Exhibit 10.15


 


AIR COMMERCIAL REAL ESTATE ASSOCIATION


STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE —
NET


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


 


RECORDING OF THIS LEASE PROHIBITED


 


1.                                      Basic Provisions (“Basic
Provisions”).


 


1.1         Parties: This Lease (“Lease”), dated for
reference purposes only MARCH 1, 2008 is made by and between HILLSIDE
ASSOCIATES III, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY. (“Lessor”) and
AEROVIRONMENT, 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 900
ENCHANTED WAY, SIMI VALLEY located in the County of VENTURA, 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) APPROXIMATELY 85,336 SQ. FT. (“Premises”). (See also Paragraph 2)


 


1.3         Term:
FIVE (5) years and ONE (1) months (“Original
Term”) commencing OCTOBER 1, 2009 (“Commencement Date”) and
ending OCTOBER 31, 2014 (“Expiration Date”). (See also Paragraph 3)


 


1.4         Early Possession: N/A (“Early Possession Date”). (See
also Paragraphs 3.2 and 3.3)


 


1.5         Initial Base Rent: $60,589.00 per month (“Base Rent”), payable
on the FIRST (1st) day of each month commencing OCTOBER 1, 2009. (See also
Paragraph 4)


 


o  If  this
box is checked, there are provisions in this Lease for the Base Rent to be
adjusted.


 


1.6         Base Rent
and Other Monies Paid Upon Execution:


 


(a) Base Rent: N/A for the period N/A.


 


(b)         Security    Deposit:   $ -0- (“Security
Deposit”). (See also Paragraph 5)


 


(c)          Association
Fees: $ N/A for the period N/A.


 


(d)         Other: $ N/A for  N/A


 


(e)          Total Due Upon Execution of this Lease: $ -0-


 


1.7         Agreed Use: OFFICE & WAREHOUSE FOR LIGHT
MANUFACTURING. (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)


 


(a)          Representation: The following real estate brokers (the “Brokers”)
and brokerage relationships exist in this transaction (check applicable boxes):


 


	
  o

  	
   

  	
  represents
  Lessor exclusively (“Lessor’s Broker”);

  
	
   

  	
   

  	
   

  
	
  x

  	
  JOSEF
  FARRAR/EQUIS

  	
  represents
  Lessee exclusively (Lessee’s Broker”); or

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  represents
  both Lessor and Lessee (“Dual Agency”).

  



 


(b)          Payment to Brokers: Upon execution and delivery of this Lease by
both Parties, Lessor shall pay to the Broker the fee agreed to in their separate
written agreement (or if there is no such agreement, the sum of or 5% of the
total Base Rent) for the brokerage services rendered by the Brokers.


 


1.10  Guarantor.  The
obligations of the Lessee under this Lease are to be guaranteed by N/A (“Guarantor”).
(See also Paragraph 37)


 


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


x   an Addendum
consisting of Paragraphs 1 through 2


o    a plot plan depicting the
Premises (Exhibit  A);


o    a
current set of the Rules and Regulations;


o    a
Work Letter;


x   other
(specify): RENT ADJUSTMENT, RENT CONCESSION AGREEMENT, ADDENDUM, ATTACHMENT,
OPTION TO RENEW.


 


2.                                       Premises.


 


2.1         Letting. 
Lessor hereby teases 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. Unless otherwise provided herein, any
statement of size set

forth in this Lease,


 


 


	
   

  	
   

  	
   

  	
   

  
	
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or that may have been used
in calculating Rent, is an approximation which the Parties agree is reasonable
and any payments based thereon are not subject to revision whether or not the
actual size is more or less. Note: Lessee is advised to verify the actual size
prior to executing this Lease. Subject to (I) all of the terms and
conditions of this Lease, (II) Force Majeure events, (III) Lessor’s
commercially reasonable security requirements, and (lV) the Applicable
Requirements, Lessee shall have access to the Premises twenty-four (24) hours
per day, seven (7) days per week throughout the Lease Term.


