SECOND LEASE AMENDMENT

EXHIBIT 10.1

SECOND LEASE AMENDMENT

CWP/JLC/kt

02/20/09

SECOND LEASE AMENDMENT

THIS SECOND LEASE AMENDMENT (the “Amendment”) is executed this 23rd day of February, 2009, by and between DUKE REALTY OHIO, an Indiana general partnership (“Landlord”), and PINNACLE DATA SYSTEMS, INC., an Ohio corporation (“Tenant”).

W I T N E S S E T H :

WHEREAS, Duke Realty Limited Partnership, as predecessor in interest to Duke-Weeks Realty Limited Partnership, as predecessor in interest to Landlord, and Tenant entered into a certain lease dated March 9, 1999, as amended by an instrument dated January 5, 2000 (collectively, the “Lease”), whereby Tenant leases from Landlord certain premises consisting of approximately 113,202 rentable square feet of space (the “Leased Premises”) located in an office/warehouse building commonly known as ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (the “Building”); and

WHEREAS, Landlord and Tenant desire to extend the Lease Term for a period of thirty-nine (39) months; and

WHEREAS, Landlord and Tenant desire to amend certain provisions of the Lease to reflect such extension and any other changes to the Lease;

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants herein contained and each act performed hereunder by the parties, Landlord and Tenant hereby enter into this Amendment.

1. Incorporation of Recitals. The above recitals are hereby incorporated into this Amendment as if fully set forth herein.

2. Extension of Term. The Lease Term is hereby extended through July 31, 2012.

3. Amendment of Section 1.01. Basic Lease Provisions and Definitions. Commencing May 1, 2009, Section 1.01, Subsections D, E, F, J and L of the Lease are hereby deleted in their entirety and the following is substituted in lieu thereof:

 

“D.

Minimum Annual Rent:

 

May 1, 2009 – May 31, 2009		$ 0.00 (1 month)*
June 1, 2009 – May 31, 2010		$339,606.00 per year
June 1, 2010 – June 30, 2010		$ 0.00 (1 month)*
July 1, 2010 – June 30, 2011		$396,207.00 per year
July 1, 2011 – July 31, 2011		$ 0.00 (1 month)*
August 1, 2011 – July 31, 2012		$452,808.00 per year.

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E.

Monthly Rental Installments:

 

May 1, 2009 – May 31, 2009		$ 0.00 per month
June 1, 2009 – May 31, 2010		$ 28,300.50 per month
June 1, 2010 – June 30, 2010		$ 0.00 per month
July 1, 2010 – June 30, 2011		$ 33,017.25 per month
July 1, 2011 – July 31, 2011		$ 0.00 per month
August 1, 2011 – July 31, 2012		$ 37,734.00 per month.

 

*	During such period of free rent, Tenant shall continue to be responsible for Additional Rent and Common Area Charges pursuant to Section 3.02 of the Lease.

 

F.

Lease Term: extended through July 31, 2012.

 

J.

Broker: CB ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. representing Tenant.

 

L.

Addresses for payments and notices:

 

Landlord:		Duke Realty Ohio
		Attn.:    Columbus Market, Vice President,
		Asset Management and Customer Service
		▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
		▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With Rental
Payments to:		Duke Realty Ohio
		▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
		▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tenant:		Pinnacle Data Systems, Inc.
		▇▇▇▇ ▇▇▇▇ ▇▇▇▇
		▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.”

4. Amendment of Article 2. Construction of Tenant Improvements for Additional Space. The second paragraph of language added to Article 2 of the Lease by paragraph 3 of the First Lease Amendment is hereby deleted in its entirety and shall be of no further force or effect.

