shall use commercially reasonable efforts to cure any interruption of service or utility and if Landlord fails to exercise such commercially reasonable efforts Tenant shall have those rights specified in Section 14.4 of this Lease. Tenant shall install surge protection systems for power provided to the Premises, and Tenant releases Landlord from all liability for any damage caused by any electrical surge.

SECTION 9. SIGNS AND OTHER INSTALLATIONS.

Without Landlord’s written consent and Landlord’s approval as to design, size, location, and color (which approval will not be unreasonably withheld), no signs, awnings, banners, placards, or other like items shall be painted on or attached to the Premises or the Building, or placed on any glass or woodwork of the Premises or positioned so as to be visible from outside the Premises, including any window covering (e.g., shades, blinds, curtains, drapes, screens, or tinting materials). All signs installed by Tenant shall comply with Landlord’s reasonable standards for signs and all applicable codes and all such installation shall be at Tenant’s sole cost. All signs and sign hardware shall be removed by Tenant, at Tenant’s sole cost and expense, upon termination of this Lease with the sign location restored to its former state unless Landlord elects to retain all or any portion thereof. Tenant may not install any alarm boxes, foil protection tape or other security equipment on the Premises without Landlord’s prior written consent, which consent shall not be unreasonably withheld. Any material violating this provision may be removed and disposed of by Landlord without compensation to Tenant, and, upon demand, Tenant shall reimburse Landlord for the cost of such removal. Notwithstanding the foregoing, Landlord, at Landlord’s cost, shall provide Tenant with Building-standard signage located adjacent to the entry doorway of the Premises and on the Building directory.

SECTION 10. INSURANCE AND INDEMNITY.

(a)                 Commercial general liability insurance providing coverage written on an occurrence basis and applying to the use and occupancy of the Premises with limits of not less than Two Million Dollars ($ 2,000,000) per occurrence and Two Million Dollars ($2,000,000) in the aggregate. Unless otherwise approved by Landlord in writing: (i) such liability insurance shall be written on a form that is no less broad than ISO form CG 00 01; (ii) Landlord, any lender of Landlord, and Landlord’s managing agent, if any, shall be named as additional insureds with coverage no less broad than that provided under ISO form CG 20 11 designating both the Premises and the Common Area as the covered premises. Additionally, such policy shall insure the liability of Tenant under Section 10.3 of this Lease.

(b)                 A “causes of loss-special form” or “all risk” property insurance policy with a sprinkler damage endorsement covering Tenant’s personal property, inventory, alterations, fixtures, equipment, plate glass and leasehold improvements located on or in the Premises, in an amount not less than one hundred percent (100%) of their actual replacement value, providing coverage for risk of direct physical loss or damage including sprinkler leakage, vandalism and malicious mischief. Coverage under such policy shall be no less broad than that provided under ISO form CP 10 30. Landlord shall have no claim to such proceeds.

(c)                 Workers’ compensation insurance and other forms of insurance as may from time to time be required by law or may otherwise be necessary to protect Landlord and the Premises from claims of any person who may at any time work on the Premises, whether as a servant, agent, or employee of Tenant or otherwise. Further, Tenant shall use commercially reasonable efforts to cause Tenant’s agents, contractors, or subcontractors to keep and maintain the insurance contemplated in this Section 10.1(c).

All insurance and endorsements contemplated under this Section 10.1 shall: (i) be issued by insurance companies licensed and admitted to issue policies in the State of Oregon; (ii) unless otherwise approved by Landlord in writing, be issued by insurance companies having a financial rating of “B+” or better under the A.M. Best financial rating scheme; (iii) contain a provision that the insurance be primary and non-contributing with any other insurance available to Landlord; and (iv) not include any self-insured retention. Within five (5) days of the Lease Commencement Date, Tenant shall deliver to Landlord a certificate evidencing such insurance that shall require no less than thirty (30) days prior written notice to Landlord prior to any cancellation or material change. No later than thirty (30) days prior to expiration of any policy, Tenant shall deliver a renewal certificate to Landlord for such insurance policy. If Tenant fails to obtain and maintain insurance as required under this Section 10.1, Landlord may, but shall not be obligated to, obtain such insurance for Landlord’s own benefit and not for or on behalf of Tenant, and in such event, Tenant shall pay, as Additional Rent, upon demand, the premium for such insurance.

10.2             Landlord’s Insurance. During the Term, Landlord shall maintain in full force and effect a policy or policies of insurance covering the Building, which shall provide coverage against such risks as are commonly covered under a “causes of loss-special form” or “all risk” property insurance policy (including, in Landlord’s sole discretion, earthquake and/or flood coverage), together with loss of rents and secondary liability insurance and other insurance as Landlord deems reasonably necessary. Such insurance shall contain such policy limits and deductibles, shall be obtained through such insurance company or companies, and shall be in such form as Landlord deems appropriate, and shall provide coverage for one hundred percent (100%) of the replacement value of the Building. All insurance proceeds payable under Landlord’s casualty insurance carried hereunder shall be payable solely to Landlord, and Tenant shall have no interest therein. Within thirty (30) days of receipt of a billing therefor, Tenant shall pay to Landlord, as Additional Rent, an amount equal to Tenant’s Proportionate Share (Building) of all amounts paid by Landlord as set forth in this Section 10.2.

10.3. Tenant’s Indemnity. Tenant shall indemnify, defend, and hold harmless Landlord and its managing agents and employees from any claim, liability, damage, or loss, or any cost or expense in connection therewith (including reasonable attorney fees), arising out of: (a) any damage to any person or property occurring in, on or about the Premises, the Building, the Common Areas, and the Project as the result of the negligence or willful misconduct of Tenant, its employees, contractors, agents or invitees; and/or (b) Tenant’s material breach or violation of any term of this Lease. The provisions of this Section 10.3 shall survive the termination or expiration of this Lease.

10.4 Landlord’s Indemnity. Landlord shall indemnify, defend, and hold harmless Tenant from any claim, liability, damage, or loss, or any cost or expense in connection therewith (including reasonable attorney fees), arising out of: (a) any damage to any person or property occurring in, on or about the Premises, the Building, the Common Areas and the Project as the result of the negligence or willful misconduct of Landlord, its employees, contractors, agents or invitees; and/or (b) Landlord’s material breach or violation of any term of this Lease. The provisions of this Section 10.4 shall survive the termination or expiration of this Lease.

SECTION 11. FIRE OR CASUALTY.

(a)                 Landlord may elect to terminate this Lease by notice in writing to Tenant within thirty (30) days after damage to the Building by fire or other casualty: (i) which causes any substantial portion of the Building to be unusable; (ii) the repair of which will cost more than twenty-five percent (25%) of the replacement value of the Building; or (iii) which is not required under this Lease to be covered by insurance.

(b)                 Tenant may elect to terminate this Lease by notice in writing to Landlord within thirty (30) days after damage to the Premises by fire or other casualty, which causes any substantial portion of the Premises to be unusable.

(c)                 If neither Landlord nor Tenant terminates this Lease after any fire or other casualty referenced in Sections 11.1(a) or (b), or if damage occurs to the Building which is not referenced in Sections 11.1(a) or (b), Landlord shall promptly restore the Building to the condition existing immediately prior to such damage, and this Lease shall continue in full force and effect. In the event of any damage to the Building by fire or other casualty, Tenant shall promptly repair and restore all tenant improvements or alterations installed or paid for by Tenant or pay the cost of such restoration to Landlord if Landlord performs such restoration. In the event the Building is damaged by any casualty, Rent shall be reduced in proportion to the unusable portion of the Building from the date of damage until the date restoration work to the Building is substantially complete. Disputes between Tenant and Landlord under this Section 11.1 shall be resolved by arbitration as provided in Section 21 below.

11.2             Waiver of Subrogation. Landlord and Tenant each hereby releases and waives any and all rights to recover from or proceed against the other party and its employees, agents and contractors, for loss or damage to any property of the releasing party or any person claiming through the releasing party arising from any cause required to be insured against by the releasing party under this Lease. Landlord and Tenant shall each cause their insurance policies to contain a waiver of subrogation provision consistent with the foregoing.

SECTION 12. EMINENT DOMAIN.

If any portion of the Building or a substantial portion of the Premises shall be permanently taken under any right of eminent domain, or any transfer in lieu thereof (the “Taking”) and such Taking renders the Premises in the reasonable opinion of Tenant or Landlord unsuitable for Tenant’s use, then either party may terminate this Lease by giving thirty (30) days prior written notice to the other party, and such termination shall be effective on the date possession of the Building, Premises or portion of either is delivered to the condemning authority. Disputes between Tenant and Landlord under this Section 12 shall be resolved by arbitration as provided in Section 21 below. If this Lease is not so terminated, Landlord shall repair and restore the Premises as close as practicable to its condition prior to the Taking, and this Lease shall continue, but, commencing with the date on which Tenant is deprived of the use of any portion of the Premises or of any rights under this Lease, Base Rent shall be proportionately abated or reduced, based on the extent to which Tenant’s use of the Premises is impaired. Any and all awards payable by the condemning authority in connection with a Taking shall be the sole property of Landlord; provided, however, that nothing contained herein shall prevent Tenant from prosecuting a separate claim against the condemning authority for Tenant’s damages arising out of the Taking, so long as that award does not diminish the award that Landlord would otherwise be entitled to as a result of the Taking.

SECTION 13. ASSIGNMENT AND SUBLETTING.