 


2.2                                 Condition.   Lessor
shall deliver the Premises to Lessee broom clean and free of debris on the
Commencement Date or the Early Possession Date, whichever first occurs (“Start
Date”), and, so long as the required service contracts described in Paragraph
7.1(b) below are obtained by Lessee and in effect within thirty days
following the Start Date, warrants that the existing electrical, plumbing, fire
sprinkler, lighting, heating. ventilating and air conditioning systems (“HVAC”),
loading doors, sump pumps, if any, and all other such elements in the Premises,
other than those constructed by Lessee, shall be in good operating condition on
said date, that the structural elements of the roof, bearing walls and
foundation of any buildings on the Premises (the “Building”) shall be free of
material defects, and that the Premises do not contain hazardous levels of any
mold or fungi defined as toxic under applicable state or federal law. If a
non-compliance with said warranty exists as of the Start Date, Lessor shall, as
Lessor’s sole obligation with respect to such matter, except as otherwise provided
in this Lease, promptly after receipt of written notice from Lessee setting
forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense. The warranty periods
shall be as follows: (i) 90 days as to the HVAC systems, and (ii) 9O
days as to the remaining systems and other elements of the Building. If Lessee
does not give Lessor the required notice within the appropriate warranty
period, correction of any such non-compliance, malfunction or failure shall be
the obligation of Lessee at Lessee’s sole cost and expense.


 


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 as of the date hereof.  
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
Lessees intended use, and acknowledges that past uses of the Premises may no
longer be allowed. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided, promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same at Lessor’s expense. If Lessee does not give
Lessor written notice of a non-compliance with this warranty within 90 days
following the Start Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee’s sole cost and expense. If the Applicable
Requirements are hereafter changed so as to require during the term of this
Lease the construction of an addition to or an alteration of the Premises
and/or Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Unit, Premises and/or
Building (“Capital Expenditure”), Lessor and Lessee shall allocate the cost of
such work as follows:


 


(a)          Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique, use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if such Capital
Expenditure is required during the last 2 years of this Lease and the cost
thereof exceeds 6 months’ Base Rent, Lessee may instead terminate this Lease
unless Lessor notifies Lessee, in writing, within 10 days after receipt of
Lessee’s termination notice that Lessor has elected to pay the difference
between the actual cost thereof and an amount equal to 6 months’ Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.


 


(b)         If such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor shall pay for such Capital Expenditure and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this Lease, on the date that on which the Base Rent is due, an amount equal to
144th of the portion of such costs reasonably attributable to the Premises.
Lessee shall pay Interest on the balance but may prepay its obligation at any
time. If, however, such Capital Expenditure is required during the last 2 years
of this Lease or if Lessor reasonably determines that it is not economically
feasible to pay Its share thereof, Lessor shall have the option to terminate
this Lease upon 90 days prior written notice to Lessee unless Lessee notifies
Lessor, in writing, within 10 days after receipt of Lessor’s termination notice
that Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure,
Lessee may advance such funds and deduct same, with Interest, from Rent until
Lessor’s share of such costs have been fully paid. If Lessee is unable to
finance Lessor’s share, or if the balance of the Rent due and payable for the
remainder of this Lease is not sufficient to fully reimburse Lessee on an
offset basis, Lessee shall have the right to terminate this Lease upon 30 days
written notice to Lessor.


 


(c)          Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall
either (i) immediately cease such changed use or intensity of use and/or
take such other steps as may be necessary to eliminate the requirement for such
Capital Expenditure, or (ii) complete such Capital Expenditure at its own
expense. Lessee shall not, however, have any right to terminate this Lease.


 


2.4                                 Acknowledgements.  Lessee acknowledges that: a)  it
has satisfied itself with respect to the 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, (b) Lessee has made such investigation as it deems necessary with
reference to such matters and assumes all responsibility therefore as the same
relate to its occupancy of the Premises, and (c) neither Lessor, nor
Lessor’s agents have made any oral or written representations or warranties
with respect to said matters other than as set forth in this Lease.


