Exhibit 10.48

 

LEASE AGREEMENT

 

This LEASE AGREEMENT (hereinafter referred to as “Lease”) made as of this 30 day
of May, 2002, by and between GROUP THREE PROPERTIES, INC., a Pennsylvania
corporation, having offices at Cross Roads Corporate Center, 4641 Pottsville
Pike, Suite E, Reading, PA 19605 (hereinafter referred to as “Lessor”) and
FIBERMARK DSI, INC., a Pennsylvania corporation, having offices at 161
Wellington Road, Brattleboro, VT 05302 (hereinafter referred to as “Lessee”).

 

BACKGROUND

 

WHEREAS, Lessor entered into a Lease Agreement, dated December 5, 1997 with
REXAM DSI, INC. (the “Existing Lease Agreement”) for premises comprising
approximately 100,000 square feet, located in the “FiberMark Building” (as
defined in Article I below) (the “Existing Premises”) on the land more
particularly described on Exhibit “A” attached hereto and made a part hereof
(the “Property”).  Lessor is the owner of the “Building” (as defined in these
recitals below) and the Property.

 

WHEREAS, subsequent to December 5, 1997, Lessee acquired REXAM DSI, INC. 
through a merger and assumed the Existing Lease Agreement.

 

WHEREAS, Lessor and Lessee have continued to lease and rent, respectively, the
Existing Premises under the terms and conditions of the Existing Lease Agreement
to the present.

 

WHEREAS, Premium Beverage Packers, Inc., a Pennsylvania corporation (“Premium”),
as sublessor, entered into a Sublease Agreement dated February 7, 2002 with
Lessee, as sublessee (as amendmed to date, the “Sublease Agreement”) for
premises comprising the entire portion of the FiberMark Building not occupied by
Lessee under the Exisiting Lease (the “Sublease Premises”) located adjacent to
the Existing Premises in the FiberMark Building.  The Existing Premises and
Sublease Premises together are the same premises as the “Leased Premises” (as
defined in Article I below).  The Leased Premises comprise all of the premises
located in the FiberMark Building.

 

WHEREAS, the FiberMark Building adjoins an approximately 208,000 square foot
building designated the “Adjacent Building” on the site plan attached hereto as
Exhibit “B” and made a part hereof (the “Site Plan”).  The FiberMark Building
and Adjacent Building are hereinafter together referred to as the “Building.”

 

WHEREAS, pursuant to that certain Agreement of Termination, Assignment,
Indemnity and Release among Lessor, Premium, and JMH, Inc., a Pennsylvania
corporation (“JMH”), dated on or about the date hereof, Lessor and Premium,
agreed, inter alia, to terminate any leasehold or other interest maintained by
Premium, or any other party, in the Building and the Property, and (ii) JMH
agreed, inter alia, to terminate its option to purchase the Building and the
Property.

 

WHEREAS, Lessor and Lessee wish to terminate the Existing Lease Agreement and
enter intothis Lease pursuant to which Lessor shall demise the Leased Premises
to Lessee under theterms and conditions contained herein.

 

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NOW, THEREFORE, INTENDING TO BE LEGALLY BOUND HEREBY, for themselves, their
successors and assigns, Lessor and Lessee agree as follows:

 

ARTICLE I. - LEASED PREMISES

 

1.            The Lessor leases to the Lessee and the Lessee leases from the
Lessor that certain portion of the Building (hereinafter referred to as the
“FiberMark Building”) presently occupied by the Lessee, as designated on the
Site Plan and floor plan (the “Floor Plan”) (attached as Exhibits “B” and “C”
hereto, respectively), known as 171-173 Tuckerton Road, Muhlenberg Township,
Berks County, Pennsylvania (hereinafter referred to as the “Leased
Premises”).The Leased Premises contain (i) approximately one hundred seventy
thousand (170,000) square feet of floor space, and (ii) the 17,000 square foot
Basement Area described in the next paragraph and shown on the Floor Plan) and
rights of ingress, egress and regress over and across private and public
rights-of-way, streets and other facilities as may be designated by Lessor from
time to time, as more fully set forth in and subject to the terms and conditions
of this Lease and to such rules and regulations for the use thereof as may be
reasonably prescribed from time to time by the Lessor in accordance with this
Lease.  Lessee shall have the right to the exclusive use of the automobile
parking spaces located adjacent to the Leased Premises and designated on the
Site Plan as the “FiberMark Parking”.

 

The Basement Area, consisting of approximately seventeen thousand (17,000)
square feet, is included as a part of the Leased Premises, but not in the
calculation of Basic Monthly Rent as defined in Article III below, it being
understood and agreed that Lessee shall not pay any Basic Monthly Rent or other
fee for the use and occupancy of such basement area.

 

ARTICLE II. - TERM OF LEASE

 

1.            The term (hereinafter referred to as the “Term”) of this Lease
shall commence as of the date of this Lease (the “Lease Commencement Date”) and
shall terminate on the last day of the month of the fifth (5th) anniversary of
the Lease Commencement Date (the “Lease Termination Date”) unless extended
pursuant to the provisions of Article XIX below.

 

2.            Except to the extent permitted by the terms of this Lease, in the
event that the Lessee shall continue to occupy the Leased Premises beyond the
Term hereof or any renewal term as provided in Article XIX hereof and the Lessor
elects to accept rent therefor, a tenancy at will from month to month only shall
be created and no tenancy for any longer period of time shall be deemed to
exist.

 

ARTICLE III. - BASIC MONTHLY RENT

 

1.            Except as otherwise provided in this Lease, the Lessee shall pay
to the Lessor, during the initial thirty-six months of the Term, an annual
rental of Five Hundred Seventy-one Thousand Two Hundred Dollars ($571,200)
determined by multiplying $3.36 times the number of square feet in the Leased
Premises, payable in equal monthly installments of Forty-seven Thousand Six
Hundred Dollars ($47,600) per month, on the first day of each month by legal
tender without deduction or setoff (except as otherwise permitted herein)
(hereinafter referred to as “Basic Monthly Rent”).

 

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2.            The Lessee shall pay to the Lessor, during the remaining
twenty-four (24) months of the Term, an annual rental of Six Hundred Thousand
One Hundred Dollars ($600,100) determined by multiplying $3.53 times the number
of square feet in the Leased Premises, payable in equal monthly installments
Fifty Thousand Eight Dollars and Thirty-three Cents ($50,008.33) per month, on
the first day of each month by legal tender without deduction or setoff (except
as otherwise permitted herein)(hereinafter referred to as “Basic Monthly Rent”).

 

The Basic Monthly Rent for any month during the term which begins or ends on
other than the first or last calendar day of a calendar month shall be prorated
based on actual days elapsed.

 

ARTICLE IV. USE OF LEASED PREMISES

 

1.            The Leased Premises may be used for the purpose of manufacturing,
storing, warehousing, and distributing Lessee’s full range of products currently
being produced in the Leased Premises and any other lawful use permitted by the
zoning ordinance of the Township of Muhlenberg, but Lessee shall not use or
permit the storage or use of any hazardous or toxic materials within the Leased
Premises, in violation of applicable federal, state or local laws, statutes,
rules, ordinances or regulations.

 

2.            The Lessee covenants and warrants to the Lessor:

 

(a)           Not to use the Leased Premises or permit the Leased Premises to be
used for any unlawful purpose or any purpose not specifically permitted by this
Lease.

 

(b)           Not to use or occupy or suffer or permit the Leased Premises or
any part thereof to be used or occupied in any manner so as to materially
increase the cost of fire or other casualty insurance above the commercially
reasonable cost of such insurance maintained by property owners of property for
the type and location of the Building or contrary to this Lease.

 

(c)           Not to place garbage, rubbish, trash or containers thereofoutside
the Leased Premises except in such containers, which the Lessee shall have
provided for such purpose with the approval of the Lessor, which approval Lessor
will not unreasonably withhold, delay or condition.

 

(d)           To keep the Leased Premises in a good, safe and clean condition,
reasonable wear and tear excepted.

 

(e)           To prevent the Leased Premises from being used in any way which
shall injure or damage the same or the Building or which may be or result in
damage to the other tenants of the Building.

 

(f)            To abide by all reasonable rules and regulations established by
Lessor, from time to time, and uniformly applied to all tenants of the Building,
provided, however, that no such rules or regulations shall prohibit or
unreasonably hinder the use of the Leased Premises for the purposes referred to
in this Article.

 

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ARTICLE V. - SIGNS

 

1.             Lessee shall have the right to erect a sign upon the Leased
Premises of a size and shape permitted by governmental authorities with
jurisdiction and at a location on the Premises reasonably acceptable to the
Lessor.  The Lessor and Lessee hereby acknowledge the existence and continued
permissive use of Lessee’s existing sign.

 

ARTICLE VI. - ALTERATIONS BY LESSEE

 

1.             Except as herein provided and subject to the provisions of
Section l(b) of Article XII below, Lessee shall not make or permit to be made
any structural alterations, improvements or additions (hereinafter collectively
referred to as “Alterations”) to the Leased Premises or any part thereof without
first obtaining the written consent of the Lessor, which consent shall not be
unreasonable withheld or delayed, but Lessee shall nevertheless be permitted to
make non-structural Alterations without the necessity of obtaining Lessor’s
consent.  In the event that the Lessor shall give such consent such consent may
be conditioned upon the fulfillment of such reasonable requirements as the
Lessor shall reasonably determine.  All Alterations to the Leased Premises shall
be made in accordance with all applicable laws and governmental rules and
regulations and, upon the expiration or earlier termination of this Lease, shall
immediately become the property of the Lessor or, at Lessor’s option, provided
Lessor gives Lessee written notice thereof at the time of Lessor’s consent, such
Alterations shall be removed at Lessee’s expense and all damage caused to the
Building as a result of such removal shall be repaired at Lessee’s expense.  In
the event of the making of such Alterations as herein provided, the Lessee shall
indemnify and save the Lessor harmless of and from any and all loss and damage
arising out of the construction thereof, except for any and all loss or damage
arising from Lessor’s negligence or willful acts or omissions.

 

2.             Upon the request of Lessee in connection with any Alterations,
Lessor, at Lessee’s cost and expense, shall join in any applications for any
permits, approvals or certificates from any governmental authority required to
be obtained by Lessee, and shall sign such applications reasonably promptly
after request by Lessee and shall otherwise cooperate with Lessee in connection
therewith, provided, however, that Lessor shall not be obligated to incur any
cost or expense, including reasonable attorneys’ fees and disbursements, or
suffer to incur any liability, in connection therewith.

