Document:

Exhibit 10.9

 

 

LEASE AGREEMENT

 

between

 

OLDS PROPERTIES CORPORATION

 

and

 

JOHN H.O. La GATTA

 

as Landlord,

 

and

 

WARNER ELECTRIC COMPANY

 

as Tenant

 

 

Date: January 29, 2003

 

 

TABLE OF CONTENTS

 

 

	
  ARTICLE I

  	
  BASIC
  LEASE TERMS AND DEFINITIONS

  	
   

  
	
   

  	
  SECTION 1.1

  	
  Basic Lease Terms

  	
   

  
	
   

  	
  SECTION 1.2

  	
  Terms Generally

  	
   

  
	
   

  	
  SECTION 1.3

  	
  Attachments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  AGREEMENT; DEMISE

  	
   

  
	
   

  	
  SECTION 2.1

  	
  Agreement

  	
   

  
	
   

  	
  SECTION 2.2

  	
  Demise

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  TERM

  	
   

  
	
   

  	
  SECTION 3.1

  	
  Initial Term

  	
   

  
	
   

  	
  SECTION 3.2

  	
  Renewal Terms

  	
   

  
	
   

  	
  SECTION 3.3

  	
  Holding Over

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  USE

  	
   

  
	
   

  	
  SECTION 4.1

  	
  Use

  	
   

  
	
   

  	
  SECTION 4.2

  	
  Cessation
  of Tenant Operations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  RENTAL AND
  SECURITY DEPOSIT

  	
   

  
	
   

  	
  SECTION 5.1

  	
  Rentals Payable

  	
   

  
	
   

  	
  SECTION 5.2

  	
  Annual Basic
  Rental

  	
   

  
	
   

  	
  SECTION 5.3

  	
  Payment of Rental

  	
   

  
	
   

  	
  SECTION 5.4

  	
  Security Deposit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  TAXES

  	
   

  
	
   

  	
  SECTION 6.1

  	
  Payment by Lessee

  	
   

  
	
   

  	
  SECTION 6.2

  	
  Proration of Taxes

  	
   

  
	
   

  	
  SECTION 6.3

  	
  Taxes on Rental

  	
   

  
	
   

  	
  SECTION 6.4

  	
  Tenant’s
  Right to Contest Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  PREMISES
  IMPROVEMENTS

  	
   

  
	
   

  	
  SECTION 7.1

  	
  Mechanics’ Liens

  	
   

  
	
   

  	
  SECTION 7.2

  	
  Tenant’s
  Trade Fixtures

  	
   

  
	
   

  	
  SECTION 7.3

  	
  Risk of Loss

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  OPERATIONS

  	
   

  
	
   

  	
  SECTION 8.1

  	
  Operations by
  Tenant

  	
   

  
	
   

  	
  SECTION 8.2

  	
  Signs and
  Advertising

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  IMPROVEMENT
  ALLOWANCE; MAINTENANCE AND REPAIRS

  	
   

  
	
   

  	
  SECTION 9.1

  	
  Improvement
  Allowance

  	
   

  
	
   

  	
  SECTION 9.2

  	
  Maintenance
  and Repairs

  	
   

  
	
   

  	
  SECTION 9.3

  	
  Alterations

  	
   

  
	
   

  	
  SECTION 9.4

  	
  Tenant Liens

  	
   

  
					

 

 

	
  ARTICLE X

  	
  UTILITIES

  	
   

  
	
   

  	
  SECTION 10.1

  	
  Water,
  Gas, Electricity, Telephone, and Sanitary Sewer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  INSURANCE;
  INDEMNIFICATION

  	
   

  
	
   

  	
  SECTION 11.1

  	
  Indemnity by
  Tenant

  	
   

  
	
   

  	
  SECTION 11.2

  	
  Tenant’s
  Insurance

  	
   

  
	
   

  	
  SECTION 11.3

  	
  Tenant’s
  Insurance Policies

  	
   

  
	
   

  	
  SECTION 11.4

  	
  Waiver of
  Subrogation

  	
   

  
	
   

  	
  SECTION 11.5

  	
  Insurance
  Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  DAMAGE AND
  DESTRUCTION

  	
   

  
	
   

  	
  SECTION 12.1

  	
  Landlord’s
  Repair upon Casualty

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  CONDEMNATION

  	
   

  
	
   

  	
  SECTION 13.1

  	
  Termination of
  Lease

  	
   

  
	
   

  	
  SECTION 13.2

  	
  Continuation
  of Lease

  	
   

  
	
   

  	
  SECTION 13.3

  	
  Apportionment
  of Award

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
  ASSIGNMENT
  AND SUBLEASING

  	
   

  
	
   

  	
  SECTION 14.1

  	
  Landlord’s
  Consent

  	
   

  
	
   

  	
  SECTION 14.2

  	
  Transfer of
  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV

  	
  DEFAULT

  	
   

  
	
   

  	
  SECTION 15.1

  	
  “Event of
  Default” Defined

  	
   

  
	
   

  	
  SECTION 15.2

  	
  Remedies

  	
   

  
	
   

  	
  SECTION 15.3

  	
  Damages

  	
   

  
	
   

  	
  SECTION 15.4

  	
  Assignment
  in Bankruptcy

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  	
  SUBORDINATION
  AND ATTORNMENT

  	
   

  
	
   

  	
  SECTION 16.1

  	
  Subordination

  	
   

  
	
   

  	
  SECTION 16.2

  	
  Mortgagee’s
  Unilateral Subordination

  	
   

  
	
   

  	
  SECTION 16.3

  	
  Attornment

  	
   

  
	
   

  	
  SECTION 16.4

  	
  Non-Disturbance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVII

  	
  NOTICES

  	
   

  
	
   

  	
  SECTION 17.1

  	
  Sending of
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVIII

  	
  QUIET ENJOYMENT

  	
   

  
	
   

  	
  SECTION 18.1

  	
  Warranty

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIX

  	
  RIGHT
  OF FIRST OFFER AND RIGHT OF FIRST REFUSAL

  	
   

  
	
   

  	
  SECTION 19.1

  	
  Right of First
  Offer

  	
   

  
	
   

  	
  SECTION 19.2

  	
  Right of
  First Refusal

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XX

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  SECTION 20.1

  	
  Estoppel
  Certificates

  	
   

  
	
   

  	
  SECTION 20.2

  	
  Inspections
  and Access by Landlord

  	
   

  
	
   

  	
  SECTION 20.3

  	
  Memorandum of
  Lease

  	
   

  
					

 

2

 

	
   

  	
  SECTION 20.4

  	
  Remedies
  Cumulative

  	
   

  
	
   

  	
  SECTION 20.5

  	
  Successors
  and Assigns

  	
   

  
	
   

  	
  SECTION 20.6

  	
  Compliance
  with Laws and Regulations

  	
   

  
	
   

  	
  SECTION 20.7

  	
  Captions and
  Headings

  	
   

  
	
   

  	
  SECTION 20.8

  	
  Broker’s
  Commission

  	
   

  
	
   

  	
  SECTION 20.9

  	
  No Joint Venture

  	
   

  
	
   

  	
  SECTION 20.10

  	
  No Option

  	
   

  
	
   

  	
  SECTION 20.11

  	
  No Modification

  	
   

  
	
   

  	
  SECTION 20.12

  	
  Severability

  	
   

  
	
   

  	
  SECTION 20.13

  	
  Third Party
  Beneficiary

  	
   

  
	
   

  	
  SECTION 20.14

  	
  Authority;
  Good Standing

  	
   

  
	
   

  	
  SECTION 20.15

  	
  Applicable Law

  	
   

  
	
   

  	
  SECTION 20.16

  	
  Performance
  of Landlord’s Obligations by Mortgagee

  	
   

  
	
   

  	
  SECTION 20.17

  	
  Hazardous
  Substances

  	
   

  
	
   

  	
  SECTION 20.18

  	
  Net Lease

  	
   

  
	
   

  	
  SECTION 20.19

  	
  Tenant
  Information

  	
   

  
	
   

  	
  SECTION 20.20

  	
  Tenant
  questionnaire

  	
   

  
	
   

  	
  SECTION 20.21

  	
  Time of Essence

  	
   

  
	
   

  	
  SECTION 20.22

  	
  Surrender
  of Lease Not Merger

  	
   

  
	
   

  	
  SECTION 20.23

  	
  Landlord;
  Transfer by Landlord

  	
   

  

 

3

 

LEASE AGREEMENT

 

THIS
LEASE AGREEMENT (this “Lease”) is made effective as of the 29th day of January,
2003 by and between OLDS PROPERTIES CORPORATION, a Delaware corporation (“Olds”),
and JOHN H.O. La GATTA (“La Gatta”) (collectively, “Landlord”), and WARNER
ELECTRIC COMPANY, a Delaware corporation, its successors and assigns and any
successor thereto by consolidation, merger or acquisition of all or substantially
all of its assets (“Tenant”).

 

RECITALS:

 

A.                                   Olds is the owner of certain real property
containing approximately 13 acres located at 701 I-85 North in the City of
Charlotte, Mecklenburg County, North Carolina, identified by Tax Parcel ID #039-053-16,
and further described on Exhibit A attached hereto and incorporated
herein by this reference (the “Land”), upon which is located an industrial
building (the “Building”) and certain other improvements, which Building and
other improvements are owned by La Gatta, and all appurtenances thereto (the
Land, Building, other improvements and appurtenances are hereinafter
collectively referred to as the “Property”).

 

B.                                     Subject to and upon the terms, provisions and
conditions hereinafter set forth, Landlord does hereby lease, demise and let to
Tenant, and Tenant does hereby lease and take from Landlord, the Property on
the terms and conditions set forth in this Lease.

 

AGREEMENT:

 

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

 

ARTICLE I

BASIC LEASE TERMS AND DEFINITIONS

 

SECTION 1.1                                             Basic Lease Terms.

 

The
terms set out and defined in this Section, whenever used in this Lease with the
first letter of each word capitalized, shall have only the meanings set forth
in this section, unless such meanings are expressly modified, limited or
expanded elsewhere in this Lease.

 

1.1.1                        “Additional Rental” shall mean all sums
payable by Tenant pursuant to this Lease, except Annual Basic Rental.

 

1.1.2                        “Affiliate” is any individual, corporation,
limited liability company, trust or other entity which directly or indirectly
controls or is directly or indirectly controlled by or is under common control
with Tenant. For purposes of this definition, “control” shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such corporation, limited liability
company or other entity, whether through the ownership of voting securities or
by contract or otherwise.

 

 

1.1.3                        The “Annual Basic Rental” for the Property
shall be as follows for the Initial Term of the Lease:

 

	
  Period

  	
   

  	
  Annual

  	
   

  	
  Monthly

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March 1,
  2003 - February 29, 2004

  	
   

  	
  $

  	
  444,000.00

  	
   

  	
  $

  	
  37,000.00

  	
   

  
	
  March 1,
  2004 - February 28, 2005

  	
   

  	
  $

  	
  444,000.00

  	
   

  	
  $

  	
  37,000.00

  	
   

  
	
  March 1,
  2005 - February 28, 2006

  	
   

  	
  $

  	
  456,000.00

  	
   

  	
  $

  	
  38,000.00

  	
   

  
	
  March 1,
  2006 - February 28, 2007

  	
   

  	
  $

  	
  456,000.00

  	
   

  	
  $

  	
  38,000.00

  	
   

  
	
  March 1,
  2007 - February 29,2008

  	
   

  	
  $

  	
  468,000.00

  	
   

  	
  $

  	
  39,000.00

  	
   

  
	
  March 1,
  2008 - February 28, 2009

  	
   

  	
  $

  	
  468,000.00

  	
   

  	
  $

  	
  39,000.00

  	
   

  
	
  March 1,
  2009 - February 28, 2010

  	
   

  	
  $

  	
  480,000.00

  	
   

  	
  $

  	
  40,000.00

  	
   

  
	
  March 1,
  2010 - February 28, 2011

  	
   

  	
  $

  	
  480,000.00

  	
   

  	
  $

  	
  40,000.00

  	
   

  
	
  March 1,
  2011 - February 29,2012

  	
   

  	
  $

  	
  492,000.00

  	
   

  	
  $

  	
  41,000.00

  	
   

  
	
  March 1,
  2012 - February 28,2013

  	
   

  	
  $

  	
  492,000.00

  	
   

  	
  $

  	
  41,000.00

  	
   

  

 

The Annual Basic Rental for the Property shall be as follows for the
First Renewal Term of the Lease, if exercised:

 

	
  Period

  	
   

  	
  Annual

  	
   

  	
  Monthly

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March 1,
  2013 - February 28, 2014

  	
   

  	
  $

  	
  501,840.00

  	
   

  	
  $

  	
  41,820.00

  	
   

  
	
  March 1,
  2014 - February 28, 2015

  	
   

  	
  $

  	
  511,876.80

  	
   

  	
  $

  	
  42,656.40

  	
   

  
	
  March 1,
  2015 - February 29, 2016

  	
   

  	
  $

  	
  522,114.36

  	
   

  	
  $

  	
  43,509.53

  	
   

  
	
  March 1,
  2016 - February 28, 2017

  	
   

  	
  $

  	
  532,556.64

  	
   

  	
  $

  	
  44,379.72

  	
   

  

 

The Annual Basic Rental for the Property shall be as follows for the
Second Renewal Term of the Lease, if exercised:

 

	
  Period

  	
   

  	
  Annual

  	
   

  	
  Monthly

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March 1,
  2017 - February 28, 2018

  	
   

  	
  $

  	
  543,207.72

  	
   

  	
  $

  	
  45,267.31

  	
   

  
	
  March 1,
  2018 - February 28, 2019

  	
   

  	
  $

  	
  554,071.92

  	
   

  	
  $

  	
  46,172.66

  	
   

  
	
  March 1,
  2019 - February 29, 2020

  	
   

  	
  $

  	
  565,153.32

  	
   

  	
  $

  	
  47,096.11

  	
   

  
	
  March 1,
  2020 - February 28, 2021

  	
   

  	
  $

  	
  576,456.36

  	
   

  	
  $

  	
  48,038.03

  	
   

  

 

The Annual Basic Rental for the Property shall be as follows for the
Third Renewal Term of the Lease, if exercised:

 

	
  Period

  	
   

  	
  Annual

  	
   

  	
  Monthly

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March 1,
  2021 - February 28, 2022

  	
   

  	
  $

  	
  587,985.48

  	
   

  	
  $

  	
  48,998.79

  	
   

  
	
  March 1,
  2022 - February 28, 2023

  	
   

  	
  $

  	
  599,745.24

  	
   

  	
  $

  	
  49,978.77

  	
   

  
	
  March 1,
  2023 - February 29, 2024

  	
   

  	
  $

  	
  611,740.20

  	
   

  	
  $

  	
  50,978.35

  	
   

  
	
  March 1,
  2024 - February 28, 2025

  	
   

  	
  $

  	
  623,975.04

  	
   

  	
  $

  	
  51,997.92

  	
   

  

 

5

 

1.1.4                        “Default Rate” shall be an annual rate of
interest equal to the lesser of (i) the maximum rate of interest which may
lawfully be charged or collected, or (ii) twelve percent (12%) per annum.

 

1.1.5                        “Event of Default” shall have the meaning set
forth in Section 15.1.

 

1.1.6                        “Force Majeure” shall mean any event the
occurrence of which prevents or delays the performance by Landlord or Tenant of
any obligation imposed upon it hereunder (other than the payment of money) and
the prevention or cessation of which event is beyond the reasonable control of
the obligor.

 

1.1.7                        “GAAP” shall mean Generally Accepted
Accounting Principles.

 

1.1.8                        “Hazardous Substances” shall have the meaning
set forth in Section 20.17.

 

1.1.9                        “Improvements” shall mean any and all
buildings, structures, and other improvements now or hereafter located on the
Property.

 

1.1.10                  “Initial Termination Date” shall mean
11:59 P.M. on February 28, 2013.

 

1.1.11                  “Lease Termination Date” shall mean the
earlier to occur of (i) 11:59 P.M. on the Initial Termination Date,
as that date may be extended by Tenant in accordance with Section 3.2 and
(ii) the date that this Lease is terminated pursuant to the express terms
hereof.

 

1.1.12                  “Mortgage” shall have the meaning set forth
in Section 16.1.

 

1.1.13                  “Mortgagee” shall have the meaning set forth
in Section 16.1.

 

1.1.14                  “Permitted Uses” shall mean office and
manufacturing related to the manufacturing of gears, clutches and power
transmission devices, heat treating and painting, including the use of floor
mounted hoists and related warehousing, assembly and distribution activities.  Notwithstanding the foregoing, any use
prohibited by any applicable law, regulation or ordinance (including zoning
laws) shall not be a Permitted Use under this Lease.

 

1.1.15                  “Premises” shall mean the Property.

 

1.1.16                  “Property” shall have the meaning set forth
in the Recitals.

 

1.1.17                  “Renewal Terms” shall have the meaning set
forth in Section 3.2.

 

1.1.18                  “Rent Commencement Date” shall be the date
that is one (1) month following the Turnover Date.

 

1.1.19                  “Rental” shall mean the Annual Basic Rental
plus all Additional Rental hereunder.

 

6

 

1.1.20                  “Rental Year” shall mean a period of one
(1) calendar year; provided, however, the first Rental Year shall commence
on the Rent Commencement Date and expire on February 29, 2004.  Each subsequent Rental Year shall commence on
March lst and expire on February 28th (or
February 29th if applicable) of the following calendar year.

 

1.1.21                  “Taking” shall have the meaning set forth in Section 13.1.

 

1.1.22                  “Taxes” shall have the meaning set forth in Section 6.1.

 

1.1.23                  “Tenant Notice Address” shall mean 997 Lenox
Drive, Suite 111, Lawrenceville, New Jersey 08648, Attention: General
Counsel.

 

1.1.24                  “Term” shall mean the period of time during
this Lease between the Rent Commencement Date and the Lease Termination Date.

 

1.1.25                  “Turnover Date” shall mean the date on which
exclusive possession of the Premises is tendered to Tenant as provided in this
Lease, whether or not Tenant actually takes possession.

 

SECTION 1.2                                             Terms Generally.

 

All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.  The definitions in
Section 1.1 shall apply equally to both the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  All
references to Articles, Sections and Exhibits shall be deemed references to
Articles and Sections of, and Exhibits to, this Lease unless the context shall
otherwise require.

 

SECTION 1.3                                             Attachments.

 

All
of the attachments to this Lease, as well as all drawings and documents
prepared pursuant thereto, are incorporated herein and shall be deemed to be a
part hereof for all purposes.

 

ARTICLE II

AGREEMENT; DEMISE

 

SECTION 2.1                                             Agreement.

 

This
Lease shall be effective on the date hereof as a valid and binding agreement
and contract between Landlord and Tenant.

 

SECTION 2.2                                             Demise.

 

Landlord
hereby leases, rents and demises to Tenant, and Tenant hereby leases, rents,
demises and accepts from Landlord, the Premises on the terms and conditions
contained herein.

 

7

 

ARTICLE III

TERM

 

SECTION 3.1                                             Initial Term.

 

(a)                                  The initial term of the Lease shall commence
on the Rent Commencement Date and shall terminate on the Initial Termination
Date (the “Initial Term”), without the necessity of any notice from either
Landlord or Tenant.

 

(b)                                 Within ten (10) days following the
Turnover Date, Landlord shall provide to Tenant copies in Landlord’s possession
or control of all available operating manuals and repair and maintenance
guidelines and brochures, warranties and guaranties, if any, relating to
equipment and machinery serving or comprising a portion of the Improvements.

 

(c)                                  During the period after the Turnover Date but
before the Rent Commencement Date (and concurrent commencement of the Term) all
terms and conditions of this Lease shall apply except the payment of Annual
Basic Rental.

 

SECTION 3.2                                             Renewal Terms.

 

Subject
to the terms and conditions of this Section 3.2, Tenant shall have three
(3) options (the “Renewal Options”) to extend the term of this Lease, as
to not less than the entire Premises, each for four (4) years (the “Renewal
Terms”).  The first Renewal Term shall
commence upon the date following the date the Initial Term would expire, the
second Renewal Term shall commence upon the date following the date the first
Renewal Term would expire, and the third Renewal Term shall commence upon the
date following the date the second Renewal Term would expire, each upon the
same terms and conditions previously applicable, except that (i) the
Annual Basic Rental will be adjusted as provided in Section 1.1.3 above,
and (ii) Tenant shall have no further extension options.  Each Renewal Option may be validly exercised
only by written notice to Landlord from Tenant no later than twelve (12) months
prior to commencement of the respective Renewal Term.  If Tenant does not exercise a Renewal Option
during the exercise period set forth above in accordance with the provisions
hereof, such Renewal Option and each succeeding Renewal Option shall forever
terminate and be of no further force and effect.  The Initial Term, together with any exercised
Renewal Terms, shall hereinafter be referred to as the “Term”.  Tenant’s right to exercise each of the
Renewal Options is subject to the following condition which may be exercised or
waived solely by Landlord in Landlord’s sole discretion: both at the time of
Tenant’s exercise of each Renewal Option and at the time of the commencement of
each Renewal Term, no Event of Default (as defined in Section 15.1 of this
Lease) shall exist.

 

SECTION 3.3                                             Holding Over.

 

Subject
to the terms of Article XIX of this Lease, if Tenant shall be in
possession of the Premises after the Lease Termination Date with Landlord’s
acquiescence but in the absence of an express agreement extending the Term
hereof, the tenancy under this Lease shall become a lease from month to month,
terminable by either party upon thirty (30) days prior written notice.  Such tenancy shall be subject to all other
conditions, provisions and obligations of this Lease, and the Annual Basic
rental shall be equal to 110% of the amount paid during the immediately
preceding

 

8

 

Rental Year.  If Tenant shall be in possession of the
Premises after the Lease Termination Date without Landlord’s acquiescence, the
tenancy under this Lease shall become a tenancy at will, terminable by either
party upon fifteen (15) days prior written notice.  Such tenancy shall be subject to all other
conditions, provisions and obligations of this Lease, except that the Annual
Basic Rental shall be 125% of the amount paid during the previous Rental
Year.  Nothing herein shall be deemed to
permit Tenant to retain possession of the Premises without Landlord’s
acquiescence after the expiration or termination of this Lease, and Tenant
shall be liable for all damage, cost and expense, including consequential
damages, that may arise from or be caused by the retention by Tenant of
possession after the termination or expiration hereof.

 

ARTICLE IV

USE

 

SECTION 4.1                                             Use.

 

The
Premises shall only be used for the Permitted Uses and for no other purpose
without Landlord’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed.

 

SECTION 4.2                                             Cessation of Tenant
Operations.

 

Tenant
shall have no obligation to operate its or any business from the Premises and
shall have the right at any time and from time to time to cease operating its
or any business at the Premises. Tenant acknowledges and agrees that its right
to cease operating its business at the Premises shall in no way discharge
Tenant from its obligations hereunder, including without limitation its obligation
to pay Rental and its maintenance obligations set forth in Article IX
hereof.

 

ARTICLE V

RENTAL AND SECURITY DEPOSIT

 

SECTION 5.1                                             Rentals Payable.

 

Tenant
covenants and agrees to pay to Landlord as Rental for the Premises, the
following:

 

(a)                                  The Annual Basic Rental specified in Section 1.1.3,
commencing on the Rent Commencement Date; plus

 

(b)                                 all Additional Rental due from time to time
hereunder.