 


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. If
Lessee totally or partially occupies the Premises prior to the Commencement
Date, the obligation to pay


 


 


	
   

  	
   

  	
   

  	
   

  
	
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Base Rent shall be abated
for the period of such early possession. All other terms of this Lease
(including but not limited to the obligations to pay insurance premiums and to
maintain the Premises) shall be in effect during such period. Any such early
possession shall not affect the Expiration Date.


 


3.3                                 Delay In Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession by such date, Lessor shall not be subject to any liability
therefore, nor shall such failure affect the validity of this Lease. Lessee
shall not, however, be obligated to pay Rent or perform its other obligations
until Lessor delivers possession of the Premises and any period of rent
abatement that Lessee would otherwise have enjoyed shall run from the date of
delivery of possession and continue for a period equal to what Lessee would
otherwise have enjoyed under the terms hereof, but minus any days of delay
caused by the acts or omissions of Lessee. If possession is not delivered
within 60 days after the Commencement Date, Lessee may, at its option, by notice
in writing within 10 days after the end of such 60 day period, cancel this
Lease, in which event the Parties shall be discharged from all obligations
hereunder. if such written notice is not received by Lessor within said 10 day
period, Lessee’s right to cancel shall terminate. If possession of the Premises
is not delivered within 120 days after the Commencement Date, this Lease shall
terminate unless other agreements are reached between Lessor and Lessee, in
writing.


 


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 and any additional rent, and any remaining amount
to any other outstanding charges or costs.


 


5.                                       Security Deposit.  Lessee shall deposit with Lessor upon execution hereof the Security
Deposit (if any) as security 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 due 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 therefore
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 increased 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.


 


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.


 


 


	
   

  	
   

  	
   

  	
   

  
	
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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 therefore. 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.


 


(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 Substances,
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 Substances which existed on the Premises prior to Lessee’s
occupancy 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 Substances on the Premises prior to Lessee’s
occupancy, 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 Lessors 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 therefore (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
rights under Paragraph 8.2(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 or
$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
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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) of 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 condition conducive to the production of 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 therefore.


 


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), ceilings,  roof membrane, 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. 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) parking lot,
landscaping and irrigation systems, (v) roof covering and
drains, (vi) clarifiers (vii) basic utility feed to the perimeter of
the Building, and (viii) any other equipment, if reasonably required by
Lessor. *(See Attachment)


 


(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 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 50% of the cost of
replacing such item, then such item shall be replaced by Lessor, end 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 (i.e. 1/144th of the cost per
month). Lessee shall pay Interest on the unamortized balance but may prepay its
obligation at any time, provided, however, that
the denominator for purposes of any roof replacement shall be 300.


 


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:
provided, however, that Lessor shall, at its sole cost and expense, be
responsible for the structure of the building (including the structural
portions of the roof (excluding the roof membrane)) unless the necessity for
repairs to the same are necessitated due to Lessee’s acts or omissions (in
which event Lessee shall be responsible for the same). 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, communication 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 Utility Installations to the interior of the Premises (excluding
the roof) without such consent but upon notice to Lessor, as tong 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. Notwithstanding
the foregoing, Lessee shall not


 


 


	
   

  	
   

  	
   

  	
   

  
	
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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 Installation 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 material men’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, or if applicable, 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 30 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 $5,000,000, 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
and coverage shall also be extended to include damage caused by heat, smoke or
fumes from a hostile fire. 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 of Lessee nor relieve
Lessee of any obligation hereunder. Lessee shall provide an endorsement on its
liability policy(is) 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 at Lessee’s sole cost  and expense have the right, but not the
obligation, to maintain liability insurance and such other Insurance that may
be required by any lender of Lessor, which insurance shall be  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, at Lessee’s sole
cost and expense, 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. If
Lessor is the Insuring Party, however, Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee’s personal property shall be insured
by Lessee under Paragraph 8.4 rather than by Lessor. If the


 


 


	
   

  	
   

  	
   

  	
   

  
	
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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 or otherwise desired by Lessor),
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
coinsurance clause, waiver of subrogation, 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 $1,000 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.


