Document:

Exhibit 10.1

 

 

TERMINATION OF THE
DEVELOPMENT, COMMERCIALIZATION

 

AND

 

LICENSE AGREEMENT

 

MADE BETWEEN VERNALIS
(R&D) LIMITED

 

Portions of this Exhibit have been omitted and
filed separately with the Secretary of the Commission pursuant to the Company’s
application requesting confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.

 

 

TERMINATION OF THE DEVELOPMENT,
COMMERCIALIZATION AND LICENSE AGREEMENT MADE BETWEEN VERNALIS (R&D) LIMITED
(THEN BRITISH BIOTECH PHARMACEUTICALS LIMITED) AND IMMUNOGEN INC, ON 4TH
MAY 2000.

 

This Termination Agreement (this “Agreement”)
is effective as of January 7, 2004 (the Termination Effective Date”), by
and between ImmunoGen, Inc. (“ImmunoGen”), a Massachusetts corporation with a
principal place of business at 128 Sidney Street, Cambridge, MA 02139, U.S.A
and Vernalis (R&D) Limited (“Vernalis”), an English corporation with a
principal place of business at Oakdene Court, Winnersh, Berkshire, RG41 5UA,
United Kingdom.

 

WHEREAS, ImmunoGen and Vernalis have
previously entered into a Development, Commercialization and License Agreement
dated as of May 4, 2000, as supplemented by a letter agreement (the “Letter
Agreement”) dated as of August 2, 2002 (as so supplemented, the “Existing Agreement”);
and

 

WHEREAS, ImmunoGen and Vernalis wish to
terminate the Existing Agreement effective as of the Termination Effective
Date, and wish to set forth herein the mutual understanding of the parties as
to the consequences of such termination.

 

NOW, THEREFORE, in consideration of the
mutual covenants and agreements set forth herein and for other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
undersigned hereby agree as follows:

 

1.                                       Defined terms in the Existing Agreement shall be deemed to have the
same meaning herein.

 

In addition the following terms shall have
the following meanings:

 

“Contingent Payment” means (a) *****(*****)
if ***** patients have been enrolled to the US Study prior to 30th
June 2004 and (i) not all of those patients have been completed at 30th
June 2004 or (ii) all of those patients have been completed and there is
***** or (b) *****(*****) if enrolment of the first ***** patients to
the US Study has not completed by 30th June 2004.

 

“Compound Supply Batch” means the batch of
P009031001 sent to Vernalis by ImmunoGen as described on the invoice attached
hereto as Exhibit A and incorporated herein by reference.

 

“Compound Supply Payment” means  *****.

 

“UK Study” means the ongoing UK phase I daily
dosing study (C10/IVB/002)

 

“US Study” means the ongoing US phase II
weekly dosing study (C10/IVB/001)

 

References to dollars are to US dollars.  References to ***** shall be interpreted in
accordance with the protocol for US Study. 
A patient shall be deemed to be enrolled when he/she has received
his/her first dose of Licensed Compound.

 

2.                                       Vernalis and ImmunoGen hereby terminate the Existing Agreement with
effect from the Termination Effective Date. 
Such termination is subject to the terms of this Agreement.  In deciding to effect such termination, both
parties have taken into account the other provisions of this Agreement.  Except as otherwise expressly provided in this
Agreement, as of the Termination Effective Date, all rights, obligations, and
licenses of the parties under the Existing Agreement shall terminate and be of
no further force and effect.  In
connection therewith, effective as of the Termination Effective Date, each of
ImmunoGen and Vernalis hereby releases the other and its respective officers,
employees, Affiliates and agents from any and all

 

 

claims, actions or causes of action by it and
arising from or related to the Existing Agreement, the transactions
contemplated thereby or the termination thereof; provided, that, this Section 2
shall not be interpreted to release either ImmunoGen or Vernalis from any
obligation expressly set forth in this Agreement, including, without
limitation, their respective continuing obligations set forth in clause 10
below.

 

3.                                       Vernalis shall use all reasonable efforts to complete the UK Study
no later than ***** and to make a preliminary report on the results to
ImmunoGen no later than ***** (*****) ***** after the last patient last visit
for the UK Study in accordance with the protocol therefor.

 

4.                                       Vernalis shall use all reasonable efforts to complete the enrolment
to the US Study of the initial ***** patients (as contemplated by the protocol
for the US Study) by 30th June 2004.  Such reasonable efforts shall consist solely of keeping open all
of the sites that are open as at 1st December 2003 and making
at least ***** per site between 1st January 2004 and 30th
June 2004 and making a preliminary report on the results to ImmunoGen no
later than ***** (*****) ***** after the earlier   of (a) completion of the last patient last visit for the first
****** patients enrolled to the US Study and (b) 30th
June 2004.

 

5.                                       Vernalis is permitted to sub-contract the performance of any work to
be carried out by Vernalis under this Agreement to any third party or third
parties of Vernalis’ choosing, provided that Vernalis shall remain primarily
responsible to ImmunoGen for the performance of any such third party or third
parties.

 

6.                                       Vernalis’s final obligations as regards the US Study shall depend on
the status of the US Study as at 30th June 2004:

 

6.1         if *****
patients complete the US Study prior to 30th June 2004 but
there are ***** then Vernalis shall terminate the US Study, following which its
only obligations shall be to report the results to ImmunoGen as described in
clause 4 of this Agreement.

6.2         if (a)
***** patients complete the US Study prior to 30th June 2004
and there is at ***** or (b) enrolment of the first ***** patients to the US
Study has completed by 30th June 2004 but not all such patients
have been completed at that date (regardless of whether there have been *****),
or (c) enrolment of the first ***** patients to the US Study does not complete
(regardless of whether there have been *****), Vernalis shall immediately
transfer all responsibilities, including the IND and sponsorship of the US
Study, to ImmunoGen or its nominee (so that ImmunoGen can then complete the US
Study, or terminate it, as it sees fit), and Vernalis shall  provide such documentation and execute such
documents as may be reasonably necessary to effect such transfer to ImmunoGen
and, following this, Vernalis shall have no further obligations in respect of
the US Study. Documents shall only qualify as ‘reasonably necessary’ in this
context if ImmunoGen has made a request in writing to Vernalis, no later than
*****, that Vernalis supply such documents to ImmunoGen. In addition, upon
request from ImmunoGen, the parties shall discuss in good faith the possibility
of entering into a consulting agreement containing commercially reasonable
terms relating to certain consulting services to be performed by medically
qualified persons in connection with ImmunoGen’s conduct of the US Study post
30 June 2004.  If the parties do
not enter into such a consulting agreement, Vernalis shall, if requested by
ImmunoGen, suggest to ImmunoGen a third party consultant who ImmunoGen may wish
to use for such purposes.

 

7.                                       ImmunoGen shall supply Vernalis with the Compound Supply Batch in
accordance with the Specifications. If Vernalis requires any further supplies
of Licensed Compound in order for Vernalis to carry out its obligations under
clauses 3 and 4 above then ImmunoGen shall supply the same in accordance with
the Letter Agreement.   Clauses 22.5 to
22.9, 23, 25.1, 25.2, 26 and 28 of the Existing Agreement shall apply to such
supply save that in no circumstances shall Vernalis be obliged to make any
payment to ImmunoGen under such clauses and if there

 

 

is any conflict between the terms of this
Agreement and such clauses then this Agreement shall prevail.

 

8.                                       Vernalis acknowledges and agrees that ImmunoGen has sent Vernalis
the invoice for the Compound Supply Payment attached hereto as Exhibit A and
incorporated herein by reference. 
Vernalis shall use all reasonable endeavours to expedite the procedures
for the release of the Compound Supply Batch and shall pay ImmunoGen the
Compound Supply Payment within ***** (*****) ***** of such release by Vernalis.
If release is not ***** then the parties shall meet and discuss in good faith a
resolution of such issues.  Vernalis
shall also pay ImmunoGen the Contingent Payment if (and only if) any of the
scenarios set out in clause 6.2 occur. Vernalis shall not make the Contingent
Payment if ***** patients complete the US Study by 30 June 2004 and there
are not ***** amongst such patients. 
Vernalis shall make such payment (if applicable) within 30 days of
ImmunoGen sending Vernalis an invoice therefore (such invoice to be dated 30th
June 2004 or thereafter).   In
connection therewith (a) Vernalis acknowledges and agrees that ImmunoGen has
paid to Vernalis any and all amounts due and payable by ImmunoGen to Vernalis
under the Existing Agreement, and (b) ImmunoGen acknowledges and agrees that,
other than with respect to the payment of the Compound Supply Payment and (if
applicable) the Contingent Payment as described in this clause 8, Vernalis has
paid to ImmunoGen any and all amounts due and payable by Vernalis to ImmunoGen
under, or in connection with, the Existing Agreement.

