Document:

Exhibit 10.4

 

	
  AIR COMMERCIAL
  REAL ESTATE ASSOCIATION

  
	
  STANDARD
  INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — NET

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

  

 

1.                                      Basic Provisions (“Basic
Provisions”).

 

1.1                                 Parties: This Lease (“Lease”),
dated for reference purposes only April 12, 2005, is made by and between S.R. Partners, a California general
partnership (“Lessor”) and Atlantic Express of L.A. Inc., a
California 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 201 Sotello Street, Los Angeles, located in the County of Los Angeles, State of California, and generally described as (describe briefly
the nature of the property and, if applicable, the “Project”, if the property is located within a Project) approximately
158,756 square feet of land and improvements thereon (“Premises”).  (See also Paragraph 2)

 

1.3                                 Term: ten (10) years and zero (0) months, plus any initial partial calendar
month as described in Paragraph 50

(“Original Term”)
commencing upon the Close of Escrow as described in Paragraph 50 (“Commencement
Date”) and ending

ten (10) years thereafter (“Expiration
Date”) or as may be otherwise extended pursuant to Paragraph 50.
(See also Paragraphs 3 and 50)

 

1.4                                 Early Possession: Lessee
is already in possession (“Early Possession Date” ).  (See also Paragraphs 3.2 and 3.3)

 

1.5                                 Base Rent: $39,583.00 per month (“Base Rent”),
payable on the first (1st) day of
each month commencing at the Close of Escrow as described in Paragraph
50 (with any initial partial month to be equitably prorated pursuant to
Paragraph 50) . (See also Paragraphs
4, 50 and 51.) Late charges shall accrue
under Paragraph 13.4 on Base Rent and any other charges not paid by Lessee
within ten (10) days after the due date.

 

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

1.6                                 Base Rent and Other Monies
Paid Upon Execution:

(a) Base Rent: $39,583.00 for the period first
full calendar month of the Original Term (plus prorated rent for any initial
partial calendar month) .

(b) Security Deposit: $N/A (“Security
Deposit”). (See also Paragraph 5)

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

(d) Other: $N/A for

(e) Total Due Upon Execution of this Lease: $39,583.00

 

1.7                                 Agreed Use: parking,
maintenance and re-fueling of a fleet of buses and related office use . (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 followingNo real estate brokers (the “Brokers”)
and brokerage relationships exist in this transaction . (check

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  
	
   

  	
   

  	
   

  
	
  ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION

  	
  FORM STN-7-4/01E

  
				

 

1

 

applicable boxes):

 

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

o                                                                                                                         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                
%                 
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 Atlantic
Express Transportation Corp., a New York corporation (“Guarantor”).  (See also Paragraph 37)

 

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

 

ýan Addendum consisting of Paragraphs 50
through 54 ;

o a plot plan depicting the Premises;

o a current set of the Rules and Regulations;

o a Work Letter;

ý other (specify): Exhibit 1 Form of
Subordination, Attornment, and Nondisturbance Agreement) and Exhibit 2
(Existing uses permitted under Paragraph 6.2 (a)).

 

2.                                      Premises.

 

2.1                                 Letting.  Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
the Premises, for the term, at the rental, and upon all of the terms, covenants
and conditions set forth in this Lease.  Unless
otherwise provided herein, any statement of size set forth in this Lease, 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.

 

2.2                                 Condition.  Lessor shall deliver
Lessee is already in possession of the Premises to Lessee broom clean and free of debris on and thus accepts the Premises, including but not limited to the building on
the Premises (the “Building”), in its “as is” condition as of 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 including but not limited to 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 all in their “as is” condition as of the Commencement Date,  on said date and

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.  If a
non-compliance with said warranty exists as of the Start Date, or if one of
such systems or elements should malfunction or fail within the appropriate
warranty period, 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) 6 months as to the HVAC systems, and (ii) 30 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 the improvements on the Premises comply with the
building codes, applicable laws, covenants or restrictions of record,
regulations, and ordinances ( “Applicable
Requirements” ) that were in effect at the time that each
improvement, or portion thereof, was constructed.  Said warranty does not apply to the use to
which Lessee will put the Premises, modifications which may be required by the Americans
with Disabilities Act or any similar laws as a result of Lessee’s use (see
Paragraph 50), or to any Alterations or Utility Installations (as defined in
Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible
for determining whether or not the building codes, applicable laws, covenants or
restrictions of record, regulations, and ordinances ( the “Applicable Requirements”), and especially the zoning, are appropriate
for Lessee’s intended use . , and acknowledges that past uses of the Premises may no
longer be allowed.  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 6 months 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:

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

2

 

(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 if immediate cessation of use is
required by law 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
and Lessee shall allocate the obligation to pay for such costs pursuant to the
provisions of Paragraph 7.1(d); provided, however, that if 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 been advised by Lessor and/or
Brokers to satisfy 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 therefor as the same
relate to its occupancy of the Premises, and (c) neither Lessor, Lessor’s
agents, nor Brokers have made any oral or written representations or warranties
with respect to said matters other than as set forth in this Lease.  In addition, Lessor acknowledges that: (i)
Brokers have made no representations, promises or warranties concerning
Lessee’s ability to honor the Lease or suitability to occupy the Premises, and
(ii) it is Lessor’s sole responsibility to investigate the financial capability
and/or suitability of all proposed tenants.

 

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

 

3.                                       Term.

 

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

3.2                                 Early Possession.  If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay 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
Real Property Taxes and insurance premiums and to maintain the Premises) shall,
however, be in effect during such period.  Any such early possession shall not affect the
Expiration Date.  See Paragraph 50.

 

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
therefor, 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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

3

 

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 on or before the day on which it is due, without
offset or deduction (except as specifically permitted 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
payments to be made by Lessee to be 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 Operating
Expense Increase, and any remaining amount to any other outstanding charges or
costs.

 

4.3                                 Association Fees.  In addition to the Base Rent, Lessee shall pay to Lessor each month an
amount equal to any owner’s association or condominium fees levied or assessed
against the Premises.  Said monies shall
be paid at the same time and in the same manner as the Base Rent.

 

5.                                       Security Deposit.  Lessee shall deposit with Lessor upon execution hereof the Security
Deposit 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 Lessor
or to reimburse or compensate Lessor for any liability, expense, loss or damage
which Lessor may suffer or incur by reason thereof.  If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease.  If the Base Rent increases during the term of
this Lease, Lessee shall, upon written request from Lessor, deposit additional
moneys 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.  Within 14 days after the
expiration or termination of this Lease, if Lessor elects to apply the Security
Deposit only to unpaid Rent, and otherwise within 30 days after the Premises
have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that
portion of the Security Deposit not used or applied by Lessor.  No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be prepayment for any
monies to be paid by Lessee under this Lease.

 

6.                                       Use.

 

6.1                                 Use.  Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably
comparable thereto, and for
no other purpose without Lessor’s prior written consent, which may be granted
or withheld in Lessor’s sole discretion.  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.  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.  Lessee shall, at all times, acquire and
maintain at Lessee’s sole cost and expense all permits and licenses necessary
for the legal use of the Premises pursuant to this Lease.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

4

 

 

6.2                                 Hazardous Substances.

 

(a) Reportable Uses Require Consent.  The term “Hazardous Substance” as used in this Lease shall mean any
product, substance, or waste whose presence, use, manufacture, disposal,
transportation, or release, either by itself or in combination with other
materials expected to be on the Premises, is either: (i) potentially injurious
to the public health, safety or welfare, the environment or the Premises, (ii)
regulated or monitored by any governmental authority, or (iii) a basis for
potential liability of Lessor to any governmental agency or third party under
any applicable statute or common law theory.  Hazardous Substances shall include, but not be
limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products,
by-products or fractions thereof.  Lessee
shall not engage in any activity in or on the Premises which constitutes a
Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee’s expense) with all
Applicable Requirements. “Reportable Use” shall
mean (i) the installation or use of any above or below ground storage tank,
(ii) the generation, possession, storage, use, transportation, or disposal of a
Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with, any
governmental authority, and/or (iii) the presence at the Premises of a Hazardous
Substance with respect to which any Applicable Requirements requires that a
notice be given to persons entering or occupying the Premises or neighboring
properties.  Notwithstanding the
foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning
materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor.  In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit.  Notwithstanding anything to the contrary in
the foregoing, Lessee may continue to engage in any activity listed in Exhibit
2 attached hereto and incorporated herein by this reference which constitutes
Reportable Use, provided and to the extent Lessee engaged in such Reportable
Use at the Premises prior to the Start Date and such Reportable Use is in
compliance with all Applicable Requirements.  See Paragraph 53.

 

(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 (or any prior lease agreement or other
arrangement regarding the Premises under which Lessee or any affiliated entity
occupied the Premises) , by or for Lessee, or any third party.  See also Paragraph 53.

 

(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.  Lessee Lessor shall retain the responsibility and pay for any investigations or
remediation

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

5

 

measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to or
during the Lease term arising out of the Lessee’s use or occupancy of the
Premises, or as required by item 9.1(d) above.  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 Lessor’s
agents to have reasonable access to the Premises at reasonable times in order
to carry out Lessor’s investigative and remedial

responsibilities.

 

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

 

6.3                                 Lessee’s Compliance with
Applicable Requirements.  Except as otherwise provided in this Lease,
Lessee shall, at Lessee’s sole
expense, fully, diligently and in a timely manner, materially comply with all
Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and
the recommendations of Lessor’s engineers and/or consultants which relate in
any manner to the such Requirements,
without regard to whether such Requirements are now in effect or become
effective after the Start Date.  Lessee
shall, within 10 days after
receipt of Lessor’’s written request, provide Lessor with copies of all permits
and other documents, and other information evidencing Lessee’s compliance with any Applicable Requirements
specified by Lessor, and shall immediately upon receipt, notify Lessor in
writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning,
complaint or report pertaining to or involving the failure of Lessee or thePremises to comply with any Applicable
Requirements.

 

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 inspectingthe 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 records regarding Hazardous Substances at the Premises material safety data sheets (MSDS) to Lessor within 10 days of the receipt of a
written request therefor.

 

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

 

7.1                                 Lessee’s Obligations.

 

(a) In General.  Subject
to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s
Compliance with Applicable  Requirements),
7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation),
Lessee shall, at Lessee’s sole expense, keep the Premises, Utility Installations (intended for Lessee’s exclusive use, no
matter where located), and Alterations in good order, condition and repair(whether or not the portion of the
Premises requiring repairs, or the means of repairing the same, are reasonably
or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s
use, any prior use, the elements or the age of such portion of the Premises),including, but not limited to, all
equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), foundations,
ceilings, roofs, roof drainage systems, floors, windows, doors, plate glass,skylights, landscaping, driveways,
parking lots, fences, retaining walls, signs, sidewalks and parkways located
in, on, or adjacent to the Premises.  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)

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

6

 

consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the
exterior repainting of the Building.

 

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

 

(c) Failure to Perform.  If Lessee fails to perform Lessee’s
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 days’ prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform 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, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this Lease, on the date on which Base Rent is due, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the
numerator of which is one, and the denominator of which is 144 (ie. 1/144th of
the cost per month). Lessee shall pay interest on the unamortized balance at a
rate that is commercially reasonable in the judgment of Lessor’s accountants.  Lessee may, however, prepay its obligation at
any time.