 

SECTION 5.2                                             Annual Basic Rental.

 

Subject
to the terms of Section 9.2(c) of this Lease, Annual Basic Rental
shall be paid without prior demand in equal monthly installments in advance,
commencing on the Rent Commencement Date, and thereafter on the first day of
each full calendar month during the Term of this Lease.  If the Rent Commencement Date or the Lease
Termination date occurs on a date other than on the first or the last day of a
calendar month, as applicable, then the first and last

 

9

 

monthly installment of
Annual Basic Rental shall be prorated for such fractional calendar month based
upon the actual number of days in such month.

 

SECTION 5.3                                             Payment of Rental.

 

For
all purposes hereof, payment of Rental payable to Landlord hereunder shall be
made and effective when, and not until, the Rental funds are received by
Landlord and are in a form readily and immediately available for expenditure by
Landlord, including without limitation wire transfer to Landlord’s account or
checks payable to Landlord after payment thereon by Tenant’s bank upon
which the check is drawn.  Tenant shall
pay all Rental when due and payable, and, except as provided herein, without
any offset, counterclaim, deduction or prior demand therefor. If Tenant shall
fail to pay any Rental within five (5) days following the date such
payment is due, Tenant shall be obligated to pay a late payment charge (a “Late
Fee”) of four percent (4%) of the payment due; provided, however, that if
Tenant becomes obligated to pay a Late Fee hereunder, the Late Fee shall be
payable on all other Rental payments payable during the same Rental Year if
such other Rental payment or payments are not made on the date such other
payment or payments are due.  In
addition, any Rental or other amounts payable hereunder which is not paid
within fifteen (15) days after the same is due, including without limitation
money advanced by Landlord on behalf of Tenant to pay amounts payable by Tenant
hereunder, shall bear interest at the Default Rate from the first day due until
paid.  Any Additional Rental which shall
become due shall be payable, unless otherwise expressly provided herein, shall
be paid with the next monthly installment of Annual Basic Rental.  Rental and statements required of Tenant
shall be paid and delivered to Landlord at its notice address set out in Section 17.1,
or at such other place as Landlord may, from time to time, designate in a
notice to Tenant.  Any payment by Tenant
or acceptance by Landlord of a check for a lesser amount than shall be due from
Tenant to Landlord shall be treated as a payment on account.

 

SECTION 5.4                                             Security Deposit.

 

A
deposit in the amount of $37,000.00 (the “Security Deposit”) shall be paid by
Tenant to Landlord together with the first monthly installment of Annual Basic
Rental.  The Security Deposit shall be
held by Landlord as security for the full and faithful performance by Tenant of
all the terms, covenants and conditions of this Lease by Tenant to be kept and
performed, provided that Tenant shall not be excused from payment of any Rental
or any other charge herein provided.  If
an Event of Default occurs with respect to any provision of this Lease,
Landlord may, at its election, use or apply all or any part of the Security
Deposit to compensate Landlord for any obligation of Tenant or loss or damage
reasonably suffered by Landlord as a result of such Event of Default, including
but not limited to, the payment of Rental or other sums due hereunder, the
reimbursement of amounts Landlord spends by reason of such Event of Default,
and compensation to Landlord for any other loss or damage that Landlord may
reasonably suffer by reason of the Event of Default.  If any portion is so used or applied, Tenant,
upon demand, will deposit with Landlord an amount sufficient to restore the
Security Deposit to its original amount. Landlord shall be required to keep the
Security Deposit separate from its general funds and shall invest the Security
Deposit in a federally insured deposit account or other account approved by
Tenant, and Tenant shall be entitled to all interest earned thereon.  If Tenant materially performs every provision
of this Lease, the Security Deposit or the balance thereof will be returned to
Tenant within thirty (30) days after the later of (i) the expiration of
this Lease

 

10

 

or any Renewal Terms of this
Lease and (ii) delivery of possession of the Premises to Landlord in the
condition required under this Lease. In no event will Tenant have the right to
apply any part of the Security Deposit to any Rental or other amount payable
under this Lease.  In the event of sale
or transfer of the Premises, if Landlord transfers the Security Deposit to the
vendee or transferee, or if such vendee or transferee assumes in writing
liability with respect to such Security Deposit, Landlord shall be considered
released by Tenant from all liability for the return of such Security Deposit,
and Tenant agrees to look solely to such vendee or transferee for the return of
the Security Deposit.  Tenant agrees that
this Section 5.4 shall apply to every transfer or assignment to all
subsequent vendees or transferees.  The
Security Deposit shall not be assigned, transferred or encumbered by Tenant,
and any attempt to do so by Tenant shall not be binding upon Landlord.

 

ARTICLE VI

TAXES

 

SECTION 6.1                                             Payment by Lessee.

 

Subject
to the provisions of Section 6.2, in addition to the Annual Basic
Rental, Tenant shall pay to the applicable taxing authorities (with a copy or
receipt to Landlord), no later than ten (10) days prior to the due date
therefor, all real property, personal property and ad valorem taxes and
assessments, general and special, water taxes and all other impositions,
ordinary and extraordinary of every kind and nature whatsoever, which, during
the Term of this Lease, may be levied or assessed against the Premises.  Landlord agrees to deliver copies of
statements received by Landlord for all of the foregoing to Tenant within ten
(10) days following the date Landlord receives such statements from applicable
taxing authorities.  Tenant shall be responsible
for all delinquencies and penalties if the same are incurred because Tenant did
not timely remit Taxes to the applicable taxing authorities or because the
amount Tenant remitted was insufficient to pay all Taxes.  Tenant shall also be solely responsible for
and pay within the time provided by law all taxes imposed on its inventory,
trade fixtures, apparatus, leasehold improvements (installed by or on behalf of
Tenant), equipment and other personal property. 
All taxes, assessments and other costs to be paid by Tenant pursuant to
this Section 6.1 are collectively referred to herein as the “Taxes”;
provided, however, “Taxes” shall in no event include (i) any federal,
state, or other tax on the income of Landlord, (ii) any franchise, estate,
inheritance or similar tax imposed upon Landlord, (iii) any tax,
assessment, recording fee, charge, or other levy imposed in connection with the
sale or mortgage of the Premises, or any portion thereof or (iv) any
increases in ad valorem taxes resulting from an increase in the appraised or
assessed value thereof following the sale or conveyance of the Premises to an
Affiliate of Landlord.  To the extent
Tenant fails to pay any of the Taxes when required pursuant to the terms hereof,
Landlord shall have the right to do so and upon Landlord’s payment thereof the
same, together with interest thereon at the Default Rate, shall become
Additional Rental hereunder payable by Tenant on demand by Landlord.

 

SECTION 6.2                                             Proration of Taxes.

 

During
the first and last years of the Term, all such taxes and assessments which
shall become payable during each of the calendar or fiscal, tax or assessment
years, as applicable, shall be ratably adjusted on a per diem basis between
Landlord and Tenant in accordance with the respective portions of such
calendar, fiscal, tax, or assessment year. 
To the extent permitted

 

11

 

by applicable law, Tenant
may pay any such assessments or taxes in annual installments.  In the event any such assessment shall be
payable in a lump sum or on an installment basis, Tenant shall have the sole
right to elect the basis of payment.  If
Tenant shall elect to pay any such assessment on the installment basis, then
Tenant shall pay only those installments which shall become due and payable
during the Term.  Any such installments
due and payable in the years in which this Lease commences and terminates shall
be prorated proportionally.

 

SECTION 6.3                                             Taxes on Rental.

 

In
addition to the Taxes payable by Tenant pursuant to Section 6.1
above, Tenant shall pay to the appropriate agency any and all sales, excise and
other taxes (not including, however, Landlord’s income taxes) levied, imposed
or assessed by the State of North Carolina or any political subdivision thereof
or other taxing authority upon any Rental payable hereunder, except to the
extent the same are in substitution for income taxes.

 

SECTION 6.4                                             Tenant’s Right to Contest
Taxes.

 

Tenant
shall have the right to participate in all negotiations of tax assessments.  Tenant shall have the right, at Tenant’s cost,
to contest the validity or the amount of any tax or assessment levied against
the Premises by such appellate or other proceedings as may be appropriate in
the jurisdiction, and may defer payment of such obligations, pay same under
protest, or take such other steps as Tenant may deem appropriate; provided,
however, Tenant hereby agrees (i) to indemnify and hold Landlord harmless
from and against any cost, expense or liability arising out of such contest,
(ii) to pursue any such contest in good faith and (iii) to post any
bond or other security required by applicable law or necessary to protect title
to the Premises from the remedies of the taxing authority in connection with
such contest.  Tenant also agrees to notify
Landlord promptly of any such contest and Landlord agrees, at the sole cost of
Tenant, to reasonably cooperate in any such contest or proceedings and execute
any documents which Landlord may be required to execute in connection with such
proceedings.  To the extent based on
taxes originally paid by Tenant, Tenant shall be entitled to all refunds paid
by taxing authorities resulting from any such contest or otherwise paid to
Landlord and attributable to the Term.

 

ARTICLE VII

PREMISES IMPROVEMENTS

 

SECTION 7.1                                             Mechanics’ Liens.

 

No
work performed by Tenant pursuant to this Lease, whether in the nature of
erection, construction, alteration or repair, shall be deemed to be for the
immediate use and benefit of Landlord so that no mechanics’ or other lien shall
be allowed against the estate of Landlord by reason of any consent given by
Landlord to Tenant to improve the Premises. 
Tenant shall pay promptly all persons furnishing labor or materials with
respect to any work performed by Tenant or its contractors on or about the
Premises. [Jim: Please note the following
sentence] Prior to the commencement of any work on the Premises,
Tenant shall exercise reasonable efforts to obtain unconditional lien waivers
from all suppliers of services or materials to the Premises and shall notify in
writing all suppliers of services or materials to the Premises that the
improvements

 

12

 

to be constructed are solely
for the benefit of Tenant, that Landlord shall not be liable for any costs
related thereto and that the Premises shall not be subject to any mechanics’ or
materialmens’ liens in connection therewith. 
In the event any mechanics’ or other lien shall at any time be filed
against the Premises by reasons of work, labor, services or materials performed
or furnished, or alleged to have been performed or furnished, to Tenant or to
anyone holding the Premises through or under Tenant, Tenant shall cause the
same to be discharged of record or bonded to the satisfaction of Landlord
within forty-five (45) days of filing. 
If Tenant shall fail to cause such lien forthwith to be so discharged or
bonded within forty-five (45) days after being notified of the filing thereof,
then, in addition to any other right or remedy of Landlord, Landlord may bond
or discharge the same by paying the amount claimed to be due, and the amount so
paid by Landlord including reasonable attorneys’ fees incurred by Landlord
either defending against such lien or in procuring the discharge of such lien,
together with interest thereon at the Default Rate, shall be due and payable by
Tenant to Landlord as Additional Rental.

 

SECTION 7.2                                             Tenant’s Trade Fixtures.

 

All
manufacturing, shipping, warehousing and other trade fixtures, signs, equipment
and apparatus owned by Tenant and installed in the Premises by Tenant, at its
expense, shall remain the property of Tenant, and Tenant may remove such
fixtures and apparatus at any time prior to the expiration of the Term.  Notwithstanding the foregoing, Tenant shall
repair any damage to the Premises caused by the removal of its personally,
inventory, trade fixtures, equipment and apparatus.

 

SECTION 7.3                                             Risk of Loss.

 

Landlord
shall bear all risk of loss to the Premises prior to the Turnover Date, except
loss caused by Tenant or Tenant’s agents, consultants, contractors, employees,
licensees or invitees. In no event shall Tenant be liable to Landlord for any
claims for injury to persons or property resulting from or arising out of the
Premises prior to the Turnover Date, unless caused by Tenant or Tenant’s
agents, consultants, contractors, employees, licensees or invitees.

 

ARTICLE VIII

OPERATIONS

 

SECTION 8.1                                             Operations by Tenant.

 

Throughout
the Term, and in addition to the requirements of
Section 9.2(b) below, Tenant will at its expense:

 

(a)                                  keep the inside and outside of all glass in
the doors and windows of the Premises clean;

 

(b)                                 keep all exterior building surfaces of the
Premises clean;

 

(c)                                  replace promptly any cracked or broken glass
of the Premises with glass of like grade and quality;

 

13

 

(d)                                 maintain the Premises in a clean, orderly and
sanitary condition and free of insects, rodents, vermin and other pests,
including cleaning, repairing or replacing all floor covering, if any, within
the Premises as needed;

 

(e)                                  keep any garbage, trash, rubbish or other
refuse in containers within the Premises until removed;

 

(f)                                    have such garbage, trash, rubbish and refuse
removed on a timely basis;

 

(g)                                 keep all mechanical apparatus free of
vibration and noise which may be transmitted beyond the Premises;

 

(h)                                 keep and maintain all landscaping in a neat
and orderly condition; and

 

(i)                                     comply with all laws, ordinances,
rules and regulations of governmental authorities applicable to the
Premises and all recommendations of any fire and liability insurance rating
organization now or hereafter in effect.

 

SECTION 8.2                                             Signs and Advertising.

 

Tenant
may modify any existing signs or install new signs used to identify Tenant on
the exterior walls of the Premises and/or on the Land, provided Tenant shall be
responsible for and repair any damage caused to the Improvements by such
modification, installation or the removal of the signs.  Tenant will, at its sole cost and expense,
maintain all signs and other advertising devices in good condition and repair
at all times.  Tenant may not install any
signs on the roof of the Premises, including the flashing, without the express
written consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed.  All signs and
other advertising on the exterior of the Premises shall be in compliance with
all applicable laws, rules and regulations.

 

ARTICLE IX

IMPROVEMENT ALLOWANCE; MAINTENANCE AND REPAIRS

 

SECTION 9.1                                             Improvement Allowance.

 

Landlord
shall provide to Tenant a tenant improvement allowance (“Allowance”) in the
amount of up to Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00) (“Maximum
Allowance”), to be used by Tenant to upfit and upgrade the Premises, in Tenant’s
discretion, including, but not limited to, floor coverings, painting, lighting
and installation of a compressed air system, but excluding any expenditures for
Tenant’s equipment, personal property or trade fixtures; except that that
Tenant shall be entitled to install and receive reimbursement from the
Allowance for trade fixtures, provided that Tenant agrees in writing at the
time of disbursement to Tenant of funds from the Allowance for such trade
fixture that Landlord, at Landlord’s option, shall be entitled at the
expiration or termination of the Lease to elect whether to retain or cause the
Tenant to remove such trade fixtures as provided for non-structural alterations
in Section 9.3 hereof (collectively, the “Tenant Improvements”).  All Tenant Improvements funded with the
Allowance shall be completed on or before the end of the twelfth (12th) full
calendar month of the Term (“Completion Deadline”).  No construction of Tenant Improvements funded
with the

 

14

 

Allowance shall occur after
the Completion Deadline.  The Allowance
shall be in the form of an abatement of Basic Annual Rental commencing the
thirteenth month of the Term in an amount equal to the Allocated Portion of the
Qualified Allowance (each as defined below), which shall be deducted from each
of the ensuing monthly payments of Basic Annual Rental until the Qualified
Allowance is depleted.  The Allocated
Portion of the Allowance shall be equal to the amount expended by Tenant for
Tenant Improvements completed on or before the Completion Deadline (“Qualified
Allowance”) divided by 13.  On or before
the Completion Deadline, Tenant shall provide to Landlord copies of receipts
for all expenditures to be charged against the Allowance, and Landlord shall be
entitled to rely on the accuracy of all invoices and fee statements for labor
performed or materials furnished in connection with the Tenant
Improvements.  Tenant shall be solely
responsible for payment of that portion of a) the costs of Tenant Improvements
that exceed the Maximum Allowance and b) the cost of any Tenant Improvements
which are completed after the Completion Deadline.  If and to the extent the Tenant Improvements
completed during the first Rental Year are less than the Maximum Allowance (the
difference between the Maximum Allowance and the cost of the Tenant
Improvements completed during the first Rental Year being the “Unused Allowance”),
Tenant shall be entitled only to the portion of the Maximum Allowance used
during the first Rental Year and shall forfeit and not be entitled to the
Unused Allowance.  Tenant shall be
responsible for coordinating and managing the Tenant Improvements and shall
ensure that all Tenant Improvements are performed in a good and workmanlike
manner and in accordance with all applicable laws, rules and codes.

 

SECTION 9.2                                             Maintenance and Repairs.

 

(a)                                  To Landlord’s knowledge, as of the Turnover
Date and except as disclosed to Tenant in writing, all electrical, mechanical,
plumbing, heating, ventilation and air conditioning systems will be in good
working order, connected, and providing the services intended.  If within ninety (90) days following the
Turnover Date Tenant discovers that any of the foregoing systems were not in
good working order, connected and providing the services intended as of the
Turnover Date, Tenant shall provide written notice thereof to Landlord, and
Landlord shall promptly commence and diligently prosecute to completion the
repair or replacement of such systems. 
In addition, Landlord shall: (i) repair or replace when reasonably
necessary, the roof of the Building (including without limitation the 1983
section of the roof), (ii) commence within three (3) months
after the Turnover Date and diligently prosecute to completion the service of
the rooftop HVAC units and mechanical room compressors, including belt and
filter replacement, so that each is in good working condition; (iii) on or
before the Turnover Date, ensure that all restrooms are in good working
condition; and (iv) within six (6) months after the Turnover Date,
commence and diligently prosecute to completion the removal of all vegetation
from, re-sealing and re-striping of all parking lots and re-painting of all
automobile stops yellow.  Except as
otherwise expressly provided in this Section 9.2 and Sections 10.1, 20.6
and 20.17(d) hereof, Tenant accepts the Premises in their “as is”
condition and without warranty of any kind.

 

During
the Term, Landlord will maintain and repair (or replace, if necessary), at its
sole cost (except as otherwise provided herein) the roof, load-bearing walls,
and foundations of the Premises in a good condition and state of repair, except
for casualty and repairs Tenant is obligated to make pursuant to
Section 9.2(b).  Tenant agrees to
reasonably cooperate in the coordination and supervision of such maintenance
and repairs and by Landlord. Landlord shall

 

15

 

also be responsible for
replacement and overlays of driveways and parking lots.  Except as expressly required by this
Section 9.2, Landlord shall not be required to furnish any services or
facilities or to make any repairs or alterations of any kind in or on the
Premises.  Except for the repair and
maintenance items specified in Section 9.2(a)(i), (ii), (iii) and
(iv), it is an express condition precedent to all obligations of Landlord to
repair, maintain or replace any portion of the Premises that Tenant notify
Landlord in writing of the need for such maintenance, repair or replacement.

 

(b)                                 The provisions of this Article IX are
subject to the provisions of Article XII and Article XIII
hereof.  At all times during the Term of
this Lease, Tenant shall keep and maintain all portions of the Premises in a
good condition and state of repair, excepting only ordinary wear and tear, and
repairs and replacements Landlord is obligated to make pursuant to
Section 9.2(a) hereof.  Tenant
shall make any and all additions to and all alterations and repairs in, on and
about the Premises which may be required by, and shall otherwise observe and
comply with, all public laws, ordinances and regulations from time to time
applicable to the Premises.  Except for
the negligence or willful misconduct of Landlord and without limiting the generality
of the foregoing, Tenant will (i) keep the interior and exterior of the
Premises, together with all electrical, plumbing, heating, ventilating,
air-conditioning, and other mechanical systems and installations therein, and
all nonload-bearing walls, in good order and repair, including normal and
customary preventive maintenance, and, except as required of Landlord pursuant
to Section 9.2(a) hereof, will make all replacements from time to
time required at its expense, (ii) maintain the grounds around the
Improvements, including the mowing of grass, care of shrubs and general
landscaping, (iii) notwithstanding anything herein to the contrary, except
for Landlord’s repair obligations and normal wear and tear, repair any damage
to the roof, load bearing walls and foundations of the Premises, to the
driveways and parking lots and to Building Systems (as defined below) caused or
permitted by Tenant or its employees, invitees, contractors and agents and
(iv) take no action to invalidate any warranty relating to the roof or any
other portion of the Improvements.

 

The
cost of maintenance, repairs and replacements to be performed by Tenant
pursuant to this Section 9.2(b) shall be borne by Tenant, except that
with respect to the maintenance, repair and replacement of any plumbing, HVAC,
mechanical, electrical and fire protection systems existing within the Building
as of the Turnover Date (“Premises Systems”), Landlord shall bear the costs
thereof to the extent such costs exceed a cumulative total of $10,000.00 per
Rental Year (“Tenant’s Annual Systems Cost”). 
Any portion of the Tenant’s Annual Systems Cost not expended during any
Rental Year shall be carried over and added to the Tenant’s Annual Systems Cost
for subsequent Rental Years (such combined total being the “Tenant’s Total
Systems Cost”).  In the event the cost of
maintenance, repair and replacement of the Premises Systems in any Rental Year
exceeds the then-current Tenant’s Total Systems Cost, Landlord shall promptly
pay such excess (“Landlord’s Systems Cost”). 
At the end of each subsequent Rental Year, Tenant shall repay Landlord
for such Landlord’s Systems Cost incurred, in an amount not to exceed the
unexpended portion of the Tenant’s Total Systems Cost, if any, for such
subsequent Rental Year.  Any such
repayment by Tenant to Landlord of Landlord’s Systems Costs incurred shall be
made within fifteen (15) days after the end of each subsequent Rental Year
until the earlier of full repayment to Landlord or the expiration of the Term
(or Renewal Term, if applicable).  If the
Term or any Renewal Term expires and Landlord shall not be fully reimbursed,
Tenant shall have no further obligation for repayment of any remaining

 

16

 

balance of Landlord’s
Systems Costs.  Tenant and Landlord each
acknowledge that any individual maintenance, repair or replacement of a
Premises System, the cost of which is equal to or less than $500.00, shall not
be included in the $10,000.00 Tenant’s Annual System Costs.

 

Tenant
shall not be entitled to reimbursement from Landlord for maintenance, repair or
replacement of a Premises System unless such maintenance, repair or replacement
is reasonably necessary and in accordance with prudent and reasonable
commercial standards to maintain such systems in good working condition (“Qualified
Maintenance”).  For any maintenance,
repair or replacement to any Premises Systems which Tenant intends to include
in the $10,000.00 Tenant’s Annual System Costs, Tenant shall deliver to
Landlord written notice thereof, together with a reasonably detailed
description (or plans and specifications, if available) of such maintenance,
repairs or replacements.  Landlord shall
have twenty (20) days following the date of receipt of such notice and
description (or plans and specifications) to notify Tenant in writing whether
Landlord agrees that the proposed maintenance, repair or replacement
constitutes Qualified Maintenance.  If
Landlord fails to timely provide such notice, the improvements shall be deemed
Qualified Maintenance.  If Landlord
timely objects to all or any portion of the maintenance, repair or replacement
as being Qualified Maintenance (“Disapproval Notice”), and if Landlord and
Tenant cannot agree within ten (10) days after receipt by Tenant of the
Disapproval Notice regarding whether the improvements constitute Qualified
Maintenance, Tenant shall be entitled, within ninety (90) days after the
expiration of such (10) day period, to commence arbitration to determine
whether the maintenance, repairs or replacement constitutes Qualified Maintenance.  The arbitration shall be conducted under the
Commercial Arbitration Rules of the American Arbitration Association.

