Exhibit 10.61

 

[g195801kg01i001.gif]AIR COMMERCIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — NET

(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

 

1.              Basic Provisions (“Basic Provisions”).

 

1.1                   Parties: This Lease (“Lease”), dated for reference
purposes only July 6, 2012 is made by and between Susana Property Co., a
California general partnership (“Lessor”) and UFP Technologies, Inc., a Delaware
corporation (“Lessee”), (collectively the “Parties,” or individually a “Party”).

 

1.2                   Premises: That certain real property, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
and commonly known as 20211 Susana Road, Compton located in the County of Los
Angeles , State of California , and generally described as (describe briefly the
nature of the property and, if applicable, the “Project”, if the property is
located within a Project) an approximately 56,000 square foot building with
office space and exclusive parking. (“Premises”). (See also Paragraph 2)

 

1.3                   Term: Five (5) years and Zero (0) months (“Original Term”)
commencing November 15, 2012 (“Commencement Date”) and ending November 14, 2017
(“Expiration Date”). (See also Paragraph 3)

 

1.4                   Early Possession: If the Premises are available Lessee may
have non-exclusive possession of the Premises commencing Lessee’s possession and
occupancy is a continuation of an existing Lease. (“Early Possession Date”).
(See also Paragraphs 3.2 and 3.3)

 

1.5                   Base Rent: $28,000.00 per month (“Base Rent”), payable on
the first (1st) day of each month commencing November 15, 2012 . (See also
Paragraph 4)

 

x If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted. See Paragraph 51

 

1.6                   Base Rent and Other Monies Paid Upon Execution:

 

(a)                   Base Rent: $28,000.00 Lessee is the current occupant of
the Premises and will comply with the obligations and conditions of its prior
agreements with respect thereto.

(b)                   Security Deposit: $28,000.00 previously deposited and
shall be retained by Lessor as Lessee’s security deposit. (“Security Deposit”).
(See also Paragraph 5)

(c)                    Association Fees: $None for the period

(d)                   Other: $None for

(e)                    Total Due Upon Execution of this Lease: $None

 

1.7                   Agreed Use: Conversion of specialty foams, foils, films
and adhesive composite into components and finished goods, warehousing and
office use in conjunction therewith and for uses similar thereto, but for no
other purposes. (See also Paragraph 6)

 

1.8                   Insuring Party:  Lessor is the “Insuring Party” unless
otherwise stated herein.  (See also Paragraph 8)

 

1.9                   Real Estate Brokers:  (See also Paragraph 15 and 25)  None

 

1.10            Guarantor:

 

1.11            Attachments.  Attached hereto are the following, all of which
constitute a part of this Lease:

 

x an Addendum consisting of Paragraphs 51 through 55;

o a plot plan depicting the Premises;

o a current set of the Rules and Regulations;

o a Work Letter;

o other (specify):

 

2.              Premises.

 

2.1.                Letting.  Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. While the
approximate square footage of the Premises may have been used in the marketing
of the Premises for purposes of comparison, the Base Rent stated herein is NOT
tied to square footage and is not subject to adjustment should the actual size
be determined to be different.  Note: Lessee is advised to verify the actual
size prior to executing this Lease.

 

2.2.                Condition.  “Lessee has been in continuous possession of the
Premises from approximately August 29, 2009 to date herein and has operated its
business in the Premises since said date.  Lessee is familiar with the condition
of the Premises and accepts same in “as is” condition without warranties of
Lessor. Nothing in this Lease shall waive Lessee’s obligation to repair all as
provided in the amendments and assignment previously executed by Lessor and
Lessee.”

 

2.3.                Compliance.  Lessor warrants that to the best of its
knowledge the improvements on the Premises comply with the building codes,
applicable laws, covenants or restrictions of record, regulations, and
ordinances (“Applicable Requirements”) that were in effect at the time that each
improvement, or portion thereof, was constructed.  Said warranty does not apply
to the use to which lessee will put the Premises, modifications which may be
required by the Americans with Disabilities Act or any similar laws as a result
of Lessee’s use (See Paragraph 50), or to any Alterations or Utility
Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. 
NOTE: Lessee is responsible for determining whether or not the Applicable
Requirements, and especially the zoning, are appropriate for Lessee’s intended
use, and acknowledges that past uses of the Premises may no longer be allowed.

 

2.4.                Acknowledgements.  Lessee acknowledges that:  (a) it has
been given an opportunity to inspect and measure the Premises,  (b) it has been
advised by Lessor and/or Brokers to satisfy itself with respect to the size and
condition of the Premises (including but not limited to the electrical, HVAC and
fire sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements and the Americans with Disabilities Act), and their
suitability for Lessee’s intended use,  (c) Lessee has made such investigation
as it deems necessary with reference to such matters and assumes all
responsibility therefor as the same relate to its occupancy of the Premises, 
(d) It is not relying on any representation as to the size of the Premises made
by Brokers or Lessor,  (e) the square footage of the Premises was not material
to Lessee’s decision to lease the Premises and pay the Rent stated herein, and
(f) neither Lessor, Lessor’s agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease. In addition, Lessor acknowledges that:  (i) Brokers have
made no representations, promises or warranties concerning Lessee’s ability to
honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor’s
sole responsibility to investigate the financial capability and/or suitability
of all proposed tenants.

 

2.5.                Lessee as Prior Owner/Occupant.  The warranties made by
Lessor in Paragraph 2 shall be of no force or effect if immediately prior to the
Start Date Lessee was the owner or occupant of the Premises.  In such event,
Lessee shall be responsible for any necessary corrective work.

 

3.              Term.

 

3.1.                Term.  The Commencement Date, Expiration Date and Original
Term of this Lease are as specified in Paragraph 1.3.

 

3.2.                Early Possession.

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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3.3.                Delay in Possession.

 

3.4.          Lessee Compliance.  Lessor shall not be required to deliver
possession of the Premises to Lessee until Lessee complies with its obligation
to provide evidence of insurance (Paragraph 8.5). Pending delivery of such
evidence, Lessee shall be required to perform all of its obligations under this
Lease from and after the Start Date, including the payment of Rent,
notwithstanding Lessor’s election to withhold possession pending receipt of such
evidence of insurance.  Further, if Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start Date shall
occur but Lessor may elect to withhold possession until such conditions are
satisfied.

 

4.              Rent.

 

4.1.                Rent Defined.  All monetary obligations of Lessee to Lessor
under the terms of this Lease (except for the Security Deposit) are deemed to be
rent (“Rent”).

 

4.2.                Payment.  Lessee shall cause payment of Rent to be received
by Lessor in lawful money of the United States, without offset or deduction
(except as specifically permitted in this Lease), on or before the day on which
it is due.  All monetary amounts shall be rounded to the nearest whole dollar.
In the event that any invoice prepared by Lessor is inaccurate such inaccuracy
shall not constitute a waiver and Lessee shall be obligated to pay the amount
set forth in this Lease. Rent for any period during the term hereof which is for
less than one full calendar month shall be prorated based upon the actual number
of days of said month. Payment of Rent shall be made to Lessor at its address
stated herein or to such other persons or place as Lessor may from time to time
designate in writing. Acceptance of a payment which is less than the amount then
due shall not be a waiver of Lessor’s rights to the balance of such Rent,
regardless of Lessor’s endorsement of any check so stating. In the event that
any check, draft, or other instrument of payment given by Lessee to Lessor is
dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in
addition to any Late Charge and Lessor, at its option, may require all future
Rent be paid by cashier’s check. Payments will be applied first to accrued late
charges and attorney’s fees, second to accrued interest, then to Base
Rent, Insurance and Real Property Taxes, and any remaining amount to any other
outstanding charges or costs.

 

4.3.                Association Fees.

 

5.              Security Deposit.  The Security Deposit previously deposited by
Lessee as provided in Paragraph 1.6 (b) is a Deposit for Lessee’s faithful
performance of its obligations under this Lease. If Lessee fails to pay Rent, or
otherwise Defaults under this Lease, Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount already due
Lessor, for Rents which will be due in the future, and/or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. If the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional monies with Lessor so that the total amount of the Security Deposit
shall at all times bear the same proportion to the increase Base Rent as the
initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor’s reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor’s reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on such change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within 90 days after the expiration or termination of this
Lease, Lessor shall return that portion of the Security Deposit not used or
applied by Lessor. No part of the Security Deposit shall be considered to be
held in trust, to bear interest or to be prepayment for any monies to be paid by
Lessee under this Lease.

 

6.              Use.

 

6.1.                Use. Lessee shall use and occupy the Premises only for the
Agreed Use, or any other legal use which is reasonably comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the Premises in
a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
occupants of or causes damage to neighboring premises or properties. Other than
guide, signal and seeing eye dogs, Lessee shall not keep or allow in the
Premises any pets, animals, birds, fish, or reptiles. Lessor shall not
unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, and/or is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after
such request give written notification of same, which notice shall include an
explanation of Lessor’s objections to the change in the Agreed Use.

 

6.2.                Hazardous Substances.

 

(a)         Reportable Uses Require Consent.  The term “Hazardous Substance” as
used in this Lease shall mean any product substance, or waste whose presence,
use, manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either: 
(i) potentially injurious to the public health, safety or welfare, the
environment or the Premises,  (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which
constitutes a Reportable Use of Hazardous Substances without the express prior
written consent of Lessor and timely compliance (at Lessee’s expense) with all
Applicable Requirements. “Reportable Use” shall mean (i) the installation or use
of any above or below ground storage tank,  (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning
materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit.

 

(b)         Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.

 

(c)          Lessee Remediation.  Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee’s expense, comply with all Applicable Requirements and take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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(d)         Lessee Indemnification.  Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys’ and consultants’ fees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from adjacent properties not caused or contributed to by
Lessee).  Lessee’s obligations shall include, but not be limited to, the effects
of any contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substance, unless specifically so agreed by Lessor in
writing at the time of such agreement.

