Document:

Exhibit
10.36

 

LEASE AGREEMENT

 

THIS AGREEMENT OF LEASE, made and entered into this 13th day of August,
2002, by and between Fink Management, LLC (herein the “LANDLORD”), and Gunite
Corporation, a Corporation (herein the “TENANT’),

 

WITNESSETH;

 

1.                                      Leased Premises and Term of Lease.

 

LANDLORD hereby demises and leases unto TENANT the building and real
estate located at 2601 Northland Drive, Elkhart, Elkhart County, Indiana, and
more particularly described in Exhibit A attached hereto and incorporated
herein.  The said real estate and
improvements are referred to collectively herein as the “Premises”.  The term of this lease shall be a period of
seven (7) years commencing on the 1st day of October, 2002, and
expiring at midnight on the 30th day of September, 2009.

 

2.                                      Rent.

 

TENANT agrees to pay, and LANDLORD agrees to accept, as the rent for
the Premises:  Eight Thousand Seven
Hundred Twenty-six and 63/100 Dollars ($8,726.63) concurrently with the
execution of this lease representing the rent for the first month and rent for
the next 11 months; Nine Thousand Two Hundred Forty-three and 76/100 Dollars
($9,243.76) on the first day of October, 2003, representing the rent for the 2nd
12 month period.  Rent for years three
through seven will be adjusted annually by Midwest
CPI.  The Basic Rent of $9,243,76 shall
be adjusted at the beginning of the twenty-fifth month based on any increases
in the Consumer Price Index and at the end of each year thereafter whether
during the term of this Lease or any renewal of extension thereof.  No annual increase shall be less than One
percent (1%) not to exceed Three and one-half percent (3.5%) per year
compounded.  Increases in the Annual Rent
shall be made in accordance with the following procedure:

 

(a)                                  The index to be used for this
adjustment shall be the Consumer Price Index (Midwest Consumer Average, All
Items, 1982-1984 equaling a base of 100, from the U.S. Department of Labor,
Bureau of Labor Statistics, Washington, D.C.).

 

(b)                                 The Consumer Price Index for the
third month prior to the commencement of this Lease shall be the “Base Period
Consumer Price Index”.  The Consumer
Price Index for the month of May in each adjustment year shall be the
“Adjustment Period Consumer Price Index.”

 

(c)                                  The Base Period Consumer Price Index
shall be subtracted from the Adjustment Period Consumer Price Index; the
difference shall be divided by the Base Period Consumer Price Index.  This quotient shall then be multiplied by the
Basic Annual Rent, and the result shall then be added to the Basic Annual
Rent.  The resulting sum shall be the
adjusted Annual Rent for such immediately succeeding leasehold period which
shall be paid in equal monthly installments.

 

(d)                                 If the said Consumer Price Index is,
at any time during the term of this Lease, discontinued by the Government, then
the most nearly comparable index shall be substituted for the purpose of the
aforesaid calculations.

 

 

All payments owing by TENANT pursuant to this lease shall be made to
LANDLORD at
                                            ,
or at such other place or places as LANDLORD may hereafter designate, and shall
be made without setoff or deductions and with reasonable attorneys’ fees and
costs of collection.  In the event TENANT
fails to pay any rent, expenses, charges or other payments to be paid by it
pursuant to this lease within ten (10) days after the due date thereof, then
any unpaid amounts shall be subject to a late charge of One Hundred Dollars
($100) per day from the due date of the date of payment.  Notwithstanding this late payment charge,
nonpayment of any amounts due under this lease shall constitute a default by
TENANT.

 

It is the intention of LANDLORD and TENANT that this shall be a true
net lease; that the rent herein specified shall be net to LANDLORD at all times
during the term of this lease; and that all costs, expenses, and obligations of
every kind relating to the Premises shall be the obligation of TENANT.

 

3.                                      Security Deposit.

 

TENANT shall pay to the LANDLORD concurrently herewith the sum of Eight
Thousand Seven Hundred Twenty-six and 63/100 Dollars $8,726.63 representing a
security deposit.  The security deposit
shall be held by Meridian Title Corporation, Elkhart, Indiana, in an interest
bearing account for the account of the TENANT as security for the full and
complete performance by TENANT of all of the terms, covenants, and conditions
of this Lease.

 

In the event TENANT commits a default hereunder, LANDLORD, at its
option, may apply the security deposit, or any part thereof, plus any sum held
as the last month’s rent to compensate LANDLORD for any loss, cost, damage, or
expense sustained by reason of such default. 
Upon LANDLORD’S request, the TENANT shall forthwith remit to LANDLORD
cash sufficient to restore such sums to the original sums deposited and
TENANT’S failure to do so within ten (10) days after receipt of a demand
therefor shall be a default under this Lease. 
If at the end of the term of this Lease or any extension or renewal of
this Lease, TENANT is not in default hereunder, the balance of the security
deposit shall be returned to TENANT.

 

LANDLORD may deliver the funds deposited hereunder to any purchaser of,
or successor to, LANDLORD’S interest in this Lease or the Premises, and
thereupon LANDLORD shall be discharged from all liability with respect to such
deposit.

 

4.                                      Covenants of Landlord.

 

LANDLORD agrees as follows:

 

(a)                                  That so long as TENANT is not in
default in the performance of any of the conditions or provisions hereof,
TENANT may peaceably hold and enjoy possession of the Premises during the term
of this lease without any interruption from LANDLORD or any person, firm, or
corporation lawfully claiming through LANDLORD.

 

(b)                                 That LANDLORD will make all repairs
necessary for the proper maintenance of the roof of the building and exterior
walls included in the Premises, except for damage thereto caused by the
negligence or willful acts of TENANT; provided, however, that TENANT shall give
LANDLORD written notice of any roof defect or exterior wall defect requiring
repair and

 

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LANDLORD shall have a reasonable time after receipt of such notice to
cause such repairs to be made.

 

(c)                                  The LANDLORD named in this Agreement
may transfer and assign, in whole or in part, all its rights and obligations
under this Agreement and in the Real Estate. 
After such transfer or assignment the LANDLORD named in this Agreement
will have no further liability to the TENANT under this Agreement for the
obligations assumed by the assignee or transferee.

 

5.                                      Covenants of Tenant.

 

TENANT agrees as follows:

 

(a)                                  That it will pay the rent for the
Premises as herein stated and all other payments and charges owing to LANDLORD
pursuant to this lease at the time and in the manner herein stated, without
relief from valuation and appraisement laws and with reasonable attorneys’ fees
and all other expenses and costs occasioned by the nonpayment thereof and
occasioned by the default by TENANT in the performance of any of the terms of
this agreement to be performed by TENANT.

 

(b)                                 That it shall pay as and when the
same become due and payable the entire cost of all electricity, gas, water,
sewerage, and other utilities and services used in or about the Premises, and
it will not permit the charges therefor to become delinquent.

 

(c)                                  That it will pay all real estate
taxes assessed against the Premises and payable during the term of this
lease.  TENANT shall pay the installments
of real estate taxes to LANDLORD on or before April 15 and October 15
of each year during the term of this lease upon presentation of receipts by
LANDLORD.  TENANT shall pay all other
assessments to LANDLORD not less than ten (10) days before such assessment is
payable.

 

(d)                                 That it shall procure, maintain, and
deliver to LANDLORD in companies to be approved by LANDLORD policies of fire,
tornado, hazard, and extended risk insurance in an amount of not less than the
full replacement value of the buildings and improvements now or hereafter
situated upon the real estate which insurance shall insure the buildings and
improvements now or hereafter erected upon the real estate against damage by
fire, tornado, and other hazards generally covered by comprehensive policies of
extended risk insurance.  TENANT shall
pay all premiums on said policies as and when the same become due and payable
and said policies shall contain a loss payable clause making such insurance
payable to LANDLORD, to TENANT, and to any mortgagee of LANDLORD as their
respective interests may appear.  All of
such policies of insurance shall be issued by insurers authorized to do
business in the State of Indiana and shall provide that the coverage not be
cancelled without at least ten (10) days prior written notice to LANDLORD,
TENANT, and LANDLORD’S mortgagee, and that any losses shall be payable notwithstanding
any act or negligence of TENANT or LANDLORD which might otherwise result in
forfeiture of the insurance.  Copies of
such insurance policies shall be delivered to LANDLORD, together with
satisfactory evidence of payment of all required premiums, prior to the
commencement of any coverage period.

 

(e)                                  That at its cost and expense it will
make all repairs and will take all action necessary for the proper maintenance
of the Premises, both internal and external, inclusive of lawn, lawn sprinkler
system, tire protection system, except for roof and exterior wall repairs to be
made by LANDLORD pursuant to paragraph 4(b) hereof; and upon the termination of
this lease by lapse of

 

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time or otherwise, it will peaceably yield up
possession of the Premises in the same condition and repair as received, loss
by fire, lightning, windstorm, and ordinary wear and tear excepted.

 

In the event TENANT shall fail to provide such necessary repairs and
maintenance, LANDLORD shall have the option, but not the obligation, to cure
such default for the account and at the expense of TENANT either during or
after the term of this lease, and any payments so made by LANDLORD shall be
additional debt owing by TENANT to LANDLORD, shall become immediately due and
payable, and shall bear interest at the rate of one
percent (1%) per month from the date of payment.

 

(f)                                    That LANDLORD shall not be liable
for any injuries or damage to the property of TENANT or for any loss or damage
of any kind sustained by TENANT by reason of any defective condition of the
Premises or by reason of any occurrence in or about the Premises except if the LANDLORD is in breach of its
obligation hereunder which causes said injury or damage.

 

(g)                                 That it shall not assign this lease
or any option or right granted to it by this lease nor shall it sublet the
Premises or any portion thereof without first obtaining the written consent of
LANDLORD, which consent shall not be unreasonably withheld.  Any such assignment or subletting permitted
by LANDLORD shall not relieve or release TENANT from any of its obligations,
covenants, undertakings, representations, warranties, and indemnifications set
forth in this lease.

 

(h)                                 That it will use the Premises for
light assembly/manufacturing and such additional purposes normally ancillary
and related thereto.  TENANT shall use
the Premises in such a manner that the reputation of the building and adjoining
areas shall not be injured and in accordance with all ordinances of Elkhart County,
all laws of the State of Indiana, and all other lawful rules and regulations
which are now or may hereafter be in effect. 
TENANT shall maintain the Premises in a safe, clean, and presentable
condition and shall not commit waste. 
TENANT shall be responsible for any and all building repairs or
renovations or changes required that are deemed necessary by codes for TENANT
to operate a light assembly/manufacturing business.