Tenant shall not assign or encumber its interest under this Lease or sublet all or any portion of the Premises without having first provided thirty (30) days written notice to Landlord and thereafter obtained Landlord’s written consent. Tenant shall deliver written notice of Tenant’s desire to assign or sublet all or any portion of the Premises and such notice shall include a recent signed and certified financial statement (audited, if available) and a statement of the intended use for such proposed assignee or subtenant. So long as any proposed subtenant or assignee is compatible with Landlord’s reasonable credit and use standards for the Premises, Landlord’s consent shall not be unreasonably withheld. Notwithstanding the foregoing, Landlord’s consent shall not be required if such assignment or subletting is in connection with an entity that is an affiliate or subsidiary of Tenant or with a merger or change in control of Tenant. No assignment shall relieve Tenant of its obligation to pay rent or perform other obligations required by this Lease during the Initial Term (and any renewal periods), and no consent to one assignment or subletting shall be a consent to any further assignment or subletting. Tenant shall reimburse Landlord for any costs incurred in connection with a proposed assignment or subletting, including reasonable attorney fees in an amount not to exceed $1,500. If Landlord consents to a proposed assignment, and any consideration is paid to the assigning Tenant, the assigning Tenant shall promptly pay to Landlord one-half (1/2) of any net consideration resulting from such transaction received by Tenant. If Landlord consents to a proposed sublease, and the rent under such sublease arrangement (the “Sub-Rent”) is greater than the Rent under this Lease, Tenant shall promptly pay to Landlord one-half of the difference between the Sub-Rent and the Rent.

SECTION 14. DEFAULT.

14.1.1        Failure by Tenant to pay Rent or any other charge due under this Lease within ten (10) days after receipt of written notice from Landlord that the same is then due, provided, however, that Landlord shall not be required to provide such written notice more than two (2) times in any twelve (12) month period.

14.1.2        Other than as set forth in Section 14.1.1 and Sections 14.1.3 through 14.1.6 below, failure by Tenant to comply with any other obligation of this Lease, including, without limitation, Section 6.2, within ten (10) days following written notice from Landlord specifying the failure (except in the case of emergency, in which event Landlord shall only be required to give such notice as is reasonable under the circumstances); provided, however, that if the nature of Tenant’s default requires more than ten (10) days to correct, Tenant shall not be deemed in default of this Lease so long as Tenant commences the cure of such failure within such ten (10)-day period and thereafter, proceeds in good faith and with all diligence to complete such cure as soon as possible but in no event later than ninety (90) days after the date of Landlord’s notice of default. Subject to this Section 14.1.2, if Tenant fails to perform Tenant’s obligations under Section 6.2, Landlord may enter upon the Premises, perform the obligations on Tenant’s behalf, and recover the cost of performance, together with interest at the rate of twelve percent (12%) per year, as Additional Rent payable by Tenant with the next installment of Rent, provided, that such rate shall not exceed the maximum rate then allowed by law.

14.1.5      Tenant’s failure to execute and deliver to Landlord the documents described in Sections 18 or 23 within ten (10) days of written notice from Landlord.

14.1.6      Tenant’s insolvency, business failure or assignment for the benefit of its creditors. Tenant’s commencement of proceedings under any provision of any bankruptcy or insolvency law or failure to obtain dismissal of any petition filed against it under such laws within the time required to answer; or the appointment of a receiver for all or any portion of Tenant’s properties or financial records.

14.2             Remedies for Default. Upon the occurrence of an Event of Default described in Section 14.1, Landlord may exercise the following remedies as well as any other remedies at law or in equity, by statute or as set forth in this Lease:

14.2.1        Landlord may terminate this Lease, reserving all rights to damages resulting from Tenant’s breach. Whether or not Landlord terminates this Lease, Landlord may retake possession of the Premises and any relet or use of the Premises by Landlord shall not be deemed a surrender or waiver of Landlord’s right to damages. If Landlord retakes possession of the Premises, Landlord’s mitigation efforts shall be deemed sufficient if Landlord follows commercially reasonable procedures and otherwise complies with Law.

14.2.2        Tenant shall be liable to Landlord for all damages caused by Tenant’s default, including, but not limited to, an amount equal to all unpaid and future Rent, lease commissions incurred for this Lease, and the unamortized cost of all improvements to the Premises installed or paid for by Landlord. Landlord may periodically sue Tenant to recover damages as they accrue, and no action therefor shall bar a later action for damages accruing thereafter. Landlord may elect in any one action to recover both accrued damages as well as damages attributable to the remaining Term of the Lease. Any damages attributable to the remaining Term of the Lease shall be equal to the difference between the Rent under this Lease and fair market rental value of the Premises (including Additional Rent) for the remainder of the Term, discounted at the prevailing interest rate on judgments to the date of the judgment.

14.3             Landlord’s Right To Cure Default. Landlord may, but shall not be obligated to, make any payment or perform any obligation under this Lease that Tenant has failed to perform, as and when required hereunder, following advance written notice to Tenant. Tenant shall pay Landlord for all expenditures and costs incurred by Landlord in performing any obligation of Tenant, upon demand, with interest thereon at the rate of one and one half percent per month (1 ½%), but in no event at a rate in excess of that allowed by Law. Landlord’s right to cure any Tenant default is for the sole protection of Landlord and in no event shall Tenant be released from any obligation to perform Tenant’s obligations and covenants under this Lease. The contents of this Section shall not be deemed a waiver by Landlord of any other right that Landlord may have arising from any default of this Lease by Tenant, whether or not Landlord exercises its rights under this Section.

14.4             Landlord’s Default. Landlord shall not be deemed to be in default of the performance of any obligation required to be performed by Landlord hereunder unless and until Landlord fails to perform such obligation within twenty (20) days after written notice by Tenant to Landlord specifying the nature of Landlord’s alleged default; provided, however, that if the nature of Landlord’s alleged default is such that more than twenty (20) days are required for its cure, then Landlord shall not be deemed to be in default if Landlord shall commence such performance within such twenty (20)-day period and thereafter proceeds in good faith and with diligence to complete such cure as soon as possible, but in no event later than ninety (90) days after the date of Tenant’s notice of default. If Landlord fails to timely cure any default under this Lease, Tenant shall have such rights and remedies provided at law and in equity.

SECTION 15. NOTICES.

Unless otherwise specified, any notice required or permitted in, or related to this Lease must be in writing and signed by the party giving the notice. Any notice will be deemed delivered: (a) when personally delivered; (b) when delivered by electronic mail transmission (in either case, with confirmation of delivery); (c) on the day following delivery of the notice by reputable overnight courier; or (d) on the day following delivery of the notice by mailing by certified or registered U.S. mail, postage prepaid, return receipt requested; and in any case shall be sent to the applicable party at its address as set forth in Section 1.2 for Tenant and Section 1.3 for Landlord. Addresses for notices may be changed from time to time by written notice to all other parties pursuant to this Section 15.

SECTION 16. LANDLORD ACCESS.

After reasonable notice to Tenant, Landlord may enter upon the Premises with its passkey or other reasonable means to assess compliance with this Lease, perform required or necessary maintenance, repairs, alterations or services to the Building or the Premises, show the Premises to potential buyers of the Building and post appropriate notices and signs, and during the last three (3) months of the Term, show the Premises to any potential tenant. Except in case of emergency, all entry to the Premises shall be at times and in a manner so as to minimize interference with Tenant’s use of the Premises.

SECTION 17. CONVEYANCE BY LANDLORD

If the Premises is sold or otherwise conveyed by Landlord or any successor, so long as Tenant is not in default beyond any applicable cure period, Landlord shall cause such successor to recognize Tenant’s rights hereunder, and Tenant shall attorn to the buyer or transferee and recognize that party as the landlord under this Lease. If the buyer or transferee assumes all obligations of Landlord under this Lease accruing thereafter, Landlord shall be deemed released of all further liability to Tenant under this Lease.

SECTION 18. SUBORDINATION, ATTORNMENT ANDNON-DISTURBANCE.

Without the need for further documentation, this Lease shall be subject and subordinate to any existing deeds of trust, mortgages, ground lease, master lease or land sale contracts and any amendment or modification thereof, now existing or hereafter recorded against the Premises (collectively, the “Encumbrances”). Tenant shall execute all documents reasonably requested by Landlord or the holder of an Encumbrance to confirm such subordination; provided, however, that this Lease shall only be subordinate to any future Encumbrance, or modification thereof, if the holder of that Encumbrance executes a non-disturbance agreement reasonably satisfactory to Tenant by which the holder of such Encumbrance recognizes Tenant’s rights under this Lease unless Tenant is in default beyond any applicable cure period. If any Encumbrance is foreclosed, Tenant shall attorn to such buyer, and this Lease shall continue in full force and effect.

SECTION 19. SURRENDER; HOLDOVER.

19.1             Surrender. Upon expiration or earlier termination of this Lease, Tenant shall surrender the Premises and the Building swept and free of debris, with carpeted areas vacuumed and in good and serviceable condition, subject to ordinary wear and tear. Tenant shall remove all of its personal property and, if requested by Landlord in accordance with Section 7 above, any conduits, wiring, cables or alterations installed by Tenant, and in any case, shall repair all damage to the Premises and the Building resulting from that removal. If Tenant fails to remove any such personal property or alterations, those items shall be deemed abandoned, and Landlord may remove or dispose of such items without liability to Tenant or others, and Tenant shall reimburse Landlord for the cost of such removal upon demand.

19.2             Holdover. If Tenant fails to surrender the Premises and remove all its personal property as set forth herein, Landlord may either: (a) recognize Tenant as a tenant at sufferance which shall be terminable upon fifteen (15) days’ notice; (b) recognize Tenant as a month-to-month tenant; or (c) evict Tenant from the Premises and recover all damages resulting from Tenant’s wrongful holdover. For purposes of the preceding subjections (a) and (b), such tenancy shall be subject to all terms of this Lease, except that Rent shall be one hundred fifty percent (150%) of the total Rent for the last month being charged and all options or other rights regarding extension of the Term or expansion of the Premises shall automatically terminate.