 

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

 

7.3                                 Utility Installations; Trade
Fixtures; Alterations.

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

7

 

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 reasonable 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.  See Paragraph 53.

 

(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 made or installed after the date of this
Lease 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.  See Paragraph 53.

 

(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, subject to Paragraph 53, 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 Project) 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.  See Paragraph 53.

 

8                                          Insurance; Indemnity.

 

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

 

8.2                                 Liability Insurance.

 

(a) Carried by Lessee.  Lessee shall obtain and keep in
force a Commercial General Liability policy of insurance protecting Lessee
and Lessor as an additional
insured against claims for bodily injury, personal injury and property damage
based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant
thereto.  Such insurance shall be on an
occurrence basis providing single limit
coverage in an amount not less than $1,000,000 $2,000,000
per occurrence with an annual aggregate of not less than $2,000,000, an
“Additional Insured-Managers or
Lessors of Premises Endorsement” and contain the “Amendment of the Pollution
Exclusion Endorsement” for 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.  All insurance carried by Lessee shall be primary to and not
contributory with any similar insurance carried by Lessor, whose insurance
shall be considered excess insurance only.

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

8

 

 

8.3 Property Insurance - Building, Improvements and Rental
Value.

 

(a) Building and Improvements.  The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with  loss payable to Lessor, any ground-lessor, and
to any Lender insuring loss or damage to the Premises.  The amount of such insurance shall be equal tothe full 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 coverage is available and commercially appropriate, such
policy or policies shall insure against all risks of direct physical loss or
damage (except the perils of flood and/or
earthquake unless required by a Lender), including at Lessor’s election
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.  At Lessor’s election, Ssaid 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, at Lessor’s election, 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, at Lessor’s election, 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 at Lessor’s election contain an agreed valuation
provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the
projected Rent otherwise payable by Lessee, for the next 12 month period.  Lessee shall be liable for any deductible amount in the event of such loss.

 

(c) Adjacent Premises.  If the Premises are part of a
larger building, or of a group of buildings owned by Lessor which are adjacent
to the Premises, the Lessee shall
pay for any increase in the premiums for the property insurance of such building
or buildings if said increase is caused
by Lessee’s acts, omissions, use or occupancy of the Premises.

 

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.  The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property. Trade Fixtures and Lessee Owned Alterations and Utility Installations.  Lessee shall provide Lessor with written
evidence that such insurance is in force.

 

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

 

(c) 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 B+, V, as set forth in the mostcurrent 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, at least 30 days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or“insurance binders” evidencing renewal
thereof, or Lessor may order such insurance and charge the cost thereof to
Lessee, which amount shall be payable
by Lessee to Lessor upon demand.  Such
policies shall be for a term of at least one year, or the length of the
remaining term of this Lease, whichever
is less.  If either Party shall fail to
procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required
to, procure and maintain the same.

 

8.6                                 Waiver of Subrogation.  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 suchcompanies 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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

9

 

damages, liens, judgments, penalties, attorneys’ and consultants’ fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the use  and/or occupancy
of the Premises by Lessee.  If any action
or proceeding is brought against Lessor by reason of any of the foregoing
matters, Lessee shall upon notice
defend the same at Lessee’s expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense.  Lessor need not have first paid any such claim
in order to be defended or indemnified.

 

8.8                                 Exemption of Lessor from
Liability.  Lessor shall not be liable for 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, 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.  Lessor shall not beliable for any damages arising from any
act or neglect of any other tenant of Lessor nor from the failure of Lessor to
enforce the provisions of any other lease in the Project. Notwithstanding Lessor’s negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to
Lessee’s business or for any loss
of income or profit therefrom.

 

8.9                                 Failure to Provide Insurance.
 Lessee acknowledges that any failure on its part to obtain or maintain
the insurance required herein
will expose Lessor to risks and potentially cause Lessor to incur costs not
contemplated by this Lease, the extent of which will be extremely difficult to ascertain.  Accordingly, for any month or portion thereof
that Lessee does not maintain the required insurance and/or does not provide Lessor with the
required binders or certificates evidencing the existence of the required
insurance, the Base Rent
shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then
existing Base Rent or $100, whichever is greater.  The parties agree that such increase in Base Rent represents fair and
reasonable compensation for the additional risk/ costs that Lessor will incur
by reason of Lessee’s failure to maintain
the required insurance.  Such increase in
Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach
with respect to the failure to
maintain such insurance, prevent the exercise of any of the other rights and
remedies granted hereunder, nor relieve Lessee of its obligation to maintain the insurance specified in this
Lease.

 

9.                                       Damage or Destruction.

 

9.1                                 Definitions.

 

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

 

(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.  Lessorshall 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 obligationto pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover
same, or adequate assurance thereof, within 10 days following receipt of
written notice of such shortage and request therefor.  If Lessor receives

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

10

 

said funds or adequate assurance thereof within said 10 day period, the
party responsible for making the repairs shall complete them as soon as  reasonably possible and this Lease shall
remain in full force and effect.  If such
funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days
thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage
in proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter.  Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to
repair any such damage or destruction.  Premises
Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be
some insurance coverage, but the net proceeds of any such insurance shall be made available for the
repairs if made by either Party.

 

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

 

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

 

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

 

9.6                                 Abatement of Rent; Lessee’s
Remedies.

 

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

 

(b) Remedies.  If
Lessor 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 so much of Lessee’s Security Deposit
as has not been, or is not then required to be, used by Lessor. 

 

9.8                                 Waive Statutes.  Lessor and Lessee agree that the terms of this Lease shall govern the
effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby
waive the provisions of any present or future statute to the extent
inconsistent herewith.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

11

 

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, including but not limited to, a change in the
ownership of the Premises, and (ii) levied or assessed on machinery or equipment provided by Lessor to
Lessee pursuant to this Lease.

 

10.2                           Payment of Taxes.  In addition to Base Rent, Lessee shall pay to Lessor an amount equal to
the Real Property Tax installment due
at least 20 days prior to the applicable delinquency date.  If any such installment shall cover any period
of time prior to or after the expiration or termination of this Lease, Lessee’s share of such installment shall be
prorated.  In the event Lessee incurs a late
charge on any Rent payment, Lessor may
estimate the current Real Property Taxes, and require that such taxes be paid
in advance to Lessor by Lessee monthly in advance with the payment of the Base Rent.  Such monthly payments shall be an amount equal
to the amount of the estimated installment of taxes divided by the number of months remaining before the month in
which said installment becomes delinquent.  When the actual amount of the applicable tax
bill is known, the amount of such
equal monthly advance payments shall be adjusted as required to provide the
funds needed to pay the applicable taxes.  If the amount collected by Lessor is insufficient to pay such Real Property
Taxes when due, Lessee shall pay Lessor, upon demand, such additional sumas 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 Lessorfrom the respective valuations assigned
in the assessor’s work sheets or such other information as may be reasonably
available.

 

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

 

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

 

12.                                 Assignment and Subletting.

 

12.1                           Lessor’s Consent Required.

 

(a) Lessee shall not
voluntarily or by operation of law assign, transfer, mortgage or encumber
(collectively, “assign or  assignment”) or sublet all or any part of Lessee’s
interest in this Lease or in the Premises (other than to a person or entity
controlling, controlled by or under
common control with Lessee) without Lessor’s prior written consent, which shall
not be unreasonably withheld 

 

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

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

12

 

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 BaseRent 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.

 

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 therefor to Lessor, or any security held by Lessor.

 

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

 

(h) In the event of any
assignment or subletting by Lessee permitted under this Lease, Lessee shall pay
additional rent as described in  Paragraph 52 of the addendum to this Lease.

 

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 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.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

13

 

(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 whichendangers or threatens life or property,
where such failure continues for a period of 3 business days following written
notice to Lessee.

 

(c) 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 fora period of 10 days following written
notice to Lessee.

 

(d) 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) or (c), 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.

 

(e) 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 (e) is contrary to any applicable law, such provision shall be ofno force or effect, and not affect the
validity of the remaining provisions.

 

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

 

(g) 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
therefor.  In the event of a Breach,
Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

14

 

 

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

 

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

 

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

 

13.3                           Inducement Recapture.  Any agreement for free or abated rent or other charges, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration for
Lessee’s entering into this Lease, all of which concessions are hereinafter
referred to as “Inducement Provisions,” shall be deemed
conditioned upon Lessee’s full and faithful performance of all of the terms,
covenants and conditions of this
Lease.  Upon Breach of this Lease by
Lessee, any such Inducement Provision shall automatically be deemed deleted
from this Lease and of no further
force or effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an inducement Provision shall be immediately due
and payable by Lessee to Lessor, notwithstanding any subsequent cure of said
Breach by Lessee.  The acceptance by Lessor of rent or the cure of
the Breach which initiated the operation of this paragraph shall not be deemed
a waiver by Lessor of the provisions
of this paragraph unless specifically so stated in writing by Lessor at the
time of such acceptance.

 

13.4                           Late Charges.  Lessee hereby acknowledges that late payment by Lessee of Rent will
cause Lessor to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to
ascertain.  Such costs include, but are
not limited to, processing and accounting
charges, and late charges which may be imposed upon Lessor by any Lender.  Accordingly, if any Rent shall not be received
by Lessor within 5 10 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% 5% 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 afterreceipt 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, in addition to other

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

15

 

remedies permitted hereunder, 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.  Lessee shall document the cost of said cure
and supply said documentation to Lessor.

 

14.                                 Condemnation.  If the Premises or any portion thereof are taken under the power of
eminent domain or sold under the 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 orpossession, 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, thatLessee shall be entitled to any
compensation for Lessee’s relocation expenses, loss of business goodwill and/or
Trade Fixtures, without regard to whether
or not this Lease is terminated pursuant to the provisions of this Paragraph.  All Alterations and Utility Installations made
to the Premises by Lessee, for
purposes of Condemnation only, shall be considered the property of the Lessee and
Lessee shall be entitled to any and all compensation which is payable therefor.  In the event that this Lease is not terminated
by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.

 

15.                                 Brokerage Fees.

 

15.1                           Additional Commission.  In addition to the payments owed pursuant to Paragraph 1.9 above, and
unless Lessor and the Brokers otherwise agree in writing, Lessor agrees that: (a) if Lessee exercises any Option, (b)
if Lessee acquires any rights to the Premises or other premises owned by Lessor
and located within the same Project, if any, within which the Premises is
located, (c) if Lessee remains in possession of the Premises, with the consent
of Lessor, after the expiration of this Lease, or (d) if Base Rent is
increased, whether by agreement or operation of an escalation clause herein,
then, Lessor shall pay Brokers a fee in accordance with the schedule of the
Brokers in effect at the time of the execution of this Lease.

 

15.2                           Assumption of Obligations.  Any buyer or transferee of Lessor’s interest in this Lease shall be
deemed to have assumed Lessor’s obligation hereunder.  Brokers shall be third party beneficiaries of
the provisions of Paragraphs 1.9, 15, 22 and 31. If Lessor fails to pay to
Brokers any amounts due as and for brokerage fees pertaining to this Lease when
due, then such amounts shall accrue Interest.  In addition, if Lessor fails to pay any
amounts to Lessee’s Broker when due, Lessee’s Broker may send written notice to
Lessor and Lessee of such failure and if Lessor fails to pay such amounts
within 10 days after said notice, Lessee shall pay said monies to its Broker
and offset such amounts against Rent.  In
addition, Lessee’s Broker shall be deemed to be a third party beneficiary of any
commission agreement entered into by and/or between Lessor and Lessor’s Broker
for the limited purpose of collecting any brokerage fee owed.