 

9.                                       Neither party shall make any public announcements, either written,
oral or in any medium relating to the Existing Agreement, this Agreement, or
Licensed Compound without the consent of the other party (such consent not to
be unreasonably withheld).  Nothing in
the foregoing however shall prohibit a party from making disclosures to the
extent required under applicable federal or state securities laws or any rule
or regulation of any nationally recognised securities exchange, provided same
is accurate and complete.

 

10.                                 Clauses 47.2.1, 47.2.2, 47.2.4 (effect of termination), 53 (other
than 53.3) (confidentiality) and 56 (standstill) of the Existing Agreement
shall survive termination of the Existing Agreement.

 

11.                                 This Agreement shall be governed by and construed and interpreted in
accordance with the Laws of the State of New York and the parties submit to the
jurisdiction of the State or Federal courts 
located in the City of New York, New York, which courts have exclusive
jurisdiction in respect thereof.

 

This agreement has been executed on the
7thJanuary 2004

 

	
  Executed by Vernalis (R&D) Limited

  acting by

  	
   

  	
  /s/ Simon Sturge

  	
   

  
	
   

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Executed by ImmunoGen, Inc

  acting by

  	
   

  	
  /s/ Mitchel Sayare

  	
   

  
	
   

  	
   

  	
  Chief Executive Officer

  

 

 

Exhibit A

 

*****

 

 

Portions of
this Exhibit have been omitted and filed separately with the Secretary of the
Commission pursuant to the Company's application requesting confidential
treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.Exhibit 10.34

 

	
  THE IOWA
  STATE BAR ASSOCIATION

  Official Form No. 164

  	
   

  	
  Christopher
  L. Farwell ISBA # 9191

  	
   

  	
  FOR THE LEGAL EFFECT OF THE USE OF

  THIS FORM, CONSULT YOUR LAWYER

  

 

 

	
  Preparer
  Information

  	
  Christopher
  L. Farwell, 343 5th Avenue South, Clinton, (563) 242-6162

  	
   

  	
   

  	
   

  	
   

  
	
  Individual’s Name

  	
   

  	
  Street Address

  	
   

  	
  City

  	
   

  	
  Phone

  
								

 

	
   

  	
  SPACE ABOVE THIS LINE

  
	
   

  	
  FOR RECORDER

  

 

[LOGO]

 

LEASE - BUSINESS PROPERTY

 

THIS LEASE AGREEMENT, is
entered into this 11th day of March, 2004 by Clinton Base Company,
L.L.C.

 

 

	
  (“Landlord”)
  whose address for the purpose of this lease is

  1003 31st Avenue, Camanche, Iowa 52730 and

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Street and
  Number)

  	
   

  	
  (City)

  	
   

  	
  (State)

  	
   

  	
  (Zip Code)

  

 

Moulded Fibre Technology, Inc.

 

 

	
  (“Tenant”)
  whose address for the purpose of this lease is

  1521 Windsor Drive, Clinton, Iowa 52732

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Street and
  Number)

  	
   

  	
  (City)

  	
   

  	
  (State)

  	
   

  	
  (Zip Code)

  

 

1. PREMISES AND TERM.  The Landlord, in consideration of the rents,
agreements and conditions herein contained, leases to Tenant and Tenant leases
from Landlord, according to the terms and provisions of this lease, the
following described “premises”,
situated in Clinton County, Iowa:

 

Lot 4,
Manufacturing Meadows III 1st Addition, Clinton, Iowa, and also the East 35
feet of Lot 3, Manufacturing Meadows III 1st Addition, Clinton, Iowa

 

 

with the improvements thereon,
and all rights, easements and appurtenances, existing or to be constructed, for
a term of (ten) 10 years, commencing at midnight of the day previous to the
first day of the lease term, which shall be on the            
day of
                 ,
2004 and ending at midnight on the last day of the lease term, which shall be
on the              
day of
                 ,
2014, upon the condition that the Tenant pays rent thereof, and otherwise
performs as in this lease provided.

 

2. RENTAL. Tenant agrees to pay to Landlord as
rental for said term, as follows:  See
Addendum

 

All sums shall
be paid at the address of Landlord, as above designated, or at such other place
as the Landlord may, from time to time, designate in writing.

 

Delinquent
payments shall draw interest at (seven) 7% per annum from the due date, until
paid.

 

 

	
  © The Iowa
  State Bar Association 2003

  	
   

  	
  164 LEASE - BUSINESS PROPERTY

  
	
  IOWADOCS®

  	
   

  	
  Revised January, 1999

  

 

 

2(2). “TRIPLE NET” PROVISION. (OPTIONAL)

 

?? INITIAL IF APPLICABLE

 

	
  Applicable

  	
  Tenant
  agrees that all duties and obligations to repair, maintain and provide
  utilities and services (paragraphs 6 and 7). In pay taxes and special
  assessments (paragraph 10) and to pay for casualty and liability insurance (paragraph
  11) shall be borne solely by Tenant during the term of this lease.  (If the parties select this provision, all
  duties and obligations set forth in paragraphs 6, 7, and 10 shall be
  performed by the Tenant)(except to the extent stated in paragraphs 6(G) and 6
  (H)).

  
	
  Landlord

  
	
  Applcable

  
	
  Tenant

  

 

3. POSSESSION.  Tenant shall be entitled to possession on the first day of the
term of this lease, and shall yield possession to the Landlord at the end of
the lease term, except as herein otherwise expressly provided.

 

4. USE OF PREMISES.  Tenant covenants and agrees during the term of this lease to use
and to occupy the leased premises only for any legal use and occupancy

 

5. QUIET ENJOYMENT.  Landlord covenants that its estate in the premises is in fee
simple and that the Tenant, if not in default, shall peaceably have, hold and
enjoy the premises for the term of this lease. 
Landlord shall have the right to mortgage all of its right, title,
interest in said premises at any time without notice, subject to this lease.

 

6. EQUIPMENT, DECORATING, REPLACEMENT, REPAIR AND
MAINTENANCE.

 

DEFINITIONS

 

“Maintain”
means to clean and keep in good condition.

 

“Repair” means
to fix and restore to good condition after damage, deterioration or partial
destruction.

 

CONDITION OF PREMISES

 

A. Tenant takes the premises in its present
condition, except for such repairs and alterations as may be expressly
otherwise provided in this lease.

 

REPAIRS AND MAINTENANCE

 

B. Landlord shall replace and repair the
structural parts of the building.  For
purposes of this lease, the structural parts of the building shall mean the
foundation, exterior walls, load bearing components of interior floors and
walls, the roof and all sewers, pipes, wiring and electrical fixtures outside
of the structure

 

C. Repairs shall be performed and paid for by
the parties as follows:

(except to the
extent provided in paragraph 41 below)

 

	
   

  	
   

  	
  PERFORMANCE

  	
   

  	
  PAYMENT

  	
   

  
	
   

  	
   

  	
  L=Landlord

  T=Tenant

  	
   

  	
  %Landlord

  	
   

  	
  %Tenant

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interior walls, floors and ceilings

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Sewer, plumbing fixtures, pipes, wiring,
  electrical fixtures within the structure

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Heating equipment

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Air conditioning equipment

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Plate glass (replacement)

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Sidewalks

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Parking areas

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Other common areas

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  

 

D. Tenant shall be responsible for all
maintenance.

 

E. Any repair or maintenance not specifically
provided for above shall be performed and paid for by Tenant

 

F. Each party shall perform their
responsibilities of repair and maintenance to the end that the premises will be
kept in a safe and serviceable condition. Neither party will permit nor allow
the premises to be damaged or depreciated in value by any act, omission to act,
or negligence of itself, its agents or employees.

 

EQUIPMENT, DECORATING AND ALTERATIONS

 

G. The following items of equipment,
furnishings and fixtures shall be supplied and replaced by the parties as
follows:

 

	
   

  	
   

  	
  SUPPLIED 

  	
   

  	
  REPLACED 

  	
   

  
	
   

  	
   

  	
  L=Landlord

  T=Tenant

  	
   

  	
  L=Landlord

  T=Tenant

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Heating equipment*

  	
   

  	
  L

  	
   

  	
  T

  	
   

  
	
  Air conditioning equipment

  	
   

  	
  T

  	
   

  	
  T

  	
   

  
	
  Carpeting/floor covering

  	
   

  	
  T

  	
   

  	
  T

  	
   

  
	
  Drapes, shades, blinds

  	
   

  	
  T

  	
   

  	
  T

  	
   

  

 

*(for warehouse purposes)

 

Any similar equipment,
furnishings and fixtures not specifically provided for above shall be provided
and paid for by Tenant.