SECTION 20. HAZARDOUS MATERIALS.

20.1             Generally. Neither Tenant nor Tenant’s agents or employees shall cause or permit any Hazardous Material, as hereinafter defined, to be brought upon, stored, used, generated, released into the environment, or disposed of on, in, under, or about the Premises or Building, except reasonable quantities of cleaning supplies and office supplies necessary to or required as part of Tenant’s business that are generated, used, kept, stored, or disposed of in a manner that complies with all laws regulating any such Hazardous Materials and with good business practices. Tenant covenants to remove from the Premises and the Building, upon the expiration or sooner termination of this Lease and at Tenant’s sole cost and expense, any and all Hazardous Materials brought upon, stored, used, generated, or released into the environment by Tenant, its agents, employees or invitees during the Term of this Lease. To the fullest extent permitted by law, Tenant hereby agrees to indemnify, defend, protect, and hold harmless Landlord, Landlord’s managing agent and their respective agents and employees, and their respective successors and assigns, from any and all claims, judgments, damages, penalties, fines, costs, liabilities, and losses that arise during or after the Term directly or indirectly from the use, storage, disposal, or release of Hazardous Materials by Tenant, its agents, employees or invitees on, in, or about the Premises or the Building which occurs during the Term of this Lease. To the fullest extent permitted by law, Landlord hereby agrees to indemnify, defend, protect and hold harmless Tenant, and its agents and employees and its respective successors and assigns, from any and all claims, judgments, damages, penalties, fines, costs, liabilities and losses that arise during or after the Term directly or indirectly from the use, storage, disposal, or release of Hazardous Materials by Landlord, its agents, employees, contractors or predecessors on, in or about the Premises or the Building. Tenant shall promptly notify Landlord of any release of Hazardous Materials in, on, or about the Premises or the Building that Tenant, or Tenant’s agents or employees, becomes aware of during the Term of this Lease, whether caused by Tenant, Tenant’s agents or employees, or any other persons or entities.

20.2             Definition. As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material, or waste which is or becomes regulated by any local governmental authority, the state of Oregon or the United States government. The term “Hazardous Material” includes, without limitation, any material or substance that is: (a) defined as a “hazardous waste,” “extremely hazardous waste,” “restricted hazardous waste,” “hazardous substance,” “hazardous material,” or “waste” under any federal, state or local law; (b) petroleum; and (c) asbestos. The provisions of this Section 20, including, without limitation, the indemnification provisions set forth herein, shall survive any termination of this Lease.

SECTION 21. DISPUTE RESOLUTION

No provision of, nor the exercise of any rights under, this Section 21 shall limit the right of Landlord to evict Tenant for default under this Lease, exercise self-help remedies or obtain provisional or ancillary remedies such as an injunction, receivership, attachment or garnishment. Subject to the preceding sentence, all claims, disputes and other matters in question between the parties to this Lease arising out of or relating to this Lease or the breach thereof, shall be decided by mandatory and binding arbitration in accordance with the rules of the Arbitration Service of Portland, Inc. (“ASP”) currently in effect unless the parties mutually agree otherwise. The following procedures shall apply:

21.1             Demand for arbitration shall be filed in writing with the other party to this Lease and with the ASP. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations.

21.2             The award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.

21.3             All filing fees and ASP costs associated with the arbitration itself shall be paid for by the party who files the notice of arbitration; provided, however, that all such expenses shall be recovered by the filing party in the event said party prevails. Any issues regarding who is the prevailing party shall be determined by the arbitration panel. The prevailing party also shall recover from the non-prevailing party all attorneys’ fees and costs, including fees and costs for legal assistants and expert witnesses, and including all fees and costs incurred relative to any challenge or appeal of the arbitration award, or confirmation by a court of law.

SECTION 22. ATTORNEY FEES; WAIVER OF JURY TRIAL.

If suit or action is instituted in connection with any controversy arising out of this Lease, including any bankruptcy proceeding, the prevailing party shall be entitled to recover, in addition to costs, such sums as the court may adjudge reasonable as attorney fees in preparation for trial, at trial and on all appeals or petition for review arising out of such suit or action. If Landlord engages a collection agency to pursue any delinquent amounts owed by Tenant, Tenant shall pay all collection agency fees charged to Landlord, in addition to all other amounts payable under this Lease. Disputes between the parties which are to be litigated shall be tried before a judge without a jury and by initialing below, Landlord and Tenant hereby expressly waive any right to require that any dispute under this Lease be heard before a jury.

SECTION 23. ESTOPPEL.

At any time and from time to time upon not less than ten (10) days prior notice from either party, the other party will execute, acknowledge and deliver to the requesting party a certificate certifying whether or not this Lease is in full force and effect and unmodified, if there are any modifications, that the Lease is in full force and effect as modified; that Tenant is in possession of the Premises; the dates to which Rent has been paid in advance and the amount of any Security Deposit or prepaid Rent; and such other matters as may be reasonably requested. If either party fails to deliver a requested certificate within the specified time, such failure shall conclusively establish that the party from whom the certificate was requested confirms that the Lease is in full force and effect, without modification except as may be represented by the requesting party. The parties agree that any such certificate may be relied upon by any existing or prospective holder of an Encumbrance or any prospective transferee of this Lease or the Premises.

SECTION 25. FORCE MAJEURE.

If the performance by either party of any provision of this Lease is prevented or delayed by any strikes, lockouts, labor disputes, acts of God, government actions, civil commotions, fire or other casualty, or other causes beyond the reasonable control of the party from whom performance is required, such party shall be excused from such performance for the period of time equal to the time of that prevention or delay. Notwithstanding the foregoing, neither party shall be relieved of their respective payment obligations under this Lease for such prevention or delay of less than sixty (60) days.

SECTION 26. BROKERS.

Each party represents that except for the broker(s) identified in the Lease Terms, neither party has had any dealings with any real estate broker, finder or other person with respect to this Lease. Landlord shall pay a leasing commission to the party(s) identified in Section 1.17 in accordance with a separate agreement by and between Landlord and the Landlord’s Agent. Landlord and Tenant each agree to indemnify and hold the other party harmless from and against any and all costs, expenses or liability for commissions or other compensation or charges claimed by or awarded to any broker or agent resulting from a breach of the representation set forth above in this Section 26.

SECTION 27. GOVERNING LAW.

This Lease shall be construed and interpreted and the rights of the parties determined in accordance with the laws of the state of Oregon (without reference to the choice-of-law provisions of Oregon law); provided further, that respect to matters of law concerning the internal corporate affairs of any corporate entity which is a party to or the subject of this Lease, and as to those matters, the law of jurisdiction under which such entity derives its powers shall govern.

SECTION 28. NONWAIVER.

No delay by either party in promptly enforcing any right or remedy set forth in this Lease shall be deemed a waiver thereof, and that right or remedy may be asserted at any time after the delaying party becomes entitled to the benefit of such right or remedy notwithstanding such delay.

SECTION 29. CAPTIONS.

The Section headings of this Lease are for descriptive purposes only and in no way define, limit or describe the scope, intent or meaning of this Lease.

SECTION 30. CONSENT.

Except where otherwise specifically provided in this Lease to the contrary, whenever a party’s consent or approval is required under this Lease, such party shall not unreasonably withhold, condition or delay its consent or approval.

SECTION 31. LIMITATION ON LIABILITY.

Notwithstanding anything to the contrary in this Lease, except to the extent of the negligence or willful misconduct of Landlord and its agents and employees, Tenant hereby releases Landlord, its agents and employees from: (a) damage to Tenant’s property; and (b) damage arising out of the acts, including criminal acts, of third parties.

SECTION 32. TIME OF THE ESSENCE AND HOLIDAYS.

Time is of the essence of each and every provision hereof. If the final date of any period of time set forth herein occurs on a Saturday, Sunday or legal holiday, then in such event, the expiration of such period of time shall be postponed to the next day which is not a Saturday, Sunday or legal holiday.

SECTION 33. COMPLETE AGREEMENT; NO IMPLIED COVENANTS; SEVERABILITY; DRAFTING.

This Lease and the attached Exhibits and schedules, if any, contain the entire agreement of Landlord and Tenant concerning the Premises, Building, Project, and Common Areas, and all prior written and oral agreements and representations between the parties are void. LANDLORD AND TENANT AGREE THAT THERE ARE NO IMPLIED COVENANTS OR OTHER AGREEMENTS BETWEEN THE PARTIES EXCEPT AS TO THE PARTIES’ RESPECTIVE IMPLIED COVENANTS OF GOOD FAITH AND FAIR DEALING AND AS OTHERWISE EXPRESSLY SET FORTH IN THIS LEASE. Neither Landlord nor Tenant is relying on any representations of the other party or such party’s agents, except those expressly set forth herein. If any provision of this Lease is held to be invalid or unenforceable, the validity and enforceability of the other provisions of this Lease shall not be affected. All provisions of this Lease have been negotiated at arm's length and this Lease shall not be construed for or against any party by reason of the authorship or alleged authorship of any provision hereof.

SECTION 34. SUCCESSORS.

Subject to Section 13, this Lease shall bind and inure to the benefit of the parties, their respective heirs, successors, and permitted assigns.