 

3.             In the event that the Lessee shall make any Alterations to the
Leased Premises pursuant to Section 1 of this Article, the Lessee shall promptly
pay when due all contractors and materialmen who shall have supplied labor, work
or materials to the Lessee.  In addition, the Lessee shall take all other steps,
including without limitation the timely filing of stipulations or waivers,
permitted or provided by applicable law in order to avoid the imposition of any
mechanic’s, laborer’s or materialmen’s charge or lien upon the Leased Premises
(hereinafter referred to as “Mechanic’s Lien”).  In the event that any
Mechanic’s Lien shall be filed with respect to the Leased Premises for work
performed by or on behalf of the Lessee, the Lessee shall bond against or cause
the same to be discharged within thirty (30) days after the Mechanic’s Lien has
been filed or formal notice of said lien has been issued, whichever shall first
occur, regardless of the validity of such Mechanic’s Lien.  Nothing contained in
this Lease or otherwise is intended to authorize the Lessee to do or cause any
work or labor to be done or any materials to be supplied for the account of the
Lessor, all of the same risk solely for the Lessee’s account and at the Lessee’s
sole risk, cost and expense.  Notwithstanding anything in this Section 3 to the

 

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contrary, Lessee shall be permitted in good faith and at its expense to contest
the existence, amount or validity of any Mechanics Lien or other lien upon the
Leased Premises by appropriate proceedings sufficient to prevent the collection
or other realization of any such Mechanic’s Lien or other lien or claim so
contested, as well as the sale, forfeiture or loss of any of the Leased
Premises.

 

ARTICLE VII. - MAINTENANCE AND REPAIR

 

1.             Repairs and Maintenance by Lessee

 

(a)           Lessee is presently in possession of the Leased Premises and
accepts the Leased Premises in “as is” condition and Lessee shall at all times
at its own expense keep and maintain the Leased Premises in good order and
repair and in a neat, safe, clean and orderly condition, reasonable wear and
tear, casualty, or condemnation excepted, including, but not limited to, making
all non-structural ordinary and extraordinary, foreseen and unforeseen repairs
and replacements to the Leased Premises, including, without limitation, repairs
and replacements to the plumbing, electrical, heating, ventilation and air
conditioning systems and mechanical systems and installations within the Leased
Premises except to the extent that any of the foregoing repairs or replacements
are caused by or result from negligence, willful acts or omissions of the Lessor
or any third party.  Lessor shall maintain the sewage pumps located within the
FiberMark Building.

 

(b)           Lessee will repair promptly at its own expense any damage (whether
structural (without Lessor’s consent) or non-structural) to the Leased Premises
caused by any construction or alterations performed by Lessee, whether said
structural or non-structural damage is known or unknown or which may have
occurred prior to the time of the execution of this Lease, or from the bringing
into the Leased Premises any property for Lessee’s use, or by the installation
or removal of such property, regardless of fault or by whom such damage shall be
caused, unless caused by the negligence, willful acts or omissions of Lessor or
its servants, agents, contractors, subcontractors, or employees.

 

(c)           In the event Lessee defaults in the performance of any of its
obligations under this Section 1, and such default continues for a period of
thirty (30) days after written notice from Lessor, Lessor, in addition to
Lessor’s other remedies under this Lease, at law or in equity, may (but shall
not be obligated to do so) cure such default on behalf of Lessee, without any
liability of Lessor, its agents, servants, employees, contractors or
subcontractors for damage to Lessee’s merchandise, fixtures or other property or
to Lessee’s business by reason thereof, unless caused by the negligence, willful
acts or omissions of Lessor or its servants, agents, contractors,
subcontractors, or employees, and Lessee shall reimburse Lessor, as Additional
Rent, upon demand, One Hundred percent (100%) of costs incurred by Lessor in
curing such default, unless Lessee has begun curing within said thirty (30) day
period and is thereafter diligently and in good faith prosecuting such cure to
completion.

 

(d)           Notwithstanding the foregoing or any other provision of this
Lease, Lessee shall not be responsible for compliance with any laws,
regulations, or the like requiring (i) structural repairs or modifications, (ii)
repairs or modifications to the utility or building service equipment, or (iii)
installation of new building service equipment, such as fire detection or

 

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suppression equipment, unless such repairs, modifications, or installations
shall be (a) due to Lessee’s particular manner of use of the Leased Premises, or
(b) due to the negligence or willful misconduct of Lessee or any agent,
employee, or contractor of Lessee.

 

(e)           Notwithstanding the foregoing or any other provision of this
Lease, if any repairs or replacements to the Leased Premises performed by Lessee
are considered capital improvements or expenses in accordance with generally
accepted accounting principles consistently applied, then upon expiration or the
earlier termination of this Lease, Lessor shall reimburse Lessee for the
non-amortized portion of any such capital improvements or expenses.

 

2.             Structural Repairs.

 

(a)           Lessor is required to make, at its sole cost and expense,
structural repairs, ordinary and extraordinary, foreseen and unforeseen to the
Leased Premises and the FiberMark Building, subject to the provisions of this
Section 2.

 

(b)           In the event that by reason of acts of negligence by the Lessee
the Lessor is required to make structural repairs to the Leased Premises, Lessor
shall have the right to collect One Hundred percent (100%) of the cost incurred
by Lessor for such repairs as Additional Rent from Lessee.  For purposes of this
Lease, any difference in floor level or shifting of floor slab, which in either
case results from Lessee installing new machinery or equipment which exceeds the
load bearing capacity of the floor slab, shall not be determined a structural
defect required to be repaired by Lessor, but shall be considered maintenance
which shall be the responsibility of Lessee.

 

(c)           If, without Lessor’s prior consent (if such consent is required
under this Lease), Lessee performs any alterations, additions, improvements,
changes, or other work which affects the structural portions of the Leased
Premises and/or the roof of the FiberMark Building and/or that portion of the
exterior of the Leased Premises which Lessor is obligated to repair pursuant to
Section 2. (a) and which materially adversely affects the structural integrity
of the Building, such action by Lessee shall release and discharge Lessor as of
the commencement of such alteration, addition, improvement, affixation or other
work of and from such repair obligation and thereafter Lessee agrees to be
solely responsible for the maintenance, repair, and replacement of any or all
such structural portions, roof, exterior and FiberMark Building which have been
affected as aforesaid; provided, in the event Lessee shall default in the
performance, to Lessor’s satisfaction, of such responsibilities, Lessor, in
addition to Lessor’s other remedies under this Lease, at law or in equity, may
(but shall not be obligated to do so) cure such default on behalf of Lessee
without any liability of Lessor, its agents, servants, employees, contractors or
subcontractors for damage to Lessee’s merchandise, fixtures or other property or
to Lessee’s business by reason thereof, except to the extent that any such
repair, maintenance or replacement is caused by the negligence or willful acts
or omissions of Lessor and Lessee shall reimburse Lessor, as Additional Rent,
upon demand, One Hundred percent (100%) of the costs incurred by Lessor in
curing such default.  For the purposes of the foregoing, if Lessee performs any
such alterations, additions, improvements, changes, affixation or other work in
a manner not consistent with Lessor’s prior consent thereto (if such consent is
required under this Lease), such work shall be deemed to have been performed
without Lessor’s consent.

 

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3.             The Lessee shall place throughout the Leased Premises such fire
extinguishers as are necessary in order to comply with all applicable laws and
shall maintain the same in good working order and repair.  In the event that the
Lessee refuses or neglects to provide such fire extinguishers, the Lessor may,
but shall not be required to, provide the same and the Lessee shall pay the cost
and expense thereof to the Lessor upon demand as Additional Rent.  In the event
that the fire extinguishers are provided by the Lessee as required herein, the
fire extinguisher shall be and remain the property of the Lessee.

 

4.             Nothing contained in this Article VII shall obligate Lessee to
bring the Leased Premises into compliance with the provisions of the Americans
With Disabilities Act, the codes or ordinances of Muhlenberg Township, the
requirements of any environmental law or statute, or the requirements of the
statutes or regulations of the Commonwealth of Pennsylvania or any department,
bureau or agency thereof, all of which shall be the obligation of Lessor.

 

ARTICLE VIII. - MAINTENANCE OF COMMON AREA (CAM)

 

1.             The Lessee shall be responsible for its pro rata share of the
cost of keeping and maintaining the common area (CAM charges), which common area
shall include, but not be limited to all roadways, entrances, accessways, the
installation, repair and replacement thereof, the cutting of grass, removal of
snow and other activities to keep the Property and Building in good order.  The
Lessee’s portion of the CAM charges shall be determined by the following
formula, the numerator of which shall be the square foot area of the Leased
Premises (exclusive of the Basement Area) and the denominator of which shall be
the square foot area of the Building, and if the Lessor shall construct a new
building on the Property or an addition to the Building, the denominator shall
be increased by the square foot area of any such new building or addition. 
Lessee shall pay its pro rata share, in advance, in equal monthly installments
on the first day of each month, as may be estimated and billed by the Lessor. 
Lessor may revise its estimate and may adjust such monthly payment semi-annually
on April 1 and November 1 of each year upon at least 30 days notice to Lessee
together with reasonable evidence of the basis for such increase.  The first
such payment shall be due and payable by Lessee on the Rent Commencement Date
(prorated for the remaining number of days in the calendar year) and subsequent
installments shall be due and payable at the beginning of each ensuing calendar
month during the term and any extensions or renewals thereof.  At the end of
each calendar year the Lessor shall prepare and submit to the Lessee a statement
of all expenses incurred by the Lessor in connection with the CAM charges and if
it is determined that Lessee has paid more than its pro rata share of the CAM
charges, then the Lessee shall receive a credit for such excess against Basic
Monthly Rent during the next succeeding months.  If, however, it is determined
that Lessee has paid less than its pro rata share of the CAM charges, then
Lessee shall make payment to Lessor within thirty (30) days of the amount due.

 

As of the date of this Lease, Lessee’s pro rata portion of the CAM charges is as
follows (which pro rata portion is subject to adjustment as provided in the
preceding paragraph); (i) for all CAM charges excluding water and sewer,
forty-five percent (45%); and (ii) for water and sewer, sixty-four and
five-tenths of one percent (64.5%).

 

2.             Lessor covenants and agrees to keep and maintain all common areas
in good order and repair and in a clean and safe condition.  Lessor shall be
responsible, among other things, for

 

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maintaining all driveways and parking areas and keeping such areas lighted and
free from accumulations of ice and snow; cutting grass and maintaining
shrubbery; and all other matters pertaining to the proper maintenance of the
common areas.  In the event Lessor shall fail to do so, Lessee shall give
written notice of such failure to Lessor and, if the same shall not be corrected
within ten days after the giving of such notice, or if such correction(s) are
commenced within such 10-day period but are not thereafter diligently pursued,
Lessee shall have the right to correct all matters specified in such notice and
to charge the full cost thereof to Lessor or set-off any or all such charge
against subsequent payments of Basic Monthly Rent.

