Exhibit 10.1

AMENDED AND RESTATED

INDUSTRIAL LEASE FOR

KEYSTONE CRANBURY EAST, LLC

“LANDLORD”

and

WILLIAMS-SONOMA DIRECT, INC.

“TENANT”

     
Property:
  257 Prospect Plains Road

  Cranbury, New Jersey

 

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AMENDED AND RESTATED AGREEMENT OF LEASE

     AMENDED AND RESTATED AGREEMENT OF LEASE (the “Lease”) made as of the 18th
day of March, 2004 and effective as of February 2, 2004, between KEYSTONE
CRANBURY EAST, LLC, a Delaware limited liability company (the “Landlord”), and
WILLIAMS SONOMA DIRECT, INC., a California corporation (the “Tenant”), with
reference to the following facts and circumstances:

A.   Landlord and Tenant entered into that certain Industrial Lease, dated as of
February 2, 2004 (the “Original Lease”).

B.   Landlord and Tenant desire to amend and restate the Original Lease in order
to correct typographical and similar errors appearing therein.

    Landlord and Tenant agree as follows:

     1. Reference Data and Definitions. The following sets forth some of the
basic lease information and definitions used in this Lease:

          1.1 “Additional Rent” shall mean Tenant’s Proportionate Share of Real
Estate Taxes and of Operating Expenses, and all other sums (exclusive of Base
Rent) payable by Tenant to Landlord under this Lease.

          1.2 “Base Rent” shall mean the annual Base Rent for each Lease Year.
The Base Rent for the Term of this Lease is set forth below:

                  Annual   Monthly Installment of Period

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  Base Rent

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  Annual Base Rent

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Phase I Rent Commencement -
Phase II Rent Commencement
  $2,718,750 ($4.35 psf x 625,000 square feet*)   $ 226,562.50  
Phase II Rent Commencement -
Phase III Rent Commencement
  $3,397,350 ($4.35 psf x 781,000 square feet)   $ 283,112.50  
Phase III Rent Commencement -
Rent Adjustment Date
  $4,350,000 ($4.35 psf x 1,000,000 square feet)   $ 362,500.00  
Rent Adjustment Date -
Expiration Date
  $4,550,000 ($4.55 psf x 1,000,000 square feet)   $ 379,166.67  

*Notwithstanding that following the Phase I Rent Commencement Date Tenant shall
pay rent based on 625,000 square feet, Tenant shall have use and occupancy of
781,000 square feet.

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     Notwithstanding the foregoing, in the event Landlord is unable to deliver
the Phase III Premises on or prior to the Outside Delivery Date such that the
Single Tenant Conversion Date does not occur and the Phase III Premises are not
added to the Premises hereunder, Base Rent for the Term of this Lease shall be
as set forth below:

                  Annual   Monthly Installment of Period

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  Base Rent

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  Annual Base Rent

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Phase I Rent Commencement -
Phase II Rent Commencement
  $2,718,750 ($4.35 psf x 625,000 square feet)   $ 226,562.50  
Phase II Rent Commencement -
Rent Adjustment Date
  $3,397,350 ($4.35 psf x 781,000 square feet)   $ 283,112.50  
Rent Adjustment Date -
Expiration Date
  $3,553,550 ($4.55 psf x 781,000 square feet)   $ 296,129.17  

          1.3 “Broker” shall mean The Staubach Company.

          1.4 “Building” shall mean the 1,000,000 s.f. building located at 257
Prospect Plains Road, Cranbury, New Jersey, a portion of which remains to be
constructed as more particularly described and discussed herein.

          1.5 “Commencement Date” shall mean the effective date of this lease.

          1.6 “Common Areas” shall mean the roadways, parking areas and
landscaped areas on the Property, and the entrances, access ways and other areas
located within the Building or otherwise on the Property intended for the common
use of all tenants of the Property and their invitees.

          1.7 “Concession Costs” shall mean leasing commissions and costs such
as construction allowances, rent concessions, moving expenses, takeover
obligations and other similar inducements, incurred in leasing, subleasing or
assigning a lease or this Lease.

          1.8 “Excess Assignment Consideration” shall mean an amount, if any,
equal to: (A) the consideration whenever paid by any assignee for the
assignment, less (B) Concession Costs, reasonably incurred by Tenant in
connection with such assignment.

          1.9 “Excess Sublease Rent” shall mean an amount, if any, equal to:
(A)(i) all rent or other consideration paid to Tenant by any subtenant, for and
during each month less (ii) the portion applicable to such month (when amortized
from the date such subtenant commences to pay rent over the remaining term of
the sublease, exclusive of any renewals or extensions) of Tenant’s Concession
Costs reasonably incurred by Tenant in connection with such subletting, less
(B)(i) the Monthly Installment of Base Rent for such month plus (ii) such other
rent or consideration attributable to such month, which would otherwise be
required to be paid by Tenant to Landlord. In determining the amount of Excess
Sublease Rent with respect to a sublease for less than all of the Premises, the
amount

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of the Monthly Installment of Base Rent to be deducted pursuant to clause (B)(i)
of this Section 1.9 shall be determined by multiplying the then applicable
square foot rate of the Monthly Installment of Base Rent by the area of the
portion of the Premises which has been sublet.

          1.10 “Guarantor” shall mean Williams-Sonoma, Inc..

          1.11 “Holidays” shall mean the days observed as holidays by the United
States government, or the state government of the State in which the Building is
located.

          1.12 “Improvements” shall mean (i) the completion of the 500,000
square foot expansion of the Building described in the Plans and Specifications,
including, but not limited to, the Common Areas, and the exterior parking areas
and truck courts; (ii) the interior build out work to the Phase II Premises
described in the Plans and Specifications, excluding, however, any Tenant Work;
and (iii) the addition of 11 dock doors to the Phase I Improvements in the area
designated on the Site Plan which shall constitute the only Improvements made,
or required to be made by, Landlord to the Phase I Premises.

          1.13 “La Jobi Lease” shall mean the lease agreement dated June 27,
2003 between Landlord and the tenant commonly known as La Jobi Industries, Inc.
pursuant to which Landlord granted a leasehold interest in, and La Jobi leases,
the Phase III Premises.

          1.14 “Landlord” shall mean the Landlord named on page 1 of this Lease
or any subsequent owner of such Landlord’s interest in the Property.

          1.15 “Landlord’s Address”:

c/o Keystone Realty Services, Inc.
200 Four Falls, Suite 208
West Conshohocken, Pennsylvania 19428
Attn: General Counsel

          1.16 “Lease Interest Rate” shall mean the lesser of (A) 200 basis
points in excess of the Prime Rate in effect from time to time or (B) the
maximum amount or rate that lawfully may be charged in the circumstances, if
such a maximum exists.

          1.17 “Lease Taxes” shall mean any tax, assessment, levy or other
charge (other than any income, franchise, transfer, estate or inheritance tax)
by any federal, state or local law now or hereafter imposed directly or
indirectly upon Landlord with respect to this Lease or the value thereof, or
upon Tenant’s use or occupancy of the Premises, or upon the Base Rent,
Additional Rent or any other sums payable under this Lease or upon this
transaction.

          1.18 “Lease Year.” The “First Lease Year” shall be the period
commencing on the Commencement Date and continuing to the last day of the
calendar month in which the first anniversary of the Phase I Rent Commencement
Date occurs. Each “Lease Year” after the First Lease Year shall be a consecutive
twelve (12) month period commencing on the first day immediately following the
preceding Lease Year.

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          1.19 “Operating Expenses” shall have the meaning set forth in Section
6.1.1.

          1.20 Intentionally Deleted.

          1.21 “Plans and Specifications” shall mean the detailed plans and
specifications attached hereto as Exhibit B describing the Improvements.

          1.22 “Permitted Use” shall mean any use permitted by applicable laws,
ordinances, rules and regulations.

          1.23 “Phase III Delivery Date” shall mean the date upon which Landlord
delivers the Phase III Premises to Tenant upon the terms and in the condition
contemplated by Section 2.3.1 hereof.

          1.24 “Phase I Premises” shall mean the 281,000 square foot area within
the Building labeled as the “Phase I Premises” on the Site Plan, together with
that portion of the Common Areas consisting of any parking areas and truck
courts expressly reserved for the use by the occupant of the Phase I Premises on
the Site Plan.

          1.25 “Phase II Premises” shall mean the 500,000 square foot area to be
constructed by Landlord as an addition to the Building pursuant to Article 3 and
labeled as the “Phase II Premises” on the Site Plan, together with that portion
of the Common Areas consisting of any parking areas and truck courts expressly
reserved for use by the occupant of the Phase II Premises on the Site Plan.

          1.26 “Phase III Premises” shall mean the 219,000 square foot area
within the Building labeled as the “Phase III Premises” which is currently
occupied by the tenant La Jobi, together with that portion of the Common Areas
consisting of any parking areas and truck courts expressly reserved for use by
the occupant of the Phase III Premises on the Site Plan.

          1.27 “Phase I Rent Commencement Date” shall mean the latest to occur
of: (i) July 15, 2004; (ii) forty-five (45) days after Landlord provides written
notice granting Tenant with access to the Phase II Premises for purposes of the
Phase II Early Occupancy (i.e. the Tenant Work), which period shall be subject
to reduction on account of Tenant Delays as described in Section 3.2; and (iii)
the date upon which Landlord Substantially Completes the Improvements to the
Phase II Premises (which date shall be subject to adjustment on account of
Tenant Delays as described in Section 3.2).

          1.28 “Phase II Rent Commencement Date” shall mean the later to occur
of: (i) January 1, 2005; and (ii) the date that is five (5) full months and
fifteen (15) days after the Phase I Rent Commencement Date.

          1.29 “Phase III Rent Commencement Date” shall mean the later to occur
of: (i) the Phase III Delivery Date; and (ii) January 1, 2006.

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          1.30 “Premises” shall mean those of the Phase I Premises, the Phase II
Premises and the Phase III Premises from time to time that are leased by Tenant,
as more particularly described and discussed in Article II.

          1.31 “Prime Rate” shall mean the rate of interest announced from time
to time by Wachovia Bank, N.A. or its successor as its prime rate or, if such
rate is discontinued, such comparable rate as Landlord reasonably designates by
notice to Tenant.

          1.32 “Property” shall mean the Building together with the parcel of
land and all appurtenances thereto on which the Building is located as depicted
on the Site Plan, together with all other improvements which may hereafter be
constructed on such parcel of land.

          1.33 “Real Estate Taxes” shall mean all real estate taxes and
assessments, general or special, ordinary or extraordinary, foreseen or
unforeseen (other than Lease Taxes) assessed or imposed upon the Property. If,
due to a future change in the method of taxation, any tax shall be levied or
imposed in substitution, in whole or in part, for (or in lieu of) any tax or
addition to or increase in any tax which would otherwise be included within the
definition of Real Estate Taxes, then such other tax shall be deemed to be
included within Real Estate Taxes.

          1.34 “Rent” shall mean Additional Rent and Base Rent, collectively.

          1.35 “Rent Adjustment Date” shall mean the first day of the first full
calendar month after the third anniversary of the Phase I Rent Commencement Date
(i.e. the first day of the fourth Lease Year).

          1.36 “Single Tenant Conversion Date” shall be the date upon which the
Phase III Rent Commencement Date occurs.

          1.37 “Site Plan” shall mean the site plan depicting the Property
annexed to this Lease as Exhibit A.

          1.38 “Substantial Completion” and “Substantially Complete” shall each
mean, with respect to each of Phase I Premises and Phase II Premises, the date
when (x) the construction of the Improvements is substantially completed in
accordance with the requirements of the Plans and Specifications (including, but
not limited to, all structural and nonstructural aspects, plumbing, wiring, HVAC
systems and other mechanical systems, but only to the extent any of the
foregoing are required to be completed by Landlord, rather than Tenant, pursuant
to the Plans and Specifications), excepting only (i) seasonal outdoor items and
(ii) “punch list items” (as that term is commonly used in the construction
industry) that will not materially interfere with completion of Tenant Work
and/or Tenant’s operations provided that Tenant has completed all of Tenant Work
that are agreed upon between Landlord and Tenant in the Acceptance Agreement
pursuant to Section 3.4 hereof; and (y) Landlord delivers to Tenant an AIA
certificate or other form reasonably acceptable to Tenant from its architect
indicating that the Phase I Premises or the Phase II Premises, as the case may
be, has been substantially completed in accordance with the requirements of the
Plans and Specifications. The issuance of a temporary or permanent certificate
occupancy

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for the Phase I Premises or the Phase II Premises shall not impact or be a
condition of the Substantial Completion of the applicable Premises.

          1.39 “Tenant” shall mean the Tenant named on page 1 of this Lease and
such person’s permitted successors and assigns, subject to the provisions of
this Lease.

          1.40 “Tenant’s Address” shall mean the Premises, with copies to:

Williams-Sonoma, Inc.
151 Union Street
San Francisco, California 94111
Attn: J. Richard Myers

          1.41 “Tenant Improvement Allowance” shall mean the tenant improvement
allowance to be provided by Landlord to Tenant with respect to the Premises in
the amount of $1,660,000.

          1.42 “Tenant Work” shall mean any build out, fixturing and space
preparation of any portion of the Premises to be performed by Tenant at Tenant’s
sole cost, including, but not limited to, any Office Work (as defined in
Section 3.1 below) performed by Tenant and funded by the Tenant Improvement
Allowance.

          1.43 “Tenant’s Proportionate Share” shall be 62.5% as of the Phase I
Rent Commencement Date, 78.1% as of the Phase II Rent Commencement Date and 100%
as of the Phase III Rent Commencement Date.

          1.44 “Term” shall mean the period commencing on the Commencement Date
and terminating on the date which is the last day of the calendar month in which
the seventh (7th) anniversary of the Phase I Rent Commencement Date occurs, as
it may be extended or renewed pursuant to the terms of this Lease.

     2. Demise of Premises.

          2.1 Phase I Demise. Subject to the terms of this Lease, Landlord
leases to Tenant and Tenant leases from Landlord the Phase I Premises and grants
to Tenant, so long as this Lease remains in effect, the non-exclusive right to
use the Common Areas for their intended purposes in common with other tenants in
the Building. Following the demise of the Phase I Premises, Tenant shall have
the exclusive right to use that portion of the Common Areas consisting of truck
courts and parking areas depicted as being reserved for Tenant’s use and
allocable to the Phase I Premises on the Site Plan.

          2.2 Phase II Demise. Subject to the terms of this Lease, Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord the Phase II
Premises, including, but not limited to, the exclusive right to use that portion
of the Common Areas consisting of the truck courts and parking areas depicted as
being reserved for Tenant’s use and allocable to the Phase II Premises on the
Site Plan provided that Tenant may not use and occupy the same until from and
after the Phase I Rent Commencement Date other than for purposes of Tenant Work
pursuant to Section 3.3. From and after the Phase I Rent Commencement Date

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and until the Phase III Delivery Date, the “Premises” within the meaning of this
Lease shall be comprised of the Phase I Premises and the Phase II Premises for
all relevant purposes and any generic reference to the Premises herein contained
shall mean the Phase I Premises and the Phase II Premises.

          2.3 Phase III Demise. Landlord represents to Tenant that: (A) the
Phase III Premises is currently leased to La Jobi pursuant to the La Jobi Lease;
and (B) Landlord has no right to terminate the La Jobi Lease. Landlord shall use
diligent efforts to terminate the La Jobi Lease and deliver the Phase III
Premises to Tenant in the condition required by Section 2.3.1 below on or prior
to July 15, 2006 (such date, the “Outside Delivery Date”). The Outside Delivery
Date is not subject to delay on account of Force Majeure Events. In the event
Landlord is unable, to terminate the La Jobi Lease for any reason and deliver
the Phase III Premises in the condition required by Section 2.3.1 below by the
Outside Delivery Date, Landlord shall pay to Tenant the sum of $750,000 (the “La
Jobi Payment”) promptly, and in any event within ten (10) business days after,
the Outside Delivery Date. The failure by Landlord for any reason to deliver the
Phase III Premises by the Outside Delivery Date does not constitute a Landlord
default and Tenant shall have no right to pursue damages or recourse at law,
hereunder or in equity on account thereof. The failure by Landlord to make the
La Jobi Payment as and when due shall be a material default of Landlord, not
subject to Force Majeure Events, and, notwithstanding Section 19.4, not subject
to notice and cure. Notwithstanding the foregoing, in the event that
(x) Landlord fails to terminate the La Jobi Lease and deliver the Phase III
Premises in the condition required by Section 2.3 by the Outside Delivery Date;
and (y) the La Jobi Lease is terminated and the Phase III Premises is vacated by
La Jobi (a “Subsequent Vacancy”) at any time on or prior to July 15, 2007,
Landlord shall promptly notify Tenant in writing of such Subsequent Vacancy,
whereupon Tenant may elect to take delivery of the Phase III Premises by
delivery of written notice to Landlord of such election within ten (10) business
days after receipt of such notice from Landlord (a “Recapture Election”). In the
event Tenant makes a Recapture Election, Landlord shall deliver the Phase III
Premises to Tenant in the condition required under Section 2.3.1 on the
twentieth day following receipt of notice of the Recapture Election, and Tenant
shall refund, as Additional Rent within thirty (30) days, to Landlord the pro
rata portion of the La Jobi Payment allocable to the portion of the one (1) year
period between July 15, 2006 and July 15, 2007 occurring after the Phase III
Delivery Date. For example, if the Phase III Delivery Date occurs on January 15,
2007 the refund would be $375,000, or if the Phase III Delivery Date occurs on
March 15, 2007 the refund would be $250,000.00.