 

(i)                                     That it will not make any structural or cosmetic changes,
alterations, or additions to the Premises without first having obtained the
written consent of LANDLORD, which consent shall not be unreasonably
withheld.  If any such alterations,
changes, or additions are permitted by LANDLORD to be made, then the same shall
forthwith be and become a part of the Premises and belong absolutely to
LANDLORD and not subject to removal, change, or destruction by TENANTS;
provided, however, that upon the termination or expiration of this lease,
TENANT shall have the right to remove from the Premises any and all items of
personal property which can be removed without material damage to the
Premises.  The cost of repairing any
damage caused by such removal shall be paid by TENANT.

 

If said changes, alterations, or additions are permitted to be made,
the cost thereof shall be paid by TENANT whenever the same shall become due and
payable and it shall not permit any mechanic’s lien or other lien to be filed
against or attached to the Premises or any part thereof for any purpose
whatsoever.  In the event any such lien
is filed against or attached to the Premises or any part thereof as a result of
such changes, alterations, or additions, TENANT shall forthwith take any and
all action and make such payments as may be required to fully discharge such
lien.

 

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(j)                                     That it shall procure and maintain
at its expense throughout the term of this lease, or any additional period
during which it is in possession the Premises, policies of insurance with a
responsible company or companies approved by LANDLORD indemnifying and
protecting LANDLORD and TENANT against loss, claims, actions, suits for damage
or damages, including exemplary or punitive damages, claimed to be directly or
indirectly, in whole or in part, due to the condition of the Premises or any
part thereof or any appurtenances thereto or equipment thereon or due to the
happening of any occurrence in or about the Premises or due to any act,
omission, or negligence of TENANT or any agent, employee, or tenant of
TENANT.  Such insurance shall have
maximum coverage limits as may be mutually agreed between LANDLORD and TENANT;
but, in no event shall the limits thereof be less than One Million Dollars
($1,000,000.00) for each occurrence whether such losses, claims, or damages
result from bodily injury or damage to property.

 

(k)                                  That LANDLORD by and through its
designated representative shall have the right at all reasonable times to enter
upon the Premises for the purpose of examining, exhibiting, repairing, altering,
or making additions to the Premises, provided that such actions by LANDLORD
shall not unduly interfere with the use of the Premises by TENANT.  The LANDLORD also shall have the right to
exhibit the Premises to prospective purchasers or tenants during the last six
(6) months of the term of this lease or any extended term of this lease.

 

(l)                                     Except for claims resulting solely
from the negligence of LANDLORD, TENANT shall indemnify and defend LANDLORD and
the Premises at the expense of TENANT, against any and all claims, expenses,
liabilities, awards, and judgments, including costs of defense and reasonable
attorneys’ fees, arising from the management of the Premises by TENANT or from
any occurrence on or about the Premises or from any default by TENANT hereunder
or any act, omission, or from the negligence of TENANT or its agents,
employees, licenses, or invitees.  Except for claims resulting solely from the
negligence of TENANT, LANDLORD shall indemnify and defend TENANT against any
and all claims, expenses, liabilities, awards and judgements, including costs
of defense and reasonable attorney’s fees arising from the management of the
Premises by LANDLORD or from any default by LANDLORD hereunder or any act,
omission, or from the negligence of LANDLORD or its agents, employees,
licensees, or invitees.

 

(m)                               That it will not engage in the
generation, storage, or transportation of any hazardous waste materials or in
the operation of a hazardous waste facility on the Premises.  TENANT shall indemnify LANDLORD completely
and unconditionally without limitation as to time against any costs, expenses,
claims, liabilities, awards, and judgments of any type or nature related to or
arising from removal or remedial action incurred as a result of any
governmental order, award, or judgment occurring as the result of the
generation, storage, transportation, or disposal of hazardous materials on the
Premises or the noncompliance by TENANT or the Premises with any existing
regulation, law, rule, or ordinance pertaining to environmental matters or
hazardous materials by TENANT.  The
indemnification shall include, but shall not be limited to, the cost of defense
incurred by LANDLORD, court costs, expenses, attorneys’ fees judgments, awards,
expense of investigation, and any other related expense arising or claimed to
have arisen from any environmental claim of any type pertaining to the Premises
or the conduct of TENANT on or about the Premises.

 

(n)                                 TENANT covenants that it has
examined and inspected the Premises and accepts the same in the condition they
are now in and without warranty, express or implied; and TENANT is

 

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not in any way relying upon any statements,
representations, or warranties by LANDLORD or LANDLORD’S agents with regard to
the condition of the Premises.

 

6.                                      Destruction of Premises.

 

In the event the Premises are damaged or destroyed by fire, lightning,
windstorm, or other hazard, and the Premises become untenantable, dangerous, or
unfit for occupancy or use by TENANT, LANDLORD shall have a period of thirty
(30) days from the date of such damage or destruction to notify TENANT of its
intention to make the Premises fit for occupancy.  In the event LANDLORD does not give TENANT such
notice of intention within thirty (30) days from the date of such damage or
destruction or in the event LANDLORD gives such notice but fails to have the
Premises made fit for occupancy within ninety (90) days after the date of such
damage or destruction, TENANT shall have the option to terminate this lease by
serving upon LANDLORD its written notice of termination and TENANT shall not be
liable for any rental payments as of the date of such damage or
destruction.  The rent shall abate for
any period during which the Premises are untenantable, and LANDLORD shall
refund to TENANT any prepaid but unearned rent for such untenantable period.

 

7.                                      Option to Extend.

 

TENANT shall have the option to extend the term of this lease, for
unlimited number of Three (3) year periods with Annual CPI Adjustments, and
upon such terms and conditions and time as LANDLORD and TENANT shall mutually
agree upon in writing.  This option to
extend shall exist only in the event TENANT is not then in default under any of
the terms and conditions of this lease. 
In the event LANDLORD and TENANT do not enter into a written agreement
prior to March 1, 2009, for the first extension, setting forth all of the
rents, conditions, and provisions for such extended term then this provision
for extension shall be void and of no further force and effect.  Each additional extension must be executed in
writing more than six months nor to the end of the current term an order for
this provision to apply.  In the event the required
six months notice to extend is not received, the lease will automatically
extend for the next option period.

 

8.                                      Waiver of Subrogation.

 

LANDLORD and TENANT, and all parties claiming by, under or through
them, hereby mutually release and discharge each other from all claims and
liabilities arising from or caused by any hazard covered by insurance in
connection with property on or activities conducted on the Premises regardless
of the cause of the damage or loss.

 

9.                                      Holdover by Tenant.

 

LANDLORD and TENANT agree that if TENANT holds over or occupies the
Premises beyond the term or any extended term of this lease with or without the
consent of LANDLORD (it being agreed that there shall be no such holding over
or occupancy without LANDLORD’S written consent), TENANT shall occupy the
Premises as a tenant from month to month and all other terms and provisions of
this lease pertaining to TENANT’S obligations shall be applicable.  Nothing herein contained shall limit or
prohibit the right of LANDLORD to obtain a judgrnent of immediate possession
and damages in the event TENANT shall hold over or occupy the Premises beyond
the term or extended term of this lease without LANDLORD’S written consent.

 

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10.                               Landlord’s Right to Cure Defaults.

 

LANDLORD may, but shall not be obligated to, cure at any time after
thirty (30) days notice, any default by TENANT under this lease; and whenever
LANDLORD so elects, all costs and expenses incurred by LANDLORD in curing such
default, including without limitation, reasonable attorneys’ fees, together
with interest on the amount of costs and expenses so incurred at the rate of twelve percent (12%)
per annum, shall be paid by TENANT to LANDLORD on demand, and shall be
recoverable as additional rent.  In the event the default on the part of the LANDLORD
concerns the condition of the roof, the LANDLORD shall not be considered to be
in default, if after being made aware of the condition of the roof by the
TENANT, the LANDLORD has commenced repairs of the roof within thirty (30) days
of notification by the TENANT.

 

11.                               Condemnation.

 

In the event the Premises or any portion thereof are condemned for any
public use or purpose by any legally constituted authority and by reason
thereof the Premises are rendered untenantable or unsuitable for use by TENANT,
then this lease shall terminate from the time when possession taken by such
public authority and the rental and other payments shall be accounted for
between LANDLORD and TENANT as of the date of the surrender of possession.  Such termination shall be without prejudice
to the rights of either LANDLORD or TENANT to recover compensation from the
condemning authority for any loss or damage caused by such condemnation.  Neither LANDLORD nor TENANT shall have any
rights in or to any award made to the other by the condemning authority.

 

12.                               Default of Tenant.

 

The occurrence of any one or more of the following events shall be
considered a default by TENANT:

 

(a)                                  Failure of TENANT to perform any
covenant or obligation under this lease within thirty (30) days after written
notice of default is received from LANDLORD, except TENANT’S failure to make
rental payments with a ten (10) day grace period
for which no written notice of default is required from LANDLORD.

 

(b)                                 The assignment by TENANT of any of
TENANT’S assets for the benefit of creditors.

 

(c)                                  The levying of a Writ of Execution
or Attachment against TENANT’S property if not released or discharged within
ninety (90) days thereafter.

 

(d)                                 The commencement in a court of
competent jurisdiction of proceedings for TENANT’S: reorganization,
liquidation, involuntary dissolution, adjudication as a bankrupt, insolvency,
or for the appointment of a receiver of the TENANT’S assets, if such
proceedings are not dismissed or any receiver, trustee, or liquidator appointed
therein discharged within ninety (90) days after the institution of the
proceedings.

 

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13.                               Hazardous Material.

 

TENANT agrees to neither cause not permit any Hazardous Material to be
brought upon, kept or used in or about the real estate by anyone, including
TENANT and its agents, employees, contractors or invitees, without the prior
written consent of LANDLORD (which LANDLORD shall not unreasonably withhold as
long as TENANT demonstrates to LANDLORD reasonable satisfaction that such
Hazardous Material is necessary or useful to TENANT’s business and will be
used, kept and stored in a manner that complies with all laws regulating any
such Hazardous Material so brought upon or used or kept in or about the real estate).  If TENANT breaches the obligations stated in
the preceding sentence, or if the presence of Hazardous Material on the real
estate caused or permitted by TENANT results in contamination of the real
estate, then as a result of such contamination TENANT shall indemnify, defend
and hold LANDLORD harmless from any and all claims, judgments, damages,
penalties, fines, costs, liabilities or losses (including, without limitation,
diminution of value of the real estate, damages for the loss or restriction on use
of usable space or of any amenity of the real estate, damages, costs or
expenses of remediation required or deemed necessary by TENANT, and sums paid
in settlement of claims, attorney’s fees, consultant fees and expert fees)
which arise during or after the completion or termination of this
Agreement.  This indemnification of
LANDLORD by TENANT includes, without limitation, costs incurred in connection
with any investigation of site conditions or any clean-up, remediation, removal
or restoration work required by any federal, state or local governmental agency
or political subdivision because of Hazardous Material present in the soil or
ground water on or under the real estate.

