Unassociated Document


    COMMERICAL
LEASE

    


    


    Dated
this 1st day of August, 2009

     

    
      
        	
                Between:

              	
                STEWART’S
      SHOPS CORP. as “Landlord”

              
	 
      	
                A
      New York Corporation

              
	 
      	
                P.O.
      Box 435

              
	 
      	
                Saratoga
      Springs, NY 12866

              
	 
      	
                Attn:
      William Dake, President

              
	
                And:

              	 
      
	 
      	
                RELETA
      BREWING COMPANY LLC as “Tenant”

              
	 
      	
                A
      Delaware LLC,

              
	 
      	
                131
      Excelsior Ave.

              
	 
      	
                Saratoga
      Springs, NY 12866

              


      

    

    


    Landlord Leases to Tenant and Tenant
Leases from Landlord the following described property (the “Premises”) on the
terms and conditions stated below:

    


    A
property of approximately 3.66 acres, which includes a building space of
approximately 35,000 square feet, and all appurtenances and improvements
thereto, which building is more particularly described as follows:

    


    Building 3, Saratoga Dairy, Excelsior
Ave., Saratoga Springs, New York, the exact legal description of which is
attached as Exhibit “A”.

    


    The
premises shall also include the sharing of rights to use springwater from the
natural spring located on the premises. Tenant to bear all expense to plumb the
spring to allow its use.

    


    Landlord hereby acknowledges that there
are no other tenants in possession or with a right to possession of any part or
portion of the Premises.

    


    SECTION
1. OCCUPANCY

    


    1.1 ORIGINAL TERM. The term of this
Lease shall commence AUGUST 15,
2009 and shall expire on JULY 14, 2014. This is deemed
the original term. The “Term Commencement date” is AUGUST 15, 2009.

    


    1.2 RENEWAL OPTION. If the Lease is not
in default at the time each option is exercised or at the time the renewal term
is to commence, Tenant shall have the option to renew this Lease for THREE (3) successive terms of
FIVE (5) YEARS each, as
follows:

    


    (1)   Each of the
renewal terms shall commence on the day following expiration of the preceding
term.

    


    (2)   The option may be
exercised by written notice to Landlord given not less than 180 days prior to
the last day of the expiring term. The giving of such notice shall be sufficient
to make the Lease binding for the renewal term without further act of the
parties. Landlord and Tenant shall then be bound to take the steps required in
connection with the determination of rent as specified below. If Tenant shall
fail to give any such notice within such one hundred eighty (180) day time
limit, Tenant’s right to exercise its option shall nevertheless continue until
thirty (30) days after Landlord shall have given Tenant notice of Landlord’s
election to terminate such option, and Tenant may exercise such option at any
time until the expiration of said thirty (30) day period. It is the intention of
the parties to avoid forfeiture of Tenant’s rights to extend the term of this
Lease under any of the options set forth in this Section 1.2 through inadvertent
failure to give notice thereof within the time limits prescribed. During any
extension of the term all Sections of this Lease will be effective, and
references to term will incorporate the extensions.

     

    
      
        
        

      

      
        Page 1 of
18

        
          

        

      

      
        
        

      

    

    
 

    (3)   The terms and
conditions of the Lease for each renewal term shall be identical with the
original term except for rent and except that Tenant will no longer have any
option to renew this Lease after the third successive renewal option has been
exercised. Rent for a renewal term shall be the rental during the last year of
the preceding original or renewal term adjusted as provided herein.

    


    SECTION
2. RENT

    


    2.1 BASE RENT. During the original
term, Tenant shall pay to Landlord as base rent the sum of $15,967.89 per month. Rent
shall commence on the Term Commencement Date. Rent shall be payable on the last
day of each month in advance at such place as may be designated by
Landlord.

    


    2.2 ADDITIONAL RENT. Any and all
charges that may become payable by the Tenant to the Landlord under this Lease
shall be considered as ADDITIONAL RENT, including but
not limited to the following: all taxes, insurance costs, utility charges and
repair costs that the Tenant is required to pay by this Lease; any and all costs
incurred by the Landlord in conjunction with the collection of rents and late
charges or the commencement of proceedings for eviction, including reasonable
attorney’s fees; late charges; and any and all damages or injuries to person or
property caused by the Tenant, employees of the Lessee, or by guests or
customers of the Tenant.

    


    2.3 ESCALATION. During the initial
Lease period and the option periods, the base rent provided in Section 2.1 shall
be increased on the anniversary date of the Lease by a percentage equal to 75%
of the percentage change in the Consumer Price Index published by the United
States Bureau of Labor Statistics of the United States Department of Labor.
Comparisons shall be made using the index entitled “U.S. City Average-All Items
and Major Group Figures for all Urban Consumers (1982-84=100),” or on the
nearest comparable data on changes in the cost of living if such index is no
longer published. The increase will begin on the fifteenth day of the month of
JULY, and will be based on the CPI increase during the initial year of the
Lease. The first change shall be determined by comparison of the figure for JULY
15, 2009, with that of each succeeding year. In no event, however, shall base
rent be reduced below that payable during the first year of this Lease. The
preceding formula shall be used for each additional renewal term as
appropriate.

    


    2.4 DELETED

    


    SECTION
3. USE OF THE PREMISES

    


    3.1 PERMITTED USE. The Premises shall
be used as a facility for brewery, winery, warehouse, office, sales and storage
purposes and for no other purpose without the consent of the Landlord, which
consent shall not be unreasonably withheld.

    


    3.2 RESTRICTIONS ON USE. In connection
with the use of the Premises, Tenant shall:

     

    
      
        
        

      

      
        Page 2 of
18

        
          

        

      

      
        
        

      

    

    
 

    (1)  Conform to all
applicable laws and regulations of any public authority affecting the premises
and the use, and correct at Tenant’s own expense any failure of compliance
created through Tenant’s fault or by reason of Tenant’s use, but Tenant shall
not be required to make any structural changes to effect such compliance, unless
created by Tenant’s structural changes to the building.

    


    (2)  Refrain from any use
that would be reasonably offensive to other tenants or owners or users of
neighboring premises or that would tend to create a nuisance or damage the
reputation of the premises. Notwithstanding this provision, Landlord
acknowledges that Tenant’s use will occasion certain odors related to brewery
and winery uses, and such odors shall not violate this provision.

    


    (3) Refrain from loading the electrical
system or floors beyond the point considered safe according to a competent
engineer or architect.

