Document:

Exhibit 10.32

 

 

 

REGISTRATION RIGHTS AGREEMENT

 

of

 

CDRT HOLDING CORPORATION

 

dated as of May 25, 2011

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Incidental Registrations
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Right to Include Registrable   Securities
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Priority in Incidental   Registrations
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Registration on Request
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Request by the Demand Party
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Priority on Demand Registration
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Cancellation of a Demand   Registration
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Limitations on Demand Registrations
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Postponements in Requested   Registrations
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Short-Form Registrations
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Shelf-Take Downs
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(h)
    	
Registration Statement Form
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(i)
    	
Selection of Underwriters
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Registration Procedures
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Indemnification
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Indemnification by the Company
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Indemnification by Holder of   Registrable Securities
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Conduct of Indemnification   Proceedings
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Contribution
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Deemed Underwriter
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Other Indemnification
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Non-Exclusivity
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
Registration Expenses
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
Rule 144
    	
22
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
8.
    	
Certain Additional Agreements
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
Miscellaneous
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Termination
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Holdback Agreement
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Amendments and Waivers
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Successors, Assigns and Transferees
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Notices
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Further Assurances
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
No Inconsistent Agreements
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(h)
    	
Entire Agreement; No Third Party   Beneficiaries
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(i)
    	
Governing Law; Jurisdiction and   Forum; Waiver of Jury Trial
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(j)
    	
Severability
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(k)
    	
Enforcement
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(l)
    	
Titles and Subtitles
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(m)
    	
No Recourse
    	
27
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(n)
    	
Counterparts; Facsimile Signatures
    	
27
    

 

ii

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of May 25, 2011, by and among CDRT Holding Corporation, a Delaware corporation (the “Company”), each of the stockholders of the Company whose name appears on the signature pages hereof and any Person who becomes a party hereto pursuant to Section 9(d) (such Persons each referred to individually as a “Stockholder” and collectively, the “Stockholders”).  Capitalized terms used herein shall have the meaning assigned to such terms in the text of this Agreement or in Section 1.

 

WHEREAS, CDRT Acquisition Corporation, a Delaware corporation and direct wholly-owned subsidiary of the Company (“Parent”), has entered into an Agreement and Plan of Merger, dated as of February 13, 2011 (as such agreement may be amended from time to time, the “Merger Agreement”), among CDRT Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Emergency Medical Services Corporation, a Delaware corporation (“EMSC”), and Parent whereby Merger Sub was merged with and into EMSC with EMSC continuing as the surviving corporation and a direct subsidiary of Parent;

 

WHEREAS, Clayton, Dubilier & Rice Fund VIII, L.P., a Cayman Islands exempted limited partnership (the “CD&R Investor”), CD&R EMS Co-Investor, L.P., a Cayman Islands exempted partnership (the “CD&R Co-Investor”), CD&R Advisor Fund VIII Co-Investor, L.P., a Cayman Islands exempted limited partnership (“CD&R Advisor”) and CD&R Friends and Family Fund VIII, L.P., a Cayman Islands exempted limited partnership (together with CD&R Investor, CD&R Co-Investor and CD&R Advisor, the “CD&R Investor Parties”), purchased and acquired from the Company, and the Company has issued and sold to the CD&R Investor Parties, an aggregate of 13,860,268 shares of Common Stock, representing 100% of all of the issued and outstanding shares of the Company’s capital stock as of the date hereof; and

 

WHEREAS, the Company desires to provide to the Stockholders rights to registration under the Securities Act of Registrable Securities, on the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises hereinafter set forth, the parties hereto agree as follows:

 

AGREEMENT

 

1.                                      Definitions. As used in this Agreement, the following capitalized terms shall have the following respective meanings:

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such person.

 

“Agreement” has the meaning given to such term in the Preamble.

 

“Automatic Shelf Registration Statement” has the meaning given to such term in Section 3(f)(iii).

 

“Board” means the Board of Directors of the Company.

 

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York City.

 

“CD&R Advisor” has the meaning given to such term in the Recitals.

 

“CD&R Co-Investor” has the meaning given to such term in the Recitals.

 

“CD&R Investor” has the meaning given to such term in the Recitals.

 

“CD&R Investor Parties” has the meaning given to such term in the Recitals.

 

“CD&R Manager” means Clayton, Dubilier & Rice, LLC, a Delaware limited liability company.

 

“Charter” means the Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of the State of Delaware on May 23, 2011.

 

“Closing” means the closing of the transactions contemplated by the Merger Agreement.

 

“Common Stock” means the common stock, par value $0.01 per share, of the Company, including any shares of capital stock into which the Common Stock may be converted (as a result of recapitalization, share exchange or similar event) or are issued including, without limitation, with respect to any stock split or stock dividend, or a successor security.

 

“Company” has the meaning given to such term in the Preamble.

 

“control” (including the terms “controlling”, “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

 

“Controlled Affiliate” means any Affiliate of the specified Person that is, directly or indirectly, controlled by the specified Person.

 

“Covered Person” has the meaning given to such term in Section 5(a).

 

“Demand Follow-Up Notice” has the meaning given to such term in Section 3(a).

 

“Demand Notice” has the meaning given to such term in Section 3(a).

 

“Demand Registration” has the meaning given to such term in Section 3(a).

 

“Equity Securities” means any and all shares of Common Stock or other equity securities of the Company, securities of the Company convertible into, or exchangeable or exercisable for, such shares, and options, warrants or other rights to acquire such shares of Common Stock or other equity securities.

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute thereto and the rules and regulations of the SEC promulgated thereunder.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“Free Writing Prospectus” has the meaning given to such term in Section 4(a).

 

“Holdback Period” means, with respect to an IPO and any other registered offering covered by this Agreement 90 days after and during the 10 days before, the effective date of the related Registration Statement or, in the case of a takedown from a shelf registration statement, 90 days after the date of the Prospectus supplement filed with the SEC in connection with such takedown and during such prior period (not to exceed 10 days) as the Company has given reasonable written notice to the Holder of Registrable Securities.

 

“Holder” means each of the Stockholders, any other Person entitled to incidental or piggyback registration rights hereunder pursuant to an agreement with the Company and any direct or indirect transferee of a Stockholder who has acquired Registrable Securities from a Stockholder and who agrees in writing to be bound by the provisions of this Agreement.

 

“Indemnified Party” has the meaning given to such term in Section 5(c).

 

“Indemnifying Party” has the meaning given to such term in Section 5(c).

 

“IPO” means the initial public offering of Common Stock pursuant to an effective Registration Statement under the Securities Act.

 

“Losses” has the meaning given to such term in Section 5(a).

 

“Merger Agreement” has the meaning given to such term in the Recitals.

 

“Merger Sub” has the meaning given to such term in the Recitals.

 

“Parent” has the meaning given to such term in the Recitals.

 

“Person” means any individual, partnership, joint venture, corporation, limited liability company, trust, unincorporated organization, government or any department or agency thereof or any other entity.

 

“Prospectus” means the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, relating to Registrable Securities, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.

 

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“Registrable Securities” means (a) any Common Stock held by a Holder and (b) any equity securities or other equity interests issued or issuable, directly or indirectly, with respect to the securities described in clause (a) by way of conversion or exchange thereof or stock dividends, stock splits or in connection with a combination of shares, reclassification, recapitalization, merger, consolidation or other reorganization.  As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (i) they are disposed of pursuant to an effective Registration Statement under the Securities Act, (ii) they are sold to the public pursuant to Rule 144 or Rule 145 (or other exemption from registration under the Securities Act), (iii) they shall have ceased to be outstanding, or (iv) they have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of the securities.

 

“Registration Statement” means any registration statement of the Company filed with the SEC under the Securities Act which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including any Prospectus, Free Writing Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

 

“Rule 144” means Rule 144 under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

 

“Rule 145” means Rule 145 under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

 

“Rule 405” means Rule 405 under the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

 

“SEC” means the U.S. Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act.

 

“Securities Act” means the Securities Act of 1933, as amended, and any successor statute thereto and the rules and regulations of the SEC promulgated thereunder.

 

“Shelf Registration Statement” has the meaning given to such term in Section 3(f)(i).

 

“Shelf Underwritten Offering” has the meaning given to such term in Section 3(g).

 

“Short-Form Registration” has the meaning given to such term in Section 3(f)(i).

 

“Stockholder” and “Stockholders” have the meanings given to such terms in the Preamble.

 

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“Subsidiary” means (i) any corporation of which a majority of the securities entitled to vote generally in the election of directors thereof, at the time as of which any determination is being made, are owned by another entity, either directly or indirectly and (ii) any joint venture, general or limited partnership, limited liability company or other legal entity in which an entity is the record or beneficial owner, directly or indirectly, of a majority of the voting interests or the general partner.

 

“Take-Down Notice” has the meaning given to such term in Section 3(g).

 

“WKSI” has the meaning given to such term in Section 3(f)(iii).

 

2.                                      Incidental Registrations.

 

(a)                                 Right to Include Registrable Securities.  If the Company determines to register its Common Stock under the Securities Act (other than pursuant to a Registration Statement filed by the Company on Form S-4 or S-8, or any successor or other forms promulgated for similar purposes or filed in connection with an exchange offer or any employee benefit or dividend reinvestment plan), whether or not for sale for its own account, in a manner which would permit registration of Registrable Securities for sale to the public under the Securities Act, it will, at each such time, give prompt written notice to all Holders of Registrable Securities of its intention to do so and of such Holders’ rights under this Section 2.  Upon the written request of any such Holder made within 15 days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Holder and the intended method or methods of disposition thereof), the Company will use its reasonable best efforts to effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Holders thereof, to the extent required to permit the disposition of the Registrable Securities so to be registered; provided that (i) in the event that such registration shall be in connection with an IPO, unless such registration is pursuant to Section 3, the Company may, at its election, not include Registrable Securities in such proposed registration if the Board shall have determined, after consultation with the managing underwriter(s) for such offering, that it is not in the best interests of the Company to include any Registrable Securities in such registration (except that, if the Board makes such a determination, the Company shall not include in such registration any securities not being sold for the account of the Company), (ii) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the Registration Statement filed in connection with such registration, the Company shall determine for any reason not to proceed with the proposed registration of the securities to be sold by it, the Company may, at its election, give written notice of such determination to each Holder of Registrable Securities and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the expenses in connection therewith), and (iii) if such registration involves an underwritten offering, all Holders of Registrable Securities requesting to be included in the Company’s registration must sell their Registrable Securities to the underwriters selected by the Company on the same terms and conditions as apply to the Company, with such differences, including any with respect to indemnification and liability insurance, as may be customary or appropriate in combined primary and secondary offerings.  If a registration requested pursuant to this Section 2(a) involves an underwritten public offering, any Holder of Registrable Securities requesting to be included in such

 

5

 

registration may elect, in writing at least two Business Days prior to the effective date of the Registration Statement filed in connection with such registration, to withdraw its request to register such securities in connection with such registration.  The Company shall not be required to maintain the effectiveness of the Registration Statement for a registration requested pursuant to this Section 2(a) beyond the earlier to occur of (i) 180 days after the effective date thereof and (ii) consummation of the distribution by the Holders of the Registrable Securities included in such Registration Statement.  Any Holder of Registrable Securities who has elected to sell Registrable Securities in an underwritten offering pursuant to this Section 2 shall be permitted to withdraw from such registration (other than a registration that involves an IPO) by written notice to the Company if the price to the public at which the Registrable Securities are proposed to be sold will be less than 90% of the average closing price of the class of stock being sold in the offering during the 10 trading days preceding the date on which the Demand Notice of such offering was given pursuant to this Section 2(a).

 

(b)                                 Priority in Incidental Registrations.  The Company shall use reasonable efforts to cause the managing underwriter(s) of a proposed underwritten offering to permit Holders of Registrable Securities who have requested to include Registrable Securities in such offering to include in such offering all Registrable Securities so requested to be included on the same terms and conditions as any other shares of capital stock, if any, of the Company included in the offering.  Notwithstanding the foregoing, if the managing underwriter(s) of such underwritten offering have informed the Company that in its good faith opinion the total number or dollar amount of securities that such Holders and the Company intend to include in such offering is such as to adversely affect the success of such offering (including, without limitation, adversely affect the per share offering price), then the amount of securities to be offered for the account of Holders of Registrable Securities (other than the Company) shall be reduced to the extent necessary to reduce the total amount of securities to be included in such offering to the amount recommended in the good faith opinion of such managing underwriter(s) by first reducing, or eliminating if necessary, all securities of the Company requested to be included by the Holders of Registrable Securities (other than the CD&R Investor Parties and their Affiliates) requesting such registration pro rata among such Holders on the basis of the percentage of the Registrable Securities requested to be included in such registration by such Holders and, second, by reducing, or eliminating if necessary, all securities of the Company requested to be included by the CD&R Investor Parties or their Affiliates pro rata among such Holders on the basis of the percentage of Registrable Securities requested to be included in such registration by such Holders.

 

3.                                      Registration on Request.

 

(a)                                 Request by the Demand Party.  Subject to Section 3(d), (i) at any time, each of the CD&R Investor Parties and their Affiliates that are Holders of Registrable Securities shall have the right to request that the Company conduct an IPO and (ii) following an IPO, each of the CD&R Investor Parties and their Affiliates that are Holders of Registrable Securities shall have the right to require the Company to register, pursuant to the terms of this Agreement, under and in accordance with the provisions of the Securities Act, the number of Registrable Securities of such Holder and its Affiliates requested to be so registered pursuant to this Agreement, in each case by delivering written notice to the Company (any such written notice, a “Demand Notice” and any such registration, a “Demand Registration”).  Subject to Section 3(d), following receipt

 

6

 

of a Demand Notice for a Demand Registration in accordance with this Section 3(a), the Company shall use its reasonable best efforts to file a Registration Statement as promptly as practicable, but no later than 45 days in the case of a Demand Notice for an IPO and 30 days in the case of any other Demand Notice, and to cause such Registration Statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof.

 

No Demand Registration shall be deemed to have occurred for purposes of the first sentence of the preceding paragraph if (i) the Registration Statement relating thereto (x) does not become effective, (y) is not maintained effective for the period required pursuant to this Section 3, or (z) the offering of the Registrable Securities pursuant to such Registration Statement is subject to a stop order, injunction, or similar order or requirement of the SEC during such period, (ii) more than 80% of the Registrable Securities requested by the demanding Holder to be included in such registration are not so included pursuant to Section 3(b) or (iii) the conditions to closing specified in any underwriting agreement, purchase agreement or similar agreement entered into in connection with the registration relating to such request are not satisfied (other than as a result of a material default or breach thereunder by such demanding Holder or its Affiliates) or otherwise waived by such demanding Holder.

 

Within 10 days after receipt by the Company of a Demand Notice in accordance with this Section 3(a), the Company shall give written notice (the “Demand Follow-Up Notice”) of such Demand Notice to all other Holders of Registrable Securities and shall, subject to the provisions of Section 3(b) hereof, include in such registration all Registrable Securities with respect to which the Company received written requests for inclusion therein within 15 days after such Demand Follow-Up Notice is given by the Company to such Holders.

 

All requests made pursuant to this Section 3 will specify the number of Registrable Securities to be registered and/or, in the case of an IPO, the number of shares of Common Stock (if any) to be issued, and the intended method or methods of disposition thereof.

 

The Company shall be required to maintain the effectiveness of the Registration Statement with respect to any Demand Registration for a period of at least 180 days after the effective date thereof or such shorter period during which all Registrable Securities included in such Registration Statement have actually been sold; provided, however, that such period shall be extended for a period of time equal to the period the Holder of Registrable Securities refrains from selling any securities included in such Registration Statement at the request of the Company or an underwriter of the Company pursuant to the provisions of this Agreement.

 

(b)                                 Priority on Demand Registration.  If any of the Registrable Securities registered pursuant to a Demand Registration are to be sold in a firm commitment underwritten offering, and the managing underwriter(s) advise the Holders of such securities that in its good faith opinion the total number or dollar amount of Registrable Securities proposed to be sold in such offering (including, without limitation, securities proposed to be included by other Holders of securities entitled to include securities in such Registration Statement pursuant to incidental or piggyback registration rights), is such as to adversely affect the success of such offering, then there shall be included in such firm commitment underwritten offering the number or dollar amount of Registrable Securities that in the good faith opinion of such managing underwriter(s)

 

7

 

can be sold without adversely affecting such offering, and such number of Registrable Securities shall be allocated as follows, unless the underwriters require a different allocation:

 

(i)                                     first, to the CD&R Investor Parties and their Affiliates requesting such registration (whether pursuant to a Demand Notice or pursuant to incidental or piggyback registration rights) pro rata on the basis of the percentage of Registrable Securities owned by each such Holder relative to the number of Registrable Securities owned by all CD&R Investors and their Affiliates, until with respect to each such Holder, all Registrable Securities requested for registration by such Holders have been included in such registration;

 

(ii)                                  second, among the Holders of Registrable Securities (other than CD&R Investor Parties and their Affiliates) requesting such registration pursuant to incidental or piggyback registration rights pro rata on the basis of the percentage of Registrable Securities owned by each such Holder relative to the number of Registrable Securities owned by all such Holders until, with respect to each such Holder, all Registrable Securities requested for registration by such Holders have been included in such registration; and

 

(iii)                               third, the securities for which inclusion in such Demand Registration was requested by the Company.

 

(c)                                  Cancellation of a Demand Registration.  Each of the Holder that submitted a Demand Notice pursuant to a particular offering and the Holders of a majority of the Registrable Securities that are to be registered in a particular offering pursuant to this Section 3 shall have the right, prior to the effectiveness of the Registration Statement, to notify the Company that it or they, as the case may be, have determined that the Registration Statement be abandoned or withdrawn, in which event the Company shall abandon or withdraw such Registration Statement.  Any Holder of Registrable Securities who has elected to sell Registrable Securities in an underwritten offering (other than an IPO) pursuant to this Section 3 (including the Holder who delivered the Demand Notice of such registration) shall be permitted to withdraw from such registration by written notice to the Company if the price to the public at which the Registrable Securities are proposed to be sold will be less than 90% of the average closing price of the class of stock being sold in the offering during the 10 trading days preceding the date on which the Demand Notice of such offering was given pursuant to Section 3(a).

 

(d)                                 Limitations on Demand Registrations.  The CD&R Investor Parties and their Affiliates shall, collectively, be entitled to initiate no more than five Demand Registrations (other than Short-Form Registrations).

 

(e)                                  Postponements in Requested Registrations.  If the filing, initial effectiveness or continued use of a Registration Statement, including a Shelf Registration Statement, with respect to a Demand Registration would require the Company to make a public disclosure of material non-public information, which disclosure in the good faith judgment of the Board (after consultation with external legal counsel) (i) would be required to be made in any Registration Statement so that such Registration Statement would not be materially misleading, (ii) would not be required to be made at such time but for the filing, effectiveness or continued

 

8

 

use of such Registration Statement or (iii) would reasonably be expected to have a material adverse effect on the Company or its business or on the Company’s ability to effect a bona fide material proposed acquisition, disposition, financing, reorganization, recapitalization or similar transaction, then the Company may, upon giving prompt written notice of such action to the Holders participating in such registration, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement; provided that the Company shall not be permitted to do so (x) more than once in any 6-month period or (y) for any single period of time in excess of 60 days, or for periods exceeding, in the aggregate, 90 days during any 12-month period.  In the event that the Company exercises its rights under the preceding sentence, such Holders agree to suspend, promptly upon receipt of the notice referred to above, the use of any Prospectus relating to such registration in connection with any sale or offer to sell Registrable Securities.  If the Company so postpones the filing of a Prospectus or the effectiveness of a Registration Statement, the demanding Holder shall be entitled to withdraw such request and, if such request is withdrawn, such registration request shall not count for the purposes of the limitations set forth in Section 3(d).  The Company shall promptly give the Holders requesting registration thereof pursuant to this Section 3 written notice of any postponement made in accordance with the preceding sentence.

 

(f)                                   Short-Form Registrations.

 

(i)                                     At all times following an IPO, the Company shall use its reasonable best efforts to qualify for registration on Form S-3 or any comparable or successor form or forms or any similar short-form registration (a “Short-Form Registration”), and, if requested by the CD&R Investor Parties and their Affiliates that are Holders of Registrable Securities and available to the Company, such Short-Form Registration shall be a “shelf” registration statement providing for the registration of, and the sale on a continuous or delayed basis of, the Registrable Securities, pursuant to Rule 415 or otherwise (a “Shelf Registration Statement”).  At any time and from time to time following an IPO, the CD&R Investor Parties and their Affiliates that are Holders of Registrable Securities shall be entitled to request an unlimited number of Short-Form Registrations, if available to the Company, with respect to the Registrable Securities held by such requesting Holder and its Affiliates in addition to the other registration rights provided in Section 2 and this Section 3.  In no event shall the Company be obligated to effect any shelf registration other than pursuant to a Short-Form Registration, subject to the immediately following sentence.  If any Demand Registration is proposed by the demanding Holder to be a Short-Form Registration and an underwritten offering, and if the managing underwriter(s) shall advise the Company and the Holders that, in its good faith opinion, it is of material importance to the success of such proposed offering to file a registration statement on Form S-1 (or any successor or similar registration statement) or to include in such registration statement information not required to be included in a Short-Form Registration, then the Company shall file a registration statement on Form S-1 or supplement the Short-Form Registration as reasonably requested by such managing underwriter(s).  No such registration nor any other Short-Form Registration shall count as a Demand Registration for purposes of calculating how many Demand Registrations the CD&R Investor Parties and their Affiliates have initiated pursuant to the provisions of Section 3.

 

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(ii)                                  Upon filing any Short-Form Registration, the Company shall use its reasonable best efforts to keep such Short-Form Registration effective with the SEC at all times and to re-file such Short-Form Registration upon its expiration, and to cooperate in any shelf take-down, whether or not underwritten, by amending or supplementing the Prospectus related to such Short-Form Registration as may be reasonably requested by the CD&R Investor Parties and their Affiliates that are Holders of Registrable Securities or as otherwise required, until such time as all Registrable Securities that could be sold in such Short-Form Registration have been sold or are no longer outstanding.