 

3.             Lessee shall have the right to audit applicable records of Lessor
to confirm that the charges billed to Lessee under this Article VIII and Article
IX below are proper and conform to the provisions of such Articles.  Such right
shall be exercisable by Lessee within one (1) year after Lessee’s receipt of
Lessor’s annual statement of such charges.  Lessor shall cooperate with Lessee
in providing Lessee reasonable access to Lessor’s books and records during
normal business hours to enable Lessee to audit Lessor’s books and records as
they relate to any costs or expenses passed through to Lessee pursuant to any
provisions of this Lease.  If the audit discloses any overpayment on the part of
Lessee, then at Lessee’s election, (i) Lessor shall immediately refund the
overpayment to Lessee, or (ii) Lessee shall be entitled to a credit on the next
succeeding installments of Basic Monthly Rent for an amount equal to the
overcharge plus interest on the amount of such overcharge from the date on which
same was paid by Lessee until the date refunded by Lessor or credited by Lessee
(as the case may be) at the prime rate then published in the Wall Street
Journal, provided, however, that in the event the term of this Lease has expired
or been earlier terminated, Lessee shall be entitled to a refund of such excess
from Lessor within thirty (30) days after such date or expiration or earlier
termination.  In addition, in the event such audit by Lessee discloses such an
overcharge in excess of three (3%) percent of the amount payable in accordance
with Articles VIII or IX of this Lease, then Lessor shall pay to Lessee the
reasonable costs and expenses of such audit.

 

ARTICLE IX. - TAXES AND ASSESSMENTS

 

1.             Lessee shall pay to Lessor in each calendar year, as additional
rent, “Lessee’s Share” (as hereinafter defined) of all real estate, and other ad
valorem taxes and other impositions, excises and other governmental or
quasi-governmental charges of every kind and nature (including, but not limited
to, sewer and fire district assessments, foreseen and unforeseen and ordinary as
well as extraordinary, but excluding general and special assessments), with
respect to the Building and the Property.  Such taxes and assessments are
sometimes referred to in this Lease as “taxes”, “taxes and assessments”, or
“impositions”.  Lessee’s Share shall be determined by the following formula: (i)
the Assessment (as hereinafter defined), multiplied by the tax millage of the
various taxing bodies, as such millage may exist from year to year, multiplied
by (ii) a fraction, (x) the numerator of which shall be the square foot floor
area of the Leased Premises (exclusive of the Basement Area) , and (y) the
denominator of which shall be the total square foot floor area of the Building,
and if hte Lessor shall construct a new building on the Property or an addition
to the Building, the denominator shall be increased by the square foot area of
any such new building or addition .  “Assessment” shall mean the current
assessment of the Building and Property.

 

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As of the date hereof, Lessee’s pro rata charge for taxes is forty-five percent
(45%) (which pro rata charge is subject to adjustment as provided in the
preceding pargraph).

 

2.             (a)           Payment of the taxes required by Section 1 above
shall be paid by the Lessee in equal monthly installments in advance in such
amounts as are reasonably estimated and billed by Lessor based upon the total
taxes payable in each calendar year.  Lessor shall hold such amounts and apply
the same to the timely payment of the obligations with respect to which the
amounts were deposited.  Lessor may revise its estimate and may adjust such
monthly payment at the end of any calendar year.  The first such payment shall
be due and payableby Lessee on the Rent Commencement Date (prorated for the
remaining number of days in the calendar year) and subsequent, installments
shall be due and payable at the beginning of each ensuing calendar month during
the term and any extensions or renewals thereof.

 

(b)           After Lessor has received the tax bills for each calendar year,
Lessor will notify Lessee of (i) the amount of taxes on which the Lessee’s tax
portion is based; (ii) the amount of any refund, reduction or deferral expense;
(iii) the gross square foot area of the Leased Premises and the Building and
other improvements, of which the Leased Premises are a part, on which the tax is
based; (iv) the amount of the tax.  If the aforesaid monthly payments on account
of the taxes paid by Lessee for a given calendar year are greater than the
Lessee’s share of the taxes payable for the given calendar year, Lessee shall
receive a credit for the excess against Basic Monthly Rent during the next
succeeding months, and if said payments are less than Lessee’s share, Lessee
shall forthwith pay to Lessor the difference.  Lessor agrees to provide Lessee
with a copy of the actual tax bill each year within thirty (30) days of receipt
of such bill.

 

3.             (a)           Lessee shall pay before delinquency any and all
taxes, assessments, impositions, excises, fees and other charges levied,
assessed or imposed by governmental or quasi-governmental authority upon Lessee
or its business operation, or based upon the use or occupancy of the Leased
Premises or upon Lessee’s leasehold interest, trade fixtures, furnishings,
equipment, leasehold furnishings, alterations, changes and additions made by
Lessee, merchandise and personal property of any kind owned, installed or used
by Lessee in, from or upon the Leased Premises.

 

(b)           Nothing herein contained shall be construed to include in taxes
and assessments or impositions the following which shall be paid solely by
Lessor: estate, succession, transfer, gift, franchise, inheritance, corporation,
income, profit or excise tax, capital levy or capital stock that is or may be
imposed upon the Lessor or any increase in taxes or assessments resulting from
the sale of or other transfer by Lessor of its interest in the Property or
Building (or any part thereof); or taxes, charges, fees, levies incurred as a
result of Lessor’s development of on-site or off-site improvements or utilities;
provided, however, that if at any time during the Term the methods of taxation
prevailing at the Lease Commencement Date shall be altered so that in lieu of
the real estate taxes now levied, there is assessed or imposed (i) a tax upon
the rents received from such real estate; or (ii) a license fee measured by the
rents receivable by Lessor from the Leased Premises or any portion of the
Property or the Building; or (iii) a tax or license fee imposed upon Lessor
which is otherwise measured by or based in full or in part upon the Leased
Premises, the Building or any portion thereof, then the same shall be included
in the computation of the real estate taxes hereunder, but only to the extent
calculated as if Lessor’s interest in the Property and the Building were
Lessor’s sole asset.  In addition,

 

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Lessee shall not be required to pay any increase in taxes or assessments
resulting from the sale of or other transfer by the Lessor of its interest in
the Building, or any part thereof; or taxes, charges, fees, levies incurred as a
result of Lessor’s development of on-site or off-site improvements or utilities.

 

4.             Lessee shall have the right to audit the appropriate records of
Lessor to confirm the charges billed Lessee under this Article IX are proper and
conform to the provisions of this Article IX as provided in Section 3 of Article
VIII above.

 

ARTICLE X. - UTILITIES

 

1.             So long as Lessee is the sole occupant of the FiberMark Building,
the Lessee shall pay for the cost and expense of all utilities and other
services rendered or furnished to the Leased Premises during the Term, including
(without limitation) heat, water, sewer, gas, electricity, telephone and trash
disposal, together with all taxes levied or assessed and all other charges on
such utilities or services.

 

It shall be the responsibility of the Lessee to make payment of such services
before same become delinquent.  In the event that Lessee shall fail to make such
payment as required, Lessor shall have the right, but not the obligation, to
make payment thereof and collect one hundred percent (100%) of the cost thereof
incurred by Lessor as Additional Rent.  Lessee shall furnish Lessor evidence of
such payment within fifteen (15) days after same become due.  In no event shall
the Lessor be liable for the quality, quantity, failure or interruption of such
utilities or services to Leased Premises.

 

2.             Interruption of Use.  An “Abatement Event” shall be defined as an
event or circumstances that prevents Lessee from using the Leased Premises or
any portion thereof, as a result of any failure of Lessor to provide services or
access to the Leased Premises.  Lessee shall give Lessor notice (“Abatement
Notice”) of any such Abatement Event, and if such Abatement Event continues
beyond the “Eligibility Period” (as that term is defined below), then the Basic
Monthly Rent and Lessee’s other monetary obligations to Lessor shall be abated
entirely or reduced, as the case may be, after expiration of the Eligibility
Period for such time that the Lessee continues to be so prevented from using,
and does not use, the Leased Premises or a portion thereof, in the proportion
that the rentable area of the portion of the Leased Premises that the Lessee is
prevented from using, and does not use, bears to the total rentable area of the
Leased Premises; provided, however, in the event that Lessee is prevented from
using, and does not use, a portion of the Leased Premises for a period of time
in excess of the Eligibility Period and the remaining portion of the Leased
Premises is not sufficient to allow Lessee to effectively conduct its business
therein, and if Lessee does not conduct its business from such remaining
portion, then for such time after expiration of the Eligibility Period during
which Lessee is so prevented from effectively conducting its business therein,
Basic Monthly Rent and Lessee’s other monetary obligations to Lessor shall be
abated entirely for such time as Lessee continues to be so prevented from using,
and does not use, the Leased Premises.  The term “Eligibility Period” shall mean
a period of three (3) consecutive days after Lessor’s receipt of any Abatement
Notice(s).  In addition, if an Abatement Event continues for ninety (90)
consecutive days after any Abatement Notice, Lessee may terminate this Lease by
written notice to Lessor at any time before the date such Abatement Event is
cured by Lessor.

 

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3.             Lessee may, at its sole cost, and after written notice to Lessor,
cause the FiberMark Building to be metered separately for electric service. 
Upon the request of Lessee in connection with separately metering the FiberMark
Building for electric service, Lessor, at Lessee’s cost and expense, shall join
in any applications for any permits, approvals or certificates from any
governmental authority or electric service provider required to be obtained by
Lessee, and shall sign such applications reasonably promptly after request by
Lessee and shall otherwise cooperate with Lessee in connection therewith,
provided, however, that Lessor shall not be obligated to incur any cost or
expense, including reasonable attorneys’ fees and disbursements or suffer to
incur any liability in connection therewith.  Lessee shall not interrupt the
electric service provided to other tenants at the Building while causing the
FiberMark Building to be separately metered for electric service without the
Lessee obtaining the consent of the other affected tenants at the Building.

 

ARTICLE XI. - INSURANCE AND DAMAGE

 

1.             The Lessor shall maintain and keep in effect throughout the Term
hereof, with policies from an insurer and in form and substance reasonably
satisfactory to the Lessor and its lender, insurance against loss or damage to
the Building and all other buildings and improvements now or hereafter located
on Lessor’s premises by fire and such other casualties as may be included in the
broadest form of all-risk insurance from time to time available, in an amount
equal to at least the full insurable replacement value of the Building and all
other buildings and improvements on Lessor’s premises.

 

2.             Lessee will keep in force with companies licensed to do business
in the Commonwealth of Pennsylvania where the Leased Premises are located at
Lessee’s expense at all times during the term of this Lease or any renewals or
extensions thereof and during such other times as Lessee occupies the Leased
Premises or any part thereof:

 

(a)           Public liability insurance with respect to Leased Premises, and
the business operated by Lessee in or from the Leased Premises with minimum
limits of Three Million Dollars ($3,000,000.00) on account of bodily injuries to
or death of one person, and Five Million Dollars ($5,000,000.00) on account of
bodily injuries to or death of more than one person as the result of any one
accident or disaster, and property damage insurance with minimum limits of Five
Hundred Thousand Dollars ($500,000.00).  If the nature of Lessee’s operation is
such as to place any or all of its employees under the coverage of local
worker’s compensation or similar statues, Lessee shall also keep in force, at
its own expense, worker’s compensation or similar insurance affording statutory
coverage and containing statutory limits.