    


    (4) Tenant shall not cause or permit
any Hazardous Substance to be spilled, leaked, disposed of, or otherwise
released on or under the premises in violation of any applicable law. Tenant may
use or otherwise handle on the Premises only those Hazardous Substances
typically used or sold in the prudent and safe operation of the business
specified in Section 3.1. Tenant may store such Hazardous Substances on the
Premises only in quantities necessary to satisfy Tenant’s reasonably anticipated
needs. Tenant shall comply with all Environmental Laws and exercise the highest
degree of care in the use, handling, and storage of Hazardous Substances and
shall take all practicable measures to minimize the quantity and toxicity of
Hazardous Substances used, handled, or stored on the Premises. Upon the
expiration or termination of this Lease, Tenant shall remove all of the
Hazardous Substances from the Premises except those placed there by Landlord, or
which are otherwise the primary responsibility of Landlord. The term
“Environmental Laws” shall mean any applicable federal, state or local statute,
regulation or ordinance or any applicable judicial or other governmental order
pertaining to the protection of health, safety or the environment. The term
“Hazardous Substance” shall mean any hazardous, toxic, infectious or radioactive
substance, waste, and material as defined or listed by any Environmental Law and
shall include, without limitation, petroleum oil and its fractions.

    


    (5) Landlord warrants that it has no
knowledge of the presence of any regulated or environmentally Hazardous
Substances in, on or within reasonable proximity to the Premises, nor of any
existing violations of any laws, rules, regulations or ordinances, including
without limitation, any Environmental Laws against or upon the
Premises.

    


    (6) Tenant shall indemnify, defend and
hold Landlord harmless from all claims, demands, liabilities, costs, expenses,
damages, and fines of any nature arising directly or indirectly from or as a
result of the presence or existence of contamination upon the Premises as a
result of the activities of Tenant or its sub lessees or assignees, or by the
failure of Tenant or its sub lessees or assignees to comply with any and all
Environmental Laws. The forgoing indemnification shall survive the termination
of expiration of this Lease.

    


    (7) Landlord shall indemnify, defend
and hold Tenant harmless from all claims, demands, liabilities, costs, expenses,
damages, and fines of any nature arising directly or indirectly from or as a
result of the presence or existence of contamination upon the Premises as a
result of the activities of the Landlord, prior tenants, owner or operators of
the Premises, or by the failure of Landlord to comply with any and all
Environmental Laws, except those caused or created by Tenant. The foregoing
indemnification shall survive the termination or expiration of this
Lease.

     

    
      
        
        

      

      
        Page 3 of
18

        
          

        

      

      
        
        

      

    

    
 

    SECTION
4. REPAIRS AND MAINTENANCE

    


    4.1 LANDLORD’S OBLIGATIONS. The
following shall be the responsibility of Landlord:

    


    (1) Except as provided herein, Landlord
shall keep the following in good order, condition and repair: the foundations,
exterior walls and roof of the Premises. Landlord shall not be obligated to
maintain or repair windows, doors, plate glass or the interior surfaces of
exterior walls. Landlord shall commence to make repairs within ten (10) days after receipt of
written notice from Tenant of the need for such repairs, and thereafter pursue
such repairs to completion. Landlord shall diligently pursue to completion the
performance of all repairs or maintenance that are the responsibility of
Landlord under the Lease.

    


    (2) Landlord is providing the building
in its current condition “As Is” except for latent defects which require repair
as provided above. Landlord shall not be required to correct structural defects
caused by Tenant’s remodel of the structure for Tenant’s uses.

    


    (3)           Landlord
shall be responsible for all repairs and maintenance to all roofs for all parts
of the structures that exist on the leased premises at the time of the execution
of this Lease.

    


    4.2 TENTANT’S OBLIGATIONS. The
following shall be the responsibility of Tenant:

    


    (1) All other repairs to the premises
which Landlord is not required to make under Section 4.1.

    


    (2) Tenant shall have no obligation to
maintain any portion of the premises it does not occupy or for which the
occupant does not pay Tenant rent. Tenant shall have no maintenance obligations
until the rent commencement date.

    


    4.3 LANDLORD’S INTERFERENCE WITH
TENANT. In performing any repairs, replacements, alterations, or other work
performed on or around the premises, Landlord shall not cause unreasonable
interference with use of the Premises by Tenant. In determining whether Landlord
has unreasonably interfered, the court shall consider, among other factors, the
nature of the repair, other alternatives for completing the repair, the cost of
the other repair alternatives, and what caused the need for repairs. If Landlord
unreasonably interferes with Tenant’s use of Premises while performing repairs,
replacements, alterations, or other work around the premises, the Tenant may
abate rent for that period, after delivering to Landlord five (5) days written
notice citing the condition which Tenant claims unreasonably interferes with its
use of the premises. Tenant may not abate rent if Landlord remedies the
condition within a five (5) day period. Nothing shall prevent Landlord from
declaring Tenant in default if Landlord does not, in fact, unreasonably
interfere with the Tenant’s use and occupancy of the Premises.

    


    4.4 REIMBURSEMENT FOR REPAIRS ASSUMED.
If either party fails or refuses to make repairs that are required by this
Section 4, the other party may make the repairs and charge the actual costs of
repairs to the first party. Such expenditures by Landlord shall be reimbursed by
Tenant on demand together with interest at the rate of 8% per annum from the
date of expenditure by Landlord. Such expenditures by Tenant may be deducted
from rent and other payments subsequently becoming due or, at Tenant’s election,
collected directly from Landlord with interest at a rate of 8% per annum until
paid. Except in an emergency creating an immediate risk of personal injury or
property damage, neither party may perform repairs which are the obligation of
the other party and charge the other party for the resulting expense unless at
least ten (10) days before work is commenced, the defaulting party is given
notice in writing outlining with reasonable particularity the repairs required,
and such party fails within that time to initiate such repairs in good
faith.

     

    
      
        
        

      

      
        Page 4 of
18

        
          

        

      

      
        
        

      

    

    
 

    4.5 INSPECTION OF PREMISES. Landlord
shall have the right to inspect the Premises at any reasonable time or times to
determine the necessity of repair. Whether or not such inspection is made, the
duty of Landlord to make repairs shall not mature until a reasonable time after
Landlord has received from Tenant written notice of the repairs that are
required. Landlord may not inspect such portion of the Premises as are subject
to “bond room” requirements without a representative of Tenant
present.

    


    SECTION
5. ALTERATIONS

    


    5.1 ALTERATIONS PROHIBITED. Tenant
shall make no improvements or alterations on the Premises of any kind without
first obtaining Landlord’s written consent, which consent shall not be
unreasonably withheld. All alterations shall be made in a good and workmanlike
manner, and in compliance with applicable laws and building codes. As used
herein, “alterations” includes the installation of computer and
telecommunications wiring, cables and conduit that require structural changes to
the building.

    


    5.2 OWNERSHIP AND REMOVAL OF
ALTERATIONS. Except as provided in Section 15.2 or otherwise all improvements
and alterations performed on the Premises by either Landlord or Tenant shall be
the property of Landlord when installed. Improvements and alterations installed
by Tenant shall, at Landlord’s option, be removed by Tenant and the premises
restored, provided, however that Tenant need not remove the structural
alterations agreed to by Landlord, and Landlord specifically conditions its
approval of the alterations upon their removal at the end of the Lease term.
Landlord agrees that the roof height need not be restored at surrender of the
Premises.