5. Amendment of Section 7.02. Landlord’s Responsibility. Commencing May 1, 2009, the following is hereby added to Section 7.02 of the Lease:

“Preventative maintenance of the HVAC units serving the Leased Premises shall continue to be Tenant’s responsibility in accordance with Section 7.01 of the Lease. Provided, however, that so long as such HVAC units are routinely maintained by Tenant in accordance with industry guidelines, in Landlord’s judgment, Landlord (at its sole cost and expense) shall be responsible for the replacement of any such unit as necessary in Landlord’s sole discretion. Additionally, in the event Landlord elects to perform an overlay of the Building’s parking lot, such work shall be at Landlord’s sole cost and expense. Any repair and maintenance of the Building’s parking lot shall be included in Operating Expenses in accordance with the Lease.”

 

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6. Amendment of Section 9.02. Tenant’s Insurance. Commencing on May 1, 2009, Section 9.02 of the Lease is hereby amended as follows:

(a) The following is hereby added as subsection E.:

“E. Automobile Insurance. Comprehensive Automobile Liability Insurance insuring bodily injury and property damage arising from all owned, non-owned and hired vehicles, if any, with minimum limits of liability of $1,000,000 per accident.”

(b) Subsection D. is hereby amended by adding the following:

“With limits of not less than an amount equal to two (2) years rent hereunder.”

7. Deletion of Section 16.12. Right of First Offer. Section 16.12 of the Lease is hereby deleted in its entirety and shall be of no further force or effect.

8. Amendment of Section 16.13. Option to Extend. Section 16.13 of the Lease is hereby deleted in its entirety and the following shall be substituted in lieu thereof:

“Section 16.13. Option to Extend.

(a) Grant and Exercise of Option. Provided that (i) Tenant has not been in Default at any time during the Lease Term, (ii) the creditworthiness of Tenant is then reasonably acceptable to Landlord, (iii) Tenant originally named herein remains in possession of and has been continuously operating in the entire Leased Premises throughout the Lease Term, and, (iv) the current use of the Leased Premises is acceptable to Landlord, Tenant shall have one (1) option to extend the Lease Term for one (1) additional period of three (3) years (the “Extension Term”). The Extension Term shall be upon the same terms and conditions contained in the Lease except (x) Tenant shall not have any further option to extend, (y) any improvement allowances or other concessions applicable to the Leased Premises under the Lease shall not apply to the Extension Term, and (z) the Minimum Annual Rent shall be adjusted as set forth herein (“Rent Adjustment”). Tenant shall exercise such option by delivering to Landlord, no later than nine (9) months prior to the expiration of the current Lease Term, written notice of Tenant’s desire to extend the Lease Term. Tenant’s failure to properly exercise such option shall be deemed a waiver of such option. If Tenant properly exercises its option to extend, Landlord shall notify Tenant of the Rent Adjustment no later than thirty (30) days after receipt of Tenant’s notice of its exercise of this option to extend. Tenant shall be deemed to have accepted the Rent Adjustment if it fails to deliver to Landlord a written objection thereto within five (5) business days after receipt thereof. If Tenant properly exercises its option to extend, Landlord and Tenant shall execute an amendment to the Lease (or, at Landlord’s option, a new lease on the form then in use for the Building) reflecting the terms and conditions of the Extension Term within thirty (30) days after Tenant’s acceptance (or deemed acceptance) of the Rent Adjustment.

 

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(b) Rent Adjustment. The Minimum Annual Rent for the Extension Term shall be an amount equal to the Minimum Annual Rent then being quoted by Landlord to prospective renewing tenants of the Building for space of comparable size and quality and with similar or equivalent improvements as are found in the Building, and if none, then in similar buildings in the immediate vicinity; provided, however, that in no event shall the Minimum Annual Rent during the Extension Term be less than the highest Minimum Annual Rent payable during the immediately preceding term. The Monthly Rental Installments shall be an amount equal to one-twelfth (1/12) of the Minimum Annual Rent for the Extension Term and shall be paid at the same time and in the same manner as provided in the Lease.”

9. Deletion of Section 16.16. Landlord’s Allowance for Future Improvement. Section 16.16 of the Lease is hereby deleted in its entirety and shall be of no further force or effect.