 

(e)          Lessor Indemnification.  Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which result from Hazardous Substance which existed on the
Premises prior to Lessee’s occupancy since August 29, 2009 or which are caused
by the gross negligence or willful misconduct of Lessor, its agents or
employees. Lessor’s obligations, as and when required by the Applicable
Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the
expiration or termination of this Lease.

 

(f)           Investigations and Remediations.  Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substance on the Premises prior to Lessee’s occupancy, as defined in
the previous paragraph, unless such remediation measure is required as a result
of Lessee’s use (including “Alterations”, as defined in paragraph 7.3(a) below)
of the Premises, in which event Lessee shall be responsible for such payment.
Lessee shall cooperate fully in any such activities at the request of Lessor,
including allowing Lessor and Lessor’s agents to have reasonable access to the
Premises at reasonable times in order to carry out Lessor’s investigative and
remedial responsibilities.

 

(g)          Lessor Termination Option.  If a Hazardous Substance Condition (see
Paragraph 9.1(e) occurs during the term of this Lease, unless Lessee is legally
responsible therefor (in which case Lessee shall make the investigation and
remediation thereof required by the Applicable Requirements and this Lease shall
continue in full force and effect, but subject to Lessor’s right under Paragraph
6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate
and remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor’s expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to remediate
such condition exceeds 12 times the then monthly Base Rent or $100,000,
whichever is greater, give written notice to Lessee, within 30 days after
receipt by Lessor of knowledge of the occurrence of such Hazardous Substance
Condition, of Lessor’s desire to terminate this Lease as of the date 60 days
following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 days thereafter, give written notice
to Lessor of Lessee’s commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to 12
times the then monthly Base Rent of $100,000, whichever is greater. Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within 30 days
following such commitment. In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are available. If Lessee does not
give such notice and provide the required funds or assurance thereof within the
time provided, this Lease shall terminate as of the date specified in Lessor’s
notice of termination.

 

6.3.                Lessee’s Compliance with Applicable Requirements.  Except as
otherwise provided in this Lease, Lessee shall, at Lessee’s sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor’s engineers and/or consultants
which relate in any manner to the such Requirements, without regard to whether
such Requirements are now in effect or become effective after the Start Date.
Lessee shall, within 10 days after receipt of Lessor’s written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee’s compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) or any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements. Likewise,
Lessee shall immediately give written notice to Lessor of:  (i) any water damage
to the Premises and any suspected seepage, pooling, dampness or other conditions
conducive to the production or mold; or (ii) any mustiness or other odors that
might indicate the presence of mold in the Premises.

 

6.4.                Inspection; Compliance.  Lessor and Lessor”s “Lender” (as
defined in Paragraph 30) and consultants shall have the right to enter into
Premises at any time, in the case of an emergency, and otherwise at reasonable
times after reasonable notice, for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease. The cost of
any such inspections shall be paid by Lessor, unless a violation of Applicable
Requirements, or a Hazardous Substance Condition (see paragraph 9.1) is found to
exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide
copies of all relevant material safety data sheets (MSDS) to Lessor within 10
days of the receipt of a written request therefor.

 

7.              Maintenance; Repairs, Utility Installations; Trade Fixtures and
Alterations.

 

7.1.                Lessee’s Obligations.

 

(a)         In General.  Subject to the provisions of Paragraph 2.2.
(Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliance with Applicable
Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee’s sole expense keep the Premises,
Utility installations (intended for Lessee’s exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee’s use, any prior use, the
elements or the age of such portion of the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, HVAC equipment, electrical,
lighting facilities, boilers, pressure vessels, fire protection system,
fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof
drainage systems, floors windows, doors, plate glass, skylights, landscaping,
driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways
located in, on, or adjacent to the Premises. Notwithstanding the foregoing,
Lessee shall not be obligated to repair any structural defects in the Premises
existing prior to Lessee’s occupancy of the Premises. Lessee, in keeping the
Premises in good order, condition and repair, shall exercise and perform good
maintenance practices, specifically including the procurement and maintenance of
the service contracts required by Paragraph 7.1(b) below. Lessee’s obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair. Lessee shall, during the term of this Lease, keep the
exterior appearance of the Building in a first-class condition (including, e.g.
graffiti removal) consistent with the exterior appearance of other similar
facilities of comparable age and size in the vicinity, including when necessary,
the exterior repainting of the Building.

 

(b)         Service Contracts.  Lessee shall, at Lessee’s sole expense, procure
and maintain contracts, with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in the maintenance of the
following equipment, and improvements, if any, if and when installed on the
Premises:  (i) HVAC equipment,  (ii) boiler, and pressure vessels,  (iii) fire
extinguishing systems, including fire alarm and/or smoke detection, 
(iv) landscaping and irrigation systems,  (v) roof covering and drains, and
(vi) clarifiers. However, Lessor reserves the right, upon notice to Lessee, to
procure and maintain any or all of such service contracts, and Lessee shall
reimburse Lessor upon demand, for the cost thereof.

 

(c)          Failure to Perform.  If Lessee fails to perform Lessee’s
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 days’ prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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such obligations on Lessee’s behalf, and put the Premises in good order,
condition and repair, and Lessee shall promptly pay to Lessor a sum equal to
115% of the cost thereof.

 

(d)         Replacement.  Subject to Lessee’s indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee’s failure to exercise and perform good maintenance
practices, if an item described in Paragraph 7.1(b) cannot be repaired other
than at a cost which is in excess of $25,000 or 50% of the cost of replacing
such item, then such item shall be replaced by Lessor, and the cost thereof
shall be prorated between the Parties and Lessee shall only be obligated to pay,
each month during the remainder of the term of this Lease, on the date on which
Base Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which is 144 (ie. 1/144th of the cost per month). Lessee shall pay interest on
the unamortized balance but may prepay its obligation at any time.

 

7.2.                Lessor’s Obligations.  Subject to the provisions of
Paragraphs 2.2. (Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14
(Condemnation), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, or
the equipment therein, all of which obligations are intended to be that of the
Lessee. It is the intention of the Parties that the terms of this Lease govern
the respective obligations of the Parties as to maintenance and repair of the
Premises, and they expressly waive the benefit of any statute now or hereafter
in effect to the extent it is inconsistent with the terms of this Lease.

 

7.3.                Utility Installations; Trade Fixtures; Alterations.

 

(a)         Definitions.  The term “Utility Installations” refers to all floor
and window coverings, air and/or vacuum lines, power panels, electrical
distribution, security and fire protection systems, communications cabling,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. 
The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can
be removed without doing material damage to the Premises.  The term
“Alterations” shall mean any modification of the improvements, other than
Utility Installations or Trade Fixtures, whether by addition or deletion. 
“Lessee Owned Alterations and/or Utility Installations” are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to paragraph 7.4(a).

 

(b)         Consent.  Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor’s prior written consent. Lessee
may, however, make non-structural Alterations or Utility Installations to the
interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof or any existing walls, will
not affect the electrical, plumbing HVAC, and/or life safety systems, and the
cumulative cost thereof during this Lease as extended does not exceed a sum
equal to 3 month’s Base Rent in the aggregate or a sum equal to one month’s Base
Rent in any one year. Notwithstanding the foregoing, Lessee shall not make or
permit any roof penetrations and/or install anything on the roof without the
prior written approval of Lessor. Lessor may, as a precondition to granting such
approval, require Lessee to utilize a contractor chosen and/or approved by
Lessor. Any Alterations or Utility Installations that Lessee shall desire to
make and which require the consent of the Lessor shall be presented to Lessor in
written form with detailed plans. Consent shall be deemed conditioned upon
Lessee’s:  (i) acquiring all applicable governmental permits,  (ii) furnishing
Lessor with copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications. For work which costs an
amount in excess of one month’s Base Rent, Lessor may condition its consent upon
Lessee providing a lien and completion bond in an amount equal to 150% of the
estimated cost of such Alteration or Utility Installations and/or upon Lessee’s
posting an additional Security Deposit with Lessor.

 

(c)          Liens; Bonds.  Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use on the Premises, which claims are or may be secured by any mechanic’s or
materialmen’s lien against the Premises or any interest therein. Lessee shall
give Lessor not less than 10 days notice prior to the commencement of any work
in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim
or demand, then Lessee shall, at its sole expense defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof. If
Lessor shall require, Lessee shall furnish a surety bond in an amount equal to
150% of the amount of such contested lien, claim or demand, indemnifying Lessor
against liability for the same. If Lessor elects to participate in any such
action, Lessee shall pay Lessor’s attorneys’ fees and costs.

 

7.4.              Ownership; Removal, Surrender; and Restoration.

 

(a)         Ownership.  Subject to Lessor’s right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a part of the
Premises. Lessor may, at any time, elect in writing to be the owner of all or
any specified part of the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or termination of
this Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.

 

(b)         Removal.  By delivery to Lessee of written notice from Lessor not
earlier than 90 and not later than 30 days prior to the end of the term of this
Lease, Lessor may require that any or all Lessee Owned Alterations or Utility
Installations be removed by the expiration or termination of this Lease. Lessor
may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.

 

(c)          Surrender; Restoration.  Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. “Ordinary
wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if
this Lease is for 12 months or less, then Lessee shall surrender the Premises in
the same condition as delivered to Lessee on the Start Date with NO allowance
for ordinary wear and tear. Lessee shall repair any damage occasioned by the
installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations
and/or Utility Installations, furnishings, and equipment as well as the removal
of any storage tank installed by or for Lessee. Lessee shall completely remove
from the Premises any and all Hazardous Substances brought onto the Premises by
or for Lessee, or any third party (except Hazardous Substances which were
deposited via underground migration from areas outside of the Premises) even if
such removal would require Lessee to perform or pay for work that exceeds
statutory requirements. Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee. Any personal property of Lessee not removed on or
before the Expiration Date or any earlier termination date shall be deemed to
have been abandoned by Lessee and may be disposed of or retained by Lessor as
Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant
to this Paragraph 7.4(c) without the express written consent of Lessor shall
constitute a holdover under the provisions of Paragraph 26 below.

