Document:

exv10w18

 

Exhibit 10.18

EXTENSION TO THE A.I.R. STANDARD INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE — NET DATED
NOVEMBER 11, 1997 BY AND BETWEEN KENNETH R. SMITH AND ALICE J. SMITH AS LESSOR AND LUMINENT,
INC., A SUBSIDIARY OF MRV COMMUNICATIONS INC. AS LESSEE FOR THE PROPERTY COMMONLY KNOWN AS 8917
FULLBRIGHT AVENUE, CHATSWORTH, CALIFORNIA DRAFTED September 25, 2002.

	55.	 	Lessor and Lessee agree to extend the original Lease for an
additional five (5) years, commencing January 1, 2003 and ending December 31, 2008. The base rent per month stated
in Paragraph 1.5 shall be adjusted to $4,250.00.

	56.	 	The Base Rent stated in Paragraph 1.5 shall be adjusted annually on January 1st of
each succeeding year by a fixed three percent (3%).

	57.	 	Option to Extend. Lessor hereby grants to Lessee the option to extend the term of this lease
for one (1) additional thirty-six (36) month period commencing when the prior term expires upon
each and all of the following terms and conditions.

	 	(i)	 	In order to exercise an option to extend, Lessee must give written notice of
such election to Lessor and Lessor must receive the same at least six (6) but not
more than nine (9) months prior to the date that the option period would commence,
time being of the essence. If proper notification of the exercise of an option is not
given and/or received, such option shall automatically expire.
	 
	 	(ii)	 	The provisions of paragraph 39, including those relating to Lessee’s Default
set forth in paragraph 39.4 of this Lease, are conditions of this Option.
	 
	 	(iii)	 	Except for the provisions of this Lease granting an option or options to
extend the term, all of the terms and conditions of this Lease except where
specifically modified by this option shall apply.
	 
	 	(iv)	 	This Option is personal to the original Lessee, and cannot be assigned or
exercised, by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and without the intention of thereafter
assigning or subletting.
	 
	 	(v)	 	The monthly rent for each of the option period shall be calculated as per paragraph 56
above.

	 	 	 	 	 	 	 
	AGREED AND ACCEPTED:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	LESSEE

	 	 	 	LESSOR	 	 
	 
	 	 	 	 	 	 
	/s/ Noam Lotan
 

Noam Lotan, President & C.E.O

	 	 	 	/s/ Kenneth R. Smith
 

Kenneth R. Smith, Owner
	 	 
	 
	 	 	 	 	 	 
	/s/ Shay Gonen

	 	 	 	/s/ Alice Smith	 	 
	 

	 	 	 	 	 	 

 

 

 AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION  

 STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — NET  

 (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)  

 1. Basic Provisions (“Basic Provisions”)  

     
1.1 Parties: This Lease (“Lease”), dated for
reference purposes only November 11,    97, is made
 by and between Kenneth R. Smith and Alice J. Smith
(“Lessor”)
and MRV Communication, Inc. (“Lessee”),
(collectively the “Parties,” or individually a “Party”).

     
1.2 Premises: That certain real property, including all improvements therein or to be provided
by Lessor under the terms of this Lease, and commonly known as    8917 Fullbriqht Avenue
located in the County of Los Angeles, State of California,  and generally
described as (describe briefly the nature of the property and, if
applicable, the “Project”, if the
property is located within a Project)
a free standing industrial building identified by parcel map per book
109, page 87 of PM,
Lot C.

  

  

  

(“Premises”). (See also Paragraph 2)

      1.3 Term: five (5) years and zero (0)  months (“Original
Term”) commencing January 01, 1998 (“Commencement Date”) and ending December
31, 2002 (“Expiration Date”). (See also Paragraph 3)

     
1.4 Early Possession: continuation from existing lease (“Early Possession Date”).

 (See also Paragraphs 3.2 and 3.3)

     
1.5 Base Rent: $3,500.00 per month (“Base
Rent”), payable on the first
 day of each month commencing January 1998 (See also Paragraph 4)