 

(iii)                               To the extent the Company is a well-known seasoned issuer (as defined in Rule 405) (a “WKSI”) at the time any Demand Notice for a Short-Form Registration is submitted to the Company and such Demand Notice requests that the Company file a Shelf Registration Statement, the Company shall file an automatic shelf registration statement (as defined in Rule 405) on Form S-3 (an “Automatic Shelf Registration Statement”) in accordance with the requirements of the Securities Act and the rules and regulations of the SEC thereunder, which covers those Registrable Securities which are requested to be registered.  The Company shall pay the registration fee for all Registrable Securities to be registered pursuant to an Automatic Shelf Registration Statement at the time of filing of the Automatic Shelf Registration Statement and shall not elect to pay any portion of the registration fee on a deferred basis.  The Company shall use its reasonable best efforts to remain a WKSI (and not to become an ineligible issuer (as defined in Rule 405)) during the period during which any Automatic Shelf Registration Statement is effective.  If at any time following the filing of an Automatic Shelf Registration Statement when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, the Company shall use its reasonable best efforts to post-effectively amend the Automatic Shelf Registration Statement to a Shelf Registration Statement on Form S-3 or file a new Shelf Registration Statement on Form S-3 or, if such form is not available, Form S-1, have such Shelf Registration Statement declared effective by the SEC and keep such Registration Statement effective during the period during which such Short-Form Registration is required to be kept effective in accordance with Section 3(f)(ii).

 

(g)                                  Shelf-Take Downs.  At any time that a Shelf Registration Statement covering Registrable Securities is effective, if any of the CD&R Investor Parties or their Affiliates delivers a notice to the Company (a “Take-Down Notice”) stating that it intends to effect an underwritten offering of all or part of its Registrable Securities included by it on the shelf registration statement (a “Shelf Underwritten Offering”), then the Company shall amend or supplement the shelf registration statement as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Underwritten Offering (taking into account the inclusion of Registrable Securities by any other Holders pursuant to Section 3(g)(i)).  In connection with any Shelf Underwritten Offering:

 

(i)                                     such proposing Holder shall also deliver the Take-Down Notice to all other Holders included on such shelf registration statement and permit each Holder to include its Registrable Securities included on the shelf registration statement in the Shelf Underwritten Offering if such Holder notifies the proposing Holder and the Company within five Business Days after delivery of the Take-Down Notice to such Holder; and

 

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(ii)                                  in the event that the underwriter advises such proposing Holder and the Company in its good faith opinion that the total number or dollar amount of Registrable Securities proposed to be sold in such offering is such as to adversely affect the success of such offering (including, without limitation, adversely affect the per share offering price), then the underwriter may limit the number of shares which would otherwise be included in such take-down offering in the same manner as described in Section 3(b) with respect to a limitation of shares to be included in a registration.

 

(h)                                 Registration Statement Form.  If any registration requested pursuant to this Section 3 which is proposed by the Company to be effected by the filing of a Registration Statement on Form S-3 (or any successor or similar short-form registration statement) shall be in connection with an underwritten public offering, and if the managing underwriter(s) shall advise the Company that, in its good faith opinion, the use of another form of Registration Statement is of material importance to the success of such proposed offering or is otherwise required by applicable law, then such registration shall be effected on such other form.

 

(i)                                     Selection of Underwriters.  If any of the CD&R Parties or their Affiliates intends that the Registrable Securities requested to be covered by a Demand Registration requested by such Holder shall be distributed by means of an underwritten offering, such demanding Holder shall so advise the Company as a part of the Demand Notice, and the Company shall include such information in the Notice sent by the Company to the other Holders with respect to such Demand Registration.  In such event, the lead underwriter to administer the offering shall be chosen by the demanding Holder, subject to the prior written consent, not to be unreasonably withheld or delayed, of the Company.  If the offering is underwritten, the right of any Holder to registration pursuant to this Section 3 will be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise agreed by the demanding Holder) and each such Holder will (together with the Company and the other Holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting (including, without limitation, pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s)), provided that (A) no Holder shall be required to sell more than the number of Registrable Securities that such Holder has requested the Company to include in any registration and (B) if any Holder disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company, the managing underwriter(s) and, in connection with an underwritten registration pursuant to this Section 3, the demanding Holder, provided further that no such Person (other than the Company) shall be required to make any representations or warranties other than those related to title and ownership of, and power and authority to transfer, shares and as to the accuracy and completeness of statements made in a Registration Statement, Prospectus or other document in reliance upon, and in conformity with, written information prepared and furnished to the Company or the managing underwriter(s) by such Person pertaining exclusively to such Holder.  Notwithstanding the foregoing, no Holder shall be required to agree to any indemnification obligations on the part of such Holder that are greater than its obligations pursuant to Section 5.

 

4.                                      Registration Procedures.  If and whenever the Company is required to use its reasonable best efforts to effect the registration of any Registrable Securities under the Securities

 

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Act as provided in Section 2 and Section 3, the Company shall effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall cooperate in the sale of such Registrable Securities and shall, as expeditiously as possible:

 

(a)                                 prepare and file, in each case as promptly as practicable, with the SEC a Registration Statement or Registration Statements on such form as shall be available for the sale of the Registrable Securities by the Holders thereof or by the Company in accordance with the intended method or methods of distribution thereof, make all required filings with FINRA, and, if such Registration Statement is not automatically effective upon filing, use its reasonable best efforts to cause such Registration Statement to be declared effective as soon as practicable and to remain effective as provided herein; provided, however, that before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including free writing prospectuses under Rule 433 (each a “Free Writing Prospectus”)) and, to the extent reasonably practicable, documents that would be incorporated by reference or deemed to be incorporated by reference in a Registration Statement filed pursuant to a Demand Notice (other than a Shelf Registration Statement), the Company shall furnish or otherwise make available to the Holders of the Registrable Securities covered by such Registration Statement, their counsel and the managing underwriter(s), if any, copies of all such documents proposed to be filed (including exhibits thereto), which documents will be subject to the reasonable review and comment of such counsel, and such other documents reasonably requested by such counsel, including any comment letter from the SEC, and, if requested by such counsel, provide such counsel reasonable opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein and such other opportunities to conduct a reasonable investigation within the meaning of the Securities Act, including reasonable access to the Company’s books and records, officers, accountants and other advisors.  The Company shall not file any such Registration Statement or Prospectus, or any amendments or supplements thereto (including such documents that, upon filing, would be incorporated or deemed incorporated by reference therein and including Free Writing Prospectuses) with respect to a Demand Registration to which the demanding Holder or the Holders of a majority of the Registrable Securities covered by such Registration Statement (or their counsel) or the managing underwriter(s), if any, shall reasonably object, in writing, on a timely basis, unless, in the opinion of the Company, such filing is necessary to comply with applicable law;

 

(b)                                 prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith and such Free Writing Prospectuses and Exchange Act reports as may be necessary to keep such Registration Statement continuously effective during the period provided herein and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement; and cause the related Prospectus to be supplemented by any Prospectus supplement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the securities covered by such Registration Statement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act in each case, until such time as all of such securities have been

 

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disposed of in accordance with the intended method or methods of disposition by the seller or sellers thereof set forth in such Registration Statement;

 

(c)                                  notify each selling Holder of Registrable Securities, its counsel and the managing underwriter(s), if any, (i) when a Prospectus or any Prospectus supplement or post-effective amendment or any Free Writing Prospectus has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceedings for that purpose, (iv) if at any time the Company has reason to believe that the representations and warranties of the Company contained in any agreement (including any underwriting agreement) contemplated by Section 1(n) below cease to be true and correct, (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of such Registrable Securities for sale in any jurisdiction, or the initiation of any proceeding for such purpose, and (vi) of the happening of any event that makes any statement made in such Registration Statement or related Prospectus, Free Writing Prospectus, amendment or supplement thereto, or any document incorporated or deemed to be incorporated therein by reference, as then in effect, untrue in any material respect or that requires the making of any changes in such Registration Statement, Prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading, and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (which notice shall notify the selling Holders only of the occurrence of such an event and shall provide no additional information regarding such event to the extent such information would constitute material non-public information);

 

(d)                                 use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the earliest date reasonably practical;

 

(e)                                  if requested by the managing underwriter(s), if any, a Holder making a Demand Notice with respect to such offering or the Holders of a majority of the then issued and outstanding Registrable Securities being sold in connection with an underwritten offering, promptly include in a Prospectus supplement or post-effective amendment such information as the managing underwriter(s), if any, or such Holder or Holders, as the case may be, may reasonably request in order to facilitate the disposition of the Registrable Securities in accordance with intended method or methods of distribution of such securities set forth in the Registration Statement and make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received such request; provided, however, that the

 

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Company shall not be required to take any actions under this Section 4(e) that are not, in the opinion of counsel for the Company, in compliance with applicable law;

 

(f)                                   deliver to each selling Holder of Registrable Securities, its counsel, and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus) and each amendment or supplement thereto (including any Free Writing Prospectus) as such Persons may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities in accordance with the intended method or methods of disposition thereof; and the Company, subject to the last paragraph of this Section 4, hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any such amendment or supplement thereto;

 

(g)                                  prior to any public offering of Registrable Securities, use its reasonable best efforts to register or qualify or cooperate with the selling Holders of Registrable Securities, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as any seller or underwriter reasonably requests in writing and to keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and to take any other action that may be necessary or advisable to enable such Holders of Registrable Securities to consummate the disposition of such Registrable Securities in such jurisdiction in accordance with the intended method or methods of disposition thereof; provided, however, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 4(g), (ii) subject itself to taxation in any jurisdiction wherein it is not so subject or (iii) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject;

 

(h)                                 cooperate with the selling Holders of Registrable Securities and the managing underwriter(s), if any, to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from each Holder of such Registrable Securities that the Registrable Securities represented by the certificates so delivered by such Holder will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriter(s), if any, or Holders may request at least two Business Days prior to any sale of Registrable Securities in a firm commitment public offering, but in any other such sale, within 10 Business Days prior to having to issue the securities;

 

(i)                                     use its reasonable best efforts to cause the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary in light of the business or operations of the Company to enable the seller or sellers thereof

 

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or the managing underwriter(s), if any, to consummate the disposition of such Registrable Securities, in accordance with the intended method or methods thereof, except as may be required solely as a consequence of the nature of such selling Holder’s business, in which case the Company will cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals, as may be necessary to enable the seller or sellers thereof or the underwriters, if any, to consummate the disposition of such Registrable Securities in accordance with the intended method or methods thereof;

 

(j)                                    upon the occurrence of any event contemplated by Section 4(c)(vi) above, prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(k)                                 prior to the effective date of the Registration Statement relating to the Registrable Securities, provide a CUSIP number for the Registrable Securities;

 

(l)                                     provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities from and after the effective date of such Registration Statement;

 

(m)                             use its reasonable best efforts to cause all shares of Registrable Securities covered by such Registration Statement to be listed on a national securities exchange if shares of the particular class of Registrable Securities are at that time listed on such exchange, prior to the effectiveness of such Registration Statement (or, if such Registration is an IPO, use its reasonable best efforts to cause such Registrable Securities to be so listed within 10 Business Days following the effectiveness of such Registration Statement);

 

(n)                                 enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other actions reasonably requested by a Holder making a Demand Notice with respect to such offering or the Holders of a majority of the Registrable Securities being sold in connection therewith (including those reasonably requested by the managing underwriter(s), if any) to expedite or facilitate the disposition of such Registrable Securities, and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, with respect to the business of the Company and its material Subsidiaries, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested, (ii) use its reasonable best efforts to furnish to the selling Holders of such Registrable Securities opinions of outside

 

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counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriter(s), if any, and counsels to the selling Holders of the Registrable Securities), addressed to each selling Holder of Registrable Securities and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and underwriters, (iii) use its reasonable best efforts to obtain “cold comfort” letters and updates thereof from an independent registered public accounting firm with respect to the Company (and, if necessary, any other independent certified public accountants of any material Subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each selling Holder of Registrable Securities (unless such accountants shall be prohibited from so addressing such letters by applicable standards of the accounting profession) and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings, (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures that are customary for underwriting agreements in connection with underwritten offerings except as otherwise agreed by the parties thereto and (v) deliver such documents and certificates as may be reasonably requested by a Holder making a Demand Notice with respect to such offering, the Holders of a majority of the Registrable Securities being sold pursuant to such Registration Statement, its or their counsel, as the case may be, or the managing underwriter(s), if any, to evidence the continued validity of the representations and warranties made pursuant to Section 4(n)(i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company.  The above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder;

 

(o)                                 upon reasonable notice, make available for inspection by a representative of the selling Holders of Registrable Securities, the underwriters participating in any such disposition of Registrable Securities, if any, and any attorneys or accountants retained by such selling Holders or underwriter at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and its Subsidiaries, and cause the officers, directors and employees of the Company and its Subsidiaries to supply all information in each case reasonably requested by any such representative, underwriter, attorney or accountant in connection with such Registration Statement; provided, however, that any information that is not generally publicly available at the time of delivery of such information shall be kept confidential by such Persons unless (i) disclosure of such information is required by court or administrative order, (ii) disclosure of such information, in the opinion of counsel to such Person, is required by law or applicable legal process, or (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by such Person.  In the case of a proposed disclosure pursuant to (i) or (ii) above, such Person shall be required to give the Company written notice of the proposed disclosure prior to such disclosure and, if requested by the Company, assist the Company in seeking to prevent or limit the proposed disclosure.

 

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Without limiting the foregoing, no such information shall be used by such Person as the basis for any market transactions in securities of the Company or its Subsidiaries in violation of law;

 

(p)                                 cause its officers to use their reasonable best efforts to support the marketing of the Registrable Securities covered by the Registration Statement (including, without limitation, participation in such number of “road shows” as the underwriter(s) reasonably request);

 

(q)                                 cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the FINRA; and

 

(r)                                    otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement, which earnings statement will satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

 

The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish to the Company in writing such information required in connection with such registration regarding such seller and the distribution of such Registrable Securities as the Company may, from time to time, reasonably request and the Company may exclude from such registration the Registrable Securities of any Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request.

 

The Company agrees not to file or make any amendment to any Registration Statement with respect to any Registrable Securities, or any amendment of or supplement to the Prospectus or any Free Writing Prospectus used in connection therewith, that refers to any Holder covered thereby by name, or otherwise identifies such Holder as the holder of any securities of the Company, without the consent of such Holder, such consent not to be unreasonably withheld or delayed, unless and to the extent such disclosure is required by law, in which case the Company shall provide written notice to such Holders no less than five Business Days prior to the filing of such amendment to any Registration Statement or amendment of or supplement to the Prospectus or any Free Writing Prospectus.

 

If the Company files any Shelf Registration Statement for the benefit of the holders of any of its securities other than the Holders, the Company agrees that it shall use its reasonable best efforts to include in such registration statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensure that the Holders may be added to such Shelf Registration Statement at a later time through the filing of a Prospectus supplement rather than a post-effective amendment.

 

Each Holder of Registrable Securities agrees if such Holder has Registrable Securities covered by such Registration Statement that, upon receipt of any notice from the Company of the

 

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happening of any event of the kind described in Section 4(c)(ii), 4(c)(iii), 4(c)(iv), 4(c)(v) and 4(c)(vi) hereof, such Holder will promptly discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 4(j) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus; provided, however, that the time periods under Section 3 with respect to the length of time that the effectiveness of a Registration Statement must be maintained shall automatically be extended by the amount of time the Holder is required to discontinue disposition of such securities.

 

5.                                      Indemnification.

 

(a)                                 Indemnification by the Company.  The Company shall, without limitation as to time, indemnify and hold harmless, to the fullest extent permitted by law, each Holder of Registrable Securities whose Registrable Securities are covered by a Registration Statement or Prospectus, the officers, directors, partners, members, managers, shareholders, accountants, attorneys, agents and employees of each of them, each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) each such Holder and the officers, directors, partners, members, managers, shareholders, accountants, attorneys, agents and employees of each such controlling person, each underwriter, if any, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter (each such person being referred to herein as a “Covered Person”), from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation and reasonable attorneys’ fees and any legal or other fees or expenses incurred by such party in connection with any investigation or proceeding), expenses, judgments, fines, penalties, charges and amounts paid in settlement (collectively, “Losses”), as incurred, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Prospectus, offering circular, or other document (including any related Registration Statement, notification, or the like or Free Writing Prospectus or any amendment thereof or supplement thereto or any document incorporated by reference therein) incident to any such registration, qualification, or compliance, or based on any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation thereunder applicable to the Company and relating to any action or inaction in connection with the related offering of Registrable Securities, and will reimburse each such Covered Person for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such Loss, provided that the Company will not be liable in any such case to the extent that any such Loss arises out of or is based on any untrue statement or omission by such Covered Person relating to such Covered Person or its Affiliates (other than the Company or any of its Subsidiaries), but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement, Prospectus, offering circular, Free Writing Prospectus or any amendment thereof or supplement thereto, or any document incorporated by reference therein, or other document in reliance upon and in conformity with written information furnished to the Company by such Covered Person with respect to such Covered Person for use therein.  It is agreed that the indemnity agreement contained in this Section 5(a) shall not apply to amounts

 

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paid in settlement of any such Loss or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).

 

(b)                                 Indemnification by Holder of Registrable Securities.  As a condition to including any Registrable Securities in any Registration Statement filed in accordance with Section 4 hereof, the Company shall have received an undertaking reasonably satisfactory to it from the prospective seller of such Registrable Securities to indemnify, to the fullest extent permitted by law, severally and not jointly with any other Holders of Registrable Securities, the Company, its directors and officers and each Person who controls (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) the Company and all other prospective sellers, from and against all Losses arising out of or based on any untrue or alleged untrue statement of a material fact contained in any such Registration Statement, Prospectus, Free Writing Prospectus, offering circular, or other document, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such directors, controlling persons and prospective sellers for any legal or any other expenses reasonably incurred in connection with investigating or defending any such Loss, in each case to the extent, but only to the extent, that such untrue statement or omission is made in such Registration Statement, Prospectus, Free Writing Prospectus, offering circular, or other document in reliance upon and in conformity with written information furnished to the Company by such Holder with respect to such Holder for inclusion in such Registration Statement, Prospectus, offering circular or other document; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such Losses (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided, further, that the liability of such Holder of Registrable Securities shall be limited to the net proceeds received by such selling Holder from the sale of Registrable Securities covered by such Registration Statement.

 

(c)                                  Conduct of Indemnification Proceedings.  If any Person shall be entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall give prompt notice to the party from which such indemnity is sought (the “Indemnifying Party”) of any claim or of the commencement of any proceeding with respect to which such Indemnified Party seeks indemnification or contribution pursuant hereto; provided, however, that the delay or failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party from any obligation or liability except to the extent that the Indemnifying Party has been materially prejudiced by such delay or failure.  The Indemnifying Party shall have the right, exercisable by giving written notice to an Indemnified Party promptly after the receipt of written notice from such Indemnified Party of such claim or proceeding, to, unless in the Indemnified Party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claim, assume, at the Indemnifying Party’s expense, the defense of any such claim or proceeding, with counsel reasonably satisfactory to such Indemnified Party; provided, however, that an Indemnified Party shall have the right to employ separate counsel in any such claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless: (i) the Indemnifying Party agrees to pay such fees and expenses; or (ii) the Indemnifying Party fails promptly to assume, or in the event of a conflict of interest cannot assume, the defense of such claim or proceeding or fails to employ counsel reasonably satisfactory to such Indemnified Party; in which case the Indemnified Party

 

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shall have the right to employ counsel and to assume the defense of such claim or proceeding at the Indemnifying Party’s expense; provided, further, however, that the Indemnifying Party shall not, in connection with any one such claim or proceeding or separate but substantially similar or related claims or proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one firm of attorneys (together with appropriate local counsel) at any time for all of the Indemnified Parties, or for fees and expenses that are not reasonable.  Whether or not such defense is assumed by the Indemnifying Party, such Indemnifying Party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld).  The Indemnifying Party shall not consent to entry of any judgment or enter into any settlement that (x) does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release, in form and substance reasonably satisfactory to the Indemnified Party, from all liability in respect of such claim or litigation for which such Indemnified Party would be entitled to indemnification hereunder or (y) involves the imposition of equitable remedies or the imposition of any obligations on the Indemnified Party or adversely affects such Indemnified Party other than as a result of financial obligations for which such Indemnified Party would be entitled to indemnification hereunder.

 

(d)                                 Contribution.  If the indemnification provided for in this Section 5 is unavailable to an Indemnified Party in respect of any Losses (other than in accordance with its terms), then each applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party, on the one hand, and Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made (or omitted) by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission.

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of this Section 5(d), an Indemnifying Party that is a selling Holder of Registrable Securities shall not be required to contribute any amount in excess of the amount that such Indemnifying Party has otherwise been, or would otherwise be, required to pay pursuant to Section 5(b) by reason of such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the

 

20

 

underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

(e)                                  Deemed Underwriter.  To the extent that any of the Holders is, or would be expected to be, deemed to be an underwriter of Registrable Securities pursuant to any SEC comments or policies or any court of law or otherwise, the Company agrees that (i) the indemnification and contribution provisions contained in this Section 5 shall be applicable to the benefit of such Holder in its role as deemed underwriter in addition to its capacity as a Holder (so long as the amount for which any other Holder is or becomes responsible does not exceed the amount for which such Holder would be responsible if the Holder were not deemed to be an underwriter of Registrable Securities) and (ii) such Holder and its representatives shall be entitled to conduct the due diligence which would normally be conducted in connection with an offering of securities registered under the Securities Act, including receipt of customary opinions and comfort letters.

 

(f)                                   Other Indemnification.  Indemnification similar to that specified in the preceding provisions of this Section 5 (with appropriate modifications) shall be given by the Company and each seller of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act.