 

8.              Insurance; Indemnity.

 

8.1.              Payment For Insurance.  Lessee shall pay for all insurance
required under Paragraph 8 except to the extent of the cost attributable to
liability insurance carried by Lessor under Paragraph 8.2(b) in excess of
$2,000,000 per occurrence. Premiums for policy periods commencing prior to or
extending beyond the Lease term shall be prorated to correspond to the Lease
term. Payment shall be made by Lessee to Lessor within 10 days following receipt
of an invoice.

 

8.2.              Liability Insurance.

 

(a)         Carried by Lessee.  Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor as
an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an annual aggregate of not less than
$2,000,000.

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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Lessee shall add Lessor as an additional insured by means of an endorsement at
least as broad as the Insurance Service Organization’s “Additional
Insured-Managers or Lessors of Premises” Endorsement. The policy shall not
contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an “insured contract” for the performance of Lessee’s indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability or Lessee nor relieve Lessee of any obligation hereunder. Lessee shall
provide an endorsement on its liability policy(ies) which provides that its
insurance shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.

 

(b)         Carried by Lessor.  Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an additional
insured therein.

 

8.3.              Property Insurance — Building, Improvements and Rental Value.

 

(a)         Building and Improvements.  The Insuring Party shall obtain and keep
in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any ground-lessor, and to any Lender insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full insurable
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by any Lender, but in no event more than the commercially
reasonable and available insurable value thereof. Lessee Owned Alterations and
Utility Installations, Trade Fixtures, and Lessee’s personal property shall be
insured by Lessee not by Lessor. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and the enforcement
of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any insurance clause, waiver, and inflation guard
protection causing an increase in the annual property insurance coverage amount
by a factor of not less than the adjusted U.S. Department of Labor Consumer
Price Index for All Urban Consumers for the city nearest to where the Premises
are located. If such insurance coverage has a deductible clause, the deductible
amount shall not exceed $5,000 per occurrence, and Lessee shall be liable for
such deductible amount in the event of an Insured Loss.

 

(b)         Rental Value.  The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one year with an extended period
of indemnity for an additional 180 days (“Rental Value insurance”). Said
insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected Rent otherwise payable by Lessee, for the next 12 month period. Lessee
shall be liable for any deductible amount in the event of such loss.

 

(c)          Adjacent Premises.

 

8.4.              Lessee’s Property; Business Interruption Insurance; Worker’s
Compensation Insurance.

 

(a)         Property Damage.  Lessee shall obtain and maintain insurance
coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $25,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.

 

(b)         Business Interruption.  Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent Lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

 

(c)          Worker’s Compensation Insurance.  Lessee shall obtain and maintain
Worker’s Compensation Insurance in such amount as may be required by Applicable
Requirements.

 

(d)         No Representation of Adequate Coverage.  Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee’s property, business operations or
obligations under this Lease.

 

8.5.              Insurance Policies.  Insurance required herein shall be by
companies maintaining during the policy term a “General Policyholders Rating” of
at least A-, VII, as set forth in the most current issue of “Best’s Insurance
Guide”, or such other rating as may be required by a Lender. Lessee shall not do
or permit to be done anything which invalidates the required insurance policies.
Lessee shall, prior to the Start Date, deliver to Lessor certified copies of
policies of such insurance or certificates with copies of the required
endorsements evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after 30 days
prior written notice to Lessor. Lessee shall, at least 10 days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
“insurance binders” evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same.

 

8.6.              Waiver of Subrogation.  Lessee or Lessor each hereby release
and relieve the other, and waive their entire right to recover damages against
the other, for loss of or damage to its property arising out of or incident to
the perils required to be insured against herein. The effect of such releases
and waivers is not limited by the amount of insurance carried or required, or by
any deductibles applicable hereto. The Parties agree to have their respective
property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.

 

8.7.              Indemnity.  Except for Lessor’s gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee’s expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessee need not
have first paid any such claim in order to be defended or indemnified.

 

8.8.              Exemption of Lessor and its Agents from Liability. 
Notwithstanding the negligence or breach of this Lease by Lessor or its agents,
neither Lessor nor its agents shall be liable under any circumstances for: 
(i) injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee’s employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is caused
by or results from fire, steam, electricity, gas, water or rain, indoor air
quality, the presence of mold or from the breakage, leakage, obstruction or
other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or
lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises or upon other portions of the
building of which the Premises are a part, or from other sources or places, 
(ii) any damages arising from any act or neglect of any other tenant of Lessor
or from the failure of Lessor or its agents to enforce the provisions of any
other lease in the Project, or (iii) injury to Lessee’s business or for any loss
of income or profit therefrom. Instead, it is intended that Lessee’s sole
recourse in the event of such damages or injury be to file a claim on the
insurance policy(ies) that Lessee is required to maintain pursuant to the
provisions of paragraph 8.

 

8.9.              Failure to Provide Insurance.  Lessee acknowledges that any
failure on its part to obtain or maintain the insurance required herein will
expose Lessor to risks and potentially cause Lessor to incur costs not
contemplated by this Lease, the extent of which will be extremely difficult to
ascertain. Accordingly, for any month or portion thereof that Lessee does not
maintain the required insurance and/or does not provide Lessor with the required
binders or certificates evidencing the existence of the required insurance, the
Base Rent shall be automatically increased, without any requirement for notice
to Lessee, by an amount equal to 10% of the then existing Base Rent or $100,
whichever is greater. The parties agree that such increase in Base Rent
represents fair and reasonable compensation for the additional risk/costs that
Lessor

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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will incur by reason of Lessee’s failure to maintain the required insurance.
Such increase in Base Rent shall in no event constitute a waiver of Lessee’s
Default or Breach with respect to the failure to maintain such insurance,
prevent the exercise of any of the other rights and remedies granted hereunder,
nor relieve Lessee of its obligation to maintain the insurance specified in this
Lease.

 

9.              Damage or Destruction.

 

9.1.              Definitions.

 

(a)         “Premises Partial Damage” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in 6 months or less from the
date of the damage or destruction. Lessor shall notify Lessee in writing within
30 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total. Notwithstanding the foregoing, Premises Partial
Damage shall not include damage to windows, doors, and/or other similar items
which Lessee has the responsibility to repair or replace pursuant to the
provisions of Paragraph 7.1.

 

(b)         “Premises Total Destruction” shall mean damage or destruction to the
Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the
date of the damage or destruction. Lessor shall notify Lessee in writing within
30 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.

 

(c)          “Insured Loss” shall mean damage or destruction to improvements on
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a) irrespective of any deductible amounts
or coverage limits involved.

 

(d)         “Replacement Cost” shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.

 

(e)          “Hazardous Substance Condition” shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance, in, on, or under the Premises which requires remediation.

 

9.2.              Partial Damage — Insured Loss.  If a Premises Partial Damage
that is an insured Loss occurs, then Lessor shall, at Lessor’s expense, repair
such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect, provided, however, that Lessee shall, at
Lessor’s election, make the repair of any damage or destruction the total cost
to repair of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee’s responsibility) as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said 10 day period, the
party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 10 days thereafter to:  (i) make such
restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or (ii) have this Lease terminate 30 days thereafter. Lessee shall not
be entitled to reimbursement of any funds contributed by Lessee to repair any
such damage or destruction. Premises Partial Damage due to flood or earthquake
shall be subject to Paragraph 9.3, notwithstanding that there may be some
insurance coverage, but the net proceeds of any such insurance shall be made
available for the repairs if made by either Party.

 

9.3.              Partial Damage — Uninsured Loss.  If a Premises Partial Damage
that is not an Insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee’s expense),
Lessor may either:  (i) repair such damage as soon as reasonably possible at
Lessor’s expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
30 days after receipt by Lessor of knowledge of the occurrence of such damage.
Such termination shall be effective 60 days following the date of such notice.
In the event Lessor elects to terminate this Lease, Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice to
Lessor of Lessee’s commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease
shall terminate as of the date specified in the termination notice.

 

9.4.              Total Destruction.  Notwithstanding any other provision
hereof, if a Premises Total Destruction occurs, this Lease shall terminate 60
days following such Destruction. If the damage or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.

 

9.5.              Damage Near End of Term.  If at any time during the last 6
months of this Lease there is damage for which the cost to repair exceeds one
month’s Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease effective 60 days following the date of occurrence of such damage by
giving a written termination notice to Lessee within 30 days after the date of
occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time
has an exercisable option to extend this Lease or to purchase the Premises, then
Lessee may preserve this Lease by,  (a) exercising such option and (b) providing
Lessor with any shortage in insurance proceeds (or adequate assurance thereof)
needed to make the repairs on or before the earlier of (i) the date which is 10
days after Lessee’s receipt of Lessor’s written notice purporting to terminate
this Lease, or (ii) the day prior to the date upon which such option expires. If
Lessee duly exercises such option during such period and provides Lessor with
funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor’s commercially reasonable expense, repair such
damage as soon as reasonably possible and this Lease shall continue in full
force and effect. If Lessee fails to exercise such option and provide such funds
or assurance during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee’s option shall be extinguished.

 

9.6.              Abatement of Rent; Lessee’s Remedies.

 

(a)         Abatement.  In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value Insurance. All other
obligation of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.

 

(b)         Remedies.  If Lessor is obligated to repair or restore the Premises
and does not commence, in a substantial and meaningful way, such repair or
restoration within 90 days after such obligation shall accrue, Lessee may, at
any time prior to the commencement of such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee’s election to terminate this Lease on a date not less than 60 days
following the giving of such notice. If Lessee gives such notice and such repair
or restoration is not commenced within 30 days thereafter, this Lease shall
terminate as of the date specified in said notice. If the repair or restoration
is commenced within such 30 days, this Lease shall continue in full force and
effect. “Commence” shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever first occurs.

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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9.7.              Termination; Advance Payments.  Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s
Security Deposit as has not been, or is not then required to be, used by Lessor.

