Document:

Exhibit
10.7

 

 

ASSET PURCHASE AGREEMENT

 

by and among

 

SMOKEY ACQUISITION, INC.

 

and

 

M&G HOLDING B.V.

 

and

 

SIMPSON DURA-VENT COMPANY, INC.

 

and

 

SIMPSON MANUFACTURING CO., INC.

 

Dated June 30, 2010

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1 Sale of Assets;
  Assumption of Liabilities; Purchase Price

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Assets To Be Sold

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Excluded Assets

  	
  3

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  Assumed Liabilities

  	
  3

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  Retained Liabilities

  	
  4

  
	
   

  	
   

  	
   

  
	
  1.5

  	
  Consideration

  	
  4

  
	
   

  	
   

  	
   

  
	
  1.6

  	
  Proration of Ad Valorem
  Taxes

  	
  4

  
	
   

  	
   

  	
   

  
	
  1.7

  	
  Allocation

  	
  5

  
	
   

  	
   

  	
   

  
	
  1.8

  	
  Transfer Taxes

  	
  5

  
	
   

  	
   

  	
   

  
	
  1.9

  	
  Estimated Closing Working Capital

  	
  6

  
	
   

  	
   

  	
   

  
	
  1.10

  	
  Final Closing Balance Sheet

  	
  6

  
	
   

  	
   

  	
   

  
	
  1.11

  	
  Disagreement and Resolution

  	
  6

  
	
   

  	
   

  	
   

  
	
  1.12

  	
  Purchase Price Adjustment

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 Closing

  	
  9

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Closing

  	
  9

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Closing Deliveries

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 Representations
  And Warranties Of Parent And Seller

  	
  11

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Organization and Good Standing

  	
  12

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Enforceability; Authority; No Conflict

  	
  12

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Capitalization

  	
  13

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Financial Statements

  	
  13

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  Books and Records; Controls

  	
  13

  
	
   

  	
   

  	
   

  
	
  3.6

  	
  Absence of Certain Changes and Events

  	
  13

  

 

i

 

	
  3.7

  	
  No Undisclosed Liabilities

  	
  15

  
	
   

  	
   

  	
   

  
	
  3.8

  	
  Sufficiency of Assets

  	
  15

  
	
   

  	
   

  	
   

  
	
  3.9

  	
  Title to Assets; Encumbrances

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.10

  	
  Condition of Assets

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.11

  	
  Accounts Receivable

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.12

  	
  Inventories

  	
  16

  
	
   

  	
   

  	
   

  
	
  3.13

  	
  Contracts; No Defaults

  	
  17

  
	
   

  	
   

  	
   

  
	
  3.14

  	
  Insurance

  	
  19

  
	
   

  	
   

  	
   

  
	
  3.15

  	
  Compliance with Applicable Laws; Permits

  	
  20

  
	
   

  	
   

  	
   

  
	
  3.16

  	
  Legal Proceedings; Orders

  	
  20

  
	
   

  	
   

  	
   

  
	
  3.17

  	
  Prohibited Payments

  	
  20

  
	
   

  	
   

  	
   

  
	
  3.18

  	
  Taxes

  	
  21

  
	
   

  	
   

  	
   

  
	
  3.19

  	
  Employment Matters and Employee Benefit Plans

  	
  22

  
	
   

  	
   

  	
   

  
	
  3.20

  	
  Environmental, Health and Safety Matters

  	
  24

  
	
   

  	
   

  	
   

  
	
  3.21

  	
  Intellectual Property Assets

  	
  25

  
	
   

  	
   

  	
   

  
	
  3.22

  	
  Real Property

  	
  26

  
	
   

  	
   

  	
   

  
	
  3.23

  	
  Products

  	
  28

  
	
   

  	
   

  	
   

  
	
  3.24

  	
  Relations with Suppliers and Customers

  	
  28

  
	
   

  	
   

  	
   

  
	
  3.25

  	
  Relationships with Affiliates

  	
  28

  
	
   

  	
   

  	
   

  
	
  3.26

  	
  Materials and Information

  	
  29

  
	
   

  	
   

  	
   

  
	
  3.27

  	
  Solvency

  	
  29

  
	
   

  	
   

  	
   

  
	
  3.28

  	
  Disclosure

  	
  29

  
	
   

  	
   

  	
   

  
	
  3.29

  	
  Brokers or Finders

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 Representations
  and Warranties of Buyer

  	
  29

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Organization and Good Standing

  	
  29

  

 

ii

 

	
  4.2

  	
  Enforceability; Authority; No Conflict

  	
  30

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Capitalization

  	
  30

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  Certain Proceedings

  	
  31

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  Brokers or Finders

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 Covenants Prior To
  Closing

  	
  31

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Access and Investigation

  	
  31

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Operation of the Business by Seller

  	
  37

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Required Approvals

  	
  37

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Notification

  	
  37

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Exclusivity

  	
  37

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Payment of Liabilities

  	
  38

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  Risk of Loss

  	
  38

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  Efforts to Close

  	
  38

  
	
   

  	
   

  	
   

  
	
  5.9

  	
  Financial Statements and Reports; Filings

  	
  38

  
	
   

  	
   

  	
   

  
	
  5.10

  	
  Transition Plan

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 [INTENTIONALLY
  OMITTED]

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 Conditions
  Precedent to Buyer’s Obligation to Close

  	
  39

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Accuracy of Representations

  	
  39

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Parent’s and Seller’s Performance

  	
  39

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Consents

  	
  39

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  No Proceedings

  	
  39

  
	
   

  	
   

  	
   

  
	
  7.5

  	
  No Conflict

  	
  40

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  No Material Adverse Effect

  	
  40

  
	
   

  	
   

  	
   

  
	
  7.7

  	
  Permits

  	
  40

  
	
   

  	
   

  	
   

  
	
  7.8

  	
  Due Diligence

  	
  40

  

 

iii

 

	
  7.9

  	
  Key Employees

  	
  40

  
	
   

  	
   

  	
   

  
	
  7.10

  	
  WARN Act

  	
  40

  
	
   

  	
   

  	
   

  
	
  7.11

  	
  Title Insurance; Estoppel Certificates, Environmental
  Report

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 Conditions
  Precedent To Parent’s And Seller’s Obligation To Close

  	
  41

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Accuracy of Representations

  	
  41

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Buyer’s Performance

  	
  41

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  No Conflict

  	
  41

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  WARN Act

  	
  41

  
	
   

  	
   

  	
   

  
	
  8.5

  	
  No Material Adverse Effect

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 Termination

  	
  41

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Termination Events

  	
  41

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Effect of Termination

  	
  42

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Mutual Termination Fee

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 Additional
  Covenants

  	
  42

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Intentionally Omitted

  	
  42

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Intentionally Omitted

  	
  43

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Reports and Returns

  	
  43

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  Assistance in Proceedings

  	
  43

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  Business Relationships

  	
  43

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  Confidentiality

  	
  43

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  Consents

  	
  43

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  Retention of and Access to Records

  	
  44

  
	
   

  	
   

  	
   

  
	
  10.9

  	
  Mail and Receivables

  	
  44

  
	
   

  	
   

  	
   

  
	
  10.10

  	
  Insurance

  	
  45

  
	
   

  	
   

  	
   

  
	
  10.11

  	
  Further Assurances

  	
  45

  

 

iv

 

	
  10.12

  	
  Employees and Employee Benefits

  	
  45

  
	
   

  	
   

  	
   

  
	
  10.13

  	
  Warranty Claims

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 Indemnification; Remedies

  	
  49

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Survival

  	
  49

  
	
   

  	
   

  	
   

  
	
  11.2

  	
  Indemnification and Reimbursement by Parent and Seller

  	
  49

  
	
   

  	
   

  	
   

  
	
  11.3

  	
  Indemnification and Reimbursement by Buyer

  	
  50

  
	
   

  	
   

  	
   

  
	
  11.4

  	
  Third Party Claims

  	
  51

  
	
   

  	
   

  	
   

  
	
  11.5

  	
  Other Claims

  	
  52

  
	
   

  	
   

  	
   

  
	
  11.6

  	
  Bar; Losses; Effect on Indemnity

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 General
  Provisions

  	
  53

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Entire Agreement

  	
  53

  
	
   

  	
   

  	
   

  
	
  12.2

  	
  Notices

  	
  53

  
	
   

  	
   

  	
   

  
	
  12.3

  	
  Enforcement of Agreement

  	
  54

  
	
   

  	
   

  	
   

  
	
  12.4

  	
  Modifications; Waiver; Remedies Cumulative

  	
  54

  
	
   

  	
   

  	
   

  
	
  12.5

  	
  Expenses

  	
  54

  
	
   

  	
   

  	
   

  
	
  12.6

  	
  Public Announcements

  	
  55

  
	
   

  	
   

  	
   

  
	
  12.7

  	
  Assignments, Successors and No Third Party Rights

  	
  55

  
	
   

  	
   

  	
   

  
	
  12.8

  	
  Severability

  	
  56

  
	
   

  	
   

  	
   

  
	
  12.9

  	
  Governing Law

  	
  56

  
	
   

  	
   

  	
   

  
	
  12.10

  	
  Jurisdiction; Venue

  	
  56

  
	
   

  	
   

  	
   

  
	
  12.11

  	
  Attorneys’ Fees

  	
  56

  
	
   

  	
   

  	
   

  
	
  12.12

  	
  Time of Essence

  	
  56

  
	
   

  	
   

  	
   

  
	
  12.13

  	
  Execution of Agreement

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 Definitions and
  Usage

  	
  57

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Definitions

  	
  57

  

 

v

 

	
  13.2

  	
  Index of Defined Terms

  	
  65

  
	
   

  	
   

  	
   

  
	
  13.3

  	
  Construction

  	
  67

  

 

vi

 

Exhibits

 

	
  A

  	
   

  	
  -

  	
   

  	
  Form of
  Bill of Sale

  
	
  B

  	
   

  	
  -

  	
   

  	
  Form of
  Assignment and Assumption Agreement

  
	
  C

  	
   

  	
  -

  	
   

  	
  Form of
  Vicksburg Deed

  
	
  D-1

  	
   

  	
  -

  	
   

  	
  Form of
  Patent Assignment

  
	
  D-2

  	
   

  	
  -

  	
   

  	
  Form of
  Trademark Assignment

  
	
  D-3

  	
   

  	
  -

  	
   

  	
  Form of
  Copyright Assignment

  
	
  E

  	
   

  	
  -

  	
   

  	
  Form of
  Noncompetition Agreement

  
	
  F

  	
   

  	
  -

  	
   

  	
  Form of
  Transition Services Agreement

  
	
  G

  	
   

  	
  -

  	
   

  	
  Form of
  Vacaville Lease

  
	
  H

  	
   

  	
  -

  	
   

  	
  Form of
  Lease Assumption

  

 

vii

 

ASSET PURCHASE AGREEMENT

 

This
Asset Purchase Agreement (this “Agreement”) is made as of June 30,
2010, by and among Smokey Acquisition, Inc., a Delaware corporation (“Buyer”),
and M&G Holding B.V., a Netherlands corporation (“M&G”), on the
one hand, and Simpson Dura-Vent Company, Inc., a California corporation (“Seller”),
and Simpson Manufacturing Co., Inc., a Delaware corporation (“Parent”),
on the other hand.  The parties hereto
are referred to herein collectively as the “Parties” and individually as
a “Party”.

 

Recitals

 

A.                                   Seller is
engaged in the business of designing, manufacturing, marketing, distributing
and selling chimney and exhaust venting systems and related equipment for gas,
wood, oil, pellet and alternative fuel burning appliances for the residential,
light industrial and commercial construction, remodeling and do-it-yourself
markets (the “Business”).

 

B.                                     Seller desires
to sell to Buyer, and Buyer desires to purchase from Seller, (i) all of
Seller’s right, title and interest in and to the Business and the assets of
Seller necessary to, or used in, the Business, and (ii) certain real
property in Vicksburg, Mississippi, that is used by Seller principally as a
warehouse, in each case for the consideration and on the terms set forth in
this Agreement and the Vicksburg Deed.

 

C.                                     Parent desires
to lease to Buyer, and Buyer desires to lease from Parent, certain real
property located at 877 Cotting Court and 902 Aldridge Road, Vacaville,
California, that is used by Seller in the Business as a manufacturing facility,
a warehouse and office facilities, for the consideration and on the terms set
forth in a Lease in substantially the form of Exhibit G attached
hereto (the “Vacaville Lease”).

 

Agreement

 

NOW,
THEREFORE, in consideration of the foregoing premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, the Parties agree as follows (Section 13.1
contains definitions of certain terms used in this Agreement that are not
otherwise defined in this Agreement):

 

ARTICLE 1

 

SALE OF ASSETS; ASSUMPTION
OF LIABILITIES; PURCHASE PRICE

 

1.1                                 Assets To Be
Sold.  Upon the terms and subject to
the conditions set forth in this Agreement, at and effective as of the Closing,
Seller shall sell, convey, assign, transfer, and deliver to Buyer, and Buyer
shall purchase and acquire from Seller, free and clear of any Encumbrances, the
Assets.  “Assets” means all of
Seller’s right, title and interest in and to the business, properties, assets
and rights of every kind, nature, character and description (accrued,
contingent or otherwise, tangible and intangible, and wherever located), other
than any of the Excluded Assets, that are owned, held or used by Seller
and are necessary to or used in the Business, including:

 

1

 

(a)                                  all Tangible
Personal Property, including the assets set forth on Schedule 1.1(a);

 

(b)                                 all of the
intangible rights and property of Seller that are used in or required for the
conduct of the Business (including all Intellectual Property Assets and the
going concern value and goodwill of the Business), including the assets set
forth on Schedule 1.1(b);

 

(c)                                  all
Inventories;

 

(d)                                 all Accounts
Receivable (excluding amounts receivable from Affiliates of Seller);

 

(e)                                  all Contracts
to which Seller is a party with Third Parties that are related to the Business,
all of which are set forth on Schedule 1.1(e) (the “Assigned
Contracts”);

 

(f)                                    all Permits
used in the Business, all of which are, or within ten (10) days of the
date hereof will be, set forth on Schedule 1.1(f) and all pending
applications therefor or renewals thereof, in each case, to the extent
transferable to Buyer;

 

(g)                                 all Books and
Records (provided that Seller shall have the right to retain (i) the
originals of all of its employment records and shall provide only copies
thereof to Buyer, and (ii) one copy of each of the other Books and
Records, if and to the extent that Seller considers necessary or advisable);

 

(h)                                 all orders for
products sold or services rendered in the Business;

 

(i)                                     all of Seller’s
claims, causes of action, choses in action, rights of recovery and rights of
set-off of any kind, against Third Parties relating to the Assets, whether
choate or inchoate, known or unknown, or contingent or noncontingent and
whether or not liquidated, (other than to the extent related to any of the
Retained Liabilities or Excluded Assets);

 

(j)                                     the benefit of
and all rights to enforce any covenants, warranties, representations or
guarantees benefiting the Business or the Assets (including covenants or
warranties made by suppliers or other Persons in connection with the Assets or
services furnished to Seller pertaining to the Business or affecting the
Assets), in each case, to the extent transferable to Buyer;

 

(k)                                  subject to Section 1.6,
all deposits (including vendor and customer deposits), prepayments, refunds,
and rights of offset, recovery or recoupment (including
any such item relating to the payment of Taxes other than income, gross receipts,
occupation, real property, personal property, sales, use, transfer, windfall
profit, capital stock, franchise and value added Taxes);  and

 

(l)                                     the real
property set forth in Schedule 1.1(l) and all rights arising out of
the ownership thereof or appurtenant thereto (the “Vicksburg Property”),
together with all buildings, structures, facilities, fixtures and other
improvements thereto (the “Improvements”).

 

2

 

1.2                                 Excluded Assets.  Notwithstanding anything to the contrary
herein, the following assets of Seller shall remain the property of Seller
after the Closing (the following are collectively referred to as the “Excluded
Assets”):

 

(a)                                  all cash,
commercial paper, certificates of deposit and other bank deposits, treasury
bills, money market instruments and funds and similar investments, and other
cash equivalents (collectively, “Cash and Equivalents”);

 

(b)                                 all minute
books, stock Records and corporate seals;

 

(c)                                  the shares of
capital stock of Seller held in treasury;

 

(d)                                 all causes of
action, claims, demands, rights and privileges against Third Parties, to the
extent related to any of the Retained Liabilities or the Excluded Assets;

 

(e)                                  all Contracts
that are not Assigned Contracts;

 

(f)                                    all personnel Records
and other Records that Seller is required by law to retain in its possession (provided,
that to the extent permitted by law, Seller shall make copies thereof available
to Buyer upon its request);

 

(g)                                 all Tax Returns
of Seller;

 

(h)                                 all claims for
refund of Taxes, to the extent that such Tax would be a Retained Liability (as
defined below) if such Tax were not refundable;

 

(i)                                     all right,
title and interest in, to and under the Trademark and trade name “Simpson” and
the “Simpson” logo, including the right, title and interest in, to and under
such portion of any Trademark or trade name that includes the word “Simpson,”
and any abbreviation or derivative thereof, and any registration thereof or
right to register the same (the “Retained Mark”);

 

(j)                                     all right,
title and interest in, to and under the Retained Software;

 

(k)                                  all rights in
connection with and assets of the Employee Benefit Plans;  and

 

(l)                                     all rights of
Seller under the Transaction Documents;

 

it
being understood that all right, title and interest in and to the real property
located in Vacaville, California, described in Schedule 1.2 (the “Vacaville
Property”), and all rights arising out of the ownership thereof or
appurtenant thereto, together with all Improvements thereto or thereon, are held
or owned exclusively by Parent, subject at the date hereof only to the
agreement by Parent herein to lease the Vacaville Property to Buyer pursuant to
the Vacaville Lease.

 

1.3                                 Assumed
Liabilities.

 

(a)                                  On the Closing
Date, Buyer shall assume only;

 

3

 

(i)                                     all Accounts
Payable,

 

(ii)                                  all Liabilities
of Seller under the Assigned Contracts arising or to be performed on or after
the Closing Date, and excluding any such obligations arising and to be
performed prior to the Closing Date,

 

(iii)                               all Liabilities
of Seller for any Tax that becomes due and payable and relates to any period
after the Closing in connection with the Business, and

 

(iv)                              those short
term Liabilities of Seller set forth on Schedule 1.3 (the items in the
preceding clauses (i) through (iv), collectively, the “Assumed
Liabilities”); provided, however, that the Assumed
Liabilities shall not include (i) any Liability of Seller arising at any
time under the Assigned Contracts as a result of any breach or default by
Seller therein or thereunder, (ii) any Liability for Taxes that relates to
any period or portion thereof ending on or prior to the Closing Date,
(iii) any Liability of Seller under the Wells Credit Agreement, or (iv) any
Liability related to product liability or product recalls with respect to
products sold or manufactured by Seller prior to the Closing Date.

 

(b)                                 Nothing
contained in this Section 1.3 or in any instrument of assumption
executed by Buyer or M&G at the Closing shall release or relieve Seller
from its representations, warranties, covenants and agreements contained in the
Transaction Documents.

 

1.4                                 Retained
Liabilities.  The
Retained Liabilities shall remain the sole responsibility of and shall be
retained, paid, performed and discharged solely by Seller.  “Retained Liabilities” shall mean
every Liability of Seller or the Business other than the Assumed
Liabilities.  The Parties acknowledge
that M&G and Buyer are not agreeing to assume any Liability of Seller or
Parent, whether related to the Assets or Business or otherwise, other than
Buyer’s assumption of the Assumed Liabilities and as expressly set forth in the
Vacaville Lease and the Vicksburg Deed, and that nothing in this Agreement
shall be construed as an agreement otherwise.

 

1.5                                 Consideration.  As consideration for the Assets, Buyer
will:  (a) assume the Assumed
Liabilities and (b) pay to Seller cash in the aggregate amount of Twenty
Million dollars $20,000,000 (the “Purchase Price”), plus (i) the
Estimated Working Capital Surplus, if any, or minus (ii) the
Estimated Working Capital Deficiency, if any (the result of the foregoing, the “Closing
Purchase Price”).  Of the Closing
Purchase Price, $50,000 is allocable to, and deemed to be in consideration of,
the covenants of Parent and Seller contained in the Noncompetition Agreement,
and the remainder is allocable to, and deemed to be in consideration of, the
Assets.

 

1.6                                 Proration of Ad Valorem Taxes.  The provisions of this Section 1.6
shall govern prorations between Buyer and Seller of items specifically
addressed in this Section 1.6.

 

(a)                                  Ad
valorem Taxes on the Assets that accrue ratably with the
lapse of time during the applicable taxable period shall be prorated on a per
diem basis based upon the number of days during the applicable taxable period
in which Closing occurs that elapse before the Closing Date (which shall be
allocated to Seller) and the number of days in such period from and after the
Closing Date (which shall be allocated to Buyer).  All such prorations shall be made at the
Closing; provided, that if the actual tax bills for such period are not
then available, then the rates and assessed valuation of the previous year,
with any known changes, shall be used, and 

 

4

 

when the actual amount of taxes and assessments for
such period are determinable, then such Taxes shall be re-prorated between
Seller and Buyer to reflect the actual amount of such Taxes for the applicable
taxable period in which Closing occurs; and provided further that Buyer shall
bear and pay any and all increases in any of such Taxes that occur after the
Closing because of any of the Contemplated Transactions.

 

(b)                                 On the Closing
Date, Seller and Buyer shall sign a statement showing the amount of all such
prorations being made on such date.

 

(c)                                  Within a
reasonable period of time following receipt by Buyer or Seller of a bill for
any item subject to a proration pursuant to this Section 1.6, such
Party shall provide a copy of such bill to the other Party and shall advise the
other Party as to the amount, if any, that each Party is responsible to pay
pursuant to this Section 1.6. 
Each Party shall thereafter promptly (no later than ten (10) Business
Days following receipt of such bill) pay its portion of such expense.

 

1.7                                 Allocation.  Not later than ninety
(90) days after the Closing, Buyer shall prepare and deliver to Seller a draft
IRS Form 8594 reflecting allocation of the sum of the Purchase Price and
any Liability or other amount properly included in the amount realized by
Seller or cost basis to Buyer with respect to the sale and purchase of the
Assets (the “Tax Purchase Price”) among the Assets in accordance with
Treasury Regulations §1.1060-1(c) and consistent with any allocation made
pursuant to Section 1.8.  If
Seller does not give written notice to Buyer within thirty (30) days after
receipt from Buyer of such draft IRS Form 8594, or in any case prior to
sixty (60) days from the due date of the Tax Return upon which the Contemplated
Transactions are required to be reported, that Seller disagrees with any part
or all of such allocation, then such allocation as so proposed by Buyer shall
be deemed agreed by Seller and Buyer for purposes of this Section 1.7.  If Seller does so give notice of any such
objection, Buyer and Seller shall negotiate in good faith to reach mutual
agreement regarding any matters subject to such objection and the allocation of
the Tax Purchase Price consistent with the requirements of this Section 1.7,
and the allocation so agreed upon shall be deemed agreed by the Parties for
purposes of this Section 1.7. 
If Buyer and Seller do not agree on such allocation within one hundred
eighty (180) days after the Closing, the allocation will be determined promptly
thereafter by the Accounting Arbitrator in the manner provided in Section 1.11,
and in any case, the allocation will be determined prior to sixty (60) days
from the due date of the Tax Return upon which the Contemplated Transactions
are required to be reported.  The Parties
shall make consistent use of the allocation as agreed or determined pursuant to
this Section 1.7 for all Tax purposes and in all filings,
declarations and reports with the IRS and other taxing authorities in respect
thereof, including the reports required to be filed under Section 1060 of
the Code.  In any Action related to the
determination of any Tax, neither Buyer nor Seller shall contend or represent
that such allocation is not correct.

 

1.8                                 Transfer Taxes.  Buyer and Seller shall cooperate in preparing,
executing and filing sales, use, transfer and similar Tax Returns relating to
the purchase and sale of the Assets, and also shall reasonably cooperate to
minimize or avoid any transfer Taxes that might be imposed to the extent
permitted by Applicable Law.  The Party,
whether Buyer or Seller, that is required by Applicable Law to file such Tax
Returns shall properly complete and file such Tax Returns (and at the same time
provide a copy thereof to the other Party) and remit to the 

 

5

 

appropriate Governmental Authorities on or before
the due date the Taxes shown thereon to be due. 
All Taxes shown as due on such Tax Returns shall be paid when due in
equal shares by Buyer and Seller.

 

1.9                                 Estimated
Closing Working Capital.  On
or before a date not less than five (5) Business Days prior to the Closing
Date, Seller shall prepare and deliver to Buyer (i) an estimated balance
sheet as of the Effective Time for Seller (the “Estimated Closing Balance
Sheet”), (ii) a statement of the Working Capital, as reflected on the
face of the Estimated Closing Balance Sheet (the “Estimated Closing Working
Capital”), an example of which is set forth on Schedule 1.9, and (iii) detailed
supporting documentation.  The Estimated
Closing Balance Sheet will be prepared in accordance with GAAP and, to the
extent consistent with GAAP, using the same accounting methods, policies,
practices and procedures, with consistent classifications and estimation
methodologies, as were used in the preparation of the most recent Year-End
Financial Statements, and will not include any changes in assets or Liabilities
as a result of purchase accounting adjustments arising from or resulting as a
consequence of the transactions contemplated hereby.  The amount, if any, by which the Estimated
Working Capital exceeds Twenty-Three Million Five Hundred Thousand dollars
($23,500,000) is referred to herein as the “Estimated Working Capital
Surplus.”  The amount, if any, by
which the Estimated Working Capital is less than Twenty-Two Million Five
Hundred Thousand dollars ($22,500,000), is referred to herein as the “Estimated
Working Capital Deficiency.”

 

1.10                           Final Closing
Balance Sheet.  Within sixty (60) days following the Closing
Date, Buyer shall prepare and deliver to Seller a balance sheet of Seller as of
the Effective Time (the “Final Closing Balance Sheet”) and a statement
of the Working Capital of Seller (the “Final Working Capital Statement”)
as reflected on the face of the Final Closing Balance Sheet (the “Final
Working Capital”), together with detailed supporting documentation.  The Final Closing Balance Sheet will be
prepared in accordance with GAAP and, to the extent consistent with GAAP, using
the same accounting methods, policies, practices and procedures, with
consistent classifications and estimation methodologies, as were used in the
preparation of the most recent Year-End Financial Statements, and will not
include any changes in assets or Liabilities as a result of purchase accounting
adjustments arising from or resulting as a consequence of the Contemplated
Transactions.  Subject to adjustment
pursuant to Section 1.11, (a) the amount, if any, by which the
Final Working Capital exceeds Twenty-Three Million Five Hundred Thousand
dollars ($23,500,000) is referred to herein as the “Final Working Capital
Surplus”  and (b) the amount, if
any, by which the Final Working Capital is less than Twenty-Two Million Five
Hundred Thousand dollars ($22,500,000), is referred to herein as the “Final
Working Capital Deficiency.”

 

1.11                           Disagreement
and Resolution.

 

(a)                                  If Seller
disagrees with the determination of the Final Working Capital as shown on the
Final Working Capital Statement, Seller shall notify Buyer in writing of such
disagreement within sixty (60) days after delivery of such Final Working
Capital Statement, which notice shall describe the nature of any such
disagreement in reasonable detail, identify the specific items involved and the
dollar amount of each such disagreement and provide reasonable supporting
documentation for each such disagreement. 
After the end of such sixty (60) day period, neither Buyer nor Seller
may introduce additional disagreements with respect to any item 

 

6

 

in the Final Working Capital Statement or increase
the amount of any disagreement, and any item not so identified shall be deemed
to be agreed to by the Parties and will be final and binding.

 

(b)                                 If Buyer and
Seller do not resolve all disagreements properly identified by Seller pursuant
to Section 1.11(a) within thirty (30) days after Seller’s
delivery to Buyer of written notice of such disagreements, then such
disagreements shall be submitted for final and binding resolution to a Neutral
Accounting Firm to resolve such disagreements (the “Accounting Arbitrator”).  The Accounting Arbitrator shall be a Neutral
Accounting Firm selected by mutual agreement of Buyer and Seller; provided,
however, that (i) if, within forty-five (45) days after Seller has
delivered notice of disagreement to Buyer pursuant to Section 1.11(a),
the Parties are unable to agree on a Neutral Accounting Firm to act as
Accounting Arbitrator, then each of Buyer and Seller shall select a Neutral
Accounting Firm and such firms together shall select the Neutral Accounting
Firm to act as the Accounting Arbitrator, and (ii) if any Party does not
select a Neutral Accounting Firm within ten (10) days of written demand
therefor by the other Party, then the Neutral Accounting Firm selected by the
other Party shall act as the Accounting Arbitrator.  Buyer and Seller shall be
permitted to present a supporting brief to the Accounting Arbitrator (which
supporting brief shall also be concurrently provided to the other Party) within
ten (10) days of the appointment of the Accounting Arbitrator.  Within five (5) days of receipt of a
supporting brief, the receiving Party may present a responsive brief to the
Accounting Arbitrator (which responsive brief shall also be concurrently
provided to the other Party).  Each
presenting Party may make an oral presentation to the Accounting Arbitrator (in
which case, such presenting Party shall notify the other Party of such
presentation, and the other Party shall have the right to be present at such
presentation) within twenty (20) days of the appointment of the Accounting
Arbitrator.  The Accounting Arbitrator
shall only consider the briefs and oral presentations of the Parties, and shall
not conduct any independent review in determining those items and amounts
disputed by the Parties.  The Accounting
Arbitrator must resolve the matter in accordance with the terms and provisions
of this Agreement and shall select either the position of Buyer or Seller as a
resolution for each item or amount disputed; provided that no such
determination as to any item will be more favorable to Buyer than that proposed
by Buyer or more favorable to Seller than that proposed by Seller.  The Accounting Arbitrator shall deliver to
Buyer and Seller, as promptly as practicable and in any event within ninety
(90) days after its appointment, a written report setting forth the resolution
of any such disagreement determined in accordance with the terms of this
Agreement.  The Accounting Arbitrator
shall make its determination based solely on presentations and supporting material
provided by the Parties and not pursuant to any independent review.  The determination of the Accounting
Arbitrator shall be final and binding. 
The fees of the Accounting Arbitrator shall be borne equally by Buyer,
on the one hand, and Seller on the other hand.

 

1.12                           Purchase Price
Adjustment.

 

(a)                                  Notwithstanding
anything in Section 1.5 to the contrary, if the Estimated Closing
Balance Sheet reflected an Estimated Working Capital Surplus and the Purchase
Price paid at Closing was increased pursuant to Section 1.5; and

 

7

 

(i)                                     if the Final
Closing Balance Sheet reflects a Final Working Capital Surplus larger than the
Estimated Working Capital Surplus, then Buyer shall pay to Seller the amount of
such difference, OR

 

(ii)                                  if the Final
Closing Balance Sheet reflects any of (1) a Final Working Capital
Deficiency, (2) neither a Final Working Capital Surplus nor a Final
Working Capital Deficiency or (3) a Final Working Capital Surplus in an
amount less than the Estimated Working Capital Surplus, then Seller shall pay
to Buyer an amount equal to the excess, if any, of (i) the amount of the
Closing Purchase Price actually paid by Buyer at the Closing pursuant to Section 1.5
over (ii) the amount that Buyer would have been required to pay to Seller
had the Final Working Capital (instead of the Estimated Closing Working
Capital) been determined for purposes of Section 1.5 immediately
before the Closing, OR

 

(iii)                               if the Final
Closing Balance Sheet reflects a Final Working Capital Surplus in an amount
exactly equal to the Estimated Working Capital Surplus, then no adjustment of
the Purchase Price shall be made pursuant to this Section 1.12.

 

(b)                                 Notwithstanding
anything in Section 1.5 to the contrary, if the Estimated Closing
Balance Sheet reflected an Estimated Working Capital Deficiency and the
Purchase Price paid at Closing was decreased pursuant to Section 1.5;
and

 

(i)                                     if the Final
Closing Balance Sheet reflects a Final Working Capital Deficiency larger than
the Estimated Working Capital Deficiency, Seller shall pay to Buyer the amount
of such difference, OR

 

(ii)                                  if the Final
Closing Balance Sheet reflects any of (1) a Final Working Capital Surplus,
(2) neither a Final Working Capital Surplus nor a Final Working Capital
Deficiency or (3) a Final Working Capital Deficiency in an amount less
than the Estimated Working Capital Deficiency, then Buyer shall pay to Seller
an amount equal to the excess, if any, of (i) the amount that Buyer would
have been required to pay to Seller had the Final Working Capital (instead of
the Estimated Closing Working Capital) been determined for purposes of Section 1.5
immediately before the Closing over (ii) the amount of the Closing
Purchase Price actually paid by Buyer at the Closing pursuant to Section 1.5,
OR

 

(iii)                               if the Final
Closing Balance Sheet reflects a Final Working Capital Deficiency in an amount
exactly equal to the Estimated Working Capital Deficiency, then no adjustment
of the Purchase Price shall be made pursuant to this Section 1.12.

 

(c)                                  Notwithstanding
anything in Section 1.5 to the contrary, if the Estimated Closing
Balance Sheet did not reflect either an Estimated Working Capital Surplus or an
Estimated Working Capital Deficiency and the Purchase Price paid at Closing was
not adjusted pursuant to Section 1.5; and

 

(i)                                     if the Final
Closing Balance Sheet reflects a Final Working Capital Surplus, then Buyer
shall pay to Seller the amount by which the Final Working Capital exceeds
$23,500,000, OR

 

8

 

(ii)                                  if the Final
Closing Balance Sheet reflects a Final Working Capital Deficiency, then Seller
shall pay to Buyer the amount by which the Final Working Capital is less than
$22,500,000.

 

(d)                                 Notwithstanding
anything in Section 1.5 to the contrary, if the Estimated Closing
Balance Sheet did not reflect either an Estimated Working Capital Surplus or an
Estimated Working Capital Deficiency and the Purchase Price paid at Closing was
not adjusted pursuant to Section 1.5, and the Final Closing Balance
Sheet reflects neither a Final Working Capital Surplus nor a Final Working
Capital Deficiency, then no adjustment of the Purchase Price shall be made
pursuant to this Section 1.12.

 

(e)                                  Any amounts
required to be paid by a Party under Section 1.12 shall be paid
within three (3) Business Days after the final determination of the Final
Working Capital of Seller and shall be accompanied by interest thereon from the
Closing Date until the date paid at the rate of five percent (5%)  per annum.

 

ARTICLE 2

 

CLOSING

 

2.1                                 Closing.  The closing of the purchase and sale provided
for in this Agreement (the “Closing”) shall be consummated on the third (3rd)
Business Day after the conditions set forth in ARTICLE 7 and ARTICLE 8
have been satisfied or waived (other than conditions that by their terms are to
be satisfied at the Closing), at the offices of Sheppard, Mullin, Richter &
Hampton LLP, Four Embarcadero Center, 17th Floor, San
Francisco, CA 94111, or at such other date, time and place as may be agreed
upon by Buyer and Seller.  Legal title,
equitable title, and risk of loss with respect to the Assets will pass to Buyer
at the Closing, which transfer will be deemed effective for tax, accounting and
other computational purposes as of 12:01 a.m. Pacific time on the Closing
Date (the “Effective Time”).

 

2.2                                 Closing
Deliveries.  In addition
to any other documents to be delivered under other provisions of this
Agreement, at the Closing:

 

(a)                                  Seller shall
deliver to Buyer:

 

(i)                                     a bill of sale
transferring to Buyer all of the Assets that are Tangible Personal Property, Inventories
or Books and Records, substantially in the form of Exhibit A (the “Bill
of Sale”), duly executed by Seller;

 

(ii)                                  an assignment
of all of the Assets that are intangible property, substantially in the form of
Exhibit B, which assignment shall also contain Buyer’s undertaking
and assumption of the Assumed Liabilities (the “Assignment and Assumption
Agreement”), duly executed by Seller;

 

(iii)                               the Vicksburg
Property special warranty deed in proper statutory form for recording and
conveying title to the Vicksburg Property (the “Vicksburg Deed”)
substantially in the form attached hereto as Exhibit C;

 

9

 

(iv)                              instruments of
assignment of all registered Marks, Patents, Copyrights and other Intellectual
Property Assets, substantially in the forms of Exhibits D-1, D-2 and
D-3, duly executed by Seller;

 

(v)                                 such other
deeds, bills of sale, assignments, certificates of title, documents and other
instruments of transfer and conveyance as may reasonably be requested by Buyer,
each in form and substance satisfactory to Buyer and duly executed by Seller;

 

(vi)                              a
Noncompetition Agreement, substantially in the form of Exhibit E
(the “Noncompetition Agreement”), duly executed by Seller and Parent;

 

(vii)                           a properly
executed certificate of non-foreign status satisfying the requirements of
Treasury Regulations § 1.1445-2(b)(2);

 

(viii)                        a Transition
Services and License Agreement, substantially in the form of Exhibit F
(the “Transition Services Agreement”), duly executed by Seller and
Parent;

 

(ix)                                a Lease
Assumption in substantially the form of Exhibit H (the “Lease
Assumption”), duly executed by Seller;

 

(x)                                   evidence, in a
form reasonably acceptable to Buyer, of the release of all Encumbrances on the
Assets;

 

(xi)                                a certificate
executed by an officer of Seller as to the accuracy of Seller’s representations
and warranties as of the date of this Agreement and as of the Closing Date in
accordance with Section 7.1, as to its compliance with and
performance of its covenants and obligations to be performed or complied with
at or before the Closing in accordance with Section 7.2 and as to
whether the other conditions specified in ARTICLE 7 have been
satisfied in all respects;

 

(xii)                             a certificate
of the Secretary of Seller certifying, as complete and accurate as of the
Closing Date, attached copies of the Governing Documents of Seller and
certifying and attaching all requisite resolutions or actions of Seller’s board
of directors approving the execution and delivery of the Transaction Documents
and the consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of Seller executing the Transaction
Documents;

 

(xiii)                          Certificates
dated as of a date not earlier than the tenth (10th) Business Day prior to the
Closing Date as to the good standing of Seller, executed by the appropriate
officials of the jurisdiction of Seller’s incorporation and each jurisdiction
in which Seller is licensed or qualified to do business as a foreign
corporation; and

 

(xiv)                         such other
documents as Buyer may reasonably request for the purpose of otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.

 

10

 

(b)                                 Buyer shall
deliver to Seller:

 

(i)                                     the Closing
Purchase Price less any withholding required by Applicable Law, in immediately
available funds, by wire transfer to an account specified by Seller by written
notice to Buyer at least three (3) Business Days prior to the Closing
Date;

 

(ii)                                  the Assignment
and Assumption Agreement, duly executed by Buyer;

 

(iii)                               the
Noncompetition Agreement, duly executed by Buyer;

 

(iv)                              the Transition
Services Agreement, duly executed by Buyer;

 

(v)                                 the Lease
Assumption, duly executed by Buyer;

 

(vi)                              a certificate
duly executed by an officer of Buyer as to the accuracy of its representations
and warranties as of the date of this Agreement and as of the Closing Date in
accordance with Section 8.1, as to its compliance with and
performance of its covenants and obligations to be performed or complied with
at or before the Closing in accordance with Section 8.2 and as to
whether the other conditions specified in ARTICLE 8 have been
satisfied in all respects; and

 

(vii)                           a certificate
of the Secretary of Buyer certifying, as complete and accurate as of the
Closing Date, attached copies of the Governing Documents of Buyer and
certifying and attaching all requisite resolutions or actions of Buyer’s board
of directors approving the execution and delivery of the Transaction Documents
and the consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of Buyer executing the Transaction
Documents; and

 

(viii)                        Certificates
dated as of a date not earlier than the tenth (10th) Business Day prior to the
Closing Date as to the good standing of Buyer, executed by the appropriate
officials of the jurisdiction of Buyer’s incorporation and each jurisdiction in
which Buyer is licensed or qualified to do business as a foreign corporation.

 

(c)                                  Each of Buyer
and Parent shall deliver to the other the Vacaville Lease duly executed by it
in the form attached hereto as Exhibit G.

 

ARTICLE 3

 

REPRESENTATIONS AND
WARRANTIES OF PARENT AND SELLER

 

Seller
represents and warrants to Buyer and M&G that the statements contained in
this ARTICLE 3  are
correct and complete as of the date hereof and will be correct and complete as
of the Closing Date (as though made then and except as expressly provided in a
representation or warranty, as though the Closing Date were substituted for the
date hereof throughout this ARTICLE 3).

 

11

 

3.1                                 Organization
and Good Standing.

 

(a)                                  Schedule 3.1(a) contains
a complete and accurate list of Seller’s jurisdiction of incorporation and any
jurisdictions in which it is qualified to do business as a foreign
corporation.  Each of Parent and Seller
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all of
its obligations.  Seller is duly qualified
to do business as a foreign corporation and is in good standing under the laws
of each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by
it, requires such qualification, except where the failure to be so qualified
would not reasonably be expected to have a Material Adverse Effect on Seller.

 

(b)                                 Seller has no
Subsidiaries and, except as disclosed in Schedule 3.1(b), does not own
any shares of securities of any other Person.

 

(c)                                  Except as set
forth on Schedule 3.1(c), no part of the Business is currently operated
through any entity other than Seller.

 

3.2                                 Enforceability;
Authority; No Conflict.

 

(a)                                  Upon the
execution and delivery by each of Parent and Seller of the Transaction
Documents to which it is a party, each Transaction Document (assuming the due
execution and delivery of the Transaction Documents by M&G and Buyer) will
constitute a legal, valid and binding obligation of each of Parent and Seller,
enforceable against each of Parent and Seller in accordance with the terms of
such Transaction Document.

 

(b)                                 Each of Parent
and Seller has the absolute and unrestricted right, power and authority to
execute and deliver the Transaction Documents and to perform its obligations
under the Transaction Documents, and such action has been duly authorized by
all necessary action by the shareholders and board of directors of each of
Parent and Seller.

 

(c)                                  Except as set
forth in Schedule 3.2(c) and except in connection with the Wells
Credit Agreement, neither the execution and delivery of the Transaction
Documents nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):  (i) Breach (A) any
provision of any of the Governing Documents of Parent or Seller or (B) any
resolution adopted by the board of directors or the shareholders of Parent or
Seller; (ii) Breach or give any Governmental Authority or other Person the
right to challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under any Applicable Law or any Order to which
Parent or Seller or any of the Assets may be subject; (iii) contravene,
conflict with or result in a violation or Breach of any of the terms or
requirements of, or give any Governmental Authority the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Permit that is held by
Seller and that relates to the Assets or to the Business; (iv) Breach any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or payment
under, or to cancel, terminate or modify, any Contract to which Seller is party
relating 

 

12

 

to the Business or the Assets; or (v) result in
the imposition or creation of any Encumbrance upon or with respect to any of
the Assets.

 

(d)                                 Except as set
forth in Schedule 3.2(d), Seller is not required to give any notice to
or obtain any Consent from any Person in connection with the execution and
delivery of the Transaction Documents or the consummation or performance of any
of the Contemplated Transactions.

 

3.3                                 Capitalization.  Parent is and will be on the Closing Date the
record and beneficial owner and holder of all of the issued and outstanding
equity securities of Seller.

 

3.4                                 Financial
Statements.  Attached as
Schedule 3.4 are the following:  (a) unaudited
balance sheets of Seller as at December 31, 2007, 2008 and 2009, and the
related statements of income and retained earnings for each of the fiscal years
then ended (collectively, the “Year-End Financial Statements”) and (b) an
unaudited balance sheet of Seller as at March 31, 2010, (the “Interim
Balance Sheet”) and the related statements of income and retained earnings
for the fiscal quarter then ended (collectively, the “Interim Financial
Statements” and together with the Year-End Financial Statements, the “Financial
Statements”).  The Financial
Statements fairly present the financial condition and results of operations of
Seller as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP (except that the Financial
Statements do not include footnotes or statements of cash flows required by
GAAP and except that the Interim Financial Statements do not contain normal
year-end adjustments, which Seller expects will not be material individually or
in the aggregate).  The Financial
Statements reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to such
financial statements.  The Financial
Statements have been prepared from, and are in accordance with, the Books and
Records.

 

3.5                                 Books and Records;
Controls.  The Books
and Records, all of which have been made available to Buyer, are complete and
correct in all material respects and represent actual, bona fide transactions
and have been maintained in accordance with sound business practices.

 

3.6                                 Absence of
Certain Changes and Events.

 

(a)                                  Except as set
forth in Schedule 3.6, since March 31, 2010, Seller (x) has
conducted its business, in all material respects, in the Ordinary Course of
Business without interruption, (y) has used commercially reasonable
efforts to maintain all of the Assets, business relationships, licenses and
operations of the Business in a manner reasonably consistent with past
practice, and (z) has not:

 

(i)                                     sold, pledged,
assigned, leased (as lessor or lessee), licensed, transferred, abandoned or
otherwise disposed of any of material assets used in, or otherwise related to,
the Business, except in the Ordinary Course of Business, or relinquished any
material right related to the Business;

 

(ii)                                  amended,
terminated or waived any material right under any Contract related to the
Business, except in the Ordinary Course of Business;

 

13

 

(iii)                               entered into any material Contract outside the Ordinary Course of
Business;

 

(iv)                              suffered any
damage, destruction or casualty with respect to any property material to the
Business (whether or not covered by insurance), or experienced any changes in
the amount or scope of insurance coverage;

 

(v)                                 issued, sold, or otherwise disposed of any of its capital stock,
or granted any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its capital stock;

 

(vi)                              redeemed, purchased, or otherwise acquired any of its capital
stock;

 

(vii)                           made any change
in its cash management practices or in any method of accounting or accounting
policies;

 

(viii)                        accelerated,
written off or discounted any Account Receivable or collected any Account
Receivable, other than in the Ordinary Course of Business;

 

(ix)                                delayed paying
payables or other Liabilities of the Business when due or deferred expenses or,
otherwise increased cash on hand outside of the Ordinary Course of Business;

 

(x)                                   made any loans or advances of money outside of the Ordinary
Course of Business;

 

(xi)                                made any material capital expenditures outside the Ordinary Course
of Business;

 

(xii)                             made any material capital investment in any other Person;

 

(xiii)                          created, incurred, assumed, or guaranteed more than One Hundred
Fifty Thousand dollars ($150,000)
in aggregate Indebtedness;

 

(xiv)                         amended its
Governing Documents;

 

(xv)                            suffered the
loss of employment of any Person identified on Schedule 3.6 as a key employee
of the Business or been notified that any such Person intends to terminate
employment with Seller;

 

(xvi)                         otherwise than
as provided elsewhere herein, implemented any employee layoffs within ninety
(90) days prior to the Closing Date which may require notice under the Federal
Worker Adjustment and Retraining Notification Act of 1988, the California
Worker Adjustment and Retraining Notification Act, the New York Worker
Adjustment and Retraining Notification Act or any similar law, regulation or
ordinance of any other state or jurisdiction (collectively the “WARN Act”);

 

14

 

(xvii)                      entered into or terminated any employment contract or collective
bargaining agreement, written or oral, outside of the Ordinary
Course of Business, or modified the
terms of any existing such contract or agreement, or entered into any
collective bargaining relationship;

 

(xviii)                   granted
any increase in the base compensation of, or any bonus to, any of its
directors, officers, and employees outside the Ordinary Course of Business;

 

(xix)                           adopted, amended, modified, or terminated any bonus, profit
sharing, incentive, severance, or other plan, contract, or commitment for the
benefit of any of its directors, officers, and employees (or taken any such
action with respect to any other Employee Benefit Plan);

 

(xx)                              made any other change in employment terms for any of its
directors, officers, and employees outside of the Ordinary Course of Business;

 

(xxi)                           entered into
any material settlement, conciliation or similar agreement related to the
Business or the Assets;

 

(xxii)                        made or changed,
with respect to the Business or the Assets, any election, changed any annual
accounting period, adopted or changed any accounting method, filed any amended
Tax Return for Taxes related to the Business or Assets, entered into any
closing agreement, settled any Tax claim or assessment, surrendered any right
to claim a refund of Taxes, consented to any extension or waiver of the
limitation period applicable to any Tax claim or assessment, or taken any other
similar action relating to the filing of any Tax Return or the payment of any
Tax, if such election, adoption, change, amendment, agreement, settlement,
surrender, consent or other action would have had the effect of increasing the
Tax Liability for any period ending after the Closing Date or decreasing any
Tax attribute existing on the Closing Date;

 

(xxiii)                     agreed, whether orally or in
writing, to do any of the foregoing.

 

(b)                                 Since March 31,
2010, to the Knowledge of Seller, no Material Adverse Effect has occurred with
respect to Seller and no event has occurred or circumstance exists that would
reasonably be expected to result in a Material Adverse Effect on Seller.

 

3.7                                 No Undisclosed
Liabilities.  Except as
set forth in Schedule 3.7 Seller has no Liability with respect to the
Business or Assets except for Liabilities reflected in the Interim Balance
Sheet and current Liabilities incurred in the Ordinary Course of Business of
Seller since the date of the Interim Balance Sheet, which are (a) not,
individually or in the aggregate, material, (b) of similar character and
nature as the Liabilities shown in the Interim Balance Sheet, and (c) not
the result of any Breach of Contract, tort, infringement or Breach of
Applicable Law.

 

3.8                                 Sufficiency of
Assets.  Except as set forth in Schedule
3.8, the Assets (a) constitute all of the assets, tangible and
intangible, of any nature whatsoever, necessary to operate the Business in the
manner currently operated by Seller and (b) include all of the operating
assets of the Business.  All material
Tangible Personal Property Assets are set forth on 

 

15

 

Schedule 1.1(a).  All material intangible rights and property
of Seller used in or necessary to the Business, other than the Retained
Trademark and the Retained Software, are set forth on Schedule 1.1(b).  The sale of the Assets by Seller to Buyer
pursuant to this Agreement will effectively convey to Buyer all of the Business
and substantially all of the tangible and intangible property used by Seller
(whether owned, leased or held under license by Seller) in connection with the
conduct of the Business as heretofore conducted by Seller, other than the
Excluded Assets and Assets disposed of since March 31, 2010, in the
Ordinary Course of Business.

 

3.9                                 Title to
Assets; Encumbrances.  Seller
owns, and will transfer, upon consummation of the Contemplated Transactions,
good and transferable title to all of the Assets free and clear of any
Encumbrances.

 

3.10                           Condition of
Assets.  Except as described in Schedule
3.10, each item of Tangible Personal Property is (except for ordinary wear
and tear) (a) in good repair, (b) in good operating condition, (c) suitable
for immediate use in the Ordinary Course of Business and (d) to Seller’s
Knowledge, free in all material respects from latent and patent defects
(provided that the foregoing representation shall in no event be construed in
any manner to assign to, or otherwise obligate Buyer with respect to, any
product liability for products sold or manufactured by Seller prior to the
Closing Date).  All items of Tangible
Personal Property have been maintained in accordance with normal industry
practice as reasonable in the Ordinary Course of Business.  Except as disclosed in Schedule 3.10,
all Tangible Personal Property used in the Business is in the possession of
Seller.

 

3.11                           Accounts
Receivable.  All
Accounts Receivable that are reflected on the Interim Balance Sheet or on the
accounting Records of the Business as of the date hereof and the Closing Date
represent or will represent valid obligations arising from sales actually made
or services actually performed by Seller in the Ordinary Course of Business,
other than those collected in the Ordinary Course of Business.  Except to the extent paid prior to the
Closing Date, such Accounts Receivable are or will be as of the Closing Date
current and collectible within their respective due dates, subject only to the reserve for bad debts reflected in the Interim
Balance Sheet.  To the
Knowledge of Seller, there is no contest, claim, defense or right of setoff
under any Contract with any account debtor of an Account Receivable relating to
the amount or validity of such Account Receivable.  Except as
reserved for bad debts in the Interim Balance Sheet or disclosed in Schedule
3.11, no account debtor (a) is delinquent in its payment by more than
one hundred twenty (120) days, (b) has refused or threatened to refuse to
pay its obligations for any reason, or (c) is insolvent or bankrupt.  Schedule 3.11 contains a complete and
accurate list of all Accounts Receivable as of the date of the Interim Balance
Sheet, which list sets forth the aging of each such Account Receivable.

 

3.12                           Inventories.  Except as disclosed on Schedule 3.12,
Seller is not in possession of any Inventories not owned by Seller, including goods
already sold, and no other Person holds any Inventories on consignment from
Seller.  Except as reserved against in
the Interim Balance Sheet or disclosed on Schedule 3.12, all Inventories
are not obsolete, damaged, slow-moving or defective.  The value at which Inventories are carried on
the Interim Balance Sheet reflects the customary inventory valuation of Seller
(which fairly reflects the value of obsolete or excess inventory) for stating
Inventory in accordance with GAAP and there has been no change to the method of
such inventory valuation in the prior three (3) years.  Inventories on hand that were 

 

16

 

purchased after the date of the Interim Balance
Sheet were purchased in the Ordinary Course of Business of Seller at a cost not
exceeding market prices prevailing at the time of purchase.  The quantities of each item of Inventory
consisting of work in process or finished goods are not excessive but are
reasonable in the present circumstances of Seller.  Work-in-process Inventories are now valued,
and will be valued on the Closing Date, according to GAAP.

 

3.13                           Contracts; No
Defaults.

 

(a)                                  Schedule 3.13(a) contains
an accurate and complete list, and Seller has delivered to Buyer accurate and
complete copies, of the following Contracts that
relate to the Business, the Assets or the Assumed Liabilities and to which Seller is a party or by which Seller or the Business
is bound:

 

(i)                                     each Contract
that involves performance of services or delivery of goods or materials by
Seller of an amount or value in excess of One Hundred Fifty Thousand dollars
($150,000);

 

(ii)                                  each Contract
that involves performance of services or delivery of goods or materials to
Seller of an amount or value in excess of One Hundred Fifty Thousand dollars
($150,000);

 

(iii)                               each Contract
that was not entered into in the Ordinary Course of Business and that involves
expenditures or receipts of Seller in excess of One Hundred Fifty Thousand
dollars ($150,000);

 

(iv)                              each Contract
for the furnishing or receipt of services, the performance of which will extend
over a period of more than one (1) year;

 

(v)                                 each Contract
affecting the ownership of, leasing of, title to, use of or any leasehold or
other interest in any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per item
or aggregate payments of less than One Hundred Fifty Thousand dollars
($150,000) and with a term of less than one year);

 

(vi)                              each Contract
with any labor union or other employee representative of a group of employees
relating to wages, hours and other conditions of employment;

 

(vii)                           each Contract
for the employment of any officer, individual employee or other person on a
full time or consulting basis, any severance agreement or any agreement
requiring any payment upon a change of control of Seller;

 

(viii)                        each material profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of Seller’s current or former directors, officers,
and employees;

 

17

 

(ix)                                each Contract under which Seller has advanced or loaned any other
Person amounts otherwise than in the Ordinary Course of Business (none of which
exceeds Ten Thousand dollars $10,000);

 

(x)                                   each Contract
(other than the Wells Credit Agreement) relating to Indebtedness or otherwise
placing an Encumbrance on any of the Assets;

 

(xi)                                each Contract
concerning confidentiality, noncompetition, nonsolicitation or
nondisparagement, including any Contract containing covenants that in any way
purport to restrict Seller’s business activity or limit the freedom of Seller
to engage in any line of business or to compete with any Person;

 

(xii)                             each
settlement, conciliation or similar Contract with any Governmental Authority;

 

(xiii)                          each Contract
(however named) involving a sharing of profits, losses, costs or Liabilities by
Seller with any other Person;

 

(xiv)                         each Contract
providing for payments to or by any Person based on sales, purchases or
profits, other than direct payments for goods;

 

(xv)                            each power of
attorney relating to the Business that is currently effective and outstanding;

 

(xvi)                         each Contract
for capital expenditures in excess of One Hundred Fifty Thousand dollars
($150,000);

 

(xvii)                      each Contract
involving Parent or any of its Affiliates that is required for the conduct and
operation of the Business in the manner in which it currently is conducted;

 

(xviii)                   each written warranty,
guaranty or other similar undertaking with respect to contractual performance
extended by Seller and relating to the Business, other than in the Ordinary
Course of Business; or

 

(xix)                           each other
Contract material to the Business whether or not entered into in the Ordinary
Course of Business.

 

Schedule
3.13(a) sets forth the name and the parties to such Contracts and the
effective dates thereof.  Seller has delivered to Buyer a correct and complete copy of each
Contract listed or required to be listed in Schedule 3.13 (as amended to date).

 

(b)                                 Except as set
forth in Schedule 3.13(b), each Contract identified or required to be
identified in Schedule 3.13 and which is being assigned to or assumed by
Buyer is assignable by Seller to Buyer without the consent of any other Person.

 

(c)                                  With respect to each Contract listed on Schedule
3.13(c): 
(i) the Contract is legal, valid, binding, enforceable, and in full
force and effect; (ii) Seller is not in breach or 

 

18

 

default, and
with respect to Seller no event has occurred that with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the Contract; (iii) to Seller’s Knowledge, no other party
to such Contract is in breach or default, and with respect to such party no
event has occurred that with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
Contract; and (iv) no party to the Contract has repudiated any material
provision of the Contract.

 

(d)                                 There are no
renegotiations of, attempts to renegotiate or outstanding rights to renegotiate
any material amounts paid or payable to Seller under any of the Contracts listed on Schedule 3.13(a).  No Person has a contractual or statutory
right to demand or require such renegotiation and no such Person has made
demand for such renegotiation.

 

3.14                           Insurance.

 

(a)                                  Seller has
delivered to Buyer (i) accurate and complete copies of all policies of
insurance related to the Business or Assets (and correspondence relating to
coverage thereunder) owned by Seller and under which Seller is or has been
covered at any time since January 1, 2007, a list of which is included in Schedule
3.14, in each case excluding policies purchased by Parent; and
(ii) accurate and complete copies of all pending applications by Seller
for policies of insurance related to the Business or Assets.

 

(b)                                 Schedule 3.14 describes
(i) any self-insurance arrangement of Seller related to the Business or
Assets, including any reserves established thereunder; (ii) any Contract
or arrangement, other than a policy of insurance, for the transfer or sharing
of any risk and to which Seller is a party and which involves the Business or
the Assets; and (iii) all obligations of the Business to provide insurance
coverage to Third Parties (for example, under Leases) and identifies the policy
under which such coverage is provided.

 

(c)                                  Except as set
forth in Schedule 3.14:

 

(i)                                     all policies of
insurance that provide coverage to Seller with respect to the Business or
Assets:  (A) are valid, outstanding
and enforceable; (B) are issued by an insurer that is financially sound
and reputable; and (C) are sufficient for compliance with all Applicable
Laws and Contracts;

 

(ii)                                  With respect to each such insurance policy:  (A) neither Seller nor any other party
to the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred that, with notice
or the lapse of time, would constitute such breach or default, or permit
termination or modification under the policy; and (C) no party to the
policy has repudiated any provision thereof.

 

(iii)                               Seller has not
received with respect to the Business or Assets (A) any refusal of
coverage or any notice that a defense will be afforded with reservation of
rights or (B) any notice of cancellation or any other indication that any
policy of insurance is no longer in full force or effect or that the issuer of
any policy of insurance is not willing or able to perform its obligations
thereunder; and

 

19

 

(iv)          Seller has paid all premiums due, and has otherwise
performed all of its obligations, under each policy of insurance owned by
Seller and related to the Business or Assets.

 

3.15         Compliance with Applicable Laws; Permits.

 

(a)           Except as set forth in Schedule 3.15, (i) Seller
is, and at all times since January 1, 2007, has been, in compliance in all
material respects with all Applicable Law; and (ii)  Seller has not
received, at any time since January 1, 2007, any written notice or other
communication with respect to the Business or the Assets from any Governmental
Authority or any other Person regarding any actual or alleged violation of, or
failure to comply with, any Applicable Law.

 

(b)           Schedule 3.15 sets forth, or within ten (10) days
of the date hereof will set forth, a complete and accurate list of each Permit
held by Seller that relates to the Business or the Assets.  Each Permit listed or required to be listed
in Schedule 3.15 is valid and in full force and effect.  Except as set forth in Schedule 3.15,
(i) Seller is, and at all times since January 1, 2007, has been, in
compliance with all of the terms and requirements of each Permit identified or
required to be identified in Schedule 3.15; (ii) to Seller’s
Knowledge, no event has occurred or circumstance exists that may (with or
without notice or lapse of time) (A) constitute or result directly or
indirectly in a failure to comply with any term or requirement of any Permit
listed or required to be listed in Schedule 3.15 or (B) result
directly or indirectly in the revocation, withdrawal, suspension, cancellation
or termination of, or any modification to, any Permit listed or required to be
listed in Schedule 3.15; (iii) Seller has not received, at any time
since January 1, 2007, any written notice or other communication from any
Governmental Authority or any other Person regarding (A) any actual or
alleged failure to comply with any term or requirement of any Permit listed or
required to be listed in Schedule 3.15 or (B) any actual or
proposed revocation, withdrawal, suspension, cancellation, termination of or
modification to any Permit listed or required to be listed in Schedule 3.15;
and (iv) all applications required to have been filed for the renewal of
the Permits listed or required to be listed in Schedule 3.15 have been
duly filed as required on a timely basis with the appropriate Governmental
Authorities, and all other filings required to have been made with respect to
such Permits have been duly made on a timely basis with the appropriate Governmental
Authorities.  The Permits listed in Schedule
3.15 as of the date hereof, or within ten (10) days of the date
hereof, collectively constitute all of the Permits necessary to permit Seller
to lawfully conduct and operate the Business in the manner in which it
currently is conducted.

 

3.16         Legal Proceedings; Orders.  Except as disclosed in Schedule 3.16,
there is no pending or, to Seller’s Knowledge, threatened Action (i) that
relates to or may affect the Business or any of the Assets; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Contemplated Transactions.  To the Knowledge of Seller, no event has
occurred or circumstance exists that is reasonably likely to give rise to or
serve as a basis for the commencement of any such Action.  Except as set forth in Schedule 3.16,
there is no Order to which the Business or any of the Assets is subject.

 

3.17         Prohibited Payments. 
Seller has not (i) made or agreed to make any contribution, payment
or gift to any government official, employee or agent where the contribution,
payment

 

20

 

or gift or the purpose thereof was illegal,
(ii) established or maintained any unrecorded fund or asset for any
purpose or made any false entries on the books and records of Seller for any
reason, or (iii) made or agreed to make any unlawful contribution, or
unlawfully reimbursed any political gift or contribution made by any other
Person, to any candidate for public office.

 

3.18         Taxes.  For
purposes of the following representations, the term “Seller” shall be construed
to refer also to each predecessor-in-interest of Seller for whose liability for
Taxes Seller has or may have liability or responsibility.

 

(a)           Seller has filed or caused to be filed on a timely basis
all Tax Returns that are or were required to be filed by Seller pursuant to
Applicable Laws.  All such Tax Returns
filed by Seller are true, correct and complete in all material respects.  Seller has timely paid, or made provision in
the Interim Balance Sheet (or made provision in the calculation of Final
Working Capital) for all Taxes related to the Assets, Business, income and
operations of Seller that are payable by Seller and have or may have accrued or
become due for all periods covered by the Tax Returns or that will have accrued
or become due as of Closing, or pursuant to any assessment received by Seller,
except such Taxes (i) as Buyer is required by any provision of any
Transaction Document to pay or (ii) as are listed in Schedule 3.18
and are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided in the Interim Balance
Sheet.  Except as disclosed in Schedule
3.18, Seller currently is not the beneficiary of any extension of time
within which to file any Tax Return related to the Business or Assets.

 

(b)           Seller has delivered or made available to Buyer copies of
all Tax Returns related to the Business or Assets and filed by Seller
(separately and not as a part of a consolidated group) since January 1,
2007.  Schedule 3.18 sets forth
each state, county, local municipal, domestic or foreign jurisdiction or
Governmental Authority in or with which, with respect to the Business or
Assets, Seller (separately and not as a part of a consolidated group)
(i) files, or is or has been required to file, a Tax Return, (ii) is
required to register for any Tax purpose, (iii) is or has been liable for
any Tax on a “nexus” basis at any time, (iv) owns or regularly uses
property, (v) has any employee or in which any employee is regularly
present, or (vi) has any agent, representative or distributor.

 

(c)           Except as set forth in Schedule 3.18, no claim has
ever been made or is expected to be made by any Governmental Authority in a
jurisdiction where Seller does not file Tax Returns that Seller is or may be
subject to taxation by that jurisdiction. 
Except as disclosed in Schedule 3.18, 
there is no dispute or claim concerning any Taxes related to the
Business or Assets either (i) claimed or raised by any Governmental
Authority in writing or (ii) as to which Seller has Knowledge.  Except as described in Schedule 3.18,
Seller has not given or been requested to give waivers or extensions (or is or would
be subject to a waiver or extension given by any other Person) of any statute
of limitations relating to the assessment or payment of Taxes with respect to
the Business or Assets.  There is no
Encumbrance on any of the Assets that arose in connection with any failure (or
alleged failure) to pay any Tax, and Seller has no Knowledge of any basis for
assertion of any claims attributable to Taxes which, if adversely determined,
would result in any such Encumbrance.

 

21

 

(d)           Seller has complied in all material respects with all
provisions of Tax law relating to withholding, payment and remittance of Taxes
and information reporting with respect thereto, and Seller has, within the time
and in the manner prescribed by Tax law, paid over to the proper Governmental
Authorities all amounts required.

 

(e)           There is no Tax ruling, request for ruling or settlement,
compromise, closing or Tax collection agreement in effect or pending which does
or could affect the liability of Seller for Taxes with respect to the Assets or
Business.

 

3.19         Employment Matters and Employee Benefit Plans.

 

(a)           Except as set forth on Schedule 3.19, to Seller’s
Knowledge, all employees of the Business (the “Employees”) are legally
entitled to work in the United States.

 

(b)           Schedule 3.19 sets forth a list of all independent
contractors contracted by Seller currently to perform services with respect to
the Business.  Except as set forth on Schedule
3.19, to the Knowledge of Seller, all such independent contractors that are
currently contracted are legally entitled to work in the United States.

 

(c)           Seller has complied in all material respects with all
Applicable Laws relating to the employment of the Employees, including Title
VII of the Federal Civil Rights Act of 1964, Occupational Safety and Health
Laws, and those relating to hours, wages, collective bargaining, hiring,
promotion, demotion and termination.

 

(d)           Except as set forth on Schedule 3.19, there are no
oral or written management, employment, consulting, non-compete,
confidentiality, severance, change of control, retention or guaranteed bonus
contracts, or similar Contracts or arrangements of any nature (collectively, “Employee
Agreements”) between Seller and any Person providing services for or on
behalf of the Business, which by their terms or operation of law will be
binding upon Buyer or result in Liabilities to Buyer.

 

(e)           Except as may otherwise be required pursuant to the
Noncompetition Agreement, to the Knowledge of Seller, no Employee or agent,
consultant, or contractor of the Business is bound by any Contract that
purports to limit the ability of such officer, director, agent, Employee,
consultant, or contractor (i) to engage in or continue or perform any
conduct, activity, duties or practice relating to the Business or (ii) to
assign to Seller or to any other Person any rights to any invention,
improvement, or discovery.

 

(f)            Neither the execution and delivery of this Agreement nor
the consummation of the Contemplated Transactions (or such transactions in
combination with any prior or subsequent transactions or events) will
(i) result in any current or former Employee, director or consultant of
the Business becoming entitled to any deferred compensation, bonus or severance
pay, materially increase or otherwise enhance any benefits otherwise payable by
Seller, (ii) result in the acceleration of time of payment or vesting, or
an increase in the amount of any compensation due to any current or former
Employee, director or consultant of the Business, in a manner that would affect
Buyer or Buyer’s conduct of the Business after the Closing, (iii) result
in forgiveness, in whole or in part, of any outstanding loans made by Seller to
any current or former Employees, directors or consultants of the Business, or
(iv) result in a

 

22

 

payment that would be considered a “parachute
payment” within the meaning of Section 280G of the Code; provided that no
representation or warranty whatsoever is made in this ARTICLE 3
regarding the applicability of or liability under the WARN Act in connection
with the Contemplated Transactions, notwithstanding anything to the contrary in
any other provision of this Agreement.

 

(g)           To Seller’s Knowledge, each Employee Benefit Plan has been
maintained, funded and administered in accordance with its terms and in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other Applicable Laws, including the continuation coverage and
notice requirements under Section 4980B(f) of the Code and Part 6
of Title I of ERISA (“COBRA”).  To
Seller’s Knowledge, each Employee Benefit Plan that is intended to be
tax-qualified under Section 401(a) of the Code has received a
favorable determination, advisory or opinion letter from the IRS as to its
tax-qualified status and the tax-exempt status of its accompanying trust
established under Section 501(a) of the Code.  Since the issuance of any such determination,
advisory or opinion letter, Seller has not received any written notice of
noncompliance from the Internal Revenue Service, the Department of Labor or the
Pension Benefit Guaranty Corporation with respect to any Employee Benefit Plan.

 

(h)           To Seller’s Knowledge, neither Seller nor any of its ERISA
Affiliates has ever maintained, sponsored, been required to contribute to or in
any way had any liability (whether contingent or otherwise) with respect to any
(i) “defined benefit plan” (as defined in Section 3(35) of ERISA),
(ii) “employee pension benefit plan” (as defined in Section 3(2) of
ERISA) that is subject to Title IV of ERISA or Section 412 of the Code, or
(iii) “multiemployer plan” (as defined in Section 3(37)
or 4001(a)(3) of ERISA).  For
purposes of this Agreement, “ERISA Affiliate” means any entity, trade or
business (whether or not incorporated) that is treated as a single employer
with Seller under Section 4001(b) of ERISA or Code Sections 414(b),
(c), (m) or (o).

 

(i)            At the Closing, except as expressly provided in the
written terms and conditions of an Assumed Liability a complete copy of which
Seller has delivered to Buyer before the execution and delivery of this
Agreement, Buyer will neither have nor be subject to any obligation or
Liability under or with respect to any Employee Benefit Plan.  Without limitation upon the foregoing, the
Assumed Liabilities do not include any actual or potential Liabilities or
funding obligations (i) under Section 4201 if ERISA for any complete
or partial withdrawal from a multiemployer plan or (ii) in respect of any
employee pension benefit plan that is subject to Title IV of ERISA or Section 412
of the Code.  None of the Assets is
subject to any Encumbrance imposed under ERISA or Section 430(k) of
the Code.  To Seller’s Knowledge, Seller
has no unsatisfied Liabilities nor is Seller reasonably expected to incur any
Liabilities, that could become a Liability of Buyer or any Employee Benefit
Plan or to which the Business or Assets could be subject and, with respect to
each such Employee Benefit Plan, full payment has been made of all amounts that
Seller is required, under the terms of each such Employee Benefit Plan, to have
paid on or prior to the Closing.

 

(j)            To Seller’s Knowledge, Seller at all times has and shall
have carried out all obligations to provide COBRA continuation coverage to any “M&A
qualified beneficiaries” (within the meaning of Treasury Regulations
§54.4980B-9, Q&A-4) that experience a qualifying event prior to or as a
result of the Contemplated Transactions.

 

23

 

(k)           Seller does not maintain, operate or administer any
nonqualified deferred compensation plan (within the meaning of Section 409A
or Section 457A of the Code).  To
Seller’s Knowledge, no Tax liabilities have arisen and are currently unpaid in
relation to a violation of any applicable Employee Benefit Plan, nor does
Seller expect any Tax liability to arise in connection with any payment as a
result of the Contemplated Transactions.

 

(l)            Except as disclosed on Schedule 3.19, to Seller’s
Knowledge, neither Seller nor any Employee Benefit Plan promises, provides or
previously provided welfare benefits, including death, life, medical or health
benefits (whether insured or uninsured), with respect to current or former
employees, officers or directors (or their respective dependents) beyond
retirement or other termination of employment, other than COBRA continuation
coverage or state law continuation coverage rights.

 

(m)          Seller has not received any written notice from a
Governmental Authority that there are any pending audits or investigations by
any governmental agency involving any Employee Benefit Plan.  Seller has not received any written notice of
any threatened or pending claims (other than routine claims for benefits),
suits or proceedings involving any Employee Benefit Plan or any fiduciary
thereof.