    


    SECTION
6. INSURANCE

    


    6.1 LIABILITY INSURANCE. During the
Lease Term, Tenant shall maintain a policy of commercial general liability
insurance (sometimes known as broad form comprehensive general liability
insurance) insuring Tenant against liability for bodily injury, property damage
(including loss of property) and personal injury arising out of operation, use
or occupancy of the Premises. Tenant shall name Landlord as an additional
insured under such policy. The initial amount of insurance shall be Two-Million
Dollars ($2,000,000) per occurrence and shall be subject to periodic increase by
Landlord based on inflation, increased liability awards, recommendation of
Landlord’s professional insurance advisors and other relevant factors. The
liability insurance obtained by Tenant under this paragraph 6.1 shall (i) be
primary and non-contributing; (ii) contain cross-liability endorsements; and
(iii) insure Landlord against Tenant’s performance of its indemnity obligations
herein, if the matters giving arise to the indemnity result from the negligence
of the Tenant. The amount and coverage of such insurance shall not limit
Tenant’s liability nor relieve Tenant of any other obligation under this Lease.
Landlord shall also obtain comprehensive public liability insurance in an amount
and with coverage determined by Landlord insuring Landlord against liability
arising out of ownership, operation, use or occupancy of the Premises but in no
event less than $1,000,000.00 per occurrence. The policy obtained by Landlord
shall not be contributory and shall not provide primary insurance.

     

    
      
        
        

      

      
        Page 5 of
18

        
          

        

      

      
        
        

      

    

     

    6.2 PROPERTY INSURANCE. During the
Lease Term, Landlord shall maintain policies of insurance covering loss of or
damage to the Premises in the full amount of its replacement value. Such policy
shall contain an Inflation Guard Endorsement
and shall provide protection against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief,
special extended perils (all risk), sprinkler leakage and any other perils which
Landlord deems reasonably necessary. Landlord shall have the right to obtain
flood and earthquake insurance if reasonably necessary in his judgment. Landlord
shall not obtain insurance for Tenant’s fixtures or equipment or building
improvements installed by Tenant on the Premises. During the Lease Term,
Landlord shall also maintain a rental income insurance policy, with loss payable
to Landlord, in an amount equal to one year’s Base Rent, plus estimated real
property taxes and insurance premiums. Landlord shall provide Tenant with a copy
of any insurance policy obtained pursuant to paragraph 6.1 or 6.2. Tenant shall
not do or permit anything to be done which invalidates any insurance
policy.

    


    6.3 PAYMENT OF PREMIUMS. Tenant shall
pay all premiums for the insurance policies described in Paragraphs 6.1 and 6.2
(whether obtained by Landlord or Tenant) within fifteen (15) days after Tenant’s
receipt of a copy of the premium statement or other evidence of the amount due,
except Landlord shall pay all premiums for non-primary comprehensive public
liability insurance which Landlord elects to obtain as provided in Paragraph
6.1. If insurance policies maintained by Landlord cover improvements on real
property other than the Premises, Landlord shall deliver to Tenant a statement
of the premium applicable to the Premises showing in reasonable detail how
Tenant’s prorated share of the premium was computed. If the Lease Term expires
before the expiration of an insurance policy maintained by Landlord, Tenant
shall be liable for only Tenant’s prorated share of the insurance premiums.
Before the Commencement Date, Tenant shall deliver to Landlord a copy of any
policy of insurance which tenant is required to maintain under this Section 6.
At least thirty (30) days prior to the expiration of any such policy, Tenant
shall deliver to Landlord a renewal of such policy. As an alternative to
providing a policy of insurance, Tenant shall have the right to provide Landlord
a certificate of insurance, executed by an authorized officer of the insurance
company, showing that the insurance which Tenant is required to maintain under
this Section 6 is in full force and effect and containing such other information
which Landlord reasonably requires.

    


    6.4
GENERAL INSURANCE PROVISIONS

    


    (1) Any insurance which Tenant is
required to maintain under this Lease shall include a provision which requires
the insurance carrier to give Landlord not less than thirty (30) days written
notice prior to any cancellation or modification of such coverage.

    


    (2) If Tenant fails to deliver any
policy, certificate or renewal to Landlord required under this Lease within the
prescribed time period or if any such policy is canceled or modified during the
Lease Term without Landlord’s consent, Landlord following fifteen (15) days
written notice to tenant of such event and Tenant’s failure to cure within that
fifteen-day period, may obtain such insurance within fifteen (15) days after
receipt of a statement that indicates the cost of such insurance.

    


    (3) Tenant shall maintain all insurance
required under this Lease with companies holding a “General Policy Rating” of
A-12 or better, as set forth in the most current issue of “Best Key Rating
Guide.” Landlord and Tenant acknowledge the insurance markets are rapidly
changing and that insurance in the form and amounts described in this Section
4.04 may not be available in the future. Tenant acknowledges that the insurance
described in this Section 6 is for the primary benefit of Landlord. If at any
time during the Lease Term, Tenant is unable to maintain the insurance required
under the Lease, Tenant shall nevertheless maintain insurance coverage which is
customary and commercially reasonable in the insurance industry for Tenant’s
type of business, as that coverage may change from time to time. Landlord makes
no representations as to the adequacy of such insurance to protect Landlord’s or
Tenant’s interests. Therefore, Tenant shall obtain any such additional property
or liability insurance which Tenant deems necessary to protect Landlord and
Tenant.

     

    
      
        
        

      

      
        Page 6 of
18

        
          

        

      

      
        
        

      

    

     

    (4) Unless prohibited under any
applicable insurance policies maintained, Landlord and Tenant each hereby waive
and release any and all rights of recovery against each other, or against the
officers, employees, agents or representative of the other, for loss of or
damage to its property or the property of others under its control, if such loss
or damage is covered by any insurance policy in force (whether or not described
in this Lease) at the time of such loss or damage. The release and waiver
contained in this section is intended to release and waive the liability of each
party for the consequences of its negligent acts or omissions. Upon obtaining
the required polices of insurance, Landlord and Tenant shall give notice to the
insurance carriers of this mutual waiver of subrogation.

    


    (5) Landlord shall abide by conditions
1-4 with regard to any insurance policy Landlord is required to maintain under
the terms of this Lease.

    


    SECTION
7. TAXES; UTILITIES

    


    7.1 PROPERY TAXES. Tenant shall pay as
due all real property taxes and special assessments levied against the Premises.
As used herein, real property taxes includes any fee or charge relating to the
ownership, use, or rental of the Premises, other than taxes on the net income of
Landlord or Tenant and excluding estate, gift inheritance and franchise taxes of
Landlord.