 

(g)                                  Non-Exclusivity.  The obligations of the parties under this Section 5 shall be in addition to any liability which any party may otherwise have to any other party.

 

6.                                      Registration Expenses.  All reasonable fees and expenses incurred in the performance of or compliance with this Agreement by the Company including, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the SEC, all applicable securities exchanges and/or FINRA and (B) of compliance with securities or blue sky laws, including, without limitation, any fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities pursuant to Section 4(g)), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses if the printing of Prospectuses is requested by the managing underwriter(s), if any, or by a Holder making a Demand Notice with respect to such offering or the Holders of a majority of the Registrable Securities included in any Registration Statement), (iii) messenger, telephone and delivery expenses of the Company, (iv) fees and disbursements of counsel for the Company, (v) expenses of the Company incurred in connection with any road show, (vi) fees and disbursements of all independent registered public accounting firms referred to in Section 4(n) hereof (including, without limitation, the expenses of any “cold comfort” letters required by this Agreement) and any other persons, including special experts retained by the Company shall be borne by the Company whether or not any Registration Statement is filed or becomes effective and (vii) fees and disbursements of separate counsel for the CD&R Investor Parties and their Affiliates if any of them is participating in the offering (which counsel shall be selected by such participating Holders) and, if none of them is participating in the offering, one counsel for the Holders of Registrable Securities whose shares are included in a Registration Statement (which counsel shall be selected by the Holders of a majority of the Registrable Securities included in

 

21

 

such Registration Statement) shall be borne by the Company whether or not any Registration Statement is filed or becomes effective.  In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange on which similar securities issued by the Company are then listed and rating agency fees and the fees and expenses of any Person, including special experts, retained by the Company.

 

The Company shall not be required to pay (i) fees and disbursements of any counsel retained by any Holder of Registrable Securities or by any underwriter (except as set forth above in this Section 6), (ii) any underwriter’s fees (including discounts, commissions or fees of underwriters, selling brokers, dealer managers or similar securities industry professionals) relating to the distribution of the Registrable Securities (other than with respect to Registrable Securities sold by the Company), (iii) expenses (other than the Company’s internal expenses) in connection with any Demand Registration begun pursuant to Section 3, the request of which has been subsequently withdrawn by the demanding Holder unless (x) the withdrawal is based upon (A) any fact, circumstance, event, change, effect or occurrence that individually or in the aggregate with all other facts or circumstances, events, changes, effects or occurrences has a material adverse effect on the Company or (B) material adverse information concerning the Company that the Company had not publicly disclosed at least forty-eight (48) hours prior to such registration request or that the Company had not otherwise notified, in writing, the demanding Holder of at the time of such request, (y) the demanding Holder has not withdrawn two Demand Registrations of a type not covered by the foregoing clauses (iii)(x)(A) or (iii)(x)(B) or (z) after the demanding Holder’s withdrawal of two Demand Registrations where such withdrawal is not covered by clauses (iii)(x)(A) or (iii)(x)(B), such demanding Holder agrees to forfeit its right to one Demand Registration pursuant to Section 3 with respect to the limit set forth in Section 3(d) or (iv) any other expenses of the Holders of Registrable Securities not specifically required to be paid by the Company pursuant to the first paragraph of this Section 6.

 

7.                                      Rule 144.  After an IPO, the Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any of the CD&R Investor Parties or their Affiliates that are Holders of Registrable Securities, make publicly available such information so long as necessary to permit sales of Registrable Securities pursuant to Rule 144), and it will take such further action as any Holder of Registrable Securities (or, if the Company is not required to file reports as provided above, any of the CD&R Investor Parties or their Affiliates that are Holders of Registrable Securities) may reasonably request, all to the extent required from time to time to enable such Holder to sell shares of Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.  Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements and, if not, the specifics thereof.

 

8.                                      Certain Additional Agreements.  If any Registration Statement or comparable statement under state blue sky laws refers to any Holder by name or otherwise as the Holder of any securities of the Company, then such Holder shall have the right to require (a) the insertion therein of language, in form and substance satisfactory to such Holder and the Company, to the

 

22

 

effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company, or (b) in the event that such reference to such Holder by name or otherwise is not in the judgment of the Company required by the Securities Act or any similar federal statute or any state blue sky or securities law then in force, the deletion of the reference to such Holder.

 

9.                                      Miscellaneous.

 

(a)                                 Termination.  The provisions of this Agreement (other than Section 5) shall terminate upon the earliest to occur of (i) its termination by the written agreement of all parties hereto or their respective successors in interest, (ii) with respect to a Stockholder, the date on which all shares of Common Stock held by such Stockholder have ceased to be Registrable Securities, (iii) with respect to the Company, the date on which all shares of Common Stock have ceased to be Registrable Securities and (iv) the dissolution, liquidation or winding up of the Company.  Nothing herein shall relieve any party from any liability for the breach of any of the agreements set forth in this Agreement.

 

(b)                                 Holdback Agreement.  In consideration for the Company agreeing to its obligations under this Agreement, each Holder agrees in connection with any registration of the Company’s securities (whether or not such Holder is participating in such registration) upon the request of the Company and the underwriter(s) managing any underwritten offering of the Company’s securities, not to effect (other than pursuant to such registration) any public sale or distribution of Registrable Securities, including, but not limited to, any sale pursuant to Rule 144, or make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of, or enter into any swap or other arrangement that transfers to another Person any of the economic consequences of ownership of, any Registrable Securities, any other equity securities of the Company or any securities convertible into or exchangeable or exercisable for any equity securities of the Company without the prior written consent of the Company or such underwriters, as the case may be, during the Holdback Period.

 

If any registration pursuant to Section 3 of this Agreement shall be in connection with any underwritten public offering, the Company will not effect any public sale or distribution of any common equity (or securities convertible into or exchangeable or exercisable for common equity) (other than a registration statement (i) on Form S-4, Form S-8 or any successor forms promulgated for similar purposes or (ii) filed in connection with an exchange offer or any employee benefit or dividend reinvestment plan) for its own account, during the Holdback Period.

 

(c)                                  Amendments and Waivers.  This Agreement may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if any such amendment, action or omission to act, has received the written consent of the Company and each of the CD&R Investor Parties or their Affiliates that are Holders of Registrable Securities, or if no such Holders remain, the Holders of a majority of the Registrable Securities; provided that this Agreement may not be amended in a manner that would, by its terms, adversely affect the rights or obligations of the CD&R Investor Parties or

 

23

 

their Affiliates that are Holders of Registrable Securities without the consent of such Holders; provided further that this Agreement may not be amended in a manner that would, by its terms, adversely affect the rights or obligations of any Stockholder which does not adversely affect the rights or obligations of all similarly situated Stockholders in the same manner without the consent of such Stockholder.  The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.  Any Stockholder may waive (in writing) the benefit of any provision of this Agreement with respect to itself for any purpose.  Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Stockholder granting such waiver in any other respect or at any other time.

 

(d)                                 Successors, Assigns and Transferees.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns who agree in writing to be bound by the provisions of this Agreement.  In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of Holders shall also be for the benefit of and enforceable by any subsequent Holder of any Registrable Securities, subject to the provisions contained herein.

 

(e)                                  Notices.  All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be given:

 

If to the Company, to:

 

CDRT Holding Corporation
 c/o Emergency Medical Services Corporation
 6200 South Syracuse Way, Suite 200
 Greenwood, CO 80111
 Attention:                       General Counsel
  Facsimile:                       (303) 495-1800

 

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

 

Clayton, Dubilier & Rice, LLC
 375 Park Avenue
 18th Floor
 New York, New York 10152
 Attention:                       Richard J. Schnall

Kenneth A. Giuriceo
 Fax: (212) 407-5252

 

24

 

and

 

Debevoise & Plimpton LLP
 919 Third Avenue
 New York, New York 10022
 Attention:                       Paul S. Bird, Esq.
                                                                                Jonathan E. Levitsky, Esq.
 Fax: (212) 909-6836

 

if to a CD&R Investor Party, to:

 

c/o Clayton, Dubilier & Rice, LLC
 375 Park Avenue

18th Floor
 New York, New York 10152
 Attention:                       Richard J. Schnall

Kenneth A. Giuriceo
 Facsimile:                       (212) 407-5252

 

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

 

Debevoise & Plimpton LLP
 919 Third Avenue
 New York, New York 10022
 Attention:                       Paul S. Bird, Esq.
                                                                                Jonathan E. Levitsky, Esq.
 Fax: (212) 909-6836

 

or such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto.

 

If to any other Holder of Registrable Securities, to the address of such other Holder as shown in the stock record book of the Company.

 

All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt.

 

(f)                                   Further Assurances.  At any time or from time to time after the date hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

 

25

 

(g)                                  No Inconsistent Agreements.  The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

 

(h)                                 Entire Agreement; No Third Party Beneficiaries.  This Agreement (i) constitutes the entire agreement among the parties with respect to the subject matter of this Agreement and supersede any prior discussions, correspondence, negotiation, proposed term sheet, agreement, understanding or agreement and there are no agreements, understandings, representations or warranties between the parties other than those set forth or referred to in this Agreement and (ii) except as provided in Section 5 with respect to an Indemnified Party, is not intended to confer in or on behalf of any Person not a party to this Agreement (and their successors and assigns) any rights, benefits, causes of action or remedies with respect to the subject matter or any provision hereof.

 

(i)                                     Governing Law; Jurisdiction and Forum; Waiver of Jury Trial.

 

(i)                                     This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts executed and to be performed wholly within such State and without reference to the choice-of-law principles that would result in the application of the laws of a different jurisdiction.

 

(ii)                                  Each party to this Agreement irrevocably submits to the jurisdiction of the United States District Court for the Southern District of New York or any court of the State of New York located in such district any suit, action or other proceeding arising out of or relating to this Agreement, and hereby irrevocably agrees that all claims in respect of such suit, action or proceeding may be heard and determined in such court.  Each party to this Agreement hereby irrevocably waives, to the fullest extent that it may effectively do so, the defense of an inconvenient forum to the maintenance of such suit, action or other proceeding.  The parties further agree, to the extent permitted by law, that final and unappealable judgment against any of them in any suit, action or other proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified copy of which shall be conclusive evidence of the fact and amount of such judgment.

 

(iii)                               EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(j)                                    Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto.  Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original

 

26

 

intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

(k)                                 Enforcement.  Each party hereto acknowledges that money damages would not be an adequate remedy in the event that any of the covenants or agreements in this Agreement are not performed in accordance with its terms, and it is therefore agreed that in addition to and without limiting any other remedy or right it may have, the non-breaching party will have the right to an injunction, temporary restraining order or other equitable relief in any court of competent jurisdiction enjoining any such breach and enforcing specifically the terms and provisions hereof.  In any action or proceeding brought to enforce any provision of this Agreement, the successful party shall be entitled to recover reasonable attorneys’ fees in addition to its costs and expenses and other available remedies.

 

(l)                                     Titles and Subtitles.  The titles of the sections and subsections of this Agreement are for convenience of reference only and will not affect the meaning or interpretation of this Agreement.

 

(m)                             No Recourse.  Notwithstanding anything that may be expressed or implied in this Agreement, the Company and each Stockholder covenant, agree and acknowledge that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any current or future director, officer, employee, shareholder, general or limited partner or member of any Stockholder or of any Affiliate or assignee thereof, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future director, officer, employee, shareholder, general or limited partner or member of any Stockholder or of any Affiliate or assignee thereof, as such for any obligation of any Stockholder under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

 

(n)                                 Counterparts; Facsimile Signatures.  This Agreement may be executed in any number of counterparts (including via facsimile and electronic transmission), each of which shall be an original, but all of which together shall constitute one instrument.  This Agreement may be executed by facsimile signature(s).

 

[Remainder of page left intentionally blank]

 

27

 

IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this Agreement to be duly executed on its behalf as of the date first written above.

 

	
 
    	
CDRT HOLDING CORPORATION
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William A. Sanger
    
	
 
    	
 
    	
Name:
    	
William A. Sanger
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
CLAYTON, DUBILIER & RICE FUND VIII, L.P.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
CD&R Associates VIII Ltd., its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Theresa A. Gore
    
	
 
    	
 
    	
Name:
    	
Theresa A. Gore
    
	
 
    	
 
    	
Title:
    	
Vice President, Treasurer and Assistant Secretary
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
CD&R EMS CO-INVESTOR, L.P.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
CD&R Associates VIII, Ltd., its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Theresa A. Gore
    
	
 
    	
 
    	
Name:
    	
Theresa A. Gore
    
	
 
    	
 
    	
Title:
    	
Vice President, Treasurer and Assistant Secretary
    

 

 

	
 
    	
CD&R FRIENDS & FAMILY FUND VIII, L.P.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
CD&R Associates VIII, Ltd., its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Theresa A. Gore
    
	
 
    	
 
    	
Name:
    	
Theresa A. Gore
    
	
 
    	
 
    	
Title:
    	
Vice President, Treasurer and Assistant Secretary
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
CD&R ADVISOR FUND VIII CO-INVESTOR, L.P.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
CD&R Associates VIII, Ltd., its general partner
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Theresa A. Gore
    
	
 
    	
 
    	
Name:
    	
Theresa A. Gore
    
	
 
    	
 
    	
Title:
    	
Vice President, Treasurer and Assistant SecretaryExhibit 10.3

 

INDUSTRIAL LEASE

 

by and between

 

AMB PROPERTY, L.P.

“LANDLORD”

 

and

 

CAPSTONE TURBINE CORPORATION

“TENANT”

 

Dated: September 25, 2000

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
1.
    	
 
    	
BASIC   PROVISIONS
    	
 
    	
1
    
	
1.1
    	
 
    	
PARTIES
    	
 
    	
1
    
	
1.2
    	
 
    	
PREMISES
    	
 
    	
1
    
	
1.3
    	
 
    	
TERM
    	
 
    	
1
    
	
1.4
    	
 
    	
BASE   RENT
    	
 
    	
1
    
	
1.5
    	
 
    	
TENANT’S   SHARE OF OPERATING EXPENSES
    	
 
    	
1
    
	
1.6
    	
 
    	
TENANT’S   ESTIMATED MONTHLY RENT PAYMENT
    	
 
    	
1
    
	
1.7
    	
 
    	
SECURITY   DEPOSIT
    	
 
    	
1
    
	
1.8
    	
 
    	
PERMITTED   USE
    	
 
    	
1
    
	
1.9
    	
 
    	
GUARANTOR
    	
 
    	
1
    
	
1.10 
    	
 
    	
ADDENDA
    	
 
    	
1
    
	
1.11 
    	
 
    	
EXHIBITS
    	
 
    	
1
    
	
1.12 
    	
 
    	
ADDRESS   FOR RENT PAYMENTS
    	
 
    	
2
    
	
2.
    	
 
    	
PREMISES   AND COMMON AREAS
    	
 
    	
3
    
	
2.1
    	
 
    	
LETTING
    	
 
    	
3
    
	
2.2
    	
 
    	
CONDITION   OF PREMISES
    	
 
    	
3
    
	
3.
    	
 
    	
TERM
    	
 
    	
3
    
	
3.1
    	
 
    	
TERM
    	
 
    	
3
    
	
3.2
    	
 
    	
DELAY   IN POSSESSION
    	
 
    	
3
    
	
3.3
    	
 
    	
COMMENCEMENT   DATE CERTIFICATE
    	
 
    	
3
    
	
4.
    	
 
    	
RENT
    	
 
    	
3
    
	
4.1
    	
 
    	
BASE   RENT
    	
 
    	
3
    
	
4.2
    	
 
    	
OPERATING   EXPENSES
    	
 
    	
3
    
	
5.
    	
 
    	
SECURITY   DEPOSIT
    	
 
    	
4
    
	
6.
    	
 
    	
USE
    	
 
    	
4
    
	
6.1
    	
 
    	
PERMITTED   USE
    	
 
    	
4
    
	
6.2
    	
 
    	
HAZARDOUS   SUBSTANCES
    	
 
    	
5
    
	
6.3
    	
 
    	
TENANT’S   COMPLIANCE WITH REQUIREMENTS
    	
 
    	
6
    
	
6.4
    	
 
    	
INSPECTION;   COMPLIANCE WITH LAW
    	
 
    	
6
    
	
7.
    	
 
    	
MAINTENANCE,   REPAIRS, TRADE FIXTURES AND ALTERATIONS
    	
 
    	
6
    
	
7.1
    	
 
    	
TENANT’S   OBLIGATIONS
    	
 
    	
6
    
	
7.2
    	
 
    	
LANDLORD’S   OBLIGATIONS
    	
 
    	
6
    
	
7.3
    	
 
    	
ALTERATIONS
    	
 
    	
6
    
	
7.4
    	
 
    	
SURRENDER/RESTORATION
    	
 
    	
6
    
	
8.
    	
 
    	
INSURANCE;   INDEMNITY
    	
 
    	
7
    
	
8.1
    	
 
    	
PAYMENT   OF PREMIUMS
    	
 
    	
7
    
	
8.2
    	
 
    	
TENANT’S   INSURANCE
    	
 
    	
7
    
	
8.3
    	
 
    	
LANDLORD’S   INSURANCE
    	
 
    	
7
    
	
8.4
    	
 
    	
WAIVER   OF SUBROGATION
    	
 
    	
7
    
	
8.5
    	
 
    	
INDEMNITY
    	
 
    	
7
    
	
8.6
    	
 
    	
EXEMPTION   OF LANDLORD FROM LIABILITY
    	
 
    	
8
    
	
9.
    	
 
    	
DAMAGE   OR DESTRUCTION
    	
 
    	
8
    
	
9.1
    	
 
    	
TERMINATION   RIGHT
    	
 
    	
8
    
	
9.2
    	
 
    	
DAMAGE   CAUSED BY TENANT
    	
 
    	
8
    
	
10.
    	
 
    	
REAL   PROPERTY TAXES
    	
 
    	
8
    
	
10.1 
    	
 
    	
PAYMENT   OF REAL PROPERTY TAXES
    	
 
    	
8
    
	
10.2 
    	
 
    	
REAL   PROPERTY TAX DEFINITION
    	
 
    	
8
    
	
10.3 
    	
 
    	
ADDITIONAL   IMPROVEMENTS
    	
 
    	
9
    
	
10.4 
    	
 
    	
JOINT   ASSESSMENT
    	
 
    	
9
    
	
10.5 
    	
 
    	
TENANT’S   PROPERTY TAXES
    	
 
    	
9
    
	
11.
    	
 
    	
UTILITIES
    	
 
    	
9
    
	
12.
    	
 
    	
ASSIGNMENT   AND SUBLETTING
    	
 
    	
9
    
	
12.1 
    	
 
    	
LANDLORD’S   CONSENT REQUIRED
    	
 
    	
9
    
	
13.
	
 
	
DEFAULT;REMEDIES
	
 
	
10

 

ii

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
 
    	
Page
    
	
13.1 
    	
 
    	
DEFAULT
    	
 
    	
10
    
	
13.2 
    	
 
    	
REMEDIES
    	
 
    	
10
    
	
13.3 
    	
 
    	
LATE   CHARGES
    	
 
    	
12
    
	
14.
    	
 
    	
CONDEMNATION
    	
 
    	
12
    
	
15.
    	
 
    	
ESTOPPEL   CERTIFICATE AND FINANCIAL STATEMENTS
    	
 
    	
12
    
	
15.1 
    	
 
    	
ESTOPPEL   CERTIFICATE
    	
 
    	
12
    
	
15.2 
    	
 
    	
FINANCIAL   STATEMENT
    	
 
    	
13
    
	
16.
    	
 
    	
ADDITIONAL   COVENANTS AND PROVISIONS
    	
 
    	
13
    
	
16.1 
    	
 
    	
SEVERABILITY
    	
 
    	
13
    
	
16.2 
    	
 
    	
INTEREST   ON PAST-DUE OBLIGATIONS
    	
 
    	
13
    
	
16.3 
    	
 
    	
TIME   OF ESSENCE
    	
 
    	
13
    
	
16.4 
    	
 
    	
LANDLORD   LIABILITY
    	
 
    	
13
    
	
16.5 
    	
 
    	
NO   PRIOR OR OTHER AGREEMENTS
    	
 
    	
13
    
	
16.6 
    	
 
    	
NOTICE   REQUIREMENTS
    	
 
    	
13
    
	
16.7 
    	
 
    	
DATE   OF NOTICE
    	
 
    	
13
    
	
16.8 
    	
 
    	
WAIVERS
    	
 
    	
13
    
	
16.9 
    	
 
    	
HOLDOVER
    	
 
    	
13
    
	
16.10 
    	
 
    	
CUMULATIVE   REMEDIES
    	
 
    	
14
    
	
16.11 
    	
 
    	
BINDING   EFFECT: CHOICE OF LAW
    	
 
    	
14
    
	
16.12 
    	
 
    	
LANDLORD
    	
 
    	
14
    
	
16.13 
    	
 
    	
ATTORNEYS’   FEES AND OTHER COSTS
    	
 
    	
14
    
	
16.14 
    	
 
    	
LANDLORD’S   ACCESS; SHOWING PREMISES; REPAIRS
    	
 
    	
14
    
	
16.15 
    	
 
    	
SIGNS
    	
 
    	
14
    
	
16.16 
    	
 
    	
TERMINATION;   MERGER
    	
 
    	
14
    
	
16.17 
    	
 
    	
QUIET   POSSESSION
    	
 
    	
14
    
	
16.18 
    	
 
    	
SUBORDINATION;   ATTORNMENT; NON-DISTURBANCE
    	
 
    	
14
    
	
16.19 
    	
 
    	
RULES   AND REGULATIONS
    	
 
    	
15
    
	
16.20 
    	
 
    	
SECURITY   MEASURES
    	
 
    	
15
    
	
16.21 
    	
 
    	
RESERVATIONS
    	
 
    	
15
    
	
16.22 
    	
 
    	
CONFLICT
    	
 
    	
15
    
	
16.23 
    	
 
    	
OFFER
    	
 
    	
15
    
	
16.24 
    	
 
    	
AMENDMENTS
    	
 
    	
15
    
	
16.25 
    	
 
    	
MULTIPLE   PARTIES
    	
 
    	
15
    
	
16.26 
    	
 
    	
AUTHORITY
    	
 
    	
16
    

 

iii

 

AMB PROPERTY CORPORATION

INDUSTRIAL LEASE

 

1.                                                   BASIC PROVISIONS (“Basic Provisions”).

 

1.1 Parties: This Lease (“Lease”) dated September 25, 2000, is made by and between AMB Property, L.P., a Delaware limited partnership, (“Landlord”) and Capstone Turbine Corporation, a Delaware corporation, (“Tenant”) (collectively, the “Parties” or individually, a “Party”).