 

(n)           To Seller’s Knowledge, no “prohibited transaction,” as
such term is defined in Section 406 of ERISA or Code Section 4975,
nor any breach of fiduciary duty, has occurred with respect to any Employee
Benefit Plan that, assuming the taxable period of such transaction expired as
of the date hereof, could subject such Employee Benefit Plan, any fiduciary
thereof, Seller or any of its ERISA Affiliates with any liability or penalty
imposed under Section 502 of ERISA or excise tax imposed under
Section 4975 of the Code.

 

(o)           To Seller’s Knowledge, with respect to each Employee
Benefit Plan, all required payments, premiums, contributions, or distributions
for all periods ending on the Closing Date have been made when due, or, if not
yet due, have been properly accrued in accordance with the requirements of
GAAP.

 

3.20         Environmental, Health and Safety Matters.  Except as disclosed in Schedule 3.20:

 

(a)           The Business is, and at all times has been, conducted and
operated in compliance in all material respects with any and all Environmental
Laws.  Seller has not, nor to Seller’s
Knowledge has any other Person for whose conduct Seller is responsible,
received any written order, notice or other communication of any actual or
potential uncured violation or uncured failure by Seller to comply with any
Environmental Laws, or of any obligation to undertake or bear the cost of any
Environmental, Health and Safety Liabilities with respect to the Business or
the Assets, or with respect to any property or Facility at or to which
Hazardous Materials were generated, manufactured, refined, transferred,
imported, used or processed by Seller (or any other Person for whose conduct
Seller is responsible) in connection with the Business, or from which Hazardous
Materials have been transported, treated, stored, handled, transferred,
disposed, recycled or received in connection with the Business.

 

(b)           There are no pending or, to the Knowledge of Seller,
threatened claims, Encumbrances, or other restrictions of any nature resulting
from any Environmental, Health and

 

24

 

Safety Liabilities or arising under or pursuant to
any Environmental Law with respect to the Business or the Assets.

 

(c)           To Seller’s Knowledge, Seller
has not treated, stored, disposed of, arranged for or permitted the disposal
of, transported, handled, manufactured, distributed, exposed any person to, or
released any substance, including any Hazardous Material, or owned or operated
any property or facility (and, to the Knowledge of Seller, no such property or
facility is contaminated by any such substance) so as to give rise to any
Environmental, Health and Safety Liabilities, including any liability for
fines, penalties, response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorneys’ fees, pursuant to
CERCLA or the RCRA, or any other Environmental, Health, and Safety
Requirements.

 

(d)           Seller has not
designed, manufactured, sold, marketed or distributed products or other items
containing asbestos, and is not and will not become subject to any liabilities
with respect to the presence of asbestos in any product or item.

 

(e)           There are no Hazardous Materials present on or in the
environment at any Facility or upon any Asset in violation of Applicable Law,
including any Hazardous Materials contained in barrels, above ground or
underground storage tanks, landfills, land deposits, dumps, equipment (whether
moveable or fixed) or other containers, either temporary or permanent, or
deposited or located in land, water, sumps, or any other part of any Asset or
upon any part of the Business, or upon any adjoining properties or incorporated
into any structure therein or thereon. 
The Seller had not permitted or conducted, and is not aware of, any
Hazardous Activity conducted with respect to any Asset or through any Business
in which the Seller has or had an interest except in compliance with all
applicable Environmental Laws.

 

(f)            There has been no material Release or, to the Knowledge
of Seller, threat of release, of any Hazardous Material at or from any Asset or
as a result of operation of the Business, or from any other property or asset
(whether real, personal or mixed) in which Seller has or had and interest.

 

(g)           To the Knowledge of Seller, Seller has delivered to Buyer
true and complete copies and results of any and all reports, environmental site
assessments, studies, analyses, tests, or monitoring possessed or initiated by
Seller, or of which Seller has Knowledge, pertaining to Hazardous Materials or
Hazardous Activities, in, on, or under the Assets, the Facilities, or
concerning compliance by the Seller with Environmental Laws.

 

3.21         Intellectual Property Assets.

 

(a)           Schedule 3.21 contains a complete and accurate list
and summary description of all Registered IP and all unregistered Trademarks,
including all registrations and applications to register all (a) Patents, (b) Trademarks,
(c) Copyrights, and (d) Domain Names, specifying in each case whether
owned by Seller or licensed to Seller. 
The Intellectual Property Assets and the Retained Software which is the
subject of the Transition Services Agreement constitute all intellectual
property rights necessary to the Business as currently conducted.

 

(b)           Seller is the owner of all right, title and interest in
and to, or has a valid and binding license to use, each of the Intellectual
Property Assets, free and clear of all

 

25

 

Encumbrances, to the extent required in connection
with the way in which Seller currently conducts the Business, to make, have
made, use, sell, import and export, distribute, publicly perform, publicly
display, reproduce, prepare derivative works of, and otherwise commercialize
the Intellectual Property Assets. 
Without limiting the generality of the foregoing, there are no
intellectual property rights of Third Parties that are included in the
Intellectual Property Assets, or to the extent that there are such Third Party
rights, the Intellectual Property Assets are being used pursuant to valid
licenses or other valid rights agreement that is listed in Schedule 3.21.

 

(c)           Except as disclosed on Schedule 3.21, (i) Seller
has not received any written notice that any Intellectual Property Asset, or
any use thereof, has interfered with, infringed upon or misappropriated any
intellectual property rights of any Third Party, and (ii) Seller has never
received any written charge, complaint, claim, demand or notice alleging any such
interference infringement, misappropriation or violation (including any claim
that Seller must license or refrain from using any intellectual property rights
of any Third Party).  Except as disclosed
on Schedule 3.21, to Seller’s Knowledge, no Third Party has interfered
with, infringed upon or misappropriated any Intellectual Property Assets, or
challenged the validity, enforceability or claim construction of any patent
rights in the Intellectual Property Assets, or Seller’s ownership or
registration of, or right to use, any Intellectual Property Asset.

 

(d)           Except as disclosed on Schedule 3.21, all material
registrations and applications for the Registered IP owned by Seller are in the
name of Seller, and are valid, in proper form, enforceable and subsisting.  All necessary registration and renewal fees
in connection with such registrations have been made, and all necessary
documents and certificates in connection with such registrations have been
filed with the relevant Governmental Authorities in all applicable United
States and Canada jurisdictions.  Seller
has made available to Buyer complete and accurate copies of all applications,
correspondence with any governing body, court or tribunal and all other material
documents relating to each item of Registered IP.  Except as disclosed on Schedule 3.21,
no material registration, or application therefor, for any of the Registered IP
has lapsed, expired or been abandoned, and no such registrations, or
applications therefor, are the subject of any opposition, interference,
cancellation, or other legal, quasi-legal, or governmental proceeding pending
before any Governmental Authority.

 

(e)           Except as disclosed on Schedule 3.21 or Schedule 3.13,
no approval or consent of any Person is needed so that the interest of Buyer in
the Intellectual Property Assets shall continue to be in full force and effect
following the transactions contemplated by this Agreement, and Seller is not
subject to any restriction, Contract, instrument, Order, judgment or decree
that would be violated or breached by the consummation of the Contemplated
Transactions, including any restriction on the direct or indirect transfer of
any license, or any interest therein, held by Seller in respect of the
Intellectual Property Assets.

 

3.22         Real Property.

 

(a)           Schedule 3.22 contains a complete and accurate list
of the following:

 

(i)            all real property and interests in real property and the
buildings, structures and improvements thereon (the “Owned Property”)
owned by Seller, or which Seller is contractually obligated to purchase;

 

26

 

(ii)           all leases or licenses of real property and interests in
real property and the buildings, structures and improvements thereon (the “Leased
Property”) pursuant to which Seller is the lessee or licensee;

 

(iii)          all contracts or options (and all amendments, extensions
and modifications thereto) held by Seller, or contractual obligations (and all
amendments, extensions and modifications thereto) on the part of Seller, to purchase,
acquire or lease any interest in real property;

 

(iv)          all contracts or options (and all amendments, extensions
and modifications thereto) granted by Seller, or contractual obligations (and
all amendments, extensions and modifications thereto) on the part of Seller, to
sell or dispose of any interest in real property; and

 

(v)           all policies of title insurance, if any, issued to and
owned by Seller with respect to the Owned Property.

 

(b)           The Facilities are sufficient for the conduct of the
Business as it is now being conducted. 
Seller has the right under valid and existing leases or other agreements
to occupy and use all Leased Property which it uses in the conduct of the
Business.  Neither the whole nor any
portion of the Facilities has been condemned, requisitioned or otherwise taken
by any Governmental Authority, and Seller has not received any written notice
that any such condemnation, requisition or taking is threatened, which
condemnation, requisition or taking would preclude or materially impair the
current use thereof.  All Improvements
constituting any part of the Facilities that are currently being used in the
conduct of the Business have been reasonably maintained, normal wear and tear
excepted.  All Facilities have received
all required Permits (including a certificate of occupancy or other similar
certificate permitting lawful occupancy of the Facilities) required in
connection with the operation thereof and have been operated and maintained in
accordance with Applicable Laws, rules and regulations.  All Facilities are supplied with adequate
utilities (including water, sewage, disposal, electricity, gas and telephone)
and other services necessary for the operation of such Facilities as currently
operated.  Buyer acknowledges that
certain portions of the slab floor of the Facility located in Vicksburg,
Mississippi have developed cracks as set forth in more detail on page 2 of
the appraisal dated March 30, 2010 with respect to such Facility provided
to Buyer prior to the date here.

 

(c)           Each Lease of a Facility is in full force and effect,
Seller is not in breach of or in default of its obligations under any such
Lease, and no event has occurred which, with notice or lapse of time or both
would constitute a breach or default or permit termination, modification or
acceleration thereunder and no such Lease is subject to any Encumbrance or
other restriction that substantially impairs the use of the property to which
it relates in the Business as now conducted.

 

(d)           Except as set forth on Schedule 3.22, Seller has
not received any written notice that it is in violation of any zoning, use,
occupancy, building, wetlands or environmental regulation, ordinance or other
law or requirement relating to the Facilities, which is uncured.  Seller has not received written notice of
any, and, to the Knowledge of Seller, there is no

 

27

 

threatened, eminent domain proceeding or proceeding
to change or redefine the zoning classification with respect to any of the
Facilities that would affect the Business as now conducted in such Facilities.

 

(e)           Seller has good, valid and marketable title to the Owned
Property, free and clear of any Encumbrance, except: (i) as reflected in
the Interim Balance Sheet; and (ii) Encumbrances as set forth in Schedule
3.22.

 

3.23         Products.

 

(a)           Except as disclosed on Schedule 3.23, on the
Closing Date, each product related to the Business and designed, manufactured,
sold or delivered by Seller was designed, manufactured, sold or delivered, as applicable,
in conformity with all Applicable Laws, Contracts, and all express and implied
warranties.

 

(b)           No product related to the Business that is designed,
manufactured, sold or delivered by Seller is subject to any guaranty, warranty,
or other indemnity or similar Liability beyond the applicable standard terms
and conditions of sale.  Schedule 3.23
includes copies of the standard terms and conditions of sale or lease for
products offered by Seller in connection with the Business (containing
applicable guaranty, warranty, and similar Liability indemnity provisions).

 

(c)           Except as set forth in Schedule 3.23, Seller has no
Liability arising out of any injury to Persons or property as a result of the
ownership, possession, or use of any product designed, manufactured, sold or
delivered by Seller in connection with the Business.

 

(d)           Except as set forth in Schedule 3.23, no product
designed, manufactured, sold or delivered by Seller in connection with the
Business has been subject to a recall by Seller, any Governmental Authority or,
to the Knowledge of Seller, any Third Person.

 

3.24         Relations with Suppliers and Customers.

 

(a)           Seller has not received any written, or to Seller’s
Knowledge, oral, notice from any supplier to Seller to the effect that such supplier
will stop, materially decrease the rate of, or materially change the terms
(whether related to payment, price or otherwise) with respect to, supplying
materials, products or services to Seller for purposes of, or in connection
with, the Business.

 

(b)           Seller has not received notice from any customer of the
Business to the effect that, and, to the Knowledge of Seller, there is no
reason to believe that, any such customer will stop, or materially decrease the
rate of, buying products or services from Seller or, following consummation of
the Contemplated Transactions, from Buyer.

 

3.25         Relationships with Affiliates.  Except as disclosed in Schedule 3.25,
no Affiliate of Seller has, or since January 1, 2007, has had, any
interest in any property (whether real, personal or mixed and whether tangible
or intangible) used in or pertaining to the Business, other than the Excluded
Assets and Parent’s ownership of the property to be subject to the Vacaville
Lease.  Seller does not own, and since January 1,
2007, has not owned, of record or as a

 

28

 

beneficial owner, an equity interest or any other
financial or profit interest in any Person that has (a) had business
dealings or a material financial interest in any transaction with Seller other
than business dealings or transactions disclosed in Schedule 3.25, each
of which has been conducted in the Ordinary Course of Business with Seller at
substantially prevailing market prices and on substantially prevailing market terms
or (b) except as disclosed in Schedule 3.25, engaged in competition
with Seller with respect to any line of the products or services of Seller (a “Competing
Business”) in any market presently served by Seller, except for ownership
of less than one percent (1%) of the outstanding capital stock of any Competing
Business that is publicly traded on any recognized exchange or in the
over-the-counter market.

 

3.26         Materials and Information.  All cost estimates, forecasts, projections
and other forward looking information, if any, regarding the Business that
Seller has provided to Buyer and its Representatives, were prepared in good
faith based upon assumptions believed to be reasonable at the time.

 

3.27         Solvency. 
Seller is not now insolvent and will not be rendered insolvent by any of
the Contemplated Transactions.  As used
in this section, “insolvent” means that the sum of the debts and other probable
Liabilities of Seller exceeds the present fair saleable value of Seller’s
assets.

 

3.28         Disclosure. 
Seller has provided or made available to Buyer correct and complete
copies of all documents listed or described in the Schedules.

 

3.29         Brokers or Finders. 
Neither Seller nor Parent nor any of its respective Representatives has
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders’ fees or agents’ commissions or other similar payments in connection
with the sale of the Business or the Assets for which Buyer or any of its
Affiliates will have responsibility.

 

ARTICLE 4

 

REPRESENTATIONS AND
WARRANTIES OF BUYER

 

Buyer
represents and warrants to Parent and Seller that the statements contained in
this ARTICLE 4  are
correct and complete as of the date hereof and will be correct and complete as
of the Closing Date (as though made then and except as expressly provided in a
representation or warranty, as though the Closing Date were substituted for the
date hereof throughout this ARTICLE 4).

 

4.1           Organization and Good Standing.

 

(a)           Buyer is incorporated in the State of Delaware.  Each of M&G and Buyer is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all of its
obligations.  Buyer is duly qualified to
do business as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities

 

29

 

conducted by it, requires such qualification, except
where the failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect on Buyer.

 

(b)           Buyer has no Subsidiaries and does not own any shares of
securities of any other Person.

 

4.2           Enforceability; Authority; No Conflict.

 

(a)           Upon the execution and delivery by each of M&G and
Buyer of the Transaction Documents to which it is a party, each Transaction
Document (assuming the due execution and delivery of the Transaction Documents
by Parent and Seller) will constitute a legal, valid and binding obligation of
each of M&G and Buyer, enforceable against each of M&G and Buyer in
accordance with the terms of such Transaction Document.

 

(b)           Each of M&G and Buyer has the absolute and
unrestricted right, power and authority to execute and deliver the Transaction
Documents to which it is a party and to perform its obligations under the
Transaction Documents, and such action has been duly authorized by all
necessary action by the shareholders and board of directors of each of M&G
and Buyer.

 

(c)           Neither the execution and delivery of the Transaction
Documents nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):  (i) Breach (A) any
provision of any of the Governing Documents of M&G or Buyer or (B) any
resolution adopted by the board of directors or the shareholders of M&G or
Buyer; (ii) Breach or give any Governmental Authority or other Person the right
to challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under any Applicable Law or any Order to which M&G or
Buyer or any of its assets may be subject; (iii) contravene, conflict with
or result in a violation or Breach of any of the terms or requirements of, or
give any Governmental Authority the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Permit that is held by Buyer or that otherwise relates
to its assets or business; (iv) Breach any provision of, or give any
Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or payment under, or to cancel,
terminate or modify, any contract to which Buyer is party; or (v) result in
the imposition or creation of any Encumbrance upon or with respect to any of
assets of Buyer.

 

(d)           Neither M&G nor Buyer is required to give any notice
to or obtain any Consent from any Person in connection with the execution and
delivery of the Transaction Documents or the consummation or performance of any
of the Contemplated Transactions.

 

4.3           Capitalization. 
M&G is and will be on the Closing Date the record and beneficial
owner and holder of all of the issued and outstanding equity securities of
Duinkerken B.V., which is and will be on the Closing Date the record and
beneficiary owner and holder of all of the issued and outstanding equity
securities of Buyer.  Buyer has funds and
net worth sufficient to make all payments when due that are or may be required
under any of the Transaction Documents and to conduct the Business from and
after the Closing in substantially the same manner as the Business is now being
conducted by Seller.  Buyer is not now
insolvent and will

 

30

 

not be rendered insolvent by any of the Contemplated
Transactions.  As used in this section, “insolvent”
means that the sum of the debts and other probable Liabilities of Buyer
exceeds, and immediately after the Closing will exceed, the present fair
saleable value of Buyer’s assets.

 

4.4           Certain Proceedings.  There is no pending Action that has been
commenced against Buyer or M&G and that challenges, or may have the effect
of preventing, delaying, making illegal or otherwise interfering with, any of
the Contemplated Transactions.  To Buyer’s
Knowledge, no such Action has been threatened.

 

4.5           Brokers or Finders. 
Neither Buyer nor M&G nor any of its respective Representatives has
incurred any Liability, contingent or otherwise, for brokerage or finders’ fees
or agents’ commissions or other similar payment in connection with the
Contemplated Transactions for which Parent or Seller or their Affiliates will
have responsibility.

 

ARTICLE 5

 

COVENANTS PRIOR TO CLOSING

 

5.1           Access and Investigation.

 

(a)           Between the date of this Agreement and the Closing Date,
and upon at least three (3) Business Days’ advance notice from Buyer, each
of Parent and Seller shall (i)  to the extent lawful, provide Buyer and
its Representatives (collectively, “Buyer Group”) with full and free
access, during regular business hours, to Seller’s president and chief
operating officer, to such other personnel of Seller as Seller may authorize in
the specific case (such authorization not to be unreasonably withheld), to the
Books and Records and to the properties, Contracts and Permits of the Business,
with such rights of access to be exercised in a manner that does not
unreasonably interfere with the operations of Parent or Seller;
(ii) furnish or make available to Buyer Group copies of all such Books and
Records and Contracts and Permits related to the Business as Buyer may
reasonably request; (iii) furnish or make available to Buyer Group such
additional financial, operating and other relevant data and information related
to the Business as Buyer may reasonably request; and (iv) otherwise
cooperate and assist, to the extent reasonably requested by Buyer, with Buyer’s
investigation of the Business and with the investigation related to the
financing that Buyer contemplates obtaining with respect to the Contemplated
Transactions.  Buyer and M&G jointly
and severally agree to indemnify and defend Seller and Parent and hold Seller
and Parent harmless from and against any and all mechanics’ liens and physical
damage to property or persons and claims arising therefrom resulting directly
from entry by any of Buyer, M&G and their Representatives on premises
occupied by Seller.

 

(b)           Seller shall arrange for Buyer and its Representative to
contact Seller’s customers, suppliers and other business relationships for the
purpose of ascertaining that the condition set forth in Section 7.3(b) has
been satisfied; provided that Buyer and its Representatives shall not have or
attempt to have any such contact except in the presence of an authorized Representative
of Seller.

 

(c)           On any termination of this Agreement without consummation
of the Contemplated Transactions, Buyer shall return to Seller all documents,
work papers and other

 

31

 

materials (including all copies thereof) in
connection with the Contemplated Transactions and shall observe and be bound by
the letter agreement dated January 6, 2010, between Parent and M&G
(the “Confidentiality Agreement”), as if Buyer were a signatory and a
party thereto.

 

(d)           SELLER SHALL PROMPTLY DELIVER TO BUYER ANY ENVIRONMENTAL
REPORTS AND OTHER WRITTEN INFORMATION REGARDING HAZARDOUS MATERIALS
SPECIFICALLY PREPARED FOR SELLER WITH RESPECT TO THE FACILITIES OR OTHERWISE IN
ITS POSSESSION OR UNDER ITS CONTROL (COLLECTIVELY, “ENVIRONMENTAL REPORTS”).  ANY ENVIRONMENTAL REPORTS DELIVERED OR TO BE
DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO BUYER MAY NOT BE
RELIED UPON BY BUYER IN CONNECTION WITH THE PURCHASE OF THE OWNED PROPERTY OR
THE ASSUMPTION OR ENTERING INTO ANY LEASES ON THE FACILITIES.  EXCEPT FOR ANY REPRESENTATIONS AND WARRANTIES
SET FORTH HEREIN, BUYER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR
OBLIGATION WHATSOEVER FOR ANY INACCURACY IN OR OMISSION FROM ANY ENVIRONMENTAL
REPORT AND BUYER WILL CONDUCT ITS OWN INVESTIGATION OF THE ENVIRONMENTAL
CONDITION OF THE FACILITIES TO THE EXTENT BUYER DEEMS SUCH AN INVESTIGATION TO
BE NECESSARY OR APPROPRIATE.

 

(e)           If Buyer desires to conduct on-site testing at any of the
Facilities (“Invasive Testing”), Buyer shall notify Seller of such
desire and Buyer shall perform, and Parent and Seller shall cooperate as may be
reasonable in, with respect to, such Invasive Testing in accordance with the
terms of the Invasive Testing Requirements set forth below:

 

(i)            Seller hereby grants to Buyer and its employees, agents,
contractors and consultants (collectively, “Buyer’s Consultants”), a
license to enter upon, in and below the surface of the Facilities (subject to
the rights of any lessors of any Leased Property to consent to such entry)  at reasonable times (the “License”)
for the purpose of performing certain environmental and other inspections on or
concerning, which inspections may include: 
(i) research regarding the Facilities as is generally conducted in
a Phase I environmental audit, (the “Phase One Investigation”); and (ii) such
other invasive investigations and tests of such Facilities as may be reasonably
approved by Seller, including the drilling of borings (including soil and gas
samplings and indoor air samplings) to ascertain the level of Hazardous
Materials (“Phase Two Investigation”). The Phase One Investigation and
Phase Two Investigation are sometimes collectively referred to herein as the “Investigation,”
which Investigation and all related activities or events shall be limited and
conducted as herein provided, all at Buyer’s sole cost and expense.

 

(ii)           Whenever Seller’s consent or approval is required pursuant
to any provision of this License, such consent must be in writing, shall not be
unreasonably withheld, conditioned or delayed and shall be given or denied with
the reasons therefor within five (5) Business Days of request.

 

(iii)          The term of the License shall terminate on termination of
this Agreement or on the Closing Date.

 

32

 

(iv)          Buyer shall obtain at its sole cost and expense all
governmental permits and authorizations required by any governmental agencies
for the Investigation.  Buyer shall, and
shall cause all of Buyer’s Consultants to, comply with all Applicable Laws and
requirements in connection with the Investigation; provided that neither Buyer
nor any of Buyer’s Consultants shall, with respect to any environmental matters
relating to the Facilities, deliver documents to or otherwise provide
information to any Governmental Authority without first consulting with Seller
regarding such requirement, except as may be required by court order or
governmental subpoena.

 

(v)           Prior to commencement of any Phase Two Investigation,
Buyer shall provide Seller and its environmental and other engineers and
consultants (collectively, “Seller’s Consultants”) with a complete set
of plans, drawings and specifications (the “Plans”) that define the work
to be performed on the Facilities pursuant to the Phase Two Investigation.
Buyer shall not commence any Phase Two Investigation unless and until Seller
approves the Plans, as modified, in writing (such approval not to be
unreasonably withheld).  All work shall
be done in accordance with the approved Plans and no change or modification
shall be permitted without the prior written consent of Seller.

 

(vi)          The Investigation shall be diligently performed and
prosecuted to completion in a manner that will not materially interfere with
the operation or use of the Facilities. Neither Buyer nor Buyer’s Consultants
shall enter Facilities without providing reasonable prior notice to Seller and,
if applicable, the lessors of the Leased Property.  Seller shall have the right at Seller’s cost
to be present during any part or all of the Investigation. At such time as the
Investigation or any portion thereof is completed, or any equipment or
materials are no longer required to continue the Investigation, Buyer shall, at
Buyer’s sole cost and expense, remove any and all equipment and materials used
in conducting the Investigation and upon completion of the Investigation shall
restore the Facilities to the condition existing prior to the
Investigation.  Buyer shall dispose of
all soil, gas, and groundwater samples obtained at, from or about the
Facilities in compliance with Applicable Law. 
Buyer shall keep the Facilities free and clear of all mechanics’,
materialmen’s and other liens resulting from the Investigation or any of its
other work under this License.

 

(vii)         Buyer agrees that the methods of performing the
Investigation will conform to the standards applied by a firm of environmental
or other appropriate consultants of national reputation specializing in work of
the type involved in the area in which the Facilities are located and will
comply with all Applicable Laws and all other applicable requirements of any
Governmental Authority.  Additionally,
where customary and appropriate, all soils, soil gas and water testing pursuant
to the Investigation shall be performed by a laboratory approved by the
Environmental Protection Agency or certified by the state in which the test
Facility is located.  Buyer shall provide
Seller with a copy of all reports prepared in connection with Buyer’s Phase Two
Investigation including, without limitation, the results of all testings.  If this Agreement is terminated Buyer will,
on request, provide Seller with copies of any reports obtained in connection
with the Facilities.

 

(viii)        The License shall be revocable as a
whole or in part by Seller immediately on termination of this Agreement or if
Buyer has failed to comply with any material

 

33

 

provision of this License if Buyer has not
substantially cured such failure within five (5) days following written
notice.

 

(ix)           To the extent permitted by Applicable Law, except as
provided below, Buyer shall protect, defend, indemnify and hold harmless Seller
and Seller’s Consultants, and any employee or agent of Seller or Seller’s
Consultants, and each of them, against and from any and all claims, demands,
causes of action, damages, costs, expenses, losses and liabilities, at law or
in equity, of every kind or nature whatsoever, arising out of or related to the
Investigation (other than discovery of existing conditions), any breach of this
License or any negligent or tortious act by Buyer or Buyer’s Consultants.  The foregoing obligation shall not cover any
claims, demands, causes of action, damages, costs, expenses, losses and
liabilities, at law or in equity, to the extent so attributable to (i) pre-existing
adverse conditions affecting the Facilities, (ii) the conduct of Seller or
any of its employees, agents, consultants, invitees or tenants, or (iii) Buyer’s
discovery of any information potentially having a negative effect on the
Facilities.

 

(x)            Buyer agrees to use commercially reasonable efforts to
purchase at its own expense and to keep in force during the term of any entry
upon the Facilities pursuant hereto commercial general liability insurance,
including public liability and property damage insurance, in the amount of at
least One Million Dollars ($1,000,000), combined single limit for personal
injuries or death of persons or property damage occurring in or about the
Facilities.

 

(xi)           Neither the review and approval by Seller or its agents of
Buyer’s plans, drawings and specifications nor physical inspection by Seller or
its agents of the Investigation or any other work done under this Agreement
shall be deemed a waiver of any rights Seller may have under this Agreement,
including this License.

 

(f)            AS-IS DISCLAIMERS.

 

(i)            EXCEPT AS SET FORTH OTHERWISE IN THIS AGREEMENT OR ANY OF
THE OTHER TRANSACTION DOCUMENTS, IT IS UNDERSTOOD AND AGREED THAT SOLELY
WITH RESPECT TO THE PHYSICAL CONDITION OF THE FACILITIES, SELLER IS NOT MAKING
AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR
CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION OF THE
FACILITIES.

 

(ii)           BUYER ACKNOWLEDGES AND AGREES THAT ON CLOSING SELLER AND
PARENT SHALL SELL AND CONVEY OR ASSIGN LEASES TO BUYER OR ENTER INTO LEASES
WITH BUYER WITH RESPECT TO THE FACILITIES AND EXCEPT AS EXPRESSLY PROVIDED
HEREIN TO THE CONTRARY BUYER SHALL ACCEPT SUCH FACILITIES “AS IS, WHERE IS,
WITH ALL FAULTS,” EXCEPT TO THE EXTENT PROVIDED OTHERWISE IN THIS AGREEMENT,
ANY OF SUCH LEASES OR ANY OF THE OTHER TRANSACTION DOCUMENTS. SOLELY WITH
RESPECT TO THE CONDITION OF THE FACILITIES, 
BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER AND PARENT ARE NOT
LIABLE FOR OR BOUND BY, ANY IMPLIED WARRANTIES, GUARANTIES, STATEMENTS,
REPRESENTATIONS OR INFORMATION PERTAINING OR RELATING TO THE FACILITIES EXCEPT
TO THE

 

34

 

EXTENT PROVIDED OTHERWISE IN THIS AGREEMENT, ANY OF
SUCH LEASES OR ANY OF THE OTHER TRANSACTION DOCUMENTS.

 

(iii)          EXCEPT WITH RESPECT TO ANY AND ALL OF

 

(1) ANY BREACH OF ANY REPRESENTATION, WARRANTY
OR COVENANT OF SELLER OR PARENT SET FORTH IN THIS AGREEMENT, ANY OF THE LEASES
OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR

 

(2) ANY THIRD PARTY CLAIM TO THE EXTENT
RELATING TO ANY ACT, OMISSION OR OCCURRENCE PRIOR TO THE CLOSING, OR

 

(3) ANY FRAUD OR INTENTIONAL MISREPRESENTATION
BY SELLER OR PARENT, (COLLECTIVELY, THE “NON-RELEASED CLAIMS”),

 

AND SOLELY WITH RESPECT TO THE CONDITION OF THE
VICKSBURG PROPERTY,

 

(A) ON CLOSING, BUYER SHALL ASSUME THE RISK
THAT ADVERSE MATTERS RELATING SOLELY TO THE CONDITION OF THE VICKSBURG PROPERTY, INCLUDING
CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS RELATING
SOLELY TO THE CONDITION OF THE VICKSBURG PROPERTY, MAY NOT HAVE BEEN
REVEALED BY BUYER’S INVESTIGATIONS, AND (B) BUYER, ON CLOSING, SHALL BE
DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER AND PARENT (AND SELLER’S
AND PARENT’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND
AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF
ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING
REASONABLE ATTORNEYS’ FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR
UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER OR PARENT
(OR SELLER’S OR PARENT’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES OR
AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT
CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, SOLELY WITH RESPECT TO THE
CONDITION OF THE VICKSBURG PROPERTY, IN EACH CASE (A) AND (B) ABOVE,
OTHER THAN WITH RESPECT TO THE NON-RELEASED CLAIMS.

 

(iv)          The release set forth herein (which excludes all
Non-Released Claims) includes claims, liabilities and other matters of which
Buyer is presently unaware or which Buyer does not presently suspect to exist
with respect to the Vicksburg Property which, if known by Buyer, may materially
affect Buyer’s willingness to enter into the release of the Seller relating
solely to the Vicksburg Property.  In
this connection and to the fullest extent permitted by law, and except for any
Non-Released Claims, Buyer hereby agrees, represents and warrants that Buyer
realizes and acknowledges that factual matters now unknown to it relating
solely to the condition of the Vicksburg Property may have given or may
hereafter give rise to causes of action, claims, demands, debts, controversies,
damages, costs, losses and expenses which are presently unknown, unanticipated
and unsuspected, and Buyer further agrees, represents and

 

35

 

warrants that the release relating solely to the
condition of the Vicksburg Property set forth herein has been negotiated and
agreed on in light of that realization and that Buyer nevertheless hereby
intends to release, discharge and acquit Seller and Parent and such other
Persons (set forth in (iii) above) from any such unknown causes of action,
claims, demands, debts, controversies, damages, costs, losses and expenses
relating solely to the Vicksburg Property, except for any liability of Seller
and Parent for any and all Non-Released Claims, which liability shall survive
the Closing for the period set forth herein. 
In connection with and only to the extent of the release relating solely
to the Vicksburg Property set forth in this Section 5.1(e), Buyer
expressly waives the benefits of Section 1542 of the California Civil Code
which provides as follows:

 

“A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing the
release, which if known by him or her must have materially affected his or her
settlement with the debtor.”

 

(v)           Notwithstanding anything to the contrary in this
Agreement, each of Seller and Parent acknowledge that Seller and Parent have
made, and Buyer and M&G have relied on, express representations and
warranties set forth in this Agreement, the leases relating to the leased
property and the other Transaction Documents with respect to, among other
things, the condition of the Facilities and the condition of the Vicksburg
Property, and the forgoing “as is” disclaimers and release set forth in this Section 5.1
shall in no way adversely affect Buyer’s or M&G’s reliance on such
representations and warranties or Seller’s and Parent’s obligation pursuant to Section 11.2
of this Agreement to indemnify the Buyer Indemnified Persons with respect to
any Breach of any representation or warranty of Parent of Seller in this
Agreement, any of such leases, or any other Transaction Document.

 

(g)           Seller acknowledges receipt from Buyer of that certain
preliminary title report prepared by Commonwealth Land Title Insurance Company
(“Title Company”) dated June 7, 2010, as report no. COM-563,
together with copies of all documents to which such report refers
(collectively, the “Title Report”). 
Buyer hereby approves exception nos. 2, 3 but only with respect to the
Restrictive Covenants adopted April 5, 1999 and recorded in Book 1168, Page 410
of the Land Records of Warren County, Mississippi, 4, 5, 7, 8 and 10 of the
Title Report (“Permitted Exceptions”) and agrees that Seller shall
convey the Vicksburg Property subject to the Permitted Exceptions and to taxes
and assessments not yet due and payable. Evidence of delivery of title to the
Vicksburg Property shall be the issuance by the Title Company of an ALTA Owners
Extended Policy covering the Vicksburg Property, in the amount equal to the
reasonable fair value subject only to the Permitted Exceptions and to taxes and
assessments not yet due and payable (the “Title Policy”). Buyer shall
timely cause an ALTA Survey of the Vicksburg Property to be delivered to the
Title Company. Seller shall promptly execute and deliver to the Title Company
(dated as of the date required by the Title Company) the form of Owner’s
Affidavit provided to Seller by the Title Company prior to Closing in
connection with issuance of the Title Policy.

 

(h)           The provisions of Sections 5.1(e), 5.1(f) and
5.1(g) and this Section 5.1(h)  shall survive the
Closing.

 

36

 

5.2           Operation of the Business by Seller.  Between the date of this Agreement and the
Closing, Seller shall (a) conduct the Business only in the Ordinary Course
of Business, (b) use its commercially reasonable efforts to preserve
intact its current business organization with respect to the Business, (c) use
its commercially reasonable efforts to keep available the services of its
officers, employees and agents and maintain its relations and goodwill with
suppliers, customers, landlords, creditors, employees, agents and others having
business relationships with the Business, and (d) not engage in any
practice, take any action, or enter into any transaction which, if engaged in,
taken or entered into at any time between March 31, 2010, and the date
hereof would be required to be set forth in Schedule 3.6.

 

5.3           Required Approvals. 
As promptly as practicable after the date of this Agreement, each Party
shall make all filings required by Applicable Laws to be made by it in order to
consummate the Contemplated Transactions. 
Each Party also shall cooperate with the other Parties and their
Representatives with respect to all filings that the other Party elects to make
or, pursuant to Applicable Laws, is required to make in connection with the
Contemplated Transactions. Each Party shall cooperate in good faith with the
other Parties and their Representatives in obtaining all Material Consents;
provided that Parent shall use such efforts as Parent considers reasonable and
appropriate to obtain any Material Consent relating to the Wells Credit
Agreement.

 

5.4           Notification.

 

(a)           Between the date of this Agreement and the Closing, each
Party shall promptly notify the other Parties in writing if it becomes aware of
(a) any fact or condition that causes or constitutes a Breach of such
Party’s representations and warranties made herein as of the date of this
Agreement, (b) the occurrence after the date of this Agreement of any fact
or condition that would or be reasonably likely to (except as expressly
contemplated by this Agreement) cause or constitute a Breach by such Party of
any such representation or warranty had that representation or warranty been
made as of the time of the occurrence of, or such Party’s discovery of, such
fact or condition, (c) any material development affecting the ability of
the Parties to consummate the Contemplated Transactions or (d) any
material development affecting the Assets or the Business.  Should any such fact or condition require any
change to any schedule hereto, the Party responsible for such schedule shall
promptly deliver to the other Parties a supplement to such schedule specifying
such change.  Such delivery shall not
affect any rights of the other Parties under Section 9.1, ARTICLE 11
or otherwise.  Between the date of this
Agreement and the Closing, each Party also shall promptly notify the other
Parties of the occurrence of any Breach by such Party of any covenant in this ARTICLE 5
or of the occurrence of any event that may make the satisfaction of the
conditions in ARTICLE 7 or ARTICLE 8 impossible or
unlikely.

 

(b)           Within ten (10) days of the date hereof, Seller shall
deliver to Buyer true, correct and complete copies of Schedules 1.1(f) and
3.15.

 

5.5           Exclusivity.

 

(a)           During the period from the date of this Agreement to the
Closing, each of Parent and Seller shall not, nor shall it authorize any of its
Representatives to, directly or

 

37

 

indirectly solicit or initiate any discussions with,
provide any information to, or negotiate with, any Third Party (any such
solicitations, discussions, furnishing of information or negotiations being
referred to as “Alternative Negotiations”), concerning any merger,
consolidation, sale of significant or substantial assets or similar transaction
relating to the Business or the Assets (any such transaction being referred to
herein as an “Acquisition Proposal”).

 

(b)           Seller shall immediately notify Buyer in writing if it
receives any Acquisition Proposal or request for information about Seller with
respect to an Acquisition Proposal.

 

5.6           Payment of Liabilities.  Seller shall pay or otherwise satisfy in the
Ordinary Course of Business all of Seller’s Retained Liabilities.

 

5.7           Risk of Loss. 
From the date hereof through the Closing Date, the risk of loss or
damage to the Assets shall be borne by Seller, and thereafter shall be borne by
Buyer.  If any material portion of the
Assets is destroyed or damaged before the Closing, other than use, wear or loss
in the Ordinary Course of Business, then Seller shall give written notice to
Buyer as soon as practicable (but in any event within five (5) days after
discovery of such damage or destruction) of the amount of insurance, if any,
covering such Assets and the amount, if any and to the extent reasonably
ascertainable, which Seller is otherwise entitled to receive as a
consequence.  Prior to the Closing, Buyer
shall have the option, which shall be exercised by written notice to Seller
within ten (10) days after receipt of Seller’s notice of (a) accepting
such Assets in their destroyed or damaged condition, in which event,
notwithstanding any other provision of this Agreement, Buyer shall be entitled
to the proceeds of any insurance or other proceeds payable with respect to such
loss, and the full Purchase Price shall be paid, (b) excluding such Assets
from this Agreement, in which event the Purchase Price shall be reduced by the
amount allocated to such Assets, as mutually agreed between Buyer and Seller,
and Seller shall be entitled to the proceeds of any insurance of other process
payable with respect to such loss, or (c) if such destroyed or damaged
Assets constitute greater than twenty percent (20%) of the total Assets,
terminating this Agreement.

 

5.8           Efforts to Close. 
Each of Parent and Seller shall use commercially reasonable efforts to
cause the conditions in ARTICLE 7 and Section 8.3 to be
satisfied.  Each of M&G and Buyer
shall use commercially reasonable efforts to cause the conditions in ARTICLE 8
and Section 7.5 to be satisfied.

 

5.9           Financial Statements and Reports; Filings.

 

(a)           No later than 15 days after the end
of each calendar month ending after the date hereof and before the Closing Date,
Seller will deliver to Buyer true and complete copies of the unaudited balance
sheet, and the related unaudited statement of operations, of the Business, as
of and for such month then ended which financial statements shall be prepared
on a basis consistent with Seller’s customary practice.

 

(b)           Seller will promptly deliver to Buyer
true and complete copies of such other financial statements, reports and
analyses relating to the Business as may be prepared or received by Seller or
as Buyer may otherwise reasonably request.

 

38

 

(c)           Seller will promptly deliver copies
of all Permit applications and other filings made by Seller in connection with
the operation of the Business after the date hereof and before the Closing Date
with any Governmental Authority (other than routine, recurring filings made in
the Ordinary Course of Business).

 

5.10         Transition Plan. 
Promptly following the date hereof, each of the Buyer and Seller shall
designate an employee reasonably acceptable to the other Party to serve as lead
transition contact to work with the other party to develop and agree prior to
the Closing Date on a detailed written transition plan relating to the
provision of services under the Transition Services Agreement.

 

ARTICLE 6

 

[INTENTIONALLY OMITTED]

 

ARTICLE 7

 

CONDITIONS PRECEDENT TO
BUYER’S OBLIGATION TO CLOSE

 

Buyer’s
obligation to purchase the Assets and to take the other actions required to be
taken by Buyer at the Closing is subject to the satisfaction, at or prior to
the Closing, of each of the following conditions (any of which may be waived by
Buyer, as a whole or in part):

 

7.1           Accuracy of Representations.  All of Parent’s and Seller’s representations
and warranties in this Agreement shall have been accurate in all material
respects as of the date of this Agreement, and shall be accurate in all
material respects as of the time of the Closing as if then made, giving effect
to any supplement to Seller’s schedules accepted by Buyer in Buyer’s sole
discretion.

 

7.2           Parent’s and Seller’s Performance.  Each of Parent and Seller shall have
delivered to Buyer all closing deliveries required to be delivered by it
pursuant to Section 2.2(a) and (c), and duly performed
and complied in all material respects with all of the other covenants and
obligations that Parent or Seller is required to perform or to comply with
pursuant to this Agreement at or prior to the Closing.

 

7.3           Consents.

 

(a)           Each Consent identified in Schedule 7.3(a) (the
“Material Consents”) shall have been obtained in a form reasonably
acceptable to Buyer and shall be in full force and effect.

 

(b)           Buyer shall have received reasonable assurances from the
material customers, suppliers and other material business relationships of the
Business identified in Schedule 7.3(b) that such Persons shall
continue to do business with Buyer following the Closing Date.

 

7.4           No Proceedings. 
Since the date of this Agreement, there shall not have been commenced or
threatened, any Action (a) involving any challenge to, or seeking damages
or other relief in connection with, any of the Contemplated Transactions or
(b) that may have the

 

39

 

effect of preventing, delaying, making illegal,
imposing limitations or conditions on or otherwise interfering with any of the
Contemplated Transactions.

 

7.5           No Conflict. 
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of, or cause Buyer
or any Affiliate of Buyer to suffer any adverse consequence under, any
Applicable Law or Order.

 

7.6           No Material Adverse Effect.  Since the date hereof, no Material Adverse
Effect shall have occurred with respect to Seller or the Business.

 

7.7           Permits. 
Buyer shall have received such Permits as are necessary to allow Buyer
to operate the Business and Assets from and after the Closing.

 

7.8           Due Diligence. 
Buyer shall have completed its due diligence relating to (i) the
Permits, (ii) any supplement to Seller’s schedules from and after the date
hereof and prior to the Closing, (iii) any supplemental disclosures by
Parent or Seller from and after the date hereof and prior to the Closing with
respect to Contemplated Transactions and (iv) any Phase 1 Environmental
Site Assessments relating to the Seller’s Facility located in Albany or the
Vacaville property subject to the Vacaville Lease and the results shall have
been satisfactory to Buyer.

 

7.9           Key Employees. 
Buyer shall have entered into acceptable employment arrangements with
each of the employees set forth in Schedule 7.9.

 

7.10         WARN Act.  Such
employee notice periods as are required, if any, by the WARN Act shall have
elapsed after receipt of all notices contemplated by Section 10.12(d)(ii).

 

7.11         Title Insurance; Estoppel Certificates, Environmental
Report.

 

(a)           Buyer shall have received the Title Policy from Title
Company, with respect to title to the Vicksburg Property and a current ALTA
survey with respect to the Vicksburg Property and a title policy with respect
to the Vacaville Property, in each case in form and substance reasonably
acceptable to Buyer.

 

(b)           Buyer shall have received estoppel certificates with
respect to each Leased Property certifying (i) that the Lease of such
Leased Property is unmodified and in full force and effect (or if there have
been modifications, a description of such modifications and that such Lease as
modified is in full force and effect), (ii) the dates to which rent has
been paid, (iii) that, to the knowledge of the landlord under such Lease,
such landlord is not in default under such Lease, (iv) that, to such
landlord’s knowledge, the tenant under such Lease is not in default under such
Lease or, if such landlord believes such tenant is in default, the nature
thereof in detail; provided that, notwithstanding the foregoing, if such
landlord fails or refuses to provide such estoppel certificate in a timely
manner, Buyer shall have received instead an estoppel certificate of Seller
certifying to such matters.

 

(c)           Acknowledging that Seller has delivered to Buyer a Phase I
Environmental Site Assessment prepared by Hazclean Environmental Consultants, Inc.,
No. 

 

40

 

10.1588.01 dated June 2010 (the “Vicksburg
Report”), Buyer may, after the date hereof and in its sole discretion,
engage a firm of licensed engineers (familiar with the identification of
Hazardous Materials) to conduct an environmental survey and assessment with
respect to the Vicksburg Property (“Supplemental Environmental Report”),
and if Buyer does so, the conclusions and recommendations of the Supplemental
Environmental Report shall not be materially and adversely different from the
conclusions and recommendations of the Vicksburg Report.

 

ARTICLE 8

 

CONDITIONS PRECEDENT TO PARENT’S
AND SELLER’S OBLIGATION TO CLOSE

 

Each
of Parent’s and Seller’s obligation to sell the Assets and to take the other
actions required to be taken by Parent or Seller at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Seller and Parent as a whole or in
part):

 

8.1           Accuracy of Representations.  All of Buyer’s representations and warranties
in this Agreement shall have been accurate in all material respects as of the
date of this Agreement, and shall be accurate in all material respects as of
the time of the Closing as if then made, giving effect to any supplement to the
Buyer’s schedules accepted by Seller and Parent.

 

8.2           Buyer’s Performance.  Each of Buyer and M&G shall have
delivered to Seller all closing deliveries required to be delivered by it
pursuant to Section 2.2(b) and (c), and duly performed
and complied in all material respects with all other covenants and obligations
that Buyer or M&G is required to perform or to comply with pursuant to this
Agreement at or prior to the Closing.

 

8.3           No Conflict. 
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of, or cause
Parent, Seller or any Affiliate of Parent or Seller to suffer any adverse
consequence under, any Applicable Law or Order.

 

8.4           WARN Act. 
Such employee notice periods as are required, if any, by the WARN Act
shall have elapsed after receipt of all notices contemplated by Section 10.12(d)(ii).

 

8.5           No Material Adverse Effect.  Since the date hereof, no Material Adverse
Effect shall have occurred with respect to Buyer or M&G.

 

ARTICLE 9

 

TERMINATION

 

9.1           Termination Events. 
By notice given prior to or at the Closing, subject to Section 9.2,
this Agreement may be terminated as follows:

 

(a)           by Buyer if a material Breach of any provision of this
Agreement has been committed by Parent or Seller and, if capable of cure (it
being understood that if such Breach is

 

41

 

not capable of cure, then Buyer may terminate by
notice immediately upon such Breach), such Breach has not been cured within
fifteen (15) days of the date of such Breach;

 

(b)           by Parent or Seller if a material Breach of any provision
of this Agreement has been committed by Buyer or M&G and, if capable of
cure (it being understood that if such Breach is not capable of cure, then
Parent or Seller may terminate by notice immediately upon such Breach), such
Breach has not been cured within fifteen (15) days of the date of such Breach;

 

(c)           by any Party that is not in material Breach of this
Agreement, if the Closing has not occurred on or before November 30, 2010;

 

(d)           by Buyer, as permitted by Section 5.7; or

 

(e)           by mutual written consent of the Parties.

 

9.2           Effect of Termination.  Any termination pursuant to Section 9.1
(other than a termination pursuant to Section 9.1(e) shall be
effected by written notice from the Party so terminating to the other Parties,
which notice shall specify the Section hereof pursuant to which this
Agreement is being terminated.  Each
Party’s right of termination under Section 9.1 is in addition to
any other rights it may have under this Agreement or otherwise, and the
exercise of such right of termination will not be an election of remedies.  In the event of termination of this Agreement
as provided in Section 9.1, this Agreement shall forthwith become
void except for this Section 9.2 and ARTICLE 12 and ARTICLE 13
provided, however, that, if this Agreement is terminated because of a Breach of
this Agreement by the non-terminating Party or because one or more of the
conditions to the terminating Party’s obligations under this Agreement is not
satisfied as a result of the Party’s failure to comply with its obligations
under this Agreement, the terminating Party’s right to pursue all legal
remedies will survive such termination unimpaired.

 

9.3           Mutual Termination Fee.  In the event of the intentional failure to
consummate the Contemplated Transactions by either of Buyer or M&G on the
one hand, or Seller or Parent on the other hand, when the respective conditions
to such Parties’ obligations to consummate the contemplated Transactions set
forth in ARTICLES 7 and 8, respectively have been satisfied (such
Party or Parties, the “Breaching Party”), such Breaching Party shall
promptly pay to the other Parties, provided such Parties are not in Breach of
this Agreement, a termination fee in the amount of FIVE HUNDRED THOUSAND
DOLLARS ($500,000) (the “Termination Fee”) which Termination Fee shall
not constitute liquidated damages or an election of remedies and shall in no
way affect such Parties’ right to pursue all legal remedies, which shall
survive unimpaired, provided, however, that the termination of this Agreement
by a Party in accordance with Section 9.1 above shall not
constitute an “intentional failure to consummate the Contemplated Transactions”
or otherwise obligate a Party to pay a Termination Fee.

 

ARTICLE 10

 

ADDITIONAL COVENANTS

 

10.1         Intentionally Omitted.

 

42

 

10.2         Intentionally Omitted.

 

10.3         Reports and Returns. 
Seller shall, and Parent shall cause Seller to, promptly after the
Closing prepare and file all reports and returns required by Applicable Laws
relating to the Business as conducted using the Assets, up to the Effective
Time.

 

10.4         Assistance in Proceedings.  Each Party will cooperate with the other
Parties and their respective Representatives in the contest or defense of, and
make available its personnel and provide any testimony and access to its books
and records in connection with, any Action involving or relating to
(a) any Contemplated Transaction or (b) any action, activity,
circumstance, condition, conduct, event, fact, failure to act, incident,
occurrence, plan, practice, situation, status or transaction on or before the
Closing Date involving the Business.

 

10.5         Business Relationships.  After the Closing, Seller will satisfy the
Retained Liabilities in a commercially reasonable manner.  Seller will refer to Buyer all inquiries
relating to the Buyer’s conduct of the Business after the Closing.  None of Parent, Seller, their Affiliates or
any Representatives of any of Parent, Seller or their Affiliates shall take any
action that would interfere with Buyer’s conduct of the Business after the
Closing in substantially the same manner as Seller conducted the Business
before the Closing.

 

10.6         Confidentiality. 
From and after the Closing, and except as otherwise required by
Applicable Law, judicial proceedings or Order, Parent, Seller and each of their
Affiliates shall hold all of the Confidential Information in confidence,
refrain from using any of the Confidential Information, and deliver promptly to
Buyer or destroy, at the request and option of Buyer, all tangible embodiments
(and all copies) of the Confidential Information which are in the possession of
Seller or any of its Affiliates.  If
Parent, Seller or any of their Affiliates is ever requested or required (by
oral question or request for information or documents in any Action) to
disclose any Confidential Information, then Parent shall notify Buyer promptly
of the request or requirement so that Buyer may seek an appropriate protective
order or waive compliance with this Section 10.6.  If, in the absence of a protective order or
the receipt of a waiver hereunder, such Person, on the written advice of
counsel, is compelled to disclose any Confidential Information to any
Governmental Authority or else stand liable for contempt, then such Person may
disclose the Confidential Information (and only such portion of the
Confidential Information as is required to be disclosed) to the Governmental
Authority; provided, however that such Person will use its
commercially reasonable efforts to obtain, at the request and expense of Buyer,
an order or other assurance (as Buyer may designate) that confidential
treatment will be given to such portion of the Confidential Information
required to be disclosed.

 

10.7         Consents.

 

(a)           If there are any Consents (other than any relating to the
Wells Credit Agreement) required in connection with the Contemplated
Transactions that have not yet been obtained (or otherwise are not in full force
and effect) immediately prior to the Closing, then, in the case of each
Assigned Contract as to which such Consents were not obtained (or otherwise are
not in full force and effect) (the “Restricted Contracts”), Buyer may
waive the closing conditions as to any such Consent and either:  (i) elect to have Seller continue its
efforts to obtain

 

43

 

such Consents; or (ii) elect to have Seller
retain that Restricted Contract and all Liabilities arising therefrom or
relating thereto.

 

(b)           If Buyer elects to have Seller continue its efforts to
obtain any such Consents and the Closing occurs, then notwithstanding Sections
1.1 and 1.3, no Transaction Document shall constitute a sale,
assignment, assumption, transfer, conveyance or delivery or an attempted sale,
assignment, assumption, transfer, conveyance or delivery of the Restricted
Contracts, and following the Closing, Seller shall use its commercially
reasonable efforts, and cooperate with Buyer, to obtain the Consent relating to
each Restricted Contract as quickly as reasonably practicable.  Pending receipt of such Consents relating to
any Restricted Contract, the Parties shall cooperate with each other in any
reasonable and lawful arrangements designed to provide to Buyer the benefits of
use of the Restricted Contract for its term (or any right or benefit arising
thereunder, including the enforcement for the benefit of Buyer of any and all
rights of Seller against a Third Party thereunder).  Once a Consent for the sale, assignment,
assumption, transfer, conveyance and delivery of a Restricted Contract is
obtained, Seller shall promptly assign, transfer, convey and deliver such
Restricted Contract to Buyer, and Buyer shall assume the obligations under such
Restricted Contract assigned to Buyer from and after the date of assignment to
Buyer pursuant to a special-purpose assignment and assumption agreement
substantially similar to the Assignment and Assumption Agreement (which
special-purpose agreement the Parties shall prepare, execute and deliver in
good faith at the time of such transfer, all at no additional cost to
Buyer).  If any such Consent shall not be
obtained, Seller shall cooperate with Buyer in any reasonable arrangement
designed to provide for Buyer the benefits intended to be assigned to Buyer
under the relevant Contract or Permit, including enforcement at the cost and
for the account of Buyer of any and all rights of Seller against the other
party thereto arising out of the breach or cancellation thereof by such other
party or otherwise.  If and to the extent
that such arrangement cannot be made, Buyer shall have no obligation pursuant
to Section 1.1 or otherwise with respect to any such Contract or
Permit.  The provisions of this Section 10.7
shall not affect the right of any Party not to consummate the Contemplated
Transactions if the condition to its obligations hereunder contained in Section 7.3
or Section 8.5 has not been fulfilled.

 

10.8         Retention of and Access to Records.  For seven (7) years after the Closing
Date, Seller, Parent and their Representatives shall have, during normal
business hours and on at least three (3) days’ prior written notice,
reasonable access to those Books and Records and other Records of Seller that
shall have been delivered to Buyer hereunder, as Seller or Parent reasonably
considers necessary to prepare financial statements or Tax returns, to deal
with Tax audits, in connection with product liability or employment matters, or
in connection with claims, disputes or litigation.  In addition, during such period, Buyer shall
make available to Seller and Parent on Seller’s or Parent’s reasonable request,
the services of employees of Buyer or M&G who shall have been employed by
Seller before the Closing, to provide advice, counsel and testimony regarding
any product liability or employment matters affecting Seller or Parent or in
connection with Third Party claims, disputes or litigation involving Seller or
Parent.

 

10.9         Mail and Receivables. 
Seller hereby irrevocably authorizes Buyer after the Closing to receive
and open all mail and other communications received by Buyer and relating to
the Business or the Assets and addressed or directed to Seller and to act with
respect to such communications in such manner as Buyer may elect, and to
endorse and cash any checks or

 

44

 

instruments payable or endorsed to Seller or its
order which are received by Buyer and which (a) relate to the Assets but
(b) are not Excluded Assets.  Seller
will promptly deliver to Buyer the original of any mail or other communication
received by Seller after the Closing that relates to the Business or the
Assets.  In addition, in the event that
any payment on Accounts Receivable or other assets included in the Assets is
received by Seller after the Closing Date, Seller will hold such amounts
received as trustee for, and remit such amounts to, Buyer by wire transfer of
immediately available funds as soon as practicable (and in any event within
five (5) Business Days following receipt thereof).

 

10.10       Insurance.  After
the Closing Seller or Parent shall obtain and maintain such insurance policies
providing commercially reasonable coverage.

 

10.11       Further Assurances. 
Each Party shall cooperate reasonably with the other Parties and their
respective Representatives in connection with any steps required to be taken as
part of their respective obligations under this Agreement, and shall (a) furnish
upon request to each other such further information; (b) execute and deliver
to each other such other documents; and (c) do such other acts and things,
all as the other Parties may reasonably request for the purpose of carrying out
the intent of this Agreement and the Contemplated Transactions.  Furthermore, the Parties agree to comply with
all Applicable Laws in connection with the Transaction Documents.

 

10.12       Employees and Employee Benefits.

 

(a)           Information on Active Employees.  For the purpose of this Agreement, the term “Active
Employees” shall mean all employees employed on the Closing Date by Seller
for its business who are employed exclusively in Seller’s Business as currently
conducted, including employees on temporary leave of absence, including family
medical leave, military leave, temporary disability or sick leave, but
excluding employees on long-term disability leave.

 

(b)           Employment Duration of Active Employees.  Except to the extent that Seller or Active
Employees may terminate the employment of Active Employees in its or their
discretion prior thereto, the Seller’s Active Employees shall remain in its
employment up to and including the time of the Closing.  Seller may retain the employment of its
non-Active Employees in its discretion. 
Prior to the Closing, Seller shall not terminate or materially alter the
terms of the employment of any Key Employee without the prior written consent
of Buyer.

 

(c)           Employment of Seller’s Employees by Buyer.

 

(i)            Except as expressly set forth in Section 10.12(d)(ii),
Buyer is not obligated to hire any of Seller’s Employees but may interview any
or all of Seller’s Employees in a time, place and manner that is not disruptive
of Seller’s operations.  At least twenty
(20) Business Days prior to the Closing Date and prior to the Buyer
interviewing any of Seller’s Employees, Seller shall assist Buyer in
distributing and receiving applications for employment with Buyer, which
applications shall be supplied by Buyer. 
Buyer will conduct interviews of those employees of Seller who submit
employment applications as expeditiously as possible prior to the Closing
Date.  Buyer will promptly provide (and
supplement) Seller with a list of Seller’s Employees to whom Buyer has made
offers of employment that have been accepted,

 

45

 

which acceptance is to be effective immediately
after the Closing.  Such of Seller’s
Employees who become employees of Buyer immediately after the Closing are
hereinafter called “Hired Employees”. 
Effective immediately after the Closing, Seller will terminate the
employment of all of its Hired Employees.

 

(ii)           It is understood and agreed that (A) Buyer’s
expressed intention to extend any offer of employment as set forth in this
section shall not constitute any commitment, Contract or understanding
(expressed or implied) of any obligation on the part of Buyer to a post-Closing
employment relationship of any fixed term or duration or upon any terms or
conditions other than those that Buyer may establish pursuant to individual
offers of employment, and (B) unless Buyer otherwise decides in its
discretion to offer different terms, Buyer intends to offer employment “at
will,” such that it may be terminated by Buyer or by an employee at any time
for any reason (subject to any written commitments to the contrary made by
Buyer or an employee and Applicable Law). 
Nothing in this Agreement shall be deemed to prevent or restrict in any
way the right of Buyer to terminate, reassign, promote or demote any of the
Hired Employees after the Closing or to change adversely or favorably the
title, powers, duties, responsibilities, functions, locations, salaries, other
compensation or terms or conditions of employment of such employees.

 

(iii)          Anything herein to the contrary notwithstanding, it is
understood and agreed that Buyer’s decisions whether to interview or offer
employment to any of Seller’s Employees are exclusively Buyer’s own, and that
Seller shall have no, and has not and will not have had any, authority or
participation in Buyer’s decisions in this regard or with respect to Buyer’s
employment interviews, offers, criteria or terms, or as to any other aspect of
Buyer’s hiring process, or as to any aspect of Buyer’s employment of or
termination of employment of Buyer’s Hired Employees, all of which are
exclusively Buyer’s own decisions and actions. 
No Representative of Seller shall have any authority to act as an agent
of Buyer for any purpose related to Buyer’s hiring, employment or termination
of employment of Buyer’s Hired Employees. 
Buyer shall indemnify Seller and hold Seller harmless from and against
any and all Losses arising out of or in any way related, as a whole or in part,
to Buyer’s hiring of, failure to hire, employment of, termination of, or
employment terms with respect to any of Seller’s Employees occurring on or
after the Closing Date as a result of an act or omission of Buyer.  Buyer covenants, represents and warrants that
any and all interviews, contacts and decisions made in the process of hiring or
not hiring any of the Seller’s Employees shall be in accordance with Applicable
Law.

 

(d)           Salaries and Benefits.

 

(i)            Seller shall be responsible, as and to the extent
required by Applicable Law, Seller’s severance policies or Contracts to which
Seller is a party, for (A) the payment of all wages and other remuneration
due to Active Employees with respect to their services as employees of Seller
through the close of business on the Closing Date; and (B) the provision
of health plan continuation coverage in accordance with the requirements of
COBRA or state law continuation coverage rights.

 

(ii)           Promptly after the date hereof, Seller shall provide any
and all notices necessary to fully comply with any potential responsibilities
it may have under the

 

46

 

Federal and California acts referred to as WARN
Acts; provided that, anything herein to the contrary notwithstanding, the
Closing shall not occur until at least sixty (60) days shall have elapsed after
all such notices are received and until any later date that Seller may determine
is required for full compliance with such WARN Acts.  Notwithstanding any other provisions of this
Agreement, and except as provided in Section 10.12(b), Seller’s New
York employees shall remain in Seller’s employ up through and including the
time of the Closing.  Buyer shall, prior
to Closing, offer employment to Seller’s New York employees which employment
shall commence immediately following the Closing and shall be on terms which
shall not result in an “employment loss” as defined by the New York Worker
Adjustment and Retraining Notification Act (“NY WARN”) such that Seller’s
New York employees shall have been “included in the sale” as defined under NY
WARN and such that no notice is required under NY WARN.

 

(iii)          Seller shall be liable for any claims by Active Employees
and their beneficiaries through the Closing Date under the Employee Benefit
Plans and under the WARN Act.  Buyer
shall be liable for any claims (including claims under NY WARN) on or after the
Closing Date (A) by Hired Employees and their beneficiaries arising from
any act or omission of Buyer or (B) by Seller’s Employees not hired by
Buyer arising from any act or omission of Buyer.  For purposes of the immediately preceding
sentence, a claim will be deemed incurred, in the case of hospital, medical or
dental benefits, when the services that are the subject of the claim are
performed and, in the case of other benefits (such as disability or life
insurance), when an event has occurred or when a condition has been diagnosed
that entitles the employee to the benefit.

 

(e)           Seller’s Employee Benefit Plans.  Seller (or Seller’s Employee Benefit Plans)
shall retain sole liability for the payment of benefits accrued under Seller’s
Employee Benefit Plans as of the Closing Date. 
Seller shall comply with ERISA and other Applicable Law in connection
with each Employee Benefit Plan.

 

(f)            No Transfer of Assets.  Seller shall not make any transfer of pension
or other Employee Benefit Plan assets to Buyer.

 

(g)           Collective Bargaining Matters.  Buyer will set its own initial terms and
conditions of employment for the Hired Employees and others it may hire,
including work rules, benefits and salary and wage structure, all as permitted
by law.  Buyer is exclusively responsible
for complying with any and all obligations it may have under the National Labor
Relations Act or any other labor relations law or legal requirement in
connection with the Contemplated Transactions, or following the Closing;
provided that Buyer is not obligated hereby to assume any collective bargaining
agreement.

 

(h)           General Employee Provisions.

 

(i)            Parent and Seller shall give any notices required by
Applicable Laws and take whatever other actions with respect to the plans,
programs and policies described in this Section 10.12(h) as
may be necessary to carry out the arrangements described in this Section 10.12(h) and
shall provide reasonable prior notice thereof to Buyer.

 

47

 

(ii)           Seller and Buyer shall provide each other with such plan
documents and summary plan descriptions, employee data or other information as
may be reasonably required to carry out the arrangements described in this Section 10.12
..

 

(iii)          If any of the arrangements described in this Section 10.12
are determined by the IRS or other Governmental Body to be prohibited by law,
Seller and Buyer shall modify such arrangements to as closely as possible
reflect their expressed intent and retain the allocation of economic benefits
and burdens to the Parties contemplated herein in a manner that is not
prohibited by law.

 

(iv)          Buyer shall be solely responsible for obtaining I-9 forms
in accordance with Applicable Law for any of the Hired Employees.  Within five (5) Business Days of Seller’s
receipt Buyer’s list of Hired Employees, Seller shall request consent in
writing from the Hired Employees to disclose any I-9 form contained in Seller’s
personnel records pertaining to such Hired Employees.  Subject to Applicable Law, Seller shall
provide Buyer with reasonable access after the Closing, on reasonable prior
notice during normal business hours, to those I-9 forms only of the Hired
Employees who so consented in writing; provided that such access is not
disruptive of the Seller’s operations.

 

(v)           Buyer shall not have any responsibility, liability or
obligation, whether to Active Employees, former employees, their beneficiaries
or to any other Person, with respect to any employee benefit plans, practices,
programs or arrangements (including the establishment, operation or termination
thereof and the notification and provision of COBRA coverage extension)
maintained by Seller.  Seller shall not
have any responsibility, liability or obligation, whether to Active Employees,
former employees, their beneficiaries or to any other Person, with respect to
any employee benefit plans, practices, programs or arrangements (including the
establishment, operation or termination thereof and the notification and
provision of COBRA coverage extension) maintained by Buyer.

 

10.13       Warranty Claims. 
From and after the Closing Date, Buyer shall be liable for satisfying
any claims of customers of the Business relating to claims under Seller’s
product warranties provided to customers in the Ordinary Course of Business for
products sold by Seller prior to the Closing (“Warranty Claims”) and
which are asserted by customers following the Closing Date, provided, however,
that for a period of ten (10) years following the Closing, Buyer shall be
liable for satisfying Warranty Claims only in an aggregate amount per year of
$35,000, and Seller shall promptly reimburse Buyer for the amount of all such
Warranty Claims in excess of such amount. 
Nothing in this Section 10.13 shall be construed to assign
to Buyer any Liability relating to any recall of, or product liability with
respect to, any products sold or manufactured by Seller prior to the Closing
Date, other than customer warranty claims arising in the Ordinary Course of
Business subject to the limitations set forth herein.

 

48

 

ARTICLE 11

 

INDEMNIFICATION; REMEDIES

 

11.1         Survival.

 

(a)           The
representations and warranties of Parent, Seller, M&G and Buyer contained
in any Transaction Document shall survive until the date that is eighteen
months from the Closing Date (the “Expiration Date”); provided, however,
that (i) the representations and warranties contained in Sections 3.1
(Organization and Good Standing), 3.2(b) (Due Authority), 3.3
(Capitalization), 3.9 (Title to Assets; Encumbrances), 3.17
(Prohibited Payments), 3.29 (Brokers or Finders), 4.1
(Organization and Good Standing), 4.2(b) (Due Authority), 4.3
(Capitalization), and 4.5 (Brokers or Finders) shall survive the Closing
Date indefinitely, and (ii) the representations and warranties contained
in Sections 3.18 (Taxes), 3.19 (Employment Matters and Employment
Benefit Plans) and 3.20 (Environmental, Health and Safety Matters) (Sections
3.1, 3.2(b), 3.3, 3.9, 3.17, 3.18, 3.19,
3.20, 3.29, 4.1, 4.2(b), 4.3 and 4.5 are
collectively referred to herein as the “Specified Representations”)
shall survive the Closing Date until the  sixtieth (60th) day after the expiration
of the respective statutes of limitation for Third Party Claims applicable to
the matters covered thereby.  The
covenants and other agreements of the Parties contained in the Transaction
Documents shall survive the Closing Date until they are performed, discharged
or terminated in accordance with their terms. 
The period from the Closing Date until the date upon which any
representation or warranty contained herein terminates if any, is referred to
herein as the “Survival Period” for such representation or
warranty.  The Parties specifically and
unambiguously intend that the Survival Periods that are set forth in this Section for
the representations and warranties contained herein shall replace any statute
of limitations for such representations or warranties that would otherwise be
applicable (including the statute of limitations prescribed by the law of the
State of California.

 

(b)           No Indemnified Person shall be entitled to make any claim
in respect of any representation or warranty after the expiration of its
applicable Survival Period, except that any claim initiated by an Indemnified
Person prior to the expiration of the applicable Survival Period, and the
representation or warranty to which such claim relates, shall survive until it
is settled or resolved pursuant to this Agreement.

 

11.2         Indemnification and Reimbursement by Parent and Seller.

 

(a)           Parent and Seller jointly and severally will indemnify,
defend and hold harmless M&G, Buyer and their respective Representatives,
shareholders and Affiliates (collectively, the “Buyer Indemnified Persons”),
and will reimburse the Buyer Indemnified Persons for any Losses, arising from,
related to or in connection with:

 

(i)            any Breach of any representation or warranty of Parent or
Seller contained in any Transaction Document;

 

(ii)           any Breach of any covenant or agreement of Parent or
Seller contained in any Transaction Document; or

 

(iii)          any Retained Liability.

 

(b)           Notwithstanding Section 11.2(a) Parent
and Seller shall only be obligated to indemnify the Buyer Indemnified Persons
under Section 11.2(a)(i) if the aggregate amount of Losses
claimed under Section 11.2(a)(i) exceeds Two Hundred Fifty
Thousand dollars ($250,000) (the “Basket Amount”) with a minimum claim
amount threshold of Twenty-Five 

 

49

 

Thousand dollars ($25,000) for each claim, but if the
aggregate of all Losses of the Buyer Indemnified Persons arising out of the
Transaction Documents exceeds the Basket Amount, then Parent and Seller shall
be obligated to indemnify the Buyer Indemnified Persons from the first dollar
of any Losses.

 

(c)           Notwithstanding Section 11.2(a) Parent
and Seller shall only be obligated to indemnify the Buyer Indemnified Persons
under Section 11.2(a)(i) for Losses claimed under Section 11.2(a)(i) up
to an aggregate of Seven Million Five Hundred Thousand Dollars ($7,500,000)
(other than arising from any Breach of any representation or warranty of Parent
of Seller set forth in Section 3.18 or 3.20 of this
Agreement), provided, Parent and Seller shall be obligated to indemnify the
Buyer Indemnified Persons up to an aggregate additional amount of Seven Million
Five Hundred Thousand Dollars ($7,500,000), for Losses claimed under Section 11.2(a)(i) arising
from any Breach of any representation or warranty of Parent of Seller set forth
in Section 3.18 or 3.20 of this Agreement.

 

11.3         Indemnification and Reimbursement by Buyer.

 

(a)           Buyer and M&G jointly and severally will indemnify,
defend and hold harmless Parent, Seller and their respective Representatives,
shareholders and Affiliates (collectively, the “Seller Indemnified Persons”),
and will reimburse the Seller Indemnified Persons for any Losses, arising from,
related to or in connection with:

 

(i)            any Breach of any representation or warranty of Buyer or
M&G contained in any Transaction Document;

 

(ii)           any Breach of any covenant or agreement of Buyer or
M&G contained in any Transaction Document;

 

(iii)          any Assumed Liability; or

 

(iv)          Any obligation or Liability related to any of the
Contemplated Transactions under or in connection with section 721 of the
Defense Production Act of 1950, as amended by the Foreign Investment and
National Security Act of 2007 (FINSA) (section 721) and as implemented by
Executive Order 11858, and regulations at 31 C.F.R. Part 800, or in
connection with any filing with or approval of the Committee on Foreign
Investment in the United States (CFIUS).