               2.3.1 Delivery of the Phase III Premises. If Landlord is able to
terminate the La Jobi Lease prior to the Outside Delivery Date, or if Tenant
elects the Recapture Election, Landlord shall deliver the Phase III Premises to
Tenant in a broom clean condition and in good order and repair. Without
limitation of the foregoing, the Building Systems (as that term is defined in
Section 9.1.1) serving the Phase III Premises shall be in good operating
condition and repair and any of the personal property, materials, inventory and
equipment owned by La Jobi or others shall have been removed on or prior to the
Phase III Delivery Date. Landlord shall not be obligated to remove the demising
wall separating the Phase III Premises from the Phase I Premises and the Phase
II Premises or the two office areas located in the Phase III Premises. As of the
Phase III Delivery Date the “Premises” as used herein shall be the Property. As
of the Phase III Rent Commencement Date:

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(i) Tenant’s Proportionate Share shall be 100%; and (ii) Landlord shall have no
further obligation to repair, maintain or replace the Common Areas except for
maintenance or repairs that Landlord was required to perform prior to the Phase
III Rent Commencement Date and has not yet completed, or are Landlord’s
obligation under Sections 8.3, 10.3, 14, or 16.1. At such time (if any) as
Landlord delivers the Phase III Premises in the condition contemplated by this
Section 2.3.1, subject to the terms of this Lease, Landlord shall lease to
Tenant and Tenant shall lease from Landlord the Phase III Premises.

     3. Possession.

          3.1 Tenant Allowance Work. Landlord has agreed to provide the Tenant
Improvement Allowance to Tenant. Among other things, Tenant may use the Tenant
Improvement Allowance to (a) complete the interior office build out and lighting
upgrades in such manner and in such fashion as Tenant elects (the “Office
Work”), which Office Work shall be Tenant Work, or (b) as a credit against the
Rent. The Office Work shall be performed by Tenant subject to the terms,
conditions and limitations of Sections 3.3, 9.1.1 (except that the dollar
limitation shall not apply), 9.1.2 and 9.2. However: (i) Landlord’s consent
shall not be required for Office Work, except as to those portions of the Office
Work that affect the structural elements of the Building or the Building
Systems; and (ii) Tenant shall have no obligation (or right) to remove any
portion of the Office Work permanently affixed to the Building upon the
expiration or sooner termination of the Lease (except that to the extent Tenant
constructs in excess of 25,000 square feet of office space, Tenant shall remove
such excess office space upon the expiration or sooner termination of the Lease
to the extent Landlord requires its removal as described in Section 9). The
portion of the Office Work permanently affixed to the Building shall be the
property of Landlord notwithstanding any contrary provision of the Lease and
shall be covered, on a full replacement cost basis, under the casualty insurance
maintained by Landlord hereunder. Landlord shall have no obligation to perform
or complete the Office Work and the completion (or failure to complete) the
Office Work shall not affect whether Landlord has Substantially Completed the
Improvements (it being acknowledged that the issuance or failure to issue a
temporary or permanent certificate of occupancy shall not impact, and is not a
condition of, the Substantial Completion of the Improvements). Tenant may
request any or all of the Tenant Improvement Allowance from Landlord, but not
more than once every thirty (30) days. Landlord shall pay to Tenant that portion
of the Tenant Improvement Allowance requested by Tenant within 10 business days
following receipt of written request therefor. Alternatively, Tenant may request
that any or all of the unused Tenant Improvement Allowance be credited against
the Rent as it next becomes due. Notwithstanding anything contained herein to
the contrary, (including, but not limited to, the terms of Section 3.2.1 below
describing the Tenant Improvements Allowance as liquidated damages), Landlord
shall in no event be obligated to pay, to Tenant or credit against Rent an
amount in excess of the Tenant Improvement Allowance.

          3.2 Improvement Work. Landlord shall, at Landlord’s sole cost and
expense (except as otherwise provided herein), furnish all of the design,
material, labor and equipment required to construct the Improvements, in
substantial conformity with the Plans and Specifications. Landlord may not make
any material changes to the Plans and Specifications without Tenant’s prior
written approval, which shall not be unreasonably

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withheld. Landlord shall construct the Improvements in a good and workmanlike
manner and in compliance with all applicable statutes, ordinances and building
codes, governmental rules, regulations and orders. Landlord shall Substantially
Complete the Improvements to the Phase I Premises on or prior to May 1, 2004
(the “Phase I Completion Date”). The Phase I Completion Date is subject to
Tenant Delays, but is not subject to Weather Delays (defined below) or Force
Majeure Events. Failure to deliver the Phase I Premises by the Phase I
Completion Date for any reason other than Tenant Delays is a material breach of
the Lease and is not subject to notice and cure under Section 19.4. Landlord
shall diligently construct the Improvements to the Phase II Premises (the “Phase
II Improvements”) and use diligent efforts to complete the Phase II Improvements
on or prior to July 15, 2004 (the “Phase II Projected Completion Date”).
However, if Landlord fails to so Substantially Complete the Phase II
Improvements and deliver possession of the Phase II Premises to Tenant for any
reason (regardless of Landlord’s efforts) on or before the Phase II Projected
Completion Date, then Landlord shall not be liable to Tenant or in default
hereunder, at law in equity, except that: (i) the Phase I Rent Commencement Date
(and consequently the Phase II Rent Commencement Date) shall be delayed until
the Substantial Completion of the Phase II Improvements (as contemplated in the
definition of the Phase I Rent Commencement Date); and (ii) Landlord shall
provide Tenant with the Per Diem Liquidated Damages (as hereinafter defined)
that are expressly set forth in Section 3.2.1 below as Tenant’s sole and
exclusive remedy hereunder, at law or in equity; and (iii) subject to the
aggregate limitation on the Tenant Improvement Allowance contained in Section
3.1 above, Tenant will be entitled to retain any portion of the Tenant
Improvement Allowance previously paid or credited to Tenant, and receive from
Landlord the unpaid portion of the Tenant Improvement Allowance as further
liquidated damages as set forth below. Landlord shall regularly (but no less
than twice weekly) apprise Tenant concerning the progress of the construction of
the Improvements until the Improvements are Substantially Complete and Landlord
has remedied all punch list items. Landlord shall permit a representative of
Tenant to have access to the Improvements during construction of the
Improvements at all reasonable times. Tenant’s representative may attend
construction meetings, including, but not limited to, meetings with local
authorities.

               3.2.1 Delay Credits. In the event the Phase II Improvements are
not Substantially Completed on or before the Phase II Projected Completion Date
(as the same may be extended on account of Tenant Delays or Weather Delays),
Landlord shall credit to Tenant against the Rent first becoming due, the amount
of $1,000 per day (the “Per Diem Liquidated Damages”) for each day following the
Phase II Projected Completion Date until the Phase II Improvements are
Substantially Completed. The Phase II Projected Completion Date shall be
extended to the extent of delays resulting from Tenant Delays for all relevant
purposes, and prior to August 15, 2004, also due to delays caused by adverse
weather conditions of a type which would cause a reasonable contractor in the
area of the Property to delay construction on a project similar to the
Improvements at the same phase of construction as is Landlord’s construction of
the Improvements when that weather condition occurs (“Weather Delays”). The
Phase II Projected Completion Date is not subject to Force Majeure Events. The
Per Diem Liquidation Damages shall increase to $2,000 for each day following
August 15, 2004 (which date shall be extended on account of delays caused by
Tenant Delays) until the Phase II Improvements are Substantially Completed (any
such period following the Phase II Projected Completion Date during which the
Phase II

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Improvements are not Substantially Completed, the “Completion Delay Period”). If
the Completion Delay Period continues up to and including December 31, 2004 (the
“Delay Termination Date”), which Delay Termination Date shall be extended to the
extent of delays resulting from Tenant Delays but not by Force Majeure Events or
Weather Delays, Tenant shall have the right to terminate this Lease by delivery
of written notice to Landlord at any time within thirty (30) days after the
Delay Termination Date (such an election, the “Delay Termination Election”). If
Tenant timely makes the Delay Termination Election, this Lease shall terminate
effective as of the Delay Termination Date and Landlord shall pay to Tenant
(within five (5) business days following the Delay Termination Date) an amount
equal to the accrued and unpaid Per Diem Liquidated Damages. Notwithstanding
anything contained herein to the contrary, the right of Tenant to (i) receive
the Per Diem Liquidated Damages; (ii) make the Delay Termination Election and,
(iii) subject to the aggregate limitation on the Tenant Improvement Allowance
contained in Section 3.1 above, retain the then paid portion of the Tenant
Improvement Allowance and receive the unpaid portion of the Tenant Improvement
Allowance from Landlord (which Landlord shall pay to Tenant concurrently with
the unpaid portion of the Per Diem Liquidated Damages) shall be Tenant’s sole
and exclusive remedy hereunder, at law or in equity on account of Landlord’s
failure to Substantially Complete the Phase II Improvements on or prior to the
Phase II Projected Completion Date (as the same may be extended) for any or no
reason and regardless of efforts and Tenant shall have no right to pursue an
action for, or collect damages from, Landlord on account of such continuance or
failure to Substantially Complete the Phase II Improvements and deliver
possession of the Phase II Premises.

               3.2.2 Delays. Notwithstanding anything contained herein to the
contrary, if and to the extent Landlord is delayed in Substantially Completing
the Improvements as a result of any “Tenant Delays,” then the Phase I Rent
Commencement Date (and consequently the Phase II Rent Commencement Date), and
the commencement of Tenant’s obligation to pay Base Rent and Additional Rent
under the Lease, shall be deemed to be and occur on the date on which the Phase
I Rent Commencement Date would have occurred, but for such Tenant Delays.
“Tenant Delays” shall mean any or all of the following:

               (i) Any delays resulting from the performance or completion by
Tenant, or any person, firm or corporation engaged by Tenant or its
representatives or agents, of any work other than the Tenant Work (which Tenant
Work includes but is not limited to installation of “racking”) in or about the
Phase I Premises or the Phase II Premises, but only to the extent such action or
omission persists after notice thereof from Landlord to Tenant; or

               (ii) Any delay resulting from the performance of Tenant Work by
or on behalf of Tenant other than in accordance with Section 3.3 below to the
extent such delay persists after notice from Landlord; or

               (iii) Any delay set forth in a change order requested by and
approved by Tenant; or

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               (iv) Any delay resulting from Tenant’s failure to use union labor
in connection with Tenant Work, but only to the extent such delay persists after
written notice from Landlord.

Landlord shall promptly notify Tenant in writing of any Weather Delay or Tenant
Delay (a “Delay Notice”). In the event that Landlord delivers a Delay Notice
describing a Tenant Delay or Weather Delay and Tenant, in good faith, disputes
the existence or extent of such Tenant Delay or Weather Delay, Landlord and
Tenant shall act, in good faith, to determine the existence and extent of such
Tenant Delay or Weather Delay for a period of five (5) business days and agree
upon the same in writing. In the event Landlord and Tenant are unable to agree
upon the existence or extent of any Tenant Delay or Weather Delay and agree upon
the same in writing, the parties shall submit the dispute to binding arbitration
with the Newark, New Jersey office of the American Arbitration Association
(“AAA”) for expedited resolution. Resolution of such dispute shall be
accomplished in accordance with the then applicable rules of the AAA for
expedited proceedings and the arbiter’s decision shall be final and binding upon
the parties and shall not be subject to appeal. Landlord and Tenant shall each
pay their own costs in connection with any such proceeding and shall share
equally in any fees and expenses charged by the AAA.

          3.3 Tenant’s Access. From and after the Commencement Date, Landlord
shall provide access to the Phase I Premises for purposes of performing Tenant
Work. Notwithstanding the foregoing, Tenant shall not be entitled to use and
occupy the Phase I Premises until the Substantial Completion of the Phase I
Improvements other than for the performance of the Tenant Work. Landlord shall
provide early access to the Phase II Premises for the benefit of Tenant prior to
the Substantial Completion of the Phase II Improvements (the “Phase II Early
Occupancy”) for the limited purpose of performing the Tenant Work as soon as
reasonably practicable, but in all events Tenant shall be provided with the
Phase II Early Occupancy at least forty-five (45) days prior to the Phase I Rent
Commencement Date. However, if Landlord is unable to provide such forty-five
(45) day Phase II Early Occupancy as a result of Tenant Delays, such failure
shall be excused (and the required forty-five (45) day period reduced) to the
extent only of the portion of the delay or inability resulting from the Tenant
Delays. Tenant shall perform any Tenant Work in the Phase I Premises and the
Phase II Premises in accordance with, and subject to the limitations contained
in this Section 3.3. For purposes of this Lease, the term “Schedule” shall mean
a detailed description of the timing and coordination of Landlord’s construction
of the Improvements and Tenant’s performance of the Tenant Work which will be
prepared as part of the Plans and Specifications. Landlord and Tenant shall
reasonably cooperate in creating a procedure for such consultation and
cooperation in reviewing and revising the Schedule. Tenant shall give to
Landlord not less than five (5) days prior written notice of its request to have
such access to the Premises (except that Tenant shall not be obligated to notify
Landlord of any access for Tenant Work contemplated by the Schedule). Prior to
commencing any Tenant Work, Tenant shall provide Landlord with: (i) copies of
all plans and specifications pertaining to the Tenant Work for which such access
is being requested to the extent not previously delivered; (ii) copies of all
licenses and permits required in connection with the performance of the work for
which such access is being requested to the extent not previously delivered; and
(iii) certificates of insurance naming Landlord as additional insured/loss payee
as applicable in form acceptable to Landlord. Regarding item

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(iii), Landlord shall provide Tenant with similar certificates of insurance
naming Tenant as an additional insured. All of the foregoing shall be subject to
Landlord’s written approval, which approval shall not be unreasonably withheld,
conditioned or delayed. Tenant and Landlord and their respective agents,
contractors, workmen, mechanics, suppliers, and invitees shall work in harmony
and not interfere with each other. Tenant agrees that any such entry into and
occupancy of the applicable Premises shall be deemed to be under all of the
terms, covenants, conditions and provisions of the Lease, except (i) the
covenant to pay Rent (including Operating Expenses and Real Estate Taxes),
(ii) the cost limitations in Section 9.1.1 and (ii) Tenant’s obligations in
Section 10.

          3.4 Delivery of Possession, Punch List, and Acceptance Agreement. As
soon as Landlord believes the Improvements are Substantially Completed for each
of the Phase I Premises and the Phase II Premises and the architect’s
certificate has been delivered to Tenant, Landlord and Tenant shall together
walk through the applicable Premises and inspect all Improvements, using
reasonable efforts to discover all uncompleted or defective construction in the
Improvements. Provided such inspection reveals that the Improvements have been
Substantially Completed in accordance with the definition of Substantial
Completion such that only “punch list” items (as that term is defined in the
construction industry) remain to be completed that will not materially interfere
with the completion of Tenant Work (or Tenant’s operation in the Premises
provided Tenant has completed all of the Tenant Work), each party shall sign an
acceptance agreement in a reasonably agreed upon form (herein the “Acceptance
Agreement”), which shall include, by attachment, a list of all “punch list”
items which the parties agree are to be corrected by Landlord in connection with
the then-applicable Premises. In determining whether any portion of the
Improvements that is not Substantially Completed constitutes a “punch list” item
rather than precludes the Improvements from being Substantially Completed within
the meaning of this Agreement, Landlord and Tenant covenant and agree to act
mutually, reasonably and in good faith and in accordance with normal and
customary industry practice. If during the walk-through it is determined that
the Phase II Premises are not complete Landlord must continue to diligently
pursue Substantial Completion and re-start the process in the first sentence of
this Section 3.4. Landlord shall use diligent efforts to complete and/or repair
such “punch list” items within thirty (30) days after executing the applicable
Acceptance Agreement, but must continue using diligent efforts to complete the
punch list items until all are complete. Without limitation on Landlord’s
warranty obligations pursuant to Section 3.5 hereof, Tenant’s commencement of
business operations from and in any part of the Premises shall be deemed to be
an acceptance by Tenant of the Improvements, except for the agreed upon punch
list items, notwithstanding that Tenant may not have executed the applicable
Acceptance Agreement at such time.

          3.5 Warranty. During the three years following the Phase I Rent
Commencement Date (the “Warranty Period”), Landlord shall, at Landlord’s sole
cost and expense, repair or replace any defective item in the Phase I Premises,
in the Phase II Premises, and any defect in the Building Systems (and
specifically excluding any Tenant Work or any defects in the Phase I Premises,
the Phase II Premises or the Building Systems caused by Tenant’s (its agents’ or
contractors’) negligence or willful misconduct, misuse, abuse or failure to
maintain), provided that (i) Tenant notifies Landlord, in writing and with
reasonable specificity and detail, of the nature and extent of any such alleged
defects in the

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Phase I Premises, Phase II Premises, or the Building Systems (“Tenant’s Defect
Notice”) and (ii) Tenant delivers Tenant’s Defect Notice to Landlord prior to
the expiration of the Warranty Period. Landlord’s or its employees’, agents’ or
contractors’ obligations under the preceding sentence are the “Warranty.” In no
event shall Landlord be liable to Tenant for damages as a result of such defect,
resulting from loss of business by Tenant or other consequential or speculative
damages. Notwithstanding Tenant’s timely delivery of a Tenant’s Defect Notice,
at no time during the Term shall Tenant have any right, of any nature
whatsoever, to withhold the timely payment of any Base Rent or Additional Rent
due under the Lease, from time to time, as a result of, or due to, or because
of, any alleged breaches by Landlord under this Lease or the alleged existence
of any defects or deficiencies in the Improvements, except as provided in
Section 19.4.

     4. Term/Renewal.

          4.1 Commencement/Termination. The term shall commence and then expire
as described in the definition of “Term.” Tenant’s rights to enter and occupy
the Phase I Premises, the Phase II Premises and the Phase III Premises,
respectively, shall occur as provided in Articles 2 and 3 hereof.