 

(b)           Lessee shall deposit with Lessor the policies of insurance
required by the provisions of this Section, or certificates thereof, together
with satisfactory evidence of the payment of the required premium or premiums
thereof.

 

(c)           All policies of insurance required to be carried by Lessee
pursuant to this Lease shall provide that the policy shall not be subject to
cancellation, termination or change except after ten (10) days prior written
notice to Lessor and shall name Lessor as an additional insured as its interest
may appear, but only to the extent of the One Million Dollar ($1,000,000) base
public liability policy.

 

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3.             (a)           Lessee will not do, omit to do, or suffer to be
done or keep or suffer to be kept anything in, upon or about the Leased Premises
which will violate the provisions of Lessor’s policies insuring against loss or
damage-by fire or other hazards, which will materially adversely affect Lessor’s
fire/casualty or liability insurance premium rating or which will prevent Lessor
from procuring such policies with companies acceptable to Lessor, provided
Lessee is first given adequate notice of the requirements of such policies.  If
anything done, omitted to be done or suffered to be done by Lessee, or kept or
suffered by Lessee to be kept in, upon or about the Leased Premises shall by
itself or in combination with other circumstances existing on residue property
of Lessor cause the premium rate of fire or other insurance on the Leased
Premises or other property of the Lessor in companies acceptable to Lessor to be
increased beyond the established rate from time to time fixed by the appropriate
underwriters with regard to the use of the Leased Premises for the purposes
permitted under this Lease, Lessee will pay the amount of such increase of
Lessor as Additional Rent upon Lessor’s demand and will thereafter pay the
amount of such increase, as the same may vary from time to time, with respect to
every premium relating to coverage of the Leased Premises during a period
falling within the Term of this Lease until such increase is eliminated.  In
addition, if applicable, after notice thereof to Lessee and an opportunity to
cure, Lessor may at its option-rectify the condition existing on the Leased
Premises which caused or was a contributing cause of the increased premium rate
in the event that the Lessee should fail to do so and may charge the cost of
such action to Lessee as Additional Rent, payable on demand after notice thereof
and opportunity to cure.

 

(b)           If Lessee shall not comply with its covenants made in this
section, Lessor in addition to Lessor’s other remedies hereunder may (but shall
not be obligated to) cause insurance, as aforesaid, to be issued, and in such
event Lessee agrees to pay the premium for such insurance as Additional Rent
promptly upon Lessor’s demand, or Lessor, at its option, may treat such failure
to comply as an Event of Default.

 

4.             Throughout the Term of this Lease, Lessee shall reimburse the
Lessor for its pro rata share of the premium paid by the Lessor for insuring the
Building and any additions theret and Lessee’s portion of the premium shall be
determined by the following formula: the numerator of which shall be the square
feet area of the Leased Premises (exclusive of the Basement Area) and the
denominator shall be the square feet area of the Building and any additions
thereto, or such portion thereof as is covered by the insurance policy for which
the premium is being paid, and the Lessor may recover one hundred percent (100%)
of Lessee’s pro rata share of the cost incurred by Lessor as Additional Rent, if
the Lessee fails to make payment thereof.

 

5.             If the Leased Premises are damaged or destroyed so they cannot be
repaired with reasonable diligence within one hundred eighty (180) days of the
date of such damage or destruction, then either Lessor or Lessee may terminate
this Lease upon thirty (30) days written notice to the other party after
occurrence of the casualty; provided, however, that if Lessor has not entered
into binding contracts within thirty (30) days of the date of damage, which
contracts require the repair and reconstruction of the Leased Premises within
one hundred eighty (180) days of the date of the damage or destruction, Lessee
shall have the option, at its sole

 

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discretion, to terminate this Lease upon thirty (30) days written notice to
Lessor.  If this Lease has not been terminated as provided in this Section 5 and
restoration is not complete within one hundred eighty (180) days from the
commencement of work, Lessee shall have the option, at its sole discretion, to
terminate this Lease upon thirty (30) days written notice to Lessor.  If the
casualty occurs within the last twelve (12) months of the Term, Lessee shall
have the option, at its sole discretion, to terminate this Lease upon thirty
(30) days written notice to Lessor.  In the event of such termination, all rent
and other charges payable by Lessee shall be payable only to the date of the
damage or destruction and any rent or other charges paid in advance by Lessee
shall be refunded by Lessor to Lessee to the extent that the same are for a
period after the damage or destruction, and neither party shall have any further
claim against the other.

 

6.             If the Leased Premises or any portion thereof are damaged or
destroyed, but this Lease is not terminated, as provided above, then Lessor
shall rebuild and restore the Leased Premises within such 180-day period and
during the period from the date of such damage or destruction until completion
of rebuilding and restoration, the charges payable by Lessee shall abate as
follows:

 

(a)           If the Leased Premises are used during such period, then all rent
and other charges payable hereunder by Lessee shall abate in direct proportion
to the amount of the Leased Premises which are unusable or inaccessible to
Lessee in the ordinary conduct of its business or to the extent of the
interference with Lessee’s use of the common areas of the Building;

 

(b)           If the Leased Premises cannot be used during such period for any
purpose by Lessee, then there shall be a complete abatement of all rent and
other charges from the date of the casualty until completion of rebuilding and
restoration.

 

7.             If any damage to or condition of the Leased Premises, which by
this Lease is Lessor’s responsibility, shall in Lessee’s reasonable judgment be
considered of such a nature as to require emergency action, then Lessee may
undertake, at Lessor’s expense temporary emergency measures and Lessor shall
reimburse Lessee on demand for the costs and expenses associated with such
measures.  Lessee shall use all reasonable efforts to notify Lessor by telephone
of any such emergency.

 

8.             The Lessor’s obligation or election to restore the Leased
premises under this Article shall not include the repair, restoration or
replacement of the fixtures, improvements, alterations, furniture or any other
property owned, installed, or for any goods or inventory, made by or in the
possession of the Lessee.

 

9.             Lessor shall obtain and keep in force a policy of general
liability insurance with coverage against such risks and in such amounts as
Lessor deems advisable insuring Lessor against liability arising out of the
ownership, operation and management of the Building and the property on which
the Building is located.

 

ARTICLE XII. - LESSEE’S PROPERTY

 

1.             All of the Lessee’s personal property of every kind or
description which may at any time be in the Leased Premises shall be at the
Lessee’s sole risk, or at the risk of those claiming under the Lessee, and the
Lessor shall not be liable for any damage to said property or loss suffered by
the business or occupation of the Lessee caused by water from any source
whatsoever or from the bursting, overflowing or leading of sewer or steam pipes
or from the

 

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sprinkler system or from the heating or plumbing fixtures or from electric wires
or from gas or odors caused in any manner whatsoever.

 

2.             “Lessee’s Property” means Lessee’s furniture, fixtures, equipment
and partitions whether moveable or affixed to the Leased Premises or the
Building, including, without limitation, telephone and other office
communications equipment, computer systems, HVAC units, generators, UPS, raised
floors, dry coolers, equipment racks and cages, metal cabinets, and other
furniture, fixtures, trade fixtures, furnishings and items of personal property
which are removable from the Leased Premises or Building subject to repair of
any damage to the Leased Premises or Building by Lessee arising from such
removal.

 

(a)           Lessee may, from time to time and without the consent or approval
of Lessor, grant security interests in Lessee’s Property and execute and deliver
security agreements, Uniform Commercial Code Financing Statements, equipment
financing agreements, conditional bills of sale, leases or other title retention
agreements or any modifications, extensions, replacement or amendments thereto
in connection with the granting of security interests in Lessee’s Building
(collectively “Equipment Financing Agreements”).

 

(b)           Lessee may, from time to time and without the consent of Lessor,
assign, mortgage, hypothecate or otherwise transfer on encumber Lessee’s
interest in this Lease as collateral security by way of a leasehold mortgage in
connection with (i) the payment and performance of Lessee’s obligations under
the terms of any Equipment Financing Agreement affecting Lessee’s Property or
(ii) other financing of Lessee made in the ordinary course; provided, however,
that the holder of any such leasehold mortgage shall be the grantee of a
security interest in substantially all of Lessee’s Property subject to the
Equipment Financing Agreements.

 

(c)           Lessor hereby waives any contractual and/or statutory “landlord
lien” or similar security interest it would otherwise have as to Lessee’s
Property and equipment of Lessee located within the Leased Premises or on the
Building and Lessor shall execute and deliver consents, access agreements, lien
waivers and other documents reasonably required by the holder or beneficiary of
any Equipment Financing Agreement, including, without limitation, an access
agreement and lien waiver; provided, however, that Lessor specifically reserves
any such rights or interest as to the fire protection system located in the
Leased Premises,

 

ARTICLE XIII. - ACCESS TO LEASED PREMISES

 

1.             The Lessee shall permit the Lessor and the Lessor’s agents, upon
reasonable advance notice to Lessee, to inspect and examine the Leased Premises
at any reasonable time and from time to time during normal business hours
accompanied by a representative of Lessee to make repairs, decorations,
alterations, improvements or additions in the Leased Premises or to the
Building.

 

2.             The Lessor shall also have the right to enter the Leased Premises
for a period commencing one hundred eighty (180) days prior to the expiration of
the Term of this Lease for the purpose of exhibiting the same to prospective
tenants or purchasers.  During said period the

 

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Lessor may place signs in or upon the Leased Premises to indicate that same are
for rent or sale, which signs shall not be removed, obliterated or hidden by
Lessee.

 

ARTICLE XIV. - ESTOPPEL CERTIFICATE; SUBORDINATION; ATTORNMENT

 

1.             At any time, and from time to time, upon the written request of
Lessor or Lessor’s mortgagee, or Lessee, Lessee or Lessor, within twenty (20)
days of the date of such written request, agrees to execute and deliver to
Lessor, or Lessor’s mortgagee, or Lessee without charge and in a commercially
reasonable form satisfactory to Lessor or Lessee, a written statement stating,
to the best of Lessee’s or Lessor’s knowledge, the following, to the extent that
such matters are true and correct: (a) confirming the commencement and
expiration dates of the term of this Lease; (b) certifying that Lessee is in
occupancy of the Leased Premises, and that the Lease is in full force and effect
and has not been modified, assigned, supplemented or amended except by such
writings as shall be stated; (c) certifying that all conditions and agreements
under this Lease to be satisfied or performed by Lessor have been satisfied and
performed or stating those conditions and agreements under this Lease which
Lessee claims have not been so satisfied; (d) certifying that there are no
defenses or offsets against the enforcement of the Lease by Lessor, or stating
those claimed by Lessee; (e) reciting the amount paid by Tenant and the date to
which such to which such rent has been paid; (f) reciting the amount of security
deposited with Lessor, if any; and (h) any other information which Lessor,
Lessee or Lessee’s mortgagee shall reasonably require.