 


8.4                                 Lessee’s Property; Business
Interruption 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 $1,000 per occurrence.    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) 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 duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a “General
Policyholders Rating” of at least A-, VI, 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
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 use good faith  efforts to furnish Lessor with evidence of renewals or “insurance
binders” evidencing renewal thereof prior to the expiration of such policies.
In the event Lessor does not receive such evidence within ten (10) days
after such expiration, then 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. Without affecting any other rights or
remedies, Lessee and 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 (collectively, “Claims”) 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. Lessor 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, 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 there from. 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, and If such failure continues for five (5) days’
after Lessor’s notice to lessee of such failure, 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 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.


 


 


	
   

  	
   

  	
   

  	
   

  
	
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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., except as provided in Section 7.1(d).


 


(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 as defined in Paragraph 6.2(a), in, on,
or under the Premises which requires repair, remediation, or restoration.


 


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 therefore. 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. *(See attachment)


 


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.
*(See attachment)


 


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. lf 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.
All other obligations of Lessee hereunder shall be performed by Lessee, and
Lessor shall have no liability for any such


 


 


	
   

  	
   

  	
   

  	
   

  
	
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damage, destruction,
remediation, repair or restoration except as provided herein.


 


(b)         Remedies. If Lessor shall be 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.


 


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
ant remaining portion of Lessee’s Security Deposit as 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 or 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, 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 taw assign, transfer,
mortgage or encumber (collectively, “assign or assignment”) or sublet all or
any part of Lessee’s interest in this 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)          Except as otherwise provided in Section 8 of the addendum, 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


 


 


	
   

  	
   

  	
   

  	
   

  
	
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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 110% 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) alter 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 therefore 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 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.


 


(c)          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


 


 


	
   

  	
   

  	
   

  	
   

  
	
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 following written notice to Lessee. *(See
attachment)


 


(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, (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 its 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 in such performance upon receipt of an
invoice therefore. 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 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                           Intentionally Omitted.


 


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


 


 


	
   

  	
   

  	
   

  	
   

  
	
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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 document to Lessor.


 


14            Condemnation.  If the Premises or any portion thereof are
taken under the power of eminent domain or sold under the threat 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 therefore. 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.


 


15.1         Representations and
Indemnities of Broker Relationships.  Lessee and Lessor each represent and warrant
to the other that it has had no dealings with any person, firm, broker or
finder (other than the Brokers, if any) in connection with this Lease, and that
no one other than said named Brokers is entitled to any commission or finder’s
fee in connection herewith. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the indemnifying Party, including any costs, expenses, attorneys’ fees
reasonably incurred with respect thereto.


 


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 or such other form
as may be reasonably required by the Requesting Party, plus such additional
information, confirmation and/or statements as may be reasonably


 


 


	
   

  	
   

  	
   

  
	
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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 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, subject to receipt of
commercially reasonable nondisclosure agreements, 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 tease. 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 alt 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; 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. Lessor
and Lessee each represents and warrants that it has made, and is relying solely
upon, its own investigation as to the nature, quality, character and financial
responsibility of the other Party to this Lease and as to the use, nature,
quality and character of the Premises.


 


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 and, in the
case of notice to Lessee, a copy to the Premises.  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
guarantee 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


 


 


	
   

  	
   

  	
   

  	
   

  
	
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STATUTE IS INCONSISTENT WITH THIS LEASE.


 


25.           lntentionally
Omitted.


 


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 no 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 Device to which this Lease is
subordinated (i) Lessee shall, subject to the non-disturbance provisions
of 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, for the remainder of the term hereof, 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


 


 


	
   

  	
   

  	
   

  	
   

  
	
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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.