 

(c)                                  Tenant will surrender the Premises at the
expiration of the Term or at such other time as it may vacate the Premises in
as good condition as when received, excepting only ordinary wear and tear,
damage by insured casualty and repairs and replacements  Landlord is obligated to make pursuant
hereto.  In the event Tenant fails to
perform its maintenance and repair obligations as set forth in Section 9.2(b),
Landlord may, but shall not be obligated to, after providing Tenant with thirty
(30) days written notice and the right to cure, do so and the cost of same
shall be Additional Rental payable to Landlord within thirty (30) days following
demand therefor.

 

(d)                                 Within thirty (30) days following receipt of
notice from Tenant to Landlord under Section 9.2(a) that maintenance
or repair by Landlord is required, Landlord shall either commence the
maintenance, repair or replacement or shall notify Tenant of Landlord’s
objections thereto (“Objection Notice”). 
If Tenant disagrees with Landlord’s objections, Tenant shall notify
Landlord in writing within ten (10) days after receipt of Landlord’s
objections (“Disagreement Notice”).  If
Tenant shall fail to timely provide the Disagreement Notice, Landlord shall not
be obligated to perform any of the repair, maintenance or replacement items
objected to by Landlord and all such maintenance, repair, or replacement items
shall be performed by Tenant at Tenant’s cost. 
If Tenant timely provides the Disagreement Notice and if Tenant and
Landlord cannot resolve any such disagreement within fifteen (15) days after
receipt by Landlord of Tenant’s Disagreement Notice (“Resolution Period”),
Tenant shall be entitled, within fifteen (15) days after the Resolution Period,
to commence arbitration to determine whether Landlord is obligated to perform
such maintenance, repair or replacement under the terms of this Lease.  The arbitration shall be conducted under the
commercial arbitration rules of

 

17

 

the American Arbitration
Association.  If the arbitrator shall
determine that Landlord is obligated under the Lease to perform such
maintenance, repairs or replacement, Landlord at Landlord’s cost shall promptly
commence and diligently prosecute to completion any maintenance, repairs or
replacement determined by the arbitrator to be the responsibility of
Landlord.  Any maintenance, repairs or
replacement determined by the arbitrator not to be the responsibility of
Landlord under this Lease shall be promptly commenced and diligently prosecuted
to completion by Tenant, the cost of which shall be paid by Tenant.  If the arbitrator shall determine that all or
a portion of the maintenance, repairs or replacement is to be performed by
Landlord and Landlord shall fail to perform such maintenance, repairs or
replacement as required herein, Tenant shall be entitled to perform such
maintenance, repairs or replacement and Landlord shall be obligated to pay
Tenant’s reasonable out-of-pocket costs of such maintenance, repairs or
replacement within thirty (30) after receipt of an invoice therefore.  Failure of Landlord to reimburse Tenant
within such thirty (30) day period shall entitle Tenant to withhold all future
Rental coming due until the cost of such maintenance, repairs or placement
shall be paid in full, together with interest at the Default Rate from the date
of expenditure.  Notwithstanding anything
to the contrary herein, in the event the need for such maintenance, repairs or
replacement constitutes an imminent threat of harm to persons or damage to
property, then Tenant may perform the same if Landlord has not commenced and
diligently prosecuted to completion such maintenance, repair or replacement in
time to prevent to such harm or damage. 
Thereafter, if Tenant believes such maintenance, repairs or replacement
is the responsibility of Landlord, Tenant shall so notify Landlord, and the
objection, arbitration and setoff provisions provided for above shall apply.

 

SECTION 9.3                                             Alterations.

 

Tenant
will not make any alterations, renovations, improvements or other installations
in, on or to the Premises or any part thereof that would alter or change any of
the structural components or aspects of the Premises (“Structural Alterations”)
without Landlord’s prior written approval thereof, which approval Landlord will
not unreasonably withhold, condition or delay; provided, however, that Landlord
may condition Landlord’s approval on Tenant’s agreement that Tenant, at the
expiration or termination of this Lease, at Tenant’s cost, remove all
Structural Alterations, repair all damage to the Premises caused by the
installation or removal of such Structural Alteration and restore all
structural components removed by Tenant. 
Tenant shall have the right to make any other alterations without
obtaining the consent of Landlord but shall make them in a good and workmanlike
manner in accordance with all applicable laws, rules and codes and all
other valid requirements of appropriate governmental authorities.  Unless Landlord at the time of approval shall
require removal thereof, all Structural Alterations shall become a part of the
Improvements and the property of Landlord upon expiration or other termination
of this Lease.  All non-structural
alterations to the Premises shall become the property of Landlord at the
expiration or other termination of the Lease; provided, however, that Landlord
at Landlord’s option may require Tenant at Tenant’s cost to remove some or all
non-structural alterations and to restore and repair any damage caused by such
removal.  Upon Tenant’s written request
at any time not more than six (6) months before the expiration of the
Term, Landlord shall notify Tenant in writing of whether Landlord elects to
cause the removal by Tenant of some or all of Tenant’s non-structural
alterations.

 

18

 

SECTION 9.4                                             Tenant Liens.

 

Tenant
will not permit the Premises to become subject to any mechanics’, laborers’ or
materialmen’s lien on account of labor or material furnished to or requested by
Tenant or Tenant’s contractor’s agents or employees or claimed to have been
furnished to Tenant or Tenant’s contractor’s agents or employees in connection
with work of any character performed or claimed to have been performed on the
Premises, by or at the direction or sufferance of Tenant and will cause all
such liens to be removed as provided in Section 7.1 hereof.

 

ARTICLE X

UTILITIES

 

SECTION 10.1                                      Water, Gas, Electricity,
Telephone, and Sanitary Sewer.

 

To
Landlord’s knowledge, at the Turnover Date and except as disclosed to Tenant in
writing, the facilities necessary to enable Tenant to obtain water, gas,
electricity, telephone and sanitary sewer service for the Premises will be in
good working condition. Tenant shall not at any time overburden or exceed the
capacity of the mains, feeders, ducts, conduits or other facilities by which
such utilities are supplied to, distributed in or serve the Premises. Subject to
obtaining Landlord’s prior written approval (which shall not be unreasonably
withheld, conditioned or delayed), Tenant may, at its expense, install any
additional utility facilities, which facilities shall, at Landlord’s option
become Landlord’s property or removed at the expiration or other termination of
the Lease as provided in Section 9.3 relating to non-structural
alterations. Tenant shall be solely responsible for and promptly pay, as and
when the same become due and payable, all charges for water, sanitary sewer,
gas, electricity, telephone and any other utility used or consumed in the
Premises during the Term.

 

ARTICLE XI

INSURANCE; INDEMNIFICATION

 

SECTION 11.1                                      Indemnity by Tenant.

 

Tenant
shall indemnify, hold harmless and defend Landlord from and against, and Tenant
waives against Landlord all claims for, any and all claims, actions, damages,
liability and expense, including, but not limited to reasonable attorneys’ and
other professional fees actually incurred, in connection with or caused by any
breach or default by Tenant hereunder or arising from or out of any use,
occupancy, operation, management, control or activity on or involving the
Premises during the Term (other than claims or liabilities that result from
Landlord’s negligence or willful misconduct), whether in tort or in contract,
by any criminal activity on or about the Premises or otherwise.  The provisions of this paragraph are subject
to the provisions of Article XII and Article XIII of this Lease and
shall survive the expiration or other termination of this Lease.

 

SECTION 11.2                                      Tenant’s Insurance.

 

Tenant
shall procure and maintain, and pay all premiums, fees and charges and
deductibles for the purpose of procuring and maintaining continuously
throughout the Term subsequent to the Turnover Date:

 

19

 

(a)                                  insurance on the Improvements and Tenant’s
personal property and inventory located in the Premises against loss or damage
by fire or other casualty, with endorsements providing what is commonly known
as “all-risk” fire and extended coverage, vandalism and malicious mischief
insurance, in an amount equal to the full replacement cost thereof, with a
deductible of no greater than Fifty Thousand and No/100 Dollars ($50,000.00).
Tenant shall maintain insurance coverage adequate to prevent Tenant from
becoming a co-insurer of the Improvements;

 

(b)                                 combined single limit general liability
insurance, including, but not limited to, insurance against assumed or
contractual liability under this Lease, with respect to the Premises, to afford
protection with limits, for each occurrence, of not less than Two Million and
No/100 Dollars ($2,000,000.00) with respect to personal injury or death, and
One Million and No/100 Dollars ($1,000,000.00) with respect to property damage;
and

 

(c)                                  Tenant shall require any contractor
performing work on the Premises to carry and maintain, at no expense to
Landlord, worker’s compensation insurance as required by statute.

 

SECTION 11.3                                      Tenant’s Insurance Policies.

 

All
liability, casualty and other insurance and policies of insurance referred to
in Section 11.2 shall include Landlord and Landlord’s Mortgagee, if any,
as additional insureds and loss payees (other than as relates to Tenant’s
personal property, equipment and inventory located at the Premises), shall
insure Landlord against liability arising out of Tenant’s negligence or the
negligence of any other person, firm or corporation and shall cover any
liability of Tenant that may arise through any indemnity given by Tenant in
this Lease.  All policies procured
hereunder shall be under standard form policies issued by insurers of
recognized responsibility, rated A-XII or better by Best’s Insurance Rating
Service and with carriers qualified to do business in North Carolina. Evidence
of such insurance, together with copies of all insurance policies required
hereunder, shall be delivered to Landlord prior to the Turnover Date, and
thereafter not less than thirty (30) days prior to the expiration thereof, and
shall provide that such policy may not be canceled or modified except upon not
less than thirty (30) days prior written notice to Landlord. If Tenant fails to
procure and maintain the insurance required by this Article XI, in
addition to all other remedies of Landlord, Landlord shall have the right to do
so, without notice to Tenant if Landlord discovers that insurance coverage has
lapsed, and the cost of same shall be Additional Rental payable to Landlord
hereunder within thirty (30) days of demand therefore with interest thereon at
the Default Rate.  Tenant will deliver
certificates of all insurance required hereunder to Landlord before the
Turnover Date and thereafter throughout the Term at least thirty (30) days
prior to expiration of each such policy. 
Landlord shall have the right from time to time, but not more often than
once in any three year period to require reasonable increases in the coverages
of insurance hereunder.

 

SECTION 11.4                                      Waiver of Subrogation.

 

Tenant
hereby waives any and all rights of recovery, claim, action or cause of action
against Landlord, its agents, employees, officers, partners, servants,
shareholders, members or

 

20

 

managers for any loss or
damage that may occur to the Premises or any personal property located therein
arising by reason of fire, the elements or any cause which could be insured
against under the terms of a standard “all-risk” fire and extended coverage
insurance policy, regardless of cause or origin.  Landlord hereby waives any and all rights of
recovery, claim, action or cause of action against Tenant, its agents,
employees, officers, partners, servants, shareholders, members or managers for
any loss or damage that may occur to the Premises or any personal property
located therein arising by reason of fire, the elements or any cause to the
extent insured against under the terms of the “all-risk” fire and extended
coverage insurance policy obtained by Tenant, regardless of cause or
origin.  Tenant agrees to have the
insurance policies obtained pursuant to this Lease endorsed to effect the terms
of this Section 11.4 and shall forward copies of the same to Landlord.

 

SECTION 11.5                                      Insurance Proceeds.

 

All
insurance proceeds or awards payable under any casualty or rental loss
insurance (except insurance proceeds for damage to Tenant’s trade fixtures,
equipment and personal property) shall be payable solely to Landlord, and
Tenant shall have no interest therein.

 

ARTICLE XII

DAMAGE AND DESTRUCTION

 

SECTION 12.1                                      Landlord’s Repair upon Casualty.

 

(a)                                  If, during the Term of this Lease, the
Improvements shall be damaged or destroyed by fire or other casualty, then
Tenant shall, subject to the provisions hereof, repair and restore the
Improvements.  All such repair and
restoration of the Premises shall be in accordance with the disbursement terms
and conditions (including plan approval) imposed by Landlord’s Mortgagee, if
any.  If no Event of Default by Tenant
exists and if, within the later to occur of (i) sixty (60) days after the
date insurance proceeds are received by Landlord or Landlord’s Mortgagee and
(ii) one hundred twenty (120) days after the date of any such casualty,
Landlord’s Mortgagee fails to make insurance proceeds available under the terms
of the mortgage documents between Landlord and Landlord’s Mortgagee, and
Landlord does not elect within twenty (20) days thereafter to pay for the
repair or restoration of the Improvements, then this Lease shall automatically
terminate effective as of the date of casualty and neither party shall have any
further obligations hereunder. 
Notwithstanding anything to the contrary contained in this Lease, if the
Premises are damaged or destroyed in the last six (6) months of the Term,
unless Tenant elects, or has elected, to extend the Term for the next Renewal
Term, either Tenant or Landlord may elect to terminate this Lease by written
notice to the other, which notice shall be given on or before the date that is
thirty (30) days after such damage or destruction.

 

(b)                                 Notwithstanding the provisions of Section 12.1(a),
if insurance proceeds are unavailable because of Tenant’s failure to maintain
insurance pursuant to the terms hereof, default by Tenant hereunder or Tenant’s
use of the Premises, then Tenant shall have no right to terminate this Lease and
Tenant shall repair or restore the Premises at its cost and expense.  Tenant acknowledges that Landlord and
Landlord’s Mortgagee, if any, shall have the right to review and approve all
plans and specifications for the Improvements to be repaired or restored
pursuant to the terms hereof, and may impose such requirements as are
reasonable and

 

21

 

customary for construction
of that type in Mecklenburg County, North Carolina.  Landlord or Landlord’s Mortgagee shall be
entitled to hold all insurance proceeds and disburse such proceeds pursuant to
reasonable construction disbursement procedures.  Unless otherwise agreed by the parties
hereto, to the extent possible and practical, the Improvements shall be rebuilt
and restored as nearly as possible to the specifications existing immediately
prior to the casualty, with such changes therein as are necessitated by
Landlord’s Mortgagee, if any, or applicable governmental rules and
regulations in a good and workmanlike manner and in accordance with applicable
laws, rules and codes.  To the
extent the cost of rebuilding or restoration exceeds the amount of insurance
proceeds received and Tenant is obligated to rebuild and restore pursuant to
the provisions of this Section 12.1 (or agrees with Landlord to
rebuild and restore), then Tenant shall contribute the difference.  Landlord shall cooperate with Tenant in
connection with any repair and restoration of the Premises and the same shall be
completed with due diligence and commenced and completed within a reasonable
time after the damage or loss occurs. 
Annual Basic Rental and all other Rental hereunder shall not abate while
the Improvements are being repaired or restored, unless Tenant has procured
rent loss insurance reasonably acceptable to Landlord and such insurance pays
the Rental that otherwise would be paid by Tenant hereunder, and in that event
Rental hereunder shall abate only to the extent of insurance proceeds received
by Landlord.

 

(c)                                  In the event the Improvements cannot be
rebuilt, restored or repaired because of prohibitions contained in then
applicable zoning or other governmental rules and regulations, then all
proceeds payable on account of such casualty shall be paid to the parties and
Landlord’s Mortgagee, as their respective interests appear, this Lease shall
terminate as of the date of casualty, and neither party shall have any further
right or obligation to the other hereunder except as otherwise provided herein.

 

ARTICLE XIII

CONDEMNATION

 

SECTION 13.1                                      Termination of Lease.

 

In
the event all or any portion of the Premises shall be acquired for any public
or quasi-public use through taking by condemnation, eminent domain or any
similar proceeding, or purchase in lieu thereof (a “Taking”), such that Tenant
determines in its reasonable discretion that the Premises cannot continue to be
operated for its then current use with reasonably sufficient parking and
vehicular access and in a commercially reasonable manner, then the Term shall
cease and terminate as of the date the condemning authority takes title or
possession to the affected portion of the Property, whichever first occurs.

 

SECTION 13.2                                      Continuation of Lease.

 

If
Tenant reasonably determines after a Taking that the Premises can continue to
be operated for its then current use with sufficient parking, then this Lease
shall remain in full force and effect in accordance with its terms, except that
the Annual Basic Rent shall be, in the case where any portion of the
Improvements has been taken, equitably reduced.

 

22

 

SECTION 13.3                                      Apportionment of Award.

 

In
the event of any Taking, whether whole or partial, Landlord shall be entitled
to receive the entire award for the Taking of the Land and any Improvements,
and Tenant shall be entitled to receive any specific allocation for Tenant’s
personal property and equipment, loss, disruption and relocation of Tenant’s
business and for the value of Tenant’s leasehold estate excluding any Renewal
Terms; provided, however, that if the total award for any Taking (excluding any
award for Tenants personal property, equipment and disruption and relocation of
Tenant’s business) is less than $100,000.00, Landlord shall be entitled to all
of such award.  The provisions of this Section 13.3
shall survive any termination of this Lease.

 

ARTICLE XIV

ASSIGNMENT AND SUBLEASING

 

SECTION 14.1                                      Landlord’s Consent.

 

Tenant
may not sublet the Premises, assign its interest in this Lease nor mortgage its
interest in the Lease (each a “Transfer”) without the prior consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed. Notwithstanding the foregoing, however, Tenant may sublet the Premises
or assign its interest in this Lease to an Affiliate or to any person acquiring
all, or substantially all, operating assets of Tenant without Landlord’s
consent. No assignment, subletting or hypothecation of any interest in this
Lease shall release Tenant from its liability under this Lease, which shall
continue as primary joint and several liability with Tenant’s assignee,
subtenant or other transferee and not as a surety or guarantor. Each assignee
shall assume jointly and severally with Tenant all obligations of Tenant
hereunder, which assumption shall be in form and content reasonably acceptable
to Landlord and delivered to Landlord concurrent with, and as a condition to,
such assignment. Tenant shall be entitled to keep any and all sublease or
assignment profits. Tenant shall only be entitled to mortgage or otherwise pledge
or assign as security (each a “Mortgage”) Tenant’s interest in this Lease
pursuant to a first priority Mortgage, securing a loan to Tenant from an
institutional lender with a payment term not longer than the remaining Lease
Term, securing only Tenant’s interest in the leasehold and/or Tenant’s personal
property. No mortgage by Tenant shall i) encumber any of Landlord’s right,
title or interest in this Lease or the Premises, ii) modify or amend this Lease
or iii) otherwise affect Landlord’s right hereunder.

 

SECTION 14.2                                      Transfer of Interest.

 

If
Tenant is a corporation, partnership or other business entity, the merger or
consolidation of Tenant with any other entity, the issuance of any additional
stock or ownership interest, the conversion or change of Tenant from one type
of business entity to another, and/or the transfer, assignment or hypothecation
of any stock or ownership interest in such entity in the aggregate in excess of
twenty-five percent (25%) of such interests to a party other than an Affiliate
of Tenant, as Tenant may be constituted as of the date of this Lease, whether
directly or indirectly, shall be deemed to be a Transfer within the meaning of
this Section 14.

 

23

 

ARTICLE XV

DEFAULT

 

SECTION 15.1                                      “Event of Default” Defined.

 

Any
one or more of the following events shall constitute an “Event of Default”:

 

(a)                                  Any attachment or execution on all or any
portion of the Premises or similar legal process not released within sixty (60)
days; or if Tenant is adjudicated as bankrupt or insolvent under any State
bankruptcy or insolvency law or an order for relief is entered against Tenant
under the Federal Bankruptcy Code and such adjudication or order is not vacated
within sixty (60) days.

 

(b)                                 The commencement of a case under any chapter
of the Federal Bankruptcy Code by or against Tenant or the filing of a
voluntary or involuntary petition proposing the adjudication of Tenant as
bankrupt or insolvent, or the reorganization of Tenant, or an arrangement by
Tenant with its creditors, unless the petition is filed or case commenced by a
party other than Tenant and is withdrawn or dismissed within sixty (60) days
after the date of the filing.

 

(c)                                  The admission by Tenant of its inability to
pay its debts when due.

 

(d)                                 The appointment of a receiver or trustee for
the business or property of Tenant unless such appointment shall be vacated
within sixty (60) days of its entry.

 

(e)                                  The making by Tenant of a general assignment
for the benefit of its creditors, or, except as permitted pursuant to
Section 14.1, if in any other manner Tenant’s interest in this Lease shall
pass to another by operation of law.

 

(f)                                    The failure of Tenant to pay any Rental or
other sum of money within fifteen (15) days after the same is due.

 

(g)                                 Default by Tenant in the performance or
observance of any covenant or agreement of this Lease (other than a default
involving the payment of money), which default is not cured within thirty (30)
days after the giving of notice thereof by Landlord, unless such default is of
such nature that it cannot be cured within such thirty (30) day period, in
which case no Event of Default shall occur so long as Tenant shall commence the
curing of the default within such thirty (30) day period and shall thereafter
diligently prosecute the curing of same.

 

SECTION 15.2                                      Remedies.

 

Upon
the occurrence and during the continuance of any Event of Default, Landlord,
without notice to Tenant in any instance, may do any one or more of the
following:

 

(a)                                  Perform, on behalf and at the expense of
Tenant, any obligation of Tenant under this Lease which Tenant has failed to
perform and of which Landlord shall have given Tenant notice, the cost of which
performance by Landlord, together with interest

 

24

 

thereon
at the Default Rate from the date of such expenditure, shall be deemed
Additional Rental and shall be payable by Tenant to Landlord within ten
(10) days after demand therefor;

 

(b)                                 Terminate this Lease and, pursuant to summary
process, reenter an repossess the Premises and remove Tenant and each and every
occupant therein and all of Tenant’s personalty, trade fixtures and apparatus
and be entitled to recover as damages a sum of money equal to the sum of
(i) the cost of recovering the Premises, (ii) all accrued and unpaid
Rental, together with interest thereon at the Default Rate and (iii) all
other damages incurred by Landlord and available hereunder or at law or equity.

 

(c)                                  Without terminating this Lease, terminate Tenant’s
right of possession to the Premises, and, pursuant to summary process, reenter
and repossess the Premises and remove Tenant and each and every occupant
therein and all of Tenant’s personalty, trade fixtures and apparatus. In the
event of reentry by Landlord, Tenant shall be liable to Landlord for losses
actually sustained, including, but not limited to, the cost of cleaning the
Premises and the costs of preparing the same for reletting to other tenants
incurred reasonably and in good faith, and including reasonable attorneys’ fees
actually incurred. No reentry by Landlord, however, or any other action by
Landlord shall constitute an acceptance of surrender by Tenant, it being
understood that such acceptance or surrender can be affected only by the written
agreement of Landlord and Tenant; and

 

(d)                                 Without limiting the foregoing, exercise any
legal or equitable right or remedy which it may have under this Lease or at law
or equity.

 

Notwithstanding
the provisions of clause (a) above and regardless of whether an Event of
Default shall have occurred, Landlord may exercise the remedy described in
clause (a) without any notice to Tenant if Landlord, in its reasonable,
good faith judgment, believes it would be irreparably injured by failure to
take rapid action or if Landlord reasonably believes that the unperformed
obligation or pending actions by Tenant will result in immediate and
substantial harm to person or property. 
Notwithstanding anything in this Lease to the contrary, Landlord shall
not have the right to place liens or encumbrances on Tenant’s personal property
and fixtures, and Landlord hereby waives any and all liens and encumbrances
against Tenant’s personal property and fixtures.  Landlord further agrees, upon request of
Tenant, to execute a customary landlord’s waiver and consent for the benefit of
Tenant and any lender of Tenant.