 

2.             Intentionally Omitted.

 

3.             Provided that Lessee has received from each mortgagee of Lessor a
non-disturbance and attornment agreement, which shall be in form and substance
reasonably satisfactory to Lessee and its counsel and which shall be in
recordable form, Lessee agrees: (a) that except as hereinafter provided, this
Lease, and all of Lessee’s rights hereunder, shall be subject and subordinate to
any first mortgage and to all advances made or to be made thereunder and to the
interest thereon, and all renewals, replacements, modifications, consolidations,
or extensions thereof; and (b) that if the holder of any such mortgage
(“Mortgagee”) or if the purchaser at any foreclosure sale or at any sale under a
power of sale contained in any Mortgage shall at its sole option so request,
Lessee will attorn to, and recognize such Mortgagee or purchaser, as the case
may be, as Lessor under this Lease for the balance then remaining of the Term of
this Lease, subject to all terms of this Lease.  Notwithstanding anything to the
contrary set forth above, any Mortgagee may at any time subordinate its Mortgage
to this Lease, without Lessee’s consent, by execution of a written document
subordinating such Mortgage to this Lease to the extent set forth therein, and
thereupon this Lease shall be deemed prior to such Mortgage to the extent set
forth in such written document without regard to their respective dates of
execution, delivery and/or recording and in that event, to the extent-set forth
in such written document such Mortgagee shall have the same rights with respect
to this Lease as though this Lease had been executed and a memorandum thereof
recorded prior to the execution, delivery and recording of the Mortgagee and as
though this Lease had been assigned to such Mortgagee.  Should Lessor or any
Mortgagee or purchaser desire confirmation of either such subordination or such
attornment, as the case may be, Lessee upon written request, and from time to
time, will execute and deliver without charge and in form satisfactory of Lessor
the Mortgagee or the

 

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purchaser all instruments and/or documents that may be requested to acknowledge
such subordination and/or agreement to attorn, in recordable form.

 

ARTICLE XV. - EVENTS OF DEFAULT; LESSOR’S REMEDIES AND DAMAGES

 

l.              Each of the following shall constitute an “Event of Default”:

 

(a)           If Lessee defaults in the payment of any sum of money (whether
Basic monthly Rent, Additional Rent or otherwise) when due and such default
shall continue for ten (10) days after the date of written notice from Lessor to
Lessee.

 

(b)           If Lessee defaults in fulfilling any of the other covenants of
this Lease on Lessee’s part to be performed hereunder and such default shall
continue for the period within which performance is required to be made by
specific provision of this Lease, or, if no such period is so provided, for
thirty (30) days after the date or written notice from Lessor to Lessee
specifying the nature of said default, or, if the default so specified shall be
of such a nature that the same cannot be reasonably cured or remedied within
said thirty (30) day period, if Lessee shall not in good faith have commenced
the curing or remedying of such default within such thirty (30) day period and
shall not thereafter diligently proceed therewith to completion.

 

(c)           If any execution or attachment shall be issued against Lessee or
any of Lessee’s property and shall not be discharged, bonded off, or vacated
within sixty (60) days after the issuance thereof.

 

(d)           If by order of a court of competent jurisdiction, a receiver or
liquidator or trustee of Lessee or any guarantor, if any, of this Lease, or of
any of its property, shall be appointed and shall not have been discharged,
dismissed or stayed within 90 days, or if by decree of a court of competent
jurisdiction Lessee or any such guarantor shall be adjudicated bankrupt or
insolvent, or any of its property shall have been sequestered, and such decree
shall have continued undischarged, undismissed, or unstayed for 90 days after
the entry thereof, or if any proceedings under the Federal Bankruptcy Act or any
similar statute applicable to Lessee or any such guarantor, if any, as or
hereafter in effect, shall be instituted by or against it and shall not be
discharged, dismissed or stayed within 90 days after such filing, or if Lessee
or any such guarantor, if any, shall institute any such proceeding or shall
consent to the institution of any such proceeding against it under any such law,
or Lessee or any such guarantor shall consent the appointment of a receiver or
liquidator or trustee of it or of all or any part of its property,

 

2.             During the occurrence of any Event of Default, upon compliance
with the requirements of applicable law, or, at any time thereafter, Lessor may,
at its option, terminate this Lease, whereupon the estate hereby vested in
Lessee shall cease and any and all other right, title and interest of Lessee
hereunder shall likewise cease without notice or lapse of time, as fully and
with like effect as if the entire term of this Lease had elapsed, but Lessee
shall continue to be liable to Lessor as hereinafter provided.

 

3.             During the occurrence of any Event of Default, upon compliance
with the requirements of applicable law, or at any time thereafter, Lessor, in
addition to and without prejudice to any other rights and remedies Lessor shall
have at law or in equity, shall have the right to re-enter the Leased Premises,
either by force or otherwise, and recover possession

 

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thereof and dispossess any or all occupants of the Leased Premises in the manner
prescribed by the applicable statute relating to summary proceedings, or similar
statutes, but Lessee in such case shall remain liable to Lessor as hereinafter
provided.

 

4.             In case of any re-entry, expiration and/or dispossession by
summary proceedings, as provided in Sections 2 and 3 of this Article XV above,
whether or not this Lease shall have been terminated as aforesaid:

 

(a)           All delinquent rent and all other sums required to be paid by
Lessee hereunder shall become payable thereupon and be paid up to the time of
such re-entry, expiration and/or dispossession;

 

(b)           Lessor shall use its best efforts to mitigate Lessee’s damages. 
Consistent therewith Lessor shall have the right to relet the Leased Premises or
any part or parts thereof for the account of Lessee, either in the name of
Lessor or otherwise, for a term or terms which may, at Lessors option, be less
than or exceed the period which would otherwise have constituted the balance of
the term of this Lease and on such conditions (which may include commercially
reasonable concessions or free rent) as Lessor, in its reasonable discretion,
may determine, and Lessor may collect and receive the rents therefor; and

 

(c)           Lessee shall reimburse Lessor for any expenses that Lessor may
incur in connection with recovering possession of the Leased Premises and any
reletting thereof, such as court costs, reasonable attorneys’ fees and brokerage
fees, the costs of advertising and the costs of any alterations, repairs,
replacements and/or decorations in or to the Leased Premises as Lessor, in
Lessor’s reasonable judgment, considers advisable and necessary for the purpose
of such reletting of the Leased Premises.

 

5.             In the case of termination of this Lease as provided in Section 2
of this Article XV above, Lessee shall pay Lessor, at Lessor’s option, either:

 

(a)           An amount equal to (i) the rent and all other sums required to be
paid by Lessee hereunder during the period which otherwise would have
constituted the unexpred portion of the term of this Lease, and all damages,
costs, fees and expenses incurred by Lessor as a result of such Event of
Default, including without limitation, reasonable attorneys’ fees, costs and
expenses incurred by Lessor in pursuit of its remedies hereunder, less (ii)
rent, if any, received by Lessor pursuant to any reletting of the Leased
Premises during the period which would otherwise have constituted the balance of
the term of this Lease; such amount calculated pursuant to this subparagraph
shall be payable in monthly installments, in advance, on the first day of each
calendar month following occurrence of such termination and continuing during
the period which would otherwise have constituted the balance of the term of
this Lease; or

 

(b)           An amount equal to (i) the present worth of the rent and all other
sums required to be paid by Lessee hereunder during the period which would
otherwise have constituted the balance of the term of this Lease, and all
damages, costs, fees and expenses incurred by Lessor as a result of such Event
of Default, including without limitation, reasonable attorneys’ fees, costs and
expenses incurred by Lessor in pursuit of its remedies hereunder, less (ii) the
present worth of the fair rental value of the Leased Premises during such period
of time,

 

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as determined by an independent real estate appraiser named by Lessor and
approved by Lessee; such amount calculated pursuant to this subparagraph shall
be payable to Lessor in one lump sum on demand and shall bear interest at eight
percent (8%) per annum, until paid.  For purposes of this clause (b), “present
worth” shall be computed by discounting such amount to present worth at a
discount rate equal to the greater of (X) prime plus one percent (1%), and six
percent (6%) per annum.

 

6.             In the event Lessee commits an Event of Default, or suffers an
Event of Default to exist, Lessee shall reimburse Lessor for Lessor’s reasonable
attorneys’ fees incurred by Lessor in the enforcement of this Lease, within ten
(10) days after written demand.

7.             Tenant shall pay Lessor interest at eight percent (8%) per annum
on all failures to pay timely the Basic Monthly Rent or any other sums required
to be paid by Lessee to Lessor hereunder, such interest to be calculated from
the date such payment is due until the date such payment is made to Lessor.

 

8.             Lessor’s Default.  Lessor shall be deemed to be in default of
this Lease if Lessor fails to make any payments to Lessee required under this
Lease and such failure continues for ten (10) days after written notice from
Lessee to Lessor, or if Lessor shall be in default in the prompt and full
performance of any other of its promises, covenants or agreements contained in
this Lease and such default in performance continues for more than thirty (30)
days after written notice thereof from Lessee to Lessor specifying the
particulars of such default or breach of performance; provided, however, that if
the default complained of, other than for the payment of monies, is of such a
nature that the same cannot be rectified or cured within such thirty (30) day
period, then such default shall be deemed to be rectified or cured if Lessor,
within such thirty (30) day period shall have commenced such cure and shall
continue thereafter with due diligence to cause such cure to be completed.  Upon
any default of this Lease by Lessor, Lessee shall be entitled to pursue any and
all remedies available to Lessee at law or in equity.

 

ARTICLE XVI. - INDEMNIFICATION; SUBROGATION

 

1.             Indemnification and Waiver of Claim.

 

(a)           To the extent that the same shall not be covered by insurance,
Lessee will, except to the extent caused by the negligence of Lessor, its
agents, servants, and employees, defend, indemnify and save harmless Lessor and
its agents from and against any and all claims, actions, damages (excluding
consequential or punitive damages), liabilities and expenses (including, but not
limited to, reasonable attorney’s fees and disbursements) in connection with the
loss of life, personal injury or damage to property or business to the extent
arising from, related to, or in connection with the occupancy or use by Lessee
of the Leased Premises or any part of Lessor’s property or to the extent
resulting from the negligence of Lessee, its agents, servants or employees,
provided that Lessee shall have the right to choose counsel to defend such
claims and Lessee shall keep Lessor informed and no settlement shall be made
which would materially adversely affect Lessor’s interest.  Lessee shall also
pay all costs, expenses and reasonable attorneys fees that may be expended or
incurred by Lessor in successfully enforcing the covenants and agreements of
this Lease.

 

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(b)           To the extent that the same shall not be covered by insurance,
Lessor will, except to the extent caused by the negligence of Lessee, its
agents, servants and employees, defend, indemnify and save harmless Lessee and
its agents from and against any and all claims, actions, damages (excluding
consequential or punitive damages), liabilities and expenses (including, but not
limited to reasonable attorney’s fees and disbursements) in connection with the
loss of life, personal injury or damage to property or business to the extent
arising from, related to, or in connection with the ownership of the Building
(including the Leased Premises) by Lessor or to the extent resulting from the
negligence of Lessor, its agents, servants, or employees, provided that Lessor
shall have the right to choose counsel to defend such claims and Lessor shall
keep Lessee informed and no settlement shall be made which would adversely
affect Lessee’s interest.  Lessor shall also pay all costs, expenses, and
reasonable attorneys’ fees as may be incurred by Lessee in successfully
enforcing the covenants and agreements of this Lease.

