**Exhibit10.12**

 

PHG/CWP/JBB/kt

01/18/08

 

**FIRST LEASEAMENDMENT**

 

THIS FIRST LEASE AMENDMENT(the “First Amendment”) is executed this 25th day of January, 2008, andeffective October 1, 2007, by and between DUGAN REALTY, L.L.C., an Indianalimited liability company (“Landlord”), and GAIAM, INC., a Colorado corporation(“Tenant”).

 

WITNESSETH :

 

WHEREAS, Landlord and Tenantentered into a certain lease dated October 5, 2005 (the “Lease”), wherebyTenant leases from Landlord certain premises consisting of approximately147,000 square feet of space (the “Current Premises”) in a building commonlyknown as Building 7 (the “Building”), located at 5455 West Chester Road, WestChester, Ohio 45069, in World Park at Union Centre (the “Park”); and

 

WHEREAS, the Lease Term expired September 30, 2007;and

 

WHEREAS, Tenant hascontinuously remained in the Current Premises and has continued to pay renttherefor during such period of holdover; and

 

WHEREAS, Landlord and Tenant desire to extend theLease Term; and

 

WHEREAS, LandlordandTenantdesiretoreducetheCurrentPremisesbyapproximately73,250squarefeet(the“RelinquishedSpace”);and

 

WHEREAS, Landlord and Tenantdesire to amend certain provisions of the Lease to reflect such extension,reduction and other changes to the Lease;

 

NOW, THEREFORE, inconsideration of the foregoing premises, the mutual covenants herein containedand each act performed hereunder by the parties, Landlord and Tenant herebyagree that the Lease is amended as follows:

 

1.                                      Incorporationof Recitals. The above recitals are hereby incorporated intothis First Amendment as if fully set forth herein.

 

2.                                      Extension ofLease Term. The Lease Term is hereby extended through June 30,2010.

 

3.                                      Amendment of Section 1.01. BasicLease Provisions and Definitions.

 

(a)                                   Commencing October1, 2007, Section 1.01 of the Lease is hereby amended by deletingsubsections D, E, G and K and substituting the following in lieu thereof:

 

“D.                              Minimum Annual Rent:

 
| October  1, 2007 – February 29, 2008 |   | $219,734.40  per year. |
|-------------------------------------------|--------|------------------------|

 

E.                                      Monthly RentalInstallments:

 

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| October  1, 2007 – February 29, 2008 |   | $ 43,946.88 per month. |
|-------------------------------------------|--------|-----------------------------|

 

G.                                     Lease Term:extended through June 30, 2010.

 

K.                                    Brokers: DukeRealty Services, LLC representing Tenant, and Colliers Turley Martin Tuckerrepresenting Tenant.

 

(b)                                 Provided Tenanthas surrendered the RelinquishedSpace in accordance withParagraph 8 of this First Amendment, commencing March 1, 2008, Section 1.01of the Lease is further amended by incorporating **Exhibit A-1,**attached hereto and incorporated hereinby reference, on which the Current Premises less the RelinquishedSpaceis depicted, in lieu of **Exhibit A**to the Lease which is hereby deleted. Hereinafter, the Current Premisesless the RelinquishedSpace shall be referred to as the “LeasedPremises”.

 

(c)                                  Provided Tenanthas surrendered the RelinquishedSpace in accordance withParagraph 8 of this First Amendment, commencing March 1, 2008, Section 1.01of the Lease is further amended by deleting subsections A, B, C, D and E andsubstituting the following in lieu thereof:

 

“A.                             Leased Premises(shown on **Exhibit ****A-1** attached hereto): 5455 WestChester Road, West Chester, Ohio 46069; Building No. 7 (the “Building”);located in World Park at Union Centre (the “Park”);

 

B.                                     Rentable Area:73,750 square feet;

 

C.                                     Tenant’sProportionate Share: 50.17%;

 

D.                                    Minimum AnnualRent:

 
| March  1, 2008 – February 28, 2009 |   | $272,874.96  per year        |
|-----------------------------------------|--------|------------------------------|
| March  1, 2009 - February 28, 2010      |   | $278,037.48  per year        |
| March  1, 2010 – June 30, 2010     |   | $ 94,645.84 (4 months); |

 

E.                                     Monthly RentalInstallments:

 
| March  1, 2008 – February 28, 2009 |   | $ 22,739.58 per month        |
|-----------------------------------------|--------|-----------------------------------|
| March  1, 2009 - February 28, 2010      |   | $ 23,169.79 per month        |
| March  1, 2010 – June 30, 2010     |   | $ 23,661.46 per month;” |