 

Any
costs and expenses incurred by either party (including, without limitation,
reasonable attorneys’ fees actually incurred) in enforcing any of its rights or
remedies under this Lease shall, in the case of sums due Landlord, be deemed
Additional Rental and shall, in all cases, be repaid to the party entitled to
the same within ten (10) days of demand therefor and shall bear interest
from the date due until paid at the Default Rate.

 

SECTION 15.3                                      Damages.

 

(a)                                  If Tenant’s right of possession under this
Lease is terminated by Landlord pursuant to Section 15.2, Tenant
shall remain liable for any Rental and its other obligations under this
Lease.  Tenant shall also pay to Landlord,
together with interest thereon at the Default

 

25

 

Rate, (i) all
reasonable costs, fees and expenses including, but not limited to, reasonable
attorneys’ fees actually incurred, costs and expenses incurred by Landlord in
pursuit of its remedies hereunder, or in reletting the Premises to others from
time to time and (ii) additional damages, which shall be in an amount or
amounts equal to the Rental due hereunder during the remainder of the Term,
less all sums received by Landlord from any reletting of the Premises and iii)
all other damages incurred by Landlord and available at law or equity.

 

(b)                                 If Tenant’s right of possession under this
Lease is terminated pursuant to Section 15.2, Landlord shall use
commercially reasonable efforts to relet the Premises or any part thereof,
alone or together with other premises, for such term or terms (which may be
greater or less than the period which otherwise would have constituted the
balance of the Term) and on such terms and conditions as Landlord may
reasonably determine are appropriate in the then-current rental market.

 

SECTION 15.4                                      Assignment in Bankruptcy.

 

In
the event of an assignment by operation of law under the Federal Bankruptcy
Code, or any State bankruptcy or insolvency law and Landlord elects not to
terminate or is stayed from termination of Tenant’s rights of possession under
this Lease, the assignee shall provide Landlord with adequate assurance of
future performance of all of the terms, conditions and covenants of the Lease,
which shall include, but which shall not be limited to, assumption of all the
terms, covenants and conditions of the Lease by the assignee and the making by
the assignee of the following express covenants to Landlord:

 

(a)                                  That assignee has sufficient capital and
financial viability to pay the Rental and other charges due under the Lease for
the entire Term; and

 

(b)                                 That assumption of the Lease by the assignee
will not cause Landlord to be in violation or breach of any provision in any
financing agreement.

 

ARTICLE XVI

SUBORDINATION AND ATTORNMENT

 

SECTION 16.1                                      Subordination.

 

(a)                                  Unless a Mortgagee shall otherwise elect as
provided in Section 16.2 of this Lease, and subject to Tenant’s
right of non-disturbance set forth in Section 16.4 below, Tenant’s
rights under this Lease are and shall remain subject and subordinate to the
operation and effect of any mortgage, deed of trust or other security
instrument constituting a lien upon the Premises, whether the same shall be in
existence at the date hereof or created hereafter, any such mortgage, deed of
trust or other security instrument being referred to herein as a “Mortgage” and
the party or parties having the benefit of the same, whether as mortgagee,
trustee or note holder, being referred to herein as a “Mortgagee”.

 

(b)                                 Tenant agrees, within ten (10) business
days after a request therefor, to execute any instrument or instruments
reasonably necessary or desirable to effectuate its agreement to subordinate
its interest to the interest of any Mortgagee, proved that such subordination
shall be subject to the non-disturbance requirements described in Sections
16.3 and 16.4 below.

 

26

 

SECTION 16.2                                      Mortgagee’s Unilateral
Subordination.

 

If
a Mortgagee shall elect by notice to Tenant or by the recording of a unilateral
declaration of subordination, then this Lease and Tenant’s rights hereunder
shall be superior and prior in right to the Mortgage of which such Mortgagee
has the benefit, with the same force and effect as if this Lease had been
executed, delivered and recorded prior to the execution, delivery and recording
of such Mortgage.

 

SECTION 16.3                                      Attornment.

 

If
any person shall succeed to all or part of Landlord’s interest in the Premises,
whether by purchase, refinance, foreclosure, deed in lieu of foreclosure, power
of sale, termination of lease, or otherwise, such successor in interest shall
not disturb Tenant’s interest in or possession of the Premises pursuant to the
terms of this Lease, Tenant shall attorn to such successor in interest and
shall, within ten (10) business days after a request therefor, execute
such agreement in confirmation of such attornment as such successor in interest
shall reasonably request; provided, however, that no Mortgagee or successor in
interest to Landlord by reason of foreclosure or deed in lieu of foreclosure
shall be (i) bound by any payment of Rental more than one (1) month
in advance; (ii) bound by any amendments or modifications of this Lease
made after the date of such Mortgage without the consent of the Mortgagee or
(iii) liable for any act or omission of a prior landlord hereunder unless
and to the extent such act or omission shall be continuing in nature and shall
have continued after the date of foreclosure or deed in lieu of foreclosure.

 

SECTION 16.4                                      Non-Disturbance.

 

So
long as no Event of Default shall exist, this Lease shall remain in full force
and effect for the full Term hereof, and Tenant’s occupancy of the Premises and
tenancy under this Lease shall not be disturbed by any foreclosure proceeding,
by any deed in lieu of foreclosure or other such transfer, or by any breach or
termination of the ground lease or other agreement by and between (Olds and La
Gatta (or any other parties comprising Landlord), and any subordination set
forth in Section 16.1 is made subject to Tenant’s non-disturbance
rights under this Section 16.4. 
Landlord shall exercise diligent, good faith efforts to cause any
current or future Mortgagee to execute and deliver a subordination,
non-disturbance and attornment agreement, in form and substance reasonably
acceptable to all parties, as soon as reasonably possible after the execution
hereof.

 

ARTICLE XVII

NOTICES

 

SECTION 17.1                                      Sending of Notices.

 

All
notices and communications hereunder shall be in writing and shall be deemed
given: (a) on the date of delivery if delivered in person; (b) on the
date placed with a nationally recognized overnight delivery service, such as
Federal Express; (c) on the date deposited in the United States mail if
sent by registered or certified mail, postage prepaid; or (d) on the date
sent by electronically-confirmed facsimile transmission.  All such notices and communication shall be
properly addressed as follows:

 

27

 

	
  If to Landlord:

  	
   

  	
  Olds Properties
  Corporation

  
	
   

  	
   

  	
  c/o Olds Securities

  
	
   

  	
   

  	
  Attn: Helene Funk

  
	
   

  	
   

  	
  150 East 57th Street,
  Suite 16-E

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Facsimile: (212) 832-1665

  
	
   

  	
   

  	
   

  
	
  and to:

  	
   

  	
  John H.O. La Gatta

  
	
   

  	
   

  	
  50 West Liberty Street,
  Suite 1080

  
	
   

  	
   

  	
  Reno, Nevada 89501

  
	
   

  	
   

  	
  Facsimile: (775) 785-2245

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Lionel Sawyer &
  Collins

  
	
   

  	
   

  	
  Attn: Gary
  Duhon, Esq. and Craig Etem, Esq.

  
	
   

  	
   

  	
  1100 Bank of America Plaza

  
	
   

  	
   

  	
  50 West Liberty Street

  
	
   

  	
   

  	
  Reno, Nevada 89501

  
	
   

  	
   

  	
  Facsimile: (775) 788-8682

  
	
   

  	
   

  	
   

  
	
  If to Tenant:

  	
   

  	
  Warner Electric Company

  
	
   

  	
   

  	
  Attn: General Counsel

  
	
   

  	
   

  	
  997 Lenox Drive,
  Suite 111

  
	
   

  	
   

  	
  Lawrenceville, New Jersey
  08648

  
	
   

  	
   

  	
  Facsimile: (609) 896-7633

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Moore & Van Allen
  PLLC

  
	
   

  	
   

  	
  Attn: Bryan P. Durrett, Esq.

  
	
   

  	
   

  	
  100 North Tryon Street,
  Floor 47

  
	
   

  	
   

  	
  Charlotte, North Carolina
  28202-4003

  
	
   

  	
   

  	
  Facsimile: (704) 339-5843

  

 

If
sent by one of the herein-described means, notices shall be deemed received:
(w) on the date delivered if given by personal delivery; (x) one
(1) business day after being placed with a nationally recognized overnight
delivery service; (y) three (3) business days after being deposited in the
United States mail service; or (z) on the following business day if sent by
electronically-confirmed facsimile transmission.

 

Either
party may at any time change its notice address (including its facsimile
number) by sending a written notice to that effect by one of the
above-described means to the other party stating the change and setting forth
the new address or number.

 

28

 

ARTICLE XVIII

QUIET ENJOYMENT

 

SECTION 18.1                                      Warranty.

 

Subject
only to applicable laws (including zoning laws), Landlord warrants that it has
full right and authority to lease the Premises upon the terms and conditions
herein set forth; and Tenant, upon paying the Rental and upon Tenant’s
performance of all of the terms, covenants and conditions of this Lease on its
part to be kept and performed, may quietly have, hold and enjoy the Premises
during the Term of this Lease without disturbance from Landlord or from any
other person claiming through Landlord.

 

ARTICLE XIX

RIGHT OF FIRST OFFER AND RIGHT OF FIRST REFUSAL

 

SECTION 19.1                                      Right of First Offer.

 

If
at any time during the Term, Landlord desires to market for sale or transfer
any or all of the Premises other than to an Affiliate, Landlord shall first
provide written notice to Tenant of its intention to do so, which notice shall
constitute an offer of purchase and sale for the Premises, or portion thereof,
to Tenant (the “First Offer Notice”). 
The First Offer Notice shall contain the terms and conditions upon which
Landlord intends to offer the Premises for sale or assign its interest therein,
including purchase price, closing date (which shall not be earlier than forty
five (45) days after acceptance) and other material business terms.  Upon receipt of the First Offer Notice,
Tenant shall have thirty (30) business days (the “Acceptance Period”) to
determine whether the terms and conditions contained therein are acceptable to
Tenant and to accept the offer of purchase and sale or to negotiate an
agreement with Landlord for the purchase and sale of the Premises upon such
other terms and conditions as are acceptable to the parties.  If the terms and conditions contained in the
First Offer Notice are acceptable to Tenant, Tenant shall so indicate by
providing written notice thereof to Landlord prior to expiration of the
Acceptance Period.  In the event the
terms and conditions contained in the First Offer Notice are unacceptable to
Tenant, and Landlord and Tenant are unable to reach agreement on other terms
and conditions acceptable to both parties prior to expiration of the Acceptance
Period, Landlord shall be free to market and sell or transfer the Premises to
other persons for a purchase price not less than the purchase price set forth
in the First Offer Notice and on other terms not materially more favorable to
the purchaser than those set forth in the First Offer Notice.  In the event Landlord does not consummate a
sale or other transfer of the Premises in accordance with the terms of the
First Offer Notice within one (1) year following the date of such First
Offer Notice, Landlord shall again be obligated to provide a new First Offer Notice
to Tenant pursuant to this Section 19.1 prior to Landlord
continuing (or again, if applicable) seeking, soliciting or entertaining any
offer to purchase, sell or transfer all or any portion of the Premises other
than to an Affiliate.  If Landlord does
consummate a sale or other transfer of the Premises in accordance with the
terms of the First Offer Notice, or to an Affiliate, such sale or transfer
shall be subject to the terms and provisions of this Lease; provided, however,
upon consummation of a bona fide, arms’ length sale or transfer of the Premises
to a party other than an Affiliate, Tenant’s rights pursuant to this Section 19.1
shall no longer apply with respect to any subsequent offers to purchase, sell
or transfer all or any portion of the Premises by the then-owner of the
Premises.

 

29

 

In
addition to the assignment by Landlord of its interest in the Premises to a
third party, the following event shall also constitute an assignment which
subjects the Improvements to the terms of this Section 19.1 and for
which a First Offer Notice is required: part or all of the ownership interests
in any entity to which La Gatta shall convey title to the Improvements shall in
any one or more instances be issued, or transferred by sale, assignment,
conveyance, operation of law (including, but not limited to, transfer as a
result of or in conjunction with any merger, reorganization or
recapitalization) or other disposition, or otherwise changed, so as to result
in less than fifty-one percent (51%) of such ownership interests being owned
individually or collectively by La Gatta and/or an Affiliate of La Gatta.

 

SECTION 19.2                                      Right of First Refusal.

 

In
the event Landlord desires to sell the Premises at any time during the Term
other than to an Affiliate, except for any sale or transfer to third parties by
Landlord allowed under Section 19.1, Tenant shall have a right of first
refusal to acquire the Premises for the purchase price and on substantially the
same other reasonable terms and conditions as contained in any bona fide offer
(an “Offer”) to purchase the Premises. 
Landlord shall promptly notify Tenant upon receipt of an Offer, which
notification shall contain a true and complete copy of the Offer.  Tenant may exercise such right by providing
Landlord with written notice of its intent to acquire the Premises within
thirty (30) business days after Tenant’s receipt of the notification and copy
of the Offer.  In the event Tenant fails
to exercise its right of first refusal within such thirty (30) business day
period, Landlord shall be free to sell the Premises in accordance with the
terms and conditions of the Offer. 
Notwithstanding the sale of the Premises, the Right of First Offer described
in Section 19.1 above shall survive the closing of such sale, and
Tenant shall retain the Right of First Offer to acquire the Premises for the
Term of the Lease.  For purposes of this Section 19.2,
a bona fide offer shall mean a legitimate, written offer containing terms and
conditions acceptable to Landlord from a prospective buyer that is ready,
willing and able to acquire the Premises on such terms and conditions.

 

ARTICLE XX

MISCELLANEOUS

 

SECTION 20.1                                      Estoppel Certificates.

 

At
any time and from time to time, within ten (10) days after request
therefor from the other party, Landlord or Tenant will execute, acknowledge and
deliver to the other, and to such Mortgagee, buyer or other third party as may
be designated in the request, a certificate in reasonable form with respect to
the matters relating to this Lease or the status of performance of obligations
of the parties hereunder as may be reasonably requested.

 

SECTION 20.2                                      Inspections and Access by
Landlord.

 

So
long as Landlord does not unreasonably interfere with Tenant’s operations,
Tenant will permit Landlord, its agents, employees, contractors, lenders,
buyers and tenants (subject to the condition below) to enter the Premises upon
not less than 24 hours prior written notice, and then only during Tenant’s
normal business hours, to inspect the same, to post notices of
non-responsibility, and to enforce or carry out any provision of this Lease,
including, without

 

30

 

limitation, any access
necessary for the making of any repairs and other reasonable business purposes;
provided that, i) in an emergency situation, such access shall be at any time
upon Landlord’s oral request, and ii) Landlord shall be entitled to show the
Premises to prospective tenants only during the last twelve (12) months of the
Term and any Renewal Terms, of which showings Landlord shall provide Tenant at
least three (3) days prior written notice, which notice shall identify the
prospective tenant, and during which showings Tenant shall be entitled to have
a representative in attendance, and iii) showing to prospective buyers during
the last twelve (12) months of the Term and any Renewal Terms shall require at
least three (3) day prior written notice, during which showing Tenant
shall be entitled to have a representative in attendance. After Landlord’s
notice to Tenant of any showing under this Section 20.2, Landlord and
Tenant shall reasonably cooperate to agree on the time or times thereof, which
showing(s) may occur one or more times during any period of five (5) consecutive
business days.  Thereafter, additional
showings to the same party shall require separate notice from Landlord to
Tenant as required herein.

 

SECTION 20.3                                      Memorandum of Lease.

 

Upon
execution of this Lease, the parties hereby agree to execute, acknowledge and
deliver for recording purposes a memorandum of lease in substantially the form
attached hereto as Exhibit B.  No
such memorandum shall include any financial terms of this Lease.  Recording, filing and like charges and any
stamp, charge for recording, transfer or other tax shall be paid by
Tenant.  In the event of termination of
this Lease, within thirty (30) days after written request from Landlord, Tenant
agrees to execute, acknowledge and deliver to Landlord an agreement terminating
such memorandum of lease of record.  If
Tenant fails to execute such agreement within that thirty (30) day period or
fails to notify Landlord within that thirty (30) day period of its reasons for
refusing to execute such agreement, Landlord is hereby authorized to execute
and record such agreement for the sole purpose of terminating the memorandum of
lease of record. This provision shall survive any termination of the Lease.

 

SECTION 20.4                                      Remedies Cumulative.

 

No
reference to any specific right or remedy shall preclude either party from
exercising any other right or from having any other remedy or from maintaining
any action to which it may otherwise be entitled at law or in equity.  The foregoing shall in no way relieve or
release Tenant from its obligation to pay all Rental, except as expressly
permitted by Section 9.2(d) hereof.  No failure by either party to insist upon the
strict performance of any agreement, term, covenant or condition hereof, or to
exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial rent during the continuance of any such breach,
shall constitute a waiver of any such breach, agreement, term, covenant or
condition.  Except for any express
written waiver by Landlord as to any breach by Tenant of its obligations under
this Lease, no waiver by Landlord as to any breach of Tenant shall affect or
alter this Lease in any way whatsoever.

 

SECTION 20.5                                      Successors and Assigns.

 

Subject
to Section 14.1 hereof, this Lease and the covenants and conditions
herein contained shall inure to the benefit of and be binding upon Landlord,
its successors and assigns,

 

31

 

and shall be binding upon
and inure to the benefit of Tenant, its successors and assigns.  Upon any sale or other transfer by Landlord
of its interest in the Premises and upon the express written assumption of
Landlord’s obligations hereunder by the assignee of Landlord’s interest herein,
Landlord shall be relieved of all of its obligations arising under this Lease
arising after the date of such sale or transfer.

 

SECTION 20.6                                      Compliance with Laws and
Regulations.

 

Landlord
hereby represents and warrants that, to Landlord’s knowledge and except as
disclosed to Tenant in writing, as of the Turnover Date the Premises will not
be in violation of the provisions of any federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations and ordinances,
including without limitation the Americans With Disabilities Act, as amended
and all rules, orders and regulations of the National Board of Fire
Underwriters or Landlord’s fire insurance rating organization or other bodies
exercising similar functions in connection with the prevention of fire or the
correction of hazardous conditions which apply to the Premises.  After the Turnover Date, subject to Section 20.17
of this Lease, Tenant, at its sole cost and expense, shall comply with and
shall cause the Premises to comply with (a) all federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations and
ordinances, including without limitation the Americans With Disabilities Act,
as amended, affecting the Premises or the use thereof, whether presently
existing or enacted after the date hereof, and (b) all rules, orders and
regulations of the National Board of Fire Underwriters or Tenant’s fire
insurance rating organization or other bodies exercising similar functions in
connection with the prevention of fire or the correction of hazardous
conditions which apply to the Premises.

 

SECTION 20.7                                      Captions and Headings.

 

The
Article and Section captions and headings are for convenience of
reference only and in no way shall be used to construe or modify the provisions
set forth in this Lease.

 

SECTION 20.8                                      Broker’s Commission.

 

Each
of the parties (i) represents and warrants that there are no claims for
brokerage commissions or finders’ fees in connection with the execution of this
Lease for which the other party will be obligated, other than that of Whiteside
Industrial Properties (“Broker”), whose commission shall be paid by Landlord in
accordance with a separate agreement between Landlord and Broker, and
(ii) except with respect to Broker, agrees to indemnify the other against,
and hold it harmless from, all liability arising from any such claim including,
without limitation, attorneys’ fees.

 

SECTION 20.9                                      No Joint Venture.

 

Any
intention to create a joint venture or partnership relation between the parties
hereto is hereby expressly disclaimed.

 

32

 

SECTION 20.10                               No Option.

 

The
submission of this Lease for examination does not constitute a reservation of
or option for the Premises, and this Lease shall become effective only upon
execution and delivery thereof by both parties.

 

SECTION 20.11                               No Modification.

 

This
writing is intended by the parties as a final expression of their agreement and
as a complete and exclusive statement of the terms thereof, all negotiations,
considerations and representations between the parties having been incorporated
herein.  No course of prior dealings
between the parties or their officers, employees, agents or affiliates shall be
relevant or admissible to supplement, explain or vary any of the terms of this
Lease.  Acceptance of, or acquiescence
in, a course of performance rendered under this or any prior agreement between
the parties or their affiliates shall not be relevant or admissible to
determine the meaning of any of the terms of this Lease.  No representations, understandings or agreements
have been made or relied upon in the making of this Lease other than those
specifically set forth herein.  This
Lease can be modified only by a writing signed by both parties.

 

SECTION 20.12                               Severability.

 

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

 

SECTION 20.13                               Third Party Beneficiary.

 

Nothing
contained in this Lease shall be construed so as to confer upon any other party
the rights of a third party beneficiary except rights contained herein for the
benefit of a Mortgagee.

 

SECTION 20.14                               Authority; Good Standing.

 

Tenant
represents and warrants to Landlord that (i) Tenant is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware and authorized to do business in the State of North Carolina and
(ii) the person executing this Lease on behalf of Tenant is authorized to
do so.  Upon the request of Landlord,
Tenant shall provide to Landlord a certificate of the Secretary or Assistant
Secretary of Tenant stating the officers of Tenant, the specimen signature of
the officer of Tenant who will execute this Lease and a resolution of the board
of directors of Tenant authorizing the officer of Tenant who will execute this
Lease to execute and deliver this Lease on behalf of Tenant.  Landlord represents and warrants to Tenant
that (i) Olds is a corporation duly formed, validly existing and in good
standing under the laws of the State of Delaware and (ii) the person
executing this Lease on behalf of Olds and La Gatta is duly authorized to do
so.  Upon the request of Tenant, Landlord
shall provide to Tenant a certificate of the Secretary or Assistant Secretary
of Olds stating the officers of Olds, the specimen signature of the officer of
Olds who will execute this Lease and a resolution of the

 

33

 

board of directors of Olds
authorizing the officer of Olds who will execute this Lease to execute and
deliver this Lease on behalf of Olds.

 

SECTION 20.15                               Applicable Law.

 

This
Lease and the rights and obligations of the parties hereunder shall be
construed in accordance with the laws of the State of North Carolina.

 

SECTION 20.16                               Performance of Landlord’s
Obligations by Mortgagee.

 

Tenant
shall accept performance of any of Landlord’s obligations hereunder by any
Mortgagee.

 

SECTION 20.17                               Hazardous Substances.