 

15.3                           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, plus such
additional information, confirmation and/or statements as may be reasonablyrequested 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 theRequesting 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.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

16

 

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

 

17.                                 Definition of Lessor.  The term “Lessor” as used
herein shall mean the owner or owners at the time in question of the fee title
to the Premises, or, if this is a
sublease, of the Lessee’s interest in the prior lease.  In the event of a transfer of Lessor’s title
or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor.  Except as provided in Paragraph 15, upon such transfer or assignment
and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect
to the obligations and/or covenants under this Lease thereafter to be performed
by the Lessor.  Subject to the foregoing,
the obligations and/or covenants
in this Lease to be performed by the Lessor shall be binding only upon the
Lessor as hereinabove defined.

 

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

 

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

 

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

 

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

 

22.                                 No Prior or Other Agreements;
Broker Disclaimer.  This Lease contains all agreements between the
Parties with respect to any matter mentioned
herein, and no other prior or contemporaneous agreement or understanding shall
be effective.  Lessor and Lessee each represents
and warrants to the Brokers 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.  Brokers have no responsibility with respect
thereto or with respect to any
default or breach hereof by either Party.  The liability (including court costs and
attorneys’ fees), of any Broker with respect to negotiation, execution, delivery or performance by either Lessor or
Lessee under this Lease or any amendment or modification hereto shall be
limited to an amount up to the
fee received by such Broker pursuant to this Lease; provided, however, that the
foregoing limitation on each Broker’s liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

 

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, by overnight courier, or
by facsimile transmission, and shall be deemed sufficiently given if served in
a manner specified in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be
that Party’s address for delivery or mailing of notices.  Either Party may by written notice to the other specify a
different address for notice, except that upon Lessee’s taking possession of
the Premises, the Premises shall constitute
Lessee’s address for notice.  A copy of
all notices to Lessor shall be concurrently transmitted to such party or
parties at such addresses as Lessor
may from time to time hereafter designate in writing.

 

23.2                           Date of Notice.  Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the
postmark thereon.  If sent by regular mail the notice shall be
deemed given 48 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.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

17

 

24.                                 Waivers.  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.  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 byLessor 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.

 

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

 

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

 

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

 

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

 

(iii)                               Agent Representing Both Lessor and Lessee.  A real
estate agent, either acting directly or through one or more associate licenses, can legally be the agent
of both the Lessor and the Lessee in a transaction, but only with the knowledge
and consent of both the Lessor
and the Lessee.  In a dual agency
situation, the agent has the following affirmative obligations to both the
Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with
either Lessor or the Lessee.  b. Other
duties to the Lessor and the Lessee as stated above in subparagraphs (i) or (ii).  In representing both Lessor and Lessee, the
agent may not without the express permission of the respective Party, disclose to the other Party that the
Lessor will accept rent in an amount less than that indicated in the listing or
that the Lessee is willing to pay a higher rent than that offered.  The
above duties of the agent in a real estate transaction do not relieve a Lessor
or Lessee from the responsibility to protect their own interests. Lessor and Lessee should carefully read all
agreements to assure that they adequately express their understanding of thetransaction. A real estate agent is a
person qualified to advise about real estate.  If legal or tax advice is desired, consult a
competent professional.

 

(b)                                 Brokers have no responsibility with respect to
any default or breach hereof by either Party.  The liability (including court costs and attorneys’ fees), of any Broker with
respect to any breach of duty, error or omission relating to this Lease shall
not exceed the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker’s liability shall not be applicable to any gross negligence or willful misconduct of such
Broker.

 

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

 

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

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

18

 

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. See
Paragraph 54.

 

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 such new owner, this Lease shall automatically become a new Lease
between Lessee and such new
owner, upon all of the terms and conditions hereof, for the remainder of the
term hereof, and (ii) Lessor shall thereafter be relieved of any furtherobligations hereunder and such new owner
shall assume all of Lessor’s obligations hereunder, except that such new owner
shall not: (a) be liable for any
act or omission of any prior lessor or with respect to events occurring prior
to acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against any prior
lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be
liable for the return of any security
deposit paid to any prior lessor.  See
Paragraph 54.

 

30.3                           Non-Disturbance.  With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination
of this Lease shall be subject to receiving a commercially reasonable
non-disturbance agreement (a “Non-Disturbance
Agreement” ) from the
Lender which Non-Disturbance Agreement provides that Lessee’s possession of the
Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises.  Further, within 60 days after the execution
of this Lease, Lessor shall 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.  See
Paragraph 54.

 

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 andLessor shall execute such further
writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance
Agreement provided for herein.  See
Paragraph 54.

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

19

 

32.                                 Lessor’s Access; Showing
Premises; Repairs.  Lessor and Lessor’s agents shall have the
right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable
prior notice for the purpose of showing the same to prospective purchasers,lenders, or tenants, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may
deem necessary or desirable and the
erecting, using and maintaining of utilities, services, pipes and conduits
through the Premises and/or other premises as long as there is no materialadverse 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
subtenancies.  Lessor’s failure within 10
days following any such event to
elect to the contrary by written notice to the holder of any such lesser
interest, shall constitute Lessor’s election to have such event constitute the termination of such
interest.

 

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 therefor.  Lessor’s consent
to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by
Lessee of this Lease exists, nor shall such consent be deemed a waiver of any
then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent.  The failure to specify
herein any particular condition
to Lessor’s consent shall not preclude the imposition by Lessor at the time of
consent of such further or other conditions as are then reasonable with reference to the particular
matter for which consent is being given.  In the event that either Party disagrees with
any determination made by the
other hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail within 10 business days
following such request.

 

37.                                 Guarantor.

 

37.1                           Execution.  The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the AIR Commercial Real Estate Association, and each such Guarantor shall have the same
obligations as Lessee under this Lease.

 

37.2                           Default.  It shall constitute a Default of the Lessee if any Guarantor fails or
refuses, upon request to provide: (a) evidence of the execution of the guaranty, including the
authority of the party signing on Guarantor’s behalf to obligate Guarantor, and
in the case of a corporate Guarantor,
a certified copy of a resolution of its board of directors authorizing the
making of such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written
confirmation that the guaranty is still in effect.

 

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

 

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, and cannot

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

20

 

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.                                 Multiple Buildings.  If the Premises are a part of a group of buildings controlled by Lessor,
Lessee agrees that it will abide by and conform to all reasonable rules and regulations which
Lessor may make from time to time for the management, safety, and care of said
properties, including the care
and cleanliness of the grounds and including the parking, loading and unloading
of vehicles, and to cause its employees, suppliers, shippers, customers, contractors and invitees to so
abide and conform.  Lessee also agrees to
pay its fair share of common expenses incurred in connection with such rules and regulations.

 

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.

 

44.                                 Authority; Multiple Parties;
Execution.

 

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

 

(b)                                 If this Lease is executed by more than one
person or entity as “Lessee”, each such person or entity shall be jointly andseverally 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 whichtogether shall constitute one and the
same instrument.

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

21

 

typewritten or handwritten provisions.

 

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

 

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

 

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

 

49.                                 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 o is ý is not attached to this Lease.

 

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

 

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

 

	
  Executed at:

  	
   

  	
   

  	
  Executed at:

  	
   

  
	
  On:

  	
   

  	
   

  	
  On:

  	
  April 15, 2005

  
	
   

  	
   

  	
   

  
	
  By LESSOR:

  	
   

  	
  By LESSEE:

  
	
  S.R. Partners,

  	
   

  	
  Atlantic Express of L.A. Inc.,

  
	
  a California general partnership

  	
   

  	
  a California corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Steve Riboli

  	
   

  	
  By:

  	
  /s/ Domenic Gatto

  
	
  Name Printed:

  	
  Steve Riboli 

  	
   

  	
  Name Printed:

  	
   Domenic Gatto

  
									

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

22

 

	
  Ttile: 

  	
  Managing Partner

  	
   

  	
  Title:

  	
  President

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Neil Abitabilo

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
  Neil Abitabilo

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
  Address:

  	
  737 Lamar Street

  	
   

  	
  Address:

  	
  7 North Street

  
	
  Los Angeles, California 90031

  	
   

  	
  Staten Island, New York 10302

  
	
   

  	
   

  	
   

  
	
  Telephone: 

  	
  (323) 223-1401, ext. 24

  	
   

  	
  Telephone:

  	
  (718) 442-7000

  
	
  Facsimile:

  	
  (323) 221-7261

  	
   

  	
  Facsimile:

  	
  (718) 442-5105

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  
																

 

	
  BROKER: 

  	
                                                                              

  	
   

  	
  BROKER:

  	
                                                                                              

  
	
                                                                                                    

  	
   

  	
                                                                                                                 

  
	
                                                                                                    

  	
   

  	
                                                                                                                 

  
	
  Attn:

  	
                                                                                      

  	
   

  	
  Attn:

  	
                                                                                                     

  
	
  Title:

  	
                                                                                      

  	
   

  	
  Title:

  	
                                                                                                     

  
	
  Address:

  	
                                                                                  

  	
   

  	
  Address:

  	
                                                                                                 

  
	
  Telephone:

  	
  (               )                                                            

  	
   

  	
  Telephone:

  	
  (               )                                                                          

  
	
  Facsimile:

  	
  (               )                                                            

  	
   

  	
  Facsimile:

  	
  (               )                                                                          

  
	
  Federal ID No.

  	
                                                                          

  	
   

  	
  Federal ID No.

  	
                                                                                      

  
												

 

NOTE: These forms are often modified to meet the
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, 700 So.  Flower Street, Suite 600, Los Angeles,
California 90017. (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.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INITIALS

  	
   

  	
  INITIALS

  

 

23

 

ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL

SINGLE-TENANT LEASE - NET

 

This Addendum is incorporated into and made a part of that certain
Standard Industrial/Commercial Single-Tenant Lease - Net, dated April 12, 2005
(the “AIREA Form”), between S.R. Partners, a California general partnership
(the “Lessor”) and Atlantic Express of L.A. Inc., a California corporation (the
“Lessee”). To the extent of any conflict between the terms and provisions of
this Addendum and the terms and provisions of the AIREA Form, the terms and
provisions of this Addendum shall be controlling.

 

50.           Close of Escrow;
Termination of Existing Lease; Lease Term and Prorated Rent.  The Parties acknowledge that Lessee currently
occupies the Premises under an existing lease or other arrangement with the
current owner of the Premises, 201 West Sotello Realty, Inc., which is an
affiliate of Lessee.  The parties
contemplate that such current owner and Lessor will be entering a purchase and
sale agreement by which such owner will sell the Premises to Lessor.  Accordingly, the effectiveness of this Lease
is conditioned upon (a) the execution and delivery by Lessor and 201 West
Sotello Realty, Inc., concurrently with the execution and delivery of this
Lease and the guaranty of this Lease, of a purchase agreement for the purchase
by Lessor of the Premises on terms and conditions mutually acceptable to Lessor
and such owner, each in its sole discretion; and (b) the acquisition of title
to the Premises by Lessor pursuant to such purchase agreement.  The Commencement Date of the term of this
Lease shall be the actual date of the close of such sale of the Premises to
Lessor (the “Close of Escrow”).  If such
sale transaction is cancelled or terminated without closing, then this Lease
shall be of no further force or effect.