 

(b)           Notwithstanding Section 11.3(a), Buyer and
M&G shall only be obligated to indemnify the Seller Indemnified Persons
under Section 11.3(a)(i) if the aggregate amount of Losses
claimed under Section 11.3(a)(i) exceeds the Basket Amount
with a minimum claim amount threshold of Twenty-Five Thousand dollars $25,000
for each claim, but if the aggregate of all Losses of the Seller Indemnified
Persons arising out of the Transaction Documents exceeds the Basket Amount,
then Buyer and M&G shall be obligated to indemnify the Seller Indemnified
Persons from the first dollar of any Losses.

 

(c)           Notwithstanding Section 11.3(a), Buyer and
M&G shall only be obligated to indemnify Parent and Seller under Section 11.3(a)(i) for
Losses claimed under Section 11.3(a)(i) up to an aggregate of
Seven Million Five Hundred Thousand Dollars ($7,500,000).

 

50

 

11.4         Third Party Claims.

 

(a)           Promptly after receipt by a Person entitled to indemnity
under Section 11.2 or 11.3 (an “Indemnified Person”)
of notice of the assertion of a Third Party Claim against it, such Indemnified
Person shall give notice to the Person obligated to indemnify under such Section (an
“Indemnifying Person”) of the assertion of such Third Party Claim; provided,
that the failure to notify the Indemnifying Person will not relieve the
Indemnifying Person of any Liability that it may have to any Indemnified
Person, except to the extent that the Indemnifying Person demonstrates that the
defense of such Third Party Claim is prejudiced by the Indemnified Person’s
failure to give such notice.

 

(b)           If an Indemnified Person gives notice to the Indemnifying
Person pursuant to Section 11.4(a) of the assertion of a Third
Party Claim, then the Indemnifying Person shall be entitled to assume the
defense of such Third Party Claim.  After
notice from the Indemnifying Person to the Indemnified Person of its election
to assume the defense of such Third Party Claim, the Indemnifying Person shall
not, so long as it diligently conducts such defense, be liable to the
Indemnified Person under this Article 11 for any fees of other
counsel or any other expenses with respect to the defense of such Third Party
Claim, in each case, subsequently incurred by the Indemnified Person in
connection with the defense of such Third Party Claim, other than reasonable
costs of investigation.  If the
Indemnifying Person assumes the defense of a Third Party Claim, then no
compromise or settlement of such Third Party Claims may be effected by the
Indemnifying Person without the Indemnified Person’s Consent unless
(A) there is no finding or admission of any violation of Applicable Law or
any violation of the rights of any Person by the Indemnified Person;
(B) the sole relief provided is monetary damages that are paid in full by
the Indemnifying Person; and (C) the Indemnified Person has no Liability
with respect to any compromise or settlement of such Third Party Claims
effected without its Consent.  If notice
is given to an Indemnifying Person of the assertion of any Third Party Claim
and the Indemnifying Person does not, within thirty (30) days after the
Indemnified Person’s notice is given, give notice to the Indemnified Person of
the Indemnifying Person’s election to assume the defense of such Third Party
Claim, then the Indemnifying Person will be bound by any determination made in
such Third Party Claim or any compromise or settlement effected by the
Indemnified Person.

 

(c)           Notwithstanding the foregoing, the Indemnifying Person
will not be entitled to assume (or retain, as applicable) control of such
defense if (i) the claim for indemnification relates to or arises in
connection with any criminal Action against the Indemnified Person,
(ii) in light of any actual or potential conflict of interest, it would be
inappropriate for legal counsel selected by the Indemnifying Person to
represent the Indemnified Person, or (iii) the Indemnifying Person fails
to prosecute or defend such claim in good faith or fails to begin such
prosecution or defense in a timely manner.

 

(d)           Each Indemnifying Person hereby consents to the
nonexclusive jurisdiction of any court in which an Action in respect of a Third
Party Claim is brought against any Indemnified Person for purposes of any claim
that such Indemnified Person may have under this Agreement with respect to such
Action or the matters alleged therein, and such Indemnifying Person agrees that
process may be served on such Indemnifying Person with respect to such a claim
anywhere in the world.

 

51

 

(e)           With respect to any Third Party Claim subject to
indemnification under this ARTICLE 11:  (i)  the Indemnified Person and the
Indemnifying Person shall keep each other fully informed of the status of such
Third Party Claim and any related Actions at all stages thereof where such
Person is not represented by its own counsel, and (ii) the Parties agree
(each at its own expense) to render to each other such assistance as they may
reasonably require of each other and to cooperate in good faith with each other
in order to ensure the proper and adequate defense of any Third Party Claim.

 

(f)            With respect to any Third Party Claim subject to
indemnification under this ARTICLE 11, each Party agrees to
cooperate in such a manner as to preserve in full (to the extent possible) the
confidentiality of all confidential information and the attorney-client and
work-product privileges of the other Parties. 
In connection therewith, each Party agrees that:  (i) it will use its commercially
reasonable efforts, in respect of any Third Party Claim in which it has assumed
the defense, to avoid production of confidential information (consistent with
Applicable Law and rules of procedure), and (ii) all communications
between any Party and counsel responsible for or participating in the defense
of any Third Party Claim shall, to the extent possible, be made so as to
preserve any applicable attorney-client or work-product privilege.

 

11.5         Other Claims. 
A claim for indemnification for any matter not involving a Third Party
Claim may be asserted by notice to the party from whom indemnification is
sought.

 

11.6         Bar; Losses; Effect on Indemnity.

 

(a)           Notwithstanding anything to the contrary contained in this
Agreement, nothing in ARTICLE 11 shall operate to bar or limit any claim
arising from or based on fraud, criminal misconduct or willful misconduct.

 

(b)           For purposes of calculating the amount of Losses incurred
by a party seeking indemnification hereunder arising out of or resulting from
any Breach of a representation, warranty covenant or agreement contained herein
(but not for purposes of determining whether such a Breach has occurred),
references to “Material Adverse Effect” or materiality (or other similar terms)
shall be disregarded.

 

(c)           As used herein, Losses of a Person are not limited to
matters asserted by Third Parties, but include Losses incurred or sustained by
such Person in the absence of claims by Third Parties.

 

(d)           Subject to and except as otherwise provided in Section 11.1,
all indemnification rights under this ARTICLE 11 shall survive the
execution and delivery of the Transaction Documents and the consummation of the
Contemplated Transactions indefinitely, regardless of any investigation,
inquiry or examination made for or on behalf of, or any Knowledge of any
Indemnified Person or the acceptance by a Party of any certificate or opinion.

 

(e)           Any indemnification payments made pursuant to this ARTICLE 11
shall be treated as an adjustment to the Purchase Price unless otherwise
required by Applicable Laws.

 

52

 

ARTICLE 12

 

GENERAL PROVISIONS

 

12.1         Entire Agreement. 
This Agreement (which includes the exhibits and schedules hereto, which
are incorporated herein by reference) and the Confidentiality Agreement
together contain the entire agreement of the parties and supersede any and all
prior or contemporaneous negotiations, correspondence, understandings and
agreements between or among the parties, written or oral (including the Letter
of Intent dated May 14, 2010, which is hereby cancelled), regarding the
subject matter hereof; provided that Seller and Buyer (in addition to Parent
and M&G) shall be deemed to be parties to and bound by the Confidentiality
Agreement, which shall continue in effect until the Closing, when it shall
expire and terminate.

 

12.2         Notices.  All
notices, Consents and other communications required or permitted by this
Agreement shall be in writing and shall be (a) delivered to the appropriate
address by hand, by nationally recognized overnight service or by courier
service (costs prepaid); (b) sent by facsimile, or (c) sent by
registered or certified mail, return receipt requested, in each case to the
following addresses or facsimile numbers and marked to the attention of the
person (by name or title) designated below (or to such other address, facsimile
number or person as a Party may designate by notice to the other Parties):

 

Parent
or Seller:

 

Simpson
Manufacturing Co., Inc.

5956
W. Las Positas Blvd.

Pleasanton,
CA 94588

Attention:  Chief Financial Officer

Facsimile
no.:  (925) 833-1496

 

with
a copy (which shall not constitute notice) to:

 

Shartsis
Friese LLP

One
Maritime Plaza, 18th Floor

San
Francisco, CA 94111-3598

Attention:  Douglas L. Hammer

Facsimile
no.:  (415) 421-2922

 

Buyer
or M&G:

 

M &
G Holding

Dr. A.F.
Philipsweg 39

9403
AD Assen - Holland

P.O. Box
77,

9400
AB Assen  Nederland

Attention:
Wim Straver

Facsimile
no.:  +31 (0) 592 340 825

 

53

 

with
a copy (which shall not constitute notice) to:

 

Sheppard,
Mullin, Richter & Hampton LLP

1111
Chapala Street, Third Floor

Santa
Barbara, CA 93101

Attention:  Ian Smith

Facsimile
no.:  (805) 879-1871

 

All
notices, Consents, waivers and other communications shall be deemed have been
duly given (as applicable):  if delivered
by hand, when delivered by hand; if delivered by overnight service, when
delivered by nationally recognized overnight service; if delivered by courier,
when delivered by courier; if sent via registered or certified mail, five (5) Business
Days after being deposited in the mail, postage prepaid; or if delivered by
facsimile, when transmitted if transmitted without indication of delivery
failure prior to 5:00 p.m. local time for the recipient (and if
transmitted without indication of delivery failure after 5:00 p.m. local
time for the recipient, then delivery will be deemed duly given at 9:00 a.m.
local time for the recipient on the next Business Day).

 

12.3         Enforcement of Agreement.  Each of Parent and Seller acknowledges and
agrees that Buyer would be irreparably damaged if any of the provisions of Section 5.5
of this Agreement are not performed in accordance with their specific terms and
that any Breach of this Agreement by Parent or Seller could not be adequately
compensated by monetary damages alone. 
Accordingly, in addition to any other right or remedy to which Buyer may
be entitled, at law or in equity, it shall be entitled to enforce Section 5.5
of this Agreement by a decree of specific performance and to temporary,
preliminary and permanent injunctive relief to prevent Breaches or threatened
Breaches of any of the provisions of this Agreement, without posting any bond,
proving the inadequacy of money damages or other undertaking.  Further, each of Parent and Seller hereby
waives any claim or defense that there is an adequate remedy at law for such
Breaches or threatened Breaches of Section 5.5 of this Agreement.

 

12.4         Modifications; Waiver; Remedies Cumulative.  No provision of this Agreement may be
amended, supplemented, waived or otherwise modified except by a written
agreement signed by the Parties (except for assignments as permitted in Section 12.7).  The rights and remedies of the Parties
hereunder are cumulative and not alternative. 
Neither any failure nor any delay by any Party in exercising any right,
power or privilege under this Agreement or any of the documents referred to in
this Agreement will operate as a waiver of such right, power or privilege, and
no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege.  To the maximum extent permitted by Applicable
Law, (a)  no waiver that may be given by a Party will be applicable
except in the specific instance for which it is given, and (b) no notice
to or demand on one Party will be deemed to be a waiver of any obligation of
that Party or of the right of the Party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
other Transaction Documents.

 

12.5         Expenses. 
Except as otherwise provided in this Agreement, each Party will bear its
respective fees and expenses incurred in connection with the preparation,
negotiation, 

 

54

 

execution and performance of the Transaction
Documents and the Contemplated Transactions, including all fees and expense of
its Representatives.

 

12.6         Public Announcements. 
Any public announcement, press release or similar publicity with respect
to this Agreement or the Contemplated Transactions will be issued, if at all,
at such time and in such manner as the Parties may mutually agree, including as
contemplated by Section 10.12(d)(ii).  Except with the prior Consent of Buyer or as
otherwise permitted by this Agreement, none of Parent, Seller, their Affiliates
or any of their respective Representatives shall disclose to any Person
(a) the fact that any Confidential Information has been disclosed to Buyer
or its Representatives, that any Confidential Information of Buyer has been
disclosed to Parent, Seller or their Representatives or (b) any
information about the Contemplated Transactions, including the status of such
discussions or negotiations, the execution of any documents (including this
Agreement) or any of the terms of the Contemplated Transactions or the related
documents (including this Agreement). 
Subject to Section 10.12(d)(ii), Parent, Seller and Buyer will
consult with each other concerning the means by which Seller’s employees,
customers, suppliers and others having dealings with Parent or Seller will be
informed of the Contemplated Transactions, and Buyer will have the right to be,
or have a Representative be, present for any such communication.  Notwithstanding any other provision hereof to
the contrary, (a) without the prior consent of Parent, Buyer and M&G
shall not, and shall not suffer or permit any Person to, issue any public
notice, press release or other publicity concerning the existence or any of the
terms and conditions of this Agreement or any of the Contemplated Transactions,
and (b) Parent may issue any public notice, press release or other
publicity concerning this Agreement or any transaction contemplated hereby that
Parent believes in good faith is required by the United States Securities
Exchange Act of 1934 and the rules and regulations thereunder, by any
other Applicable Law or by the rules of the New York Stock Exchange, Inc.

 

12.7         Assignments, Successors and No Third Party Rights.  Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any Party hereto without
the prior written consent of the other Party hereto and any attempt to do so will
be void, except (a) for assignments and transfers by operation of law, (b) M&G
and Buyer on the one hand, and Parent and Seller on the other, may assign any
or all of its rights, interests and obligations hereunder to a wholly-owned
subsidiary, provided that any such subsidiary agrees in writing to be bound by
all of the terms, conditions and provisions contained herein, (c) Buyer
may assign any or all of its rights, interests and obligations hereunder any
post-Closing purchaser of the Business or substantially all of the Assets or (d) M&G
and Buyer on the one hand, and Parent and Seller on the other, may assign any
or all of its rights, interests and obligations hereunder to any financial
institution providing purchase money or other financing to such Party from time
to time as collateral security for such financing, but no such assignment
referred to in clause (b), (c) or (d) shall relieve such Party of its
obligations hereunder.  Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of
and is enforceable by the Parties and their respective successors and assigns.
Nothing expressed or referred to in this Agreement will be construed to give
any Person other than the Parties any legal or equitable right, remedy or claim
under or with respect to any provision of this Agreement, except such rights as
shall inure to a successor or permitted assignee pursuant to this paragraph.

 

55

 

12.8                           Severability.  If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.  Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.

 

12.9                           Governing Law.  This Agreement will be governed by and
construed under the internal laws of the State of California applicable to a
contract made and performed in that state, without regard to choice of law or
conflict of law principles.

 

12.10                     Jurisdiction;
Venue.  The Parties agree that all
actions or proceedings arising in connection with this Agreement shall be
initiated and tried exclusively in the State and Federal courts located in the
City and County of San Francisco, State of California.  The aforementioned choice of venue is
intended by the Parties to be mandatory and not permissive in nature, thereby
precluding the possibility of litigation between the Parties with respect to or
arising out of this Agreement in any jurisdiction other than that specified in
this Section 12.10.  Each
Party hereby waives any right it may have to assert the doctrine of forum non
conveniens or similar doctrine or to object to venue with respect to any
proceeding brought in accordance with this paragraph, and stipulates that the
State and Federal courts located in the City and County of San Francisco, State
of California, shall have in personam jurisdiction and venue over each of them
for the purposes of litigating any dispute, controversy or proceeding arising
out of or related to this Agreement. 
Each Party hereby authorizes and accepts service of process sufficient
for personal jurisdiction in any action against it as contemplated by this Section 12.10
by registered or certified mail, return receipt requested, postage prepaid, to
its address for the giving of notices as set forth in this Agreement, or in the
manner set forth in Section 12.2 of this Agreement for the giving
of notice.  Any final judgment rendered
against a Party in any action or proceeding shall be conclusive as to the
subject of such final judgment and may be enforced in other jurisdictions in
any manner provided by law.

 

12.11                     Attorneys’ Fees.  If any Action is brought for the enforcement
of this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing Party shall be entitled to recover reasonable
attorneys’ fees and other costs incurred in that Action, in addition to any
other relief to which it may be entitled.

 

12.12                     Time of Essence.  With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.

 

12.13                     Execution of
Agreement.  The
exchange of copies of this Agreement or any other Transaction Document and of
signature pages by facsimile or electronic transmission shall constitute
effective execution and delivery thereof as to the Parties and may be used in
lieu of the original thereof for all purposes. 
Signatures of the Parties transmitted by facsimile or electronic
transmission shall be deemed to be their original signatures for all
purposes.  At the request of any Party,
any facsimile or electronic document shall be re-executed in original form by
the Parties who executed the facsimile or electronic document.  This Agreement may be executed in any number
of counterparts, or by different parties in different counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

56

 

ARTICLE 13

 

DEFINITIONS AND USAGE

 

13.1                           Definitions.  For purposes of this Agreement, the following
terms and variations thereof have the meanings specified or referred to in this
Section 13.1:

 

“Accounts
Payable”  means all obligations of
Seller with respect to accounts payable reflected or reserved against in the
Interim Balance Sheet or those arising in the Ordinary Course of Business since
March 31, 2010.

 

“Accounts
Receivable” means (a) all billed and unbilled trade accounts
receivable and other rights to payment from customers of the Business and the
full benefit of all security for such accounts or rights to payment, including
all trade accounts receivable representing amounts receivable in respect of
goods shipped or products sold or services rendered to customers of the
Business, (b) all other accounts or notes receivable that have arisen in
the Business and the full benefit of all security for such accounts or notes
and (c) any claim, remedy or other right related to any of the foregoing;
provided that no note, debt, duty, obligation or liability of any Affiliate of
Seller, and no security therefor or right to payment thereof or claim, remedy
or right related thereto, are or shall be deemed to be “Accounts Receivable.”

 

“Action”
means any action, arbitration, audit, hearing, investigation, litigation or
suit (whether civil, criminal, administrative, judicial or investigative,
whether formal or informal, whether public or private) commenced, brought,
conducted or heard by or before, or otherwise involving, any Governmental
Authority or arbitrator.

 

“Affiliate”
means, with respect to any specified Person, a Person that, directly or
indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with, such specified Person.  For this definition, “control” (and its
derivatives) means the possession, directly or indirectly, or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting interests, as trustee
or executor, by Contract or otherwise.

 

“Applicable
Law” means, with respect to any Person, each and any of the following that
is applicable to such Person:  federal,
state, local, municipal, foreign, international, multinational or other
constitution, law, ordinance, principle of common law, code, rule, regulation,
statute or treaty, in each of the foregoing cases.

 

“Books
and Records” means originals, if available and copies if not, of all of
Seller’s books, data, files and Records used
in the Business, whether in print, electronic or other media, including:  engineering drawings; designs; tool designs;
manufacturing plans; quality plans; engineering notebooks; laboratory papers,
reports and test results; engineering plans and reports; production
plans/documentation, work papers and process aides; operations and maintenance
manuals, any other technical data, information or manufacturing/production
documentation; correspondence; sales data; information relating to customers;
mailing lists; brochures; advertising materials; business and marketing plans;
sales literature; promotional literature; customer, supplier and distributor
lists; display units; listings; and purchasing records; 

 

57

 

provided, however,
that Books and Records excludes (a) items related to Excluded Assets or
Excluded Liabilities and (b) originals that Seller is permitted by this
Agreement or required by law to retain in its possession.

 

“Breach”
means any breach of, or any inaccuracy in, any representation or warranty or
any breach of, or failure to perform or comply with, any covenant or
obligation, in or of this Agreement or any other Contract, or any event which
with the passing of time or the giving of notice, or both, would constitute
such a breach, inaccuracy or failure.

 

“Business
Day” means any day other than (a) Saturday or Sunday or (b) any
other day on which banks in San Francisco, California, are permitted or
required to be closed.

 

“Closing
Date” means the date on which the Closing actually takes place.

 

“Code”
means the Internal Revenue Code of 1986.

 

“Confidential
Information” means any confidential or secret information that relates to
the Assets or the Business or to the business of any of customers, suppliers or
other business relationships of the Business.

 

“Consent”
means any approval, consent, ratification, waiver or other authorization.

 

“Contemplated
Transactions” means all of the transactions contemplated by this Agreement
and the other Transaction Documents.

 

“Contract”
means any agreement, contract, Lease, consensual obligation, promise or
undertaking (whether written or oral and whether express or implied).

 

“Employee
Benefit Plan” means each plan, program, policy, contract, agreement
(including Employee Agreements), or other arrangement providing for
compensation, deferred compensation, retirement, profit sharing, savings,
pension, bonus, incentive, severance, termination pay, performance awards,
stock or stock related awards, phantom equity, health insurance, life
insurance, disability, fringe benefits or other employee benefits of any kind,
whether formal or informal, funded or unfunded, written or oral and whether or
not legally binding, including each “employee benefit plan” within the meaning
of Section 3(3) of ERISA that is sponsored, maintained or contributed
to by Seller or to which Seller has any Liability.

 

“Encumbrance”
means any charge, claim, community or other marital property interest,
condition, equitable interest, lien, option, pledge, security interest,
mortgage, right of way, easement, encroachment, servitude, right of first
option, right of first refusal or similar restriction, including any
restriction on use, voting (in the case of any security or equity interest),
transfer, receipt of income or exercise of any other attribute of ownership.  Notwithstanding the foregoing, the following
shall not constitute Encumbrances: 
(a) encumbrances for Taxes not yet due and payable and for which
there are adequate reserves on the books of the Person in question; (b) workers’
or unemployment compensation liens arising in the Ordinary Course of Business;
(c) mechanic’s, materialman’s, supplier’s, vendor’s or similar liens
arising in the Ordinary Course of Business securing amounts that are not
delinquent or past due; (d) purchase 

 

58

 

money
security interests arising in the Ordinary Course of Business; (e) zoning
ordinances, easements and other restrictions of legal record affecting real
property that would be revealed by a current ALTA survey of the real property;
and (f) all recorded exceptions to title in existence on the Facilities
that are in existence on the date of this Agreement, other than mechanic’s
liens, mortgages, security interests, rights of first option or rights of first
refusal that were created by or are the responsibility of Seller or Parent
hereunder.

 

“Environment”
means soil, land surface or subsurface strata, surface waters (including
navigable waters and ocean waters), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life and any
other environmental medium or natural resource.

 

“Environmental,
Health and Safety Liabilities” means any Liabilities or Losses arising from
or under any Environmental Law or Occupational Safety and Health Law, including
those consisting of or relating to:  (a) any
environmental, health or safety matter or condition (including on-site or
off-site contamination, occupational safety and health and regulation of any
chemical substance or product); (b) any fine, penalty, judgment, award,
order, settlement, legal or administrative proceeding, Loss, claim, demand or
response, investigation, remedial or inspection cost or expense arising under
any Environmental Law or Occupational Safety and Health Law; (c) financial
responsibility under any Environmental Law or Occupational Safety and Health
Law for cleanup or investigation costs or corrective action, including any
cleanup, removal,  site assessment,
containment or other remediation or response actions (“Cleanup”)
required by any Environmental Law or Occupational Safety and Health Law
(whether or not such Cleanup has been required or requested by any Governmental
Authority or any other Person) and for any natural resource damages; or (d) any
other compliance, investigative, corrective or remedial measure required under
any Environmental Law or Occupational Safety and Health Law.  The terms “removal,” “remedial” and “response
action” include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”).

 

“Environmental
Laws” shall mean any Applicable Law relating to pollution, protection or
cleanup of the Environment (including ambient air, surface water, groundwater,
land surface or subsurface strata), including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Resources Conservation
and Recovery Act of 1976 (the “RCRA”), and any other federal, state, and
local legal requirements relating to: 
(a) a Release or the containment, investigation, assessment,
removal, remediation, response, cleanup or abatement of a Hazardous Material;
(b) the manufacture, generation, formulation, processing, labeling,
distribution, introduction into commerce, use, treatment, handling, storage, or
transportation of a Hazardous Material; (c) exposure of Persons, including
employees, to a Hazardous Material; (d) occupational safety or health
matters; and (e) the physical structure or condition of a building,
facility, fixture or other structure, including those relating to the
management, use, storage, disposal, cleanup or removal of asbestos,
asbestos-containing materials, polychlorinated biphenyls or any other Hazardous
Material.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974.

 

59

 

“Facilities”
means the Owned Property, the Leased Property and any other real property,
leasehold or other interest in real property currently operated by Seller in
connection with the Business.  Notwithstanding
the foregoing, for purposes of the definitions of “Remedial Action” and Section 3.22,
“Facilities” shall mean any real property, leasehold or other interest in real
property currently or formerly owned or operated by Seller in connection with the
Business.

 

“GAAP”
means generally accepted accounting principles for financial reporting in the
United States, applied on a consistent basis.

 

“Governing
Documents” means with respect to any particular entity, (a) if a
corporation, the articles or certificate of incorporation and the bylaws; (b) if
a general partnership, the partnership agreement and any statement of
partnership; (c) if a limited partnership, 
the limited partnership agreement and the certificate of limited
partnership; (d) if a limited liability company, the articles or
certificate of organization or formation and operating agreement; (e) if
another type of Person, any other charter or similar document adopted or filed
in connection with the creation, formation or organization of the Person; (f) all
equity holders’ agreements, voting agreements, voting trust agreements, joint
venture agreements, registration rights agreements or other agreements or
documents relating to the organization, management or operation of any Person
or relating to the rights, duties and obligations of the equity holders of any
Person; and (g) any amendment or supplement to any of the foregoing.

 

“Governmental
Authority” means any foreign, domestic, federal, territorial, state or
local governmental authority, quasi-governmental authority, multinational
organization, court, tribunal, commission, board, bureau, agency or
instrumentality, or any regulatory, administrative or other department, agency,
or any political or other subdivision, department, branch, official of any of
the foregoing.

 

“Hazardous
Material” shall mean any toxic substance or waste, pollutant, hazardous
substance or waste, contaminant, special waste, industrial substance or waste,
petroleum or any fraction of petroleum, any petroleum-derived substance or
waste, asbestos, myotoxia, urea formaldehyde or any toxic or hazardous
constituent or any such substance or waste, including any substance regulated
under or defined by Environmental Laws.

 

“Indebtedness”
of any Person means, without duplication, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind,
(b) all obligations of such Person evidenced by (or which customarily
would be evidenced by) bonds, debentures, notes or similar instruments,
(c) all reimbursement obligations of such Person with respect to letters
of credit and similar instruments, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to property
or assets purchased by such Person, (e) all obligations of such Person
incurred, issued or assumed as the deferred purchase price of property other
than accounts payable incurred and paid on terms customary in the business of
such Person (it being understood that the “deferred purchase price” in connection
with any purchase of property or assets shall include only that portion of the
purchase price which is deferred beyond the date on which the purchase is
actually consummated), (f) all obligations secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any lien on property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (g) all
obligations of 

 

60

 

such
Person under forward sales, futures, options and other similar hedging
arrangements (including interest rate hedging or protection agreements),
(h) all obligations of such Person to purchase or otherwise pay for
merchandise, materials, supplies, services or other property under an
arrangement which provides that payment for such merchandise, materials,
supplies, services or other property shall be made regardless of whether
delivery of such merchandise, materials, supplies, services or other property
is ever made or tendered, (i) all capitalized lease obligations of such Person,
and (j) all guaranties by such Person of any obligation mentioned in the
foregoing clauses (a) through (i).

 

“Intellectual
Property Assets” means all worldwide intellectual property owned, used,
held for use, or licensed (as licensor or licensee) by Seller that are
necessary to or useful in the conduct of the Business as presently conducted or
as presently proposed to be conducted, including (a) all patents, patent
applications, invention disclosures and inventions and discoveries, whether or
not patentable and whether or not reduced to practice, improvements thereto,
and other rights of invention (the items in clause (a), collectively, “Patents”);
(b) registered and unregistered trademarks, service marks, trade names,
trade dress, logos, product names and slogans, including any common law rights,
registrations and applications for the foregoing (the items in clause (b),
collectively, “Trademarks”); (c) copyrightable works, website
content, all registered and unregistered copyrights in both published works and
unpublished works, other rights of authorship and exploitation, and any
applications, registrations and renewals in connection therewith (the items in
clause (c), collectively, “Copyrights”); (d) all rights in mask
works; (e) all know-how, trade secrets, confidential or proprietary
information, customer lists, financial information, business information,
technical information, data, process technology, plans, drawings and blue
prints (the items in clause (e), collectively, “Trade Secrets”); (f) all
rights in internet web sites and internet domain names presently used by Seller
in connection with the Business (such web sites and internet domain names
included in the Intellectual Property Assets are collectively referred to as “Domain
Names”); and (g) rights to exclude others from appropriating any of
such Intellectual Property Assets, including the right to sue for and remedies
against past, present and future infringements of any or all of the foregoing
and rights of priority and protection of interests therein, and any other
proprietary, intellectual property and other rights relating to any or all of
the foregoing anywhere in the world. 
Anything in this Agreement to the contrary notwithstanding, however, “Intellectual
Property Assets” excludes, and the Parties acknowledge that pursuant to this
Agreement Buyer will acquire no, right, title or interest in or to, (a) the
Retained Mark or (b) any Software purchased or licensed by Seller, Parent
or any of their respective Affiliates from any Third Party or created or
developed by any employee, contractor or consultant employed or engaged by
Seller, Parent or any of their Affiliates, including any and all intellectual property
rights associated therewith and any registration thereof or right to register
the same (the “Retained Software”).

 

“Inventories”
means any and all inventories of the Business, wherever located, including all
finished goods, work-in-process, raw materials, spare parts and all other
materials and supplies to be used or consumed by Seller in the production of
finished goods.

 

“IRS”
means the United States Internal Revenue Service and, to the extent relevant,
the United States Department of the Treasury.

 

61

 

“Knowledge”
means, when used with respect to an individual, that such individual has
knowledge of a particular fact or other matter if (a) that individual is
actually aware of that fact or matter; or (b) a prudent individual would
be reasonably expected to discover or otherwise become aware of that fact or
matter in the course of fulfilling such individual’s daily duties in the
Ordinary Course of Business.  Parent and
Seller will be deemed to have Knowledge of a particular fact or other matter if
any of Stephen P. Eberhard, Victor Lambert, Karen Colonias, Jeffrey Mackenzie,
Michael J. Herbert or Brian Magstadt has actual knowledge of that fact or other
matter.   M&G and Buyer will be
deemed to have Knowledge of a particular fact or other matter if any of Wim
Straver or Gert Karenbeld has actual knowledge of that fact or other matter.

 

“Lease”
means any lease of real property or other lease or rental agreement, or
license, right to use or installment and conditional sale agreement to which
Seller is a party and any other Contract to which Seller is a party pertaining
to the leasing or use of any Tangible Personal Property.

 

“Liability”
means with respect to any Person, any liability or obligation of such Person of
any kind, character or description, whether known or unknown, absolute or
contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements
of such Person.

 

“Losses”
means any and all losses, liabilities, claims, damages, expenses (including
costs of investigation and defense and reasonable attorneys’ fees and
expenses).

 

“Material
Adverse Effect” shall mean any event, development or circumstance that has
caused a material adverse condition or material adverse change in or effect on
(a) the business, assets, Liabilities, condition (financial or otherwise),
prospects, results of operations of a specified Party, (b) the ability of
a specified Party to perform its obligations under the Transaction Documents;
or (c) the validity or enforceability of the Transaction Documents or the
rights or remedies of a Party thereunder. 
An effect or development resulting from conditions affecting the
industry in which a specified Party does business or the economy as a whole
shall not constitute a Material Adverse Effect so long as such conditions do
not disproportionately affect such Party or its business or assets compared to
other companies that operate in the same industry or industries as such Party
and as compared to the industry as a whole.

 

“Neutral
Accounting Firm” means Ernst & Young, LLP.

 

“Occupational
Safety and Health Law” means any Applicable Law designed to provide safe
and healthful working conditions and to reduce occupational safety and health
hazards, including the Occupational Safety and Health Act, and any program,
whether governmental or private (such as those promulgated or sponsored by
industry associations and insurance companies), designed to provide safe and
healthful working conditions.

 

“Order”
means any order, injunction, judgment, decree, ruling, assessment or arbitration
award of any Governmental Authority or arbitrator.

 

62

 

“Ordinary
Course of Business” means, with respect to an action taken by a Person,
that such action is reasonably consistent in nature, scope and magnitude with
the past practices of such Person and is taken in the ordinary course of the
normal, day-to-day operations of such Person.

 

“Permit”
means any Consent, certification, endorsement, license, registration or permit
issued, granted, given or otherwise made available by or under the authority of
any Governmental Authority or other Person (other than in connection with the
Wells Credit Agreement) or pursuant to any Applicable Law.

 

“Person”
means an individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity or a Governmental
Authority.

 

“Record”
means information that is inscribed on a tangible medium or that is stored in
an electronic or other medium and is retrievable in perceivable form.

 

“Registered
IP” means all Intellectual Property Assets consisting of federal, state,
international, and other:  (i) patents
and patent applications (including provisional applications); (ii) registered
trademarks and service marks and applications to register trademarks and
service marks, including intent-to-use or similar applications; (iii) registered
copyrights and applications for copyright registration; (iv) mask work registrations
and applications to register mask works; (v) Internet domain names; and (vi) other
Intellectual Property Assets that are the subject of an application,
certificate, filing, registration or other document issued by, filed with, or
recorded by, any Governmental Authority, including any domain names; provided
that the Retained Mark, the Retained Software and any and all rights in
connection therewith are excluded from the Registered IP.

 

“Release”
shall mean any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, escaping, leaching, dumping or disposing of a Hazardous Material
into the environment of any kind whatsoever, including the abandonment or
discarding of barrels, containers, tanks or other receptacles containing or previously
containing Hazardous Material.

 

“Remedial
Action” means all actions, including any capital expenditures, required or
voluntarily undertaken (a) to clean up, remove, treat or in any other way
address any Hazardous Material or other substance; (b) to prevent the
Release or Threat of Release or to minimize the further Release of any
Hazardous Material or other substance so it does not migrate or endanger or
threaten to endanger public health or welfare or the Environment; (c) to
perform pre-remedial studies and investigations or post-remedial monitoring and
care; or  (d) to bring all
Facilities and the operations conducted thereon into compliance with
Environmental Laws and environmental Permits.

 

“Representative”
means, with respect to a particular Person, any director, officer, partner,
manager, employee, agent, consultant, advisor, accountant, financial advisor,
investment banker, legal counsel or other representative of that Person.

 

“Software”
means all computer databases, computer software and subsequent versions
thereof, including firmware, programs, modules, source code, object, executable
or 

 

63

 

binary
code, objects, comments, screens, user interfaces, libraries, drivers, report
formats, templates, menus, buttons and icons and all files, data, materials,
manuals, design notes and all other items and documentation related thereto or
associated therewith, and portions thereof, including computer programs,
materials, tapes, know-how, processes and other written materials.

 

“Subsidiary”
means, with respect to any Person,
any corporation, limited liability company, partnership, association, or other
business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers, or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof or (ii) if a limited liability company, partnership, association,
or other business entity (other than a corporation), a majority of the
partnership or other similar ownership interests thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof and for this purpose, a
Person or Persons own a majority ownership interest in such a business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of such business entity’s gains or losses or shall be or control any
managing director or general partner of such business entity (other than a
corporation).  The term ‘‘Subsidiary’’
shall include all Subsidiaries of such Subsidiary.

 

“Tangible
Personal Property” means all machinery, equipment, tools, special tooling,
manufacturing tooling, production tooling, special test equipment, models,
office equipment, computer hardware, supplies, materials, vehicles and other
items of tangible personal property (other than Inventories) of every kind
owned or leased by Seller and used in connection with or necessary to the
Business (wherever located and whether or not carried on Seller’s books),
together with any freely assignable express or implied warranty by the
manufacturers, sellers or lessors of any item or component part of Tangible
Personal Property and all maintenance records and other documents relating
thereto.

 

“Tax”
means any and all federal, state, local and foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation,
environmental, windfall profit, customs, vehicle, airplane, boat, vessel or
other title or registration, capital stock, franchise, withholding, social
security, unemployment, disability, real property, personal property, escheat,
ad valorem, documentary, sales, use, transfer, value added, alternative, add-on
minimum and other tax, fee, assessment, levy, tariff, charge, custom or duty of
any kind whatsoever and any interest, penalty, addition or additional amount
thereon imposed, assessed or collected by or under the authority of any
Governmental Authority or payable under any tax-sharing agreement or any other
Contract, as a successor or transferee, by operation of law, or otherwise.

 

“Tax
Return” means any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information (including any amended return or amendment,
modification or supplement to any of the foregoing) filed with or submitted to,
or permitted or required to be filed with or submitted to, any Governmental
Authority in connection with the determination, assessment, collection or
payment of any Tax or in connection with the administration, implementation or
enforcement of or compliance with any Applicable Law relating to any Tax.

 

64

 

“Third
Party” means a Person that is not a Party.

 

“Third
Party Claim” means any claim against any Indemnified Person by a Third
Party, whether or not involving a Action.

 

“Threat
of Release” means a reasonable likelihood of a Release that may require action
in order to prevent or mitigate damage to the Environment that may result from
such Release.

 

“Transaction
Document” means this Agreement, the Bill of Sale, the Assignment and
Assumption Agreement, the Vicksburg Deed, the Patent Assignment, the Trademark
Assignment, the Copyright Assignment, the Noncompetition Agreement, the
Transition Services Agreement, the Lease Assumption and the certificates of the
parties’ officers delivered pursuant to Section 2.2

 

“Treasury
Regulations” means the regulations promulgated by the Secretary of the
Treasury pursuant to the Code.

 

“Wells
Credit Agreement” means that certain Credit Agreement dated as of October 10,
2007, among Parent as Borrower, Seller, Simpson Strong-Tie Company, Inc.
and Simpson Strong-Tie International, Inc. as Guarantors, the lenders
party thereto, and Wells Fargo Bank, National Association as
Administrative Agent, Sole Arranger and Sole Bookrunner, and all
Contracts, notes, or instruments entered into in connection therewith.

 

“Working
Capital” means the working capital of Seller as of the Effective Time
calculated in accordance with GAAP as calculated and adjusted pursuant to Schedule
1.9.

 

13.2                           Index of
Defined Terms.  Solely for
convenience purposes, the following is a list of certain terms that are defined
in this Agreement and the section numbers where such definitions are contained:

 

	
  TERM:

  	
   

  	
  SECTION:

  
	
  Accounting
  Arbitrator

  	
   

  	
  Section 1.11(b)

  
	
  ACM

  	
   

  	
  Section 5.1(e)(iii)

  
	
  Acquisition
  Proposal

  	
   

  	
  Section 5.5(a)

  
	
  Active
  Employees

  	
   

  	
  Section 10.12(a)

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Alternative
  Negotiations

  	
   

  	
  Section 5.5(a)

  
	
  Assets

  	
   

  	
  Section 1.1

  
	
  Assigned
  Contracts

  	
   

  	
  Section 1.1(e)

  
	
  Assignment
  and Assumption Agreement

  	
   

  	
  Section 2.2(a)(ii)

  
	
  Assumed
  Liabilities

  	
   

  	
  Section 1.3(a)

  
	
  Basket
  Amount

  	
   

  	
  Section 11.2(b)

  
	
  Bill
  of Sale

  	
   

  	
  Section 2.2(a)(i)

  
	
  Breaching
  Party

  	
   

  	
  Section 9.3

  
	
  Business

  	
   

  	
  Recitals

  
	
  Buyer

  	
   

  	
  Preamble

  

 

65

 

	
  TERM:

  	
   

  	
  SECTION:

  
	
  Buyer
  Group

  	
   

  	
  Section 5.1(a)

  
	
  Buyer
  Indemnified Persons

  	
   

  	
  Section 11.2(a)

  
	
  Buyer’s
  Consultants

  	
   

  	
  Section 5.1(d)(i)

  
	
  Cash
  and Equivalents

  	
   

  	
  Section 1.2(a)

  
	
  CERCLA

  	
   

  	
  Section 13.1

  
	
  Closing

  	
   

  	
  Section 2.1

  
	
  Closing
  Purchase Price

  	
   

  	
  Section 1.5

  
	
  COBRA

  	
   

  	
  Section 3.19(g)

  
	
  Competing
  Business

  	
   

  	
  Section 3.25

  
	
  Confidentiality
  Agreement

  	
   

  	
  Section 5.1(b)

  
	
  Copyrights

  	
   

  	
  Section 13.1

  
	
  Domain
  Names

  	
   

  	
  Section 13.1

  
	
  Effective
  Time

  	
   

  	
  Section 2.1

  
	
  Employee
  Agreements

  	
   

  	
  Section 3.19(d)

  
	
  Employees

  	
   

  	
  Section 3.19(a)

  
	
  Equity
  Award

  	
   

  	
  Section 3.19(k)

  
	
  ERISA
  Affiliate

  	
   

  	
  Section 3.19(h)

  
	
  Estimated
  Closing Balance Sheet

  	
   

  	
  Section 1.9

  
	
  Estimated
  Final Working Capital

  	
   

  	
  Section 1.9

  
	
  Estimated
  Working Capital Deficiency

  	
   

  	
  Section 1.9

  
	
  Estimated
  Working Capital Surplus

  	
   

  	
  Section 1.9

  
	
  Excluded
  Assets

  	
   

  	
  Section 1.2

  
	
  Excluded
  Taxes

  	
   

  	
  Section 1.3(a)

  
	
  Expiration
  Date

  	
   

  	
  Section 11.1(a)

  
	
  Final
  Closing Balance Sheet

  	
   

  	
  Section 1.10

  
	
  Final
  Working Capital

  	
   

  	
  Section 1.10

  
	
  Final
  Working Capital Statement

  	
   

  	
  Section 1.10

  
	
  Financial
  Statements

  	
   

  	
  Section 3.4

  
	
  Hired
  Employees

  	
   

  	
  Section 10.12(b)(i)

  
	
  Improvements

  	
   

  	
  Section 1.1(l)

  
	
  Indemnified
  Person

  	
   

  	
  Section 11.4(a)

  
	
  Indemnifying
  Person

  	
   

  	
  Section 11.4(a)

  
	
  Interim
  Balance Sheet

  	
   

  	
  Section 3.4

  
	
  Interim
  Financial Statements

  	
   

  	
  Section 3.4

  
	
  Invasive
  Testing

  	
   

  	
  Section 5.1(d)

  
	
  Lease
  Assumption

  	
   

  	
  Section 2.2(a)(ix)

  
	
  Leased
  Property

  	
   

  	
  Section 3.22(a)(ii)

  
	
  License

  	
   

  	
  Section 5.1(d)(i)

  
	
  Material
  Consents

  	
   

  	
  Section 7.3(a)

  
	
  Noncompetition
  Agreement

  	
   

  	
  Section 2.2(a)(vi)

  
	
  Nonqualified
  Deferred Compensation Plan

  	
   

  	
  Section 3.19(k)

  
	
  Non-Released
  Claims

  	
   

  	
  Section 5.1(e)(iii)

  
	
  Owned
  Property

  	
   

  	
  Section 3.22(a)(i)

  

 

66

 

	
  TERM:

  	
   

  	
  SECTION:

  
	
  Parties
  or Party

  	
   

  	
  Preamble

  
	
  Patents

  	
   

  	
  Section 13.1

  
	
  Phase
  One Investigation

  	
   

  	
  Section 5.1(d)(i)

  
	
  Phase
  Two Investigation

  	
   

  	
  Section 5.1(d)(i)

  
	
  Plans

  	
   

  	
  Section 5.1(d)(vi)

  
	
  Purchase
  Price

  	
   

  	
  Section 1.5

  
	
  RCRA

  	
   

  	
  Section 13.1

  
	
  Retained
  Mark

  	
   

  	
  Section 1.2(i)

  
	
  Restricted
  Contracts

  	
   

  	
  Section 10.7(a)

  
	
  Retained
  Liabilities

  	
   

  	
  Section 1.4

  
	
  Retained
  Mark

  	
   

  	
  Section 1.2(i)

  
	
  Retained
  Software

  	
   

  	
  Section 13.1

  
	
  Seller

  	
   

  	
  Preamble

  
	
  Seller
  Indemnified Persons

  	
   

  	
  Section 11.3(a)

  
	
  Seller’s
  Consultants

  	
   

  	
  Section 5.1(d)(vi)

  
	
  Software

  	
   

  	
  Section 13.1

  
	
  Specified
  Representations

  	
   

  	
  Section 11.1(a)

  
	
  SST
  Canada

  	
   

  	
  Section 10.14

  
	
  Supplemental
  Environmental Report

  	
   

  	
  Section 7.9(c)

  
	
  Survival
  Period

  	
   

  	
  Section 11.1(a)

  
	
  Tax
  Purchase Price

  	
   

  	
  Section 1.7

  
	
  Termination
  Fee

  	
   

  	
  Section 9.3

  
	
  Title
  Company

  	
   

  	
  Section 10.8

  
	
  Title
  Policy

  	
   

  	
  Section 10.8

  
	
  Title
  Report

  	
   

  	
  Section 10.8

  
	
  Trade
  Secrets

  	
   

  	
  Section 13.1

  
	
  Trademarks

  	
   

  	
  Section 13.1

  
	
  Transition
  Services Agreement

  	
   

  	
  Section 2.2(a)(ix)

  
	
  Vacaville
  Lease

  	
   

  	
  Section 2.2(a)(x)

  
	
  Vacaville
  Property

  	
   

  	
  Section 1.2

  
	
  Vicksburg
  Deed

  	
   

  	
  Section 2.2(a)(iii)

  
	
  Vicksburg
  Property

  	
   

  	
  Section 1.1(l)

  
	
  Vicksburg
  Report

  	
   

  	
  Section 7.9(c)

  
	
  WARN
  Act

  	
   

  	
  Section 3.6(a)(xvi)

  
	
  Warranty
  Claims

  	
   

  	
  Section 10.13

  
	
  Year-End
  Financial Statements

  	
   

  	
  Section 3.4

  

 

13.3                           Construction.

 

(a)                                  Each Party
acknowledges that it has consulted with, or has been afforded the opportunity
to consult with, counsel of its own choosing in connection with the drafting,
negotiation and execution of this Agreement and that it enters into this
Agreement of its own free will and as its independent act.  The language used in this Agreement has been
chosen by the 

 

67

 

Parties to express their mutual intent, and no rule of
construction shall be applied against or in favor of any Party, and no Party
shall be deemed the drafter of this Agreement.

 

(b)                                 In this
Agreement, unless a clear contrary intention appears:

 

(i)                                     the singular
number includes the plural number and vice versa and reference to any gender
includes each other gender;

 

(ii)                                  reference to
any Person includes such Person’s successors and assigns but only if such
successors and assigns are not prohibited by this Agreement, and reference to a
Person in a particular capacity excludes such Person in any other capacity;

 

(iii)                               the Table of
Contents and the headings of Articles and Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation; and

 

(iv)                              all references
to “Articles,” “Sections,” “Exhibits” and “Schedules” refer to the
corresponding Articles, Sections, Exhibits and Schedules of this Agreement,
unless otherwise stated;

 

(v)                                 “hereunder,” “hereof,”
“hereto,” and words of similar import shall be deemed references to this
Agreement as a whole and not to any particular Article, Section or other
provision hereof;

 

(vi)                              reference to
any agreement, document or instrument (including any Transaction Document)
means such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof;

 

(vii)                           references to
documents, instruments or agreements (including this Agreement) shall be deemed
to refer as well to all addenda, exhibits, schedules, restatement, supplements
or amendments thereto;

 

(viii)                        reference to
any Applicable Law means such Applicable Law as amended, modified, codified,
replaced or reenacted, as a whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder, and reference to
any Section or other provision of any Applicable Law means that provision
of such Applicable Law from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or reenactment
of such Section or other provision;

 

(ix)                                “including”
(and with correlative meaning “include”) means including without limiting the
generality of any description preceding the word “including”;

 

(x)                                   where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner;

 

(xi)                                “or” is used in
the inclusive sense of “and/or”;

 

68

 

(xii)                             with respect to
the determination of any period of time, “from” means “from and including” and “to”
means “to but excluding”;

 

(xiii)                          the measure of
a period of one (1) month or year for purposes of this Agreement shall be
the date of the following month or year corresponding to the starting date, provided
that if no corresponding date exists, then the end date of such period being
measured shall be the next actual date of the following month or year (for
example, one (1) month following February 18 is March 18 and one
(1) month following March 31 is May 1);

 

(xiv)                         any approval or
consent required to be given by any Party in this Agreement shall be given or
withheld by such Party in its sole discretion;

 

(xv)                            references to
amounts of money expressed in dollars are references to United States dollars,
unless express reference is made to currency of another country; and

 

(xvi)                         all accounting
terms used herein shall be interpreted, and all accounting determinations
hereunder shall be made, in accordance with GAAP.

 

[Remainder of page intentionally left blank]

 

69

 

IN
WITNESS WHEREOF, the Parties have executed and delivered this Asset Purchase
Agreement as of the date first written above.

 

	
   

  	
  M&G:

  
	
   

  	
  M&G
  HOLDING B.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Wim Straver

  
	
   

  	
  Name:
  

  	
  Wim
  Straver

  
	
   

  	
  Title:
  

  	
  CEO

  
	
   

  	
   

  
	
   

  	
  Buyer:

  
	
   

  	
  SMOKEY
  ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Wim Straver

  
	
   

  	
  Name:
  

  	
  Wim
  Straver

  
	
   

  	
  Title:
  

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Seller:

  
	
   

  	
  SIMPSON
  DURA-VENT COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Karen Colonias

  
	
   

  	
  Name:
  

  	
  Karen
  Colonias

  
	
   

  	
  Title:
  

  	
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Parent:

  
	
   

  	
  SIMPSON
  MANUFACTURING CO., INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Karen Colonias

  
	
   

  	
  Name:
  

  	
  Karen
  Colonias

  
	
   

  	
  Title:
  

  	
  CFO

  

 

[Signature Page to Asset Purchase Agreement]

 

 

EXHIBIT A

 

FORM OF BILL OF SALE

 

See
attached.

 

 

EXHIBIT A

 

BILL OF SALE

 

THIS
BILL OF SALE (this “Bill of Sale”), dated as of
              
    , 2010,  is made
by and among Simpson Dura-Vent Company, Inc., a California corporation, (“Seller”),
and [Newco], Inc., a Delaware corporation (“Buyer”).

 

RECITALS

 

WHEREAS,
Buyer and Seller are parties to that certain Asset Purchase Agreement dated as
of
                          ,
2010 (the “APA”), pursuant to which Seller has agreed to sell, transfer,
assign, convey and deliver to Buyer, and Buyer has agreed to purchase and
acquire from Seller, all of Seller’s right, title and interest in and to the
Assets (as defined in the APA); and

 

WHEREAS,
Buyer and Seller desire to document, and set forth the terms of, the sale,
transfer, assignment, conveyance, and delivery of the tangible assets included
in the Assets.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

 

1.             Definitions.  Capitalized terms used but not defined herein
shall have the meanings assigned to them in the APA.  All references to schedules and sections
shall mean references to the APA, except as otherwise noted herein.

 

2.             Sale.  Effective as of the Closing on the Closing
Date, Seller hereby irrevocably sells, conveys, assigns, transfers and delivers
to Buyer all right, title and interest, legal and equitable, in and to the
tangible assets included in the Assets, including without limitation the assets
specified on Exhibit I hereto (the “Purchased Tangible Assets”).  Buyer hereby purchases, acquires and accepts
from Seller, the Purchased Tangible Assets. 
Seller hereby irrevocably constitutes and appoints Buyer as its true and
lawful attorney, with full power of substitution, in Seller’s name and stead,
but on behalf and for the benefit of Buyer lawfully to demand and receive any
and all of the Purchased Tangible Assets, and to give receipts and releases
therefor, and from time to time to take any and all lawful actions in Seller’s
name, for the benefit of Buyer for the collection and/or reduction to
possession of the Purchased Tangible Assets. 
Such powers of attorney are coupled with an interest and are irrevocable
by Seller.

 

3.             APA.  This Bill of Sale is in accordance with and
is subject to all the terms, representations, warranties, covenants, agreements
and limitations set forth in the APA and all such terms, representations,
warranties, covenants, agreements and limitations are incorporated herein by
this reference.  The execution and
delivery of this Bill of Sale by the parties hereto shall not in any way limit
the rights and obligations of the parties under the APA.  In the event of any conflict between the
terms of this Bill of Sale and the APA, the APA shall control.

 

1

 

4.             Execution of Bill of Sale.  This Bill of Sale may be executed in
counterpart signature pages executed and delivered via facsimile
transmission or via email with scan or email attachment.  Any such counterpart executed and delivered
via facsimile transmission or via email with scan or email attachment will be
deemed an original for all intents and purposes, and all such counterparts
shall together constitute one and the same instrument.

 

5.             Further Assurances.  The parties hereto agree to execute such
other documents and perform such other acts as may be necessary or desirable to
carry out the purposes of this Bill of Sale.

 

2

 

IN
WITNESS WHEREOF, the undersigned have executed this Bill of Sale as of the date
first set forth above.

 

	
   

  	
   

  	
  SELLER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SIMPSON
  DURA-VENT COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BUYER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NEWCO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Signature Page to Bill of Sale

 

 

EXHIBIT I

 

PURCHASED TANGIBLE ASSETS

 

See
attached.

 

 

EXHIBIT B

 

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

 

See
attached.

 

 

EXHIBIT B

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS
ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”), dated as of
                                 ,
2010, is made by and among Simpson Dura-Vent Company, Inc., a California
corporation, (“Seller”), and [Newco, Inc.], a Delaware corporation
(“Buyer”).

 

RECITALS

 

WHEREAS,
Buyer and Seller are parties to that certain Asset Purchase Agreement dated as
of
                          ,
2010 (the “APA”), pursuant to which Seller has agreed to sell, transfer,
assign, convey and deliver to Buyer, and Buyer has agreed to purchase and
acquire from Seller, all of Seller’s right, title and interest in and to the
Assets (as defined in the APA);

 

WHEREAS,
pursuant to the APA, Buyer has agreed to assume the Assumed Liabilities (as
defined in the APA); and

 

WHEREAS,
Buyer and Seller desire to document, and set forth the terms of, the sale,
transfer, assignment, conveyance, and delivery of the contracts and intangible
assets included in the Assets and the assumption of the Assumed Liabilities.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

 

1.             Definitions.  Capitalized terms used but not defined herein
shall have the meanings assigned to them in the APA.  All references to schedules and sections
shall mean references to the APA, except as otherwise noted herein.

 

2.             Assignment.  Effective as of the Closing Date, Seller does
hereby irrevocably sell, transfer, assign, convey and deliver to Buyer, free
and clear of any Encumbrances, all right, title and interest, legal and
equitable, in and to the intangible assets included in the Assets, including
without limitation the assets described on Exhibit 1 hereto (the “Intangible
Assets”).  Seller hereby irrevocably
constitutes and appoints Buyer as its true and lawful attorney, with full power
of substitution, in Seller’s name and stead, but on behalf and for the benefit
of Buyer lawfully to demand and receive any and all of the Intangible Assets,
and to give receipts and releases therefor, and from time to time to take any
and all lawful actions in Seller’s name, for the benefit of Buyer for the
collection and/or reduction to possession of the Intangible Assets.  Such powers of attorney are coupled with an
interest and are irrevocable by Seller.

 

3.             Assumption.  Effective as of the Closing Date, Buyer does
hereby accept the foregoing sale, transfer, assignment, conveyance and delivery
of all of Seller’s right, title and interest in and to the Intangible Assets
and hereby assumes and agrees to pay, perform and

 

1

 

discharge when due, in accordance with the APA, all
of the liabilities set forth on Exhibit 2 hereto.

 

4.             APA.  This Agreement is made in accordance with and
is subject to all the terms, representations, warranties, covenants, agreements
and limitations set forth in the APA, and all such terms, representations,
warranties, covenants, agreements and limitations are incorporated herein by
this reference.  The execution and
delivery of this Agreement by the parties hereto shall not in any way limit the
rights and obligations of the parties under the APA.  In the event of any conflict between the
terms of this Agreement and the APA, the APA shall control.

 

5.             Third Parties.  The assumption by Buyer of certain
obligations of Seller as provided in Section 3 is not intended by the
parties to expand the rights or remedies of any third party against Buyer or
Seller or Parent, as the case may be, as compared to the rights and remedies
which such third party would have had against Seller or Parent had Buyer not
consummated the transactions contemplated by the APA.  Nothing contained herein will, or should be
construed to, prejudice the right of Buyer or Seller or Parent, as the case may
be, to contest any claim or demand with respect to any litigation or liability
assumed or not assumed, respectively, hereunder; and Buyer or Seller or Parent,
as the case may be, will have all rights which it has or may have to defend or
contest any such claim or demand.

 

6.             Counterparts.  This Agreement may be executed in counterpart
signature pages executed and delivered via facsimile transmission or via
email with scan or email attachment.  Any
such counterpart executed and delivered via facsimile transmission or via email
with scan or email attachment will be deemed an original for all intents and
purposes, and all such counterparts shall together constitute one and the same
instrument.

 

7.             Further Assurances.  Upon Buyer’s request, Seller shall enter into
and deliver such further assignments of the Intangible Assets and/or the rights
related thereto and other documents as are reasonably necessary to protect
Buyer’s rights therein, and Seller agrees to cooperate with Buyer in the
enforcement of such rights and shall give such testimony as may reasonably be
deemed necessary or required of Seller or Parent by Buyer or its designee to
develop, preserve or extend Buyer’s rights relating to any Intangible Assets
and to permit Buyer or its designee to file and prosecute patent applications
and, as to copyrightable material, to obtain copyright registrations
thereof.  Seller hereby appoints Buyer as
its attorney-in-fact to execute on its behalf any assignments or other
documents deemed necessary by Buyer to protect or perfect its rights to any
Intangible Assets.

 

[Remainder of page intentionally
left blank]

 

2

 

IN
WITNESS WHEREOF, the undersigned have executed this Assignment and Assumption
Agreement as of the date first set forth above.

 

	
   

  	
   

  	
  SELLER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SIMPSON
  DURA-VENT COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BUYER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NEWCO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Signature Page to Assignment and Assumption
Agreement

 

 

EXHIBIT 1

 

Intangible Assets

 

 

EXHIBIT 2

 

Assumed Liabilities

 

 

EXHIBIT C

 

See
attached

 

2

 

EXHIBIT C

 

NOTE SELLER SHALL EXECUTE A WARRANTY DEED IF TITLE COMPANY REQUIRES A
WARRANTY DEED IN ORDER TO INSURE TITLE WITHOUT TAKING AN EXCEPTION FOR THE FORM OF
DEED

 

 

DEED
PREPARED BY:

 

Alan
J. Robin 

Shartsis
Friese LLP 

One
Maritime Plaza, 18th Floor 

San
Francisco, Ca 94111

Phone:
415 421-6500

 

WHEN
RECORDED RETURN TO:

 

Kris
Motola

Sheppard
Mullin, LLP

Four
Embarcadero Center

17th
Floor

San
Francisco, CA 94111

Phone:
415 434-9100

 

INDEXING
INSTRUCTIONS:

 

1

 

SPECIAL WARRANTY DEED

 

FOR
AND IN CONSIDERATION of the sum of Ten Dollars ($10.00) cash in hand paid, and
other good and valuable considerations, the receipt and sufficiency of which is
hereby acknowledged, the receipt and sufficiency of which is hereby
acknowledged, the undersigned, SIMPSON DURA-VENT COMPANY, INC., a
California corporation, Grantor, does hereby grant, bargain, sell and convey
and warrant specially unto                                             ,
a
                            
Grantee, the following described real property located and situated in Warren
County, Mississippi, and being more particularly described as follows:

 

A
parcel of land lying in the Northwest One-Quarter (NW 1/4) of the Southeast
One-Quarter (SE 1/4) and in the Northeast One-Quarter (NE 1/4) of the
Southeast One-Quarter (SE 1/4)  and in
the Southwest One-Quarter (SW 1/4) of 
the Southeast One-Quarter (SE 1/4) and in Southeast One-Quarter (SE 1/4)
of the Southeast One-Quarter (SE 1/4) of Section 13 Township 16 North,
Range 5 East, Warren County, Mississippi, more particularly described as
follows, to-wit:

 

Beginning
at an iron pin marking the intersection of the Southerly line of Road “B”
Extended with the Easterly line of Road “C” of the Industrial Complex, Phase 1,
E.D.A. Project No 04-01-03490, Contract 3, Site Development, said iron pin
being 50 feet  from the centerline of
Road “C” and 50 feet  from the
centerline of Road “B”, all being 
measured perpendicular to the centerline of each roadway, said iron pin
lying 5,645.65 feet South of and 3,454.40 feet East of an iron rail marking the
Northwest corner of the Southwest One-Quarter of Section 12, Township 16
North, Range 5 East, Warren County, Mississippi; said iron pin lying South 05
degrees 46 minutes 09 seconds East, 100.11 feet from a recovered iron pin
marking the Southwest corner of that tract conveyed by Warren County,
Mississippi to McCarty Foods, Inc. by Warranty Deed dated April 17,
1990, and recorded an Deed Book 890 at Page 658 of the records of the
Chancery Clerk at Vicksburg, Warren County, Mississippi; run thence North 85
degrees 14 minutes 36 seconds East, 30.0 feet along the Southerly line of Road “B”
Extended; thence leaving the Southerly line of Road “B” Extended, run South 05
degrees 59 minutes 24 seconds East 38.15 feet; run thence North 85 degrees
01 minutes 06 seconds East, 38.0 feet; run thence North 05 degrees 59 minutes
24 seconds West, 38.0 feet to the Southerly line of Road “B” Extended; run
thence North 85 degrees 14 minutes 36 seconds East, 822.00 feet along the
Southerly line of Road “B” Extended; thence leaving the Southerly line of Road “B”
Extended, run South 04 degrees 45 minutes 24 seconds East, 1,160.77 feet; run
thence South 85 degrees 14 minutes 36 seconds West, 870.21 feet to the Easterly
line of Road “C”; run thence North 05 degrees 44 minutes 00 seconds West,
1,160.94 feet along the Easterly line of Road “C” to the Point of Beginning,
containing 23.420 acres, more or less.

 

The
warranty of this conveyance is subject to (a) all of  the terms and conditions set forth in that
certain Warranty Deed from Warren County, Mississippi and the Warren County
Port Commission to Simpson Manufacturing Co., Inc. dated November 6,
1997, and recorded in Book 1124 at Page 1 in the office of the
Chancery Clerk of Warren County, Mississippi, (b) all liens, encumbrances,
easements, covenants, conditions and restrictions of record, including any

 

2

 

matters
shown on any subdivision or parcel map affecting the Property; (c) all
exceptions appearing in the policy of title insurance for the Property issued
to the Grantee as of the date hereof; (d) all matters which would be revealed
or disclosed in an accurate survey; (e) a lien not yet delinquent for (i) taxes
for real property and (ii) any general or special assessments against the
Property; and (f) zoning ordinances and regulations and any other laws,
ordinances, or governmental regulations restricting or regulating the use,
occupancy or enjoyment of the Property, but only to the extent such are in
effect and relate to the Property.

 

[Signature on Following Page]

 

3

 

WITNESS THE SIGNATURE of the undersigned Grantor, this
         day of
          , 2010.

 

	
   

  	
  SIMPSON
  DURA-VENT COMPANY, INC.,

  
	
   

  	
  a
  California corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  

 

 

STATE OF

 

COUNTY OF

 

Personally appeared before
me, the undersigned authority in and for the said county and state, on this
       day of
                    ,
2010, within my jurisdiction, the within named                     ,
who acknowledged that (he)(she) is
                    
of SIMPSON DURA-VENT COMPANY, INC., a California corporation, and that for
and on behalf of the said corporation, and as its act and deed (he)(she)
executed the above and foregoing instrument, after first having been duly
authorized by said corporation so to do.

 

                 (NOTARY
PUBLIC)

 

My commission expires:

 

                         ”

 

(Affix official seal, if
applicable)

 

4

 

EXHIBIT D-1

 

FORM OF PATENT ASSIGNMENT

 

 

EXHIBIT D-1

 

PATENT AND PATENT APPLICATION ASSIGNMENT AGREEMENT

 

This
Patent and Patent Application Assignment Agreement (this “Assignment
Agreement”) is made and entered into as of June         ,
2010 (the “Effective Date”) by and between
Simpson Dura-Vent Company, Inc., a California corporation (“ASSIGNOR”) and [Newco, Inc.], a Delaware corporation (“ASSIGNEE”).

 

RECITALS

 

WHEREAS,
ASSIGNOR is the owner of each of the United States and Canadian patents and
patent applications, including, expired and abandoned patent and patent
application, listed on Exhibit A attached hereto (collectively, the
“Patents”) and the inventions covered by
and disclosed in the Patents;

 

WHEREAS,
ASSIGNOR desires to assign to ASSIGNEE its entire right, title, and interest in
and to the Patents and the inventions covered by and disclosed in the Patents;

 

WHEREAS,
ASSIGNEE desires to accept such assignment from ASSIGNEE;

 

NOW,
THEREFORE, in consideration of the mutual covenants, representations, and
warranties set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

 

AGREEMENT

 

1.             Recitals.  Each and all of the foregoing Recitals are
true and correct and are incorporated herein by reference.

 

2.             Assignment.  ASSIGNOR hereby assigns to ASSIGNEE, and
ASSIGNEE hereby accepts such assignment of, the entire right, title, and
interest in and to the Patents, together with: (a) the inventions covered
by and disclosed in the Patents; (b) all original and reissued patent
registrations associated with the Patents; (c) any continuations,
divisions, continuations-in-part, reexaminations, or extensions associated with
the Patents in the United States, Canada, or elsewhere, and (d) all
income, royalties, damages, or payments due or payable including, without
limitation, all claims for damages by reason of past, present, or future
infringement or other unauthorized use of the Patents, with the right to sue
for and collect such damages, for ASSIGNEE’S own use and benefit and that of
its successors, assigns, and other legal representatives.  All of the foregoing to be held and enjoyed by
ASSIGNEE, for its own use and benefit and for the use and benefit of its
successors, assigns, and other legal representatives to the full end of the
terms for which such Patents are granted, and for the patents which may be
granted in respect of any patent applications listed on Exhibit A,
as fully and entirely as the same would have been held and enjoyed by ASSIGNOR
had this assignment not been made.

 

3.             Authorizations.  ASSIGNOR hereby authorizes and requests that
the patent and trademark offices in the United States, Canada, and elsewhere to
record ASSIGNEE as the assignee and owner of the Patents, and any
continuations, divisions, continuations-in-part,

 

1

 

reissues, reexaminations, or extensions associated
with the Patents, and to issue to ASSIGNEE the Patents as assignee of the
entire right, title, and interest in and to such Patents, for the sole use and
benefit of ASSIGNEE, its successors, assigns, or other legal representatives.

 

4.             Further Cooperation.  Upon reasonable request by ASSIGNEE, ASSIGNOR
shall execute and deliver to ASSIGNEE such additional instruments of assignment
as may be reasonably necessary (a) to establish ASSIGNEE as owner of
record of all Patents assigned under this Assignment Agreement; and (b) for
ASSIGNEE to secure registration in any of the Patents and the right to secure
any continuations, divisions, continuations-in-part, reexaminations, or
extensions associated with the Patents in the United States, Canada, or
elsewhere.

 

IN
WITNESS WHEREOF, ASSIGNOR and ASSIGNEE have executed this Assignment Agreement
as of the Effective Date by their duly authorized representatives as set forth
below.

 

	
  ASSIGNOR

  SIMPSON DURA-VENT COMPANY, INC.

  	
   

  	
  ASSIGNEE

  [NEWCO, INC., / M&G HOLDING B.V.]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
  [Type or Print]

  	
   

  	
   

  	
  [Type or Print]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  

 

 

NOTICE
TO ASSIGNOR:  Please
arrange for your execution of this Agreement to be acknowledged by a notary
public.

 

	
  STATE
  OF

  	
  )

  	
   

  
	
  COUNTY
  OF

  	
  )

  	
   

  

 

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

 

I
certify under PENALTY OF PERJURY under the laws of the State of
                                  
that the foregoing paragraph is true and correct.

 

WITNESS
my hand and official seal.

 

	
  Signature

  	
   

  	
   

  

 

2

 

EXHIBIT A

 

UNITED
STATES PATENTS AND PATENT APPLICATIONS

 

	
  Country

  	
   

  	
  Patent

  No.

  	
   

  	
  Serial No.

  	
   

  	
  Inventor(s)

  	
   

  	
  Title

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  7,665,457

  	
   

  	
  11/743,065

  	
   

  	
  John
  R. Jacklich, Eric Adair

  	
   

  	
  Wall
  thimble with outside air inlet

  	
   

  	
  REGISTERED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  D552,725

  	
   

  	
  29/229,096

  	
   

  	
  John
  R. Jacklich, Eric Adair

  	
   

  	
  Vent
  cap

  	
   

  	
  REGISTERED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  D552,726

  	
   

  	
  29/229,192

  	
   

  	
  John
  R. Jacklich, Eric Adair

  	
   

  	
  Direct
  vent cap

  	
   

  	
  REGISTERED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  11/118,702

  	
   

  	
  John
  R. Jacklich, Eric Adair

  	
   

  	
  Direct
  vent cap

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  11/743,041

  	
   

  	
  John
  R. Jacklich, Eric Adair

  	
   

  	
  Gasket-less
  vent pipe coupling

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  11/743,290

  	
   

  	
  John
  R. Jacklich, Eric Adair, Steven L. McIntyre

  	
   

  	
  Exhaust
  system interlocking mechanism

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  11/948,877

  	
   

  	
  Eric
  Adair, Steve Eberhard

  	
   

  	
  Biofuel
  appliance venting system

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  12/544993

  	
   

  	
  John
  Jacklich; Eric Adair

  	
   

  	
  Wall
  thimble with outside air inlet

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  12/544,996

  	
   

  	
  John
  R. Jacklich, Eric Adair

  	
   

  	
  Wall
  thimble with outside air inlet

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  12/605,985

  	
   

  	
  John
  R. Jacklich, Eric Adair

  	
   

  	
  Ceiling
  support box without outside air inlet

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  12/427,576

  	
   

  	
  John
  Jacklich; Eric Adair

  	
   

  	
  Retrofitted
  corrosive resistant venting system

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  4,385,623

  	
   

  	
  06/189,253

  	
   

  	
  John
  R. Jacklich

  	
   

  	
  Flue
  pipe for fireplace stove

  	
   

  	
  EXPIRED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  4,608,963

  	
   

  	
  06/688,714

  	
   

  	
  Donald
  M. Townsend, John R. Jacklich

  	
   

  	
  Thermally
  balanced air flow chimney

  	
   

  	
  EXPIRED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  4,846,147

  	
   

  	
  07/105,709

  	
   

  	
  Donald
  M. Townsend, John R. Jacklich

  	
   

  	
  Chimney
  liner system

  	
   

  	
  EXPIRED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  5,165,732

  	
   

  	
  07/681,152

  	
   

  	
  Donald
  M. Townsend

  	
   

  	
  Gas
  appliance connection

  	
   

  	
  EXPIRED

  

 

3

 

PROTECH
SYSTEMS, INC. PATENTS AND PATENT APPLICATIONS

 

	
  Country

  	
   

  	
  Patent

  No.

  	
   

  	
  Serial No.

  	
   

  	
  Inventor(s)

  	
   

  	
  Title

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  6,026,803

  	
   

  	
  08/859,922

  	
   

  	
  Martin
  Wawrla (assigned to ProTech Systems, Inc.)

  	
   

  	
  Coupling
  with Built-In Gasket And Mechanical With Locking Device (As Amended)

  	
   

  	
  REGISTERED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  60/826,680

  	
   

  	
  Martin
  Wawrla (assigned to ProTech Systems, Inc.)

  	
   

  	
  Catch
  For Condensates

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  11/859,582

  	
   

  	
  Martin
  Wawrla (assigned to ProTech Systems

  	
   

  	
  Catch
  For Condensates

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  09/416,652

  	
   

  	
  Martin
  Wawrla (assigned to ProTech Systems

  	
   

  	
  Coupling
  With Built-In Gasket And Mechanical Locking Device And Method For Use (As
  Amended)

  	
   

  	
  ABANDONED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  60/804,010

  	
   

  	
  Martin
  Wawrla (assigned to ProTech Systems

  	
   

  	
  Gasket
  Seal

  	
   

  	
  ABANDONED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  NONE

  	
   

  	
  60/826,698

  	
   

  	
  Martin
  Wawrla (assigned to ProTech Systems

  	
   

  	
  Test
  Port Apparatus, System And Method Of Use

  	
   

  	
  ABANDONED

  

 

CANADIAN
PATENTS AND PATENT APPLICATIONS

 

	
  Country

  	
   

  	
  Patent

  No.

  	
   

  	
  Serial No.