 

10.       Real Property Taxes.

 

10.1.         Definition.  As used herein, the term “Real Property Taxes” shall
include any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Premises of the
Project, Lessor’s right to other income therefrom, and/or Lessor’s business of
leasing, by any authority having the direct or indirect power to tax and where
the funds are generated with reference to the Building address and where the
proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. Real
Property Taxes shall also include any tax, fee, levy, assessment or charge, or
any increase therein:  (i) imposed by reason of events occurring during the term
of this Lease, including but not limited to, a change in the ownership of the
Premises, and (ii) levied or assessed on machinery or equipment provided by
Lessor to Lessee pursuant to this Lease.

 

10.2.       Payment of Taxes.  In addition to Base Rent, Lessee shall pay to
Lessor an amount equal to the Real Property Tax installment due at least 20 days
prior to the applicable delinquency date. If any such installment shall cover
any period of time prior to or after the expiration or termination of this
Lease, Lessee’s share of such installment shall be prorated. In the event Lessee
incurs a late charge on any Rent payment, Lessor may estimate the current Real
Property Taxes, and require that such taxes be paid in advance to Lessor by
Lessee monthly in advance with the payment of the Base Rent. Such monthly
payments shall be an amount equal to the amount of the estimated installment of
taxes divided by the number of months remaining before the month in which said
installment becomes delinquent. When the actual amount of the applicable tax
bill is known, the amount of such equal monthly advance payments shall be
adjusted as required to provide the funds needed to pay the applicable taxes. If
the amount collected by Lessor is insufficient to pay such Real Property Taxes
when due, Lessee shall pay Lessor, upon demand, such additional sum as is
necessary. Advance payments may be intermingled with other moneys of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the performance
of its obligations under this Lease, then any such advance payments may be
treated by Lessor as an additional Security Deposit.

 

10.3.       Joint Assessment.  If the Premises are not separately assessed,
Lessee’s liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor’s work sheets or such other information as
may be reasonably available.

 

10.4.       Personal Property Taxes.  Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause its Lessee Owned Alterations and
Utility Installations, Trade Fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Lessor. If any of Lessee’s said property shall be assessed with Lessor’s real
property, Lessee shall pay Lessor the taxes attributable to Lessee’s property
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee’s property.

 

11.       Utilities and Services.  Lessee shall pay for all water, gas, heat,
light, power, telephone, trash disposal and other utilities and services
supplied to the Premises, together with any taxes thereon. If any such services
are not separately metered or billed to Lessee, Lessee shall pay a reasonable
proportion, to be determined by Lessor, of all charges jointly metered or
billed. There shall be no abatement of rent and Lessor shall not be liable in
any respect whatsoever for the inadequacy, stoppage, interruption or
discontinuance of any utility or service due to riot, strike, labor dispute,
breakdown, accident, repair or other cause beyond Lessor’s reasonable control or
in cooperation with governmental request or directions.

 

12.       Assignment and Subletting.

 

12.1.       Lessor’s Consent Required.

 

(a)         Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, “assign or assignment” or sublet
all or any part of Lessee’s interest in the Lease or in the Premises without
Lessor’s prior written consent.

 

(b)         Unless Lessee is a corporation and its stock is publicly traded on a
national stock exchange, a change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of 25% or
more of the voting control of Lessee shall constitute a change in control for
this purpose.

 

(c)          The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee’s assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was or is greater, shall be considered an
assignment of this Lease to which Lessor may withhold its consent. “Net Worth of
Lessee” shall mean the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles.

 

(d)         An assignment or subletting without consent shall, at Lessor’s
option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects to
treat such unapproved assignment or subletting as a noncurable Breach, Lessor
may either:  (i) terminate this Lease, or (ii) upon 30 days written notice,
increase the monthly Base Rent to 110% of the Base Rent then in effect. Further,
in the event of such Breach and rental adjustment,  (i) the purchase price of
any option to purchase the Premises held by Lessee shall be subject to similar
adjustment to 100% of the price previously in effect, and (ii) all fixed and
non-fixed rental adjustments scheduled during the remainder of the Lease term
shall be increased to 110% of the scheduled adjusted rent.

 

(e)          Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be
limited to compensatory damages and/or injunctive relief.

 

(f)           Lessor may reasonably withhold consent to a proposed assignment or
subletting if Lessee is in Default at the time consent is requested.

 

(g)          Notwithstanding the foregoing, allowing a de minimis portion of the
Premises, ie. 20 square feet or less, to be used by a third party vendor in
connection with the installation of a vending machine or payphone shall not
constitute a subletting.

 

12.2.       Terms and Conditions Applicable to Assignment and Subletting.

 

(a)           Regardless of Lessor’s consent, no assignment or subletting
shall:  (i) be effective without the express written assumption by such assignee
or sublessee of the obligations of Lessee under this Lease,  (ii) release Lessee
of any obligations hereunder, or (iii) after the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

 

(b)           Lessor may accept Rent or performance of Lessee’s obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor’s right to exercise its remedies for Lessee’s Default or Breach.

 

(c)            Lessor’s consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.

 

(d)           In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee’s obligations under this Lease, including any assignee
or sublessee, without first exhausting Lessor’s remedies against any other
person or entity responsible therefor to Lessor, or any security held by Lessor.

 

(e)            Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor’s determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $500 as
consideration for Lessor’s

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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considering and processing said request. Lessee agrees to provide Lessor with
such other or additional information and/or documentation as may be reasonably
requested. (See also Paragraph 36)

 

(f)             Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment, entering into such sublease, or entering into
possession of the Premises or any portion thereof, be deemed to have assumed and
agreed to conform and comply with each and every term, covenant, condition and
obligation herein to be observed or performed by Lessee during the term of said
assignment or sublease, other than such obligations as are contrary to or
inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.

 

(g)            Lessor’s consent to any assignment or subletting shall not
transfer to the assignee or sublessee any Option granted to the original Lessee
by this Lease unless such transfer is specifically consented to by Lessor in
writing. (See Paragraph 39.2)

 

12.3.         Additional Terms and Conditions Applicable to Subletting.  The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

 

(a)           Lessee hereby assigns and transfers to Lessor all of Lessee’s
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee’s obligations under this Lease; provided, however,
that until a breach shall occur in the performance of Lessee’s obligations,
Lessee may collect said Rent. In the event that the amount collected by Lessor
exceeds Lessee’s then outstanding obligations any such excess shall be refunded
to Lessee. Lessor shall not, by reason of the foregoing or any assignment of
such sublease, nor by reason of the collection of Rent, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee’s
obligations to such sublessee. Lessee hereby irrevocably authorizes and directs
any such sublessee, upon receipt of a written notice from Lessor stating that a
Breach exists in the performance of Lessee’s obligations under this Lease, to
pay to Lessor all Rent due and to become due under the sublease. Sublessee shall
rely upon any such notice from Lessor and shall pay all Rents to Lessor without
any obligation or right to inquire as to whether such Breach exists,
notwithstanding any claim from Lessee to the contrary.

 

(b)           In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.

 

(c)            Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.

 

(d)           No sublessee shall further assign or sublet all or any part of the
Premises without Lessor’s prior written consent.

 

(e)            Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.

 

13.       Default; Breach; Remedies.

 

13.1.         Default; Breach.  A “Default” is defined as a failure by the
Lessee to comply with or perform any of the terms, covenants, conditions or
Rules and Regulations under this Lease.  A “Breach” is defined as the occurrence
of one or more of the following Defaults, and the failure of Lessee to cure such
Default within any applicable grace period.

 

(a)           The abandonment of the Premises, or the vacating of the Premises
without providing a commercially reasonable level of security, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism.

 

(b)          The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or surety bond, or
to fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of 3 business days following
written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT
OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR’S
RIGHTS, INCLUDING LESSOR’S RIGHT TO RECOVER POSSESSION OF THE PREMISES.

 

(c)            The failure of Lessee to allow Lessor and/or its agents access to
the Premises or the commission of waste, act or acts constituting public or
private nuisance, and/or an illegal activity on the Premises by Lessee, where
such actions continue for a period of 3 business days following written notice
to Lessee.

 

(d)           The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements,  (ii) the service contracts, 
(iii) the rescission of an unauthorized assignment or subletting,  (iv) an
Estoppel Certificate or financial statements,  (v) a requested subordination, 
(vi) evidence concerning any guaranty and/or Guarantor,  (vii) any document
requested under Paragraph 42,  (viii) material safety data sheets (MSDS), or
(ix) any other documentation or information which Lessor may reasonably require
of Lessee under the terms of this Lease, where any such failure continues for a
period of 10 days following written notice to Lessee.

 

(e)            A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b), (c) or (d), above,
where such Default continues for a period of 30 days after written notice;
provided, however, that if the nature of Lessee’s Default is such that more than
30 days are reasonably required for its cure, then it shall not be deemed to be
a Breach if Lessee commences such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.

 

(f)             The occurrence of any of the following events:  (i) the making
of any general arrangement or assignment for the benefit of creditors; 
(ii) becoming a “debtor” as defined in 11 U.S.C. §101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within 60 days);  (iii) the appointment of a trustee or receiver to
take possession of substantially all of Lessee’s assets located at the Premises
or of Lessee’s interest in this Lease, where possession is not restored to
Lessee within 30 days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee’s assets located at the Premises or of
Lessee’s interest in this Lease, where such seizure is not discharged within 30
days; provided, however, in the event that any provision of this subparagraph is
contrary to any applicable law, such provision shall be of no force or effect,
and not affect the validity of the remaining provisions.

 

(g)            The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.

 

(h)           If the performance of Lessee’s obligations under this Lease is
guaranteed:  (i) the death of a Guarantor,  (ii) the termination of a
Guarantor’s liability with respect to this Lease other than in accordance with
the terms of such guaranty,  (iii) a Guarantor’s becoming insolvent or the
subject of a bankruptcy filing,  (iv) a Guarantor’s refusal to honor the
guaranty, or (v) a Guarantor’s breach of its guaranty obligation on an
anticipatory basis, and Lessee’s failure, within 60 days following written
notice of any such event, to provide written alternative assurance or security,
which when coupled with the then existing resources of Lessee, equals or exceeds
the combined financial resources of Lessee and the Guarantors that existed at
the time of execution of this Lease.