 

1.2 Premises The premises (“Premises”) consist of:

 

o Approximately square feet of space as depicted on Exhibit A. This space is a part of the building (“Building”) which is also identified on Exhibit A.

 

or

 

x All of the building (“Building”) identified on Exhibit A, consisting of approximately 78,711 square feet and commonly known as 16640 Stagg Street, Van Nuys, California.

 

If the Premises are all of the Building, there shall, for purposes of this Lease, be no distinction between the words “Premises” or “Building.”

 

1.3 Term: 10 years and 2 months (“Term”) commencing October 1, 2000 (“Commencement Date”) and ending December 31, 2010 (“Expiration Date”).

 

1.4 Base Rent: $44,078.00 per month (“Base Rent”). $51,495.00 is payable on execution of this Lease for the period December 2000.

 

1.5 Tenant’s Share of Operating Expenses (“Tenant’s Share”):

 

	
(a)
    	
 
    	
Building Operating   Expenses
    	
 
    	
100
    	
%
    

 

1.6 Tenant’s Estimated Monthly Rent Payment: Following is the estimated monthly Rent payment to Landlord pursuant to the provisions of this Lease. This estimate is made at the inception of the Lease and is subject to adjustment pursuant to the provisions of this Lease:

 

	
(a)
    	
Base Rent (Paragraph 4.1)
    	
 
    	
$
    	
44,078.00
    	
 
    	
 
    	
 
    
	
(b)
    	
Operating Expenses (Paragraph 4.2, excluding Real   Property Taxes, Landlord Insurance, and HVAC)
    	
 
    	
$
    	
3,000.00
    	
 
    	
 
    	
 
    
	
(c)
    	
Landlord Insurance (Paragraph 8.3)
    	
 
    	
$
    	
415.00
    	
 
    	
 
    	
 
    
	
(d)
    	
Real Property Taxes (Paragraph 10)
    	
 
    	
$
    	
4,002.00
    	
 
    	
 
    	
 
    
	
(e)
    	
HVAC maintenance (Paragraph 4.2)
    	
 
    	
$
    	
-0-
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Estimated Monthly Payment
    	
 
    	
 
    	
 
    	
$
    	
51,495.00
    	
 
    
									

 

1.7 Security Deposit: $44,078.00 (“Security Deposit”).

 

1.8 Permitted Use (“Permitted Use”): Office, assembly, product testing (outside and inside), warehouse and distribution of micro-turbines, recuperators and related parts and for other general office, assembly, warehouse and distribution purposes provided they do not involve Hazardous Substances, as defined in this Lease and for no other purpose.

 

1.9 Guarantor: None

 

1.10 Addenda: Attached hereto are the following Addenda, all of which constitute a part of this Lease:

 

(a) Addenda: Rent Adjustment

(b) Addenda: Option to Extend

(c) Addenda: Addendum

(d) Addenda: Tenant Improvement Addendum

 

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

 

Exhibit A: Description of Premises.

Exhibit B: Commencement Date Certificate.

Exhibit C: Estoppel Certificate

Exhibit D: Hazardous Substances Questionnaire

 

1

 

1.12 Address for Rent Payments: All amounts payable by Tenant to Landlord shall, until further notice from Landlord, be paid to AMB Property Corporation at the following address:

 

AMB Property, L.P.

P.O. Box 840507

Dallas, TX 75284-0507

 

2

 

2.                                                   PREMISES AND COMMON AREAS.

 

2.1 Letting. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises upon all of the terms, covenants, and conditions, set forth in this Lease. Any statement of square footage set forth in this Lease or that may have been used in calculating Base Rent and/or Operating Expenses is an approximation which Landlord and Tenant agree is reasonable, and the Base Rent and Tenant’s Share based thereon is not subject to revision whether or not the actual square footage is more or less. 

 

Intentionally Deleted Intentionally Deleted Intentionally Deleted Intentionally Deleted

 

2.2 Condition of Premises. Landlord shall deliver the Premises to Tenant clean and free of debris on the Commencement Date. Landlord represents and warrants to Tenant that the roof shall be water-tight and the plumbing, lighting, ceiling, interior and exterior walls, electrical, air conditioning, fire-sprinklers, heating, ventilating and other mechanical systems and equipment and fixtures in the Premises, and the loading doors shall be in good operating condition on the Commencement Date. Without limitation to Landlord’s obligations as set forth in Paragraph 7.2, in the event that Tenant gives notice to Landlord within 6 months following the Commencement Date of any defect or malfunction in or repair reasonably needed to any of the aforementioned items or systems, as long as not caused by Tenant, then it shall be the obligation of Landlord to promptly, at Landlord’s sole cost and expense, perform such work.

 

3.                                                   TERM.

 

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

 

3.2 Delay in Possession. If for any reason Landlord cannot deliver possession of the Premises to Tenant by the Commencement Date, except as provided below, Landlord shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of Tenant hereunder. In such case, Tenant shall not, except as otherwise provided herein, be obligated to pay Rent or perform any other obligation of Tenant under the terms of this Lease until Landlord delivers possession of the Premises to Tenant. The term of the Lease shall commence on the earlier of (a) the date Tenant takes possession of the Premises or (b) 10 days following notice to Tenant that Landlord is prepared to tender possession of the Premises to Tenant. If possession of the Premises is not delivered to Tenant within 60 days after the Commencement Date and such delay is not due to Tenant’s acts, failure to act, or omissions, Tenant shall have the option to either (i) by notice in writing to Landlord within 10 days after the end of said 60-day period cancel this Lease and the parties shall be discharged from all obligations hereunder; or (ii) elect not to cancel this Lease, in which case Tenant shall receive rent abatement, to be applied to the rent coming due when the term of the Lease commences, equal to one day for each day following such sixtieth (60th) day that Landlord fails to deliver the Premises to Tenant If such written notice of Tenant’s cancellation under (i) above is not received by Landlord within said 10-day period, Tenant’s right to cancel this Lease shall terminate and Tenant shall be deemed to have elected option (ii) above.

 

3.3 Commencement Date Certificate. At the request of Landlord, Tenant shall execute and deliver to Landlord a completed certificate (“Commencement Date Certificate”) in the form attached hereto as Exhibit B.

 

4.                                                   RENT.

 

4.1 Base Rent. Tenant shall pay to Landlord Base Rent and other monetary obligations of Tenant to Landlord under the terms of this Lease (such other monetary obligations are herein referred to as “Additional Rent”) in lawful money of the United States, without offset or deduction, in advance on or before the first day of each month. Base Rent and Additional Rent for any period during the term hereof which is for less than one full month shall be prorated based upon the actual number of days of the month involved. Payment of Base Rent and Additional Rent shall be made to Landlord at its address stated herein or to such other persons or at such other addresses as Landlord may from time to time designate in writing to Tenant. Base Rent and Additional Rent are collectively referred to as “Rent.” All monetary obligations of Tenant to Landlord under the terms of this Lease are deemed to be Rent.

 

4.2 Operating Expenses. Tenant shall pay to Landlord on the first day of each month during the term hereof, in addition to the Base Rent, Tenant’s Share of all Operating Expenses in accordance with the following provisions:

 

3

 

(a) “Operating Expenses” are all reasonable costs incurred by Landlord relating to the ownership and operation of the Premises including, but not limited to, the following:

 

(i) The operation, repair, maintenance, and replacement in neat, clean, good order, and condition of the areas of the Premises Landlord is obligated to maintain under this Lease.

 

(ii) Property management.

 

(iii) Reserves set aside for maintenance, repair, and replacement of the Building.

 

(iv) Real Property Taxes.

 

(v) Premiums for the insurance policies maintained by Landlord under Paragraph 8 hereof.

 

(vi) Environmental monitoring and insurance programs, but only in the event that such monitoring is required by the acts or omissions of Tenant or its agents.

 

(vii) Monthly amortization of capital improvements to the Building. The monthly amortization of any given capital improvement shall be the sum of the (a) quotient obtained by dividing the cost of the capital improvement by Landlord’s estimate of the number of months of useful life of such improvement plus (b) an amount equal to the cost of the capital improvement times 1/12 of the lesser of 12% or the maximum annual interest rate permitted by law.

 

(viii) Maintenance of the Building including, but not limited to, painting, caulking, and repair and replacement of Building components, including, but not limited to, roof, elevators, and fire detection and sprinkler systems.

 

(ix) Maintenance, repair and replacement of the heating, ventilating, and air conditioning systems (“HVAC”).

 

(b) Tenant’s Share of Operating Expenses shall be 100%.

 

(c) Tenant shall pay monthly in advance, on the same day that the Base Rent is due, Tenant’s Share of estimated Operating Expenses and HVAC maintenance costs in the amount set forth in Paragraph 1.6. Landlord shall deliver to Tenant within 90 days after the expiration of each calendar year a reasonably detailed statement showing Tenant’s Share of the actual Operating Expenses incurred during the preceding year. If Tenant’s estimated payments under this Paragraph 4(c) during the preceding year exceed Tenant’s Share as indicated on said statement, Tenant shall be credited the amount of such overpayment against Tenant’s Share of Operating Expenses next becoming due, or, if such amount is owing at the end of Lease term, such amount shall be paid within 30 days following the end of the Lease term. If Tenant’s estimated payments under this Paragraph 4.2(c) during said preceding year were less than Tenant’s Share as indicated on said statement, Tenant shall pay to Landlord the amount of the deficiency within 30 days after delivery by Landlord to Tenant of said statement. At any time Landlord may, in the exercise of its reasonable judgment, adjust the amount of the estimated Tenant’s Share of Operating Expenses and HVAC maintenance costs to reflect Landlord’s estimate of such expenses for the year.

 

5. SECURITY DEPOSIT. Tenant shall deposit with Landlord upon Tenant’s execution hereof the Security Deposit set forth in Paragraph 1.7 as security for Tenant’s faithful performance of Tenant’s obligations under this Lease. If Tenant fails to pay Base Rent or Additional Rent or otherwise defaults under this Lease (as defined in paragraph 13.1), landlord may use the security deposit for the payment of any amount due Landlord or to reimburse or compensate Landlord for any liability, cost, expense, loss, or damage (including attorneys’ fees) which Landlord may suffer or incur by reason thereof. Tenant shall on demand pay Landlord the amount so used or applied so as to restore the Security Deposit to the amount set forth in Paragraph 1.7. Landlord shall not be required to keep all or any part of the Security Deposit separate from its general accounts. Landlord shall, at the expiration or earlier termination of the term hereof and after Tenant has vacated the Premises, return to Tenant that portion of the Security Deposit not used or applied by Landlord. No part of the Security Deposit shall be considered to be held in trust, to bear interest, or to be prepayment for any monies to be paid by Tenant under this Lease.

 

6.                                                   USE.

 

6.1 Permitted Use. Tenant shall use and occupy the Premises only for the Permitted Use set forth in Paragraph 1.8. Tenant shall not commit any nuisance, permit the emission of any objectionable noise or odor, suffer any waste, make

any use of the Premises which is

 

4

 

contrary to any law or ordinance, or which will invalidate or increase the premiums for any of Landlord’s insurance. Tenant shall not service, maintain, or repair vehicles on the Premises. Tenant shall not store foods, pallets, drums, or any other materials outside the Premises. Notwithstanding the foregoing, Tenant shall be permitted, provided such use is not in violation of any law or ordinance and such use is screened from view by screening reasonably acceptable to Landlord, to use the exterior areas of the Premises for the purposes of product testing and uses related to such product testing.

 

6.2 Hazardous Substances.

 

(a) Reportable Uses Require Consent. The term, “Hazardous Substance,” as used in this Lease, shall mean any product, substance, chemical, material, or waste whose presence, nature, quantity, and/or intensity of existence, use, manufacture, disposal, transportation, spill, release, or effect, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment, or the Premises; (ii) regulated or monitored by any governmental authority; or (iii) a basis for potential liability of Landlord to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substance shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil, or any products or by-products thereof. Tenant shall not engage in any activity in or about the Premises which constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances without the express prior written consent of Landlord and compliance in a timely manner (at Tenant’s sole cost and expense) with all Applicable Requirements (as defined in Paragraph 6.3). “Reportable Use” shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration, or business plan is required to be filed with, any governmental authority, and (iii) the presence in, on, or about the Premises of a Hazardous Substance with respect to which any Applicable Requirements require that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Tenant may, without Landlord’s prior consent, but upon notice to Landlord and in compliance with all Applicable Requirements, use any ordinary and customary materials reasonably required to be used by Tenant in the normal course of the Permitted Use, so long as such use is not a Reportable Use and does not expose the Premises or neighboring properties to any meaningful risk of contamination or damage, or expose Landlord to any liability therefor. In addition, Landlord may (but without any obligation to do so) condition its consent to any Reportable Use of any Hazardous Substance by Tenant upon Tenant’s giving Landlord such additional assurances as Landlord, in its reasonable discretion, deems necessary to protect itself, the public, the Premises, and the environment against damage, contamination, injury, and/or liability therefor, including but not limited to the installation (and, at Landlord’s option, removal on or before Lease expiration or earlier termination) of reasonably necessary protective modifications to the Premises (such as concrete encasements) and/or the deposit of an additional Security Deposit.

 

(b) Duty to Inform Landlord. If Tenant knows, or has reasonable cause to believe, that a Hazardous Substance is located in, under, or about the Premises or the Building, Tenant shall immediately give Landlord written notice thereof, together with a copy of any statement, report, notice, registration, application, permit, business plan, license, claim, action, or proceeding given to, or received from, any governmental authority or private party concerning the presence, spill, release, discharge of, or exposure to such Hazardous Substance. Tenant shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including, without limitation, through the plumbing or sanitary sewer system).

 

(c) Indemnification. Tenant shall indemnify, protect, defend, and hold Landlord, Landlord’s affiliates, Lenders, and the officers, directors, shareholders, partners, employees, managers, independent contractors, attorneys, and agents of the foregoing (“Landlord Entities”) and the Premises harmless from and against any and all damages, liabilities, judgments, costs, claims, liens, expenses, penalties, loss of permits, and attorneys’ and consultants’ fees arising out of or involving any Hazardous Substance on or brought onto the Premises by or for Tenant or by any of Tenant’s employees, agents, contractors, servants, visitors, suppliers, or invitees (such employees, agents, contractors, servants, visitors, suppliers, and invitees as herein collectively referred to as “Tenant Entities”). Tenant’s obligations under this Paragraph 6.2(c) shall include, but not be limited to, the effects of any contamination or injury to person, property, or the environment created or suffered by Tenant, and the cost of investigation (including consultants’ and attorneys’ fees and testing), removal, remediation,

 

5

 

restoration and/or abatement thereof, or of any contamination therein involved. Tenant’s obligations under this Paragraph 6.2(c) shall survive the Expiration Date or earlier termination of this Lease.

 

6.3 Tenant’s Compliance with Requirements. Tenant shall, at Tenant’s sole cost and expense, fully, diligently, and in a timely manner comply with all “Applicable Requirements,” which term is used in this Lease to mean all laws, rules, regulations, ordinances, directives, covenants, easements, and restrictions of record, permits, the requirements of any applicable fire insurance underwriter or rating bureau, and the reasonable recommendations of Landlord’s engineers and/or consultants, relating in any manner to the Premises (including but not limited to matters pertaining to (a) industrial hygiene, (b) environmental conditions on, in, under, or about the Premises, including soil and groundwater conditions, and (c) the use, generation, manufacture, production, installation, maintenance, removal, transportation, storage, spill, or release of any Hazardous Substance), now in effect or which may hereafter come into effect. Tenant shall, within 5 days after receipt of Landlord’s written request, provide Landlord with copies of all documents and information evidencing Tenant’s compliance with any Applicable Requirements, and shall immediately upon receipt notify Landlord in writing (with copies of any documents involved) of any claim, notice, citation, warning, complaint, or report pertaining to or involving failure by Tenant or the Premises to comply with any Applicable Requirements.

 

6.4 Inspection; Compliance with Law. In addition to Landlord’s environmental monitoring and insurance program, the cost of which is included in Operating Expenses as provided in Paragraph 4, Landlord and the holders of any mortgages, deeds of trust, or ground leases on the Premises (“Lenders”) shall have the right to enter the Premises at any time in the case of an emergency, and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and for verifying compliance by Tenant with this Lease and all Applicable Requirements. Landlord shall be entitled to employ experts and/or consultants in connection therewith to advise Landlord with respect to Tenant’s installation, operation, use, monitoring, maintenance, or removal of any Hazardous Substance on or from the Premises. The cost and expenses of any such inspections shall be paid by the party requesting same unless a violation of Applicable Requirements exists or is imminent, or the inspection is requested or ordered by a governmental authority. Tenant shall upon request reimburse Landlord or Landlord’s Lender, as the case may be, for the costs and expenses of such inspections.

 

7.                                                   MAINTENANCE, REPAIRS, TRADE FIXTURES AND ALTERATIONS.

 

7.1 Tenant’s Obligations. Subject to the provisions of Paragraph 2.6 (Condition of the Premises, Paragraph 7.2 (Landlord’s Obligations), Paragraph 9 (Damage or Destruction), and Paragraph 14 (Condemnation), Tenant shall, at Tenant’s sole cost and expense and at all times, keep the Premises and every part thereof in good order, condition, and repair (whether or not such portion of the Premises requiring repair, or the means of repairing the same, are reasonable or readily accessible to Tenant and whether or not the need for such repairs occurs as a result of Tenant’s use, any prior use, the elements, or the age of such portion of the Premises) including, without limiting the generality of the foregoing, all equipment or facilities specifically serving the Premises, such as plumbing, heating, ventilating, electrical, lighting facilities, boilers, fired or unfired pressure vessels, fire hose connectors if within the Premises, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights, but excluding any items which are the responsibility of Landlord pursuant to Paragraph 7.2 below. Tenant’s obligations shall include restorations, replacements, or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition, and state of repair.

 

7.2 Landlord’s Obligations. Subject to the provisions of Paragraph 6 (Use), Paragraph 7.1 (Tenant’s Obligations), Paragraph 9 (Damage or Destruction), and Paragraph 14 (Condemnation), Landlord, at its expense and not subject to the reimbursement requirements of Paragraph 4.2, shall keep in good order, condition, and repair the roof structure, foundations and exterior walls of the Building. Landlord, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition, and repair the air conditioning systems servicing the Premises, Building roof membrane, and Common Areas.

 

7.3 Alterations. Tenant shall not make nor cause to be made any alterations or installations in, on, under, or about the Premises without the prior written consent of Landlord which will not be unreasonably withheld or delayed.  

 

7.4 Surrender/Restoration. Tenant shall surrender the Premises by the end of the last day of the Lease term or any earlier termination date, clean and free of debris and in good operating order, condition, and state of repair, ordinary wear and tear excepted. Without limiting

 

6

 

the generality of the above, Tenant shall remove all Alterations designated by Landlord in Landlord’s sole discretion, personal property, trade fixtures, and floor bolts, patch all floors, and cause all lights to be in good operating condition. Notwithstanding the foregoing, Tenant by written notice to Landlord may require, prior to the installation of any Alterations, that Landlord elect whether such Alterations must be removed at the end of the Lease term or whether Tenant shall have the option of removing such Alterations at the end of the Lease term, and Landlord shall make such election within 20 days following Landlord’s receipt such written notice.

 

8.                 INSURANCE; INDEMNITY.

 

8.1 Payment of Premiums. The cost of the premiums for the insurance policies maintained by Landlord under this Paragraph 8 shall be an Operating Expense reimbursable pursuant to Paragraph 4.2 hereof. Premiums for policy periods commencing prior to, or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding Commencement Date and Expiration Date.

 

8.2 Tenant’s Insurance.

 

(a) At its sole cost and expense, Tenant shall maintain in full force and effect during the Term of the Lease the following insurance coverages insuring against claims which may arise from or in connection with the Tenant’s operation and use of the Premises.

 

(i) Commercial General Liability insurance with minimum limits of $1,000,000 per occurrence and $3,000,000 general aggregate for bodily injury, personal injury, and property damage. If required by Landlord, liquor liability coverage will be included. Such insurance shall be endorsed to include Landlord and Landlord Entities as additional insureds, shall be primary and noncontributory with any Landlord insurance, and shall provide severability of interests between or among insureds.

 

(ii) Workers’ Compensation insurance with statutory limits and Employers Liability with a $1,000,000 per accident limit for bodily injury or disease.

 

(iii) Automobile Liability insurance covering all owned, nonowned, and hired vehicles with a $1,000,000 per accident limit for bodily injury and property damage.

 

(iv) Property insurance against “all risks” at least as broad as the current ISO Special Form policy, including earthquake and flood, for loss to any tenant improvements or betterments, floor and wall coverings, and business personal property (except for earthquake and flood coverage) on a full insurable replacement cost basis with no coinsurance clause, and Business Income insurance covering at least six months of loss of income and continuing

expense.

 

(b) Tenant shall deliver to AMB certificates of all insurance reflecting evidence of required coverages prior to initial occupancy, and annually thereafter.

 

(c) If, in the opinion of Landlord’s insurance advisor, the amount or scope of such coverage is deemed inadequate at any time during the Term, Tenant shall increase such coverage to such reasonable amounts or scope as Landlord’s advisor deems adequate and which are customary for premises of the size and location of the Premises.

 

(d) All insurance required under Paragraph 8.2 (i) shall be issued by insurers licensed to do business in the state in which the Premises are located and which are rated A:VII or better by Best’s Key Rating Guide and (ii) shall be endorsed to provide at least 30-days prior notification of cancellation or material change in coverage to said additional insureds.