10. Incorporation of Section 16.17. Patriot Act. The following is hereby incorporated as Section 16.17 of the Lease:

“Section 16.17. Patriot Act. Each of Landlord and Tenant, each as to itself, hereby represents its compliance and its agreement to continue to comply with all applicable anti-money laundering laws, including, without limitation, the USA Patriot Act, and the laws administered by the United States Treasury Department’s Office of Foreign Assets Control, including, without limitation, Executive Order 13224 (“Executive Order”). Each of Landlord and Tenant further represents (such representation to be true throughout the Lease Term) (i) that it is not, and it is not owned or controlled directly or indirectly by any person or entity, on the SDN List published by the United States Treasury Department’s Office of Foreign Assets Control and (ii) that it is not a person otherwise identified by government or legal authority as a person with whom a U.S. Person is prohibited from transacting business. As of the date hereof, a list of such designations and the text of the Executive Order are published under the internet website address ▇▇▇.▇▇▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇▇▇/▇▇▇▇.”

11. Acknowledgment of Completion of Improvements. Tenant hereby acknowledges that the improvements designated as Landlord’s obligations in Exhibit B of the Lease and Exhibit B-1 of the First Lease Amendment have been completed in a satisfactory manner.

12. Broker. Tenant represents and warrants that, except for Duke Realty Services, LLC representing Landlord and CB ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. representing Tenant, no other real estate broker or brokers were involved in the negotiation and execution of this Amendment. Tenant shall indemnify Landlord and hold it harmless from any and all liability for the breach of any such representation and warranty on its part and shall pay any compensation to any other broker or person who may be deemed or held to be entitled thereto.

13. Representations.

(a) Tenant hereby represents that (i) Tenant is duly organized, validly existing and in good standing (if applicable) in accordance with the laws of the State under which it was organized; (ii) Tenant is authorized to do business in the State where the Building is located; and (iii) the individual(s) executing and delivering this Amendment on behalf of Tenant has been properly authorized to do so, and such execution and delivery shall bind Tenant to its terms.

 

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(b) Landlord hereby represents that (i) Landlord is duly organized, validly existing and in good standing (if applicable) in accordance with the laws of the State under which it was organized; (ii) Landlord is authorized to do business in the State where the Building is located; and (iii) the individual(s) executing and delivering this Amendment on behalf of Landlord has been properly authorized to do so, and such execution and delivery shall bind Landlord to its terms.

14. Examination of Amendment. Submission of this instrument for examination or signature to Tenant does not constitute a reservation or option, and it is not effective until execution by and delivery to both Landlord and Tenant.

15. Definitions. Except as otherwise provided herein, the capitalized terms used in this Amendment shall have the definitions set forth in the Lease.

16. Incorporation. This Amendment shall be incorporated into and made a part of the Lease, and all provisions of the Lease not expressly modified or amended hereby shall remain in full force and effect.

(SIGNATURES CONTAINED ON FOLLOWING PAGE)

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed on the day and year first written above.

 

 

STATE OF OHIO		)
		)		SS:
COUNTY OF FRANKLIN		)

Before me, a Notary Public in and for said County and State, personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇, by me known and by me known to be the Senior Vice President, Columbus Operations, of Duke Realty Corporation, an Indiana corporation, the general partner of Duke Realty Limited Partnership, the managing partner of Duke Realty Ohio, an Indiana general partnership, who acknowledged the execution of the foregoing “Second Lease Amendment” on behalf of said partnership.

WITNESS my hand and Notarial Seal this 23rd day of February, 2009.

 

My Commission Expires: 10-19-09

My County of Residence: Franklin

 

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STATE OF OHIO		)
		)		SS:
COUNTY OF Franklin		)

Before me, a Notary Public in and for said County and State, personally appeared ▇▇▇▇▇▇▇ ▇▇▇▇▇, by me known and by me known to be the President & CEO of Pinnacle Data Systems, Inc., an Ohio corporation, who acknowledged the execution of the foregoing “Second Lease Amendment” on behalf of said corporation.

WITNESS my hand and Notarial Seal this 23rd of February, 2009.

 

My Commission Expires: July 13, 2011

My County of Residence: Franklin

 

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