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

      1.6 Base Rent Paid Upon Execution: $3,500.00 as Base Rent for the period January 1998

      1.7 Security Deposit: $5,000.00 (“Security Deposit”). (See also Paragraph 5)

      1.8 Agreed Use: Manufacturing and assembly of electronics components and related uses.
 (See also Paragraph 6)

     
1.9
Insuring Party. Lessor is the “Insuring Party” unless otherwise stated herein. (See also Paragraph 8)

      1.10 Real Estate Brokers: (See also Paragraph 15)

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

o
                              
 represents Lessor exclusively (“Lessor’s Broker”);

 o
                              
represents Lessee exclusively (“Lessee’s Broker”); or

þ

 TOLD Partners Inc. represents both Lessor and Lessee (“Dual Agency”)

           (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor
shall pay to the Broker the fee agreed to in their separate written agreement (or if there is no such agreement, the sum
of 2.500% of the total Base Rent for the brokerage services rendered by said Broker).

     
1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by
          
           
               
         
(“Guarantor”). (See also Paragraph 37)

     
1.12 Addenda and Exhibits. Attached hereto is an Addendum or
Addenda consisting of Paragraphs 50 through 54 and Exhibits   A,  all of which constitute a part of this Lease.

 2. Premises.  

      2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set
forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this
Lease, or that may have been used in calculating rental is an approximation which the Parties
agree is reasonable and the rental based thereon is not subject to revision whether or not the
actual size is more or less.

      2.2 Condition.
 Lessor shall deliver the Premises to Lessee    broom elean and free
of debrts on the Commencement Date or the Early Possession Date, whichever first occurs (“Start
Date”), and, so long as the required service
contracts described in Paragraph 7.1(b) below are
obtained by Lessee within thirty (30) days following the Start Date,
warrants that the existing
electrical, plumbing, fire sprinkler, lighting heating, ventilating and air conditioning systems
(“HVAC”), loading doors, If any, and all other such
elements in the Premises, other than those
constructed by Lessee, shall be in good operating condition on said
date and that the
structural elements of the roof, bearing walls and foundation of any
buildings
 on the Premises (the “Building”) shall be free of
material defects. If a non
compliance with said warranty exists as of the Start Date, Lessor
shall, as Lessor’s sole
obligation with respect to such matter, except as otherwise provided in this Lease, promptly
after receipts of written notice from   Lessee   setting forth
with specificity the nature
and extent of such non-compliance, rectify some at Lessor’s
expense. If, other the start, Date,
Lessee does not give Lessor written notice  of any  non-compliance with this warranty within: (i) one
 year as to the surface of the roof and the structural portions of the roof foundations and bearing walls, (ii) six (6)  months
« as to the HVAC systems, (iii)  thirty (30) days as to the remaining systems and other elements of the Building,  
correction of such non-compliance shall be the obligation of Lessee at Lessee’s sole cost and
expense.

     
2.3 Compliance. Lessor warrants that the improvements on the Premises comply with all applicable
laws, covenants or restrictions of record, building codes, regulations and ordinances
(“Applicable Requirements”) in effect on the Start Date. Said warranty does not apply to the use
to which Lessee will put the Premises or to any Alterations or Utility Installations (as defined
in Paragraph 7.   3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for determining
whether or not the zoning is appropriate for Lessee’s intended use, and acknowledges that past
uses of the Premises may no longer be allowed. If the Premises do not comply with said warranty,
Lessor shall, except as otherwise provided, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance, rectify the same at
Lessor’s expense. If Lessee does not give Lessor written notice of a non-compliance with this
warranty within six (6) months following the Start Date, correction of that non-compliance shall
be the obligation of Lessee at Lessee’s sole cost and expense. If the Applicable Requirements
are hereafter changed (as opposed to being in existence at   the
Start Date, which  is addressed in Paragraph 6.   2(e)    below) so as
to require during the term of this Lease the construction of an addition to or an alteration of the
Building, the remediation of any Hazardous Substance, or the reinforcement or other physical modification
of the Building (“Capital Expenditure”), Lessor and Lessee shall allocate the cost of such work as follows:

FORM STN-6-2/97 EZ  

 © 1997 - American Industrial Real Estate Association 

Initials                                          

TOLD Partners Inc. 5940 Varial
Avenue, Wood and Hills CA 91367  

Phone: 818-593-3800  

 Fax:  818-593-3850  

PAGE 1

 

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

          (b) If such Capital Expenditure is not the result of the specific and unique
use of the Premises by Lessee (such as, governmentally mandated seismic modifications),
then Lessor and Lessee shall allocate the obligation to pay for such costs pursuant to
the provisions of Paragraph 7.1(c); provided, however, that if such Capital Expenditure is required
during the last two years of this Lease or if Lessor reasonably determines that it is not
economically feasible to pay its share thereof, Lessor shall have the option to terminate this Lease
upon ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor, in writing, within ten (10) days after receipt of Lessor’s termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate,
and fails to tender its share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest, from Rent until Lessor’s share of such costs have been fully paid. If Lessee is unable to finance Lessor’s share, or if the balance of the Rent due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Lease upon thirty (30) days written notice to Lessor.

          (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended
to apply only to non-voluntary,
unexpected, and new Applicable Requirements. If the Capital Expenditures are instead
triggered by Lessee as a result of an actual or
proposed change in use, change in intensity of use, or modification to the Premises then,
and in that event, Lessee shall be fully
responsible for the cost thereof, and Lessee shall not have any right to terminate this Lease.

      2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or Brokers to satisfy itself with
respect to the condition of the Premises (including but not limited to the electrical, HVAC
and fire sprinkler systems, security,
environmental aspects, and compliance with Applicable Requirements), and their suitability
for Lessee’s intended use, (b) Lessee has
made such investigation as it deems necessary with reference to such matters and assumes
all responsibility therefor as the same relate
to its occupancy of the Premises, and (c) neither Lessor, Lessor’s agents, nor any Broker
has made any oral or written representations
or warranties with respect to said matters other than as set forth in this Lease. In
addition, Lessor acknowledges that: (a) Broker has
made no representations, promises or warranties concerning Lessee’s ability to honor the
Lease or suitability to occupy the Premises,
and (b) it is Lessor’s sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.

     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be
of no force or effect if
immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In
such event, Lessee shall be responsible for
any necessary corrective work.

 3. Term.

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

     3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to
pay Base Rent shall be abated for the period of such early
possession. All other terms of
this Lease (including but not limited to the
obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises)
shall, however, be in effect during such
period. Any such early possession shall not affect the Expiration Date.

     3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to
deliver possession of the Premises to
Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be
subject to any liability therefor, nor shall such failure affect the validity of this
Lease. Lessee shall not, however, be obligated to pay Rent
or perform its other obligations until it receives possession of the Premises. If
possession is not delivered within sixty (60) days after the
Commencement Date, Lessee may, at its option, by notice in writing within ten (10) days
after the end of such sixty (60) day period,
cancel this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by
Lessor within said ten (10) day period, Lessee’s right to cancel shall terminate Except as
otherwise provided, if possession is not
tendered to Lessee by the Start Date and Lessee does not terminate this Lease, as
aforesaid, any period of rent abatement that Lessee
would otherwise have enjoyed shall run from the date of delivery of possession and continue
for a period equal to what Lessee would
otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the
acts or omissions of Lessee. If possession of
the Premises is not delivered within four (4) months after the Commencement Date, this
Lease shall terminate unless other agreements
are reached between Lessor and Lessee, in writing.

     3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies
with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of
such evidence, Lessee shall be required to
perform all of its obligations under this Lease from and after the Start Date, including
the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of such evidence of insurance. Further, if
Lessee is required to perform any other
conditions prior to or concurrent with the Start Date, the Start Date shall occur but
Lessor may elect to withhold possession until such
conditions are satisfied.

4. Rent.

     4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this
Lease (except for the Security Deposit)
are deemed to be rent (“Rent”).