Tenant shall provide all trade
equipment, furnishings and fixtures used in connection with the operation of
its business, such as telephones, computers, desks, chairs, shelving and
similar items.

 

H. Landlord shall provide and pay for the
following items of interior decorating:

None

Tenant shall be responsible for
all interior decorating. Landlord shall provide and pay for the following items
of interior fit-up:  See Exhibit A
(Specifications)

 

2

 

AMERICANS WITH DISABILITIES ACT

 

I. Tenant will
make no unlawful use of said premises and agrees to comply with all valid
regulations of the Board of Health, City Ordinances or applicable municipality,
the laws of the State of Iowa and Federal government, but this provision shall
not be construed as creating any duty by Tenant to members of the general
public, provided, however, responsibility for compliance with the Americans
with Disabilities Act shall be performed and paid for by the parties as
follows:

 

	
   

  	
   

  	
  %Landlord

  	
   

  	
  %Tenant

  
	
  Common areas

  	
   

  	
  100

  	
   

  	
  0

  
	
  Tenants
  area:

  	
   

  	
   

  	
   

  	
   

  
	
  Initial compliance (specify)

  	
   

  	
  0

  	
   

  	
  100

  
	
  Future compliance

  	
   

  	
  0

  	
   

  	
  100

  

 

7.  UTILITIES AND
SERVICES.  Utilities and
Services shall be furnished and paid for by the parties as follows:

 

	
   

  	
   

  	
  FURNISHED

  	
   

  	
  PAYMENT

  	
   

  
	
   

  	
   

  	
  L=Landlord

  T=Tenant

  	
   

  	
  %Landlord

  	
   

  	
  %Tenant

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Electricity

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Gas

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Water and Sewer

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Garbage/Trash

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Janitor/Cleaning

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Common areas

  	
   

  	
  T

  	
   

  	
   

  	
   

  	
  100

  	
   

  
	
  Other:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

8.  TERMINATION,
SURRENDER OF PREMISES AT END OF TERM — REMOVAL OF FIXTURES.

 

(a)  TERMINATION.   This
lease shall terminate upon expiration of the original term; or if this lease
expressly provides for any option to renew, and if any such option is exercised
by the Tenant, then this lease will terminate at the expiration of the option
term or terms.

 

(c)  SURRENDER.   Tenant
agrees that upon the termination of this lease it will surrender and deliver
the premises in good and clean condition, except the effects of ordinary wear
and tear and depreciation arising from lapse of time, or damage without fault
or liability of Tenant.

 

(d)  HOLDING OVER.   Continued
possession by Tenant, beyond the expiration of its tenancy, coupled with the
receipt of the specified rental by the Landlord (and absent a written agreement
by both parties for an extension of this lease, or for a new lease) shall
constitute a month to month extension of this lease.

 

(e)  See Addendum

 

9.  ASSIGNMENT
AND SUBLETTING.  See
Addendum.

 

10.  REAL
ESTATE TAXES.

 

A. All
installments of real estate taxes would become delinquent if not paid during
the term of this lease, shall be paid by the parties in the following
proportions:

 

	
  Landlord 0%

  	
   

  	
  Tenant 100%

  	
   

  

 

B. Any
increase in such installments that exceeds the amount of the installment that
would be delinquent if not paid by 

	
  4-1-04

  	
   shall be paid as follows:

  
	
  Date

  	
   

  

 

	
  Landlord 0%

  	
   

  	
  Tenant 100%

  	
   

  

 

C. PERSONAL
PROPERTY TAXES.   Tenant agrees to timely pay all taxes,
assessments or other public charges levied or assessed by lawful authority
against its personal property on the premises during the term of this lease.

 

D. SPECIAL
ASSESSMENTS.   Special assessments that would be delinquent if
not paid during the term of this lease shall be timely paid by the parties in
the following proportions:

 

	
  Landlord 0%

  	
   

  	
  Tenant 100%

  	
   

  

 

E. Each party
reserves its right of protest of any assessment of taxes.

 

11. INSURANCE.

 

A. PROPERTY
INSURANCE.   Tenant agree to insure that
                
real and personal property for the full insurable value.  Such insurance shall cover losses included
in the Insurance Services Office Special Form Causes of Loss.  To the extent permitted by their policies
the Landlord and Tenant waive all rights of recovery against each other.

 

B. LIABILITY
INSURANCE.   Tenant shall obtain commercial general liability
insurance in the amounts of $ 1,000,000.00 each occurrence and
$5,000,000.00 annual aggregate per location. 
Such policy shall include liability arising from premises operations,
independent contractors, personal injury, products and completed operations and
liability assumed under an insured contract. 
This policy shall be endorsed to include the Landlord as an additional
insured.

 

C.  CERTIFICATES OF
INSURANCE.   Prior to the time the lease takes effect the Tenant
will provide the Landlord with a certificate of insurance with these property
and liability insurance requirements, such certificate shall include 30 days
advance notice of cancellation to the Landlord.  A renewal certificate shall be provided prior to expiration of
the current policies.

 

3

 

D. ACTS BY
TENANT.  Tenant will not do or omit
doing of any act which would invalidate any insurance, or increase the
insurance rates in force on the premises.

 

E.
RECOMMENDATIONS - IOWA INSURANCE SERVICES OFFICE.  Tenant further agrees to comply with recommendations of Iowa
Insurance Services Office and to be liable for and to promptly pay, as if
current rental, any increase in insurance rates on said premises and on the
building of which said premises are a part, due to increased risks or hazards
resulting from Tenant’s use of the premises otherwise than as herein
contemplated and agreed.

 

F. Tenant
shall provide a copy of this lease to their insurers.

 

12. LIABILITY FOR DAMAGE.  Each party shall be liable to the other for
all damage to the property of the other negligently, recklessly or
intentionally caused by that party (or their agents, employees or invitees),
except to the extent the loss is insured and subrogation is waived under the
owner’s policy.

 

13. INDEMNITY.  Except as provided in paragraph 21 (A) (5) and except for the
negligence of Landlord, Tenant will protect, defend and indemnify Landlord from
and against any and all loss, costs, damage and expenses occasioned by, or
arising out of, any accident or other occurrence, causing or inflicting injury
or damage to any person or property, happening or done in, upon or about the
premises, or due directly or indirectly to the tenancy, use or occupancy
thereof, or any part thereof by Tenant or any person claiming through or under
Tenant.

 

14. FIRE AND CASUALTY, 
(a) PARTIAL DESTRUCTION OF PREMISES.  In the event of a partial destruction or
damage of the premises, which is a business interference which prevents the
conducting of a normal business operation and which damage is reasonably
repairable within 180 days after its occurrences, this lease shall not
terminate but the rent for the premises shall abate during the time of such business
interference.  In the event of a partial
destruction, Landlord shall repair such damages within 180  days of its occurrence unless prevented
from so doing by acts of God, government regulations, or other causes beyond
Landlord’s reasonable control.

 

(b) ZONING. 
Should the zoning ordinance of the municipality in which this property
is located make it impossible for Landlord to repair or rebuild so that Tenant
is not able to conduct its business on these premises, than such partial
destruction shall be treated as a total destruction as provided in the next
paragraph.

 

(c) TOTAL DESTRUCTION OF BUSINESS USE.  In the event of a destruction or damage of
the leased premises including the parking
area (if parking area is a part of this lease) so that Tenant is not
able to conduct its business on the premises or the then current legal use for
which the premises are being used and which damages cannot be repaired within
180 days this lease may be terminated at the option of either the Landlord or
Tenant.  Such termination in such event
shall be effected by written notice of one party to the other, within twenty 20
days after such destruction.   Tenant
shall surrender possession within ten 10 days after such notice issues and each
party shall be released from all future obligations, and Tenant shall pay rent
pro rata only to the date of such destruction. 
In the event of such termination of this lease, Landlord at its option,
may rebuild or not, at its discretion.

 

15.  CONDEMNATION.

 

(a) DISPOSITION OF AWARDS.  Should the whole or any part of the premises
be condemned or taken for any public or quasi-public purpose, each party shall
be entitled to retain, as its own property, any award payable to it.  Or in the event that a single entire award
is made on account of condemnation, each party will then be entitled to take
such proportion of said award as may be fair and reasonable.

 

(b) DATE OF LEASE TERMINATION. If the whole of
the demised premises shall be so condemned or taken, the Landlord shall not be
liable to the Tenant except and as its rights are preserved as in paragraph 14
(a) above.

 

16. DEFAULT, NOTICE OF DEFAULT AND REMEDIES.

 

EVENTS OF DEFAULT

 

A. Each of the
following shall constitute an event of default by Tenant:

 

1. Failure to
pay rent when due.

 

2. Failure to
observe or perform any duties, obligations, agreements or conditions imposed on
Tenant pursuant to the terms of the lease.