  	
   

  	
  Inventor(s)

  	
   

  	
  Title

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  113,303

  	
   

  	
  113,303

  	
   

  	
  John
  Jacklich; Eric Adair

  	
   

  	
  Vent
  cap

  	
   

  	
  REGISTERED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  113,305

  	
   

  	
  113,305

  	
   

  	
  John
  Jacklich; Eric Adair

  	
   

  	
  Direct
  vent cap

  	
   

  	
  REGISTERED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  NONE

  	
   

  	
  2,545,225

  	
   

  	
  John
  Jacklich; Eric Adair

  	
   

  	
  Direct
  vent cap

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  NONE

  	
   

  	
  2,587,062

  	
   

  	
  John
  Jacklich; Eric Adair

  	
   

  	
  Gasket-less
  vent pipe coupling

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  NONE

  	
   

  	
  2,645,390

  	
   

  	
  Eric
  Adair, Steve Eberhard

  	
   

  	
  Biofuel
  appliance venting system

  	
   

  	
  PENDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  1,142,405

  	
   

  	
  368,032

  	
   

  	
  John
  R. Jacklich

  	
   

  	
  Flue
  pipe for fireplace stove

  	
   

  	
  EXPIRED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  1,269,816

  	
   

  	
  506,154

  	
   

  	
  Donald
  M. Townsend, John R. Jacklich

  	
   

  	
  Themally
  balanced air flow chimney

  	
   

  	
  EXPIRED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  NONE

  	
   

  	
  2,041,709

  	
   

  	
  Donald
  M. Townsend

  	
   

  	
  Gas
  appliance connection

  	
   

  	
  ABANDONED

  

 

4

 

EXHIBIT D-2

 

FORM OF TRADEMARK ASSIGNMENT

 

 

EXHIBIT D-2

 

TRADEMARK AND TRADEMARK APPLICATION ASSIGNMENT AGREEMENT

 

This
Trademark and Trademark Application Assignment Agreement (this “Assignment Agreement”) is made and entered into as of June         ,
2010 (the “Effective Date”) by and between
Simpson Dura-Vent Company, Inc., a California corporation (“ASSIGNOR”) and [Newco, Inc.], a Delaware corporation (“ASSIGNEE”).

 

RECITALS

 

WHEREAS,
ASSIGNOR is the owner of each of the United States, Canadian, and California
trademarks, trademark applications, including, all common law trademark rights
associated with  the same, listed on Exhibit A
attached hereto (collectively, the “Trademarks”)
and all goodwill associated with the Trademarks;

 

WHEREAS,
ASSIGNOR desires to assign to ASSIGNEE its entire right, title, and interest in
and to the Trademarks and all goodwill associated with the Trademarks;

 

WHEREAS,
ASSIGNEE desires to accept such assignment from ASSIGNEE;

 

NOW,
THEREFORE, in consideration of the mutual covenants, representations, and
warranties set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

 

AGREEMENT

 

1.             Recitals.  Each and all of the foregoing Recitals are
true and correct and are incorporated herein by reference.

 

2.             Assignment.  ASSIGNOR hereby assigns to ASSIGNEE, and
ASSIGNEE hereby accepts such assignment of, the entire right, title, and
interest in and to the Trademarks, together with (a) the goodwill
connected with and symbolized by the Trademarks; and (b) all income,
royalties, damages, or payments due or payable including, without limitation,
all claims for damages by reason of past, present, or future infringement or
other unauthorized use of the Trademarks, with the right to sue for and collect
such damages, for ASSIGNEE’S own use and benefit and that of its successors,
assigns, and other legal representatives. 
All of the foregoing to be held and enjoyed by ASSIGNEE, for its own use
and benefit and for the use and benefit of its successors, assigns, and other
legal representatives to the full end of the terms for which such Trademarks
are granted, and for the trademarks which may be granted in respect of any
trademark applications listed on Exhibit A, as fully and entirely
as the same would have been held and enjoyed by ASSIGNOR had this assignment
not been made.

 

3.             Authorizations.  ASSIGNOR hereby authorizes and requests that
the patent and trademark offices in the United States, Canada, California, and
elsewhere to record ASSIGNEE as the assignee and owner of the Trademarks, and
any renewals, reissues, and extensions of such Trademarks, and to issue to
ASSIGNEE the Trademarks as assignee of the entire right, title, and

 

1

 

interest in and to such Trademarks, for the sole use
and benefit of ASSIGNEE, its successors, assigns, or other legal
representatives.

 

4.             Further Cooperation.  Upon reasonable request by ASSIGNEE, ASSIGNOR
shall execute and deliver to ASSIGNEE such additional instruments of assignment
as may be reasonably necessary (a) to establish ASSIGNEE as owner of
record of all Trademarks assigned under this Assignment Agreement; and (b) for
ASSIGNEE to secure registration in any of the Trademarks and the right to
secure any renewals, reissues, and extensions of such Trademarks in the United
States, Canada, California, or elsewhere.

 

IN
WITNESS WHEREOF, ASSIGNOR and ASSIGNEE have executed this Assignment Agreement
as of the Effective Date by their duly authorized representatives as set forth
below.

 

	
  ASSIGNOR

  SIMPSON DURA-VENT COMPANY, INC.

  	
   

  	
  ASSIGNEE

  [NEWCO, INC., / M&G HOLDING B.V.]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
  [Type or Print]

  	
   

  	
   

  	
  [Type or Print]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  

 

 

NOTICE
TO ASSIGNOR:  Please
arrange for your execution of this Agreement to be acknowledged by a notary
public.

 

	
  STATE
  OF

  	
  )

  
	
  COUNTY
  OF

  	
  )

  

 

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

 

I
certify under PENALTY OF PERJURY under the laws of the State of
                                  
that the foregoing paragraph is true and correct.

 

WITNESS
my hand and official seal.

 

	
  Signature

  	
   

  	
   

  

 

2

 

EXHIBIT A

 

UNITED
STATES REGISTERED TRADEMARKS AND APPLICATIONS

 

	
  Country

  	
   

  	
  Type

  	
   

  	
  Status

  	
   

  	
  Mark

  	
   

  	
  Serial No

  	
   

  	
  Filed Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Intent
  To Use Application

  	
   

  	
  Registered

  	
   

  	
  DURAPRO

  	
   

  	
  78/824,489

  	
   

  	
  2/27/2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Intent
  To Use Application

  	
   

  	
  Registered

  	
   

  	
  PELLETVENT
  PRO

  	
   

  	
  78/824,565

  	
   

  	
  2/27/2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURA-VENT

  	
   

  	
  73/251,572

  	
   

  	
  2/25/1980

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURA-CHIMNEY

  	
   

  	
  73/251,455

  	
   

  	
  2/25/1980

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURA-BLACK

  	
   

  	
  73/251,454

  	
   

  	
  2/25/1980

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DV
  (design mark)

  	
   

  	
  73/251,573

  	
   

  	
  2/25/1980

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURA-PLUS

  	
   

  	
  73/591,405

  	
   

  	
  4/3/1986

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DVL

  	
   

  	
  73/674,190

  	
   

  	
  7/24/1987

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  PELLET-VENT

  	
   

  	
  73/684,041

  	
   

  	
  9/14/1987

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Intent
  To Use Application

  	
   

  	
  Registered

  	
   

  	
  DURA/CONNECT

  	
   

  	
  74/127,065

  	
   

  	
  12/26/1990

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURA
  FLEX

  	
   

  	
  74/518,993

  	
   

  	
  5/2/1994

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Intent
  To Use Application

  	
   

  	
  Registered

  	
   

  	
  ENGINEERED
  EXCELLENCE

  	
   

  	
  74/519,006

  	
   

  	
  5/2/1994

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DIRECT
  VENT GS

  	
   

  	
  74/584,784

  	
   

  	
  10/12/1994

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURATECH

  	
   

  	
  75/832,807

  	
   

  	
  10/28/1999

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURA
  CHIMNEY

  	
   

  	
  78/857,721

  	
   

  	
  4/10/2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  VENTINOX

  	
   

  	
  77/466,837

  	
   

  	
  5/6/2008

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered*

  	
   

  	
  FASNSEAL

  	
   

  	
  75/614,007

  	
   

  	
  9/5/2000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Regular

  	
   

  	
  Registered*

  	
   

  	
  THER
  MIX

  	
   

  	
  74/666,446

  	
   

  	
  4/23/1996

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Intent
  To Use Application

  	
   

  	
  Filed

  	
   

  	
  S-VENT

  	
   

  	
  77/306,773

  	
   

  	
  10/17/2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Intent
  To Use Application

  	
   

  	
  Filed

  	
   

  	
  POLYPRO

  	
   

  	
  77/723,770

  	
   

  	
  4/28/2009

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  States

  	
   

  	
  Intent
  To Use Application

  	
   

  	
  Filed

  	
   

  	
  GREENVENT

  	
   

  	
  77/025,245

  	
   

  	
  10/19/2006

  

 

CANADIAN
REGISTERED TRADEMARKS AND APPLICATIONS

 

	
  Country

  	
   

  	
  Type

  	
   

  	
  Status

  	
   

  	
  Mark

  	
   

  	
  Serial No

  	
   

  	
  Filed Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  PELLETVENT

  	
   

  	
  1251452

  	
   

  	
  3/22/2005

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  PELLETVENT
  PRO

  	
   

  	
  1314632

  	
   

  	
  8/28/2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURAPRO

  	
   

  	
  1314633

  	
   

  	
  8/28/2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  Intent
  To Use Application

  	
   

  	
  Filed/Allowed

  	
   

  	
  DURA/PLUS
  HTC

  	
   

  	
  1246532

  	
   

  	
  2/9/2005

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canada

  	
   

  	
  Regular

  	
   

  	
  Filed/Allowed

  	
   

  	
  GREENVENT

  	
   

  	
  1,342,395

  	
   

  	
  4/5/2007

  

 

* The owner of this mark was ProTech
Systems, Inc., which was merged into Simpson Dura-Vent Company, Inc.

 

* The owner of this mark was ProTech
Systems, Inc., which was merged into Simpson Dura-Vent Company, Inc.

 

3

 

CALIFORNIA
REGISTERED TRADEMARKS AND APPLICATIONS

 

	
  Country

  	
   

  	
  Type

  	
   

  	
  Status

  	
   

  	
  Mark

  	
   

  	
  Serial No

  	
   

  	
  Filed Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  California

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURA-PLUS

  	
   

  	
  80872

  	
   

  	
  4/8/1986

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  California

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DVL

  	
   

  	
  85497

  	
   

  	
  10/28/1987

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  California

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURA/LINER

  	
   

  	
  87074

  	
   

  	
  2/29/1988

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  California

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  DURA/CONNECT

  	
   

  	
  95113

  	
   

  	
  11/12/1991

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  California

  	
   

  	
  Regular

  	
   

  	
  Registered

  	
   

  	
  PELLET-VENT

  	
   

  	
  85931

  	
   

  	
  11/25/1987

  

 

UNREGISTERED/COMMON
LAW TRADEMARKS

 

DIRECTVENT
PRO

DURALOCK

DURA/LINER

VENTINOX VFT

VENTINOX HIFLEX

VENTINOX VG

FASNCLAMP

FASNSMOOTH

FASNFLEX

PROFOIL

PROMESH

PROTECH
SYSTEMS

PROTECH

PELLET
VENT (Canadian Application filed, but abandoned)

DURA/CONNECT
(Canadian Application filed, but abandoned)

RENEW-A-FLUE

 

4

 

EXHIBIT D-3

 

FORM OF COPYRIGHT ASSIGNMENT

 

 

EXHIBIT D-3

 

COPYRIGHT ASSIGNMENT AGREEMENT

 

This
Copyright Assignment Agreement (this “Assignment Agreement”)
is made and entered into as of June         ,
2010 (the “Effective Date”) by and between
Simpson Dura-Vent Company, Inc., a California corporation (“ASSIGNOR”) and [Newco, Inc.], a Delaware corporation (“ASSIGNEE”).

 

RECITALS

 

WHEREAS,
ASSIGNOR is the owner of each of the works of authorship, registered
copyrights, and common law copyrights listed on Exhibit A attached
hereto (collectively, the “Copyrights”);

 

WHEREAS,
ASSIGNOR desires to assign to ASSIGNEE its entire right, title, and interest in
and to the Copyrights;

 

WHEREAS,
ASSIGNEE desires to accept such assignment from ASSIGNEE;

 

NOW,
THEREFORE, in consideration of the mutual covenants, representations, and
warranties set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

 

AGREEMENT

 

1.             Recitals. 
Each and all of the foregoing Recitals are true and correct and are
incorporated herein by reference.

 

2.             Assignment. 
ASSIGNOR hereby assigns to ASSIGNEE, and ASSIGNEE hereby accepts such
assignment of, the entire right, title, and interest in and to the Copyrights,
together with (a) the goodwill connected with and symbolized by the
Copyrights; and (b) all income, royalties, damages, or payments due or
payable including, without limitation, all claims for damages by reason of
past, present, or future infringement or other unauthorized use of the
Copyrights, with the right to sue for and collect such damages, for ASSIGNEE’S
own use and benefit and that of its successors, assigns, and other legal
representatives.  All of the foregoing to
be held and enjoyed by ASSIGNEE, for its own use and benefit and for the use
and benefit of its successors, assigns, and other legal representatives to the
full end of the terms for which such Copyrights are granted, and for the
Copyrights which may be granted in respect of any pending copyright
applications listed on Exhibit A, as fully and entirely as the same
would have been held and enjoyed by ASSIGNOR had this assignment not been made.

 

3.             Authorizations. 
ASSIGNOR hereby authorizes and requests that the Copyright Offices in
the United States, Canada, and elsewhere to record ASSIGNEE as the assignee and
owner of the Copyrights, and any renewals, reissues, and extensions of such
Copyrights, and to issue to ASSIGNEE the Copyrights as assignee of the entire
right, title, and interest in and to such Copyrights, for the sole use and
benefit of ASSIGNEE, its successors, assigns, or other legal representatives.

 

1

 

4.             Further Cooperation.  Upon reasonable request by ASSIGNEE, ASSIGNOR
shall execute and deliver to ASSIGNEE such additional instruments of assignment
as may be reasonably necessary (a) to establish ASSIGNEE as owner of
record of all Copyrights assigned under this Assignment Agreement; and (b) for
ASSIGNEE to secure registration in any of the Copyrights and the right to
secure any renewals, reissues, and extensions of such Copyrights in the United
States, Canada, or elsewhere.

 

IN
WITNESS WHEREOF, ASSIGNOR and ASSIGNEE have executed this Assignment Agreement
as of the Effective Date by their duly authorized representatives as set forth
below.

 

	
   

  	
  ASSIGNOR  

  SIMPSON DURA-VENT COMPANY, INC.

  	
   

  	
   

  	
  ASSIGNEE  

  [NEWCO, INC., / M&G HOLDING B.V.]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
  [Type or Print]

  	
   

  	
   

  	
  [Type or Print]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  

 

NOTICE
TO ASSIGNOR:  Please
arrange for your execution of this Agreement to be acknowledged by a notary
public.

 

	
  STATE
  OF

  	
  )

  
	
  COUNTY
  OF

  	
  )

  

 

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

 

I
certify under PENALTY OF PERJURY under the laws of the State of
                                  
that the foregoing paragraph is true and correct.

 

WITNESS
my hand and official seal.

 

	
  Signature

  	
   

  	
   

  

 

2

 

EXHIBIT A

 

ASSIGNOR
generally indicates its right in and to Copyrights by using the © symbol and
listing the applicable year.  Copyrights
created during the eighteen (18) months prior to the Effective Date of this
Assignment Agreement include, without limitation, the following works:

 

·                  Retail cartons

 

·                  Installation Instructions

 

·                  PolyPro sales sheet

 

·                  CAS sales sheet

 

·                  Sizing Handbook

 

·                  Product brochures

 

·                  Assignor’s product catalog

 

·                  Assignor’s price book

 

·                  Assignor’s recent ads

 

·                  Product bulletins

 

·                  Contents of the “duravent.com” and “protechinfo.com”
Websites

 

3

 

 

EXHIBIT E

 

FORM OF NONCOMPETITION AGREEMENT

 

See
attached.

 

 

EXHIBIT E

 

NONCOMPETITION AGREEMENT

 

This
Noncompetition Agreement (the “Agreement”), is made as of
                         ,
2010, by and among Simpson Dura-Vent Company, Inc., a California corporation,
(“Seller”), Simpson Manufacturing Co., Inc., a Delaware corporation
(“Parent”), and Smokey Acquisition, Inc., a Delaware corporation (“Buyer”).  Capitalized terms used but not otherwise
defined herein shall have the meanings set forth in the Asset Purchase
Agreement (as defined below).

 

RECITALS

 

A.            Buyer, M&G Holding B.V. (“M&G”),
Parent and Seller have entered into an Asset Purchase Agreement dated June 30,
2010 (the “Asset Purchase Agreement”), pursuant to which Seller has
agreed to sell, and Buyer has agreed to purchase, substantially all of the
assets (including goodwill) and assume certain liabilities of the Business (as
defined below) owned and operated by Seller (the “Acquisition”).

 

B.            Buyer, M&G, Parent and Seller
have also entered into a Transition Services and License Agreement dated the
date hereof (the “Transition Services Agreement”).

 

C.            Buyer desires to obtain certain
covenants not to compete from Parent and Seller in connection with the
Acquisition, and Parent and Seller are willing to provide such covenants.  The execution and delivery of this Agreement
by Parent and Seller is a condition precedent to Buyer’s obligation to
consummate the Acquisition under the Asset Purchase Agreement.  Parent and Seller enter into this Agreement
in consideration of the execution by Buyer of the Asset Purchase Agreement.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the parties hereby agree as follows:

 

1.             Definitions. 
Capitalized terms used but not defined herein have the meanings ascribed
to them in the Purchase Agreement.  For
purposes of this Agreement, the following terms have the following meanings:

 

(a)           “Business” means the business carried on by Seller
immediately before the date hereof, including, without limitation, the business
of designing, manufacturing, marketing, distributing and selling chimney and
exhaust venting systems and related equipment for gas, wood, oil, pellet and
alternative fuel burning appliances for the residential, light industrial and
commercial construction, remodeling and do-it-yourself markets.

 

(b)           “Products” means the types of products sold by
Seller immediately before the date hereof, including, without limitation,
chimney and exhaust venting systems, vents, venting pipes, chimneys, venting
caps and venting flashing; provided, however, that the “Products” shall not
include the Strong-Tie Products.

 

(c)           “Strong-Tie Products” means the types of products
sold by Simpson Strong-Tie Company, Inc. or its Affiliates (other than
Seller) immediately before the date hereof, 

 

1

 

including without limitation fasteners, anchors,
connectors, ties, strapping, supports, grips, adhesives and epoxies, but specifically
excluding chimney and exhaust venting systems, vents, venting pipes, chimneys,
venting caps, and venting flashing.

 

2.             Noncompetition. 
(a) Except as otherwise provided in Section 2(b) or 2(c) below
or in the Transition Services Agreement,  during the
period commencing on the date hereof and terminating on the fifth anniversary
of the date hereof (the “Noncompetition Period”), Parent and Seller
shall not, and shall not permit any of their Affiliates to, directly or
indirectly carry on a business that sells any of the Products or own, enter
into, engage in, operate, manage, control, participate in, advise, assist,
contribute or give or lend funds to or otherwise finance, be employed by or
render services to or consult with, or have a financial interest in, any
business (including without limitation any division, group or franchise of a
larger organization) that sells any of the Products within any city, county,
state, country or other political subdivision or geographical area in which the
Business is being conducted, including without limitation the United States and
all of its territories and possessions, as well as U.S. military bases wherever
located (collectively, the “Territory”), whether for or by itself or as an
agent, stockholder, partner or joint venturer or in any capacity for any other
person, individual, corporation, partnership, joint venture or other entity or
business organization.

 

(b)           Parent and Seller warrant and represent that neither they
nor any of their Affiliates has any financial interest in any Person that
carries on any activity from which Parent and Seller are prohibited under Section 2(a).  If, after the date hereof, Parent or Seller
directly or indirectly acquires or has any financial interest in a Person that
engages directly or indirectly in a line of business that sells any of the
Products within the Territory or otherwise carries on any activity in which
Parent and Seller are prohibited to engage under Section 2(a), then Parent
and Seller and its Affiliates shall divest all of their interest in such Person
or cause such Person to divest its entire line of the Products within
9 months after Parent and Seller acquire such interest or such Person
enters such line of business.  The
requirement to divest as set forth above shall apply only during the
Noncompetition Period and not thereafter.

 

(c)           Notwithstanding anything herein to the contrary, Buyer
understands and agrees that Parent, Seller, and their Affiliates may, and
nothing herein shall limit or otherwise affect their right to (i) continue
to sell Products in Canada until for the period, in the manner and to the
extent provided in the Transition Services Agreement, or (ii) manufacture,
market, distribute and sell Strong-Tie Products.

 

3.             Nonsolicitation. 
Parent and Seller shall reasonably cooperate with Buyer in Buyer’s
efforts to hire those employees of the Business designated by Buyer that Buyer
desires to hire immediately following the Closing Date.  During the period from the date hereof to the
second anniversary of the date hereof, Parent and Seller agree that, without
Buyer’s prior written consent, they shall not directly or indirectly solicit,
induce or attempt to influence any employee of Buyer to terminate his or her
employment with Buyer or, as applicable, with any Affiliate of Buyer.  Buyer agrees that the offer made by Parent to
one of its employees in a letter dated February 19, 2010 and any
acceptance hereafter of such offer by such employee shall not constitute a
breach of the provisions of this Section 3, provided that Parent and
Seller shall not hereafter directly or indirectly solicit, induce or attempt to
influence such employee (i) to accept 

 

2

 

such offer made by Parent or (ii) to terminate
his employment with Buyer (or any Affiliate of Buyer) if such employee accepts
employment with Buyer (or such Affiliate).

 

4.             Nondisparagement; Referrals.  During the period from the date hereof to the
second anniversary of the date hereof, Parent and Seller agrees that it shall
not either directly or indirectly solicit, induce, attempt to influence, or
take any action that has or is intended to have the effect of discouraging any
past or present lessor, licensor, customer, supplier, licensee, or other
business associate of Buyer from entering into or maintaining, or causing it to
terminate or cease, the same relationships with Buyer with respect to the
Business after the Closing Date as it maintained with Seller with respect to
the Business prior to the Closing Date. 
During the period commencing on the Closing Date and ending six (6) months
thereafter, Parent and Seller shall refer all customer inquiries relating to
the Business to Buyer promptly after receiving such inquiries.

 

5.             Entire Agreement. 
This Agreement, together with the provisions of the Asset Purchase
Agreement relating hereto, contains the entire agreement of the parties with
respect to Parent’s and Seller’s covenants not to compete with Buyer, and
supersedes all prior agreements written or oral with respect thereto.

 

6.             Remedies. 
Parent and Seller acknowledge that, in the event of any breach or
anticipatory or threatened breach by it of any of the provisions of this
Agreement, the remedies available to Buyer at law may be inadequate, and hereby
agrees that, in addition to any other remedies that may be available to Buyer,
Buyer shall be entitled to obtain temporary or permanent injunctive relief
without the necessity of proving damages. 
Such remedies shall be cumulative and nonexclusive and shall be in addition
to any other remedy to which the parties may be entitled.

 

7.             Waiver. 
The failure of either party to insist, in any one or more instances,
upon performance of the terms or conditions of this Agreement shall not be
construed as a waiver or relinquishment of any right granted hereunder or of
the future performance of any such term, covenant or condition.  No waiver on the part of any party of any
right, power or privilege, nor any single or partial exercise of any such
right, power or privilege, shall preclude any further exercise thereof or the
exercise of any other such right, power or privilege.

 

8.             Notices. 
Any notice to be given hereunder to any party hereto or Person subject
hereto shall be given in the manner provided in the Asset Purchase Agreement
(and shall be deemed to have been given as provided therein), and otherwise as
the Persons subject to this Agreement may designate in writing delivered to the
parties hereto.

 

9.             Reformation. 
In the event a court of competent jurisdiction determines that any of
the covenants contained in Paragraph 2, 3 or 4 or any other provision
hereof is unenforceable as written, the parties agree that such court shall,
for purposes of enforcing such covenant in such jurisdiction, reform the scope
of such covenant to the extent necessary to render such covenant reasonable in
scope under the circumstances then obtaining, and that such covenant, as
reformed, shall be enforceable in such jurisdiction.

 

3

 

10.           Severability. 
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

 

11.           Amendment. 
This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by each of Parent and Buyer or, in the case of a waiver, by the party
waiving compliance.

 

12.           Governing Law. 
This Agreement shall be governed by and construed under the internal
laws of the State of California applicable to a contract made and performed in
that state, without regard to choice of law or conflict of law principles.

 

13.           Binding Nature; Assignment.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns
and legal representatives.  Neither this
Agreement, nor any right hereunder, may be assigned by any party without the
written consent of the other party hereto, except that Buyer shall have the right
to assign this Agreement and Buyer’s rights hereunder in the manner and to the
same extent as described in Section 12.7 of the Asset Purchase
Agreement.  Any non-permitted assignment
or attempted assignment shall be void.

 

14.           Headings. 
The headings in this Agreement are for reference only, and shall not
affect the interpretation of this Agreement.

 

15.           Attorneys’ Fees. 
If any legal action or other proceeding is brought for the enforcement
of this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party shall be entitled to recover reasonable
attorneys’ fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.

 

16.           Nature of Covenants.  It is understood by the parties hereto that
the covenants contained in this Agreement are essential elements of the Asset
Purchase Agreement and that, but for the agreement of Parent and Seller to
comply with such covenants, Buyer would not have agreed to enter into the Asset
Purchase Agreement.  This Agreement is
reasonable and necessary to protect and preserve Buyer’s legitimate business
interests and the value of the Business and to prevent any unfair
advantage.  Parent and Seller hereby
agree that the covenants set forth in this Agreement are a material and
substantial part of the transaction contemplated by the Asset Purchase
Agreement.

 

17.           Interpretation. 
Each party has negotiated this Agreement at arm’s length and agrees that
its terms shall not be construed or interpreted in favor of or against any
party.

 

4

 

IN
WITNESS WHEREOF, Buyer and Seller have duly executed and delivered this Noncompetition
Agreement as of the date first above written.

 

	
   

  	
  SELLER

  
	
   

  	
  SIMPSON
  DURA-VENT COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PARENT

  
	
   

  	
  SIMPSON
  MANUFACTURING CO., INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BUYER

  
	
   

  	
  SMOKEY
  ACQUISITION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

5

 

EXHIBIT F

 

FORM OF TRANSITION SERVICES AGREEMENT

 

See
attached.

 

 

EXHIBIT F

 

TRANSITION SERVICES AND LICENSE AGREEMENT

 

This
Transition Services and License Agreement, is made as of
                          
      , 2010 (as may be amended from time to time
pursuant hereto, and including the Schedules hereto, this “Agreement”),
among (i) Smokey Acquisition, Inc., a Delaware corporation  (“Buyer”), (ii) M&G Holding B.V., a
Netherlands corporation (“M&G”), (iii) Simpson Dura-Vent Company, Inc.,
a California corporation (“SDV”), and (iv) Simpson Manufacturing
Co., Inc., a Delaware corporation (“Parent” and, together with SDV,
M&G, Buyer, the “Parties” and each a “Party”).

 

RECITALS

 

WHEREAS, Buyer, M&G, SDV and Parent, have entered into
an Asset Purchase Agreement, dated as of June 30, 2010 (the “Purchase
Agreement”), pursuant to which, among other things, Buyer is acquiring
substantially all of the assets of SDV (the “Acquisition”); and

 

WHEREAS, the Parties desire that, following the
Acquisition, certain transition services and licenses be provided as set forth
herein, for the purpose of, among other things, facilitating the Acquisition
and, in particular, Buyer’s ability to operate the business conducted by SDV
immediately prior to the Acquisition as more specifically described in the
Purchase Agreement (the “Business”);

 

NOW, THEREFORE, in
consideration of the promises and the mutual agreements and covenants
hereinafter set forth, the receipt and sufficiency of which hereby are
acknowledged by the Parties, and intending to be legally bound, the Parties do
hereby agree as follows:

 

SECTION 1.           Definitions.  Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Purchase Agreement.  For purposes of this Agreement, the following
terms shall have the following meanings:

 

“Books,
Records and Files” means any studies, reports, records (including shipping
records), books of account, invoices, contracts, instruments, surveys, data
(including financial, sales, purchasing and operating data), computer data,
disks, diskettes, tapes, marketing plans, customer lists, supplier lists,
distributor lists, correspondence and other documents created by or for SDV or
Parent as part of performing Services hereunder.

 

“Object
Code” means the code produced by a compiler from the Source Code in the
form of machine language that a computer can execute directly.

 

“Simpson
Blue Screen Program” means those certain Simpson software modules
identified on Schedule E attached hereto, which modules address accounting
functions, as well as manufacturing, inventory, and product pricing for the SDV
products.

 

“Simpson
Trademarks” means all registered and unregistered “SIMPSON” trademarks and
all associated design marks, logos, labels, and brand elements that have been
used on or in connection with any SDV products included in the Assets that were
manufactured by SDV before the Closing or were in the process of being
manufactured by SDV immediately before the 

 

1

 

Closing,
including, without limitation, the “SIMPSON DURA-VENT” trademark (U.S.
Registration No. 74693242).

 

“Source
Code” means a collection of programming statements written in a human-readable
computer programming language.

 

“Term”
has the meaning given in Section 4(a).

 

SECTION 2.         Services.

 

(a)           Initial Services. 
Commencing on the Closing Date and continuing through the Term (as
defined below), to the extent that employees of SDV or Parent (or any of their
Affiliates) performed such services immediately prior to the Closing Date,
Parent agrees that its employees shall be made available to Buyer to perform
and shall perform  the applicable services set forth
on Schedule A through Schedule D hereto (all of the foregoing, the “Services”),
on the terms set forth therein.

 

(b)           Modification to Schedules.  In the event that the Parties mutually desire
that the Services described on any Schedule be modified, then the Parties, by a
mutually signed written instrument, may approve such modifications, and the
revised Schedule reflecting such modifications shall be incorporated into, and
be made a part of, this Agreement; provided, however, that, to the extent any
such amendment conflicts with any provision in this Agreement regarding such
Service, then the provisions in such amendment shall control.

 

(c)           Additional Services.  Notwithstanding the Services set forth on the
Schedules attached hereto and as may be amended (the “Schedules”),
Parent agrees to respond in good faith to any reasonable request by Buyer for
any additional services during the Initial Term that are reasonably necessary
in connection with the operation of the Business and which are not currently
contemplated in the Schedules; provided Buyer will pay a commercially
reasonable fee for such additional services to be established in good faith by
the parties at the time such additional services are requested.

 

(d)           Access. 
During the Term, and subject to Applicable Law, each Party shall make
available on a timely basis to the other Parties all information and materials
reasonably requested that are necessary to enable Parent to provide the
relevant Services to Buyer.

 

(e)           Performance of Services. Parent agrees that, in
providing the Services under this Agreement, its employees shall: (i) perform
the Services in a manner that is reasonably consistent (in nature, quality and
timeliness) with analogous services heretofore performed by such employees for
SDV, and (ii) perform the Services in compliance with Applicable Law.  Nothing in this Agreement shall require
Parent to perform or cause to be performed any Service in a manner that would
constitute a violation of Applicable Law. 
Neither Parent nor any of its Affiliates shall be required hereby to
perform or to cause to be performed any of the Services for the benefit of any
Person other than Buyer.  Neither Parent
nor any of its respective Affiliates shall be required to perform or cause to
be performed any Services for the benefit of Buyer other than in connection
with the Business.

 

2

 

 

(f)            Charges for Services.  The Services shall be provided without cost
to the Buyer or its Affiliates, except when such costs are expressly provided
herein or for out-of-pocket expenses incurred by Parent at Buyer’s request in
connection with the performance of Services hereunder.

 

(g)           Third-Party Service Providers.  Parent may retain, at its sole expense during
the Initial Term, third-party service providers to provide Services to Buyer,
but solely to the extent Parent or SDV had been retaining such third-party
service providers to provide Services to SDV immediately prior to the closing
of the Acquisition.  Parent may not,
without the prior written consent of Buyer, retain any third-party service
providers to perform any Services that were not being performed by third-party
service providers immediately prior to the closing of the Acquisition.  Provided that Parent and/or SDV, as
applicable, provide oversight and management of such third party service
providers in a manner consistent with their past practices, Parent and SDV
shall have no responsibility or liability for or with respect to any Services
performed by any third-party service provider.

 

(h)           Cooperation. 
In the event that the provision of a Service would violate Applicable
Law, the Parties agree to work together in good faith to arrange for an
alternative means by which Buyer may obtain, at Buyer’s sole cost, the Services
so affected in compliance with Applicable Law.

 

(i)            Designated Contact.  Parent shall appoint one of its employees who
shall have general day-to-day responsibility for managing the Services and
licenses provided hereunder and for keeping Buyer advised in a timely matter
regarding the performance of Services and licenses (the “Designated Contact”).  The Designated Contact may perform other
duties that Parent deems appropriate. 
The initial Designated Contact under this Agreement shall be Brian
Magstadt.  Parent may remove and replace
the employee serving as the Designated Contact at any time or times.

 

SECTION 3.         Licenses

 

(a)           Simpson Trademarks License Grant.  Subject to the terms and conditions of this
Agreement, SDV and Parent, individually and collectively, hereby grant to Buyer
and M&G, during the Term, a limited, non-exclusive, non-transferable, fully
paid, royalty free, license and right to use the Simpson Trademarks solely for
the purpose of Buyer marketing, selling, and otherwise using those certain SDV
products included in the Assets that were manufactured by SDV before the
Closing or are in the process of being manufactured by SDV immediately before
the Closing and as contemplated by the Purchase Agreement.  The license granted in this Section 3(a) shall
not include the right of Buyer or M&G to grant sublicenses.  SDV and Parent each retain all right, title,
and interest in and to their respective Simpson Trademarks, except for the
limited license granted to Buyer and M&G pursuant to this Section 3(a).  Nothing herein shall be construed to
restrict, impair, encumber, alter, deprive, or adversely affect SDV’s and/or
Parent’s intellectual property rights in and to Simpson Trademarks.

 

(b)           Simpson Blue Screen Program License Grant.  Subject to the terms and conditions of this
Agreement, SDV and Parent, individually and collectively, hereby grant to Buyer
and M&G, a limited, perpetual, non-exclusive, non-transferable, fully paid,
royalty free, license and right to access and use the Object Code of the
Simpson Blue Screen Program solely 

 

3

 

for the purpose of conducting the Business.  From time to time, Parent, in its sole
discretion, may modify or update the Simpson Blue Screen Program and shall (i) keep
Buyer reasonably apprised as to all proposed modifications and updates, (ii) allow
Buyer to participate (if it wishes to do so) in the testing of such
modifications and updates, and (iii) promptly provide such modifications
and updates to Buyer.  Buyer shall host
the Simpson Blue Screen Program on a secure server at Buyer’s premises.  The license granted in this Section 3(b) shall
not include the right of Buyer or M&G to sublicense, assign, modify,
transfer, sell, market or otherwise dispose of this limited license, any
portion thereof or any of its rights under this Agreement.  Source Code for the Simpson Blue Screen
Program, Application Programming Interface (API) code and all other information
pertaining to the logic design of the Simpson Blue Screen Program is
specifically excluded from this license, and neither Buyer nor M&G shall
have any direct or indirect access to the Source Code for the Simpson Blue
Screen Program.  SDV and Parent each
retain all right, title, and interest in and to Simpson Blue Screen Program,
subject to the limited license granted to Buyer and M&G pursuant to this Section 3(b).  Nothing herein shall be construed to
restrict, impair, encumber, alter, deprive, or adversely affect SDV’s and
Parent’s right, title and interest in and to the Simpson Blue Screen
Program.  Any rights not expressly
granted herein are and shall be reserved.

 

(c)           Simpson Blue Screen Program Services.  During the Initial Term, Parent agrees to
provide reasonable maintenance and support in connection with the Simpson Blue
Screen Program at no charge to Buyer. 
During any Extended Term, Parent agrees to continue to provide
reasonable maintenance and support in connection with the Simpson Blue Screen
Program; provided Buyer agrees to pay a commercially reasonable, industry
standard fee for such maintenance and support services during any Extended
Term, such fee to be established in good faith by the parties prior to the
commencement of the Extended Term.  Such
reasonable maintenance and support shall include modifications, bug-fixes,
corrections, or additions that, when made or added to the Simpson Blue Screen
Program, bring the Simpson Blue Screen Program into material conformity with
the current specifications of the Simpson Blue Screen Program.  Buyer may request such reasonable maintenance
and support via the Designated Contact. 
If Buyer determines that Parent owns other software modules that were
used in connection with the Business but were not included as part of the
Simpson Blue Screen Program, Buyer may request such modules and Parent must
promptly provide such modules, which shall be included in the Simpson Blue
Screen Program licensed hereunder.  Apart
from such reasonable maintenance and support, Buyer is solely responsible for
operating the Simpson Blue Screen Program. 
Buyer shall be solely responsible for any expenses incurred by Parent in
connection with such maintenance and support services, and Buyer shall promptly
reimburse Parent for any out-of-pocket expenses incurred by Parent in
connection with such services.  Neither
SDV nor Parent has any obligation to provide, and shall not provide, any
maintenance and support for the Simpson Blue Screen Program after expiration of
the Term or after the earlier termination of this Agreement.  Additionally, after the Term, neither Parent
nor SDV shall have any obligation to retain or continue to monitor, support or
operate the Simpson Blue Screen Program.

 

(d)           Third Party Licenses.  With respect to commercially available
third-party software that shall have been licensed by Parent or its Affiliates
(other than SDV) immediately before the Closing, including, without limitation,
the software used for project management, ticketing, project tracking, defect
tracking, and billing systems; that is, Microsoft Office, 

 

4

 

Microsoft Exchange, Microsoft Dynamics AX, AutoCAD,
Autodesk Inventor, and Citrix, the parties agree that such third-party software
licenses shall not be assigned or subleased to Buyer; provided, that at the
Closing Parent or SDV shall pay to Buyer the sum of $40,000 by wire transfer of
immediately available funds.  For
clarity, Parent and SDV represent that the Simpson Blue Screen Program does not
incorporate any third-party software for which Buyer would need to obtain a
separate license from a third party in order to use the Simpson Blue Screen
Program as contemplated herein.

 

(e)           Representations and Warranties.  SDV and Parent, individually and
collectively, represent and warrant that SDV or Parent owns and hereafter will
own the necessary rights in order to make the grant of rights, licenses, and
permissions made in this Section 3, and that the exercise of such rights,
licenses, and permissions by Buyer and M&G shall not violate,
misappropriate, or infringe the rights of any third party, including, without
limitation, the intellectual property rights of any third party.

 

(f)            Disclaimer. 
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY OF THE OTHER
TRANSACTION DOCUMENTS:  (a) IT IS
UNDERSTOOD AND AGREED THAT NEITHER SDV NOR PARENT IS MAKING, AND NEITHER SDV
NOR PARENT HAS AT ANY TIME MADE, ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND
OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE SIMPSON TRADEMARKS, THE
SIMPSON BLUE SCREEN PROGRAM, OR THE SERVICES; (b) BUYER ACKNOWLEDGES AND
AGREES THAT THE SIMPSON TRADEMARKS, THE SIMPSON BLUE SCREEN PROGRAM, AND THE
SERVICES SHALL BE PROVIDED HEREUNDER “AS IS, WHERE IS, AND WITH ALL FAULTS”;
AND (c) BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND SDV AND PARENT ARE
NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES,
STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING OR RELATING TO THE
SIMPSON TRADEMARKS, THE SIMPSON BLUE SCREEN PROGRAM, OR THE SERVICES.

 

(g)           Limitation of Liabilities.  THE FOLLOWING LIMITATIONS SHALL NOT APPLY TO
ANY CLAIM THAT (A) IS SUBJECT TO INDEMNIFICATION UNDER ANY TRANSACTION
DOCUMENT OR (B) ARISES OUT OF GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR
FRAUD:  IN NO EVENT SHALL ANY PARTY TO
THIS AGREEMENT BE LIABLE TO ANY OTHER PARTY TO THIS AGREEMENT, WHETHER IN
CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING LOST DATA, DAMAGE TO
PROPERTY AND LOST PROFIT OR BUSINESS INTERRUPTION) EVEN IF SUCH PARTY HAS BEEN
ADVISED, IS AWARE OR SHOULD BE AWARE, OF THE POSSIBILITY OF SUCH DAMAGES.

 

(h)           Necessary Acts, Further Assurances.  Upon reasonable request by Buyer, SDV and/or
Parent (as appropriate) shall execute and deliver such further documents and
instruments and shall take such other actions as may be reasonably necessary or
appropriate to evidence or carry out the intent and purposes of the grant of
rights, licenses, and permissions made in this Section 3.

 

5

 

SECTION 4.         Term
and Termination.

 

(a)           Term.  This
Agreement shall commence as of the date of this Agreement and shall terminate
at the close of business on the 180th day following
such date (the “Initial Term”). 
Buyer, at its option, by notice given to Parent at least ten (10) Business
Days prior to the end of the Initial Term, may extend the term of this Agreement
for an additional period of up to twelve (12) months (the “Extended Term”);
provided Buyer agrees to pay a commercially reasonable fee for the Services
during any Extended Term, such fee to be established by the parties promptly
following the giving of such notice by Buyer. 
The Initial Term and any Extended Term are collectively referred to as
the “Term” of this Agreement.

 

(b)           Transmission of Books, Records and Files.  On a schedule and in a format to be mutually
agreed upon between Parent and Buyer prior to the termination of the applicable
Service, subject to Applicable Law, Parent shall transfer or cause to transfer
one copy of each of the Books, Records and Files, if any, created by Parent for
the benefit of Buyer during the Term. 
Parent shall only be obligated to provide such copies of Books, Records
and Files pursuant to this Section 4(b) in the form, condition and
format in which they exist as of the end of the Term, and in no event shall
either Party be required to perform any improvement, modification, conversion,
updating or reformatting of any such Books, Records and Files.  Buyer shall promptly reimburse Parent for the
reasonable costs, if any, of creating, gathering, copying and transporting such
Books, Records and Files.  Such costs
shall be computed in accordance with Parent’s standard methodology and
procedures, or, if none exist, based on Parent’s good faith, reasonable
estimation.  Notwithstanding anything to
the contrary contained herein, Parent may redact any information not related to
the Business from any Books, Records and Files and similar materials conveyed
pursuant to this Section 4(b). 
Nothing contained in this Section 4(b) shall be construed to
require Parent to provide copies of the Source Code for the Simpson Blue Screen
Program to Buyer.

 

SECTION 5.         Canadian
Transition.

 

(a)           During the period from the date hereof to December 31,
2010, or such earlier date hereafter as Buyer may specify in a written notice
given to Parent, Buyer agrees that Buyer shall continue to supply Products to
Simpson Strong-Tie Canada, Limited (“Strong-Tie Canada”) in the ordinary course
of the Business at the prices and on the terms that such Products were sold to
Strong-Tie Canada immediately before the date hereof.

 

(b)           Buyer agrees to purchase from Strong-Tie Canada its entire
inventory of Products on hand as of January 1, 2011, at a cost equal to
the price paid for such Products by Strong-Tie Canada, inclusive any freight
charges, shipping charges, taxes, and duties separately stated on the sales
invoice for such Products.  Strong-Tie
Canada shall deliver the Products to Seller on or before January 31, 2011,
FOB the warehouse location where such Products shall have been stored by
Simpson Strong-Tie Canada.  Parent and
Strong-Tie Canada shall be solely responsible for any shipping, handling or
other costs incurred in connection with the return of such Products to
Buyer.  On or before March 1, 2011,
Buyer shall pay Strong-Tie Canada in Canadian Dollars for all such
Products.  Parent represents to Buyer that
Strong-Tie Canada has an inventory of Products as of the date of this Agreement
of approximately $400,000, based on the price paid by Strong-Tie Canada for
such Products.

 

6

 

(c)           At Buyer’s request, Parent agrees to reasonably cooperate
with and assist Buyer in efforts to contact and possibly hire the sales person
currently engaged by Strong-Tie Canada regarding working for Buyer after December 31,
2010 or such earlier date as Buyer may specify as provided above.  Buyer acknowledges that no representations
have been made by Parent or Strong-Tie Canada as to whether such employee will
elect to work for Buyer if Buyer makes an employment offer to such employee.

 

SECTION 6.         Miscellaneous.

 

(a)           Effectiveness.  Each Party hereby agrees and acknowledges
that the effectiveness and validity of all other provisions of this Agreement
is expressly subject to the consummation of the Acquisition.

 

(b)           Acknowledgement. 
Each Party hereby acknowledges that this Agreement is being entered into
by the Parties pursuant to Section 2.2(a)(viii) of the Purchase
Agreement.

 

(c)           Severability. 
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any Applicable Law, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect
for so long as the economic or legal substance of the transactions contemplated
by this Agreement is not affected in any manner materially adverse to any
Party.  Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties shall negotiate in good faith to modify this Agreement to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated by this Agreement are consummated as
originally contemplated to the greatest extent possible.

 

(d)           Entire Agreement. 
This Agreement supersedes all prior agreements, whether written or oral,
between the Parties with respect to its subject matter and constitutes (along
with the Purchase Agreement and the documents executed and delivered in
connection therewith and the Schedules delivered pursuant to this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter.

 

(e)           Confidentiality. 
Any and all “Confidential Information” (as such term is defined in the
Purchase Agreement) obtained by Buyer, SDV or any of their Affiliates shall be
subject to Section 10.6 of the Purchase Agreement.

 

(f)            Assignment. 
This Agreement may not be assigned without the express written consent
of each of the Parties.  Any purported
assignment in contravention of this provision shall be null and void.

 

(g)           Amendment. 
This Agreement may not be amended or modified except (i) by an
instrument in writing signed by, or on behalf of, Buyer and Parent, (ii) by
a waiver in accordance with Section 6(h), or (iii) in accordance with
the procedures set forth in Section 2(b) hereof.

 

(h)           Waiver. 
Either Party to this Agreement may (a) extend the time for the
performance of any of the obligations or other acts of the other Party or (b) to
the extent permitted by Applicable Law, waive compliance with any of the
agreements of the other Party or conditions to such Party’s obligations
contained herein.  Any such extension or
waiver shall be 

 

7

 

valid only if set forth in an instrument in writing
signed by the Party to be bound thereby. 
Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition of this Agreement.  The failure of either Party hereto to assert
any of its rights hereunder shall not constitute a waiver of any of such
rights.

 

(i)            No Third Party Beneficiaries.  This Agreement shall be binding upon and
inure solely to the benefit of the Parties and their respective successors and
permitted assigns, and nothing herein is intended to or shall confer upon any
other person or entity any legal or equitable right, benefit or remedy of any
nature whatsoever, including any rights of employment for any specified period,
under or by reason of this Agreement.

 

(j)            Other Remedies. 
Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a Party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by Applicable Law or equity
upon such Party, and the exercise by a Party of any one remedy will not
preclude the exercise of any other remedy.

 

(k)           Interpretive Rules. 
The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement, and all Section references are to
this Agreement unless otherwise specified. 
The words “include,” “includes” and “including” will be deemed to be
followed by the phrase “without limitation.” 
The word “days” means calendar days unless otherwise specified
herein.  The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. 
No provision of this Agreement shall be construed to require a Party or
its respective officers, directors, or Affiliates to take any action that would
violate or conflict with any Applicable Law. 
The word “if” means “if and only if.” 
The word “or” shall not be exclusive. 
The meanings given to terms defined herein will be equally applicable to
both the singular and plural forms of such terms.  Whenever the context may require, any pronoun
includes the corresponding masculine, feminine and neuter forms.  Except as otherwise expressly provided
herein, all references to “dollars” or “$” will be deemed references to the
lawful money of the United States of America.

 

(l)            Title to Intellectual Property.  Except for the grant of rights, licenses, and
permissions made in Section 3 of this Agreement, each Party acknowledges
that it shall acquire no right, title or interest (including any license rights
or rights of use) in any intellectual property that is owned or licensed by the
other Party by reason of the provisions of this Agreement.  Neither Party shall remove or alter any
copyright, trademark, confidentiality or other proprietary notices that appear
on any property of the other Party relating to intellectual property owned or
licensed by such other Party, and neither Party shall reproduce any such notice
on any copy thereof.  Neither Party shall
attempt to decompile, translate, reverse engineer or make excessive copies of
any intellectual property owned by or licensed to the other Party, and such
Party shall promptly notify the other Party of any such attempt, regardless of
whether by such Party or any third party, of which it becomes aware.  Nothing in this Agreement shall affect any
rights or obligations maintained by, granted to, or to be performed by a Party
under the Purchase Agreement or any other Transaction Documents.

 

8

 

(m)          Force Majeure. 
No Party shall be liable to another Party if, and to the extent that,
the performance or delay in performance of any of its obligations under this
Agreement is prevented, restricted, delayed or interfered with due to
circumstances beyond the reasonable control of such Party, including, but not
limited to, government legislation, fires, floods, explosions, epidemics,
accidents, acts of God, wars, terrorism, riots, strikes, lockouts or other
concerted acts of workers and/or acts of government.  The Party claiming an event of force majeure
shall promptly notify the other Party in writing, and provide a reasonably
detailed explanation of the cause or event and the date of first occurrence
thereof, as soon as possible after the event and also keep the other Party
informed of any further developments. 
The Party so affected shall use its commercially reasonable efforts to
remove the cause of non-performance, and both Parties shall promptly resume
performance hereunder when such cause is removed.

 

(n)           Independent Contractors.  The Parties each acknowledge that they are
separate entities, each of which has entered into this Agreement for
independent business reasons. The relationships of the Parties hereunder are
those of independent contractors and nothing contained herein shall be deemed
to create a joint venture, partnership or any other relationship.

 

(o)           Governing Law. 
This Agreement and any disputes hereunder shall be governed by and
construed in accordance with the internal laws of the State of California
without giving effect to any choice or conflict of law provision or rule (whether
of the State of California or any other jurisdiction) that would cause the application
of laws of any jurisdiction other than those of the State of California.

 

(p)           Survival.  Section 1
(Definitions), Section 3(b) (Simpson Blue Screen Program License
Grant), Section 3(e)(Representations and Warranties), Section 3(f)(Disclaimer),
Section 3(g)(Limitation of Liabilities), Section 4(b)(Transmission of
Books, Records and Files), Section 5(b)(Canadian Transition) (for the
period defined in Section 5(b) only), and Section 6 (Miscellaneous),
shall survive any expiration or termination of this Agreement; provided, that
the provisions of Section 3(e) (Representations and Warranties) shall survive
for a period of eighteen (18) months after the Term, unless a claim is made by
Buyer prior to the end of such period, in which case the provisions subject to
such claim shall survive until the final resolution of such claim.

 

(q)           Notices.  Any
notice to be given hereunder to any Party or Person subject hereto shall be
given in the manner provided in the Asset Purchase Agreement (and shall be
deemed to have been given as provided therein), and otherwise as the Persons
subject to this Agreement may designate in writing delivered to the Parties.

 

(r)            Dispute Resolution.  In the event either Party hereto (i.e., Buyer
and M&G, on the one hand, and Parent and SDV, on the other hand) determines
that the other Party is in breach of any provision of this Agreement, such
determining Party (the “Claimant”), before commencing any litigation regarding
such breach, shall give written notice of its claim regarding such breach to a
representative selected by such other Party. 
Promptly after such notice is given (and in any event no later than five
(5) Business Days thereafter) the representative of such other Party and
the representative of the Claimant shall meet (in person or by conference call
at the election of  the Claimant) and
negotiate in good faith regarding the possible resolution of such claim.  In the event such resolution is not reached,
the Claimant shall have the right to pursue all rights and 

 

9

 

remedies available to the Claimant.  For purposes of this Section 6(r), the
representative initially selected by Parent/SDV is Karen Colonias and the
representative initially selected by Buyer is Wim Straver.  Such Party’s representative may be changed at
any time by written notice to the other Party naming a new representative.

 

(s)           Counterparts. 
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different Parties in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.

 

10

 

IN
WITNESS WHEREOF, each of Parent, SDV, Buyer and M&G has caused this
Transition Services and License Agreement to be executed as of the date first
written above by their respective officers thereunder duly authorized.

 

	
   

  	
  PARENT:

  
	
   

  	
   

  
	
   

  	
  SIMPSON
  MANUFACTURING CO., INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  SDV:

  
	
   

  	
   

  
	
   

  	
  SIMPSON
  DURA-VENT COMPANY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
   

  	
  SMOKEY
  ACQUISITION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  M&G
  HOLDING B.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

11

 

 

SCHEDULE A

 

INFORMATION TECHNOLOGY SERVICES

 

Description

 

During
the Initial Term, Information Technology Operations (“ITO”)
services shall be provided by Parent to Buyer for all internally developed
applications, and assets owned or managed by Parent in connection with SDV and
the Business immediately prior to the Acquisition.  The ITO services will allow Buyer to continue
to run in a manner substantially similar to the manner conducted by Parent
immediately prior to the Acquisition, all current existing applications and
systems used to process and support the Business systems for all customers for
the Initial Term of this Agreement.

 

To
the extent practicable, the IT systems will continue to be supported by the
existing Parent support team for the Initial Term of this Agreement.  Buyer will continue to be assisted by the
Parent core systems support team for all shared components as well as network,
system support, system backups and restores, web services (including any
internet web-sites), billing and all other areas currently being reasonably
required for the daily support of the system, provided that Buyer shall be
solely responsible for ensuring that any backups Buyer wishes to make are
implemented.

 

The
ITO services shall also include all standard ITO services and systems
reasonably sufficient for Buyer to conduct the Business from and after the Closing
Date in the ordinary course of business in the manner that SDV conducted the
Business immediately before the Acquisition and without interruption, including:

 

·                  Core
problem and change management

·                  Any
allocated, dedicated, or shared Parent IT, help desk or support staff

·                  Access
to and use of existing network infrastructure to allow existing SDV customers
to access SDV systems as well as to allow existing support personnel to monitor
and support the SDV systems

 

The ITO services shall also include all existing
security functions, services and systems reasonably sufficient for Buyer to
conduct the Business from and after the Closing Date in the ordinary course of
business in the manner that SDV conducted the Business immediately before the
Acquisition and without interruption.

 

Parent
shall notify Buyer within twenty-four (24) hours of the occurrence of any
material security or compliance event of which Parent becomes aware.

 

Within
60 days from the date of this Agreement, the Parties shall work together in
good faith to create a transition plan designed to transition to Buyer the
foregoing responsibilities as soon as reasonably practicable  and in any event by the end of the Initial
Term.  Such transition plan shall be
updated periodically by the Parties.

 

12

 

SCHEDULE B

 

BACK-OFFICE SERVICES, SYSTEMS AND SUPPORT

 

Description

 

During
the Initial Term, Parent shall provide access to reasonable additional
corporate support staff sufficient for Buyer to conduct the Business from
and after the Closing Date in the ordinary course of business in the manner
that SDV conducted the Business immediately before the Acquisition and without
interruption, including:

 

·                  Finance and
Accounting Support

1.               Parent
will provide Buyer with sufficient financial detail needed for Buyer to
establish an opening balance sheet. 
Supplemental financial information should be provided to Buyer as
reasonably requested throughout the transition process.

2.               Financial
data provided should include a detailed fixed Asset list as of purchase date;
list should include Asset description, purchase date and purchase amount,
current accumulated depreciation and/ or net book value by asset.

3.               Parent
will provide available additional financial information as reasonably needed
throughout the transition.

 

·                  Tax Support

1.               Parent
will continue to update any changes in sales tax rates for specific
jurisdictions, if applicable; provided, however, that Buyer shall be
responsible for confirming the accuracy and completeness of all such
information as shown on customer invoices.

2.               Parent
will appoint one of its employees who shall have general day-to-day
responsibility for including sales tax information in the Simpson Blue Screen
Program.  Buyer shall promptly notify
such designated employee of Parent if Buyer becomes aware that any of the sales
tax information on customer invoices is inaccurate or incomplete.

 

·                  Billing
System Support

1.               In
preparation for the billing transition, Parent shall provide Buyer with
adequate customer information including customer name and contact, customer
billing address, and any special billing arrangements made with customers in a
mutually agreed upon electronic file format, all with respect only to customers
of SDV immediately before the Acquisition. 
Parent should also identify which accounts are on a consolidated bill
(invoice includes billing for more than one account number), and include the
address for the consolidated bills.

2.               Parent
shall continue to provide invoicing services to customers until all customers
have been transitioned to Buyer’s billing system.  Invoicing Services include preparation and
delivery of customer invoices, as well as maintaining any non-standard billing
arrangements with customers (electronic billing, expedited
delivery, etc.).  Invoices should be
delivered using standard SDV delivery procedures, and within standard delivery
times.  After customer invoicing is
complete, Buyer will be provided an electronic file, format to be mutually
agreed, that includes sufficient 

 

13

 

detail by customer and invoice for updating Buyer’s
accounting records.

3.               Parent
shall provide invoices on a calendar month end basis to customers, i.e.
invoices should include billing for July 01-July 31, 2010;
August 01-August 31; etc., unless such invoices were provided on a
different basis immediately before the Acquisition.

4.               All
invoices produced during to the transition should include the Buyer’s payment
address.

5.               All
invoices produced during the transition should include a notice of the change
in payment address.

 

·                          Payroll Support.

1.               Parent shall
provide Buyer user support necessary to transition the Business personnel to
new payroll systems operated by Buyer as soon after the Closing as practicable,
but in no event shall Parent be responsible for the actual processing of
payroll which accrues subsequent to the Closing.  This service shall include activities
necessary to support calendar year-end payroll requirements, including but not
limited to W-2 generation and other related closing statements or activities.

 

·                  Accounts
Payable Support.

1.                Parent shall provide to
Buyer support necessary to transition accounts payable information and data to
new accounts payable support systems operated by Buyer as soon after the
Closing as practicable, but in no event shall Parent be responsible for the
actual payment or processing of accounts payable which are incurred and accrue
before or subsequent to the Closing.  All
required accounts payable detail for closure of outstanding payables/purchase
orders is to be provided by Parent’s accounting system.

 

14

 

SCHEDULE C

 

EMPLOYEE BENEFITS AND HUMAN RESOURCES

 

Description

 

During
the Initial Term, Parent shall assist Buyer with the following employment and
human resource matters:  subject to
Applicable Law, assisting Buyer in the smooth transition of employees of SDV
that Buyer elects to hire after the Closing.

 

15

 

SCHEDULE D

 

RISK MANAGEMENT SERVICES

 

Description

 

During
the Initial Term, Parent shall provide reasonable assistance to Buyer with the
following risk management/insurance matters:

 

1.                   assisting Buyer
in analyzing all corporate, production and other risks and insurance issues
relating to the Business.

 

2.                   obtaining
information for insurance underwriters for insurance policy placement, or for
other means in protecting risk exposures.

 

3.                   providing
information and responding to questions of Buyer regarding insurance policies
and claim information.

 

4.                   arranging for
bonds, certificates of insurance, filings, and the like where applicable.

 

5.                   administering
corporate/production insurance claims.

 

6.                   providing
information and responding to questions of Buyer regarding safety and
environmental services.

 

7.                   cooperating
with, advising, and assisting Buyer in obtaining, renewing and negotiating
insurance policies appropriate for the Business.

 

16

 

SCHEDULE E

 

SIMPSON BLUE SCREEN PROGRAM

 

	
  Exe

  	
   

  	
  Name

  
	
  Itmstr

  	
   

  	
  itemmaster

  
	
  Mlt

  	
   

  	
  material
  master

  
	
  Rdrin

  	
   

  	
  order
  entry

  
	
  Wo

  	
   

  	
  work
  order

  
	
  Po

  	
   

  	
  purchase
  order system

  
	
  Emp

  	
   

  	
  employee
  master

  
	
  Cust

  	
   

  	
  customer
  master

  
	
  Ship

  	
   

  	
  shipping
  program

  
	
  Inv

  	
   

  	
  invoicing
  printing program

  
	
  Slsinv

  	
   

  	
  invoice
  inquiry

  
	
  Stkinq

  	
   

  	
  stock
  inquiry

  
	
  Stksts

  	
   

  	
  stock
  status report

  
	
  Whsinq

  	
   

  	
  warehouse
  programs

  
	
   

  	
   

  	
   

  
	
  Apvend

  	
   

  	
  AP
  vendor master

  
	
  Mcnuse

  	
   

  	
  machine
  loading

  
	
  Coil

  	
   

  	
  coil
  id system

  
	
  Mtlsts

  	
   

  	
  raw
  material status report

  
	
  Ncmrnon

  	
   

  	
  conforming
  mtl system

  
	
  Nrpmcn

  	
   

  	
  nrp
  machine load

  
	
  Upclbl6

  	
   

  	
  product
  label printing

  
	
  Wohrs

  	
   

  	
  work
  order labor analysis

  
	
  Vser

  	
   

  	
  vendor
  service exceptions

  
	
  ECO

  	
   

  	
  engineering
  change orders

  
	
  Itmlog

  	
   

  	
  item
  activity

  
	
  Itmadj

  	
   

  	
  inventory
  adjustment program

  
	
  Invcost

  	
   

  	
  inventory
  cost report

  
	
  Mtllog

  	
   

  	
  material
  activity

  
	
  Mtladj

  	
   

  	
  raw
  material adjustment pgm

  
	
  Nrpitm

  	
   

  	
  NRP
  for FG and Comp

  
	
  Nrpmtl

  	
   

  	
  NRP
  for Raw Mtls

  
	
  Pay

  	
   

  	
  payroll
  program

  
	
  Cipc

  	
   

  	
  shop
  floor labor collection sys

  
	
  Edi
  +

  	
   

  	
  there
  are 5 edi programs

  
	
   

  	
   

  	
   

  
	
  Bin

  	
   

  	
  bin
  master

  
	
  Bmtrdisp

  	
   

  	
  barometer

  
	
  Mtlbin

  	
   

  	
  raw
  material bin master

  
	
  Itmqty

  	
   

  	
  physical
  inventory for FGs

  
	
  Mtlqty

  	
   

  	
  physical
  inventory for RMs

  

 

17

 

	
  Exe

  	
   

  	
  Name

  
	
  Stdinq

  	
   

  	
  std
  cost inquiry

  
	
  Stdcalc

  	
   

  	
  std
  cost re-calc pgm

  
	
  Train

  	
   

  	
  training
  database

  
	
  Slsinq

  	
   

  	
  sales
  inquiry pgm

  
	
   

  	
   

  	
   

  
	
  Accounting:

  	
   

  	
   

  
	
  GL

  	
   

  	
  gl
  account numbers

  
	
  Flow

  	
   

  	
  cost
  flow report

  
	
  Ovhd

  	
   

  	
  set
  overhead rates

  
	
  Invcost

  	
   

  	
  inventory
  cost report

  
	
   

  	
   

  	
   

  
	
  AR:

  	
   

  	
   

  
	
  Age

  	
   

  	
  AR
  aging report

  
	
  CRIN

  	
   

  	
  cash
  receipts entry

  
	
  Drget

  	
   

  	
  invoice
  import

  
	
  Stmnt

  	
   

  	
  statement
  printing program

  
	
  Drin

  	
   

  	
  invoice
  editor

  
	
  Prdend

  	
   

  	
  period
  end closing

  
	
   

  	
   

  	
   

  
	
  AP:

  	
   

  	
   

  
	
  Vend

  	
   

  	
  vendor
  master

  
	
  Gldist

  	
   

  	
  account
  distribution report

  
	
  Age

  	
   

  	
  acct
  aging report

  
	
  Id

  	
   

  	
  bank
  id master

  
	
  Chk

  	
   

  	
  check
  printing program

  
	
  Chkrecon

  	
   

  	
  (3
  pgms for chk recons)

  
	
  Chkreg

  	
   

  	
  check
  register

  
	
  Tde

  	
   

  	
  payables
  entry

  
	
  Yrend

  	
   

  	
  year
  end closing

  
	
  Apinq

  	
   

  	
  payables
  inquiry

  
	
   

  	
   

  	
   

  
	
  GL:

  	
   

  	
   

  
	
  GL

  	
   

  	
  GL
  account master

  
	
  GLBUD

  	
   

  	
  Gl
  Budget

  
	
  TDE

  	
   

  	
  data
  entry

  
	
  IMP

  	
   

  	
  import
  program

  
	
  Jvlog

  	
   

  	
  journal
  voucher log report

  
	
  lgr

  	
   

  	
  general
  ledger

  
	
  tb

  	
   

  	
  trial
  balance printout

  
	
  glinq

  	
   

  	
  GL
  inquiry

  
	
  Run

  	
   

  	
  report
  writer print

  
	
  Def

  	
   

  	
  report
  writer

  

 

18

 

EXHIBIT G

 

FORM OF VACAVILLE LEASE AGREEMENT

 

(Attached)

 

1

 

LEASE

 

SIMPSON MANUFACTURING CO., INC., (LANDLORD)

 

and

 

[NEWCO, INC., (TENANT)

 

PREMISES LOCATED AT

 

877 COTTING COURT, AND 902 ALDRIDGE ROAD, VACAVILLE, CALIFORNIA

 

2

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Building;
  Premises

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Lease
  Term

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  Rentable
  Area

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  Commencement
  Date

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.5

  	
  Expiration
  Date

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.6

  	
  Base
  Rent

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.7

  	
  Tenant’s
  Percentage Share

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.8

  	
  [Security
  Deposit

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.9

  	
  Tenant’s
  Permitted Use

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.10

  	
  Landlord’s
  Address For Notices

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.11

  	
  [Tenant’s
  Address For Notices

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  PREMISES

  	
  2

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Lease
  of Premises

  	
  2

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Parking

  	
  2

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Acceptance
  of Premises

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  TERM

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  RENTAL

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Definitions

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Base
  Rent

  	
  5

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Adjustment
  Procedure; Estimates

  	
  5

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  Review
  of Statement

  	
  6

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  Payment

  	
  7

  
	
   

  	
   

  	
   

  
	
  4.6

  	
  Late
  Charge; Interest

  	
  7

  
	
   

  	
   

  	
   

  
	
  4.7

  	
  Additional
  Rent

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  SECURITY DEPOSIT

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  USE OF PREMISES

  	
  8

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Tenant’s
  Permitted Use

  	
  8

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Compliance
  With Laws and Other Requirements

  	
  8

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Hazardous
  Materials

  	
  9

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  UTILITIES AND SERVICES

  	
  11

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Building
  Services

  	
  11

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Interruption
  of Services

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  MAINTENANCE AND REPAIRS

  	
  13

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Landlord’s
  Obligations

  	
  13

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Tenant’s
  Obligations

  	
  13

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Landlord’s
  Rights

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  ALTERATIONS, ADDITIONS AND IMPROVEMENTS

  	
  13

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Landlord’s
  Consent; Conditions

  	
  13

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Performance
  of Alterations Work

  	
  14

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Liens

  	
  14

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Lease
  Termination

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  INDEMNIFICATION AND INSURANCE

  	
  15

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Indemnification

  	
  15

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Property
  Insurance

  	
  16

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Liability
  Insurance

  	
  17

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  Workers’
  Compensation Insurance

  	
  17

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  Policy
  Requirements

  	
  17

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  Waiver
  of Subrogation

  	
  18

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  Failure
  to Insure

  	
  18

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  Exemption
  of Landlord from Liability

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  DAMAGE OR DESTRUCTION

  	
  19

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Total
  Destruction

  	
  19

  
	
   

  	
   

  	
   

  
	
  11.2

  	
  Partial
  Destruction of Premises

  	
  19

  
	
   

  	
   

  	
   

  
	
  11.3

  	
  Exceptions
  to Landlord’s Obligations

  	
  19

  
	
   

  	
   

  	
   

  
	
  11.4

  	
  Waiver

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
  CONDEMNATION

  	
  20

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Taking

  	
  20

  
	
   

  	
   

  	
   

  
	
  12.2

  	
  Award

  	
  20

  
	
   

  	
   

  	
   

  
	
  12.3

  	
  Temporary
  Taking

  	
  20

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
  RELOCATION

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
  ASSIGNMENT AND SUBLETTING

  	
  20

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  Restriction

  	
  20

  
	
   

  	
   

  	
   

  
	
  14.2

  	
  Notice
  to Landlord

  	
  21

  
	
   

  	
   

  	
   

  
	
  14.3

  	
  Landlord’s
  Recapture Rights

  	
  22

  
	
   

  	
   

  	
   

  
	
  14.4

  	
  Landlord’s
  Consent; Standards

  	
  22

  
	
   

  	
   

  	
   

  
	
  14.5

  	
  Additional
  Rent

  	
  22

  
	
   

  	
   

  	
   

  
	
  14.6

  	
  Landlord’s
  Costs

  	
  23

  
	
   

  	
   

  	
   

  
	
  14.7

  	
  Continuing
  Liability of Tenant

  	
  23

  
	
   

  	
   

  	
   

  
	
  14.8

  	
  Non-Waiver

  	
  23

  
	
   

  	
   

  	
   

  
	
  14.9

  	
  Remedies

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
  DEFAULT AND REMEDIES

  	
  23

  
	
   

  	
   

  	
   

  
	
  15.1

  	
  Events
  of Default By Tenant

  	
  23

  
	
   

  	
   

  	
   

  
	
  15.2

  	
  Remedies

  	
  24

  
	
   

  	
   

  	
   

  
	
  15.3

  	
  Landlord’s
  Right To Continue Lease Upon Tenant Default

  	
  25

  
	
   

  	
   

  	
   

  
	
  15.4

  	
  Right
  of Landlord to Perform

  	
  25

  
	
   

  	
   

  	
   

  
	
  15.5

  	
  Non-Waiver

  	
  25

  
	
   

  	
   

  	
   

  
	
  15.6

  	
  Cumulative
  Remedies

  	
  26

  
	
   

  	
   

  	
   

  
	
  15.7

  	
  Default
  by Landlord

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16

  	
  ATTORNEYS’ FEES; COSTS OF SUIT

  	
  26

  
	
   

  	
   

  	
   

  
	
  16.1

  	
  Attorneys’
  Fees

  	
  26

  
	
   

  	
   

  	
   

  
	
  16.2

  	
  Indemnification

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE 17

  	
  SUBORDINATION AND ATTORNMENT

  	
  27

  
	
   

  	
   

  	
   

  
	
  17.1

  	
  Subordination

  	
  27

  
	
   

  	
   

  	
   

  
	
  17.2

  	
  Attornment

  	
  27

  
	
   

  	
   

  	
   

  
	
  17.3

  	
  Mortgagee
  Protection

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE 18

  	
  QUIET ENJOYMENT

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19

  	
  RULES AND REGULATIONS

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE 20

  	
  ESTOPPEL CERTIFICATES

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE 21

  	
  ENTRY BY LANDLORD

  	
  29

  

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 22

  	
  LANDLORD’S LEASE UNDERTAKINGS — EXCULPATION FROM PERSONAL LIABILITY;
  TRANSFER OF LANDLORD’S INTEREST

  	
  30

  
	
   

  	
   

  	
   

  
	
  22.1

  	
  Landlord’s
  Lease Undertakings

  	
  30

  
	
   

  	
   

  	
   

  
	
  22.2

  	
  Transfer
  of Landlord’s Interest

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE 23

  	
  HOLDOVER TENANCY

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 24

  	
  NOTICES

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 25

  	
  BROKERS

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 26

  	
  COMMUNICATIONS AND COMPUTER LINES

  	
  32

  
	
   

  	
   

  	
   

  
	
  26.1

  	
  Generally

  	
  32

  
	
   

  	
   

  	
   

  
	
  26.2

  	
  Interruption

  	
  32

  
	
   

  	
   

  	
   

  
	
  26.3

  	
  Removal

  	
  32

  
	
   

  	
   

  	
   

  
	
  26.4

  	
  Abandonment

  	
  32

  
	
   

  	
   

  	
   

  
	
  26.5

  	
  New
  Providers

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE 27

  	
  MISCELLANEOUS

  	
  33

  
	
   

  	
   

  	
   

  
	
  27.1

  	
  Entire
  Agreement

  	
  33

  
	
   

  	
   

  	
   

  
	
  27.2

  	
  Amendments

  	
  34

  
	
   

  	
   

  	
   

  
	
  27.3

  	
  Successors

  	
  34

  
	
   

  	
   

  	
   

  
	
  27.4

  	
  Force
  Majeure

  	
  34

  
	
   

  	
   

  	
   

  
	
  27.5

  	
  Survival
  of Obligations

  	
  34

  
	
   

  	
   

  	
   

  
	
  27.6

  	
  Light
  and Air

  	
  34

  
	
   

  	
   

  	
   

  
	
  27.7

  	
  Governing
  Law

  	
  34

  
	
   

  	
   

  	
   

  
	
  27.8

  	
  Severability

  	
  34

  
	
   

  	
   

  	
   

  
	
  27.9

  	
  Captions

  	
  34

  
	
   

  	
   

  	
   

  
	
  27.10

  	
  Interpretation

  	
  34

  
	
   

  	
   

  	
   

  
	
  27.11

  	
  Independent
  Covenants

  	
  35

  
	
   

  	
   

  	
   

  
	
  27.12

  	
  Number
  and Gender

  	
  35

  
	
   

  	
   

  	
   

  
	
  27.13

  	
  Time
  is of the Essence

  	
  35

  
	
   

  	
   

  	
   

  
	
  27.14

  	
  Joint
  and Several Liability

  	
  35

  
	
   

  	
   

  	
   

  
	
  27.15

  	
  Exhibits

  	
  35

  
	
   

  	
   

  	
   

  
	
  27.16

  	
  No
  Counterclaim; Choice of Laws; Waiver of Jury Trial

  	
  35

  

 

iv

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  27.17

  	
  Electrical
  Service to the Premises

  	
  35

  
	
   

  	
   

  	
   

  
	
  27.18

  	
  Rights
  Reserved by Landlord

  	
  35

  
	
   

  	
   

  	
   

  
	
  27.19

  	
  No
  Recordation

  	
  36

  
	
   

  	
   

  	
   

  
	
  27.20

  	
  No
  Merger

  	
  36

  
	
   

  	
   

  	
   

  
	
  27.21

  	
  Financial
  Reports

  	
  36

  
	
   

  	
   

  	
   

  
	
  27.22

  	
  Presumption

  	
  36

  
	
   

  	
   

  	
   

  
	
  27.23

  	
  Signing
  Authority

  	
  36

  

 

v

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  EXHIBIT A
  FLOOR PLAN OF PREMISES

  	
  A-1

  
	
   

  	
   

  
	
  EXHIBIT B
  RULES

  	
  B-1

  

 

vi

 

LEASE

 

THIS
LEASE (“Lease”), dated
[                          2010  (“Commencement Date”) is made and entered
into by and between Simpson Manufacturing Co. Inc., a Delaware corporation (“Landlord”),
and [Newco, Inc., a Delaware corporation] (“Tenant”), upon the following
terms and conditions:

 

ARTICLE 1

 

DEFINITIONS

 

Unless
the context otherwise specifies or requires, the following terms shall have the
meanings specified herein:

 

1.1           Building; Premises. 
The term “Building” and “Premises” shall mean those certain building
located at 877 Cotting Court (“Cotting Premises”) and 902 Aldridge Road (“Aldridge
Premises”), Vacaville, California, 
together with any related land, improvements, parking areas,  driveways, sidewalks and landscaping,  as more particularly outlined on the drawing
attached hereto as Exhibit A and incorporated herein by reference.