     4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States, without offset
or deduction (except as specifically permitted in this Lease), on or before the day on
which it is due. Rent for any period during the term
hereof which is for less than one (1) full calendar month shall be prorated based upon the
actual number of days of said month. Payment
of Rent shall be made to Lessor at its address stated herein or to such other persons or
place as Lessor may from time to time designate
in writing. Acceptance of a payment which is less than the amount then due shall not be a
waiver of Lessor’s rights to the balance of
such Rent, regardless of Lessor’s endorsement of any check so stating.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit
as security for Lessee’s faithful
performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise
Defaults under this Lease, Lessor may use,
apply or retain all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate
Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason
thereof. If Lessor uses or applies all or any
portion of said Security Deposit, Lessee shall within ten (10) days after written request
therefor deposit monies with Lessor sufficient to
restore said Security Deposit to the full amount required by this Lease. If the Base Rent
increases during the term of this Lease, Lessee
shall, upon written request from Lessor, deposit additional monies with Lessor so that the total
amount of the Security Deposit shall at all
times bear the same proportion to the increased Base Rent as the initial Security Deposit bore
to the initial Base Rent. Should the
Agreed Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee,
Lessor shall have the right to increase the Security Deposit to the extent necessary, in
Lessor’s reasonable judgment, to account for any
increased wear and tear that the Premises may suffer as a result thereof. If a change in control
of Lessee occurs during this Lease and
following such change the financial condition of Lessee is, in Lessor’s reasonable Judgment,
significantly reduced. Lessee shall deposit
such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at
a commercially reasonable level based
on said change in financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts.
Within fourteen (14) days after the expiration or termination of this Lease, if Lessor elects to
apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated pursuant to
Paragraph 7.4(c) below, Lessor shall return
that portion of the Security Deposit not used or applied by Lessor. No part of the Security
Deposit shall be considered to be held in trust,
to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease.

Initials                                          

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6. Use.

     6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other
legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful creates damage, waste or a nuisance, or
that disturbs owners and/or occupants of, or causes damage to neighboring properties. Lessor shall
not unreasonably withhold or delay its consent to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity of the improvements on the
Premises or the mechanical or electrical systems therein, is not significantly more burdensome to
the Premises. If Lessor elects to withhold consent, Lessor shall within five (5) business days
after such request give written notification of same, which notice shall include an explanation of
Lessor’s objections to the change in use.

     6.2 Hazardous Substances.

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

          (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a
Hazardous Substance has come to be located in, on, under or about the Premises, other than as
previously consented to by Lessor, Lessee shall immediately give written notice of such fact to
Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which
it has concerning the presence of such Hazardous Substance.

          (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under, or about the Premises (including through the plumbing or
sanitary sewer system) and shall promptly, at Lessee’s expense, take all investigatory and/or
remedial action reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises during the term of
this Lease, by or for Lessee, or any third party.

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

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

          (f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any
Investigations or remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to the Start Date, unless
such remediation measure is required as a result of Lessee’s use (including “Alterations”, as
defined in Paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for
such payment. Lessee shall cooperate fully in any such activities at the request of Lessor,
including allowing Lessor and Lessor’s agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor’s investigative and remedial responsibilities.

          (g) Lessor Termination Option. If a Hazardous Substance Condition occurs during the term of
this Lease, unless Lessee is legally responsible therefor (in which case Lessee shall make the
investigation and remediation thereof required by the Applicable Requirements and this Lease shall
continue in full force and effect, but subject to Lessor’s rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate and remediate such Hazardous
Substance Condition, if required, as soon as reasonably possible at Lessor’s expense, in which
event this Lease shall continue in full force and effect, or (ii) if the estimated cost to
remediate such condition exceeds twelve (12) times the then monthly Base Rent or $100,000,
whichever is greater, give written notice to Lessee, within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to
terminate this Lease as of the date sixty (60) days following the date of such notice. In the
event Lessor elects to give a termination notice, Lessee may, within ten (10) days thereafter,
give written notice to Lessor of Lessee’s commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to twelve (12) times the
then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said
funds or satisfactory assurance thereof within thirty (30) days following such commitment. In such
event, this Lease shall continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required funds are available. If Lessee does
not give such notice and provide the required funds or assurance thereof within the time provided,
this Lease shall terminate as of the date specified In Lessor’s notice of termination.