 

(a)                                  Except as disclosed on the Tenant’s
Questionnaire attached hereto as Exhibit C, Tenant agrees that it
shall not store, use, possess, generate, dispose, release, spill or dispose of
(collectively “Hazardous Substance Activity”) any Hazardous Substances from, on
or under the Premises or knowingly permit any other party to engage in any
Hazardous Substance Activity from, on or under the Premises.  Tenant shall cause all of its Hazardous
Substance Activity on the Premises during the term to be conducted in
accordance with all applicable laws. 
Tenant shall indemnify and hold harmless Landlord and Landlord’s
officers, members, managers, agents and employees (collectively, the “Landlord
Indemnified Parties”) from any claim, demand, liability, damage, loss or
expense (including attorneys’ fees and court costs) that Landlord might suffer
as a result of any Hazardous Substance Activity of Tenant, any agent of Tenant,
or any other person present at the Premises by permission of Tenant (a “Tenant
Permittee”), from, on or under the Premises during the Term, except to the
extent any such claim, demand, liability, damage, loss or expense is caused by
or arises out of (i) any Hazardous Substance Activity by Landlord or any
agent of Landlord (a “Landlord Hazardous Substance Activity”), or (ii) any
Hazardous Substance Activity occurring prior to the Turnover Date (a “Previous
Hazardous Substance Activity”), provided, however, that Tenant shall be
responsible to indemnify and hold the Landlord Indemnified Parties harmless
from and against any such claim, demand, liability, damage, loss or expense if,
and only to the extent, physically caused by Tenant’s knowing or negligent
exacerbation of any Landlord Hazardous Substance Activity or Previous Hazardous
Substance Activity.  In any action by a
Landlord Indemnified Party to enforce Tenant’s obligations hereunder arising
out of any Hazardous Substance which is of the same type or nature as the
Hazardous Substances, or any constituent element thereof, which are either
(a) the subject of the Corrective Action Plan No. 9735209 dated
April 16, 1999 that Honeywell International, Inc. is implementing at
the Premises (the “CAP”) or (b) identified in the Environmental Site
Assessment report for the Premises prepared by Erler &
Kalinowski, Inc. and dated January 14, 2003 (the “Phase I”), the
burden shall be upon such Landlord Indemnified Party to show that the claim,
demand, liability, damage, loss or expense for which indemnity is sought was
caused by Tenant’s Hazardous Substance Activity and not by any Landlord
Hazardous Substance Activity or Previous Hazardous Substance Activity;
provided, however, if Tenant conducted any Hazardous Substance Activity on the
Premises involving such Hazardous Substance or a constituent element thereof,
the burden of proof shall not be allocated to either Landlord or Tenant
pursuant to this paragraph.

 

34

 

Landlord
shall indemnify and hold harmless Tenant and Tenant’s officers, members,
managers, agents and employees (collectively, the “Tenant Indemnified Parties”)
from any claim, demand, liability, damage, loss or expense (including attorneys’
fees and court costs) that any Tenant Indemnified Party might suffer as a
result of any Hazardous Substance Activity of Landlord, or any agent of
Landlord, from, on or under the Premises during the Term.

 

The
indemnities contained in this Section 20.17(a) shall survive the
expiration or earlier termination of this Lease.  “Hazardous Substances” means and includes any
of the substances, materials, elements or compounds that are contained in the
list of hazardous substances adopted by the United States Environmental
Protection Agency (the “EPA”) and the list of toxic pollutants designated by
the United States Congress or the EPA and substances, materials, elements or
compounds affected by any other federal, state or local statute, law ordinance,
code, rule regulation, order or decree now or at any time hereafter in
effect regulating, relating to or imposing liability or standards of conduct
concerning any hazardous, toxic, dangerous, restricted or otherwise regulated
waste, substance or material, as now or at any time hereafter in effect.  Tenant shall be entitled to modify from time
to time as reasonably necessary for the conduct of Tenant’s Permitted Use the
Hazardous Substance Activities described on Exhibit C, subject to
the prior approval in writing by Landlord, which approval shall not be
unreasonably withheld or delayed.

 

(b)                                 Tenant shall notify Landlord promptly in the
event of any spill or release of Hazardous Material into, on, or under the
Premises or the Project, regardless of the source or cause of such spill or
release, whenever Tenant knows or suspects that such a spill or release has
occurred, and shall promptly notify Landlord of any other breach, violation or
default by Tenant of Tenant’s obligations under this Section 20.17.  Tenant shall promptly provide copies to
Landlord of all notices, correspondence, claims or other documents received or
sent by Tenant or Tenant’s agents, employees or consultants relating to the
violation of any environmental law related to the Premises.

 

(c)                                  Upon twenty-four (24) hour prior notice by
Landlord (except in an emergency or to prevent potential exacerbation of any
contamination, in which event no prior notice shall be necessary), Tenant shall
permit Landlord or Landlord’s agents or consultants to enter upon the Premises
and the Project to conduct environmental site assessments and such other
examinations, tests, inspections and reviews (including but not limited to geohydraulic
survey of soil and subsurface conditions and inspections of the improvements
located on the Premises) of the Premises as Landlord shall reasonably desire to
discover, assess, evaluate or monitor or otherwise address any potential
environmental problem, including without limitation the existence of Hazardous
Substances on the property.

 

(d)                                 Landlord represents that as of the Turnover
Date, to Landlord’s knowledge and except as disclosed to Tenant in writing, the
Premises are not in violation of any environmental laws.

 

(e)                                  Remedial Acts.  In
the event of any spill or release of or the presence of any Hazardous Substance
affecting the Premises, whether the same originates or emanates from the
Premises or any contiguous real estate, Landlord may, upon reasonable notice to
Tenant, at Landlord’s election, but without obligation to do so, give such
notices, cause such work to be

 

35

 

performed at the Premises
and take any and all other actions as Landlord reasonably shall deem necessary
or advisable in order to fully remedy said spill, release or presence of
hazardous Substance.  If the spill,
release or presence of Hazardous Substance constitutes a breach, default or
violation by Tenant of its covenants or obligations hereunder or is otherwise
the responsibility of Tenant under applicable law, then (1) Landlord may
undertake any or all actions Landlord may reasonably deem necessary or
appropriate to remediate such Hazardous Materials to the extent required by
applicable law or cure such breach, default or violation or, upon Landlord’s
demand, Tenant at Tenant’s expense shall promptly commence and diligently
prosecute to completion all actions reasonably necessary or appropriate to
remediate and cleanup all Hazardous Substances as and to the extent required by
law, and (2) all reasonable expenses and costs incurred by Landlord in
connection with such spill, release or presence of Hazardous Substance, or the
remediation or cure thereof and the enforcement of Landlord’s remedies
hereunder, together with interest at the Default Rate, shall be due and payable
by Tenant to Landlord upon demand.

 

SECTION 20.18                               Net Lease.

 

Except
for the warranty obligations of Landlord under Sections 10.1. 20.6 and
20.17(d), the Allowance provided under Section 9.1, and the
maintenance, repair and replacement obligations of Landlord under Section 9.2(a) and
Section 9.2(d), it is the purpose, intent and agreement of Landlord
and Tenant that the Annual Basic Rental payable hereunder shall be a net return
to Landlord, undiminished by the Taxes, setoff, abatement or any part thereof,
or any other maintenance or repair costs, costs of insurance, or any other
charges of any kind or nature whatsoever relating to the Premises or any
Improvements, which may arise or become due during the term of this Lease, all
of which shall be paid by Tenant.

 

SECTION 20.19                               Tenant Information.

 

Tenant
agrees it will provide to Landlord, no more often than three times per Rental
Year, such financial and other information regarding Tenant as Landlord may
reasonably request, and Landlord may use such information for the purpose of
obtaining financing for the Premises, for marketing the Premises for sale to a
prospective buyer, or, upon express written consent of Tenant, which consent
shall not be unreasonably withheld, conditioned or delayed for any other
reasonable business purpose of Landlord.

 

SECTION 20.20                               Tenant questionnaire.

 

Tenant
shall complete and return to Landlord on or before Tenant’s execution hereof
the Tenant’s Questionnaire attached hereto as Exhibit C and incorporated
herein by reference. Tenant hereby represents and warrants to Landlord that
Tenant’s Questionnaire, as completed by Tenant, and all of Tenant’s answers and
responses thereon or attached thereto, are true, correct and complete.

 

SECTION 20.21                               Time of Essence.

 

Time
is of the essence of each term and provision of this Lease.

 

36

 

SECTION 20.22                               Surrender of Lease Not
Merger.

 

The
voluntary or other surrender of this Lease by Tenant, or mutual cancellation
hereof, or the termination of this Lease by Landlord, shall not cause a merger.

 

SECTION 20.23                               Landlord; Transfer by
Landlord.

 

For
purposes hereof, “Landlord” shall mean the parties defined as Landlord on
page 1 hereof and any assignee or transferee of Landlord’s interest in the
Premises. Landlord and each assignee or transferee shall only be the “Landlord”
hereunder and shall only be liable for the obligations and liabilities of
Landlord arising under this Lease during such party’s period of ownership of
the Premises. Tenant’s rights under this Lease will not be affected by any
transfer or conveyance by Landlord, and Tenant agrees to attorn to any assignee
or transferee.

 

[Signature Page Follows}

 

37

 

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have
executed this Lease under seal as of the day and year first above written.

 

	
   

  	
  LANDLORD:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  OLDS PROPERTIES CORPORATION,

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  John H.O. La Gatta

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WARNER ELECTRIC INC.,

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Thomas M. O’Brien

  	
   

  
	
   

  	
  Title:

  	
  Vice President, General
  Counsel and

  	
   

  
	
   

  	
   

  	
  Secretary

  	
   

  
							

 

Attachments:

 

Exhibit A – Legal Description of the Land

Exhibit B – Form of Memorandum of Lease

 

38

 

Exhibit A

 

Legal
Description of the Land

 

 

All that certain parcel of real estate, together with improvements
thereon, situate, lying, and being in the County of Mecklenburg, State of North
Carolina, more particularly described as follows:

 

BEGINNING at an old iron, a corner of the property conveyed to W. H.
Keistler and wife by deed of J. T. McGee, Trustee, dated October 9, 1920,
and recorded in Book 436, Page 9, in the Office of the Register of Deeds
for Mecklenburg County, North Carolina, which point of beginning is located at
or near the Easterly terminus of the center line of Linwood Avenue and which
point of beginning is located North 54-46-30 West, a distance of 295.05 feet
from an iron stake in the Northwesterly margin of the right of way of
interstate Highway No. 85, the intersection of said right of way with
one of the Westerly lines of said Keistler property; and running thence a new
line through said Keistler property North 6-25-51 West 555.99 feet to an old
iron; running thence North 73-34-12 East 860.57 feet to an iron, the Northerly
corner of said Keistler property, running thence South 18-34-57 East, a
distance of 529.75 feet to an iron in the Northerly margin of the right of way
of Interstate Highway No. 85; running thence with the Northerly margin of
the right of way of Interstate Highway No. 85 in a Southwesterly direction
and with the arc of a circular curve to the left, a radius of 2994.79 feet, an
arc distance of 834.60 feet (Chord South 56-03-21 West 831.90 feet) to an iron
in the Northerly margin of the right of way of Interstate Highway No. 85,
the intersection of said right of way with one of the lines of said
Keistler property; and running thence North 54-46-30 West 296.05 feet to an old
iron, the point or place of Beginning, containing 13.622 acres, according to a
survey entitled “The Olds Company, Inc.” prepared by Carolina
Surveyors, Inc., dated February 5, 1986.

 

39

 

 

Exhibit B

 

FORM OF MEMORANDUM OF LEASE

 

THIS MEMORANDUM
OF LEASE (this “Memorandum”) is made as of the 29th day of January,
2003, by and between OLDS PROPERTIES CORPORATION, a Delaware corporation, and
JOHN H.O. La GATTA (collectively, “Landlord”) and WARNER ELECTRIC COMPANY, a
Delaware corporation (“Tenant”).

 

WITNESSETH:

 

WHEREAS,
Landlord is the owner of certain real property located in Charlotte,
Mecklenburg County, North Carolina, identified by Tax Parcel ID #039-053-16,
and more fully described on Exhibit A attached hereto and made a
part hereof (the “Premises”); and

 

WHEREAS,
Landlord, as landlord, and Tenant, as tenant, have entered into a certain Lease
Agreement (the “Lease”) dated January 29, 2003 for the lease of the
Premises on terms more fully set forth therein; and

 

WHEREAS, the
parties hereto desire to execute and record a Memorandum of the Lease.

 

NOW, THEREFORE,
the parties hereto, intending to be legally bound hereby, hereby agree as
follows:

 

1.                                       Tenant.  The name of Tenant is Warner Electric
Company, a Delaware corporation.

 

2.                                       Landlord.  The name of Landlord is Olds Properties
Corporation, a Delaware corporation, and John H.O. La Gatta.

 

	
  3.

  	
   

  	
  Addresses.

  	
   

  	
  Tenant’s address is:

  	
  997 Lenox Drive,
  Suite 111

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Lawrenceville, New
  Jersey 08648.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Landlord’s address is:

  	
  John H.O. La Gatta

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  50 West Liberty Street, Suite 1080

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Reno, Nevada 89501

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Facsimile: (775) 785-2245

  

 

4.                                       Date
of Lease.  The Lease is dated
January 29, 2003.

 

5.                                       Premises.  The property that is the subject of the Lease
is more fully described on Exhibit A attached hereto and made a
part hereof.

 

6.                                       Term.  The term of the Lease commences
February 1, 2003 and expires February 28, 2013, subject to prior
termination provisions set forth in the Lease. Tenant has three
(3) options of four (4) years each to extend the term of the Lease.

 

7.                                       Right
of First Offer.  The Lease contains a
right of first offer in favor of Tenant.

 

40

 

8.                                       Right
of First Refusal.  The Lease contains
a right of first refusal in favor of Tenant.

 

9.                                       Incorporation
by Reference.  This Memorandum is not
intended to set forth all of the terms of the Lease, and reference is hereby
made thereto for all of the terms. In the event of conflict between the terms
of the Lease and this Memorandum, the terms of the Lease shall control. All
provisions of the Lease are incorporated herein by this reference as though
fully set forth.

 

 

[Signature Page Follows]

 

41

 

IN WITNESS WHEREOF,
the parties hereto, intending to be legally bound hereby, have executed this
Lease under seal as of the day and year first above written.

 

	
   

  	
  LANDLORD:

  	
   

  
	
   

  	
  OLDS
  PROPERTIES CORPORATION,

  	
   

  
	
   

  	
  a Delaware
  corporation

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  John H.O. La
  Gatta

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  	
   

  
	
   

  	
  WARNER
  ELECTRIC INC.,

  	
   

  
	
   

  	
  a Delaware
  corporation

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Thomas M. O’Brien

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President, General Counsel and

  	
   

  
	
   

  	
   

  	
  Secretary

  	
   

  
							

 

42Exhibit 10.10

 

DATED AS OF THE 4th DAY OF November, 1994

ONTARIO NET INDUSTRIAL SINGLE LEASE

BETWEEN

SLOUGH ESTATES CANADA LIMITED

AS LANDLORD

- and -

KILIAN MANUFACTURING,

a division of INGERSOLL-RAND CANADA INC.

AS TENANT

BUILDING NO. 703

ADDRESS:      413 Horner Avenue, Etobicoke,
Ontario

 

 

INDEX TO LEASE

 

	
  CLAUSE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.01

  	
   

  	
  GRANT

  	
   

  	
   

  
	
  2.01

  	
   

  	
  TERM

  	
   

  	
   

  
	
  3.01

  	
   

  	
  NET RENT

  	
   

  	
   

  
	
   

  	
   

  	
  Deposit

  	
   

  	
   

  
	
   

  	
   

  	
  Early
  Occupancy

  	
   

  	
   

  
	
  4.00

  	
   

  	
  TENANT’S
  COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
  Rent

  	
   

  	
   

  
	
   

  	
   

  	
  Accord and Satisfaction

  	
   

  	
   

  
	
   

  	
   

  	
  Additional
  Rent

  	
   

  	
   

  
	
   

  	
   

  	
  Rental
  Insurance

  	
   

  	
   

  
	
   

  	
   

  	
  Dilapidation
  etc

  	
   

  	
   

  
	
   

  	
   

  	
  Municipal
  Taxes

  	
   

  	
   

  
	
   

  	
   

  	
  Business Taxes

  	
   

  	
   

  
	
   

  	
   

  	
  Tax on Rent

  	
   

  	
   

  
	
   

  	
   

  	
  Maintenance
  Administration Fee

  	
   

  	
   

  
	
   

  	
   

  	
  Utility
  Charges

  	
   

  	
   

  
	
   

  	
   

  	
  Cleaning

  	
   

  	
   

  
	
   

  	
   

  	
  Repairs and Maintenance

  	
   

  	
   

  
	
   

  	
   

  	
  Landlord
  May View Repairs, etc

  	
   

  	
   

  
	
   

  	
   

  	
  Landlord May Enter, etc

  	
   

  	
   

  
	
   

  	
   

  	
  Leave Premises in Good
  Repair

  	
   

  	
   

  
	
   

  	
   

  	
  Use of
  Premises

  	
   

  	
   

  
	
   

  	
   

  	
  Insurance
  Risks

  	
   

  	
   

  
	
   

  	
   

  	
  Contaminants

  	
   

  	
   

  
	
   

  	
   

  	
  Waste, Offensive Business

  	
   

  	
   

  
	
   

  	
   

  	
  Auction Sale, Nuisance

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance with
  Statutes, etc

  	
   

  	
   

  
	
   

  	
   

  	
  Rules and Regulations

  	
   

  	
   

  
	
   

  	
   

  	
  Alterations to Premises

  	
   

  	
   

  
	
   

  	
   

  	
  Removal of Goods from Premises

  	
   

  	
   

  
	
   

  	
   

  	
  Waiver of Limitation
  of Distress

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant’s Sign

  	
   

  	
   

  
	
   

  	
   

  	
  No
  Additional Signs

  	
   

  	
   

  
	
   

  	
   

  	
  No Assignment or Subletting

  	
   

  	
   

  
	
   

  	
   

  	
  Showing
  Premises

  	
   

  	
   

  
	
   

  	
   

  	
  Debris

  	
   

  	
   

  
	
   

  	
   

  	
  Outside
  Storage

  	
   

  	
   

  
	
   

  	
   

  	
  Notice of Accidents or
  Defects

  	
   

  	
   

  
	
   

  	
   

  	
  Heavy Equipment

  	
   

  	
   

  
	
   

  	
   

  	
  Indemnity
  of Landlord

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant’s Insu rance

  	
   

  	
   

  
	
   

  	
   

  	
  Registration

  	
   

  	
   

  
	
   

  	
   

  	
  Liens on Alternations, etc.

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant’s
  Certificates

  	
   

  	
   

  
	
   

  	
   

  	
  Relocation

  	
   

  	
   

  

 

 

	
  5.01

  	
   

  	
  PROVISOS
  OF RE-ENTRY

  	
   

  	
   

  
	
   

  	
   

  	
  Remedies
  of Landlord

  	
   

  	
   

  
	
  6.00

  	
   

  	
  LANDLORD’S
  COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
  Quiet Enjoyment

  	
   

  	
   

  
	
   

  	
   

  	
  Insurance

  	
   

  	
   

  
	
  7.00

  	
   

  	
  MUTUAL
  COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
  Net Rent

  	
   

  	
   

  
	
   

  	
   

  	
  Landlord
  May Perform Tenant’s Obligation

  	
   

  	
   

  
	
   

  	
   

  	
  Default

  	
   

  	
   

  
	
   

  	
   

  	
  Forfeiture

  	
   

  	
   

  
	
   

  	
   

  	
  Limitation
  of Landlord’s Liability

  	
   

  	
   

  
	
   

  	
   

  	
  Waiver

  	
   

  	
   

  
	
   

  	
   

  	
  Fire, etc

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant’s
  Parking

  	
   

  	
   

  
	
   

  	
   

  	
  Collection
  Charges

  	
   

  	
   

  
	
   

  	
   

  	
  Acceptance of Premises

  	
   

  	
   

  
	
   

  	
   

  	
  Lien

  	
   

  	
   

  
	
   

  	
   

  	
  Overholdmg

  	
   

  	
   

  
	
   

  	
   

  	
  Amounts Owing as Additional Rent

  	
   

  	
   

  
	
   

  	
   

  	
  Interest on Amounts Owing

  	
   

  	
   

  
	
   

  	
   

  	
  Notices

  	
   

  	
   

  
	
   

  	
   

  	
  Subordination

  	
   

  	
   

  
	
   

  	
   

  	
  Entire Agreement

  	
   

  	
   

  
	
   

  	
   

  	
  Change of Control Tenant

  	
   

  	
   

  
	
   

  	
   

  	
  Adjustments

  	
   

  	
   

  
	
   

  	
   

  	
  Expropriation

  	
   

  	
   

  
	
   

  	
   

  	
  Force Majeure

  	
   

  	
   

  
	
   

  	
   

  	
  Covenants; Severability

  	
   

  	
   

  
	
   

  	
   

  	
  Titles

  	
   

  	
   

  
	
   

  	
   

  	
  Successors and Assigns

  	
   

  	
   

  
	
   

  	
   

  	
  Smoking

  	
   

  	
   

  
	
   

  	
   

  	
  Confidentiality

  	
   

  	
   

  
	
   

  	
   

  	
  Personal

  	
   

  	
   

  
	
  8.01

  	
   

  	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule “A”
  - Site Plan

  	
   

  	
   

  
	
  Schedule “B”
  - Fixtures

  	
   

  	
   

  
	
  Schedule “C” - Floor Plan

  	
   

  	
   

  
	
  Schedule “D” - Landlord’s Work

  	
   

  	
   

  
	
  Schedule “E”
  - Rules and Regulations

  	
   

  	
   

  
	
  Schedule “F” - Option to Extend

  	
   

  	
   

  

 

 

	
   

  	
   

  	
  THIS LEASE made this 4th
  day of November, 1994

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  IN
  PURSUANT OF THE SHORT FORMS OF LEASES ACT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BETWEEN:  SLOUGH
  ESTATES CANADA LIMITED
a company incorporated
  under the laws of the Province
  of Ontario, having its head office at the City of
  Toronto, in the Province of Ontario

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (hereinafter
  called the “Landlord’)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OF
  THE FIRST PART,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AND:              KILIAN MANUFACTURING,

  a division of INGERSOLL-RAND
  CANADA INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (hereinafter called the
  “Tenant”)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OF THE SECOND PART.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WITNESSETH:

  
	
   

  	
   

  	
   

  
	
  DEMISE

  	
   

  	
  1.01                           That in consideration of the rents, covenants and agreements hereinafter reserved and contained on the part of the Tenant to be paid, observed and
  performed, the Landlord hereby demises and leases unto the Tenant all that certain parcel or tract of
  land and premises located in the Landlord’s Industrial Estate in the City of Etobicoke, in the
  Province of Ontario, shown outlined in blue in Schedule ’A” hereto,
  together with the building or buildings and other improvements now or
  hereafter erected thereon, and municipally known as 413 Horner Avenue, (hereinafter called the “Building”) and
  known as Building 703, consisting of approximately 30,120 square feet shown
  outlined in red on Schedule ”A’ hereto
  (subject to final measurement)
  and the fixtures listed in Schedule ”B” hereto (hereinafter called the “Premises”).

  
	
   

  	
   

  	
   

  
	
  TERM

  	
   

  	
  2.01                           TO HAVE AND TO HOLD the Premises for and during the term (hereinafter called the “Term”) of FIVE (5) years to be computed from the 1st day of November, 1994 and from
  thenceforth next ensuing and fully to
  be completed and ended on the 31st day of October, 1999.