 

As used herein, the term “Hazardous Material” means any hazardous or
toxic substances material or waste which is or become regulated by any local
governmental authority, the State of Indiana or the Untied States
Government.  The term “Hazardous
Material” includes, without limitation, any material or substance which is (i)
defined as a “hazardous substance” under I.C. 13-78.7-1 of the Indiana
Hazardous Substance Response Trust Fund Act; (ii) petroleum; (iii) asbestos;
(iv) designated as a “hazardous substance” pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C § 1317); (v) defined as a
“hazardous waste” pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C § 6901 et seq. (42 U.S.C. § 6903);
(vi) defined as a hazardous substance” pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
§ 9601 et seq. (42 U.S.C. § 9601) or (vii) defined as a “regulated
substance” pursuant to Subchapter IX, Solid Waste Disposal Act (regulation of
Underground Storage Tanks), 42 U.S.C. § 6991 et seq. (42 U.S.C. § 6991).

 

In the event of default by the TENANT and this contract is terminated
either voluntarily or by other legal means the TENANT’s environmental liability
extends beyond the life of this contract for any and all environmental damage
that may be caused to the property during the life of this contract.

 

In the same manner, LANDLORD agrees to indemnify and hold TENANT
harmless from any claims, damages, costs, or expense, including reasonable
attorney’s fees, for any event or condition which is a violation of the
applicable laws and regulations relating to the environment which occurred or
existed prior to TENANT’s occupancy of the premises, whether or not such
violation or condition is discovered during the initial environmental survey.  This indemnity shall survive the termination
of the Lease Agreement.

 

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14.                               Remedies of Landlord.

 

If TENANT defaults in payment of any rent or expenses required by this
lease, or if TENANT shall be in default in the performance of any other
covenant, agreement, or condition of this lease which
are not cured, TENANT shall at once deliver peaceable possession
of the Premises to LANDLORD.  If TENANT
fails to do so, LANDLORD may declare the lease term ended and may reenter and
take possession of the Premises.  In the
event LANDLORD elects to reenter the property, LANDLORD may either declare the
lease term ended for all or any part of the Premises or, without terminating
the lease, may from time to time make such alterations or repairs as may be
necessary to relet the Premises. 
LANDLORD may then relet all or any part of the Premises for such rent
and other conditions as LANDLORD in LANDLORD’S sole discretion determines
advisable. All rentals received by LANDLORD from such reletting shall be
applied first to the payment of any indebtedness other than rent due from
TENANT to LANDLORD, next to the payment of any costs or expenses of such
reletting (including brokerage fees and attorney fees and the costs of such
alterations and repairs), and finally to the payment of rent and additional
charges due and unpaid under this lease, together with interest at the rate of twelve (12%) per year.  The residue, if any, shall be held by
LANDLORD and applied to the payment of future rent as it may become due and
payable under this lease.  Upon such
reentry, LANDLORD either with or without due process of law may remove TENANT
or any persons occupying the property using such force as may be reasonably
necessary to do so and may then relet without waiving any remedies which
otherwise might be used for rental arrearage or breach of the lease
provisions.  The acceptance of rent by
LANDLORD, whether in a single instance or repeatedly or after any knowledge of
TENANTS breach of payment, shall not be construed as a waiver of any of
LANDLORD’S rights to proceed under the remedies provided by this lease or
provided by applicable law.

 

15.                               Waiver.

 

No waiver by LANDLORD or TENANT of any breach of any term, covenant or
condition hereof shall be deemed a waiver of the same or any subsequent breach
of the same or any other term, covenant, or condition hereof, regardless of
LANDLORD’S knowledge of such breach when such rent is accepted.  No covenant, term or condition of this lease
shall be deemed waived by LANDLORD or TENANT unless waived in writing.

 

16.                               Notices.

 

In the event any party hereto desires or is required to give notice
pursuant to the terms of this lease agreement, such notice shall be sufficient
if delivered in person or if mailed by certified mail or registered mail,
postage prepaid and requesting a return receipt, to the following addresses:

 

TO LANDLORD:                                                 Fink
Management, LLC

                                                                                2331
Sylvan Lane

                                                                                Elkhart,
IN 46514

 

TO TENANT:                                                       Mr.
Kelly Bodway

                                                                                302
Peoples Ave.

                                                                                Rockford,
IL 61104

 

 

 

 

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17.                               Partial Invalidity.

 

If any provision of this lease or the application thereof to any person
or circumstance shall to any extent be invalid or unenforceable, the remainder
of this lease, or the application of such provision to persons or circumstances
other than those as to which it is invalid or unenforceable, shall not be
affected thereby and each provision of this lease shall be valid and
unenforceable to the fullest extent permitted by law

 

18.                               Paragraph Headings, Number and Gender.

 

This lease shall be construed with reference
to paragraph headings which are inserted only for convenience of reference. The
use herein of a singular term shall include the plural and use of the
masculine, feminine or neuter genders shall include all others.

 

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This lease shall be construed with reference to paragraph headings
which are inserted only for convenience of reference.  The use herein of a singular term shall
include the plural and use of the masculine, feminine or neuter genders shall
include all others.

 

19.                               Entire Agreement; Successors.

 

This lease agreement constitutes the entire agreement of the parties
with respect to each and all of the terms of lease of the Premises and shall
not be altered or amended except by written agreement of the parties.  This agreement shall be construed and
interpreted in accordance with the laws of the State of Indiana and shall inure
to the benefit of, and be binding upon, the parties hereto and their respective
successors and assigns.

 

20.                               Brokers

 

LANDLORD and TENANT each represent to the other that it has not dealt
with any finder or real estate broker other than FM Stone Commercial and that
no finder or real estate broker was in any way connected with the transaction
contemplated hereby.  Neither LANDLORD
nor TENANT has engaged any brokers who would be entitled to any commission or
fee based on the execution of this Lease, other than those set forth in Exhibit
“B”, attached, who shall be paid by LANDLORD pursuant to separate agreement.

 

IN WITNESS WHEREOF, the parties have executed this agreement of lease
this day and year first above written.

 

	
  BY:

  	
  /s/ Elizabeth Sue Fink

  	
   

  	
  By:

  	
  /s/ Kelly Bodway - Gunite

  	
   

  
	
   

  	
  LANDLORD

  	
   

  	
   

  	
  TENANT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  STATE OF ILLINOIS

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
  ) SS:

  	
   

  	
   

  
	
  COUNTY OF WINNEBAGO

  	
  )

  	
   

  	
   

  

 

Before me, the undersigned, a Notary Public in and for said County and
State, personally appeared Kelly Bodway acknowledged the execution of the
foregoing Lease Agreement.

 

Witness my hand and Notarial Seal this 12th day of 2002.

 

My Commission expires:

 

 

	
   

  	
  /s/ Virginia L. Neal

  	
   

  
	
  8/27/05

  	
   

  	
  Notary
  Public

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Residing in Ogle County

  

 

11Exhibit
10.37

 

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, July 16, 2003, is made by and between
Napa/Livermore Properties, LLC, a California limited partnership (“Lessor”) and FABCO Automotive Corporation, a Delaware
corporation (“Lessee”) (collectively the
“Parties,” or individually a “Party”).

 

1.2                               Premises:  That certain real Property, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
and commonly known as 151 Lawrence Drive, Livermore located in the County of
Alameda, 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) an approximately 56,800 rentable square foot
industrial building more particularly described on Exhibit “A” hereto (“Premises”).  (See also
Paragraph 2)

 

1.3                               Term:  Ten (10) years and zero (0) months (“Original Term”) commencing October 1, 2003
(“Commencement Date”) and ending September 30, 2013 (“Expiration
Date”).  (See also Paragraph
3)

 

1.4                               Early
Possession:  September 1, 2003
or earlier (“Early Possession Date”) (See also
Paragraphs 3.2 and 3.3)

 

Lessee shall be granted early possession of the Premises for the
purpose of planning and constructing their tenant improvements to the Premises
on the date that Lessor is in receipt of all of the following: (a) Fully
executed Lease documents; (b) all deposits required under the Lease, including
the Security Deposit; and (c) evidence of Lessee’s liability Insurance policy
with endorsement naming Lessor as additional Insured as required by Paragraph
8.2(a) of the Lease.  The Early
Possession Date shall be acknowledged in writing by Lessor and Lessee within
ten (10) days following the Early Possession Date.

 

1.5                               Base
Rent:  (“Base Rent”),
shall be payable on the first (1st) day of each month commencing October 1,
2003 in accordance with the following schedule:

 

                                                                                                                                                               .  (See also Paragraph 4)

 

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

 

	
  Months

  	
   

  	
  Monthly Base Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1-12

  	
   

  	
  $

  	
  29,536.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13-24

  	
   

  	
  $

  	
  30,422.08

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  25-36

  	
   

  	
  $

  	
  31,334.74

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  37-48

  	
   

  	
  $

  	
  32,274.78

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  49-60

  	
   

  	
  $

  	
  33,243.03

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  61-72

  	
   

  	
  $

  	
  34,240.32

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  73-84

  	
   

  	
  $

  	
  35,267.53

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  85-96

  	
   

  	
  $

  	
  36,325.55

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  97-108

  	
   

  	
  $

  	
  37,415.32

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  109-120

  	
   

  	
  $

  	
  38,537.78

  	
   

  

 

 

 

1.6                               Base
Rent and Other Monies Paid Upon Execution:

 

(a)                                  Base Rent: $29,536 for the period October 1,
2003 through October 31, 2003

 

(b)                                 Security Deposit: $76,907.20 (“Security
Deposit”). (See also Paragraph 5)

 

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

 

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

 

(e)                                  Total Due Upon Execution of this
Lease:
$106,443.20

 

1.7                               Agreed
Use:  general office, design,
engineering and manufacturing.  Without
limiting the Agreed Use, Lessee’s present use is the development and
manufacture (including machining, assembly, welding and Painting) of AWD and
power transfer components for the heavy-duty commercial and off-road vehicle
industry.

 

(See also Paragraph 6)

 

1.8                               Insuring
Party:  Lessor is the “Insuring
Party” unless otherwise stated herein. (See also Paragraph 8)

 

1.9                               Real
Estate Brokers:  (See also Paragraph
15)

 

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

 

ý                                    Colliers
International represents Lessor exclusively (“Lessor’s
Broker”);

 

ý                                    BT
Commercial Real Estate 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 Lessor’s Broker the fee agreed to in their separate written agreement and
$92,000.00 to BT Commercial Real Estate for the brokerage services rendered.

 

2

 

1.10                        Guarantor.  The obligations of the Lessee under this
Lease are to be guaranteed by Transportation Technologies Industries Inc., a
Delaware corporation (“Guarantor”).  (See also Paragraph __)

 

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

 

ý                                    an
Addendum consisting of Paragraphs
                                         
through
                           ;

 

ý                                    a
plot plan depicting the Premises;

 

o                                    a
Work Letter;

 

ý                                    other
(specify) Exhibits A through E attached hereto.