 

8.3 Landlord’s Insurance. Landlord shall maintain “all risks” coverage as broad as the current ISO Special Form policy, including earthquake and flood, covering Building and such other insurance in such amounts and covering such other liability or hazards as deemed appropriate by Landlord. The amount and scope of coverage of Landlord’s insurance shall be determined by Landlord from time to time in its sole discretion and shall be subject to such reasonable deductible amounts as Landlord may elect. Except as to the “all risks” coverage for the Building, Landlord shall have the right to reduce or terminate any insurance or coverage.

 

8.4 Waiver of Subrogation. To the extent permitted by law and with permission of their insurance carriers, Landlord and Tenant each waive any right to recover against the other on account of any and all claims Landlord or Tenant may have against the other with respect to property insurance actually carried, or required to be carried hereunder, to the extent of the proceeds realized from such insurance coverage.

 

8.5 Indemnity. Tenant shall protect, defend, indemnify, and hold Landlord and Landlord Entities harmless from and against any and all loss, claims, liability, or costs (including court costs and attorneys’ fees) incurred

by reason of:

 

(a) any damage to any property (including but not limited to property of any Landlord Entity) or death, bodily, or personal injury to any person occurring in or about the

 

 

7

 

Premises, the Building, or the Industrial Center to the extent that such injury or damage shall be caused by or arise from any actual or alleged act, neglect, fault, or omission by or of Tenant, its agents, servants, employees, invitees, contractors, suppliers, subtenants, or visitors;

 

(b) the conduct or management of any work or anything whatsoever done by the Tenant on or about the Premises or from transactions of the Tenant concerning the Premises;

 

(c) Tenant’s failure to comply with any and all governmental laws, ordinances, and regulations applicable to the condition or use of the Premises or its occupancy; or

 

(d) any breach or default on the part of Tenant in the performance of any covenant or agreement to be performed pursuant to this Lease.

 

The provisions of this Paragraph 8.5 shall, with respect to any claims or liability accruing prior to such termination, survive the Expiration Date or earlier termination of this Lease.

 

8.6 Exemption of Landlord from Liability. Except to the extent caused by the gross negligence or willful misconduct of Landlord, Landlord shall not be liable for and Tenant waives any claims against Landlord for injury or damage to the person or the property of Tenant, Tenant Entities, or any other person in or about the Premises, Building, or Industrial Center from any cause whatsoever, including, but not limited to, damage or injury which is caused by or results from (a) fire, steam, electricity, gas, water, or rain, or from the breakage, leakage, seepage, back up of sewers or drains, obstruction, or other defects of pipes, fire sprinklers, wires, appliances, plumbing, air conditioning, or lighting fixtures or (b) from the condition of the Premises, other portions of the Building, or Industrial Center. Landlord shall not be liable for any damages arising from any act or neglect of any other tenant of Landlord nor from the failure by Landlord to enforce the provisions of any other lease of which Landlord is the landlord. Except with respect to Landlord’s gross negligence or willful misconduct, Landlord shall not be liable for injury to Tenant’s business, for any loss of income or profit therefrom, or any indirect, consequential, or punitive damages.

 

9.                 DAMAGE OR DESTRUCTION.

 

9.1 Termination Right. Tenant shall give Landlord immediate written notice of any damage to the Premises. Subject to the provisions of Paragraph 9.2, if the Premises or the Building shall be damaged to such an extent that there is substantial interference for a period exceeding 90 consecutive days with the conduct by Tenant of its business at the Premises, Tenant, at any time prior to commencement of repair of the Premises and following 10 days written notice to Landlord, may terminate this Lease effective 30 days after delivery of such notice to Landlord. Such termination shall not excuse the performance by Tenant of those covenants which under the terms hereof survive termination. Rent shall be abated in proportion to the degree of interference during the period that there is such substantial interference with the conduct of Tenant’s business at the Premises. Abatement of rent and Tenant’s right of termination pursuant to this provision shall be Tenant’s sole remedy for Tenant’s loss of beneficial use of the Premises due to the failure of Landlord to keep in good order, condition, and repair the foundations and exterior walls of the Building, Building roof, utility systems outside the Building, the Common Areas, and HVAC.

 

9.2 Damage Caused by Tenant. Tenant’s termination rights under Paragraph 9.1 shall not apply if the damage to the Premises or Building is the result of any act or omission of Tenant or of any of Tenant’s, agents, employees, customers, invitees, or contractors (“Tenant Acts”). Any damage resulting from a Tenant Act shall be promptly repaired by Tenant. Landlord at its option may at tenant’s expense repair any damage caused by tenant acts. Tenant shall continue to pay all rent and other sums due hereunder and shall be liable to Landlord for all damages that Landlord may sustain resulting from a Tenant Act. This section shall not apply to any damage covered by Landlord’s insurance pursuant to Section 8.3.

 

10.               REAL PROPERTY TAXES.

 

10.1 Payment of Real Property Taxes. Landlord shall pay the Real Property Taxes due and payable during the term of this Lease and, except as otherwise provided in Paragraph 10.3, such payments shall be a Common Area Operating Expense reimbursable pursuant to Paragraph 4.2. Notwithstanding the foregoing, there shall be excluded from Real Property Taxes: (i) all excess profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes, federal and state income taxes, and other taxes to the extent applicable to Landlord’s general or net income (as opposed to rents, receipts, or income attributable to operations at the project), and (ii) any items included as operating expenses.

 

10.2 Real Property Tax Definition. As used herein, the term “Real Property Taxes” is any form of tax or assessment, general, special, ordinary, or extraordinary, imposed or levied upon (a) the Industrial Center or Building, (b) any interest of Landlord in the Industrial Center or

 

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Building, (c) Landlord’s right to rent or other income from the Industrial Center or Building, and/or (d) Landlord’s business of leasing the Premises. Real Property Taxes include (a) any licenses fee, commercial rental tax, excise tax, improvement bond or bonds, levy, or tax; (b) any tax or charge which replaces or is in addition to any of such above-described “Real Property Taxes,” and (c) any fees, expenses, or costs (including attorneys’ fees, expert fees, and the like) incurred by Landlord in protesting or contesting any assessments levied or any tax rate. Real Property Taxes for tax years commencing prior to, or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding Commencement Date and Expiration Date.

 

10.3 Additional Improvements. Operating Expenses shall not include Real Property Taxes attributable to improvements placed upon the Building by Landlord unless requested by Tenant. Tenant shall, however, pay to Landlord at the time Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed by reason of improvements placed upon the Premises by Tenant or at Tenant’s request.

 

10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed.

 

10.5 Tenant’s Property Taxes. Tenant shall pay prior to delinquency all taxes assessed against and levied upon Tenant’s improvements, fixtures, furnishings, equipment, and all personal property of Tenant contained in the Premises.

 

11.               UTILITIES. Tenant shall pay directly for all utilities and services supplied to the Premises, including but not limited to electricity, telephone, security, gas, and cleaning of the Premises, together with any taxes thereon.

 

12.               ASSIGNMENT AND SUBLETTING

 

12.1 Landlord’s Consent Required.

 

(a) Tenant shall not assign, transfer, mortgage, or otherwise transfer or encumber (collectively, “assign”) or sublet all or any part of Tenant’s interest in this Lease or in the Premises without Landlord’s prior written consent, which consent shall not be unreasonably withheld. Relevant criteria in determining reasonability of consent include, but are not limited to, credit history of a proposed assignee or sublessee, references from prior landlords, any change or intensification of use of the Premises or the Common Areas, and any limitations imposed by the Internal Revenue Code and the Regulations promulgated thereunder relating to Real Estate Investment Trusts. Assignment or sublet shall not release Tenant from its obligations hereunder. Tenant shall not (i) sublet, assign, or enter into other arrangements in which the amounts to be paid by the sublessee or assignee thereunder would be based, in whole or in part, on the income or profits derived by the business activities of the sublessee or assignee; (ii) sublet the Premises or assign this Lease to any person or entity in which Landlord owns an interest, directly or indirectly (by applying constructive ownership rules set forth in Section 856(d)(5) of the Internal Revenue Code (the “Code”); or (iii) sublet the Premises or assign this Lease in any other manner which could cause any portion of the amounts received by Landlord pursuant to this Lease or any sublease to fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or which could cause any other income received by Landlord to fail to qualify as income described in Section 856(c)(2) of the Code. The requirements of this Section 12.1 shall apply to any further subleasing by any subtenant. Notwithstanding the foregoing, in the event of any assignment or subletting to which Landlord consents, Landlord shall receive fifty percent (50%), in the event of a sublease, of any rent received by Tenant above the rent then being paid by Tenant to Landlord less: (i) rent obligations paid by Tenant hereunder during any period when the Premises were vacant following the marketing of the Premises for such sublease; (ii) the costs of any tenant improvements made or allowance given to the subtenant for tenant improvements; (iii) any free rent or other economic concessions given the subtenant; and (iv) any commissions or marketing expense paid by Tenant for such sublease. In addition, Landlord shall receive fifty percent (50%), in the event of an assignment, of any profit derived by Tenant from such assignment less any commissions or marketing expense paid by Tenant for such assignment. In the event of any assignment or subletting, Tenant shall pay to Landlord or its authorized managing agent (as directed by Landlord)a fee of $750.00 to cover Landlord’s costs of review, negotiation, preparation or execution of any documentation regarding such assignment or subletting. Notwithstanding the foregoing, Tenant may sublease up to 50% of the Premises, pursuant to this Section, and Landlord shall not receive any portion of the profit derived from such sublease. Landlord shall approve or disapprove a proposed sublease of up to 50% of the Premises within ten (10) days following receipt of Tenant’s written request.

 

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(b) A change in the control of Tenant shall constitute an assignment requiring Landlord’s consent. The transfer, on a cumulative basis, of 25% or more of the voting or management control of Tenant shall constitute a change in control for this purpose, provided that changes resulting from the sale of stock through a recognized stock exchange shall not constitute a change of control hereunder.

 

12.2 Non-Transfers. The term “Affiliate” shall mean any entity which is controlled by controls, or is under common control with, Tenant or which merges with, is acquired by, or acquires all of Tenant’s assets or stock. “Control,” as used in this Paragraph 12.2, shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract or otherwise. Notwithstanding anything to the contrary contained in this Paragraph 12, an assignment or subletting of all or a portion of the Premises to an “Affiliate” of Tenant shall not be deemed a Transfer under this Paragraph 12, provided that Tenant notifies Landlord of any such assignment or sublease and promptly supplies Landlord with any documents or information reasonably required by Landlord regarding such assignment or sublease or such Affiliate, and further provided that such assignment or sublease is not a subterfuge by Tenant to avoid its obligations and Tenant remains liable under this Lease.

 

13.               DEFAULT; REMEDIES.

 

13.1  Default. The occurrence of any one of the following events shall constitute an event of default on the part of Tenant (“Default”):

 

(a) The abandonment of the Premises by Tenant;

 

(b) Failure to pay any installment of Base Rent, Additional Rent, or any other monies due and payable hereunder, said failure continuing for a period of 5 days after Tenant receives notices that such payment was not received when due, which notice shall be in lieu of and not in addition to any notice required by statute;

 

(c) A general assignment by Tenant or any guarantor for the

benefit of creditors;

 

(d) The filing of a voluntary petition of bankruptcy by Tenant or any guarantor; the filing of a voluntary petition for an arrangement; the filing of a petition, voluntary or involuntary, for reorganization; or the filing of an involuntary petition by Tenant’s creditors or guarantors;

 

(e) Receivership, attachment, of other judicial seizure of the Premises or all or substantially all of Tenant’s assets on the Premises;

 

(f) Failure of Tenant to maintain insurance as required by

Paragraph 8.2;

 

(g) Any breach by Tenant of its covenants under Paragraph 6.2;

 

(h) Failure in the performance of any of Tenant’s covenants, agreements, or obligations hereunder (except those failures specified as events of Default in other Paragraphs of this Paragraph 13.1 which shall be governed by such other Paragraphs), which failure continues for 20 days after written notice thereof from Landlord to Tenant; provided that, if Tenant has exercised reasonable diligence to cure such failure and such failure cannot be cured within such 20-day period despite reasonable diligence, tenant shall not be in default under this subparagraph unless Tenant fails thereafter diligently and continuously to prosecute the cure to completion;

 

13.2 Remedies. In the event of any Default by Tenant, Landlord shall have any or all of the following remedies:

 

(a) Termination. In the event of any Default by Tenant, then in addition to any other remedies available to Landlord at law or in equity and under this Lease, Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder by giving written notice of such intention to terminate. In the event that Landlord shall elect to so terminate this Lease then Landlord may recover from Tenant:

 

(1) the worth at the time of award of any unpaid Rent and any other sums due and payable which have been earned at the time of such

termination; plus

 

(2) the worth at the time of award of the amount by which the unpaid Rent and any other sums due and payable which would have been earned after termination until the time of award exceeds the amount of such rental loss Tenant proves could have been reasonably avoided; plus

 

(3) the worth at the time of award of the amount by which the unpaid Rent and any other sums due and payable for the balance of the term of this Lease after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus

 

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(4) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course would be likely to result therefrom, including, without limitation, any costs or expenses incurred by Landlord (i) in retaking possession of the Premises; (ii) in maintaining, repairing, preserving, restoring, replacing, cleaning, the Premises or any portion thereof, including such acts for reletting to a new lessee or lessees; (iii) for leasing commissions; or (iv) for any other costs necessary or appropriate to relet the Premises; plus

 

(5) such reasonable attorneys’ fees incurred by Landlord as a result of a Default, and costs in the event suit is filed by Landlord to enforce such remedy; and plus

 

(6) 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. As used in subparagraphs (1) and (2) above, the “worth at the time of award” is computed by allowing interest at an annual rate equal to twelve percent (12%) per annum or the maximum rate permitted by law, whichever is less. As used in subparagraph (3) above, the “worth at the time of award” is 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 %). Tenant waives redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or under any other present or future law, in the event Tenant is evicted or Landlord takes possession of the Premises by reason of any Default of Tenant hereunder.

 

(b) Continuation of Lease. In the event of any Default by Tenant, then in addition to any other remedies available to Landlord at law or in equity and under this Lease, Landlord shall have the remedy described in California Civil Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant’s Default and abandonment and recover Rent as it becomes due, provided tenant has the right to sublet or assign, subject only to reasonable limitations).

 

(c) Re-entry. In the event of any Default by Tenant, Landlord shall also have the right, with or without terminating this Lease, in compliance with applicable law, to re-enter the Premises and remove all persons and property from the Premises; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant.

 

(d) Reletting. In the event of the abandonment of the Premises by Tenant or in the event that Landlord shall elect to re-enter or shall take possession of the Premises pursuant to legal proceeding or pursuant to any notice provided by law, then if Landlord does not elect to terminate this Lease as provided in Paragraph a, Landlord may from time to time, without terminating this Lease, relet the Premises or any part thereof for such term or terms and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable with the right to make alterations and repairs to the Premises. In the event that Landlord shall elect to so relet, then rentals received by Landlord from such reletting shall be applied in the following order: (1) to reasonable attorneys’ fees incurred by Landlord as a result of a Default and costs in the event suit is filed by Landlord to enforce such remedies; (2) to the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord; (3) to the payment of any costs of such reletting; (4) to the payment of the costs of any alterations and repairs to the Premises; (5) to the payment of Rent due and unpaid hereunder; and (6) the residue, if any, shall be held by landlord and applied in payment of future Rent and other sums payable by Tenant hereunder as the same may become due and payable hereunder. Should that portion of such rentals received from such reletting during any month, which is applied to the payment of Rent hereunder, be less than the Rent payable during the month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such reletting or in making such alterations and repairs not covered by the rentals received from such reletting.

 

(e) Termination. No re-entry or taking of possession of the Premises by Landlord pursuant to this Addendum shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding any reletting without termination by Landlord because of any Default by Tenant, Landlord may at any time after such reletting elect to terminate this Lease for any such Default.

 

(f) Cumulative Remedies. The remedies herein provided are not exclusive and Landlord shall have any and all other remedies provided herein or by law or in equity.

 

(g) No Surrender. No act or conduct of Landlord, whether consisting of the acceptance of the keys to the premises, or otherwise, shall be deemed to be or constitute an acceptance of the surrender of the premises by tenant prior to the expiration of the term, and such acceptance by Landlord of surrender by tenant shall only flow from and must be evidenced by a written acknowledgment of acceptance of surrender signed by landlord. The surrender of this lease by tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects in writing that

 

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such merger take place, but shall operate as an assignment to Landlord of any and all, existing subleases, or Landlord may, at its option, elect in writing to treat such surrender as a merger terminating Tenant’s estate under this Lease, and thereupon Landlord may terminate any or all such subleases by notifying the sublessee of its election so to do within five (5) days after such surrender.

 

(h) Notice Provisions. Tenant agrees that any notice given by Landlord pursuant to Paragraph 13.1 of the Lease shall satisfy the requirements for notice under California Code of Civil Procedure Section 1161, and Landlord shall not be required to give any additional notice in order to be entitled to commence an unlawful detainer proceeding. Should Landlord prepare any notice to Tenant for failure to pay rent, additional rent or perform any other obligation under the Lease, Tenant shall pay to Landlord, without any further notice from Landlord, the additional sum of $75.00 which the parties hereby agree represents a fair and reasonable estimate of the costs Landlord will incur by reason of preparing such notice.

 

13.3 Late Charges. Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges. Accordingly, if any installment of Rent or other sum due from Tenant shall not be received by Landlord or Landlord’s designee within 4 days after such amount shall be due, then, without any requirement for notice to Tenant, Tenant shall pay to Landlord a late charge equal to 5% of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant’s Default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. In addition, should Landlord be unable to negotiate any payment made by Tenant on the first attempt by Landlord and without any notice to Tenant, Tenant shall pay to Landlord a fee of $50.00 per item which the parties hereby agree represents a fair and reasonable estimate of the costs Landlord will incur by reason of Landlord’s inability to negotiate such item(s). Notwithstanding the foregoing or anything to the contrary, Tenant shall not be obligated to pay a late charge until each time after the fourth time during the term or extended term of that Tenant fails to pay any amount due under this Lease within 4 days after said amount shall be due.

 

14. CONDEMNATION. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of exercise of said power (all of which are herein called “condemnation”), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the floor area of the Premises, or more than 25% of the portion of the Common Areas designated for Tenant’s, parking, is taken by condemnation, Tenant may, at Tenant’s option, to be exercised in writing within 10 days after Landlord shall have given Tenant written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession), terminate this Lease as of the date the condemning authority takes such possession. If Tenant does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in the same proportion as the rentable floor area of the Premises taken bears to the total rentable floor area of the premises. No reduction of Base Rent shall occur if the condemnation does not apply to any portion of the Premises. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Landlord; provided, however, that Tenant shall be entitled to any compensation, separately awarded to Tenant, for Tenant’s relocation expenses and/or loss of Tenant’s trade fixtures. In the event that this Lease is not terminated by reason of such condemnation, Landlord shall to the extent of its net severance damages in the condemnation matter, repair any damage to the Premises caused by such condemnation authority. Tenant shall be responsible for the payment of any amount in excess of such net severance damages required to complete such repair.

 

15.               ESTOPPEL CERTIFICATE AND FINANCIAL STATEMENTS.

 

15.1 Estoppel Certificate. Each party (herein referred to as “Responding Party”) shall within 10 days after written notice from the other Party (the “Requesting Party”) execute, acknowledge, and deliver to the Requesting Party, to the extent it can truthfully do so, an estoppel certificate in the form attached hereto as Exhibit C, plus such additional information, confirmation, and statements as be reasonably requested by the Requesting Party. Should Tenant fail to deliver an executed and acknowledged estoppel certificate to Landlord as prescribed herein, Tenant hereby authorizes Landlord to act as Tenant’s attorney-in-fact in executing such

 

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estoppel certificate or, at Landlord’s option, Tenant shall pay a fee of $100.00 per day (“Estoppel Delay Fee”) for each day after the 10 days’ written notice in which Tenant fails to comply with this requirement.

 

15.2 Financial Statement. If Landlord desires to finance, refinance, or sell the Building, Industrial Center, or any part thereof, Tenant shall deliver to any potential lender or purchaser designated by Landlord such financial statements of Tenant as may be reasonably required by such lender or purchaser, including but not limited to Tenant’s financial statements for the past 3 years. All such financial statements shall be received by Landlord and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.

 

16.               ADDITIONAL COVENANTS AND PROVISIONS.

 

16.1 Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall not affect the validity of any other provision hereof.

 

16.2 Interest on Past-Due Obligations. Any monetary payment due Landlord hereunder not received by Landlord within 10 days following the date on which it was due shall bear interest from the date due at 12% per annum, but not exceeding the maximum rate allowed by law in addition to the late charge provided for in Paragraph 13.3.

 

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

 

16.4 Landlord Liability. Tenant, its successors, and assigns shall not assert nor seek to enforce any claim for breach of this Lease against any of Landlord’s assets other than Landlord’s interest in the Industrial Center. Tenant agrees to look solely to such interest for the satisfaction of any liability or claim against Landlord under this Lease. In no event whatsoever shall Landlord (which term shall include, without limitation, any general or limited partner, trustees, beneficiaries, officers, directors, or stockholders of Landlord) ever be personally liable for any such liability.

 

16.5 No Prior or Other Agreements. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and supersedes all prior or contemporaneous oral or written agreements or understandings.

 

16.6 Notice Requirements. All notices required or permitted by this Lease shall be in writing and may be delivered in person (by hand, messenger, or courier service) or may be sent by regular, certified, or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission during normal business hours, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 16.6. The addresses noted adjacent to a Party’s signature on this Lease shall be that Party’s address for delivery or mailing of notice purposes. Either Party may by written notice to the other specify a different address for notice purposes, except that upon Tenant’s taking possessing of the Premises, the Premises shall constitute Tenant’s address for the purpose of mailing or delivering notices to Tenant. A copy of all notices required or permitted to be given to Landlord hereunder shall be concurrently transmitted to such party or parties at such addresses as Landlord may from time to time hereafter designate by written notice to Tenant.