 

3. Abandonment
of the premises, “Abandonment” means the Tenant has failed to engage in its
usual and customary business activities on the premises for more than fifteen
(15) consecutive business days.

 

4. Institution
of voluntary bankruptcy proceedings by Tenant; institution of involuntary
bankruptcy proceedings in which the Court orders relief against the Tenant as a
debtor; assignment for the benefit of creditors of the interest of Tenant under
this lease agreement; appointment of a receiver for the property or affairs of
Tenant, where the receivership is not vacated within ten (10) days after the
appointment of the receiver.

 

NOTICE OF DEFAULT

 

B. Landlord
shall give Tenant a written notice specifying the default and giving the Tenant
ten (10) days in which to correct the default. 
If there is a default (other than for nonpayment of a monetary
obligation of Tenant, including rent) that cannot be remedied in ten (10) days
by diligent efforts of the Tenant, Tenant shall propose an additional period of
time in which to remedy the default. 
Consent to additional time shall not be unreasonably withheld by
Landlord.  Landlord shall not be
required to give Tenant any more than three notices for the same default within
any 365 day period.

 

REMEDIES

 

C. In the
event Tenant has not remedied a default in a timely manner following a Notice
of Default, Landlord may proceed with all available remedies at law or in
equity, including but not limited to the following:

 

1. Termination.  Landlord may declare this lease to be
terminated and shall give Tenant a written notice of such termination.  In the event of termination of this lease,
Landlord shall be entitled to prove claim for and obtain judgment against
Tenant for the balance of the rent agreed to be paid for the term herein
provided, plus all expenses of Landlord in regaining possession of the premises
and the reletting thereof, including attorney’s fees and court costs, crediting
against such claim, however, any amount obtained by reason of reletting.

 

2. Forfeiture.  If a default is not remedied in a timely
manner, Landlord may then declare this lease to be forfeited and shall give
Tenant a written notice of such forfeiture, and may, at the time, give Tenant
the notice to quit provided for in Chapter 648 of the Code of Iowa.

 

17. RIGHT OF EITHER PARTY TO MAKE GOOD ANY DEFAULT OF THE
OTHER.  If default shall be
made by either party in the performance of, or compliance with, any of the
terms or conditions of this lease, and such default shall have continued for
thirty (30) days after written notice thereof from one party to the other, the
person aggrieved, in addition to all other remedies provided by law, may, but
need not, perform such term or condition, or make good such default and any
amount advanced shall be repaid forthwith on demand, together with interest at
the rate of (seven) 7% per annum, from the date of advance.

 

18. SIGNS. 
(a)  Tenant shall have the right
of attaching, painting or exhibiting signs on the leased premises, provided
only (1) that any sign shall comply with the ordinances of municipality in
which the property is located and the laws of the State of Iowa; (2) such sign
shall not change the structure of the building; (3) such sign, if and when
removed, shall not damage the building; and (4) such sign shall be subject to
the prior written approval of the Landlord, which approval shall not be
unreasonably withheld.

 

(b) Landlord
during the last ninety (90) days of this lease, or extension, shall have the
right to maintain in the windows or on the building or on the premises either
or both a “For Rent” or “For Sale” sign and Tenant will permit, at such time,
prospective tenants or buyers to enter and examine the premises.

 

4

 

19. MECHANIC’S LIENS.  Neither the
Tenant nor anyone claming by, through, or under the Tenant, shall have the
right to file or place any mechanic’s liens or other lien of any kind or
character whatsoever, upon the premises or upon any building or improvement, or
upon the leasehold interest of the Tenant, and notice is hereby given that no
contractor, sub-contractor, or anyone else who may furnish any material,
service or labor for any building, improvements, alteration, repairs or any
paid thereof, shall at any time be or become entitled to any lien on the
premises, and for the further security of the Landlord, the Tenant covenants
and agrees to give actual notice thereof in advance, in any and all contractors
and sub-contractors who may furnish or agree to furnish any such material,
service or labor.

 

21. ENVIRONMENTAL.

 

A. Landlord.  To the best of Landlord’s knowledge to date:

 

1. Neither
Landlord nor Landlord’s former or present tenants are subject to any
investigation concerning the premises by any governmental authority under any
applicable federal, state, or local codes, rules and regulations pertaining to
air and water quality, the handling, transportation, storage, treatment, usage,
or disposal of toxic or hazardous substances, air emissions, other
environmental matters, and all zoning and other land use matters.

 

2. Any
handling, transportation, storage, treatment, or use of toxic or hazardous
substances that has occurred on the premises has been in compliance with all
applicable federal, state and local codes, rules and regulations.

 

3. No leak,
spill release, discharge, emission or disposal of toxic or hazardous substances
has occurred on the premises.

 

4. The soil,
groundwater, and soil vapor on or under the premises is free of toxic or
hazardous substances.

 

5. Landlord
shall assume liability and shall indemnify and hold Tenant harmless against all
liability or expense arising from any condition which existed, whether known or
unknown, at the time of execution of the lease which condition is not a result
of actions of the Tenant or which condition arises after date of execution but
which is not a result of actions of the Tenant.

 

B. Tenant.  Tenant expressly represents and agrees:

 

1. During the
lease term, Tenant’s use of the property will not include the use of any
hazardous substance without Tenant first obtaining the written consent of
Landlord. Tenant understands and agrees that Landlord’s consent is at
Landlord’s sole option and complete discretion and that such consent may be
withheld or may be granted with any conditions or requirements that Landlord
deems appropriate.

 

2. During the
lease term, Tenant shall be fully liable for all costs and expenses related to
the use, storage, removal and disposal of hazardous substances used or kept on
the property by Tenant, and Tenant shall give immediate notice to Landlord of
any violation or any potential violation of any environmental regulation, rule,
statute or ordinance relating to the use, storage or disposal of any hazardous
substance.

 

3. Tenant, at
its sole cost and expense, agrees to remediate, correct or remove from the
premises any contamination of the property caused by any hazardous substances
which have been used or permitted by Tenant on the premises during any term of
this lease. Remediation, correction or removal shall be in a safe and
reasonable manner, and in conformance with all applicable laws, rules and
regulations. Tenant reserves all rights allowed by law to seek indemnity or
contribution from any person, other than Landlord, who is or may be liable for
any such cost and expense.

 

4. Tenant
agrees to indemnify and hold Landlord harmless from and against all claims,
causes of action, damages, loss, costs, expense, penalties, lines, lawsuits,
liabilities, attorney fees, engineering and consulting fees, arising out of or
in any manner connected with hazardous substances, which are caused or created
by Tenant on or after the date of this lease and during any term of this lease,
including, but not limited to, injury or death to persons or damage to
property, and including any [ILLEGIBLE] of the value of any leased premises
which may result from the foregoing. This indemnity shall survive the
cessation, termination, abandonment or expiration of this lease.

 

(b) Nothing herein contained shall be
construed as denying to Tenant the right to dispose of inventoried merchandise
in the ordinary course of the Tenant’s trade of business.

 

23. RIGHTS CUMULATIVE.  The various rights, powers, options,
elections and remedies of either party, provided in this lease, shall be
construed as cumulative and no one of them as exclusive of the others, or
exclusive of any rights, remedies or priorities allowed either party by law,
and shall in no way affect or impair the right of either party to pursue any
other equitable or legal remedy to which either party may be entitled as long
as any default remains in any way unremedied, unsatisfied or undischarged.

 

24. NOTICES AND DEMANDS.  Notices as provided for in this lease shall
be given to the respective parties hereto at the respective addresses
designated on page one of this lease unless either party notices the other, in
writing, of a different address. Without prejudice to any other method of
notifying a party in writing or making a demand or other communication, such
message shall be considered given under the terms of this lease when sent,
addressed as above designated, postage prepaid, by certified mail deposited in
a United States mail box.

 

25. PROVISIONS TO BIND AND BENEFIT SUCCESSORS, ASSIGNS,
ETC.  Each and every covenant
and agreement herein contained shall extend to and be binding upon the
respective successors, [ILLEGIBLE], administrators, executors and assigns of
the parties; except that if any part of this lease is held in joint tenancy,
the successor in interest shall be the surviving joint tenant.

 

26. CHANGES TO BE IN WRITING.  None of the covenants, provisions, terms or
conditions of this lease shall be modified, waived or abandoned, except by a
written instrument duly signed by the parties. 
This lease together with the attached
Addendum and Exhibits contains the whole agreement of the parties.

 

27. RELEASE OF DOWER.  Spouse of Landlord appears as a signatory to this lease solely
for the purpose of releasing dower, or distributive share, unless said spouse
is also a co-owner of an interest in the leased premises.