 

Lessee agrees to cause to be signed (i) any documents reasonably
necessary or appropriate between Lessee and the current owner of the Premises,
201 West Sotello Realty, Inc., to terminate, effective as of the Close of
Escrow, any existing lease or other arrangement pursuant to which Lessee has
previously occupied the Premises, as well as (ii) any additional documents
necessary or appropriate to convey to such current owner before the Close of
Escrow, free of liens (so that such current owner can convey, in turn, to  Lessor at the Close of Escrow), any and all
interest of Lessee in the Premises, the Building, all other improvements and fixtures
on the Premises (excepting Lessee’s trade fixtures relating specifically to
Lessee’s bus line business, rather than to the property generally), and the
personal property relating to the Premises which is being sold by such current
owner to Lessor (which property does not include buses, fuel, bus maintenance
supplies, bus line licenses, bus line records, office furnishings, and Lessee’s
other personal property relating specifically to its bus line operations, all
of which is being retained by Lessee). 
It is the intention of the Parties that Lessee’s tenancy at the Premises
from and after the Close of Escrow shall be governed by the terms and
conditions of this Lease.  In no event
shall

 

1

 

Lessor have any obligation to Lessee arising out of or relating to any
such prior lease or arrangement and, accordingly, Lessee shall look solely to
201 West Sotello Realty, Inc., and not to Lessor, regarding any matters arising
from or relating to Lessee’s use, occupancy, or leasing of the Premises prior
to the Close of Escrow.

 

If the Commencement Date does not occur on the first day of a calendar
month, then the term of this Lease shall be adjusted to extend for ten years
(120 months) from and after the first day of the first full calendar month
after the Commencement Date.  In such
event the Base Rent due from Lessee for the initial partial calendar month
shall be prorated as follows:  The monthly
Base Rent indicated in Paragraph 1.5 shall be divided by the number of days in
the then-current calendar month to obtain the daily rate, which shall then be
multiplied by the number of days from and including the Commencement Date up
through the last day of such calendar month. 
The Base Rent for any initial partial month and the Base Rent for the
first full calendar month shall be paid by Lessee to Lessor at or before the
Close of Escrow.

 

Notwithstanding any contrary provision in this Lease, if the Expiration
Date  (as defined in Paragraph 1.3)
occurs prior to June 30 of the same calendar year, the term of this Lease shall
be adjusted to extend to and include June 30 of such calendar year so that
Lessee may complete any obligations it has to provide bus service to schools
through the end of the then-current school year.  In such event, the monthly Base Rent due from
Lessee for any additional month(s) after month 120 of the Original Term of this
Lease through June 30 of the same calendar year as month 120 shall be the same
as the monthly Base Rent due from Lessee for months 109 through 120 as set
forth in Paragraph 51 below.

 

Following the actual commencement of the Lease Term, the Parties agree
to memorialize in writing the Commencement Date, the Expiration Date, and the
dates on which any rent adjustments under Paragraph 51 shall occur under this
Lease.

 

51.           Base Rent
Adjustments.  The monthly Base Rent
shall be increased annually throughout the Original Term of this Lease by 2.5%
over the monthly Base Rent in effect during the immediately preceding 12-month
period, as set forth in the following schedule. 
The “Lease Months” in the following schedule are numbered starting with
the first full calendar month that commences on or after the Close of Escrow.

 

	
  Lease Months

  	
   

  	
  Monthly Base Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1 through 12 (plus initial partial month)

  	
   

  	
  $

  	
  39,583.00

  	
   

  
	
  13 through 24

  	
   

  	
  $

  	
  40,572.58

  	
   

  
	
  25 through 36

  	
   

  	
  $

  	
  41,586.89

  	
   

  
	
  37 through 48

  	
   

  	
  $

  	
  42,626.56

  	
   

  
	
  49 through 60

  	
   

  	
  $

  	
  43,692.23

  	
   

  
	
  61 through 72

  	
   

  	
  $

  	
  44,784.53

  	
   

  
	
  73 through 84

  	
   

  	
  $

  	
  45,904.14

  	
   

  
	
  84 through 96

  	
   

  	
  $

  	
  47,051.75

  	
   

  
	
  97 through 108

  	
   

  	
  $

  	
  48,228.04

  	
   

  
	
  109 through 120 (plus additional month(s)
  through June 30)

  	
   

  	
  $

  	
  49,433.74

  	
   

  

 

2

 

52.           Sale of Business;
Change in Management; Additional Rent Upon Subletting or Assignment.  No sale, transfer, assignment or
hypothecation of all or substantially all of the business conducted by Lessee
on the Premises, or all or substantially all assets used by Lessee in such
business, and no agreement for the management or operation of such business by
third parties other than shareholders or employees of Lessee (or any person or
entity controlling, controlled by or under common control with Lessee, which
persons or entities are referred to herein as “Affiliates”), shall be made by
Lessee without Lessor’s prior written consent, which shall not be unreasonably
withheld.  If Lessor gives such consent,
Lessor may condition such consent on, among other things, the purchaser,
assignee, transferee, manager or operator demonstrating, to the satisfaction of
Lessor, that it is financially capable of operating the permitted business in
the Premises, is professionally qualified to operate such business in a
first-class manner, and intends to so operate the business on the
Premises.  Any sale, transfer,
assignment, hypothecation, management agreement or operating agreement in
violation of this section shall be deemed a default under this Lease.  The provisions of this Paragraph 52 are in
addition to, and not in lieu of, the other provisions of this Lease regarding
assignment and subletting in Paragraph 12.

 

In the event that Lessee has sought and received Lessor’s consent to
assign this Lease, or to enter into a sublease as to all or any portion of the
Premises (other than to an Affiliate of Lessee), the monthly Base Rent payable
by Lessee to Lessor pursuant to Paragraphs 1.5, 4, and 51 shall be increased by
50% of the excess of (a)  the amount to
be received by Lessee during each month pursuant to the terms of the assignment
or sublease, over (b)  Lessee’s monthly
Rent payable to Lessor (without regard to this paragraph) for the month in
question for the space subject to the assignment or sublease.  The amounts referred to in item (a) of the
previous sentence include rent, additional rent, and any other payment in
respect of use or occupancy, or in reimbursement of costs of leasehold
improvements installed by Lessee, and whether paid in a lump sum or periodic
payments.  In no event shall the total
sums payable to Lessor by Lessee be less than the monthly Rent Lessor would
have received but for such assignment or sublease.  Lessee’s obligation for the additional rent
under this paragraph shall not commence until Lessee has recovered (out of the
portion of the first payments made by the sublessee or assignee that would
otherwise

 

3

 

be treated as excess payments to be shared with Lessor) the amount of
Lessee’s actual out-of-pocket expenses for broker’s commissions and tenant
improvements incurred for the sublease or assignment transaction in question.

 

Such additional rent shall be due and payable to Lessor in accordance
with the schedule specified in the sublease or assignment instrument, and the
failure of any sublessee or assignee to make any payments in accordance with
that schedule shall not affect the obligation of Lessee to pay the additional
rent to Lessor; provided, however, that if the sublessee or assignee is in
default and Lessee diligently pursues eviction proceedings against the
sublessee or assignee, then commencing with the date that Lessee gives the
sublessee or assignee a notice of default and continuing for so long as Lessee
diligently pursues eviction proceedings against the sublessee or assignee, the
additional rent due from Lessee to Lessor under this Paragraph 52 shall be calculated
based only on the sums actually recovered by Lessee from the sublessee or
assignee.

 

The calculation of the amount of rentable space being sublet shall be
made by Lessor in accordance with its usual reasonable standards (with a
corresponding calculation by Lessor in Lessor’s reasonable discretion of the
rental rate per square foot being paid for such space by Lessee to Lessor under
this Lease, taking into account whether the space being sublet is parking lot
space or Building space).  Lessor may
require acknowledgment by Lessee of Lessee’s concurrence on such calculations
by Lessor as a condition to Lessor’s consent to any sublease.

 

The provisions of a sublease or assignment instrument consented to by
Lessor cannot be modified, nor the sublease or assignment terminated, other
than in accordance with its terms, without the prior written consent of Lessor,
which consent shall not be unreasonably withheld.  The terms of this Paragraph 52 shall also
apply to any subletting or assignment by any sublessee or assignee.

 

53.           No Improvements
by Lessor; Lessee’s Trade Fixtures and Personal Property.  Notwithstanding any contrary provision in
this Lease, Lessee is taking the Premises in its “as is” condition existing as
of Commencement Date.  Lessor shall have
no obligation to make improvements to the Premises, and Lessor shall have no
obligation for costs of any tenant improvements.  Lessee shall pay any and all tenant
improvement costs for any improvements that Lessee may desire to the Premises,
subject to the other provisions of this Lease.

 

The Parties
acknowledge that the Premises is presently occupied by Lessee and that Lessee
currently has personal property and trade fixtures located on the Premises,
including, among other things, a fleet of buses, related equipment for
maintaining and

 

4

 

servicing such buses,
underground fuel tanks, and office furnishings. 
The Parties acknowledge that Lessee plans to keep such items on the
Premises after the Close of Escrow for continued use by Lessee after the Term
of this Lease commences.  However,
notwithstanding anything to the contrary in Paragraph 7.4, Lessee shall, at
Lessee’s sole cost and expense, cause all such personal property and trade
fixtures, including but not limited to the underground fuel tanks (unless
removal of the fuel tanks is waived as described below), to be removed from the
Premises in accordance with all applicable laws (including but not limited to
all laws governing the removal and closing of underground fuel tanks and
remediation of the surrounding area) immediately upon or prior to the
expiration or termination of this Lease. In no event shall Lessor be
responsible for any costs or expenses related to the removal of any personal
property or trade fixtures Lessee is obligated to remove under this Lease.

 

As to the
underground fuel tanks, upon the expiration or termination of this Lease, as it
may be extended, the Parties shall cooperate, at Lessee’s sole cost and
expense, in testing the underground fuel tanks and surrounding area (with four
test borings around the tanks at the depth of the tanks in a matter consistent
with the test borings made by Lessor before purchasing the Premises) to
determine if any leakage has occurred from the tanks.  If such tests indicate that the tanks are in
good condition, based on comparison with the results of Lessor’s tests before
purchasing the Premises, they shall be left on the Premises and become Lessor’s
property and Lessor shall be responsible thereafter for their maintenance.  However, if such tests indicate that the
underground fuel tanks have leaked, based on comparison with the results of
Lessor’s tests before purchasing the Premises, Lessee shall be responsible for
causing the underground fuel tanks to be removed from the Premises in
accordance with all applicable laws as described above.  If Lessee wishes to assign the Lease or
sublet the portion of the Premises including the underground fuel tanks other
than to a person or entity controlling, controlled by or under common control
with Lessee, Lessor may also require such testing (and removal of the tanks if
leakage is indicated by the testing) at Lessee’s expense at that time as a
condition to the assignment or sublease.

 

54.                           Form
of Subordination, Nondisturbance and Attornment Agreement.  Without limiting the provisions of Paragraph
30.4, at the request of Lessor or Lessor’s lender, Lessee shall execute a
Subordination, Nondisturbance and Attornment Agreement in substantially the
form attached hereto as Exhibit 1, or such other commercially reasonable form
as requested by Lessor or Lessor’s lender.