 

1.2           Lease Term.  The term “Lease Term” shall mean the period
between the Commencement Date and the Expiration Date (as such terms are
hereinafter defined), unless sooner terminated as otherwise provided in this
Lease.

 

1.3           Rentable Area. 
The term “Rentable Area” shall mean with respect to the Cotting Premises
120,300 square feet and with respect to the Aldridge Premises shall mean
158,885 square feet.

 

1.4           Commencement Date. 
The term “Commencement Date” shall mean the date the Lease is fully
executed by Landlord and Tenant.

 

1.5           Expiration Date. 
The term “Expiration Date” shall mean the last day of the 120th calendar
month following the Commencement Date.

 

1.6           Base Rent. 
The term “Base Rent” shall mean:

 

	
  Period

  	
   

  	
  Annual

  	
   

  	
  Monthly

  	
   

  
	
  Months 1-120

  	
   

  	
  $

  	
  935,000.00

  	
   

  	
  $

  	
  77,916.67

  	
   

  
								

 

(a)           Base Rent for the first month of the Term shall be paid on
the Commencement Date.

 

(b)           All rental payments shall be made payable to Landlord and
should be sent to the address designated below or to such other person or at
such other place as Landlord may from time to time designate in writing.

 

1

 

1.7           Tenant’s Percentage Share.  The term “Tenant’s Percentage Share” shall
mean 100% of the Property Taxes and 
Operating Expenses (as such terms are hereinafter defined), unless
Tenant at any time during the Term is not the Tenant of the entire Premises.

 

1.8           Security Deposit. 
The term “Security Deposit” shall mean an amount equal to
$467,500.00.  The Security Deposit shall
be paid upon the execution of this Lease by Tenant through a Letter of Credit
(as defined in Article 5).

 

1.9           Tenant’s Permitted Use.  The term “Tenant’s Permitted Use” shall mean
office, administration, manufacturing, research and development; provided
however that any  such manufacturing
shall be generally similar to the type of manufacturing occurring in the
Premises immediately  prior to the
Commencement Date.  Except for permits in
effect as of the Commencement Date, Tenant shall be responsible for maintaining
all necessary approvals and permits for the Use.

 

1.10         Landlord’s Address For Notices.  The term “Landlord’s Address for Notices”
shall mean  Simpson Manufacturing Co., Inc.,
5956 West Las Positas Boulevard, Pleasanton, California 94588, Attention:  CFO with a copy to Shartsis, Friese LLP, One
Maritime Plaza, 18th Floor, San Francisco, California 94111, Attention:  Alan Robin, Esq..

 

1.11         [Tenant’s Address For Notices.  The term “Tenant’s Address for Notices” shall
mean
                                                                                                                                                .

 

ARTICLE 2

 

PREMISES

 

2.1           Lease of Premises. 
Landlord hereby leases the Premises to Tenant, and Tenant hereby leases
the Premises from Landlord, upon all of the terms, covenants and conditions
contained in this Lease. Landlord shall deliver the Premises to the Tenant on
the Commencement Date.

 

2.2           Parking.  For
and in consideration of its performance of its obligations hereunder,
including, but not limited to the remittance of Rent, Tenant shall have the
right to use the paved parking area identified on Exhibit A and included
within the Premises.

 

2.3           Acceptance of Premises.

 

(a)           Tenant acknowledges that Landlord has not made any
representation or warranty with respect to the condition of the Premises or the
Building or with respect to the suitability or fitness of either for the
conduct of Tenant’s Permitted Use or for any other purpose.

 

(b)           Landlord represents and warrants that the Premises and the
Building Systems are in good working order and condition as of the Commencement
Date and to Landlord’s knowledge Landlord has not received notices of any
violations of laws or of any Environmental Laws that have not been cured.

 

2

 

(c)           Except as otherwise expressly provided in this Lease,
Tenant agrees to accept the Premises in its “as is” physical condition without
any agreements, representations, understandings or obligations on the part of
Landlord to perform any alterations, repairs or improvements (or to provide any
allowance for same).  Tenant hereby
waives Sections 1941 and 1942 of the Civil Code of California or any
successor provision of law.

 

ARTICLE 3

 

TERM

 

The
Lease Term shall be for the period described in Section 1.4 of this Lease,
commencing on the Commencement Date described in Section 1.5 of this
Lease.

 

ARTICLE 4

 

RENTAL

 

4.1           Definitions. 
As used herein,

 

(a)           “Property Taxes” shall mean the aggregate amount of all
real estate taxes, assessments (whether they be general or special), sewer
rents and charges, transit taxes, taxes based upon the receipt of rent and any
other federal, state or local governmental charge, general, special, ordinary
or extraordinary (but not including income or franchise taxes, capital stock,
inheritance, estate, gift, or any other taxes imposed upon or measured by
Landlord’s gross income or profits, unless the same shall be imposed in lieu of
real estate taxes or other ad valorem taxes), which Landlord shall pay or
become obligated to pay in connection with the Building, or any part
thereof.  Property Taxes shall also
include all fees and costs, including attorneys’ fees, appraisals and
consultants’ fees, incurred by Landlord in seeking to obtain a reassessment,
reduction of, or a limit on the increase in, any Property Taxes, regardless of
whether any reduction or limitation is obtained.  Property Taxes for any calendar year shall be
Property Taxes which are assessed or become a lien during such year.  Property Taxes shall include any tax,
assessment, levy, imposition or charge imposed upon Landlord and measured by or
based in whole or in part upon the Building or the rents or other income from
the Building, to the extent that such items would be payable if the Building
was the only property of Landlord subject to same and the income received by Landlord
from the Building was the only income of Landlord.  Notwithstanding the foregoing, if a
reassessment of the Building for ad valorem property tax purposes, including
any reassessment pursuant to California Constitution Article 13A and  Sections 60 through 67 of the California
Revenue & Taxation Code, occurs, then Tenant shall be obligated to pay
Tenant’s Percentage Share of any such additional Property Taxes resulting from
any such reassessment with respect to the Building.  Property Taxes shall also include any
personal property taxes imposed upon the furniture, fixtures, machinery,
equipment, apparatus, systems and appurtenances of Landlord used in connection
with the Building.

 

(b)           “Operating Expenses” shall mean all costs, fees,
disbursements and expenses paid or incurred by or on behalf of Landlord in the
operation, ownership, maintenance, 

 

3

 

insurance, management, replacement and repair of the
Building (excluding Property Taxes and Direct Reimbursement Expenses (as
hereinafter defined)) including without limitation:

 

(i)            Premiums for property, casualty, liability, rent
interruption, earthquake or other types of insurance carried by Landlord or by
Tenant and all deductibles required in connection with such insurance policies.

 

(ii)           Salaries, wages and other amounts paid or payable for
personnel and other employees of Landlord involved in the maintenance and
operation of the Building, and the total charges of any independent contractors
or property managers engaged in the operation, repair, care, maintenance and
cleaning of any portion of the Building.

 

(iii)          Building cleaning expenses, including without limitation
janitorial services, window cleaning, and garbage and refuse removal, excluding
Direct Reimbursement Expenses.

 

(iv)          Landscaping expenses, including without limitation
irrigating, trimming, mowing, fertilizing, seeding, and replacing plants
(excluding Direct Reimbursement Expenses).

 

(v)           Heating, ventilating, air conditioning and steam/utilities
expenses, including fuel, gas, electricity, water, sewer, telephone, and other
services to the Common Areas of the Building (excluding Direct Reimbursement
Expenses).

 

(vi)          Subject to the provisions of Section 4.1(B)(xii) below,
the cost of maintaining, operating, repairing and replacing components of
equipment or machinery, including without limitation heating, refrigeration,
ventilation, electrical, plumbing, mechanical, elevator, escalator, sprinklers,
fire/life safety, security, access control and energy management systems,
including service contracts, maintenance contracts, supplies and parts
(excluding Direct Reimbursement Expenses).

 

(vii)         Other items of repair or maintenance of elements of the
Building (excluding Direct Reimbursement Expenses).

 

(viii)        The costs of policing, security and
supervision of the Building (excluding Direct Reimbursement Expenses).

 

(ix)           The cost of supplies used in the maintenance and operation
of the Building (excluding Direct Reimbursement Expenses).

 

(x)            Audit fees and the cost of accounting services incurred
in the preparation of statements referred to in this Lease and financial
statements.

 

(xi)           Operating expenses shall include only the following
Capital expenditures: those which are (a) made primarily to reduce Operating
Expenses, but only to the extent of the estimated amount of such reduction, or
to comply with any laws or other governmental requirements which become
effective on or after the Commencement Date, or (b) for replacements (as
opposed to additions or new improvements, which shall not be included 

 

4

 

as an Operating Expense) of structural items or
systems; provided, all such permitted capital expenditures (together with
reasonable financing charges) shall be amortized for purposes of this Lease
over the shorter of (i) their useful lives, (ii) the period during
which the reasonably estimated savings in Operating Expenses equals the
expenditures.

 

(xii)          A commercially reasonable management fee not to exceed three
(3%) of annual sum of Base Rent and Tenant’s Percentage Share of Operating
Expenses (whether or not Landlord engages or manages the Property with Landlord’s
personnel) and all items reimbursable to the manager, if any, pursuant to any
management contract for the Property.

 

(xiii)         Legal fees and expenses.

 

Notwithstanding
anything contained herein to the contrary, Operating Expenses shall not include
the following: (a) depreciation or amortization of the Premises or
equipment in the Premises except as expressly provided herein; (b) loan
principal payments, financing costs, including interest and principal
amortization, of any mortgage or other encumbrance; (c) capital expenses
other than as provided above in Section 4.1(xi); (d) costs of
improvement, renovation or alteration of tenants’ premises; (e) leasing
commissions, advertising costs or other expenses incurred in connection with
the marketing or leasing of the Premises; (f) costs to the extent Landlord
receives reimbursement from any source (less Landlord’s reasonable expenses in
obtaining such reimbursement), including but not limited to repair or
replacement of any item covered by warranty; (g) costs for services
furnished for any tenant other than Tenant to a materially greater extent than
furnished to tenants generally in the Premises, or that are furnished on an
exclusive basis to any one tenant or group of tenants in the Building; (h) costs
arising from the presence of Hazardous Materials for which Landlord is
responsible under Section 6.3; (i) costs which are either (i) for
repairing damage to the structural elements of the Premises to the extent
Landlord is reimbursed by insurance proceeds or by the party causing same, or (ii) for
repairing defects in the original construction of the Premises; (j) any
costs incurred in connection with Landlord’s compliance as to all laws,
regulations, ordinances and rulings (including The Americans With Disabilities
Act of 1990) (collectively “Laws”, as they exist and are interpreted prior to
the Commencement Date, provided, however any costs incurred in connection with
any Laws enacted on or after the Commencement Date, or as a result of any new
or different interpretations of Laws as they currently exist, shall be costs
included in Operating Expenses; (k) any expense paid directly by any
tenant in the Premises; (l) cost of repairs caused by fire, windstorm, or
other casualty (but only to the extent Landlord is reimbursed by insurance
proceeds for such casualties); (m) any fees, fines, penalties and/or
interest incurred by Landlord as a result of Landlord’s noncompliance with any
Laws; (n) rental or other payments under any ground lease; and (o) attorney
fees, accounting fees, and other expenses incurred in connection with disputes
with other tenants or occupants of the Premises, except as specifically
provided in this Lease.

 

(c)           So long as an Event of Default has not occurred with
respect to Tenant under this Lease, Tenant shall have the right (but not the
obligation) to perform any item of repair, maintenance and replacement required
at the Premise for which Landlord has a right to charge Tenant as an item of
Operating Expense, in which event Tenant shall not have any duty or obligation
to pay such sums to Landlord.

 

5

 

(d)           “Direct Reimbursement Payments” shall mean all charges for
(i) utilities serving the Premises, including heating, ventilating, air
conditioning and steam/utilities expenses, fuel, gas, electricity, water,
sewer, telephone, and other services (ii) janitorial services provided to
the Premises, and (iii) all other items which would be Operating Expenses
but which are paid directly by Tenant to the utility provider or service
vendor.

 

4.2           Base Rent.

 

(a)           During the Lease Term, Tenant shall pay to Landlord as
rental for the Premises the Base Rent described in Section 1.7 above,
subject to the following adjustments (herein called the “Rent Adjustments”):

 

During
each applicable calendar year, or portion thereof, during the Lease Term, the
Base Rent payable by Tenant to Landlord, 
shall be increased by (collectively, the “Tax and Operating Expense and
Direct Reimbursement Payments Adjustment”): 
(i) Tenant’s Percentage Share of Operating Expenses incurred by
Landlord during each year during the Term of this Lease, (ii) Tenant’s
Percentage Share of Taxes incurred by Landlord during each year during the Term
of this Lease, and (iii) during each year of the Term, Direct
Reimbursement Payments to the extent reimbursable to Landlord and not paid
directly to the utility provider or service vendor (collectively, “Rent
Adjustments”).  A decrease in Property
Taxes or Operating Expenses shall not decrease the amount of the Base Rent due
hereunder or give rise to a credit in favor of Tenant.

 

4.3           Adjustment Procedure; Estimates.  The Tax and Operating Expense and Direct
Reimbursement Payments Adjustment specified in Section 4.2 shall be
determined and paid as follows:

 

(a)           During each calendar year, or portion thereof, during the
Lease Term, Landlord shall give Tenant written notice of its estimate of any
amounts payable under Section 4.2 for that calendar year for Operating
Expenses, Taxes and/or Direct Reimbursement Expenses, respectively as the case
may be.  On or before the first day of
each calendar month during the calendar year, Tenant shall pay to Landlord
one-twelfth (1/l2th) of such estimated amounts; provided, however, that,
not more often than quarterly, Landlord may, by written notice to Tenant,
revise its estimate for such year, and subsequent payments by Tenant for such
year shall be based upon such revised estimate.

 

(b)           Within one hundred twenty (120) days after the close
of each calendar year or as soon thereafter as is practicable, Landlord shall
endeavor to deliver to Tenant a statement of that year’s Property Taxes,
Operating Expenses, and Direct Reimbursement Expenses, and the actual Tax and
Operating Expense and Direct Reimbursement Payments Adjustment to be made
pursuant to Section 4.2 for such calendar year, as determined by Landlord
(the “Statement”) and such Statement shall be binding upon Tenant, except as
provided in Section 4.4 below.

 

(c)           If the amount of the actual Tax and Operating Expense and
Direct Payments Adjustment is more than the estimated payments for such
calendar year made by Tenant, Tenant shall pay the deficiency to Landlord
within thirty (30) days following receipt of 

 

6

 

Statement.  If
the amount of the actual Tax and Operating Expense and Direct Reimbursement
Payments Adjustment is less than the estimated payments for such calendar year
made by Tenant, any excess shall be paid to Tenant within thirty (30)
days.  No delay in providing the
statement described in this subparagraph (B) shall act as a waiver of
Landlord’s right to payment under Section 4.2 above.

 

(d)           If this Lease shall terminate on a day other than the end
of a calendar year, the amount of the Tax and Operating Expense and Direct
Reimbursement Payments Adjustment to be paid pursuant to Section 4.2 that
is applicable to the calendar year in which such termination occurs shall be
prorated on the basis of the number of days from January 1 of the calendar
year to the termination date bears to 365. 
The termination of this Lease shall not affect the obligations of
Landlord and Tenant pursuant to Section 4.3 to be performed after such
termination.

 

4.4           Review of 
Statement.

 

(a)           The Statement shall be binding upon Landlord and Tenant
except as otherwise provided herein. Landlord shall maintain books and records
showing Operating Expenses, Direct Reimbursement Expenses and Property Taxes in
accordance with sound accounting and management practices, consistently
applied.  Tenant or its representative
(which representative shall be a certified public accountant licensed to do
business in the state where the Premises is located and whose primary business
is certified public accounting and who shall not be paid on a contingency
basis) shall have the right, for a period of 200 days following the date upon
which the Statement is delivered to Tenant, to examine the Landlord’s books and
records with respect to the items in the foregoing statement of Operating
Expenses, Direct Reimbursement Expenses and Property Taxes during normal
business hours, upon written notice, delivered at least three (3) business
days in advance.

 

(b)           If Tenant does not object in writing to the Statement
within 200 days of Tenant’s receipt thereof, specifying the nature of the item
in dispute and the reasons therefor, then the Statement shall be considered
final and accepted by Tenant.  If Tenant
does not provide such notice of dispute and a copy of such audit to Landlord
within such 200 day period, it shall be deemed to have waived such right to
dispute the Statement.

 

(c)           Any amount due to the Landlord as shown on the Statement,
whether or not disputed by Tenant shall be paid by Tenant when due as provided
above, without prejudice to any written exception. Upon resolution of any
dispute with respect to Operating Expenses, Direct Reimbursement Expenses and
Property Taxes, Tenant shall either pay Landlord any shortfall or Landlord
shall credit Tenant with respect to any overages paid by Tenant.

 

(d)           The records obtained by Tenant shall be treated as
confidential and neither Tenant nor any of its representatives or agents  shall disclose or discuss the information set
forth in the audit to or with any other person or entity subject to any
requirement to the contrary by a governmental agency or court (“Confidentiality
Requirement”).  Tenant shall indemnify
and hold Landlord harmless for any losses or damages arising out of the breach
of the Confidentiality Requirement. In no event shall Tenant be permitted to
examine Landlord’s 

 

7

 

records or to dispute any statement of Operating
Expenses and Taxes unless Tenant has paid and continues to pay all Rent when
due.

 

4.5           Payment.

 

(a)           Concurrently with the execution hereof, Tenant shall pay
Landlord Base Rent for the first calendar month of the Lease Term for which
Base Rent is due.  Thereafter the Base
Rent described in Section 1, as adjusted in accordance with
Section 4.2, shall be payable in advance on the first day of each calendar
month.

 

(b)           If the Commencement Date is other than the first day of a
calendar month, the prepaid Base Rent for such partial month shall be prorated
in the proportion that the number of days this Lease is in effect during such
partial month bears to the total number of days in the calendar month.

 

(c)           All Rent, and all other amounts payable to Landlord by
Tenant pursuant to the provisions of this Lease, shall be paid to Landlord,
without notice, demand, abatement, deduction or offset, in lawful money of the
United States at Landlord’s office in the Building or to such other person or
at such other place as Landlord may designate from time to time by written
notice given to Tenant.  No payment by
Tenant or receipt by Landlord of a lesser amount than the correct Rent due
hereunder shall be deemed to be other than a payment on account; nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment be deemed to effect or evidence an accord and satisfaction; and
Landlord may accept such check or payment without prejudice to Landlord’s right
to recover the balance or pursue any other remedy in this Lease or at law or in
equity provided.

 

4.6           Late Charge; Interest.

 

(a)           Tenant acknowledges that the late payment of Base Rent or
any other amounts payable by Tenant to Landlord hereunder (all of which shall
constitute additional rental to the same extent as Base Rent) will cause
Landlord to incur administrative costs and other damages, the exact amount of
which would be impracticable or extremely difficult to ascertain.

 

(b)           Landlord and Tenant agree that if Landlord does not receive
any such payment on or before the date the payment is due, Tenant shall pay to
Landlord, as additional rent, a late charge equal to five percent (5%) of
the overdue amount to cover such additional administrative costs and
(b) interest on the delinquent amounts from the due date to the date paid
at the lesser of the maximum rate permitted by law, if any, or which is the
lesser of five percent (5%) above the publicly announced prime rate (sometimes
referred to as such bank’s reference rate) charged on such due date by Citibank
(or any successor bank thereto) (or if there is no such publicly announced
rate, the rate quoted by such bank in pricing ninety (90) day commercial loans
to substantial commercial borrowers) (“Interest Rate”).  Notwithstanding the foregoing, Landlord shall
provide Tenant with written notice and five (5) days to cure any such
nonpayment one (1) time during any twelve (12) month period prior to the
imposition of a late charge or interest at the Interest Rate.

 

8

 

4.7           Rent.  For
purposes of this Lease, all amounts payable by Tenant to Landlord pursuant to
this Lease, whether or not denominated as such, shall constitute additional
rental hereunder.  Such additional
rental, together with the Base Rent and Rent Adjustments, shall sometimes be
referred to in this Lease as “Rent”.

 

ARTICLE 5

 

SECURITY DEPOSIT

 

(a)           Upon the execution of this Lease, Tenant shall deposit
with Landlord the Security Deposit.  The
Security Deposit is made by Tenant to secure the faithful performance of all
the terms, covenants and conditions of this Lease to be performed by
Tenant.  If Tenant shall default with
respect to any covenant or provision hereof, Landlord may use, apply or retain
all or any portion of the Security Deposit to cure such default or to
compensate Landlord for any loss or damage which Landlord may suffer thereby
pursuant to Section 1951.2 of the California Civil Code.

 

(b)           For purposes of this Lease, “Letter of Credit” shall mean
an unconditional, irrevocable sight draft letter of credit, drawable in the San
Francisco Bay Area,  issued by Wells
Fargo Bank or another bank reasonably satisfactory to Landlord, naming Landlord
as beneficiary and otherwise in form and substance satisfactory to Landlord.
The Letter of Credit shall be for a one (1) year term and shall provide: (i) that
Landlord may make partial and multiple draws thereunder; (ii) that if
Tenant fails to pay rent or other charges due under the Lease, or otherwise
defaults, after applicable notice and cure periods, if any, with respect to any
provision of the Lease, or if Landlord is otherwise permitted under the terms
of the Lease to draw upon the Letter of Credit, Landlord may at its sole option
draw upon the Letter of Credit and the bank will honor a sight draft of Landlord;
(iii) that other than the delivery of any required statement by Landlord,
the bank shall honor such draw without inquiry and the bank shall not have the
authority, ability, right or discretion to inquire as to the basis for such
statement; (iv) that in the event of Landlord’s assignment or other
transfer of its interest in the Lease, the Letter of Credit shall be freely
transferable by Landlord, one or more times, without recourse to the Landlord
or the assignee or transferee of such interest and Tenant shall be responsible
for any transfer fees or charges imposed by the issuer of the Letter of Credit
in connection with Landlord’s transfer or assignment thereof;  (v) that the Letter of Credit is
governed by the Uniform Customs and Practice for Documentary Credits (2007
revisions), International Chamber of Commerce Publication No. 600; (vi) that
the Letter of Credit will be automatically renewed upon the expiration of its
term for additional one (1) year periods, not to extend beyond sixty (60)
days after the Expiration Date of the Lease; and, (vii)  that if the bank
does not confirm the extension of the Letter of Credit at least sixty (60) days
prior to the relevant annual expiration date or if Tenant does not substitute a
replacement Letter of Credit by such date, or if a Default occurs under the
Lease, Landlord shall be entitled to draw on the Letter of Credit and to hold
and apply such funds as an additional Security Deposit in accordance with the
terms of the Lease. Landlord and Tenant hereby approve the form of Letter of
Credit attached hereto as Exhibit C.

 

(c)           If Landlord draws upon the Letter of Credit in accordance
with the terms of this Lease, Tenant shall within ten (10) days after
Landlord’s draw deposit with Landlord a cash sum or substitute Letter of Credit
in an amount which when added to the amount available 

 

9

 

to be drawn under the Letter of Credit equals the
face amount of the Letter of Credit. 
Tenant’s failure to do so shall be a material breach of this Lease and
entitle Landlord to draw down the entire Letter of Credit.

 

(d)           If Landlord so uses or applies all or any portion of the
Security Deposit, Tenant shall immediately upon written demand deposit cash
with Landlord in an amount sufficient to restore the Security Deposit to the
full amount hereinabove stated.  Landlord
shall not be required to  keep the
Security Deposit separate from its general accounts and Tenant shall not be
entitled to interest on the Security Deposit.

 

(e)           At the expiration of the Lease Term, and provided there
exists no default by Tenant hereunder, the Security Deposit or any balance
thereof shall be returned to Tenant (or, at Landlord’s option, to Tenant’s
assignee), provided that subsequent to the expiration of this Lease, Landlord
may retain from said Security Deposit (a) an amount reasonably estimated
by Landlord to cover potential Rent Adjustments reconciliation payments due
with respect to the calendar year in which this Lease terminates or expires
(such amount so retained shall not, in any event, exceed ten percent (10%) of
estimated Tax and Operating Expense and Direct Payments Adjustment payments due
from Tenant for such calendar year through the date of expiration or earlier
termination of this Lease and any amounts so retained and not applied to such
reconciliation shall be returned to Tenant within thirty (30) days after
Landlord’s delivery of Landlord’s Statement for such calendar year),
(b) any and all amounts reasonably estimated by Landlord to cover the
anticipated costs to be incurred by Landlord to remove signage, if any,
provided to Tenant under this Lease and to repair any damage caused by such
removal (in which case any excess amount so retained by Landlord shall be
returned to Tenant within thirty (30) days after such removal and repair),
and (c) any and all amounts permitted by law or this Article 5.

 

(f)            Tenant hereby waives the provisions of
Section 1950.7 of the California Civil Code and all other provisions of
law, now or hereafter in effect, which provide that Landlord may claim from a
Security Deposit only those sums reasonably necessary to remedy defaults in the
payment of rent, to repair damage caused by Tenant or to clean the Premises, it
being agreed that Landlord may, in addition, claim those sums specified in this
Article V above and/or those sums reasonably necessary to compensate
Landlord for any other loss or damage, foreseeable or unforeseeable, caused by
the acts or omissions of Tenant or any officer, employee, agent, contractor or
invitee of Tenant.

 

ARTICLE 6

 

USE OF PREMISES

 

6.1           Tenant’s Permitted Use.  Tenant shall use the Premises only for Tenant’s
Permitted Use as set forth in Section 1.9 and shall not use or permit the
Premises to be used for any other use or purpose whatsoever.  Tenant shall, at its sole cost and expense,
obtain all governmental licenses and permits required to allow Tenant to
conduct Tenant’s Permitted Use.  Landlord
disclaims any warranty that the Premises are suitable for Tenant’s use, and
Tenant acknowledges that it has had a full opportunity to make its own
determination in this regard.

 

10

 

6.2           Compliance With Laws and Other Requirements.

 

(a)           Tenant shall cause the Premises to comply in all material respects
with all laws, ordinances, regulations and directives of any governmental
authority having jurisdiction including, without limitation, any certificate of
occupancy and any law, ordinance, regulation, covenant, condition or
restriction affecting the Building or the Premises which in the future may
become applicable to the Premises.

 

(b)           Landlord and Tenant acknowledge that the Americans With
Disabilities Act of 1990 (42 U.S.C. §12101 et seq.) and regulations and
guidelines promulgated thereunder, as all of the same may be amended and
supplemented from time to time (collectively referred to herein as the “ADA”)
establish requirements for business operations, accessibility and barrier
removal, and that such requirements may or may not apply to the Premises and
the Property depending on, among other things: (1) whether Tenant’s
business is deemed a “public accommodation” or “commercial facility”, (2) whether
such requirements are “readily achievable”, and (3) whether a given
alteration affects a “primary function area” or triggers “path of travel”
requirements.  The parties hereby agree
that: (a) Landlord shall be responsible for ADA Title III compliance with
respect to the condition of the Premises as of the Commencement Date, (b) Tenant
shall be responsible for ADA Title III compliance with respect to any leasehold
improvements or other work to be performed in the Premises by Tenant under or
in connection with this Lease, and (c) Landlord may perform, or require
that Tenant perform, and Tenant shall be responsible for the cost of, ADA Title
III “path of travel” requirements triggered by Tenant Additions in the
Premises.  Tenant shall be solely
responsible for requirements under Title I of the ADA relating to Tenant’s
employees.

 

(c)           Tenant shall not use the Premises, or permit the Premises
to be used, in any manner which: (i) violates any applicable law;
(ii) causes or is reasonably likely to cause damage to the Building or the
Premises; (iii) violates a requirement or condition of any fire and
extended insurance policy covering the Building and/or the Premises; or
(iv) violates the Rules (as defined in Article 19).

 

(d)           Tenant shall not place a load upon any floor of the
Premises exceeding the floor load per square foot area which such floor was
designed to carry and which may be allowed by law.  Landlord reserves the right to prescribe the
weight and position of all heavy equipment and similar items, and to prescribe
the reinforcing necessary, if any, which in the reasonable opinion of Landlord
may be required under the circumstances, such reinforcing to be at Tenant’s
prepaid expense.

 

(e)           The parties acknowledge that safety and security devices,
services and programs provided by Landlord, if any, while intended to deter
crime and ensure safety, may not in given instances prevent theft or other
criminal acts, or ensure safety of persons or property.  The risk that any safety or security device,
service or program may not be effective, or may malfunction, or be circumvented
by a criminal, is assumed by Tenant with respect to Tenant’s property and
interests, and Tenant shall obtain insurance coverage to the extent Tenant
desires protection against such criminal acts and other losses, as further
described in this Lease.  Tenant agrees
to cooperate in any reasonable safety or security program developed by Landlord
or required by Law.

 

11

 

6.3           Hazardous Materials.

 

(a)           No Hazardous Materials, as defined herein, shall be
Handled, as also defined herein, upon, about, above or beneath the Premises or
any portion of the Building by or on behalf of Tenant, its subtenants or its
assignees, or their respective contractors, clients, officers, managers,
members, partners, directors, employees, agents, or invitees without Landlord’s
prior written consent.  Any such
Hazardous Materials so Handled shall be known as Tenant’s Hazardous
Materials.  Notwithstanding the
foregoing, normal quantities of  Tenant’s
Hazardous Materials customarily used in the conduct of the Permitted Use as of
the Commencement Date may be  Handled at
the Premises without Landlord’s prior written consent. Tenant’s Hazardous
Materials shall be Handled at all times in compliance with the manufacturer’s
instructions therefor and all applicable Environmental Laws, as defined herein.

 

(b)           In the event of any release of Hazardous Materials upon
the Property after the Commencement Date, if caused by Tenant or any other
Tenant Party, Tenant shall promptly remedy the problem in accordance with all
applicable Hazardous Materials Laws. 
Except as and to the extent provided in subsections (c) and (d) below,
Tenant shall not cause or permit the storage, use, generation, release,
handling or disposal (collectively, “Handling”) of any Hazardous Materials, in,
on, or about the Premises or the Property by Tenant or any agents, invitees,
employees, contractors, licensees, subtenants, or customers of Tenant
(collectively with Tenant, “Tenant Parties”) in violation of Environmental
Laws. Tenant shall be solely responsible for and shall indemnify, defend and
hold Landlord harmless from and against all claims, actions, liabilities,
damages and costs (including reasonable attorneys’ fees and other costs of
suit) arising out of or in connection with, or otherwise relating to (x) any
Handling of Hazardous Materials by any Tenant Party or Tenant’s breach of its
obligations hereunder, or (y) any removal, cleanup, or restoration work
and materials necessary to return the Property or any other property of
whatever nature located on, adjacent to the Premises, or other property
otherwise affected by such Handling to be in compliance with all applicable
Environmental  Laws.

 

(c)           Notwithstanding the obligation of Tenant to indemnify
Landlord pursuant to this Lease, Tenant shall, at its sole cost and expense,
promptly take all actions required by any Regulatory Authority, as defined
herein, or necessary for Landlord to make full economic use of the Premises or
any portion of the Building, which requirements or necessity arises from the
Handling of Tenant’s Hazardous Materials upon, about, above or beneath the
Premises or any portion of the Building. 
Such actions shall include, but not be limited to, the investigation of
the environmental condition of the Premises or any portion of the Building, the
preparation of any feasibility studies or reports and the performance of any
cleanup, remedial, removal or restoration work. 
Tenant shall take all actions necessary to restore the Premises or any
portion of the Building to the condition existing prior to the introduction of
Tenant’s Hazardous Materials, notwithstanding any less stringent standards or
remediation allowable under applicable Environmental Laws.  Tenant shall nevertheless obtain Landlord’s
written approval prior to undertaking any actions required by this Section,
which approval shall not be unreasonably withheld so long as such actions would
not potentially have a material adverse long-term or short-term effect on the
Premises or any portion of the Building. Tenant agrees to execute affidavits,
representations, and the like from time to time at Landlord’s request stating
Tenant’s best knowledge and belief regarding the presence of Hazardous
Materials on the Premises.

 

12

 

(d)           Landlord shall be solely responsible for and shall
indemnify, defend and hold Tenant harmless from and against all claims,
actions, liabilities, damages and costs (including reasonable attorneys’ fees
and other costs of suit) arising out of or in connection with, or otherwise relating
to (i) any Hazardous Materials existing on the Property as of the
Commencement Date in violation of any Laws as of such date, or (ii) any
removal, cleanup, or restoration work and materials necessary with respect to
Hazardous Material existing on the Property immediately prior to the
Commencement Date, or (iii) any Hazardous Materials which are not the
obligations of Tenant under subsection (ii) above.

 

(e)           Landlord shall be solely responsible for all claims,
actions, liabilities, damages and costs (including reasonable attorneys’ fees
and other costs of suit) arising out of or in connection with, or otherwise
relating to (i) any Hazardous Materials existing on the Property as of the
Commencement Date in violation of any Laws as of such date, or (ii) any
removal, cleanup, or restoration work and materials necessary with respect to
Hazardous Material existing on the Property immediately prior to the
Commencement Date, or (iii) any Hazardous Materials which are not the
obligations of Tenant under subsection (ii) above.

 

(f)            Each party shall promptly provide the other party with
copies of all notices received by it in connection with the presence of
Hazardous Materials in or about the Premises.

 

(g)           The following terms used in this Article shall have
the meanings set forth below:

 

(i)            “Environmental Laws” means and includes all now and
hereafter existing statutes, laws, ordinances, codes, regulations, rules,
rulings, orders, decrees, directives, policies and requirements by any  Regulatory Authority regulating, relating to,
or imposing liability or standards of conduct concerning public health and
safety or the environment.

 

(ii)           “Hazardous Materials” means:  any hazardous or toxic substance, material,
or waste which is or becomes regulated by any local governmental authority, the
State of California or the United States Government.  The term “Hazardous Material” includes,
without limitation, any material or substance which is (i) defined as “Hazardous
Waste,” “Extremely Hazardous Waste,” or “Restricted Hazardous Waste” under
Sections 25115, 25117 or 25122.7, or listed pursuant to
Section 25140, of the California Health and Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Law); (ii) defined as a “Hazardous
Substance” under Section 25316 of the California Health and Safety Code,
Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous
Substance Account Act), (iii) defined as a “Hazardous Material,” “Hazardous
Substance,” or “Hazardous Waste” under Section 22501 of the California
Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory), (iv) defined as a “Hazardous
Substance under Section 25281 of the California Health and Safety Code,
Division 20, Chapter 6.7 (Underground Storage of Hazardous
Substances), (v) petroleum, (vi) asbestos, (vii) designated as a
“Hazardous Substance” pursuant to Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. § 1317), (viii) 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), or (ix) defined as a 

 

13

 

“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).

 

(iii)          “Handle,” “handle,” “Handled,” “handled,” “Handling,” or “handling”
shall mean any installation, handling, generation, storage, treatment, use,
disposal, discharge, release, manufacture, refinement, presence, migration,
emission, abatement, removal, transportation, or any other activity of any type
in connection with or involving Hazardous Materials.

 

(iv)          “Regulatory Authority” shall mean any federal, state or
local governmental agency, commission, board or political subdivision.

 

ARTICLE 7

 

UTILITIES AND SERVICES

 

7.1           Services. 
Tenant shall contract directly with the utility company or service
provider to provide the following utilities and services to the Premises at
Tenant’s sole cost and expense:

 

(a)           Electricity and Gas. 
Tenant shall contract directly with Pacific Gas & Electric
company for electricity and gas service. 
At all times Tenant’s use of electric current shall not exceed the
capacity of the feeders to the Premises or the risers or wiring installation or
the electrical panels serving the Premises.

 

(b)           Water.  Tenant shall
contact directly with the local water department for water service to the
Premises.

 

(c)           Janitorial Service. 
Tenant shall provide, at its sole cost and expense, janitorial services
within the Premises.  The entity
providing such services shall be subject to Landlord’s approval, which approval
shall not be unreasonably withheld. 
Tenant shall contract directly for removal of refuse and rubbish.

 

(d)           Telecommunications. 
Tenant shall be responsible for and shall pay all costs incurred in
connection with the installation of telephone cables and communication wiring
in the Premises, including any hook-up, access and maintenance fees related to
the installation of such wires and cables in the Premises and the commencement
of service therein, and the maintenance thereafter of such wire and cables.

 

(e)           Rubbish Removal. 
Tenant shall contract directly with the local service provider for
rubbish and trash removal services.

 

(f)            Security System. 
Landlord shall not be obligated to provide or maintain any security
patrol or security system for the Project.

 

7.2           Interruption in Services.  Landlord shall not be liable for, and Tenant
shall not be entitled to any abatement or reduction of Rent by reason of, no
eviction of Tenant shall result from and, further, Tenant shall not be relieved
from the performance of any covenant or

 

14

 

 agreement in
this Lease because of, the failure to furnish any of the foregoing
services.  Notwithstanding the foregoing,
if any such failure, stoppage, or interruption causes such utilities or
services to be unavailable to the Premises is covered by Landlord’s business
interruption insurance, then Tenant’s obligation to pay Rent shall be equitably
abated to the extent of such recovery by Landlord.

 

7.3           Utilities and Services Regulations.  Tenant agrees to cooperate at all times with
Landlord and to abide by all reasonable regulations and requirements which
Landlord may prescribe for the use of the utilities and services.  Notwithstanding anything to the contrary set
forth in this Lease, Tenant acknowledges that Landlord has not and does not
make any representations or warranties concerning the identity or identities of
the company or companies which provide services to the Property and the
Premises or its occupants and Tenant acknowledges that the choice of service
providers and matters concerning the engagement and termination thereof shall be
solely that of Landlord.

 

7.4           Stopping of Service.  Provided the same is done in a manner so as
to minimize any inconvenience with Tenant’s conduct of its business, and, to
the extent commercially feasible, following Landlord’s provision of alternative
sources of utilities to prevent damage to Tenant’s inventory and merchandise,
Landlord reserves the right to stop services of the plumbing, heating,
ventilation, air-conditioning and electric systems and other Building systems,
and access to the Premises, when necessary by reason of accident or emergency,
or for repairs, maintenance, alterations or improvements, in the judgment of
Landlord desirable or necessary to be made or performed, until the repairs,
alterations or improvements have been completed.  Subject to the limitations of this Section,
Landlord shall have no responsibility or liability for any such interruption in
access, services or utilities, or for failure to supply any such access,
services or utilities, or for its failure to furnish or perform any other act
or thing for the benefit of Tenant as otherwise required pursuant to this
Lease.  In the event of any failure, stoppage or
interruption in any access, utilities or services which Landlord is obligated
to provide pursuant to this Lease, Landlord shall use its diligent efforts to
cause the provision of such access, utilities or services to be resumed.  To the extent practical, Landlord shall give
Tenant notice of proposed shutdowns of services or interruption in access to
the Premises.

 

ARTICLE 8

 

MAINTENANCE AND REPAIRS

 

8.1           Tenant’s Obligations.

 

(a)           Except as otherwise provided in this Lease, Tenant, at all
times during the Term and at Tenant’s sole cost and expense, shall keep the
Premises and every part thereof, including the parking area, walkways,
landscaping, exterior and roof of the Premises, interior walls and ceilings,
lighting and relamping, and plate glass, in good condition and repair and in
compliance with all applicable Laws and shall engage such contractors and
vendors to perform such maintenance and repair, which contractors and vendors
shall be subject to the reasonable approval of Landlord.  Tenant, at Tenant’s sole cost and expense,
shall also (i) maintain and repair all supplemental or special systems or
other Building Systems located within and exclusively serving the Premises,
such as computer room fire suppression systems, security 

 

15

 

systems and any electrical system components other
than Premises standard wiring and other equipment and (ii) repair and
maintain the roof surface and membrane (but not the periodic replacement of the
roof membrane, which shall be performed by Landlord and not any repair,
maintenance or replacement of the structural aspects of the roof, which shall
be performed by Landlord).

 

(b)           Notwithstanding the foregoing, Tenant shall not be
responsible for repairs to the extent such repairs are (i) necessitated
by  fire, earthquake, acts of God or the
elements and are covered by the casualty section of this Lease or (ii) constitute
reasonable wear and tear of a type that is not generally repaired and
maintained.

 

(c)           Tenant shall be solely responsible for the daily
maintenance of the HVAC system and equipment serving the Premises and any
components and equipment used in connection therewith.  Tenant, at its sole cost and expense, shall
procure and maintain in full force and effect a contract for the maintenance of
such equipment, with a service and maintenance firm reasonably acceptable to
Landlord.  Tenant shall follow all
reasonable recommendations of said contractor for the maintenance of the HVAC
system including any recommended intervals for the repair and replacement of
the HVAC system or any of its components. 
The service contract shall provide that the contractor shall inspect the
system and perform recommended maintenance at an interval of not less than the
intervals prescribed by the manufacturer’s recommendations.  Tenant shall be liable for the cost of any
maintenance to or repairs of any of the HVAC system as a result of Tenant’s
failure to comply with the terms and conditions of this provision.

 

(d)           Tenant hereby waives all right to make repairs at the
expense of Landlord or in lieu thereof to vacate the Premises and its other
similar rights as provided in California Civil Code Sections 1932(1), 1941 and
1942 or any other Legal Requirement (whether now or hereafter in effect).

 

8.2           Landlord’s Obligations.  Except to the extent Tenant, with Landlord’s
prior written consent, performs repair and maintenance of the Building Systems
and/or Base Building Components, Landlord shall, as an Operating Expense,
repair and maintain in good condition and repair the Base Building Components
and Building Systems; provided, however, that to the extent such repair is
covered by casualty insurance proceeds, the cost of any deductible for such
claim shall be an Operating Expense, subject to the terms of Section 4.1(b) hereof.

 

8.3           Landlord’s Rights. 
Subject to Article 21 hereof, Landlord and its contractors shall have
the right, at all reasonable times and upon prior oral or telephonic notice to
Tenant at the Premises, other than in the case of any emergency in which case
no notice shall be required, to enter upon the Premises to make any repairs to
the Premises or the Building reasonably required or deemed reasonably necessary
by Landlord and to erect such equipment, including scaffolding, as is
reasonably necessary to effect such repairs.

 

16

 

ARTICLE 9

 

ALTERATIONS, ADDITIONS AND
IMPROVEMENTS

 

9.1           Landlord’s Consent; Conditions.

 

(a)           Except for Cosmetic Alterations (as hereinafter defined)
Tenant shall not make or permit to be made any alterations, additions, or
improvements in or to the Premises (“Alterations”) without the prior written
consent of Landlord, which consent, with respect to nonstructural alterations,
shall not be unreasonably withheld.

 

(b)           Notwithstanding the foregoing, Tenant shall have the
right, without Landlord’s consent, to make any Alteration to the Premises (“Cosmetic
Alterations”) that  (a) does not
affect either (i) the structure of the Building or the Base Building
Components (as hereinafter defined) or (ii) the Building Systems (as
hereinafter defined) and does not cost more than $100,000 in connection with
any particular Alteration.  Any such
Cosmetic Alteration shall use only first-class materials and be performed in a
workman-like manner and in accordance with all applicable laws. As used in this
Lease, “Building Systems” means the Premises’ mechanical, plumbing, gas,
electrical, heating/air conditioning and ventilation systems (“HVAC Systems”),
security and fire and other life safety systems, and “Base Building Components”
means the Premises’ roof, foundations, floor slabs and exterior walls.

 

(c)           Landlord may impose as a condition to making any
Alterations such requirements as Landlord in its reasonable discretion deems
necessary or desirable including without limitation:  Tenant’s submission to Landlord, for Landlord’s
prior written approval, of all plans and specifications relating to the
Alterations; Landlord’s prior written approval of the time or times when the
Alterations are to be performed; Landlord’s prior written approval of the
contractors and subcontractors performing work in connection with the
Alterations; Tenant’s receipt of all necessary permits and approvals from all
governmental authorities having jurisdiction over the Premises prior to the
construction of the Alterations; Tenant’s delivery to Landlord of such bonds
and insurance as Landlord shall reasonably require; and Tenant’s payment to
Landlord of all reasonable third party out-of-pocket costs and expenses
incurred by Landlord because of Tenant’s Alterations, including but not limited
to costs incurred in reviewing the plans and specifications for, and the
progress of, the Alterations.  Tenant is
required to provide Landlord written notice of whether the Alterations include
the Handling of any Hazardous Materials and whether these materials are of a
customary and typical nature for industry practices.  Upon completion of the Alterations, Tenant
shall provide Landlord with copies of as-built plans.  Neither the approval by Landlord of plans and
specifications relating to any Alterations nor Landlord’s supervision or
monitoring of any Alterations shall constitute any warranty by Landlord to
Tenant of the adequacy of the design for Tenant’s intended use or the proper
performance of the Alterations.

 

9.2           Performance of Alterations Work.  All work relating to the Alterations shall be
performed in compliance with the plans and specifications approved by Landlord,
all applicable laws, ordinances, rules, regulations and directives of all
governmental authorities having jurisdiction and the requirements of all
carriers of insurance on the Premises and the Building, the Board of
Underwriters, Fire Rating Bureau, or similar organization, including, without
limitation,  the ADA as it may be amended
from time to time, and any governmental regulations with respect thereto and
Title 24 of the California Administrative Code.  All work shall be performed in a diligent,
first class manner and so as not to unreasonably interfere with any other
tenants or occupants of the Building. 
All costs incurred by Landlord relating to the Alterations 

 

17

 

shall be payable to Landlord by Tenant as additional
rent within ten (10) business days after receipt of written demand
therefor.  No asbestos-containing
materials shall be used or incorporated in the Alterations.  No lead-containing surfacing material,
solder, or other construction materials or fixtures where the presence of lead
might create a condition of exposure not in compliance with Environmental Laws
shall be incorporated in the Alterations.

 

9.3           Liens. 
Tenant shall pay when due all costs for work performed and materials
supplied to the Premises.  Tenant shall
keep Landlord, the Premises and the Building free from all liens, stop notices
and violation notices relating to the Alterations or any other work performed
for, materials furnished to or obligations incurred by or for Tenant and Tenant
shall protect, indemnify, hold harmless and defend Landlord, the Premises and
the Building of and from any and all loss, cost, damage, liability and expense,
including attorneys’ fees, arising out of or related to any such liens or
notices.  Further, Tenant shall give
Landlord not less than seven (7) business days prior written notice before
commencing any Alterations in or about the Premises to permit Landlord to post
appropriate notices of non-responsibility. 
Tenant shall also secure, prior to commencing any Alterations, at Tenant’s
sole expense, a completion and lien indemnity bond satisfactory to Landlord for
such work.  During the progress of such
work, Tenant shall, upon Landlord’s request, furnish Landlord with sworn
contractor’s statements and lien waivers covering all work theretofore
performed.  Tenant shall satisfy or
otherwise discharge all liens, stop notices or other claims or encumbrances
within ten (10) days after Landlord notifies Tenant in writing that any
such lien, stop notice, claim or encumbrance has been filed.  If Tenant fails to pay and remove such lien,
claim or encumbrance within such ten (10) days, Landlord, at its election,
may pay and satisfy the same and in such event the sums so paid by Landlord,
with interest from the date of payment at the rate set forth in
Section 4.6 hereof for amounts owed Landlord by Tenant shall be deemed to
be additional rent due and payable by Tenant at once without notice or demand.

 

9.4           Surrender of Premises Upon Lease Termination.

 

(a)           On the Expiration Date or earlier termination of this
Lease, Tenant shall surrender the Premises to Landlord with all of its
inventory, finished goods, raw materials, equipment and trade fixtures removed
from the Premises, with any damage associated with such removal repaired, in
broom-clean condition, with all building systems required to be maintained by
Tenant in working order (ordinary wear and tear, and damage from casualty and
condemnation excepted).

 

(b)           Tenant shall also remove any and all Alterations which
Tenant is required to remove in accordance with this Article.  Tenant shall repair any damage or perform any
restoration work required by the removal, including closing all floor, ceiling,
stairwell and roof openings.  If Tenant
fails to timely remove any personal property or Alterations as aforesaid, such
items shall be conclusively deemed to have been abandoned by Tenant and Landlord
may remove the property and store and/or dispose of the same at Tenant’s
expense, including interest at the Interest Rate.

 

(c)           If the Premises are not so surrendered at the termination
of this Lease, Tenant shall indemnify Landlord against all claims resulting
from delay by Tenant in so surrendering the Premises, including, without
limitation, any claims made by any succeeding

 

18

 

tenant,
losses to Landlord due to lost opportunities to lease to succeeding tenants,
and attorneys’ fees and costs.  Tenant
shall give written notice to Landlord at least thirty (30) days prior to
vacating the Premises and shall meet with Landlord for a joint inspection of
the Premises at the time of vacating.

 

(d)                                 Notwithstanding
the foregoing to the contrary, in the event that Landlord gives its consent,
pursuant to the provisions of Section 9.1 of this Lease, to allow Tenant
to make an Alteration in the Premises, Landlord agrees, upon Tenant’s written
request, to notify Tenant in writing at the time of the giving of such consent
whether Landlord will require Tenant, at Tenant’s cost, to remove such
Alteration at the end of the Lease Term.

 

ARTICLE 10

 

INDEMNIFICATION AND
INSURANCE

 

[This
section subject to review by Landlord and Tenant’s Insurance Advisors and will
be finalized prior to Closing]

 

10.1                           Indemnification.

 

(a)                                  Except to the
extent of Landlord’s waiver in Section 10.6, Tenant agrees to protect,
indemnify, hold harmless and defend Landlord and any Mortgagee, as defined
herein, and each of their respective partners, directors, officers, managers,
members, agents and employees, successors and assigns, (except to the extent of
the losses described below are caused by the negligence or willful misconduct
of Landlord, its agents and employees), from and against:

 

(i)                                     any and all
loss, cost, damage, liability or expense as incurred (including but not limited
to reasonable attorneys’ fees and legal costs) arising out of or related to any
claim, suit or judgment brought by or in favor of any person or persons for
damage, loss or expense due to, but not limited to, bodily injury, including
death, or property damage sustained by such person or persons which arises out
of, is occasioned by or is in any way attributable to the use or occupancy of
the Premises or any portion of the Building by Tenant or the acts or omissions
of Tenant or its agents, employees, contractors, clients, invitees or
subtenants.  Such loss or damage shall
include, but not be limited to, any injury or damage to, or death of, Landlord’s
employees or agents or damage to the Premises or any portion of the Building.

 

(ii)                                  any and all
environmental damages which arise from: 
(i) the Handling of any Tenant’s Hazardous Materials, as defined in
Section 6.3 or (ii) the breach of any of the provisions of this
Lease.  For the purpose of this Lease, “environmental
damages” shall mean (a) all claims, judgments, damages, penalties, fines,
costs, liabilities, and losses (including without limitation, diminution in the
value of the Premises or any portion of the Building, damages for the loss of
or restriction on use of rentable or usable space or of any amenity of the
Premises or any portion of the Building, and from any adverse impact of
Landlord’s marketing of space); (b) all reasonable sums paid for
settlement of claims, attorneys’ fees, consultants’ fees and experts’ fees; and
(c) all costs incurred by Landlord in connection with

 

19

 

investigation or remediation relating to the
Handling of Tenant’s Hazardous Materials, necessary for Landlord to make full
economic use of the Premises or any portion of the Building, or otherwise
required under this Lease.

 

(b)                                 Notwithstanding
anything to the contrary contained herein, nothing shall be interpreted or used
to in any way affect, limit, reduce or abrogate any insurance coverage provided
by any insurers to either Tenant or Landlord.

 

(c)                                  Tenant’s
obligations and liabilities pursuant to this Section 10.1 shall survive
the expiration or earlier termination of this Lease.

 

10.2                           Property
Insurance.

 

(a)                                  Landlord shall
procure and maintain as an Operating Expense in full force and effect with
respect to the Premises a policy or policies of all risk insurance (including
sprinkler, vandalism and malicious mischief coverage, and any other
endorsements desired by the Landlord or required by the holder of any fee or
leasehold mortgage on the Property, but not the insurance on Tenant’s
Alterations) in such amount as Landlord shall determine, but in an amount at
least equal to one hundred percent (100%) of the full replacement cost
(including debris removal, and demolition, but excluding the land and the
footings, foundations and installations below the basement level) thereof.  Such insurance, and all other insurance
maintained by Landlord under this Lease, shall be for the sole benefit of
Landlord, and the proceeds therefrom shall be under Landlord’s sole control,
except as otherwise expressly provided in this Lease.  Without obligation to do so, Landlord may, in
its sole discretion from time to time, carry insurance in amounts greater
and/or for coverage additional to the coverage and amounts set forth
above.  Notwithstanding the foregoing,
if, as of the Commencement Date, Landlord approves an insurance program and
insurance policies provided by Tenant, Tenant shall have the right to provide
the insurance required under this Section 10.2 (a) at its sole cost
and expense.

 

(b)                                 At all times
during the Lease Term, Tenant shall procure and maintain, at its sole expense, “all-risk”
property insurance, for damage or other loss caused by fire or other casualty
or cause including, but not limited to, vandalism and malicious mischief,
theft, water damage of any type, including sprinkler leakage, bursting of
pipes, explosion, in an amount not less than one hundred percent (100%) of
the replacement cost covering (a) all Alterations made by or for Tenant in
the Premises; and (b) Tenant’s trade fixtures, equipment and other
personal property from time to time situated in the Premises.  The proceeds of such insurance shall be used
for the repair or replacement of the property so insured, except that if not so
applied or if this Lease is terminated following a casualty, the proceeds
applicable to the leasehold improvements shall be paid to Landlord and the
proceeds applicable to Tenant’s personal property shall be paid to Tenant.

 

(c)                                  At all times
during the Lease Term, Tenant shall procure and maintain business interruption
insurance in such amount as will reimburse Tenant for direct or indirect loss
of earnings attributable to all perils insured against in Section 10.2(A).

 

20

 

10.3                           Liability
Insurance.

 

(a)                                  At all times
during the Lease Term, Tenant shall procure and maintain, at its sole expense,
commercial general liability insurance applying to the use and occupancy of the
Premises and the business operated by Tenant. 
Such insurance shall have a minimum combined single limit of liability
of at least Five Million Dollars ($5,000,000) per occurrence and a general
aggregate limit of at least Five Million Dollars ($5,000,000).  All such policies shall be written to apply
to all bodily injury, property damage, personal injury losses and shall be
endorsed to include Landlord and its agents, beneficiaries, partners,
employees, and any Mortgagee of Landlord or any ground lessor as additional
insureds.  Such liability insurance shall
be written as primary policies, not excess or contributing with or secondary to
any other insurance as may be available to the additional insureds.

 

(b)                                 Landlord shall,
at all times during the Lease Term as an Operating Expense, procure and
maintain commercial general liability insurance.  Such insurance shall have minimum combined
single limit of liability of at least Five Million Dollars ($5,000,000) per
occurrence, and a general aggregate limit of at least Five Million Dollars ($5,000,000).

 

10.4                           Workers’
Compensation Insurance.  At
all times during the Lease Term, Tenant shall procure and maintain Workers’
Compensation Insurance in accordance with the laws of the State of California,
and Employer’s Liability insurance with a limit not less than One Million
Dollars ($1,000,000) Bodily Injury Each Accident; One Million Dollars
($1,000,000) Bodily Injury By Disease Each Person; and One Million Dollars
($1,000,000) Bodily Injury to Disease Policy Limit.

 

10.5                           Policy
Requirements.  All
insurance required or permitted to be maintained by Tenant shall be issued by
insurance companies authorized to do insurance business in the State of
California and rated not less than AVIII in Best’s Insurance Guide.  A certificate of insurance (or, at Landlord’s
option, copies of the applicable policies) evidencing the insurance required
under this Article shall be delivered to Landlord not less than thirty
(30) days prior to the Commencement Date, and the certificate and/or
policy for Tenant’s commercial general liability insurance will name Landlord
and the other parties required under Section 10.3(A) as additional
insureds.  No such policy shall be
subject to cancellation or modification without thirty (30) days prior
written notice to Landlord and to any Mortgagee designated by Landlord to Tenant.  Tenant shall furnish Landlord with a
replacement certificate with respect to any insurance not less than thirty
(30) days prior to the expiration of the current policy.  Tenant shall have the right to provide the
insurance required by this Article pursuant to blanket policies, but only
if such blanket policies expressly provide coverage to the Premises and
Landlord as required by this Lease.

 

10.6                           Waiver of
Subrogation.  Any policy
or policies of fire, extended coverage or similar casualty insurance which
either party obtains in connection with the Property, the Premises, or Tenant’s
Personal Property shall include a clause or endorsement denying the insurer any
rights of subrogation against the other party (and the other parties named as
additional insureds pursuant to this Article). 
Landlord and Tenant each waives any rights of recovery against the other
(and the other parties named as additional insureds) for injury or loss due to
hazards insurable by policies of fire, extended coverage or similar casualty
insurance, regardless of whether such insurance policies or coverage shall
actually have been obtained by the party granting such waiver, and regardless
of the cause of such fire or casualty, including the

 

21

 

negligence of the party benefiting from such
waiver.  Because this Section will
preclude the assignment of any claim mentioned in it by way of subrogation or
otherwise to an insurance company or any other person, each party to this Lease
agrees immediately to give to each of its insurance companies written notice of
the terms of the mutual waivers contained in this Section and to have the
insurance policies properly endorsed, if necessary, to prevent the invalidation
of the insurance coverages by reason of the mutual waivers contained herein.

 

10.7                           Earthquake and
Flood Insurance.  [In
addition to any other insurance policies carried by Landlord in connection with
the Premises, Landlord may elect to procure and maintain in full force and
effect during the Term as an Operating Expense (i) a policy of earthquake,
flood and/or surface water insurance, including rental value insurance against
abatement or loss of rent in the case of damage or loss covered under the
earthquake/volcanic and flood and/or surface water insurance, in an amount up
to one hundred percent (100%) of the full replacement cost (including debris
removal and demolition) of the Premises, 
(ii) a terrorism insurance policy, and/or (iii) any insurance
required by a lender to Landlord.] 
[DISCUSS LIMITS]

 

10.8                           Failure to
Insure.  If either Landlord or Tenant
fails to maintain any insurance which such applicable party is required to
maintain pursuant to this Article, such party shall be liable to the other
party for any loss or cost resulting from such failure to maintain.  Tenant may not self-insure against any risks
required to be covered by insurance without Landlord’s prior written consent.

 

10.9                           Exemption of
Landlord from Liability. 
Landlord shall not be liable for injury to Tenant’s business, or loss of
income therefrom, or, except in connection with damage or injury resulting from
the gross negligence or willful misconduct of Landlord, or its employees or its
authorized agents, for damage that may be sustained by the person, goods,
wares, merchandise or property of Tenant, its employees, invitees, customers,
agents, or contractors, or any other person in, on or about the Premises
directly or indirectly caused by or resulting from fire, steam, electricity,
gas, water, or rain which may leak or flow from or into any part of the
Premises, or from the breakage, leakage, obstruction or other defects of the
pipes, sprinklers, wires, appliances, plumbing, air conditioning, light
fixtures, or mechanical or electrical systems or from intrabuilding network
cable, whether such damage or injury results from conditions arising upon the
Premises or upon other portions of the Building or from other sources or places
and regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant. 
Landlord shall not be liable to Tenant for any damages arising from any
act or neglect of any other tenant of the Building.  Except to the extent of the gross negligence
or willful misconduct of Landlord, or its employees or agents, Landlord shall
not be liable for losses due to theft, vandalism or like causes.  Except to the extent of the negligence or
willful misconduct of Landlord, or its employees or agents, Tenant shall defend,
indemnify and hold Landlord harmless from any such claims made by any employee,
licensee, invitee, contractor, agent or other person whose presence in, on or
about the Premises or the Building is attendant to the business of Tenant.

 

22

 

ARTICLE 11

 

DAMAGE OR DESTRUCTION

 

11.1                           Landlord’s
Obligation to Rebuild.  If
the Premises are damaged or destroyed, Landlord shall promptly and diligently
repair the Premises, unless Landlord or Tenant has the option to terminate this
Lease as provided herein, and Landlord or Tenant elects to terminate.

 

11.2                           Right to
Terminate.

 

(a)                                  Landlord shall
have the option to terminate this Lease if either the Cotting Premises and/or
the Aldridge Premises are destroyed or damaged by fire or other casualty,
regardless of whether the casualty is insured against under this Lease, if
Landlord reasonably estimates that the repair of such damage cannot be
completed within nine (9) months after the date of the casualty or if such
casualty will require at least three (3) months to restore after the date
of the casualty and such damage occurs during the last eighteen (18) months of
the Term (“Termination Events”).

 

(b)                                 Tenant shall
also have the option to terminate this Lease if either of the Termination
Events apply.

 

(c)                                  Landlord shall
also have the right to terminate this Lease if the repair is not fully covered
by insurance maintained (or required to be maintained) pursuant to this Lease
other than by reason of the deductible amounts under such insurance policies.

 

(d)                                 Landlord shall
notify Tenant of Landlord’s estimate for such repair within (60) days after the
casualty.  If a party desires to exercise
the right to terminate this Lease as a result of a casualty, the party shall
exercise the right by giving the other party written notice of its election to
terminate within thirty (30) days after delivery of Landlord’s repair period
estimate, in which event this Lease shall terminate the earlier of (i) sixty
(60) days after the date of the terminating party’s notice or (ii) the date
Tenant surrenders possession of the Premises.

 

(e)                                  If neither
Landlord nor Tenant exercises the right to terminate this Lease, this Lease
shall continue in full force and effect and Landlord shall promptly commence
the process of obtaining necessary permits and approvals, and shall commence
repair of the Premises or the Property as soon as practicable and thereafter
prosecute the repair diligently to completion.

 

11.3                           Limited
Obligation to Repair.  Landlord’s
obligation, should Landlord elect or be obligated to repair or rebuild, shall
be limited to the Premises shell and improvements existing as of the
Commencement Date.  Tenant, at its option
and expense, shall replace or fully repair all trade fixtures, equipment,
Alterations and other improvements installed by Tenant and existing at the time
of the damage or destruction.  Subject to
force majeure events,  Landlord shall
promptly commence and thereafter diligently prosecute the completion of any
repairs or restoration work required to be performed by Landlord under this
Lease.

 

11.4                           Abatement of
Rent.  Except if the cause of the
casualty is an act of Tenant for which Landlord does not receive rent abatement
insurance proceeds, the Base Rent and Rent

 

23

 

shall be temporarily abated proportionately to the
degree the Premises are untenantable as a result of the damage or destruction,
commencing from the date of the damage or destruction and continuing during the
period required by Landlord to substantially complete its repair and
restoration of the Premises; provided, however, that nothing herein shall
preclude Landlord from being entitled to collect the full amount of any rent
loss insurance proceeds.  Tenant shall
not be entitled to any compensation or damages from Landlord for loss of the
use of the Premises, damage to Tenant’s personal property or any inconvenience
occasioned by any damage, repair or restoration.

 

11.5                           Insurance
Proceeds.  If this
Lease is terminated, Landlord may keep all the insurance proceeds resulting
from the damage payable pursuant to insurance coverage maintained hereunder,
and Tenant shall have no claims thereto and Tenant may keep all the insurance
proceeds resulting from the damage to Tenant’s Alterations, furniture, fixtures
or equipment or otherwise payable pursuant to insurance coverage maintained by
Tenant.

 

11.6                           Statutory
Waivers.  The provisions of this Lease,
constitute an express agreement between Landlord and Tenant with respect to any
and all damage to, or destruction of, the Premises or the Property or any part
of either, and any Law, including Sections 1932(2), 1933(4), 1941 and 1942 of
the California Civil Code, with respect to any rights or obligations concerning
damage or destruction shall have no application to this Lease or to any damage
to or destruction of all or any part of the Premises or any part of either, and
are hereby waived.

 

ARTICLE 12

 

CONDEMNATION

 

12.1                           Taking.  If the entire Premises or so much of the
Premises as to render the balance unusable by Tenant shall be taken by
condemnation, sale in lieu of condemnation or in any other manner for any
public or quasi-public purpose (collectively “Condemnation”), then this Lease
shall terminate on the date that title or possession to the Premises is taken
by the condemning authority, whichever is earlier.  Tenant hereby waives any and all rights it
might otherwise have pursuant to Section 1265.130 of the California Code
of Civil Procedure.  Notwithstanding the
foregoing, if more than 15% of the buildings located on the Premises, or more
than 25% of the parking areas is taking by Condemnation and reasonable
alternative parking is not made available to the Premises, Tenant may, at
Tenant’s option, to be exercised within ten (10) days after Tenant
receives written notice of such Condemnation from Landlord or the condemning
authority, terminate this Lease as of the date the condemning authority
requires Tenant to vacate possession of such portion of the Premises.  If Tenant does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the remaining portion of the Premises, except the Base Rent and Tenant’s
Share shall be reduced in proportion to the reduction in utility of the
Premises caused by such Condemnation.

 

12.2                           Award.  In the event of any Condemnation, the entire
award for such taking shall belong to Landlord. 
Tenant shall have no claim against Landlord or the award for the value
of any unexpired term of this Lease or otherwise.  Tenant shall be entitled to independently
pursue a separate award in a separate proceeding, unless a separate proceeding
is not provided, for

 

24

 

Tenant’s relocation costs, loss of business goodwill
and/or trade fixtures directly associated with the taking, provided such
separate award does not diminish Landlord’s award.

 

12.3                           Temporary
Taking.  No temporary taking of the
Premises shall terminate this Lease or entitle Tenant to any abatement of the
Rent payable to Landlord under this Lease; provided, further, that any award
for such temporary taking shall belong to Tenant to the extent that the award
applies to any time period during the Lease Term and to Landlord to the extent
that the award applies to any time period outside the Lease Term.

 

ARTICLE 13

 

SIGNAGE

 

13.1                           Signage.  Subject to the following terms and
conditions,  Tenant shall have the right,
at its sole cost and expense, to install signage on the exterior walls of the
Premises (“Signage”).

 

(a)                                  The size,
location, lighting, materials and design of the Signage shall be subject to
approval of Landlord, not to be unreasonably withheld, and to approvals from
the City of Vacaville.  Landlord shall
provide its response to Tenant’s submittals of signage location, design and
content under this subsection within fifteen (15) days after Landlord’s receipt
of such information.

 

(b)                                 Landlord makes
no representations and warranties regarding the approval of any Signage or the
conditions imposed by the City of Vacaville.

 

(c)                                  In no event may
Tenant assign the Signage except in connection with the assignment of its
entire interest under this Lease, and in no event may Tenant sublease the
Signage except in connection with a sublease to a permitted subtenant occupying
substantially all of the Premises of Tenant in the Premises (“Signage Transfer”).  Landlord shall have the right to approve any
Signage Transfer, including, without limitation, a Signage Transfer to an
Affiliate (unless the Affiliate is the successor to substantially all of Tenant’s
assets and retains the sign in place at the time of such Signage
Transfer).  With respect to a Signage
Transfer, the size, location, lighting, materials and design of the signage
shall be subject to approval of Landlord, not to be unreasonably withheld, and
to approvals from the City of Vacaville.

 

(d)                                 Tenant shall
comply, at its sole cost and expense, with any and all laws and governmental
requirements applicable to the Signage, including, without limitation, all
historical designation regulations and requirements.  Tenant shall not install any Signage without
having obtained all necessary permits and licenses.  Tenant shall pay for all engineering costs
and all costs of designing, installing, maintaining and removing the
Signage.  Upon the end of the Term,
Tenant shall, at its sole cost and expense, remove the Signage and restore the
exterior wall to the condition it was in prior to such installation, ordinary
wear and tear, acts of God, casualties and condemnation excepted.

 

25

 

13.2                           Failure to
Comply.  Tenant further agrees to
maintain any such Signage as may be approved, in good condition and repair at
all times.  If Tenant shall fail to meet
the conditions specified herein, Landlord may immediately remove Tenant’s
signage at Tenant’s expense.

 

ARTICLE 14

 

ASSIGNMENT AND SUBLETTING

 

14.1                           Prohibitions.

 

(a)                                  Except for
transfers expressly permitted pursuant to Section 14.2 below, Tenant shall
not assign this Lease or sublet all or a portion of the Premises without the
prior written consent of Landlord in each instance, which consent shall not,
subject to Landlord’s rights under this Article, be unreasonably withheld.  If Tenant desires to assign this Lease or to
sublet all or a portion of the Premises, Tenant shall give to Landlord written
notice of its intent, which notice shall designate the terms of the proposed
assignment or sublet, the identity of the proposed assignee or sublessee, and
shall be accompanied by financial statements of such proposed assignee or
sublessee and such other information regarding such party and its business and
reputation as shall be required by Landlord to evaluate the proposed assignment
or sublet.  Landlord shall have ten (10) days
after the date of service of Tenant’s request for Landlord’s consent to
identify with particularity any information not provided by Tenant that is
required by Landlord to evaluate the request. 
If Landlord fails to timely advise Tenant of any omitted materials or
information, then Tenant’s package shall be deemed complete.