 

13.2.         Remedies.  If Lessee fails to perform any of its affirmative
duties or obligations, within 10 days after written notice (or in case of an
emergency, without notice), Lessor may, at is option, perform such duty or
obligation on Lessee’s behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs
and expenses incurred by Lessor’s in such performance upon receipt of an invoice
therefor. In the event of a Breach, Lessor may, with or without further notice
or demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach:

 

(a)           Terminate Lessee’s right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee:  (i) the unpaid Rent

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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which had been earned at the time of termination;  (ii) the worth at the time of
award of the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
the Lessee proves could have been reasonably avoided;  (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the term
after the time of award exceeds the amount of such rental loss that the Lessee
proves could be reasonably avoided; and (iv) any other amount necessary to
compensate Lessor for all the detriment proximately caused by the Lessee’s
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including but not limited
to the cost of recovering possession of the Premises, expenses of reletting,
including necessary renovation and alteration of the Premises, reasonable
attorneys’ fees, and that portion of any leasing commission paid by Lessor in
connection with this Lease applicable to the unexpired term of this Lease. The
worth at the time of award of the amount referred to in provision (iii) of the
immediately preceding sentence shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of the District within which the
Premises are located at the time of award plus one percent. Efforts by Lessor to
mitigate damages caused by Lessee’s Breach of this Lease shall not waive
Lessor’s right to recover damages under Paragraph 12. If termination of this
Lease is obtained through the provisional remedy of unlawful detainer, Lessor
shall have the right to recover in such proceeding any unpaid Rent and damages
as are recoverable therein, or Lessor may reserve the right to recover all or
any part thereof in a separate suit. If a notice and grace period required under
Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to
perform or quit given to Lessee under the unlawful detainer statute shall also
constitute the notice required by Paragraph 13.1. In such case, the applicable
grace period required by Paragraph 13.1 and the unlawful detainer statute shall
run concurrently, and the failure of Lessee to cure the Default within the
greater of the two such grace periods shall constitute both an unlawful detainer
and a Breach of this Lease entitling Lessor to the remedies provided for in this
Lease and/or by said statute.

 

(b)           Continue the Lease and Lessee’s right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign, subject
only to reasonable limitations. Acts of maintenance, efforts to relet, and/or
the appointment of a receiver to protect the Lessor’s interests, shall not
constitute a termination of the Lessee’s right to possession.

 

(c)            Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee’s right
to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee’s occupancy of the Premises.

 

13.3.         Inducement Recapture

 

13.4.         Late Charges.  Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall immediately pay
to Lessor a one-time late charge equal to 10% of each such overdue amount or
$100, whichever is greater. The Parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in
no event constitute a waiver of Lessee’s Default or Breach with respect to such
overdue amount, nor prevent the exercise of any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder, whether
or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at
Lessor’s option, become due and payable quarterly in advance.

 

13.5.         Interest.  Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within 30 days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the 31st day after it was due as to non-scheduled
payments. The interest (“Interest”) charged shall be computed at the rate of 10%
per annum but shall not exceed the maximum rate allowed by law. Interest is
payable in addition to the potential late charge provided for in Paragraph 13.4.

 

13.6.         Breach by Lessor.

 

(a)           Notice of Breach.  Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than 30 days after receipt by Lessor, and any
Lender whose name and address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such obligation of Lessor has
not been performed; provided, however, that if the nature of Lessor’s obligation
is such that more than 30 days are reasonably required for its performance, then
Lessor shall not be in breach if performance is commenced within such 30 day
period and thereafter diligently pursued to completion.

 

(b)          Performance by Lessee on Behalf of Lessor.  In the event that
neither Lessor nor Lender cures said breach within 30 days after receipt of said
notice, or if having commenced said cure they do not diligently pursue it to
completion, then Lessee may elect to cure said breach at Lessee’s expense and
offset from Rent the actual and reasonable cost to perform such cure, provided,
however, that such offset shall not exceed an amount equal to the greater of one
month’s Base Rent or the Security Deposit, reserving Lessee’s right to seek
reimbursement from Lessor for any such expense in excess of such offset. Lessee
shall document the cost of said cure and supply said documentation to Lessor.

 

14.       Condemnation.  If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the treat of the exercise of said
power (collectively “Condemnation”), this Lease shall terminate as to the part
taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than 10% of the Building, or more than 25% of
that portion of the Premises not occupied by any building, is taken by
Condemnation, Lessee may, at Lessee’s option, to be exercised in writing within
10 days after Lessor shall have given Lessee written notice of such taking (or
in the absence of such notice, within 10 days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in proportion to the reduction in utility of the Premises caused by such
Condemnation. Condemnation awards and/or payments shall be the property of
Lessor, whether such award shall be made as compensation for diminution in value
of the leasehold, the value of the part taken, or for severance damages;
provided, however, that Lessee shall be entitled to any compensation paid by the
condemnor for Lessee’s relocation expenses, loss of business goodwill and/or
Trade Fixtures, without regard to whether or not this Lease is terminated
pursuant to the provisions of this Paragraph. All Alterations and Utility
installations made to the Premises by Lessee, for purposes of Condemnation only,
shall be considered the property of the Lessee and Lessee shall be entitled to
any and all compensation which is payable therefor. In the event that this Lease
is not terminated by reason of the Condemnation, Lessor shall repair any damage
to the Premises caused by such Condemnation.

 

15.       Brokerage Fees.

 

16.       Estoppel Certificates.

 

(a)           Each Party (as “Responding Party”) shall within 10 days after
written notice from the other Party (the “Requesting Party”) execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current “Estoppel Certificate” form published by the
AIR Commercial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

 

(b)           If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such 10 day period, the Requesting Party may execute
an Estoppel Certificate stating that:  (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, 
(ii) there are no uncured defaults in the Requesting Party’s performance, and
(iii) if Lessor is the Requesting Party, not

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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more than one month’s rent has been paid in advance. Prospective purchasers and
encumbrancers may rely upon the Requesting Party’s Estoppel Certificate, and the
Responding Party shall be estopped from denying the truth of the facts contained
in said Certificate.

 

(c)            If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee and all Guarantors shall within 10 days after written
notice from Lessor deliver to any potential lender or purchaser designated by
Lessor such financial statements as may be reasonably required by such lender or
purchaser, including but not limited to Lessee’s financial statements for the
past 3 years. All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes herein
set forth.

 

17.       Definition of Lessor.  The term “Lessor” as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee’s interest in the prior lease. In the event of
a transfer of Lessor’s title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Upon such transfer or assignment and delivery
of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all
liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. Subject to the foregoing, the
obligations and/or covenants in this Lease to be performed by the Lessor shall
be binding only upon the Lessor as hereinabove defined.

 

18.       Severability.  The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.

 

19.       Days.  Unless otherwise specifically indicated to the contrary, the
word “days” as used in this Lease shall mean and refer to calendar days.

 

20.       Limitation on Liability.  The obligations of Lessor under this Lease
shall not constitute personal obligations of Lessor or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease, and shall not seek recourse against Lessor’s
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction.

 

21.       Time of Essence.  Time is of the essence with respect to the
performance of all obligations to be performed or observed by the Parties under
this Lease.

 

22.       No Prior or Other Agreements; Broker Disclaimer.  This Lease contains
all agreements between the Parties with respect to any matter mentioned herein,
and no other prior or contemporaneous agreement or understanding shall be
effective.

 

23.       Notices.

 

23.1.         Notice Requirements.  All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party’s
signature on this Lease shall be that Party’s address for delivery or mailing of
notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee’s taking possession of the Premises,
the Premises shall constitute Lessee’s address for notice. A copy of all notices
to Lessor shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate in writing.

 

23.2.         Date of Notice.  Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given 72 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier. Notices transmitted by facsimile transmission or similar
means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day.

 

24.       Waivers.

 

(a)           No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor’s consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor’s consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent.

 

(b)           The acceptance of Rent by Lessor shall not be a waiver of any
Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on
account of moneys or damages due Lessor, notwithstanding any qualifying
statements or conditions made by Lessee in connection therewith, which such
statements and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of deposit of
such payment.

 

(c)            THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH
REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY
PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH
THIS LEASE.

 

25.       Disclosures Regarding The Nature of a Real Estate Agency Relationship

 

(a)           When entering into a discussion with a real estate agent regarding
a real estate transaction, a Lessor or Lessee should from the outset understand
what type of agency relationship or representation it has with the agent or
agents in the transaction. Lessor and Lessee acknowledge being advised by the
Brokers in this transaction, as follows:

 

(i)                         Lessor’s Agent.  A Lessor’s agent under a listing
agreement with the Lessor acts as the agent for the Lessor only. A Lessor’s
agent or subagent has the following affirmative obligations:  To the Lessor: A
fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with
the Lessor.  To the Lessee and the Lessor:  a. Diligent exercise of reasonable
skills and care in performance of the agent’s duties.  b. A duty of honest and
fair dealing and good faith.  c. A duty to disclose all facts known to the agent
materially affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of, the Parties. An
agent is not obligated to reveal to either Party any confidential information
obtained from the other Party which does not involve the affirmative duties set
forth above.

 

(ii)                      Lessee’s Agent.  An agent can agree to act as agent
for the Lessee only. In these situations, the agent is not the Lessor’s agent,
even if by agreement the agent may receive compensation for services rendered,
either in full or in part from the Lessor. An agent acting only for a Lessee has
the following affirmative obligations.  To the Lessee: A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings with the Lessee.  To
the Lessee and the Lessor:  a. Diligent exercise of reasonable skills and care
in performance of the agent’s duties.  b. A duty of honest and fair dealing and
good faith.  c. A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not known to, or
within the diligent attention and observation of, the Parties. An agent is not
obligated to reveal to either Party any confidential information obtained from
the other Party which does not involve the affirmative duties set forth above.