  
	
   

  	
   

  	
   

  
	
  NET RENT

  	
   

  	
  3.01                           (a) YIELDING AND PAYING THEREFORE
  yearly and every year during the Term unto the Landlord the sum of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                                     For the period commencing November 1st, 1994 to October 31st,
  1995 of the Term, the sum of THIRTY THOUSAND ONE
  HUNDRED and TWENTY and—00/100 Dollars ($30,120.00)

  

 

1

 

	
   

  	
   

  	
  per annum of lawful money
  of Canada, payable in advance in equal monthly installments of TWO
  THOUSAND FIVE HUNDRED and TEN and—00/100 Dollars ($2,510.00) each,
  on the first day of each and every month. The foregoing “Net Rent” is based
  upon an annual rate of $1.00 per square foot times the Rentable Area of the
  Premises of 30,120 square feet.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)                                  For the period commencing November 1st,
  1995 to October 31st, 1996 of the Term, the sum of THIRTY-SEVEN
  THOUSAND SIX HUNDRED and FIFTY and—00/100 Dollars ($37,650.00) per annum of
  lawful money of Canada, payable in advance in equal monthly installments of THREE THOUSAND ONE HUNDRED and THIRTY-SEVEN and—50/100 Dollars ($3,137.50) each, on the first day of each and every
  month. The foregoing “Net Rent” is
  based upon an annual rate of $1.25 per
  square foot times the Rentable
  Area of the Premises of 30,120 square feet.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)                               For the period commencing November 1st, 1996 to October 31st, 1997 of the Term, the sum of FORTY-FIVE THOUSAND ONE
  HUNDRED and EIGHTY and—00/100 Dollars
  ($45,180.00) per annum of lawful money of Canada, payable in advance in equal monthly installments of THREE THOUSAND SEVEN HUNDRED and SIXTY-FIVE and—00/100
  Dollars ($3,765.00) each, on the first day of each and every month. The foregoing “Net
  Rent” is based upon an annual
  rate of $1.50 per square foot times the Rentable Area of the
  Premises of 30,120 square feet.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)                              For the period commencing November 1st, 1997
  to October 31st, 1998
  of the Term, the sum of FIFTY-TWO
  THOUSAND SEVEN HUNDRED and TEN and—00/100 Dollars ($52,710.00) per annum of lawful money of Canada, payable in advance in
  equal monthly installments of FOUR THOUSAND THREE
  HUNDRED and NINETY-TWO and—00/100
  Dollars ($4,392.50) each,
  on the first day of each and
  every month. The foregoing “Net Rent”
  is based upon an annual rate of $1.75
  per square foot times
  the Rentable Area of the Premises of 30,120 square feet.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)                                 For the period commencing November 1st, 1998 to October 31st, 1999 of the Term,
  the sum of SIXTY THOUSAND TWO HUNDRED
  and FORTY and—00/l00 Dollars ($60,240.00)
  per annum of lawful money of Canada,
  payable in advance in equal monthly
  installments of FIVE THOUSAND
  and TWENTY and—00/100 Dollars ($5,020.00) each, on the first day of each and every month. The foregoing “Net Rent” is based
  upon an annual rate of $2.00 per square foot times the Rentable Area of
  the Premises of 30,120 square feet.

  
	
   

  	
   

  	
   

  
	
  Deposit

  	
   

  	
  (b)                                 The Landlord hereby acknowledges receipt of a deposit in the amount of ELEVEN
  THOUSAND SIX HUNDRED and

  

 

2

 

	
   

  	
   

  	
  FOUR —15/100 Dollars
  ($11,604.15) will be applied towards last two (2) months’ rental payment due.

  
	
   

  	
   

  	
   

  
	
  Early Occupancy

  	
   

  	
  (c)                                  Notwithstanding the foregoing and provided the Lease has been fully executed, the Tenant shall have joint occupancy to the Premises prior to the commencement of the Term. This access period Shall be free of Net Rent. During this
  period, the Tenant will be
  responsible for Additional Rent as outlined in this Lease and all other terms
  and conditions of this Lease Shall be in full force and effect.

  
	
   

  	
   

  	
   

  
	
  TENANTS
COVENANTS

  	
   

  	
  4.00                           The Tenant
  covenants with the Landlord as follows:

  
	
   

  	
   

  	
   

  
	
  Rent

  	
   

  	
  4.01                           The Landlord shall advise the Tenant each calendar year during the
  Term of its revised estimate
  of the amount of the
  Additional Rent payable by the Tenant for such year and shall provide the Tenant with the particulars
  thereof.

  
	
   

  	
   

  	
   

  
	
  Accord
  and

  Satisfaction

  	
   

  	
  4.02                           No payment by
  Tenant or receipt by Landlord of a lesser amount than any installment or payment of Rent due shall be deemed to be other than on account
  of the amount due, and no endorsement or statement on any check or
  payment of Rent shall be deemed
  an accord and satisfaction. Landlord may accept such cheque or payment without prejudice to Landlord’s right
  to recover the balance of such installment or payment of Rent, or pursue any
  other remedies available to
  Landlord.

  
	
   

  	
   

  	
   

  
	
  Additional Rent

  	
   

  	
  4.03                           to pay to the
  Landlord as “Additional Rent” the
  following: -

  
	
   

  	
   

  	
   

  
	
  Insurance

  	
   

  	
  (a)                                  (i) a sum or sums of money equal
  to the expense incurred by the
  Landlord in effecting and maintaining the insurance on the Premises provided for in paragraph
  6.02 hereof;

  
	
   

  	
   

  	
   

  
	
  Rental
  Insurance

  	
   

  	
  (ii) a sum or sums of money equal to the expense
  incurred by the Landlord
  in effecting and maintaining
  rental insurance against loss of one year’s
  rent due to the perils specified in
  paragraph 6.02 hereof; and

  
	
   

  	
   

  	
   

  
	
  Dilapidation etc.

  	
   

  	
  (iii) any and all amounts expended by the Landlord in fulfillment of the Tenant’s obligations under this
  lease pursuant to paragraph 7.02
  hereof: such additional rent
  to be paid without any deduction whatsoever upon the receipt of a written
  notice of same by the Landlord
  and to be recovered in the same manner as rent in arrears;,

  
	
   

  	
   

  	
   

  
	
  Municipal Taxes

  	
   

  	
  (b)                                 in each and every
  year during the Term to pay when due each installment
  of all municipal property taxes, rates (including local improvement rates), duties and
  assessments now or at any time during the Term rated, charged, levied and
  assessed against the Premises or any part thereof and/or against any
  machinery, equipment or other facilities now or at any time during the Term
  brought in or onto the Premises or any part thereof and to pay any similar tax not now contemplated which

  

 

3

 

	
   

  	
   

  	
  may be levied at any time during the Term by any competent government or municipal body in
  lieu of property taxes. Estimated cost for the calendar year 1994 is $2.19
  per square foot;

  
	
   

  	
   

  	
   

  
	
  Business Taxes

  	
   

  	
  (c)                                  (i) to pay
  all taxes, rates, duties, assessments and licence fees whatsoever whether
  municipal, parliamentary or otherwise
  now charged or hereafter charged upon
  or in respect of the contents of the Premises and/or upon and/or in respect of any business
  or other activity carried on
  upon and/or in connection with
  the Premises and/or upon the
  Tenant on account of the
  Premises or such contents, business or other activity and to pay any similar
  tax not now contemplated which may be levied at any time during the Term by any competent government or municipal body in
  lieu of such taxes, rates,
  duties, assessments and licence
  fees now charged;

  
	
   

  	
   

  	
   

  
	
  Tax
  on Rent

  	
   

  	
  (ii) If
  at any time during the term of this
  Lease or any renewals thereof a tax or
  excise on rents or other tax, however described, is levied by any Governmental authority against the Landlord
  for the minimum rent or any
  other monies collectable under this Lease, the Tenant covenants to pay and discharge such tax or excise on rents or other tax or levy but only to the extent of the amount
  thereof which is lawfully assessed or imposed upon the Landlord and which as so assessed or imposed
  as a direct result of the Landlord’s ownership
  of the Demised Premises, or of this
  Lease or of the rental occurring under this Lease, it being the intention of
  the parties hereto that all rent to be
  paid under this Lease, shall be paid to the Landlord absolutely net without any deduction of any nature
  whatsoever.

  
	
   

  	
   

  	
   

  
	
  Maintenance
Administration Fee

  	
   

  	
  (d)                                 To pay Tenant’s proportionate share of the business taxes, if any, against
  the common areas of the said lands
  charged to the Landlord and all other taxes, assessments and charges
  of any kind and nature whatsoever with respect to the said lands and without limitation, the Tenant’s
  proportionate share of all coats and expenses (other than all such
  taxes, assessments, charges, costs and expenses for which Tenant is directly
  liable under the terms of this
  Lease), for the operation, management, maintenance, replacement and
  repair of the said lands, the buildings thereon and the ‘facilities
  thereon and therein, including without
  limitation, insurance, services, maintenance, management fee, full and/or part-time supervision (and
  applicable benefits and associated
  overhead costs), snow and ice removal,
  lighting, repairs, driveways, sidewalks, lawns, asphalting, grading, consulting
  (if required), doors, windows, electrical repairs and supplies, elevators (if applicable),
  refuse (if applicable), HVAC (if applicable), janitorial, landscaping,
  painting, plumbing, roof repairs, security and alarms, structural repairs,
  parking areas and all other public and/or
  common areas on the said lands
  and the Demised Premises on the said lands, all expenditure made by the Landlord in
  an effort to promote energy
  conservation, accounting costs
  incurred in connection with preparation of statements and opinions for Tenants, plus an administration fee of 10% of the total
  of all the costs

  

 

4

 

	
   

  	
   

  	
  and
  expenses hereinbefore set
  out. Estimated costs for the
  calendar year 1994 is Maintenance $0.34 per square foot, and
  Insurance $0.06 per square foot;

  
	
   

  	
   

  	
   

  
	
  Utility Charges

  	
   

  	
  (e)                                  to pay all or its proportionate share
  whichever is applicable of all rates
  and charges for electricity, water, telephone, gas, oil, heating, and other similar utilities supplied to the
  Premises;

  
	
   

  	
   

  	
   

  
	
  Cleaning

  	
   

  	
  4.04                           to keep and maintain the Premises and the windows thereof in a clean and sanitary
  condition, not to allow any refuse or debris to accumulate on or about the Premises;

  
	
   

  	
   

  	
   

  
	
  Repairs and
Maintenance

  	
   

  	
  4.05                           from time to time and at all times
  during the term at its own cost well
  and sufficiently to repair, cleanse, paint, maintain, amend and keep the Premises and the fixtures therein and the walls, roofs, foundations, water
  service and gas connections, pipes, mains, fences, vaults, roads, sewers and drains in, on or under the Premises and the
  appurtenances thereof in a good
  and workmanlike manner and to the
  satisfaction of the Landlords engineers damage by the perils set forth in paragraph 6.02 hereof and inherent structural defects only excepted
  and in particular without limiting the generality of the foregoing.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In the last year of the Term (or, if this lease is
  earlier terminated, in
  the year of termination)
  thoroughly to prepare and paint, in a good and workmanlike manner and to the satisfaction of the Landlord’s
  engineers, all interior portions
  of the Building usually painted, applying at least two coats of prime quality oil or such other paint
  as maybe approved by the Landlord and
  to grain, varnish, wash, paint,
  caulk, whiten and colour all interior
  portions of the Building as were so treated at or subsequent to the
  commencement of the Term. The Tenant
  covenants and agrees, at the Tenant’s own cost and expense, at all times during the term of this Lease, to obtain and maintain an inspection
  and maintenance service contract or
  contracts in relation to the mechanical systems in the Demised Premises including, without limitation, the heating, ventilation, air conditioning, fire protection, lighting, electrical
  installations, plumbing, furnace,
  sprinkler system, and other mechanical systems including shipping doors and building hardware, as a
  prudent owner would obtain and maintain;

  
	
   

  	
   

  	
   

  
	
  Landlord May View
Repairs, etc.

  	
   

  	
  4.06                           that the Landlord may enter and view the state of maintenance and repair and the
  Tenant will repair, according to
  notice in writing, damage by the perils specified in paragraph 7.02 hereof (and
  if applicable paragraph 7.03
  hereof) and inherent structural defects
  only excepted;

  
	
   

  	
   

  	
   

  
	
  Landlord May

  Enter, etc.

  	
   

  	
  4.07                           to permit the Landlord, its servants and agents at all reasonable times to enter upon the Premises for the purpose
  of taking inventory of the Landlord’s property
  thereon, for the purpose of inspecting
  and making such repairs,
  extensions, alterations and improvements as the Landlord may deem
  necessary to the adjoining property of the Landlord

  

 

5

 

	
   

  	
   

  	
  and to any drains, pipes, wires, cables, apparatus and works
  in, through, under or over the
  Premises or any adjoining
  Premises or for the purpose of
  removing any article or
  remedying any condition which in the opinion of the Landlord would be likely to lead to the cancellation of any
  policy of insurance on the Premises
  and the Tenant shall not be entitled to compensation of any kind for any inconvenience, nuisance,
  loss or discomfort occasioned thereby nor shall such entry be
  deemed to be a re-entry by the Landlord;

  
	
   

  	
   

  	
   

  
	
  Leave Premises

  in Good Repair

  	
   

  	
  4.08                           to leave the
  Premises in good repair, damage by the perils specified in paragraph 6.02 hereof and inherent structural defects only excepted;

  
	
   

  	
   

  	
   

  
	
  Use of Premises

  	
   

  	
  4.09                           not to use the Premises or any part thereof as a dwelling house, place of amusement, meeting
  ball, theatre or cinematograph theatre nor to use the Premises or
  any part thereof or permit
  the same to be used for any other purpose than that of operations incidental to warehouse, distribution and light
  manufacturing and assembly of
  steel products.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Nothing
  herein shall be so interpreted as to imply that
  this Lease is conditional or dependent upon the Tenant obtaining
  any permit or licence from any
  municipal, provincial or other authority;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant agrees to supply the Landlord with written
  verification of the Tenant’s intended use in the Premises.

  
	
   

  	
   

  	
   

  
	
  Insurance Risks

  	
   

  	
  4.10                           not to do or permit to be done in, upon or about the Premises any act or thing which may
  make void or voidable, or result in the increase of the premium payable in respect of, any policy of insurance on the Building or any part thereof
  or adjoining or near the Premises. If
  the rate of such insurance shall be increased by reason of any use of
  the Premises or by reason of anything done or permitted to be done or committed by the Tenant or anyone permitted by the Tenant to be in, on or about the Premises the
  Tenant shall on demand pay to the Landlord the amount of such increase and if the insurance
  maintained by the Landlord pursuant to paragraph 7.02 hereof shall be cancelled by the insurer by reason of the use or occupation of the Premises or any part
  thereof by the Tenant or by. any
  assignee or subtenant of the Tenant
  or by anyone permitted by the Tenant to be in, on or about
  the Premises, the Landlord may,
  at its option, in addition to
  any other remedy it may have, forthwith terminate this Lease by notice in writing to the Tenant
  and thereupon rent (including
  additional rent) and any other payments for which the Tenant is liable under
  this Lease shall be apportioned
  (where necessary) and paid in full
  to the date of such termination
  and the Tenant shall
  immediately deliver up possession of the Premises to the Landlord and the Landlord may re-enter and take possession of the same;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  To give written notice to
  Landlord and the company or companies carrying the applicable insurance on the said Lands and/or the Demised

  

 

6

 

	
   

  	
   

  	
  Premises,
  of any vacancy,
  unoccupancy or cessation of
  operations for more than thirty (30) consecutive days on
  the Demised Premises or such other times as set out in any such insurance
  policy and of the supply of gasoline, benzene, naphtha or other material of equal or greater volatility exceeding
  one (1) gallon in all to the Demised Premises and of any interruption to or flaw or defect in the sprinkler
  system if any, on the Demised
  Premises.

  
	
   

  	
   

  	
   

  
	
  Contaminants

  	
   

  	
  4.11                           (i)                                     The Tenant shall not store, create,
  discharge or bring onto the Premises,
  the Building, the Complex or
  the industrial park of which
  the Premises form part, any contaminants
  as this term is defined in the Environmental
  Protection Act, R.S.O. 1980, Chapter
  141, as amended, or any substance which is an equivalent under any succeeding
  legislation (a “Contaminant”) unless such Contaminant is required in the ordinary course of carrying on the Tenant’s business.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Tenant shall at any and all times
  during the Term keep the Premises, the Building and the complex
  or industrial park of which the Premises form part free from any
  and all Contaminants resulting
  from its use and occupation of
  the Premises. In the event, the Tenant fails to comply with this obligation,
  the Tenant agrees to indemnify and save the Landlord harmless from loss, cost or
  expense arising out of any governmental demand, direction or request that the Landlord or the Tenant
  test for, monitor, clean up, remove, contain, treat, detoxify or neutralize such Contaminants and;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)                                  it is hereby understood and agreed that the
  Landlord, in addition to any other inspection right, shall have the right,
  prior to the expiry of the Term hereof or earlier termination of this Lease,
  upon having reasonable ground for believing that the Tenant is not in compliance with this
  Section 4.11, to cause an
  independent environmental audit of the Premises and the building and the Tenant shall be responsible for the cost of such audit,
  and any clean up. removal,
  containment, treatment, detoxification or neutralization of any Contaminant
  as required if caused by the Tenant (provided that in the event the audit
  reveals no material breach or act of non-compliance by the Tenant, then the
  cost of the audit shall be borne solely by the Landlord), and;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)                               Tenant further
  agrees to indemnify and save harmless the Landlord from any damage
  arising out of the actual, alleged or threatened discharge, disposal, release
  or escape of such Contaminants at or from the Premises or at or from the
  Building, the complex or industrial park of which the Premises form part and the surrounding lands and notwithstanding anything to the contrary herein contained this
  indemnity shall survive the expiry or termination of this Lease for a period
  of one (1) year following
  said expiry. Further the
  Landlord agrees to provide the Tenant within three (3) months of the Tenant’s occupancy
  an environmental audit of the Premises.

  

 

7

 

	
  Waste, Offensive

  Business

  	
   

  	
  4.12                           not to do or
  suffer any waste, disfiguration or injury to the
  Premises or any part thereof and not
  to use or permit to be used
  any part of the Premises for any dangerous, noxious or offensive
  trade or business and not to
  cause or permit any nuisance in, on or about the Premises;

  
	
   

  	
   

  	
   

  
	
  Auction
  Sale,

  Nuisance

  	
   

  	
  4.13                           not to conduct
  any auction sale on the Premises and not to do or permit to be done in, on or
  about the Premises any act or
  thing which shall or may be or become
  a nuisance, annoyance or
  inconvenience to the Landlord or
  its tenants or the occupiers of any Premises in the neighborhood of the Premises;

  
	
   

  	
   

  	
   

  
	
  Compliance with

  Statutes, etc.

  	
   

  	
  4.14                           not to do or permit to be done or omit or
  permit to be omitted any act, matter or thing in or respecting the Premises which by virtue
  of any statute, regulation, by-law or order of any duly constituted public authority should
  not be done or ought to be done or
  which shall contravene any of the
  provisions thereof and to indemnify
  and keep indemnified the Landlord
  against all actions, proceedings,
  costs, expenses, claims and demands in respect of any such act, matter or thing contravening any of the
  said provisions as aforesaid;

  
	
   

  	
   

  	
   

  
	
  Rules and
Regulations

  	
   

  	
  4.15                           that the Tenant and the employees of the Tenant and all persons visiting or doing
  business with the Tenant on the Premises
  shall, while on the Premises, be bound by and observe all
  reasonable rules and regulations
  made by the Landlord of which notice in writing shall be given to the Tenant and all
  such rules and regulations
  shall be deemed to be incorporated
  in and form part of this lease;

  
	
   

  	
   

  	
   

  
	
  Alterations to
Premises

  	
   

  	
  4.16                           not at any time during the Term, without the prior written consent
  of the Landlord, to erect any new building on the Premises
  or make any alterations, whether structural or otherwise, or any
  addition to the Building or make any excavation on the Premises or
  interfere with or by building or otherwise cause access to any pipe, wires, cables,
  drains, sewers, watercourses, conduits or subways which now are or at any time hereafter may be under,
  in or through the Premises to be
  interfered with or adversely affected or carry out any
  development of any kind whatsoever; provided that any alterations, additions or improvements
  so erected or made shall on
  the expiration or other termination of this Lease be and remain
  the property of the Landlord; provided, however, that the Tenant may remove his fixtures. Further the
  Tenant agrees to restore the Premises
  to their original condition at the expiration
  of the Lease term, normal wear and tear excepted, at the Landlord’s option.

  
	
   

  	
   

  	
   

  
	
  Removal
  of Goods
from Premises

  	
   

  	
  4.17                           not to sell,
  dispose of or remove any of its goods or chattels from the Premises
  except in the ordinary course
  of the Tenant’s business, whether or not there is rent in arrears and to permit the Landlord to
  seize and sell all such goods and chattels
  at any place to which they have been
  removed contrary to the provisions of this paragraph;

  

 

8

 

	
  Waiver
  of

  Limitation of

  Distress

  	
   

  	
  4.18                           the Tenant waives and renounces the benefit of any present or future statute taking away or limiting the Landlord’s
  right to distress and agrees with the Landlord that
  notwithstanding any such statute, none of the Tenant’s goods and chattels on the Premises at any time during the Term shall be
  exempt from levy by distress for rent
  in arrears;

  
	
   

  	
   

  	
   

  
	
  Tenant’s Sign

  	
   

  	
  4.19                           that the Tenant shall within three months from the date hereof erect or paint
  a sign on the Premises setting out
  the name and business of the
  Tenant and shall maintain the
  same in a state of good repair and appearance. Before erecting or painting the said sign the Tenant shall obtain the written approval of the
  Landlord;

  
	
   

  	
   

  	
   

  
	
  No
  Additional Signs

  	
   

  	
  4.20                           that the Tenant will not at any time during the Term erect or cause to be erected on the
  Premises any sign, signboard or other
  outdoor advertising, without first obtaining the written consent of the Landlord;

  
	
   

  	
   

  	
   

  
	
  No
  Assignment
or Subletting

  	
   

  	
  4.21                           the Tenant shall not assign or sublet or
  allow the Premises or any part
  thereof to be occupied or used by any other person, firm or corporation without the prior written
  consent of the Landlord, which consent may not unreasonably be withheld, notwithstanding the provisions
  of Section 23 of The Landlord and Tenant Act;

  
	
   

  	
   

  	
   

  
	
  Showing
  Premises

  	
   

  	
  4.22                           to permit the Landlord or its agents at any time within
  three months next preceding the
  expiration or sooner determination of the Term to enter upon the Premises and
  to affix upon any suitable part thereof
  a notice for selling or reletting the same and not to remove or obscure the same and to permit all persons authorized
  in writing by the Landlord or its agents to view the Premises at all
  reasonable hours;

  
	
   

  	
   

  	
   

  
	
  Debris

  	
   

  	
  4.23                           that the Tenant will not at any time during the Term allow any refuse or debris to accumulate in or about
  the Premises and will at all times keep the Premises in a clean and wholesome condition and will
  observe all Municipal by-laws and
  regulations relating to the drains and sewers servicing the Premises;

  
	
   

  	
   

  	
   

  
	
  Outside
  Storage

  	
   

  	
  4.24                           not at
  any time during the Term to store any material or supplies of any kind
  on or about any part of the Premises outside the Building without the prior written consent of the Landlord.