 

5

 

EXHIBIT 1

 

 

FORM OF SUBORDINATION, NONDISTURBANCE

AND ATTORNMENT AGREEMENT

 

 

[To be attached prior to lease execution]

 

1

 

EXHIBIT 2

 

 

EXISTING USES PERMITTED UNDER PARAGRAPH
6.2(a)

 

 

[To be attached prior to lease execution]

 

1

 

EXHIBIT 1

 

FORM OF SUBORDINATION, NONDISTURBANCE

AND ATTORNMENT AGREEMENT

 

	
  RECORDING REQUESTED BY

  	
  )

  	
   

  
	
  AND WHEN RECORDED MAIL TO:

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
   

  
	
  Attn.:                                                      

  	
  )

  	
   

  
	
  Loan No.:                                               

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  	
  Space above for Recorder’s
  Use

  

 

SUBORDINATION, NONDISTURBANCE

AND ATTORNMENT AGREEMENT

 

This Subordination,
Nondisturbance and Attornment Agreement (“Agreement”) is entered into as of                    ,
19     , by                                     (“Bank”),                                          (“Landlord”)
and                                   (“Tenant”).

 

RECITALS

 

A. Landlord and Tenant have
entered into a                                 [describe lease], dated as of                    ,
19     (“Lease”), covering certain premises (“Demised
Premises”), situated in                           ,
California, being part of a                         [provide project description, e.g., shopping
center] located at                               [provide property address] (“Property”).  The Property is more particularly described
in Exhibit A attached hereto and incorporated herein.

 

B. Bank is the beneficiary
of                                  [provide name of deed of trust] (“Deed of
Trust”), dated as of                          ,
19     , and recorded on                          ,
19     , in the Official Records of                               ,
as Instrument No.                             ,
encumbering the Property, which secures a note payable to Bank in the original
principal amount of                 Dollars
($                             ).

 

C. On the terms and
conditions in this Agreement, the parties desire to subordinate Tenant’s
leasehold interest in the Demised Premises to the lien of the Deed of Trust and
to assure Tenant possession of the Demised Premises for the entire term of the
Lease, even though Bank may foreclose the lien of the Deed of Trust before
expiration of the Lease.

 

Therefore, in consideration
of the mutual covenants and agreements contained in this Agreement, the parties
agree as follows:

 

Section 1. Subordination.

 

The Lease shall be subject
and subordinate to the lien of the Deed of Trust and to any renewals,
modifications, consolidations, replacements and extensions of the Deed of Trust
to the full extent of the principal sum secured by the Deed of Trust, including
any interest.

 

Section 2. Nondisturbance.

 

So long as Tenant is not in
default, beyond any period given to Tenant to cure a default, in the payment of
rent or in the performance of any of the terms, covenants, or conditions of the
Lease, Tenant’s possession of the Demised Premises and Tenant’s rights and
privileges under the Lease, including any extensions or renewals, shall not be
diminished or interfered with by Bank during the term

 

Subordination,
Nondisturbance & Attornment (Short Form)

SF-165493 (9/99)

 

1

 

of the Lease or any
extensions or renewals. So long as Tenant is not in default, beyond any period
given Tenant to cure such default, in the payment of rent or in the performance
of any of the terms, covenants, or conditions of the Lease, Bank will not join
Tenant as a party for the purpose of terminating or otherwise affecting
Tenant’s interest under the Lease, in any action of foreclosure or other
proceeding brought by Bank to enforce any rights arising because of any default
under the Deed of Trust. Bank may, however, join Tenant as a party if joinder
is necessary under any statute or law to secure the remedies available to Bank
under the Deed of Trust, but joinder shall be for that purpose only and not for
the purpose of terminating the Lease or affecting Tenant’s right to possession
of the Demised Premises.

 

Section 3. Attornment.

 

If the Landlord’s interest
is transferred to and owned by Bank or any successor of Bank (“Acquiring
Party”) because of foreclosure, sale under a private power from a deed of
trust, other proceedings brought by Bank, or by any other manner and Bank
succeeds to Landlord’s interest under the Lease, Tenant shall be bound to the
Acquiring Party, and Acquiring Party shall be bound to Tenant under all of the
terms, covenants and conditions of the Lease for the balance of the remaining
term, including any extensions or renewals, with the same effect as if
Acquiring Party were Landlord under the Lease. Tenant agrees to attorn to
Acquiring Party as the Landlord, with the attornment being effective and
self-operable immediately upon Acquiring Party succeeding to the interest of
Landlord under the Lease, all without the execution by the parties of any
further instruments. However, Tenant shall not be obligated to pay rent to
Acquiring Party until Tenant receives written notice from Acquiring Party,
together with evidence satisfactory to Tenant, demonstrating that Acquiring
Party has succeeded to Landlord’s interest under the Lease and directing where
rent should be mailed. The respective rights and obligations of Tenant and
Acquiring Party upon attornment, to the extent of the then-remaining balance of
the term of the Lease, shall be the same as in the Lease, which is incorporated
by reference in this Agreement. If Acquiring Party succeeds to Landlord’s
interest in the Lease, Acquiring Party shall be bound to Tenant under all the
terms, covenants and conditions of the Lease, and Tenant shall, after Acquiring
Party’s succession to Landlord’s interest, have the same remedies against
Acquiring Party for the breach of any agreement in the Lease that Tenant might
have had against Landlord.

 

[Delete the following section and corresponding exhibits if a separate
tenant estoppel certificate is being obtained or if a tenant estoppel
certificate is not required.]

 

Section 4. Tenant Estoppel
Certificate.

 

(a) Tenant has no right or
option of any nature whatsoever, whether arising out of the Lease or otherwise,
to purchase the Demised Premises or the Property, or any interest or portion in
or of either of them, to expand into other space in the Property or to extend
or renew the term of the Lease, except as described in the attached Exhibit B.

 

(b) Tenant represents and
warrants to Bank that Exhibit C accurately identifies all amendments,
supplements, side letters and other agreements and memoranda pertaining to the
Lease, the leasehold and/or the Demised Premises.

 

(c) As of the date of this
Agreement, Tenant represents and warrants that there exist no events of
default, or events that with notice or the passage of time or both would be
events of default, under the Lease, on either Tenant’s part or Landlord’s, nor
is there any right of offset (including audit or accounting rights which might
otherwise give rise to a claim or an offset for rents paid under the Lease)
against any of Tenant’s obligations under the Lease, except as described in the
attached Exhibit D. The Lease is in full force and effect as of the date of
this Agreement.

 

(d) Tenant acknowledges that
Bank is relying on the representations, certifications and undertakings made by
Tenant in this Agreement in extending credit to Landlord.

 

(e) Within ten (10) days
after Bank’s request, Tenant shall deliver to Bank and to any person designated
by Bank, estoppel certificates executed by Tenant, certifying (if such is the
case) that the Lease is in full force and effect, that there are no defenses or
offsets outstanding under the Lease (or

 

2

 

stating those claimed by
Tenant, as the case may be) and such other information about Tenant or the
Lease as Bank may reasonably request.

 

(f) This Agreement satisfies
any condition or requirement in the Lease relating to the granting of a
nondisturbance agreement from Bank.

 

Section 5. Definitions.

 

The term “Bank” or any
similar term shall include Bank, the trustee under any deed of trust affecting
the Demised Premises, and any agents, heirs, successors or assigns, including
any party that succeeds to Landlord’s interest by foreclosure of the Deed of
Trust, of the deed in lieu of foreclosure, or of a sale under a private power
contained in the Deed of Trust or by any other proceeding. The term “Deed of
Trust” or any similar term shall include the Deed of Trust and any amendments
or addenda. The term “Landlord” shall include Landlord and the successors,
assigns, and sublessees of Landlord. The term “Tenant” shall include Tenant and
the successors, assigns and sublessees of Tenant. This Agreement shall inure to
the benefit of and be binding upon all successors, assigns and sublessees. The
term “Lease” shall include the Lease and all amendments, addenda, extensions,
and renewals.

 

Section 6. No Change in Lease.

 

Landlord and Tenant agree
not to change, alter, amend or otherwise modify the Lease without the prior
written consent of Bank. Any change, alteration, amendment, or other
modification to the Lease without the prior written consent Bank shall be void
as to Bank.

 

Section 7. Notices.

 

In this Agreement, wherever
it is required or permitted that notice and demand be given by any party to
another party, that notice or demand shall be given in writing and forwarded by
certified mail, addressed as follows:

 

	
  For Landlord:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  
	
  For Tenant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  
	
  For Bank:

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

Any party may change an
address given for notice by giving written notice of that change by certified
mail to all other parties.

 

Section 8. Authority.

 

If any party is a corporation
or a partnership, all individuals executing this Agreement on behalf of a
corporation or partnership represent and warrant that they are authorized to
execute and deliver this Agreement on behalf of the corporation or partnership
and that this Agreement is binding upon the corporation or partnership.

 

Section 9. Miscellaneous.

 

This Agreement may not be
modified other than by an agreement in writing signed by the parties or by
their respective successors in interest. If any party commences any action against
any other party based on this Agreement, the prevailing party shall be entitled
to recover reasonable attorney fees,

 

3

 

expenses, and costs of suit.
This Agreement shall be binding on and inure to the benefit of the parties and
their respective heirs, successors and assigns. The headings of this Agreement
are for reference only and shall not limit or define any meaning of this
Agreement. This Agreement may be executed in one or more counterparts, each of
which is an original, but all of which shall constitute one and the same
instrument. This Agreement shall be construed in accordance with and governed
by California law.

 

The parties have duly
executed this Agreement as of the date first above written.

 

	
   

  	
  BANK:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LANDLORD:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								

 

[All signatures must be acknowledged]

 

4

 

EXHIBIT A

 

[Attach legal description]

 

 

EXHIBIT A
TO SUBORDINATION, NONDISTURBANCE

AND ATTORNMENT AGREEMENT

SF-165493 (9/99)

 

 

EXHIBIT B

 

(PURCHASE, EXPANSION, FIRST REFUSAL, EXTENSION AND RENEWAL
OPTIONS)

 

 

EXHIBIT B
TO SUBORDINATION, NONDISTURBANCE

AND ATTORNMENT AGREEMENT

(Purchase, Expansion, First
Refusal, Extension

and Renewal Options)

SF-165493 (9/99)

 

 

EXHIBIT C

 

(SCHEDULE OF AMENDMENTS, SUPPLEMENTS, SIDE LETTERS AND OTHER
AGREEMENTS AND

MEMORANDA PERTAINING TO LEASE)

 

 

EXHIBIT C TO SUBORDINATION,
NONDISTURBANCE

AND ATTORNMENT AGREEMENT

(Schedule of Amendments,
Supplements, Side Letters, and

other Agreements & Memoranda pertaining to Lease)

SF-165493 (9/99)

 

 

EXHIBIT D

 

(EXISTING DEFAULTS OR OFFSETS UNDER LEASE)

 

 

EXHIBIT D
TO SUBORDINATION, NONDISTURBANCE

AND ATTORNMENT AGREEMENT

(Existing Defaults or Offsets Under Lease)

SF-165493 (9/99)

 

 

ACKNOWLEDGMENT

 

	
  State of California

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  County of                                                             

  	
  )

  	
   

  

 

On                                           ,
19     , before me, a Notary Public in and for said
State, personally appeared                                                                         ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

 

WITNESS my hand and official
seal.

 

 

	
  Signature

  	
   

  	
   

  	
  (Seal)

  

 

 

	
  State of California

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  County of                                                              

  	
  )

  	
   

  

 

On                                          ,
19     , before me, a Notary Public in and for said
State, personally appeared                                                                        ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

 

WITNESS my hand and official
seal.