 

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 the Premises to Lessee
broom clean and free of debris on the Commencement Date or the Early Possession
Date, whichever first occurs (“Start Date”),
and, so long as the required service contracts described in Paragraph 7.1(b)
below are obtained by Lessee and in effect within thirty days following the
Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, sump pumps, if any, and all other
such elements in the Premises, other than those constructed by Lessee, shall be
in good operating condition on said date 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) 6-12 months as to the HVAC systems, and (ii)
90 days as to the remaining systems and other elements of the Building.  Lessor may obtain a maintenance contract
reasonably acceptat4e to Lessee and at Lessee’s cost, to apply during the 12
month warranty period.  If Lessee objects
to the cost of the maintenance contract, Lessor shall not procure it and the
warranty on HVAC shall be 6 months.  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 Applicable Requirements, and
especially

 

3

 

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 6-12
months following the Start Date, correction of that non-compliance shall be
deemed to be a “Capital Expenditure” as defined in the next sentence in this
Paragraph 2.3, with the cost of causing such compliance to be allocated between
the parties in the same manner as the cost of a Capital Expenditure is
allocated pursuant to said next sentence. 
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 (except for any Hazardous Substances used In Lessee’s paint booth on
the Premises), or the reinforcement or other physical modification of the Unit,
Premises and/or Building (“Capital Expenditure”),
Lessor and Lessee shall allocate the cost of such work as follows:

 

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

 

(b)                                 If such Capital Expenditure is not
the result of the specific and unique use of the Premises by Lessee (such as,
governmentally mandated seismic modifications), then Lessor 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.

 

4

 

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.

 

3.3                               Delay
In Possession.  Lessor agrees to use
its best commercially reasonable efforts to deliver possession of the Premises
to Lessee by the Early Possession Date, including, without limitation, giving
timely and appropriate notices to any existing tenant and filing an unlawful
detainer action against such tenant on the earliest date such action can be
commenced.  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 other obligations until 45 days
following the date on which 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 at
any time prior to delivery or possession, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder.  If such written notice is not received by
Lessee within said period,
Lessee’s right to cancel shall terminate. 
In addition to the foregoing, if Lessor does not deliver possession of
the Premises to Lessee on or before the Commencement Date, then Lessee shall
receive a rent credit equal to one and one-half days of the rent payable
hereunder for each day after the Commencement Date that Lessor does not deliver
possession of the Premises to Lessee in the condition required herein,

 

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

 

5

 

such evidence, Lessee shall be required to perform all of its obligations
under this Lease from and after the Commencement 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.

 

3.5                               Extension
Options.

 

A.                                   Option
Period: Provided that Lessee is not in default hereunder either at the time of
exercise or at the time the extended term commences, Lessee shall have the
option to extend the initial 10 year term of this Lease for 2 extended 5-year
terms on the same terms, covenants and conditions provided herein, except that
upon such extension the monthly Base Rent due hereunder shall be determined
pursuant to this Paragraph.  Lessee may
exercise the first option by giving Lessor written notice (“Option Notice”) at least 180 days prior to the expiration of
the initial term of this Lease.  Lessee
may exercise the second option by giving Lessor written notice (“Option Notice”) at least 180 days prior to the expiration of
the term of this Lease as extended by the exercise of the first option.

 

B.                                     Option
Period Monthly Base Rent: the monthly Base Rent for each Option Period, which
shall include all adjustments, shall be determined as follows:

 

(i)                                     The
parties shall have 15 days after Lessor receives the Option Notice for the
Option in question within which to agree on the monthly Base Rent for the
Option Period in question based upon the then fair market rental value of the
Premises as defined in Paragraph below. 
If the parties agree on the monthly Base Rent for the Option Period in
question within 15 days, they shall immediately execute an amendment to this
Lease stating the monthly Base Rent for the Option Period in question.

 

(ii)                                  If
the parties are unable to agree on the monthly Base Rent for the Option Period
in question within 15 days, then the monthly Base Rent for the Option Period in
question shall be the then current fair market rental value of the Premises as
determined in accordance with the following provisions.

 

(iii)                               the “then fair market
rental value of the Premises” shall be defined to mean the fair market rental
value of the Premises as of the commencement of the Option Period in question
(plus customary annual Increases In such rent), taking into consideration the
uses permitted under this Lease, the quality, size, design, and location of the
Premises, and the rent for comparable buildings located in Livermore,
California.

 

(iv)                              Within
7 days after the expiration of the 15-day period set forth in (ii) above, each
party, at its cost and by giving notice to the other party, shall appoint a
real estate appraiser with at least 5 years full-time commercial appraisal
experience in the area in which the Premises are located to appraise and set
the then fair market rental value of the Premises for the Option Period in
question.  If a party does not appoint an
appraiser within 10 days after the other party has given notice of the name of
its appraiser the single appraiser appointed shall be the sole appraiser and
shall set the then fair market rental value of the Premises.  If the 2 appraisers are appointed by the
parties as stated in this Paragraph, they shall meet promptly and attempt to
set the then fair market value of the Premises. 
If they are unable to agree within 30 days after the second appraiser
has been appointed, they shall attempt to elect

 

6

 

a third appraiser meeting
the qualifications stated in this paragraph within 10 days after the last day
the 2 appraisers are given to set the then fair market rental value of the
Premises.  If they are unable to agree on
the their appraiser, either of the parties to this Lease by giving 10 days’
notice to the other party, can apply to the then President of the Alameda
County Real Estate Board or to the then Presiding Judge of the Alameda County
Superior Court, for the selection of a third appraiser who meets the
qualifications stated in this paragraph. 
Each of the parties shall bear 1/2 of the cost of appointing the third
appraiser and of paying the third appraiser’s fee.  The third appraiser, however selected shall
be a person who has not previously acted in any capacity for either party.

 

Within 30 days after the selection of the third appraiser, a majority
of the appraisers shall set the then fair market value of the Premises.  If a majority of the appraisers are unable to
set the then fair market rental value of the Premises within the stipulated
period of time, the 3 appraisals shall be added together and their total
divided by 3; the resulting quotient shall be the then fair market rentable
value of the Premises.

 

If, however, the low appraisal and/or the high appraisal are/is more
than 10% lower and/or higher than the middle appraisal, the low appraisal
and/or the high appraisal shall be disregarded. 
If only one appraisal is disregarded, the remaining 2 appraisals shall
be added together and their total divided by 2; the resulting quotient shall be
the then fair market value of the Premises. 
If both the low appraisal and the high appraisal are disregarded as
stated in this paragraph, the middle appraisal shall be the then fair market
rental value of the Premises.

 

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

 

7

 

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. 
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. 
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 unreasonably 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.

 

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 lay theory. 
Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products or actions 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. 
Prior to executing this Lease, Lessee shall complete, execute and
deliver to Lessor an initial Hazardous Materials Disclosure Certificate (the “HazMat
Certificate”) in the form attached as Exhibit “B” and incorporated herein by
this reference.  Lessee covenants,
represents and warrants to Lessor that the information to be submitted on the
HazMat Certificate shall be true and correct and shall accurately

 

8

 

describe the uses of the Hazardous Materials which will be
made and/or used on the Premises by Lessee. 
In addition, Lessee shall, commencing on the date which is one year from
the Commencement Date and continuing every year thereafter, complete, execute
and deliver to Lessor a Hazardous Materials Disclosure Certificate (the “Annual
HazMat Certificate”) describing Lessee then present use of Hazardous Materials
on the Premises, and any other reasonably necessary documents as requested by Lessor.  The Annual HazMat Certificate required
hereunder shall be substantially in the form which is attached hereto as
Exhibit “B”.  In addition, Lessor may
condition its consent to any other 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).

 

(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 required, for the cleanup
of any contamination of, and for the maintenance, security and/or monitoring of
the Premises or neighboring properties, that was caused or materially contributed
to by Lessee, or pertaining to or involving any Hazardous Substance brought
onto the Premises during the term of this Lease, by or for Lessee, or any third
party.

 

(d)                                 Lessee Indemnification. 
Lessee shall indemnify, defend and hold Lessor, its agents, employees,
lenders and ground lessor, if any, harmless from and against any and all loss
of rents and/or damages, liabilities, judgments, claims, expenses, penalties,
and attorneys’ and consultants’ fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee, or any third party
(provided, however, that Lessee shall have no liability under this Lease with
respect to underground migration of any Hazardous Substance under the Premises
from adjacent properties not caused or contributed to by Lessee).   Lessee’s obligations shall include, but not
be limited to, the effects of any contamination or injury to person, property
or the environment created or suffered by Lessee, and the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease.  No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.

 

(e)                                  Lessor Indemnification. Lessor and its successors and
assigns shall indemnify, defend, reimburse and hold Lessee, its employees and
lenders, harmless from and against any and all environmental damages, including
the cost of remediation, which result from Hazardous Substances which existed
on the Premises prior to Lessee’s occupancy or which are caused by the gross
negligence or willful misconduct of Lessor, its agents or employees.  Lessor’s obligations, as and when required by
the Applicable Requirements, shall include, but not be limited to, the cost of
investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease.

 

9

 

(f)                                    Investigations and Remediations. 
Lessor shall retain the responsibility and pay for any investigations or
remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to
Lessee’s occupancy, unless such remediation measure is required as a result of
Lessee’s use (including “Alterations”, as defined in paragraph 7.3(a) below) of
the Premises, in which event Lessee shall be responsible for such payment.  Lessee shall cooperate fully in any such
activities at the request of Lessor, including allowing Lessor and 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
remediation as soon as reasonably possible after the required funds are
available.  If Lessee does not give such
notice and provide the required funds or assurance thereof within the time
provided, this Lease shall terminate as of the date specified in Lessor’s
notice of termination.

 

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

 

6.4                               Inspection;
Compliance.  Lessor and Lessor’s
“Lender” (as defined in Paragraph 30) and consultants shall have the right to
enter into Premises at any time, in the case of an emergency, and otherwise at
reasonable times after reasonable notice, for the purpose of inspecting the
condition of the Premises and for verifying compliance by Lessee with this
Lease.  The cost of any such inspections
shall be paid by Lessor, unless a violation of Applicable Requirements, or a
Hazardous Substance Condition (see paragraph 9.1) is found to exist or be
imminent, or the inspection is requested or ordered by a governmental
authority.  In such case, Lessee shall
upon request reimburse Lessor for the cost of such inspection, so long as such
inspection reasonably related to the violation or contamination caused by
Lessee.  In addition, Lessee shall
provide copies of all relevant material safety data sheets (MSDS) to Lessor
within 10 days of the receipt of a written request therefor.