          4.2 Renewal. If Tenant is not in default (beyond applicable periods
for notice and cure) under this Lease at the time any of the options to renew
described below (each, a “Renewal Option”) is exercised or at the commencement
of the applicable Renewal Period (as hereinafter defined), Tenant shall have the
right to irrevocably extend the Term, for three (3) five (5) year periods (each,
a “Renewal Period”) commencing on the first day following the last day of the
initial term, the first Renewal Period, or the second Renewal Period, as the
case may be, upon the same terms and conditions as are contained in this Lease,
except as hereinafter provided. Base Rent for each Renewal Period (the “Renewal
Rate”) shall be equal to ninety-five percent (95%) of the then Fair Market
Rental for the applicable Renewal Period determined as described in Exhibit C.
Unless otherwise agreed in a writing between Landlord and Tenant, Landlord shall
have no obligation to make any improvements, decorations, repairs, alterations
or additions to the Premises as a condition to Tenant’s obligation to pay Rent
for any Renewal Period. Each Renewal Option shall be exercised by written notice
to Landlord (a “Renewal Notice”) given no later than twelve (12) months prior to
the expiration date of the Lease (as may be extended by the first Renewal Period
and the second Renewal Period). However, if Tenant fails to provide a Renewal
Notice prior to the 12-month period, the Renewal Option will remain effective
until the sooner to occur of (1) six (6) months prior to the expiration date;
and (2) 30-days following Tenant’s receipt of written notice from Landlord that
the Renewal Option has lapsed. In the event Tenant fails strictly to comply with
the procedure for exercise of the applicable Renewal Option, Tenant shall have
no further right to extend the Term. The exercise by Tenant of its Renewal
Option shall be irrevocable.

     5. Base Rent.

          5.1 Payment. Base Rent shall be payable by Tenant in equal monthly
installments on or before the first day of each calendar month, in advance. All
payments of Base Rent and Additional Rent shall be made without prior demand
and, except as otherwise expressly provided in this Lease, without offset,
deduction or counterclaim of any kind, in

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lawful money of the United States of America. Such payments shall be made at
Landlord’s Address or at such other place as Landlord shall designate from time
to time. Notwithstanding anything contained herein to the contrary, Tenant shall
have no right to set-off, offset or deduct against Rent on account of any
breach, default, or failure of performance on the part of Landlord hereunder or
otherwise hereunder, except as expressly provided in this Lease.

          5.2 Late Charges. If Tenant fails to pay any Base Rent or Additional
Rent within five (5) days after receipt of notice of delinquency, interest shall
accrue on such unpaid amount at the Lease Interest Rate until paid in full. In
addition, such unpaid amounts will be subject to a late payment charge equal to
three percent (3%) of the unpaid amounts if Tenant does not pay such delinquent
amounts to Landlord within five (5) days after written notice from Landlord to
Tenant of such delinquency; provided, however, that if Tenant is twice
delinquent in any twelve (12) consecutive month period, Landlord shall have no
further obligation to provide notice of any delinquency to Tenant and the late
payment charge and the interest charge shall be due and owing if Tenant
thereafter fails to pay any installment of Base Rent or Additional Rent within
five (5) days of the date the same is due and payable. Such late payment charge
has been agreed upon by Landlord and Tenant, after negotiation, as a reasonable
estimate of the additional administrative costs and detriment that will be
incurred by Landlord as a result of any such failure by Tenant, the actual costs
thereof being extremely difficult if not impossible to determine. The late
payment charge constitutes fair and reasonable compensation to Landlord for its
damages resulting from such failure by Tenant to timely pay and shall be paid to
Landlord together with such unpaid amounts.

     6. Additional Rent for Operating Expenses and Real Estate Taxes.

          6.1 Definitions.

               6.1.1 “Operating Expenses” shall mean the reasonable costs and
expenses paid by Landlord in connection with the management, operation,
maintenance and repair of the Property including, without limitation:

                    (a) the cost of electricity, gas, water, sewer service, and
other systems and utilities serving Common Areas, and the cost of supplies and
equipment and maintenance and service contracts in connection therewith;

                    (b) the cost of repairs, maintenance and cleaning,
including, without limitation, the cost of janitorial and other service
agreements and trash and snow removal with respect to Common Areas and roof
maintenance and routine repairs;

                    (c) the cost of fire, extended coverage, boiler, sprinkler,
apparatus, public liability, property damage, rent, earthquake and other
insurance as Landlord carries with respect to the Property so long as such other
insurance is of the type and in amounts as then customarily being carried by
similar landlords of similar Class A industrial buildings in the general area of
the Property;

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                    (d) an annual management fee equal to $.05 multiplied by the
number of square feet comprising the Premises;

                    (e) Capital Repair/Replacements (as defined in
Section 10.1.5), to the Common Areas, shall be amortized in the same manner as
provided in Section 10.1.8;

                    (f) the cost of any Capital Repairs/Replacements made to the
Property after the date of this Lease designed to reduce Operating Expenses but
only to the extent of the savings realized from such capital improvement which
shall be amortized in the manner described in Section 10.1.5;

                    (g) costs for landscaping at the Property other than the
initial landscaping at the Property; and

                    (h) fees, costs and disbursements incurred in connection
with proceedings to contest, determine, or reduce Operating Expenses or Real
Estate Taxes, but in no event greater than the savings realized.

“Operating Expenses” shall not include:

                    (aa) leasing commissions, accountants’ or attorneys’ fees;

                    (bb) interest on debt or amortization payments on any
mortgages or deeds of trust or any other borrowings of Landlord;

                    (cc) except as provided in subsection (e) and (f) above, any
other capital item or other expense that under generally accepted accounting
principles and practices would not be considered a maintenance or operating
expense;

                    (dd) salaries, benefits or other compensation paid to
leasing agents, promotional directors, officers, directors, employees and
executives of Landlord;

                    (ee) all contributions to any organizations, whether
political or charitable;

                    (ff) interest or penalties for late payments;

                    (gg) costs to repair or restore casualty damage;

                    (hh) ground lease rental;

                    (ii) costs paid by Landlord to comply with its obligations
under Section 8.4 (Hazardous Materials) and under its indemnity;

                    (jj) any costs for which Landlord is responsible in
connection with its Warranty and under Section 8.3, 10.3, 14 or 16;

                    (kk) depreciation;

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                    (ll) expenses in connection with services or other benefits
of a type which are not provided to Tenant but are provided to another tenant or
occupant;

                    (mm) Landlord’s general overhead;

                    (nn) amounts paid to affiliates or subsidiaries of Landlord
in excess of the fair market value of such services provided that the management
fee described in Section 6.1.1(d) shall not be subject to this exclusion; and

                    (oo) tax or other penalties as a result of Landlord’s
negligence, inability or unwillingness to make payments when due.

          6.2 Payment of Real Estate Taxes. Tenant’s obligation to pay Tenant’s
Proportionate Share of Real Estate Taxes shall commence as of the Phase I Rent
Commencement Date. Landlord shall provide Tenant with copies of the bills for
Real Estate Taxes promptly after its receipt thereof. Tenant shall reimburse
Landlord for Tenant’s Proportionate Share of Real Estate Taxes no later than
twenty (20) days prior to delinquency. Assessments shall be paid in the maximum
number of installments permitted provided that such method of payment does not
result in the imposition of any penalties or the loss of any discounts.
Notwithstanding anything contained herein to the contrary, Tenant’s
Proportionate Share shall be 62.5% as of the Phase I Rent Commencement Date.
Tenant’s Proportionate Share shall be increased to 78.1% as of the Phase II Rent
Commencement Date. As of the Single Tenant Conversion Date, Landlord shall cease
paying Real Estate Taxes subject to reimbursement by Tenant effective as of the
payment of the next installment of Real Estate Taxes and Tenant shall have no
further obligation to reimburse Landlord for Real Estate Taxes at such time as
Tenant has reimbursed Landlord for all such Real Estate Taxes applicable to the
period associated with the last installment of Real Estate Taxes. Commencing
with the next installment of Real Estate Taxes owing after the Single Tenant
Conversion Date, Tenant shall pay in full all Real Estate Taxes directly to the
taxing authority applicable to the remaining Term prior to the delinquency
thereof and present evidence of such payments to Landlord.

          6.3 Payment of Operating Expenses. Commencing on the first day of the
first calendar month following the Phase I Rent Commencement Date, Tenant shall
pay to Landlord as Additional Rent one twelfth (1/12th) of Tenant’s
Proportionate Share of Operating Expenses for the Property for each calendar
year on or before the first day of each month during such year, in advance, in
an amount reasonably estimated by Landlord in good faith and billed by Landlord
to Tenant. Landlord shall have the right to reasonably revise such estimate from
time to time. Within ninety (90) days after the expiration of each calendar
year, Landlord shall furnish Tenant with a statement (“Landlord’s Operating
Expense Statement”), setting forth in reasonable detail the actual amount of
Operating Expenses for the Property for such year and Tenant’s Proportionate
Share of Operating Expenses. If the actual amount of Operating Expenses due for
such year payable by Tenant differs from the estimated amount of Operating
Expenses paid by Tenant for such year, then, if Tenant owes any amounts to
Landlord, such amounts shall be paid by Tenant (whether or not this Lease has
terminated) within thirty (30) days after receipt of Landlord’s Operating
Expense Statement, and if Landlord owes any amounts to Tenant, such amounts
shall be credited against the next installments of Base Rent and Additional Rent
due from Tenant (or

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if the Lease has terminated for any reason paid to Tenant within thirty
(30) days after delivery of Landlord’s Operating Expense Statement). Tenant’s
obligation to pay Tenant’s Proportionate Share of Operating Expenses (as
provided in Section 6.2) shall commence as of the Phase I Rent Commencement
Date. As of the Single Tenant Conversion Date, except to the extent Landlord is
responsible in connection with its Warranty, in Section 8.3, 10.3, 14 or 16 and
any items of deferred repairs, maintenance or replacement that were required to
be performed by Landlord prior to the Single Tenant Conversion Date but have yet
to be performed, Landlord shall have no obligation to repair, maintain or make
replacements regarding the Common Area and shall cease providing the common area
maintenance services associated with the Property, including, but not limited
to, the type of services, repairs, maintenance and replacements described in the
Operating Expense items 6.1.1(a), (b) and (g) (such services, “Common Area
Maintenance Services”) and Tenant shall have no further obligation to reimburse
Landlord for the Operating Expenses associated with Common Area Maintenance
Services at such time as Tenant has reimbursed Landlord for all such Operating
Expenses associated with the period prior to the Single Tenant Conversion Date.
However, said items shall remain reimbursable to the extent of Tenant’s
Proportionate Share of Operating Expenses. From and after the Single Tenant
Conversion Date, (i) Landlord shall remain obligated for the Warranty and its
repair, maintenance and replacement obligations under Sections 10.3, 8.3, 14 and
16; and (ii) Tenant shall remain obligated to reimburse Landlord for the
Operating Expenses described in items 6.1(c), (d), (e) and (f). Operating
Expenses shall be “grossed up” in each Lease Year to reflect such amounts as
would have been paid had the Rentable Area of the Building been one hundred
percent (100%) occupied during such Lease Year.

          6.4 Tenant’s Audit Rights. Landlord shall keep complete records of all
Operating Expenses and Real Estate Taxes for a period of at least three (3)
years after the end of each Lease Year. Not more frequently than once in every
12-month period and after at least twenty (20) days’ prior written notice to
Landlord, Tenant shall be permitted to audit the records of the Operating
Expenses and Real Estate Taxes. If Tenant exercises its audit rights as provided
above, Tenant shall conduct any inspection at a reasonable time and in a manner
so as not to unduly disrupt the conduct of Landlord’s business. Any such
inspection by Tenant shall be for the sole purpose of verifying the Operating
Expenses and/or Real Estate Taxes. Tenant shall hold any information obtained
during any inspection in confidence, except that Tenant shall be permitted to
disclose such information to its attorneys and advisors and as may be required
by applicable law, provided Tenant informs such parties of the confidential
nature of such information and uses commercially reasonable efforts to cause
such parties to maintain such information as confidential. Any shortfall or
excess revealed and verified by Tenant’s audit shall be paid to the applicable
party within thirty (30) days after that party is notified of the shortfall or
excess to the extent such overage or shortfall had not previously been adjusted
pursuant to the terms of this Lease. If Tenant’s inspection of the records for
any given Lease Year or partial Lease Year reveals that Tenant was overcharged
for Operating Expenses or Real Estate Taxes by an amount of greater than four
percent (4%), Tenant paid such overage and such overage had not previously been
adjusted pursuant to the terms of this Lease, Landlord shall reimburse Tenant
for its reasonable, out of pocket cost of the audit.

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          6.5 Right to Contest. Tenant may contest, in good faith, by
appropriate proceedings at its own expense any Real Estate Taxes provided that
Tenant shall first have paid such Real Estate Taxes or, if the payment of such
Real Estate Taxes is to be postponed during the pendency of such contest, Tenant
shall have furnished Landlord with such additional sums as may reasonably be
required to pay interest or penalties accrued or to accrue on any such Real
Estate Taxes and shall indemnify and hold Landlord harmless from any loss
resulting from the failure to timely pay such Real Estate Taxes. Nothing
contained herein, however, shall release Tenant of the obligation to pay and
discharge contested Real Estate Taxes as finally adjudicated, with interest and
penalties, and all other charges directed to be paid in or by any such
adjudication. Any such contest or legal proceeding shall be commenced by Tenant
with due promptness after the imposition of any contested Real Estate Taxes and
shall be prosecuted to final adjudication with all reasonable promptness and
dispatch; provided, however, that Tenant may in its discretion consolidate any
proceeding to obtain a reduction in the assessed valuation of the Premises for
tax purposes relating to any tax year with any similar proceeding or proceedings
relating to one or more other tax years. Notwithstanding anything contained in
this Section 6.5, Tenant shall pay all such contested Real Estate Taxes before
the time when the Premises or any part thereof might be subject to lien or
forfeited as a result of nonpayment. Landlord shall, at no out-of-pocket cost to
Landlord, join in any proceedings referred to above and hereby agrees that the
same may be brought in its name, if the provisions of any law, rule or
regulation at the time in effect shall so require. Tenant shall indemnify and
save Landlord harmless from any liabilities, losses, or out of pocket expenses
(including reasonable attorneys fees) in connection with any such proceedings in
which Landlord shall join or permit to be brought in its name or any such
contest. Prior to the distribution of any refund, Tenant shall be entitled to
recover its reasonable, out of pocket costs incurred in contesting taxes. Prior
to distribution of any refund, Tenant shall thereafter be entitled to any
remaining refund of any Real Estate Taxes, and all penalties or interest thereon
received by Landlord which shall have been paid by Tenant, or which shall have
been paid by Landlord but previously reimbursed in full by Tenant. The terms of
this Section 6.5 shall survive the expiration or sooner termination of this
Lease.

     7. Intentionally Omitted.

     8. Use; Compliance With Law.

          8.1 Permitted Use. The Premises shall be used only for the Permitted
Use and for no other purpose. Tenant acknowledges that it has reviewed the
Standard Industrial Classification Manual prepared by the Office of Management
and Budget of the U.S. (or, if applicable, the US NAICS Manual) and that the
S.I.C. (or, if applicable, NAICS) number for the operations to be conducted at
the Premises is 4225. Tenant shall advise Landlord in the event its S.I.C. (or,
if applicable, NAICS) number should change.

          8.2 No Nuisance. Tenant shall not allow, or knowingly suffer or permit
the Premises or any use thereof to constitute a nuisance.

          8.3 Compliance with Laws. Tenant, at Tenant’s expense, shall comply
with and cause all of Tenant’s contractors, agents, servants, employees,
invitees and licensees (the “Tenant Parties”) to comply with all applicable
laws, ordinances, rules and

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regulations of governmental authorities applicable to Tenant’s use or occupancy
of the Premises. Without limiting the generality of the foregoing, Tenant shall
comply with the requirements of (a) the Occupational Safety and Health Act (and
all regulations promulgated thereunder), and (b) the Americans with Disabilities
Act (and all regulations promulgated thereunder), as the same may be amended
from time to time. The foregoing obligation of Tenant shall not however permit
Tenant to make, without Landlord’s prior written approval, any alterations to
the Premises which otherwise would require Landlord’s approval under this Lease,
and Tenant shall comply with all of the requirements of this Lease in making any
such alterations. Notwithstanding anything to the contrary contained in this
Lease, Landlord, at its sole expense, shall be obligated to make any alterations
or capital expenditures to the Property to bring the Property in compliance with
applicable laws, unless and to the extent any such alterations are necessary as
the result of Tenant’s particular use of the Premises, as opposed to general
warehousing and distribution uses or laws of general application. Also, nothing
in this Section 8.3 shall relieve or diminish Landlord’s obligation to deliver
the Premises so that the Premises complies with all applicable laws, ordinances,
rules and regulations.

     8.4 Hazardous Materials.

               8.4.1 Definitions. “Hazardous Substance” shall mean any hazardous
or toxic substance, material or waste which is or becomes regulated by any
local, state or federal governmental authority having jurisdiction. The term
“Hazardous Substance” includes, without limitation, any material or substance
which is (i) designated as a “hazardous substance” pursuant to Section 311 of
the Federal Water Pollution Control Act (33 U.S.C. Section 1317), (ii) defined
as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903),
(iii) defined as a “hazardous substance” pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq. (42 U.S.C. Section 9601), (iv) petroleum, (v) designated as
a “hazardous substance” by the New Jersey Department of Environmental Protection
pursuant to the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq. (“ISRA”)
or (vi) asbestos or asbestos-containing materials.

               8.4.2 Compliance with Law. Tenant shall conduct, and cause to be
conducted, all of its operations and activity at the Premises in compliance with
all applicable present and future federal, state, municipal and other
governmental statutes, ordinances, regulations, orders, directives and other
requirements, and all present and future requirements of common law, concerning
the protection of public health, safety or the environment (collectively
“Environmental Statutes”). In performing its obligations under the Warranty and
under Section 8.3, 10.3, 14 and 16 and prior to the Single Tenant Conversion
Date, regarding the Common Areas, Landlord shall have the same obligation as
Tenant has under the preceding sentence.

               8.4.3 Permits. Each of Landlord and Tenant, in a timely manner,
shall, to the extent required due to each party’s respective activities at the
Property, obtain and maintain in full force and effect all permits, licenses and
approvals, and shall make and file all notifications and registrations as
required by Environmental Statutes. Each of

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Landlord and Tenant shall at all times comply with the terms and conditions of
any such permits, licenses, approvals, notifications and registrations.