 

(b)                                 Landlord shall
have fifteen (15) days after the date that Tenant’s request package is complete
or deemed complete to notify Tenant in writing that Landlord elects to (i) consent
to the proposed assignment or sublet as described in Tenant’s notice, or (ii) refuse
to consent to Tenant’s proposed assignment or sublet, stating the reasons for
such refuse, or (iii) in the event of an assignment of the Lease to elect
to terminate the Lease, or (iv) in the event of an assignment of substantially
all of the Cotting Premises and/or the Aldridge Premises for substantially all
of the remaining Term, to terminate the Lease with respect to the portion of
the Premises being sublet; provided, however, in the event Landlord elects to
terminate the Lease under the foregoing provision, Tenant shall have the right
to deliver a written notice within five (5) business days after such
election rescinding its request regarding such proposed assignment or sublease,
in which case this Lease shall continue in full force and effect.

 

(c)                                  With respect to
Landlord’s consent to an assignment or sublease, Landlord may take into
consideration any factors that Landlord may deem commercially reasonable and
relevant, and the reasons for which Landlord’s denial shall be deemed to be
reasonable shall include, without limitation, the following: (i) a
proposed change in the use of the Premises from that agreed to in this Lease;
or (ii) the business reputation or creditworthiness of any proposed
subtenant or assignee is not acceptable to Landlord in Landlord’s reasonable
judgment; or (iii) in Landlord’s reasonable judgment the proposed assignee
or sublessee would diminish the value or reputation of the Premises or
Landlord.

 

(d)                                 If Landlord
fails to notify Tenant in writing of its election within such fifteen (15) day
period, Landlord shall be deemed to have disapproved such requested

 

26

 

assignment or sublease; provided however that if
Tenant shall provide Landlord with a second notice after the expiration of such
fifteen (15) day period and Landlord does not respond within five (5) days
after receipt of such notice, such assignment or subletting shall be deemed
approved.  No consent by Landlord to any
assignment or sublet shall be deemed to be a consent to a use not permitted
under this Lease, to any act in violation of this Lease or to any subsequent
assignment or sublet.  Any attempted
assignment or sublet by Tenant in violation of the terms and covenants of this Section shall
be void.

 

14.2                           Affiliates.  Notwithstanding the foregoing, Tenant may
assign this Lease or sublet the Premises or any portion thereof, without
Landlord’s consent and with out payment of Leasehold Profit, to any
partnership, corporation or other entity which (i) controls, is controlled
by, or is under common control with Tenant (control being defined for such
purposes as ownership of 50% or more of all of the voting stock of a
corporation or 50% or more of the voting legal or equitable interest in any
other business entity, and the power to direct the management and operations
of, the relevant entity), or (ii) any entity resulting from a merger or
other reorganization of Tenant (collectively “Affiliates”); provided that with
respect to each of the foregoing transactions described above: (i) Landlord
receives written notice of the assignment or subletting no later than five (5) Business
Days prior to the effective date thereof, in which notice Tenant shall
expressly confirm that Tenant remains primarily liable (together with the
assignee in the event of an assignment) for all of the obligations of the
Tenant under this Lease or in the event Tenant is not permitted to disclose
such transfer under applicable laws, rules, regulations or requirements of any
governmental authority or nationally recognized public securities exchange,
then within five (5) business days after such transfer, (ii) in the
case of an assignment to an Affiliate, the Affiliate remains an Affiliate for
the duration of the subletting or the balance of the term in the event of an
assignment, (iv) Landlord receives a fully executed copy of the assignment
or sublease agreement between Tenant and the Affiliate no later than five (5) Business
Days prior to the effective date of such assignment or sublease, in which the
Affiliate assumes (in the event of an assignment) all of Tenant’s obligations
under this Lease, and agrees (in the event of a sublease) that such subtenant
will, at Landlord’s election, attorn directly to Landlord in the event that this
Lease is terminated for any reason, (v) the use of the Premises will
remain a Permitted Use, and (vi) in the case of an assignment, the
essential purpose of such assignment is to transfer an active, ongoing business
with substantial assets in addition to this Lease, and in the case of an
assignment or sublease the transaction is for legitimate business purposes
unrelated to this Lease and the transaction is not a subterfuge by Tenant to
avoid its obligations under this Lease or the restrictions on assignment and
subletting contained herein.  Each
subtenant shall be subject to the provisions of this Lease and Tenant shall
provide Landlord with the names of all subtenants, and a copy of the executed
agreement with such entities.

 

14.3                           Consideration
to Landlord.

 

(a)                                  Except for
transfers expressly permitted pursuant to Section 14.2, in the event of
any assignment or sublease, Landlord shall be entitled to receive, as
additional rent hereunder, fifty percent (50%) of any “Leasehold Profit” (as
defined below) paid by the assignee for the assignment or, in the case of a
sublease, fifty percent (50%) of the excess of the amount of rent paid for the
sublet space by the subtenant over the amount of Monthly Base Rent and
Assignment or Subletting Costs (as defined below), in each case to the extent
attributable to the sublet space for the corresponding month.

 

27

 

(b)           “Leasehold Profit” shall be the value allocated to the
leasehold between the parties to the assignment or sublease, or if no value is
allocated to the leasehold by the parties or if Landlord disputes that such
value is reasonable, Leasehold Profit shall be reasonably determined by taking
into account such facts and circumstances as the then fair market rental value
of the Premises, the value of the business and good will of the Tenant, and the
fair market value of any personal property transferred by Tenant to such
sublessee or assignee.  It is expressly
covenanted and agreed by the parties that the intent of this provision is that
Landlord is to receive its allocable share of any such consideration paid by
the assignee or subtenant or deemed paid by such assignee or subtenant which is
reasonably related to the difference between the then fair market value of the
Premises for the remainder of the Term and the Rent under the Lease (after
Tenant’s recovery of all the Assignment or Subletting Costs) and Tenant is to
receive that portion of any consideration paid by the assignee or subtenant or
deemed paid by such assignee or subtenant which is reasonably related to the
sale or transfer of the business and good will of Tenant and/or the personal
property of Tenant.  Upon default beyond
any applicable notice or cure periods by Tenant (and only so long as such
default remains outstanding and uncured) Tenant shall direct any subtenant or
assignee to pay directly to Landlord the amounts due to it pursuant to this Section on
account of such sublease or assignment.

 

(c)           “Assignment or Subletting Costs” shall mean, (x) any
brokerage commissions or third party attorney fees paid by Tenant in connection
with the subletting or assignment (such brokerage commissions not to exceed
commissions typically paid in the market at the time of such subletting or
assignment), (y) the cost of any Alterations specifically made by Tenant
to the space which is the subject of the assignment or sublet to prepare the
same for the assignee’s or subtenant’s occupancy, including architect’s fees,
and permit costs in connection with the same, and (2) any other reasonable
monetary inducements made to or in connection with such transfer.  As a condition to Tenant recapturing the
Assignment or Subletting Costs, Tenant shall provide to Landlord, within sixty
(60) days after Landlord’s delivery of a demand for same (which demand will not
be made sooner than the later of (i) Landlord’s execution of Landlord’s
consent to the assignment or subletting, or (ii) the commencement date of
the assignment or sublease), a reasonably detailed accounting of the Assignment
or Subletting Costs and supporting documents, such as receipts and construction
invoices.

 

14.4         Indirect Assignments. 
For purposes of this Article, the following event shall be deemed an
assignment of this Lease:  a reduction of
Tenant’s assets to the point that this Lease is substantially Tenant’s only
asset.

 

14.5         Documentation. 
No permitted assignment or subletting by Tenant shall be effective until
there has been delivered to Landlord a fully executed counterpart of the
assignment or sublease which expressly provides that (i) in the case of a
sublease, the subtenant may not assign its sublease or further sublet the
sublet space without Landlord’s prior written consent, (ii) in the case of
an assignment, the assignee assumes all of Tenant’s obligations under this
Lease arising on or after the date of the assignment, and (iii) in the
case of a sublease, the subtenant agrees to be and remain jointly and severally
liable with Tenant to Landlord for the payment of Rent pertaining to the sublet
space in the amount set forth in the sublease, and for the performance of all
of the terms and provisions of this Lease pertaining to the sublet space.  In addition to the foregoing, no assignment
or sublease by Tenant shall be effective until there has

 

28

 

been delivered to Landlord a fully executed
counterpart of a reasonable consent to assignment or sublease form, as
applicable.  The failure or refusal of a
subtenant or assignee to execute any such instrument shall not release or
discharge the subtenant or assignee from its liability as set forth above.  Notwithstanding the foregoing, no subtenant
or assignee shall be permitted to occupy the Premises unless and until such
subtenant or assignee provides Landlord with certificates evidencing that such
subtenant or assignee is carrying all insurance coverage required of it under
this Lease.

 

14.6         Tenant Liability. 
In the event of any sublease or assignment, whether or not with Landlord’s
consent, Tenant shall not be released or discharged from any liability, whether
past, present or future, under this Lease. 
Tenant’s liability shall remain primary, and in the event of default by
any subtenant, assignee or successor of Tenant in performance or observance of
any of the covenants or conditions of this Lease, Landlord may proceed directly
against Tenant without the necessity of exhausting remedies against said subtenant,
assignee or successor.  After any
assignment, Landlord may consent to subsequent assignments or subletting of
this Lease, or amendments or modifications of this Lease with assignees of
Tenant, without notifying Tenant, or any successor of Tenant, and without
obtaining its or their consent thereto, and such action shall not relieve
Tenant or any successor of Tenant of liability under this Lease.

 

14.7         No Merger. 
Without limiting any of the provisions of this Section, the voluntary or
other surrender of this Lease by Tenant, or a mutual cancellation by Landlord
and Tenant, shall not work a merger, and shall, at the option of Landlord,
terminate all or any existing subleases or subtenancies or, at the option of
Landlord, operate as an assignment to Landlord of any or all such subleases or
subtenancies.  If Landlord does elect
that such surrender or cancellation operate as an assignment of such subleases
or subtenancies, Landlord shall in no way be liable for any previous act or
omission by Tenant under the subleases or for the return of any deposit(s) under
the subleases that have not been actually delivered to Landlord, nor shall
Landlord be bound by any sublease modification(s) executed without
Landlord’s consent or for any advance rental payment by the subtenant in excess
of one month’s rent.

 

14.8         Processing Expenses. 
Tenant shall pay to Landlord, as Landlord’s cost of processing each
proposed assignment or subletting (whether or not the same is ultimately
approved by Landlord or consummated by Tenant), an amount equal to the sum of (i) Landlord’s
reasonable attorneys’ fees and (ii) other professional fees, in an amount
not exceeding $2000.00 per request (collectively, “Processing Costs”).  Notwithstanding anything to the contrary
herein, Landlord shall not be required to process any request for Landlord’s
consent to an assignment or subletting until Tenant has paid to Landlord the
amount of Landlord’s estimate of the Processing Costs.  When the actual amount of the Processing
Costs is determined, it shall be reconciled with Landlord’s estimate, and any
payments or refunds required as a result thereof shall promptly thereafter be
made by the parties.

 

29

 

ARTICLE 15

 

DEFAULT AND REMEDIES

 

15.1         Events of Default By Tenant.  The occurrence of any of the following shall
constitute an Event of Default under this Lease by Tenant:

 

(a)           The failure by Tenant to pay Base Rent or make any other
payment required to be made by Tenant hereunder as and when due; provided,
however, that notwithstanding the foregoing, Landlord shall provide Tenant with
written notice and five (5) days to cure any such nonpayment of Base Rent
one (1) during any twelve (12) month period prior to the occurrence of an
Event of Default.

 

(b)           The abandonment of the Premises by Tenant or the vacation
of the Premises by Tenant for fourteen (14) consecutive days (with or
without the payment of Rent) without providing a commercially reasonable level
of security or where the insurance coverage required hereunder is jeopardized
as a result thereof.

 

(c)           The failure of Tenant to perform any term, covenant or
condition of this Lease except those requiring the payment of money, and Tenant
shall have failed to cure the breach within thirty (30) days after written
notice from Landlord if the breach could reasonably be cured within the thirty
(30) day period; provided, however, if the failure could not reasonably be
cured within the thirty (30) day period, then Tenant shall not be in default
unless it has failed to promptly commence and thereafter complete the cure
within ninety (90) days after such notice.

 

(d)           Any material misrepresentation herein, or material
misrepresentation or omission in any financial statements or other materials
provided by Tenant to Landlord.

 

15.2         Remedies.

 

(a)           Upon the occurrence of any default by Tenant as provided
in Section 15.1, Landlord may exercise all of its remedies as may be
permitted by law, including but not limited to the remedy provided by
Section 1951.4 of the California Civil Code, and including without
limitation, terminating this Lease, reentering the Premises and removing all
persons and property therefrom, which property may be stored by Landlord at a
warehouse or elsewhere at the risk, expense and for the account of Tenant.

 

(b)           If Landlord elects to terminate this Lease, Landlord shall
be entitled to recover from Tenant the aggregate of all amounts permitted by
law, including but not limited to (i) the worth at the time of award of
the amount of any unpaid rent which had been earned at the time of such
termination; plus (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 Tenant proves could
have been reasonably avoided; plus (iii) the worth at the time of award of
the amount by which the unpaid rent for the balance of the Lease Term after the
time of award exceeds the amount of such rental loss that Tenant proves could
have been reasonably avoided; plus (iv) any other amount necessary to
compensate

 

30

 

Landlord for all of the detriment proximately caused
by Tenant’s failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, specifically
including but not limited to, brokerage commissions and advertising expenses
incurred, expenses of remodeling the Premises or any portion thereof for a new
tenant; and (v) at Landlord’s election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by applicable
law.  The term “rent” as used in this
Section 15.2 shall be deemed to be and to mean all sums of every nature
required to be paid by Tenant pursuant to the terms of this Lease, whether to
Landlord or to others.  As used in
items (i) and (ii), above, the “worth at the time of award” shall be
computed by allowing interest at the Interest Rate, but in no case greater than
the maximum amount of such interest permitted by law.  As used in item (iii), above, the “worth
at the time of award” shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).

 

15.3         Landlord’s Right To Continue Lease Upon Tenant Default.  Landlord shall have the remedy described in
Section 1951.4 of the California Civil Code (that is, Landlord may
continue this Lease in effect after Tenant’s breach and abandonment and recover
Rent as it becomes due, because Tenant has the right to sublet or assign,
subject only to reasonable limitations). Even though Tenant has breached this
Lease and abandoned the Premises, this Lease shall continue in effect for so
long as Landlord does not terminate Tenant’s right to possession, and Landlord
may enforce all its rights and remedies as Rent becomes due under this
Lease.  Acts of maintenance or
preservation or efforts to relet the Premises or the appointment of a receiver
upon initiative of Landlord to protect Landlord’s interest under this Lease
shall not constitute a termination of Tenant’s right to possession, and this
Lease will not be deemed terminated unless and until Landlord delivers notice
to Tenant expressly stating Landlord’s intention to terminate this Lease.

 

15.4         Right of Landlord to Perform.  All covenants and agreements to be performed
by Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost
and expense.  If Tenant shall fail to pay
any sum of money, other than Rent, required to be paid by it hereunder or shall
fail to perform any other act on its part to be performed hereunder, Landlord
may, but shall not be obligated to, make any payment or perform any such other
act on Tenant’s part to be made or performed, without waiving or releasing
Tenant of its obligations under this Lease. 
Any sums so paid by Landlord and all necessary incidental costs,
together with interest thereon at the Interest Rate from the date of such payment,
shall be payable to Landlord as additional rent on demand and Landlord shall
have the same rights and remedies in the event of nonpayment as in the case of
default by Tenant in the payment of Rent.

 

15.5         Non-Waiver. 
Nothing in this Article shall be deemed to affect Landlord’s rights
to indemnification for liability or liabilities arising prior to termination of
this Lease or Tenant’s right to possession of the Premises for personal injury
or property damages under the indemnification clause or clauses contained in
this Lease.  No acceptance by Landlord of
a lesser sum than the Rent then due shall be deemed to be other than on account
of the earliest installment of such rent due, and shall not be deemed to be a
waiver of any preceding breach by Tenant of any agreement, condition, or provision
of this Lease, other than the failure of Tenant to pay the particular rent so
accepted; regardless of Landlord’s knowledge of such preceding breach at the
time of acceptance of such rent, nor shall any endorsement or statement on any
check or

 

31

 

any letter accompanying any check or payment as rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord’s right to recover the balance of such
installment or pursue any other remedy in the Lease provided.  The delivery of keys to any employee of
Landlord or to Landlord’s agent or any employee thereof shall not operate as a
termination of this Lease or a surrender of the Premises.  The waiver by a party of any agreement,
condition or provision contained in this Lease will not be deemed to be a
waiver of any subsequent breach of the same or any other agreement, condition,
or provision contained in this Lease; nor will any custom or practice that may
grow up between the parties in the administration of the terms of this Lease be
construed to waive or to lessen the right of a party to insist upon the
performance by the other party in strict accordance with the terms of this
Lease.

 

15.6         Cumulative Remedies. 
The specific remedies to which a party may resort under the terms of the
Lease are cumulative and are not intended to be exclusive of any other remedies
or means of redress to which it may be lawfully entitled in case of any breach
or threatened breach by a party of any provisions of the Lease.  In addition to the other remedies provided in
the Lease, including the right to terminate this Lease or to terminate Tenant’s
right of possession of the Premises and reenter and repossess the Premises and
remove all persons and property from the Premises without terminating this
Lease as provided in Section 15.2, Landlord shall be entitled to a
restraint by injunction of the violation or attempted or threatened violation
of any of the covenants, conditions or provisions of the Lease or to a decree
compelling specific performance of any such covenants, conditions or
provisions.  Exercise of any of the
remedies described in this Article will not prevent the concurrent or subsequent
exercise of any other remedy provided for in this Lease or otherwise available
to a party at law or in equity.

 

15.7         Default by Landlord. 
Landlord’s failure to perform or observe any of its obligations under
this Lease shall constitute a default by Landlord under this Lease only if such
failure shall continue for a period of thirty (30) days (or the
additional time, if any, that is reasonably necessary to promptly and
diligently cure the failure) after Landlord receives written notice from Tenant
specifying the default.  The notice shall
give in reasonable detail the nature and extent of the failure and shall
identify the Lease provision(s) containing the obligation(s).  If Landlord shall default in the performance
of any of its obligations under this Lease (after notice and opportunity to cure
as provided herein), Tenant may pursue any remedies available to it under the
law and this Lease, except that in no event shall Tenant be entitled to
punitive damages, lost profits, business interruption, speculative,
consequential or other such damages.

 

ARTICLE 16

 

ATTORNEYS’ FEES; COSTS OF
SUIT

 

16.1         Attorneys’ Fees. 
If either Landlord or Tenant shall commence any action or other
proceeding against the other arising out of, or relating to, this Lease or the
Premises, the prevailing party shall be entitled to recover from the losing
party, in addition to any other relief, its actual attorneys’ fees irrespective
of whether or not the action or other proceeding is prosecuted to judgment and
irrespective of any court schedule of reasonable attorneys’ fees.  In addition, Tenant shall reimburse Landlord,
upon demand, for all reasonable attorneys’ fees

 

32

 

incurred in collecting Rent or otherwise seeking
enforcement against Tenant, its sublessees and assigns, of Tenant’s obligations
under this Lease.

 

16.2         Indemnification. 
Should Landlord be made a party to any litigation instituted by Tenant
against a party other than Landlord, or by a third party against Tenant, Tenant
shall indemnify, hold harmless and defend Landlord from any and all loss, cost,
liability, damage or expense incurred by Landlord, including attorneys’ fees,
in connection with the litigation except to the extent of Landlord’s negligence
or willful misconduct.

 

ARTICLE 17

 

SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT

 

17.1         Subordination, Nondisturbance and Attornment.

 

(a)           Except as provided in Section 17.1, this Lease will
be subject and subordinate to all ground and underlying leases, mortgages and
deeds of trust which hereafter affect the Property or any portion thereof, to
all covenants, conditions, and restrictions and other matters of record
hereafter pertaining to the Property, and to all renewals, modifications,
consolidations, replacements and extensions of the foregoing.  After Landlord’s written request therefor,
Tenant shall execute any and all commercially reasonable documents required by
Landlord, the lessor under any ground or underlying lease (“Ground Lessor”), or
the holder or holders of any mortgage or deed of trust (“Holder”), evidencing
this Lease to be subordinate to the lien of any such lease, mortgage or deed of
trust, as the case may be,  so long as
same satisfies the requirements of this Section.

 

(b)           Notwithstanding the foregoing, Landlord covenants and
agrees to obtain a subordination, non-disturbance and attornment agreement (“SNDA”)
from any Holder or Ground Lessor arising after the date of this Lease on such
entities standard form with such changes as such Holder and Tenant may agree to
and Landlord shall deliver to Tenant in recordable form, and Tenant agrees to
execute and shall have the right to record with the county recorder of the
county in which the Property is located, a SNDA satisfying the requirements set
forth herein.

 

(c)           If the interest of Landlord in the Property or the
Premises is transferred to any Ground Lessor or Holder who has signed a SNDA,
pursuant to or in lieu of proceedings for enforcement of any such lease,
mortgage, or deed of trust, upon request of such Ground Lessor or Holder,
Tenant shall immediately and automatically attorn to the Ground Lessor or
Holder, as the case may be, provided, however, that such purchaser or ground
lessor shall not be (i) bound by any payment of Rent for more than one
month in advance except payments in the nature of security for the performance
by Tenant of its obligations under this Lease; (ii) subject to any
existing offset, defense or damages arising out of a default of any obligations
of any preceding Landlord; provided however that such Ground Lessor or Holder
shall cure any then existing defaults of Landlord which are curable by a third
party; (iii) bound by any amendment or modification of this Lease made
without the written consent of the Holder or Ground Lessor; or (iv) liable
for any security deposits not actually received in cash by such Ground Lessor
or Holder.

 

33

 

17.2         Ground Lessor or Holder Rights.

 

(a)           If, in connection with obtaining financing for the
Property or any portion thereof, any Holder or Ground Lessor shall request
reasonable modification to this Lease as a condition to such ground lease or
financing, Tenant shall within twenty (20) days after receipt of Landlord’s
request, execute and deliver to Landlord any such modification agreement so
requested, provided such modifications do not adversely affect Tenant’s rights
or increase Tenant’s obligations hereunder (acceptable modifications would
include, for example, imposition of additional notice requirements that do not
exceed the time periods provided to Landlord hereunder or other similar
ministerial obligations upon Tenant).

 

(b)           If a Ground Lessor or a Holder advises Landlord that it
desires or requires this Lease to be prior and superior to a lease, mortgage or
deed of trust, Landlord may notify Tenant. 
Within ten (10) business days of Landlord’s notice, Tenant shall
execute, have acknowledged and deliver to Landlord any and all documents or
instruments, in the reasonable form presented to Tenant, which Landlord, Ground
Lessor or Holder deems necessary or desirable to make this Lease prior and
superior to the lease, mortgage or deed of trust.

 

(c)           Tenant agrees to give any Ground Lessor or Holder, by
registered or certified mail, a copy of any notice of default served upon the
Landlord by Tenant, provided that prior to such notice Tenant has received
notice (by way of service on Tenant of a copy of an assignment of rents and
leases, or otherwise) of the address of such Holder or Ground Lessor.  Tenant further agrees that upon the
occurrence of an Event of Default with respect to Landlord, the Holder or
Ground Lessor shall have the same period to cure such default as is provided to
Landlord by this Lease after receipt of notice on such Ground Lessor or Holder
within which to cure such default or if such default cannot be cured within
that time, then such additional notice time as may be reasonably necessary, if,
within such thirty (30) days, any Holder or Ground Lessor has commenced the
on-site performance of such cure and is diligently pursuing such cure to
completion.

 

ARTICLE 18

 

QUIET ENJOYMENT

 

Provided
that an Event of Default does not exist under this Lease, Tenant shall have and
peaceably enjoy the Premises during the Lease Term free of claims by or through
Landlord, subject to all of the terms and conditions contained in this Lease.

 

ARTICLE 19

 

RULES AND REGULATIONS

 

The
Rules and Regulations attached hereto as Exhibit B are hereby
incorporated by reference herein and made a part hereof.  Tenant shall abide by, and faithfully observe
and comply with the Rules and Regulations and any reasonable and
nondiscriminatory amendments, modifications and/or additions thereto as may
hereafter be adopted and published by written notice to tenants by Landlord for
the safety, care, security, good order and/or cleanliness of the

 

34

 

Premises
and/or the Building.  In the event of any
conflict between the Rules and Regulations and the terms of this Lease,
this Lease shall control.

 

ARTICLE 20

 

ESTOPPEL CERTIFICATES

 

(a)           Tenant agrees at any time and from time to time upon not
less than ten (10) business days’ prior written notice from Landlord to
execute, acknowledge and deliver to Landlord a statement in writing addressed
and certifying to Landlord (to the extent factually correct), to any current or
prospective Mortgagee or any assignee thereof, to any prospective purchaser of
the land, improvements or both comprising the Building, and to any other party
designated by Landlord, that this Lease is unmodified and in full force and
effect (or if there have been modifications, that the same is in full force and
effect as modified and stating the modifications); that Tenant has accepted
possession of the Premises, which are acceptable in all respects, and that any
improvements required by the terms of this Lease to be made by Landlord have
been completed to the satisfaction of Tenant; 
that Tenant is in full occupancy of the Premises; that no rent has been
paid more than thirty (30) days in advance; that the first month’s Base
Rent has been paid; that Tenant is entitled to no free rent or other
concessions except as stated in this Lease; that Tenant has not been notified
of any previous assignment of Landlord’s or any predecessor landlord’s interest
under this Lease; the dates to which Base Rent, additional rental and other
charges have been paid; that Tenant, as of the date of such certificate, has no
charge, lien or claim of setoff under this Lease or otherwise against Base
Rent, additional rental or other charges due or to become due under this Lease;
that Landlord is not in default in performance of any covenant, agreement or
condition contained in this Lease; or any other factual matter relating to this
Lease or the Premises or, if so, specifying each such default.  Landlord agrees at any time and from time to
time upon not less than ten (10) business days’ prior written notice from
Tenant to execute, acknowledge and deliver to Tenant a statement in writing
addressed and certifying to Tenant (to the extent factually correct) and to any
party designated by Tenant, an estoppel certificate substantially in the form,
as applicable, that Tenant is required to provide Landlord under the terms of
this Article 20.

 

(b)           Any such statement delivered pursuant to this Section may
be relied upon by Landlord or any Mortgagee, or prospective purchaser to whom
it is addressed and such statement, if required by its addressee, may so
specifically state.

 

ARTICLE 21

 

ENTRY BY LANDLORD

 

Landlord
may enter the Premises at all reasonable times upon at least twenty-four (24)
hours prior written notice except in the event of an emergency, to:  inspect the same; exhibit the same to
prospective purchasers, Mortgagees or tenants; determine whether Tenant is complying
with all of its obligations under this Lease; supply services to be provided by
Landlord to Tenant under this Lease; post notices of non-responsibility; and
make repairs or improvements in or to the Building or the Premises; provided,
however, that all such work shall be done as promptly as reasonably possible
and so as to cause as little interference to Tenant as reasonably possible.

 

35

 

Tenant
hereby waives any claim for damages for any injury or inconvenience to, or
interference with, Tenant’s business, any loss of occupancy or quiet enjoyment
of the Premises or any other loss occasioned by such entry.  Landlord shall at all times have and retain a
key with which to unlock all of the doors in, on or about the Premises
(excluding Tenant’s vaults, safes and similar areas designated by Tenant in
writing in advance), and Landlord shall have the right to use any and all means
by which Landlord may deem proper to open such doors to obtain entry to the
Premises, and any entry to the Premises obtained by Landlord by any such means,
or otherwise, shall not under any circumstances be deemed or construed to be a
forcible or unlawful entry into or a detainer of the Premises or an eviction,
actual or constructive, of Tenant from any part of the Premises.  Such entry by Landlord shall not act as a
termination of Tenant’s duties under this Lease.  If Landlord shall be required to obtain entry
by means other than a key provided by Tenant, the cost of such entry shall be
payable by Tenant to Landlord as additional rent.

 

ARTICLE 22

 

LANDLORD’S LEASE
UNDERTAKINGS — EXCULPATION FROM

PERSONAL LIABILITY; TRANSFER OF LANDLORD’S INTEREST

 

22.1.1      Landlord Liability.  Notwithstanding anything to the contrary
contained in this Lease, including any Exhibits hereto attached, it is
expressly understood and agreed by and between the parties hereto that:
(i) the recourse of Tenant or its successors or assigns against Landlord
with respect to the alleged breach by or on the part of Landlord of any
representation, warranty, covenant, undertaking or agreement contained in this
Lease or otherwise arising out of Tenant’s use of the Premises or the Building
(collectively, “Landlord’s Lease Undertakings”) shall extend only to Landlord’s
interest in the real estate of which the Premises demised under this Lease are
a part (“Landlord’s Real Estate”) and not to any other assets of Landlord or
its constituent partners; and (ii) except to the extent of Landlord’s
interest in Landlord’s Real Estate, no personal liability or personal responsibility
of any sort with respect to any of Landlord’s Lease Undertakings or any alleged
breach thereof is assumed by, or shall at any time be asserted or enforceable
against, Landlord, or its directors, officers, shareholders, employees, or
agents.

 

22.1.2      Transfer of Landlord’s Interest.  In the event of any transfer of Landlord’s
interest in the Building, Landlord shall be automatically freed and relieved
from all applicable liability with respect to performance of any covenant or
obligation on the part of Landlord, including, without limitation, the
obligations of Landlord with respect to the Security Deposit, to the extent the
grantee of Landlord’s interest assumes in writing, the terms, covenants and
conditions of this Lease to be performed on the part of Landlord, it being
intended hereby that the covenants and obligations contained in this Lease on
the part of Landlord shall, subject to all the provisions of this Article, be
binding on Landlord, its successors and assigns, only during their respective
periods of ownership.

 

ARTICLE 23

 

HOLDOVER TENANCY

 

(a)           Nothing contained herein will be construed to give Tenant
the right to hold over at any time, and Landlord may exercise any and all
remedies at law or in equity to

 

36

 

recover possession of the Premises, as well as any
damages incurred by Landlord due to Tenant’s failure to vacate and deliver
possession to Landlord as provided herein.

 

(b)           If Tenant holds possession of the Premises after the
expiration or termination of the Lease Term, by lapse of time or otherwise,
Tenant shall become a tenant at sufferance upon all of the terms contained
herein, except as to Rent.  During such
holdover period, Tenant shall pay to Landlord, on the first day of each applicable
month, a monthly rental equivalent to one hundred fifty percent (150%) of
the Rent payable by Tenant to Landlord with respect to the last month of the
Lease Term.

 

(c)           The monthly rent payable for such holdover period shall in
no event be construed as a penalty or as liquidated damages for such retention
of possession.  Without limiting the
foregoing, Tenant hereby agrees to indemnify, defend and hold harmless
Landlord, its beneficiary, and their respective agents, contractors and
employees, from and against any and all claims, liabilities, actions, losses,
damages (including, without limitation, direct, indirect, incidental and
consequential) and expenses (including, without limitation, court costs and
reasonable attorneys’ fees) asserted against or sustained by any such party and
arising from or by reason of such retention of possession, which obligations
shall survive the expiration or termination of the Lease Term.

 

ARTICLE 24

 

NOTICES

 

(a)           All notices which Landlord or Tenant may be required, or may
desire, to serve on the other may be served by hand delivery, or alternatively,
by (a) delivery by private express courier (such as Federal Express or
Airborne Courier) or (b) mailing the same by registered or certified mail,
postage prepaid, addressed to Landlord at the addresses for Landlord set forth
in Section 1 above and to Tenant at the address for Tenant set forth in
Section 1 above, or addressed to such other address or addresses as either
Landlord or Tenant may from time to time designate to the other in writing.

 

(b)           Notice shall be deemed to have been served by private
express courier on the date of delivery (or refusal if the recipient declines
to sign for same).  Any notice or demand
from an attorney acting or purporting to act on behalf of a party shall be
deemed to be notice from such party, provided that such attorney is authorized
to act on behalf of such party.

 

ARTICLE 25

 

BROKERS

 

(a)           Each party warrants and represents that it has had no
dealings with any real estate broker or agent in connection with the
negotiation of this Lease, and that it knows of no real estate broker or agent
who is or might be entitled to a fee, commission or other compensation in
connection with this Lease.

 

(b)           Each party shall indemnify, defend and hold harmless the
other party from and against any and all claims (including reasonable attorneys’
fees and costs) arising

 

37

 

out such party’s conversations or other dealings
with any other broker or individual regarding this Lease.

 

ARTICLE 26

 

COMMUNICATIONS AND COMPUTER
LINES

 

26.1         Generally.

 

(a)           Tenant acknowledges and agrees that all telephone and
telecommunications services (“Telecommunications Services”) desired by Tenant
shall be ordered and utilized at the sole expense of Tenant.  Unless Landlord otherwise requests or
consents in writing, all equipment, apparatus and devices, including without
limitation wiring and cables, for the provisions of Telecommunications Services,
as well as Tenant’s computer and data wiring and cabling (collectively, the “Telecommunications
Equipment”) shall be and remain solely in the Premises. Landlord shall have no
responsibility for the maintenance of Tenant’s Telecommunications Equipment,
nor for any wiring or other infrastructure to which Tenant’s Telecommunications
Equipment may be connected.

 

(b)           Tenant agrees that, to the extent any Telecommunications
Services are interrupted, curtailed or discontinued, Landlord shall have no
obligation or liability with respect thereto and it shall be the sole
obligation of Tenant, at its sole expense, to obtain substitute service.  Tenant shall not be entitled to any rent
abatement and the Commencement Date of this Lease shall not be delayed due to
Tenants inability to obtain telecommunication services.

 

(c)           In the event that Tenant wishes at any time to utilize the
services of a telephone or telecommunications provider whose equipment is not
then servicing the Building (a “New Provider”), no such New Provider shall be
permitted to install its lines or other equipment within the Building without
first securing the prior written approval of the Landlord, which approval may
be withheld in Landlord’s reasonable discretion.  Landlord’s approval shall not be deemed any
kind of warranty or representation by Landlord, including, without limitation,
any warranty or representation as to the suitability, competence or financial
strength of the New Provider.

 

26.2         Interruption. 
Landlord shall have the right, upon such notice as is practicable in the
case of emergencies, and otherwise upon reasonable prior notice to Tenant, to
interrupt or turn off telecommunications facilities in the event of emergency
or as necessary in connection with repairs to the Building.

 

26.3         Removal.  Any
and all Telecommunications Equipment installed in the Premises, or elsewhere in
the Building by or on behalf of Tenant, including wiring and other facilities
for the provision of Telecommunications Services, shall be removed by Tenant
upon the expiration or earlier termination of the Lease Term, by Tenant at its
sole expense or, at Landlord’s election, by Landlord at Tenant’s sole expense,
with the cost thereof to be paid as additional rent under this Lease.

 

38

 

26.4         Abandonment. 
If the Telecommunications Equipment is not removed within thirty
(30) days of the termination or expiration of this Lease, the
Telecommunications Equipment shall conclusively be deemed to have been
abandoned and may be removed, appropriated, sold, stored, destroyed, otherwise
disposed of, or retained and used, by Landlord without notice to Tenant,
without obligation to account therefor, and without payment to Tenant or credit
against any amount due from Tenant to Landlord pursuant to this Lease.  Tenant shall pay to Landlord upon demand all
costs of any such removal, disposition and storage of the Telecommunication
Equipment, as well as all costs to repair any damage to the Building caused by
such removal.  The obligations within
this Article shall survive the expiration or earlier termination of this
Lease.

 

ARTICLE 27

 

RIGHT OF FIRST OFFER

 

(a)           Landlord shall provide Tenant with a notice (“Right of
First Offer Notice”) in the event that during the Term Landlord decides to
market the Premises for sale to an unrelated third party entity.

 

(b)           The Right of First Offer Notice shall include the market
terms on which Landlord is prepared to sell the Premises, including purchase
price, deposit, due diligence period and other material terms and conditions of
such sale.  Tenant acknowledges that
Landlord will sell the Premises in its “as is” condition without
representations and warranties as to the physical condition of the Premises or
its compliance with applicable laws.

 

(c)           For a period of 30 days after receipt of the Right of
First Offer Notice or any subsequent Right of First Offer Notice, (the “Negotiation
Period”) Landlord and Tenant shall negotiate in good faith concerning the sale
of the Premises to Tenant.  If the
parties do not reach agreement on the terms of such sale, Landlord shall be
able to market the Premises upon such terms and conditions as it may elect to
accept; provided however that if Landlord has not entered into a contract  for the sale of the Premises within 180 days
after the end of the Negotiation Period, and Landlord shall send a second Right
of First Offer Notice prior to entering into any agreements with a prospective
purchaser of the Premises.

 

(d)           Notwithstanding anything to the contrary contained,
herein, all rights of Tenant pursuant to this Section shall automatically
terminate without notice and shall be of no further force and effect with
respect, whether or not Tenant has timely exercised the option granted herein,
(i) if an Event of Default exists at the time of exercise of the option or  (ii) Tenant has assigned this Lease other
than to an Affiliate.

 

(e)           If Tenant is entitled to and properly exercises its Right
of First Offer, and Landlord and Tenant agree upon the terms of such sale,
Landlord shall prepare a purchase and sale agreement to reflect the agreed upon
terms and other terms customarily included in a sale and purchase of real
estate. The parties acknowledge that neither party shall be bound to buy and
sell the Premises unless a purchase and sale agreement, satisfactory to such
party in its sole and absolute condition is executed by such party.

 

39

 

ARTICLE 28

 

MISCELLANEOUS

 

28.1         Entire Agreement. 
This Lease contains all of the agreements and understandings relating to
the leasing of the Premises and the obligations of Landlord and Tenant in
connection with such leasing.  Landlord
has not made, and Tenant is not relying upon, any warranties, or
representations, promises or statements made by Landlord or any agent of
Landlord, except as expressly set forth herein. 
This Lease supersedes any and all prior agreements and understandings
between Landlord and Tenant and alone expresses the agreement of the parties.

 

28.2         Amendments. 
This Lease shall not be amended, changed or modified in any way unless
in writing executed by Landlord and Tenant.

 

28.3         Successors. 
Except as expressly provided herein, this Lease and the obligations of
Landlord and Tenant contained herein shall bind and benefit the successors and
assigns of the parties hereto.

 

28.4         Force Majeure. 
Neither Landlord nor Tenant shall incur any liability to the other party
with respect to, and shall not be responsible for any failure to perform, any
of its obligations hereunder (other than mandatory obligations such as payments
of monies and defaults for which an outside cure period is expressly provided)
if such failure is caused by any reason beyond its control, including, but not
limited to, strike, labor trouble, governmental rule, regulations, ordinance,
statute or interpretation, or by fire, earthquake, civil commotion, or failure
or disruption of utility services.  The
amount of time for such party to perform any of its obligations shall be
extended by the amount of time it is delayed in performing such obligation by
reason of any force majeure occurrence whether similar to or different from the
foregoing types of occurrences.

 

28.5         Survival of Obligations.  Any obligations of the parties accruing prior
to the expiration of the Lease shall survive the expiration or earlier
termination of the Lease, and the responsible party shall promptly perform all
such obligations whether or not this Lease has expired or been terminated.

 

28.6         Light and Air. 
No diminution or shutting off of any light, air or view by any structure
now or hereafter erected shall in any manner affect this Lease or the
obligations of Tenant hereunder, or increase any of the obligations of Landlord
hereunder.

 

28.7         Governing Law. 
This Lease shall be governed by, and construed in accordance with, the
laws of the State of California.

 

28.8         Severability. 
In the event any provision of this Lease is found to be unenforceable,
the remainder of this Lease shall not be affected, and any provision found to
be invalid shall be enforceable to the extent permitted by law.  The parties agree that in the event two
different interpretations may be given to any provision hereunder, one of which
will render the provision unenforceable, and one of which will render the
provision enforceable, the interpretation rendering the provision enforceable
shall be adopted.

 

40

 

28.9         Captions.  All
captions, headings, titles, numerical references and computer highlighting are
for convenience only and shall have no effect on the interpretation of this
Lease.

 

28.10       Interpretation.

 

(a)           Tenant acknowledges that it has read and reviewed this
Lease and that it has had the opportunity to confer with counsel in the
negotiation of this Lease.

 

(b)           This Lease shall be construed neither for nor against
Landlord or Tenant, but shall be given a fair and reasonable interpretation in
accordance with the meaning of its terms and the intent of the parties.

 

28.11       Independent Covenants. 
Each covenant, agreement, obligation or other provision of this Lease to
be performed by a party are separate and independent covenants of such party,
and not dependent on any other provision of the Lease.

 

28.12       Number and Gender. 
All terms and words used in this Lease, regardless of the number or
gender in which they are used, shall be deemed to include the appropriate
number and gender, as the context may require.

 

28.13       Time is of the Essence. 
Time is of the essence of this Lease and the performance of all
obligations hereunder.

 

28.14       Joint and Several Liability.  If Tenant comprises more than one person or
entity, or if this Lease is guaranteed by any party, all such persons shall be
jointly and severally liable for payment of rents and the performance of Tenant’s
obligations hereunder.

 

28.15       Choice of Laws; Waiver of Jury Trial.

 

(a)           Tenant hereby submits to local jurisdiction in the State
of California  and agrees that any action
by Tenant against Landlord shall be instituted in the State of California and
that Landlord shall have personal jurisdiction over Tenant for any action
brought by Landlord against Tenant in the State of California.

 

(b)           TO THE FULLEST EXTENT PERMITTED BY LAW, INCLUDING ANY LAW
ENACTED AFTER THE LEASE DATE, TENANT AND LANDLORD HEREBY, KNOWINGLY AND
VOLUNTARILY, WAIVE TRIAL BY JURY IN ANY ACTION WHATSOEVER BROUGHT BY LANDLORD
OR TENANT UNDER OR IN RESPECT OF THIS LEASE, INCLUDING, BUT NOT LIMITED TO, ANY
AND ALL COUNTERCLAIMS.  THE FOREGOING
WAIVER HAS BEEN A MATERIAL INDUCEMENT TO LANDLORD’S AND TENANT’S ENTERING INTO
THIS LEASE.

 

28.16       Electrical Service to the Premises.  Anything set forth in this Lease to the
contrary notwithstanding, electricity to the Premises shall not be furnished by
Landlord, but shall be furnished by the approved electric utility company serving
the Building.  Landlord shall permit
Tenant to receive such service directly from such utility company at Tenant’s
cost  and shall permit Landlord’s wire
and conduits, to the extent available, suitable and safely capable, to be used
for such purposes.

 

41

 

28.17       Rights Reserved by Landlord.  Landlord reserves the following rights
exercisable without notice (except as otherwise expressly provided to the
contrary in this Lease) and without being deemed an eviction or disturbance of
Tenant’s use or possession of the Premises or giving rise to any claim for
setoff or abatement of Rent:  (i) to
change the name or street address of the Building; (ii) to install, affix
and maintain all signs on the exterior and/or interior of the Building;
(iii) to designate and/or approve prior to installation, all types of
signs, window shades, blinds, drapes, awnings or other similar items, and all
internal lighting that may be visible from the exterior of the Premises and,
the design, arrangement, style, color and general appearance of the portion of
the Premises visible from the exterior, and contents thereof, including,
without limitation, furniture, fixtures, signs, art work, wall coverings,
carpet and decorations, and all changes, additions and removals thereto, shall,
at all times have the appearance of premises having the same type of exposure
and used for substantially the same purposes that are generally prevailing in
comparable office buildings in the area, and any violation of this provision
shall be deemed a material breach of this Lease; (iv) if required by
applicable laws, to change the arrangement of entrances, doors, corridors,
elevators and/or stairs in the Building, provided no such change shall
materially adversely affect access to the Premises; (v)  to install,
operate and maintain security systems which monitor, by close circuit
television or otherwise, all persons entering or leaving the Building; and
(vi) to retain at all times master keys or pass keys to the Premises.

 

28.18       No Recordation. 
Tenant shall not record this Lease or any memorandum or short form of
it.

 

28.19       No Merger.  The
voluntary or other surrender of this Lease by Tenant or the cancellation of
this Lease by mutual agreement of Tenant and Landlord or the termination of
this Lease on account of Tenant’s default will not work a merger, and will, at
Landlord’s option, (a) terminate all or any subleases and subtenancies or
(b) operate as an assignment to Landlord of all or any subleases or
subtenancies. Landlord’s option under this Section will be exercised by
written notice to Tenant and all known sublessees or subtenants in the Premises
or any part of the Premises.

 

28.20       Financial Reports. 
Within fifteen (15) business days after Landlord’s request
(provided that such reports shall only be provided by Tenant in connection with
a sale or refinancing of the Property by Landlord), Tenant will furnish Tenant’s
most recent audited financial statements (including any notes to them) to
Landlord, or, if no such audited statements have been prepared, such other
financial statements (and notes to them) as may have been prepared by an
independent certified public accountant or, if those are not so prepared,
Tenant’s internally prepared financial statements. Tenant will discuss its
financial statements with Landlord and will give Landlord access to Tenant’s
books and records in order to enable Landlord to verify the financial
statements. Landlord will not disclose any aspect of Tenant’s financial
statements that Tenant designates to Landlord as confidential except
(a) to Landlord’s lenders or prospective purchasers of the project,
(b) in litigation between Landlord and Tenant, and (c) if required by
court order.

 

28.21       Signing Authority. 
Concurrently with Tenant’s execution of this Lease, Tenant shall provide
to Landlord a copy of:  (i) if
Tenant is a corporation, such resolution of the board of directors of Tenant
authorizing the execution of this Lease on behalf of such corporation, which

 

42

 

copy of resolution shall be duly certified by the
secretary or an assistant secretary of the corporation to be a true copy of a
resolution duly adopted by the board of directors of said corporation and shall
be in a form reasonably acceptable to Landlord, (ii) if Tenant is a
partnership, a copy of the provisions of the partnership agreement granting the
requisite authority to each individual executing this Lease on behalf of said
partnership, and (iii) if Tenant is a limited liability company, a copy of
the provisions of its operating or limited liability company agreement granting
the requisite authority to each individual executing this Lease on behalf of
said limited liability company.

 

28.22       Exhibits. 
Exhibits A (Floor Plan of Premises) and  B (Rules) are incorporated into this Lease by
reference and made a part hereof.

 

43

 

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

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIMPSON
  MANUFACTURING CO., INC.,

  	
   

  	
  NEWCO,
  INC.,

  
	
  a
  Delaware corporation

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Karen
  Colonias

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Chief
  Financial Officer

  	
   

  	
  Title:

  	
   

  

 

44

 

EXHIBIT A

 

PREMISES

 

Cotting Court

 

All
that certain real property situated in the County of Solano, State of
California, described as follows:

 

City
of Vacaville

 

Parcel
C, as shown on Parcel Map filed November 24, 1981, In Book 22 of Parcel Maps, Page 97, Solano
County Records.

 

EXCEPTING
THEREFROM, all oil, gas and other hydrocarbons, geothermal resources as defined In Section 6903 of the
California Public Resources Code and all other minerals, whether similar to
those herein specified or not, within or that nay be produced from said real
property, and further excepting, the sole and exclusive right from time to time
to drill and maintain wells or other works into or through said real property
and the adjoining streets, roads and highways below a depth of five hundred
(500) feet and to produce, inject, store and remove from and through such wells
or works, oil, gas, water and other substances of whatever nature, Including
the right to perform below said depth any and all operations deemed necessary
or convenient for the exercise of such rights. 
The rights hereinabove excepted and reserved do not include and do not
except or reserve any right to use the surface of said real property or the
first five hundred (500) feet below said surface or to conduct any operations
thereon or therein, as reserved
by Chevron Land and Development Company by Deed recorded February 9, 1983,
in Book 1983, of Official Records of Solano County, Page 9188.

 

Assessor’s
Parcel Number 0133-020-540

 

1

 

ALDRIDGE ROAD

 

All
that certain real property situated in the County of Solano, State of
California, described as follows:

 

City
of Vacaville

 

All
that real property in the State of California, County of Solano, City of
Vacaville, located in a portion of projected Section 3, Township 6 North, Range
1 West, Mount Diablo Meridian, in Lot 37, Rancho Los Putos, more particularly
described as follows: All of Parcel 2 as set forth in that certain “CERTIFICATE
OF COMPLIANCE FOR WAIVER OF PARCEL MAP NO. 97-05” recorded September 25, 1997,
as Series No. 199700063826, Solano County Records, being described as
follows:

 

Beginning
at a point on the Southerly line of Aldridge Road at the Northwest corner of
Parcel “D” as it is shown in that Parcel Map for Chevron Land and Development
Company, filed November 24, 1981, in Book 22 of Parcel Maps, at Page 97, Solano
County records; thence from said point of beginning, South 89° 45’ 45” East
622.00 feet along said Southerly line to a point on the Easterly line of a
parcel granted to Solano Irrigation District recorded July 13, 1961, in Book
1089 of Official Records, at Page 377, Solano County Records, thence South 0°14’15”
East 483.76 feet along said Easterly line and the Easterly line of Parcel “E”
of said Book 22 of Parcel Maps, at Page 97, to the Northerly line of that 40
foot wide “Railroad Spur and P.U.E.”, shown on said Parcel Map; thence North
89° 45’ 36” West 622.00 feet to the Southwest corner of said Parcel “D”, thence
North 0°14’15” West 483.73 feet along the Westerly line thereof to the point of
beginning.

 

Excepting
therefrom all oil, gas and other hydrocarbons, geothermal resources as defined
in section 6903 of the California Public Resources code and all other minerals,
whether similar to those herein specified or not, within or that may be
produced from said real property, and further excepting and reserving to
grantor, it’s successors and/or assigns, the sole and exclusive right from time
to time to drill and maintain wells or other works into or through said real
property and the adjoining streets, road and highways below a depth of five
hundred (500) feet and to produce, inject, store and remove from and through
such wells or works, oil, gas, water and other substances of whatever nature,
including the right to perform below said depth any and all operations deemed
by Grantor necessary or convenient for the exercise of such rights.  The rights hereinabove excepted and reserved
to Grantor do not include and do not except or reserve to Grantor any right of
grantor to use the surface of said real property or the first five hundred
(500) feet below said surface or to conduct any operations thereon or therein,
as excepted and reserved in the Deed from Chevron Land and Development Company,
a Delaware corporation, recorded December 1, 1983, at Page 100876, Instrument
No. 53217, Solano County Records.

 

APN:
0133-020-970

 

2

 

EXHIBIT B

 

RULES

 

(1)           Tenant shall not paint, display,
inscribe, maintain or affix any sign, placard, picture, advertisement, name,
notice, lettering or direction on any part of the outside or inside of the
Building, or on any part of the inside of the Premises which can be seen from
the outside of the Premises, without the prior consent of Landlord, and then
only such name or names or matter and in such color, size, style, character and
material as may be first approved by Landlord in writing.  Landlord reserves the right to remove at
Tenant’s expense all matter not so installed or approved without notice to
Tenant.

 

(2)           Tenant shall not place anything or
allow anything to be placed in the Premises near the glass of any door,
partition, wall or window which may be unsightly from outside the Premises, and
Tenant shall not place or permit to be placed any article of any kind on any
window ledge or on the exterior walls.

 

(3)           Furniture, freight and other large or
heavy articles, and all other deliveries may be brought into the Building and
always through the loading dock and freight elevators, at the Tenant’s sole
responsibility and risk.  All damage done
to the Building by moving or maintaining such furniture, freight or articles
shall be repaired by Tenant at its expense expense.  Landlord may inspect items brought into the Building
or Premises with respect to weight or dangerous nature.

 

(4)           Tenant shall not overload any floor
or part thereof in the Premises, or Building, bringing in or removing any large
or heavy articles, and Landlord may direct and control the location of safes
and all other heavy articles and require supplementary support, at Tenant’s
expense of such material and dimensions as Landlord may deem necessary to
appropriately distribute the weight.

 

(5)           Tenant shall not attach or permit to
be attached additional locks or similar devices to any door or window, change
existing locks or the mechanism thereof, or make or permit to be made any keys
for any door other than those provided by Landlord.  Tenant, upon termination of its tenancy,
shall deliver to the Landlord all keys of offices, rooms and toilet rooms which
have been furnished Tenant or which the Tenant shall have had made, and in the
event of loss of any keys so furnished shall pay Landlord therefor.

 

(6)           If Tenant desires signal,
communication, alarm or other utility or similar service connections installed
or changed, Tenant shall not install or change the same without the prior
approval of Landlord, and then only under Landlord’s direction at Tenant’s
expense.  Tenant shall not install in the
Premises any equipment which requires more electric current than Landlord is
required to provide under this Lease, without Landlord’s prior approval, and
Tenant shall ascertain from Landlord the maximum amount of load or demand for
or use of electrical current which can safely be permitted in the Premises,
taking into account the capacity of electric wiring in the Building and the
Premises and the needs of tenants of the Building, and shall not in any event
connect a greater load then such safe capacity.

 

1

 

(7)           The toilet rooms, urinals, wash bowls
and other such apparatus shall not be used for any purposes other than that for
which they were constructed and no foreign substance of any kind whatsoever
shall be thrown therein and the expense of any breakage, stoppage or
damage resulting from the violation of this Rule shall be borne by the
Tenant who, or whose employees or invitees shall have caused it.

 

(8)           The janitorial closets, utility
closets, telephone closets, broom closets, storage closets, and other such
closets, rooms and areas shall be used only for the purposes and in the manner
designated by Landlord, and may not be used by tenants, or their contractors,
agents, employees, or other parties without Landlord’s prior written consent.

 

(9)           Tenant shall not waste electricity,
water, heat or air conditioning or other utilities or services, and agrees to
cooperate fully with Landlord to assure the most effective and energy efficient
operation of the Building and shall not allow the adjustment (except by Landlord’s
authorized Building personnel) of any controls.

 

(10)         Tenant shall conduct no auction, “fire
sale” or “going out of business sale” or bankruptcy sale in or from the
Premises, and such prohibition shall apply to Tenant’s creditors.

 

(11)         Tenant shall cooperate and comply with
any reasonable safety or security programs, including fire drills and air raid
drills, and the appointment of “fire wardens” developed by Landlord for the
Building, or required by Law.

 

(12)         Tenant will comply with all municipal,
county, state, federal or other requirements including without limitation,
environmental, health, safety and police requirements and regulations
respecting the Premises, now or hereinafter in force, at its sole cost.

 

(13)         Subject to the terms of the Lease,
Tenant shall not use or permit to be brought into the Premises or the Building
any flammable oils or fluids, or any explosive or other articles deemed
hazardous to persons or Building, or do or permit to be done any act or thing
which will invalidate or which if brought in would be in conflict with any
insurance policy covering the Building or its operation, or the Premises, or
any part of either, and will not do or permit to be done anything in or upon
the Premises, or bring or keep anything therein, which shall not comply with
all rules, orders, regulations or requirements or any organization, bureaus,
department or body having jurisdiction with respect thereto (and Tenant shall
at all times comply with all such rules, orders, regulations or requirements),
or which shall increase the rate of insurance on the Building, its
appurtenances, contents or operation.

 

(14)         No vending machines of any description
shall be installed, maintained or operated without the written consent of
Landlord.

 

(15)         Tenant shall not carry on any business,
activity or service except those ordinarily embraced within the permitted use
of the Premises specified in the Lease and more particularly, but without
limiting the generality of the foregoing, shall not (i) install or operate
any internal combustion engine, boiler, machinery, refrigerating, heating or
air conditioning equipment in or about the Premises, (ii) use the Premises
for housing, lodging or sleeping purposes or for the washing of clothes,
(iii) place any radio or television antennae other than inside of the
Premises, (iv) operate or permit to be operated any musical or sound
producing instrument or device which

 

2

 

may
be heard outside the Premises, (v) use any source of power other than
electricity, (vi) operate any electrical or other device from which may
emanate electrical or other waves which may interfere with or impair radio,
television, microwave, or other broadcasting or reception from or in the
Building or elsewhere, (vii) bring or permit any bicycle or other vehicle,
or dog (except as a service dog in the company of a disabled person or except
where specifically permitted) or other animal or bird in the Building,
(viii) make or permit objectionable noise or odor to emanate from the
Premises, (ix) do anything in or about the Premises tending to create or
maintain a nuisance or do any act tending to injure the reputation of the
Building, (x) throw or permit to be thrown or dropped any article from any
window or other opening in the Building, (xi) use or permit upon the
Premises anything that will invalidate or increase the rate of insurance on any
policies of insurance now or hereafter carried on the Building or violate the
certificates of occupancy issued for the premises or the Building,
(xii) use the Premises for any purpose, or permit upon the Premises
anything, that may be dangerous to persons or Building (including but not
limited to flammable oils, fluids, paints, chemicals, firearms or any explosive
article or materials) nor (xiii) do or permit anything to be done upon the
Premises in any way tending to unreasonably disturb any other tenant at the
Building or the occupants of neighboring Building.

 

3

 

EXHIBIT C

FORM OF IRREVOCABLE LETTER OF CREDIT

 

	
   

  	
   

  	
  Letter of Credit No. 

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Ladies
  and Gentlemen:

  	
   

  	
   

  

 

At
the request and for the account of
                                      
(the “Applicant”), we hereby establish our Irrevocable Letter of Credit in your
favor in the amount of 
                                    
available with us at our above office by payment of your draft(s) drawn on
us at sight accompanied by

 

1.               A dated statement
purportedly signed by an Authorized Representative of the Beneficiary, followed
by his/her printed name and designated title, stating any of the following:

 

“(a) an
event of default has occurred under that certain lease agreement between
applicant, as tenant, and beneficiary, as landlord, dated as of                       ,
as amended.”

 

or

 

“(b) an
uncured failure by the tenant to perform one or more of its obligations has
occurred under that certain lease between applicant, as tenant, and
beneficiary, as landlord dated as of                         ,
as amended, and there exists circumstances under which landlord is enjoined or
otherwise prevented by operation of law from giving to tenant a written notice
which would be necessary for such failure of performance to constitute an  event of default under such lease.”

 

or

 

“(c) 
applicant has failed to deliver to beneficiary, not less than sixty (60) days
prior to the expiry date of the letter of credit being encashed, a “replacement
letter of credit,” as defined in, and in accordance with the provisions of the
lease between applicant, as tenant, and beneficiary, as landlord, dated as                           as amended.”

 

The
lease mentioned above is for identification purposes only and it is not
intended that said lease be incorporated herein or form part of this letter of
credit.

 

Upon
presentation of this Letter of Credit accompanied by any one of the foregoing
statements, we shall not require proof of the authority of the representative
signing the statement, and will not require proof of the matters set forth in
the statement and shall instead presume the

 

1

 

authority
of the representative and the adequacy of the statement by reason of
presentation with it of the original letter of credit.

 

This
Letter of Credit expires at our above office on
                    ,
but shall be automatically extended, without written amendment, to
                        
in each succeeding calendar year up to, but not beyond, (month, day, year, final expiration date)
unless we have sent written notice to you at your address above by registered
mail or express courier that we elect not to extend the expiration date of this
Letter of Credit beyond the date specified in such notice, which date will be
                      
or any subsequent
                    
occurring before (month, day, year, final expiration date) and be at least
sixty (60) calendar days after the date we send you such notice. Upon our
sending you such notice of the non-extension of the expiration date of this
Letter of Credit, you may also draw under this Letter of Credit by presentation
to us at our above address, on or before the expiration date specified in such
notice, of your draft drawn on us at sight.

 

Partial
and multiple drawings are permitted under this Letter of Credit.

 

Each
draft must be marked “Drawn under
                              
Letter of Credit No.                 .”

 

Each
draft must also be accompanied by the original of this Letter of Credit for our
endorsement on this Letter of Credit of our payment of such draft and will be
returned to you unless it is fully utilized.

 

If
any instructions accompanying a drawing under this Letter of Credit request
that payment is to be made by transfer to an account with us or at another
bank, we and/or such other bank may rely on an account number specified in such
instructions even if the number identifies a person or entity different from
the intended payee.

 

This
Letter of Credit is transferable one or more times, but in each instance to a
single transferee and only in the full amount available to be drawn under the
Letter of Credit at the time of such transfer. Any such transfer may be
affected only through ourselves and upon presentation to us at our
above-specified office of a duly executed instrument of transfer in the format
attached hereto as Exhibit A together with the original of this Letter of
Credit. Any transfer of this Letter of Credit may not change the place of
expiration of this Letter of Credit from our above-specified office. Each
transfer shall be evidenced by our endorsement on the reverse of the original
of this Letter of Credit, and we shall deliver the original of this Letter of
Credit so endorsed to the transferee. All transfer fees are for the account of
the Applicant.

 

This
Letter of Credit cannot be modified or revoked without the written consent of
the Beneficiary.

 

The
obligation of the bank under this letter of credit shall be the individual
obligation of the bank and is in no way contingent upon reimbursement with
respect hereto and not dependent on the ability of bank to perfect a lien,
security interest, or any other reimbursement.

 

2

 

As
used herein the term “Business Day” shall mean a day of the year on which our
San Francisco Trade Services Division, Northern California office is open for
business. Notwithstanding any provision to the contrary in the UCP (as
hereinafter defined) if the Expiration Date is not a Business Day, then such
date shall automatically be extended to the next succeeding day which is a
Business Day.

 

This
Letter of Credit is subject to the Uniform Customs and Practice for Documentary
Credits (2007 Revision), International Chamber of Commerce Publication No. 600
(the “UCP

 

We
hereby engage with you that drafts drawn under and in compliance with the terms
and conditions of this letter of credit will be duly honored if presented to us
on or before the expiration date or any automatically extended expiry date.

 

	
   

  	
   

  	
  Very
  truly yours

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BY:

  	
   

  
	
   

  	
   

  	
  (AUTHORIZED SIGNATURE)

  

 

3

 

EXHIBIT A

 

 

	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

Subject:
Your Letter of Credit No.                 

 

Ladies
and Gentlemen:

 

For
value received, we hereby irrevocably assign and transfer all our rights under
the above-captioned Letter of Credit, as heretofore and hereafter amended,
extended or increased, to:

 

	
   

  	
   

  	
   

  
	
   

  	
  [insert name of transferee]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [insert address]

  	
   

  

 

By
this transfer, all of our rights in the Letter of Credit are transferred to the
transferee, and the transferee shall have sole rights as beneficiary under the
Letter of Credit, including sole rights relating to any amendments, whether
increases or extensions or other amendments, and whether now existing or hereafter
made. You are hereby irrevocably instructed to advise future amendment(s) of
the Letter of Credit to the transferee without our consent or notice to us.

 

Enclosed
are the original Letter of Credit and the original of all amendments to this
date. Please notify the transferee of this transfer and of the terms and
conditions of the Letter of Credit as transferred. This transfer will not
become effective until the transferee is so notified.

 

	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [insert
  name of transferor]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
  Signature
  of Transferor Guaranteed

  	
   

  	
   

  
	
  [insert
  name of bank]

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
					

 

4

 

	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
  [a corporate notary
  acknowledgement or

  	
   

  	
   

  
	
  a certificate of authority with
  corporate seal is

  	
   

  	
   

  
	
  acceptable in lieu of bank
  guarantee above]

  	
   

  	
   

  

 

 

5

 

EXHIBIT H

 

FORM OF LEASE ASSUMPTION

 

See
attached.

 

 

EXHIBIT H

 

LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS
LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment”) is dated as
of 
                
    , 2010 (the “Effective Date”), by and among SIMPSON
DURA-VENT COMPANY, INC., a California corporation (“Assignor”) and [Newco, Inc.],
a Delaware corporation (“Assignee”) with reference to the following facts:

 

A.            GANSEVOORT PARTNERS, L.P., a
New York limited partnership (“Landlord”) and Assignor, as Tenant, entered into
that certain Lease dated June 17, 2008 (the “Lease”), a copy of which is
attached as Exhibit A, pursuant to which Assignor leased from Landlord the
premises located at 400 South Pearl Street, Albany, New York,  more particularly described therein (the “Premises”).

 

B.            Pursuant to the terms of
that certain Asset Purchase Agreement (the “Asset Purchase Agreement”) made as
of the Effective Date, by and among Assignee and M&G Holding B.V., a
[Netherlands corporation], on the one hand, and Assignor and Simpson
Manufacturing Co., Inc., a Delaware corporation, on the other hand,
Assignor desires to assign its interest as tenant in the Lease and the Premises
to Assignee, and Assignee desires to assume the tenant’s obligations
thereunder, subject to and upon the terms and conditions herein.

 

NOW,
THEREFORE, in consideration of the promises and conditions contained herein,
and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereby agree as follows:

 

1.             Assignment.  As of the Effective Date, Assignor hereby
assigns to Assignee all of Assignor’s right, title and interest in and to the
Lease and the Premises (including without limitation, any security deposits
provided in connection with the Lease and any pre-paid rents that have been
paid by Assignor under the Lease for any period after the Effective Date).
Assignor agrees to indemnify, protect, defend and hold Assignee harmless from
and against any and all liabilities, losses, costs, damages and expenses
(including reasonable attorneys’ fees) directly or indirectly arising out of or
related to any breach or default in Assignor’s obligations hereunder or under
the Lease.

 

2.             Assumption.  From and after the Effective Date, Assignee
assumes and agrees to perform and fulfill all the terms, covenants, conditions,
and obligations required to be performed and fulfilled by Assignor as Tenant
under the Lease, including the timely making of all payments due to or payable
on behalf of Landlord under the Lease as they become due and payable.  Assignee agrees to indemnify, protect, defend
and hold Assignor harmless from and against any and all liabilities, losses,
costs, damages and expenses (including reasonable attorneys’ fees) directly or
indirectly arising out of or related to any breach or default in Assignee’s
obligations hereunder or under the Lease.

 

1

 

3.             Assignor’s Representations
and Warranties.

 

(a)           Assignor represents and
warrants that the copy of the Lease attached as Exhibit A is a true and
accurate copy of the Lease as currently in effect and that there exists no
other agreement affecting Assignor’s tenancy under the Lease.

 

(b)           Assignor represents and
warrants that rent required to be paid by Assignor for all periods through the
Effective Date has been paid in full.

 

(c)           Assignor represents and
warrants that the Lease is in full effect.

 

(d)           Assignor represents and
warrants that, to the knowledge of Assignor as of the Effective Date (i) Landlord
is not in material default of its obligations under the Lease and (ii) Assignor
is not in material default of its obligations under the Lease.

 

(e)           Assignor represents and
warrants that it has not previously transferred or assigned the Lease or Assignor’s
interest therein to any other person or entity.

 

4.             Condition of Premises.

 

Subject
to the terms of the Asset Purchase Agreement, the Premises will be delivered to
Assignee by Assignor in its “as is” condition, with all fixtures, furnishings
and equipment owned by Assignor and located at the Premises (“FF&E”).  All FF&E will be and become the property
of Assignee on the Effective Date. 
Assignor represents and warrants that the FF&E is not subject to any
liens, conditional sales contracts or other encumbrances, except for any rights
Landlord may have therein as provided in the Lease.

 

5.             Successors and Assigns.

 

This
Assignment shall be binding on and inure to the benefit of the parties to it,
their heirs, executors, administrators, successors in interest, and assigns.

 

6.             Notices.

 

Notices
shall be provided to each of the parties in the manner and at the addresses set
forth in the Lease; provided however that notices to Assignor shall be sent to:

 

Simpson Dura-Vent Company, Inc., as Tenant

877
Cotting Court

P.O. Box
1510

Vacaville,
California 95696

 

Attention:  Stephen P. Eberhard

 

with
a copy to:

 

Simpson
Manufacturing Co., Inc.

5956
West Las Positas Boulevard

Pleasanton,
California 94588

 

2

 

Attention:  Chief Financial Officer

 

and
a copy to:

 

Shartsis
Friese LLP

One Maritime Plaza, 18th Floor

San Francisco, CA 94111-3598

Attention:  Alan Robin

 

And
notices to Assignor shall be sent to:

 

M &
G Holding

Dr. A.F. Philipsweg 39

9403
AD Assen - Holland

P.O. Box
77,

9400
AB Assen  Nederland

Attention:
Wim Straver

 

with
a copy to:

 

Sheppard,
Mullin, Richter & Hampton LLP

1111 Chapala Street, Third Floor

Santa Barbara, CA 93101

Attention:  Ian Smith

 

7.             Brokers.  Assignee and Assignor each warrants and
represents that it has had no dealings with any real estate broker or agent in
connection with the negotiation of this Assignment.  Assignee shall indemnify and hold harmless
Assignor from and against any and all claims (including reasonable attorneys’
fees and costs) arising out Assignee’s conversations or other dealings with any
other broker or individual regarding this Assignment.  Assignor shall indemnify, defend and hold
harmless Assignee from and against any and all claims made by such brokers or
any other individual or brokers claiming for a fee, commission or other
compensation arising from Assignor’s conversations or other dealings.

 

8.             Choice of Law; Construction;
Jury Trial; Jurisdiction and Venue.

 

(a)           This Lease shall be
construed and enforced in accordance with the laws of the State of New York.

 

(b)           The language in all parts of
this Lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Landlord or Tenant.

 

3

 

(c)           TO THE FULLEST EXTENT
PERMITTED BY LAW, INCLUDING ANY LAW ENACTED AFTER THE DATE OF THIS LEASE,
THE PARTIES HEREBY, KNOWINGLY AND VOLUNTARILY, WAIVE TRIAL BY JURY IN ANY
ACTION WHATSOEVER BROUGHT BY EITHER PARTY UNDER OR IN RESPECT OF THIS LEASE, INCLUDING,
BUT NOT LIMITED TO, ANY AND ALL COUNTERCLAIMS. 
THE FOREGOING WAIVER HAS BEEN A MATERIAL INDUCEMENT TO EACH PARTY
ENTERING INTO THIS LEASE.

 

(d)           In the event of any
litigation relating to this Lease, the parties consent to the exclusive
personal jurisdiction and venue in Albany, New York in Federal or State Court.

 

9.             Enforcement.  In the event any party brings any suit or
other proceeding with respect to the subject matter or enforcement of this
Assignment, the prevailing party (as determined by the court, agency or other
authority before which such suit or proceeding is commenced) shall, in addition
to such other relief as may be awarded, be entitled to recover attorneys’ fees,
expenses and costs of investigation as actually incurred (including, without
limitation, attorneys’ fees, expenses and costs of investigation incurred in
appellate proceedings or in connection with the enforcement or collection of
any judgment obtained in any suit or other proceeding with respect to the
subject matter or enforcement of this Assignment, costs incurred in
establishing any right to indemnification, or in any action or participation,
or in connection with, any case or proceeding under Chapters 7, 11 or 13 of the
Bankruptcy Code, 11 United States Code Section 101 et seq., or any
successor statutes.  A successful party
shall be any party who is entitled to recover its costs of suit, whether or not
the suit proceeds to final judgment.

 

10.           Entire Agreement; No
Amendment.

 

This
Assignment constitutes the entire agreement and understanding between the
parties with respect to its subject and supersedes in its entirety all other
prior written and oral agreements concerning this subject matter.  This Assignment may not be amended, modified
or otherwise changed in any respect whatsoever except by a writing duly
executed by authorized representatives of Assignor and Assignee.  Except as expressly amended hereby, the Lease
remains in full force and effect.

 

11.           Severability.

 

If
any provision of this Assignment or the application thereof to any person or
circumstances shall be invalid or unenforceable to any extent, the remainder of
this Assignment and the application of such provision to other persons or
circumstances, other than those to which it is held invalid, shall not be
affected and shall be enforced to the furthest extent permitted by law.

 

12.           Agreement to Perform
Necessary Acts.

 

Each
party agrees that, upon demand, it shall promptly perform all further acts and
execute, acknowledge and deliver all further instructions, instruments and
documents 

 

4

 

which
may be reasonably necessary or useful to carry out the provisions of this
Assignment.

 

13.           Captions and Headings.

 

The
titles or headings of the various paragraphs hereof are intended solely for
convenience of reference and are not intended and shall not be deemed to
modify, explain or place any construction upon any of the provisions of this
Assignment.

 

14.           Counterparts.  This Assignment may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

 

SIGNATURES
ON FOLLOWING PAGE

 

5

 

IN
WITNESS WHEREOF,  Assignor and Assignee
have executed this Assignment and Assumption of Lease as of the day and year
first above written.