 

10

 

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), 6.2 (Hazardous Substances), 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, an whether
or not the need for such repairs occurs as a result of Lessee’s 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 (including exterior lighting), boilers, pressure vessels,
fire protection system, fixtures, interior walls ceilings, roofs, roof drainage
systems, floors, windows, doors, plat 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
if procurement and maintenance of the service contracts required by Paragraph
7.1(b) below.  Lessee’s obligations shall
include restorations, replacements renewals when necessary to keep the Premises
and all improvements thereon or a part thereof in good order, condition and
state of repair.  Lessee shall during the
term of this Lease, keep the exterior appearance of the Building in a
first-class condition (including, e.g. graffiti removal) consistent with the exterior
appearance of other similar facilities of comparable age and size in the
vicinity, including, when necessary, the exterior repainting of the Building.
Lessee shall contract for its own garbage dumpster and store the dumpster in a
location as designated by Lessor at all times. 
Lessor shall cause all maintenance, repairs an replacements to be done
to all landscaping, driveways, parking lots, fences, retaining walls, signs,
sidewalks and parkways located in, on or adjacent to the Premises, and to the extent any of the foregoing are
Lessee’s obligations, Lessee shall pay Lessor for the costs thereof
within thirty (30) days of receiving a bill therefor from Lessor.  Prior to incurring any expense for any of the
foregoing which is expected to exceed ten thousand dollars ($10,000), Lessor
shall obtain three competitive bids from qualified contractors for the work
involved and Lessee shall have the right to select, from the bidding
contractors, the contractor to do the work.

 

(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 at 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 detector (iv) landscaping and
irrigation systems, (v) roof covering and drains, (vi) clarifiers and (vii) 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.

 

11

 

(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 reasonable
cost, 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 (i.e. 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.  Except for the roof
structure, foundations. structural components of exterior walls and other
Structural components of the Premises, all of which shall be maintained by
Lessor in good condition and repair, and subject to the provisions of
Paragraphs 2.2 (Condition), 2.3 (Compliance), 6.2 (Hazardous Substances),
7.1(d) (Replacement), 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. 
If Lessee fails to perform Lessor’s obligations under this Paragraph
7.2, Lessee may, after 30 days’ prior written notice to Lessor (except in the
case of an emergency, in which case the only notice which shall be required is
a commercially reasonable notice given the circumstances), perform such
obligations upon Lessor’s behalf and put the Premises in good order, condition
and repair, and Lessor shall promptly pay to Lessee (or provide a Rent credit
for Rent next due and owing under the Lease) a sum equal to the cost thereof,
plus Interest (as defined in Paragraph 13.5 below) thereon.

 

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. 
Except for the Trade Fixtures, Utility Installations and Alterations
described in Exhibit “C’, all of which have been consented to by Lessor, Lessee
shall not make any Alterations or Utility Installations to the Premises without
Lessor’s prior written consent.  Lessee
may, however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor,
as 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 Lease as extended does not exceed a sum equal to 3 month’s
Base Rent in the aggregate or 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

 

12

 

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 installation 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.

 

(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 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 thereto before the
enforcement thereof.  If Lessor shall
require, Lessee shall furnish a surety bond in an amount equal to 150% of the
amount of such contested lien claim or demand, indemnifying Lessor against
liability for the same.  If Lessor elects
to participate in any such action, Lessee shall pay Lessor’s attorneys’ fees
and costs.

 

7.4                               Ownership;
Removal; Surrender; and Restoration.

 

(a)                                  Ownership. 
Subject to Lessor’s right to require removal or elect ownership as
hereinafter provided, all Alterations and Utility Installations made by Lessee
shall be the property of Lessee, but considered a part of the Premises.  Lessor may, at any time, elect in writing to
be the owner of all or any specified part of the Lessee Owned Alterations and
Utility Installations.  Unless otherwise
instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and
Utility Installations shall, at the expiration or termination of this Lease,
become the property of Lessor and be surrendered by Lessee with the Premises.

 

(b)                                 Removal. 
By delivery to Lessee of written notice from Lessor which notice shall
be given, if at all, concurrently with Lessor’s consent to proposed Alteration
or Utility Installation, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or
termination of this Lease.  Lessor may
require the removal at any time of any or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent,

 

(c)                                  Surrender; Restoration. Lessee shall surrender the
Premises by the Expiration Date or any earlier termination date, with all of
the improvements, parts and surfaces thereof broom clean and free of debris,
and in good operating order, condition and state of repair, ordinary wear and
tear excepted.  “Ordinary
wear and tear” shall not include any damage or deterioration that
would have been prevented by good maintenance practice Notwithstanding the
foregoing, if this Lease is for 12 months or less, then Lessee shall surrender
the Premises in the same condition as delivered to Lessee on the Start Date
with NO allowance for ordinary wear and tear. 
Lessee shall repair any damage occasioned by the installation,
maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or
Utility Installations, furnishings, and equipment as well as the removal of any
storage tank installed by for Lessee. 
Lessee shall 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

 

13

 

applicable, the Project); provided, however,
that Lessee shall not be obligated to perform or pay for work that exceeds
statutory or regulatory requirements Trade Fixtures, including, without
limitation, Lessee’s crane and paint booth, 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.  Except
for Lessee’s obligations pertaining to Hazardous Substances, Lessor shall be
deemed to have agreed that Lessee has performed its maintenance and repair
obligations hereunder and that Lessee has surrendered the Premises in the
condition required in this Lease if Lessor does not specify, in reasonable
detail, in a written notice to Lessee given within 90 days after the surrender
of the Premises to Lessor, any failure by Lessee to perform such maintenance
and repair and to so surrender the Premises to Lessor or, if Lessor does not
correct any such failure within a reasonable time thereafter, not to exceed 90
days after such notice is given to Lessee.

 

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 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 [the beginning of] the Lease Term shall be prorated to correspond to the Lease Term.  Payments 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 having a standard Pollution
Exclusion.  Such insurance shall be on an
occurrence basis providing single limit coverage in an amount not less than
$1,000,000 per occurrence with an annual aggregate of not less than $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 if 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.

 

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 to
the full replacement cost of the

 

14

 

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 Installation, 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 coverage for debris removal
and the enforcement of any Applicable Requirements requiring the upgrading,
demolition, reconstruction or replacement of any portion of the Premises as the
result of a covered loss.  Said policy or
policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a
factor of not less than the adjusted U.S. Department of Labor Consumer Price
Index for All Urban Consumers for the city nearest where the Premises are
located.  If such insurance coverage has
a deductible clause, the deductible amount shall not exceed $1,000 per
occurrence, and Lessee shall be liable for such deductible amount in the event
of an Insured Loss.

 

(b)                                 Rental Value. 
The Insuring Party shall obtain and keep in force a policy or policies
in the name of Lessor with loss payable to Lessor and any Lender, insuring the
loss of the full Rent for one year with an extended period of indemnity for an
additional 180 days (“Rental Value insurance”).  Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by Lessee, for the next 12 month period.

 

(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 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.  The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owner 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 most
current issue “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

 

15

 

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 5
business 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,
and may provided for customary exclusions. 
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 require to,
procure and maintain the same.

 

8.6                               Waiver
of Subrogation.  Without affecting
any other rights or remedies, Lessee and Lessor each hereby release and relieve
the other and waive their entire right to recover damages against the other,
for loss of or damage to its property arising out of or incident to the perils
required to be insured against herein. 
The effect of such releases and waivers is not limited by the amount of
insurance carried or required, or by any deductibles applicable hereto.  The Parties agree to have their respective
property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.

 

8.7                               Indemnity.  Except for Lessor’s gross negligence or
willful misconduct, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor’s master or ground lessor, partners
and Lenders, from and against any and all claims, loss of rents and/or damage
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, wire appliances, plumbing, HVAC or lighting fixtures,
or from any other cause, whether the said injury or damage results from
conditions arising upon the Premise, or upon other portions of the building of
which the Premises are a part, or from other sources or places.  Lessor shall not be liable 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

 

16

 

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 Owner 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. 
Lessor shall notify Lessee in writing within 30 days from the date of
the damage or destruction as to whether or not the damage is Partial or Total.

 

(c)                                  “Insured Loss” shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.

 

(d)                                 “Replacement Cost” shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of the occurrence to the
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 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 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 this purpose.  Notwithstanding
the foregoing, if the required insurance was not in force or the insurance
proceeds are not sufficient to effect such repair, the Insuring Party shall
promptly contribute the shortage in proceeds (except as to the deductible which
is Lessee’s responsibility) as and when required to complete said repairs.  In the event, however, such shortage was due
to the fact that, by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and available,
Lessor shall have no obligation to pay for the shortage in insurance proceeds
or 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

 

17

 

and request therefor.  If Lessor
receives said funds or adequate assurance thereof within said 10 day period,
the party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect.  If such funds or assurance are not received,
Lessor may nevertheless elect by written notice to Lessee within 10 days
thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds in which case this Lease
shall remain in full force and effect, or have this Lease terminate 30 days
thereafter; provided, however, that the option to terminate this Lease as set
forth under clause (ii) shall be available to Lessor only if the Insured Loss
results from the action or inaction of Lessee at the Premises.  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 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 no event shall Lessor have the right to
terminate this Lease under this Paragraph 9.3 if the cost of repair of the
damage is expected to be less than $500,000 (unless the repair is required due
to damage caused by terrorism or Acts of God, including earthquake and flood;
provided, however, that such exclusions shall not be applicable if Lessor
commences to repair the building within 6 months of the occurrence of such
damage and Lessee elects to require Lessor to rescind such termination).  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
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, the 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 the 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 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

 

18

 

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.  If Lessor shall be obligated to repair or
restore the Premises and does not substantially complete such repair or
restoration within 180 days of the damage or destruction to the Premises as
such period may be extended by matters not within the reasonable control of
Lessor, Lessee may, at any time prior to such substantial completion, given
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 later than 30 days
following the giving of such notice.  In
the event that the repair or restoration is completed within said 30 days, this
lease shall continue in full force and effect, notwithstanding Lessee’s
election to terminate.

 

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.

 

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

 

19

 

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.  Notwithstanding the foregoing,
any Real Property Taxes which may be paid in installments shall be so paid, and
Lessee shall pay when due only those installments which are applicable to the
Term.  Any overpayments of Real Property
Taxes by Lessee shall, at Lessee’s election, be promptly refunded by Lessor or
credited to the next Installment of Rent; provided, however, that if the
overpayment was made to the governmental agency collecting said Real Property
Taxes, the overpayment shall not be required to be paid or credited to Lessee
until Lessor receives the applicable refund from such governmental agency. In
no event shall Lessee be liable or responsible for any traffic impact fee or
imposition which may be levied as a result of any change in use of the Premises
resulting from Lessee’s initial use of the Premises.