               8.4.4 Documents. Each party, as to the Premises or the Property
only, shall provide to the other, copies of the following, promptly after each
shall have been submitted, prepared or received: (A) all applications and
associated materials submitted to any governmental agency relating to any
Environmental Statute; (B) all notifications, registrations, reports and other
documents, and supporting information, prepared, submitted or maintained in
connection with any Environmental Statute or otherwise relating to environmental
conditions; (C) all permits, licenses, approvals, and amendments or
modifications thereof, obtained under any Environmental Statute; and (D) any
correspondence, notice of violation, summons, order, complaint, or other
document received which pertains to compliance with or liability under any
Environmental Statute.

               8.4.5 Operations. Tenant shall not cause or knowingly suffer or
permit to occur in, on or under the Premises any generation, use, manufacturing,
refining, transportation, emission, release, treatment, storage, disposal,
presence or handling of Hazardous Substances, except that limited quantities of
Hazardous Substances may be used, handled or stored by Tenant on the Premises,
provided such is incident to and reasonably necessary for the maintenance of the
Premises and Tenant’s operations for the Permitted Use and is in compliance with
all Environmental Statutes and all other applicable governmental requirements.
Should a release of any Hazardous Substance occur at the Premises as the result
of the acts or omissions of Tenant and/or any of the Tenant Parties or Landlord
or Landlord’s agents, employees, contractors or representatives, Tenant or
Landlord, as the case may be, shall immediately contain, remove and dispose of,
off the Premises, such Hazardous Substances and any material that was
contaminated by the release, and remedy and mitigate all threats to human health
or the environment relating to such release. When conducting any such measures
Tenant or Landlord, as the case may be, shall comply with all Environmental
Statutes.

               8.4.6 Inspection. Upon not less than seventy-two (72) hours’
prior telephonic or written notice (except in case of an emergency in which
event Landlord shall provide such telephonic or written notice as Landlord is
able to under the circumstances), Tenant agrees to permit Landlord and its
authorized representatives to enter, inspect and assess the Premises at
reasonable times for the purpose of determining Tenant’s compliance with the
provisions of this Section. Such inspections and assessments may include
obtaining samples and performing tests of soil, surface water, groundwater or
other media and shall be at Landlord’s cost unless expressly covered by
Section 8.4.8 hereof. Such inspection and assessments shall not unreasonably
interfere with the conduct of Tenant’s business on the Premises.

               8.4.7 Tanks. Tenant shall not install or cause the installation
of any above ground or underground storage tank at the Premises, other than any
above ground fuel tank to service an above ground generator or any above ground
water tank, the installation of which shall be subject to Section 9 and which
shall be removed by Tenant prior to the expiration or sooner termination of this
Lease.

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               8.4.8 Indemnification. Notwithstanding any other provision in
this Lease to the contrary, Tenant hereby agrees to indemnify and to hold
harmless Landlord and its officers, directors, shareholders, partners and
principals of, from and against any and all expense, loss, cost, claim, damage,
penalty, fine, or liability of any kind or nature suffered by Landlord by reason
of the presence or release of Hazardous Substances at or from the Premises as a
result of the acts or omissions of Tenant or the Tenant Parties or Tenant’s
breach of any of the provisions of this Article 8, including without limitation:
(A) any and all reasonable, out of pocket expenses incurred by Landlord in
complying with any Environmental Statutes, (B) any and all reasonable, out of
pocket costs incurred by Landlord in studying, assessing, containing, removing,
remedying, mitigating, or otherwise responding to, the presence or release of
any Hazardous Substance at or from the Premises, (C) any and all costs for which
Landlord becomes liable to any governmental agency for studying, assessing,
containing, removing, remedying, mitigating, or otherwise responding to, the
presence or release of any Hazardous Substance at or from the Premises, (D) any
and all fines or penalties assessed, upon Landlord by reason of a failure of
Tenant to comply with any obligations, covenants or conditions set forth in this
Section, and (E) any and all reasonable legal fees and costs incurred by
Landlord in connection with any of the foregoing. Tenant’s obligations under
this Section shall survive the expiration or earlier termination of the Term of
this Lease. Notwithstanding anything to the contrary in this Section 8.4, Tenant
shall have no liability to Landlord and no obligation to remediate or monitor
with respect to Hazardous Substances present at the Property due to the acts or
omissions of any party other than Tenant and the Tenant Parties.

          8.5 ISRA.

               8.5.1 The business operations which Tenant shall conduct at the
Premises shall not constitute the operation of an industrial establishment as
defined in ISRA, or, if it is or at any time shall become such an industrial
establishment Tenant will comply with all ISRA requirements applicable to
Tenant’s operations and at the time of closing, terminating or transferring such
operations.

               8.5.2 Tenant shall comply in all respects, at its expense, with
ISRA in connection with Tenant’s operation and cessation of its business at the
Premises. If required by ISRA, no later than thirty (30) days prior to (i) the
anticipated termination of this Lease, (ii) Landlord’s transfer of title to the
Property, or (iii) the date on which Tenant intends to close, terminate or
transfer operations at the Premises, as those terms are defined in ISRA, Tenant
shall file with the New Jersey Department of Environmental Protection such
information, affidavits, forms, negative declaration statements or other
information as said Department may require and perform such actions as may be
required by said Department pertaining to the removal of Hazardous Substances,
Hazardous Materials and Hazardous Wastes that then remain on the Premises and
that were introduced to the Premises during the term by Tenant or any of the
Tenant Parties, and shall provide to Landlord either a “no further action”
letter from the New Jersey Department of Environmental Protection stating that
Tenant has taken all actions required by ISRA with respect to its cessation of
operations or a “letter of non-applicability” from the New Jersey Department of
Environmental Protection stating that the Premises do not constitute an
“Industrial Establishment” within the meaning of ISRA. Tenant hereby agrees to
indemnify

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and to hold harmless Landlord from, of, and against any and all expense, loss
and liability suffered by Landlord by reason of action successfully taken by
Landlord to attain compliance due to any violation of ISRA by Tenant, including
but not limited to any and all reasonable expenses that Landlord may incur in
complying with ISRA, any and all fines or penalties assessed upon Landlord under
ISRA and any and all reasonable legal fees and costs incurred by Landlord in
connection with any of the foregoing. The provisions of this Section shall
survive termination of this Lease.

          8.6 Common Areas.

               8.6.1 Tenant shall have the non-exclusive right to use the Common
Areas in common with other tenants of the Property during the Term.

               8.6.2 Landlord shall not make any alterations or additions to the
Property and the Common Areas, excepting the Phase III Premises prior to the
Phase III Delivery Date, without Tenant’s consent, which consent shall not be
unreasonably withheld or delayed.

          8.7 Landlord represents and warrants the following as of the date
hereof:

                    (a) Except as noted in the Phase I Environmental Site
Assessment prepared by EMG Corporate Center dated March 8, 2000; the Memorandum
of Agreement Application to New Jersey Department of Environmental Protection
(“NJDEP”) dated December 13, 2000; Memorandum of Agreement from NJDEP dated
February 8, 2001; the Remedial Action Workplan dated February 20, 2001; the
Letter from NJDEP dated March 7, 2002; and Remedial Action Report dated
September 17, 2002, to Landlord’s actual knowledge, after reasonable inquiry,
the Property is in material compliance with all applicable laws, rules and
regulations and all easements, restrictions and covenants of record.

                    (b) The Property is zoned LI (light industrial) and permits
the operation of a warehouse and distribution center on the Premises 24 hours
per day, 7 days per week.

                    (c) Landlord holds fee title to the Property, subject only
to a lien in favor of Bank of New York, those exceptions to title shown on
Schedule B of that certain Title Insurance Policy Issued by Fidelity National
Title Insurance, dated June 7, 2003 (the “Title Policy”) and Landlord’s land use
entitlements and the permits, licenses and approvals incident to the
construction of the Improvements (collectively “Exceptions”). Neither the
location nor any parties’ rights of access to such Exceptions adversely affects
the use of the Property as a warehouse or distribution center.

                    (d) Landlord has not granted any option or right of first
refusal to sell the Property.

                    (e) Other than the La Jobi Lease and as reflected in the
Title Policy, there are no other leases, licenses or similar agreements
affecting the Building or the Property.

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                    (f) Neither the absence of a “No Further Action” letter from
the State of New Jersey Department of Environmental Protection with respect to
the completion of the obligations of Landlord under the Remedial Action Workplan
referred in 8.7(a) nor the work required thereunder shall prohibit or interfere
with Tenant’s improvement, use and occupancy of the Premises as a warehouse and
distribution center.

     9. Alterations and Tenant’s Property.

          9.1 Alterations Defined.

               9.1.1 Tenant shall not make or, knowingly suffer or allow to be
made, any alterations, additions or improvements in or to the Premises
(collectively, “Alterations”) without first obtaining Landlord’s written consent
based on conceptual plans submitted by Tenant. However, Landlord’s consent will
not be required if (a) the proposed Alterations will not affect the structure or
the mechanical, electrical, HVAC, plumbing or life safety systems of the
Improvements (collectively, “Building Systems”) and (b) the total cost to
acquire and install the proposed Alterations will be no more than (i)
$250,000.00 in any one instance and (ii) $500,000.00 in the aggregate during any
calendar year. In all other instances where Landlord’s consent is so required,
it shall be granted or withheld by Landlord in its reasonable discretion. In all
events, Tenant shall notify Landlord prior to commencing any Alterations other
than de minimis Alterations.

               9.1.2 Tenant agrees that all such work (regardless of whether
Landlord’s consent is required) shall be done at Tenant’s sole cost and expense,
in accordance with the plans and specifications reasonably approved by Landlord
in advance and in a good and workmanlike manner, that the structural integrity
of the Building shall not be impaired, and that no liens shall attach to all or
any part of the Premises, the Building, or the Property by reason thereof.
Tenant shall obtain, at its sole expense, all permits required for such work.

          9.2 Removal of Property. All Alterations shall become the property of
Landlord and shall be surrendered to Landlord upon the expiration or earlier
termination of this Lease. However (i) movable equipment, trade fixtures,
personal property, furniture, or any other items that can be removed without
material harm to the Improvements will remain Tenant’s property (“Tenant Owned
Property”); and (ii) the racks to be installed by Tenant shall not become the
property of Landlord but shall be removed by Tenant upon the expiration or
earlier termination of this Lease. All Tenant Owned Property (including the
racks) shall be removed from the Premises at Tenant’s sole cost and expense at
the expiration or sooner termination of this Lease. When granting consent for
any Alterations that require Landlord’s consent, Landlord shall indicate whether
it will require the removal of those Alterations at the expiration or earlier
termination of the Lease. Prior to making any Alterations not requiring
Landlord’s consent, Tenant may request that Landlord notify Tenant whether
Landlord requires Tenant to remove that Alteration prior to expiration or
earlier termination of the Lease. Tenant shall remove those Alterations that
Landlord requested be removed under the prior two sentences at the expiration or
earlier termination of the Lease. Tenant shall repair at its sole cost and
expense all damage caused to the Premises or the Building by removal of any
Alterations, racking or Tenant Owned Property. Landlord may remove any Tenant
Owned Property, racking or Alterations that Tenant is

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required but fails to remove at the expiration or earlier termination of the
Lease and Tenant shall pay to Landlord the reasonable cost of removal. Tenant’s
obligations under this Section shall survive the expiration or earlier
termination of this Lease.

     10. Repairs and Other Work.

          10.1 Tenant’s Obligations.

               10.1.1 Without limiting or affecting Landlord’s Warranty granted
under Section 3.5 and except for Landlord’s obligations under Section 10.3, 8.3,
14 and 16 Tenant shall maintain in good, clean and sanitary order and condition
the Premises and every non-structural part thereof, including without limiting
the generality of the foregoing, all plumbing, heating, air conditioning,
ventilating, electrical, lighting facilities and equipment within the Premises,
fixtures, interior walls, ceilings, decking, floors, windows, doors, and plate
glass located within the Premises, and signs (except Landlord’s signs, if any,
and any sign erected by the owner of the adjacent parcel) located on the
Premises.

               10.1.2 Tenant will not overload the electrical wiring serving the
Premises or within the Premises, and will install at its expense, subject to the
provisions of this Lease, any additional electrical wiring which may be required
in connection with Tenant’s apparatus.

               10.1.3 Except for Landlord’s Warranty obligations under
Section 3.5 and Landlord’s obligations under Section 8.3, Section 10.3,
Section 14 and Section 16, Tenant will repair, at its expense, any damage to the
Premises, or to the Property, arising out of Tenant’s use or occupancy thereof,
including damage caused by bringing into the Premises any property for Tenant’s
use or by the installation or removal of such property, all regardless of fault,
or by whom such damage shall be caused, except if caused by Landlord, its
agents, employees, or contractors in which case Landlord shall make the repairs
at its expense. If Tenant fails to make such repairs Landlord may make the same
and Tenant agrees to pay to Landlord, upon Landlord’s demand, as Additional
Rent, the cost thereof.

               10.1.4 From and after the Single Tenant Conversion Date, Tenant
shall, at Tenant’s sole cost, repair and maintain the Common Areas (except: (a)
Landlord’s obligations under Section 8.3, 10.3, 14 and 16 (b) any repairs,
maintenance or replacements (x) required as of the Single Tenant Conversion Date
or (y) arising from a fire or other casualty or condemnation), including, but
not limited to, all landscaping, snow removal and otherwise perform the Common
Area Maintenance Services.

               10.1.5 Capital Repair/Replacement. Notwithstanding the foregoing
in this Section 10, if one or more of the Building Systems or a portion thereof
actually requires a repair that (a) (i) is at a cost in excess of 50% of the
cost of replacing that Building System or applicable portion thereof or
otherwise requires replacement, and (ii) is at a cost in excess of $25,000 in
any one occurrence, or (iii) would be a capitalized expenditure under Generally
Accepted Accounting Principles, and (b) is not the result of Tenant’s
negligence, failure to maintain, misuse of the Premises or a breach by Tenant of
its obligations under this Lease (which repair and replacement shall be Tenant’s
responsibility), then Tenant must notify Landlord in writing of the need for
such repair or replacement along

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with supporting estimates for their cost. In such event, the Building System or
affected portion thereof shall be either replaced or repaired by Landlord, at
Landlord’s determination (“Capital Repair/Replacement”). The cost of a Capital
Repair/Replacement shall be initially paid by Landlord and amortized over the
useful life of the applicable Capital Repair/Replacement in accordance with
generally accepted accounting principles plus interest at a rate equal to the
Lease Interest Rate, and the annual amortized amount shall be paid by Tenant to
Landlord monthly, as Additional Rent, in equal installments, during the
remainder of the initial Term (and any Renewal Period that is exercised by
Tenant) until the cost of such Capital Repair/Replacement has been fully
amortized as an Operating Expense, both before and after the Single Tenant
Conversion Date. If any Capital Repair/Replacement is not fully amortized over
the initial Term of the Lease and any Renewal Period, Tenant shall only be
responsible for the costs amortized during the initial Term and any Renewal
Period with Tenant reserving the right to prepay its obligation at any time.

          10.2 Conditions Applicable to Repairs and Other Work. All repairs,
replacements and reconstruction (including, without limitation, all Alterations)
that are Tenant’s obligations under this Lease shall be made and performed:
(a) at Tenant’s cost and expense, (b) by contractors or mechanics reasonably
approved by Landlord, (c) at least equal in quality of materials and workmanship
to the original work or installation, (d) in accordance with such reasonable
requirements as Landlord may impose with respect to insurance to be obtained by
Tenant in connection with the proposed work (but in no event in excess of that
type and amount of coverage required by other similarly situated landlords),
(e) in accordance with all applicable laws and regulations of governmental
authorities having jurisdiction over the Premises and (f) Tenant shall provide
Landlord with as-built drawings of such Alterations.

          10.3 Landlord’s Obligations. In addition to Capital
Repair/Replacement, Landlord, at its expense, shall be responsible for the
performance of all repair, maintenance and replacement of all structural
elements, the floor slab, the parking areas (including the sidewalks and truck
courts), the roof, the roof membrane, skylights and exterior walls of the
Building. Except for casualties under Section 14, if any such work is required
as a result of the negligence or misconduct of Tenant, Tenant’s contractors,
employees or invitees, Tenant shall reimburse Landlord for all reasonable costs
incurred by Landlord for such work within ten (10) business days of demand as
Additional Rent. Prior to the Single Tenant Conversion Date, Landlord shall also
be responsible for the performance of landscaping and snow removal (i.e. the
Common Area Maintenance Services). Landlord’s performance obligations under this
Section shall be carried out in a manner necessary to maintain the Property in a
first class condition. If Landlord unreasonably interferes with Tenant’s
business for a period of three (3) business days after notice from Tenant to
Landlord, or performing any repairs, maintenance, alteration or improvement in
or to any portion of the Property, including, without limitation, the Premises,
or in or to the fixtures, appurtenances and equipment therein the Rent will
proportionally abate while the unreasonable interference persists, provided,
however, that Tenant shall act reasonably to accommodate and coordinate any such
activities by Landlord and must provide reasonable access to Landlord for
purposes thereof.

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     11. Liens. Tenant shall keep the Premises and the Property free from any
liens arising out of any work performed or material furnished to or for the
Premises by or for Tenant. If Tenant shall not, within thirty (30) days
following notice of the imposition of any such lien, cause same to be released
of record by payment or posting of a bond satisfactory to Landlord, Landlord, in
addition to all other remedies provided under this Lease and by law, shall have
the right (but not the obligation) to cause the lien to be released by such
means as Landlord shall deem proper, including, without limitation, payment of
the claim giving rise to such lien. All such sums reasonably paid by Landlord
and all expenses incurred by it in connection therewith shall be considered
Additional Rent and shall be payable by Tenant within ten (10) days after
receipt of written demand.

     12. Subordination.

          12.1 Provided Tenant is provided with a reasonable and customary
subordination, nondisturbance and attornment agreement (“SNDA”), this Lease
shall be subject and subordinate at all times to (a) all ground leases or
underlying leases that may now exist or hereafter be executed affecting the
Property or any portion thereof, (b) the lien of any mortgage, deed of trust or
other security instrument that may now exist or hereafter be executed in any
amount for which the Property or any portion thereof, any ground leases or
underlying leases, or Landlord’s interest or estate therein is specified as
security, and (c) all modifications, renewals, supplements, consolidations and
replacements thereof and Tenant shall attorn to Landlord’s successors.