 

16.7 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail, the notice shall be deemed given 48 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or an overnight courier that guarantees next day delivery shall be deemed given 24 hours after delivery of the same to the United States Postal Service or courier. If any notice is transmitted by facsimile transmission or similar means, the same shall be deemed served or delivered upon telephone or facsimile confirmation of receipt of the transmission thereof, provided a copy is also delivered via hand or overnight delivery or certified mail. If notice is received on a Saturday, Sunday, or legal holiday, it shall be deemed received on the next business day.

 

16.8 Waivers. No waiver by Landlord of a Default by Tenant shall be deemed a waiver of any other town, covenant, or condition hereof, or of any subsequent Default by Tenant of the same or any other term, covenant, or condition hereof.

 

16.9 Holdover. Tenant has no right to retain possession of the Premises or any part thereof beyond the expiration or earlier termination of this Lease. If Tenant holds over with the consent of Landlord: (a) the Base Rent payable shall be increased to 150% of the Base Rent applicable during the month immediately preceding such expiration or earlier termination; (b) Tenant’s right to possession shall terminate on 30 days notice from Landlord; and (c) all other terms and conditions of this Lease shall continue to apply. Nothing contained herein shall be

 

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construed as a consent by Landlord to any holding over by Tenant. Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all claims, demands, actions, losses, damages, obligations, costs, and expenses,

including, without limitation, attorneys’ fees incurred or suffered by Landlord by reason of Tenant’s failure to surrender the Premises on the expiration or earlier termination of this Lease in accordance with the provisions of this Lease.

 

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

 

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

 

16.12 Landlord. The covenants and obligations contained in this Lease on the part of Landlord are binding on Landlord, its successors, and assigns only during their respective period of ownership of an interest in the Building. In the event of any transfer or transfers of such title to the Building, Landlord (and, in the case of any subsequent transfers or conveyances, the then grantor) shall be concurrently freed and relieved from and after the date of such transfer or conveyance, without any further instrument or agreement, of all liability with respect to the performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed.

 

16.13 Attorneys’ Fees and Other Costs. If any Party brings an action or proceeding to enforce the terms hereof or declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding shall be entitled to reasonable attorneys’ fees. The term “Prevailing Party” shall include, without limitation, a Party who substantially obtains or defeats the relief sought. Landlord shall be entitled to attorneys’ fees, costs, and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting breach. Tenant shall reimburse Landlord on demand for all reasonable legal, engineering, and other professional services expenses incurred by Landlord in connection with all requests by Tenant or any lender of Tenant for consent, waiver or approval of any kind.

 

16.14 Landlord’s Access; Showing Premises; Repairs. Landlord and Landlord’s agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times upon reasonable notice for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements, or additions to the Premises or to the Building, as Landlord may reasonably deem necessary. Landlord may at any time place on or about the Premises or Building any ordinary “For Sale” signs, and Landlord may at any time during the last 180 days of the term hereof place on or about the Premises any ordinary “For Lease” signs. All such activities of Landlord shall be without abatement of rent or liability to Tenant.

 

16.15 Signs. Tenant shall not place any signs at or upon the exterior of the Premises or the Building, except that Tenant may, with Landlord’s prior written consent, install (but not on the roof) such signs as are reasonably required to advertise Tenant’s own business so long as such signs are in a location designated by Landlord and comply with sign ordinances and the signage criteria established for the Industrial Center by Landlord.

 

16.16 Termination; Merger. Unless specifically stated otherwise in writing by Landlord, the voluntary or other surrender of this Lease by Tenant, the mutual termination or cancellation hereof, or a termination hereof by Landlord for Default by Tenant, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, Landlord shall, in the event of any such surrender, termination, or cancellation, have the option to continue any one or all of any existing subtenancies. Landlord’s failure within 10 days following any such event to make a written election to the contrary by written notice to the holder of any such lesser interest shall constitute Landlord’s election to have such event constitute the termination of such interest.

 

16.17 Quiet Possession. Upon payment by Tenant of the Base Rent and Additional Rent for the Premises and the performance of all of the covenants, conditions, and provisions on Tenant’s part to be observed and performed under this Lease, Tenant shall have quiet possession of the Premises for the entire term hereof, subject to all of the provisions of this Lease.

 

16.18 Subordination; Attornment; Non-Disturbance.

 

(a) Subordination. This Lease shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or mortgage (collectively, “Mortgage”) now or hereafter placed by Landlord upon the real

property of which the Premises are a part, to

 

14

 

any and all advances made on the security thereof, and to all renewals, modifications, consolidations, replacements, and extensions thereof. Tenant agrees that any person holding any Mortgage shall have no duty, liability, or obligation to perform any of the obligations of Landlord under this Lease. In the event of Landlord’s default with respect to any such obligation, Tenant will give any Lender, whose name and address have previously been furnished in writing to Tenant, notice of a default by Landlord. Tenant may not exercise any remedies for default by Landlord unless and until Landlord and the Lender shall have received written notice of such default and a reasonable time (not less than 90 days) shall thereafter have elapsed without the default having been cured. If any Lender shall elect to have this Lease superior to the lien of its Mortgage and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such Mortgage. The provisions of a Mortgage relating to the disposition of condemnation and insurance proceeds shall prevail over any contrary provisions contained in this Lease.

 

(b) Attornment. Subject to the nondisturbance provisions of subparagraph (c) of this Paragraph 16.18, Tenant agrees to attorn to a Lender or any other party who acquires ownership of the Premises by reason of a foreclosure of a Mortgage. In the event of such foreclosure, such new owner shall not: (i) be liable for any act or omission of any prior landlord or with respect to events occurring prior to acquisition of ownership, (ii) be subject to any offsets or defenses which Tenant might have against any prior Landlord, or (iii) be liable for security deposits or be bound by prepayment of more than one month’s rent.

 

(c) Non-Disturbance. With respect to a Mortgage entered into by Landlord after the execution of this Lease, Tenant’s subordination of this Lease shall be subject to receiving assurance (a “nondisturbance agreement”) from the Mortgage holder that Tenant’s possession and this Lease will not be disturbed so long as Tenant is not in default and attorns to the record owner of the Premises.

 

(d) Self-Executing. The agreements contained in this Paragraph 16.18 shall be effective without the execution of any further documents; provided, however, that upon written request from Landlord or a Lender in connection with a sale, financing, or refinancing of Premises, Tenant and Landlord shall execute such further writings as may be reasonably required to separately document any such subordination or nonsubordination, attornment, and/or nondisturbance agreement, as is provided for herein. Landlord is hereby irrevocably vested with full power to subordinate this Lease to a Mortgage.

 

16.19 Rules and Regulations. Tenant agrees that it will abide by, and to cause its employees, suppliers, shippers, customers, tenants, contractors, and invitees to abide by, all reasonable rules and regulations (“Rules and Regulations”) which Landlord may make from time to time for the management, safety, care, and cleanliness of the Industrial Center, the parking and unloading of vehicles, and the preservation of good order, as well as for the convenience of other occupants or tenants of the Building and the Industrial Center and their invitees. Landlord shall not be responsible to Tenant for the noncompliance with said Rules and Regulations by other tenants of the Industrial Center.

 

16.20 Security Measures. Tenant acknowledges that the rental payable to Landlord hereunder does not include the cost of guard service or other security measures. Landlord has no obligations to provide same. Except for the gross negligence or intentional acts of Landlord and its agents, Tenant assumes all responsibility for the protection of the Premises, Tenant, its agents, and invitees and their property from the acts of third parties.

 

16.21 Reservations. Landlord reserves the right to grant such easements that Landlord deems necessary and to cause the recordation of parcel maps, so long as such easements and maps do not unreasonably interfere with the use of the Premises by Tenant. Tenant agrees to sign any documents reasonably requested by Landlord to effectuate any such easements or maps.

 

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

 

16.23 Offer. Preparation of this lease by either Landlord or Tenant or Landlord’s agent or Tenant’s agent and submission of same to Tenant or Landlord shall not be deemed an offer to lease. This Lease is not intended to be binding until executed and delivered by all Parties hereto.

 

16.24 Amendments. This Lease may be modified only in writing, signed by the parties in interest at the time of the modification.

 

16.25 Multiple Parties. Except as otherwise expressly provided herein, if more than one person or entity is named herein as Tenant, the obligations of such persons shall be the joint and several responsibility of all persons or entities named herein as such Tenant.

 

15

 

16.26 Authority. Each person signing on behalf of Landlord or Tenant warrants and represents that she or he is authorized to execute and deliver this Lease and to make it a binding obligation of Landlord or Tenant.

 

[SIGNATURES ON FOLLOWING PAGE]

 

16

 

The parties hereto have executed this Lease at the place and on the dates specified below their respective signatures.

 

	
LANDLORD:
    	
TENANT:
    
	
AMB   PROPERTY, L.P.
    	
CAPSTONE   TURBINE CORPORATION
    
	
a   Delaware limited partnership
    	
A   Delaware corporation
    
	
 
    	
 
    
	
By:
    	
AMB   Property Corporation,
    	
 
    
	
 
    	
a   Maryland corporation
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   J. WATTS
    	
9/26/00
    
	
 
    	
By:
    	
/s/   MARTIN J. COYNE
    	
 
    	
Its:
    	
CFO
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
N/A
    
	
 
    	
Martin   J. Coyne, Vice President
    	
Telephone:
    	
(818)   734-5552
    
	
Telephone:                                   (415)   394-9000
    	
Facsimile:
    	
(818)   734-5352
    
	
 
    	
 
    	
 
    
	
Facsimile:                                         (415)   394-9001
    	
Executed   at: Manhattan Beach, CA
    
	
 
    	
 
    
	
Executed   at: San Francisco, CA
    	
Executed   at: 90266
    
	
 
    	
 
    
	
on:    10/11/2000
    	
ADDRESS
    	
 
    
	
 
    	
 
    	
 
    
	
ADDRESS
    	
ADDRESS
    	
 
    
	
 
    	
 
    	
 
    
	
505   Montgomery Street
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
San   Francisco, CA 94111
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Tax ID:
    	
 
    
										

 

17

 

GLOSSARY

 

The following terms in the Lease are defined in the paragraphs opposite the terms.

 

TERM DEFINED IN PARAGRAPH

 

	
Assignment
    	
 
    	
12
    
	
Base   Rent
    	
 
    	
1.4
    
	
Basic   Provisions
    	
 
    	
1
    
	
Building
    	
 
    	
1.2
    
	
Building   Operating Expenses
    	
 
    	
4.2
    
	
Commencement   Date
    	
 
    	
1.3
    
	
Commencement   Date Certificate
    	
 
    	
3.3
    
	
Condemnation
    	
 
    	
14
    
	
Default
    	
 
    	
13.1
    
	
Expiration   Date
    	
 
    	
1.3
    
	
HVAC
    	
 
    	
4.2(a)(x)
    
	
Hazardous   Substance
    	
 
    	
6.2
    
	
Indemnity
    	
 
    	
8.5
    
	
Landlord
    	
 
    	
1.1
    
	
Landlord   Entities
    	
 
    	
6.2(c)
    
	
Lease
    	
 
    	
1.1
    
	
Mortgage
    	
 
    	
16.18
    
	
Operating   Expenses
    	
 
    	
4.2
    
	
Party/Parties
    	
 
    	
1.1
    
	
Permitted   Use
    	
 
    	
1.8
    
	
Premises
    	
 
    	
1.2
    
	
Real   Property Taxes
    	
 
    	
10.2
    
	
Rent
    	
 
    	
4.1
    
	
Reportable   Use
    	
 
    	
6.2
    
	
Requesting   Party
    	
 
    	
15
    
	
Responding   Party
    	
 
    	
15
    
	
Rules and   Regulations
    	
 
    	
16.19
    
	
Security   Deposit
    	
 
    	
1.7,   5
    
	
Taxes
    	
 
    	
10.2
    
	
Tenant
    	
 
    	
1.1
    
	
Tenant   Acts
    	
 
    	
9.2
    
	
Tenant’s   Entity
    	
 
    	
6.2(c)
    
	
Tenant’s   Share
    	
 
    	
1.5
    
	
Term
    	
 
    	
1.3
    
	
Use
    	
 
    	
6.1
    

 

18

 

AMB PROPERTY, L.P.,

A DELAWARE LIMITED PARTNERSHIP

INDUSTRIAL LEASE

RENT ADJUSTMENT ADDENDUM

 

This Rent Adjustment Addendum is a part of the Lease dated September 251, 2000, by and between AMB PROPERTY, L.P. (“Landlord”) and Capstone Turbine Corporation (“Tenant”) for the premises commonly known as 16664 Stagg Street, Van Nuys, California.

 

Monthly Base Rent for the each of the periods designated in this Addendum (“Adjustment Periods”) shall be the amount calculated in accordance with the alternative selected below (“Rent Adjustment Alternative”), but in no event shall the monthly Base Rent for an Adjustment Period be less than the highest monthly rent payable during the term preceding the Adjustment Period.

 

1.            ADJUSTMENT PERIODS:

October 1, 2000 to March 31, 2003 (“Period One”)

April 1, 2003 to September 30, 2005 (“Period Two”)

October 1, 2005 to March 31, 2008 (“Period Three”)

April 1, 2008 to September 30, 2010 (“Period Four”)

October 1, 2010 to November 30, 2010 (“Period Five”)

 

2.            RENT ADJUSTMENT ALTERNATIVES

x           Fixed rent adjustment (“Fixed Rent Adjustment”)

$44,078.00 shall be the monthly Base Rent for Period One.

$47,384.00 shall be the monthly Base Rent for Period Two.

$50,938.00 shall be the monthly Base Rent for Period Three.

$54;758.00 shall be the monthly Base Rent for Period Four.

$58,865.00 shall be the monthly Base Rent for Period Five.

 

o           Cost of living adjustment (“CPI Adjustment”)

 

Monthly Base Rent shall be calculated using the following CPI index (“Index”):

 

o  Urban Wage Earners and Clerical Workers

o  All Urban Consumers

o                                                                       

 

The Comparison Month is:

 

o  the first month of the term of this Lease; or

o                                                                       

 

o           Market rent (“Market Rent Adjustment”)

 

3.            CALCULATION OF RENT ADJUSTMENT

 

	
LANDLORD:
    	
 
    	
TENANT:
    
	
AMB   PROPERTY, L.P.
    	
 
    	
CAPSTONE   TURBINE CORPORATION
    
	
A   DELAWARE LIMITED-PARTNERSHIP
    	
 
    	
A   DELAWARE CORPORATION
    
	
By:
    	
AMB   Property Corporation,
    	
 
    	
 
    
	
 
    	
a   Maryland corporation, its
    	
 
    	
 
    
	
 
    	
general   partner
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ MARTIN COYNE
    	
 
    	
 
    
	
 
    	
Martin Coyne, Vice   President
    	
 
    	
/s/ J. WATTS
    
	
 
    	
 
    	
 
    	
By: J. Watts
    
	
 
    	
 
    	
 
    	
Its: CFO
    

 

1

 

AMB PROPERTY, L.P.,

A DELAWARE LIMITED PARTNERSHIP

INDUSTRIAL LEASE

 

OPTION TO EXTEND

 

This Option to Extend is a part of the Lease dated September 25, 2000, by and between AMB PROPERTY, L.P. (“Landlord”) and Capstone Turbine Corporation (“Tenant”) for the premises commonly known as 16640 Stagg Street, Van Nuys, California.

 

1.            OPTION TO EXTEND. Landlord hereby grants to Tenant the option to extend the term of this Lease for the following periods (“Option Periods”) commencing when the prior term expires:

 

December 1, 2010 to November 30, 2015 (“Period One”)

 

December 1, 2015 to November 30, 2020 (“Period Two”)

 

2.            EXERCISE DATES. For purposes of Paragraph 4 of this Addendum,

 

a.              the Earliest Exercise Date is 12 months prior to the date that the Option Period would commence, and

 

b.              the Last Exercise Date is 4 months prior to the date that the Option Period would commence.

 

3.            MONTHLY BASE RENT. The monthly Base Rent for each month of an Option Period shall be the amount calculated in accordance with the alternative selected below (“Rent Adjustment Alternative”), but in no event shall the monthly Base Rent for an Option Period be less than the highest monthly Base Rent payable during the term immediately preceding the Option Period.

 

x          Fixed rent adjustment (“Fixed Rent Adjustment”) 7.5% increase at the 1st and 31st month of each option period.

 

o            Cost of living adjustment (“CPI Adjustment”) Monthly Base Rent shall be calculated using the following CPI index (“Index”):

 

o    Urban Wage Earners and Clerical Workers

 

o    All Urban Consumers

 

o                                                                         

 

The Comparison Month is:

 

o    the first month of the term of this Lease; or

 

o                                                                         

 

o             Market rent (“Market Rent Adjustment”)

 

4.            CONDITIONS TO EXERCISE OF OPTION. Tenant’s right to extend is conditioned upon and subject to each of the following:

 

a.     In order to exercise an option to extend, Tenant must give written notice of such election to Landlord and Landlord must receive the same by the Last Exercise Date but not prior to the Earliest Exercise Date. If proper notification of the exercise of an option is not given and/or received, such option shall automatically expire. Options (if there are more than one) may only be exercised consecutively. Failure to exercise an option terminates that option and all subsequent options. Tenant acknowledges that because of the importance to Landlord of knowing no later than the Last Exercise Date whether or not Tenant will exercise the option, the failure of Tenant to notify Landlord by the Last Exercise Date will conclusively be presumed an election by Tenant not to exercise the option.

 

b.     Tenant shall have no right to exercise an option (i) if Tenant is in Default or (ii) in the event that Landlord has given to Tenant three or more notices of separate Defaults during the 12-month period immediately preceding the exercise of the option, whether or not the Defaults are cured. The period of time within which an option may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise an option because of the provisions of this paragraph.

 

c.     All of the terms and conditions of this Lease, except where specifically modified by this Addendum, shall apply.

 

1

 

d.     The options are personal to the Tenant, cannot be assigned or exercised by anyone other than the Tenant, and only while the Tenant is in full possession of the Premises and without the intention of thereafter assigning or subletting.

 

	
LANDLORD:
    	
 
    	
TENANT:
    
	
AMB   PROPERTY, L.P.
    	
 
    	
Capstone   Turbine Corporation
    
	
a   Delaware limited partnership
    	
 
    	
a   California corporation
    
	
By:
    	
AMB   Property Corporation,
    	
 
    	
 
    
	
 
	
a Maryland corporation
    	
 
	
 

	
 
    	
 
	
 
	
 

	
BY
    	
 
	
 
	
 
	
By:
	
J. Watts

	
 
    	
Martin Coyne, Vice President
	
 
	
 
	
Its:
	
CFO 9/26/00

	
 
    	
 
	
 
	
 
	
 
	
 

	
 
    	
/s/ MARTIN COYNE
	
 
	
 
	
By:
	
/s/ J. WATTS

	
 
    	
 
	
 
	
 
	
Its:
	
CFO

 

2

 

AMB PROPERTY, L.P.,

A DELAWARE LIMITED PARTNERSHIP

INDUSTRIAL LEASE

 

ADDENDUM

 

This Addendum to Industrial Lease (“Addendum”) is made and entered into as of the 25th day of September, 2000, by and between AMB Property, L.P., a Delaware limited partnership (“Landlord”), and Capstone Turbine Corporation, a Delaware corporation (“Tenant”), with reference to that certain Industrial Lease dated as of September 25th, 2000, by and between Landlord and Tenant (“Lease”). The promises, covenants, agreements and declarations made and set forth herein are intended to and shall have the same force and effect as if set forth at length in the body of the Lease. To the extent that the provisions of this Addendum are inconsistent with the terms and conditions of the Lease, the terms of this Addendum shall prevail and control for all purposes. Unless otherwise defined below, all terms used in this Addendum and defined in the Lease shall have the same meaning as is ascribed to such terms in the Lease.

 

1.     Delivery of Premises. Subject to Landlord performing the improvements set forth on Attachment 2 and delivering the Premises pursuant to Section 2.6 of the Lease, Tenant acknowledges that it has inspected and accepts the Premises in their present “as-is” condition as suitable for the purpose for which the Premises are leased. The taking of possession by Tenant shall be conclusive to establish that the Premises are in good and satisfactory condition when possession is taken, except as expressly set forth in this Lease. Tenant further acknowledges that no representations or promises were made by Landlord or any agent of Landlord to repair, alter, remodel or improve the Premises, except as expressly set forth in this Lease.

 

2.     Signage. Provided Tenant is not in default hereunder, Tenant shall have the right to install (i) a monument sign, and (ii) exterior sign identification of the Premises, at Tenant’s sole cost and expense (collectively, “Tenant’s Signage”). Tenant’s Signage shall be subject to Landlord’s approval as to size, design, location, graphics, materials, colors and similar specifications and shall be consistent with the exterior design, materials and appearance of the Industrial Center and the Industrial Center’s signage program and shall be further subject to and comply with all applicable local governmental laws, rules, regulations, codes and other approvals. Landlord has the right, but not the obligation, to oversee the installation of Tenant’s Signage. The cost to operate, if any, Tenant’s Signage shall be paid for by Tenant, and Tenant shall be separately metered for such expense (the cost of separately metering any utility usage shall also be paid for by Tenant). Upon the expiration of the Lease Term, or other earlier termination of this Lease, Tenant shall be responsible for any and all costs associated with the removal of Tenant’s Signage, including, but not limited to, the cost to repair and restore the Premises to its original condition, normal wear and tear excepted.

 

3.     Rental Abatement. Landlord shall grant to Tenant base rental abatement for the first 2 months of the Lease Term.

 

4.     DWP Interconnect. Landlord shall allow Tenant the right to interconnect with the DWP grid, subject to DWP final approval. There shall be no cost or expense to Landlord.