IN WITNESS WHEREOF, the duly authorized representatives of the parties have executed this Lease:

EXHIBIT A

Legal Description of the Project

That part of Block 1, INDUSTRIAL CENTER, in the City of Portland, County of Multnomah and State of Oregon, lying South of the north line of the D. Balch Donation Land Claim;

EXCEPTING THEREFROM that portion thereof described in deed to Industrial Metals Co., an Oregon corporation, recorded October 2, 1956, in Book 1808, page 392, Deed Records, and being more particularly described as follows: Beginning at an iron pipe at the northwest corner of the William Blackistone DLC, thence North 89°22’ West 257.36 feet to an iron pipe, said iron pipe being in the west line of Block 1, INDUSTRIAL CENTER: thence South 0°38’ West 115 feet along the said west line of said Block 1; thence South 89°22’ East 258.86 feet to an iron pipe, said iron pipe being on the east line of the aforesaid Block 1; thence North 0°7’ West 115 feet to the point of beginning.

ALSO EXCEPTING THEREFROM any portion thereof lying within the boundaries of roads and highways.

EXHIBIT C

Work Letter

Landlord will perform the following work: 

EXHIBIT D

Rules and Regulations

In the event of a conflict between the following Rules and Regulations and the terms of the Lease to which this Addendum is attached, the terms of the Lease shall control.

EXHIBIT F

Addendum

First Right of Refusal to Lease:

So long as Tenant is not then in material violation of the terms of the Lease, during the term of the Lease, Tenant will be granted a first right of refusal to lease the remainder of Building 2 for the duration of the Term in the event of a vacancy. Base Rent for the expansion space shall be based upon the current Base Rent being paid for the Premises on a per square foot basis, multiplied by the expansion area, and shall escalate at the same rate and time in accordance with the rent schedule set forth in Section 1.14 of the Lease. In the event that Tenant exercises the first right of refusal, the Lease will be amended by Landlord and Tenant to include the expansion space.

OPTION TO RENEW AT MARKET RENT

1.       Option Period:

So long as Tenant is not in default under this Lease beyond the applicable cure period, if any, at the time of exercise, Landlord hereby grants Tenant one (1) option(s) to extend the initial term of this Lease for an additional period of five (5) years each (the "Option Period") on the same terms, covenants, and conditions of this Lease, except that the Rent shall be determined pursuant to Paragraph 2 below. Tenant shall exercise each option, if at all, by giving Landlord written notice (the "Option Notice") at least One Hundred Eighty (180) days prior to the expiration of the immediately preceding term or Option Period of this Lease.

2.       Option Period Monthly Rent:

The monthly rent for of each Option Period will be determined as follows:

2.1       Landlord and Tenant will have fifteen (15) days after Landlord receives the Option Notice within which to agree on a rental rate for the first (1st) year of the Option Period which shall be an amount equal to the then fair market rental value of the Premises as defined in Paragraph 2.3 below. If Landlord and Tenant agree on the initial monthly rent for the first (1st) year of the Option Period within said fifteen (15) days, the parties will amend this Lease by stating the initial monthly rent for the Option Period.

2.2       If Landlord and Tenant are unable to agree on the initial monthly rent for the first (1st) year of the Option Period within said fifteen (15) days, then, the initial monthly rent for the first (1st) year of the Option Period will be the then fair market rental value of the Premises as determined in accordance with Paragraph 2.4 below.

2.3       The "then fair market rental value of the Premises" means what a landlord under no compulsion to lease the Premises and a tenant under no compulsion to lease the Premises would determine as rents (including initial monthly rent and rental increases) for the Option Period, as of the commencement of the Option Period, taking into consideration the uses permitted under this Lease, the quality, size, design, and location of the Premises, and the rent for comparable buildings located in Northwest Portland. The then fair market rental value of the Premises for each Option Period will not be less than the Rent provided during the initial term.

2.4       Within seven (7) days after the expiration of the fifteen (15) day period set forth in Paragraph 2.2, Landlord and Tenant will each appoint a real estate appraiser with at least five (5) years' full-time commercial appraisal experience in the geographic area in which the Premises are located to appraise the then fair market rental value of the Premises. If either Landlord or Tenant does not appoint an appraiser within ten (10) days after the other has given notice of the name of its appraiser, the single appraiser appointed will be the sole appraiser and will set the then fair market rental value of the Premises. If two appraisers are appointed pursuant to this paragraph, they will meet promptly and attempt to set the then fair market rental value of the Premises. If they are unable to agree within thirty (30) days after the second appraiser has been appointed, they will attempt to elect a third appraiser meeting the qualifications stated in this paragraph within ten (10) days after the last day the two appraisers are given to set the then fair market rental value of the Premises. If they are unable to agree on the third appraiser, either Landlord or Tenant, by giving ten (10) days' prior notice to the other, can apply to the then presiding judge of the Multnomah County Court for the selection of a third appraiser who meets the qualifications stated in this paragraph. The parties shall each bear the cost of the appraiser selected by such party and one-half (1/2) of the cost of appointing the third appraiser and of paying the third appraiser's fee. The third appraiser, however selected, must be a person who has not previously acted in any capacity for either Landlord or Tenant.

2.5       Within thirty (30) days after the selection of the third appraiser, a majority of the appraisers will set the then fair market rental value of the Premises. If a majority of the appraisers are unable to set the then fair market rental value of the Premises within thirty (30) days after selection of the third appraiser, the three appraisals will be averaged and the average will be the then fair market rental value of the Premises.

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CHIEF EXECUTIVE OFFICER AGREEMENT

This Chief Executive Officer Agreement (“Agreement”) is made and entered into on August 26, 2020, for services commencing as of August 26, 2020 (“Commencement Date”), by and between Schmitt Industries, Inc., an Oregon corporation (“Company”), and Michael R. Zapata, an individual (“Michael” or “CEO”).

1.   Term. The initial term of this Agreement shall begin on the Commencement Date and continue for a period of three years (“Initial Term”). At the conclusion of the Initial Term, and each successive term thereafter, the Agreement shall be automatically renewed for an additional one-year term, unless either party gives written notice of its intention to terminate the Agreement pursuant to the termination provision in Sections 4(b) and (c), below at least 30-days’ prior to the automatic renewal date (collectively, the “Term”).

2.   Services.

(a)   CEO, President of Schmitt Industries. During the Term Michael shall serve as Chief Executive Officer (“CEO”) and President of the Company. Michael shall, to the extent appointed or elected and subject to the terms of this Agreement, continue to serve as Chairman of the Board throughout the Term.

(b)   Position and Duties. Michael shall have the general powers, duties and responsibilities usually vested in the office of the CEO and President of the Company, as such powers, duties, and responsibilities are defined in the Company’s Bylaws (the “Bylaws”) and such other additional powers as may be prescribed from time to time by the Board.

(c)   Other Services. Company acknowledges and approves Michael’s current responsibilities as Founder of Sententia Capital Management, LLC (“Sententia”). In addition, Company acknowledges that Michael may do charity work and conduct personal business, as long as such activities do not materially interfere with the performance of Michael’s duties hereunder.

3.   Compensation. During the term of this Agreement, Company shall pay the amounts and provide the benefits described in this section, and Michael agrees to accept such amounts and benefits in full payment for Michael’s services under this Agreement.

(a)   Annual Salary. The CEO’s annual salary shall be Two Hundred and Fifty Thousand Dollars ($250,000) (the “Annual Salary”). The Annual Salary shall be paid in accordance with the then-prevailing payroll practices of the Company, less applicable taxes, payroll deductions and withholdings required by law. The Board shall review the Annual Salary on an annual basis and make appropriate adjustments thereto from time to time; provided that the Annual Salary shall not be reduced below $200,000 without the Michael’s prior written consent. At the end of fiscal year 2021, the Company agrees that the Board shall review the Annual Salary to make any appropriate adjustments, in its sole discretion, based on anticipated improvements in the Company’s cost structure and business outlook.

(b)   Bonuses.

(i) Subject to the foregoing and any restrictions under federal or state law of the rules of any exchange upon which the shares of Company’s common stock are then traded, Michael shall be eligible to receive a bonus target of 50% of annual salary, paid as half cash and half stock, as determined in the reasonable discretion of the Board or its Compensation Committee based on financial objectives as determined by the Board. The financial objectives will be established as soon as reasonably practicable and reevaluated on an annual basis by mutual agreement of CEO and the Board or its Compensation Committee. The bonus will be based on a fiscal year and paid no later than one hundred five (105) calendar days after the end of the fiscal year.

(ii) The Board, in its sole discretion, may also determine to pay Michael a discretionary cash bonus from time to time (the “Discretionary Bonus”) based on factors determined in its sole discretion.

(c)   Annual Review. Upon each anniversary of the Commencement Date, Michael’s cash compensation and bonus target shall be reevaluated by the Board or its Compensation Committee and, if appropriate, increased to ensure appropriate compensation in the competitive marketplace based on the position and level of service of CEO.

(d)   Reimbursement of Expenses. Company shall pay to or reimburse Michael for all reasonable and ordinary out-of-pocket business, travel, promotional and similar expenditures incurred by Michael.

(e)   Deductions. Company shall deduct and withhold from all compensation payable to Michael all amounts required to be deducted or withheld pursuant to any present or future law, ordinance, regulation, order, writ, judgment or decree requiring such deduction and withholding. To the extent legally permissible, the Company shall not treat any fringe benefits or expense reimbursement as income to Michael.

4.   Termination

(a)   Termination for Cause. The Company may immediately terminate Michael for Cause (as defined below) by giving written notice to Michael. In the event of a termination for Cause, Michael shall be entitled to payment of (i) that portion of any of Michael’s Annual Salary that Michael earned through and including the Termination Date, at the rate of the Annual Salary in effect at that time, (ii) any Termination Vacation Pay, and (iii) any bonus earned prior to the Termination Date that remains unpaid, subject to any offset or recoupment rights of the Company and any other rights or remedies applicable to any breach of this Agreement by Michael prior to the Termination Date.