 

 

ASSIGNOR:

 

SIMPSON DURA-VENT COMPANY, INC.,

a California corporation

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Stephen
  P. Eberhard

  	
   

  
	
   

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  ASSIGNEE:

  	
   

  

 

6

 

EXHIBIT A

COPY OF ALBANY LEASE

 

7

 

LEASE

 

GANSEVOORT PARTNERS, L.P., a New York limited partnership (LANDLORD)

 

and

 

SIMPSON DURA-VENT COMPANY, INC., a California corporation (TENANT)

 

400 South Pearl Street, Albany, New York

 

 

LEASE

 

BASIC LEASE INFORMATION

 

In
the event of any conflict between the Basic Lease Information and any other
Lease provision, such other Lease provision shall control.

 

	
  DATE
  OF LEASE:

  	
   

  	
  June         ,
  2008

  
	
   

  	
   

  	
   

  
	
  PREMISES,
  BUILDING AND PROPERTY:

  	
   

  	
  400
  South Pearl Street, Albany, New York, having 39,405 square feet, consisting
  of the following:

  (i) a
  13,000 square foot warehouse plus 1,930 square of storage on the second floor
  for a total of 14,930 square feet and (ii) a 21,000 square foot building
  with 4,672 square feet of office space on the first floor, 2,935 square feet
  of office space on the second floor and 540 square feet of storage space on
  the second floor.

  
	
   

  	
   

  	
   

  
	
  LANDLORD
  AND ADDRESS:

  	
   

  	
  GANSEVOORT
  PARTNERS, L.P., 

  400
  South Pearl Street 

  Albany,
  New York 12202 

   

  with
  a copy to: 

   

  Lemery
  Greisler LLC 

  50
  Beaver Street 

  Albany,
  New York 12207 

  Attention:
     Charles B. Dumas, Esq. and Robert J. May, Esq.

  
	
   

  	
   

  	
   

  
	
  TENANT
  ADDRESS FOR NOTICES:

  	
   

  	
  Simpson
  Dura-Vent Company, Inc., as Tenant 

  877
  Cotting Court 

  P.O. Box
  1510 

  Vacaville,
  California 95696 

   

  Attention:
  Stephen P. Eberhard 

   

  with
  a copy to: 

   

  Simpson
  Manufacturing Co., Inc. 

  5956
  West Las Positas Boulevard 

  Pleasanton,
  California 94588 

   

  Attention:
  Chief Financial Officer 

  

 

1

 

	
   

  	
   

  	
  and:
  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Shartsis,
  Friese LLP 

  One
  Maritime Plaza, 18th Floor 

  San Francisco, California 94111 

   

  Attention: Alan Robin, Esq.

  
	
   

  	
   

  	
   

  
	
  TERM:

  	
   

  	
  Sixty
  (60) months

  
	
   

  	
   

  	
   

  
	
  RENEWAL
  OPTION:

  	
   

  	
  Two
  options of five (5) years each

  
	
   

  	
   

  	
   

  
	
  COMMENCEMENT
  DATE:

  	
   

  	
  The
  delivery of the Premises to Tenant which is estimated to be the Date of
  Lease.

  
	
   

  	
   

  	
   

  
	
  EXPIRATION
  DATE:

  	
   

  	
  The
  Expiration Date shall be on the last day of the sixtieth (60th) calendar month following
  the Commencement Date.

  
	
   

  	
   

  	
   

  
	
  INITIAL BASE RENT:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Months

  	
   

  	
  Monthly
  Base Rent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1-60

  	
   

  	
  $ 15, 500.00  subject to adjustment as
  provided herein

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Monthly Base Rent shall be subject to CPI Increases as more particularly set
  forth in Section 3(b).

   

  The
  Base Rent for the first month of the Term in the amount of $15,500.00 shall
  be paid upon execution of this Lease by Tenant and Landlord.

  
	
   

  	
   

  	
   

  
	
  TENANT’S
  PERCENTAGE SHARE:

  	
   

  	
  100%

  
	
   

  	
   

  	
   

  
	
  USE:

  	
   

  	
  Office,
  administration, manufacturing, warehouse research and development, as
  permitted by all Laws applicable to the Premises, Building and Property..

   

  Tenant
  shall be responsible for obtaining all necessary and requisite government
  approvals and permits for the Use.

  

 

2

 

LEASE

 

THIS
LEASE, which is effective as of the date set forth in the Basic Lease
Information, is entered by Landlord and Tenant, as set forth in the Basic Lease
Information.  Terms, which are
capitalized in this Lease, shall have the meanings set forth in the Basic Lease
Information.

 

1.             PREMISES AND
PARKING

 

(a)           Premises.  Subject to and upon the terms and condition
of this Lease, Landlord leases to Tenant, and Tenant leases from Landlord, the
Premises described in the Basic Lease Information and more particularly shown
in Exhibit A attached hereto. 
Reference herein to the “Building”, “Premises” or “Property” includes
all leaseable space located therein.

 

(b)           Parking.  For and in consideration of its performance
of its obligations hereunder, including, but not limited to the remittance of
Rent, Tenant shall have the right to use the paved parking area identified on Exhibit A
and included within the Property.

 

(c)           Expansion Premises.

 

(i)            The parties contemplate that
during the initial term of this Lease, Tenant will require additional
manufacturing and warehouse space (the “Expansion Premises”).  Based on Tenant’s requirements and provided
the Property will reasonably accommodate such additional facilities, Landlord
will use commercially reasonable efforts to develop such facilities either as
an addition to existing structures or as a separate, free standing building.

 

(ii)           Landlord and Tenant shall
cooperate reasonably in the design and construction of the Expansion Premises.
Tenant has approved the initial plans and specifications for the Expansion
Premises  and Landlord has approved comments,
if any provided by Tenant to such plans and specifications.  Tenant shall have the right to approve all
changes to the plans and specifications for the Expansion Premises.  Landlord covenants and agrees to use
commercially reasonable efforts to complete the construction of the Expansion
Premises on or before December 31, 2008.

 

(iii)          Upon substantial completion
of the Expansion Premises, Tenant and Landlord shall have a joint walkthrough
and inspection of the Expansion Premises and mutually agree on a punchlist and
date of occupancy for Tenant. Tenant shall occupy the entire building.  The Expansion Premises shall be constructed
in accordance with the approved plans and Landlord shall have received all
certificates of occupancy and other approvals permitting occupancy of the
Expansion Premises for the intended use, subject only to Tenant improvements (“Incorporation
Date”).

 

Landlord
shall provide Tenant with ten (10) days notice of the proposed
Incorporation Date. Landlord and the Tenant shall enter into an amendment to
this Lease incorporating the Expansion Premises into the Lease as of the
Incorporation Date and adjusting the amount of Rent to reflect the
incorporation of the Expansion Premises and such other changes as the parties
shall reasonably require to reflect their agreement with respect to the
Expansion Premises.  The rent for the
Expansion Premises shall be $6.50 per square foot of rentable area per annum
for the remainder of the Term.  The
Monthly Base Rent shall be subject to CPI Increases as more 

 

3

 

particularly
set forth in Section 3(b) on the same dates that the CPI Increases
are made to the Monthly Base Rent.  In
addition Tenant shall pay Operating Expenses and Taxes on the Expansion
Premises in the same manner it is paying Operating Expenses and Taxes on the
Premises.

 

2.             TERM

 

(a)           Lease Term.  The term of this Lease (the “Term”) shall
commence on the Commencement Date and, unless terminated or extended in
accordance with the terms of this Lease, shall end on the Expiration Date.

 

(b)           Condition of Premises.  The Premises shall be delivered to Tenant on
the Commencement Date in its then “as-is” condition, without representation or
warranty except as expressly set forth:

 

(i)            To Landlord’s knowledge,
there are no material physical, design or mechanical defects existing in the
Premises, and the Premises is in good condition and repair and, to Seller’s
knowledge, in compliance with all applicable laws.  Landlord has not received any notice that any
such building or improvement is in violation of any applicable law, and, to
Landlord’s knowledge, each of such buildings and improvements is in compliance
with all applicable laws.

 

(ii)           All water, sewer, gas,
electric, telephone and drainage facilities and all other utilities required by
law or by the normal use and operation of the Premises are installed to the
property lines of the Building, are connected pursuant to valid permits and are
adequate to permit full compliance with all requirements of law and normal
usage of the Premises by Tenant.

 

(iii)          Landlord has complied and is
presently in compliance with all Hazardous Materials Laws (as defined in Section 6(f))
applicable to Landlord.  No party has
asserted that Landlord or the Property has violated, or is in violation of, any
Hazardous Materials Laws.

 

(iv)          Except as set forth in the
Tank Closure Report Progress Report of Smith & Mahoney, P.C. dated
February, 1997, correspondence of Smith & Mahoney, P.C. dated April 15,
2002 and the New York State Department of Environmental Conservation closure
letter dated April 29, 2002 copies of which have been delivered to Tenant,
to Landlord’s knowledge no underground storage tanks containing petroleum
products or Hazardous Materials (as defined in Section 6(f)) are currently
or have been located on the Property. 
Landlord has complied with Hazardous Materials Laws applicable to
Landlord regarding the closure of any such underground storage tanks.

 

(c)           Commencement Date Memorandum.  If the Commencement Date is not the Date of
Lease, when the Commencement Date is determined, the parties shall execute a
Commencement Date Memorandum, in the form attached hereto as Exhibit A,
setting forth the Commencement Dates and the Expiration Date and confirming the
other information set forth therein.

 

4

 

3.             RENT

 

(a)           Rent.  As used in this Lease, the term “Rent” shall
include:  (i) Base Rent; (ii) Taxes
(as defined in Section 4(b)); and (iii) all other amounts which
Tenant is obligated to pay under the terms of this Lease.  All amounts of money payable by Tenant to
Landlord shall be paid without prior notice or demand, deduction or offset,
except as expressly provided herein.. Tenant shall pay monthly Rent for the
Premises in advance on the first day of each month of the Term, to Landlord (or
other entity designated by Landlord), in advance, at Landlord’s address for
notices (as set forth in the Basic Lease Information) or at such other address
as Landlord may from time to time designate, or by electronic funds transfer to
an account designated in writing by Landlord if Landlord shall so
determine.  The initial Base Rent shall
be the amount set forth in the Basic Lease Information.

 

(b)           CPI INCREASE.

 

(1)           The Base Rent  will be subject to increase on the first day
of the 25th month following the Commencement Date and on the first day of the
49th month following the Commencement Date (each such date is referred to as an
“Adjustment Date”) to an amount determined by multiplying the then current
monthly installment of Base Rent  which
falls due hereunder by a fraction, the denominator of which shall be the most
recent Consumer Price Index (as hereinafter defined) figure published prior to
the Commencement Date, and the numerator of which shall be the most recent
Consumer Price Index figure published prior to the respective Adjustment Date.

 

(2)           Should Landlord fail to make
the determination on such Adjustment Date, Tenant shall continue to pay the
Base Rent in effect immediately prior to such Adjustment Date.  As soon as Landlord determines the
revised  Base Rent payable from and after
such date, it shall notify Tenant of the adjustment in writing. Tenant shall
pay the difference to Landlord within ten (10) days after Landlord gives
Tenant the notice of adjustment.

 

(3)           Consumer Price Index shall
mean the United States Department of Labor’s Bureau of Labor Statistics’
Consumer Price Index, All Urban Consumers, All Items, for  Albany, New York (1982-84 equals 100).  If the Index is calculated from a base different
from the base 1982-84 equals 100, or if the Index is revised as to the
metropolitan area covered, frequency of publication, selection of weighing of
goods and services covered or in any other manner, the adjustment of Base
Annual Rent shall first be converted in accordance with any conversion formula
published by the United States Department of Labor’s Bureau of Labor
Statistics.  If the Index is no longer
published, another index of consumer prices shall be substituted by Landlord
for the Index, which other index Landlord determines in its good faith exercise
of its business judgment most nearly answers the description of the Index and
which is most representative of changes in prices paid by urban consumers in
Albany, New York and which is generally recognized as authoritative.

 

(c)           Proration of Rent.  If the Commencement Date is not the first day
of a calendar month, or if the end of the Term is not the last day of a
calendar month, Base Rent and Taxes payable by Tenant shall be prorated on a
daily basis (based upon a thirty (30) day month) for such fractional
month.  If any date on which Base Rent is
to be adjusted hereunder is not the first 

 

5

 

day of a calendar month, Base Rent payable by Tenant
for such calendar month shall be prorated on a daily basis (based on the number
of days in such month) to take into account the differing Base Rent rates.  The termination of this Lease shall not
affect the obligations of Landlord and Tenant hereunder for amounts accrued as
of the date of termination.

 

(d)           Late Charge; Interest Rate.

 

(i)            If any installment of Base
Rent. Taxes, or other amounts due hereunder are not paid by Tenant on or before
the due date thereof, Tenant shall pay to Landlord a late payment charge equal
to five percent (5%) of such amount, in addition to the amount of Rent then
owing, regardless of whether a notice of default or notice of termination has
been given by Landlord.  Notwithstanding
the foregoing, Landlord will provide Tenant written notice and five days in
which to cure such default one (1) time in each calendar year prior to the
imposition of a late charge.

 

(ii)           In addition to the late
charge, any Base Rent, Taxes or other amounts owing hereunder which are not
paid within five (5) days after written notice of non-payment, shall
thereafter bear interest at the rate (“Interest Rate”) which is the lesser of
two percent (2%) above the publicly announced prime rate (sometimes referred to
as such bank’s reference rate) charged on such due date by Citibank (or any
successor bank thereto) (or if there is no such publicly announced rate, the
rate quoted by such bank in pricing ninety (90) day commercial loans to
substantial commercial borrowers) or the maximum rate permitted by applicable
law.

 

(e)           Net Rent.  It is the intent of the parties that the Base
Rent shall be net to Landlord and that all costs, expenses and other
obligations with respect to the Property are assumed and shall be payable by
Tenant as Rent. Notwithstanding the forgoing, Tenant shall not be responsible
for (i) except as expressly provided in Section 8(b), payment for any
Capital Improvements (as defined in Section 8(b)); (ii) any costs of
Landlord reimbursed by insurance proceeds (excluding deductible amounts), (iii) 
costs incurred due to violations by Landlord of this Lease or any Legal
Requirements (as hereinafter defined), (iv) property management fees, (v) costs
incurred by Landlord with respect to building code violations existing as of
the Commencement Date or the remediation of any Hazardous Materials at the
Property preexisting the Commencement Date (provided that such exclusion from
Operating Expenses shall not limit Tenant’s obligation or liability with
respect to any Hazardous Materials brought onto the Property by Tenant or used
or released by Tenant on the Property), or (v) costs attributed to any
Purchase Agreement Obligations.

 

4.             TAXES

 

(a)           Payment of Taxes.  Tenant shall pay promptly when due, directly
to the applicable taxing authority and prior to the last date for payment of
any installment before a late charge is assessed, all Taxes.  Tenant shall provide Landlord with a
concurrent copy of each paid installment of Taxes.  Landlord shall cause a copy of all Tax bills
received by Landlord to be forwarded promptly to Tenant.

 

(b)           Definition of Taxes.  All federal, state and local governmental
taxes, assessments and charges of every kind or nature, whether general,
special, ordinary or extraordinary, which 

 

6

 

Landlord shall pay or become obligated to pay
because of or in connection with the ownership, leasing, management, control or
operation of the Property or any of its components (including any personal
property used in connection therewith), which may also include any rental or
similar taxes levied in lieu of or in addition to general real and/or personal
property taxes.  For purposes hereof,
Taxes for any year shall be Taxes that are assessed for any period of such year,
whether or not such Taxes are billed and payable in a subsequent calendar
year.  There shall be included in Taxes
for any year the amount of all fees, costs and expenses (including reasonable
attorneys’ fees) paid by Landlord during such year in seeking or obtaining any
refund or reduction of Taxes.  Taxes for
any year shall be reduced by the net amount of any tax refund received by
Landlord attributable to such year. 
Notwithstanding the foregoing, Taxes shall not include any gross
receipts tax or other tax on Landlord’s gross or net income from the Property,
federal or state inheritance, general income, gift or estate taxes, except that
if a change occurs in the method of taxation resulting in whole or in part in
the substitution of any such taxes, or any other assessment, for any Taxes as above
defined, such substituted taxes or assessments shall be included in the Taxes
to the extent attributable to the Property. 
Tenant shall pay, prior to delinquency, all taxes assessed or levied
against Tenant’s personal property, equipment, furniture or trade fixtures
(collectively, “Personal Property”) in, on or about the Premises.  When possible, Tenant shall cause its
Personal Property to be assessed and billed separately from the real or
personal property of Landlord.  Notwithstanding
the foregoing, it is expressly understood and agreed that in no event shall
Taxes include any taxes allocated to any other property if the Premises are not
a separate tax parcel or any taxes assessed or allocable to a period prior to
the Commencement Date.  If the Property
is not a separate tax parcel, Taxes shall be equitably prorated between the
Property and any other property included within such parcel.

 

5.             USE OF THE
PREMISES; COMPLIANCE WITH LAWS

 

(a)           Use.  Subject to compliance with applicable laws,
governmental requirements and any and all restriction and easements affecting
the Property, Building or Premises (collectively, the “Protective Covenants”),
the Premises shall be used for the use described in the Basic Lease Information
and this Article.  Landlord makes no
representations or warranties regarding the Use.  Tenant may use the Premises and the parking
area seven (7) days a week, twenty-four (24) hours a day, three hundred
sixty-five (365) days a year.

 

(b)           Rooftop Antennae.  Subject to compliance with applicable laws,
governmental requirements, Tenant may, at its sole cost and expense, install in
a good and workmanlike manner and in accordance with the requirements of
Landlord’s roofing consultant a roof top antennae or satellite dish on the
Building.  Tenant shall obtain all
necessary permits and approvals for such antennae and shall remove such
antennae or satellite dish, in a good and workmanlike manner and in accordance
with the requirements of Landlord’s roofing consultant, on the expiration of
the Term.  Tenant shall repair any damage
caused by the installation, existence/ presence, maintenance and/or removal of
such equipment and shall indemnify Landlord from any cost and expense incurred
by Landlord resulting from such installation, existence/ presence, maintenance
and/or removal.

 

(c)           Security.  Landlord is not responsible to provide
security personnel at the Building.

 

7

 

(d)           Nuisance.  Tenant shall not permit the Premises to be
used for any immoral or unlawful purpose, nor shall Tenant cause, maintain,
suffer or permit any nuisance in, on or about the Premises or Property.

 

(e)           Compliance.  Tenant shall not permit the Premises to be
used in violation of or in conflict with, and at its sole cost and expense shall
promptly comply with, all laws, statutes, ordinances and governmental rules,
regulations or requirements now in force or which hereinafter may be in force,
with the requirements of any board of fire underwriters or other similar board
now or hereafter constituted, with any direction or occupancy certificate
issued pursuant to any law by any public officer or officers, as well as the
provisions of the Protective Covenants and all other recorded documents
affecting the Premises, collectively, “Legal Requirements” or “Laws”), insofar
as any thereof relate to or affect the condition, use or occupancy of the
Premises (including Alterations (as defined in Section 10) with respect
thereto; provided however that except as expressly provided in Section 8(b),
Tenant shall not be required to pay for any Capital Improvements required by
any Legal Requirements.  Tenant shall
perform all work to the Premises required to effect such compliance, subject .  Landlord represents that as of the
Commencement Date, to Landlord’s knowledge the Premises and the parking lot are
in compliance with all Legal Requirements and may be used for the existing
use.  Landlord shall be responsible for
costs, if any, required to place the Premises and parking lot into compliance
with all Legal Requirements in effect as of the Commencement Date.

 

(f)            Hazardous Materials.

 

(i)            For purposes of this Lease, “Hazardous
Materials” means any explosive, radioactive materials, hazardous wastes, or
hazardous substances, including without limitation asbestos containing
materials, PCBs, CFCs, or substances defined as “hazardous substances” or “hazardous
materials” in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601-9657; the
Hazardous Materials Transportation Act of 1975, 49 U.S.C. Section 1801-1812;
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901-6987;
or any other Legal Requirement, Law of the Federal government of the United
States of America, or the State of New York, regulating, relating to, or
imposing liability or standards of conduct concerning any such materials or
substances now or at any time hereafter in effect (collectively, “Hazardous
Materials Laws”).

 

(ii)           In the event of any release
of Hazardous Materials upon the Property after the Commencement Date, if caused
by Tenant or any other Tenant Party, Tenant shall promptly remedy the problem
in accordance with all applicable Hazardous Materials Laws.  Except as and to the extent provided in
subsections (iii) and (iv) below, Tenant shall not cause or permit
the storage, use, generation, release, handling or disposal (collectively, “Handling”)
of any Hazardous Materials, in, on, or about the Premises or the Property by
Tenant or any agents, invitees, employees, contractors, licensees, subtenants,
or customers of Tenant (collectively with Tenant, “Tenant Parties”) in
violation of Hazardous Materials Laws. Tenant shall be solely responsible for
and shall indemnify, defend and hold Landlord harmless from and against all
claims, actions, liabilities, damages and costs (including reasonable attorneys’
fees and other costs of suit) arising out of or in connection with, or
otherwise relating to (x) any Handling of Hazardous Materials by any
Tenant Party or Tenant’s breach of its obligations hereunder, or (y) any
removal, cleanup, or restoration work and materials necessary to return the
Property or any 

 

8

 

other property of whatever nature located on,
adjacent to the Property, or other property otherwise affected by such Handling
to be in compliance with all applicable Hazardous Materials Laws.

 

(iii)          Landlord shall be solely
responsible for and shall indemnify, defend and hold Tenant harmless from and
against all claims, arising out of or in connection with, or otherwise relating
to (i) any Hazardous Materials existing on the Property as of the
Commencement Date in violation of any Laws as of such date, or (ii) any
removal, cleanup, or restoration work and materials necessary with respect to
Hazardous Material existing on the Property immediately prior to the
Commencement Date, or (iii) any Hazardous Materials which are not the
obligations of Tenant under subsection (ii) above.

 

(iv)          Each party shall promptly
provide the other party with copies of all notices received by it in connection
with the presence of Hazardous Materials in or about the Property.

 

6.             UTILITIES AND
SERVICES

 

(a)           Utilities and Services.

 

(i)            Ventilation.  Tenant shall have sole responsibility for repairing
and maintaining the HVAC systems serving the Property.  Tenant shall cooperate to the best of its
ability at all times with Landlord and shall abide by all reasonable
regulations and requirements which Landlord may prescribe for the proper
functioning and protection of the HVAC system.

 

(ii)           Electricity.  Tenant shall contract directly for
electricity service with the electricity provider providing electricity service
to the Property..

 

(iii)          Water.  Tenant shall contract directly with the
utility provider for water.

 

(iv)          Refuse and Rubbish.  Tenant shall contract directly with the
refuse and rubbish removal companies to remove its refuse and rubbish from the
Premises on a regular schedule so as to maintain the Premises in a clean and
orderly manner.  All refuse and rubbish
shall be placed and stored in closed containers or compactors.

 

(v)           Telecommunications.  Tenant shall have the right to select a
telecommunications provider of its choice. 
If required by Landlord, no later than the Termination Date Tenant shall
remove all telephone cables and communication wiring installed by Tenant for
and during Tenant’s occupancy.

 

(b)           Interruption in Services.  Except for Landlord’s gross negligence or
willful misconduct, Landlord shall not be liable for and Tenant shall not be
entitled to any abatement or reduction of Rent by reason of, no eviction of
Tenant shall result from and, further, Tenant shall not be relieved from the
performance of any covenant or agreement in this Lease because of any
interruption of any of the foregoing services or utilities.

 

9

 

 

7.                                       ALTERATIONS

 

(a)                                  Alterations.

 

(i)                                     Tenant shall
not make any alteration, addition or improvement in, to or upon the Premises (“Alteration”)
without the prior written consent of Landlord in each instance, which consent
shall not be unreasonably withheld or delayed. 
Tenant shall give Landlord not less than ten (10) days’ prior
written notice of any Alteration Tenant desires to make.  Any Alterations as to which Landlord shall
consent shall be made only by contractors approved in advance, in writing by Landlord,
which approval shall not be unreasonably withheld.  Tenant shall comply with all Legal
Requirements applicable to each Alteration. 
Tenant shall be solely responsible for maintenance and repair of all
Alterations made by Tenant.  All
Alterations shall be performed and completed diligently and in a first-class
workmanlike manner.  Landlord may further
condition its consent upon Tenant furnishing to Landlord and Landlord approving
prior to the commencement of any work or delivery of materials to the Premises
related to the Tenant Alterations such of the following as specified by
Landlord: architectural plans and specifications, necessary permits and
licenses, certificates of insurance, and such other documents in such form
reasonably requested by Landlord.  Upon
completion of the Tenant Alterations, Tenant shall deliver to Landlord an
as-built set of plans and specifications for the Tenant Alterations and
contractors’ affidavits and full and final waivers of lien and receipted bills
covering all labor and materials expended and used in connection therewith and
such other documentation reasonably requested by Landlord.  Tenant shall notify Landlord immediately if
Tenant receives any notice of violation of any Law in connection with
completion of any Tenant Alterations and shall immediately take such steps as
are necessary to remedy such violation. 
In no event shall such supervision or right to supervise by Landlord nor
shall any approvals given by Landlord under this Lease constitute any warranty
by Landlord to Tenant of the adequacy of the design, workmanship or quality of
such work or materials for Tenant’s intended use or impose any liability upon
Landlord in connection with the performance of such work.  Landlord hereby approves the plans submitted
by Tenant for the initial alterations, if any, which Tenant may construct after
the Commencement Date.

 

(ii)                                  Notwithstanding
the foregoing, Tenant shall have the right, without Landlord’s consent, to make
any Alteration to the Premises (“Cosmetic Alterations”) that (a) is
decorative in nature (such as paint, carpet or other wall or floor finishes,
movable partitions or other such work), does not affect the Building plumbing,
electrical, mechanical, HVAC or other systems, and (b) is not structural
in nature.  All such work shall be
performed in a workman-like manner and in accordance with all applicable Legal
Requirements.

 

(b)                                 Liens.  If, because of any act or omission of Tenant
or anyone claiming by, through, or under Tenant, any mechanic’s lien or other
lien is filed against the Premises or any other portion of the Property or
against other property of Landlord (whether or not the lien is valid or
enforceable), Tenant shall, at its own expense, cause it to be discharged of
record within a reasonable time, not to exceed thirty (30) days, after the date
of the filing or deliver to Landlord a bond, in form, content, amount, and
issued by surety, satisfactory to Landlord, holding Landlord harmless from all
costs and liabilities resulting from such lien and the foreclosure or attempted
foreclosure of such lien. Tenant shall defend and indemnify Landlord and hold
it harmless from any and all claims, actions, damages, liabilities, costs and
expenses (including 

 

10

 

reasonable attorneys’ fees and other costs of suit)
resulting from the lien.  Without
limitation of Landlord’s other remedies by reason of such Event of Default, if
Tenant does not remove such lien, Landlord shall have the right to pay or
discharge the same and Tenant shall reimburse Landlord upon demand for the
amount so paid, including Landlord’s reasonable costs and expenses.

 

(c)                                  Request
Regarding Removal Obligation.  At the time that Tenant requests Landlord’s
consent to any Alteration, Tenant may request that Landlord notify Tenant at
the time of such approval of the plans if Landlord will require Tenant to
remove any or all of the Alteration by the end of the Term, and to restore the
Premises to its condition prior to the Alteration.

 

8.                                       REPAIRS

 

(a)                                  Tenant, at all
times during the Term and at Tenant’s sole cost and expense, subject to
ordinary wear and tear and damage by fire or other casualty governed by Section 9
below, shall keep and maintain in good condition and repair (including the
replacement of system parts and components when necessary) and in compliance
with all applicable Laws, (i) the exterior and structure of the Premises
and the Building, including the building foundation, the roof structure, the
roof covering, the exterior walls of the Building and the parking areas, and (ii) the
interior of the Premises, including the interior walls and ceilings, lighting,
any major system in the Building, and plate glass.

 

(b)                                 Notwithstanding
the foregoing, Tenant shall not be responsible for the cost of any repairs to
the extent such repairs are (i) necessitated by fire, earthquake, acts of
God or weather related hazards or (ii) necessitated by the negligence or
willful misconduct of Landlord or Landlord’s agents, employees or contractors
or the breach of this Lease by Landlord or (iii) for any improvements
required to cause the Building to be in compliance with Laws in effect on the
Commencement Date, all of which are the responsibility of Landlord hereunder.

 

(c)                                  In the event
that any capital improvements or replacements are required to be made to the
Premises during the term of the Lease (including the renewal term) to the
building foundation or structure, the roof, the exterior walls of the Building
or to any major system serving the Premises, including, life safety,
mechanical, structural, plumbing or HVAC systems serving the Premises that are
generally capitalized rather than expensed by landlords for accounting
purposes  (“Capital Improvements”) which
are not otherwise the responsibility of Landlord or Tenant to perform or pay
for pursuant to the terms of this Lease (i) Landlord and Tenant shall each
have the right to reasonably approve or disapprove such Capital
Improvements;  (ii) Landlord and
Tenant shall mutually determine whether such Capital Improvements are to be
performed by Landlord or Tenant; and (iii) the Capital Improvements shall
be amortized over their useful life and Tenant shall pay a portion of such
amortized costs equal to the balance of the Term (or renewal term if exercised)
and Landlord shall pay the balance.  For
example, if the roof is replaced during the 2nd year of the Term, and such roof
has a useful life of 20 years, Tenant shall pay an amount equal to three (3) years
of such amortized payments and Landlord shall pay an amount equal to seventeen
(17) years of such amortized payments.

 

11

 

9.                                       DAMAGE OR
DESTRUCTION

 

(a)                                  Landlord’s
Obligation to Rebuild.  If
the Premises are damaged or destroyed, Landlord shall promptly and diligently
repair the Premises to substantially the condition existing as of the date of
delivery of the Premises to Tenant, unless Landlord has the option to terminate
this Lease as provided herein, and Landlord elects to terminate.

 

(b)                                 Rights to
Terminate.  Landlord
shall have the option to terminate this Lease if the Premises is destroyed or
damaged by fire or other casualty, regardless of whether the casualty is
insured against under this Lease, if Landlord reasonably estimates that the
repair of the Premises cannot be completed within one year after the date of
the casualty.  Landlord shall also have
the right to terminate this Lease if the repair is not fully covered by
insurance maintained (or required to be maintained) by Tenant pursuant to this
Lease other than by reason of the deductible amounts under such  insurance policies.  Tenant shall have the option to terminate
this Lease if the Premises is damaged or destroyed by fire or other casualty
that cannot be repaired or restored within one year after the date of the
casualty, as reasonably estimated by Landlord and Tenant.  Landlord shall notify Tenant of Landlord’s
estimate for such repair within ninety (90) days after the casualty.  If a party desires to exercise the right to
terminate this Lease as a result of a casualty, the party shall exercise the
right by giving the other party written notice of its election to terminate
within thirty (30) days after delivery of Landlord’s repair period estimate, in
which event this Lease shall terminate fifteen (15) days after the date of the
terminating party’s notice.  If neither
Landlord nor Tenant exercises the right to terminate this Lease, this Lease
shall continue in full force and effect and Landlord shall promptly commence
the process of obtaining necessary permits and approvals, and shall commence
repair of the Premises or the Building as soon as practicable and thereafter
prosecute the repair diligently to completion. 
Notwithstanding the foregoing, Tenant shall have the right to terminate,
exercisable in its sole discretion, if more than 25% of the Premises are
destroyed or rendered unusable by fire or other casualty during the last year
of the term of the Lease, or the last year of the Renewal Term.

 

(c)                                  Limited
Obligation to Repair.  Landlord’s
obligation, should Landlord elect or be obligated to repair or rebuild, shall
exclude any and all improvements constructed or installed by Tenant in the
Premises.  Upon such restoration by
Landlord, if the Lease has not been terminated, Tenant, at its expense, shall
replace or fully repair all trade fixtures, equipment, Alterations and other
improvements installed by Tenant and existing at the time of the damage or
destruction.

 

(d)                                 Abatement of
Rent.  In the event of any damage or
destruction to the Premises which does not result in termination of this Lease,
the Base Rent shall be temporarily abated proportionately to the degree the
Premises are untenantable as a result of the damage or destruction, commencing
from the date of the damage or destruction and continuing during the period
required by Landlord to substantially complete its repair and restoration of
the Premises; provided, however, that nothing herein shall preclude Landlord
from being entitled to collect the full amount of any rent loss insurance
proceeds.

 

(e)                                  Insurance
Proceeds.  If this
Lease is terminated, Landlord may keep all the insurance proceeds resulting
from the damage to the Property payable pursuant to insurance coverage
maintained by Landlord or Tenant, and Tenant shall have no claims thereto and
Tenant 

 

12

 

may keep all the insurance proceeds pursuant to
insurance coverage it maintains on Tenant’s Personal Property.

 

(f)                                    Statutory
Waivers.  The provisions of this Lease,
including this section, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, the Premises
or the Property or any part of either, and supersede any provision of New York
law to the contrary.

 

10.                                 EMINENT DOMAIN

 

(a)                                  If all or any
material part of the Premises or the parking lot is taken for public or
quasi-public use by a governmental authority under the power of eminent domain
or is conveyed to a governmental authority in lieu of such taking (a “taking”),
Landlord may terminate this Lease by written notice to Tenant within thirty
(30) days after the taking.  If all or
any material part of the Premises is taken, and if in any such case the taking
causes the remaining part of the Premises to be materially untenantable and
inadequate for use by Tenant for the purpose for which they were leased, in
Tenant’s reasonable opinion, then Tenant, at its option and by giving notice
within thirty (30) days after the taking, may terminate this Lease as of the
date Tenant is required to surrender possession of the Premises.  If part of the Premises is taken but the
remaining part is tenantable and adequate for Tenant’s use, then this Lease
shall be terminated as to the part taken as of the date Tenant is required to
surrender possession, and, unless Landlord shall have terminated this Lease
pursuant to the foregoing provisions, Landlord shall make such repairs,
alterations and improvements as may be necessary to render the part not taken
tenantable, and the Rent shall be reduced in proportion to the part of the
Premises taken.  If all or any material
part of the Premises is taken, and if in any such case the taking causes the
remaining part of the Premises to be untenantable and inadequate for use by
Tenant for the purpose for which they were leased, then Tenant, at its option
and by giving notice within thirty (30) days after the taking, may terminate
this Lease as of the date Tenant is required to surrender possession of the
Premises.

 

(b)                                 All
compensation awarded for the taking shall be the property of Landlord without
any deduction therefrom for any estate of Tenant, and Tenant hereby assigns to
Landlord all its right, title and interest in and to the award.  Tenant shall have the right, however, to
recover from the governmental authority, but not from Landlord, only such
compensation as may be awarded to Tenant on account of any improvements made to
the Premises at Tenant’s cost, moving and relocation expenses, loss of good
will and the business as a going concern and removal of Tenant’s Personal
Property, provided that any such award to Tenant will not reduce the award
which would otherwise be made to Landlord.

 

11.                                 INSURANCE

 

(a)                                  Public
Liability.  Tenant, at
its own cost and expense, shall keep and maintain in full force and effect during
the Term the following insurance coverages, (i) commercial general
liability insurance, including contractual liability coverage, insuring Tenant’s
activities with respect to the Premises and/or the Building against loss,
damage or liability for personal injury or death of any person or loss or
damage to property occurring in, upon or about the Premises, with a minimum
coverage of One Million Dollars ($1,000,000) per occurrence/Two Million Dollars

 

13

 

($2,000,000) general aggregate, (ii) fire
damage legal liability insurance and personal/advertising injury insurance
(which shall not be subject to the contractual liability exclusion), each in
the minimum amount of One Million Dollars ($1,000,000), and (iii) worker’s
compensation insurance in statutory amounts; provided, however, that if, at any
time during the Term, Tenant shall have in full force and effect a blanket
policy of public liability insurance with the same coverage for the Premises as
described above, as well as coverage of other premises and properties of
Tenant, or in which Tenant has some interest, the blanket insurance shall
satisfy the requirement hereof and be endorsed to separately apply to the
Premises if any only if such blanket policy (i) contains an endorsement
that names Landlord, the holder of any mortgage lien against the Premises, and
any and all designees identified by the Landlord, from time to time, as loss
payee, mortgagee, additional insureds as their interests may appear, references
the Premises and guarantees a minimum limit available to the premises equal to
the amount of insurance required to be carried by the Tenant.

 

(b)                                 Fire and
Extended Coverage.  Tenant
shall, at Tenant’s expense, procure and maintain in full force and effect with
respect to the Building a policy or policies of all risk insurance (including
sprinkler, vandalism and malicious mischief coverage, and any other
endorsements reasonably desired by the Landlord or required by the holder of
any mortgage on the Property), in an amount equal the full replacement cost
(including debris removal, and demolition, but excluding the land and the
footings, foundations and installations below the basement level) thereof.  Such insurance shall be for the benefit of
Landlord, and the proceeds therefrom shall be subject to Landlord’s control but
shall be applied as and to the extent required under the terms of this
Lease.  The policy shall be in
substantially the form and provide substantially the same coverages as are in the
policy on the Building held by Landlord as of the Date of Lease, a copy of
which has been delivered to Tenant.

 

(c)                                  Insurance
Companies.  All
insurance policies obtained by Tenant shall be written by good and solvent
insurance companies(y) licensed by and admitted to issue insurance in the
State of New York, and shall be subject to the prior written approval of
Landlord, which approval shall not be unreasonably withheld.

 

(d)                                 Insurance
Certificates.  Tenant
shall furnish to Landlord, on or before the Commencement Date and thereafter
thirty (30) days prior to the expiration of each policy, an original policy of
insurance issued by the insurance carrier of each policy of insurance carried
by Tenant pursuant to this Section.  The
policies shall expressly provide that the policies shall not be cancelable or
subject to reduction of coverage or otherwise be subject to modification except
after thirty (30) days’ prior written notice to the parties named as
insureds.  Landlord, its successors and
assigns, and any nominee of Landlord holding any interest in the Premises,
including, without limitation, any ground lessor or the holder of any fee or
leasehold mortgage, shall be named as the insured under the fire and extended
coverage policy and as a loss payee, mortgagee, or an additional insured, as
their interests may appear, with Tenant under the public liability policy of
insurance maintained by Tenant pursuant to this Lease.  The policies and certificates shall further
provide that the coverage shall be primary, and that any coverage carried by
Landlord shall be secondary and noncontributory with respect to Tenant’s
policy.

 

(e)                                  Waiver of
Subrogation.  Any policy
or policies of fire, extended coverage or similar casualty insurance which
either party obtains in connection with the Building, the 

 

14

 

Premises, or Tenant’s Personal Property shall
include a clause or endorsement denying the insurer any rights of subrogation
against the other party (and the other parties named as additional insureds
pursuant to this Article).  Landlord and
Tenant each waives any rights of recovery against the other (and the other
parties named as additional insureds) for injury or loss due to hazards insurable
by policies of fire, extended coverage or similar casualty insurance.  Because this Section will preclude the
assignment of any claim mentioned in it by way of subrogation or otherwise to
an insurance company or any other person. each party to this Lease agrees
immediately to give to each of its insurance companies written notice of the
terms of the mutual waivers contained in this Section and to have the
insurance policies properly endorsed, if necessary, to prevent the invalidation
of the insurance coverages by reason of the mutual waivers contained herein.

 

(f)                                    Landlord’s
Public Liability.  Landlord
shall, at Landlord’s expense, procure and maintain in full force and effect
during the Term, commercial general liability insurance, including contractual
liability coverage, insuring Tenant’s activities with respect to the Premises
and/or the Building against loss, damage or liability for personal injury or
death of any person or loss or damage to property occurring in, upon or about
the Premises, with a minimum coverage of One Million Dollars ($1,000,000) per
occurrence/Two Million Dollars ($2,000,000) general aggregate.

 

12.                                 ASSIGNMENT OR SUBLET

 

(a)                                  Prohibitions.  Tenant shall not assign this Lease or sublet
the Premises or any portion thereof without the prior written consent of
Landlord in each instance, which consent shall not be unreasonably
withheld.  If Tenant desires to assign
this Lease or to sublet the Premises, or any part thereof, Tenant shall give to
Landlord written notice of its intent at least thirty (30) days in advance of
the date on which Tenant desires to assign or sublet the Premises, which notice
shall designate the terms of the proposed assignment or sublet, the identity of
the proposed assignee or sublessee, and shall be accompanied by financial
statements of such proposed assignee or sublessee and such other information
regarding such party and its business and reputation as shall be required by
Landlord to evaluate the proposed assignment or sublet.  Landlord shall have twenty (20) days after
receipt of Tenant’s written notice and the above specified information within
which to notify Tenant in writing that Landlord elects to (i) consent to
the proposed assignment or sublet as described in Tenant’s notice, or (ii) refuse
to consent to Tenant’s proposed assignment or sublet, stating the reasons for
such refusal.  If Landlord fails to
notify Tenant in writing of its election within the twenty (20) day period,
Landlord shall be deemed to have made the election in clause (ii) above;
provided that Tenant may provide Landlord with a second notice and five (5) days
in which to respond and if Landlord does not respond within five (5) days
after receipt of the second notice, Landlord shall be deemed to have made the
election in clause (i) above.

 

(b)                                 Affiliates.  Tenant may assign this Lease or sublet the
Premises or any portion thereof, without Landlord’s consent, to any
partnership, corporation or other entity which controls, is controlled by, or
is under common control with Tenant, or to any partnership, corporation or
other entity resulting from a merger or consolidation with Tenant or which
acquires all or substantially all of Tenant’s assets (through a transfer of
assets or equity interests in Tenant) as a going concern and such assets
include substantial assets other than this Lease 

 

15

 

(collectively “Affiliates”), provided that (i) Landlord
receives written notice of the assignment or subletting no later than five (5) days
prior to the effective date thereof, in which notice Tenant shall expressly
confirm that Tenant remains primarily liable (together with the assignee in the
event of an assignment) for all of the obligations of the Tenant under this
Lease, and (ii) Landlord receives a fully executed copy of the assignment
or sublease agreement between Tenant and the Affiliate no later than five (5) days
prior to the effective date of such assignment or sublease, in which the
Affiliate assumes (in the event of an assignment) all of Tenant’s obligations
under this Lease, and agrees (in the event of a sublease) that such subtenant
will, at Landlord’s election, attorn directly to Landlord in the event that
this Lease is terminated for any reason.

 

(c)                                  Tenant
Liability.  In the
event of any sublease or assignment, whether or not with Landlord’s consent,
Tenant shall not be released or discharged from any liability, whether past,
present or future, under this Lease, including any liability arising from the
exercise of any renewal or expansion option, to the extent such exercise is expressly
permitted by Landlord.  The Tenant’s
liability shall remain primary, and in the event of default by any subtenant,
assignee or successor of Tenant in performance or observance of any of the
covenants or conditions of this Lease, Landlord may proceed directly against
Tenant without the necessity of exhausting remedies against said subtenant,
assignee or successor.  After any
assignment, Landlord shall not consent to subsequent assignments or subletting
of this Lease, or amendments or modifications of this Lease with assignees of
Tenant, without notifying Tenant, or any successor of Tenant, and without
obtaining its or their consent thereto, provided however that such action shall
not relieve Tenant or any successor of Tenant of liability under this Lease.

 

(d)                                 Documentation.  No permitted assignment or subletting by
Tenant shall be effective until there has been delivered to Landlord a fully
executed counterpart of the assignment or sublease which expressly provides
that (i) in the case of a sublease, the subtenant may not assign its
sublease or further sublet the sublet space without Landlord’s prior written
consent, (ii) in the case of an assignment, the assignee assumes, for the
benefit of Landlord, and without releasing Tenant, all of Tenant’s obligations
under this Lease arising on or after the date of the assignment, and (iii) in
the case of a sublease, the subtenant agrees to be and remain jointly and
severally liable with Tenant to Landlord for the payment of Rent pertaining to
the sublet space in the amount set forth in the sublease, and for the
performance of all of the terms and provisions of this Lease pertaining to the
sublet space.   No subtenant or assignee
shall be permitted to occupy the Premises unless and until such subtenant or
assignee provides Landlord with certificates evidencing that such subtenant or
assignee is carrying all insurance coverage required of it under this Lease.

 

(e)                                  Processing
Expenses.  Tenant
shall pay to Landlord, as Landlord’s cost of processing each proposed assignment
or subletting, an amount equal to the sum of Landlord’s reasonable attorneys’
fees, but in no event more than $2,500.00 (“Processing Costs”).

 

13.                                 DEFAULT

 

(a)                                  Tenant’s
Default.  The occurrence or existence of
any one or more of the following shall constitute an “Event of Default” (or,
collectively, “Events of Default”) by Tenant under this Lease:  (i) if Tenant shall have failed to pay
Base Rent, Tenant’s Percentage Share of 

 

16

 

Taxes, or any other sum required to be paid
hereunder within five (5) days after due date thereof and Tenant shall
have failed to pay such sum(s) within five (5) days after written
demand from the Landlord therefore; (ii) if Tenant shall have failed to
perform any term, covenant or condition of this Lease except those requiring
the payment of money, and Tenant shall have failed to cure the breach within
thirty (30) days after written notice from Landlord if the breach could
reasonably be cured within the thirty (30) day period; provided, however, that
if the nature of Tenant’s obligation is such that more than thirty (30) days
are required for its performance, then Tenant shall not be deemed to be in
default if Tenant shall commence the performance of such obligation within the
thirty (30) day period and thereafter shall diligently prosecute the same to
completion; (iii) in the event Tenant shall have assigned this Lease or
sublet all or any portion of the Building, the Property or the Premises in
violation of the terms and conditions herein; or (iv) a petition is filed
by or against Tenant to declare Tenant bankrupt or seeking a plan of
reorganization or arrangement under any Chapter of the Bankruptcy Code, or any
amendment, replacement or substitution therefor, or to delay payment of, reduce
or modify Tenant’s debts, which in the case of an involuntary action is not
discharged within thirty (30) days.

 

(b)                                 Remedies Upon
Tenant’s Default.  Upon an
Event of Default, Landlord shall have the rights and remedies allowed under
applicable New York law. Landlord covenants and agrees to attempt to mitigate
its damages by finding a reasonable replacement tenant for the Premises, but
shall not be responsible to the Tenant for its inability to do so long as it
has attempted in good faith  to find a
reasonable replacement tenant.

 

(c)                                  Bankruptcy.  The following provisions shall apply in the
event of the bankruptcy or insolvency of Tenant:

 

(i)                                     In connection
with any proceeding under Chapter 7 of the Bankruptcy Code where the trustee of
Tenant elects to assume this Lease for the purposes of assigning it, such
election or assignment, may only be made upon compliance with the following
provisions which conditions Landlord and Tenant acknowledge to be commercially
reasonable.  In the event the trustee
elects to reject this Lease then Landlord shall immediately be entitled to
possession of the Premises without further obligation to Tenant or the trustee.

 

(ii)                                  Any election to
assume this Lease under Chapter 11 or 13 of the Bankruptcy Code by Tenant as
debtor-in-possession or by Tenant’s trustee (the “Electing Party”) must provide
for the Electing Party to cure or provide to Landlord adequate assurance that (i) it
will cure all monetary defaults under this Lease prior to the date of
assumption, and (ii) that it will cure all nonmonetary defaults under this
Lease within thirty (30) days from the date of assumption.  Landlord and Tenant acknowledge such
condition to be commercially reasonable.

 

(iii)                               Landlord’s
acceptance of rent or any other payment from any trustee, receiver, assignee,
person, or other entity will not be deemed to have waived, or waive, the
requirement of Landlord’s consent, Landlord’s right to terminate this Lease for
any transfer of Tenant’s interest under this Lease without such consent, or
Landlord’s claim for any amount of Rent due from Tenant.

 

(d)                                 Landlord’s
Default.  Landlord shall not be deemed
to be in default in the performance of any obligation required to be performed
by Landlord hereunder unless and until 

 

17

 

Landlord has failed to perform the obligation within
thirty (30) days after receipt of written notice by Tenant to Landlord
specifying the obligation Landlord has failed to perform; provided, however,
that if the nature of Landlord’s obligation is such that more than thirty (30)
days are required for its performance, then Landlord shall not be deemed to be
in default if Landlord shall commence the performance of such obligation within
the thirty (30) day period and thereafter shall diligently prosecute the same
to completion.

 

14.                                 LANDLORD’S RIGHT TO PERFORM TENANT’S
COVENANTS

 

If
Tenant shall at any time fail to make any payment or perform any other act on
its part to be made or performed under this Lease after applicable notice and
cure periods, Landlord may, but shall not be obligated to, make the payment or
perform any other act to the extent Landlord may deem desirable and, in
connection therewith, pay expenses and employ counsel.  Any payment or performance by Landlord shall
not waive or release Tenant from any obligations of Tenant under this
Lease.  All sums so paid by Landlord, and
all penalties, interest and costs in connection therewith, shall be due and
payable by Tenant on the fifth (5th) business day after notice of any payment by
Landlord, together with interest thereon at the Interest Rate, from that date
to the date of payment thereof by Tenant to Landlord, plus collection costs and
attorneys’ fees.  Landlord shall have the
same rights and remedies for the nonpayment thereof as in the case of default
in the payment of Base Rent.

 

15.                                 SURRENDER OF PREMISES AND
HOLDOVER

 

(a)                                  End of Term.  On the Expiration Date or earlier termination
of this Lease, Tenant shall surrender the Premises to Landlord in its condition
as of the Commencement Date, normal wear and tear and damage by fire or other
casualty excepted.  Tenant shall remove
from the Premises all of Tenant’s Personal Property and any Alterations
required to be removed pursuant to Section 8 of this Lease.  Tenant shall repair any damage or perform any
restoration work required by the removal, including closing all floor, ceiling,
stairwell and roof openings.  If Tenant
fails to timely remove any Personal Property or Alterations as aforesaid, such
items shall be conclusively deemed to have been abandoned by Tenant and
Landlord may remove the property and store and/or dispose of the same at Tenant’s
expense, including interest at the Interest Rate.

 

(b)                                 Holdover.  If Tenant remains in possession of all or any
part of the Premises after the expiration of the Term or the earlier
termination of this Lease with Landlord’s prior written consent, such holdover
shall be for the period and at the rent agreed upon by Landlord and
Tenant.  If Tenant remains in possession
of all or any part of the Premises after the expiration of the Term or the
earlier termination of this Lease without Landlord’s prior written consent, the
tenancy shall be a month to month tenancy only and shall not constitute a
renewal or extension for any further term, regardless of whether Landlord shall
accept Rent for any such period.  In such
event, and without prejudice to Landlord’s rights and remedies to evict Tenant,
Base Rent shall be increased in an amount equal to three hundred fifty percent
(150%) of the Base Rent during the last month of the Term (including any
extensions), and any other sums due under this Lease shall be payable in the
amount, and at the times, specified in this Lease.  The tenancy shall be subject to every other
term, condition, covenant and agreement contained in this Lease, except that
any renewal or extension option or right of first negotiation in favor of
Tenant shall not be 

 

18

 

applicable. 
No such increase shall impair Landlord’s other rights and remedies
against Tenant by reason of such holding over by Tenant.  In addition to the foregoing, if Tenant
remains in possession of all or any part of the Premises without Landlord’s
prior written consent, Tenant shall indemnify, defend and hold Landlord
harmless from and against all claims, actions, liabilities, damages, costs and
expenses (including reasonable attorneys’ fees and other costs of suit)
incurred by or asserted against Landlord and arising directly or indirectly
from Tenant’s failure to timely surrender the Premises, including but not
limited to (i) any rent payable by or any loss, cost, or damages claimed
by any new tenant of the Premises or any portion thereof, and (ii) Landlord’s
damages as a result of any prospective tenant rescinding or refusing to enter
into the prospective lease of the Premises or any portion thereof by reason of
such failure to timely surrender the Premises.

 

16.                                 ACCESS TO PREMISES

 

Tenant
shall permit Landlord and its agents to enter the Premises at all reasonable
times upon reasonable notice (which shall be given at least forty-eight (48)
hours prior to the date and time of the intended entry), except in the case of
an emergency (in which event entry may be made when necessary and without notice),
to inspect the Premises, to post Notices of Nonresponsibility and similar
notices, to show the Premises to interested parties such as prospective
mortgagees and purchasers and tenants (with respect to tenants, during the last
six (6) months of the term of the Lease or the Renewal Term) to provide
any services required of Landlord hereunder, to make necessary alterations,
additions, improvements or repairs either to the Premises or the Building.  No such entry shall constitute a constructive
eviction or give rise to an abatement of Rent hereunder, constitute a
constructive eviction, or otherwise diminish Tenant’s obligations under this
Lease.  Tenant shall have the right to
have a representative of Tenant accompany Landlord or its agents in connection
with any such entry, provided that such representative does not interfere with
the permitted activities of Landlord or its agents.  In exercising its rights under this Section,
Landlord shall at all times minimize interference with Tenant’s operations, to
the extent practicable.

 

17.                                 SIGNS

 

Tenant
may place and shall maintain in good condition and repair a number of signs on
the Building not greater than the number of signs and at the location(s) thereof  maintained on the Premises on the date
hereof.  The installation, maintenance
and removal of Tenant’s signage pursuant to this Section shall be
performed by Tenant at Tenant’s expense, but in coordination with Landlord and
its reasonable installation procedures and requirements.  All signage of Tenant shall be subject to
compliance with all Legal Requirements. 
Upon the expiration or earlier termination of this Lease, Tenant shall,
at Tenant’s expense, remove Tenant’s signage and repair any damage to the
Building caused by such removal.

 

19

 

 

18.                                MORTGAGES; SUBORDINATION AND
NON-DISTURBANCE

 

(a)                                  Mortgages.

 

(i)                                    Landlord
represents that as of the Commencement Date mortgages securing repayment of the
following obligations encumber the Property(the “Existing Mortgages”):

 

(1)                                  Loan from
Keybank National Association pursuant to a Promissory Note dated Sept 19, 2003
in the original principal amount of $154,000.00.

 

(2)                                  Loan from New
York Job Development Authority (“ACBDC”) pursuant to a Real Estate Promissory
Note dated November 16, 2005 in the original principal amount of
$300,000.00.

 

(3)                                  Loan from
Keybank National Association pursuant to a Second Amended and Restated
Promissory Note dated June 20, 2005 in the original principal amount of
$619,555.45.

 

(ii)                                 There are no
defaults by Landlord under the Existing Mortgages and, to the best of Landlord’s
knowledge, no acts with the  giving of
notice or passing of time would constitute a default under any of the Existing
Mortgages.

 

(iii)                              Landlord
covenants and agrees to make all payments required under the Existing Mortgages
and any other mortgages which may be placed upon the Property  (“Subsequent Mortgages”) when and as due and,
subject to Tenant’s performance of its obligations under this Lease, shall not
default under the Existing Mortgages or any Subsequent Mortgages.

 

(iv)                             Landlord shall
provide a copy of any notices of default received from any of the mortgages
under the Existing Mortgages or any Subsequent Mortgages, immediately upon
receipt of the same.

 

(v)                                During the
pendency of any default under the Existing Mortgages or any Subsequent
Mortgages, (“Mortgage Default”), Tenant may, in its discretion, pay the lenders
under the such mortgages (“Mortgage Offset”) directly to cure the Mortgage
Default and reduce the amount of Rent by the amount of the Mortgage Offset.

 

(vi)                             Landlord
covenants and agrees that it will not increase any of the Existing Mortgages or
obtain any Subsequent Mortgages where the loan to value at the time of such
increase or new mortgage is in excess of 75% loan to value as determined by an
independent third party appraiser acceptable to such lending institution.  Landlord agrees to provide a copy of any such
appraisal to Tenant.  Tenant acknowledges
that with respect to the Expansion Premises, the loan to value may be based
upon the value of the completed building.

 

20

 

(b)                                 Subordination
and Non-Disturbance.

 

(i)                                    On the
Commencement Date, Landlord covenants and agrees to obtain a subordination,
non-disturbance and attornment agreement (x) from KeyBank National
Association in the form of Exhibit C-1 and (y) from ACBDC in the form
of Exhibit C-2 each in recordable form, and Tenant agrees to execute and
record each of such agreements.

 

(ii)                                 As a condition
to the subordination of this Lease to any mortgage, deed of trust or ground or
underlying lease arising after the date of this Lease, Landlord shall deliver
to Tenant in recordable form, and Tenant agrees to execute and shall have the
right to record, a subordination, non-disturbance and attornment agreement in
substantially the form of Exhibit C-1 if the lender is KeyBank National
Association or in substantially the form of Exhibit C-2 if the Lender is
ACBDC or any other lender.

 

(c)                                  Liability of
Holder.  If the interest of Landlord in
the Real Property or the Building is transferred to any mortgagee or purchaser
at a foreclosure sale (“Holder”) pursuant to or in lieu of proceedings for
enforcement of any such lease, mortgage, or deed of trust, upon request of such
Holder, Tenant shall immediately and automatically attorn to the Holder and
such Holder shall recognize Tenant’s rights hereunder pursuant to the terms of
the applicable subordination, non-disturbance and attornment agreement.

 

(d)                                 Holder Rights.  Tenant agrees to give any Holder, by
registered or certified mail, a copy of any notice of default served upon the
Landlord by Tenant, provided that prior to such notice Tenant has received
notice (by way of service on Tenant of a copy of an assignment of rents and
leases, or otherwise) of the address of such Holder.  Tenant further agrees that if Landlord shall
have failed to cure such default within the time provided for in this Lease,
then the Holder shall have an additional thirty (30) days after receipt of
notice thereof within which to cure such default.  This Lease may not be modified or amended so
as to reduce the Rent or shorten the Term, or so as to adversely affect in any
other respect to any material extent the rights of the Landlord, nor shall this
Lease be canceled or surrendered, without the prior written consent, in each
instance, of the Holder.

 

19.                                ESTOPPEL CERTIFICATES

 

(a)                                  Tenant Estoppel
Certificates.  Within
thirty (30) days after request therefor by Landlord or Holder or any
prospective mortgagee or purchaser, Tenant agrees to execute an Estoppel
Certificate, binding upon Tenant, certifying (i) that this Lease is
unmodified and in full force and effect (or if there have been modifications, a
description of such modifications and that this Lease as modified is in full
force and effect), (ii) the dates to which Rent has been paid,
(iii) that Tenant is in the possession of the Premises if that is the
case, (iv) that, to Tenant’s knowledge, Landlord is not in default under
this Lease, or, if Tenant believes Landlord is in default, the nature thereof
in detail, (v) that, to Tenant’s knowledge, Tenant has no offsets or
defenses to the performance of its obligations under this Lease (or if Tenant
believes there are any offsets or defenses, an explanation thereof), (vi) that
if an assignment of rents or leases has been served upon the Tenant by a
Holder, Tenant will acknowledge receipt thereof and agree to be bound by the
provisions thereof, and (vii) that Tenant will give to the Holder copies
of all 

 

21

 

notices required or permitted to be given by Tenant
to Landlord.  The failure of Tenant to
deliver such certificate shall be an Event of Default.

 

(b)                                 Landlord
Estoppel Certificate.  At the
request of Tenant from time to time, but not more frequently than three (3) times
in each twelve (12) months, during the Term, within thirty (30) days after
request therefore by Tenant, Landlord shall provide an estoppel certificate
similar to the Tenant Estoppel Certificate which Tenant may use in connection
with a financing or sale of Tenant.

 

20.                                ATTORNEYS’ FEES

 

In
the event any party brings any suit or other proceeding with respect to the
subject matter or enforcement of this Lease, the prevailing party (as
determined by the court, agency or other authority before which such suit or
proceeding is commenced) shall, in addition to such other relief as may be
awarded, be entitled to recover reasonable attorneys’ fees, expenses and costs
of investigation as actually incurred, including court costs, expert witness
fees, costs and expenses of investigation, and all attorneys’ fees, costs and
expenses in any such suit or proceeding (including in any action or
participation in or in connection with any case or proceeding under the
Bankruptcy Code, 11 United States Code Sections 101 et seq., or any successor
statutes, in establishing or enforcing the right to indemnification, in
appellate proceedings, or in connection with the enforcement or collection of
any judgment obtained in any such suit or proceeding).

 

21.                                BROKERS

 

Each
party warrants and represents that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this Lease, and that it
knows of no real estate broker or agent who is or might be entitled to a fee,
commission or other compensation in connection with this Lease.  Each party shall indemnify and hold harmless
the other party from and against any and all claims (including reasonable
attorneys’ fees and costs) arising out such party’s conversations or other
dealings with any other broker or individual regarding this Lease.

 

22.                                NOTICES

 

Unless
otherwise agreed by the parties on a case by case basis, any notice, demand or
request required or desired to be given under this Lease shall be in writing sent
to the address of the party specified in this Lease, and shall be deemed to
have been sufficiently given or served when delivered by hand or by overnight
courier service or by registered or certified mail, return receipt requested,
postage prepaid, directed to the party to receive the same at its address
stated in the Basic Lease Information or at such other addresses as may be
substituted by notice given upon receipt or, if receipt is refused, three (3) days
thereafter. As of the date of execution of this Lease, the addresses of
Landlord and Tenant are as specified in the Basic Lease Information.  Either party may, upon ten (10) days
prior written notice, change its address by giving notice of the change in
accordance with this Section.

 

22

 

23.                                QUIET ENJOYMENT

 

Landlord
covenants, in lieu of any implied covenant of quiet possession or quiet
enjoyment, that so long as Tenant is in compliance with the covenants and
conditions set forth in this Lease, Tenant shall have the right to quiet
enjoyment of the Premises without hindrance or interference from Landlord or
those claiming through Landlord, and subject to the covenants and conditions
set forth in this Lease and to the rights of any Holder.

 

24.                                RENEWAL OPTIONS

 

(a)                                  Tenant shall
have two options to renew this Lease (each, a “Renewal Option”) each for one (1) additional
term of five (5) years, commencing upon expiration of the Term or renewal
term (each a “Renewal Term”).  Each
Renewal Option shall be null and void and Tenant shall have no right to renew
this Lease if on the date Tenant exercises the Renewal Option or on the date
immediately preceding the commencement date of the respective Renewal Term an
Event of Default shall have occurred and be continuing beyond the applicable
cure period hereunder.  Each Renewal
Option must be exercised, if at all, by written notice given by Tenant to
Landlord on or before the first day of the 49th month of the
Term or the 49th month of the first Renewal Term, respectively.  If Tenant properly exercises a Renewal
Option, references in the Lease to the Term shall be deemed to mean the
respective Renewal Term, unless the context clearly provides otherwise,
provided that this sentence shall not confer any additional renewal options
after the second Renewal Option conferred under this Section.

 

(b)                                 If Tenant
properly exercises a Renewal Option, then during the respective Renewal Term
all of the terms and conditions set forth in this Lease as applicable to the
Premises during the initial Term shall apply during the Renewal Term, including
without limitation the obligation to pay Taxes, except that (i) Tenant
shall take the Premises in their then “as-is” state and condition and Landlord
shall have no obligation to make or pay for any improvements to the Premises,
and (ii) during the Renewal Term, the Base Rent payable by Tenant shall be
the Fair Market Rent (as hereinafter defined) during the respective Renewal
Term.

 

(c)                                  For purposes of
this Section, the term “Fair Market Rent” shall mean the prevailing rental rate
and other charges and increases, if any, for comparable space under a new
primary lease (and not a sublease) for the Property, taking into consideration
the amenities and existing improvements on the Property and the amenities and
improvements in comparable properties in comparable locations in Albany, New
York, and also taking into consideration the then-prevailing ordinary rental
market practices with respect to monetary consideration, rent concessions,
tenant improvement allowances, and other tenant concessions (if any).

 

(d)                                 If Tenant
properly exercises a Renewal Option, the Base Rent shall be adjusted to an
amount equal to the rent for the Premises as specified by Landlord by notice to
Tenant not less than ninety (90) days prior to commencement of the respective
Renewal Term.  Tenant, within thirty (30)
days after date on which Landlord provides such notice shall either (i) give
Landlord final binding written notice (“Binding Notice”) of Tenant’s acceptance
of Landlord’s determination of such rent, or (ii) if Tenant disagrees with
Landlords’ determination, provide Landlord with written notice of Tenant’s
election to submit the Fair Market Rent to binding arbitration (the “Arbitration
Notice”).  If Tenant fails to provide
Landlord with either a Binding 

 

23

 

Notice or Arbitration Notice within such thirty (30)
day period, Tenant shall have been deemed to have given the Arbitration Notice.

 

(e)                                  If the parties
are unable to agree upon the rent for the Premises within twenty (20) days
after Landlord’s receipt of the Arbitration Notice, Fair Market Rent as of
commencement of the respective Renewal Term shall be determined as follows:

 

(i)                                     Each party
shall, at its sole expense, within thirty (30) days obtain and deliver in
writing to the other party a determination of the Fair Market Rent for the
Premises for a term equal to the Renewal Term from a broker or appraiser
licensed in the State of New York and engaged in the office and manufacturing
rental market in Albany, New York for at least the immediately preceding five (5) years.

 

(ii)                                  Within twenty
(20) days, Landlord’s broker or appraiser and Tenant’s broker or appraiser
shall name a third broker or appraiser, similarly qualified.  The third broker or appraiser shall choose
the determination of the Landlord’s broker or appraiser or the Tenant’s broker
or appraiser which is closest to its own determination of Fair Market Rent.

 

(iii)                               The Base Rent
payable by Tenant effective as of the commencement of the respective Renewal
Term shall be the rent proposed by either Landlord’s broker or appraiser or
Tenant’s broker or appraiser which is closest to the determination of fair
market rent by the third broker or appraiser.

 

(iv)                              Landlord shall
pay the costs and fees of Landlord’s broker or appraiser in connection with any
determination hereunder, and Tenant shall pay the costs and fees of Tenant’s
broker or appraiser in connection with such determination.  The costs and fees of any third broker or
appraiser shall be paid one-half by Landlord and one-half by Tenant.

 

(v)                                 If the amount
of the Fair Market Rent is not known as of the commencement of the respective
Renewal Term, then Tenant shall continue to pay the Base Rent in effect at the expiration
of the Term or first Renewal Term until the amount of the Fair Market Rent is
determined.  When such determination is
made, the parties shall reconcile any overpayment or underpayment.

 

(f)                                    If Tenant is
entitled to and properly exercises a Renewal Option, Landlord shall prepare an
amendment (the “Renewal Amendment”) to reflect changes in the Base Rent, Term,
Expiration Date and other appropriate terms. 
Each Renewal Amendment shall be sent to Tenant within a reasonable time
after receipt of the Binding Notice and, if acceptable to Tenant, Tenant shall
execute and return the Renewal Amendment to Landlord within thirty (30) days
after its receipt of same. 
Notwithstanding the foregoing, upon final determination of the Fair
Market Rent as applicable, an otherwise valid exercise of a Renewal Option
shall be fully effective whether or not the Renewal Amendment is executed.

 

25.                                OPTION TO PURCHASE

 

(a)                                  Option to
Purchase.  Tenant
shall have the right and option to purchase the Property (“Option to Purchase”).  If Tenant elects to exercise the Option to
Purchase, it shall provide written notice of the exercise at Tenant’s election,
on or before either (i) the first day of 

 

24

 

the 49th month of the
Term or (ii) if the Renewal Option is exercised by Tenant, the first day
of the 109th month of the Term (“Exercise Notice”).  If exercised, the closing sale of the
Property shall occur on the Expiration Date of the Term or the Renewal Term,
respectively as the case may be (“Closing Date”).  The Option to Purchase is personal to Tenant
and any Affiliate of Tenant and may not be exercised by an assignee of the
Lease which is not an affiliate of Tenant.

 

(b)                                 Option Price.  The Option Price shall be the fair market
value of the Property as of the Closing Date (“Fair Market Value”).  The Fair Market Value of the Property shall
be determined free and clear of the Lease.

 

(c)                                  Fair Market
Value.  If the parties are unable to
agree upon the Fair Market Value of the Property within sixty (60) days after
Landlord’s receipt of the Exercise Notice, Fair Market Value shall be
determined as follows:

 

(i)                                     Landlord shall
provide its notice specifying Fair Market Value.

 

(ii)                                  Within twenty
(20) days after receipt of Landlord’s notice specifying Fair Market Value, if
Tenant does not agree with such value, Tenant, at its sole expense, shall
obtain and deliver in writing to Landlord a determination of the Fair Market
Value for the Property from a New York State Certified and Licensed Real Estate
Appraiser (“Tenant’s Appraiser”). If Landlord accepts such determination, the
Fair Market Value shall be the amount determined by Tenant’s Appraiser.

 

(iii)                               If Landlord
does not accept such determination, within twenty (20) days after receipt of
the determination of Tenant’s Appraiser, Landlord shall designate New York
State Certified and Licensed Real Estate Appraiser (“Landlord’s Appraiser”)
licensed in the State of New York and possessing the qualifications set forth
in (i) above.

 

(iv)                              Landlord’s
Appraiser and Tenant’s Appraiser shall name a third New York State Certified
and Licensed Real Estate Appraiser (the “Third Appraiser”), similarly
qualified, within five (5) days after the appointment of Landlord’s
Appraiser.  The Purchase Price to be paid
by Tenant shall be the Fair Market Value proposed by either Landlord’s
Appraiser or Tenant’s Appraiser which is closest to the determination of Fair
Market Value by the Third Appraiser.

 

(v)                                 Landlord shall
pay the costs and fees of Landlord’s Appraiser in connection with any
determination hereunder, and Tenant shall pay the costs and fees of Tenant’s
Appraiser in connection with such determination.  The costs and fees of any Third Appraiser
shall be paid one-half by Landlord and one-half by Tenant.

 

(d)                                 Closing.  The closing in respect of the sale of the
Property (“Closing”) shall be held on the Closing Date.

 

(e)                                  Closing
Procedure and Prorations.  At
the Closing, a special warranty deed from Landlord to Tenant, together with
such other instruments and documents as may be necessary to effectuate the sale
and transfer of the Property to Tenant, shall be deposited in escrow with an
escrow agreement and with a title company mutually approved by Tenant and
Landlord.  The instruments and documents
to be deposited in escrow at the Closing shall be legally sufficient to 

 

25

 

convey all of the applicable property to Tenant free
and clear of all loans, mortgages, deeds of trust, liens and encumbrances (“Encumbrances”).  Landlord shall be responsible for all fees
and costs, including prepayment fees required in connection with the payment
and reconveyance of all Encumbrances. The purchase price and all other sums due
at the time of closing shall be paid by delivery of funds in escrow which are
immediately available to Landlord upon closing. 
All prorations of items of income and expense will be prorated as of the
Closing Date and closing costs (including recording fees, transfer taxes,
escrow costs, title insurance premiums, etc) shall be allocated between
Landlord and Tenant in the manner that is customary for the county in which the
Property is located.  Without limiting
the generality of the foregoing, all recordation and transfer taxes on the deed
to the Property shall be shared equally by Landlord and Tenant.  Landlord’s obligation to convey title to the
applicable property in accordance herewith shall be fully satisfied upon the
willingness of the title company to issue to Tenant upon payment by Landlord of
its regularly scheduled premium its policy of ALTA title insurance, (containing
such endorsements as Tenant may reasonably request provided that Tenant shall
pay for such endorsements), insuring that Tenant is vested as the owner of the
applicable property subject only to all covenants, conditions, easements and
other matters of record and the state of facts and updated survey and/ or
inspection of the Premises would reveal, so long as the same do not render
title to the Premises unmarketable..

 

(f)                                    Memorandum.  Promptly following the mutual execution and
delivery of this Lease, Landlord will execute, acknowledge, and cause to be
recorded in the official records of the county recorder, at Tenant’s expenses,
a Memorandum of the Option to Purchase in the form of Exhibit D attached
hereto.

 

26.                                GENERAL

 

(a)                                  Captions.  The captions and headings used in this Lease
are for the purpose of convenience only and shall not be construed to limit or
extend the meaning of any part of this Lease.

 

(b)                                 Time.  Time is of the essence for the performance of
each term of this Lease.

 

(c)                                  Severability.  If any provision of this Lease is held to be
invalid, illegal or unenforceable, the invalidity, illegality, or
unenforceability shall not affect any other provision of this Lease, but this Lease
shall be construed as if the invalid, illegal or unenforceable provision had
not been contained herein.