 

5.     Environmental Indemnification. Landlord shall indemnify, protect, defend, and hold Tenant, Tenant’s affiliates, and the officers, directors, shareholders, partners, employees, managers, independent contractors, attorneys, and agents of the foregoing (“Tenant Entities”) and the Premises, harmless from and against any and all damages, liabilities, judgments, costs, claims, liens, expenses, penalties, loss of permits, and attorneys’ and consultants’ fees arising out of or involving any Hazardous Substance that exists at or beneath the Premises or that migrate to, beneath or from the Premises, unless directly caused by Tenant or its agents. Landlord’s obligations under this Paragraph 4 shall include, but not be limited to, the effects of any contamination or injury to persons, property, or the environment and the cost of investigation (including consultants’ and attorneys’ fees and testing), removal, remediation, restoration and/or abatement thereof, or of any contamination therein involved. Landlord’s obligations under this Paragraph 4 shall survive the Expiration Date or earlier termination of this Lease directly caused by Tenant.

 

1

 

6.     Early Possession. Tenant shall be given early possession of the premises (subject to all terms and conditions of the Lease with the exception of Rent) upon full execution of Lease documents.

 

7.     Roof Maintenance. Roof maintenance following the Commencement Date shall be the responsibility of Tenant, subject to an annual maintenance cost cap of $1,500.00. All costs in excess of $1,500 shall be paid by Landlord except

that Tenant shall bear the entire cost of any roof repair attributable to a negligent or intentional act or omission of Tenant’s Entities.

 

8.     Tenant Improvements. Tenant shall have the right to construct canopies over the east parking lot/yard portion of the Premises, subject to Landlord’s reasonable approval. Such canopies shall be removed at the end of the Lease Term.

 

9.     Subordination - Non-Disturbance from Existing Lender. Prior to the Commencement Date, Landlord shall provide Tenant with a commercially reasonable subordination and non-disturbance agreement from any existing lender to whose interest, Tenant’s interest in this Lease is subordinate.

 

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

 

	
LANDLORD:
    	
 
    
	
 
    	
 
    
	
AMB   PROPERTY, L.P.,
    	
 
    
	
a   Delaware limited partnership
    	
 
    
	
 
    	
 
    
	
By:
    	
AMB   Property Corporation,
    	
 
    
	
 
    	
a   Maryland corporation, its general partner
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   MARTIN J. COYNE
    	
 
    
	
 
    	
 
    	
Martin   J. Coyne, Vice President
    	
 
    
	
 
    	
 
    
	
TENANT:
    	
 
    
	
 
    	
 
    
	
CAPSTONE   TURBINE CORPORATION,
    	
 
    
	
a Delaware corporation
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/S/ J. WATTS
    	
9/26/00
    	
 
    
	
 
    	
 
    	
 
    
	
Its:
    	
CFO
    	
 
    
					

 

2

 

ATTACHMENT 1

 

PARKING DIAGRAM

 

[PARKING DIAGRAM]

 

Bldg 7

78, 711 SF

16640 Stagg St.

 

3

 

Attachment 2

 

LANDLORD’S WORK

 

As part of Landlord’s Work, Landlord will:

 

	
1.
    	
Carpet   (in a mutually agreeable color/grade) the entire office space.
    
	
 
    	
 
    
	
2.
    	
Once   the cul-de-sac is completed, Landlord shall install a wrought iron fence with   gate similar to the existing entrance to the property (or a mutually   acceptable substitute).
    
	
 
    	
 
    
	
3.
    	
Repair,   clean, and seal the warehouse floor.
    
	
 
    	
 
    
	
4.
    	
Assist   in the installation of a 4” high pressure gas line; any repair work   necessitated by the installation shall be Landlord’s sole cost and expense.
    
	
 
    	
 
    
	
5.
    	
Install   traffic rated drain across the northeastern ground level door.
    
	
 
    	
 
    
	
6.
    	
Landlord   warrants that the parking lot shall drain properly with no unreasonable   puddling.
    
	
 
    	
 
    
	
7.
    	
Term shall not commence   until Landlord’s work as described in Item 3 above, as well connection to   permanent electrical power is completed.
    

 

4

 

AMB PROPERTY, L.P.,

DELAWARE LIMITED PARTNERSHIP

INDUSTRIAL LEASE

 

TENANT IMPROVEMENT ADDENDUM

 

This Tenant Improvement Addendum is a part of the Lease dated September 25, 2000, by and between AMB PROPERTY, L.P. “(Landlord”) and Capstone Turbine Corporation, a Delaware corporation (“Tenant”) for the premises commonly known as 16640 Stagg Street, Van Nuys, California.

 

Tenant may construct at its sole cost and expense the improvements (“Alterations”) described on Exhibit 1 attached hereto. Prior to commencement of construction, Tenant shall obtain and deliver to Landlord any building permit required by applicable law and a copy of the executed construction contract(s). Tenant shall reimburse Landlord within 10 days after the rendition of a bill for all of Landlord’s actual out-of-pocket costs incurred in connection with the Alterations, including, without limitation, all management, engineering, outside consulting, and construction fees incurred by or on behalf of Landlord for the review and approval of Tenant’s plans and specifications and for the monitoring of construction of the Alterations. Tenant shall require its contractor to maintain insurance in the amounts and in the forms described in Exhibit 2. The Alterations shall be constructed by licensed contractors approved by Landlord and in accordance with rules, such as hours of construction, imposed by Landlord. The Alterations shall be completed lien free, in accordance with the plans and specifications described in Exhibit 1, in a good, workmanlike, and prompt manner, with new materials of first-class quality and comply with all applicable local, state, and federal regulations. The competed Alterations shall be the property of Landlord and shall, subject to the provisions of the next sentence, be surrendered with the Premises upon the expiration or sooner termination of this Lease.

 

Prior to commencing construction of the Improvements, Tenant shall obtain from its contractors and deliver to Landlord a commercially reasonable waiver and release of any and all claims against Landlord and liens against the Premises to which such contractor might at any time be entitled and to provide such payment and performance bonds as Landlord may require. The delivery of the waiver and release of claims and liens and such bonds shall be a condition precedent to Tenant’s ability to begin its construction work at the Premises.

 

Tenant shall pay when due all claims for labor or materials furnished or alleged to have been furnished to or for Tenant at or for use on the Premises. Tenant shall give Landlord not less than 10 days’ notice prior to the commencement of any work in, on, or about the Premises, and Landlord shall have the right to post notices of non-responsibility in or on the Premises as provided by law.

 

Tenant agrees to indemnify, protect, and defend Landlord and hold Landlord harmless against any loss, liability, or damage resulting from construction of the Alterations.

EXHIBITS

 

Exhibit 1: Description of Alterations and plans and specifications

 

Exhibit 2: Insurance requirements

 

1

 

EXHIBIT A

 

DESCRIPTION OF PREMISES

 

[DESCRIPTION OF PREMISES]

 

Bldg 7

78, 711 SF

16640 Stagg St.

 

 

COMMENCEMENT DATE MEMORANDUM

 

	
LANDLORD:
    	
AMB   PROPERTY, L.P.
    
	
 
    	
 
    
	
TENANT:
    	
Capstone   Turbine Corporation
    
	
 
    	
 
    
	
LEASE   DATE:
    	
September 25,   2000
    
	
 
    	
 
    
	
PREMISES:
    	
16640   Stagg Street
    
	
 
	
Van Nuys, CA

 

Tenant hereby accepts the Premises as being in the condition required under the Lease.

 

The Commencement Date of the Lease is October 1, 2000.

 

The Expiration Date of the Lease is September 30, 2005.

 

	
LANDLORD:
    	
TENANT:
    
	
AMB PROPERTY, L.P.,
	
CAPSTONE TURBINE CORPORATION,

	
 
	
 

	
a Delaware limited partnership
	
a Delaware corporation

 

	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
AMB   Property Corporation,
    	
By:
    	
 
    
	
 
    	
a   Maryland corporation,
    	
 
    
	
 
    	
its   general partner
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
Martin   J. Coyne 
    	
Telephone:      (      )
    
	
Its:
    	
Vice   President
    	
 
    
	
 
    	
Facsimile:        (     )
    
	
 
    	
 
    
	
Telephone:         (415) 394-9000
    	
 
    
	
 
    	
ADDRESS:
    
	
Facsimile:           415   394-6257
    	
 
    
	
 
    	
 
    
	
ADDRESS:
    	
 
    
	
 
    	
 
    
	
505   Montgomery Street
    	
 
    
	
San Francisco, CA 94111
	
Tax ID:

							

 

EXHIBIT B

 

 

EXHIBIT “D”

 

TENANT MOVE-IN AND LEASE RENEWAL ENVIRONMENTAL QUESTIONNAIRE

FOR

COMMERCIAL AND INDUSTRIAL PROPERTIES

 

	
Property   Name:
    	
Airport   Business Park
    
	
Property Address:
    	
16640 Stagg Street, Van   Nuys, CA
    

 

Addendum to the Lease Dated September 25, 2000

Between

CAPSTONE TURBINE CORPORATION

a Delaware corporation

(“Tenant”)

and

AMB PROPERTY, L.P.

(“Landlord”)

 

Instructions: The following questionnaire is to be completed by the Tenant Representative with knowledge of the planned/existing operations for the specified building/location. A copy of the completed form must be attached to all new leases and renewals, and forwarded to the Owner’s Risk Management Department. 

 

	
1.0
    	
PLANNED   USE/OPERATIONS
    
	
 
    	
 
    
	
1-1.       Describe planned use (new Lease) or existing operations (lease renewal), and   include brief description of manufacturing processes employed.
    
	
 
    	
 
    
	
THE   MANUFACTURING PROCESSES INCLUDE: METAL FORMING, WELDING, MECHANICAL ASSEMBLY   AND PRODUCT PERFORMANCE TESTING.
    
	
 
    	
 
    
	
2.0
    	
HAZARDOUS   MATERIALS
    
	
 
    	
 
    
	
2-1.
    	
Are   hazardous materials used or stored? If so, continue with the next question.   If not, go to Section 3.0.
    
	
 
    	
 
    
	
 
    	
YES
    
	
 
    	
 
    
	
2-2.
	
Are any of the following materials handled on the property? (A material is handled if it is used, generated, processed, produced, packaged, treated, stored, emitted, discharged, or disposed.) If so, complete this section. If this section is not applicable, skip this section and go on to Section 5.0.

	
 
	
 

	
 
	
o    Explosives
    	
x  Fuels
    	
x  Oils
    
	
 
	
 
    	
 
    	
 
    
	
 
	
o    Solvents
    	
o    Oxidizers
    	
x    Organics/Inorganics
    
	
 
	
 
    	
 
    	
 
    
	
 
	
o  Acids
    	
o  Bases
    	
o    Pesticides
    
	
 
	
 
    	
 
    	
 
    
	
 
	
x  Gases
	
o  PCBs
	
o  Radioactive Materials

	
 
	
 
	
 
	
 

	
 
	
o  Other (please specify)
	
 
	
 

	
 
	
 
	
 
	
 

	
2-3.
	
For the following groups of chemicals, please check the type(s), use(s), and quantity of each chemical used or stored on the site. Attach either a chemical inventory or list the chemicals in each category.

	
 
	
 
	
 
	
 

	
 
	
Solvents
	
Gases
	
SEE ATTACHMENT “A”

	
 
	
 
	
 

	
 
	
Type:
    	
Type:

	
 
	
 
    	
 

	
 
	
Use:
    	
Use:
    
	
 
	
 
    	
 
    
	
 
	
Quantity:
    	
Quantity:
    
	
 
	
 
    	
 
    
	
 
	
Inorganic
    	
Acids
    

 

 

	
Type:
    	
Type:
    
	
 
    	
 
    
	
Use:
    	
Use:
    
	
 
    	
 
    
	
Quantity:
    	
Quantity:
    
	
 
    	
 
    
	
Fuels
    	
Explosives
    
	
 
    	
 
    
	
Type:
    	
Type:
    
	
 
    	
 
    
	
Use:
    	
Use:
    
	
 
    	
 
    
	
Quantity:
    	
Quantity:
    
	
 
    	
 
    
	
Oils
    	
Bases
    
	
 
    	
 
    
	
Type:
    	
Type:
    
	
 
    	
 
    
	
Use:
    	
Use:
    
	
 
    	
 
    
	
Quantity:
    	
Quantity:
    
	
 
    	
 
    
	
Oxidizers
    	
Pesticides
    
	
 
    	
 
    
	
Type:
    	
Type:
    
	
 
    	
 
    
	
Use:
    	
Use:
    
	
 
    	
 
    
	
Quantity:
    	
Quantity:
    
	
 
    	
 
    
	
Organic
    	
Radioactive   Materials
    
	
 
    	
 
    
	
Type:
    	
Type:
    
	
 
    	
 
    
	
Use:
    	
Use:
    
	
 
    	
 
    
	
Quantity:
	
Quantity:

 

Other

 

Type:

 

Use:

 

Quantity:

 

2

 

2-4.   List and quantify the materials identified above. SEE ATTACHMENT “A”

 

	
MATERIAL
	
 
	
PHYSICAL STATE
	
 
	
CONTAINER SIZE
	
 
	
NUMBER OF 
 CONTAINERS

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

 

	
2-5.
	
Describe the storage area location(s) for these materials.

	
 
	
 

	
3.0
	
HAZARDOUS WASTES

	
 
	
 

	
3-1.
	
Are hazardous wastes generated? If so, continue with the next question.

	
 
	
 

	
 
	
If not, skip this section and go to section 4.0.

	
 
	
 

	
 
	
YES

	
 
	
 

	
3-2.
	
Are any of the following wastes generated, handled, or disposed of (where applicable) on the property?

 

	
o Hazardous   wastes
    	
x Industrial   Wastewater
    
	
x Waste oils
    	
o PCBs
    
	
x Air   emissions
    	
o Sludges
    
	
o Other (please specify)
	
 

 

	
3-3.
	
Identify and describe those wastes generated, handled or disposed of (disposition). Specify any wastes known to be regulated under the Resource Conservation and Recovery Act (RCRA) as “listed characteristic or statutory” wastes. Include total amounts generated monthly. Please include name, location, and permit number (e.g. EPA ID No.) for transporter and disposal facility, if applicable. Attach separate pages as necessary.

	
 
	
 

	
 
	
 
    	
EPA   ID # CAL 000131155
    
	
 
	
 
    	
 
    
	
 
	
1)
    	
WASTE   OILS FROM METAL WORKING WATER SOLUBLE
    
	
 
	
 
    	
 
    
	
 
	
2)   
    	
INDUSTRIAL   WASTEWATER FROM WELDING OPERATIONS 
    
	
 
	
 
    	
 
    
	
 
	
3)   
    	
AIR   EMISSION FROM WELDING AND PRODUCT TESTING. 
    

 

3

 

	
3-4. 
    	
List and   quantify the materials identified in Question 3-2 of this section.
    

 

	
 
    	
 
    	
 
    	
 
    	
APPROXIMATE
    	
 
    	
 
    	
 
    	
 
    
	
WASTE
    	
 
    	
 
    	
 
    	
MONTHLY
    	
 
    	
WASTE
    	
 
    	
 
    
	
GENERATED
    	
 
    	
SOURCE
    	
 
    	
QUANTITY
    	
 
    	
CHARACTERIZATION
    	
 
    	
DISPOSITION
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
INDUSTRIAL WASTEWATER
    	
 
    	
WELDING
    	
 
    	
60,000 GAL PER MO
    	
 
    	
BAY AREA WASTEWATER BEING ANALYZED
    	
 
    	
COULD BE CONDITIONALLY

AUTHORIZED FOR NPORS
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
WASTE OILS
    	
 
    	
MACHINES
    	
 
    	
55 GAL
    	
 
    	
HAZ WASTE LIQUID
    	
 
    	
STORE FOR HAZ WASTE
    
	
WATER SOLUBLE
    	
 
    	
METAL WORK
    	
 
    	
PER MO
    	
 
    	
NON-FLAM RCRA
    	
 
    	
PICK-UP AND DISPOSAL
    

 

	
3-5.
    	
Are   pollution controls or monitoring employed in the process to prevent or   minimize the release of wastes into the environment? If so, please describe.
    
	
 
    	
 
    
	
 
    	
NO
    
	
 
    	
 
    
	
4.0
    	
USTS/ASTS
    
	
 
    	
 
    
	
4-1.
    	
Are   underground storage tanks (USTs), aboveground storage tanks (ASTs), or   associated pipelines present on site (lease renewals) or required for planned   operations (new tenants)? If not, continue with section 5.0. If yes, please   describe capacity, contents, age, design and construction of USTs or ASTs.
    
	
 
    	
 
    
	
 
    	
YES
    
	
 
    	
ONE AST 300   GALLON WITH SECONDARY CONTAINMENT, ONE YEAR OLD
    
	
 
    	
 
    
	
4-2.
    	
Is the   UST/AST registered and permitted with the appropriate regulatory agencies?   Please provide a copy of the required permits.
    
	
 
    	
 
    
	
 
    	
NOT PROCURED   - TO BE DETERMINED
    
	
 
    	
 
    
	
4-3.
    	
Indicate if   any of the following leak prevention measures have been provided for the   USTs/ASTs and their associated piping. Additionally, please indicate the   number of tanks that are provided with the indicated measure. Please provide   copies of written test results and monitoring documentation.
    

 

NOT YET DESIGNED OR PROCURED

 

	
 
    	
o
    	
Integrity testing
    	
o Inventory   reconciliation
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
o
    	
Leak detection system
    	
o Overfill spill   protection
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
o
    	
Secondary containment
    	
o              Other   (please describe)
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
o
    	
Cathodic protection
	
 

 

	
4-4.
    	
If this Questionnaire   is being completed for a lease renewal, and if any of the USTs/ASTs have   leaked, please state the substance released, the media(s) impacted   (e.g., soil, water, asphalt, etc.), the actions taken, and all remedial   responses to the incident.
    
	
 
    	
 
    
	
N/A
    	
 
    

 

4

 

	
4-5.
    	
If this   Questionnaire is being completed for a lease renewal, have USTs/AST’s been   removed from the property? If so, please provide any official closure letters   or reports and supporting documentation (e.g., analytical test results,   remediation report results, etc.)
    
	
 
    	
 
    
	
 
    	
N/A
    
	
 
    	
 
    
	
4-6.
    	
For Lease   renewals, are there any above or below ground pipelines on site used to   transfer chemicals or wastes? For new tenants, are installations of this type   required for the planned operations? If so, please describe.
    
	
 
    	
 
    
	
 
    	
To be   determined.
    
	
 
    	
 
    
	
4-7.
    	
If present   or planned, have the chemical transfer pipelines been inspected or tested for   leaks? If so, please indicate the results and provide a copy of the   inspection or test results.
    
	
 
    	
 
    
	
 
    	
Not present   - not planned.
    
	
 
    	
 
    
	
5.0
    	
ASBESTOS   CONTAINING BUILDING MATERIALS
    
	
 
    	
 
    
	
5-1.
    	
Please be advised that this property participates in an Asbestos   Operations and Maintenance Program, and that an asbestos survey may have been   performed at the Property. If provided, please review the information that   identifies the locations of known asbestos containing material or presumed   asbestos containing material. All personnel and appropriate subcontractors   should be notified of the presence of these materials, and informed not to   disturb these materials. Any activity that involves the disturbance or   removal of these materials must be done by an appropriately trained   individual/contractor. 
    
	
 
    	
 
    
	
6.0
    	
REGULATORY
    
	
 
    	
 
    
	
6-1.
    	
For lease Renewals, are there any past, current, or pending   regulatory actions by federal, state, or local environmental agencies   alleging noncompliance with regulations? If so, please describe. 
    
	
 
    	
 
    
	
 
    	
Unknown
    
	
 
    	
 
    
	
6-2.
    	
For lease renewals, are there any past, current, or pending lawsuits   or administrative proceedings for alleged environmental damages involving the   property, you, or any owner or tenant of the property? If so, please   describe. 
    
	
 
    	
 
    
	
 
    	
Yes - previous tenants/current owner have remediation in process for   trichloroethylene. Should be complete in 4 months.
    
	
 
    	
 
    
	
6-3.
    	
Does the operation have or require a National Pollutant Discharge   Elimination System (NPDES) or equivalent permit? If so, please provide a copy   of this permit.
    
	
 
    	
 
    
	
 
    	
No
    
	
 
    	
 
    
	
6-4.
    	
For Lease renewals, have there been any complaints from the   surrounding community regarding facility operations? If so, please describe.   Have there been any worker complaints or regulatory investigations regarding   hazardous material exposure at the facility? If so, please describe status   and any corrective actions taken. 
    
	
 
    	
 
    
	
 
    	
Unknown
    
	
 
    	
 
    
	
6-5.
    	
Has a Hazardous Materials Business Plan been developed for the site?   If so, please provide a copy.
    
	
 
    	
 
    
	
 
	
No

 

5

 

CERTIFICATION

 

I am familiar with the real property described in this questionnaire. By signing below, I represent and warrant that the answers to the above questions are complete and accurate to the best of my knowledge. I also understand that the Owner will rely on the completeness and accuracy of my answers in assessing any environmental liability risks associated with the property.

 

	
 
    	
Signature: 
    	
/s/ J WATTS
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
J Watts
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
CFO
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
10-9-00
    
	
 
    	
 
    	
 
    
	
 
    	
Telephone: 
    	
818-734-5552
    

 

6

 

ATTACHMENT “A”

TENANT MOVE-IN AND LEASE RENEWAL ENVIRONMENTAL QUESTIONNAIRE

FOR

COMMERCIAL AND INDUSTRIAL PROPERTIES

 

	
Property Name:
    	
Airport Business Park
    
	
Property Address:
	
16640 Stagg Street, Van Nuys, CA

 

Addendum to the Lease Dated September 25, 2000

 

CAPSTONE TURBINE CORPORATION

A Delaware corporation

(“Tenant”)

and

AMB Property, L.P.