 


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, wilt 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, contractor 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- who substantially obtains or defeats the relief sought, as
the case may be, whether by compromise, settlement, judgment, or the
abandonment by the other Party of its claim or defense. The 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 (in no event less than 24
hours’ notice (except In cases of emergency)) 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 of 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 or all existing sub-tenancies, 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.


 


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 but 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 therefore.
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.           Intentionally
Omitted.


 


38.           Quiet Possession. Subject to payment by Lessee
of the Rent and performance of all of the covenants, conditions and provisions
on


 


 


	
   

  	
   

  	
   

  	
   

  
	
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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                      Definition. “Option” shall mean: (a) the right to
extend the term of or renew This Lease or to extend 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 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 (‘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. In the event that Lessee has any multiple
Options to extend or renew this Lease, a later Option cannot be exercised
unless the prior Options have been validly exercised.


 


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.           lntentionally Omitted.


 


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.


 


(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.           Intentionally Omitted


 


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.


 


 


	
   

  	
   

  	
   

  	
   

  
	
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48.           Waiver of Jury Trial.  TO THE
EXTENT ALLOWED UNDER THE APPLICABLE REQUIREMENTS, 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.           Mediation
and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease x
is o  is not
attached to this Lease. *(See attachment)


 


50.           Americans
with Disabilities Act. Subject to Lessor’s representations and
warranties contained herein, 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, subject to Lessor’s
express obligations set forth herein, 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 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 SYSTEMS, 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.


 


RECORDING OF THIS LEASE PROHIBITED


 


	
  Executed at:

  	
  Simi Valley, CA

  	
   

  	
  Executed at:

  	
  Monrovia, CA

  
	
  On:

  	
  6/3/08

  	
   

  	
  On:

  	
  4/16/08

  
	
   

  	
   

  
	
  By LESSOR:

  	
  By LESSEE:

  
	
  HILLSIDE ASSOCIATES III,
  LLC

  	
  AEROVIRONMENT, INC.,

  
	
  A CALIFORNIA LIMITED
  LIABILITY COMPANY

  	
  A DELAWARE CORPORATION

  
							



 


	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Cathleen
  S. Cline

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
  CATHLEEN S. CLINE, VP
  ADMIN

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  By:

  	
  /s/ Margaret M. Kestly

  	
   

  	
  By:

  	
   

  
	
  Name Printed: 

  	
  MARGARET M. KESTLY

  	
   

  	
  Name Printed:

  	
   

  
	
  Title: 

  	
  AUTHORIZED AGENT

  	
   

  	
  Title:

  	
   

  
	
  Address:

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  Telephone: (   )

  	
   

  	
   

  	
  Telephone: (   )

  	
   

  
	
  Facsmile: (   )

  	
   

  	
   

  	
  Facsmile: (   )

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  
	
   

  	
   

  
	
  BROKER:

  	
  BROKER:

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attn:

  	
   

  	
   

  	
  Attn:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:(   )

  	
   

  	
   

  	
  Telephone:(   )

  	
   

  
	
  Facsmile:(   )

  	
   

  	
   

  	
  Facsmile:(   )

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  
																															



 


 


	
   

  	
   

  	
   

  	
   

  
	
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  AIR COMMERCIAL REAL ESTATE ASSCOCIATION

  	
   

  	
   

  	
  FORM STN-10-6/07E

  	
   

  



 


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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.


 


 


	
   

  	
   

  	
   

  	
   

  
	
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  ©2001 –
  AIR COMMERCIAL REAL ESTATE ASSCOCIATION

  	
   

  	
   

  	
  FORM STN-10-6/07E

  	
   

  



 


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AIR COMMERCIAL REAL ESTATE ASSOCIATION


STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE – NET


 


ATTACHMENT


 


7.1 (b)             However, if in Lessor’s sole opinion one or
more service providers contracted for by Lessee is performing in a ubstandard
fashion, Lessor may give Lessee 30 days’ written notice to cure the
problem.  Should Lessee fail to cure the
substandard performance within that 30 day period, then Lessor may, at its
option, procure and maintain a substitute service provider(s), the cost for
which Lessee shall reimburse Lessor, upon demand.