 

(d)                                 Attorneys’ Fees.  In the event any party brings any suit or
other proceeding with respect to the subject matter or enforcement of this
Lease, the prevailing party (as determined by the court, arbitrator or other
authority before which such suit or proceeding is commenced) shall, in addition
to such other relief as may be awarded, be entitled to recover reasonable
attorneys’ fees, expenses and costs of investigation as actually incurred,
including court costs and expert witness fees, and all reasonable attorneys’
fees, costs and expenses in any action or participation in or in connection
with any case or proceeding under the Bankruptcy Code, 11 United States Code
Sections 101 et seq., or any successor statutes, in establishing or enforcing
the right to indemnification, in appellate proceedings, or in connection with
the enforcement or collection of any judgment obtained in any such suit or
proceeding.

 

26

 

(e)                                  Choice of Law;
Construction; Jury Trial; Jurisdiction and Venue.

 

(i)                                     This Lease
shall be construed and enforced in accordance with the laws of the State of New
York.

 

(ii)                                  The language in
all parts of this Lease shall in all cases be construed as a whole according to
its fair meaning and not strictly for or against either Landlord or Tenant.

 

(iii)                               Waiver of Jury
Trial.  TO THE FULLEST EXTENT
PERMITTED BY LAW, INCLUDING ANY LAW ENACTED AFTER THE DATE OF THIS LEASE,
THE PARTIES HEREBY, KNOWINGLY AND VOLUNTARILY, WAIVE TRIAL BY JURY IN ANY
ACTION WHATSOEVER BROUGHT BY EITHER PARTY UNDER OR IN RESPECT OF THIS LEASE, INCLUDING,
BUT NOT LIMITED TO, ANY AND ALL COUNTERCLAIMS. 
THE FOREGOING WAIVER HAS BEEN A MATERIAL INDUCEMENT TO EACH PARTY
ENTERING INTO THIS LEASE.

 

(iv)                              In the event of
any litigation relating to this Lease, the parties consent to the exclusive
personal jurisdiction and venue in Albany, New York in Federal or State Court.

 

(f)                                    Binding Effect.  The covenants and agreements contained in
this Lease shall be binding on the parties hereto and, on their respective
successors and permitted assigns.

 

(g)                                 Waiver.  The waiver by either party of any breach of
any term, condition or covenant of this Lease shall not be deemed to be a
waiver of the provision or any subsequent breach of the same or any other term,
condition or covenant of this Lease.  No
covenant, term or condition of this Lease shall be deemed to have been waived
by either party unless the waiver is in writing signed by such party.  No payment by Tenant or receipt by Landlord
of a lesser amount than any installment or payment of Rent due shall be deemed
to be other than on account of the amount due, and no endorsement or statement
on any check or any letter accompanying any check or payment of Rent shall be
deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord’s right to recover the balance of such
installment or payment of Rent or pursue any other remedies available to
Landlord.

 

(h)                                 Entire
Agreement; Modifications.  This
Lease is the entire agreement between the parties, and supersedes all prior
agreements, including letters of intent, between them, and there are no
agreements or representations between the parties except as expressly set forth
herein.  Except as otherwise provided
herein, no subsequent change or addition to this Lease shall be binding unless
in writing and signed by the parties hereto.

 

(i)                                     Counterparts.  This Lease may be executed in counterparts,
each of which shall be an original, and all of which together shall constitute
but one instrument.

 

(j)                                     Authority.  If either party hereto is a corporation,
partnership, trust, association, limited liability company or other entity,
such party hereby covenants and warrants that (i) it is duly incorporated
or otherwise established or formed and validly existing under the laws of its
state of incorporation, establishment or formation, (ii) it has and is
duly qualified to do business in the state in which the Property is located, (iii) it
has full corporate, partnership, trust, association or other appropriate power
and authority to enter into this Lease and to perform all its 

 

27

 

obligations hereunder, and (iv) each person
(and all of the persons if more than one signs) signing this Lease on behalf of
such party is duly and validly authorized to do so.

 

IN
WITNESS WHEREOF, the parties, each being authorized to do so, have executed
this Lease on the dates set forth below, effective as of the date first above
written.

 

 

	
  TENANT:
  

  	
   

  	
  LANDLORD:
  

  
	
   

  	
   

  	
   

  
	
  SIMPSON
  DURA-VENT COMPANY, INC.,

  a California corporation 

  	
   

  	
  GANSEVOORT
  PARTNERS, L.P., a New York limited partnership 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
   

  	
   

  	
  By:
  

  	
   

  
	
   

  	
  Stephen
  P. Eberhard 

  	
   

  	
   

  	
  Martin
  Wawrla, 

  
	
   

  	
  President

  	
   

  	
   

  	
  General
  Partner

  
	
   

  	
   

  	
   

  

 

28

 

STATE
OF CALIFORNIA

)
ss.:

 

COUNTY
OF

 

On the            day
of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared  Stephen P. Eberhard, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity, and that by his signature on
the instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  

 

 

STATE
OF CALIFORNIA

)
ss.:

 

COUNTY
OF

 

On the            day
of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared                                                          , personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  

 

STATE
OF NEW YORK

)
ss.:

 

COUNTY
OF

 

On the            day
of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared  Martin Wawrla,, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity, and that by his signature on
the instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
   

  

 

 

 

EXHIBIT A

 

PROPERTY DESCRIPTION

 

All
that tract or parcel of land situate, lying and being located on the southerly
side of South Pearl Street, in the City of Albany, County of Albany, State of
New York, being more particularly bounded and described as follows:

 

BEGINNING
at a point in the southerly line of South Pearl Street at its intersection with
the westerlyline of Gansevoort Street, said point being the northeasterly
corner of the herein described parcel; running thence southerly along the
westerly line of Gansevoort Street the following two (2) courses and
distances: 1) South 41”-58’-39” East 411.05 feet to a point; thence 2) South 49”-57’-46”
East 1.09 feet to a point in the division line between land now or formerly of
Gansevoort Partners as described in Liber 2364 of deeds at page 56 on the
north and lands now or formerly of Carmine A. Ferrara as described in Liber
2499 of deeds at page 380 on the south; thence westerly along said
division line, South 63a-531-35” West 436.56 feet .to a point; thence northerly
along said division line and along the division line between land now or
formerly of the Gansevoort Partners as described in Liber 2338 of deeds at page 570
on the east and lands now or formerly of Carmine A. Ferrara as described in
Liber 2499 of deeds at page 385 on the west, North 40’-55’-14” West 303.34
feet to a point in the southerly line of South Pearl Street; thence easterly
along the southerly line of South Pearl Street, North 49a-28146” East 414.31
feet to the point or place of beginning. Said premises are now known as St. No. 400
South Pearl Street, Albany, New York.

 

TOGETHER
with an easement for ingress and egress in common with Carmine A. Ferrara, his
heirs and assigns, being 15.0 feet in width measured perpendicularly, lying
adjacent to and southerly of the southerly boundary of the above described
parcel and being more particularly bounded and described as follows:

 

COMMENCING
at a point in the westerly line of Gansevoort Street at its intersection with
the southerly line of South Pearl Street; running thence southerly along. the
westerly line of Gansevoort Street the following two (2) courses and
distances: 1) South 41”-56’-39” East 411.05 feet to a point; thence 2) South 49”-57’-46”
East 1.09 feet to the point of beginning for the herein described premises,
said point being the southeasterly corner of the first above described parcel;
running thence southerly along the westerly line of Gansevoort Street South
49%57’-46” East 16.40 feet to a .point in the northerly highway boundary of
Interstate Route 787 as established by Appropriation Map No. 35, Parcel 94, Interstate
Route Connection 540-1-1, Route 9W to Green Street; thence westerly along said
northerly highway boundary, South 63°-53’-35” West 439.23 feet to a point;
thence northerly through lands noel or formerly of Carmine A. Ferrara as
described in Liber 2499 of deeds at page 380, North 40”-55’-14” West 15.52
feet to 6 point in the southerly line of the first above described parcel;
thence easterly along the southerly line of the first above described parcel,
North 63’-53’-35” East 436.56 feet to the point or place of beginning for the
herein described premises. Said easement subject to license conveyed to Niagara
Mohawk Power Corporation by Delaware & Hudson Railway Company dated August 23,
1972.

 

A-1

 

SUBJECT
to rights and easements, if any, of public utility companies and municipalities
to maintain and operate underground and. overhead utilities and appurtenances
lying, and being located within, across or adjacent to the premises above
described.

 

SUBJECT
to all rights, easements, covenants and restrictions of record.

 

A-2

 

EXHIBIT B

 

COMMENCEMENT DATE MEMORANDUM

 

GANSEVOORT
PARTNERS, L.P., a New York limited partnership (“Landlord”) and SIMPSON
DURA-VENT COMPANY, INC., a California corporation (“Tenant’) have entered
into a certain Lease, dated as of
                  ,
           2008 (the “Lease”).

 

WHEREAS,
Landlord and Tenant wish to confirm and memorialize the Commencement Date and
Expiration Date of the Lease as provided for in the Lease;

 

NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, receipt of which is hereby acknowledged, Landlord and Tenant
agree as follows:

 

1.                                       Unless
otherwise defined herein, all capitalized terms shall have the same meaning
ascribed to them in the Lease.

 

2.                                       The
Commencement Date (as defined in the Lease) of the Lease is

 

3.                                       The Expiration
Date (as defined in the Lease) of the Lease is

 

4.                                       Tenant hereby
confirms the following:  (A) That it
has accepted possession of the premises pursuant to the terms of the Lease;
and, (B) That the Lease is in full force and effect.

 

5.                                       Except as
expressly modified hereby, all terms and provisions of the Lease are hereby
ratified and confirmed and shall remain in full force and effect and binding on
the parties hereto.

 

 

	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  SIMPSON
  DURA-VENT COMPANY, INC., a California corporation

  	
   

  	
  GANSEVOORT
  PARTNERS, L.P., a New York limited partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Stephen
  P. Eberhard

  	
   

  	
   

  	
  Martin
  Wawrla,

  
	
   

  	
  President

  	
   

  	
   

  	
  General
  Partner

  

 

B-1

 

STATE
OF CALIFORNIA

)
ss.:

 

COUNTY
OF

 

On the            day
of                                     ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared  Stephen P. Eberhard, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity, and that by his signature on
the instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument.

 

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

STATE
OF CALIFORNIA

)
ss.:

 

COUNTY
OF

 

On the            day
of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared                                                          , personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

 

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

STATE
OF NEW YORK

)
ss.:

 

COUNTY
OF

 

On the            day
of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared  Martin Wawrla,, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

 

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

B-2

 

EXHIBIT C-1 KeyBank SNDA

 

RECORDING REQUESTED BY AND

AFTER RECORDING, RETURN TO:

 

Shartsis Friese, LLP

One Maritime Plaza

San Francisco, CA 94111

Attn:  Alan Robin, Esq.

 

SPACE ABOVE THIS LINE RESERVED
FOR RECORDER’S USE

 

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

 

This
Subordination, Non-Disturbance and Attornment Agreement (“Agreement”),
is made as of June     , 2008, among:

 

KEYBANK
NATIONAL ASSOCIATION, a banking association duly organized and validly
existing under the laws of the United States of America, with an office for the
transaction of business at 66 South Pearl Street, Albany, New York, 12207 (“Lender”):

 

GANSEVOORT
PARTNERS, L.P., a limited partnership duly organized and validly
existing in accordance with the laws of the State of New York, having its
principal executive office located at 400 South Pearl Street, Albany, New York
12202 (“Landlord”); and

 

SIMPSON
DURA-VENT COMPANY, INC., a corporation duly
organized and validly existing in accordance with the laws of the State of
California, having its principal executive office located at 877 Cotting Court
(P. 0. Box 1510), Vacaville, California 95696 (“Tenant”).

 

Background

 

Lender has made loans (collectively, the “Loan”) to Landlord secured by those
certain mortgages itemized in the Mortgage Schedule attached as Exhibit “A”
(the “Security Instruments”) against
Landlord’s property commonly known and referred to as 400 South Pearl Street,
Albany, New York 12202 bounded and described as set forth in the property
description attached hereto as Exhibit “B” (“Property”).

 

Tenant is the present lessee under that certain lease
agreement between Landlord and Tenant dated as of June       ,
2008, as thereafter modified and supplemented (“Lease”),
demising the Property described more particularly in the Lease (the “Premises”).

 

The parties are entering into this Agreement to provide
for the subordination of the Lease, subject to Lender’s agreement to recognize
Tenant’s rights under the Lease and not to 

 

C-1

 

disturb Tenant’s possession of the Leased Premises upon
the conditions set forth in this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual promises of this Agreement, and
intending to be legally bound hereby, the parties hereto agree as follows:

 

1.                                       Subordination.  Subject to the provisions of Section 2,
Tenant agrees that the Lease, and all estates, options and rights created under
the Lease, are subordinated and made subject to the lien and effect of the
Security Instrument.

 

2.                                       Nondisturbance.  Notwithstanding Tenant’s
subordination under Section 1 above, but subject to the provisions of
Sections 6(b) below, Lender agrees that no foreclosure, deed-in-lieu of
foreclosure, or other sale of the Property in connection with enforcement of
the Security Instruments or otherwise in satisfaction of the Loan shall operate
to terminate the Lease or any of Tenant’s rights and privileges thereunder,
including without limitation, Tenant’s two (2) “Renewal Option(s)” as
defined in and pursuant to the terms of the Lease, Tenant’s “Option to Purchase”
as defined in and pursuant to the terms of the Lease, the application of
insurance and condemnation proceeds pursuant to the terms of the Lease, and any
option of Tenant to terminate the Lease.

 

3.                                       Attornment.  Tenant agrees to attorn to and
recognize as its landlord under the Lease any party acquiring legal title to
the Property by foreclosure of the Security Instrument, deed-in-lieu of
foreclosure, or other sale in connection with enforcement of the Security
Instrument or otherwise in satisfaction of the Loan (“Successor
Owner”).  Successor Owner
shall perform all obligations of the landlord under the Lease arising from and
after the date title to the Property is transferred to Successor Owner.  In no event, however, will any Successor
Owner be:

 

(a)                                  liable
for any default, act or omission of any prior landlord under the Lease
(including Landlord);

 

(b)                                 subject
to any offset or defense which Tenant may have against any prior landlord under
the Lease unless Tenant shall have given notice under Section 5 of this
Agreement to Lender at that time (whether or not Lender elected to cure or
remedy the default, act or omission);

 

(c)                                  bound
by any payment of rent or additional rent made by Tenant to Landlord more than
30 days in advance;

 

(d)                                 bound
by any modification or supplement to the Lease, or waiver of Lease terms, which
would materially adversely affect any right of Landlord under the Lease, made
without Lender’s written consent thereto, which consent will not be
unreasonably withheld; or

 

(e)                                  liable
for the return of any security deposit or other prepaid charge paid by Tenant
under the Lease, except to the extent such amounts were actually received by
Lender.

 

Although the foregoing provisions of this Agreement are
self-operative, Tenant and Successor Owner agree to execute such further
instruments as either party may from time to time 

 

C-2

 

request in order to confirm this Agreement.  If any liability of Successor Owner does
arise pursuant to this Agreement, such liability shall be limited to Successor
Owner’s interest in the Property. 
Notwithstanding the foregoing, any Successor Owner shall be liable for
the performance of the obligations of the Landlord under the Lease, that
constitute continuing defaults of a prior Landlord (including without
limitation the Landlord) to the extent such act, omission or default is
continuing after Successor Owner acquires the Property and it has received from
Tenant such notice and opportunity to cure or commence to cure as is provided
for in the Lease with respect to such act, omission or default.

 

4.                                       Rent
Payments; Notice to Tenant Regarding Rent Payments.  Tenant agrees not to pay rent
more than one (1) month in advance unless otherwise specified in the
Lease.  After notice is given to Tenant
by Lender that Landlord is in default under the Security Instrument and that
the rentals under the Lease are to be paid to Lender directly pursuant to the
assignment of leases and rents granted by Landlord to Lender in connection
therewith, Tenant shall thereafter pay to Lender all rent and all other amounts
due or to become due to Landlord under the Lease.  Landlord hereby expressly authorizes Tenant
to make such payments to Lender upon reliance on Lender’s written notice
(without any inquiry into the factual basis for such notice or any prior notice
to or consent from Landlord) and hereby releases Tenant from all liability to
Landlord in connection with Tenant’s compliance with Lender’s written
instructions.

 

5.                                       Lender
Opportunity to Cure Landlord Defaults.  Tenant agrees that, until the lien of
Security Instruments is released by Lender, it will not exercise any remedies
under the Lease following a Landlord default without having first given to
Lender (a) written notice of the alleged Landlord default and (b) the
opportunity to cure such default within the longer of (i) 30 days after
the cure period provided under the Lease to Landlord, (ii) 30 days from
Landlord’s receipt of Tenant’s notice to Lender of a Landlord default, or (iii) if
the cure of such default requires possession of the Property, 30 days after
Lender has obtained possession of the Property; provided that, in each case, if
such default, other than the payment of money, cannot reasonably be cured
within such 30-day period and Lender has diligently commenced to cure such
default promptly within the time contemplated by this Agreement, such 30-day
period shall be extended for so long as it shall require Lender, in the
exercise of due diligence, to cure such default, but, unless the parties
otherwise agree, in no event shall the entire cure period be more than 90 days.
Tenant acknowledges that Lender is not obligated to cure any Landlord default,
but if Lender elects to do so, Tenant agrees to accept cure by Lender as that
of Landlord under the Lease and will not exercise any right or remedy under the
Lease for a Landlord default. Performance rendered by Lender on Landlord’s
behalf is without prejudice to Lender’s rights against Landlord under the
Security Instrument or any other documents executed by Landlord in favor of
Lender in connection with the Loan.

 

6.                                       Lender
and Tenant Agreements.

 

(a)                                  Lender
covenants and agrees to provide Tenant with a copy of any notices of default
under the Security Instruments prior to exercising any of Lender’s remedies
thereunder, and that Tenant shall, in each case, have the same period of time
to cure such default as provided for Landlord thereunder.

 

C-3

 

(b)                                 Lender further
covenants and agrees that Lender shall give notice to Tenant prior to the
commencement of any foreclosure action,
acceptance of any deed-in-lieu of foreclosure, or conducting any other sale of
the Property in connection with enforcement of the Security Instruments or
otherwise in satisfaction of the Loan, and that Tenant shall have a period of
not less than 60 days from the effective date of such notice to exercise
its “Option to Purchase”, as defined in the
Lease.  Unless Tenant shall
exercise its “Option to Purchase” before
expiration of such 60 day period, Tenant’s “Option
to Purchase” shall terminate. 
Notwithstanding anything contained in the Lease to the contrary,
Landlord expressly acknowledges and agrees that Tenant shall have the right to
exercise its Option to Purchase in accordance with this Section 6(b) and
Landlord covenants and agrees to be bound by such exercise by Tenant of the
Option to Purchase in accordance with this Section 6(b).

 

(c)                                  Tenant shall enter into no
material amendment or modification of any of the material provisions of the
Lease without Lender’s prior written consent, which consent shall not be
unreasonably withheld or delayed.

 

(d)                                 Landlord
acknowledges and agrees that, notwithstanding any provision of the Lease to the
contrary, Tenant covenants and agrees not to subordinate its rights under the
Lease to any other mortgage, deed of trust, or other security instrument made
by Landlord which under the terms of the Security Instruments requires the
prior written consent of Lender without Landlord and Lender providing Tenant
evidence of such consent, and that absent such consent the Lease shall be
superior to any such mortgage, deed of trust or other security instrument.

 

(e)                                  Landlord
acknowledges and agrees that, notwithstanding any provision of the Lease to the
contrary, Tenant covenants and agrees not to accept any termination of the
Lease by Landlord, which under the terms of the Security Instruments requires
the prior written consent of Lender without Landlord and Lender providing
Tenant evidence of such consent, which consent Lender agrees not to
unreasonably withhold, and that absent such consent the Lease shall continue as
the binding and enforceable obligation of Tenant.

 

7.                                       Miscellaneous.

 

(a)                                  Notices.  All notices and other
communications under this Agreement are to be in writing and sent to the
addresses as set forth below.  Default or
demand notices shall be deemed to have been duly given upon the earliest of: (i) actual
receipt; (ii) one (1) business day after having been timely deposited
for overnight delivery, fee prepaid, with a reputable overnight courier
service, having a reliable tracking system; (iii) one
(1) business day after having been sent by telecopier (with answer back acknowledged)
provided an additional notice is given pursuant to (ii);  or (iv) three (3) business days after
having been deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by certified mail, postage prepaid,
return receipt requested, and in the case of clause (ii) and (iv) irrespective
of whether delivery is accepted.  A new
address for notice may be established by written notice to the other parties;
provided, however, that no address change will be effective until written
notice thereof actually is received by the party to whom such address change is
sent.

 

	
  To
  Lender:

  	
  KeyBank
  National Association

  
	
   

  	
  66
  South Pearl Street

  

 

C-4

 

	
   

  	
  Albany,
  New York, 12207

  
	
   

  	
  Attn:
  John M. Rajter, Vice President

  
	
  To
  Tenant:

  	
  Simpson
  Dura-Vent Company, Inc.

  
	
   

  	
  877
  Cotting Court

  
	
   

  	
  P.
  O. Box 1510

  
	
   

  	
  Vacaville,
  California 95696

  
	
   

  	
  Attn:
  Stephen P. Eberhard

  
	
   

  	
   

  
	
  and

  	
  Simpson
  Manufacturing Co., Inc.

  
	
   

  	
  5956
  West Las Positas Boulevard

  
	
   

  	
  Pleasanton,
  California 94588

  
	
   

  	
  Attn:
  Chief Financial Officer

  
	
   

  	
   

  
	
  To
  Landlord:

  	
  Gansevoort
  Partners, L.P.

  
	
   

  	
  400
  South Pearl Street

  
	
   

  	
  Albany,
  New York, 12202

  
	
   

  	
  Attn:
  Martin J. Wawrla

  

 

(b)                                 Entire
Agreement; Modification.  This Agreement is the entire agreement between
the parties hereto with respect to the subject matter hereof, and supersedes
and replaces all prior discussions, representations, communications and
agreements (oral or written).  This
Agreement shall not be modified, supplemented, or terminated, nor any provision
hereof waived, except by a written instrument signed by the party against whom
enforcement thereof is sought, and then only to the extent expressly set forth
in such writing.

 

(c)                                  Binding
Effect; Joint and Several Obligations.  This Agreement is binding upon and inures to
the benefit of the parties hereto and their respective heirs, executors, legal
representatives, successors, and assigns, whether by voluntary action of the
parties or by operation of law.

 

(d)                                 Unenforceable
Provisions.  Any provision of this Agreement which is
determined by a court of competent jurisdiction or government body to be
invalid, unenforceable or illegal shall be ineffective only to the extent of
such determination and shall not affect the validity, enforceability or legality
of any other provision, nor shall such determination apply in any circumstance
or to any party not controlled by such determination.

 

(e)                                  Duplicate
Originals; Counterparts.  This Agreement may be executed in any number
of duplicate originals, and each duplicate original shall be deemed to be an
original. This Agreement (and each duplicate original) also may be executed in
any number of counterparts, each of which shall be deemed an original and all
of which together constitute a fully executed Agreement even though all
signatures do not appear on the same document.

 

(f)                                    Construction
of Certain Terms.  Defined terms used in this Agreement may be
used interchangeably in singular or plural form, and pronouns shall be
construed to cover all genders.  Article and
section headings are for convenience only and shall not be used in
interpretation of this Agreement.  The
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular section, paragraph

 

C-5

 

or other subdivision; and the word “section” refers to
the entire section and not to any particular subsection, paragraph or other
subdivision; and each of the Loan Documents referred to herein mean the
agreement as originally executed and as hereafter modified, supplemented,
extended, consolidated, or restated from time to time.

 

(g)                                 Governing
Law.  This
Agreement shall be interpreted and enforced according to the laws of the State
of New York.

 

(h)                                 Consent
to Jurisdiction. Each party hereto
irrevocably consents and submits to the exclusive jurisdiction and venue of any
state or federal court sitting in the county and state where the Property is
located with respect to any legal action arising with respect to this Agreement
and waives all objections which it may have to such jurisdiction and venue.

 

(i)                                     Attorneys Fees. In the event
it becomes necessary to enforce any of the terms and provisions of this
Agreement (including an action or proceeding between Landlord and the trustee
debtor in possession while Guarantor is a debtor in a proceeding under the
Bankruptcy Code (Title 11 of the United States Code) or any successor statute
to such Code), whether or not suit be instituted, the prevailing party shall be
entitled to its reasonable costs and expenses incurred with respect thereto,
including, but not limited to, reasonable attorney’s fees, and such other costs
and expenses as may be allowed by law, whether or not such action, proceeding
or appeal is prosecuted to judgment or other final determination, together with
all costs of enforcement and/or collection of any judgment or other relief.

 

(j)                                     WAIVER OF JURY TRIAL.  TO THE FULLEST EXTENT PERMITTED BY LAW, EACH
PARTY HERETO WAIVES AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY
ISSUE ARISING OUT OF THIS AGREEMENT.

 

[Remainder of page is blank;
signatures appear on next page.]

 

C-6

 

IN WITNESS WHEREOF, this Agreement is executed
as of the date set forth above.

 

	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  WITNESSES:

  	
   

  	
  SIMPSON DURA-VENT COMPANY, INC.,

  
	
   

  	
   

  	
  a
  California corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  WITNESSES:

  	
   

  	
  GANSEVOORT PARTNERS, L.P.,

  
	
   

  	
   

  	
  a New York limited
  partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
   

  
								

 

[signatures continue on next page]

 

C-7

 

	
   

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
  WITNESSES:

  	
   

  	
  KeyBank
  National Association

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
   

  
						

 

C-8

 

STATE
OF

 

COUNTY
OF                                                    ss.:

 

On the
           day of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared Stephen P. Eberhard, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity, and that by his signature on
the instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument.

 

 

	
   

  	
   

  
	
   

  	
  Notary
  Public

  

 

STATE
OF

 

COUNTY
OF                                                    ss.:

 

On the
           day of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared Martin J. Wawrla, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity, and that by his signature on
the instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument.

 

 

	
   

  	
   

  
	
   

  	
  Notary
  Public

  

 

STATE
OF

 

COUNTY
OF                                                    ss.:

 

On the
           day of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared                                       ,
personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he/she executed the same in his/her capacity, and
that by his/her signature on the instrument, the individual, or the person upon
behalf of which the individual acted, executed the instrument.

 

 

	
   

  	
   

  
	
   

  	
  Notary
  Public

  

 

C-9

 

EXHIBIT A

Security Instruments

 

 

EXHIBIT B

 

Legal Description of Property

 

(See attached)

 

2

 

EXHIBIT C-2—ACBDC SNDA

 

RECORDING REQUESTED BY AND

AFTER RECORDING, RETURN TO:

 

Shartsis Friese, LLP

One Maritime Plaza

San Francisco, CA 94111

Attn:  Alan Robin, Esq.

 

SPACE ABOVE THIS LINE RESERVED
FOR RECORDER’S USE

 

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

 

This
Subordination, Non-Disturbance and Attornment Agreement (“Agreement”), is made
as of May 30, 2008, among:

 

ALBANY COUNTY BUSINESS DEVELOPMENT CORPORATION, AS ADMINISTRATOR OF THE
AL TECH TRUST FUND, successor in interest to New York Job Development Authority
d/b/a Empire State Development Corporation, as Administrator of the Al Tech
Trust Fund, a corporation duly organized and validly existing
in accordance with the Not-For-Profit Corporation Law of the State of New York,
with an office for the transaction of business at One Computer Drive South,
Albany, New York 12205(“Lender”);

 

GANSEVOORT PARTNERS, L.P., a limited partnership duly
organized and validly existing in accordance with the laws of the State of New
York, having its principal executive office located at 400 South Pearl Street,
Albany, New York 12202 (“Landlord”);  and

 

SIMPSON
DURA-VENT COMPANY, INC., a corporation duly
organized and validly existing in accordance with the laws of the State of
California, having its principal executive office located at 877 Cotting Court
(P. O. Box 1510), Vacaville, California 
95696 (“Tenant”).

 

Background

 

Lender has made loans to Landlord collateralized by
those certain mortgages itemized in the Mortgage Schedule attached as Exhibit “A”
(the “Security Instruments”) “against
Landlord’s property commonly known and referred to as 400 South Pearl Street,
Albany, New York 12202 bounded and described as set forth in the property
description attached hereto as Exhibit “B” (“Property”).

 

Tenant is the present lessee under that certain lease
agreement between Landlord and Tenant dated as of May 30, 2008, as
thereafter modified and supplemented (“Lease”),
demising the Property described more particularly in the Lease (“Leased Premises”).

 

3

 

The parties are entering into this Agreement to provide
for the subordination of the Lease, subject to Lender’s agreement to recognize
Tenant’s rights under the Lease and not to disturb Tenant’s possession of the
Leased Premises upon the conditions set forth in this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual promises of this Agreement, and
intending to be legally bound hereby, the parties hereto agree as follows:

 

1.                                       Subordination.  Subject to the provisions of Section 2, Tenant agrees that the
Lease, and all estates, options and rights created under the Lease, are
subordinated and made subject to the lien and effect of the Security
Instruments, and to any renewals, extensions, modifications, consolidations or
replacements thereof.

 

2.                                       Nondisturbance.  Notwithstanding Tenant’s subordination under Section 1 above, Lender
agrees that no foreclosure, deed-in-lieu of foreclosure, or other sale of the
Property in connection with enforcement of the Security Instruments or
otherwise in satisfaction of the Loan shall operate to terminate the Lease or
any of Tenant’s rights and privileges thereunder, including without limitation,
Tenant’s two (2) “Renewal Option(s)” as defined in and pursuant to the
terms of the Lease, Tenant’s “Option to Purchase” as defined in and pursuant to
the terms of the Lease, the application of insurance and condemnation proceeds
pursuant to the terms of the Lease, and any option of Tenant to terminate the
Lease, so long as Tenant is not in default under the Lease (beyond any
applicable cure period thereunder) and shall pay the rent due thereunder.

 

3.                                       Attornment.  Tenant agrees to attorn to and recognize as its landlord under the Lease
any party acquiring legal title to the Property by foreclosure of the Security
Instruments, deed-in-lieu of foreclosure, or other sale in connection with
enforcement of the Security Instruments or otherwise in satisfaction of the
Loan (“Successor Owner”).  Successor Owner shall perform all obligations
of the landlord under the Lease arising from and after the date title to the
Property is transferred to Successor Owner. 
In no event, however, will any Successor Owner be:

 

a.               liable
for any default, act or omission of any prior landlord under the Lease
(including Landlord);

 

b.              subject
to any offset or defense which Tenant may have against any prior landlord under
the Lease unless Tenant shall have given notice under Section 5 of this
Agreement to Lender at that time (whether or not Lender elected to cure or
remedy the default, act or omission);

 

c.               bound
by any payment of rent or additional rent made by Tenant to Landlord more than
30 days in advance;

 

d.              bound
by any modification or supplement to the Lease, or waiver of Lease terms, which
would materially adversely affect any right of Landlord under the Lease, made
without Lender’s written consent thereto, which consent will not be
unreasonably withheld; or

 

e.               liable
for the return of any security deposit or other prepaid charge paid by Tenant
under the Lease, except to the extent such amounts were actually received by
Lender.

 

Although the foregoing provisions of this Agreement are
self-operative, Tenant and Successor Owner agree to execute such further
instruments as either party may from time to time request in order to confirm
this Agreement.  If any liability of
Successor Owner does arise pursuant to this Agreement, such liability shall be
limited to Successor Owner’s interest in the Property.  

 

4

 

Notwithstanding the foregoing, any Successor Owner shall
be liable for the performance of the obligations of the Landlord under the
Lease, that constitute continuing defaults of a prior Landlord (including
without limitation the Landlord) to the extent such act,
omission or default is continuing after Successor Owner acquires the Property
and it has received from Tenant such notice and opportunity to cure or commence
to cure as is provided for in the Lease with respect to such act, omission or
default.

 

4.                                       Rent Payments; Notice to Tenant Regarding Rent Payments.  Tenant
agrees not to pay rent more than one (1) month in advance unless otherwise
specified in the Lease.  After notice is
given to Tenant by Lender that Landlord is in default under the Security
Instruments and that the rentals under the Lease are to be paid to Lender
directly pursuant to the assignment of leases and rents granted by Landlord to
Lender in connection therewith, Tenant shall thereafter pay to Lender all rent
and all other amounts due or to become due to Landlord under the Lease.  Landlord hereby expressly authorizes Tenant
to make such payments to Lender upon reliance on Lender’s written notice
(without any inquiry into the factual basis for such notice or any prior notice
to or consent from Landlord) and hereby releases Tenant from all liability to
Landlord in connection with Tenant’s compliance with Lender’s written
instructions.

 

5.                                       Lender Opportunity to Cure Landlord Defaults.  Tenant
agrees that, until the Security Instruments is released by Lender, it will not
exercise any remedies under the Lease following a Landlord default without
having first given to Lender (a) written notice of the alleged Landlord
default and (b) the opportunity to cure such default within the longer of (i) 30
days after the cure period provided under the Lease to Landlord, (ii) 30
days from Landlord’s receipt of Tenant’s notice to Lender of a Landlord
default, or (iii) if the cure of such default requires possession of the
Property, 30 days after Lender has obtained possession of the Property;
provided that, in each case, if such default, other than the payment of money,
cannot reasonably be cured within such 30-day period and Lender has diligently
commenced to cure such default promptly within the time contemplated by this
Agreement, such 30-day period shall be extended for so long as it shall require
Lender, in the exercise of due diligence, to cure such default, but, unless the
parties otherwise agree, in no event shall the entire cure period be more than
90 days. Tenant acknowledges that Lender is not obligated to cure any Landlord
default, but if Lender elects to do so, Tenant agrees to accept cure by Lender
as that of Landlord under the Lease and will not exercise any right or remedy
under the Lease for a Landlord default. Performance rendered by Lender on
Landlord’s behalf is without prejudice to Lender’s rights against Landlord
under the Security Instruments or any other documents executed by Landlord in
favor of Lender in connection with the Loan.

 

6.                                       Lender and Tenant Agreements.

 

a.               Lender covenants and agrees
to provide Tenant with a copy of any notices or notices of default which it
provides Landlord simultaneously with the provision of such notice to Landlord.

 

b.              Intentionally
Omitted.

 

7.                                       Miscellaneous.

 

a.               Notices.  All notices and other
communications under this Agreement are to be in writing and sent to the
addresses as set forth below.  Default or
demand notices shall be deemed to have been duly given upon the earliest of: (i) actual
receipt; (ii) one (1) business day after having been timely deposited
for overnight delivery, fee prepaid, with a reputable overnight courier
service, having a reliable tracking system; (iii) one
(1) business day after having been sent by telecopier (with answer back
acknowledged) provided an additional notice is given pursuant to (ii);  or (iv) three (3) business
days after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by certified mail,
postage prepaid, return receipt 

 

5

 

requested,
and in the case of clause (ii) and (iv) irrespective of whether
delivery is accepted.  A new address for
notice may be established by written notice to the other parties; provided,
however, that no address change will be effective until written notice thereof
actually is received by the party to whom such address change is sent.

 

	
  To
  Lender:

  	
  Albany
  County Business Development Corporation,

  
	
   

  	
  As
  Administrator of the Al Tech Trust Fund

  
	
   

  	
  One
  Computer Drive South,

  
	
   

  	
  Albany,
  New York 12205

  
	
   

  	
  Attn:
  Kevin P. Catalano

  
	
   

  	
   

  
	
  To
  Tenant:

  	
  Simpson
  Dura-Vent Company, Inc.

  
	
   

  	
  877
  Cotting Court

  
	
   

  	
  P.
  O. Box 1510

  
	
   

  	
  Vacaville,
  California 95696

  
	
   

  	
  Attn:
  Stephen P. Eberhard

  
	
   

  	
   

  
	
  and

  	
  Simpson
  Manufacturing Co., Inc.

  
	
   

  	
  5956
  West Las Positas Boulevard

  
	
   

  	
  Pleasanton,
  California 94588

  
	
   

  	
  Attn:
  Chief Financial Officer

  
	
   

  	
   

  
	
  To
  Landlord:

  	
  Gansevoort
  Partners, L.P.

  
	
   

  	
  400
  South Pearl Street

  
	
   

  	
  Albany,
  New York 12202

  
	
   

  	
  Attn:
  Martin J. Wawrla

  
			

 

b.              Entire Agreement; Modification.  This Agreement is the entire agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes and replaces all prior discussions, representations, communications
and agreements (oral or written).  This
Agreement shall not be modified, supplemented, or terminated, nor any provision
hereof waived, except by a written instrument signed by the party against whom
enforcement thereof is sought, and then only to the extent expressly set forth
in such writing.

 

c.               Binding Effect; Joint and Several Obligations.  This Agreement is binding upon
and inures to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors, and assigns, whether by voluntary
action of the parties or by operation of law.

 

d.              Unenforceable Provisions.  Any provision of this Agreement which is
determined by a court of competent jurisdiction or government body to be
invalid, unenforceable or illegal shall be ineffective only to the extent of
such determination and shall not affect the validity, enforceability or
legality of any other provision, nor shall such determination apply in any
circumstance or to any party not controlled by such determination.

 

e.               Duplicate Originals; Counterparts.  This Agreement may be executed in any number
of duplicate originals, and each duplicate original shall be deemed to be an
original. This Agreement (and each duplicate original) also may be executed in
any number of counterparts, each of which shall be deemed an original and all
of which together constitute a fully executed Agreement even though all
signatures do not appear on the same document.

 

6

 

f.                 Construction of Certain Terms.  Defined terms used in this Agreement may be
used interchangeably in singular or plural form, and pronouns shall be
construed to cover all genders.  Article and
section headings are for convenience only and shall not be used in
interpretation of this Agreement.  The
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular section, paragraph
or other subdivision; and the word “section” refers to the entire section and
not to any particular subsection, paragraph or other subdivision; and each of
the Loan Documents referred to herein mean the agreement as originally executed
and as hereafter modified, supplemented, extended, consolidated, or restated
from time to time.

 

g.              Governing Law.  This Agreement shall be interpreted and
enforced according to the laws of the State of New York.

 

h.              Consent
to Jurisdiction. Each party hereto
irrevocably consents and submits to the exclusive jurisdiction and venue of any
state or federal court sitting in the county and state where the Property is
located with respect to any legal action arising with respect to this Agreement
and waives all objections which it may have to such jurisdiction and venue.

 

i.                  Attorneys Fees. In the event
it becomes necessary to enforce any of the terms and provisions of this
Agreement (including an action or proceeding between Landlord and the trustee
debtor in possession while Guarantor is a debtor in a proceeding under the
Bankruptcy Code (Title 11 of the United States Code) or any successor statute
to such Code), whether or not suit be instituted, the prevailing party shall be
entitled to its reasonable costs and expenses incurred with respect thereto,
including, but not limited to, reasonable attorney’s fees, and such other costs
and expenses as may be allowed by law, whether or not such action, proceeding
or appeal is prosecuted to judgment or other final determination, together with
all costs of enforcement and/or collection of any judgment or other relief.

 

j.                  WAIVER OF JURY TRIAL.  TO THE FULLEST EXTENT PERMITTED BY LAW, EACH
PARTY HERETO WAIVES AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY
ISSUE ARISING OUT OF THIS AGREEMENT.

 

[Remainder of page is blank;
signatures appear on next page.]

 

7

 

IN WITNESS WHEREOF, this Agreement is executed
as of this        day of May, 2008.

 

 

	
  TENANT: 

  	
  SIMPSON DURA-VENT COMPANY, INC.,

  
	
   

  	
  a
  California corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  LANDLORD:

  	
  GANSEVOORT PARTNERS, L.P.,

  
	
   

  	
  a New York limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: Martin J. Wawrla

  
	
   

  	
  Title: General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
  LENDER:

  	
  ALBANY-COLONIE REGIONAL CHAMBER OF COMMERCE, AS AGENT FOR ALBANY
  COUNTY BUSINESS DEVELOPMENT CORPORATION, AS ADMINISTRATOR OF THE AL TECH
  TRUST FUND

  
	
   

  	
  a New York not-for-profit corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: Kevin P. Catalano

  
	
   

  	
  Title: Loan Officer

  

 

8

 

STATE OF CALIFORNIA

 

COUNTY OF                                         ss.:

 

On this          day of May,
2008 before me, the undersigned, personally appeared
                                                                  ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that she executed the same in her capacity, and that by her
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

STATE OF NEW YORK

 

COUNTY OF ALBANY                      ss.:

 

On this          day of May,
2008 before me, the undersigned, personally appeared Martin J.
Wawrla, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that she executed the same in her
capacity, and that by her signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

STATE OF NEW YORK

 

COUNTY OF ALBANY                      ss.:

 

On this          day of May,
2008 before me, the undersigned, personally appeared Kevin P.
Catalano, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that she executed the same in her
capacity, and that by her signature on the instrument, the individual, or the
person upon behalf of which the individual acted, executed the instrument.

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

9

 

EXHIBIT A

 

Mortgage Schedule

 

MORTGAGE

 

	
  MORTGAGOR:

  	
  Gansevoort
  Partners, L.P.

  
	
  MORTGAGEE:

  	
  New
  York Job Development Authority

  
	
  AMOUNT:

  	
  $300,000.00

  
	
  DATED:

  	
  11/16/05

  
	
  RECORDED:

  	
  12/30/05

  	
  BOOK/PAGE:

  	
  5141/
  211

  
	
  ASSIGNED TO:

  	
  Albany
  County Business Development Corporation, as Administrator of the Al Tech
  Trust Fund

  
	
  DATED:

  	
  2/28/07

  	
   

  	
   

  
	
  RECORDED:

  	
  4/30/07

  	
  BOOK/PAGE:

  	
  5462/
  835

  

 

1

 

EXHIBIT B

 

PROPERTY DESCRIPTION

 

All
that tract or parcel of land situate, lying and being located on the southerly
side of South Pearl Street, in the City of Albany, County of Albany, State of
New York, being more particularly bounded and described as follows:

 

BEGINNING
at a point in the southerly line of South Pearl Street at its intersection with
the westerlyline of Gansevoort Street, said point being the northeasterly
corner of the herein described parcel; running thence southerly along the
westerly line of Gansevoort Street the following two (2) courses and
distances: 1) South 41”-58’-39” East 411.05 feet to a point; thence 2) South 49”-57’-46”
East 1.09 feet to a point in the division line between land now or formerly of
Gansevoort Partners as described in Liber 2364 of deeds at page 56 on the
north and lands now or formerly of Carmine A. Ferrara as described in Liber
2499 of deeds at page 380 on the south; thence westerly along said
division line, South 63a-531-35” West 436.56 feet .to a point; thence northerly
along said division line and along the division line between land now or
formerly of the Gansevoort Partners as described in Liber 2338 of deeds at page 570
on the east and lands now or formerly of Carmine A. Ferrara as described in
Liber 2499 of deeds at page 385 on the west, North 40’-55’-14” West 303.34
feet to a point in the southerly line of South Pearl Street; thence easterly
along the southerly line of South Pearl Street, North 49a-28146” East 414.31
feet to the point or place of beginning. Said premises are now known as St. No. 400
South Pearl Street, Albany, New York.

 

TOGETHER
with an easement for ingress and egress in common with Carmine A. Ferrara, his
heirs and assigns, being 15.0 feet in width measured perpendicularly, lying
adjacent to and southerly of the southerly boundary of the above described
parcel and being more particularly bounded and described as follows:

 

COMMENCING
at a point in the westerly line of Gansevoort Street at its intersection with
the southerly line of South Pearl Street; running thence southerly along. the
westerly line of Gansevoort Street the following two (2) courses and
distances: 1) South 41”-56’-39” East 411.05 feet to a point; thence 2) South 49”-57’-46”
East 1.09 feet to the point of beginning for the herein described premises,
said point being the southeasterly corner of the first above described parcel;
running thence southerly along the westerly line of Gansevoort Street South
49%57’-46” East 16.40 feet to a .point in the northerly highway boundary of
Interstate Route 787 as established by Appropriation Map No. 35, Parcel 94, Interstate
Route Connection 540-1-1, Route 9W to Green Street; thence westerly along said
northerly highway boundary, South 63°-53’-35” West 439.23 feet to a point;
thence northerly through lands noel or formerly of Carmine A. Ferrara as
described in Liber 2499 of deeds at page 380, North 40”-55’-14” West 15.52
feet to 6 point in the southerly line of the first above described parcel;
thence easterly along the southerly line of the first above described parcel,
North 63’-53’-35” East 436.56 feet to the point or place of beginning for the
herein described premises. Said easement subject to license conveyed to Niagara
Mohawk Power Corporation by Delaware & Hudson Railway Company dated August 23,
1972.

 

2

 

EXHIBIT D

 

MEMORANDUM OF PURCHASE OPTION

 

WHEN
RECORDED RETURN TO:

 

Alan
J. Robin, Esq.

Shartsis
Friese LLP

One
Maritime Plaza, 18th Floor

San
Francisco, California 94118

 

THIS MEMORANDUM OF PURCHASE OPTION is entered into as of the
           day of
                ,
2008 (the “Effective Date”), by and between GANSEVOORT PARTNERS, L.P., a New
York limited partnership (“Landlord”), and SIMPSON DURA-VENT COMPANY, INC.,
a California corporation (“Purchaser”) with reference to the following facts:

 

RECITALS

 

A.            Landlord owns the land and
improvements known as 400 South Pearl Street, Albany, New York (the “Property”)
which is more particularly described in Exhibit A attached hereto and made
a part hereof.

 

B:            Tenant is currently the
tenant of the Property, pursuant to a Lease dated as of the Effective Date
that, among other terms, provides Tenant with the right and option to purchase
the Property (the “Lease’).

 

NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, receipt of which is hereby acknowledged, Landlord and Tenant
agree as follows:

 

1.             Landlord hereby covenants
and agrees that Tenant has the right and option to purchase the Property upon
and subject to the terms and conditions and covenants contained in that Section 25
of that certain unrecorded Lease, which Lease is incorporated herein by this
reference, including without limitation the following:

 

25            Option to Purchase.

 

(a)           Tenant shall have the right
and option to purchase the Property (“Option to Purchase”).  If Tenant elects to exercise the Option to
Purchase, it shall provide written notice of the exercise at Tenant’s election,
on or before either (i) the first day of the 49th month of the
Term or (ii) if the Renewal Option is exercised by Tenant, the first day
of the 109th month of the Term (“Exercise Notice”).  If exercised, the closing sale of the
Property shall occur on the Expiration Date of the Term or the Renewal Term,
respectively as the case may be (“Closing Date”).  The Option to Purchase is personal to Tenant and
any Affiliate of Tenant and may not be exercised by an assignee of the Lease
which is not an affiliate of Tenant.

 

D-1

 

(b)           The Option Price shall be
the fair market value of the Property as of the Closing Date (“Fair Market
Value”).  The Fair Market Value of the
Property shall be determined free and clear of the Lease.

 

Reference
is made to the Lease for the rest of the terms and conditions of the Option.

 

2.             This Memorandum is not
intended to change any of the terms of the Lease and in the event of any
inconsistency between the terms of this Memorandum and the terms of the Lease,
the terms of the Lease shall prevail. The Lease is available at the offices of
Landlord and Tenant.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Memorandum of Purchase
Option dated as of the date first set forth above.

 

 

	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  SIMPSON
  DURA-VENT COMPANY, INC.,

  	
   

  	
  GANSEVOORT
  PARTNERS, L.P., a New 

  
	
  a
  California corporation

  	
   

  	
  York
  limited partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Stephen
  P. Eberhard

  	
   

  	
   

  	
  Martin
  Wawrla,

  
	
   

  	
  President

  	
   

  	
   

  	
  General
  Partner

  

 

D-2

 

	
  STATE
  OF CALIFORNIA

  	
   

  
	
   

  	
  )
  ss.:

  
	
  COUNTY
  OF

  	
   

  

 

On the            day
of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared  Stephen P. Eberhard, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity, and that by his signature on
the instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument.

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

	
  STATE
  OF CALIFORNIA

  	
   

  
	
   

  	
  )
  ss.:

  
	
  COUNTY
  OF

  	
   

  

 

On the            day
of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared                                                          , personally known to me or proved to me on
the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his capacity, and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument.

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

	
  STATE
  OF NEW YORK

  	
   

  
	
   

  	
  )
  ss.:

  
	
  COUNTY
  OF

  	
   

  

 

On the            day
of
                                    ,
2008, before me, the undersigned, a notary public in and for said state,
personally appeared  Martin Wawrla,, personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his capacity, and that by his signature on
the instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument.

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

D-3

 

EXHIBIT A

 

PROPERTY DESCRIPTION

 

All
that tract or parcel of land situate, lying and being located on the southerly
side of South Pearl Street, in the City of Albany, County of Albany, State of
New York, being more particularly bounded and described as follows:

 

BEGINNING
at a point in the southerly line of South Pearl Street at its intersection with
the westerlyline of Gansevoort Street, said point being the northeasterly
corner of the herein described parcel; running thence southerly along the
westerly line of Gansevoort Street the following two (2) courses and
distances: 1) South 41”-58’-39” East 411.05 feet to a point; thence 2) South 49”-57’-46”
East 1.09 feet to a point in the division line between land now or formerly of
Gansevoort Partners as described in Liber 2364 of deeds at page 56 on the
north and lands now or formerly of Carmine A. Ferrara as described in Liber
2499 of deeds at page 380 on the south; thence westerly along said
division line, South 63a-531-35” West 436.56 feet .to a point; thence northerly
along said division line and along the division line between land now or
formerly of the Gansevoort Partners as described in Liber 2338 of deeds at page 570
on the east and lands now or formerly of Carmine A. Ferrara as described in
Liber 2499 of deeds at page 385 on the west, North 40’-55’-14” West 303.34
feet to a point in the southerly line of South Pearl Street; thence easterly
along the southerly line of South Pearl Street, North 49a-28146” East 414.31
feet to the point or place of beginning. Said premises are now known as St. No. 400
South Pearl Street, Albany, New York.

 

TOGETHER
with an easement for ingress and egress in common with Carmine A. Ferrara, his
heirs and assigns, being 15.0 feet in width measured perpendicularly, lying
adjacent to and southerly of the southerly boundary of the above described
parcel and being more particularly bounded and described as follows:

 

COMMENCING
at a point in the westerly line of Gansevoort Street at its intersection with
the southerly line of South Pearl Street; running thence southerly along. the
westerly line of Gansevoort Street the following two (2) courses and
distances: 1) South 41”-56’-39” East 411.05 feet to a point; thence 2) South 49”-57’-46”
East 1.09 feet to the point of beginning for the herein described premises,
said point being the southeasterly corner of the first above described parcel;
running thence southerly along the westerly line of Gansevoort Street South
49%57’-46” East 16.40 feet to a .point in the northerly highway boundary of
Interstate Route 787 as established by Appropriation Map No. 35, Parcel 94, Interstate
Route Connection 540-1-1, Route 9W to Green Street; thence westerly along said
northerly highway boundary, South 63°-53’-35” West 439.23 feet to a point;
thence northerly through lands noel or formerly of Carmine A. Ferrara as
described in Liber 2499 of deeds at page 380, North 40”-55’-14” West 15.52
feet to 6 point in the southerly line of the first above described parcel;
thence easterly along the southerly line of the first above described parcel,
North 63’-53’-35” East 436.56 feet to the point or place of beginning for the
herein described premises. Said easement subject to license conveyed to Niagara
Mohawk Power Corporation by Delaware & Hudson Railway Company dated August 23,
1972.

 

D-4

 

SUBJECT
to rights and easements, if any, of public utility companies and municipalities
to maintain and operate underground and. overhead utilities and appurtenances
lying, and being located within, across or adjacent to the premises above
described.

 

SUBJECT
to all rights, easements, covenants and restrictions of record.

 

D-5

 

SMOKEY
ACQUISITION, INC.

 

June 30, 2010

 

Simpson Dura-Vent Company, Inc.

Simpson Manufacturing Co., Inc.

5956 W. Las Positas Blvd.

Pleasanton, CA 94588

 

Re:          Letter Agreement

 

Ladies and Gentlemen:

 

This letter agreement is
being entered into concurrently with the execution and delivery of that certain
Asset Purchase Agreement (the “APA”) dated as of June 30, 2010, among
Smokey Acquisition, Inc. (“Buyer”), M&G Holding B.V., Simpson
Dura-Vent Company, Inc. (“SDV”) and Simpson Manufacturing Co., Inc. (“Parent”).
Capitalized terms used but not otherwise defined in this Letter Agreement shall
have the respective meanings assigned to them in the APA.

 

1.                                       Wawrla
Covenants. Reference is made to that certain Stock Purchase
Agreement (the “Protech Purchase Agreement”) dated May 29, 2008 between
Martin J. Wawrla as seller (“Wawrla) and SDV as buyer. Pursuant to the APA,
Buyer is purchasing the Business of SDV, including the business of ProTech
Systems, Inc. purchased by SDV in 2008 from Wawrla, and in this regard
Buyer wishes to receive the benefits of certain provisions of the ProTech
Purchase Agreement. Accordingly, SDV and Parent agree, at the request of Buyer,
to use commercially reasonable efforts to enforce as against Wawrla and his
Affiliates the provisions of Sections 4.14 (Covenants Regarding Competition),
4.15 (Confidential Matter), 4.16 (No Disparagement) and 4.17 (Injunctive
Relief) of the ProTech Purchase Agreement. Parent and SDV will otherwise
reasonably cooperate with Buyer in connection with Buyer’s efforts to obtain
the benefits of such provisions of the ProTech Purchase Agreement. Such
enforcement and cooperation shall be at Buyer’s sole expense and with counsel
reasonably acceptable to Buyer.

 

SDV further agrees to
perform, and Parent shall cause SDV to perform in a timely manner, all of SDV’s
obligations under the Protech Purchase Agreement, including without limitation
the obligation to make the payments described in Section 2.6 of the
Protech Purchase Agreement when and as due. For the avoidance of doubt, nothing
contained herein or in the APA shall constitute an

 

 

assumption by Buyer of, or
otherwise require Buyer to pay any amounts or perform any obligation under, the
Protech Purchase Agreement.

 

2.                                       Key Employees. With respect
to Section 7.9 of the APA, Buyer agrees that the employment arrangements
described in Section 7.9 shall be on terms not less favorable in the
aggregate to such Key Employees than those in place with respect to such Key
Employees immediately prior to the date hereof.

 

3.                                       Victor Lambert. With respect
to the offer made by Parent to Victor Lambert in a letter dated February 19,
2010, Parent and SDV agree that they shall not hereafter directly or indirectly
solicit, induce or attempt to influence Mr. Lambert to (i) accept
such offer made by Parent or (ii) reject any employment offer made by
Buyer (or any Affiliate of Buyer) to Mr. Lambert to take effect after the
Closing.

 

4.                                       General
Provisions. The provisions of Sections 12.2, 12.4, 12.7, 12.8,
12.9, 12.10, 12.11, 12.12, and 12.13 of the APA shall apply to this letter
agreement with the same force and effect as they apply with respect to the APA.

 

If the foregoing correctly
reflects your understanding and agreement, please so indicate by signing this
Letter Agreement in the space provided below.

 

2

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Smokey
  Acquisition, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. Straver

  
	
   

  	
   

  	
  W. Straver

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED
  AND AGREED: 

  	
   

  
	
   

  	
   

  
	
  Simpson Manufacturing Co., Inc.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Karen Colonias

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Simpson Dura-Vent Company, Inc.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Karen Colonias

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
   

  

 

3EXHIBIT 10.1

 

FRAMEWORK
AGREEMENT FOR CREDIT PRODUCTS

between

 

L.
Kellenberger & Co. AG, Heiligkreuzstrasse
28, 9009 St. Gallen

(hereinafter referred to as
“the Borrower”)

 

and

 

CREDIT
SUISSE AG

Mailing address:     P.O. Box
564, 9001 St. Gallen

Contact address:     St. Leonhardstrasse 3, 9000 St. Gallen

(the lender, hereinafter
referred to as the “Bank”)

 

 

	
  Amount of Credit Facility

  	
   

  	
  CHF 6’000’000.00

  
	
   

  	
   

  	
   

  
	
  Purpose of Credit Facility

  	
   

  	
  Working Capital Facility

  
	
   

  	
   

  	
   

  
	
  Utilization

   

  	
   

  	
  This credit facility can be used as a limit for cash credits up to a total amount of
  CHF 6’000’000.00

   

  ·      as a current account overdraft on all
  existing and future accounts in CHF and/or in any other freely convertible
  foreign currencies up to the total amount of CHF 6’000’000.00

   

  ·      in the form of fixed advances in CHF
  and/or in any other freely convertible foreign currencies up to a total
  amount of 6’000’000.00, with maximum terms of up to 36 month(s)

   

  Any extension of a fixed
  advance must be requested by no later than two banking days before the fixed
  advance expires.

   

  Fixed advances may be
  granted without having to comply with any specific requirements as to form;
  they will be confirmed by the Bank in writing, but without a signature.

   

  The Bank reserves the right
  to refuse individual transactions relating to the credit products above.

  
	
   

  	
   

  	
   

  
	
  Interest Rate

  	
   

  	
  Current account overdrafts

  The interest rate is determined by the Bank. The interest rate is
  based, among other things, on the prevailing money and capital market
  conditions. The Swiss franc interest rate is currently 4.75% p.a.

   

  The Bank may at any time and with immediate effect adjust the interest
  rate without any separate notice to reflect changes in the money and capital
  market conditions and/or changes in the Bank’s risk assessment.

  

 

1

 

	
   

  	
   

  	
  The current interest rates are printed on the account statements.

   

  Fixed advances

  Interest rates may be agreed upon, including orally, without any
  specific requirements as to form. The interest rate is based, among other
  things, on the prevailing money and capital market conditions (taking into
  account the term and currency).

   

  General

  If the currently valid capital requirements are increased through
  measures by authorities or provisions of law, the Bank reserves the right to
  pass on the additional borrowing costs that thereby result to the Borrower by
  increasing the interest rate.

  
	
   

  	
   

  	
   

  
	
  Interest Due Date

  	
   

  	
  Interest falls due in each case upon the account closing (cf. “Account
  Closings” below).

  The interest may be debited to an account of the Borrower.

  
	
   

  	
   

  	
   

  
	
  Commissions

   

  	
   

  	
  For the utilization of the loan in the form of a current account
  overdraft, a credit commission is payable by the Borrower as of the end of
  each quarter, in the amount of 0.25% per quarter on the average outstanding
  loan amount.

   

  In the case of contingent liabilities of the Bank
  (e.g. guarantees, documentary credits and bills of exchange), the Borrower
  owes the commissions determined by the Bank.

  
	
   

  	
   

  	
   

  
	
  Special Costs

  	
   

  	
  All costs that the Bank incurs on the basis of the present Framework
  Agreement and the associated loan arrangements, including any contingent
  liabilities of the Bank, among other things, from pursuing or defending its
  rights, shall be paid by the Borrower at the Bank’s first request.

  
	
   

  	
   

  	
   

  
	
  Account Closings

  	
   

  	
  Current accounts are closed four times per year, as of the end of each
  quarter.

   

  Fixed advances with term of up to 12 months are closed upon maturity;
  fixed advances with a term of more than12 months are closed on a quarterly basis,
  as of the end of each quarter.

  
	
   

  	
   

  	
   

  
	
  Collateral

   

  	
   

  	
  ·                  CHF 150’000.00 charge on
  real estate (“Namenschuldbrief”) ranked no 1, no prior ranking,

  ·                  CHF 25’000.00 charge on
  real estate (“Inhaberschuldbrief”), ranked no 2, prior ranking CHF
  150’000.00,

  ·                  CHF 1’500’000.00 charge on
  real estate (“Inhaberschuldbrief”), ranked no 3, prior ranking CHF
  175’000.00, ranking equally with CHF 4’500’000.00,

  ·                  CHF 1’500’000.00 charge on
  real estate (“Inhaberschuldbrief”), ranked no 3, prior ranking CHF
  175’000.00, ranking equally with CHF 4’500’000.00,

  ·                  CHF 1’500’000.00 charge on
  real estate (“Inhaberschuldbrief”), ranked no 3, prior ranking CHF
  175’000.00, ranking equally with CHF 4’500’000.00,

  

 

2

 

	
   

  	
   

  	
  ·                  CHF 1’500’000.00 charge on
  real estate (“Inhaberschuldbrief”), ranked no 3, prior ranking CHF
  175’000.00, ranking equally with CHF 4’500’000.00,

  on the building at Heiligkreuzstrasse 28, 9008 St. Gallen, land
  register St. Fiden (SG), land register No. 342, transferred to the Bank
  as collateral in accordance with the “Agreement (Security Agreement)”
  (signature date Borrower: May 11, 2010; signature date Bank: April 30,
  2010).

  
	
   

  	
   

  	
   

  
	
  Financial Ratios

   

  	
   

  	
  The Borrower’s adherence to the following financial ratios is
  mandatory:

   

  Minimum Equity

  The minimum equity
  means, (share capital, plus reserves, plus retained earnings, minus long term
  intercompany accounts, minus other intercompany accounts except intercompany
  trade accounts) must at no time fall below 35% of the balance sheet total
  assets (according to the auditors’ report in accordance with Swiss Auditing
  Standards) during the entire term of the credit relationship. 

  The ratio
  resulting from minimum equity divided by total assets.

  
	
   

  	
   

  	
   

  
	
  Borrower’s Affirmative Obligations

   

  	
   

  	
  ·                  Obligation to provide information

  The Borrower is obliged to
  inform the Bank without delay of current business developments and
  significant changes in its management and in its direct and/or indirect
  ownership/control as well as other significant changes that could influence
  the Borrower’s financial situation.

  

 

	
   

  	
   

  	
  In particular, the Borrower will submit the following documents to the
  Bank:

   

  ·  Quarterly:

  ·                  Statements including
  balance sheet, income statement, bookings and actual backlog of the Borrower
  not later than 60 days after the end of each quarter.

   

  ·  Annually:

  ·                  Annual report including
  balance sheet, profit and loss statement as well as appendices and auditor’s
  report of the Borrower within six months after the end of each financial
  year.

  ·                  Budget figures, including
  the capital expenditure budget of the Borrower within the first month of the
  budget year.

  ·                  Group financial statements
  of Hardinge Inc. with auditors’ report within six months after the end of
  each financial year.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·                  Pari Passu 

  
	
   

  	
   

  	
  The Borrower undertakes to provide collateral for its current and
  future obligations vis•à•vis third parties in their favour only if the
  Borrower simultaneously provides the same collateral, or collateral accepted
  by the Bank as being equivalent, for all 

  

 

3

 

	
   

  	
   

  	
  current and future obligations under this framework agreement.

  
	
   

  	
   

  	
   

  
	
  Borrower’s Negative Obligations

   

  	
   

  	
  ·                  Negative Pledge Clause

  The Borrower
  undertakes, to the extent permitted by law, to refrain from providing new or
  additional collateral in favour of a third party to secure existing or future
  liabilities or the Borrower or a third party except cash credits up to an
  amount of CHF 3’000’000.00 secured by charges on real estate (“Schuldbrief”).

   

  ·                  The Borrower undertakes not to distribute
  any dividends in case of negative net profit during the entire term of the
  credit relationship.

   

  ·                  The Borrower undertakes to ensure that
  loans or other credits granted by the Borrower to any subsidiaries of Hardinge
  Inc., Elmira (USA), and/or shareholders and/or associated persons (i.e. all
  intercompanies) do not exceed CHF 10’000’000.00 cumulatively during the
  entire term of the credit relationship without the prior consent of the Bank.

   

  ·                  Furthermore, the
  Borrower informs the bank before granting any new loan to intercompanies
  above the sum of CHF 2’000’000.00.

  
	
   

  	
   

  	
   

  
	
  Late Payment

  	
   

  	
  The Borrower will be in default with immediate effect, without any
  reminder by the Bank, if he/she/it fails to fulfill a payment obligation
  under this framework agreement and/or any agreements based on the framework
  agreement when they fall due.

   

  In the event of late payment, the Bank is entitled, in case of a
  current account overdraft calculated on the outstanding amount(s), to
  increase the interest rate by 2% p.a. as of the due date, but in any case to
  charge a minimum rate of 5% p.a.

   

  
	
   

  	
   

  	
   

  
	
  Ordinary Termination

  	
   

  	
  ·                  Framework agreement

  This framework agreement may be terminated by either party at any time
  with immediate effect.

   

  Upon termination of the framework agreement, all limits and other
  utilization options granted under this framework agreement lapse; in
  particular, a loan that has not been terminated will fall due for repayment
  within six weeks or on a repayment date determined by the Bank. Where legally
  permissible, the Bank may, at its discretion, give early notice on or
  terminate any of its contingent liabilities.

   

  Irrespective of termination of the framework agreement, fixed advances
  shall continue to run until their maturity; the following provisions on early
  termination and an automatic acceleration of the due date remain reserved.
  Following the 

  

 

4

 

	
   

  	
   

  	
  termination of the framework agreement, no fixed advances may be
  extended and no new fixed advances may be claimed.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·                  Credit limits

  A credit limit, in particular a current account overdraft, may be
  terminated or reduced by either party at any time with immediate effect.

   

  ·                  General

  The termination or maturity of a credit product granted under this
  framework agreement does not automatically result in the termination of this
  framework agreement.

  
	
   

  	
   

  	
   

  
	
  Maturity of a Fixed Advance 

  	
   

  	
  Subject to an extension or early termination, each fixed advance
  automatically falls due for repayment upon its maturity, without any need for
  a termination notice.

   

  The Bank is entitled to debit a fixed advance that is due for repayment
  to an account of the Borrower.

  
	
   

  	
   

  	
   

  
	
  Early Termination

  	
   

  	
  Upon the occurrence of one of the following events, the Bank is
  entitled at any time to declare all fixed advances (fixed term) and credit
  products with an agreed notice period granted under this framework agreement,
  plus all accrued interest, commission and fees, to be immediately due and
  payable, on an accelerated basis:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ·                  the Borrower is more than
  30 calendar days in default on an interest payment or a repayment of
  principal;

  ·                  the Borrower has breached
  any other obligation under this framework agreement and/or under any
  agreements based hereon and has failed or was unable to restore the proper
  contractual situation within 30 calendar days after written notice from the
  Bank;

  ·                  the credit facility  is used for a purpose other than the
  purpose mentioned above under “Purpose of Credit Facility”;

  ·                  bankruptcy proceedings have
  been instituted against the Borrower or a third party providing collateral,
  one of them has been granted a debt restructuring moratorium or deferral of
  bankruptcy, or one of them has concluded a judicial or extrajudicial debt
  restructuring agreement;

  ·                  there has been a change in
  direct or indirect ownership/control in respect of the Borrower to the extent
  of 50 % ownership/control except for internal restructuring action within
  Hardinge Inc.;

  ·                  there has been a change in
  direct or indirect ownership/control in respect of Hardinge Inc. to the
  extent of 50% ownership/control;

  ·                  owing to default and/or
  maturity clauses, another loan or similar obligation entered into by the
  Borrower has been terminated early;

  ·                  in the Bank’s view, the
  Borrower’s asset and/or revenue situation has deteriorated significantly;

  

 

5

 

	
   

  	
   

  	
  ·                  the auditor’s report
  contains a material qualification.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Bank is entitled at its discretion to declare an acceleration of
  the due date of the loan, either immediately or at a later point in time.

  
	
   

  	
   

  	
   

  
	
  Automatic
  Acceleration of Due Date in the event of deficient cover

  	
   

  	
  If, in the Bank’s view, the existing collateral is not sufficient to
  cover the outstanding loans and the Borrower failed to remedy the situation
  to the extent required by the Bank and within the deadline set by the Bank,
  all claims in connection with this framework agreement automatically fall due
  for immediate repayment on expiry of this deadline (subject to special
  agreements in collateral agreements).

  
	
   

  	
   

  	
   

  
	
  Settlement
  of Costs in the Event of Early Termination of Fixed Advances 

  	
   

  	
  If any fixed advances
  granted under this framework agreement are terminated early, the Bank will
  credit or debit the Borrower with the interest gain or interest shortfall
  accrued thereon. This is calculated based on the difference between the
  contractual interest rate which applies at the time of termination and the
  interest rate that, in the Bank’s view, can be earned on an investment with
  the same residual term in the money or capital markets at the time of
  termination, multiplied by the outstanding credit amount and the residual
  term. Any surplus in favor of the Borrower is set off against the fee
  described below for the Bank’s time and expense.

   

  In addition a flat fee of 0.1% of the loan amount, but not less than
  CHF 1’000.00, is owed for the Bank’s expenses.

  
	
   

  	
   

  	
   

  
	
  Credit Risk Hedging

  	
   

  	
  In order for the Bank to directly or indirectly insure
  or hedge credit risk arising from this credit relationship or collateral
  underlying the credit, the Bank may, at any time, disclose data and
  information associated with the credit relationship and the credit risk
  evaluation required for buying credit protection or credit insurance from a
  third party. Such hedging and
  insurance transactions do not entail a transfer of all or any part of this
  credit relationship or its servicing to a third party.

   

  Data and
  information may be disclosed to third parties in Switzerland or abroad,
  namely to hedging or insurance providers, such as banks, financial
  institutions, credit insurers, hedge funds or to other entities offering
  credit protection.
  In the context of such hedging transactions
  data and information may also be disclosed to other parties involved within
  the scope of such hedging or insurance transactions, such as rating agencies.

   

  These
  third parties shall be obliged to keep such transferred data and information
  confidential and to handle it securely which is subject to the local legal
  and regulatory provisions governing secrecy and data protection obligations.

  
	
   

  	
   

  	
   

  
	
  Additional
  Agreements and Special Contractual Terms

  	
   

  	
  The additional agreements
  that must be concluded or have already been concluded in accordance with the
  terms of this framework agreement and the agreed credit products (including
  the special 

  

 

6

 

	
   

  	
   

  	
  contractual terms
  applicable to the individual credit products) form an integral part of this
  framework agreement.

   

  Should any provisions of this framework agreement contradict those of
  the additional agreements and/or any special contractual terms, then those
  provisions/contractual terms shall take precedence over the provisions of
  this framework agreement.

  
	
   

  	
   

  	
   

  
	
  General Conditions

  	
   

  	
  The Bank’s “General Conditions including the Safe Custody Regulations”
  supplement this framework agreement.

  
	
   

  	
   

  	
   

  
	
  Place of
  Performance

  	
   

  	
  The place of performance is
  the location of the Swiss branch of the Bank with which the Borrower has a
  contractual relationship.  For Borrowers whose present or future domicile is
  outside Switzerland, the place of performance shall also be the place of debt
  enforcement (“special domicile” as defined in Art. 50 par. 2 of the Federal
  Law on Debt Collection and Bankruptcy).

  
	
   

  	
   

  	
   

  
	
  Applicable Law and Place of Jurisdiction

  	
   

  	
  This framework agreement and the agreements based on this framework
  agreement are governed by Swiss law.

   

  The Borrower recognizes the exclusive jurisdiction of the courts of Zurich or of the location of the branch
  of the Bank with which the contractual relationship exists. The Bank also has
  the right to bring legal action against the Borrower before any other
  competent court.

  
	
   

  	
   

  	
   

  
	
  Issuance/Signing of Agreement

  	
   

  	
  This framework agreement is being issued and signed in duplicate. The
  Borrower and the Bank shall each receive one specimen hereof.

   

  This framework agreement replaces the “Framework Agreement for Credit
  Products” between the Borrower and the Bank (signature date Borrower: May 11,
  2010; signature date Bank: April 30, 2010), but shall not effect any
  novation of the Borrower’s existing debts as defined in Art. 116 of the Swiss
  Code of Obligations.

  

 

 

	
  CREDIT
  SUISSE  

  	
   

  	
  L.
  Kellenberger & Co. AG  

  
	
   

  	
   

  	
   

  
	
  /S/
  ARMIN SIGNER  

  	
   

  	
  /S/
  JURG KELLENBERGER  

  
	
  Armin
  Signer  

  	
   

  	
  Jurg
  Kellenberger  

  
	
   

  	
   

  	
   

  
	
  /S/
  CHRISTIAN KUNZ  

  	
   

  	
  /S/
  PETER HURSCH  

  
	
  Christian
  Kunz  

  	
   

  	
  Peter
  Hursch

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Borrower’s signature  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Zurich, 7. June 2010  

  	
   

  	
       
  St. Gallen ,  June 17, 2010  

  
	
   

  	
   

  	
  Place and date

  

 

"General Conditions including Safe
Custody Regulations"

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]