  
	
   

  	
   

  	
   

  
	
  Notice of Accidents
or Defects

  	
   

  	
  4,25                           to give to the Landlord prompt written notice of any accident or other defect
  in the water pipes or heating apparatus telephone, electric light or other wires, but unless
  otherwise expressly provided there shall be no obligation on the part of the Landlord to repair or make good any such
  matters;

  
	
   

  	
   

  	
   

  
	
  Heavy Equipment

  	
   

  	
  4.26                           not to bring upon the Premises or any part thereof any machinery, equipment, article or thing that by reason of its weight or size might damage the Premises and not at any
  time to overload the floors of the
  Premises and if any damage is caused to the Premises by any machinery,

  

 

9

 

	
   

  	
   

  	
  equipment, article or
  thing or by overloading or by any
  act, neglect or misuse on the part
  of the Tenant or any of its agents or servants or any person having business with the
  Tenant forthwith to repair such damage;

  
	
   

  	
   

  	
   

  
	
  Indemnity of

  Landlord

  	
   

  	
  4.27                           that the Tenant shall indemnify and save harmless the Landlord from any and
  all liabilities, damages, costs and claims, suits or actions arising out of:-

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                                     any breach,
  violation or non-performance of any covenants, conditions or agreements in this Lease set forth and contained on the part of the Tenant to be fulfilled, kept,
  observed and performed;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)                                  any damage to property occasioned by
  the use and occupation of the
  Premises;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)                               any injury to any person or persons, including death, resulting at any time in, on or about the Premises, and/or
  on the roads or sidewalks adjacent thereto;

  
	
   

  	
   

  	
   

  
	
  Tenants
  Insurance

  	
   

  	
  4.28                           At its expense to maintain in force during the Term and any renewal
  thereof:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                                     comprehensive
  general liability insurance
  against claims for personal injury,
  death or property damage
  arising out of all operations of the
  Tenant including Tenant’s legal liability, products and completed operations
  and contractual liability with
  respect to the business carried on in and from the Premises and the Building by the Tenant or any of its employees, servants, agents, contractors, or persons for whom the Tenant is at law
  responsible, in amounts required by the Landlord and any mortgagee but in no event
  less than TWO MILLION DOLLARS per occurrence;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)                                  all risks direct damage insurance including flood and
  earthquake, covering all chattels, stock-in-trade and fixtures and all
  leasehold improvements, installations, additions and partitions made by the Tenant or by the Landlord at the Tenant’s expense, in an amount equal to the full replacement value thereof;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)                               Business interruption insurance on all risks including flood and
  earthquake in such amount necessary to
  fully compensate the Tenant
  from interference with or prevention
  of access to the Premises
  or the Building; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)                              such other forms of insurance as may be reasonably required by the Landlord and any
  mortgagee from time to time.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All
  such insurance shall be with insurers licensed
  to do business in the Province of Ontario with the Landlord as an additional
  named insured and containing a cross liability clause and a severability of
  interest clause.

  

 

10

 

	
   

  	
   

  	
  Evidence
  of insurance and renewals thereof shall be delivered to the Landlord prior to
  the Commencement Date of the Term. All policies covering the property or
  business interruption shall
  also contain a waiver of subrogation
  and all policies shall contain a
  provision prohibiting the insurer
  from snaking alterations that
  reduce or restrict coverage or
  cancelling the coverage without first giving the Landlord thirty (30) days’ prior written notice thereof by
  registered mall. If the Tenant falls to take out and maintain in force such insurance, the Landlord
  may do so and pay the premiums and the Tenant shall pay the Landlord the
  amount of such premiums forthwith upon demand. All insurance proceeds on
  leasehold improvements shall be payable to the Landlord, If both the
  Landlord and the Tenant have claims to be indemnified under any such insurance, the indemnity shall be applied first to the settlement of the
  Landlord’s claim and the balance,
  if any, to the settlement of the
  Tenant’s claim.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  It
  is agreed and
  understood that if any glass is
  damaged, the Tenant will replace same at his own cost with the same type, quality and
  thickness.

  
	
   

  	
   

  	
   

  
	
  Registration

  	
   

  	
  4.29                           the Tenant agreed
  with the Landlord not to register this Lease or any notice
  thereof.

  
	
   

  	
   

  	
   

  
	
  Liens on Alterations,

  etc.

  	
   

  	
  4.30                           the Tenant shall duly pay for all labour performed, material or equipment furnished in, about or
  with reference to any buildings
  erections, repairs, alterations, installations or improvements which may
  be made or done from time to time in
  or upon the Premises and every part thereof at all times free and clear of all liens in respect thereof;

  
	
   

  	
   

  	
   

  
	
  Tenant’s
  Certificates

  	
   

  	
  4.31                           The Tenant agrees
  that it will at any time and from time to time upon not less than ten
  (10) days prior notice execute and deliver to the Landlord a statement
  in writing certifying that this
  Lease is unmodified and in full
  force and effect (or, if modified,
  stating the modifications and that
  the same is in full force and
  effect as modified), the amount of
  the annual rental then being paid hereunder, the dates to which the same, by installment or
  otherwise and other charges hereunder
  have been paid, and whether or
  not there is any existing default on the part of the Landlord of which the Tenant has notice.

  
	
   

  	
   

  	
   

  
	
  Relocation

  	
   

  	
  4.32                           The Tenant agrees
  that notwithstanding anything
  herein contained the Landlord shall have
  the right at any time and from time to time to change the location of the Premises as set forth in Article 1
  hereof and Schedule ”A” attached hereto comparable Premises in the Building, and upon such change being made the new Premises shall be deemed to be the
  Premises for all purposes under this Lease. If the Landlord exercises its right to relocate the Tenant hereunder, after the
  date upon which the Landlord
  gives notice to the Tenant that the Leased Premises are ready for
  installation of the Tenant’s improvements the Landlord shall pay the
  reasonable relocation expenses incurred by the Tenant in moving from the original Premises to the relocated
  Premises.

  

 

11

 

	
  PROVISOS OF

  RE-ENTRY

  	
   

  	
  5.01                           (a) Provision
  for re-entry by the Landlord on non-payment of rent or non-performance of
  covenants, positive or negative.

  
	
   

  	
   

  	
   

  
	
  Remedies of

  Landlord

  	
   

  	
  (b)                                 If the Tenant
  shall fall to make any payment or payments of rent or any part thereof or fail to pay Landlord any sum or sums which are to be paid under this Lease to the Landlord or otherwise and such default shall continue for fifteen
  (15) days or if the Tenant shall fail to perform any other covenants, conditions
  or agreements contained herein and shall allow such default to continue for
  fifteen (15) days after
  written notice thereof then (i) the term hereby granted may, at the option of the Landlord expressed in writing,
  be terminated subject to any other rights or remedies available to the
  Landlord and the term and estate
  hereby vested in the Tenant and any and all other rights of the Tenant
  hereunder shall thereupon immediately cease and expire as full and with like
  effect as if the entire term herein provided for had elapsed and rent and any
  other payment for which the Tenant is
  liable under this Lease shall
  be apportioned and paid in full to the date of such termination together with
  reasonable expenses of the Landlord, including, but not restricted to, legal
  costs, solicitors’ fees and brokerage and expenses of keeping the Premises in
  good order and of preparing the Premises for reletting, and the Tenant shall
  immediately deliver up possession of
  the Premises to the Landlord and (ii) the Landlord, in addition to all
  other rights which it may have under this Lease or otherwise, shall have the right to enter the Premises as the agent of the
  Tenant without being liable for any prosecution therefore and to relet the
  Premises as the agent of the Tenant for whatever term and under whatever conditions the Landlord
  may seem advisable and to receive the rent therefore and as agent of the
  Tenant to take possession of
  any chattels, furniture or other property on the Premises and to lease the same or sell the same at public or private
  sale with or without notice and to apply the proceeds of such lease or sale and any rent
  derived from reletting the Premises on account of the rent or other charges
  under this Lease.

  
	
   

  	
   

  	
   

  
	
  LANDLORD’S

  COVENANTS

  	
   

  	
  6.00                           The Landlord
  covenants with the Tenant as follows: -

  
	
   

  	
   

  	
   

  
	
  Quiet
  Enjoyment

  	
   

  	
  6.01                           for quiet
  enjoyment;

  
	
   

  	
   

  	
   

  
	
  Insurance

  	
   

  	
  6.02                           the Landlord
  covenants to insure the Building (not including the Tenant’s leasehold improvements, fixtures, equipment
  or contents) against fire and extended perils, and to carry public liability and property damage insurance, with such coverages and
  in such amounts usually
  carried by prudent owners of similar buildings, and as required by the~ Landlord’s mortgagees, the cost of
  which shall be included in Additional Rent.

  
	
   

  	
   

  	
   

  
	
  MUTUAL
COVENANTS

  	
   

  	
  7.00                           It is hereby mutually agreed between the Landlord and the Tenant as follows: -

  

 

12

 

	
  Net Rent

  	
   

  	
  7.01                           it is the
  intention of this lease that the rental hereby reserved shall be net to the
  Landlord and clear of all taxes (except the Landlord’s income taxes), costs and charges arising from or relating to the
  Premises and that the Tenant shall
  pay all charges, impositions, expenses of every
  nature and kind relating to
  the Premises and the Tenant covenants with the Landlord accordingly.

  
	
   

  	
   

  	
   

  
	
  Landlord
  May
Perform Tenant’s
Obligation

  	
   

  	
  7.02                           if the Tenant
  shall fail to perform or cause to be performed eachand every
  one of the covenants and obligations of the Tenant in this Lease contained, the Landlord shall have
  the right (but shall not be
  obligated) to perform or cause the
  same to be performed and to do or cause to be done such things as may be
  necessary or incidental thereto (including without limiting the generality of
  the foregoing, the right to make repairs, installations, and expend money) and all payments,
  expenses, charges, fees and disbursements incurred or paid by or on behalf of
  the Landlord in respect thereof shall be paid by the Tenant to the Landlord
  forthwith upon demand and shall be recoverable in the same manner as rent in
  arrears;

  
	
   

  	
   

  	
   

  
	
  Default

  	
   

  	
  7.03                           if the Tenant
  shall be in default of any of its
  covenants and obligations hereunder
  other than its covenant to pay
  rent or amounts collectible hereunder as rent reserved and in arrears the Landlord may give notice to the Tenant upon such default coming to the attention of the
  Landlord and in such notice the Landlord shall with reasonable particularity
  state the nature of the
  default and require the same to
  be remedied and the Tenant shall have thirty (30) days (or such
  longer period as may be reasonably necessary bearing in mind the nature of
  the default) from the receipt of such notice within which to remedy such default. If after the
  expiration of the times above limited the Tenant remains in default the Landlord may thereupon at its option
  either by itself or its lawfully authorized agent enter and re-enter into and
  upon the Premises or any part thereof
  in the name of the whole and have again, repossess and enjoy its former estate free and clear
  of all claims of the Tenant.

  
	
   

  	
   

  	
   

  
	
  Forfeiture

  	
   

  	
  7.04                           provided that
  during the Term any of the goods
  and chattels of the Tenant shall
  be at any time seized or taken in execution or in attachment by any
  creditor of the Tenant, or, if the Tenant is a corporation, any proceeding shall be taken or order shall be
  made for the winding-up of the Tenant, or for the surrender or cancellation
  of, or the forfeiture of the charter of the Tenant, or if a writ of execution shall issue against the goods
  or chattels of the Tenant, or if the Tenant shall
  execute any chattel mortgage or bill of sale of any of its goods or chattels otherwise than in the ordinary
  course of business, or if the Tenant shall make an assignment for the benefit of creditors,
  or becoming bankrupt or insolvent shall take the benefit of any Act that may be in force for bankrupt or insolvent debtors or shall abandon or
  attempt to abandon the Premises, or to sell or dispose of its goods and chattels so that there would not in the event of such sale
  or disposal be in the opinion of the Landlord a sufficient distress on the
  Premises, or if the Premises shall without the consent in writing of the Landlord become and remain vacant or be not used for a period of
  thirty (30) days or be used by

  

 

13

 

	
   

  	
   

  	
  any
  persons other than such as are entitled to use them
  under the terms of this Lease or
  for any purpose other than that for which the same are hereby demised then, and in every such
  case, the then current month’s rent, together with the rent for the three
  months next ensuing and taxes
  for the then current year (to be reckoned at the rate for the next preceding
  year in case the rate shall not have been fixed for the then current year), shall immediately become
  due and payable and the Term shall, at the option of the Landlord, forthwith
  become forfeited and determined and in every of the above cases, such
  taxes shall be recoverable by the
  Landlord in the same way as rent in arrears;

  
	
   

  	
   

  	
   

  
	
  Landlords Liability

  	
   

  	
  7.05                           the Landlord
  shall not be liable nor responsible in any way for any personal or
  consequential damages of any nature whatsoever that may be
  suffered or sustained by the Tenant or any employee, invitee, or licensee
  of the Tenant or any other person who
  may be upon the Premises and, save as to damage caused by the negligence of
  the Landlord, its employees, servants, or agents, the Landlord shall not be
  responsible in anyway for any injury to any person or for any loss of or damage to any
  property belonging to the Tenant, or to employees, invitees, or licensees of
  the Tenant while such person or property is in, on or about the Premises,
  including (without limiting the generality of the foregoing) any loss of or damage to any such property caused by theft or breakage
  or steam, water, rain or snow
  which may leak into, issue or flow from any part of the Premises or any adjacent or
  neighbouring land or Premises
  or from the water, steam, or drainage pipes or plumbing works of the same or
  from any other place or from
  any damage caused by or attributable to the condition or arrangement of any
  electric or other wiring nor
  for any damage caused by anything done or omitted to be done by any other tenant of the Landlord. The Tenant covenants to save harmless and indemnify
  the Landlord from and against all liability, loss, costs, claims or demands made against it in respect of
  any injuries or damage referred to in this paragraph except such as may arise
  out of the negligence of the Landlord, its employees, agents or servants;

  
	
   

  	
   

  	
   

  
	
  Waiver

  	
   

  	
  7.06                           any waiver by the
  Landlord of the breach of any covenant, condition, or proviso herein shall not be taken to be a waiver of the breach of any other covenant,
  condition or proviso herein nor a continuing waiver of the same breach of the
  same covenant, condition or proviso or of the subsequent compliance with the
  said covenants, conditions or
  provisos and all of the rights and remedies of the Landlord shall be deemed to be cumulative and not
  alternative;

  
	
   

  	
   

  	
   

  
	
  Fire, etc.

  	
   

  	
  7.07                           if and whenever
  during the Term the Building shall be destroyed or damaged by fire, lightning
  or tempest, or any of the perils for which the Landlord and
  the Tenant are insured, then and
  in every such event:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                                     if the damage or destruction is such that the Premises are rendered wholly unfit
  for occupancy or are unsafe to use and occupy and if in either
  event the damage, in the opinion of
  the Landlord, to be given to the Tenant within ten (10) days of
  the happening of such damage or
  destruction,

  

 

14

 

	
   

  	
   

  	
  cannot
  be repaired with reasonable diligence within one hundred and
  twenty (120) days from the happening
  of such damage or destruction,
  then either the Landlord or the Tenant may within five (5) days
  next succeeding the giving of the Landlord’s opinion as aforesaid
  terminate this Lease by giving to the
  other notice in writing of
  such termination, in which
  event this Lease and the Term shall cease and be at an end as of the date of such damage or destruction and the rent (including
  additional rent) and all other
  payments for which the Tenant is liable under the terms of this Lease shall be apportioned and paid in full to the date of such damage or
  destruction. In the event that neither the Landlord nor the Tenant
  terminates this Lease as aforesaid, then the rent hereby reserved shall abate from the date
  of the happening of the damage until the damage shall be made good to the extent of enabling the Tenant to use and
  occupy the Premises, and the Landlord
  shall repair the damage with all reasonable speed;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)                                  if the damage be such that the Premises are
  wholly unfit for occupancy, or are unsafe to use or occupy
  but if in either event the damage, in
  the opinion of the Landlord, to
  be given to the Tenant within ten (10) days from the happening of such damage, can be
  repaired with reasonable diligence within one hundred and twenty (120) days from the happening of such damage then the rent hereby
  reserved shall abate from the
  happening of such damage until
  the damage shall be made good to the extent of enabling the Tenant to use and occupy the
  Premises and the Landlord shall repair the damage with
  all reasonable speed;

  
	
   

  	
   

  	
   

  
	
  Tenant’s Parking

  	
   

  	
  7.08                           the Tenant and the employees of the Tenant shall park their automobiles or trucks only in areas designated
  by the Landlord as parking
  areas and further, the Landlord and person authorized by the Landlord shall have the right without unduly interfering with the Tenant’s business to
  relocate or alter parking areas, driveways and access ramps from time to time as the Landlord may desire
  including the reduction, increase or change
  of the size and location thereof
  provided always that access to
  and from the Premises are at
  all times available;

  
	
   

  	
   

  	
   

  
	
  Collection
  Charges

  	
   

  	
  7.09                           in the event it shall be necessary to distrain or commence an action for the collection of rent herein reserved
  or any portion thereof, or any other amount payable by the Tenant under this
  Lease or if
  it shall be necessary to collect the same upon the demand of a solicitor or in the event that
  it becomes necessary for the
  Landlord to prepare and serve
  a notice requiring the Tenant
  to remedy a breach of any of the covenants herein, the Tenant shall pay to the Landlord on demand all costs, charges and expenses
  (including solicitor’s and counsel
  fees) incurred by the
  Landlord incidental thereto or in
  connection therewith and such costs, charges and expenses shall be recoverable in the same way as rent in arrears;

  
	
   

  	
   

  	
   

  
	
  Acceptance of
Premises

  	
   

  	
  7.10                           the Tenant has
  leased the Premises after
  examining the site and the Building or the plans and specifications relating
  to the same and unless the Tenant furnishes the Landlord with a notice in writing specifying any defect in
  the construction of the Premises or
  otherwise within ten (10) days

  

 

15

 

	
   

  	
   

  	
  after
  taking possession thereof, such taking of possession shall be conclusive evidence as against the
  Tenant that at the time thereof the
  Premises were in good order
  and satisfactory condition;

  
	
   

  	
   

  	
   

  
	
  Lien

  	
   

  	
  7.11                           As security for
  the due payment by the Tenant of the Rent reserved
  hereunder and the performance by the Tenant of all covenants,
  agreements, provisoes and conditions of the Tenant to be performed hereunder, including but not limited to any
  work conducted by the Landlord the cost of which is amortized or
  repayable by the Tenant, pursuant to the terms hereof, the Tenant hereby grants to the
  Landlord a first lien and charge
  on all goods, chattels, trade
  fixtures, furniture, equipment and inventory of the Tenant situate on, in or about the Leased Premises or elsewhere. Such lien and charge
  shall constitute a security agreement
  within the meaning of The Personal Property Security Act (Ontario) and on
  default of the Tenant hereunder the Landlord shall have, in addition to any
  other rights and remedies it may be
  entitled to under this Lease or otherwise, all the rights and remedies of a secured party
  under The Personal Property Security
  Act.

  
	
   

  	
   

  	
   

  
	
  Overholding

  	
   

  	
  7.12                           if, at the expiration or other termination
  of this lease, the Tenant shall
  remain in possession of the Premises, with or without the consent of
  the Landlord and without any further written
  agreement, a tenancy from year to year shall not be created by implication of law, but the Tenant shall be
  deemed to be a monthly tenant only, at a monthly rental equal to one
  and one-quarter (1.25) times the rent payable in respect of the last month
  prior to the expiration of the Term, payable in advance on the first day of each month and subject in all other respects to the terms of this
  lease.

  
	
   

  	
   

  	
   

  
	
  Amounts
  Owing as
Additional Rent

  	
   

  	
  7.13                           all amounts owed by the Tenant to the Landlord hereunder, other than rent, shall be deemed to be additional
  rent and shall, unless otherwise
  provided herein, be paid within fifteen (15) days
  from the date of demand by the Landlord;

  
	
   

  	
   

  	
   

  
	
  Interest
  on Amounts
Owing

  	
   

  	
  7.14                           all amounts owed by the Tenant to the Landlord hereunder, including
  rent, shall bear interest from the date due until the date paid at the rate equivalent to two
  per cent (2%) above the prime rate of interest in effect on the date of
  payment at The Royal Bank of Canada,
  Toronto or at the maximum legal
  rate of interest, whichever is lower.

  
	
   

  	
   

  	
   

  
	
  Notices

  	
   

  	
  7.15                           All notices
  or other documents required or which may be given under this Lease shall be
  in writing, duly signed by the
  party giving such notice and
  delivered or transmitted by
  registered or certified mail, telegram, facsimile, or telex addressed to the
  Landlord at 40 King Street West, Suite 4803, P.O. Box 303, Toronto, Ontario, M5H 3Y2, facsimile (416) 360-7082;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)                                     and to the Tenant
  at the Demised Premises;

  

 

16

 

	
   

  	
   

  	
  (ii)                                  or to any solicitor
  or firm of solicitors for the time being acting for the Landlord or the Tenant. Any notice or document so given shall be deemed
  to have been received on the fourth business day following the date of mailing, if
  sent by mail, but shall be deemed to
  have been received on the same
  day if transmitted by facsimile and on the next business day if transmitted by telex or telegram. In the event of
  interruption of the postal system
  by labour strife, such notice shall be
  sent by telex, facsimile or telegram or delivered. Any party may from time to time by notice given as
  provided above change its address
  for the service;

  
	
   

  	
   

  	
   

  
	
  Subordination

  	
   

  	
  7.16                           this Lease is subject and subordinate
  to all ground and underlying leases and to any charges on or charges from time to time created by the Landlord by mortgage or charge on the Premises
  or the Building and the Tenant
  shall from time to time as requested by the Landlord execute all
  documents and give such further
  assurances as maybe reasonably
  required to postpone its
  rights and privileges to the holder
  of any such leases charges or
  mortgages;

  
	
   

  	
   

  	
   

  
	
  Entire
  Agreement

  	
   

  	
  7.17                           the Tenant
  acknowledges that there are no covenants representations, warranties, agreements or conditions expressed or implied, collateral or
  otherwise forming part of or
  in any way affecting or
  relating to this Lease save as
  expressly set out in this Lease and that this Lease constitutes the entire agreement between the Landlord and the
  Tenant and may not be modified
  except as herein explicitly provided
  or except by subsequent agreement in writing of equal formality hereto executed by the Landlord and the Tenant.

  
	
   

  	
   

  	
   

  
	
  Change of Control

  Tenant

  	
   

  	
  7.18                           if the Tenant is
  a corporation and, if, by sale or other dispositions, the
  control thereof changes at any time during the Term, then, at the option of the Landlord, this lease may be
  cancelled by the Landlord upon giving sixty (60) days’ prior written notice to the Tenant of its
  intention to do so.

  
	
   

  	
   

  	
   

  
	
  Adjustments

  	
   

  	
  7.19                           upon the
  termination of this Lease by effluxion of time, or the sooner determination
  of this Lease, other than sooner determination resulting from any of the matters referred to
  in paragraph 7.04 hereof, the
  Landlord shall pay to the Tenant the value of any unexpired insurance upon the Building and
  other improvements on the Premises and the parties shall pro rata adjust, apportion and allow
  between themselves all items of taxes, water rates and other matters of a similar nature to the intent
  and purpose that the Tenant shall bear the burden thereof until it shall deliver up possession of the Premises on the termination of
  the lease or at the expiry of any holding over but not afterwards.