 

2.             Subrogation.

 

In the event the Leased Premises or its contents are damaged or destroyed by
fire or other insured casualty, (a) Lessor, to the extent of the coverage of
Lessor’s policies of fire insurance with extended coverage endorsements, hereby
waives its rights, if any, against Lessee with respect to such damage or
destruction, even if said fire or other casualty shall have been caused, in
whole or in part, by the negligence of Lessee, its agents, servants or
employees, and (b) Lessee, to the extent of the coverage of Lessee’s policies of
fire insurance with extended coverage, hereby waives its rights, if any, against
Lessor with respect to such damage, or destruction, even if said fire or other
casualty shall have been caused, in whole or in part, by the negligence of
Lessor, its agents, servants or employees, provided, however, such waivers of
subrogation shall only be effective with respect to loss or damage occurring
during such time as Lessor’s or Lessee’s policies of fire insurance with
extended coverage endorsements (as the case may be) shall contain a clause or
endorsement providing in substance that the aforesaid waiver of subrogation
shall not prejudice the type and amount of coverage under such policies or the
right of Lessor or Lessee (as the case may be) to recover thereunder.  If, at
any time, Lessor’s or Lessee’s insurance carrier refuses to write insurance
which contains a consent to the foregoing waiver of subrogation, Lessor or
Lessee, as the case may be, shall notify the other party thereof in writing, and
upon the giving of such notice, the provisions of this Section shall be null and
void as to any casualty which occurs after such notice.  If Lessor’s or Lessee’s
insurance carrier shall make a charge for the incorporation of the aforesaid
waiver of subrogation in its policies, then the party requesting the waiver
shall promptly pay such charge to the other party, upon demand.  In the event
the party requesting the waiver fails to pay such charge upon demand, the other
party shall be released of its obligation to supply such waiver.

 

ARTICLE XVII. - NO WAIVER

 

1.             No failure on the part of the Lessor and/or Lessee to exercise,
and no delay in exercising, any right or remedy of which it may be possessed
shall operate as a waiver thereof, nor shall any single or partial exercise by
the Lessor and/or Lessee of any right or remedy of which it may be possessed
preclude any other or future exercise thereof or the exercise of any other right
or remedy.

 

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ARTICLE XVIII. – EMINENT DOMAIN

 

1.             Total condemnation.

 

If the whole of the Leased Premises shall be taken by any public or quasi-public
authority under the power of eminent domain, condemnation or expropriation or in
the event of a conveyance in lieu thereof, then this Lease shall terminate as of
the date on which possession of the Leased Premises is required to be
surrendered to the condemning authority.

 

2.             Partial condemnation.

 

If any part of the Leased Premises shall be so taken or conveyed and if such
partial taking or conveyance shall render the Leased Premises unsuitable for the
business of the Lessee, then the term of this Lease shall cease and terminate as
of the date on which possession of the Leased Premises is required to be
surrendered to the condemning authority.  In the event such partial taking is
extensive enough to render the Leased Premises unsuitable for the business of
Lessee, in Lessee’s sole discretion, Lessee shall have the right to terminate
this Lease by giving written notice of termination to Lessor.  In the event such
partial taking is not extensive enough to render the Leased Premises unsuitable
for the business of Lessee, this Lease shall continue in full force and effect
except that the Basic Monthly Rent shall be reduced in the same proportion that
the floor area of the Leased Premises so taken or conveyed bears to such floor
area immediately prior to such taking or conveyance such reduction commencing as
of the date Lessee is required to surrender possession of such portion.  Lessor
shall promptly restore the Leased Premises, to the extent of condemnation
proceeds available for such purpose, as nearly as practicable to a condition
comparable to their condition at the time of such condemnation less the portion
lost in the taking or conveyance and Lessee shall promptly make all necessary
repairs, restoration and alterations of Lessee’s fixtures, equipment and
furnishings and shall promptly re-enter the Leased Premises and commence doing
business in accordance with the provisions of this Lease.  For purposes of
determining the amount of funds available for restoration of the Leased Premises
from the condemnation award said amount will be deemed to be that part of the
award which remains after payment of Lessor’s reasonable expenses incurred in
recovering same and of any amounts due to any mortgagee of Lessor, and which
represents a portion of the total sum so available (excluding any award or other
compensation for land) which is equitably allocable to the Leased Premises.

 

3.             In the event of total condemnation or of partial condemnation,
Lessor and Lessee shall each be entitled to receive such damages from the
condemning authority as are provided by applicable law.

 

ARTICLE XIX. - OPTION TO RENEW

 

1.             Providing that no Event of Default then exists, Lessee shall have
the right and option, which option shall be exercised by written notice by the
Lessee to the Lessor at least six (6) months prior to the expiration of the then
current term, to extend the term of the within Lease for up to two (2)
additional five (5) year terms immediately following the original Term or any
extension term, as the case may be, under the same terms and conditions as
herein provided, except that the rents payable during each of the extension
terms shall be as follows:

 

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(a)           During the initial thirty (30) months of the first extension term,
the annual rent shall be Six Hundred Twenty Thousand Five Hundred Dollars
($620,500), payable in equal monthly installments of Fifty One Thousand Seven
Hundred and Eight Dollars and Thirty-three Cents ($51,708.33), which annual
rental shall be determined by multiplying $3.65 per square foot times the
170,000 square feet of leased area as provided in this Lease.

 

(b)           During the remaining thirty (30) months of the first extension
term, the annual rent shall be Six Hundred Thirty Nine Thousand Two Hundred
Dollars ($639,200), payable in equal monthly installments of Fifty Three
Thousand Two Hundred Sixty-six Dollars and Sixty-six Cents ($53,266.66), which
annual rental shall be determined by multiplying $3.76 per square foot times the
170,000 square feet of leased area as provided in this Lease.

 

(c)           During the initial thirty (30) months of the second extension
term, the annual rent shall be Six Hundred Fifty-seven Thousand Nine Hundred
Dollars ($657,900), payable in equal monthly installments of Fifty-four Thousand
Eight Hundred Twenty-five Dollars ($54,825), which annual rental shall be
determined by multiplying $3.87 per square foot times the 170,000 square feet of
leased area as provided in this Lease.

 

(d)           During the remaining thirty (30) months of the second extension
term, the annual rental shall be Six Hundred Seventy-four Thousand Nine Hundred
Dollars ($674,900), payable in equal monthly installments of Fifty-six Thousand
Two Hundred Forty-one Dollars and Sixty-six Cents ($56,241.66), which annual
rental shall be determined by multiplying $3.97 per square foot times the
170,000 square feet of leased area as provided in this Lease.

 

All other terms and conditions of this Lease shall remain in full force and
effect during each of the option terms.

 

ARTICLE XX. - ASSIGNMENT AND SUBLETTING

 

1.             Assignment and Subletting.

 

(a)           Lessee shall not voluntarily, involuntarily, or by operation of
law, assign, transfer, mortgage or otherwise encumber (herein collectively
referred to as an “assignment”) this Lease or any interest of Lessee herein, in
whole or in part, nor sublet the whole or any part of the Leased Premises, nor
permit the Leased Premises or any part thereof to be used or occupied by others,
without first obtaining in each and every instance the prior written consent of
Lessor, not to be unreasonably withheld, delayed or conditioned.  Any consent by
Lessor to an assignment or subletting or use or occupancy by others shall be
held to apply only to the specific transaction thereby authorized and shall not
constitute a waiver of the necessity for such consent to any subsequent
assignment or subletting or use or occupancy by others, including, but not
limited to a subsequent assignment or subletting by any trustee, receiver,
liquidator, or personal representative of Lessee, nor shall the references
anywhere in this Lease to subtenants, licensees and concessionaires be construed
as a consent by Lessor to an assignment.  If this Lease or any interest herein
be assigned or if the Leased Premises or any part thereof be sublet or used or
occupied by anyone other than Lessee without Lessor’s prior written consent
having been obtained thereto, Lessor may nevertheless collect rent (including,
but not limited to, Basic Monthly Rent, and Additional Rent) from the assignee,
sublessee, user or occupant and apply the

 

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net amount collected to the rents herein reserved, and furthermore in any such
event Lessee shall pay to Lessor monthly, as additional rent, the excess of the
consideration received or to be received during such month for such assignment,
sublease or occupancy (whether or not denoted as rent) over the rental reserved
for such month in this Lease applicable to such portion of the Leased Premises
so assigned, sublet or occupied.  In calculating any excess rent payable by
Lessee to Lessor pursuant to this provision, Lessee shall first be entitled to
deduct (a) the gross revenue paid to Lessor by Lessee with respect to the
subject portion of the Leased Premises during the period commencing on the date
the Lessee vacates the subject portion of the Leased Premises until the date the
assignee or sublessee is obligated to pay rent pursuant to its assignment or
sublease; (b) improvement allowances or other economic concessions granted by
Lessee to the assignee or sublessee; (c) the unamortized costs of initial and
subsequent improvements to the subject portion of the Leased Premises paid for
by Lessee; (d) costs incurred by Lessee to buy-out or take over the previous
lease of the assignee or sublessee; (e) all costs incurred by Lessee to
advertise the subject portion of the Leased Premises for assignment or sublease;
and (f) brokerage commissions and or legal fees paid by Lessee in connection
with the assignment or sublease.  No such assignment, subletting, use, occupancy
or collection shall be deemed a waiver of the covenant herein against
assignment, subletting or use or occupancy by others, or the acceptance of the
assignee, subtenant, user or occupant as Lessee hereunder or constitute a
release of Lessee from the further performance by Lessee of the terms and
provisions of this Lease.  If this Lease or any interest of Lessee herein be
assigned or if the whole or any part of the Leased Premises be sublet or used or
occupied by others, after having obtain Lessor’s prior written consent thereto,
Lessee shall nevertheless remain fully liable for the fall performance of all
obligations under this Lease to be performed by Lessee and Lessee shall not be
released therefrom in any manner.

 

(b)           The foregoing provisions regarding assignment or subletting shall
in no way prohibit and Lessor’s consent shall not be required in connection
with, (i) the sale of all or substantially all of the assets of Lessee, (ii) the
sale of all or any part of the shares of capital stock of Lessee including
without limitation in connection with an initial public offering or follow-on
public offering or otherwise, (iii) the merger, consolidation, or any other
combination of Lessee to or with any other business entity, (iv) an assignment
or subletting to a subsidiary, affiliate, or other parent entity to which Lessee
controls is controlled by or is under common control with, Lessee.  Following
any such sale, merger, consolidation or combination, successor Lessee resulting
from such sale, merger, consolidation or combination shall remain bound by the
provisions of this Article XX.