 

 

	
  Signature

  	
   

  	
   

  	
  (Seal)

  

 

SF-165493 (9/99)

 

 

	
  State of California

  	
  )

  	
   

  
	
   

  	
  )

  	
   

  
	
  County of                                                                

  	
  )

  	
   

  

 

On                                              ,
19     , before me, a Notary Public in and for said
State, personally appeared                                                                         ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

 

WITNESS my hand and official
seal.

 

 

	
  Signature

  	
   

  	
   

  	
  (Seal)

  

 

 

EXHIBIT 2

 

EXISTING USES PERMlTTED UNDER PARAGRAPH 6.2(a)

 

Diesel
fuel

Unleaded
fuel

Aerosol
grease

Crankcase
oil

Transmission
oil

Valve
grinding oil

Gear
lubricant

Heavy
duty grease

Hydraulic
fluid

Cooling
fluid

Coolant

Brake
fluid

Power
steering fluid

Automatic
transmission fluid

Industrial
oil

Anti-freeze

Freon

Acetylene

Oxygen

Commercial
parts cleaning solvent

Absorbent
powder

Paint
remover

Road
tar remover

Wax
and grease remover

Polishing/buffing
compound

Upholstery
conditioner

Metal
cleaners

Liquid
rubbing compound

Petroleum
based waxes

Steam
cleaning solution

Graffiti
remover scrubs

Adhesives

Weather
strip adhesive

Caulking
and sealing materials

Polyester
resins and catalysts

Silicone
adhesive/sealant

Threadlocker

Epoxies

Liquid
vinyl

Lacquer
paint

Enamel
paint

Urethane
paint

Lacquer
thinner

Enamel
reducer

Undercoating

Spray
paint

Rust
control paint

Engine
paint

Anti-seize
compound

Dry
chemical

Miscellaneous
office supplies

Miscellaneous
cleaning suppliesEXHIBIT
10.1

 

EMPLOYMENT AGREEMENT

 

AGREEMENT
dated as of May 11, 2004 between MAIDENFORM, INC., a New York corporation
with a principal place of business at 154 Avenue E, Bayonne, NJ 07002 (the
“Employer”), Thomas Ward residing at [* * *] (the “Employee”), and solely
for purposes of Sections 3(c), 3(d), 4, 10(e), 10(f) and 19, MF
Acquisition Corporation.

 

W I T N E S S E T H :

 

WHEREAS, the
Employer wishes to continue to employ the Employee for the period provided in
this Agreement, and the Employee is willing to continue to serve in the employ
of the Employer for such period, upon the terms and conditions hereinafter
provided;

 

WHEREAS, as
part of the negotiations in respect of this Agreement, the Employer, MF Acquisition
Corporation and the Employee have agreed to the terms of the Rollover Stock
Option Agreements (the “Rollover Option Agreements”) between MF Acquisition
Corporation and Employee dated May 11, 2004 in respect of options to
purchase shares of MF Acquisition Corporation common stock and MF Acquisition
Corporation preferred stock granted on the date hereof in substitution for
Maidenform, Inc. stock options (the “Rollover Stock Options”);

 

NOW,
THEREFORE, in consideration of the mutual covenants herein contained, the parties
agree as follows:

 

1.                                       Employment.  The Employer hereby employs the Employee and
the Employee hereby accepts employment upon the terms and conditions
hereinafter set forth.

 

2.                                       Term
of Employment.  (a)  The term of
the Employee’s employment under this Agreement shall commence on, and this
Agreement shall be contingent upon, the Closing of the Merger

 

 

pursuant to the Agreement and
Plan of Merger dated as of March 16, 2004, among Maidenform, Inc., MF
Acquisition Corporation, MF Merger Corporation and Ares Corporate Opportunities
Fund, L.P., and as amended by Amendment No.1 dated as of May 3, 2004 (the
“Merger Agreement”), and it shall continue for a period of four years
thereafter (the “Initial Term”), unless this Agreement shall be renewed for an
additional term or terms in accordance with paragraph (b) of this
Section 2, or unless earlier terminated as provided herein (such period of
time, collectively the “Term of Employment”).

 

(b)                                 This
Agreement shall automatically be renewed upon the expiration of the Initial
Term for successive periods of one year each (each an “Additional Term”),
unless either party notifies the other party in writing at least one year prior
to the expiration of the Initial Term or any such Additional Term.

 

3.                                       Compensation.  (a)  Base.  During the Term of Employment, the Employer
shall pay the Employee a base salary at not less than an annual rate of Five
Hundred Thousand ($500,000.00) Dollars, in accordance with the Employer’s
normal payroll practices (as increased in accordance with this
Section 3(a), the “Base Salary”). 
Such Base Salary shall be reviewed at least annually by the Board of
Directors of MF Acquisition Corporation (the “Board”) and the Board may at any
time increase (but not decrease) the Employee’s Base Salary hereunder as the
Board may in its sole and absolute discretion deem reasonable and appropriate.

 

(b)                                 Incentive
Compensation.  The Employee shall be
a participant in the Maidenform, Inc. 2004 Incentive Plan for Designated
Key Employees for calendar year 2004 with the operating targets, compensation
percentage and other terms with respect to the Employee as in effect on the
date hereof.  For calendar years
following 2004 during the Term of Employment, the Employee’s incentive
compensation shall be based upon a Personal Goals Bonus, an EBITDA Target Level
Bonus and an Extraordinary

 

2

 

EBITDA Target Level Bonus, each
on the terms and subject to the conditions set forth below.  The Personal Goals Bonus shall be up to 20%
of the Base Salary in effect for the year for which the bonus is paid and shall
be based upon personal goals set by the Compensation Committee of the Board
(the “Compensation Committee”) after consultation with the Employee, with the
level of such achievement determined by the Compensation Committee, in its
discretion.  The EBITDA Target Level
Bonus shall be up to 80% of the Base Salary as in effect for the year for which
the bonus is paid, and it shall be based on achievement (as determined by the
Compensation Committee) of a EBITDA target set and structured by mutual
agreement on an annual basis by the Compensation Committee and the
Employee.  The Extraordinary EBITDA
Target Level Bonus shall be up to 40% of the Base Salary as in effect for the
year for which the bonus is paid, and it shall be based on achievement (as
determined by the Compensation Committee) of a higher EBITDA target set and
structured by mutual agreement on an annual basis by the Compensation Committee
and the Employee.  It is understood that
the Plan Year for the annual incentive compensation plans will be the calendar
year.

 

(c)                                  Stock
Options.  (i) The Employee shall
receive a non-qualified stock option to purchase shares of the common stock of
MF Acquisition Corporation (the “Parent”) representing 2.25% of the common
stock of the Parent, determined on a fully diluted basis as of the closing of
the Merger (as defined in the Merger Agreement) (the “Closing”), pursuant to
the Parent’s Stock Option Plan.  The
exercise price per share for such options shall be $1.82, which is the price
per share assigned to the common stock of the Parent to finance the Merger and
related transactions (the “Going-In Common Equity Value Per Share”).  The Employee will also receive a nonqualified
option to purchase shares of common stock of the Parent representing an
additional 2.25% of the common stock of the Parent, determined on a fully
diluted basis as of the Closing, pursuant to the Parent’s Stock Option
Plan.  The exercise price per share for
such options shall be $3.64, (two times the Going-In Common Equity Value Per
Share).  Each of the

 

3

 

stock options granted pursuant
to this Section 2(c) will vest and become exercisable in equal
quarterly installments over a four year period (provided the Employee is
continuously employed by the Employer through the applicable vesting date),
beginning at the end of the first full calendar quarter after the date of
grant, subject to 100% acceleration of vesting upon a Change in Control (as defined
below).  Notwithstanding anything
contained in the Parent’s Stock Option Plan or this Agreement to the contrary,
vesting of all such options shall accelerate upon termination of the Employee’s
employment due to the death or Disability (as defined below) of Employee.  The provisions of this
Section 3(c) shall supersede any conflicting provision of the
Parent’s Stock Option Plan or the applicable stock option agreements between
the Parent and the Employee.

 

(ii)                                  If
the Employee’s employment is terminated by the Employer without Cause (as
defined below) or by the Employee as a resignation for Good Reason (as defined
below), the stock options shall become vested with respect to the number of
shares that would have vested if the Employee’s employment would have continued
for an additional twenty-four month period. 
Following any such termination described in this
Section 3(c)(ii) or termination due to the Employee’s Disability or
death, the stock options shall remain exercisable until the earlier of
(1) the original expiration date of the option, or (2) one year
following the date Parent shares to which the Employee is entitled under the
options described in this Section 3(c) are registered with the
Securities and Exchange Commission.  In
the event the Employee’s employment terminates for reasons other than death,
Disability of the Employee, termination by the Employer without Cause or
termination by the Employee as a Resignation for Good Reason, then vested
options shall remain exercisable for ninety days following such termination
(but not beyond the full original term of the option).

 

4

 

For purposes
of this Agreement, “Change in Control” shall mean consummation of (i) a
sale of all or substantially all of the consolidated assets of the Parent and
its subsidiaries to a person who is not either a member of, or an affiliate of
a member of, the Initial Investor Group (as defined below); or (ii) a sale
by the Parent, one or more members of the Initial Investor Group or any of
their respective affiliates resulting in more than 50% of the capital stock of
the Parent that ordinarily votes for directors (“Voting Stock”) being held by a
person or group (as such terms are used in the Securities Exchange Act of 1934,
as amended) that does not include any member of the Initial Investor Group or
any of their respective affiliates; or (iii) a merger or consolidation of
the Parent into another person as a result of which a person or group acquires
more than 50% of the Voting Stock of the Parent that does not include any
member of, or an affiliate of a member of, the Initial Investor Group; provided,
however, that a Change in Control shall occur if and only
if after any such event listed in (i)-(iii) above the Initial
Investor Group is unable to elect a majority of the Board of the entity that
purchased the assets in the case of an event described in (i) above, the
Parent in the case of an event described in (ii) above, or the resulting entity
in the case of an event described in (iii) above, as the case may be.  The “Initial Investor Group” shall mean Ares
Corporate Opportunity Fund, L.P. and any other fund under the management of
Ares Management, L.P. or its affiliates (collectively, “Ares”) and OCM
Opportunities Fund II, L.P. and any other fund under the management of Oaktree
Capital Management or its affiliates (collectively, “Oaktree”).

 

(d)                                 Parent
and Employee shall enter into the Rollover Option Agreements on the date
hereof.