Except as provided herein or required by applicable law, Michael shall not be entitled to any other compensation or benefits. Termination for “Cause” shall mean termination by the Board of Michael’s employment with the Company, after a good faith determination by the Board at a meeting called and held for that purpose, or in a written consent to resolutions signed by all members of the Board (except the CEO), and after reasonable notice to Michael, that the CEO:

(i) has willfully engaged in misconduct materially and adversely affecting the Company;

(ii) engaged in theft, fraud, embezzlement or similar behavior;

(iii) has been indicted or convicted of a felony;

(iv) Materially violated the Company’s written Codes of Ethics as adopted by the Board under the Sarbanes-Oxley Act or its Directors’ Confidentiality Policy dated October 12, 2018 (the “Confidentiality Policy”);

(v) Refused to comply with a relevant and material obligation assumable and chargeable to an executive of CEO’s corporate rank and responsibilities under the Sarbanes-Oxley Act and the regulations of the Securities and Exchange Commission promulgated thereunder; or

(vi) has willfully continued, after a correction period, to fail to substantially perform the material duties of CEO’s position with the Company (other than failure resulting from incapacity due to physical or mental illness). The correction period shall last not less than ten (10) days after the Company provides Michael with written notice of CEO’s failure to substantially perform CEO’s material duties.

(b)   Termination Without Cause. The Company may, in its sole discretion, terminate Michael without Cause, by providing written notice to Michael (the “Termination Notice”) at least thirty (30) calendar days prior to the Termination Date. In the event of a termination without Cause, and subject to Michael’s signature to a Separation and Release Agreement, in the form attached to this Agreement as Exhibit A, Michael shall be entitled to: (i) payment of that portion of any of Michael’s Annual Salary that Michael earned through and including the Termination Date, at the rate of the Annual Salary in effect at that time; (ii) any Termination Vacation Pay; (iii) any bonus earned prior to the Termination Date that remains unpaid; (iv) payment of Michael’s Annual Salary, at the rate of the Annual Salary in effect at that time, commencing on the Termination Date and continuing for the twelve (12) month period thereafter; (v) immediate vesting of any RSUs granted

pursuant to Section 3(c) and (vi) if such termination occurs on or before January 01, 2021, a cash payment of $200,000; provided, however, in each case (i)-(vi) that Michael executes and delivers to the Company a complete release agreement in form and substance reasonably acceptable to the Company, but excluding payments set forth in this paragraph 4(b). In addition, the Company shall be obligated to continue any health and welfare benefits provided to the CEO under Section 3(d) throughout the period commencing on the Termination Date and continuing for a twelve (12) month period thereafter. Except as provided herein or required by applicable law, Michael shall not be entitled to any other compensation or benefits. With respect to Section 4(b)(iv) above, such payments shall be paid in accordance with the then-prevailing payroll practices of the Company, less applicable taxes, payroll deductions and withholdings required by law.

(c)   Resignation. Michael may resign from his employment with the Company at any time by providing written notice to the Company thirty (30) calendar days prior to the Resignation Date. In the event of resignation other than any resignation for Good Reason covered by paragraph (d) below: (i) Michael shall be entitled to payment of that portion of Michael’s Annual Salary that Michael earned through and including the Resignation Date, at the rate of the Annual Salary in effect at that time, any Termination Vacation Pay and any bonus earned prior to the Resignation Date that remains unpaid.

Except as provided herein (including, without limitation, in Section 4(d)) or required by applicable law, Michael shall not be entitled to any other compensation or benefits. 

(d)   Resignation for Good Reason. Notwithstanding Section 4(c), Michael may terminate his employment by the Company for Good Reason (as defined below) by providing written notice thereof to the Company (the “Resignation Notice”) at least thirty (30) days prior to the Resignation Date, which notice shall set forth in reasonable detail the nature of the facts and circumstances which constitute “Good Reason” (as defined below) and Company shall have thirty (30) days after receipt of the Resignation Notice to cure in all material respects the facts and circumstances which constitute Good Reason. Subject to Michael’s signature to a Separation Agreement and Release, in the form provided in Exhibit A, in the event of a termination for Good Reason, Michael shall be entitled to: (i) payment of that portion of Michael‘s Annual Salary that Michael earned through and including the Resignation Date, at the rate of the Annual Salary in effect at that time; (ii) any Termination Vacation Pay; (iii) any bonus earned prior to the Resignation Date that remains unpaid; (iv) payment of CEO’s Annual Salary, at the rate of the Annual Salary in effect at that time, commencing on the Resignation Date and continuing for the twelve (12) month period thereafter; (v) immediate vesting of any RSUs granted pursuant to Section 3(c) and (vi) if such termination occurs on or before January 01, 2021, a cash payment of $200,000; in each case (i)-(vi) provided, however, that Michael executes and delivers to the Company a complete release agreement in form and substance reasonably acceptable to the Company. In addition, the Company shall be obligated to continue any health and welfare benefits provided to Michael under Section 3(d) throughout the period commencing on the Termination Date and continuing for a twelve (12) month period thereafter. Except as provided herein or required by applicable law, Michael shall not be entitled to any other compensation or benefits. With respect to Section 4(d)(iv) above, such payments shall be paid in accordance with the then-prevailing payroll practices of the Company, less applicable taxes, payroll deductions and withholdings required by law.

For purposes of this Agreement, “Good Reason” means the resignation of Michael’s employment by the Company by Michael, because of (A) any reduction in Michael’s Annual Salary then in effect in a manner that is not permitted under Section 3(a) hereof, (B) a substantial diminution in the duties, responsibilities or titles of Michael (including, without limitation, duties and responsibilities as a director of the Company), but only if uncured in accordance with the foregoing provisions hereof, or (C) being required by the Board to work in the Company’s office located in any place other than in the Los Angeles area for more than 12 days in any one month in order to maintain employment with the Company pursuant to this Agreement. 

(e)    Death. If Michael dies, his employment with the Company and this Agreement shall automatically terminate on the date of his death. Michael’s estate or personal representative shall be entitled to receive that portion of the Annual Salary that Michael earned through and including the date of the Michael’s death, at the rate of the Annual Salary in effect at that time, any Termination Vacation Pay and any bonus earned prior to the date of Michael’s death that remains unpaid. All restricted stock and/or restricted stock units (or comparable forms of equity compensation, if any) held by Michael which, as of the date of the death of Michael, are not then subject to any performance conditions for vesting, shall be fully vested and shall not be subject to any risk of forfeiture or repurchase as of the date of Michael’s death. The payment described in this Section, if payable, will be paid within ten (10) days after Michael’s death. Except as provided herein or required by applicable law, neither Michael’s estate nor his personal representative shall be entitled to any other compensation or benefits.

(f)    Disability. Michael shall be deemed “Permanently Disabled” when he has suffered any medically determinable physical or mental illness, injury or infirmity that prevents Michael from performing his responsibilities under this Agreement and which disability has lasted or that the Board in good faith has determined can be expected to last for a continuous period of not less than 120 calendar days. The Board has the discretion to determine whether Michael is disabled and that determination shall be binding and conclusive on Michael (and any guardians or representatives for him). If Michael becomes Permanently Disabled, the Company may terminate the Michael’s employment with the Company as a result of the Permanent Disability by providing written notice to Michael thirty (30) calendar days prior to the Termination Date, or Michael may resign from his employment with the Company by providing written notice to the Company thirty (30) calendar days prior to the Resignation Date. In the event Michael’s employment under this Agreement is terminated as a result of Michael’s disability, or Michael resigns from employment as a result of a Permanent Disability, Michael shall be entitled to receive that portion of the Annual Salary, at the rate in effect when he became Permanently Disabled, that he earned through and including the Termination Date or Resignation Date, as applicable, less any amounts Michael is entitled to receive under any disability insurance policy maintained by the Company, any Termination Vacation Pay and any bonus earned prior to the Termination Date or Resignation Date, as applicable, that remains unpaid. All restricted stock and/or restricted stock units (or comparable forms of equity compensation, if any) held by Michael which, as of the date of the disability of Michael, are not then subject to any performance conditions for vesting, shall be fully vested and shall not be subject to any risk of forfeiture or repurchase as of the date of Michael’s termination due to disability (as defined in this paragraph). Except as provided herein or required by applicable law, Michael shall not be entitled to any other compensation or benefits.

Section 5.    Confidentiality. For purposes of this Section 5, the term “Company” shall include, in addition to the Company, its affiliates, subsidiaries and any of their respective predecessors, successors and assigns.

(a)    Confidential Information. As used in this Agreement, “Confidential Information” means any and all confidential, proprietary or other information, whether or not originated by the CEO or the Company, which is in any way related to the past or present Company’s business and is either designated as confidential or not generally known by or available to the public. Confidential Information includes, but is not limited to (whether or not reduced to writing or designated as confidential) (i) information regarding the Company’s existing and potential customers and vendors; (ii) any contracts (including the existence and contents thereof and parties thereto) to which the Company is a party or is bound; (iii) information regarding products and services being purchased or leased by or provided to the Company; (iv) information received by the Company from third parties under an obligation of confidentiality, restricted disclosure or restricted use; (v) personnel and financial information of the Company; (vi) information with respect to the Company’s products, services, facilities, business methods, systems, trade secrets, technical know-how, and other intellectual property; and (vii) marketing and developmental plans and techniques, price and cost data, forecasts and forecast assumptions, and potential strategies of the Company.