 

28. CONSTRUCTION.  Words and phrases herein, including acknowledgment hereof, shall
be construed as in the singular or plural number, and as masculine, feminine or
neuter gender according to the context.

 

	
  Moulded Fibre Technology, Inc.

  	
   

  	
  Clinton Base Company, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Ronald J. Lataille

  	
   

  	
  By:

  	
  /s/ Lynn V.
  Payne Member  MGR

  
	
   

  	
  Ronald J. Lataille - Treasurer

  	
  TENANT

  	
   

  	
   

  	
  Lynn V.
  Payne  Member-Manager

  	
  LANDLORD

  
	
   

  	
   

  	
   

  	
   

  	
  (and spouse if 27 is applicable)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tenant

  	
   

  	
   

  	
   

  	
  SPOUSE

  
							

 

5

 

Exhibit A: Landlord’s Construction

 

A.    Building No. 3

 

•              Ceco
Metal Warehouse - 30,000 square feet

-slab on grade
approximately same floor elevation as Building No. 2 (floor weight)

•              Enclosed
runways to Building No. 2

 

B.    Interior Build-out

 

•              Lighting

•              Heat

•              Sprinklers

•              Ventilation

•              Three
loading docks with levelers, bumpers, and door weather seals

•              Two
drive-through tunnels

•              One
unisex handicap restroom

•              Security
lighting

•              Roll-up
doors

•              120
volt outlets on interior of exterior walls of building (similar to Building No.
2)

 

 

Exhibit B

 

Prepared by and return to Christopher L. Farwell, Farwell & Bruhn,
343 5th Avenue South, Clinton, Iowa 52732

 

STATE OF IOWA

 

COUNTY OF CLINTON

 

MEMORANDUM OF LEASE

 

THIS
MEMORANDUM OF LEASE
(“Memorandum”) is executed
this                  day
of                            ,
2004, by and between Clinton Base Company, L.L.C. (“Landlord”), whose mailing
address is 1003 31st Avenue, Camanche, Iowa 52730, and                                                    ,
a              corporation
(“Tenant”), whose mailing address is
                                                          .

 

WHEREAS, Landlord and Tenant executed and entered into
a Lease (the “Lease”)
dated                        ,
2004, for the Premises (as hereinafter defined).

 

WHEREAS, the parties wish to provide a memorandum of the Lease.

 

NOW, THEREFORE, in consideration of the Lease and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:

 

1.             Lease Term.   The term of
the Lease shall be ten (10) years beginning
on                                  ,
2004. (“the Commencement Date”) and terminating at midnight on the tenth (10th)
anniversary of the Commencement Date (the “Term”).

 

2.             Premises.  Subject to the terms of the Lease, as may be
amended from time to time, Landlord is the owner of the real property described
in Exhibit “A” attached hereto (the “Property”) and Landlord has leased to
Tenant the portion of the Property which is described in Exhibit B attached
hereto (the “Premises”).

 

3.             Notices and Demands.  Notices as provided for in this Lease shall
be given to the respective parties hereto at the respective addresses
designated above unless either party notifies the other, in writing, of a
different address. Without prejudice to any other method of notifying a party
in writing or making a demand or other communication, such message shall be
considered given under the terms of the Lease when sent, addressed as above
designated, postage prepaid, by certified mail deposited in a United States
mail box.

 

	
  Landlord:

  	
  Tenant:

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Lynn V. Payne, Member-Manager

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
					

 

 

ADDENDUM

 

29.           Release
of Mechanics Lien. If,
notwithstanding paragraph 19 of the lease, any lien is filed against the
premises as a result of any work performed by or on behalf of Tenant, Tenant
shall cause the same to be released no later than thirty (30) days following
the filing thereof. If Tenant fails or refuses to cause the release of any lien
as provided above, Landlord may pay the demand of the lien claimant in full or
otherwise cause the release of such lien, and Tenant shall reimburse Landlord
for all such charges and costs upon demand, including attorneys’ fees. Nothing
contained herein shall constitute a waiver of Tenant’s right to contest the
validity of the underlying claim giving rise to any such lien.

 

30.           Governing Law. This lease shall be
deemed to be a contract made under the laws of the State of Iowa and for all
purposes shall be governed by and construed, interpreted, and enforced in
accordance with the laws of the State of Iowa, excluding and without regard to
choice of law or conflict of law rules that would require the application of
the laws of any other jurisdiction.

 

31.           Subordination. Notwithstanding anything
to the contrary stated herein, this lease is and shall be subject and
subordinate to all mortgages, deeds of trust, and similar security documents
which may now or hereafter be secured upon the premises, and to all advances,
renewals, modifications, consolidations, replacements, and extensions relative
thereto; provided, however, that in connection with Landlord’s execution of any
mortgage, deed of trust, or similar security document which may now or
hereafter be secured upon the premises, Landlord shall use its best efforts to
negotiate a provision therein (as long as Tenant is not in default under the
lease), whereby the holder of the such mortgage, deeds of trust, or similar
security document shall agree to recognize the lease and the rights of Tenant hereunder
and not to disturb Tenant in its use of the premises in the event of a
foreclosure.  This provision shall be
self-operative and no further instrument of subordination shall be required of
Landlord or any mortgagee, but in confirmation of such subordination, Tenant
shall execute, within fifteen (15) days after Landlord’s request, any
certificates that Landlord may reasonably require acknowledging such
subordination; provided, however, that Tenant irrevocably appoints Landlord, as
Tenant’s agent, to execute and deliver in the name of Tenant any such
instruments of subordination if Tenant fails or refuses to do so. This
authorization shall in no way relieve Tenant of the obligation to execute such
instruments of subordination. Tenant’s failure or refusal to timely execute and
deliver such instrument of subordination shall constitute a material default
under this lease.

 

32.           Counterparts. 
This lease may be executed in counterparts, each of which shall
constitute an original and all of which together shall constitute but one and
the same agreement. The original execution pages of counterpart copies of this
lease may be attached to any one such copy to form a single, complete document.

 

33.           Incorporation
of Exhibits. All Exhibits to
this lease are incorporated within and made a part of this lease by their
reference herein.

 

34.          Memorandum
of Lease. At the request of
either party, the other party agrees to execute a memorandum of this lease in
substantially the same form as attached hereto as Exhibit B

 

 

in recordable form, setting forth a description of the premises, the
general terms of this lease, and other information desired by Tenant for the
purpose of giving public notice thereof to third parties.

 

35.           Severability.   If any provision of this
lease is found by a court of competent jurisdiction to be invalid or
unenforceable, then such provision shall be severed from this lease and the
remainder will remain in full force and effect.

 

36.           Survival.  The
provisions of this lease, which by their nature are continuing, including,
without limitation, all indemnification and exculpation provisions, shall
continue in full force and effect and shall to bind the parties beyond any
termination of this lease (which shall include, for purposes of this lease, any
forfeiture, termination, surrender, abandonment, or expiration of this lease).

 

37.           Estoppel
Certificate. Each of
Landlord and Tenant agrees that it will from time to time, upon written request
by the other, execute and deliver a written statement addressed to the
requesting party (or to a third party designated by it), which statement shall,
as applicable, identify the parties and this Lease, certify that this lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as so modified), confirm that neither
Tenant nor Landlord is in default as to any obligations under this lease (or if
either party is in default, specifying any default), and contain such other
information or confirmations, as applicable, as the requesting party may
reasonably require. Subject to the requesting party’s written approval as to
form and content, the Estoppel Certificate shall be prepared by the other and
furnished to the requesting party by the other or a third party designated by
it.

 

38.           Attornment. Tenant agrees to attorn to the transferee
of Landlord’s interest in the premises by foreclosure, deed in lieu of
foreclosure, exercise of any available remedy provided in any encumbrance or
underlying lease, or by operation of law (without offset of deduction), if
requested to do so by the transferee and to recognize the transferee as the
landlord under the lease.

 

39.           Authority. Each person executing this lease on behalf
of any party hereto warrants that he or she has the right and authority to
execute this lease, and that all the procedures and approvals that are
necessary and required to enable him or her to properly execute this lease on
behalf of a party hereto and to bind the person or entity whom he represents in
accordance with the provisions hereof have been followed and secured. Each
party agrees to execute and deliver all documents and to perform all further
acts as may be reasonably necessary to carry out the provisions of this lease.
This document is not effective as a lease or otherwise until executed by both
Landlord and Tenant. At Landlord’s request, Tenant agrees to provide Landlord
with an appropriate corporate resolution authorizing the execution of this
lease by or on behalf of Tenant.