 

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4.                                      Amendment of Section 2.02. Constructionof Tenant Improvements. Section 2.02 of the Lease is herebyamended by incorporating the following:

 

“Tenant is presently inpossession of the Leased Premises, has inspected same, and accepts the same **“AS IS”** without representation or warranty by Landlord ofany kind and with the understanding that Landlord shall have no responsibilitywith respect thereto. Tenant acknowledges that the Tenant Improvements in **Exhibit B**of the Lease have beencompleted in a satisfactory manner. Notwithstanding the foregoing, in the eventLandlord leases the RelinquishedSpace, or any portion thereof,to a third party, Landlord shall, at its sole cost and expense, demise theCurrent Premises and RelinquishedSpace.”

 

5.                                      Amendment of Section 9.02. Tenant’sInsurance. Section 9.02 of the Lease is hereby amended asfollows:

 

(a)                                   Subparagraph B. of Section 9.02of the Lease is hereby deleted in its entirety and the following shall besubstituted in lieu thereof:

 

“B.                              CommercialGeneral Liability Insurance (which insurance shall not exclude blanket,contractual liability, broad form property damage, personal injury, or firedamage coverage) covering the Leased Premises and Tenant’s use thereof againstclaims for bodily injury or death and property damage, which insurance shallprovide coverage on an occurrence basis with a per occurrence limit of not lessthan $11,000,000 for each policy year, which limits may be satisfied by anycombination of primary and excess or umbrella per occurrence policies.”

 

(b)                                  Subparagraph D. of Section 9.02of the Lease is hereby amended by adding the following: “with limits of notless than an amount equal to two (2) years rent hereunder.”

 

(c)                                   The last paragraph of Section 9.02of the Lease is hereby deleted in its entirety and the following shall besubstituted in lieu thereof:

 

“All insurance required byTenant hereunder shall (i) be issued by one or more insurance companiesreasonably acceptable to Landlord, licensed to do business in the State inwhich the Leased Premises is located and having an AM Best’s rating of A IX orbetter, and (ii) provide that said insurance shall not be materiallychanged, canceled or permitted to lapse on less than thirty (30) days’ priorwritten notice to Landlord. In addition, Tenant’s insurance shall protect Tenantand Landlord as their interests may appear, naming Landlord, Landlord’smanaging agent, and any mortgagee requested by Landlord, as additional insuredsunder its commercial general liability policies. On or before November 1, 2007,and thereafter, within thirty (30) days prior to the expiration of each suchpolicy, Tenant shall furnish Landlord with certificates of insurance in theform of ACORD 25 or ACORD 25-S (or other evidence of insurance reasonablyacceptable to Landlord), evidencing all required coverages, together with acopy of the endorsements to Tenant’s commercial general liability policiesevidencing primary and non-contributory coverage afforded to the appropriateadditional insureds. Upon Tenant’s receipt of a request from Landlord, Tenantshall provide Landlord with copies of all insurance policies, including allendorsements, evidencing the coverages required hereunder. If Tenant fails tocarry such insurance and furnish Landlord with such 

 

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certificates of insurance or copies of insurance policies (ifapplicable), Landlord may obtain such insurance on Tenant’s behalf and Tenantshall reimburse Landlord upon demand for the cost thereof as Additional Rent.Landlord reserves the right from time to time to require Tenant to obtainhigher minimum amounts or different types of insurance if it becomes customaryfor other landlords of similar buildings in the area to require similar sizedtenants in similar industries to carry insurance of such higher minimum amountsor of such different types.”

 

6.                                       Incorporationof Section 16.14. The following is hereby incorporated as Section 16.14of the Lease:

 

“Section 16.14. PatriotAct. Each of Landlord and Tenant, each as to itself, hereby represents itscompliance with all applicable anti-money laundering laws, including, withoutlimitation, the USA Patriot Act, and the laws administered by the United StatesTreasury Department’s Office of Foreign Assets Control, including, withoutlimitation, Executive Order 13224 (“Executive Order”). Each of Landlord andTenant further represents (i) that it is not, and it is not owned orcontrolled directly or indirectly by any person or entity, on the SDN Listpublished by the United States Treasury Department’s Office of Foreign AssetsControl and (ii) that it is not a person otherwise identified bygovernment or legal authority as a person with whom a U.S. Person is prohibitedfrom transacting business. As of the date hereof, a list of such designationsand the text of the Executive Order are published under the internet websiteaddress www.ustreas.gov/offices/enforcement/ofac.”