(b)    Non-Disclosure and Non-Use of Confidential Information. The CEO acknowledges that the Confidential Information of the Company is a valuable, unique asset of the Company and the CEO’s use or disclosure thereof could cause irreparable harm to the Company for which no remedy at law could be adequate. Accordingly, the CEO agrees that he shall hold all Confidential Information of the Company in strict confidence and solely for the benefit of the Company, and that, except as necessary in the course of CEO’s duties as an employee of the Company, he shall not, directly or indirectly, disclose or use or authorize any third party to disclose or use any Confidential Information. The CEO shall follow all the Company policies and procedures to protect all Confidential Information and take any additional precautions necessary to preserve and protect the use or disclosure of any Confidential Information at all times.

(c)    Ownership of Confidential Information. The CEO acknowledges and agrees that all Confidential Information is and shall remain the exclusive property of the Company, whether or not prepared in whole or in part by the CEO and whether or not disclosed to or entrusted to the custody of the CEO. Upon the termination or resignation of his employment by the Company, or at any other time at the request of the Company, the CEO shall promptly deliver to the Company all documents, tapes, disks, or other storage media and any other materials, and all copies thereof in whatever form, in the possession of the CEO pertaining to the Company’s Business, including, but not limited to, any containing Confidential Information.

(d)  Confidentiality Policy. The CEO’s obligations under this Section 5 are in addition to those imposed by the Confidentiality Policy.

(e) Defend Trade Secret Act Disclosure. Notwithstanding anything to the contrary in this Section 5(e) or elsewhere in this Agreement, CEO has the right to disclose in confidence Company’s trade secrets to government officials, or to any attorney for the sole purpose of reporting or investigating a suspected violation of law. CEO also has the right to disclose Company’s trade secrets in a document filed in a lawsuit or other proceeding but only if the filing is under seal and protected from public disclosure. CEO will not be held criminally or civilly liable for disclosure of a Company’s trade secret under those limited circumstances. Nothing in this Agreement is intended to create liability for disclosure of Company’s trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Company requests that CEO inform it of any disclosure that will be made under this Section 5(e).

(f)    Survival. The CEO’s obligations set forth in this Section 5, and the Company’s rights and remedies with respect hereto, shall indefinitely survive the termination of this Agreement and the CEO’s employment by the Company, regardless of the reason therefor.

Section 6.    Restrictive Covenants. For purposes of this Section 6, the term “Company” shall include, in addition to the Company, its affiliates, subsidiaries and any of their respective predecessors, successors and assigns.

(a)    Non-Competition. The CEO shall not, during the Restricted Period and within the Restricted Area (each as defined in subsection (c) below), directly or indirectly, perform on behalf of any Competitor (as defined in subsection (c) below) the same or similar services as those that CEO performed for the Company during the CEO’s employment by the Company or otherwise. In addition, the CEO shall not, during the Restricted Period or within the Restricted Area, directly or indirectly engage in, own, manage, operate, join, control, lend money or other assistance to, or participate in or be connected with (as an officer, director, member, manager, partner, shareholder, consultant, employee, agent, or otherwise), any Competitor.

(b)    Non-Solicitation. During the Restricted Period, the CEO shall not, directly or indirectly, for himself or on behalf of any Person (as defined in subsection (c) below), (i) solicit or attempt to solicit any Customers (as defined in subsection (c) below), or prospective Customers, with whom the CEO had contact at any time during the CEO’s employment by the Company, or about whom the CEO learned Confidential Information; (ii) divert or attempt to divert any business of the Company to any other Person; (iii) solicit or attempt to solicit for employment, endeavor to entice away from the Company, recruit, hire, or otherwise interfere with the Company’s relationship with, any Person who is currently employed by or otherwise engaged to perform services for the Company (or was employed or otherwise engaged to perform services for the Company, as of any given time, within the immediately preceding twenty-four (24) month period); (iv) cause or assist, or attempt to cause or assist, any current employee or other service provider to leave the Company; or (v) otherwise interfere in any manner with the employment or business relationships of the Company or the business or operations then being conducted by the Company.

(c)    Definitions. For purposes of this Section 6, the following definitions have the following meanings:

(i)     “Competitor” means any Person that engages in a business that is the same as, or similar to, the Company’s Business.

(ii)    “Customer” means any Person who, as of any given date, used or purchased or contracted to use or purchase any services or products from the Company within the immediately preceding twenty-four (24) month period.

(iii)    “Person” means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, or unincorporated organization, or any governmental agency, officer, department, commission, board, bureau, or instrumentality thereof.

(iv)    “Restricted Area” means, because the market for Company’s Business is global, or has the potential of being global, and is not dependent upon the physical location or presence of the Company, the CEO, or any individual or entity that may be in violation of this Agreement, the broadest geographic region enforceable by law (excluding any location where this type of restriction is prohibited by law) as follows: (A) everywhere in the world that has access to Company’s Business because of the availability of the Internet; (B) everywhere in the world that the CEO has the ability to compete with Company’s Business through the Internet; (C) each state, commonwealth, territory, province and other political subdivision located in North America; (D) each state, commonwealth, territory and other political subdivision of the United States of America; (E) any state in which the CEO has performed any services for the Company; (F) any geographical area in which the Company has performed any services or sold any products; (G) any geographical area in which the Company or any of its subsidiaries have engaged in Company’s Business, which has resulted in aggregate sales revenues of at least $25,000 during any year in the five (5) year period immediately preceding the commencement of the Restricted Period; (H) any state or other jurisdiction where the Company had an office at any time during the CEO’s employment by the Company; (I) within one hundred (100) miles of any location in which the Company had an office at any time during the CEO’s employment by the Company; and (J) within one hundred (100) miles of any location in which the CEO provided services for the Company.

(v)    “Restricted Period” means the period of time during the CEO’s employment by the Company plus a period of twelve (12) months from the Termination Date or Resignation Date, as applicable. In the event of a breach of this Agreement by the CEO, the Restricted Period will be extended automatically by the period of the breach.

(d)    Survival. The CEO’s obligations set forth in this Section 6, and the Company’s rights and remedies with respect thereto, will remain in full force and effect during the Restricted Period and until full resolution of any dispute related to the performance of the CEO’s obligations during the Restricted Period.

(e)    Public Company Exception. The prohibitions contained in this Section 6 do not prohibit the CEO’s ownership of stock which is publicly traded, provided that (1) the investment is passive, (2) the CEO has no other involvement with the company, (3) the CEO’s interest is less than five (5%) percent of the shares of the company, and (4) the CEO makes full disclosure to the Company of the stock at the time that the CEO acquires the shares of stock.

Section 7.    Assignment of Inventions. Any and all inventions, improvements, discoveries, designs, works of authorship, concepts or ideas, or expressions thereof, whether or not subject to patents, copyrights, trademarks or service mark protections, and whether or not reduced to practice, that are conceived or developed by the CEO while employed with the Company and which relate to or result from the actual or anticipated business, work, research or investigation of the Company (collectively, “Inventions”), shall be the sole and exclusive property of the Company. The CEO shall do all things reasonably requested by the Company to assign to and vest in the Company the entire right, title and interest to any such Inventions and to obtain full protection therefor. Notwithstanding the foregoing, the provisions of this Agreement do not apply to an Invention for which no equipment, supplies, facility, or Confidential Information of the Company was used and which was developed entirely on the CEO’s own time, unless (a) the Invention relates (i) to Company’s Business, or (ii) to the Company’s actual or demonstrably anticipated research or development, or (b) the Invention results from any work performed by the CEO for the Company.

Section 8.    Reasonableness; Remedies; Claims.

(a)    Reasonableness. The CEO has carefully considered the nature, extent and duration of the restrictions and obligations contained in this Agreement, including, without limitation, the geographical coverage contained in Section 6 and the time periods contained in Section 5 and Section 6, and acknowledges and agrees that such restrictions are fair and reasonable in all respects to protect the legitimate interests of the Company and that these restrictions are designed for the reasonable protection of Company’s Business.

(b)    Remedies/Injunctive Relief. The CEO recognizes that any breach of this Agreement shall cause irreparable injury to the Company, inadequately compensable in monetary damages. Accordingly, in addition to any other legal or equitable remedies that may be available to the Company, the CEO agrees that the Company shall be able to seek and obtain injunctive relief in the form of a temporary restraining order, preliminary injunction, or permanent injunction, in each case without notice or bond, against CEO to enforce this Agreement. The Company shall not be required to demonstrate actual injury or damage to obtain injunctive relief from the courts. To the extent that any damages are calculable resulting from the breach of this Agreement, the Company shall also be entitled to recover damages, including, but not limited to, any lost profits of the Company and/or its affiliates or subsidiaries. For purposes of this Agreement, lost profits of the Company shall be deemed to include all gross revenues resulting from any activity of the CEO in violation of this Agreement and all such revenues shall be held in trust for the benefit of the Company. Any recovery of damages by the Company shall be in addition to and not in lieu of the injunctive relief to which the Company is entitled. In no event will a damage recovery be considered a penalty in liquidated damages. In addition, in any action at law or in equity arising out of this Agreement, the prevailing party shall be entitled to recover, in addition to any damages caused by a breach of this Agreement, all costs and expenses, including, but not limited to, reasonable attorneys’ fees, expenses, and court costs incurred by such party in connection with such action or proceeding. Without limiting the Company’s rights under this Section 7(b) or any other remedies of the Company, if a court of competent jurisdiction determines that the CEO breached any of the provisions of Section 5 or 6, the Company will have the right to cease making any payments or providing any benefits otherwise due to the CEO under the terms and conditions of this Agreement.