 


9.2           ...,
except emergency repairs required in the judgment of Lessee to prevent
additional loss to real or personal property of the parties hereto.


 


9.4                                 ... 7 days after Lessor determines that damage
is Total Destruction.


 


13.1(c)           No default or breach shall occur when access
is denied by Lessee when Lessor or its employees or agents do not comply with
the citizenship and status requirements of the International Traffic in Arms
Regulations require that anyone allowed access to the building must be a U.S.
citizen, legal permanent resident or a member of a protected class since items
produced in the premises are listed on the U.S. Munitions list of the ITAR.


 


32.                               No default or breach shall occur when access
is denied by Lessee when Lessor or its employees or agents do not comply with
the citizenship and status requirements of the International Traffic in Arms
Regulation of the United States Government. 
Such regulations require that anyone allowed access to the building must
be a U.S. citizen, legal permanent resident or a member of a protected class
since items produced in the premises are listed on the U.S. Munitions list of
the ITAR.


 


45.                               Agreement constitutes the entire agreement
between the parties, regardless of any prior negotiations.  This Agreement shall only be amended or
otherwise changed through a writing, signed by both Lessor and Lessee.


 


49.                               The parties shall agree to first attempt
mediation of any disputes, with an agreed to mediator and his/her cost shared
equally by the parties.  If said
mediation does not occur within 30 days of the dispute arising, then either
party may proceed to Court. 
Notwithstanding the foregoing, lessor shall not be obligated to engage in
mediation for any cause of action seeking possession and/or rents owed by
Lessee.  In such cases, the Civil code
and the Code of Civil Procedure shall govern the dispute resolution.


 


 


	
   

  	
   

  	
   

  	
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ADDENDUM


 


Date: MARCH 1, 2008


 


By and
Between (Lessor) HILLSIDE
ASSOCIATES III, LLC


(Lessee)
AEROVIRONEMTN, INC., A DELAWARE CORPORATION


 


Address
of Premises: 900
ENCHANTED WAY


SIMI
VALLEY, CA 93065


 


1.               TENANT IMPROVEMENTS:


 


(a)       Tenant will do their own
tenant improvements.  Landlord will give
Tenant a tenant improvement allowance of $200,000.00. This allowance will be
paid to the tenant upon expiration of the existing lease with L3 of September 30,
2009.  Any and all improvements must
reasonably be approved by Landlord prior to construction.


 


(b)       Notwithstanding the
above, Landlord agrees to repair leaking windows, repair the roof, slurry coat
and stripe the parking lot within ninety days from execution of the lease and
related documents.


 


(c)       Lessee agrees that any
and all improvements contracted and paid for by Lessee are done at Lessee’s
sole risk and expense.  Lessee shall
either self insure or insure all tenant work at Lessee’s expense.  Lessee shall indemnify and hold Lessor
harmless from any and all claims arising out of or related to Lessee’s work at
or about the premises.


 


2.               ROOF:


 


Notwithstanding
the language contained in the body of this Lease, the Parties agree that the
Lessor shall guaranty the roof as of the execution date of the lease under the
express condition that Lessor shall have no obligation to guaranty the roof,
unless and until Lessee makes repairs to roof areas at and around the fourteen
(14) HVAC units previously installed by Lessee. 
Lessee shall be required to perform the contemplated repairs using SBR
Roofing Company at Lessee’s sole cost and expense.  Scope of the repairs shall be determined by
SBR Roofing Company, and upon completion of
such repairs by SBR Roofing Company, shall be deemed sufficient for the
purposes of activating each guaranty.


 


During
the time in which Lessee occupies the Premises, any work or repairs to the roof
in addition to that provided for above, performed by Lessee or its agent or
subcontractor or anyone acting by or through it, shall be performed only after
Lessee receives prior written consent from Lessor.  Upon receiving consent from Lessor, the work
shall be performed by SBR Roofing Company, or another contractor approved in
writing by Lessor.