 

7.                                       Incorporationof Section 16.15. Option to Extend. The following ishereby incorporated as Section 16.15 of the Lease:

 

“Section 16.15. Option to Extend.

 

(a)                                     Grant andExercise of Option. Provided that (i) no default has occurred andis then continuing, (ii) the creditworthiness of Tenant is then reasonablyacceptable to Landlord and (iii) Tenant originally named herein or itsPermitted Transferee remains in possession of and has been continuouslyoperating in the entire Leased Premises throughout the Lease Term, Tenant shallhave one (1) option to extend the Lease Term for one (1) additionalperiod of eight (8) months (the “Extension Term”). The Extension Termshall be upon the same terms and conditions contained in the Lease except (x) Tenantshall not have any further option to extend, (y) any improvementallowances or other concessions applicable to the Leased Premises under theLease shall not apply to the Extension Term, and (z) the Minimum AnnualRent shall be adjusted as set forth herein (“Rent Adjustment”). Tenant shallexercise such option by delivering to Landlord, no later than six (6) monthsprior to the expiration of the current Lease Term, written notice of Tenant’sdesire to extend the Lease Term. Tenant’s failure to properly exercise suchoption shall be deemed a waiver of such option. If Tenant properly exercisesits option to extend, Landlord shall notify Tenant of the Rent Adjustment nolater than ninety (90) days prior to the commencement of the Extension Term.Tenant shall be deemed to have accepted the Rent Adjustment if it fails todeliver to Landlord a written objection thereto within five (5) businessdays after receipt thereof. If Tenant properly exercises its option to extend,Landlord and Tenant shall execute an amendment to the Lease (or, at Landlord’soption, a new lease on the form then in use for the

 

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Building) reflecting the terms and conditions of theExtension Term within thirty (30) days after Tenant’s acceptance (or deemedacceptance) of the Rent Adjustment.

 

(b)                                 Rent Adjustment. The MinimumAnnual Rent for the Extension Term shall be an amount equal to the MinimumAnnual Rent then being quoted by Landlord to prospective renewing tenants ofthe Building for space of comparable size and quality and with similar orequivalent improvements as are found in the Building, and if none, then insimilar buildings in the vicinity; provided, however, that in no event shallthe Minimum Annual Rent during the Extension Term be less than the highestMinimum Annual Rent payable during the immediately preceding term. The MonthlyRental Installments shall be an amount equal to one-twelfth (1/12) of theMinimum Annual Rent for the Extension Term and shall be paid at the same timeand in the same manner as provided in the Lease.”

 

8.                                      Incorporation of Section 16.16.Right of First Refusal. The following is hereby incorporated as Section 16.16of the Lease:

 

“Section 16.16. Right of FirstRefusal.

 

(a)                                  Provided that (i) nodefault has occurred and is then continuing, (ii) the creditworthiness ofTenant is then reasonably acceptable to Landlord, and (iii) Tenantoriginally named herein or a Permitted Transferee remains in possession of andhas been continuously operating in the entire Leased Premises throughout theLease Term, and subject to any rights of other tenants to the Refusal Space (asdefined herein) and Landlord’s right to renew or extend the lease term of anyother tenant with respect to the portion of the Refusal Space now or hereafterleased by such other tenant, Tenant shall have a on-going right of firstrefusal (“Refusal Option”) to lease additional space in the Building locatedcontiguous to the Leased Premises as shown crosshatched on the attached **Exhibit G**(“Refusal Space”). Priorto entering into any lease that includes all or any portion of the RefusalSpace, Landlord shall notify Tenant in writing (“Landlord’s Notice”) ofLandlord’s receipt of an arms-length offer to lease such space that Landlord iswilling to accept from a bona fide third party offeror (“Bona Fide Offer”) andsetting forth the material terms of the Bona Fide Offer and such other terms asare herein provided. If the Bona Fide Offer includes space in the Building inaddition to the Refusal Space, then the Refusal Space shall be deemed toinclude, and this Refusal Option shall be deemed to apply to, all of the spaceincluded in the Bona Fide Offer. Tenant shall have five (5) days afterTenant receives Landlord’s Notice in which to notify Landlord in writing of itselection to lease the Refusal Space upon the terms set forth in Landlord’sNotice. If Tenant declines to exercise this Refusal Option or fails to givesuch written notice within the time period required, Tenant shall be deemed tohave waived this Refusal Option, and thereafter this Refusal Option shall bevoid and of no further force or effect, and Landlord shall be free to lease theRefusal Space to the bona fide offeror or any other third party. The RefusalSpace shall be offered to Tenant at the rental rate and upon such other termsand conditions as are set forth in the Bona Fide Offer and herein.