(c)    Claims by the CEO. The CEO acknowledges and agrees that any claim or cause of action by the CEO against the Company shall not constitute a defense to the enforcement of the restrictions and covenants set forth in this Agreement and shall not be used to prohibit injunctive relief.

Section 9.    Nonassignability, Binding Agreement.

(a)    By the CEO. The CEO shall not assign, transfer or delegate this Agreement or any right, duty, obligation, or interest under this Agreement without the Company’s prior written consent; provided, however, that nothing shall preclude the CEO from designating beneficiaries to receive compensation or benefits, if any, payable under this Agreement upon his death.

(b)    By the Company. The Company shall not assign, transfer or delegate this Agreement or any right, duty, obligation or intent under this Agreement without the CEO’s prior written consent; provided, however, that the Company may assign this Agreement and all of its rights and obligations hereunder to any person who or entity that shall acquire all or substantially all of the assets and properties of the Company in a bona fide sale transaction.

(c)    Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties, any successors or assigns of the Company and the CEO’s heirs and the personal representative(s) or executor(s) of the CEO’s estate.

Section 10.    Definitions. The following capitalized terms shall have, throughout this Agreement, the following meanings:

(a)     “Resignation Date” shall mean the date specified in the Resignation Notice, or the actual date the CEO terminates employment with the Company as the result of a resignation as provided in whichever occurs earlier.

(b)    “Termination Date” shall mean the actual date the CEO ceases to be employed with the Company as a result of action taken by the Company, and not as a result of CEO’s resignation from employment.

Section 11.    Judicial Modification and Severability. CEO agrees that if a court of competent jurisdiction should determine that any phrase or provision in this Agreement is invalid or unenforceable as written for any reason, the court shall modify and enforce any such phrase or provision to the maximum extent reasonably necessary to protect the Company’s legitimate business interests, so long as the modification does not render the phrase or provision more restrictive with regard to CEO than originally drafted. CEO further agrees that if such modification of a phrase or provision that is invalid or unenforceable as written is legally impossible, the Court shall sever any such phrase or provision from this Agreement, and that the enforceability of all other provisions of this Agreement shall not be affected, but shall otherwise remain in full force and effect.

Section 12.    Amendment. This Agreement may not be modified, amended, or waived in any manner except by a written instrument signed by both parties to this Agreement.

Section 13.    Waiver. The waiver by any party of compliance by any other party with any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement (whether or not similar), or a continuing waiver or a waiver of any subsequent breach by a party of a provision of this Agreement. Performance by any of the parties of any act not required of it under the terms and conditions of this Agreement shall not constitute a waiver of the limitations on its obligations under this Agreement, and no performance shall estop that party from asserting those limitations as to any further or future performance of its obligations.

Section 14.    Governing Law and Forum. This Agreement shall be governed, construed and enforced in accordance with the laws of the State of Oregon, without regard to principles of conflict of laws of such State. Any action to enforce this Agreement shall be brought solely in the state or federal courts located in Multnomah County, Oregon.

Section 15.    Notices. All notices required or desired to be given under this Agreement shall be in writing and shall be deemed to have been given if delivered in person and receipted

for by the party to whom the notice is directed; mailed by certified or registered United States mail postage prepaid, not later than the day upon which the notice is required to be given pursuant to this Agreement; or delivered by expedited courier, shipping prepaid or mailed to sender, on the next business day, after the date on which it is so sent, and addressed as follows:

Either party may, by giving written notice to the other party, change the address to which notice shall then be sent.

Section 16.    Prior Agreements. This Agreement is a complete and total integration of the understanding of the parties related to the CEO’s employment with the Company and supersedes all prior or contemporaneous negotiations, commitments, agreements, writings, and discussions with respect to the subject matter of this Agreement. This Agreement shall not be integrated nor supersede any commitments, agreements, writings, and discussions with respect to the CEO’s prior service as a member of the Company’s Board of Directors.

Section 17.    Headings. The headings of the sections of this Agreement are inserted solely for convenience of reference and shall not be deemed to affect the meaning or interpretation of this Agreement.

Section 18.    Counterparts. This Agreement may be executed in two (2) counterparts, each of which shall be deemed to be an original, but both of which together shall constitute one and the same Agreement.

Section 19.    Statutory and Common Law Duties. The duties the CEO owes to the Company under this Agreement shall be deemed to include federal and state statutory and common law obligations of the CEO, and do not in any way supersede or limit any of the obligations or duties the CEO owes to the Company.

Section 20    Arbitration.

(a)     “Except as otherwise provided in Section 11.2, any dispute, controversy, or claim arising out of the subject matter of this Agreement will be settled by arbitration before a single arbitrator in Portland, Oregon.

(b)    “If the parties agree on an arbitrator, the arbitration will be held before the arbitrator selected by the parties. If the parties do not agree on an arbitrator, each party will designate an arbitrator and the arbitration will be held before a third arbitrator selected by the designated arbitrators. Each arbitrator will be an attorney knowledgeable in the relevant area of law.

(c)     “The arbitration will be initiated by filing a claim with Arbitration Service of Portland, and will be conducted in accordance with the then-current rules of the Arbitration Service of Portland.

(d)     “The resolution of any dispute, controversy, or claim as determined by the arbitrator will be binding on the parties. Judgment on the award of the arbitrator may be entered by any party in any court having jurisdiction.

(e) )    “A party may seek from a court an order to compel arbitration, or any other interim relief or provisional remedies pending an arbitrator’s resolution of any dispute, controversy, or claim. Any such action, suit, or proceeding – or any action, suit, or proceeding to confirm, vacate, modify, or correct the award of the arbitrator – will be litigated in courts located in Multnomah County, Oregon.

(f)    “For the purposes set forth in Section 11.2, each party consents and submits to the jurisdiction of any local, state, or federal court located in Multnomah County, Oregon.

(g) )    “EACH PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO EMPLOYEE’S EMPLOYMENT OR TERMINATION OF EMPLOYMENT OR THIS AGREEMENT.

I acknowledge that I have received and read or have had the opportunity to read this arbitration agreement. I understand that this arbitration agreement requires that disputes that involve the matters subject to the agreement be submitted to mediation or arbitration pursuant to the arbitration agreement rather than to a judge and jury in court. _____ Employee Initials

Section 21: Attorney’s Fees. If any arbitration, action, suit, or proceeding is instituted to interpret, enforce, or rescind this Agreement, or otherwise in connection with the subject matter of this Agreement, including but not limited to any proceeding brought under the United States Bankruptcy Code, the prevailing party on a claim will be entitled to recover with respect to the claim, in addition to any other relief awarded, the prevailing party’s reasonable attorney's fees and other fees, costs, and expenses of every kind, including but not limited to the costs and disbursements specified in ORCP 68 A(2), incurred in connection with the arbitration, action, suit, or proceeding, any appeal or petition for review, the collection of any award, or the enforcement of any order, as determined by the arbitrator or court.

Section 22: Compliance with Code Section 409A. This Agreement and the benefits provided hereunder are intended to either be exempt from or comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder (“Section 409A”) and should be interpreted consistent therewith. If a benefit hereunder is subject to Section 409A, references to “termination of employment” (or similar phrases) shall be interpreted as consistent with the definition of “separation from service” in the regulations promulgated under Section 409A. If any other payments of money or other benefits due to Employee hereunder could cause the application of an accelerated or additional tax under Section 409A, the Company and Employee shall adopt such amendments to the Agreement, including amendments with retroactive effect, that Employee’s legal counsel shall deems appropriate to preserve the intended tax treatments and to comply with the requirements of Section 409A.

Section 23.    CEO Acknowledgments.

(a)    The CEO Has Read the Document. The CEO acknowledges and agrees that he has carefully read this entire Agreement and has been given sufficient opportunity to discuss this Agreement with the Company before signing.

(b)    The CEO Has Had an Opportunity to Consult with Others. The CEO acknowledges and agrees that he has been given an adequate opportunity to consult with his lawyer, accountant, tax advisor, spouse and other persons he deems appropriate concerning this Agreement and the terms and conditions hereof.

(c)    Signing is Acceptance. By signing, the CEO agrees to accept all of the terms and conditions of this Agreement and understands that the Company is relying upon the CEO’s stated acceptance of such terms and conditions.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above.

EXHIBIT A

[Notice: This form of Release of Claims should not be used without consulting with legal counsel to confirm compliance with applicable laws as of the time of signing.]

FORM OF RELEASE OF CLAIMS

This is a confidential agreement (this “Release Agreement”) between you, Michael Zapata, and us, Schmitt Industries, Inc. (“Employer”). This Release Agreement is dated for reference purposes __________, 20__, which is the date we delivered this Release Agreement to you for your consideration.

1.       Termination of Employment. Your employment terminates [or was terminated] on __________, 20__ (the “Separation Date”).

2.       Payments. In exchange for your agreeing to the release of claims and other terms in this Release Agreement, we will pay you the Severance Benefit as defined in Section 4(b) of the Employment Agreement between you and Employer dated ________, 2020 (the “Employment Agreement”). Such provisions of the Employment Agreement are incorporated herein by reference. You acknowledge that we are not obligated to make these payments to you unless you comply with the material terms of the Employment Agreement and of this Release Agreement.

3.       Insurance Continuation Coverage. Your normal employee participation in Employer’s group health coverage, if any, will terminate on the Separation Date. Continuation of group health coverage thereafter will be made available to you and your dependents pursuant to federal law (COBRA). Continuation of group health coverage after the Separation Date is entirely at your expense, as provided under COBRA.