 

40.           No
Waiver. No failure or delay
by either party to exercise their rights under this lease or to insist upon the
strict compliance with any obligation imposed by this lease, and no course of
dealing or custom or practice of either party contrary to the provisions of this
lease, shall constitute

 

2

 

a
waiver or modification of the provisions of this lease or the right to demand
strict compliance with the provisions of this lease.

 

41.             Condition
of Premises/ Landlord’s Construction.     A Ceco
metal building and two “runways” shall be constructed by Landlord and/or Payne
& Associates upon the demised premises at the expense of Lessor and/or
Payne & Associates. The Ceco metal building shall be 30,000.00 square feet
(or more) and the two runways shall be a total of 2,080 square feet (or more).
The “runways” for the Ceco metal building (intended to be known as “Building
No. 3”) shall be connected to “Building No. 2”.

 

Landlord covenants to complete “Building No.
3” and said runways (collectively “Landlord’s Construction”) and deliver them
to Tenant with a certificate of occupancy, and subject to only minor matters,
if any (to be noted on a written punchlist jointly prepared by the parties
pursuant to a walk-through inspection of the premises by representatives of
Landlord and Tenant, with the process of completing the matters identified on
the said punchlist, if applicable, not materially interfering with Tenant’s
occupation of the premises for the conduct of its business), no later than
12:00 noon one-hundred eighty (180) days after the closing on the real estate
identified in paragraph 59 below (i.e., the real estate legally described as
Lot 4, Manufacturing Meadows III 1st Addition, Clinton, Iowa, and also the East
35 feet of Lot 3, Manufacturing Meadows III 1st Addition, Clinton, Iowa).

 

In the event that a certificate of occupancy
is not issued by 12:00 noon one-hundred eighty (180) days after the closing on
the above-referenced real estate, Tenant shall be entitled to a rebate of
pro-rata rental for each day which passes between such date and the actual date
the certificate of occupancy is issued and a credit of one day’s rent for each
day which passes between such date and the actual date the certificate of
occupancy is issued, except where Landlord’s delay in this regard is a result
of Tenant’s interference or other fault, or matters beyond Landlord’s
reasonable control.

 

If Tenant has not delivered the punchlist to
Landlord within ten (10) days following delivery of the premises to inspect the
same and to identify in writing the punchlist items, Tenant shall be deemed to
have accepted the premises as delivered by Landlord and Landlord shall have no
further responsibility for the same.

 

After the commencement of the Lease Term,
Landlord will repair or replace defective parts or components of the building
or improvements which were supplied or installed by Landlord unless the
defective condition was caused by Tenant’s abuse or failure to maintain the
defective part or component.

 

Subject to Landlord’s construction, Tenant acknowledges that it has examined the premises
and accepts the premises “As Is” and in its present condition.
Subject to Landlord’s Construction, Landlord makes no representation or
warranty whatsoever, express or implied, concerning the fitness or suitability
of the premises for the conduct of Tenant’s operations or for any other reason
and Tenant acknowledges that Tenant has made such investigations as it deems

 

3

 

reasonable
and necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Tenant’s use and occupancy of the premises.

 

42.           Indemnification,
Exculpation, Duty to Defend.

 

a.             Indemnification.

 

The indemnification provision set forth in
paragraph 13 herein extends to and includes all reasonable attorneys’ fees
incurred by or on behalf of Landlord (including its agents, employees,
partners, members, managers, directors, officers, shareholders, successors, and
assigns) and all claims, actions, causes of action, liabilities, obligations,
damages, costs and expenses (whether at law or in equity), including court
costs and reasonable attorney and expert witness fees (hereinafter
collectively, “Claims”) relative to (a) injury to any persons (including
death); (b) loss of, injury or damage to, or destruction of property (including
all loss of use); (c) all economic losses and incidental, consequential, or
resulting damages (including lost profits) of any kind from any cause; and (d)
any penalties, damages, or charges imposed for a violation of any law,
ordinance, or environmental law from any cause. The parties’ insurance
obligations under the lease are independent of Tenant’s indemnification
obligations and other obligations under the lease and shall not be interpreted
or construed in any way to restrict, limit, or modify such obligations, or to
limit the parties’ respective liabilities under the lease. The indemnification
provision set forth in paragraph 13 herein extends to Landlord (including its
agents, employees, partners, members, managers, directors, officers,
shareholders, successors, and assigns).

 

b.             Exculpation.

 

Notwithstanding anything to the contrary
stated herein, to the fullest extent permitted by law, Tenant waives and
relinquishes all Claims (whether at law or in equity) against Landlord
(including its agents, employees, partners, members, managers, directors,
officers, shareholders, successors, and assigns) arising out of, and agrees
that Landlord shall not be liable to Tenant for (and Tenant knowingly and
voluntarily assumes the risk of), the following: (i) injury to or death of any
person from any cause; (ii) loss of, injury or damage to, or destruction of any
tangible or intangible property, including the resulting loss of use, economic
loss, and incidental, consequential, or resulting damages (including lost
profits) of any kind from any cause; (iii) any loss, damage, or expense,
including the resulting loss of use, economic loss, and incidental, consequential,
or resulting damages (including lost profits) of any kind arising out or
resulting from a loss, interruption, or impairment of services (including,
without limitation, electrical, telephone, or telecommunication), or for
diminution in the quality of such services; (iv) any loss, damage, or expense,
including the resulting loss of use, economic loss, and incidental,
consequential, or resulting damages (including lost profits) of any kind
arising out or resulting from any acts or omissions of Tenant’s employees,
agents, contractors, suppliers, subcontractors, subtenants, licensees,
customers, or invitees; or (v) any loss, damage, or expense, including the
resulting loss of use, economic loss, and incidental, consequential, or
resulting damages (including lost profits) of any kind arising out or resulting
from a power failure, vandalism, fire, theft, or destruction or damage to the
improvements on the

 

4

 

premises; provided, however,
that this exculpation provision shall not apply to Claims of Tenant against
Landlord to the extent that a final judgment of a court of competent
jurisdiction establishes that the injury, loss, or damage was proximately
caused by Landlord’s negligent, reckless, or intentional injury to person or
property; and further provided that, notwithstanding the foregoing, Tenant
waives all rights of recovery against Landlord to the extent the injury, loss,
or damage is insured. The parties’ insurance obligations under the lease are independent
of Tenant’s exculpation obligations and other obligations under the lease and
shall not be interpreted or construed in any way to restrict, limit, or modify
such obligations, or to limit the parties’ respective liabilities under the
lease.

 

c.             Duty
to Defend.

 

Tenant’s duty to defend Landlord is separate
and independent of Tenant’s duty to indemnify Landlord. The duty to defend
applies regardless of whether the issues of negligence, liability, fault,
default, or other obligation on the part of Tenant (or Tenant’s agents,
employees, contractors, subcontractors, subtenants, licensees, customers, or
invitees) have been determined. The duty to defend applies immediately,
regardless of whether Landlord has paid any sums or incurred any detriment
arising out of or relating (directly or indirectly) to any Claims.

 

In the event Tenant is required to defend,
hold harmless, or indemnify Landlord hereunder, the indemnifying party shall
have the right to defend and control the defense of any action giving rise to
such indemnity using the legal resources of the indemnifying party; provided,
however, that the indemnifying party shall not take any action which
unreasonably exposes the other party to a risk of damage which would not be
covered by such indemnity, and may not settle any matter without the consent of
the indemnified party.

 

43.             Additional
Insureds. The additional insured endorsement referenced in paragraph 11B of
the lease must be on a form reasonably acceptable to Landlord. Tenant’s
commercial general liability policy or policies shall be endorsed as needed to
provide that the insurance afforded by such policy or policies to the
additional insured is primary and that all insurance carried by Landlord is
strictly excess and secondary and shall not contribute with Tenant’s liability
insurance. Tenant shall name Landlord as loss payee and building owner relative
to the insurance of real property required in paragraph 11 A.

 

43A.          Blanket
Insurance Coverage. Any insurance required to be maintained by Tenant under
this lease may be provided and maintained by blanket insurance covering the
demised premises and other locations of the Tenant, Tenant’s subsidiaries, or
affiliated companies provided that the coverage obtained by such blanket policy
shall be sufficient to satisfy the insurance obligation of Tenant under this
lease and provided further that in such blanket policy or policies, Landlord
and the premises as well as Tenant shall be specifically named and described
and absolutely insured for the amounts set forth, herein without diminution by
reason of other persons or property being named or mentioned in said blanket
policy.

 

5

 

44.           Negotiated
Lease. This lease is a
result of negotiations of the parties, each of which has had the opportunity to
be represented by counsel, and all of the provisions have been agreed to by
both Landlord and Tenant after negotiations. Accordingly, any rule of law or
legal decision that would require interpretation or construction of any
provision of this lease against the party that has drafted it is not applicable
and is waived.