 

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 on this Lease,
Lessee’s share of such installment shall be prorated.  In the event Lessee incurs a late charge on
any Rent payment, Lessor may estimate the current Real Property Taxes, and
require that such taxes be paid in advance to Lessor by Lessee monthly in
advance with the payment of the Base Rent. 
Such monthly payments shall be an amount equal to the amount of the
estimated installment of taxes divided by the number of months remaining before
the month in which said installment becomes delinquent. When the actual amount
of the applicable tax bill is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the
applicable taxes.  If the amount
collected by Lessor is insufficient to pay such Real Property Taxes when due,
Lessee shall pay Lessor, upon demand, such additional sum as is necessary.  Advance payments may be intermingled with MISSED TEXT in the event of a Breach by Lessee in the
performance of its obligations under this Lease, then 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 reasonably determined by Lessor from
the respective valuations assigned in the assessor’s work sheets or such other
information as may be reasonably available.

 

10.4                        Personal
Property Taxes.  Lessee shall pay,
prior to delinquency, all taxes assessed against and levied upon Lessee Owned
Alterations Utility Installations, Trade Fixtures, furnishings, equipment and
all personal property of Lessee.  When
possible, Lessee shall cause its Lessee Owner 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 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

 

20

 

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)                                  Except for any “Permitted
Transfer,” 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 without Lessor’s prior written consent.

 

(b)                                 Unless Lessee is a corporation and
its stock is publicly traded on a national stock exchange, a change in the
control of Lessee shall constitute an assignment requiring consent.  The transfer, on a cumulative basis, of 25%
or more of the voting control of Lessee shall constitute a change in control
for this purpose.  Notwithstanding
anything to the contrary herein, no consent shall be required for or in
connection with any “Permitted Transfer” of this Lease which is any sublease or
assignment of this Lease to any party which directly or indirectly (i) owns or
controls Lessee. (ii) is owned or controlled by Lessee. (iii) is under common
ownership or control with Lessee, or (iv) into which Lessee or any of the
foregoing parties is merged, consolidated or reorganized or to which all or
substantially all of Lessee’s or such other party’s stock or assets are
transferred, provided (a) Lessor shall receive an executed copy of the transfer
document promptly after execution and (b) the transferee shall expressly assume
Lessee’s obligations hereunder. 
Notwithstanding anything herein to the contrary, in the event of a
Permitted Transfer which is an assignment to a financially responsible
transferee which Lessor would accept as a direct tenant, Lessor shall, at
Lessee’s request, execute a commercially reasonable release of Lessee from further
liability under this Lease; provided, however, that if such transferee’s
assumption of Lessee’s obligations hereunder is limited to those obligations
arising after the date of such transfer, then Lessee shall remain liable for
obligations hereunder arising prior to the date of such transfer.

 

(c)                                  Subject to the preceding Paragraph
12.1(b), 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
Lessees” shall mean the net worth of Lessee (excluding any
guarantors) established under generally accepted accounting principles.

 

(d)                                 An assignment or subletting without
consent shall, at Lessor’s option, be a Default curable after notice per
Paragraph 13.1(c), or a noncurable Breach without the necessity of any notice
and grace period. If Lessor elects to treat such unapproved assignment or
subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease,
or (ii) upon 30 days written notice, increase the monthly Base Rent to 110% of
the Base Rent then in effect.  Further,
in the event of such Breach and rental adjustment, (i) the purchase price of
any option to purchase the Premises held by Lessee shall be subject to similar
adjustment to 110% of the price previously in effect, and (ii) all fixed and
non-fixed rental adjustments scheduled during the remainder of the Lease term
shall be increased to 110% of the scheduled adjusted rent.

 

21

 

 

(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.  Notwithstanding anything herein to the
contrary, in the event of an assignment to a financially responsible transferee
which Lessor would accept as a direct tenant, Lessor shall, at Lessee’s
request, execute a commercially reasonable release of Lessee from further
liability under this Lease.

 

(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)

 

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:

 

22

 

(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 to the
extent such consent is otherwise required under this Lease.

 

(d)                                 No sublessee shall further assign or
sublet all or any part of the Premises without Lessor’s prior written consent.

 

(e)                                  Lessor shall deliver a copy of any
notice of Default or Breach by Lessee to the sublessee, who shall have the
right to cure the Default of Lessee within the grace period, if any, specified
in such notice. The sublessee shall have a right of reimbursement and offset
from and against Lessee for any such Defaults cured by the sublessee.

 

(f)                                    If Lessor’s consent is required for
any assignment or sublease hereunder, then Lessee shall pay to Lessor, as
additional rent, at the same time as the monthly installments of rent are
payable hereunder, 50% of the Transfer Premium. 
The term “Transfer Premium” shall mean all
rent, additional rent and other consideration payable [MISSING TEXT]
incurred by Lessee in connection with any such assignment or sublease
including, without limitation, marketing costs and commissions, legal
experience, the cost of any improvements or modifications installed for the
assignee or subleassee and any other economic concessions provided to induce
the assignee or sublessee to enter into the assignment or sublease.

 

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

 

23

 

Paragraph 8.3 is jeopardized as a result thereof, or without
providing reasonable assurances to minimize potential vandalism.

 

(b)                                 The failure of Lessee to make any
payment of Rent or any Security Deposit required to be made by Lessee
hereunder, whether to Lessor or to a third party, when due, to provide
reasonable evidence of insurance or surety bond, or to fulfill any obligation
under this Lease which endangers or threatens life or property, where any of
the foregoing 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 contract, (iii) the rescission of an unauthorized assignment
or subletting, (iv) an Estoppel Certificate, (v) a requested subordination,
(vi) evidence concerning any guaranty and/or Guarantor, (vii) any document
requested under Paragraph 42, (viii) material safety data sheets (MSDS), or
(ix) any other documentation or information which Lessor may reasonably require
of Lessee under the terms of this Lease, where any such failure continues for a
period of 10 days following written notice to Lessee.

 

(d)                                 A Default by Lessee as to the terms,
covenants, conditions or provisions of this Lease, or of the rules adopted
under Paragraph 4   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 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 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 of no 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 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

 

24

 

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 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,

 

25

 

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 days
after such amount shall be due, then, without any requirement for notice to
Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to
10% of each such overdue amount: provided, however, that the late charge shall
be $100 for the first late payment by Lessee in any 12 consecutive months of
the Lease Term.  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 overall 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 schedule 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 a rate of 10% per
annum but shall not exceed the maximum rate allowed by law.  Interest is payable in addition to the
potential late charge provided for in Paragraph 13.4.

 

13.6                        Breach
by Lessor.

 

(a)                                  Notice of Breach. 
Lessor shall not be deemed in breach of this Lease unless Lessor fails
within a reasonable time to perform an obligation required to be performed by
Lessor.  For purposes of this Paragraph,
a reasonable time shall in no event be less than 30 days after receipt by
Lessor, and any Lender whose name and address shall have been furnished Lessee
in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, if the nature
of Lessor’s obligation is such that more than 30 days are reasonably required
for its performance, then Lessor shall not be in breach if performance is
commenced within such 30 day period and thereafter diligently pursued to
completion.

 

(b)                                 Performance by Lessee on Behalf
of Lessor.  In the event that neither Lessor nor Lender
cures said breach within 30 days after receipt of said notice, or if having
commenced said cure they do not diligently pursue it to completion, then Lessee
may elect to cure said breach at Lessee’s expense and offset from Rent the
actual and reasonable cost to perform such cure; provided however, that such
offset shall not exceed an amount equal to the greater of two month’s Base Rent
or the Security Deposit, reserving Lessee’s

 

26

 

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 or possession, whichever first occurs.  If more than 10% of the Building, or more
than 25% of that portion of the Premises not occupied by any building, is taken
by Condemnation, Lessee may, at Lessee’s option, to be exercised in writing
within 10 days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, within 10 days after the condemning
authority shall have taken possession) terminate this Lease as of the date the
condemning authority takes such possession. 
If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in
proportion to the reduction in utility of the Premises caused by such
Condemnation.  Condemnation awards and/or
payments shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be
entitled to any compensation to 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                        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 amount 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.

 

15.2                        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, farm, 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 American

 

27

 

Industrial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by
the Requesting Party.

 

(b)                                 If the Responding Party shall fail
to execute or deliver the Estoppel Certificate within such 10 day period, the
Requesting Party may execute an Estoppel Certificate stating that: (i) the
Lease is in full force and effect without modification except as may be
represented by the Requesting Party, (ii) there are no uncured defaults in the
Requesting Party’s performance, and (iii) if Lessor is the Requesting Party,
not more than one month’s rent has been paid in advance. Prospective purchasers
and encumbrances and transferees may rely upon the Requesting Party’s Estoppel
Certificate, and the Responding Party shall be estopped from denying the truth
of the facts contained in said Certificate.

 

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

 

17.                               Definition
of Lessor.  The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease,
of the Lessee’s interest in the prior 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’s
partners, members, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against Lessor’s partners, members, directors, officers or shareholders, or any
of their personal assets to 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

 

28

 

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 certified or
registered mail return receipt requested, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23.1 and Paragraph 23.2.  The addresses noted adjacent to a Party’s
signature on this Lease shall be that Party’s address for delivery or mailing
of notices; provided, however, that with respect to Lessee such notices shall also
be delivered to Lessee in the care of Kenneth Tallering, Vice President,
General Counsel and Secretary, Transportation Technologies Industries Inc., 980
North Michigan Avenue, Suite 1000, Chicago, IL 60611, and Lee Gotshall-Maxon,
Allen Matkins Leck Gamble & Mallory LLP, 333 Bush Street, 17th
Floor, San Francisco, CA 54104-2006. 
Either or any 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.  Notices
transmitted by facsimile transmission or similar means shall be deemed
delivered upon written confirmation of receipt (confirmation report from fax
machine is sufficient), provided a copy is also delivered via the delivery
process permitted above.  If notice is
received on a Saturday, Sunday or legal holiday, it shall be deemed received on
the next business day.

 

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 by
Lessor on account of moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.

 

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
should from 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:

 

29

 

(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 dealing 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 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 the transaction.  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 cost 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 is considered 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.

 

30

 

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

 

28.                               Covenants
and Conditions; Construction of Agreement. 
All provisions of this Lease to be observed or performed by Lessee are
both covenants and conditions.  In
construing this Lease, all headings and titles are for the convenience of the
Parties only and shall not be considered a part of this Lease.  Whenever required by the context, the
singular shall include the plural and vice versa.  This Lease shall not be construed as if
prepared by one of the Parties but rather according to its fair meaning as a
whole, as if both Parties had prepared it.

 

29.                               Binding
Effect; Choice of Law.  This Lease
shall be binding upon the Parties, their personal representatives, successors
and assigns and be governed by the laws of the State in which the Premises are
located. Any litigation between the Parties hereto concerning this Lease shall
be initiated in the county in which the Premises are located.