          12.2 Within ten (10) days following request by Landlord, Tenant agrees
to execute any documents reasonably required to effectuate the foregoing
subordination and attornment, to make this Lease prior to the lien of any
mortgage, deed of trust or underlying lease, as the case may be.

          12.3 Tenant agrees to give to any party holding a mortgage encumbering
the Building, by registered or certified mail, a copy of any notice of default
served upon Landlord provided Tenant has been notified in writing of the names
and addresses of such mortgagee(s). Tenant further agrees that if Landlord shall
have failed to cure such default within the time provided for in this Lease,
then the mortgagee(s) shall have the same cure rights as Landlord has under this
Lease.

     13. Inability to Perform. If, by reason of acts of God, governmental
restrictions, strikes, labor disturbances, shortages of materials or supplies or
any other cause or event beyond a party’s reasonable control (collectively,
“Force Majeure Events”), Landlord or Tenant is unable to furnish or is delayed
in furnishing any utility or service required to be furnished by either under
the provisions of this Lease, or either party is unable to perform or make or is
delayed in performing or making any installations, decorations, repairs,
alterations, additions or improvements required to be performed or made under
this Lease, no such inability or delay shall impose any liability upon such
non-performing party or, except as otherwise provided in Section 10, provide the
other party with any right to offset, deduction or abatement of rent by reason
of inconvenience or annoyance to such other party, or otherwise. The terms of
this Section 13 shall not be applicable to Landlord’s obligation to timely
Substantially Complete the Phase I Improvements on or prior to May 1, 2004, or
the Phase II Improvements on or prior to the Phase II Projected Completion Date
or to make

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any reimbursements to Tenant as and when required under this Lease and shall not
be applicable to or excuse any failing on the part of Tenant to timely satisfy
Tenant’s obligation to pay Rent or other required payments to Landlord.
Notwithstanding the foregoing, lack of funds shall not be a Force Majeure Event.

     14. Damage and Destruction.

          14.1 Repair. Subject to the provisions of Sections 14.2, 14.3 and 14.4
below, if any portion of the Property is damaged or destroyed by fire,
earthquake, flood or other casualty Landlord shall proceed immediately to
restore and make repairs in accordance with Section 14.4.

          14.2 Tenant’s Right to Terminate. If such damage affects the Premises
and, in the reasonable opinion of Landlord and Tenant, such damage cannot be
repaired within nine (9) months after the date of the event causing such damage
(under a normal construction schedule not requiring the payment of overtime or
premium) Tenant may terminate this Lease by delivery of written notice to
Landlord within forty-five (45) days after the date of the event causing such
damage. If Tenant does not or is not entitled to elect to terminate under the
preceding sentence, and if by the date eleven (11) months after the date of the
event causing such damage the repairs are not substantially completed, Tenant
may thereafter terminate this Lease by delivery of written notice to Landlord
prior to the time such repairs are actually substantially completed. Upon
termination, Rent shall be apportioned as of the date of the damage and all
prepaid Rent shall be repaid to Tenant (less the amount necessary to cure any
monetary default of Tenant under this Lease existing as of the date of
termination).

          14.3 Landlord’s Right to Terminate. If (i) the cost to repair damage
to or destruction of the Property exceeds 50% of replacement cost of the
Building and other improvements on the Property for a casualty of the type
covered by the insurance required to be carried under Section 15.5, or (ii) if
the Premises or any other portion of the Property is damaged by a casualty not
of the type covered by the insurance required to be carried under Section 15.5
and the amount by which the cost to repair such damage exceeds Available
Proceeds, if any, is greater than fifteen (15%) of the then replacement cost of
the Building and other improvements on the Property, or (iii) such damage cannot
be repaired within nine (9) months after the casualty (under a normal
construction schedule not requiring the payment of overtime or premium),
Landlord may terminate this Lease by delivery of written notice to Tenant within
forty-five (45) days after the date of the casualty. Notwithstanding the
foregoing, if Landlord elects to terminate under clause (ii) of the preceding
sentence, that election will be void and of no effect if, within fifteen
(15) days after being notified in writing of such election Tenant, in its sole
discretion, notifies Landlord in writing that Tenant will be responsible for
payment of the any excess repair cost. Upon termination, Rent shall be
apportioned as of the date of the damage and all prepaid Rent shall be repaid to
Tenant (less the amount necessary to cure any monetary default of Tenant under
this Lease existing as of the date of termination).

          14.4 Extent of Repair and Restoration Obligations. If this Lease is
not terminated as provided in Section 14.2 or 14.3, Landlord shall repair and
restore the Property to its condition immediately prior to the damage or
destruction, but with any

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changes required by applicable law; provided, however, that Landlord shall not
be responsible for repair or replacement of Tenant’s racking or trade fixtures,
any Tenant Owned Property or any interior tenant build out not paid for from the
Tenant Improvement Allowance. All such repairs shall be performed in a good and
workmanlike manner, in accordance with applicable laws, and with due diligence,
and Landlord shall restore the items repaired to substantially the same
usefulness and construction as existed immediately before the damage. In the
event of any termination of this Lease, the proceeds from any insurance paid by
reason of damage to or destruction of the Property or any portion thereof, or
any other element, component or property insured by Landlord (exclusive of
proceeds for damage to Tenant Owned Property and alterations and improvements
paid for by Tenant), shall belong to and be paid to Landlord.

          14.5 Adjustment of Rent. If a casualty unreasonably interferes with
Tenant’s access to or normal use of the Premises, Rent shall proportionately
abate commencing on the date of the casualty and ending upon Landlord’s delivery
of the Premises to Tenant with Landlord’s restoration obligation hereunder
substantially complete, except that Rent shall continue to proportionately abate
as aforesaid for up to forty-five (45) days after if (i) it is necessary for
Tenant to install replacement racking; and (ii) Tenant has not been provided a
reasonable opportunity to do so prior to such date. The extent of the abatement
shall be based upon the portion of the Premises which is rendered inaccessible
or not reasonably usable by Tenant for the normal conduct of its business.

          14.6 Mutual Waiver of Subrogation. Notwithstanding anything to the
contrary in this Lease, Landlord and Tenant mutually waive their respective
rights of recovery against each other and each other’s officers, directors,
constituent partners, agents and employees, and Tenant waives such rights
against each lessor under any ground or underlying lease and each lender under
any mortgage or deed of trust or other lien encumbering the Property or any
portion thereof or interest therein, to the extent any loss is or would be
covered by fire, extended coverage, and other property insurance policies
required to be carried under this Lease or otherwise carried by the waiving
party, regardless of deductibles, and the rights of the insurance carriers of
such policy or policies to be subrogated to the rights of the insured under the
applicable policy. Each party shall cause its insurance policy to be endorsed to
evidence compliance with such waiver.

          14.7 Available Proceeds. For purposes of this Lease, “Available
Proceeds” means proceeds available from insurance maintained by Landlord, plus
the amount of any deductible under the applicable policy or policies.

     15. Insurance.

          15.1 Insurance on Tenant’s Property. Tenant shall procure at its cost
and expense and keep in effect during the Term commercial property insurance
that shall at, a minimum, cover the perils insured under the ISO special causes
of loss form (CP 10 30) insurance coverage for all risks of physical loss or
damage insuring the full replacement value of Alterations, Tenant’s trade
fixtures, furnishings, equipment, plate glass, signs and all other items of
personal property of Tenant. Landlord shall not be liable for any damage of any
nature whatsoever to persons or property caused by explosion, fire, theft or
breakage, vandalism, falling plaster, by sprinkler, drainage or plumbing
systems, or air conditioning

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equipment, by the interruption of any public utility or service, by steam, gas,
electricity, water, rain or other substances leaking, issuing or flowing into
any part of the Premises, by natural occurrence, acts of the public enemy, riot,
strike, insurrection, war, court order, requisition or order of governmental
body or authority, or by anything done or omitted to be done by any tenant,
occupant or person in the Building (not including Landlord or any party under
Landlord’s control), it being agreed that Tenant shall be responsible for
obtaining appropriate insurance to protect its interests. Tenant is hereby
permitted, at its discretion, to self-insure for a portion or all of Tenant’s
property provided Guarantor underwrites such self-insurance and has a net worth
equal to or in excess of $100,000,000.

          15.2 Tenant’s Liability and Workers’ Compensation Insurance. Tenant
shall maintain commercial general liability (CGL) and, if necessary, commercial
umbrella insurance with a limit of not less than $2,000,000 each occurrence. CGL
insurance shall be written on ISO occurrence form CG 00 01 (or a substitute form
providing equivalent coverage) and shall cover liability arising from premises,
operations, independent contractors, products-completed operations, personal
injury and advertising injury and liability assumed under an insured contract.
Tenant shall also maintain statutory workers compensation insurance and
employers liability insurance with limits not less than $500,000 each accident
for bodily injury by accident or $500,000 each employee for bodily injury by
disease. Such CGL insurance shall name Landlord and any other parties reasonably
designated by the Landlord as additional insureds as respects insurable
liabilities assumed by Tenant under this Lease. At Landlord’s request Tenant
shall increase such insurance coverage to a level that is reasonably required by
Landlord.

          15.3 Form of Tenant’s Policies. Tenant’s insurance shall be issued by
companies authorized to do business in the State in which the Building is
located. Tenant shall have the right to provide insurance coverage pursuant to
blanket policies obtained by Tenant if the blanket policies expressly afford
coverage required by this Article 15. All insurance policies required to be
carried by Tenant under this Lease shall provide that Landlord shall receive
thirty (30) days notice from the insurer before any cancellation of such
insurance policy. Each such policy shall be primary and non-contributing with
respect to any policies carried by Landlord and shall contain a severability of
interest provision. Tenant shall deliver reasonably satisfactory evidence of
such insurance to Landlord on or before the Commencement Date, and thereafter at
least thirty (30) days before the expiration dates of expiring policies.
Notwithstanding the foregoing, if any such insurance expires without having been
renewed by Tenant, Landlord shall have the option in addition to Landlord’s
other remedies to procure such insurance for the account of Tenant immediately
following written notice to Tenant, and the cost thereof shall be paid to
Landlord as Additional Rent. The limits of the insurance required under this
Lease shall not limit the liability of Tenant.

          15.4 Compliance with Insurance Requirements. Tenant shall not do
anything, or suffer or permit anything to be done, in or about the Premises that
shall invalidate or be in conflict with the provisions of any fire or other
insurance policies covering the Building. Subject to the provisions of the
Warranty, Sections 8.3, 10.3, 14 and 16, Tenant, at Tenant’s expense, shall
comply with, and shall cause all occupants of the Premises to comply with, all
applicable customary rules, orders, regulations or requirements

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of any board of fire underwriters or other similar body. It is agreed that
Tenant’s operations as a warehouse and distribution center at the Premises do
not invalidate or conflict with any fire or other insurance policies covering
the Building or other applicable customary rules, orders, regulations or
requirements of any board of fire underwriters or other similar body.

          15.5 Landlord’s Insurance. Landlord shall purchase, maintain and keep
in effect during the Term insurance written by companies authorized to do
business in the State in which the Building is located and of the types and in
the amounts described below:

               15.5.1 Landlord’s Liability Insurance. Commercial property
insurance that shall at, a minimum, cover the perils insured under the ISO
special causes of loss form (CP 10 30) insuring the full replacement cost of the
Building and flood and earthquake coverage with a limit as close to the full
replacement cost of the Building as is reasonably available and rental loss
insurance.

               15.5.2 Commercial general liability (CGL) and, if necessary,
commercial umbrella insurance with a limit of not less than $2,000,000 each
occurrence. CGL insurance shall be written on ISO occurrence form CG 00 01 (or a
substitute form providing equivalent coverage) and shall cover liability arising
from premises, operations, independent contractors, products-completed
operations, personal injury and advertising injury and liability assumed under
an insured contract. Landlord shall also maintain statutory workers compensation
insurance and employers liability insurance with limits not less than $500,000
each accident for bodily injury by accident or $500,000 each employee for bodily
injury by disease.

               15.5.3 All costs of insurance carried by Landlord and referred to
in this Section 15.5 will constitute Operating Expenses.

               15.5.4 Form of Landlord’s Policies. Landlord’s insurance shall be
issued by companies authorized to do business in the State in which the Building
is located. Landlord shall have the right to provide insurance coverage pursuant
to blanket policies obtained by Landlord if the blanket policies expressly
afford coverage required by this Article 15.5. All insurance policies required
to be carried by Landlord under this Lease shall provide that Tenant shall
receive thirty (30) days notice from the insurer before any cancellation and
shall contain a severability of interests clause. Landlord shall deliver
reasonably satisfactory evidence of such insurance to Tenant on or before the
Commencement Date, and thereafter at least thirty (30) days before the
expiration dates of expiring policies. The limits of the insurance required
under this Lease shall not limit the liability of Landlord.

               15.5.5 Compliance with Insurance Requirements. Neither Landlord
nor any party under Landlord’s control shall do anything, in or about the
Property that shall invalidate or be in conflict with the provisions of any fire
or other insurance policies covering the Building. Tenant shall not allow the
Property to be used or occupied in a manner that might invalidate or increase
the rate of or make inoperative an insurance policy carried by Tenant. Landlord
shall comply with all applicable customary rules, orders, regulations or
requirements of any board of fire underwriters or other similar body.

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     16. Eminent Domain.

          16.1 Effect of Taking. If all of the Premises is condemned or taken in
any permanent manner before or during the Term for any public or quasi-public
use, or any permanent transfer of the Premises is made in avoidance of an
exercise of the power of eminent domain (each of which events shall be referred
to as a “taking”), this Lease shall automatically terminate as of the date of
the vesting of title as a result of such taking. If a part of the Premises is so
taken, this Lease shall automatically terminate as to the portion of the
Premises so taken as of the date of the vesting of title as a result of such
taking. If such portion of the Property is taken as to render the balance of the
Premises unusable by Tenant for the Permitted Use, as reasonably determined by
Tenant and Landlord, this Lease may be terminated by Landlord or Tenant, as of
the date of the vesting of title as a result of such taking, by written notice
to either party given within sixty (60) days following notice to Landlord of the
date on which said vesting will occur. If this Lease is not terminated as a
result of any taking, Landlord shall restore the Building to an architecturally
whole unit; provided, however, that Landlord shall not be obligated to expend on
such restoration more than the amount of condemnation proceeds actually received
by Landlord.

          16.2 Award. Landlord shall be entitled to the entire award for any
taking, including, without limitation, any award made for the value of the
leasehold estate created by this Lease. No award for any partial or entire
taking shall be apportioned, and Tenant hereby assigns to Landlord any award
that may be made in any taking, together with any and all rights of Tenant now
or hereafter arising in or to such award or any part thereof; provided, however,
that nothing contained herein shall be deemed to give Landlord any interest in
or to require Tenant to assign to Landlord any separate award made to Tenant for
its relocation expenses, the taking of personal property and fixtures belonging
to Tenant, the unamortized value of improvements made or paid for by Tenant or
the interruption of or damage to Tenant’s business.

          16.3 Adjustment of Rent. In the event of a partial taking that does
not result in a termination of this Lease as to the entire Premises, Base Rent
and Additional Rent shall be equitably adjusted in relation to the portions of
the Premises and Building taken or rendered unusable by such taking.

          16.4 Temporary Taking. If all or any portion of the Premises is taken
for a limited period of time before or during the Term, this Lease shall remain
in full force and effect; provided, however, that Rent shall abate during such
limited period in proportion to the portion of the Premises taken by such
taking. Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking; provided, however, that nothing
contained herein shall be deemed to give Landlord any interest in or to require
Tenant to assign to Landlord any separate award made to Tenant for its
relocation expenses, the taking of personal property and fixtures belonging to
Tenant, the unamortized value of improvements made or paid for by Tenant or the
interruption of or damage to Tenant’s business. Any temporary taking of all or a
portion of the Premises which continues for three (3) months shall be deemed a
permanent taking of the Premises or such portion and subject to Section 6.1
above.

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     17. Assignment; Subleasing.

          17.1 Consent Required. Neither Tenant nor any sublessee or assignee of
Tenant, directly or indirectly, voluntarily or by operation of law, shall sell,
assign, encumber, pledge or otherwise transfer or hypothecate all or any part of
the Premises or Tenant’s leasehold estate hereunder (each such act is referred
to as an “Assignment”), or sublet the Premises or any portion thereof or permit
the Premises to be occupied by anyone other than Tenant (each such act is
referred to as a “Sublease”), without Landlord’s prior written consent in each
instance. In the case of any proposed Assignment or Sublease, Landlord’s consent
shall not be unreasonably withheld, delayed or conditioned. Any Assignment or
Sublease that is not in compliance with this Article 17 shall be void and, at
the option of Landlord, shall constitute a material default by Tenant under this
Lease. The acceptance of Rent by Landlord from a proposed assignee, sublessee or
occupant of the Premises shall not constitute consent to such Assignment or
Sublease by Landlord. Fifty percent (50%) of the Excess Assignment Consideration
which is attributable to this Lease in connection with any Assignment, and fifty
percent (50%) of the Excess Sublease Rent, shall be payable to Landlord as
Additional Rent. The right to such amounts is expressly reserved from the grant
of Tenant’s leasehold estate for the benefit of Landlord.

          17.2 Notice. Any request by Tenant for Landlord’s consent to a
specific Assignment or Sublease shall include (a) the name of the proposed
assignee, sublessee or occupant, (b) the nature of the proposed assignee’s
sublessee’s or occupant’s business to be carried on in the Premises, (c) a copy
of the proposed Assignment or Sublease, and (d) such financial information (in
the event of an Assignment) and such other information as Landlord may
reasonably request concerning the proposed assignee, sublessee or occupant or
its business. Landlord shall respond in writing, stating the reasons for any
disapproval, within ten (10) days after receipt of all information reasonably
necessary to evaluate the proposed Assignment or Sublease.