 

4.                                       Duties.  During the Term of Employment, (i) the Employee
shall be engaged as the Chairman of the Board and Chief Executive Officer of
Maidenform, Inc. and its subsidiary companies (hereinafter individually
and collectively along with the Parent called the “Employer’s Group”) and
(ii) so

 

5

 

long as service as both
Chairman of the Board of Directors of Parent and Chief Executive Officer of
Maidenform, Inc. is permissible under applicable law, regulations and the
corporate governance requirements of any stock exchange or market quotation
system on which the shares of Parent are listed or quoted, the Employee shall
also serve as Chairman of the Board of Directors of Parent.  If, for the reasons set forth in the
immediately preceding sentence, the Employee cannot serve as both Chairman of
the Board of Directors of Parent and Chief Executive Officer of
Maidenform, Inc., so long as service as both Chief Executive Officer of
Maidenform, Inc. and on the Board of Directors of Parent is permissible
under applicable law, regulations and the corporate governance requirements of
any stock exchange or market quotation system on which the shares of Parent are
listed or quoted, the Employee shall serve as Chief Executive Officer of
Maidenform, Inc. and as a member of the Board of Directors of Parent.  The Employee shall have the full
responsibility and authority to manage and direct the business of the Employer,
subject to the supervision of the Board of Directors.  In addition, the Employee shall have such
other or more specific responsibilities or duties with respect to the business
of the Employer consistent with the Employee’s position as Chief Executive
Officer as may be determined and assigned to the Employee from time to time by
or upon the authority of the Board of Directors of the Employer or the
Parent.  The Employee shall report to the
Boards of Directors of the Employer and the Parent.  The Employee shall also serve as a Director
of the Parent and as an Officer or Director of any member of the Employer’s
Group as requested by the Employer without any additional compensation
therefore other than as specified in this Agreement.  The Company has Director’s and Officer’s
Liability Insurance in effect and will maintain Director’s and Officer’s
Liability Insurance Coverage uninterruptedly in effect during the Term of this
Agreement.

 

5.                                       Extent
of Service.  The Employee agrees to
devote his best efforts, energies and skills to the faithful discharge of the
duties and responsibilities attributable to his offices, and to this end

 

6

 

will devote his full working
time and attention to the business and affairs of the Employer’s Group.  Employee shall be based at the Employer’s
Bayonne, New Jersey office and its New York City office, but shall perform
services hereunder at other locations as shall be reasonably appropriate.  Notwithstanding the foregoing, it is
understood that the Employee may devote reasonable time and attention
consistent with the practice of other senior executives similarly situated, to
civic or community affairs and to service on the Board of Directors or Advisory
Board of other non-competing corporations, provided that (i) in addition
to any service on the Board of Directors of Samsonite Corporation (which service
shall not be required under this Agreement) and any service on other Boards of
Directors at the request of Ares (which service shall not be required under
this Agreement), the Employee shall serve on no more than two such Corporate
Boards or Advisory Boards at any time; (ii) the Compensation Committee of
the Board shall have approved such Board memberships, which approval shall not
be unreasonably withheld; and (iii) it does not interfere in any material
way with the performance of his responsibilities to the Employer under this
Agreement.  In the event the Employee
serves on the Board of Directors of Samsonite Corporation or any other Board of
Directors at the request of Ares (other than Parent and its subsidiaries), he
will receive the compensation, if any, paid to nonemployee directors of those
companies.

 

6.                                       Expenses.  The Employee is authorized to incur
reasonable, ordinary and necessary expenses in the performance of his duties
hereunder consistent with the Employer’s existing expense reimbursement policy,
as it may be amended from time to time, and the Employer shall reimburse the
Employee for all such expenses upon the presentation by the Employee, from time
to time, of an account of such expenditures. 
The Employer shall pay or reimburse the Employee for his reasonable
attorneys’ fees in connection with the negotiation of this Employment
Agreement, upon presentation of documentation, including time records.

 

7

 

7.                                       Vacation.  The Employee shall be entitled to twenty (20)
days of paid vacation during each of the successive twelve (12) month periods
comprising the Term of Employment, or a pro rata portion thereof for any such
successive period which is less than twelve (12) months.  Vacation hereunder shall be taken at times
which are mutually determined by the Employer and the Employee not to
interfere, in any material respect, with the Employee’s performance of his
duties hereunder.

 

8.                                       Employee
Benefits.  The Employee shall be
entitled during the Term of Employment to participate in any employee benefit
program or arrangement maintained by the Employer which is generally available
to other senior employees of the Employer, including any qualified or
non-qualified retirement or deferred compensation arrangements or 401(k)
savings plan, life insurance, medical, long-term disability plans, severance
arrangements, or other allowances.  Such
participation shall be in accordance with all applicable terms and conditions
of such plans or programs, including, without limitation, provisions respecting
the satisfaction of any applicable eligibility periods for plan participation
and the modification or termination of such plans; provided, however,
that the Employee’s service with Employer prior to the Closing of the Merger
under the Merger Agreement shall count towards satisfaction of any eligibility
or vesting requirements under such plans or programs.  In addition, during the Term of Employment,
the Employer shall lease an automobile of the Employee’s choice for the Employee’s
use, provided that, before any capital cost reduction payments, the lease
payments for a three-year lease shall not exceed $1,200 per month, and the
Employer shall also reimburse the Employee for the cost of a monthly garage
space to park the leased automobile and for the monthly cost of insurance for
the leased automobile during the Term of Employment; provided, however,
that the total of such reimbursed lease, garage and insurance costs shall not
exceed $2,500 per month.  As an
alternative to such reimbursement of lease, garage and insurance costs (and not
in addition thereto), during the Term of Employment the

 

8

 

Employer shall provide the Employee
with the use of an automobile and driver, with a monthly cost not to exceed
$2,500.

 

9.                                       Termination
of Employment.  Notwithstanding any
other provision of this Agreement, the Employee’s employment under this
Agreement may be terminated at any time by the Employer in the event of:

 

(A)                              (i) The Employee’s conviction
for or entry of a plea of guilty or nolo contendere with respect to a felony or
any crime that constitutes a misdemeanor involving moral turpitude under
federal law or the law of any state, (ii) the Employee’s willful
misappropriation of funds or property of the Employer or other acts of fraud,
dishonesty self-dealing, any significant violation of any statutory or common
law duty of loyalty to the Employer, (iii) the Employee’s perpetration of
an illegal act which causes material economic injury to the Employer, or
(iv) a material breach of this Agreement or the Employee’s failure to
perform his employment duties in any material respect, provided that as to
(iv), the Employee shall be given notice and an opportunity, not to exceed ten
(10) days, to effectuate a cure, provided that such breach or failure is
susceptible to cure, as determined by the Board of Directors, in its sole
discretion in good faith (hereinafter “Cause”).

 

(B)                                The Employee’s death;
or

 

(C)                                The Employee’s
inability due to any physical or mental condition of the Employee, to perform
his duties hereunder for a period of ninety (90) consecutive days or one
hundred twenty (120) days within any twelve (12) month period (hereinafter
“Disability”);

 

by written
notice to the Employee (except that notice of termination shall not be required
in the case of the Employee’s death) specifying the event relied upon for such
termination and the effective date of such

 

9

 

termination
(the effective date of any termination of employment hereunder is referred to
as the “Termination Date”).

 

10.                                 Payments
Upon Termination of Employment. 
(a)  In the event the Employee’s employment under this Agreement is
terminated for any reason specified in Section 9 above, this Agreement
shall terminate and be deemed cancelled and the Employer shall be under no
obligation hereunder either to continue the Employee’s employment or to provide
the Employee with any payment or benefit of any kind whatsoever, except for the
Employee’s Base Salary through the Termination Date and such vested benefits or
rights which the Employee may have accrued through the Termination Date
hereunder or under any benefit plan of Employer (other than any severance pay
plan maintained by the Employer).  In
addition, in the event of termination pursuant to 9(B) or (C) above,
the Employer shall also pay the amount of any incentive compensation to which
the Employee would have been entitled for the year of termination had the
Employee’s employment not terminated, prorated to the Termination Date, payable
when such incentive compensation would be payable to other employees for that
year and based upon the Employer’s financial performance for the full
applicable year.  In addition, in the
event of termination pursuant to 9(B) or (C) above, the Employee
shall be entitled to benefits under any group life insurance or disability
insurance benefits provided in accordance with the Employer’s welfare benefit
plans.

 

(b)                                 The
Employee’s employment under this Agreement may also be terminated on fifteen
(15) days prior notice by the Employer not for Cause and it may be terminated
by the Employee for Good Reason if circumstances constituting Good Reason
exist, and neither of such terminations of employment shall be a breach of this
Agreement by the Employer so long as the benefits set forth below are provided
to the Employee.  In the event that the
Employee’s employment with the Employer is terminated by the Employer without
Cause or the Employee resigns employment with the Employer for Good Reason,
then, in addition to the Employee’s Base Salary through the Termination Date
and such vested

 

10

 

benefits or rights which the
Employee may have accrued through the Termination Date hereunder or under any
benefit plan of the Employer (other than any severance pay plan maintained by
the Employer), subject to the Employee’s execution and delivery of a release,
to the fullest extent permitted by law in favor of the Employer in substantially
the form attached hereto, as may be modified to take into account changes in
applicable law, the Employee will be entitled to the following.

 

(1)                                  Payment of a lump sum
equal to two times the sum of (i) his Base Salary (as in effect on the
Termination Date), and (ii) his average annual bonus (taking into account
all annual bonuses paid under Section 3(b) hereof for the applicable
year) over the three calendar years immediately preceding his termination of
employment.  This amount shall be subject
to tax and other required withholdings and be payable within ten days of the
date of termination of employment (but not prior to the end of the Revocation
Period (as defined in Exhibit A hereto)).

 

(2)                                  In addition, if the
Employee or his dependents are otherwise eligible for COBRA continuation of
group health plan coverage and timely elect to receive it, the Employer shall
pay the cost of such COBRA coverage in an amount equal to 100% of the monthly
premium for such coverage for eighteen months.

 

Notwithstanding
the foregoing, nothing in this Agreement shall be construed to require the
Executive to seek other employment following the termination of his employment
hereunder.  For the avoidance of doubt,
the Employer giving notice of nonrenewal of the term pursuant to
Section 2(b) above shall not be treated as a termination of the
Employee’s employment by the Employer.

 

(c)                                  For
the purposes of this Agreement “Good Reason” shall mean:

 

11

 

(1)                                  The assignment to the
Employee of duties inconsistent in any material way with his position
(including title and reporting requirements), authority, duties, or
responsibilities;

 

(2)                                  Employee’s ceasing to
be a member of the Board of Directors of the ultimate parent corporation of the
Employer, other than such cessation resulting from a prohibition of the
Employee holding both the position of Chief Executive Officer of the Employer
and being a member of the Board of Directors of Parent under applicable law,
regulations or the corporate governance requirements of any stock exchange or
market quotation system on which the shares of Parent are listed are quoted;

 

(3)                                  Reduction in the
Employee’s Base Salary or annual bonus opportunity; or

 

(4)                                  Relocation of the
Employee to a location outside a radius of 50 miles of the Employer’s Bayonne,
New Jersey office and its New York, NY office;

 

provided that,
as to (1), (2) and (3), the Employer shall be given notice and an
opportunity, not to exceed ten (10) days, to effectuate a cure for such
asserted “Good Reason” by the Employee.

 

(d)                                 Following
the Employee’s termination of employment with the Employer, any shares of stock
of Parent acquired by him may be sold subject to the rights of first offer
under the Stockholders Agreement by and among Parent, the Ares Investors, the
Oaktree Investors and certain other investors and management investors listed
on the signature pages thereto, dated as of May 11, 2004 (the
“Stockholders Agreement”).

