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12 <br /> encumbrances of record other than those (i) existing as of the effective date of this Lease, or (ii)which are <br /> approved by Tenant, such approval not to be unreasonably withheld. All closing costs related to the transfer <br /> of the Property shall be paid by the Tenant (buyer), except that the Landlord shall be responsible for <br /> attorneys'fees for any attorneys representing Landlord. Tenant shall be responsible for all funds required to <br /> satisfy and cancel any assessments, judgments, liens, deeds of trust, or other financial encumbrances <br /> against the Property and the described portion of the Property save and except any such encumbrances <br /> incurred by the Landlord. <br /> (ii) If the option to purchase is exercised, Landlord shall credit against the purchase price <br /> the amount of the Deposit and the amount of Rent paid by Tenant to Landlord up to the date of the closing. <br /> (iii) This option to purchase is contingent upon and subject to the following terms and <br /> conditions: This option to purchase shall commence on the date of the full execution of this Lease and shall <br /> continue through the end of the initial 120-month term thereof. The purchase price shall be based on <br /> appraisals using income methodology with each party selecting an independent appraiser and negotiating <br /> any differences in the appraisals to arrive at a purchase price, but shall also be less the value of the initial <br /> $250,000 deposit and rent paid up to the date of closing. If the option to purchase is exercised by the Tenant <br /> the sale of the described portion of the Property shall occur within sixty (60)days after the date of the option <br /> to purchase notice. <br /> 4. RENT. <br /> (a) Initial Annual Base Rent. Tenant shall pay to Landlord annual base rent in the amounts set forth in <br /> the Rent Summary set forth hereinabove (during the first six (6) Lease Years) and pursuant to Section 4(b) <br /> below thereafter. <br /> For each succeeding Lease Year of the Term and any optional extensions, Tenant shall pay to Landlord <br /> annual base rent as determined pursuant to this schedule and subsection (b) below, payable in equal <br /> monthly installments commencing on the first day of each Lease Year. All monthly base rent payments shall <br /> be due on the first day of each month in advance, without notice or demand. All rent payments shall be <br /> made to Landlord at: Orange County, Finance and Administrative Services, P.O. Box 8181 <br /> Hillsborough, NC 27278, or at such other place as Landlord may designate from time to time in writing. <br /> (b) Annual Base Rent after Sixth Lease Year. In the event that Tenant has not elected to <br /> purchase the Premises pursuant to Section 3(d) above, within one hundred eighty (180) days prior to the <br /> commencement of the seventh (7th) Lease Year, Landlord and Tenant shall work together diligently and in <br /> good faith to determine the fair market rental value of the Premises for the seventh (7th) Lease Year,with the <br /> parties to select a commercial property broker with at least 10 years' relevant experience in the Chapel Hill <br /> market area. In the event that the parties cannot agree upon a commercial property broker for such <br /> determination, they shall each select a commercial property broker with at least 10 years' relevant <br /> experience in the Chapel Hill market area, and the rent shall be the average of the good faith determination <br /> made by both such brokers. The parties shall then enter into an amendment to this Lease setting forth the <br /> annual base rent for the seventh (711) Lease Year, which annual base rent shall thereafter escalate by two <br /> percent (2%) per annum at the beginning of each further Lease Year thereafter. <br /> (c) Base Rent for Partial Month. Base rent due for any partial month at the beginning of the <br /> Term shall be $1,108.41 per day, payable in advance on the Commencement Date. Base rent due for any <br /> partial month at the end of the Term shall be determined on a per diem basis, using the then applicable <br /> annual base rent. Calculation of Rents is based on the annual rent amount divided by a 365-day year. <br /> (d) Intentionally omitted. <br /> (e) Intentionally omitted. <br /> (f) Additional Rent. All other charges, costs and sums required to be paid by Tenant to <br /> Landlord under this Lease shall be deemed to be additional rent, and shall be collectable by Landlord as <br /> such. <br /> (g) Independent Covenant. The obligation to pay any and all rent hereunder is a separate and <br /> independent covenant of Tenant, and no breach or alleged breach by Landlord of the terms hereof shall give <br /> Tenant any right to withhold or escrow any rental payments when due. <br /> 5. LATE PAYMENT. Tenant recognizes and acknowledges that if rent payments are not received when <br /> due, Landlord will suffer damages and additional expense. Tenant therefore agrees that a late fee equal to <br /> five (5%)percent of the rent which is late may be assessed by Landlord as additional rent if the Landlord has <br /> Landlord Tenant <br /> Initials Initials <br />