  
	
   

  	
   

  	
   

  
	
  Exproportion

  	
   

  	
  7.20                           if the Premises
  or any part thereof shall be expropriated for a public or quasi public purpose the Landlord shall be
  entitled, at its option,
  forthwith to terminate this Lease by
  giving notice in writing to
  the Tenant and thereupon rent
  and all other payments payable by the Tenant hereunder shall be apportioned
  and paid to the date of termination and the Tenant shall

  

 

17

 

	
   

  	
   

  	
  surrender and yield up possession of the Premises to the Landlord
  and the Landlord shall solely be entitled
  to any award payable on any such expropriation free of any
  apportionment in favour of the Tenant;

  
	
   

  	
   

  	
   

  
	
  Force
  Majeure

  	
   

  	
  7.21                           wherever in this
  Lease it is provided that
  anything be done or performed within
  a specified period such provisions
  are subject to strikes,
  lockouts, availability of materials,
  government rules, regulations or
  order or any other conditions (other than financial conditions) beyond the reasonable control
  of the Landlord or the Tenant,
  as the case may be, and where any
  such conditions arise the period of time for the Landlord or Tenant to comply with the specific
  obligation hereunder shall be extended to the extent of the period of
  delay caused by any of the foregoing events;

  
	
   

  	
   

  	
   

  
	
  Covenants:

  Severability

  	
   

  	
  7.22                           the Landlord and the Tenant agree that all of the provisions of this
  Lease are to be construed as \covenants and agreements as though the words importing such covenants and
  agreement were used in each separate section hereof. Should any
  provision or provisions of this Lease be illegal or not enforceable it or
  they shall be considered separate or severable from this Lease and its
  remaining provisions shall remain in
  force and be binding upon the parties
  hereto as though the said provision or provisions had
  never been included;

  
	
   

  	
   

  	
   

  
	
  Titles

  	
   

  	
  7.23                           the titles of articles and the captions of sections appearing in this Lease have been
  inserted as a matter of convenience
  and for reference only and in
  no way define, limit or enlarge the scope or meaning of this Lease or of any provisions thereof;

  
	
   

  	
   

  	
   

  
	
  Successors and
Assigns

  	
   

  	
  7.24                           this indenture and everything herein contained shall enure to the benefit of
  and be binding upon the respective heirs, executors, administrators,
  successors, assigns and other legal
  representatives, as the case may be, of each and every of the
  parties hereto, subject to the granting
  of consent by the Landlord as
  provided in paragraph 4.21 hereof to any assignment or sublease and every reference herein to any party hereto shall include the heirs,
  executors, administrators, successors, assigns and other legal
  representatives of such  party, and where there is more than one tenant or there is a female party
  or a corporation the
  provisions hereof shall be read with all
  grammatical changes thereby rendered necessary and all covenants shall be deemed joint and several.

  
	
   

  	
   

  	
   

  
	
  Smoking

  	
   

  	
  7.25                           Smoking is prohibited in the common areas of the building, Premises and the Landlord’s business park. Smoking
  includes the carrying of a
  lighted cigar, cigarette, pipe or other lighted smoking equipment. Tenant’s
  shall ensure their employees, servants, contractors, invitees and licensees abide by this rule at all times.

  
	
   

  	
   

  	
   

  
	
  Confidentiality

  	
   

  	
  7.26                           The Tenant agrees
  that the contents of this Lease are
  to be kept confidential and that it
  will not disclose the terms hereof to any other parties. The financial
  terms of the Lease shall not be revealed by the Tenant.

  

 

18

 

	
  Personal

  	
   

  	
  7.27                           It is understood
  and agreed that any, and all inducements, Landlord’s Work,
  Options, or rights contained or
  referred to herein are personal
  to KILIAN MANUFACTURING, a
  division of INGERSOLL-RAND CANADA INC. (the ‘Tenant’) and are non-assignable, and not transferrable to any assignee or sub-lessee without the prior
  written approval of the Landlord.

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
  8.01                           Schedule ”A”,
  “B”, “C”, “D”,”E” and “F”(attached
  hereto) form part of this Lease.

  

 

IN WITNESS WHEREOF the parties hereto have executed
this Lease on the date first above written.

 

 

	
   

  	
   

  	
  KILIAN MANUFACTURING, a
  division of

  
	
   

  	
   

  	
  INGERSOLL-RAND CANADA,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  C.H. Engeland

  
	
   

  	
   

  	
  Title:

  	
  Secretary – Ingersoll-Rand
  Canada, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  And:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  J.D. Heal

  
	
   

  	
   

  	
  Title:

  	
  V.P. – Sales &
  Marketing – Construction & Mining Group

  
	
   

  	
   

  	
  We have authority to bind
  the corporation.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SLOUGH ESTATES CANADA
  LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  And:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  We have authority to bind
  the corporation.

  

 

19

 

SCHEDULE “A”

SITE PLAN

 

 

 

SCHEDULE “B”

FIXTURES

 

A complete list of Landlord’s
Fixtures located on or in the Premises
will be taken on occupancy
and forwarded to Tenant for
verification and approval and one agreed upon and initialized by both parties will be attached as Schedule ”B” to this Lease.

 

 

SCHEDULE “C”

FLOOR PLAN

 

To
follow for Tenant’s approval.

 

 

SCHEDULE “D”

LANDLORD’S WORK

 

The Landlord agrees to
commence the following Landlord’s
Work once this Lease has been fully executed. The items listed below or any new
construction that is included
under the Landlord’s Work shall
be constructed in accordance with the
Landlord’s Building Standard Finishes. Such work to be completed on or before occupancy.

 

1.                                       Ensure that all the
Building’s mechanical systems including but not limited to heating,
air conditioning, hydro,
electrical, sprinkler, plumbing, lighting, shipping doors, truck levellers, and security systems (if owned by
the Landlord) are in good repair and free of defects.

 

2,                                       Ensure that the
roof is in good repair and free of defects.

 

3.                                       Steam clean the office area carpet.

 

4.                                       Paint office area walls in a colour to be chosen by the Tenant.

 

5.                                       Ensure Building is broomswept clean and free of all debris.

 

6                                          The Landlord to tile the
supervisors office and women’s enlarged warehouse washroom.

 

7.                                       The Landlord to
enlarge and add three (3) additional sinks, and one (1) toilet
to the women’s warehouse washroom.

 

8.                                       The Landlord to
connect the enlarged women’s warehouse washroom to the newly created
women’s locker room;.

 

9.                                       The Landlord to
block up the two (2) windows in the women’s locker room
and relocate the said two (2) windows to the to the supervisors office;

 

10.                                 The Landlord to
erect a drywall partition in P.O. #1 to create a new P.O. # 1 and P.O. #
2.

 

11.                                 The Landlord to install a new entrance with door into the main electrical room from the warehouse area;

 

12                                    CONDITION ON COMMENCEMENT OF LANDLORD’S WORK

 

The Tenant acknowledges that the
Landlord will not commence the
above noted work until the Lease has been fully executed.

 

 

13.                                 DELAY OF LANDLORD’S WORK BY TENANT

 

Should the Landlord’s Work be delayed due to any
delays caused by the Tenant then the Lease and the Rent Free Period shall commence and be in
full force and effect upon the
dates as set out in the Proposal and Lease Agreement.

 

14.                                 UNAVOIDABLE DELAY OF
LANDLORD’S WORK

 

For the purpose of this Lease ‘Unavoidable Delay” shall be
defined as a delay caused by fire, strike or other casualty or contingency
beyond the reasonable control of the Landlord who is by reason thereof, delayed in the performance of its obligations
under the lease in circumstances
where it is not within the reasonable control of such party to avoid such delay (but does not include lack of funds or other financial
causes of delay), the Landlord shall
use all reasonable efforts to
subsequently complete the work as set out herein by the commencement date of
the Lease. If the Landlord is unavoidably delayed then the date to complete the
work shall be automatically
extended by the length of such delay and the commencement date and the Rent Free Period as set out in the Proposal and the Lease Agreement shall also be extended
accordingly.

 

15.                                 EXTRA COSTS RE USE

 

It is agreed and understood that any
additional construction costs incurred to meet municipal regulations and building codes due to the Tenant’s specific use and occupancy shall be at the Tenant’s expense.

 

16.                                 CONSTRUCTION COST

 

The Tenant agrees to contribute towards the cost of
the Landlord’s Work by way of payment in the amount of TWO THOUSAND
and 00/100 Dollars ($2,000.00) payable
upon completion and receipt of
invoice.

 

CWO 727- KILIAN MANUFACTURING a division of -

INGERSOLL-RAND OF CANADA INC.

Building 703

 

 

SCHEDULE “E”

RULES AND REGULATIONS

 

The
Tenant covenants and
agrees that the Rules and
Regulations shall in all respect be observed and performed by the Tenant, its
employees and agents and to the
extent the Tenant can require the same, by its invitees and others over whom the Landlord shall have
available to it, all remedies provided in this Lease and all other legal
remedies available at law or in equity upon a breach of the Rules and
Regulations by the Tenant.  The Landlord
may terminate this Lease
forthwith upon such breach if, after Notice of such breach, the Tenant
fails to remedy or commence to remedy such
breach within ten (10) days or
fails to diligently continue to rectify such breach. The Tenant acknowledges
that the Landlord has no obligation and there shall be no liability upon the
Landlord for non-enforcement of the Rules and
Regulations. The Rules and Regulations shall include, without limitation, the following:

 

(1)                                  Animals or Birds:

 

No animals or birds shall be kept
in the Leased Premises.

 

(2)                                  Care of Interior and
Exterior (if applicable)
of Leased Premises:

 

The
Tenant shall keep the Interior and Exterior
(if applicable) of the Leased Premises clean, orderly and tidy.  The Tenant shall keep perishable items properly
refrigerated. The Tenant shall deposit all debris, trash and refuse in areas, at. times and in such a
manner as the Landlord shall reasonably delegate.

 

(3)                                  No one shall use the Premises
for sleeping quarters.

 

(4)                                  The Tenant shall observe strict care not to allow windows admitting light into the Premises to be left opened or remain open so as to admit rain or snow, or so as to interfere with the heating of the Premises or the air conditioning of the Premises or of the Building.
 The
Tenant will be responsible for
any injury caused to the property
of other Tenants or to the property of
the Landlord by failure on the
part of the Tenant to observe this rule.

 

(5)                                  Furniture, effects and supplies shall not be taken into or removed from the Premises except at such time or in the normal
course of business and in such manner as may be previously approved by
the Landlord.

 

(6)                                  The Landlord shall have the right to require
all persons entering and leaving the
Building at hours other than normal business
hours, which are defined as between 8.00 am and 6.00 pm, Monday through
Friday, to identify themselves to a watchman or security guard (where
applicable).

 

(7)                                  Electrical and Communications Wiring:

 

The Landlord shall direct the location and manner of installation of all wiring and
equipment in the Leased Premises. There
shall be no boring, cutting or
installation of

 

 

telephone, telegraphic, electric or other wiring
without the written consent of the Landlord.

 

(8)                                  Loading, Unloading, Delivery (if
applicable):

 

Deliveries,
shipments and all loading and unloading of items to and from the Premises by means of such
doorways, corridors and in such manner as the Landlord shall reasonably
designate.

 

(9)                                  Use of Elevator (if
applicable):

 

Elevators shall not be used without the prior
approval of the Landlord for the movement of furniture, freight, supplies or equipment and shall be left in clean condition following use.

 

(10)                            Obstruction of Plumbing and Washroom Facilities and
Common Areas

 

The Tenant agrees that it will not use or permit its employees,
agents or invitees to use the plumbing or washroom facilities of the Leased
Premises or common areas for any purpose
other than that for which they are
constructed.

 

(11)                            Overloading of floors (if
applicable):

 

The
Tenant shall not permit any floor of
the Leased Premises to be loaded to more than (250) pounds per square foot live load. All safes and other heavy
objects liable to injure or destroy
any part of the Leased premises or the
Park development shall be moved at such times, by such means and by such persons as the Landlord shall
reasonably direct. Upon the termination
of this lease and the Tenant shall forthwith inform the Landlord in writing of
the combination of all locks, safes and vaults in or on the Leased Premises.

 

(12)                            Restriction on Dangerous
Materials:

 

The
Tenant shall not keep, use, sell or offer for sale in the Leased Premises,
anything of a dangerous, inflammable or explosive nature.

 

(13)                            Signs, Advertising and Displays:

 

The Tenant shall not, in or about
the Leased Premises without the written consent
of the Landlord, erect exterior signs, install window or door signs, affix window or door lettering, erect awnings or canopies or display advertising media
or devices which may be seen or heard outside the Leased Premises. The Tenant
shall remove forthwith all signs, lettering, awnings, canopies and displays
which are found by the Landlord to
be objectionable. The Tenant shall indemnify and save harmless the Landlord
from all claims, demands, loss or damage to any person or property arising out of or in any way
caused by the erection, maintenance or removal of any sign or other
installation erected or installed on or about the exterior of the Leased
Premises. The Tenant shall at its
own expense, maintain in good condition
and repair all such signs, lettering, awnings, canopies and displays, and shall
observe and comply with all requirements of any

 

 

competent authority regarding the erection and maintenance of signs including the
payment of license or other fees.

 

(14)                            Use of Entrances, etc.:

 

The sidewalks, entrances, lobbies, elevators,
stairways and corridors of the Premises, Building or Park Development shall not
be obstructed by the Tenant or used by it for any other, purpose than for
ingress and egress to and from. the
Leased Premises and the Tenant shall
not place or allow to be placed in any
such areas any waste paper,
dust, garbage, refuse or anything whatever that shall tend to make such
areas appear clean or untidy.

 

(15)                            Refuse/Garbage:

 

All
garbage disposal containers used by the
Tenant must be covered, locked and maintained by the Tenant at the Tenant’s expense
in such a manner as not to cause refuse or litter of any nature within the vicinity of the container or which will cause discomfort or damage to neighbouring tenants. The
container must be emptied daily by
the Tenant at his own expense (where
applicable).  Should the Tenant not
observe the aforesaid provision then the Landlord will have the
right to remedy and clean up will all costs to be charged to the Tenant.  The Landlord and any person authorized
by the Landlord shall have the right without unduly interfering with the Tenant’s business to relocate garbage
disposal containers within the lands owned or managed by the Landlord.

 

The Tenant shall comply, at its own expense with all
federal, provincial and municipal, fire, sanitary and safety laws and regulations and by-laws pertaining to
the use of the Demised Premises and surrounding area.

 

(16)                            Odours

 

The Tenant shall not permit or allow odours, vapours, steam, water, vibrations, noises or
other undesirable effects to emanate from the Premises or any equipment or installation therein
which, in the Landlord’s opinion, are objectionable or cause any interference with the safety, comfort or
convenience of the Building by the Landlord or any occupants thereof or their
invitees.

 

(17)                            Pest Control:

 

The Tenant shall, at its own expense
and at such reasonable intervals as the Landlord may require, use such
pest extermination contractors for the
Leased Premises as the Landlord may direct. If the Tenant fails to
exercise such pest control measures as so directed by the Landlord, the Landlord shall have the right, at its option, to exercise such pest
control measures for the Leased Premises,
and one hundred and fifteen percent of the cost thereof shall be payable forthwith by the Tenant upon
demand by the Landlord.

 

 

SCHEDULE “F”

OPTION TO EXTEND

 

Provided that; the Tenant
has duly and regularly paid all net rent, additional rent and any other sums required to be paid pursuant to the Lease
and within the times and the manner set out in
the Lease; and the Tenant has duly and regularly
observed and performed each and every one of the terms, covenants and conditions contained in the Lease
on its part to be observed and
performed and within the times
and in the manner set out in the Lease; and the Tenant has given written notice to the Landlord at least six
(6) months and no earlier than twelve (12) months prior to the expiration
of the initial Term that it is to exercising the within Option to Extend; and
so long as the Tenant is KILIAN MANUFACTURING, a
division of INGERSOLL-RAND
CANADA INC. and is in itself in possession of and conducting its business
in the whole of the Premises in accordance with the terms of the Lease; then
the Landlord will grant the Tenant the right to extend the Term of the Lease
for the Premises on an ‘as is’ basis for a further period of Five (5) years
(the “Extended Term”) commencing upon the expiration of the initial Term on
such terms and conditions as are contained in the Lease, save and except for:

 

(a)                                                          the Tenant shall not be entitled to the
benefit of or to receive any leasehold improvement allowance or any payments by
the Landlord to the Tenant as set out in the Original Lease;

 

(b)                                                         the Net Rent for the Extended Term will be
based on the Landlord’s prevailing rental rates for similar space in a similar
area at the time of exercise by the Tenant of the within option to extend, but
in no event shall such Net Rent be less than the Tenant’s Net Rent for the
initial Term;

 

(c)                                                          there shall be no further right of extension.

 

If the Tenant fails to give
the appropriate notice within the time limit set out herein for extending the
Term, then this Extension Option shall be null and void and of no further force
or effect.

 

If the Tenant gives such
appropriate notice within the time limit set out herein for extending the Term,
it shall forthwith execute all documentation submitted by the Landlord prior to
the commencement of the Extension period.

 

 

EXTENSION AGREEMENT

 

THIS AGREEMENT made as of
the 22nd day of June, 1999.

B E T W E E N

 

JER QUEENSWAY, U.L.C.

c/o 201 Consumers Road, Suite 106

North York, Ontario

M2J 4G8

 

(hereinafter referred to as the “Landlord”)

 

OF THE FIRST PART

 

- and -

 

KILIAN MANUFACTURING,

a division of INGERSOLL-RAND CANADA INC.

413 Horner Avenue

Etobicoke, Ontario

M8W 4W3

 

(hereinafter referred to as the “Tenant”)

 

OF THE SECOND PART

 

WHEREAS
by a Lease dated the 4th day of November, 1994, Slough Estates Canada Limited,
as previous landlord did demise and lease unto the Tenant the lands and
premises therein described and known municipally as 413 Horner Avenue, Building
703, Etobicoke, Ontario (the “Premises”) for a term of five (5) years commencing on the 1st day of
November, 1994 (hereinafter called the “Original Lease”);

 

AND
WHEREAS the Original Lease was assumed by the Landlord upon receiving title to
the Premises on or about the 14th day of August, 1997;

 

AND
WHEREAS by extension letter dated the 1st day of June, 1999 and accepted by the
Tenant on the 1st day of June, 1999, the Landlord and the Tenant agreed to
further extend and renew the term of the Original Lease until the 31st day of
October, 2004;

 

NOW
THEREFORE THIS AGREEMENT WITNESSETH as follows:

 

1.                                       The Landlord hereby demises and extends the
Term of the Original Lease unto to the Tenant for the lands and premises
described in the Original Lease for a further five (5) year term commencing on the 1st day of November, 1999.

 

2.                                       For the period commencing November 1,
1999 to October 31, 2000, annual basic rent in the amount of ONE HUNDRED AND FIVE THOUSAND, FOUR HUNDRED AN]) TWENTY DOLLARS
($105,420.00) of lawful money of
Canada payable in advance in equal monthly installments of EIGHT THOUSAND, SEVEN HUNDRED AND EIGHTY-FIVE DOLLARS ($8,785.00) each on the
1st day of each and every month, and additional rental as set out in the
lease.  The foregoing rental is based
upon an annual rate of $3.50 per
square foot times the Rentable Area of the Premises of 30,120 square feet.

 

 

3.                                       For the period commencing November 1,
2000 to October 31, 2001, annual basic rent in the amount of ONE HUNDRED AND TWELVE THOUSAND, NINE HUNDRED AND FIFTY DOLLARS
($112,950.00) of lawful money of Canada payable in advance in equal
monthly installments of NINE THOUSAND, FOUR HUNDRED AND TWELVE DOLLARS AND
FIFTY CENTS ($9,412.50) each
on the 1st day of each and every month, and additional rental as set out in the
lease.  The foregoing rental is based
upon an annual rate of $3.75 per square foot times the Rentable Area of the
Premises of 30,120 square feet.

 

4.                                       For the period commencing November 1,
2001 to October 31, 2002, annual basic rent in the amount of ONE HUNDRED AND TWENTY THOUSAND, FOUR HUNDRED AND EIGHTY DOLLARS ($120,480.00) of
lawful money of Canada payable in advance in equal monthly installments of TEN THOUSAND, FORTY DOLLARS
($10,040.00) each on the 1st day of each and every month, and additional
rental as set out in the lease.  The
foregoing rental is based upon an annual rate of $4.00 per square foot times
the Rentable Area of the Premises of 30,120 square feet.

 

5.                                       For the period commencing November 1,
2002 to October 31, 2003, annual basic rent in the amount of ONE HUNDRED AND
TWENTY-EIGHT THOUSAND, AND TEN DOLLARS ($128,010.00) of lawful money
of Canada payable in advance in equal monthly installments of TEN THOUSAND, SIX HUNDRED AND SIXTY-SEVEN DOLLARS AND FIFTY CENTS
($10,667.50) each on the 1st day of each and every month, and
additional rental as set out in the lease. 
The foregoing rental is based upon an annual rate of $4.25 per square
foot times the Rentable Area of the Premises of 30,120 square feet.

 

6.                                       For the period commencing November 1,
2003 to October 31, 2004, annual basic rent in the amount of ONE HUNDRED AND THIRTY-FIVE THOUSAND, FIVE HUNDRED AND FORTY DOLLARS ($135,540.00) of
lawful money of Canada payable in advance in equal monthly installments of ELEVEN THOUSAND, TWO HUNDRED AND NINETY-FIVE DOLLARS ($11,295.00) each
on the 1st day of each and every month, and additional rental as set out in the
lease.  The foregoing rental is based
upon an annual rate of $4.50 per square foot times the Rentable Area of the
Premises of 30,120 square feet.

 

Subject
to and with the benefits of the same covenants on the part of the Landlord and
the Tenant respectively and the like provisos and conditions in all respects
(including the provisos for reentry) as are contained in the Original Lease,
save as herein otherwise provided and save for any Landlord’s Work, Tenant
inducements of any kind Extension Option, Expansion Option and the Landlord’s
covenant for extension, if any.

 

7.                                       It is agreed and understood that in
consideration of the Landlord continuing to hold the deposit in the amount of ELEVEN THOUSAND, SIX HUNDRED AND FOUR DOLLARS AND FIFTEEN CENTS ($11,604.15) in accordance with the
Original Lease dated November 4, 1994, that this deposit shall be applied
toward the last months rental of the Extended Term of the Original Lease.

 

8.                                       It is understood and agreed that all options
or rights contained or referred to herein are personal to KILIAN MANUFACTURING,
a division of INGERSOLL-RAND CANADA INC., and are non-assignable, or
transferable to any assignee or sub-lessee without the prior written approval
of the Landlord.

 

9.                                       The Landlord and the Tenant mutually covenant
and agree that they will respectively perform and observe the several
covenants, provisos and stipulations expressed in the Original Lease including,
without limitations, the obligations to repair, to repair according to notice
in writing and to leave the Premises in good repair as fully as if the said
covenants, provisos and stipulations had been repeated herein in full with such
modifications only as are necessary to make
them applicable to this Extension Agreement and as if the Term of this
Extension Agreement had commenced on the commencement

 

2

 

date
of the Original Lease.

 

IN
WITNESS WHEREOF the parties hereto have caused their hands and seals to be
hereunto affixed under the hands of their proper officers duly authorized in
that behalf.

 

	
   

  	
   

  	
  The Corporate Seal of
  J.E.R. QUEENSWAY, U.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  I/We authority to bind the
  corporation.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Corporate Seal of
  KILIAN MANUFACTURING, a division of INGERSOLL-RAND CANADA INC. was hereunto
  affixed in the presence of

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signing Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  I/We authority to bind the
  corporation.

  

 

3

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