 

(e)                                  In
the event the Employee’s employment is terminated prior to consummation of an
Initial Public Offering (as defined in the Stockholders Agreement) by the
Employer for Cause or by the Employee not for Good Reason, the Parent shall
have the option, exercisable at any time during the

 

12

 

180 day period following the
Termination Date, to purchase (A) all Parent stock held by the Employee
which was obtained upon exercise of a stock option under a Rollover Option
Agreement at a price per share equal to the lesser of (i) the fair market
value per share of such stock on the date of purchase (as determined by the
Board of Directors of the Parent, in good faith), or (ii) the amount per
share paid by the Initial Investor Group (with appropriate adjustments as
determined by the Board of Directors of the Parent, in good faith,  to reflect share splits and other similar
recapitalizations) (the lesser of (i) or (ii) is referred to herein
as the “Section 10 Price Per Share”) and (B) all Rollover Stock
Options held by the Employee (or his permitted transferees) for an amount equal
to the number of shares subject to the option multiplied by the excess, if any,
of the Section 10 Price Per Share plus the then Option Adjustment Amount
per share (as defined in the applicable Rollover Option Agreement) over the
then exercise price per share of the option. 
Any such purchase shall occur not later than fifteen (15) days after the
Parent’s option to purchase hereunder is exercised; provided, however,
that a purchase shall not occur if it would result in a breach of any provision
of any debt instrument of the Parent or its affiliates, and in such case the
date on which the purchase will occur shall be deferred until the earliest date
on which such purchase would not result in a breach.  For purposes of determining the
Section 10 Price Per Share, the parties hereto agree that the amount paid
by the Initial Investor Group for Parent shares was allocable one half to
Parent common stock and one half to Parent Preferred Stock (as defined in Parent’s
2004 Rollover Stock Option Plan).

 

(f)                                    In
the event the Employee’s employment is terminated prior to an Initial Public
Offering by the Employer not for Cause, by the Employee for Good Reason or due
to the Employee’s death or Disability, then the Employee (or, in the case of
his death, his estate) shall have the option, exercisable at any time during
the 180 day period following the Termination Date, to sell to the Parent
(A) all Parent stock held by the Employee which was obtained upon exercise
of a stock option under a Rollover

 

13

 

Option Agreement at a price per
share equal to the Section 10 Price Per Share, and (B) all Rollover
Stock Options held by the Employee for an amount equal to the number of shares
subject to the option multiplied by the excess, if any, of the Section 10
Price Per Share plus the then Option Adjustment Amount per share over the then
exercise price per share of the option. 
Any such sale shall occur not later than fifteen (15) days after the
option to sell hereunder is exercised; provided, however, that a sale
shall not occur if it would result in a breach of any provision of any debt
instrument of the Parent or its affiliates, and in such case the date on which
the sale will occur shall be deferred until the earliest date on which such
sale would not result in a breach.

 

11.                                 Confidentiality.  The Employee recognizes and acknowledges that
the Proprietary Information (as hereinafter defined) is a valuable, special and
unique asset of the Employer.  As a
result, during the Term of Employment and thereafter, the Employee shall not,
without the prior written consent of the Board, for any reason, either directly
or indirectly, divulge to any third party (except as may be required to further
the interests of the Employer) or use for his own benefit, or for any purpose
other than the exclusive benefit of the Employer, any and all confidential,
proprietary, business and technical information or trade secrets of the
Employer’s Group (“Proprietary Information”) revealed, obtained or developed in
the course of his employment with the Employer. 
Such Proprietary Information shall include but shall not be limited to,
marketing and development plans, confidential cost and pricing information,
identities of customers and suppliers, the relationship of the Employer’s Group
with actual or prospective customers who are engaged in discussions with the
Employer’s Group, the needs and requirements of any such customers, and any
other confidential information relating to the business of the Employer’s
Group, provided that nothing herein contained shall restrict the Employee’s
ability to make such disclosures during the course of his employment as may be
necessary or appropriate to the effective and efficient discharge of his duties
hereunder or such disclosures as may be required by law; and further provided

 

14

 

that nothing herein contained
shall restrict Employee from divulging or using for his own benefit or for any
other purpose any Proprietary Information which is readily available to the
general public so long as such information did not become available to the
general public as a direct or indirect result of Employee’s breach of this
Section 11.

 

12.                                 Property.  All Proprietary Information shall be and
remain the sole property of the Employer. 
During the Term of Employment, and thereafter, Employee shall not remove
from the Employer’s Group offices or premises any documents, records,
notebooks, files, correspondence, reports, memoranda or similar materials of or
containing information of the type identified in Section 11 hereof, or
other materials or property of any kind unless necessary or appropriate in
accordance with his duties and responsibilities hereunder and, in the event
that such materials or property are removed, all of the foregoing shall be
returned to their proper files or places of safekeeping as promptly as
reasonably possible after the removal shall serve its specific purpose.  Employee shall not make, retain, remove
and/or distribute any copies of any of the foregoing for any reason whatsoever
except as may be necessary in the discharge of his assigned duties; and upon
the termination of his employment with the Employer, he shall leave with or
return to the Employer all originals and copies of the foregoing then in his
possession, whether prepared by Employee or by others.

 

13.                                 Covenant
not to Compete.  In consideration for
the Employer’s covenants set forth in Section 3(c)(ii) and
Section 10(b) hereof, the Employee shall not, during the Term of
Employment and for a period of two (2) years after his employment
terminates for any reason do any of the following directly or indirectly
without the prior written consent of the Board:

 

15

 

(a)                                  engage or participate
in any business activity directly competitive with the business of the
Employer’s Group as conducted upon the termination of the Employee’s employment
with the Employer;

 

(b)                                 become interested in
(as owner, stockholder, lender, partner, co-venturer, director, officer,
employee, agent, consultant or otherwise) any person, firm, corporation,
association or other entity engaged in any business that is, taken as a whole,
directly competitive with the business of the Employer’s Group as conducted
upon the termination of the Employee’s employment with the Employer, or become
interested in (as owner, stockholder, lender, partner, co-venturer, director,
officer, employee, agent, consultant or otherwise) any subsidiary or division
of the business of any person, firm, corporation, association or other
affiliate where such portion of such business is directly competitive with the
business of the Employer’s Group as conducted upon termination of the Employee’s
employment with the Employer. 
Notwithstanding the foregoing, nothing contained in this Section 13
shall prohibit the Employee from (i) holding not more than five percent
(5%) of the outstanding securities of any class of any publicly-traded company,
or (ii) after the Term of Employment engaging or participating in or
having an interest in (as owner, stockholder, lender, partner, co-venturer,
director, officer, employee, agent, consultant or otherwise) any subsidiary or
division of the business of any person, firm, corporation, association or other
affiliate where such portion of such business is not directly competitive with
the business of the Employer’s Group as conducted upon termination of the
Employee’s employment with the Employer, provided Employee does not breach the
provisions of Section 13 (c) or (d) or (e), hereof;

 

16

 

(c)                                  solicit either
directly or indirectly any customer of the Employer’s Group with whom the
Employer’s Group shall have dealt regularly at any time during the one
(1) year period immediately preceding the termination of the Employee’s
employment with the Employer for the purpose of offering or selling any
products or services which are identical, substantially similar or comparable
to the products or services then offered to the customer by the Employer’s
Group;

 

(d)                                 influence or attempt
to influence any supplier, customer, or potential customer of the Employer’s
Group to terminate or modify any written or oral agreement or course of dealing
with the Employer’s Group; or

 

(e)                                  (i) influence or
attempt to influence any person to terminate or modify his employment with the
Employer’s Group, or (ii) employ directly or indirectly, any person
employed by the Employer’s Group as an employee at any time during the six
(6) month period preceding the effective date of the Employee’s
termination.

 

14.                                 Specific
Performance.  The Employee
acknowledges that the services to be rendered by the Employee are of a special,
unique and extraordinary character and, in connection with such services, the
Employee will have access to confidential information vital to the Employer’s
business and the business of its subsidiaries and affiliates.  By reason of this, the Employee acknowledges
consents and agrees that if the Employee violates any of the provisions of
Sections 11, 12 or 13 hereof, the Employer would sustain irreparable
injury and that money damages would not provide adequate remedy to the Employer
and that, in addition to any other remedies the Employer might have, including
money damages, the Employer shall be entitled to have Sections 11, 12 and
13 specifically enforced by any court having jurisdiction by means of any and
all equitable remedies.  The provisions
of Sections 10(e), 10(f), 11, 12, 13, 14 and 19 shall survive the
termination of this Agreement.

 

17

 

15.                                 Notices.  Any notice required or permitted to be given
under this Agreement shall be sufficient if in writing, and shall be delivered
personally by telecopier or by courier providing for next day delivery or sent
by registered or certified mail return receipt requested to the following
addresses:

 

To the
Employer:

 

Maidenform, Inc.

154 Avenue E

Bayonne, New Jersey  07002

Attention:

Steven N. Masket

Telecopier:  201-436-9506

 

To the
Employee:

 

Thomas Ward
[* * *]

 

With a copy
to:

 

Alan S.
Jacobs, Esq.

The Jacobs
Group P.L.L.C.

45 Rockefeller
Plaza, Suite 2026

New York,
NY  10111

Telecopier:
212-319-0856

 

Any such
notices shall be deemed given, if personally, upon delivery; if sent by
certified or registered mail, 3 days after deposit (postage pre-paid) with
the U.S. Mail Service; if by courier service providing for next day delivery,
the next day following deposit with such courier; and, if telecopied, when
telecopied.  Any party may change the
address for notices by sending written notice of such change of address in
accordance with this Section 15.

 

16.                                 Benefits.  This Agreement shall inure to the benefit of
and shall be binding upon the Employer and its successors and assigns, and upon
the Employee, his heirs and legal representatives.

 

18

 

This Agreement and all rights
and obligations hereunder are personal to the Employee and shall not be
assignable.

 

17.                                 Entire
Agreement.  This Agreement embodies
the entire agreement of the parties concerning the subject matter hereof and
supersedes any prior or contemporaneous agreements or understandings in
connection therewith.  Without limiting
the generality of the foregoing, this Agreement, so long as it becomes
effective under Section 2(a) above, supersedes the Employment
Agreement dated as of July 30, 2001 between the Employer and the Employee
which, upon the beginning of the Term of Employment hereunder, shall have no
further force or effect.  The Agreement
may be amended or modified only by a written instrument executed by both parties
hereto.

 

18.                                 Severability.  If any term or provision of this Agreement is
held by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of the terms and provisions of this Agreement shall remain in full
force and effect and shall in no way be affected or invalidated.  To the extent required to enforce any provision
of this Agreement, such provision may be reformed in order to preserve its
validity if it would otherwise be held unenforceable.

 

19.                                 Indemnification.  The indemnification provisions in the
Parent’s Amended and Restated Certificate of Incorporation covering officers of
the Parent and the Employer shall apply to the Employee in his capacity as an
employee (or former employee), such indemnification to be in addition to any
other indemnification right in favor of the Employee.

 

20.                                 Withholding.  The Employer may deduct and withhold from any
amounts which it is otherwise obligated to pay hereunder any amount which it
may determine it is required to deduct or withhold pursuant to any applicable
statute, law, regulation or order of any jurisdiction whatsoever.

 

19

 

21.                                 Governing
Law.  This Agreement shall be subject
to, and governed, construed and enforced in accordance with, the laws of the
State of New York, without giving effect to the principles thereof relating to
the conflict of laws.

 

20

 

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the date first
above written.

 

 

	
  MAIDENFORM, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Steven N. Masket

  	
   

  	
   

  	
  /s/ Thomas Ward

  
	
   

  	
  Name: Exec. V.P. - Chief Legal Officer

  	
   

  	
  Thomas Ward

  
	
   

  	
  Title: Steven N. Masket

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Solely with respect to Sections 3(c), 3(d),

  4, 10(e), 10(f) and 19:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MF ACQUISITION CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ David B. Kaplan

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]