    


    7.2 CONTEST OF TAXES. Tenant shall be
permitted to contest the amount of any tax or assessment as long as such contest
is conducted in a manner that does not cause any risk that Landlord’s interest
in the Premises will be foreclosed for nonpayment. Landlord shall cooperate in
any reasonable manner with such contest by Tenant.

    


    7.3 PRORATION OF TAXES. Tenant’s share
of real property taxes and assessments for the years in which this Lease
commences or terminates shall be prorated based on the portion of the tax year
that this Lease is in effect.

    


    7.4 NEW CHARGES OR FEES. If a new
charge or fee relating to the ownership or use of the premises or the receipt of
rental therefrom or in lieu of property taxes is assessed or imposed, then, to
the extent permitted by law, Tenant shall pay such charge or fee. Tenant,
however, shall have no obligation to pay any income, profits, or franchise tax
levied on the net income derived by Landlord from this Lease.

    


    7.5 PAYMENT OF UTILITIES CHARGES.
Tenant shall pay when due all charges for services and utilities in connection
with the use, occupancy, operation, and maintenance of the Premises, including
(but not limited to) charges for fuel, water, gas, electricity, sewage disposal,
power, refrigeration, air conditioning, telephone, and janitorial services. If
any utility services are provided by or though Landlord, charges to Tenant shall
be comparable with prevailing rates for comparable services.

     

    
      
        
        

      

      
        Page 7 of
18

        
          

        

      

      
        
        

      

    

     

    7.6 INTERRUPTION OF ESSENTIAL SERVICES.
In the event of an interruption of any essential service (“essential services”
shall be defined as gas, electricity, water or sewer), Landlord shall use
reasonable diligence to restore such service. If there is an interruption in any
essential service to the Premises and such interruption is not the result of the
negligence or willful misconduct of the

    Tenant,
its agents, employees, invitees, visitors, sublessees, or assigns, and such
interruption continues for more than five (5) days after receipt by Landlord of
written notice from Tenant, Tenant shall be entitled to an abatement of all rent
and other sums due hereunder with respect to that portion of the Premises
rendered unusable by Tenant until such time as such essential service is
restored to an extent that such portion is again rendered usable by Tenant. In
addition to the foregoing, Tenant shall have the right to terminate this Lease
by giving written notice to Landlord in the event there is an interruption in
any essential service that has not been cured within thirty (30) days following
the date of the first occurrence of such interruption, ten (10) days notice of
termination is given to Landlord, and the essential service has not been
restored prior to the date for termination given in the notice.

    


    SECTION
8. DAMAGE AND DESTRUCTION

    


    8.1 PARTIAL DAMAGE. If the Premises are
partly damaged and Section 8.2 does not apply, the Premises shall be repaired by
Landlord at Landlord’s expense. Repairs shall be accomplished with all
reasonable dispatch subject to interruptions and delays from labor disputes and
matters beyond the control of Landlord and shall be performed in accordance with
the provisions of Section 4.3.

    


    8.2 DESTRUCTION. If the Premises are
destroyed or damaged such that the cost of repair exceeds 50% of the value of
the structure before the damage or such that the damage renders a substantial
section of the structure untenantable, either party may elect to terminate the
Lease as of the date of the damage or destruction by notice given to the other
in writing not more than 45 days following the date of damage. In such event,
all rights and obligations of the parties shall cease as of the date of
termination, and Tenant shall be entitled to the reimbursement of any prepaid
amount paid by Tenant and attributable to the anticipated term. If neither party
elects to terminate, Landlord shall proceed to restore the Premises to
substantially the same form as prior to the damage or destruction. Work shall be
commenced as soon as reasonably possible and thereafter shall proceed without
interruption except for work stoppages on account of labor disputes and matters
beyond Landlord’s reasonable control, and be completed within ninety (90) days
thereafter. If the Landlord fails to complete repairs within the time provided,
Tenant may elect to terminate this Lease after thirty (30) days after Tenant’s
notice to terminate is delivered to Landlord. Nevertheless, this Lease shall not
terminate if Landlord substantially completes the repairs and delivers occupancy
to Tenant within such thirty (30) day notice period.

    


    8.3 RENT ABATEMENT. Rent shall be
abated during the repair of any damage to the extent the premises are
untenantable.

    


    8.4 DAMAGE LATE IN TERM. If damage or
destruction to which Section 8.2 would apply occurs within one year before the
end of the then-current Lease term, Tenant may elect to terminate the Lease by
written notice to Landlord given within 30 days after the date of the
damage.

    


    SECTION
9. EMINENT DOMAIN

     

    
      
        
        

      

      
        Page 8 of
18

        
          

        

      

      
        
        

      

    

    
 

    9.1 PARTIAL TAKING. If a portion of the
Premises is condemned and Section 9.2 does not apply, the Lease shall continue
on the following terms:

    


    (1) Except as otherwise provided,
Landlord shall be entitled to all of the proceeds of condemnation, and Tenant
shall have no claim against Landlord as a result of the
condemnation.

    


    (2) Landlord shall proceed as soon as
reasonably possible to make such repairs and alterations to the Premises as are
necessary to restore the remaining Premises to a condition as comparable as
reasonably practicable to that existing at the time of the condemnation. If
condemnation occurs and this Lease is not terminated, restoration work shall be
commenced as soon as reasonably possible and thereafter shall proceed without
interruption except for work stoppages on account of labor disputes and matters
beyond Landlord’s reasonable control, and be completed within ninety (90) days
thereafter. If the Landlord fails to complete restoration within the time
provided, Tenant may elect to terminate this Lease after thirty (30) days after
Tenant’s notice to terminate is delivered to Landlord. Nevertheless, this Lease
shall not terminate if Landlord substantially completes the restoration and
delivers occupancy to tenant within the thirty (30) day notice
period.

    


    (3) After the date on which title vests
in the condemning authority or an earlier date on which alterations or repairs
are commenced by Landlord to restore the balance of the Premises in anticipation
of taking, the rent shall be reduced in proportion to the reduction in value of
the Premises as an economic unit on account of the partial taking. If the
parties are unable to agree on the amount of the reduction of rent, each shall
appoint one appraiser, and each appraiser shall appoint a third appraiser, and
the appraisers shall determine the rental value.

    


    (4) If a portion of Landlord’s property
not included in the Premises is taken, and severance damages are awarded on
account of the Premises, or an award is made for detriment to the Premises as a
result of activity by a public body not involving a physical taking of any
portion of the Premises, this shall be regarded as a partial condemnation to
which Section 9.1(1) and 9.1(3)apply, and the rent shall be reduced to the
extent of reduction in rental value, if any, of the Premises as though a portion
had been physically taken.