 

45.           No
Partnership. No provision of
this lease and no actions or omissions of the parties hereto shall be construed
to create a partnership or joint venture between Landlord and Tenant, or make
cither party responsible for the debts of the other.

 

46.           Additional
Rent. All amounts payable by
Tenant pursuant to the provisions of this lease shall be deemed to be
obligations in the nature of rental, irrespective of whether such amounts are
or are not expressly identified as rental in any specific provision of this
lease. Such amounts shall be collectible by Landlord as rental and upon default
in payment thereof, Landlord shall have the same rights and remedies as for
failure to pay rental.

 

47.           Environmental. For purposes of this lease, “hazardous
substances” shall mean any pollutant, contaminant, hazardous, toxic, or
dangerous waste, substance, or material, or any other substance or material
regulated or controlled pursuant to any environmental laws. For purposes of
this lease, “environmental laws” shall mean all federal, state, and local laws
applicable to the premises and relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of any hazardous substance into the environment or the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of hazardous substances and any and all regulations,
codes, standards, plans, orders, decrees, judgments, injunctions, notices, or
demand letters issued, entered, adopted, or approved thereunder. Pursuant to
the requirements of Paragraph 21 .B.1 above, Landlord hereby consents to
Tenant’s use at the premises of hazardous substances of types and in quantities
associated with normal office and warehouse activities; provided that the same
are used, stored, and disposed of in accordance with the requirements of
applicable law.

 

48.           Improvements. Notwithstanding any contrary provision of
statutory or common law, title to all alterations and/or improvements erected,
constructed, or installed by or on behalf of Landlord (e.g., runways) or Tenant
on the premises shall at all times be and remain the property of Landlord,
regardless of whether such improvements are attached or affixed to the
premises; provided, however, that Tenant may remove any trade fixture and
freestanding equipment belonging to Tenant. Tenant shall repair any damage to
the premises caused by such removal; provided, however, that as it pertains to
the removal of the runway(s), in the event either or each runway is removed,
Landlord shall restore the premises (where runway attaches to Building No. 2),
the real estate located within the boundaries of the leased premises, the real
estate located outside the boundaries of the leased premises relative to either
or each runway, and Building No. 3 (where runway attaches to Building No. 3) to
their original configuration and condition before either or each runway was
installed.

 

6

 

By written notice to Tenant before expiration
of the lease term, or within a reasonable time after any sooner termination,
Landlord may require Tenant, at Tenant’s sole expense, to remove any
improvements or alterations (but specifically excluding the runways, including
that portion of the runways which are constructed and existing outside the
boundaries of the leased premises), and restore the premises to their original
configuration and condition before the improvement or alteration was made. If
Tenant fails to complete such restoration within thirty (30) days after written
notice from Landlord requesting the restoration, Landlord may do so and charge
the cost of restoration to Tenant.

 

Tenant shall not make any improvements or
alterations to the premises without Landlord’s prior written consent, which
consent shall not be unreasonably withheld or delayed. In the event Landlord
gives Tenant prior written consent, no such improvements or alterations shall
proceed without Landlord’s prior written approval (which may not be
unreasonably withheld or delayed) of (i) Tenant’s contractor; (ii) insurance
policies of Tenant’s contractor’s for liability insurance and worker’s compensation
coverage. All work relating to improvements or alterations performed by or on
behalf of Tenant shall (i) be at Tenant’s expense; (ii) be done in a good and
workmanlike manner; and (iii) comply with all applicable laws and ordinances.

 

Unless otherwise agreed to in writing by Landlord
and Tenant, Tenant’s “trade fixtures” shall not include floor coverings,
lighting fixtures, runways, and ceilings.

 

49.           Security
Deposit. Tenant shall
provide a security deposit to Landlord in the sum of Ten Thousand Dollars
($10,000.00). Upon expiration of the lease term, or sooner termination of the
lease, the security deposit shall be returned to Tenant; provided, however,
that Landlord may withhold the security deposit, or such amounts thereof, (i)
to remedy any defaults of Tenant under the lease; (ii) to restore the premises
to the condition existing at the commencement of the tenancy, ordinary wear and
tear excepted; and (iii) for any other purpose allowed by law.

 

50.           Tenant’s
Option to Terminate Lease.
Tenant may, at its option, terminate the lease at any time during years four
through eight upon the following terms and conditions. Any notice to exercise
this option to terminate must be given by Tenant in writing not less than
one-hundred eighty (180) days prior to the effective termination date, which
shall be specified in the said notice. 
If Tenant exercises this option to terminate for purposes of terminating
the Lease effective during year four, then Tenant shall pay to Landlord the sum
of $446,417.28. If Tenant exercises this option to terminate for purposes
terminating the Lease effective during year five, then Tenant shall pay to
Landlord the sum of $111,604.32. If Tenant exercises this option to terminate
for purposes of terminating the Lease effective during year six, then Tenant
shall pay to Landlord the sum of $91,604.00. If Tenant exercises this option to
terminate for purposes of terminating the Lease effective during year seven,
then Tenant shall pay to Landlord the sum of $61,604.00. If Tenant exercises this
option to terminate for purposes of terminating the Lease effective during year
eight, then Tenant shall pay to Landlord the sum of $36,604.00.

 

7

 

51.           Change
of Status of Landlord. In
the event Landlord subsequently changes its status to a corporation, limited
liability company, or other entity, the terms, provisions, and conditions of
the lease shall be fully applicable to such status, whether as a corporation,
limited liability company, or otherwise.

 

52.           Tenant’s
Termination of Lease Prior to Possession. Notwithstanding anything to the contrary stated herein, if Tenant,
for any or no reason, terminates the lease after the execution of the lease,
but prior to possession by Tenant, Tenant agrees to pay Landlord the sum of
$355,100.00, based, in part, on the dirt work, purchase of real estate,
obtaining of building materials, and obtaining of building permit.  Termination of this lease shall include,
without limitation, any forfeiture, surrender, or abandonment of this lease.

 

53.           Lease
Term. The first day of the
lease term for purposes of paragraph 1 of the lease shall be (a) the date of
the issuance of the certificate of occupancy referenced in paragraph 41 above,
or (b) the date Tenant occupies the premises for the conduct of its business
(including warehouse purposes), whichever first occurs.

 

Landlord and Tenant shall amend the lease to
reflect the first day of the lease term and the last day of the lease term in
paragraph 1 of the lease. The lease term shall be for a period of ten (10)
years. Landlord shall not be liable for any loss, damage, expense, or claim of
any nature arising out of or resulting from any delay in completion of any of
Landlord’s work or in delivering possession of the premises to Tenant (provided
that Landlord shall be subject to paragraph 41 above), nor shall the validity
of this Lease be affected by any such delay and Tenant’s only remedy shall be a
rebate of pro-rata rental for each day which passes between such date and the
actual date the certificate of occupancy is issued and a credit of one day’s
rent for each day which passes between such date and the actual date the
certificate of occupancy is issued, except where Landlord’s delay in this
regard is a result of Tenant’s interference or other fault, or matters beyond
Landlord’s reasonable control, as provided in paragraph 41 above.

 

54.           Entry
Made at Tenant’s Risk.
Subject to appropriate coordination with Landlord and its contractors, Tenant
shall have the right to enter the premises prior to date the certificate of
occupancy is issued, only for the purpose of installing Tenant’s improvements,
fixtures, and equipment, provided, however, that any such entry into the
premises by Tenant, its agents, contractors, employees, or anyone acting by or
through Tenant during the construction of the improvements by Landlord shall be
at the sole risk of such parties, and Tenant hereby releases Landlord
(including its agents, employees, partners, members, managers, directors,
officers, shareholders, successors, and assigns), from any and all claims,
actions, causes of action, liabilities, obligations, damages, costs and
expenses (whether at law or in equity), including court costs and attorney and
expert witness fees (hereinafter collectively, “Claims”) relative to any injury
(including bodily injury, death, or property damage) incurred or suffered by
Tenant in or about the premises during the construction of the improvements by
Landlord. Tenant shall indemnify, defend, and hold harmless Landlord (including
its agents, employees, partners, members, managers, directors, officers,
shareholders, successors, and assigns) harmless from and against any and all
Claims made or existing

 

8

 

against Landlord by anyone as a result of any entry into the premises
by Tenant, its agents, contractors, employees, or anyone acting by or through
Tenant prior to date the certificate of occupancy is issued.