 

30.                               Subordination;
Attornment; Non-Disturbance.

 

30.1                        Subordination.  This Lease and any Option granted hereby
shall be subject and subordinate to any ground lease, mortgage, deed of trust,
or other hypothecation or security device (collectively, “Security
Device”), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and
extensions thereof. Lessee agrees that the holders of any such Security Devices
(in this Lease together referred to as “Lender”) shall have no liability or
obligation to perform any of the obligations of Lessor under this Lease.  Any Lender may elect to have this Lease
and/or any Option granted hereby superior to the lien of its Security Device by
giving written notice thereof to Lessee, whereupon this Lease and such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof.

 

30.2                        Attainment.  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, attain 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
the terms and conditions hereof, for the remainder of the term hereof, and (ii)
Lessor shall thereafter be relieved of any further obligations hereunder and
such new owner shall assume all of Lessor’s obligations hereunder, except that
such new owner shall not: (a) be liable for any act or omission of any prior
lessor 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.

 

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 disturbed so long as Lessee is not in Breach hereof and attorns to the
record owner of the Premises. Further, within 30 days after the execution of
the Lease, Lessor shall 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 30 days, then Lessee may, at

 

31

 

Lessee’s option, directly contact Lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.

 

30.4                        Self-Executing.    The agreements contained in this Paragraph
30 shall be effective without the execution of any further documents; provided,
however, that, upon written request from Lessor or a Lender in connection with
a sale, financing or refinancing of the Premises, Lessee and Lessor shall
execute such further writings as may be reasonably required to separately
document any subordination, attornment and/or Non-Disturbance Agreement

 

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
relief sought, 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’ fee award shall not be
computed in accordance with any court fee schedule, but shall be such as to
fully reimburse all attorneys’ fees reasonably incurred.  In addition, Lessor shall be entitled to
attorneys’ fees, costs and expenses incurred in the preparation and service of
notices of Default and consultations in connection therewith, whether or not a
legal action is subsequently commenced in connection with such Default or
resulting Breach ($200 is a reasonable minimum per occurrence for such services
and consultation).

 

32.                               Lessor’s
Access; Showing Premises; Repairs. 
Lessor and Lessor’s agents shall have the right to enter the Premises at
any time, in the case any emergency and otherwise at reasonable times after
reasonable prior notice for the purpose of showing the same to prospective
purchasers, lenders, tenants, and making such alterations, repairs,
improvements or additions to the Premises as Lessor may deem necessary or
desirable and the erecting, using and maintaining of utilities, services, pipes
and conduits through the Premises and/or other premises as long as there is no
material adverse effect to Lessee’s use of the Premises.  All such activities shall be without
abatement of rent or liability to Lessee.

 

33.                               Auctions.  Lessee shall not conduct, nor permit to be
conducted, any auction upon the Premises without Lessor’s prior written
consent.  Lessor shall not be obligated
to exercise any standard of reasonableness in determining whether to permit an
auction.

 

34.                               Signs.  Lessor may place on the Premises ordinary
“For Sale” signs at any time and ordinary “For Lease” signs during the last 6
months of the term hereof.  Except for
ordinary “for sublease” signs, Lessee shall not place any sign upon the
Premises without Lessor’s prior written consent.  All signs must comply with all Applicable
Requirements.  Lessee shall be entitled
to the maximum signage permitted by the City of Livermore, subject to Lessor’s
reasonable approval of the design and location thereof.  In accordance with Lessor’s signage program
and the CC&Rs of the Greenville Business Park, Lessor has approved Lessee’s
signage which is described in Exhibit “D” attached hereto.

 

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

 

32

 

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, conditioned or delayed;
provided, however, that a refusal by Lessor to consent to an assignment or
subletting which would subject the Premises to a materially increased risk of
contamination by Hazardous Substances shall not be deemed an unreasonable
refusal to consent.  Any disapproval by
Lessor hereunder shall be in writing and shall specify the basis for the
disapproval.  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 attached as Exhibit “E”, 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, 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 term hereof.

 

39.                               Options.  If Lessee is granted an Option, as defined
below, then the following provisions shall apply:

 

39.1                        Definition.  “Option” shall
mean: (a) the right to extend the term of or renew this Lease or to extend or
renew any lease that Lessee has on other property of Lessor; (b) the right of
first refusal or first offer to lease either the Premises or other property of
Lessor; (c) the right to purchase or the right of first refusal to purchase the
Premises or other property of Lessor.

 

39.2                        Options
Personal To Original Lessee.  Any
Option granted to Lessee in this Lease is personal to the original Lessee, and
cannot be assigned or exercised by anyone other than said original Lessee and
only

 

33

 

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 exercise 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 of 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.

 

34

 

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 and severally liable hereunder. 
It is agreed that any one of the named Lessees shall be empowered to
execute any amendment to this Lease, or other document ancillary thereto and
bind all of the named Lessees, and Lessor may rely on the same as if all of the
named Lessees had executed such document.

 

(c)                                  This Lease may be executed by the
Parties in counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.

 

45.                               Conflict.   Any conflict between the printed provisions
of this Lease and typewritten or handwritten provisions shall be controlled by
the 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 ý
is o is not attached to this Lease.  See Arbitration Agreement Standard Lease
Addendum attached hereto as Paragraph 9BA and incorporated herein by this
reference.

 

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.

 

35

 

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED
THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND
      THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

 

ATTENTION: NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL 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:

  	
  Pleasanton, CA

  	
  Executed at:

  	
  Emeryville, CA,

  
	
  on: 8/8/03

  	
  on:

  	
  8/7/03

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By LESSOR:

  	
   

  	
  By LESSEE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Napa/Livermore Properties, LLC, a

  	
  FABCO Automotive, a Delaware corporation

  
	
  California limited liability company

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Norman S. Bailey

  	
   

  	
  By:

  	
  /s/ Al Sunderland 8/7/03

  	
   

  
	
  Name Printed: Norman Bailey

  	
  Name Printed: Al Sunderland

  
	
  Title:

  	
  Managing Member

  	
  Title:

  	
  President

  
											

 

36

 

	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name Printed:

  	
   

  	
   

  	
  Name Printed:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Address:

  	
  P.O. Box 635

  	
  Address Prior to Commencement Date: 1249 67th
  Street

  
	
  Fremont, CA 94537

  	
  Emeryville, CA 94608

  
	
  Telephone/Facsimile: (510)
  656-0201/510656-5823

  	
  Telephone/Facsimile: (510) 596-2700/(510)
  547-2633

  
	
  Federal ID No.

  	
   

  	
   

  	
  Federal ID No.

  	
   

  	
   

  
	
   

  	
   

  	
  Address on and after Commencement Date: The
  Premises

  
	
   

  	
   

  	
   

  	
   

  
	
  BROKER:

  	
   

  	
  BROKER:

  
	
   

  	
   

  	
   

  	
   

  
	
  Colliers International

  	
  BT Commercial Real Estate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attn: Ned Wood / Mark Triska / Mike
  Rosendin

  	
  Attn: Jeffrey Leenhouts

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Address: 5050 Hopyard Road, Suite 180

  	
  Address: 530 Water Street, Suite 750

  
	
  Pleasanton, CA 94588

  	
  Oakland, CA 94607-3746

  
	
  Telephone/Facsimile: (925)463-2300/(925)463-0747
  

  	
  Telephone/Facsimile: (510) 267-6014

  
	
  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:  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700
So. Flower Street, Suite 600, Los Angeles, California 90017. (213) 687-8777.
Fax No. (213) 687-8616

 

37

 

ARBITRATION AGREEMENT

Standard
Lease Addendum

 

Dated                 July 16, 2003

 

	
  By and Between

  	
   

  	
  (Lessor)

  	
   

  	
  Napa/Livermore Properties, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Lessee)

  	
   

  	
  Fabco Automotive Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address of Premises

  	
   

  	
   

  	
   

  	
  151 Lawrence Drive Livermore, California

  

 

Paragraph 49A

 

A.                                   ARBITRATION
OF DISPUTES:

Except as provided in Paragraph B below, the Parties agree to resolve
any and all claims, disputes or disagreements arising under this Lease,
including, but not limited to any matter relating to Lessor’s failure to
approve an assignment, sublease or other transfer of Lessee’s interest in the
Lease under Paragraph 12 of this Lease, any other defaults by Lessor, or any
defaults by Lessee by and through arbitration as provided below and irrevocably
waive any and all rights to the contrary. 
The Parties agree to at all times conduct themselves in strict, full,
complete and timely accordance with the terms hereof and that any attempt to
circumvent the terms of this Arbitration Agreement shall be absolutely null and
void and of no force or effect whatsoever.

 

B.                                     DISPUTES
EXCLUDED FROM ARBITRATION:

The following claims, disputes or disagreements under this Lease are
expressly excluded from the arbitration procedures set forth herein: 1.
Disputes for which a different resolution determination is specifically set
forth in this Lease, 2. All claims by either party which (a) seek anything
other than enforcement or determination of rights under this Lease, or (b) are
primarily founded upon matters of fraud, willful misconduct, bad faith or any
other allegations of tortuous action, and seek the award of punitive or
exemplary damages, 3. Claims relating to (a) Lessor’s exercise of any unlawful
detainer rights pursuant to applicable law or (b) rights or remedies used by
Lessor to gain possession of the Premises or terminate Lessee’s right of possession
to the Premises, all of which disputes shall be resolved by suit filed in the
applicable court of jurisdiction, the decision of which court shall be subject
to appeal pursuant to applicable law and 4. 
All claims arising under Paragraph 39 of this Lease, which disputes
shall be resolved by the specific dispute resolution procedure provided in
Paragraph 39 to the extent that such disputes concern solely the determination
of rent.

 

C.                                     APPOINTMENT
OF AN ARBITRATOR:

All disputes subject to this Arbitration Agreement, shall be determined
by binding arbitration before: ý  a retired judge of the applicable court of
jurisdiction (e.g., the Superior Court of the State of California) affiliated
with Judicial Arbitration & Mediation Services, Inc. (“JAMS”),
o the American Arbitration Association (“AAA”) under its commercial arbitration rules, o
                                                    
or as may be otherwise mutually agreed by Lessor and Lessee (the “Arbitrator”).
Such arbitration shall be initiated by the Parties, or either of them, within
ten (10) days after either party sends written notice (the “Arbitration
Notice”) of a demand to arbitrate by registered or certified mail to the other
party and to the Arbitrator.  The
Arbitration Notice shall contain a description of the subject matter of the
arbitration, the dispute with respect thereto, the amount involved, if any, and
the remedy or determination sought.  If
the Parties have agreed to use JAMS they

 

 

may agree on a retired judge from the JAMS panel.  If they are unable to agree within ten days,
JAMS will provide a list of three available judges and each party may strike
one.  The remaining judge (or if there
are two, the one selected by JAMS) will serve as the Arbitrator.  If the Parties have elected to utilize AAA or
some other organization, the Arbitrator shall be selected in accordance with
said organization’s rules.  In the event
the Arbitrator is not selected as provided for above for any reason, the party
initiating arbitration shall apply to the appropriate Court for the appointment
of a qualified retired judge to act as the Arbitrator.