4.       Termination of Benefits. Except as provided in Section 3 hereof, your participation in all employee or other benefit plans and programs ended on the Separation Date. Your rights under any pension benefit or other plans in which you may have participated will be determined in accordance with the written plan documents governing those plans.

5.       Full Payment. You acknowledge having received full payment of all compensation of any kind (including but not limited to salary, reimbursements, PTO, commissions, bonuses and incentive compensation) that you earned as a result of your employment by us, except the severance benefit referenced in Section 2 hereof, which is contingent upon executing and not revoking this Release Agreement.

6.       No Further Compensation. Any and all agreements to pay you compensation, bonuses or benefits are terminated. You understand and agree that you have no right to receive any further payments or benefits from us, except as described in Sections 2 and 3 of this Release Agreement.

7.       Release of Claims.

(a)       You hereby release (i) Employer and its subsidiaries, affiliates, and benefit plans, (ii) each of Employer’s past and present shareholders, officers, directors, agents, employees, representatives, administrators, fiduciaries and attorneys, and (iii) the predecessors, successors, transferees and assigns of each of the persons and entities described in this sentence, from any and all claims of any kind, known or unknown, that arose on or before the date you signed this Release Agreement.

(b)       The claims you are releasing include, without limitation, claims of wrongful termination, claims of constructive discharge, claims arising out of employment agreements, representations or policies related to your employment, claims arising under federal, state or local laws or ordinances prohibiting discrimination or harassment or requiring accommodation on the basis of age, race, color, national origin, religion, sex, disability, marital status, sexual orientation or any other status, claims of failure to accommodate a disability or religious practice, claims for violation of public policy, claims of retaliation, claims of failure to assist you in applying for future position openings, claims of failure to hire you for future position openings, claims for wages or compensation of any kind (including overtime claims), claims of tortious interference with contract or expectancy, claims of fraud or negligent misrepresentation, claims of breach of privacy, defamation claims, claims of intentional or negligent infliction of emotional distress, claims of unfair labor practices, claims arising out of any claimed right to shares of stock or stock options, claims for attorneys’ fees or costs, and any other claims that are based on any legal obligations that arise out of or are related to your employment relationship with us.

(c)       You specifically waive any rights or claims that you may have under Chapters 652, 653, 654, 656, 659 and 659 A of the Oregon Revised Statutes, the Civil Rights Act of 1964 (including Title VII of that Act), the Equal Pay Act of 1963, the Age Discrimination in Employment Act of 1967 (ADEA), the Americans with Disabilities Act of 1990 (ADA), the Fair Labor Standards Act of 1938 (FLSA), the Family and Medical Leave Act of 1993 (FMLA), the Worker Adjustment and Retraining Notification Act (WARN), the Employee Retirement Income Security Act of 1974 (ER1SA), the National Labor Relations Act (NLRA), and all similar federal, state and local laws.

(d)       You agree not to seek any personal recovery (of money damages, injunctive relief or otherwise) for the claims you are releasing in this Release Agreement, either through any complaint to any governmental agency or otherwise. You agree never to start any lawsuit or arbitration asserting any of the claims you are releasing in this Release Agreement. You represent and warrant that you have not initiated any complaint, charge, lawsuit or arbitration involving any of the claims you are releasing in this Release Agreement. Should you apply for future employment with Employer, Employer has no obligation to consider you for future employment.

(e)       You represent and warrant that you have all necessary authority to enter into this Release Agreement (including but not limited to an agreement, if you are married, on behalf of your marital community) and that you have not transferred any interest in any claims to your spouse, domestic partner or to any third party.

(f)       This Release Agreement does not affect your rights, if any, to receive pension plan benefits, medical plan benefits, unemployment compensation benefits or workers’ compensation benefits. This Release Agreement also does not affect your rights, if any, under agreements, bylaw provisions, insurance or otherwise, to be indemnified, defended or held harmless in connection with claims that may be asserted against you by third parties.

(g)       You understand that you are releasing potentially unknown claims, and that you have limited knowledge with respect to some of the claims being released. You acknowledge that there is a risk that, after signing this Release Agreement, you may learn information that might have affected your decision to enter into this Release Agreement. You assume this risk and all other risks of any mistake in entering into this Release Agreement. You agree that this release is fairly and knowingly made.

(h)       You are giving up all rights and claims of any kind, known or unknown, except for the rights specifically given to you in this Release Agreement.

8.       No Admission of Liability. Neither this Release Agreement nor the benefits provided under this Release Agreement are an admission of liability or wrongdoing by Employer.

9.       Employer Materials. You represent and warrant that you have, or by no later than the Separation Date will have, returned all keys, credit cards, documents and other materials and property that belong to Employer.

10.       No Disparagement. You may not disparage Employer or Employer’s employees, officers, directors or affiliates, and may not encourage any third parties to sue Employer.

11.       Covenants. You shall comply with the covenant in Section 4.2 (Assignment of Intellectual Property Rights) and restrictive covenants in Sections 6 (Non-Disclosure), Section 7 (Non-competition), Section 8 (Non-Solicitation), Section 9 (Non-Recruit) and Section 10 (Post Employment Disclosure) of the Employment Agreement, which are incorporated herein by reference, which may be enforced pursuant to the Employment Agreement.

12.       Remedies for Breach. In the event you breach the terms of this Release Agreement, in addition to any other remedies that Employer may have in law or equity, you shall be obligated to return to Employer the full amount of any severance benefit paid to you pursuant to Section 2 of this Release Agreement.

13.       Cooperation Regarding Other Claims. If any claim is asserted by or against Employer as to which you have relevant knowledge, you will reasonably cooperate with us in the prosecution or defense of that claim, including by providing truthful information and testimony as reasonably requested by us.

14.       Independent Legal Counsel. You are advised and encouraged to consult with an attorney before signing this Release Agreement. You acknowledge that you have had an adequate opportunity to do so.

15.       Consideration Period. You have 21 days from the date this Release Agreement is given to you to consider this Release Agreement before signing it. You may use as much or as little of this 21-day period as you wish before signing. If you do not sign and return this Release Agreement within this 21-day period, you will not be eligible to receive the benefits described in this Release Agreement.

16.       Revocation Period and Effective Date . You have 7 calendar days after signing this Release Agreement to revoke it. To revoke this Release Agreement after signing it, you must deliver a written notice of revocation to Employer’s President before the 7-day period expires. This Release Agreement shall not become effective until the 8th calendar day after you sign it. If you revoke this Release Agreement it will not become effective or enforceable and you will not be entitled to the benefits described in this Release Agreement.

17.       Arbitration. Any dispute or claim that arises out of, or that relates to this Release Agreement, including any and all disputes that arise out of or are related in any way to the employment relationship, shall be resolved by arbitration. All such arbitration shall be conducted in accordance with the then effective arbitration rules of the Arbitration Service of Portland, Inc. The arbitrator shall have the authority to rule on dispositive motions. Judgment upon the award rendered pursuant to such arbitration may be entered in any court in Multnomah County, Oregon having jurisdiction thereof. The arbitration shall be held within 90 days of written demand, unless the arbitration deadline is extended by the arbitrator. The arbitrator shall issue a confidential written decision setting forth findings of fact and conclusions of law. The decision shall be final and binding. The arbitrator shall have no authority to add to, subtract from, or modify any of the terms or the conditions of this Release Agreement except as expressly provided by law. Employer shall be responsible to the arbitrator to pay the arbitrator’s fees and costs beyond the cost of the filing fee in Multnomah County. The arbitrator shall award the prevailing party its reasonable costs of the arbitration and any appeal, including the arbitrator’s fees paid by the prevailing party and expert witness expenses and other litigation costs incurred in connection with the arbitration. The arbitrator shall apply the law of the state of Oregon. The arbitrator may award any equitable or legal relief he/she determines the parties are entitled to pursuant to the terms of this Release Agreement and authorized by law. You and acknowledge that you are voluntarily waiving your right to a trial before a judge and a jury.

18.       Venue. Either you or Employer may seek from a court an order to compel arbitration, or any other interim relief or provisional remedies pending the arbitrators’ resolution of any dispute, controversy, or claim. Any such action, suit, or proceeding will be litigated in courts located in Multnomah County, Oregon.

19.       Expenses/Attorneys’ Fees. If any arbitration, action, suit, or proceeding is instituted to interpret, enforce, or rescind this Release Agreement, or otherwise in connection with the subject matter of this Release Agreement, including but not limited to any proceeding brought under the United States Bankruptcy Code, the prevailing party on a claim will be entitled to recover with respect to the claim, in addition to any other relief awarded, the prevailing party’s reasonable attorney's fees and other fees, costs, and expenses of every kind, including but not limited to the costs and disbursements specified in ORCP 68 A(2), incurred in connection with the arbitration, action, suit, or proceeding, any appeal or petition for review, the collection of any award, or the enforcement of any order, as determined by the arbitrator or court.

20.       Severability. If any term or provision of this Release Agreement, the deletion of which would not adversely affect the receipt of any material benefit by either party hereunder, shall be held to be invalid or unenforceable to any extent, the remainder of this Release Agreement shall be affected thereby and each term and provision of this Release Agreement shall be valid and enforceable to the fullest extent permitted by law.

21.       Final and Complete Agreement. Except for the Employment Agreement to the extent it is expressly incorporated herein by reference, this Release Agreement is the final and complete expression of all agreements between us on all subjects and supersedes and replaces all prior discussions, representations, agreements, policies and practices. You acknowledge you are not signing this Release Agreement relying on anything not set out herein.

IN WITNESS WHEREOF, the Parties hereto, having been advised to consult with an attorney, have executed this Release Agreement intending to be bound by the terms set forth herein, effective ______________, 20__.