 

ARTICLE XXI. - SURRENDER

 

1.             The Lessee covenants to the Lessor to deliver up and surrender to
the Lessor possession of the Leased Premises upon expiration of this Lease or
its earlier termination as herein provided, structurally sound, broom clean and
in good condition and repair, ordinary wear and tear excepted.  Acceptance of
delivery of the Leased Premises or opening same for business shall be deemed
conclusive evidence that the Leased Premises were in good condition and repair
at the commencement of the Term of this Lease.

 

2.             The Lessee shall at Lessee’s expense remove all property of
Lessee and repair all damage to the Leased Premises caused by such removal.  Any
property not so removed and as to

 

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which the Lessor shall have not made said election, shall be deemed to have been
abandoned by the Lessee and may be retained or disposed of by the Lessor, as the
Lessor shall desire.  The Lessee’s obligation to observe or perform this
covenant shall survive the expiration of the Term of this Lease.  Anything to
the contrary notwithstanding in this paragraph, it is acknowledged by Lessor
that Lessee has installed a certain air conditioning/humidifier in the space
being leased, title to which will remain in the Lessee and which may be removed
by Lessee at the end of the Term or any renewal term, or on termination of this
Lease, provided, however, that Lessee shall, at Lessee’s sole cost and expense,
upon removal of said units, repair and replace the opening created by such
removal, which will be reasonably acceptable to the Lessor.

 

ARTICLE XXII. - LESSOR’S RIGHT OF EXPANSION

 

1.             During the term of this Lease, at the option of Lessor, Lessor
shall have the right to expand the Building by making such additions thereto as
Lessor may desire and/or by constructing a separate building, providing the
expansion or separate building shall not jeopardize the Lessee’s safety or its
flow of production or unreasonably interfere with Lessee’s operation of its
business at the Leased Premises.

 

ARTICLE XXIII. - MISCELLANEOUS

 

1.             Intentionally Omitted.

 

2.             Holding over.  Should Lessee hold over in possession of the
Leased Premises after the expiration of the term hereof without the execution of
a new lease, agreement of extension or renewal agreement, Lessee shall be deemed
to be occupying the Leased Premises from month to month, subject to such
occupancy being terminated by either party upon at least thirty (30) days,
written notice, at the rental, including, but not limited to, Basic Monthly Rent
and Additional Rent all calculated, from time to time, as though the Term of
this Lease had continued and otherwise subject to all of the other terms,
covenants and conditions of the Lease insofar as the same may be applicable to a
month to month tenancy.

 

3.             Intentionally Omitted.

 

4.             Quiet enjoyment.  So long as there exists no Event of Default,
Lessor covenants and agrees that Lessee shall peaceably and quietly hold and
enjoy the Leased Premises for the Term hereby demised without hindrance or
interruption by Lessor or any other person or persons lawfully claiming by,
through or under Lessor.

 

5.             Waiver.  The waiver by Lessor or Lessee of any breach of any
term, covenant or condition herein contained shall not be deemed to be a waiver
or any subsequent breach of the same or a waiver of any other term, covenant or
condition herein contained.  The subsequent acceptance by Lessor of rent due
hereunder or any or all other monetary obligations of Lessee hereunder, whether
or not denoted as rent hereunder, shall not be deemed to be a waiver of any
preceding breach by Lessee of any term, covenant or condition of this Lease,
other than the failure of Lessee to make the particular payment so accepted,
regardless of Lessor’s knowledge of such preceding breach at the time of
acceptance of such rent.  No covenant, term or condition of the Lease shall be
deemed to have been waived by Lessor or Lessee, unless such waiver be in writing
and executed by Lessor or Lessee.

 

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6.             Accord and Satisfaction.  No payment by Lessee or Lessor or
receipt by Lessor or Lessee of a lesser amount than any payment of Basic Monthly
Rent or Additional Rent or other amount herein stipulated to be paid to Lessor
or Lessee shall be deemed to be other than on account of the earliest stipulated
Basic Monthly Rent or Additional Rent or other amount then due and payable to
Lessor or Lessee, as the case may be, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment as rent or other
amount due and payable to Lessor or Lessee be deemed an accord and satisfaction,
and Lessor or Lessee may accept such check or payment without prejudice to
Lessor’s or Lessee’s right to recover the balance of such rent or any other
amount due and payable to Lessor or Lessee or pursue any other remedy provided
in this Lease, at law or in equity.

 

7.             Performance of Covenants.  Lessee covenants and agrees that it
will perform all agreements and observeall covenants herein expressed on its
part to be performed and observed and that it will promptly, upon receipt of
written notice specifying the action required by Lessee in connection with any
such agreement or covenant, comply with such notice; and further, that if Lessee
shall not comply with any such notice to the satisfaction of Lessor prior to the
date on which such noncompliance would constitute an Event of Default, in
addition to, and not in lieu of or in limitation of any other remedy which
Lessor may have pursuant to this Lease, at law or in equity, Lessor may, but
shall not be obligated to, enter upon the Leased Premises and do the things
specified in said notice.  Lessor shall have no liability to Lessee for any loss
or damage existing in any way from such action and Lessee agrees to pay upon
demand, as Additional Rent, any expense incurred by Lessor in taking such
action.  Notwithstanding the foregoing, Lessor’s performance of any or all of
Lessee’s covenants shall not release Lessee from liability-for non-performance
except arising out of Lessor’s negligence or willful acts or omissions.

 

Lessor covenants and agrees that it will perform all agreements and observe all
covenants herein expressed on its part to be performed and observed and that it
will promptly, upon receipt of written notice specifying the action required by
Lessor in connection with any such agreement or covenant, comply with such
notice.  In the event Lessor shall fail to perform any such covenant, as
specified in any such notice, Lessee shall have the right to perform the same
and to charge One Hundred percent (100%) of the cost thereof to Lessor,
including the right to offset such charges against Basic Monthly Rent thereafter
becoming due.

 

9.             Entire Agreement.  The Lease, including the Exhibits and Rider,
if any, and that certain Subordination, Non-Disturbance and Attornment Agreement
dated                  ,     , 2002 among Archon Financial, L.P., a Delaware
limited partnership, Lessor and Lessee (the “SNDA”), set forth all the
covenants, promises, agreements, conditions and understandings between Lessor
and Lessee concerning the Leased Premises and there are no covenants, promises,
agreements, conditions or understandings, either oral or written, between them
other than as herein set forth.  All prior communications, negotiations,
arrangements, representations, agreements and understandings, whether oral,
written or both, between the parties hereto, and their representatives, are
merged herein and extinguished, this Lease superseding and canceling the same. 
Except as herein otherwise provided, no subsequent alteration, amendment, change
or addition to this Lease shall be binding upon Lessor or Lessee unless reduced
to writing and executed by both Lessor and Lessee.

 

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10.           No Partnership.  Lessor does not, in any way or for any purpose,
become a partner of Lessee in the conduct of its business, or otherwise, or
joint venturer or a member of a joint enterprise with Lessee.

 

11.           Captions and Index.  The captions and index appearing in the
-Lease are inserted only as a matter of convenience and i n no way define,
limit, construe or describe the scope or intent of such sections or articles of
this Lease nor in any way affect this Lease.

 

12.           Lessee Defined.  The word “Lessee” shall be deemed and taken to
mean each and every person or party mentioned as a Lessee herein, be the same
one or more; and if there shall be more than one Lessee, any noticed required or
permitted by the terms of this Lease may be given by or to any one thereof, and
shall have the same force and effect as if given by or to all thereof.  The use
of the neuter singular pronoun to refer to Lessor or Lessee shall be deemed a
proper reference even though Lessor or Lessee may be an individual, a
partnership, a corporation, or a group of two or more individuals or
corporations.  The necessary grammatical changes required to make the provisions
of this Lease apply in the plural number where there is more than one Lessor or
Lessee and to either corporations, associations, partnerships or individuals,
males and females, shall in all instances be assumed as though in each case
fully expressed.

 

13.           Partial Invalidity; Separate Covenants.  If any term, covenant or
condition of this Lease or the application thereof to any person or circumstance
shall to any extent, be invalid or unenforceable, the remainder of this Lease or
the application of such term, covenant, or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable shall not be
affected thereby and each term, covenant and condition of this Lease shall be
valid and be enforced to the fullest extent permitted by law.  Furthermore, each
covenant, agreement, obligation and other provision contained in this Lease is,
and shall be deemed and construed as a separate and independent covenant of the
party bound by, undertaking or making the same, and not dependent on any other
provision of this Lease unless expressly so provided.

 

14.           Recording.  Lessee and Lessor shall not record this Lease without
the written consent of the other party.  If Lessor or Lessee requests, the
parties shall execute and acknowledge a short form memorandum of lease in form
suitable for recording purposes of which shall be recorded at Lessor’s expense.

 

15.           Broker’s Commission.  Lessee represents and warrants to Lessor
that it has not dealt with any broker and Lessee shall indemnify and save
harmless Lessor from and against all claims, costs, suits or actions, including
any cost and reasonable attorney’s fees, which may be asserted against the
Lessor by any broker who claims to be owed a fee or commission from Lessee in
connection with the execution of this Lease.  Lessor does hereby represent and
warrant to Lessee that it has not dealt with any broker and Lessor agrees to
indemnify and save harmless Lessee from, and against allclaims, costs, suits or
actions, including any cost and reasonable attorney’s fees, which may be
asserted against the Lessee by any broker who claims to be owed a fee or
commission from Lessor in connection with the execution of this Lease.

 

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16.           Construction.  It is the intent of the parties hereto that all
terms, covenants, conditions, or agreements of this Lease shall be interpreted
according to their fair meaning and shall not be strictly construed against
either party.

 

17.           Notices.  All notices, requests, consents, approvals or other
communications required or otherwise given hereunder shall be in writing and
mailed by written notice or personal delivery, by Federal Express or other
similar service, or by Certified mail, Return Receipt Requested, postage
prepaid, addressed to the parties as follows:

 

As to Lessor:
Group Three Properties, Inc.
Cross Roads Corporate Center
4641 Pottsville Pike, Suite E
Reading, PA 19605

 

As to Lessee:

 

FiberMark DSI, Inc.
161 Wellington Road
Brattleboro, VT 05302

 

With a copy to:

 

Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention:  Peter Tarr, Esquire

 

which written notice shall be deemed to have been given by either party when
said written notice is actually received by either party.

 

18.           Governing Law.  This Agreement shall be construed and interpreted
in accordance with the laws of the Commonwealth of Pennsylvania, without regard
for the law of conflict of laws.

 

19.           Successors.  The parties hereto do hereby agree that this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, their respective heirs, personal representatives and assigns.

 

20.           Counterparts.  This Lease may be executed in any number of
counterparts, all of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.