    


    9.2 TOTAL TAKING. If a condemning
authority takes all of the Premises or a portion sufficient to render the
remaining premises reasonably unsuitable for the use that Tenant was then making
of the premises (including access and parking), the Lease shall terminate as of
the date the title vests in the condemning authorities. Such termination shall
have the same effect as a termination under Section 8.2.

    


    9.3 COMPENSATION. Any compensation
awarded due to any condemnation whether for the whole or a part of the Premises,
shall be apportioned between the parties according to applicable law. Nothing
contained herein shall preclude Tenant from prosecuting any claim against the
condemning authority in any such condemnation proceedings or the cost of its
moving expenses, loss of business, or depreciation to, damage to, cost of
removal of, or the value of its trade fixtures, equipment, furniture and other
personal property included in such taking. If this Lease is terminated in such
taking, Tenant shall have no claim against Landlord on account of
termination.

    


    9.4 SALE IN LIEU OF CONDEMNATION. Sale
of all or part of the premises to a purchaser with the power of eminent domain
in the face of a threat or probability of the exercise of the power shall be
treated for the purposes of this Section 9 as a taking by
condemnation.

     

    
      
        
        

      

      
        Page 9 of
18

        
          

        

      

      
        
        

      

    

     

    SECTION 10. LIABILITY AND
INDEMNITY

    


    10.1 LIENS. The provisions of
subparagraph (1) and subparagraph (2) which immediately follow, shall only apply
to such claims as arise from work, services or materials furnished at the
request of Tenant.

    


    (1) Except with respect to activities
for which Landlord is responsible, Tenant shall pay as due all claims for work
done on and for services rendered or material furnished to the Premises, and
shall keep the Premises free from any liens. If Tenant fails to pay any such
claims or to discharge any lien, Landlord may do so and collect the cost as
additional rent. Any amount so added shall bear interest at the rate of 8% per
annum from the date expended by Landlord and shall be payable on demand. Such
action by Landlord shall not constitute a waiver of any right or remedy which
Landlord may have on account of Tenant’s default.

    


    (2) Tenant may withhold payment of any
claim in connection with a good-faith dispute over the obligation to pay, as
long as Landlord’s property interests are not jeopardized. If a lien is filed as
a result of nonpayment, Tenant shall, within 10 days after knowledge of the
filing, secure the discharge of the lien or deposit with Landlord cash or
sufficient corporate surety bond or other surety satisfactory to Landlord in an
amount sufficient to discharge the lien plus any costs, attorney fees, and other
charges that could accrue as a result of a foreclosure or sale under the
lien.

    


    10.2 TENANT’S INDEMNITY. Tenant shall
indemnify Landlord against and hold Landlord harmless from any and all costs,
claims or liability arising from: (a) Tenant’s use of the Premises; (b) the
conduct of Tenant’s business or anything else done or permitted by Tenant, its
agents, employees or invitees to be done in or about the Premises, including any
contamination of the Premises or any other property resulting from the presence
or use of Hazardous Material caused or permitted by Tenant; (c) any breach or
default in the performance of Tenant’s obligations under the Lease; (d) any
misrepresentation of breach of warranty by Tenant under this Lease; or (e) other
acts or omissions of Tenant, its agents, employees or invitees. Tenant shall
defend Landlord against any such cost, claim or liability at Tenant’s expense
with counsel reasonably acceptable to Landlord. As a material part of the
consideration to Landlord, Tenant assumes all risk of damage to property or
injury to person in or about the Premises arising from any cause, and Tenant
hereby waives all claims in respect thereof against Landlord, except for any
claim arising out of Landlord’s negligence or willful misconduct. As used in
this section, the term “Tenant” shall include Tenant’s employees, agents,
contractors, invitees, sublessees, and assigns if applicable.

    


    10.3 LANDLORD’S INDEMNITY. Landlord
shall defend Tenant against any uninsured cost, claim or liability at Landlord’s
expense with counsel reasonably acceptable to Tenant, or at Tenant’s election
and if allowed by Landlord’s insurer, Landlord shall reimburse Tenant for any
legal fees or costs incurred by Tenant arising out of Landlord’s gross
negligence or willful misconduct related to the Premises of this Lease. As used
in this section, the term “Landlord” shall include Landlord’s employees, agents,
contractors, invitees, sublessees and assigns if applicable.

    


    SECTION
11. QUIET ENJOYMENT; MORTGAGE PRIORITY

    


    11.1 LANDLORD’S WARRANTY. Landlord
warrants that it is the owner of the Premises and has the right to lease them
free of all encumbrances except those set forth on this attached schedule
entitled “Exceptions to Title”. Subject to these exceptions, Landlord will
defend Tenant’s right to quiet enjoyment of the Premises from the lawful claims
of all persons during the Lease term.

     

    
      
        
        

      

      
        Page 10
of 18

        
          

        

      

      
        
        

      

    

     

    11.2 SUBORNDINATION, NON-DISTURBANCE
AND ATTORNMENT. This Lease shall be subject and subordinate to the lien and
security interest of any mortgage or deed of trust now or hereafter placed so as
to encumber the Leased Premises; provided, however, that as an express condition
to any such subordination by Tenant, the mortgagee or beneficiary under such
mortgage or deed of trust must agree in writing with Tenant that, in the event
of a foreclosure sale or deed in lieu of foreclosure (i) Tenant’s rights under
the Lease will be recognized and (ii) Tenant’s possession of the Leased premises
will not be disturbed provided Tenant is not then in default under this Lease.
Subject to the foregoing, Tenant shall, upon request, attorn to any person or
entity succeeding to the interest of Landlord by foreclosure or otherwise. With
respect to any mortgage or deed of trust currently encumbering the Leased
Premises as of the commencement of this Lease, Landlord must secure form the
mortgagee or beneficiary thereunder an agreement in favor of Tenant in a form
and substance acceptable to Tenant and containing those terms set out in (i) and
(ii) of this section above.

    


    11.3 ESTOPPEL CERTIFICATE. Either party
will, within 20 days after notice from the other, execute and deliver to the
other party a certificate stating whether or not this Lease has been modified
and is in full force and effect and specifying any modification or alleged
breaches by the other party. The certificate shall also state the amount of
monthly base rent, the dates to which rent has been paid in advance, and the
amount of any security deposit or prepaid rent. Failure to deliver the
certificate within the specified time shall be conclusive upon the party from
whom the certificate was requested that the Lease is in full force and effect
and has not been modified except as represented in the notice requesting the
certificate.