 

(iii)                   Agent Representing Both Lessor and Lessee.  A real
estate agent, either acting directly or through one or more associate licenses,
can legally be the agent of both the Lessor and the Lessee in a transaction, but
only with the knowledge and consent of both the Lessor and the Lessee. In a dual
agency situation, the agent has the following affirmative obligations to both
the Lessor and the Lessee:  a. A fiduciary duty of utmost care, integrity,
honesty and loyalty in the dealings with either Lessor or the Lessee.  b. Other
duties to the Lessor and the Lessee as stated above in subparagraphs (i) or
(ii). In representing both Lessor and Lessee, the agent may not without the
express permission of the respective Party, disclose to the other Party that the
Lessor will accept rent in an amount less than that indicated in the listing or
that the Lessee is willing to pay a higher rent that that offered. The above
duties of the agent in a real estate transaction do not

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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relieve a Lessor or Lessee from the responsibility to protect their own
interests. Lessor and Lessee should carefully read all agreements to assure that
they adequately express their understanding of the transaction. A real estate
agent is a person qualified to advise about real estate. If legal or tax advice
is desired, consult a competent professional.

 

(b)           Brokers have no responsibility with respect to any default or
breach hereof by either Party. The Parties agree that no lawsuit or other legal
proceeding involving any breach of duty, error or omission relating to this
Lease may be brought against Broker more than one year after the Start Date and
that the liability (including court costs and attorneys’ fees), of any Broker
with respect to any such lawsuit and/or legal proceeding shall not exceed the
fee received by such Broker pursuant to this Lease; provided, however, that the
foregoing limitation on each Broker’s liability shall not be applicable to any
gross negligence or willful misconduct of such Broker.

 

(c)            Lessor and Lessee agree to identify to Brokers as “Confidential”
any communication or information given Brokers that is considered by such Party
to be confidential.

 

26.       No Right To Holdover.  Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
150% of the Base Rent applicable immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by Lessor to
any holding over by Lessee.

 

27.       Cumulative Remedies.  No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

 

28.       Covenants and Conditions; Construction of Agreement.  All provisions
of this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both Parties
had prepared it.

 

29.       Binding Effect, Choice of Law.  This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

 

30.       Subordination; Attornment; Non-Disturbance.

 

30.1.         Subordination.  This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, “Security Device”), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as “Lender”) shall have not liability or obligation to perform any
of the obligations of Lessor under this Lease. Any Lender may elect to have this
Lease and/or any Option granted hereby superior to the lien of its Security
Device by giving written notice thereof to Lessee, whereupon this Lease and such
Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.

 

30.2.         Attornment.  In the event that Lessor transfers title to the
Premises, or the Premises are acquired by another upon the foreclosure or
termination of a Security Devise to which this Lease is subordinated (i) Lessee
shall, subject to the non-disturbance provisions or Paragraph 30.3, attorn to
such new owner, and upon request, enter into a new lease, containing all of the
terms and provisions of this Lease, with such new owner for the remainder of the
term hereof, or, at the election of the new owner, this Lease will automatically
become a new lease between Lessee and such new owner, and (ii) Lessor shall
thereafter be relieved of any further obligations hereunder and such new owner
shall assume all of Lessor’s obligations, except that such new owner shall not:
(a) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership; (b) be subject to any
offsets or defenses which Lessee might have against any prior lessor, (c) be
bound by prepayment of more than one month’s rent, or (d) be liable for the
return of any security deposit paid to any prior lessor which was not paid or
credited to such new owner.

 

30.3.         Non-Disturbance.  With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee’s subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a “Non-Disturbance Agreement”) from the Lender which Non-Disturbance
Agreement provides that Lessee’s possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within 60 days after the execution of this Lease, Lessor
shall, if requested by Lessee, use its commercially reasonable efforts to obtain
a Non-Disturbance Agreement from the holder of any pre-existing Security Device
which is secured by the Premises. In the event that Lessor is unable to provide
the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.

 

30.4.         Self-Executing.  The agreements contained in this Paragraph 30
shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with a
sale, financing or refinancing of the Premises, Lessee and Lessor shall execute
such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

 

31.      Attorneys’ Fees.  If any Party or Broker brings an action or proceeding
involving the Premises whether founded in tort, contract or equity, or to
declare rights hereunder, the Prevailing Party (as hereafter defined) in any
such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys’ fees. Such 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” shall include, without limitation, a
Party or Broker 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 or Broker of its claim or defense. The attorneys’ fees award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys’ fees reasonably incurred. In addition,
Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such Default or resulting Breach ($200 is a reasonable minimum per
occurrence for such services and consultation).

 

32.      Lessor’s Access; Showing Premises; Repairs.  Lessor and Lessor’s agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times after reasonable prior notice for
the purpose of showing the same to prospective purchasers, lenders, or tenants,
and making such alterations, repairs, improvements or additions to the Premises
as Lessor may deem necessary or desirable and the erecting, using and
maintaining of utilities, services, pipes and conduits through the Premises
and/or other premises as long as there is no material adverse effect to Lessee’s
use of the Premises. All such activities shall be without abatement or rent or
liability to Lessee.

 

33.      Auctions.  Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor’s prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.

 

34.      Signs.  Lessor may place on the Premises ordinary “For Sale” signs at
any time and ordinary “For Lease” signs during the last 6 months of the term
hereof. Except for ordinary “for sublease” signs, Lessee shall not place any
sign upon the Premises without Lessor’s prior written consent. All signs must
comply with all Applicable Requirements.

 

35.      Termination; Merger.  Unless specifically stated otherwise in writing
by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one of all
existing subtenancies. Lessor’s failure within 10 days following any such event
to elect to the contrary by written notice to the holder of any such lesser
interest, shall constitute Lessor’s election to have such event constitute the
termination of such interest.

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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36.      Consents.  Except as otherwise provided herein, wherever in this Lease
the consent of a Party is required to an act by or for the other Party, such
consent shall not be unreasonably withheld or delayed. Lessor’s actual
reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent,
including by not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt
of an invoice and supporting documentation therefor. Lessor’s consent to any
act, assignment or subletting shall not constitute an acknowledgment that no
Default or Breach by Lessee of this Lease exists, nor shall such consent be
deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent.
The failure to specify herein any particular condition to Lessor’s consent shall
not preclude the imposition by Lessor at the time of consent of such further or
other conditions as are then reasonable with reference to the particular matter
for which consent is being given. In the event that either Party disagrees with
any determination made by the other hereunder and reasonably requests the
reasons for such determination, the determining party shall furnish its reasons
in writing and in reasonable detail within 10 business days following such
request.

 

37.       Guarantor.

 

38.      Quiet Possession.  Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee’s part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.

 

39.      Options.  If Lessee is granted an Option, as defined below, then the
following provisions shall apply:

 

39.1.         Definitions.  “Option” shall mean: (a) the right to extend or
reduce the term of or renew this Lease or to extend or reduce the term of or
renew any lease that Lessee has on other property of Lessor; (b) the right of
first refusal or first offer to lease either the Premises or other property of
Lessor; (c) the right to purchase, the right of first offer to purchase or the
right of first refusal to purchase the Premises or other property of Lessor.

 

39.2.         Options Personal to Original Lessee.  Any Option granted to Lessee
in this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.

 

39.3.         Multiple Options.

 

39.4.         Effect of Default on Options.

 

(a)           Lessee shall have no right to exercise an Option; (i) during the
period commencing with the giving of any notice of Default and continuing until
said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given Lessee), (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has
been given 3 or more notices of separate Default, whether or not the Defaults
are cured, during the 12 month period immediately preceding the exercise of the
Option.

 

(b)           The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee’s inability to exercise an
Option because of the provisions of Paragraph 39.4(a).

 

(c)            An Option shall terminate and be of no further force or effect,
notwithstanding Lessee’s due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term or completion of the
purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent
becomes due (without any necessity of Lessor to give notice thereof), or (ii) if
Lessee commits a Breach of this Lease.

 

40.       Multiple Buildings.

 

41.      Security Measures.  Lessee hereby acknowledges that the Rent payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

 

42.      Reservations.  Lessor reserves to itself the right, from time to time,
to grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.

 

43.      Performance Under Protest.  If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment “under protest” and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay. A Party who
does not initiate suit for the recovery of sums paid “under protest” with 6
months shall be deemed to have waived its right to protest such payment.

 

44.     Authority; Multiple Parties; Execution.

 

(a)           If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each individual executing this Lease on
behalf of such entity represents and warrants that he or she is duly authorized
to execute and deliver this Lease on its behalf. Each Party shall, within 30
days after request, deliver to the other Party satisfactory evidence of such
authority.

 

(b)           If this Lease is executed by more than one person or entity as
“Lessee”, each such person or entity shall be jointly and severally liable
hereunder. It is agreed that any one of the named Lessees shall be empowered to
execute any amendment to this Lease, or other document ancillary thereto and
bind all of the named Lessees, and Lessor may rely on the same as if all of the
named Lessees had executed such document.

 

(c)            This Lease may be executed by the Parties in counterparts, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.

 

45.      Conflict.  Any conflict between the printed provisions of this Lease
and typewritten or handwritten provisions shall be controlled by the typewritten
or handwritten provisions.

 

46.      Offer.  Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

 

47.      Amendments.  This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee’s obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.

 

48.      Waiver of Jury Trial.  THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING
OUT OF THIS AGREEMENT.

 

49.      Arbitration of Disputes.  An Addendum requiring the Arbitration of all
disputes between the Parties and/or Brokers arising out of this Lease o is    x
is not attached to this Lease.

 

50.      Americans with Disabilities Act.  Since compliance with the Americans
with Disabilities Act (ADA) is dependent upon Lessee’s specific use of the
Premises, Lessor makes no warranty or representation as to whether or not the
Premises comply with ADA or any similar legislation. In the event that Lessee’s
use of the Premises requires modifications or additions to the Premises in order
to be in ADA compliance, Lessee agrees to make any such necessary modifications
and/or additions at Lessee’s expense.

 

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

 

ATTENTION:  NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL
REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

 

1.             SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF
THIS LEASE.

 

2.             RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE
CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED
TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES,
THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEM, AND
THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED USE.

 

WARNING.  IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.