(“Landlord”)

 

Ref: EXHIBIT “D”, Section 2-3 & 2-4

 

CHEMICAL/SUBSTANCE INVENTORY

 

 

	
 
    	
 
    	
MATERIAL   SUBSTANCE
    	
 
    	
PHYSICAL
    	
 
    	
CONTAINER
    	
 
    	
 
    	
 
    	
 
    
	
CATEGORY
    	
 
    	
NAME
    	
 
    	
STATE
    	
 
    	
SIZE
    	
 
    	
QTY
    	
 
    	
USE
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Oils
    	
 
    	
Compressor Oil
    	
 
    	
liquid
    	
 
    	
1 gallon
    	
 
    	
2
    	
 
    	
lubricant for equipment
    
	
 
    	
 
    	
Hydraulic jack oil
    	
 
    	
liquid
    	
 
    	
1 gallon
    	
 
    	
2
    	
 
    	
hydraulic fluid - equip
    
	
 
    	
 
    	
LPS Tapmatic cutting fluid
    	
 
    	
liquid
    	
 
    	
16 oz
    	
 
    	
4
    	
 
    	
metalworking lubricant
    
	
 
    	
 
    	
LPS LST Penetrant oil
    	
 
    	
liquid
    	
 
    	
11 oz
    	
 
    	
2
    	
 
    	
penetrating oil
    
	
 
    	
 
    	
Rapid Tap cutting oil
    	
 
    	
liquid
    	
 
    	
4 oz
    	
 
    	
4
    	
 
    	
metal cutting oil
    
	
 
    	
 
    	
Saf-T-Eze anti-seize
    	
 
    	
liquid
    	
 
    	
8 oz
    	
 
    	
4
    	
 
    	
thread anti-seize
    
	
 
    	
 
    	
White multipurpose grease
    	
 
    	
liquid
    	
 
    	
14 oz
    	
 
    	
4
    	
 
    	
lubricant
    
	
 
    	
 
    	
Molly Graph multipurpose
    	
 
    	
liquid
    	
 
    	
14 oz
    	
 
    	
4
    	
 
    	
lubricant
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Gases
    	
 
    	
Air - compressed
    	
 
    	
gas
    	
 
    	
“A” cylinder
    	
 
    	
2
    	
 
    	
calibration
    
	
 
    	
 
    	
Mixture: CO in air
    	
 
    	
gas
    	
 
    	
“A” cylinder
    	
 
    	
1
    	
 
    	
calibration
    
	
 
    	
 
    	
Mixture: CO2 in air
    	
 
    	
gas
    	
 
    	
“A” cylinder
    	
 
    	
1
    	
 
    	
calibration
    
	
 
    	
 
    	
Mixture: NO in air
    	
 
    	
gas
    	
 
    	
“A” cylinder
    	
 
    	
 
    	
 
    	
calibration
    
	
 
    	
 
    	
Mixture: propane in air/ non-flammable 
    	
 
    	
gas 
    	
 
    	
“A” cylinder 
    	
 
    	
1 
    	
 
    	
calibration 
    
	
 
    	
 
    	
Carbon Dioxide
    	
 
    	
gas
    	
 
    	
“A” cylinder
    	
 
    	
2
    	
 
    	
calibration
    
	
 
    	
 
    	
Nitrogen
    	
 
    	
gas
    	
 
    	
“A” cylinder
    	
 
    	
2
    	
 
    	
calibration
    
	
 
    	
 
    	
Methane
    	
 
    	
gas
    	
 
    	
“A” cylinder
    	
 
    	
1
    	
 
    	
calibration
    
	
 
    	
 
    	
Acetylene
    	
 
    	
gas
    	
 
    	
“A” cylinder
    	
 
    	
1
    	
 
    	
calibration
    
	
 
    	
 
    	
Argon
    	
 
    	
gas
    	
 
    	
400 ltr
    	
 
    	
1
    	
 
    	
calibration/welding
    
	
 
    	
 
    	
Hydrogen
    	
 
    	
gas
    	
 
    	
400 ltr
    	
 
    	
1
    	
 
    	
welding
    
	
 
    	
 
    	
Hydrogen/Helium mix
    	
 
    	
gas
    	
 
    	
“A” cylinder
    	
 
    	
1
    	
 
    	
calibration
    
	
 
    	
 
    	
Propane
    	
 
    	
gas
    	
 
    	
498 gallons
    	
 
    	
1
    	
 
    	
fuel - product testing
    
	
Oxidizers
    	
 
    	
Oxygen
    	
 
    	
gas
    	
 
    	
“A” cylinder
    	
 
    	
2
    	
 
    	
calibration
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Organics & Inorganics
    	
 
    	
Isopropyl Alcohol
    	
 
    	
liquid
    	
 
    	
1 gallon
    	
 
    	
4
    	
 
    	
cleaning-hand wipe
    
	
 
    	
 
    	
Acetone
    	
 
    	
liquid
    	
 
    	
1 gallon
    	
 
    	
4
    	
 
    	
cleaning-hand wipe
    
	
 
    	
 
    	
Methyl Ethyl Keytone
    	
 
    	
liquid
    	
 
    	
1 gallon
    	
 
    	
1
    	
 
    	
thinning
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fuels
    	
 
    	
Diesel #2
    	
 
    	
liquid
    	
 
    	
300 gallons
    	
 
    	
1
    	
 
    	
fuel - product testing
    
	
 
    	
 
    	
Gasoline
    	
 
    	
liquid
    	
 
    	
5 gallons
    	
 
    	
2
    	
 
    	
fuel - product testing
    
	
 
    	
 
    	
Kerosene
    	
 
    	
liquid
    	
 
    	
5 gallons
    	
 
    	
4
    	
 
    	
fuel -   product testing
    

 

1

 

FIRST AMENDMENT TO LEASE

 

This First Amendment to Lease (“Amendment”) is made and entered into as of October 7, 2008, by and between AMB Property, L.P., a Delaware limited partnership (“Landlord”) and Capstone Turbine Corporation, a Delaware corporation (“Tenant”).

 

RECITALS

 

A.            Tenant and Landlord are parties to that certain Industrial Lease dated September 25, 2000 (“Lease”). Pursuant to the terms and conditions of the Lease, Tenant has leased from Landlord the premises commonly known as 16640 Stagg Street, Van Nuys, CA 91406 consisting of approximately 78,711 rentable square feet (“Premises”).

 

B.            Tenant has requested and Landlord intends to give its consent to the making of certain alterations to the Premises as set forth in Exhibit A to this Amendment (“Alterations”) on the terms set forth in this Amendment.

 

C.            Landlord and Tenant also intend to provide for the removal of the Alterations and Other Alterations (as hereafter defined) on the terms set forth in this Amendment.

 

D.            All capitalized terms used herein but not specifically defined in this Amendment shall have the meanings ascribed to such terms in the Lease. The term “Lease” where used in the Lease shall hereinafter refer to the Lease, as amended by this Amendment.

 

AGREEMENTS

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, conditions and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

 

1.             Consent to Alterations.   Landlord hereby consents to the making of the Alterations by Tenant provided the Alterations are constructed in a good and workman-like manner and lien free condition and in compliance with all applicable laws, statutes, ordinances, regulations, rules, covenants and agreements governing the Premises (collectively “Applicable Law”).

 

2.             Removal of Alterations.   Notwithstanding anything to the contrary, at the end of the Term or earlier termination of the Lease, at Tenant’s sole cost and expense, Tenant shall, in compliance with Applicable Law, remove the Alterations and promptly repair any damage to the Premises or any areas serving the Premises caused by the removal of the Alterations.

 

3.             Removal of Other Alterations.   Landlord and Tenant acknowledge and agree that during the Term Tenant has made or constructed other alterations to the Premises which are attached to the outside of the Building or outside of the Building and not within the four concrete tilt-up walls of the Building and alterations to the inside of the Building including, but not limited to the construction or installation of warehouse offices, conduits, cabling, pipes, and data lines (collectively “Other Alterations”) for which Landlord’s consent was not sought or obtained. Notwithstanding anything to the contrary, at the end of the Term or earlier termination of the Lease, at Tenant’s sole cost and expense, Tenant shall, in compliance with Applicable Law, remove the Other Alterations and promptly repair any damage to the Premises or any areas serving the Premises caused by the removal of the Other Alterations. Notwithstanding anything to the contrary, nothing in this Amendment shall be deemed to be consent by Landlord to the Other Alterations.

 

4.             Indemnity by Tenant.   Notwithstanding anything to the contrary, the indemnity set forth in Paragraph 8.5 of the Lease by Tenant to Landlord and Landlord Entities (as defined in the Lease) shall be specifically applicable to the construction and removal of the Alterations and Other Alterations as well as the compliance of the Alterations and Other Alterations with Applicable Law.

 

5.             Broker’s Fees.   Tenant represents and warrants that it has dealt with no broker, agent or other person in connection with this Amendment and that no broker, agent or other person brought about this transaction and Tenant shall indemnify, defend, protect and hold Landlord harmless from and against any claims, losses, liabilities, demands, costs, expenses or causes of action by any broker, agent or other person claiming a commission or other form of compensation by virtue of having dealt with Tenant with regard to this Amendment.

 

1

 

6.             Effect of Amendment.   Except as modified herein, the terms and conditions of the Lease shall remain unmodified and continue in full force and effect. In the event of any conflict between the terms and conditions of the Lease and this Amendment, the terms and conditions of this Amendment shall prevail. Except as otherwise provided herein, the terms and provisions of the Lease are hereby incorporated in this Amendment.

 

7.             Authority.   Subject to the provisions of the Lease, this Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors and assigns. Each party hereto and the persons signing below warrant that the person signing below on such party’s behalf is authorized to do so and to bind such party to the terms of this Amendment.

 

8.             Counterparts.   This Amendment may be executed in counterparts by the parties, which counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument.

 

9.             Estoppel.   Tenant warrants, represents and certifies to Landlord that as of the date of this Amendment, (a) Landlord is not in default under the Lease, as amended by this Amendment, and (b) Tenant does not have any defenses or offsets to payment of rent and performance of its obligations under the Lease, as amended by this Amendment, as and when the same become due.

 

[signatures on following page]

 

2

 

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

 

	
Landlord:
    	
 
    	
Tenant:
    
	
 
    	
 
    	
 
    
	
AMB Property, L.P.
    	
 
    	
Capstone Turbine Corporation,
    
	
a Delaware limited   partnership
    	
 
    	
a Delaware corporation
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
AMB Property   Corporation,
    	
 
    	
 
    	
 
    
	
 
    	
a Maryland corporation,
    	
 
    	
By:
    	
/s/ Leigh L. Estus
    
	
 
    	
its general partner
    	
 
    	
Name:
    	
Leigh L. Estus
    
	
 
    	
 
    	
 
    	
Its:
    	
Senior Vice President   of Operations
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Robert Antrobius
    	
 
    	
 
    	
 
    
	
 
    	
Robert Antrobius,
    	
 
    	
 
    	
 
    
	
 
    	
Vice President
    	
 
    	
 
    	
 
    

 

3

 

Exhibit A

 

Alterations

 

Stagg Facility

Modification Plan

 

June 2008

 

 

1

 

 

2

 

 

3

 

 

4

 

 

5

 

 

6

 

 

7

 

W.O. 4846

 

EXHIBIT “A”

 

LEGAL DESCRIPTION FOR YARD MAINTENANCE PURPOSES

 

Those portions of Lots 596, 597, 602 and 603 of Tract No. 1000 in the city of Los Angeles, county of Los Angeles, state of California as per map recorded in Book 19, Pages 1 to 34 inclusive of Maps, Records of Los Angeles County described as a whole as follows:

 

The easterly 138.2 feet of the southerly 400 feet of said Lot 596; and the westerly 176.6 feet of the southerly 400 feet of said Lot 597; and the easterly 138.2 feet of the northerly 239 feet of said Lot 603; and the westerly 176.6 feet of the northerly 239 feet of said Lot 602;

 

EXCEPT therefrom those portions dedicated for street purposes per Instrument Number 78-1094459 and 02-1242807 (known as Stagg Street).

 

NOTE: The 60 foot wide yards to be maintained for an oversized building for the above described parcel of land are depicted in EXHIBIT “B” attached hereto.

 

8

 

 

9

 

SECOND AMENDMENT TO LEASE

 

This Second Amendment to Lease (“Amendment”) is made and entered into as of August 11, 2009, by and between AMB Property, L.P., a Delaware limited partnership (“Landlord”)  and Capstone Turbine Corporation, a Delaware corporation (“Tenant”).

 

RECITALS

 

A.            Tenant and Landlord are parties to that certain Industrial Lease Agreement dated September 25, 2000 as amended by a First Amendment to Lease dated October 7, 2008 (collectively “Lease”).  Pursuant to the terms and conditions of the Lease, Tenant has leased from Landlord the premises commonly known as 16640 Stagg Street, Van Nuys, CA 91406 consisting of approximately 78,711 rentable square feet (“Premises”).

 

B.            Landlord and Tenant desire to extend the Term of the Lease and modify certain other obligations of Tenant under the Lease on the terms set forth in this Amendment.

 

C.            All capitalized terms used herein but not specifically defined in this Amendment shall have the meanings ascribed to such terms in the Lease. The term “Lease” where used in the Lease shall hereinafter refer to the Lease, as amended by this Amendment.

 

AGREEMENTS

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, conditions and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

 

1.             Exercise of Option and Extension of Term.   The Term of the Lease is hereby extended (“Extended Term”) until and including December 31, 2012 (“First Option Termination Date”). Notwithstanding anything to the contrary contained in the Lease, the extension of the Term for the Extended Term, even though for a shorter period of time than set forth in the Option for Period One, as defined in the Option to Extend Addendum to the Lease (“Option Addendum”), shall be deemed an exercise by Tenant of the entire Option for Period One.

 

2.             Base Rent.            Notwithstanding anything to the contrary contained in the Lease, the monthly Base Rent shall hereafter be as follows:

 

	
August 1, 2009 —   September 30, 2010
    	
 
    	
—
    	
 
    	
$
    	
51,162.15
    	
 
    
	
October 1, 2010 —   December 31, 2011
    	
 
    	
—
    	
 
    	
$
    	
56,475.14
    	
 
    
	
January 1, 2012 —   December 31, 2012
    	
 
    	
—
    	
 
    	
$
    	
60,371.34
    	
 
    

 

3.             Remaining Options.            Landlord and Tenant acknowledge and agree that, pursuant to the Option Addendum, Tenant has one additional and remaining 5-year option (“Remaining Option”) to extend the Term of the Lease beyond the First Option Termination Date, pursuant to the terms of the Option Addendum. Notwithstanding the foregoing or anything to the contrary contained in the Option Addendum, if Tenant exercises the Remaining Option, the Monthly Base Rent from the commencement of the Remaining Option through the end of the thirtieth (30th) month thereafter shall be $66,904.35 and shall thereafter increase to $71,922.18 at the beginning of the thirty-first (31st) month through the end of the Remaining Option.

 

1

 

4.             “As-Is”.                  Tenant acknowledges and agrees that its tenancy of the Premises through the First Option Termination Date is a continuation of its tenancy of the Premises under the Lease. Therefore, Tenant accepts the Premises in its existing condition, “as-is, where is, and with all faults”.

 

5.             Landlord’s Address for Payments and Notices.

 

The address for notices to Landlord as set forth in the Lease shall be to:

 

AMB Property, L.P.

c/o AMB Property Corporation

Pier 1, Bay 1

San Francisco, CA 94111

Attention: Martin J. Coyne

 

The address for payments to Landlord as set forth in the Lease shall be to:

 

AMB Property, L.P.

c/o AMB Property Corporation

P.O. Box 6156

Hicksville, NY 11802-6156

 

6.             Broker’s Fees.       Tenant represents and warrants that it has dealt with no broker, agent or other person in connection with this transaction and that no broker, agent or other person brought about this transaction and Tenant shall indemnify, defend, protect and hold Landlord harmless from and against any claims, losses, liabilities, demands, costs, expenses or causes of action by any broker, agent or other person claiming a commission or other form of compensation by virtue of having dealt with Tenant with regard to this leasing transaction.

 

7.             Effect of Amendment.       Except as modified herein, the terms and conditions of the Lease shall remain unmodified and continue in full force and effect.  In the event of any conflict between the terms and conditions of the Lease and this Amendment, the terms and conditions of this Amendment shall prevail. Except as otherwise provided herein, the terms and provisions of the Lease are hereby incorporated in this Amendment.

 

8.             Authority.              Subject to the provisions of the Lease, this Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors and assigns.  Each party hereto and the persons signing below warrant that the person signing below on such party’s behalf is authorized to do so and to bind such party to the terms of this Amendment.

 

9.             Counterparts.       This Amendment may be executed in counterparts by the parties, which counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument.

 

10.          Estoppel.               Tenant warrants, represents and certifies to Landlord that as of the date of this Amendment, (a) Landlord is not in default under the Lease, as amended by this Amendment, and (b) Tenant does not have any defenses or offsets to payment of rent and performance of its obligations under the Lease, as amended by this Amendment, as and when the same become due.

 

[signatures on following page]

 

2

 

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

 

	
Landlord:
    	
 
    	
Tenant:
    
	
 
    	
 
    	
 
    
	
AMB Property, L.P.
    	
 
    	
Capstone Turbine Corporation,
    
	
a Delaware limited partnership
    	
 
    	
a Delaware corporation
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
AMB Property Corporation,
    	
 
    	
 
    	
 
    
	
 
    	
a Maryland corporation,
    	
 
    	
 
    	
 
    
	
 
    	
its general partner
    	
 
    	
By:
    	
/s/ EDWARD I.   REICH
    
	
 
    	
 
    	
 
    	
Name:
    	
Edward I. Reich
    
	
 
    	
 
    	
 
    	
Its:
    	
Executive Vice President and CFO
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ ROBERT   B.  ANTROBIUS
    	
 
    	
 
    	
 
    
	
 
    	
Robert B. Antrobius
    	
 
    	
 
    	
 
    
	
 
    	
Vice President
    	
 
    	
 
    	
 
    

 

3

 

THIRD AMENDMENT TO LEASE

 

THIS THIRD AMENDMENT TO LEASE AGREEMENT (the “Third Amendment”) is entered into as of the 28 day of March, 2013, by and between Prologis, L.P., a Delaware limited partnership (“Landlord”), formerly known as AMB Property, L.P. a Delaware limited partnership and Capstone Turbine Corporation, a Delaware corporation (“Tenant”).

 

W I T N E S S E T H:

 

WHEREAS, Landlord and Tenant have entered into a Lease dated September 25, 2000 as amended by First Amendment to Lease dated October 7, 2008 and Second Amendment to Lease dated August 11, 2009 (collectively “Lease”), pursuant to which Landlord leased to Tenant certain premises consisting of approximately 78,711 square feet located at 16640 Stagg Street, Van Nuys, California 91406 (the “Premises”).

 

WHEREAS, Landlord and Tenant desire to modify the Lease on the terms and conditions set forth below.

 

A G R E E M E N T:

 

NOW THEREFORE, in consideration of the Premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

 

1.                            The Lease Term is extended for sixty (60) months, such that the Lease shall terminate on December 31, 2017 (the “Second Extension Term”). The Second Extension Term shall commence on January 1, 2013 (“Second Extension Term Effective Date”). All of the terms and conditions of the Lease shall remain in full force and effect during such extension period except that the Monthly Base Rent shall be as follows:

 

	
Period
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Monthly Base Rent
    	
 
    
	
January 1, 2013
    	
 
    	
through
    	
 
    	
June 30, 2015
    	
 
    	
$
    	
60,371.34
    	
 
    
	
July 1, 2015
    	
 
    	
through
    	
 
    	
December 31, 2017
    	
 
    	
$
    	
64,899.19
    	
 
    

 

2.                            Except as otherwise expressly provided herein, all defined terms used in this Third Amendment shall have the same respective meanings as are provided for such defined terms in the Lease. Tenant shall accept the Premises in its “as is” condition and shall pay Operating Expenses as provided in the Lease during the Second Extension Term.

 

3.                           Tenant represents and warrants that it has dealt with no broker, agent or other person in connection with this transaction and that no broker, agent or other person brought about this transaction, and Tenant agrees to indemnify and hold Landlord harmless from and against any claims by any other broker, agent or other person claiming a commission or other form of compensation by virtue of having dealt with Tenant with regard to this leasing transaction.

 

4.                            Insofar as the specific terms and provisions of this Third Amendment purport to amend or modify or are in conflict with the specific terms, provisions and exhibits of the Lease, the terms and provisions of this Third Amendment shall govern and control; in all other respects, the terms, provisions and exhibits of the Lease shall remain unmodified and in full force and effect.

 

5.                           Landlord and Tenant hereby agree that (i) this Third Amendment is incorporated into and made a part of the Lease, (ii) any and all references to the Lease hereinafter shall include this Third Amendment, and (iii) the Lease and all terms, conditions and provisions of the Lease are in full force and effect as of the date hereof, except as expressly modified and amended hereinabove.

 

6.                            Any obligation or liability whatsoever of Prologis, a Maryland real estate investment trust, which may arise at any time under this Lease or any obligation or liability which may be incurred by it pursuant to any other instrument, transaction, or undertaking contemplated hereby shall not be personally binding upon, nor shall resort for the enforcement thereof be had to the property of, its trustees, directors, shareholders, officers, employees or agents, regardless of whether such obligation or liability is in the nature of contract, tort, or otherwise.

 

IN WITNESS WHEREOF, the parties hereto have signed this Third Amendment as of the day and year first above written.

 

	
TENANT:
    	
LANDLORD:
    
	
Capstone   Turbine Corporation
    	
PROLOGIS,   L.P.
    
	
a   Delaware corporation
    	
a   Delaware limited partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
Prologis, Inc.,   a Maryland
   corporation, its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Edward Reich
    	
 
    	
By:
    	
/s/ Douglas McGregor
    
	
Name:
    	
Edward Reich
    	
 
    	
Name:
    	
Douglas McGregor
    
	
Title:
    	
CFO
    	
 
    	
Title:
    	
Senior Vice President, Head   of Operations –
    
	
 
    	
 
    	
Southwest Region

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