 


If
Lessee exercises its Option to extend the term of the Lease, beyond the
original five (5) year term, then Lessor shall, at its sole cost and
expense, replace the roof of the premises in its entirety within nine (9) months
of the consummation of such extension.


 


Any
conflict between the language of this Addendum and the language of the body of
the Lease shall be resolved in favor of the language contained within this
Addendum.


 


 


	
   

  	
   

  	
   

  	
   

  
	
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RENT ADJUSTMENT(S)


STANDARD LEASE ADDENDUM


 


Dated:                                    MARCH 1, 2008


 


By and Between (Lessor) HILLSIDE ASSOCIATES III, LLC, A CALIFORNIA LIMITED


LIABILITY
COMPANY


 


(Lessee)
AEROVIRONMENT, INC., A DELAWARE CORPORATION


 


Address of Premises: 900 ENCHANTED WAY


SIMI
VALLEY, CA 93065


 


Paragraph


 


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): N/A


 


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): _ CPI W (Urban Wage Earners
and Clerical Workers) or _ CPI U (All Urban Consumers), for (Fill In Urban
Area:


 


    N/A,
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 the 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 _ first month of the term of this Lease as set forth in
paragraph 1.3 (“Base Month”) or _ (Fill In Other “Base Month”): N/A.  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): N/A


 


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 mutually 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 _ appraiser or _ 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 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 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.


 


 


	
   

  	
   

  	
   

  	
   

  
	
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(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 closes 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.


 


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:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  OCTOBER 1, 2010

  	
   

  	
  $

  	
  62,407.00

  	
   

  
	
  OCTOBER 1, 2011

  	
   

  	
  $

  	
  64,279.00

  	
   

  
	
  OCTOBER 1, 2012

  	
   

  	
  $

  	
  66,207.00

  	
   

  
	
  OCTOBER 1, 2013

  	
   

  	
  $

  	
  68,194.00

  	
   

  
	
  OCTOBER 1, 2014

  	
   

  	
  $

  	
  70,239.00

  	
   

  



 


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.


 


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


 


 


	
   

  	
   

  	
   

  	
   

  
	
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  AIR COMMERCIAL REAL ESTATE ASSOCIATION

  	
   

  	
   

  	
  FORM RA-3-8/00E

  	
   

  



 


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RENT CONCESSION AGREEMENT


 


This
document shall set-forth the agreement of HILLSIDE III, Lessor,
and AEROVIRONMENT, INC., A DELAWARE CORPORATION, Lessee
concerning the Rent Concessions offered to Lessee in connection with that
certain Lease dated MARCH 1, 2008
by and between Lessor and Lessee for the premises located at: 900 ENCHANTED WAY, City of SIMI VALLEY,
State of California.


 


AS
MATERIAL CONSIDERATION for the Rent Concession set-forth herein is Lessee’s
agreement to lease the Premises on all terms and provisions of the Lease for
the entire Lease term.  Lessee
acknowledges that the Free Rent as set-forth below (herein called “Rent
Concession”) is a concession given to Lessee for leasing the Premises for a
term stated in the Lease Agreement.  In
the event Lessee becomes in default of any Lease provision at any time during
the Lease term, Lessor and Lessee agree that: (a) in addition to any other
remedy available to Lessor, Lessor shall be entitled to recover from Lessee the
total rental amount of all Rent Concessions taken by Lessee prior to such
default date, (b) Lessee agrees to pay such amount to Lessor within the
next rental payment, and (c) future Rent Concessions shall then be null,
void and of no force or effect.  Lessee
shall be entitled to Free Rent and /or Rent Concession(s) for the period
of time referenced below:


 


OCTOBER 1, 2010 THROUGH OCTOBER 31, 2010 — $31,575.00


SEPTEMBER 1, 2011 THROUGH SEPTEMBER 30, 2011 — $31,575.00


 


Rent
Concession(s) referenced above equal a fair rental value in a sum as
determined at the time the Rent Concession commences.