    


    11.4 WAIVER OF LANDLORD’S LIEN. From
time to time, some or all of Tenant’s Premises may be financed by or owned by
someone other than Tenant. To the extent that any of Tenant’s property is
financed or owned by someone other then Tenant or Tenant’s Affiliate, Landlord
agrees that such property is not Landlord’s property no matter how the same is
affixed to the Premises or used by Tenant and agrees to recognize the rights of
the lender, owner, secured creditor or lessor (“Secured Party”) of Tenant’s
property. Landlord hereby waives any claim arising by way of any Landlord’s lien
(whether created by statute or by contract or otherwise) with respect to the
interest of any Secured Party in Tenant’s property (“Landlord’s Lien Waiver”).
If such confirmation is required by Tenant or Secured Party, Landlord agrees to
execute and deliver Landlord’s Lien Waiver within fifteen days from Tenant’s or
Secured Party’s request therefor or Landlord will have conclusively been deemed
to have granted confirmation of Landlord’s Lien Waiver thereafter and Landlord
agrees that Tenant and Secured party may thereafter rely thereon and Landlord
shall be estopped from raising any claim or lien on Tenant’s property for which
the Landlord’s Lien Waiver was requested.

    


    11.5 FINANCIAL INFORMATION. Tenant
shall provide financial information reasonably required by Landlord to allow
Landlord to finance or refinance the Premises. Tenant shall meet this
requirement if it provides to Landlord its most recently prepared annual
financial report to shareholders, provided it is not more than one year old,
together with any quarterly reports which update the annual financial
report.

    


    SECTION
12. ASSIGNMENT AND SUBLETTING

     

    
      
        
        

      

      
        Page 11
of 18

        
          

        

      

      
        
        

      

    

    
 

    Tenant may not assign this Lease or
sublet the Leased Premises or any portion thereof without  the written
consent of Landlord, which consent shall not be unreasonably withheld, to any
person or entity which controls, is controlled by, or is under common control
with Tenant, or to any person or entity, joint business or joint operation
resulting from a merger, consolidation or agreement with Tenant, or to any
person or entity that acquires substantially all the assets of Tenant as a going
concern (collectively, an “Affiliate”); provided, however, that the Affiliate
assumes in writing all of Tenant’s obligations under the Lease and provided
further that Tenant shall remain primarily liable under this Lease.

    


    It is further understood that Tenant
may be periodically offering for sale shares of ownership or similar interests
in its corporation or a corporation with which it may merge or consolidate on a
public or private basis for the purposes of expanding, capitalizing and or
financing Tenant’s business and no prohibitions or conditions on assignment or
subletting shall apply to such activities.

    


    Tenant shall be permitted to grant
subleases as to minor portions of the Premises to consultants or other providing
services or support necessary to the development and operation of Tenant’s
continuing business at the Premises with the written consent of Landlord, which
consent shall not be unreasonably withheld. For the purpose of this section, a
minor portion of the premises shall not exceed twenty-five percent (25%) of the
premises in total sublet space.

    


    Except as provided above, Tenant may
not assign or sublet to another user (the “Assignee”) the Premises or this Lease
except with the written consent of Landlord, which consent shall not be
unreasonably withheld. The Landlord may consider, among other factors, the
following in deciding whether the intended use of the proposed Assignee is
consistent with this Lease and other surrounding uses and available services;
the experience and capability of the proposed Assignee for the intended business
use of the property; and whether the Landlord’s lender will allow the
assignment.

    


    Tenant may also sublet to current
occupants of the building after the first year anniversary of the rent
commencement date, on terms mutually agreed between Tenant and the proposed
subtenant.

    


    Landlord shall have the right to
transfer, assign and convey, in whole or part, any or all of the right, title
and interest to the Premises provided such transferee or assignee shall be bound
by the terms, covenants and agreements herein contained, and expressly assumes
and agrees in writing to perform the covenants and agreements of Landlord herein
contained.

    


    SECTION
13. DEFAULT

    


    The following shall be events of
default:

    


    13.1 DEFAULT IN RENT. Failure of Tenant
to pay any rent or other charge within 10 days after written notice from
Landlord; provided, however, that Landlord shall not be obligated to give notice
that rent is due more than twice in any calendar year. After the second written
notice in any calendar year, Tenant shall be in default without further written
notice.

    


    13.2 DEFAULT IN OTHER COVENANTS.
Failure of Tenant to comply with any term or condition or to fulfill any
obligation of the Lease (other than the payment of rent or other charges) within
30 days after written notice by Landlord specifying the nature of the default
with reasonable particularity; provided, however, that if the default is of a
nature  that it cannot be completely remedied within the 30-day
period, this provision shall be complied with if Tenant begins correction of the
default within the 30-day period and thereafter proceeds with reasonable
diligence and in good faith to effect the remedy as soon as
practicable.

     

    
      
        
        

      

      
        Page 12
of 18

        
          

        

      

      
        
        

      

    

    
 

    13.3 INSOVLENCY. An assignment by
Tenant for the benefit of creditors; the filing by Tenant of a voluntary
petition in bankruptcy; an adjudication that Tenant is bankrupt or the
appointment of a receiver of the properties of Tenant; the filing of any
involuntary petition of bankruptcy and failure of Tenant to secure a dismissal
of the petition within 30 days after filing; attachment for the levying of
execution on the Leasehold interest and failure of Tenant to secure discharge of
the attachment or release of the levy of execution within 30 days shall
constitute a default. If Tenant consists of two or more individuals or business
entities, the events of default specified in this Section 13.3 shall apply to
each individual unless within 10 days after an event of default occurs, the
remaining individuals produce evidence satisfactory to Landlord that they have
unconditionally acquired the interest of the one causing the default. If the
Lease has been assigned, the events of default so specified shall apply only
with respect to the one then exercising the rights of Tenant under the
Lease.

    


    SECTION
14. REMEDIES OF DEFAULT

    


    14.1 TERMINATION. In the event of a
default, the Lease may be terminated at the option of Landlord by written notice
to Tenant. Whether or not the Lease is terminated by the election of Landlord or
otherwise, Landlord shall be entitled to recover damages from Tenant for the
default, and Landlord may reenter, take possession of the premises, and remove
any persons or property by legal action or by self-help with the use of
reasonable force and without liability for damages and without having accepted a
surrender.

    


    14.2 RELETTING. Following re-entry or
abandonment, Landlord may relet the Premises, and in that connection, may make
any suitable alterations or refurbish the Premises, or both, or change the
character or use of the Premises, but Landlord shall not be required to relet:
(i) for any use or purpose other than that specified in the Lease, or (ii) for
any use or purpose which Landlord may reasonably consider injurious to the
Premises, or (iii) to any tenant that Landlord may reasonably consider
objectionable. Landlord may relet all or part of the Premises, alone or in
conjunction with other properties, for a term longer or shorter than the term of
this Lease, upon any reasonable terms and conditions, including the granting of
some rent-free occupancy or other rent concession.

    


    14.3 DAMAGES. In the event of
termination or retaking of possession following default, Landlord shall be
entitled to recover immediately, without waiting until the due date of any
future rent or until the date fixed for expiration of the Lease term, the
following amounts as damages:

    


    (1) The loss of rental from the date of
default until a new tenant is, or with the exercise of reasonable efforts could
have been, secured and paying out.