 

(b)                                 If Tenant shallexercise the Refusal Option, the parties shall enter into an amendment to thisLease adding the Refusal Space to the Leased Premises upon the terms andconditions set forth herein and making such other modifications to this Lease

 

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as are appropriate under the circumstances. IfTenant shall fail to enter into such amendment within ten (10) daysfollowing Tenant’s exercise of the Refusal Option, then Landlord may terminatethis Refusal Option, by notifying Tenant in writing, in which event thisRefusal Option shall become void and of no further force or effect, andLandlord shall thereafter be free to lease the Refusal Space to the bona fideofferor or any other third party.

 

9.                                     Incorporation of Section 16.17.Option to Expand. The following is hereby incorporated as Section 16.17of the Lease:

 

“Section 16.17. Optionto Expand. Any time during the Lease Term and provided that (i) no defaulthas occurred and is then continuing, (ii) the creditworthiness of Tenantis then reasonably acceptable to Landlord, and (iii) Tenant originallynamed herein or its Permitted Transferee remains in possession of and has beencontinuously operating in the entire Leased Premises throughout the Lease Term,subject to any rights of other tenants to the Expansion Space (as definedherein) and Landlord’s right to renew or extend the lease term of any othertenant with respect to the portion of the Expansion Space now or hereafterleased by such other tenant, Tenant shall have the right to expand the LeasedPremises to include all or a portion of the Relinquished Space (the “ExpansionSpace”).  In the event Tenant elects toexercise its expansion option, Tenant hereby agrees that Tenant shall provideLandlord with written notice of its desire to expand, and Tenant may, at itselection, extend the Lease Term for the existing Leased Premises to becoterminous with the term for the Expansion Space and the Minimum Annual Rentfor such extension term shall be an amount equal to the Minimum Annual Rentthen being quoted by Landlord to prospective renewal tenants of the Buildingfor space of comparable size and quality and with similar or equivalentimprovements as are found in the Building, and if none, then in similarbuildings in the Park; provided, however, that in no event shall the MinimumAnnual Rent during such extension term be less than the highest Minimum AnnualRent payable during the immediately preceding term. If such extension is atleast twenty-eight (28) months then (i) the lease term of Tenant’s leasewith Landlord’s affiliate, Dugan Financing LLC at Building 8 in the Park shallalso be extended to be coterminous with the Lease Term, and (ii) Landlordshall provide Tenant with a tenant improvement allowance of up to ThirtyThousand Dollars ($30,000.00) to be used toward improvements for the LeasedPremises, as expanded; provided, however, if Tenant elects not to extend theLease Term for the existing Leased Premises or elects to extend the Lease Termand such extension is for less than twenty-eight (28) months, the per squarefoot rate for the Leased Premises shall be Three and 50/100 Dollars ($3.50) persquare foot.

 

10.                               Surrender of RelinquishedSpace. Tenant hereby agrees to surrender the Relinquished Space to Landlordon or before March 1, 2008 in accordance with the terms of Section 2.03of the Lease. Provided Tenant surrenders the Relinquished Space as providedherein, Tenant’s obligation to pay rent for the Relinquished Space shallterminate on February 29, 2008; provided that Tenant shall continue to beliable for rent obligations accruing prior to March 1, 2008. In the event,however, that Tenant fails to deliver the Relinquished Space to Landlord inaccordance with this paragraph before March 1, 2008, in addition to any otherrights and remedies that Landlord has under the Lease, Tenant shall pay rentfor the Relinquished Space in accordance with Section 2.04 of theLease until Tenant delivers the Relinquished Space to Landlord in accordancewith this paragraph.

 

11.                               Brokerage Commissions. The partieshereby represent and warrant that the only real estate brokers involved in thenegotiation and execution of this First Amendment are Duke Realty Services,LLC, representing Landlord, and Colliers Turley Martin Tucker representingTenant. Each

 

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party shall indemnify the other party from any and all liability forthe breach of this representation and warranty on its part and shall pay anycompensation to any other broker or person who may be entitled thereto.