 


THIS
DOCUMENT shall not be deemed binding upon Lessor unless and until it is
executed by Lessor a copy delivered to Lessee


 


Dated
this 16th day of April, 2008.


 


	
  LESSOR:

  	
   

  	
   

  	
  LESSEE:

  
	
  HILLSIDE III

  	
   

  	
  AEROVIRONMENT, INC.,

  
	
   

  	
   

  	
  By MID VALLEY PROPERTIES,

  	
   

  	
  A DELAWARE CORPORATION

  
	
   

  	
   

  	
  Managing Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  BY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  BY:

  	
  /s/ Cathleen S. Cline

  
	
   

  	
   

  	
   

  	
  CATHLEEN S. CLINE, VP
  ADMIN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/ Margaret M. Kestly

  	
   

  	
   

  
	
   

  	
  MARGARET M. KESTLY,
  AUTHORIZED AGENT

  	
   

  	
   

  
								



 


 


	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
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OPTION TO RENEW


 


Tenant
is granted one option to extend the within lease for a period of 5 years
commencing immediately after the expiration of the basic lease term.  It shall be the obligation of the tenant to
notify the Landlord of its intention to exercise its option to renew within the
period between 270 days and 360 days prior to the day that the current lease
expires.  The notification of the intent
to exercise its option shall be sent by tenant in writing by U.S. mail
certified, overnight courier delivery or registered with return receipt
requested.


 


The
commencement rent for the first month of the option period shall be equal to
the comparable market rent for a similar building located within a ten-mile
radius of the leases property giving consideration to all concessions, tenant
improvement allowance and rental abatement for a non-renewal and non-sublease
space.  In analyzing the comparable
building properties, the parties may take into account all factors including
ceiling height, parking ratio, loading docks, loading doors and height/size of
those doors, HVAC, office build out, electrical power and distribution,
skylights, yard space, the general location and the view from inside the
building.


 


Upon
receipt within the time period spelled out above, of tenant’s exercise of its
option to extend said lease, both parties will meet and confer in an attempt to
arrive at the beginning rent during the option period.  If the parties are not able to agree on the
option period rent, each party shall designate a licensed real estate broker
who has dealt in the industrial property in the Simi Valley area for not less
than 5 years from the date of his appoint, and is at that time employed by an
established real estate brokerage firm. 
If both brokers are unable to agree on the reasonable commencement rent
for the option period, then both brokers will attempt to designate a third
broker with qualifications at least as stringent as those required of the
original brokers.  Said third broker
shall be given all of the material used by the original brokers to base their
reasonable market value, and said broker shall make his own investigation.  The third broker then shall select the
opinion of one broker as the most correct value, and the value selected buy
said third broker shall be binding upon the parties.


 


If
the two original brokers cannot agree on a third broker, of if the third broker
is unacceptable to the parties as defined herein, then either party may request
that the presiding judge of the Superior Court of the County of Ventura select
a commercial real estate broker from the list annually kept by said presiding
judge, and said appointed brokers opinion shall be absolutely binding on all
parties.


 


Any
outside broker representing the tenant will receive a market commission for the
comparable building as outlined above.


 


Not
withstanding the foregoing, the new Market Rental Value shall not be less than
the rent payable for the month immediately preceding the rent adjustment.


 


Entered
into this 16th day of April, 2008 in the City of Simi Valley, State
of California.


 


	
  LANDLORD:

  	
  LESSEE:

  
	
  HILLSIDE III, LLC

  	
  AEROVIRONMENT, INC.,

  
	
  A
  California Limited Liability Company

  	
  A DELAWARE CORPORATION

  
	
   

  	
   

  
	
  By:

  	
  /s/ Margaret M. Kestly

  	
  By:

  	
  /s/ Cathleen S. Cline

  
	
   

  	
  Margaret M. Kestly

  	
   

  	
  CATHLEEN S. CLINE, VP
  ADMIN

  
	
   

  	
  Authorized Agent