 

D.                                    ARBITRATION
PROCEDURE:

 

1.                                       PRE-HEARING
ACTIONS.   The Arbitrator shall schedule a
pre-hearing conference to resolve procedural matters, arrange for the exchange
of information, obtain stipulations, and narrow the issues. The Parties will
submit proposed discovery schedules to the Arbitrator at the pre-hearing
conference.  The scope and duration of
discovery will be within the sole discretion of the Arbitrator, except that no deposition shall be allowed or taken. The
Arbitrator shall have the discretion to order a pre-hearing exchange of
information by the Parties, including, without limitation, production of
requested documents, exchange of summaries of testimony of proposed witnesses.
This discretion shall be exercised in favor of discovery reasonable under the
circumstances. The Arbitrator shall issue subpoenas and subpoenas duces tecum
as provided for in the applicable statutory or case law (e.g., in California
Code of Civil Procedure Section 1282.6).

 

2.                                       THE
DECISION.  The arbitration shall be
conducted in the city or county within which the Premises are located at a
reasonably convenient site.  Any Party
may be represented by counsel or other authorized representative.  In rendering a decision(s), the Arbitrator
shall determine the rights and obligations of the Parties according to the
substantive laws and the terms and provisions of this Lease. The Arbitrator’s
decision shall be based on the evidence introduced at the hearing, including
all logical and reasonable inferences therefrom. The Arbitrator may make any
determination and/or grant any remedy or relief that is just and
equitable.  The decision must be based
on, and accompanied by, a written statement of decision explaining the factual
and legal basis for the decision as to each of the principal controverted
issues. The decision shall be conclusive and binding, and it may thereafter be
confirmed as a judgment by the court of applicable jurisdiction, subject only
to challenge on the grounds set forth in the applicable statutory or case law
(e.g., in California Code of Civil Procedure Section 1286.2). The validity
and enforceability of the Arbitrator’s decision is to be determined exclusively
by the court of appropriate jurisdiction pursuant to the provisions of this
Lease. The Arbitrator may award costs, including without limitation,
Arbitrator’s fees and costs, attorneys’ fees, and expert and witness costs, to
the prevailing party, if any, as determined by the Arbitrator in his
discretion.

 

Whenever a matter which has been submitted to arbitration involves a
dispute as to whether or not a particular act or omission (other than a failure
to pay money) constitutes a Default, the time to commence or cease such action
shall be tolled from the date that the Notice of Arbitration is served through
and until the date the Arbitrator renders his or her decision. Provided,
however, that this provision shall NOT apply in the event that the Arbitrator
determines that the Arbitration Notice was prepared in bad faith.

 

Whenever a dispute arises between the Parties concerning whether or not
the failure to make a payment of money constitutes a default, the service of an
Arbitration Notice shall NOT toll the time period in which to pay the money.
The Party allegedly obligated to pay the money may, however, elect to pay the
money “under protest” by accompanying said payment with a written statement
setting forth the reasons for such protest. 
If thereafter, the Arbitrator determines that the Party who received
said money was not entitled to such payment, said money shall be promptly
returned to the Party who paid such money under protest together with Interest

 

 

thereon as defined in Paragraph 13.5. If a Party makes a payment “under
protest” but no Notice of Arbitration is filed within thirty days, then such
protest shall be deemed waived. (See also Paragraph 43)

 

NOTICE: These forms are often modified to meet changing requirements of
law and industry needs. Always write or call us to make sure you are utilizing
the most current form: American Industrial Real Estate Association, 700 South
Flower Street, Suite 600, Los Angeles, CA 90017, Telephone No.: (213) 687-8777.
Fax No.: (213) 687-8616.

 

 

	
  Exhibit “A”

  	
   

  	
  Building Description

  
	
   

  	
   

  	
   

  
	
  Exhibit “B”

  	
   

  	
  HazMat Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit “C”

  	
   

  	
  Trade Fixtures, Utility Installations and
  Alterations

  
	
   

  	
   

  	
   

  
	
  Exhibit “D”

  	
   

  	
  Approved Signage

  
	
   

  	
   

  	
   

  
	
  Exhibit “E”

  	
   

  	
  Form of Guaranty

  

 

 

EXHIBIT
A

 

[Building Description]

 

 

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

GUARANTY OF LEASE

 

WHEREAS,
Napa/Livermore Properties, LLC, a California limited partnership, hereinafter
“Lessor”, and FABCO Automotive Corporation, a Delaware corporation, hereinafter
“Lessee”, are about to execute a document entitled “Lease” dated July 16, 2003
concerning the premises commonly known as 151 Lawrence Drive, Livermore,
California wherein Lessor will lease the premises to Lessee, and

 

WHEREAS,
Transportation Technologies Industries, Inc., a Delaware corporation
hereinafter “Guarantors” have a financial interest in Lessee, and

 

WHEREAS, Lessor
would not execute the Lease if Guarantors did not execute and deliver to Lessor
the Guarantee of Lease.

 

NOW, THEREFORE, in
consideration of the execution of the foregoing Lease by Lessor and as a
material inducement to Lessor to execute said Lease, Guarantors hereby jointly,
severally, unconditionally and irrevocably guarantee the prompt payment by
Lessee of all rents and all other sums payable by Lessee under said Lease and
the faithful and prompt performance by Lessee of each and every one of the
terms, conditions and covenants of said Lease to be kept and performed by
Lessee.

 

Following
a Permitted Transfer (as defined in the Lease) in accordance with the terms and
conditions of Paragraph 12.1(b) of the Lease, Guarantor shall be released from
further liability under this Guaranty (except to the extent that Lessee shall
remain liable for obligations under the Lease arising prior to the date of such
Permitted Transfer under the provisions of the last proviso set forth in
Paragraph 12.1(b) unless the new guarantor expressly guaranties such continuing
obligations) (i) if a new guaranty of lease, in substantially the form attached
to the Lease as Exhibit F, is executed by a new guarantor which meets the
Financial Suitability Test or (ii) if the transferee meets the Financial
Suitability Test.  As used herein, the
“Financial Suitability Test” means that, when the Permitted Transfer is
effective, and giving effect to the transactions of which the Permitted
Transfer is a part, the Permitted Transfer transferee or the new guarantor, as
the case may be, shall have a ratio of total debt to EBITDA (earnings before
interest, taxes, depreciation or amortization), determined on a proforma basis,
which is not greater than the ratio of debt to EBITDA of the Guarantor as of
the Commencement Date of the Lease.

 

It is specifically
agreed that the terms of the foregoing Lease may be modified by agreement
between Lessor and Lessee, or by a course of conduct, and said Lease may be
assigned by Lessor or any assignee without consent or notice to Guarantors and
that this Guaranty shall guarantee the performance of said Lease as so
modified.

 

This Guaranty
shall not be released, modified or affected by the failure or delay on the part
of Lessor to enforce any of the rights or remedies of the Lessor under said
Lease, whether pursuant to the terms thereof or at law or in equity.

 

No notice of
default need be given to Guarantors, it being specifically agreed that the
guarantee of the undersigned is a continuing guarantee under which Lessor may
proceed immediately against Lessee

 

 

and/or against Guarantors following any breach or
default by Lessee or for the enforcement of any rights which Lessor may have as
against Lessee under the terms of the Lease or at law or in equity.

 

Lessor shall have
the right to proceed against Guarantors hereunder following any breach or
default by Lessee without first proceeding against Lessee and without previous
notice to or demand upon either Lessee or Guarantors.

 

Guarantors hereby
waive (a) notice of acceptance of this Guaranty, (b) demand of payment,
presentation and protest, (c) all right to assert or plead any statute of
limitations relating to this Guaranty or the Lease, (d) any right to require
the Lessor to proceed against the Lessee or any other Guarantor or any other
person or entity liable to Lessor, (e) any right to require Lessor to apply to
any default any security deposit or other security it may hold under the Lease,
(f) any right to require Lessor to proceed under any other remedy Lessor may
have before proceeding against Guarantors, (g) any right of subrogation.  Notwithstanding the
foregoing, Guarantor shall be entitled to assert any defense that Lessee could
assert under the Lease other than any defense arising from the operation of any
state or federal bankruptcy laws.

 

Guarantors do
hereby subrogate all existing or future indebtedness of Lessee to Guarantors to
the obligations owed to Lessor under the Lease and this Guaranty.

 

If a Guarantor is
married, such Guarantor expressly agrees that recourse may be had against his
or her separate property for all of the obligations hereunder.

 

The obligations of
Lessee under the Lease to execute and deliver estoppel statements and financial
statements, as therein provided, shall be deemed to also require the Guarantors
hereunder to do and provide the same.

 

The term “Lessor”
refers to and means the Lessor named in the Lease and also Lessor’s successors
and assigns.  So long as Lessor’s
interest in the Lease, the leased premises or the rents, issues and profits
therefrom, are subject to any mortgage or deed of trust or assignment for
security, no acquisition by Guarantors of the Lessor’s interest shall affect
the continuing obligation of Guarantors under this Guaranty which shall
nevertheless continue in full force and effect for the benefit of the
mortgagee, beneficiary, trustee or assignee under such mortgage, deed of trust
or assignment and their successors and assigns.

 

The term “Lessee”
refers to and means the Lessee named in the Lease and also Lessee’s successors
and assigns.

 

In the event any
action be brought by said Lessor against Guarantors hereunder to enforce the
obligation of Guarantors hereunder, the unsuccessful party in such action shall
pay to the prevailing party therein a reasonable attorney’s fee which shall be
fixed by the court.

 

Any
notice or other communication to be given to Landlord or the undersigned
hereunder shall be in writing and sent in accordance with the notice provisions
of the Lease.  Notices to Landlord shall
be delivered to Landlord’s address set forth in the Lease.  Notices to Guarantor shall be delivered to
Guarantor’s address set forth below, or to each other place as Guarantor may
from time to time designate in a written notice to Landlord.

 

 

If this Form has
been filled in, it has been prepared for submission to your attorney for his
approval.  No representation or
recommendation is made by the American Industrial Real Estate Association, the
real estate broker or its agents or employees as to the legal sufficiency,
legal effect, or tax consequences of this form or the transaction relating
thereto.

 

	
  Executed at:

  	
   

  	
   

  	
  Transportation Technologies Industries, Inc., a

  
	
   

  	
  Delaware corporation

  
	
  on

  	
  August 7, 2003

  	
   

  	
  By:

  	
  /s/ Donald C. Mueller

  
	
  Address:

  	
  980 N. Michigan Ave. Suite 1000

  	
   

  	
   

  	
  Donald C. Mueller

  
	
   

  	
  Chicago, IL 60614

  	
   

  	
   

  	
  VP & CFO

  
	
   

  	
  “Guarantors”

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