 

12.                               Tenant’sRepresentations and Warranties. The undersigned representsand warrants to Landlord that (i) Tenant is duly organized, validlyexisting and in good standing in accordance with the laws of the state under whichit was organized; (ii) all action necessary to authorize the execution ofthis First Amendment has been taken by Tenant; and (iii) the individualexecuting and delivering this First Amendment on behalf of Tenant has beenauthorized to do so, and such execution and delivery shall bind Tenant. Tenant,at Landlord’s request, shall provide Landlord with evidence of such authority.

 

13.                               Examination ofAmendment. Submission of this instrument for examination orsignature to Tenant does not constitute a reservation or option, and it is noteffective until execution by and delivery to both Landlord and Tenant.

 

14.                               Definitions. Except asotherwise provided herein, the capitalized terms used in this First Amendmentshall have the definitions set forth in the Lease.

 

15.                               Incorporation. This FirstAmendment shall be incorporated into and made a part of the Lease, and allprovisions of the Lease not expressly modified or amended hereby shall remainin full force and effect.

 

(SIGNATURES CONTAINED ON FOLLOWING PAGE)

 

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IN WITNESS WHEREOF, theparties have caused this First Amendment to be executed on the day and yearfirst written above.

 
|   | LANDLORD:                             |
|--------|---------------------------------------|
|   |                                  |
|   | DUGAN  REALTY, L.L.C.,                |
|   | an  Indiana limited liability company |
|   |                                  |
|   | By:                                   | Duke  Realty Limited Partnership,   an Indiana limited partnership, its member |
|   |                                  |   |
|   |                                  | By: | Duke  Realty Corporation,   an Indiana corporation, its general partner |
|   |                                  |   |   |
|   |                                  |   | By: | /s/ Jon C. Burger |
|   |                                  |   |   | Jon C. Burger |
|   |                                  |   |   | Senior  Vice President   Cincinnati Group |

 
| STATE  OF OHIO      | )      |   |
|---------------------|--------|--------|
|                | )  SS: |   |
| COUNTY  OF HAMILTON | )      |   |

 

Before me, a Notary Public in and for said County and State, personallyappeared Jon C. Burger, by me known to be the Senior Vice President, CincinnatiGroup of Duke Realty Corporation, an Indiana corporation, the general partnerof Duke Realty Limited Partnership, the member of Dugan Realty, L.L.C., anIndiana limited liability company, who acknowledged the execution of theforegoing “First Lease Amendment” on behalf of said limited liability company.

 

WITNESS my hand and Notarial Seal this 25th**day of January,2008.

 
|                                          |   |                 |   |
|------------------------------------------|--------|----------------------|--------|
|                                     |   |                 |
| ROSE ANDRIACCO                           |   | /s/  Rose Andriacco  |
| Notary Public, State of Ohio             |   | Notary  Public       |
| My Commission Expires March 8, 2010 |   |                 |
|                                     |   |                 |
|                                     |   | (Printed  Signature) |

 

 
| My  Commission Expires:  |     |   |
|--------------------------|----------|--------|
|                     |     |   |
| My  County of Residence: | Clermont |   |

 

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|   | TENANT:                              |
|--------|--------------------------------------|
|   |                                 |
|   | GAIAM,  INC., a Colorado corporation |
|   |                                 |
|   | By:                                  | /s/ Mark Lipien |
|   |                                 |   |
|   | Printed:                             |     Mark  Lipien |
|   |                                 |   |
|   | Title:                               |    VP |

 
| STATE  OF COLORADO    | )      |   |
|-----------------------|--------|--------|
|                  | )  SS: |   |
| COUNTY  OF BROOMFIELD | )      |   |

 

Before me, a Notary Public in and for said County and State, personallyappeared Mark Lipien, by me known and by me known to be the Vice President ofGaiam, Inc., a Colorado corporation, who acknowledged the execution of theforegoing “First Lease Amendment” on behalf of said corporation.

 

WITNESS my hand and NotarialSeal this 21st day of January, 2008.

 

 
|   | /s/ Chelli Lalik                     |
|--------|--------------------------------------|
|   | Notary Public                        |
|   |                                 |
|   |                                 |
|   |     Chelli Lalik |
|   | (Printed Signature)                  |

 

 
| My Commission Expires:   | 4-12-2008 |   |
|--------------------------|-----------|--------|
|                     |      |   |
| My  County of Residence: | Jefferson |   |

 

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**EXHIBIT A-1**

 

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**EXHIBIT G**

 

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