 

21.           Reasonableness.  Regardless of any references to the words “sole”
or “absolute” (but except for matters which will have an adverse effect on (a)
structural integrity of the Building (b) the Building’s plumbing, heating, life
safety, ventilating, air conditioning, mechanical or electrical systems, or (c)
the exterior appearance of the Building, whereupon in each such case Lessor’s
duty is to act in good faith and in compliance with the Lease), any time

 

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the consent of Lessor or Lessee is required, such consent shall not be
unreasonably withheld, conditioned or delayed.  Whenever the Lease grants Lessor
or Lessee the right to take action, exercise discretion, establish rules and
regulations, or make allocations or other determinations, Lessor and Lessee
shall act reasonably in good faith.

 

22.           Reciprocal Litigation.  In the event of any litigation between
Lessor and Lessee, the unsuccessful party as determined by a court of competent
jurisdiction shall reimburse the successful party for all legal fees and
expenses incurred by the successful party in prosecuting or defending any such
action.

 

23.           Lease Conditioned Upon Execution and Delivery of Lease Termination
Agreements.  This Lease is conditioned upon, and shall not be effective, and the
Existing Lease shall not terminate, unless and until, (i) Lessor has delivered
to Lessee a certified copy of a fully executed Agreement of Termination,
Assignment, Indemnity and Release among Lessor, Premium, and JMH, providing for,
inter alia, the termination of that certain lease agreement between Lessor and
Premium dated December 8, 1997, as amended to date(as so amended, the “PBP
Lease”) and all of Premium’s and/or JMH’s right, title and interest in and to
the Leased Premises and the Building, including, without limitation, termination
of JMH’s option to purchase the Building (or any portion thereof), including a
discharge of such option to purchase in recordable form, and (ii) Lessor has
delivered to Lessee the SNDA.

 

24.           Lessor’s Representations.  Lessor (i) represents and warrants to
Lessee that, as of the date hereof, no third parties have any right, title and
interest in and to the Leased Premises and the FiberMark Building, including
without limitation any right of first refusal or option to expand into the
Leased Premises or the FiberMark Building, or any option to purchase the
FiberMark Building, and (ii) shall indemnify and save harmless Lessee from any
and all liability, costs, expenses, damages, causes of action, claims, judgments
(including reasonable attorneys’ fees) suffered by Lessee as a result of the
representation and warranty in the foregoing clause (i) not being true and
correct as of the date hereof.

 

25.           Termination of Existing Lease and Release.

 

(a)           The Existing Lease shall terminate simultaneously with the
effectiveness of the Lease (the “Termination Event”), whereupon the term of the
Existing Lease shall cease and expire as if the date of the Termination Event
were the expiration date set forth in the Existing Lease.  Upon such
termination, Lessee shall be released from all liability under the Existing
Lease arising before and after the termination of the Existing Lease, including
the obligation to pay rent.

 

(b)           Effective as of the termination of the Existing Lease, Lessee and
its successors and assigns hereby release, acquit, satisfy and forever discharge
Lessor and its employees, agents, officers, subsidiaries, affiliates, partners,
trustees, beneficiaries, members, successors and assigns, from any and all
actions, causes of actions, claims, demands, rights, damages, losses, expenses,
occurrences and liabilities, of any kind whatsoever, both known and unknown,
arising out of any matter, happening or thing, from the beginning of time
relating to the Lease.

 

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(c)           Effective as of the termination of the Existing Lease, Lessor and
its successors and assigns hereby release, acquit, satisfy and forever discharge
Lessee and its employees, agents, officers, subsidiaries, affiliates, partners,
trustees, beneficiaries, members, successors and assigns, from any and all
actions, causes of actions, claims, demands, rights, damages, losses, expenses,
occurrences and liabilities, of any kind whatsoever, both known and unknown,
arising out of any matter, happening or thing, from the beginning of time
relating to the Lease.

 

[Balance of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly
executed and their seals to be hereunto affixed on the day and year first above
written.

 

 

GROUP THREE PROPERTIES, INC.

 

 

 

By:

/s/ Frederick L. Snyder

 

 

 

Frederick L. Snyder

 

 

President

 

 

 

Attest:

/s/ Karen L. Schantz

 

 

 

 

FIBERMARK DSI, INC.

 

 

 

By:

/s/ Bruce Moore

 

 

 

Bruce Moore

 

 

Vice President

 

 

 

Attest:

/s/ Mary Larsen

 

 

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Exhibit “A”

 

ALL THOSE TWO CERTAIN tracts or parcels of land, the first situated on the north
side of Township Route No. T-547, Tuckerton Road, with the concrete block and
brick building and other improvements erected thereon, the second situated on
the north side of Pennsylvania State Highway S.R. 0222, Road To Nowhere, in the
Township of Muhlenberg, County of Berks, Commonwealth of Pennsylvania, being
more fully bounded and described as follows to wit:

 

TRACT 1

 

BEGINNING at an iron pin on the northern right-of-way line of Township Route No.
T-547, Tuckerton Road, being the southeasternmost corner of the herein described
tract; thence along the same the six following courses and distances 1) South
seventy-five degrees zero minutes eighteen seconds West (S.75°00’18”W.) a
distance of forty-five and forty-seven hundredths feet (45.47’) to an iron pin
2) South eighty-two degrees thirteen minutes three seconds West (S.82°13’03”W.)
a distance of one hundred three and thirty-six hundredths feet (103.36’) to an
iron pin 3) South eighty-seven degrees fourteen minutes fifty-eight seconds West
(S.87°14’58”W.) a distance of seventy-four and eighty hundredths feet (74.80’)
to an iron pin 4) North eighty degrees twenty-six minutes fifty-one seconds West
(N.80°26’51”W.) a distance of three hundred five and eighty-seven hundredths
feet (305.87’) to an iron pin 5) South seventy-seven degrees fifty-six minutes
seven seconds West (S.77°56’07”W.) a distance of one hundred forty-four and
fifty-six hundredths feet (144.56’) to an iron pin 6) South thirty-nine degrees
twenty-five minutes twenty-nine seconds West (S.39°25’29”W.) a distance of
twenty and six hundredths feet (20.06’) to an iron pin; thence along property of
Reading Blue Mountain & Northern Railroad Company North eighteen degrees
twenty-one minutes fifteen seconds West (N.18°21’15”W.) a distance of one
thousand six hundred twenty-three and twenty-seven hundredths feet (1,623.27’)
to an iron pin; thence along the southern line of Pennsylvania State Highway
S.R. 0222, Road to Nowhere, the five following courses and distances 1) North
sixty-five degrees three minutes twenty-seven seconds East (N.65°03’27”E.) a
distance of two hundred forty-eight and fifty-six hundredths feet (248.56’) to a
point 2) North twenty-four degrees fifty-six minutes thirty-three seconds West
(N.24°56’33”W.) a distance of twenty feet (20.00’) to a point 3) North
sixty-five degrees three minutes twenty-seven seconds East (N.65°03’27”E.) a
distance of two hundred feet (200.00’) to a point 4) North twenty-four degrees
fifty-six minutes thirty-three seconds West (N.24°56’33”W.) a distance of ten
feet (10.00’) to a point 5) North sixty-five degrees three minutes twenty-seven
seconds East (N.65°03’27”E.) a distance of two hundred nine and twenty-two
hundredths feet (209.22’) to an iron pin; thence along property of Erin Partners
South eighteen degrees twenty-one minutes fifteen seconds East (S.18°21’15”E.) a
distance of one thousand nine hundred eighteen and fifty-nine hundredths feet
(1,918.59’) to the place of beginning.

 

CONTAINING in area twenty-six and three hundred fifty-five thousandths (26.355)
acres.

 

TRACT 2

 

BEGINNING at an iron pin on the northern line of Pennsylvania State Highway S.R.
0222, Road To Nowhere being the southwesternmost corner of the herein described
tract located North five degrees fifty-three minutes thirteen seconds West
(N.5°53’13”W.) a distance of three hundred

 

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forty-two and seventy-eight hundredths feet (342.78’) from the northwest corner
of Tract 1; thence along property of Reading Blue Mountain & Northern Railroad
crossing a rail monument 102.12 feet from the next described corner North
eighteen degrees twenty-one minutes fifteen seconds West (N.18°21’15”W.) a
distance of four hundred seventeen and eighty hundredths feet (417.80’) to a
point; thence passing through and along the Schuylkill River the six following
courses and distances 1) South sixty-eight degrees twenty-six minutes East
(S.68°26’E.) a distance of two hundred and forty-two hundredths feet (200.42’)
to a point 2) North seventy-four degrees fifteen minutes East (N.74°15’E.) a
distance of two hundred eight feet (208.00’) to a point 3) North sixty-two
degrees forty-five minutes East (N.62°45’E.) a distance of one hundred
eighty-two feet (182.00’) to a point 4) North eighty-seven degrees forty-five
minutes East (N.87°45’E.) a distance of one hundred sixty feet (160.00’) to a
point 5) North sixty-one degrees fifteen minutes East (N. 61°15’E.) a distance
of one hundred twenty-three and fifty hundredths feet (123.50’) to a point 6)
North fifty-two degrees East (N.52°E.) a distance of two hundred sixty-one and
fifty hundredths feet (261.50’) to a point; thence along property of No. 1
Contracting Corporation of Delaware passing through an iron pin located 120.00
feet from the last described corner South fifteen degrees thirty minutes East
(S.15°30’E.) a distance of two hundred eighty-two and forty hundredths feet
(282.40’) to an iron pin on the northern right-of-way line of Pennsylvania State
Highway S.R. 0222, Road To Nowhere; thence along the same the seven following
courses and distances 1) on a line curving to the right with a radius of
2,788.93 feet, a central angle of 1 degree 41 minutes 55 seconds, and a chord
bearing of South sixty-three degrees three minutes forty-four seconds West
(S.63°03’44”W.) a distance of eighty-two and sixty-eight hundredths feet
(82.68’) to a point 2) South twenty-six degrees five minutes eighteen seconds
East (S.26°05’18”E.) a distance of seventeen and eighty-four hundredths feet
(17.84’) to a point 3) South sixty-five degrees three minutes twenty-seven
seconds West (S.65°03’27”W.) a distance of two hundred eighty-three and
thirty-eight hundredths feet (283.38’) to a point 4) North twenty-four degrees
fifty-six minutes thirty-three seconds West (N.24°56’33”W.) a distance of sixty
feet (60.00’) to a point 5) South sixty-five degrees three minutes twenty-seven
seconds West (S.65°03’27”W.) a distance of two hundred feet (200.00’) to a point
6) South twenty-four degrees fifty-six minutes thirty-three seconds East
(S.24°56’33”E.) a distance of ten feet (10.00’) to a point 7) South sixty-five
degrees three minutes twenty-seven seconds West (S.65°03’27”W.) a distance of
four hundred eighty-six and sixty-five hundredths feet (486.65’) to the place of
beginning.

 

CONTAINING in area six and two hundred sixty-one thousandths (6.261) acres.

 

BEING a portion of the same premises which Rexam DSI, Inc. granted and conveyed
unto Group Three Properties, Inc. by deed dated December 5, 1997 and recorded in
Record Book Volume 2891, Page 29, Berks County Records.

 

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