          17.3 No Release. No consent by Landlord to any Assignment or Sublease
by Tenant, and no specification in this Lease of a right of Tenant’s to make any
Assignment or Sublease, shall relieve Tenant of any obligation to be performed
by Tenant under this Lease, whether arising before or after (a) the Assignment
or Sublease or (b) any extension of the Term (pursuant to exercise of an option
granted in this Lease). Notwithstanding the preceding sentence, in an Assignment
consented to by Landlord or an assignment described in Section 17.8, if the
assignee or its guarantor has an investment grade rating by Standard & Poor
equal to or in excess of BBB, then Tenant and Guarantor automatically shall be
released from all their duties and obligation under this Lease and Guaranty,
respectively, related to the period from and after the effective date of the
Assignment upon delivery of a fully executed assignment or a fully executed
guaranty (by the guarantor of the assignee), or both, as the case may be in form
acceptable to Landlord in its reasonable discretion and otherwise in compliance
with Section 17.6 (“Release Assignment”). The consent by Landlord to any
Assignment or Sublease shall not relieve Tenant or any successor of Tenant from
the obligation to obtain Landlord’s express written consent to any other
Assignment or Sublease.

          17.4 Cost of Processing Request. Tenant shall pay to Landlord the
reasonable amount of Landlord’s cost of processing every proposed Assignment or
Sublease,

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including without limitation reasonable legal review fees and expenses, together
with the reasonable amount of all direct and indirect expenses incurred by
Landlord arising from any assignee, occupant or sublessee taking occupancy
(including, without limitation, security service, janitorial and cleaning
service, and rubbish removal service) not to exceed $5,000.00.

          17.5 Corporate or Partnership Transfers. Any sale or other transfer,
including without limitation by consolidation, merger or reorganization, of a
majority of the voting stock of Tenant or any beneficial interest therein, if
Tenant is a corporation, or any sale or other transfer of a majority of the
general partnership or membership interests in Tenant or any beneficial interest
therein, if Tenant is a partnership or limited liability company, shall be an
Assignment for purposes of this Lease. The provisions of this Section 17.5 shall
not apply at any time the stock of Tenant is traded on a national exchange.

          17.6 Assumption of Obligations. Except as otherwise expressly provided
in Section 17.3, each assignee or other transferee (other than a sublessee) of
Tenant’s interest under this Lease, other than Landlord, shall assume all
obligations of Tenant under this Lease and shall be and remain liable jointly
and severally with Tenant for the payment of Base Rent and Additional Rent, and
for the performance of all the terms, covenants, conditions and agreements
contained in this Lease which are to be performed by Tenant. Each sublessee of
all or any portion of the Premises shall agree in writing for the benefit of
Landlord (a) to comply with and agree to the provisions of this Lease, and (b)
that such sublease (and all further subleases of any portion of the Premises)
shall terminate upon any termination of this Lease, regardless of whether or not
such termination is voluntary. So long as the rent under a Sublease is equal to
or greater than the Rent hereunder and the Sublease has been approved by
Landlord, Landlord will provide commercially reasonable non-disturbance
protection to the Sublease thereunder provided the terms thereof are reasonably
acceptable to Landlord and the same does act to release Tenant or Guarantor. No
Assignment or Sublease shall be valid or effective unless the assignee or
sublessee or Tenant shall deliver to Landlord a fully-executed counterpart of
the Assignment or Sublease and an instrument that contains a covenant of
assumption by the assignee or agreement of the sublessee, reasonably
satisfactory in substance and form to Landlord, consistent with the requirements
of this Section 17.6. The failure or refusal of the assignee to execute such
instrument of assumption or of the sublessee to execute the agreement described
above shall not release or discharge the assignee or sublessee from its
obligations that would have been contained in such instrument or agreement, all
of which obligations shall run automatically to such assignee or sublessee.

          17.7 Limitation. Notwithstanding anything contained in this Lease, no
proposed Assignment or Sublease shall provide for a rental or other payment for
the leasing, use, occupancy or utilization of all or any portion of the Premises
based, in whole or in part, on the income or profits derived by any person from
the property so leased, used, occupied or utilized other than an amount based on
a fixed percentage or percentages of gross receipts or sales. No proposed
Assignment of this Lease or Sublease of the Premises shall, in the sole opinion
of Landlord, (a) cause a violation of the Employee Retirement Income Security
Act of 1974 or the regulations promulgated thereunder, as amended from time to
time, by such proposed assignee or subtenant, by Landlord, or by any person
which, directly or

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indirectly, controls, is controlled by, or is under common control with,
Landlord or any person who controls Landlord or (b) result in Landlord, or any
person which, directly or indirectly, controls Landlord, receiving “unrelated
business taxable income” as defined in the Internal Revenue Code, as amended
(the “Code”). The provisions of this Section 17.7 shall be incorporated into the
provisions of any Sublease.

          17.8 Permitted Transfers. Notwithstanding anything to the contrary in
this Section 17, Tenant, without Landlord’s consent but after reasonable prior
notice, may assign or sublet this Lease: (i) to any entity or legal person which
controls, is controlled by or is under common control with Williams-Sonoma,
Inc.; (ii) to any entity or legal person resulting from a consolidation or
merger with Tenant; or (iii) to any entity or legal person acquiring all, or
substantially all, of Tenant’s assets or issued and outstanding stock provided,
however, that Guarantor shall in no event be released unless such assignment
constitutes a Release Assignment satisfying the requirements that are set forth
in Section 17.3 above. No Excess Sublease Rent or Excess Assignment
Consideration shall be due from Tenant to Landlord for Subleases or Assignments
under the preceding sentence.

     18. Utilities and Services.

          18.1 Utilities. Until the Single Tenant Conversion Date, Tenant shall
pay to Landlord, as Additional Rent, Tenant’s Proportionate Share of all
electric, gas, water and sewer utilities consumed at the Common Areas. After the
Single Tenant Conversion Date, Tenant shall pay all such costs. Landlord shall
cause electric and gas consumption at the Premises to be separately metered and
Tenant shall thereafter pay directly to the providing utility companies all
charges for electric and gas consumed within the Premises on the basis of
readings of such meters.

          18.2 Certain Services. Tenant shall contract separately for the
provision, at Tenant’s sole cost, of janitorial service and trash removal for
the Premises and Landlord will have no obligation to provide any such services
to the Premises.

          18.3 Involuntary Cessation of Services. Landlord reserves the right,
without any liability to Tenant and without affecting Tenant’s covenants and
obligations hereunder, to stop service of any or all of the HVAC, electric,
sanitary, and other systems serving the Premises, or to stop any other services
required by Landlord under this Lease, whenever and for so long as may be
necessary by reason of accidents, emergencies, or the making of repairs or
changes which Landlord, in good faith, deems necessary. No such interruption of
service shall be deemed an eviction or disturbance of Tenant’s use and
possession of the Premises or any part thereof, or render Landlord liable to
Tenant for damages, or relieve Tenant from performance of Tenant’s obligations
under this Lease, including, but not limited to, the obligation to pay Rent;
provided, however, that if: (a) any interruption of services persists for a
period in excess of two (2) consecutive business days Tenant shall, as Tenant’s
sole remedy, be entitled to a proportionate abatement of Rent to the extent, if
any, of any actual loss of use of the Premises by Tenant; or (b) any
interruption of services persists for a period in excess of one hundred eighty
(180) consecutive days, Tenant shall have the right to terminate this Lease by
written notice to Landlord.

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  19. Default.

          19.1 Events of Default by Tenant. Except as otherwise provided in this
Lease, the failure to perform or honor any covenant, condition or other
obligation of Tenant or the failure of any representation made by Tenant under
this Lease shall constitute a default by Tenant upon expiration of the
applicable grace period, if any. Tenant shall have a period of five (5) days
from the date it receives written notice from Landlord that any payment of Rent
is due within which to cure any default in the payment of Rent. Except as
otherwise provided in Article 20, Tenant shall have a period of thirty (30) days
from the date of written notice from Landlord within which to cure any other
default under this Lease; provided, however, that with respect to any default
(other than a default which can be cured by the payment of money) that cannot
reasonably be cured within thirty (30) days, the default shall not be deemed to
be uncured if Tenant commences to cure within thirty (30) days from Landlord’s
notice, continues to prosecute diligently the curing of such default and
actually cures such default within ninety (90) days after Landlord’s notice.
Notwithstanding anything contained in this Section 19.1, Landlord shall not be
obligated to provide Tenant with notice of substantially similar defaults more
than two (2) times in any twelve (12) month period.

          19.2 Remedies. Upon the occurrence of a default by Tenant that is not
cured by Tenant within the applicable grace periods specified in Section 19.1,
Landlord shall have all of the following rights and remedies in addition to all
other rights and remedies available to Landlord at law or in equity:

               19.2.1 The right to terminate Tenant’s right to possession of the
Premises and to recover (i) all Rent which shall have accrued and remain unpaid
through the date of termination; plus (ii) the amount by which the unpaid Rent
for the balance of the Term, discounted to present value at the Prime Rate then
in effect, shall exceed the then fair rental value of the Premises for the
balance of the Term, similarly discounted, plus (iii) any other amount necessary
to compensate Landlord for all the damages caused by Tenant’s failure to perform
its obligations under this Lease (including, without limitation, reasonable
attorneys’ and accountants’ fees, costs of alterations of the Premises, interest
costs and brokers’ fees incurred upon any reletting of the Premises).

               19.2.2 The right to continue the Lease in effect after Tenant’s
breach and recover Rent as it becomes due. Acts of maintenance or preservation,
efforts to relet the Premises or the appointment of a receiver upon Landlord’s
initiative to protect its interest under this Lease shall not of themselves
constitute a termination of Tenant’s right to possession.

               19.2.3 Pursuant to applicable law, the right and power to enter
the Premises and remove therefrom any property, to store such property in a
public warehouse or elsewhere at the cost of and for the account of Tenant, and
to sell such property and apply the proceeds therefrom to the satisfaction of
Tenant’s obligations under this Lease. In such event, Landlord may from time to
time sublet the Premises or any part thereof for such term or terms (which may
extend beyond the Term) and at such rent and such other terms as Landlord in its
sole discretion may deem advisable, with the right to make alterations and
repairs (in character substantially similar to those commonly made in warehouse
and

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distribution facilities in the Cranbury, New Jersey area) to the Premises. Upon
each such subletting, rents received from such subletting shall be applied by
Landlord, first, to payment of any costs of such subletting (including, without
limitation, reasonable attorneys’ and accountants’ fees, costs of alterations of
the Premises, interest costs, and brokers’ fees) and of any such alterations and
repairs; second, to payment of Base Rent and Additional Rent due and unpaid
hereunder; and the residue, if any, shall be held by Landlord and applied in
payment of future Base Rent and Additional Rent as they become due. If any
rental or other charges due under such sublease shall not be promptly paid to
Landlord by the sublessees, or if such rentals received from such subletting
during any month are less than Base Rent and Additional Rent to be paid during
that month by Tenant, Tenant shall pay any such deficiency to Landlord plus the
costs of such subletting (including, without limitation, attorneys’ and
accountants’ fees, costs of alterations of the Premises, interest costs and
brokers’ fees), and any other amounts due Landlord under this Section 19.2. Such
deficiency shall be calculated and paid monthly. No taking possession of the
Premises by Landlord shall be construed as an election on its part to terminate
this Lease unless a written notice of such intention is given to Tenant.
Landlord’s subletting the Premises without termination shall not constitute a
waiver of Landlord’s right to elect to terminate this Lease for such previous
breach.

               19.2.4 The right to have a receiver appointed for Tenant, upon
application by Landlord, to take possession of the Premises, to apply any rental
collected from the Premises and to exercise all other rights and remedies
granted to Landlord pursuant to this Article.

               19.2.5 The right to specific performance of any or all of
Tenant’s obligations under, and to damages for delay in the failure of such
performance.

               19.2.6 Landlord shall use reasonable efforts to mitigate damages
resulting from a default by Tenant, as required by applicable law.

          19.3 Remedies Cumulative. The exercise of any remedy provided by law
or the provisions of this Lease shall not exclude any other remedies unless they
are expressly excluded by this Lease. Tenant hereby waives any right of
redemption or relief from forfeiture following termination of, or exercise of
any remedy by Landlord with respect to, this Lease.

          19.4 Events of Default by Landlord and Tenant’s Remedies. The failure
by Landlord to observe or perform any of the covenants, conditions, or
provisions of this Lease to be observed or performed by Landlord, where such
failure shall continue for a period of thirty (30) days after written notice
thereof by Tenant to Landlord, shall be deemed to be a default by Landlord under
this Lease; provided, however, that if the nature of Landlord’s default is such
that more than thirty (30) days are reasonably required for its cure, then
Landlord shall not be deemed to be in default if Landlord commences such cure
within said thirty (30) day period and thereafter diligently prosecutes such
cure to completion, provided that the default shall actually be cured within
ninety (90) days after notice. In the event of a default by Landlord beyond
applicable cure periods, Tenant shall have the right, at its election, to: (a)
terminate the Lease immediately effective upon giving an additional written
notice to Landlord and sue for damages sustained by reason of the default; (b)
sue

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for damages sustained by reason of the default without terminating; or (c)
perform the obligations described in the notice in which case Landlord shall
reimburse Tenant for the reasonable cost of the performance of such obligations
within ten (10) business days after Tenant’s submission of an invoice therefor.
If Tenant elects to proceed under clause (c) above, then the Landlord’s default
shall be deemed to have been cured when Tenant’s expense has been reimbursed in
full. In the event Tenant commences a suit for damages sustained by reason of a
default by Landlord and prevails in such suit and obtains a final,
non-appealable judgment with respect to such suit, Tenant may then set-off the
amount of such judgment against the amounts due to Landlord under this Lease.
Tenant shall have no other right to set-off.

          19.5 Limitation of Landlord’s Liability. None of Landlord’s covenants,
undertakings or agreements under this Lease is made or intended as personal
covenants, undertakings or agreements by any of Landlord’s shareholders,
directors, officers, trustees or constituent partners. Except as expressly
provided below as to Landlord only, no personal liability is assumed by nor at
any time may be asserted against Landlord or any of Landlord’s shareholders,
directors, officers, trustees or constituent partners. Notwithstanding anything
to the contrary set forth in this Lease, in all events the liability of Landlord
to Tenant shall be limited to the interest of Landlord in the Property, and
Tenant agrees to look solely to Landlord’s interest in the Property for the
recovery of any judgment or award against Landlord, it being intended that
Landlord shall not be personally liable for any judgment or deficiency;
provided, however, that Tenant shall always have the right to collect up to an
amount equal to twenty-five percent (25%) of the fair market value of the
Property as of the date of a Judgment (the “Minimum Equity”; the amount by which
the Minimum Equity as of the date of any Judgment exceeds Landlord’s actual
equity interest as of the date of the Judgment, the “Equity Deficiency”).
Notwithstanding the above, Landlord shall have personal liability to Tenant for
any Judgment up to an amount not to exceed the Equity Deficiency. The term
“Judgment” shall mean a final, nonappealable judgment against Landlord.

          19.6 Transfer of Landlord’s Interest. Upon the sale or other
conveyance or transfer of Landlord’s interest in the Property, the transferor
shall be relieved of all covenants and obligations of Landlord arising under
this Lease from and after the closing of such sale, conveyance or transfer,
provided the transferee assumes the obligations of Landlord under this Lease
from and after the date of transfer.

     20. Insolvency or Bankruptcy. The occurrence of any of the following shall,
at Landlord’s option, constitute a breach of this Lease by Tenant: (i) the
appointment of a receiver to take possession of all or substantially all of the
assets of Tenant or the Premises, (ii) an assignment by Tenant for the benefit
of creditors, (iii) any action taken or suffered by Tenant under any insolvency,
bankruptcy, reorganization, moratorium or other debtor relief act or statute,
whether now existing or hereafter amended or enacted, (iv) the filing of any
voluntary petition in bankruptcy by Tenant, or the filing of any involuntary
petition by Tenant’s creditors, which involuntary petition remains undischarged
for a period of ninety (90) days, (v) the attachment, execution or other
judicial seizure of all or substantially all of Tenant’s assets or the Premises,
if such attachment or other seizure remains undismissed or undischarged for a
period of thirty (30) days after the levy thereof, (vi) the admission of

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Tenant in writing of its inability to pay its debts as they become due,
(vii) the filing by Tenant of any answer admitting or failing timely to contest
a material allegation of a petition filed against Tenant in any proceeding
seeking reorganization, arrangement, composition, readjustment, liquidation or
dissolution of Tenant or similar relief, (viii) if within sixty (60) days after
the commencement of any proceeding against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such proceeding
shall not have been dismissed, or (ix) the occurrence of any of the foregoing on
the part of any Guarantor. Upon the occurrence of any such event or at any time
thereafter, Landlord may elect to exercise any of its remedies under Article 19
above or any other remedy available at law or in equity. In no event shall this
Lease be assigned or assignable by operation of law or by voluntary or
involuntary bankruptcy proceedings or otherwise, and in no event shall this
Lease or any rights or privileges under this Lease be an asset of Tenant under
any bankruptcy, insolvency or reorganization proceedings. If, upon the
occurrence of any of the events enumerated above, under applicable law Tenant or
the trustee in bankruptcy has the right to affirm this Lease and continue to
perform the obligations of Tenant under this Lease, Tenant or such trustee, in
such time period as may be permitted by the bankruptcy court having
jurisdiction, shall cure all defaults of Tenant outstanding under this Lease as
of the date of the affirmance of this Lease and provide to Landlord such
adequate assurances as may be necessary to ensure Landlord of the continued
performance of Tenant’s obligations under this Lease. Notwithstanding the
provisions of Section 19.1, there shall be no cure periods for any breach or
default under this Article 20 except as expressly provided in this Article 20.