    


    (2) The reasonable costs of reentry and
reletting including, without limitation, the cost of any cleanup, refurbishing,
removal of Tenant’s property and fixtures, costs incurred under Section 14.5, or
any other expense occasioned by Tenant’s default, including but not limited to,
any remodeling or repair costs, attorney fees, court costs, broker commissions,
and advertising costs.

    


    (3) Any excess of the value of the rent
and all of Tenant’s other obligations under this Lease over the reasonable
expected return from the premises from the period commencing on the earlier of
the date of trial or the date the premises are relet, and continuing through the
end of the term. The present value of future amounts will be computed using a
discount rate equal to the prime loan rate of major Oregon banks in effect on
the date of trail.

     

    
      
        
        

      

      
        Page 13
of 18

        
          

        

      

      
        
        

      

    

    
 

    14.4 RIGHT TO SUE MORE THAN ONCE.
Landlord may sue periodically to recover damages during the period corresponding
to the remainder of the Lease term, and no action for damages shall bar a later
action for damages subsequently accruing.

    


    14.5 LANDLORD’S RIGHT TO CURE DEFAULTS.
If Tenant fails to perform any obligation under this Lease, Landlord shall have
the option to do so after 30 days’ written notice to Tenant. All of Landlord’s
expenditures to correct the default shall be reimbursed by Tenant on demand with
interest at the rate of 8% per annum from the date of expenditure by Landlord.
Such action by Landlord shall not waive any other remedies available to Landlord
because of the default.

    


    14.6 REMEDIES CUMULATIVE. The foregoing
remedies shall be in addition to and shall not exclude any other remedy
available to Landlord under applicable law.

    


    SECTION
15. SURRENDER AT EXPIRATION

    


    15.1 CONDITION OF PREMISES. Upon
expiration of the Lease term or earlier termination on account of default,
Tenant shall deliver all keys to Landlord and surrender the Premises in
first-class condition and broom clean, ordinary wear and tear excepted.
Alterations constructed by Tenant with permission from Landlord shall not be
removed or restored to the original condition unless the terms of permission for
the alteration so require. Tenant’s obligations under this section shall be
subordinate to the provisions of Section 8 relating to destruction and Section 9
relating to eminent domain.

    


    15.2 FIXTURES.

    


    (1) All fixtures placed upon the
Premises during the Term, other than Tenant’s trade fixtures, shall, at
Landlord’s option, become the property of Landlord. If Landlord so elects,
Tenant shall remove any or all fixtures that would otherwise remain the property
of Landlord, and shall repair any physical damage resulting from the removal. If
Tenant fails to remove such fixtures, Landlord may do so and charge the cost to
Tenant with interest at the legal rate from the date of
expenditure.

    


    (2) Prior to expiration or other
termination of the Lease term, Tenant shall remove all furnishings, furniture,
and trade fixtures that remain its property. If Tenant fails to do so, Landlord
may provide notice in writing to Tenant to remove said property within 20 days,
and if Tenant fails to remove said property within 20 days, this shall
constitute an abandonment of the property. Landlord may elect to retain the
abandoned property, and all rights of Tenant with respect to said property shall
cease; or the Landlord may elect to require Tenant to remove said property,
Landlord may effect a removal and place the property in public storage for
Tenant’s account. Tenant shall be liable to Landlord for the cost of removal,
transportation to storage, and storage, with interest at the legal rate on all
such expenses from the date of expenditure by Landlord.

    


    (3) Notwithstanding any other provision
of this Lease, Tenant shall have the right to place its trade fixtures and other
equipment at the Premises and such shall be and remain the property of Tenant at
all times. Tenant shall have the right to remove such trade fixtures and
equipment upon the termination or expiration of this Lease provided that Tenant
is not in default and that Tenant shall repair any damage to the Premises caused
by such removal.

    


    
      
        
        

      

      
        Page 14
of 18

        
          

        

      

      
        
        

      

    

     

    15.3
HOLDOVER.

    


    (1) If Tenant does not vacate the
Premises at the time required, Landlord shall have the option to treat Tenant as
a tenant from month-to-month, subject to all of the provisions of this Lease
except the provisions for term and renewal and at a rental rate equal to rent
last paid by Tenant during the original term, adjusted by any escalation
provision contained in this Lease, or to eject Tenant from the Premises and
recover damages caused by wrongful holdover. Failure of Tenant to remove
fixtures, furniture, furnishings, or trade fixtures that Tenant is required to
remove under this Lease shall constitute a failure to vacate to which this
section shall apply if the property not removed will substantially interfere
with occupancy of the Premises by another tenant or with occupancy by Landlord
for any purpose including preparation for a new tenant.

    


    (2) If a month-to-month tenancy results
from a holdover by Tenant under this Section 15.3, the tenancy shall be
terminable at the end of any monthly rental period on written notice from
Landlord given not less than 10 days prior to the termination date which shall
be specified in the notice. Tenant waives any notice that would otherwise be
provided by law with respect to a month-to-month tenancy.

    


    SECTION
16. LANDLORD’S DEFAULT.

    


    Except where the provisions of this
Lease grant Tenant an express exclusive remedy, if Landlord shall fail to
perform or observe any covenant, term, provision or condition of this Lease and
such default should continue beyond a period of ten (10) days as to a monetary
default or thirty (30) days (or such longer period as is reasonably necessary to
remedy a default provided Landlord shall continuously and diligently pursue such
remedy at all times until such default is cured, or in the event of any
emergency such shorter reasonable time period as warranted by the nature of the
emergency, but in no event shall such shorter time period be less than
forty-eight hours) as to a non-monetary default, after which, in each instance,
receipt for a written notice (the “Notice”) thereof is given by Tenant to
Landlord, then in any such event Tenant, upon expiration of the applicable grace
period, shall have the right (a) to cure such default, and Landlord shall
reimburse Tenant on demand for all sums expended in so curing the default plus
interest thereon at the rate of eight percent (8%) per annum until paid (and if
not paid by Landlord on demand, Tenant may offset such amount due from the rent
all other sums due hereunder until paid) and (b) to commence such actions at law
or in equity to which Tenant may be entitled.

    


    SECTION
17. MISCELLANEOUS

    


    17.1 NONWAIVER. Waiver by either party
of strict performance of any provision of this Lease shall not be a waiver of or
prejudice the party’s right to require strict performance of the same provision
in the future or of any other provision.

    


    17.2 ATTORNEY FEES. If suit or action
is instituted in connection with any controversy arising out of this Lease, the
prevailing party shall be entitled to recover in addition to costs such sum as
the court may adjudge reasonable as attorney fees at trial, on petition for
review, and on appeal.