 

55.           Rental. Tenant agrees to pay Landlord as rental for
the term set forth herein, as follows: SEVEN THOUSAND NINE HUNDRED EIGHTY SEVEN
AND NINETY TWO HUNDREDTHS DOLLARS ($7,987.92) per month, in advance, without
offset or deduction, the first payment becoming due and payable on (a) the date
of the issuance of the certificate of occupancy referenced in paragraph 41
above, or (b) the date Tenant occupies the premises for the conduct of its
business (including warehouse purposes), whichever first occurs, and the same
amount, in advance, without deduction or offset, becoming due and payable on
the        day of each month
thereafter, during the term of this lease. As indicated in paragraph 53 herein,
Landlord and Tenant shall amend the lease to reflect the first day of the lease
term and the last day of the lease term in paragraph 1 of the lease.
Additionally, paragraph 55 herein shall be amended to reflect the omitted day
of each month on which the rental is due and payable, above referenced.

 

56.           Repairs and Maintenance of Runways.     Tenant shall
be responsible for all repairs and maintenance of the runways, including that
portion of the runways which are constructed and existing outside the
boundaries of the leased premises.

 

57.          Assignment
and Subletting.     Any
assignment of this Lease or subletting of the premises or any part thereof,
without the Landlord’s prior written permission shall, at the option of the
Landlord, make the rental for the balance of the lease term due and payable at
once. Such written permission shall not be unreasonably withheld or delayed,
and no such permission shall be required in connection with a subletting or
assignment to any affiliated entity or successor to Tenant by merger,
consolidation or acquisition of substantially all of the assets of Tenant,
provided, however, that such written permission shall be required if Tenant is
in default after any required notice and the expiration of any applicable cure
period under this Lease, and further provided that in the event of an
assignment, the assignee has a tangible net worth, as evidenced by reasonably
satisfactory financial statements delivered to Landlord, at least equal to
Tenant’s net worth immediately before the transfer.

 

Tenant
shall deliver to Landlord an original assignment or sublease executed by Tenant
and the transferee which shall expressly provide: (a) that such transferee
shall he bound by all the provisions of this Lease, and shall assume all the
obligations of Tenant under this Lease relating to the portion or the whole of
the premises, as the case may be, acquired by such party; (b) that Tenant and
the transferee shall be jointly and severally liable for Tenant’s obligations
to Landlord under paragraph 42 of this Lease and such paragraph 42 shall be
applicable to any assignee or subtenant; (c) that in no event shall Tenant be deemed
relieved of any obligation or liability under this lease; and (d) that any
transfer shall not be deemed effective for any purpose unless and until
compliance with the foregoing is obtained. Tenant shall pay Landlord, as
condition to any permitted transfer becoming effective, all reasonable
attorneys’ fees and costs incurred by Landlord in connection therewith.

 

9

 

Without waiving any obligations of Tenant hereunder,
if this lease is assigned, Landlord may collect rent directly from the
transferee. If the premises are subleased and Tenant defaults, Landlord may
collect rent directly from the transferee. Landlord shall apply the amount
collected from the transferee to Tenant’s monetary obligations under this
lease.

 

If Landlord duly terminates this lease on account of
any default by Tenant, Landlord may: (i) terminate any sublease, license,
concession, or other consensual arrangement for possession entered into by
Tenant and affecting the premises; or (ii) choose to succeed to Tenant’s
interest in such an arrangement. If Landlord elects to succeed to Tenant’s
interest in such an arrangement, Tenant shall, as of the date of written notice
by Landlord of that election, have no further right to, or interest in, the
rent or any other consideration receivable under that arrangement.

 

58.          Closing on real estate.     In connection
with this lease, Landlord intends on purchasing certain real estate situated in
Clinton County, Iowa and legally described as Lot 4, Manufacturing Meadows III
1st Addition, Clinton, Iowa, and also the East 35  feet of Lot 3, Manufacturing Meadows III 1st Addition,
Clinton, Iowa to Moulded Fibre Technology, Inc. (“Tenant”). At the closing of
Landlord’s purchase of the real estate, above-referenced, upon which the Ceco
metal building and a portion of the “runway(s)” will be constructed, the
parties shall execute this lease.

 

59.          Counterparts.       This lease
(with attached Addendum and Exhibits) may be executed in counterparts, each of
which shall constitute an original and all of which together shall constitute
but one and the same agreement. The original execution pages of counterpart
copies of this lease may be attached to any one such copy to form a single,
complete document.

 

60.          Lease Contingency.       This lease
is contingent upon the closing on Landlord’s purchase of the real estate
described herein and Landlord’s agreement with Millcreek Investments, L.C. as
to the location of the runways and the execution of any necessary casements with
Millcreek Investments, L.C., if deemed appropriate by Landlord. In the event
that Landlord has not completed the said land purchase and execution of
easements (if deemed appropriate by Landlord) by 5:00 PM on March 26, 2004,
Tenant shall have the right to terminate this lease, at no cost or liability to
Tenant, by giving written notice of termination to Landlord no later than 5:00
PM on March 31, 2004, and should Tenant not give such notice this lease shall
continue in full force and effect.

 

61.           Insurance Proceeds.       In connection
with paragraph 14(a) of this lease, Tenant acknowledges and agrees that any
insurance proceeds payable to Tenant shall be assigned to Landlord as loss
payee or otherwise and otherwise be paid to Landlord for purposes of Landlord
effecting the repairs required by the said paragraph 14(a) of the lease. In
connection with paragraphs 2(2), 11A, and 11B of the lease, Tenant acknowledges
and agrees that Tenant shall pay for the cost of the insurance Tenant obtains.
Tenant’s policy of insurance under paragraph 11A above shall contain a loss of
rents coverage for the benefit of Landlord, equal to one year’s rent.

 

10

 

	
  THE IOWA
  STATE BAR ASSOCIATION

  Official Form No. 193

  	
   

  	
  Christopher
  L. Farwell ISBA # 9191

  	
   

  	
  FOR THE LEGAL EFFECT OF THE USE OF

  THIS FORM, CONSULT YOUR LAWYER

  

 

[LOGO]

 

 

STATE OF IOWA, COUNTY OF
CLINTON, ss:

 

On this
         day of
                            ,
2004, before me, a Notary Public in and for the said State, personally appeared
Lynn V. Payne, to me personally known, who being by me duly sworn did say that
that person is Member-Manager (Insert title of executing member) of said
limited liability company, that (no seal has been procured by the said) limited
liability company and that said instrument was signed on behalf of the said
limited liability company by authority of its managers and the said Lynn V.
Payne acknowledged the execution of said instrument to be the voluntary act and
deed of said limited liability company by it voluntarily executed.

 

	
   

  	
  /s/ 
  Lynn V. Payne, Member  MGR

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ 
  A. John Frey Jr.

  	
  Notary Public in and for said State.

  
	
   

  	
  A. JOHN FREY JR.

  	
   

  
	
   

  	
  [LOGO]

  	
  COMMISSION NO. 010044

  	
  (Section 558.39, Code of Iowa)

  
	
   

  	
  MY COMMISSION EXPIRES

  	
   

  
	
   

  	
  9-22-04

  	
   

  
				

 

Acknowledgement: For use in the case of limited liability companies

 

	
  © The Iowa
  State Bar Association 2003

  	
   

  	
  193 ACKNOWLEDGMENT

  
	
  IOWADOCS®

  	
   

  	
  Revised January, 1999

  

 

 

	
  THE IOWA
  STATE BAR ASSOCIATION

  Official Form No. 182

  	
   

  	
  Christopher
  L. Farwell ISBA # 9191

  	
   

  	
  FOR THE LEGAL EFFECT OF THE USE OF

  THIS FORM, CONSULT YOUR LAWYER

  

 

[LOGO]

 

 

STATE OF MASSACHUSSETS, COUNTY
OF ESSEX, ss:

 

On this 28 day
of January, 2004, before me, the undersigned, a Notary Public in and for the
said State, personally appeared Ronald J. Lataille and
                                 ,
to me personally known, who being by me duly sworn, did say that they are the
Treasurer and
                                             ,
respectively, of the corporation executing the within and foregoing instrument to which this is attached, that (no seal
has been procured by the) (the seal affixed thereto is the seal of the)
corporation; that the instrument was signed (and
sealed) on behalf of the corporation by authority of its Board of
Directors; and that Ronald J. Lataille and R. Jeffrey Bailly as officers
acknowledged the execution of the foregoing instrument to be the voluntary act
and deed of the corporation, by it and by them voluntarily executed.

 

 

	
   

  	
  /s/ Joan F. Young

  
	
   

  	
   

  
	
   

  	
  State of Massachusetts, Notary Public in
  and for said State.

  
	
   

  	
   

  
	
   

  	
  expires: 1/22/10

  	
  (Section 558.39 Code Iowa)

  

 

 

Acknowledgment: For use in the case of corporations

 

	
  © The Iowa
  State Bar Association 2003

  	
   

  	
  182 ACKNOWLEDGMENT

  
	
  IOWADOCS®

  	
   

  	
  Revised January, 1999

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