     21. Fees and Expenses; Indemnity; Payment.

          21.1 Landlord’s Right to Remedy Defaults. If Tenant shall default in
the performance of any of its obligations under this Lease after notice and
expiration of the applicable cure period, Landlord, at any time thereafter and
without additional notice, may remedy such default for Tenant’s account and at
Tenant’s expense, without waiving any other rights or remedies of Landlord with
respect to such default. Notwithstanding the foregoing, Landlord shall have the
right to cure any failure by Tenant to perform any of its obligations under this
Lease without notice to Tenant if such failure results in an immediate threat to
life or safety of any person, or materially adversely impairs the Building or
its efficient operation. Notwithstanding anything contained in this Lease,
Landlord shall not be liable for, and there shall be no abatement of Rent with
respect to, any injury to or interference with Tenant’s business arising from
the exercise by Landlord of its rights under this Section 21.1.

          21.2 Indemnity. Subject to Section 14.6, Tenant shall indemnify,
defend and hold Landlord harmless from and against any and all claims, losses,
costs, liabilities, damages and expenses including, without limitation,
penalties, fines and reasonable attorneys’ fees, to the extent incurred in
connection with or arising from (a) any default by Tenant in the performance of
its obligations under this Lease, or the failure of any representation made by
Tenant in this Lease, and (b) the use or occupancy or manner of use or occupancy
of the Premises or any injury or damage caused by Tenant, Tenant Parties or any
person occupying the Premises through Tenant. Subject to Section 14.6, Landlord
shall indemnify, defend and hold Tenant harmless from and against any and all
claims, losses,

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costs, liabilities, damages and expenses including, without limitation,
penalties, fines and reasonable attorneys’ fees, to the extent incurred in
connection with or arising from (a) any default by Landlord in the performance
of its obligations under this Lease, or the failure of any representation made
by Landlord in this Lease, (b) any negligent, willful or intentional acts or
omissions of Landlord or any parties within the control of Landlord, (c) the
presence of Hazardous Substances introduced in, on, under or about the Premises
prior to the Commencement Date, and (d) the migration of Hazardous Substances to
the Premises at any time during the Term, violations of Environmental Statutes
by the Premises or the Property existing as of the Commencement Date or as a
result of the actions of Landlord or its agents, employees, representatives or
contractors.

          21.3 Interest on Past Due Obligations. Unless otherwise specifically
provided herein, any amount due from one party to the other under this Lease
which is not paid within ten (10) days after written notice from Landlord shall
bear interest from the due date until paid at the Lease Interest Rate.

     22. Access to Premises. Landlord reserves for itself and its agents,
employees and independent contractors the right to enter the Premises upon at
least twenty-four (24) hours written notice to inspect the Premises, to supply
any service to be provided by Landlord to Tenant, to show the Premises to
prospective purchasers, mortgagees, beneficiaries or (no earlier than nine (9)
months prior to the expiration of this Lease) tenants, to post notices of
nonresponsibility, to determine whether Tenant is complying with its obligations
under this Lease, and to alter, improve or repair the Premises or any other
portion of the Building. Landlord’s right to enter the Premises shall include
the right to grant reasonable access to the Premises to governmental or utility
employees. Landlord may erect, use and maintain scaffolding, pipes, conduits and
other necessary structures in and through the Premises or any other portion of
the Building where reasonably required by the character of the work to be
performed in making repairs or improvements, provided that the entrance to the
Premises shall not be blocked thereby, and that there is no unreasonable
interference with the business of Tenant. In the event of an emergency, Landlord
shall have the right to enter the Premises at any time without notice. Except to
the extent caused by Landlord’s negligence or willful misconduct, Tenant waives
any claim for damages for any injury or inconvenience to or interference with
Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, any
right to abatement of Rent, or any other loss occasioned by Landlord’s exercise
of any of its rights under this Section 22.

     23. Notices. Except as otherwise expressly provided in this Lease, any
payment required to be made and any bills, statements, notices, demands,
requests or other communications given or required to be given under this Lease
shall be effective only if rendered or given in writing, sent by personal
delivery or registered or certified mail, return receipt requested, by overnight
courier service or by facsimile followed by another permitted method of notice,
addressed (a) to Tenant at Tenant’s Address, (b) to Landlord at Landlord’s
Address, or (c) to such other address as either Landlord or Tenant may designate
as its new address for such purpose by notice given to the other in accordance
with the provisions of this Article 23. Any such bill, statement, notice,
demand, request or other communication shall be deemed to have been rendered or
given on the date of receipt or refusal to accept delivery.

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     24. No Waiver. Neither this Lease nor any term or provision of this Lease
may be waived, and no breach thereof shall be waived, except by a written
instrument signed by the party against which the enforcement of the waiver is
sought. No failure by Landlord to insist upon the strict performance of any
obligation of Tenant under this Lease or to exercise any right, power or remedy
consequent upon a breach thereof, no acceptance of full or partial Base Rent or
Additional Rent during the continuance of any such breach, no course of conduct
between Landlord and Tenant, and no acceptance of the keys or to possession of
the Premises before the termination of the Term by Landlord or any employee of
Landlord shall constitute a waiver of any such breach or a waiver or
modification of any term, covenant or condition of this Lease or operate as a
surrender of this Lease. No waiver of any breach shall affect or alter this
Lease, but each and every term, covenant and condition of this Lease shall
continue in full force and effect with respect to any other then-existing or
subsequent breach thereof. No payment by Tenant or receipt by Landlord of a
lesser amount than the aggregate of all Base Rent and Additional Rent then due
under this Lease shall be deemed to be other than on account of the first items
of such Base Rent and Additional Rent then accruing or becoming due, unless
Landlord elects otherwise. No endorsement or statement on any check and no
letter accompanying any check or other payment of Base Rent or Additional Rent
in any such lesser amount and no acceptance by Landlord of any such check or
other payment shall constitute an accord and satisfaction. Landlord may accept
such check or payment without prejudice to Landlord’s right to recover the
balance of such Base Rent or Additional Rent or to pursue any other legal
remedy.

     25. Tenant’s Certificates. Landlord and Tenant, at any time and from time
to time, within ten (10) days after written request, shall execute, acknowledge
and deliver to the other, addressed to the requesting party (and if requested,
any prospective purchaser, ground or underlying lessor or mortgagee or
beneficiary of any part of the Property or any prospective assignee, subtenant
or other transferee of Tenant), an estoppel certificate certifying: (i) that the
Lease is in full force and effect and not modified or amended except as
disclosed; (ii) the relevant dates under the Lease; (iii) the Rent; (iv) to the
knowledge of the certifying party, that no defaults exist under the Lease, and
(v) any other items reasonably requested. Tenant shall cause Guarantor to join
in any such estoppel certificate for the purpose of certifying that Guarantor’s
guaranty remains in full force and effect. It is intended that any such
certificate may be relied upon by the requesting party and any prospective
purchaser, investor, ground or underlying lessor or mortgagee or beneficiary of
all or any part of the Property.

     26. Intentionally deleted.

     27. Tenant’s Taxes. In addition to all other sums to be paid by Tenant
under this Lease, Tenant shall pay, before delinquency, any and all taxes levied
or assessed during the Term, whether or not now customary or within the
contemplation of the parties, (a) upon, measured by or reasonably attributable
to Tenant’s improvements, equipment, furniture, fixtures and other personal
property located in the Premises, (b) upon or measured by Base Rent or
Additional Rent, or both, payable under this Lease, including without limitation
any gross income tax or excise tax levied by any governmental body having
jurisdiction with respect to the receipt of such rental; (c) upon or with
respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy by Tenant of the

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Premises or any portion thereof; or (d) upon this transaction or any document to
which Tenant is a party creating or transferring an interest or an estate in the
Premises. Tenant shall reimburse Landlord upon demand for any and all such taxes
paid or payable by Landlord (other than state and federal personal or corporate
income taxes measured by the net income of Landlord from all sources).
Notwithstanding anything to the contrary in this Section 27, Tenant shall have
the right to contest any taxes payable by Tenant under this Section provided
that Tenant, at its sole cost and expense, diligently undertakes and pursues any
such contest in appropriate proceedings, indemnifies Landlord against and holds
Landlord harmless from all loss or damages that Landlord shall suffer by reason
of such contest, and does not permit any lien to be placed on the Building or
any part thereof or interest therein.

     28. Miscellaneous.

          28.1 Annual Financial Statement. Within ten (10) days following the
request of Landlord, which request may not be given more than two (2) times
during any of the initial Term or any Renewal Term, at any time during the Term
that neither Tenant nor Guarantor is a “publicly traded company” (i.e.,
ownership interests are listed on a public securities exchange), then Tenant and
any Guarantor shall furnish to Landlord a financial statement, in form and
substance satisfactory to Landlord, showing the complete results of such
entity’s operations for its immediately preceding fiscal year, certified as true
and correct by a certified public accountant and prepared after audit in
accordance with generally accepted accounting principles applied on a consistent
basis from year to year.

          28.2 References. All personal pronouns used in this Lease, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and vice versa. The use herein
of the word “including” or “include” when following any general statement, term
or matter shall not be construed to limit such statement, term or matter to the
specific items or matters set forth immediately following such word or to
similar items or matters, whether or not non-limiting language (such as “without
limitation”, or “but not limited to,” or words of similar import) is used with
reference thereto. All references to “mortgage” and “mortgagee” shall include
deeds of trust and beneficiaries under deeds of trust, respectively. All
Exhibits referenced and attached to this Lease are incorporated in this Lease by
this reference. The captions preceding the Sections and Articles of this Lease
have been inserted solely as a matter of convenience, and such captions in no
way define or limit the scope or intent of any provision of this Lease.

          28.3 Successors and Assigns. The terms, covenants and conditions
contained in this Lease shall bind and inure to the benefit of Landlord and
Tenant and, except as otherwise provided herein, their respective personal
representatives and successors and assigns.

          28.4 Severability. If any provision 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 provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall remain in effect and shall be enforceable to the full extent permitted by
law.

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          28.5 Construction. This Lease shall be governed by and construed in
accordance with the laws of the State in which the Building is located, without
regard for such State’s choice of law requirements.

          28.6 Integration. The terms of this Lease (including, without
limitation, the Exhibits to this Lease) are intended by the parties as a final
expression of their agreement with respect to such terms as are included in this
Lease and may not be contradicted by evidence of any prior or contemporaneous
agreement, arrangement, understanding or negotiation (whether oral or written).
The parties further intend that this Lease constitutes the complete and
exclusive statement of its terms, and no extrinsic evidence whatsoever may be
introduced in any judicial proceeding involving this Lease. Neither Landlord nor
Landlord’s agents have made any representations or warranties with respect to
the Premises, the Building, the Property or this Lease except as expressly set
forth herein. The language in all parts of this Lease shall in all cases be
construed as a whole and in accordance with its fair meaning and not construed
for or against any party by reason of such party having drafted such language.

          28.7 Surrender. Upon the expiration or sooner termination of the Term,
Tenant will quietly and peacefully surrender to Landlord the Premises in the
condition in which they are required to be kept as provided in this Lease,
ordinary wear and tear and casualty excepted.

          28.8 Quiet Enjoyment. Upon Tenant paying the Base Rent and Additional
Rent and performing all of Tenant’s obligations under this Lease, Tenant may
peacefully and quietly enjoy the Premises during the Term as against all persons
or entities claiming by or through Landlord; subject, however, to the provisions
of this Lease and to any mortgages or deeds of trust or ground or underlying
leases referred to in Article 12.

          28.9 Holding Over. If Tenant shall hold over after the expiration of
the Term, Tenant shall pay monthly Base Rent equal to one hundred fifty percent
(150%) of the Base Rent payable during the final full month of the applicable
Lease Year (exclusive of abatements, if any), in which such termination occurs
together with an amount reasonably estimated by Landlord for the monthly
Additional Rent payable under this Lease, and shall otherwise be on the terms
and conditions herein specified so far as applicable (but expressly excluding
all renewal or extension rights), which amounts shall constitute Landlord’s sole
damages remedy on account of such holding over, except as hereunder provided.
Notwithstanding anything contained herein to the contrary, Landlord shall be
entitled to pursue and collect actual damages from Tenant on account of a
holdover by Tenant only if and to the extent (i) Landlord has leased all or some
portion of the Premises to a tenant; (ii) Landlord notifies Tenant, in writing,
of the existence of such lease and the date upon which Tenant must vacate the
Premises such that Landlord may timely deliver the leased premises (the “Vacancy
Date”); (ii) such notice is provided at least thirty (30) days prior to the
Vacancy Date; and (iv) Tenant fails to vacate the Premises on or prior to the
Vacancy Date and deliver the same prior to such date in the condition required
by this Lease. For purposes of the preceding sentence, damages shall include
lost rental income to Landlord resulting from the termination of any such lease
(provided Landlord shall be obligated to use reasonable efforts to mitigate such
damages). No holding over by Tenant after the Term shall operate to extend the
Term. Any holding over with Landlord’s written consent shall be

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construed as a tenancy at sufferance or from month to month, at Landlord’s
option. Any holding over without Landlord’s written consent shall entitle
Landlord to reenter the Premises as provided in Article 19 and to terminate this
Lease in accordance with Article 19 or its rights at law or in equity.

          28.10 Time of Essence. Time is of the essence of each and every
provision of this Lease.

          28.11 Broker’s Commissions. Each party represents and warrants to the
other that it has not entered into any agreement or incurred or created any
obligation which might require the other party to pay any broker’s commission,
finder’s fee or other commission or fee relating to the leasing of the Premises,
other than the Broker referenced herein. Each party shall indemnify, defend and
hold harmless the other and the other’s constituent partners and their
respective officers, directors, shareholders, agents and employees from and
against all claims for any such commissions or fees made by anyone claiming by
or through the indemnifying party.

          28.12 No Merger. The voluntary or other surrender or termination of
this Lease by Tenant, or a mutual cancellation hereof shall not work a merger,
but, at Landlord’s sole option, shall either terminate all existing subleases or
subtenancies or shall operate as an assignment to Landlord of all such subleases
or subtenancies.

          28.13 Survival. All of Tenant’s and Landlord’s covenants and
obligations contained in this Lease which by their nature might not be fully
performed or capable of performance before the expiration or earlier termination
of this Lease shall survive such expiration or earlier termination. No provision
of this Lease providing for termination in certain events shall be construed as
a limitation or restriction of Landlord’s or Tenant’s rights and remedies at law
or in equity available upon a breach by the other party of this Lease.

          28.14 Amendments. No amendments or modifications of this Lease or any
agreements in connection therewith shall be valid unless in writing duly
executed by both Landlord and Tenant. No amendment to this Lease shall be
binding on any mortgagee or beneficiary of Landlord (or purchaser at any
foreclosure sale) unless such mortgagee or beneficiary shall have consented in
writing to such amendment.

          28.15 WAIVER OF JURY TRIAL. LANDLORD AND TENANT KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BROUGHT BY EITHER PARTY AGAINST THE OTHER IN ANY MATTER ARISING OUT OF THIS
LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE
PREMISES OR ANY CLAIM OF INJURY OR DAMAGE.

          28.16 DELIVERY FOR EXAMINATION. DELIVERY OF THE LEASE TO TENANT SHALL
NOT BIND LANDLORD IN ANY MANNER, AND NO LEASE OR OBLIGATIONS OF LANDLORD SHALL
ARISE UNTIL THIS INSTRUMENT IS SIGNED BY BOTH LANDLORD AND TENANT AND DELIVERY
IS MADE TO EACH.

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          28.17 Board Contingency. Landlord acknowledges and agrees that: (i)
Tenant has not obtained the approval of the Board of Directors (the “Board”) of
Guarantor, the parent company of Tenant, necessary to unconditionally authorize
this Lease and the transactions contemplated hereby including, without
limitation, the Guaranty (the “Board Approval”); and (ii) the Board may grant or
withhold the Board Approval in its sole and absolute discretion. Tenant’s
obligations under this Lease are conditioned upon the receipt of the Board
Approval on or prior to 5:00 p.m. Pacific Standard Time on February 3, 2004 (the
“Board Approval Time”). In the event Tenant has not provided written notice to
Landlord of the Board Approval by the Board Approval Time, this Lease and the
Guaranty described in Section 28.18 shall terminate and neither party shall have
any liability to the other hereunder.

          28.18 Guaranty. Simultaneously with the execution and delivery of this
Lease by Tenant, Guarantor, the parent company of Tenant, has executed a
guaranty to and for the benefit of Landlord of all of Tenant’s liabilities and
obligations hereunder in the form attached hereto as Exhibit E.

          28.19 Attorneys’ Fees. In the event of any litigation or other
proceeding between Landlord and Tenant to interpret or enforce the terms hereof,
or to seek a declaration of the rights of the parties hereunder, or otherwise
arising out of or relating to this Lease, the losing party will pay to the
prevailing party (as hereinafter defined) its reasonable costs of litigation
including reasonable attorneys’ fees. Such costs and attorneys’ fees may be
awarded in the same suit or recovered in a separate suit, whether or not such
action or proceeding is pursued to decision or judgment. The term “prevailing
party” will include, without limitation, a party who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment or the abandonment by the other party of its claim or
defense. The non-prevailing party shall also pay the attorneys’ fees and costs
incurred by the prevailing party in any post-judgment proceedings to collect and
enforce the judgment. The covenant in the preceding sentence is separate and
several and shall survive the merger of this provision into any judgment on this
Lease.

          28.20 Counterparts. This Lease may be executed in two or more
counterparts, each of which may be deemed an original, but all of which together
will constitute one and the same instrument.

          28.21 Relationship to Original Lease. This Lease amends, restates and
supersedes in its entirety the Original Lease.

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     IN WITNESS WHEREOF, Landlord and Tenant have each caused their duly
authorized representatives to execute this Lease on their behalf as of the date
first above written.

              LANDLORD
 
            KEYSTONE CRANBURY EAST, LLC
 
       

  By:   /s/ Charles C. Lee

     

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      Charles C. Lee

  Its:   Senior Vice President

       
 
            TENANT
 
            WILLIAMS-SONOMA DIRECT, INC.
 