    


    17.3 NOTICES. Any notice required or
permitted under this Lease shall be given when actually delivered by overnight
courier or telecopy or 48 hours after
deposited in United States mail as certified mail addressed to the address first
given in this Lease or to such other address as may be specified from time to
time by either of the parties in writing.

     

    
      
        
        

      

      
        Page 15
of 18

        
          

        

      

      
        
        

      

    

    
 

    17.4 SUCCESSION. Subject to the
above-stated limitations on transfer of Tenant’s interest, this Lease shall be
binding on and inure to the benefit of the parties and their respective
successors and assigns.

    


    17.5 RECORDATION. This Lease may be
recorded at the option of Tenant, provided that Tenant pays the cost of
recording a memorandum of the Lease.

    


    17.6 ENTRY FOR INSPECTION. Landlord
shall have the right to enter upon the Premises at any time upon reasonable
advance notice to determine Tenant’s compliance with this Lease, to make
necessary repairs to the building or to the Premises, or in the last 6 months of
the term show the Premises to any prospective Tenant or purchaser, and in
addition shall have the right, at any time during the last two months of the
Lease, to place and maintain upon the premises notices for leasing or selling of
the Premises. Landlord shall comply with all “bond room” restrictions in
exercising its right of entry.

    


    17.7 INTEREST ON RENT AND OTHER
CHARGES. Any rent or other payment required of Tenant by this Lease shall, if
not paid within 10 days after it is due, bear interest at the rate of 8% per
annum (but not in any event at a rate greater than the maximum rate of interest
permitted by law) from the due date until paid.

    


    17.8 PRORATION OF RENT. In the event of
commencement or termination of this Lease at a time other than the beginning or
end of one of the specified rental periods, then the rent shall be prorated as
of the date of commencement or termination, and in the event of termination for
reasons other than default, all prepaid rent shall be refunded to Tenant or paid
on its account.

    


    17.9 TIME OF ESSENCE. Time is of the
essence of the performance of each of Tenant's obligations under this
Lease.

    


    17.10 PARKING. Tenant may improve and
stripe the parking areas around the building at its cost and expense. For the
first year after the rent commencement date of this lease, Tenant shall be
entitled to use eighty-two percent (82%) of the spaces created and may designate
certain spaces for its exclusive use.

    


    17.11 SIGNAGE. Tenant may erect such
signs as seems to it appropriate, provided, however, that all such signs shall
comply with all laws, regulations and ordinances.

    


    17.12 APPROVALS. It is specifically
understood and agreed that as regards any approvals or matters to be performed
to the satisfaction of a party or only with a party's consent, that party shall
not unreasonably withhold or delay its approval or indication of satisfaction or
consent unless specifically otherwise provided herein.

    


    17.13 DUTY OF GOOD FAITH. Landlord and
Tenant shall have at all times a right and duty to act reasonably and in good
faith and mitigate any damages or claims arising out of this Lease or in
connection with the use, condition or occupancy of the Premises or an occurrence
of a default in any terms of this Lease. The party claiming a lack of good faith
or failure to mitigate shall have the burden to prove such a claim.

    


    SECTION
18. RIGHT OF FIRST REFUSAL

     

    
      
        
        

      

      
        Page 16
of 18

        
          

        

      

      
        
        

      

    

    
 

    Landlord agrees not to sell, transfer,
exchange, grant an option to purchase, lease (except following default by
Tenant), or otherwise dispose of the Premises or any part of, or interest in,
the Premises without first offering the Premises to Tenant on the terms and
conditions set forth in any proposed contract or agreement with a third party
(hereinafter referred to as “Offer”). The term “sell” includes ground lease of
the Premises with primary renewal terms of more than 15 years in the
aggregate.

    


    Within 10 days of receiving an offer,
Landlord shall provide Notice to Tenant of the Offer; said Notice shall contain
the terms of the Offer. When Tenant receives the Notice and a copy of the Offer,
Tenant shall have the prior and preferential right to purchase the Premises (or
the part of or interest in the Premises covered by the Offer, as the case may
be) at the same price and on the same terms and conditions as are contained in
the Offer, except that if Tenant exercises the right of first refusal by
electing to purchase the Premises, then (1) the closing of the transaction
contemplated by the Offer shall take place no earlier than 90 days after the
date that Tenant elects to exercise the right of first refusal, and (2) Tenant
shall receive a credit against the sale price of the Premises in an amount equal
to any brokerage commission that Landlord may have selling the Premises to
Tenant rather than the Third-Party Offeror.

    


    Tenant shall have 45 days from the date
Tenant receives the Notice to Tenant of the Offer to notify Landlord whether
Tenant elects to purchase the Premises pursuant to the terms of the Offer. If
Tenant elects to exercise its right to purchase the Premises, then, in addition
to giving Landlord written notice of its election within the 45-day period,
Tenant also shall tender an amount equal to the earnest money deposit, if any,
specified in the Offer, which will be held and used in accordance with the terms
of the Offer.

    


    If Tenant fails to timely exercise its
right to purchase the Premises within the 45-day period, and for any reason
Landlord shall not sell or convey the Premises to the Third-Party Offeror on the
terms contained in the Offer within six months of Tenant's election not to
purchase, then Landlord must resubmit the Offer as well as any other Offer to
Tenant before selling the Premises, and such Offers shall be subject to Tenants'
right of first refusal under this Lease.

    


    


    


    LANDLORD

    


    Stewart's
Shops Corp.

    


    


    By:
______________________________________

         Authorized
Agent

    


    


    TENANT

    


    Releta
Brewery Company, LLC

    


    


    By:
_______________________________________

          Authorized
Agent

     

    
      
        
        

      

      
        Page 17
of 18

        
          

        

      

      
        
        

      

    

     

    Schedule
“A”

    


    All that tract or parcel of land
situate in the City of Saratoga Springs, Saratoga County, N.Y.S., bounded and
described as follows:

    


    Beginning at a point on the northerly
boundary of Excelsior Avenue at the southwesterly corner of lands now or
formerly of Efnor and Evelyn VanDerwerker as recorded in the Saratoga County
Clerk’s Office in Liber 584 of Deeds, Page 208, being the southeast corner of
the lot herein described. Thence along the northerly line of Excelsior Avenue, S
87°59’35” W. 385.07 feet to a point and N 89°42’24” W. 128.88 feet to a point.
Thence through the lands of the grantor, N 25°17’00” E. 261.25 feet to a point
and N 01°85’59” W. 138.82 feet to a point. Thence along the southerly line of
New York State Route 50, the following three courses: S 71°33’00” E. 33.00 feet
to a point; N 88°04’00” E. 206.52 feet to a point; N 82°45’00” E. 159.00 feet to
a point. Thence along the westerly line of lands of said VanDerwerker S
01°35’59” E. 378.90 feet to the point of beginning. Containing 3.663 acres of
land.

    


    


    
      
        
        

      

      
        Page 18
of 18