 

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

 

Executed at: Beverly Hills, California

 

Executed at: Georgetown, MA

On: July 26, 2012

 

On: July 19, 2012

 

 

 

By LESSOR:

 

By LESSEE:

Susana Property Co.,

 

UFP Technologies, Inc.

a California general partnership

 

a Delaware corporation

 

 

 

By:

/s/ Thomas Schneider

 

By:

/s/ Ron Lataille

Name Printed:

Thomas Schneider

 

Name Printed:

Ron Lataille

Title:

Managing General Partner

 

Title:

 

Name Printed:

 

 

Name Printed:

 

Title:

 

 

Title:

 

Address:

 

Address:

Telephone: (        )

 

Telephone: (        )

Facsimile: (        )

 

Facsimile: (        )

Email:

 

Email:

Telephone: (        )

 

Telephone: (        )

Federal ID No.

 

Federal ID No.

 

NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form:  AIR Commercial Real Estate Association, 800 W 6th Street,
Suite 800, Los Angeles, CA 90017.

Telephone No. (213) 687-8777. Fax No.: (213) 687-8616.

 

© Copyright 2001 — By AIR Commercial Real Estate Association. All rights
reserved.

No part of these works may be reproduced in any form without permission in
writing.

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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[g195801kg05i001.gif]

RENT ADJUSTMENT(S)

STANDARD LEASE ADDENDUM

 

Dated

July 6, 2012

By and Between  (Lessor)

Susana Property Co., a California general partnership

(Lessee)

UFP Technologies, Inc., a Delaware corporation

Address of Premises:

20211 Susana Road

 

Compton, CA

 

Paragraph                                        51

 

A.                                    RENT ADJUSTMENTS:

 

The monthly rent for each month of the adjustment period(s) specified below
shall be increased using the method(s) indicated below.

(Check Method(s) to be Used and Fill in Appropriately)

 

o  I.                      Cost of Living Adjustment(s) (COLA)

 

a.              On (Fill in COLA Dates): Not applicable

 

the Base Rent shall be adjusted by the change, if any, from the Base Month
specified below, in the Consumer Price Index of the Bureau of Labor Statistics
of the U.S. Department of Labor for (select one):  o CPI W (Urban Wage Earners
and Clerical Workers) or   o CPI U (All Urban Consumers), for (Fill in Urban
Area):

                                                                                                                                                                                                                   .
All items (1982-1984 = 100), herein referred to as “CPI”.

 

b.              The monthly rent payable in accordance with paragraph A.I.a. of
this Addendum shall be calculated as follows: the Base Rent set forth in
paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the
numerator of which shall be the CPI of the calendar month 2 months prior to the
month(s) specified in paragraph A.I.a. above during which the adjustment is to
take effect, and the denominator of which shall be the CPI of the calendar month
which is 2 months prior to (select one):   the o first month of the term of this
Lease as set forth in paragraph 1.3 (“Base Month”) or  o (Fill in Other “Base
Month”): Not applicable. The sum so calculated shall constitute the new monthly
rent hereunder, but in no event, shall any such new monthly rent be less than
the rent payable for the month immediately preceding the rent adjustment.

 

c.               In the event the compilation and/or publication of the CPI
shall be transferred to any other governmental department or bureau or agency or
shall be discontinued, then the index most nearly the same as the CPI shall be
used to make such calculation. In the event that the Parties cannot agree on
such alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties.

 

o  II.                 Market Rental Value Adjustment(s) (MRV)

 

a.              On (Fill in MRV Adjustment Date(s): Not applicable

 

the Base Rent shall be adjusted to the “Market Rental Value” of the property as
follows:

 

1)             Four months prior to each Market Rental Value Adjustment Date
described above, the Parties shall attempt to agree upon what the new MRV will
be on the adjustment date. If agreement cannot be reached within thirty days,
then:

 

(a)         Lessor and Lessee shall immediately appoint a mutual acceptable
appraiser or broker to establish the new MRV within the next 30 days. Any
associated costs will be split equally between the Parties, or

 

(b)         Both Lessor and Lessee shall each immediately make a reasonable
determination of the MRV and submit such determination, in writing, to
arbitration in accordance with the following provisions:

 

(i)             Within 15 days thereafter, Lessor and Lessee shall each select
an o appraiser or o broker (“Consultant” — check one) of their choice to act as
an arbitrator. The two arbitrators so appointed shall immediately select a third
mutually acceptable Consultant to act as a third arbitrator.

 

(ii)          The 3 arbitrators shall within 30 days of the appointment of the
third arbitrator reach a decision as to what the actual MRV for the Premises is,
and whether Lessor’s or Lessee’s submitted MRV is the closest thereto. The
decision of a majority of the arbitrators shall be binding on the Parties. The
submitted MRV which is determined to be the closest to the actual MRV shall
thereafter be used by the Parties.

 

(iii)       If either of the Parties fails to appoint an arbitrator within the
specified 15 days, the arbitrator timely appointed by one of them shall reach a
decision on his or her own, and said decision shall be binding on the Parties.

 

(iv)      The entire cost of such arbitration shall be paid by the party whose
submitted MRV is not selected, i.e., the one that is NOT the closest to the
actual MRV.

 

2)             Notwithstanding the foregoing, the new MRV shall not be less than
the rent payable for the month immediately preceding the rent adjustment.

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

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b.              Upon the establishment of each New Market Rental Value:

 

1)             the new MRV will become the new “Base Rent” for the purpose of
calculating any further Adjustments, and

 

2)             the first month of each Market Rental Value term shall become the
new ‘Base Month’ for the purpose of calculating any further Adjustments.

 

x  III.          Fixed Rental Adjustment(s) (FRA)

 

The Base Rent shall be increased to the following amounts on the dates set forth
below:

 

On (Fill in FRA Adjustment Date(s)):

 

The New Base Rent shall be:

November 15, 2013

 

$

28,840.00

November 15, 2014

 

$

29,705.00

November 15, 2015

 

$

30,596.00

November 15, 2016

 

$

31,513.00

 

B.                                    NOTICE:

 

Unless specified otherwise herein, notice of any such adjustments, other than
Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the
Lease.

 

C.                                    BROKER’S FEE:

 

The Brokers shall be paid a Brokerage Fee for each adjustment specified above in
accordance with paragraph 15 of the Lease or if applicable, paragraph 9 of the
Sublease.

 

NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form:  AIR Commercial Real Estate Association, 800 W 6th Street,
Suite 800, Los Angeles, CA 90017.

Telephone No. (213) 687-8777. Fax No.: (213) 687-8616.

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

INITIALS

INITIALS

©2000 — AIR COMMERCIAL REAL ESTATE ASSOCIATION

FORM RA-3-8/00E

 

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OPTION(S) TO EXTEND

STANDARD LEASE ADDENDUM

 

Dated

July 6, 2012

By and Between  (Lessor)

Susana Property Co., a California general partnership

By and Between  (Lessee)

UFP Technologies, Inc., a Delaware corporation

Address of Premises:

20211 Susana Road

 

Compton, CA

 

Paragraph                                        52

 

A.                  OPTION(S) TO EXTEND:

 

Lessor hereby grants to Lessee the option to extend the term of this Lease for
one (1)  additional sixty (60)

 

month period(s) commencing when the prior term expires upon each and all of the
following terms and conditions:

 

i.                  In order to exercise an option to extend, Lessee must give
written notice of such election to Lessor and Lessor must receive the same at
least six (6) but not more than nine (9) months prior to the date that the
option period would commence, time being of the essence. If proper notification
of the exercise of an option is not given and/or received, such option shall
automatically expire. Options (if there are more than one) may only be exercised
consecutively.

 

ii.               The provisions of paragraph 39, including those relating to
Lessee’s Default set forth in paragraph 39.4 of this Lease, are conditions of
this Option.

 

iii.            Except for the provisions of this Lease granting an option or
options to extend the term, all of the terms and conditions of this Lease except
where specifically modified by this option shall apply.

 

iv.           This Option is personal to the original Lessee, and cannot be
assigned or exercised by anyone other than said original Lessee and only while
the original Lessee is in full possession of the Premises and without the
intention of thereafter assigning or subletting.

 

v.              The monthly rent for each month of the option period shall be
calculated as follows, using the method(s) indicated below:

(Check Method(s) to be Used and Fill in Appropriately)

 

o    I.                Cost of Living Adjustment(s) (COLA)

 

a.              On (Fill in COLA Dates): Not applicable

 

the Base Rent shall be adjusted by the change, if any, from the Base Month
specified below, in the Consumer Price Index of the Bureau of Labor Statistics
of the U.S. Department of Labor for (select one):  o CPI W (Urban Wage Earners
and Clerical Workers) or  o CPI U (All Urban Consumers), for (Fill in Urban
Area):

 

All Items (1982-1984 = 100), herein referred to as “CPI”.

 

b.              The monthly rent payable in accordance with paragraph A.I.a. of
this Addendum shall be calculated as follows: the Base Rent set forth in
paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the
numerator of which shall be the CPI of the calendar month 2 months prior to the
month(s) specified in paragraph A.I.a. above during which the adjustment is to
take effect, and the denominator of which shall be the CPI of the calendar month
which is 2 months prior to (select one):  o the first month of the term of this
Lease as set forth in paragraph 1.3 (“Base Month”) or  o (Fill in Other “Base
Month”):

 

The sum so calculated shall constitute the new monthly rent hereunder, but in no
event, shall any such new monthly rent be less than the rent payable for the
month immediately preceding the rent adjustment.

 

x  II.               Market Rental Value adjustment(s) (MRV)

 

a.              On (Fill in MRV Adjustment Date(s): Not applicable

 

the Base Rent shall be adjusted to the “Market Rental Value” of the property as
follows:

 

1)             Four months prior to each Market Rental Value Adjustment Date
described above, the Parties shall attempt to agree upon what the new MRV will
be on the adjustment date. If agreement cannot be reached within thirty days,
then:

 

(a)              Lessor and Lessee shall immediately appoint a mutual acceptable
appraiser or broker to establish the new MRV within the next 30 days. Any
associated costs will be split equally between the Parties, or

 

(b)              Both Lessor and Lessee shall each immediately make a reasonable
determination of the MRV and submit such determination, in writing, to
arbitration in accordance with the following provisions:

 

(i)             Within 15 days thereafter, Lessor and Lessee shall each select
an o appraiser or o broker (“Consultant” — check one) of their choice to act as
an arbitrator. The two arbitrators so appointed shall immediately select a third
mutually acceptable Consultant to act as a third arbitrator.