       

  By:   /s/ J. Richard Meyers

     

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      J. Richard Myers

  Its:   Vice President

       

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EXHIBIT A

Keystone Cranbury East
Cranbury, NJ

 

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(KEYSTONE CRANBURY EAST SITE PLAN) [f99301f9930100.gif]

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EXHIBIT B

Shell Building Specifications
1,000,000 S.F. Warehouse

for

the property located at 275 Prospectus Plains Drive
Cranbury, New Jersey

as developed by

KEYSTONE CRANBURY EAST, LLC

CRANBURY, NEW JERSEY

FEBRUARY 2, 2004

 

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Division 1: General Requirements

01 100 – Project Description

A.   This project consists of a 500,000 square foot warehouse with a 500,000
square foot expansion per the Architectural drawings by Mitchell & Hugeback.
281,000 square feet is currently vacant with the 500,000 square foot expansion
under construction.

01 102 – Architectural and Engineering

A.   Civil, structural and architectural construction documents will be prepared
by Keystone Cranbury East, LLC.   B.   Mechanical, electrical, plumbing and fire
protection drawings will be prepared by design-build contractors.   C.   These
documents will be adequate for the purpose of obtaining building permits and
properly defining the scope of work for the project.   D.   The Americans with
Disabilities Act Accessibility Guide will be consulted in the design of the
facility.   E.   These documents will not be released for construction before
they are mutually approved by Keystone Cranbury East, LLC, the Tenant and the
contractor.

01 400 – Testing and Inspections

A.   Keystone Cranbury East, LLC to conduct soils and concrete testing
throughout the course of the project to ensure quality performance of the
placement of subgrade materials and concrete.   B.   Results of all tests and
inspections will be made available to Tenant upon request.

01 500 – Temporary Services

A.   The following temporary services will be provided for the project:

1.   Electric   2.   Water   3.   Telephone   4.   Sanitary Facilities   5.  
Project Signage   6.   Job Trailer   7.   Cleaning

 

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Division 2 Sitework

02 130 – Excavation

A.   Excavations for foundations, pits and trenches will be made as necessary.
Excavations will be made to establish the bottom of all footings below finished
grade per local code.   B.   Site excavations are based on a balanced cut/fill
site. Excess topsoil to be distributed on the site.   C.   Any necessary fill
material will be placed in appropriate lifts and compacted to a density of 95%
Modified Proctor.   D.   The following site work is included per civil drawings
by Schoor DePalma Engineers & Design Professionals:

1.   All Grading   2.   Mass Excavation   3.   Topsoil respread   4.   Erosion
Control   5.   Domestic Water   6.   Sanitary Sewer   7.   Storm Sewers   8.  
Underground Fire Loop   9.   Site Staking

02 180 – Landscaping

A.   Irrigation, landscaping and picnic areas are included per the landscape
drawings.   B.   Keystone retaining wall shall be included per plans.

02 511 – Asphaltic Pavement

A.   All paved areas will be hot asphalt placed over a compacted stone
aggregate. Pavement thickness will be installed as follows:

1.   Drive Areas – 6” stone subbase, 5” base course, 2” surface course   2.  
Truck Parking – 6” stone subbase, 5” base course, 2” surface course   3.   Car
Parking – 3” base course, 2” surface course on approved compacted subgrade.

B.   Striping of the auto parking spaces and trailer spaces will be provided per
the site plan by Schoor DePalma.

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02 514 – Portland Cement Concrete Paving

A.   Concrete apron 55’ deep is included at the loading docks in the location as
shown on Exhibit A (February 2, 2004). The pad will consist of 8” reinforced
concrete at 4,500 psi compressive strength.   B.   10’ dolly pads are included
per the drawings.   C.   Concrete curbing will be installed in all paved areas.
  D.   Tenant entry sidewalks are included.

Division 3: Concrete

03 130 – Foundations

A.   Concrete foundations will have steel reinforcing suitable for the loads
imposed by the structure.   B.   Concrete will obtain a minimum compressive
strength of 4,000 psi in 28 days.   C.   Reinforcing steel shall have a minimum
yield strength or 60,000 psi per ASTM.   D.   Exterior footings will be founded
below grade per local code. Interior footings will be founded below grade per
local code.   E.   Trench footings will be a minimum of 12” wide with
longitudinal reinforcing per Structural drawings.   F.   Concrete retaining
walls are included for the drive-in ramps. Concrete compressive strength will be
4,000 psi in 28 days. All concrete exposed to freeze/thaw conditions will be
air-intrained at 4-6%.

03 300 – Cast in Place Concrete

A.   Concrete slabs in the warehouse area will be 7” thick, non-reinforced floor
slab placed over a minimum of 6” of properly compacted fill. Compressive
strength will be 4,000 psi in 28 days. A floor flatness profile of Ff 60, and Fl
of 40 shall be achieved as measured by the floor flatness profile number system.
Control joints shall be provided in accordance with American Concrete Institute
Standards. Landlord shall provide floor flatness and levelness test reports for
each pour to Tenant.   B.   Warehouse floor slabs shall receive one coat of
Diamond Hard or equal.

03 222 – Concrete Tilt Wall Panels

A.   The perimeter of the facility will be concrete tilt wall panels per the
Tilt up drawings and specifications by Smith/Roberts & Associates.

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B.   The panel joints shall be caulked on both the outside and the inside of the
panels, from 12” below finished grade to top of panels, with Tremco or equal
material. One inch round foam mini-cell backer rod shall be placed between panel
joints on the outside of panels prior to caulking.   C.   Tilt wall panels will
include reveals per the architectural elevations.

Division 4: Masonry

This division is not applicable.

Division 5: Metals

05 100 – Structural Steel

A.   The structural system will consist of conventional steel framing with all
necessary columns, beams, girders, and bracing. Clear height to the lowest
structural member is 36’   B.   Bay sizes are a nominal 51’-10” x 50’-0”   C.  
The structural system will be designed for a ballast roofing system with a 90
mph wind up lift rating.

05 200 – Metal Deck

A.   Roof Deck will be per structural drawings and will be factory painted
(white) metal.

05 500 – Miscellaneous Metals

A.   Concrete filled pipe bollards, 6” in diameter, are included at the interior
and exterior of all drive-in overhead doors and the interior of all dock doors.

D.   All handrail and safety railing will be provided in order to conform to the
New Jersey Building Code.

Division 6: Wood & Plastics

This division is not applicable.

Division 7: Thermal & Moisture Protection

07 120 – Structural Steel

A.   A 1” hardliner insulation system from 10’ above finished floor to eave
height.

B.   The roof insulation shall be rigid closed cell isocyanurate boards having a
minimum density of 2.1 pcf, a minimum 20 psi compressive strength and a total
minimum aged R value of 12.8.

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C.   Perimeter foundations shall have extruded polystyrene per local code.

07 160 – EPDM Ballasted Roof

A.   The roof membrane shall be a single ply 45 mil, EPDM, loose laid, ballasted
system. The roofing system shall have a UL Class A rating and a Factory Mutual
Class I fire rating (noncombustible) with a 90 mph wind uplift rating based on
Ground Roughness of C. The stone ballast shall be applied at a uniform rate of
12 psf in the field, 15 psf at a 10’ wide perimeter band and 18 psf in an area
of 10’ by 10’ at the corners. The ballast shall be washed, rounded river gravel
and range in size from 1” to 2” in diameter. Precast walkway pads will be
provided around the roof access hatch.

B.   Sheet metal work made of 24 gauge paint grip galvanized iron in the Owner’s
choice of standard color which will be furnished and installed.

07 182 – Roof Hatch

A.   Two (2) 30” x 36” roof hatches are included.

Division 8: Doors & Windows

08 110 – Metal Doors & Frames

A.   All exterior walk doors and demising wall doors are to be 3’ x 7’ steel
stiffened hollow metal.

B.   Exterior doors and pairs of interior doors will have 14 gauge metal frames.
Single interior doors will have 16 gauge metal frames. Frames and doors will be
fire-rated as necessary.

08 146 – Overhead Sectional Doors

A.   Overhead sectional doors will be installed as follows:

Phase I: 281,000 s.f.

1.   Forty-eight (48) 9’ x 10’ dock doors with vision lite   2.   One (1) 12’ x
14’ drive in door with vision lite

Phase II: 500,000 s.f.

1.   Seventy-six (76) 9’ x 10’ dock doors with vision lite   2.   Two (2) 12’ x
14’ drive in doors with vision lite

Phase III: 219,000 s.f.

1.   Twenty (20) 9’ x 10’ dock doors with vision lite   2.   One (1) 12’ x 14’
drive in door with vision lite

B.   Doors will be Series 426 by Overhead Door Corporation, or equal. The 12’ x
14’ doors will be motor operated.

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C.   Doors shall be 24 gauge galvanized steel sections with polystyrene
insulation and 26 gauge steel back covers (R value = 7.35).   D.   All overhead
doors to include complete vertical lift hardware with 3” track and perimeter
weather-stripping.

08 152 – Entrance Doors

A.   Glass and aluminum entrance doors are included per the Architectural
drawings.

B.   Entrance doors will have weather-stripping.

08 190 – Glass and Glazing

A.   Window units will be installed on the perimeter of the office per
architectural elevations.

B.   Windows will be commercial grade fixed units with 1” insulated Greylite 14
glass and anodized aluminum frames.

Division 9: Finishes

09 250 – Entry Soffits

A.   Framing and EIFS soffitt entries are included.

09 900 – Painting

A.   The exterior tilt wall panels to be power washed and to receive two coats
of high performance coating. The interior tilt wall panels are to be painted
with two coats of flat latex paint to 10’ above finished floor.

B.   Hollow metal doors, frames, handrails, guardrails, roof hatch ladders, pipe
bollards and all other miscellaneous metal shall receive two (2) coats of
high-gloss enamel.

Division 10: Specialties

10 350 – Flat Pole

A.   One (1) 30’ aluminum flagpole is included.

10 460 – Skylights

A.   5’ x 8’ skylights to be included in Phase II only.

Division 11: Equipment

11 160 – Loading Dock Equipment

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A.   6’ x 8’ mechanical dock levelers will be installed at the dock doors.
Levelers will be 30,000 # capacity with side weatherseals and 12” bumpers.

B.   Fabric covered, foam dock seals, Frommelt or equal, will be installed at
each dock door.

C.   Swing arm dock lights will be installed at each dock door.

Phase I: 281,000 s.f.

1.   Forty-eight (48) levelers, seals, bumpers and lights will be installed.

Phase II: 500,000 s.f.

1.   Seventy-six (76) levelers, seals, bumpers and lights will be installed.

Phase III: 219,000 s.f.

1.   Twenty (20) levelers, seals, bumpers and lights will be installed.

Division 12: Furnishings

This division is not applicable.

Division 13: Special Construction

This division is not applicable.

Division 14: Conveying Systems

This division is not applicable.

Division 15: Mechanical

15,000 – Systems Description (HVAC) for full 1,000,000 s.f.

Warehouse:

A.   Winter – Twelve (12) roof mounted Cambridge units to achieve 60 degrees
Fahrenheit inside at 12 degrees Fahrenheit outside.

B.   Summer – Forty (40) roof mounted exhaust fans will be installed to achieve
three (3) air changes per hour. Make up air to be introduced via approximately
forty (40) manual opening dock doors.

C.   Warehouse Ceiling Fans

1.   Twenty (20)-paddle fans are included for circulation.

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15,325 – Standpipe and Sprinkler Description for full 1,000,000 s.f.

A.   ESFR sprinklers will be installed in the warehouse. 12 ESFR sprinklers
calculated for the most remote 12 ESFR sprinklers to operate at 75 psi. ESFR
sprinklers will meet the spacing and obstruction criteria of NFPA 13.   B.  
There will be twenty-six (26) 75 psi ESFR systems in this building.   C.   The
sprinkler systems will include the following:

1.   Wall post indicator valves   2.   Water flow alarm switches   3.   Main
drain assembly and pressure gage   4.   Alarm bell   5.   Fire department
connection at pump room   6.   Control valves with tamper switches per code   7.
  Hose stations.   8.   Two (2) sprinkler cabinets with 24 spare sprinklers each
and wrench   9.   Fire pump in Phase I is sized for Phase II expansion.   10.  
Backflow device per code

15,410 – Plumbing Piping and Specialties

A.   Interior pipe trenches and exterior pipe trenches are to be backfilled with
excavated materials per the soil engineer’s requirements. All exterior pipe
trenches under the paved areas will be backfilled with excavated or granular
material.

B.   The roof drain by interior downspouts with overflows per code and piped
directly into the storm system, location along columns as specified by Keystone
with Tenant’s reasonable approval.

C.   The under slab sanitary sewer and water lines are included the length of
the building along the east side of the building and to the west wall in Phase
II for future shipping and receiving office.

Division 16: Electrical

16,000 – Electrical Systems Description for full 1,000,000 s.f.

A.   The following electrical service will be installed:

1.   One (1) 4,000 amp 480/277 volt Main Distribution Panelboards for incoming
service in Phase I and one (1) 4,000 amp in Phase II for total of 8,000 amp
service.   2.   400 amp 480/277 volt panelboards for control of lighting and
power circuits.   3.   Transformers and switchboards for 120/208 volt loads.

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B.   The following telephone service will be installed:

1.   Two (2) 4” PVC conduits from inside of building at telephone board to just
outside of building at service location.   2.   Conduits for telephone
lines/alarm system at fire sprinkler system control area.   3.   4 x 8 plywood
backboard for phone equipment.

C.   The following lighting will be installed:

Phase I 281,000 s.f. & Phase III 219,000 s.f.

1.   1,000 watt High Bay Metal Halide fixtures to achieve 20 foot-candles at 30”
above finished floor. Lighting to be switched at panelboards. Utilize modular
style wiring system for hook-up of High Bay lighting. 10% quartz restrike on
high bay fixtures.   2.   Exit and emergency lights at mandoors.

Phase II 500,000 s.f.

1.   400 watt High Bay Metal Halide fixtures to achieve 30 foot-candles at 30”
above finished floor. Lighting to be switched at panelboards. Utilize modular
style wiring system for hook-up of High Bay lighting. 10% quartz restrike on
high bay fixtures.   2.   Exit and emergency lights at mandoors.

D.   The site lighting will be installed per the site lighting plan by Schoor
Depalma:

Note: Site lighting will achieve one (1) foot candle subject to Township
approvals.

E.   The following equipment connections will be installed:

1.   Make-up air units   2.   Exhaust fans   3.   Ceiling paddle fans   4.  
Irrigation controller

F.   The following fire alarm system will be installed:

1.   Surface mounted horn/strobe at each exit door   2.   Surface mounted pull
stations at each exit door   3.   Tamper and flow switches   4.   One (1) fire
alarm panel with remote enunciator

Division 17: ADA Compliance

A.   If required due to location of Tenant office, Landlord will install one
(1) ADA compliant pedestrian ramp or lift in a location to be reasonably
determined by Tenant, within 30 days of written request subject to Township
approval.

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EXHIBIT C

FAIR MARKET RENT DETERMINATION

     (a) If Tenant timely exercises a Renewal Option, Landlord shall send to
Tenant, within forty five (45) days of Landlord’s receipt of Tenant’s exercise
notice, a notice (the “Fair Market Value Rental Notice”) setting forth
Landlord’s designation of the Fair Market Value Rental for the Premises for the
Renewal Period. Landlord and Tenant shall promptly commence negotiations in an
effort to reach a mutually acceptable determination of the Fair Market Value
Rental. If within thirty (30) days after the date of the Fair Market Rental
Value Notice, Landlord and Tenant have not agreed upon in writing a mutually
acceptable Fair Market Value Rental, then, subject to the provisions of
paragraph (e) of this Exhibit C, by the close of business on the fifth (5th)
business day following the end of such 30-day period each of Landlord and Tenant
will submit to the other its final proposed Fair Market Value Rental. If either
party fails to timely submit its final proposed Fair Market Value Rental to the
other as required above, then the Fair Market Value Rental shall be deemed to be
that submitted by the party who has so timely acted.

     (b) Within ten (10) business days after the last of Landlord’s or Tenant’s
proposed Fair Market Value Rental is submitted, each of Landlord and Tenant will
appoint a person who is an appraiser who is a member of the American Institute
of Real Estate Appraisers, with not less than five (5) years’
commercial/industrial experience in the greater Cranbury business district in
which the Premises is located (each, an “Arbitrator”). The two (2) Arbitrators
so appointed shall appoint an impartial third Arbitrator, similarly qualified,
who has no business relationship with either Landlord or Tenant, within ten
(10) days after the appointment of the last appointed Arbitrator, and shall
notify the parties of the identity of such third Arbitrator. If the two (2)
Arbitrators are unable to agree upon a third Arbitrator, either Landlord or
Tenant may, upon not less than five (5) days’ written notice to the other party,
apply to the American Arbitration Association for appointment of a third
similarly qualified Arbitrator. The three (3) Arbitrators are referred to in
this Lease as the “Arbitration Panel.” Within thirty (30) days after the
appointment of the third Arbitrator, the Arbitration Panel shall (i) conduct a
hearing, at which Landlord and Tenant may each make supplemental oral and/or
written presentations, with an opportunity for questioning by the members of the
Arbitration Panel and (ii) select either the Landlord’s proposed Fair Market
Value Rental or the Tenant’s proposed Fair Market Value Rental as the Fair
Market Value Rental, which designation will constitute the Fair Market Value
Rental for the Renewal Term. The determination of the Arbitration Panel shall be
limited solely to the issue of whether Landlord’s or Tenant’s proposed Fair
Market Value Rental is closest to the actual Fair Market Value Rental, and the
Arbitration Panel will have no right to propose a middle ground or to modify
either of the two (2) proposals. The decision of a majority of the three
(3) members of the Arbitration Panel shall be binding upon Landlord and Tenant.
In the event of the failure, refusal or inability of an Arbitrator to act, a
successor shall be appointed in the same manner as the original Arbitrator. Each
party shall pay any cost of the Arbitrator selected by such party (and their own
attorneys and consultants) and one half of the cost of the third Arbitrator so
selected plus one half of any other costs incurred in resolving the disagreement
regarding the Fair Market Value Rental.

 

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     (c) If Landlord and Tenant reach agreement regarding the Fair Market Value
Rental, or if the Arbitration Panel determines the Fair Market Value Rental,
then, within thirty (30) days, the parties shall execute an amendment to this
Lease confirming the terms and conditions applicable to the Renewal Term,
including the newly extended expiration date.

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