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

INITIALS

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©2000 — AIR COMMERCIAL REAL ESTATE ASSOCIATION

FORM OE-3-8/00E

 

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(ii)          The 3 arbitrators shall within 30 days of the appointment of the
third arbitrator reach a decision as to what the actual MRV for the Premises is,
and whether Lessor’s or Lessee’s submitted MRV is the closest thereto. The
decision of a majority of the arbitrators shall be binding on the Parties. The
submitted MRV which is determined to be the closest to the actual MRV shall
thereafter be used by the Parties.

 

(iii)       If either of the Parties fails to appoint an arbitrator within the
specified 15 days, the arbitrator timely appointed by one of them shall reach a
decision on his or her own, and said decision shall be binding on the Parties.

 

(iv)      The entire cost of such arbitration shall be paid by the party whose
submitted MRV is not selected, ie. the one that is NOT the closest to the actual
MRV.

 

2)             Notwithstanding the foregoing, the new MRV shall not be less than
the rent payable for the month immediately preceding the rent adjustment.

 

b.              Upon the establishment of each New Market Rental Value:

 

1)             the new MRV will become the new “Base Rent” for the purpose of
calculating any further Adjustments, and

 

2)             the first month of each Market Rental Value term shall become the
new ‘Base Month’ for the purpose of calculating any further Adjustments.

 

3)             *** Notwithstanding the foregoing, the Prevailing Market Rent as
used in the Paragraph shall mean the fair market rent of the Premises according
to the comparable properties in the general area. In determining the FMV the
arbitrators or appraisers shall assume that:

 

a. The Premises is in excellent condition and repair and there shall be no
deduction for depreciation, absolescence or deferred mainenance;

 

b. The Premises would be leased for the period of the Option Term that is being
exercised;

 

c. The Premises would be leased on the same terms of this Lease insofar as the
obligations for repair; maintenance, insurance and real estate taxes as of the
expiration of the prior Lease Term of this Lease,

 

d. No deductions shall be given nor consideration given to allowances for real
estate brokerage commissions.

 

e. No consideration may be given for Rent abatement and/or concession in the
form of general improvements or alloances.

 

f. The Premises will be used for the purposes as described in the Lease..

 

T  III.            Fixed Rental Adjustment(s) (FRA)

 

The Base Rent shall be increased to the following amounts on the dates set forth
below:

 

On (Fill in FRA Adjustment Date(s)):

 

The New Base Rent shall be:

November 15, 2018

 

Previous year plus 3%

November 15, 2019

 

Previous year plus 3%

November 15, 2020

 

Previous year plus 3%

November 15, 2021

 

Previous year plus 3%

 

B.                                    NOTICE:

 

Unless specified otherwise herein, notice of any rental adjustments, other than
Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the
Lease.

 

C.                                    BROKER’S FEE:

 

The Brokers shall be paid a Brokerage Fee for each adjustment specified above in
accordance with paragraph 15 of the Lease or if applicable, paragraph 9 of the
Sublease.

 

NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form:  AIR Commercial Real Estate Association, 800 W 6th Street,
Suite 800, Los Angeles, CA 90017.

Telephone No. (213) 687-8777. Fax No.: (213) 687-8616.

 

/s/ T.S.

 

 

/s/ R.L.

 

 

 

 

INITIALS

INITIALS

©2000 — AIR COMMERCIAL REAL ESTATE ASSOCIATION

FORM OE-3-8/00E

 

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ADDENDUM TO THE AIR STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — NET
LEASE dated this  6 day of July , 2012 between SUSANA PROPERTY CO. a general
partnership and UFP TECHNOLOGIES, INC., a Delaware corporation.

 

In the event of any conflict between any provision in this Addendum and earlier
paragraphs of this Lease the terms of this Addendum shall control.

 

51.                   Rent Adjustment:           See attached AIR form.

 

52.                   Option to Extend:        See attached AIR form.

 

53.                   Applicability of this Lease to prior occupancy and
possession of Lessee:

 

Lessee acknowledges that since August 29, 2009, it has been in continuous
occupancy of the leased premises pursuant to an assignment of a preexisting
lease and amendments executed thereto. Notwithstanding this Lessee’s agreement
to occupy the leased premises pursuant to this lease, Lessee agrees that its
obligations as provided in paragraph 7.1 and 7.4 of this Lease shall be
applicable as if Lessee’s possession and occupancy shall have been as of
August 29, 2009.

 

54.                   Early termination Option:  Lessee has requested the Lessor
to agree to early termination options of the Lease. In connection therewith, the
parties agree to such Options on the terms and conditions of this paragraph 54
only, time being of the essence. For purposes of convenience the two options to
terminate are referenced herein as Option #1 and Option #2.

 

A.                        Conditions Applicable to both Option #1 and Option #2:

 

(1)                     Lessee shall not be in default under this Lease either
on the date that Lessee exercises the Termination Option or on the designated
early Termination Date;

 

(2)                     Lessee has not assigned the lease;

 

(3)                     Each Option is a one-time right which must be exercised
by a written “Notice to Terminate” delivered to Lessor in accordance with
paragraph 23 of the Lease. Such Notice must be delivered to Lessor with a stated
“Termination Date” and under all the terms and conditions provided in this
paragraph 54.

 

(4)                     The “Termination Fee” for either of the Options to
Terminate shall be included in full and delivered with the Notice to Terminate.

 

(5)                     The security deposit shall be returned by the Lessor
upon the full compliance by Lessee of the Lease and the conditions of this
paragraph 54; in no event shall the security deposit be used or applied as a
credit upon the Termination Fee.

 

(6)                     Lessee acknowledges that the Termination Fee is a fair
and reasonable estimate of the damages which would otherwise be difficult to
ascertain, including the unamortized costs and loss of rental income that Lessor
may incur as a result of the exercise of the Options granted herein.

 

(7)                     Lessee must vacate the premises no later than the
Termination Date set forth in the Notice of Terminate.

 

(8)                     If Lessee properly exercises either of the Termination
Options and performs all of its obligations of the Lease through the Termination
Date and all Rent(s) payable under this Lease have been paid through the
Termination Date, the term of the Lease shall expire as of the Termination Date.
Neither party shall thereafter have any further rights or obligations accruing
after said date except those which by the provisions of this Lease expressly
survive the expiration of the Lease Term. Specifically, but without limitation,
the lease conditions that will survive are: (a) the holdover and surrender
provisions; and (b) those conditions or actions that relate to or arise out of
events, defaults or other circumstances occurring prior to the Termination Date.

 

(9)                     The failure to fulfill all of the terms and conditions
provided in this Lease and/or the conditions for the exercise of the Options, as
described in paragraph 54, shall at the option of the Lessor, cancel and waive
the Options to Terminate granted herein and the Lease shall be unaffected
thereby.

 

(10)              In order to facilitate Lessor’s re-leasing of the Premises,
Lessee agrees to cooperate with reasonable diligence in the scheduling of, and
to participate in good faith in, walkthroughs of the Premises, as reasonably
requested by Landlord from time to time with reasonable notice after the date
hereof, with representatives of Landlord and of any prospective tenant of the
Premises.

 

(11)              It is specifically understood and agreed that Lessee may not
exercise any Option to Terminate wherein Lessee’s possession and occupancy would
cease in the first three years of this lease term, that is, November 15, 2012
through November 14, 2015.

 

B.                        Further Conditions — Option #1:

 

(1)                     Lessee’s Option #1 is limited solely to a Notice of
Termination that contains a Termination Date in the fourth (4) year of this
Lease, that is, between November 15, 2015 and November 14, 2016 only. Any other
date shall result in the failure to exercise of the Option.

 

/s/ T.S.

 

 

/s/ R.L.

 

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(2)                     The Notice to Terminate shall be delivered to Lessor at
least six (6) but no more than nine (9) months prior the Termination Date set
forth therein.

 

(3)                     The Termination Fee shall be included and delivered to
Lessor with the Notice to Terminate. This fee shall equal to the sum of six
(6) months of monthly installments of Base Rent together with all additional
Rent payable by Lessee under the terms of the Lease that would have otherwise
been payable by Lessee for the Premises for said six month period at the rate
which would have been in effect immediately following the Termination Date had
this lease not been terminated by Lessee pursuant to its Notice to Terminate.

 

(4)                     Lessee has complied with all applicable conditions of
Paragraph 54 A.

 

C.                        Further Conditions — Option #2

 

(1)                     Lessee’s Option #2 is limited solely to a Notice of
Termination that contains a Termination Date in the firth (5) year of this
Lease, that is, between November 15, 2016 and November 14, 2017 only. Any other
date shall result in the failure to exercise of the Option.

 

(2)                     The Notice to Terminate shall be delivered to Lessor at
least six (6) but no more than nine (9) months prior to the Termination Date set
forth therein.

 

(3)                     The Termination Fee shall be included and delivered to
Lessor with the Notice to Terminate. This fee shall equal to the sum of three
(3) months of monthly installments of Base Rent together with all additional
Rent payable by Lessee under the terms of the Lease that would have otherwise
been payable by Lessee for the Premises for said three month period at the rate
which would have been in effect immediately following the Termination Date had
this lease not been terminated by Lessee pursuant to its Notice to Terminate.

 

(4)                     Lessee has complied with all applicable conditions of
Paragraph 54 A. (1)

 

55.                   Tenant improvement allowance:  Lessor shall pay to Lessee
on or before the Commencement date of this Lease the sum of $10,000 to be used
for interior or exterior improvements.

 

NOTHING FURTHER ON THIS PAGE

 

/s/ T.S.

 

 

/s/ R.L.

 

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