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

     6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30 below)
and consultants shall have the right to enter into Premises at any time, in the case of an
emergency, and otherwise at reasonable times, for the purpose of inspecting the condition of the
Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections
shall be paid by Lessor, unless a violation of Applicable Requirements, or a contamination is
found to exist or be imminent, or the inspection is requested or ordered by a governmental
authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such
inspections, so long as such inspection is reasonably related to the violation or contamination.

Initials                    

PAGE 3 

 

7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.

     7.1 Lessee’s Obligations.

          (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance),
6.3 (Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or
Destruction), and 14 (Condemnation). Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations, and Alterations in good order, condition and repair (whether or not the
portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or
readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of
Lessee’s use, any prior use, the elements or the age of such portion of the Premises), including,
but not limited to, all equipment or facilities, such as plumbing, heating, ventilating,
air-conditioning, electrical, lighting facilities, boilers pressure vessels, fire protection
system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, floors, windows,
doors, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls,
signs, sidewalks and parkways located in, on, or adjacent to the Premises. Lessee, in keeping the
Premises in good order, condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Lessee’s obligations shall include restorations, replacements
or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. Lessee shall, during the term of this Lease, keep the
exterior appearance of the Building in a first-class condition consistent with the exterior
appearance of other similiar facilities of comparable age and size in the vicinity, including,
when necessary, the exterior repainting of the Building.

          (b) Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain contracts,
with copies to Lessor, in customary form and substance for, and with contractors specializing and
experienced in the maintenance of the following equipment and Improvements, if any, if and when
Installed on the Premises: (i) HVAC equipment, (ii) boiler,
and pressure vessels, (iii) fire
extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (v) roof covering and drains, (vi) driveways and parking lots, (vii) clarifiers, (viii)
basic utility feed to the perimeter of the Building, and (ix) any other equipment, if reasonably
required by Lessor.

          (c) Replacement.
Subject to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7
below, and without relleving Lessee of liability resulting from Lessee’s failure to exercise and
perform good maintenance practices, if the Basic Elements described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is In excess of 50% of the cost of replacing such Basic
Elements, then such Basic Elements shall be replaced by Lessor, and the cost thereof shall be
prorated between the Parties and Lessee shall only be obligated to pay, each month during the
remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the
product of multiplying the cost of such replacement by a fraction, the numerator of which is one,
and the denominator of which is the number of months of the useful life of such replacement as such
useful life is specified pursuant to, Federal income tax regulations or guidelines for depreciation
thereof (including interest on the unamortized balance as is then commercially reasonable in the
judgment of Lessor’s accountants), with Lessee reserving the right to prepay its obligation at any
time.

     7.2
Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance), 9 (Damage or Destruction) and 14 (Condemnation), it is intended by the Parties hereto
that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, or
the equipment therein, all of which obligations are intended to be that of the Lessee. It Is the
intention of the Parties that the terms of this Lease govern the respective obligations of the
Parties as to maintenance and repair of the Premises, and they expressly waive the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease.

     7.3 Utility Installations; Trade Fixtures; Alterations.

          (a) Definitions; Consent Required. The term “Utility Installations” refers to all floor and
window coverings, air lines, power panels, electrical distribution, security and fire protection
systems, communication systems, lighting fixtures. HVAC equipment, plumbing, and fencing in or on
the Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can be
removed without doing material damage to the Premises. The term “Alterations” shall mean any
modification of the improvements, other than Utility Installations or Trade Fixtures, whether by
addition or deletion. “Lessee Owned Alterations and/or Utility Installations” are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a). Lessee shall not make any Alterations or Utility Installations to the
Premises without Lessor’s prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost thereof during this
Lease as extended does not exceed $50,000 in the aggregate or $10,000 in any one year.

          (b) Consent. Any Alterations or Utility Installations that Lessee shall desire to make and
which require the consent of the Lessor shall be presented to Lessor in written form with detailed
plans. Consent shall be deemed conditioned upon Lessee’s: (i) acquiring all applicable
governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or
Utility Installations shall be performed in a workmanlike manner with good and sufficient
materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and
specifications. For work which costs an amount equal to the greater of one month’s Base Rent, or
$10,000, Lessor may condition its consent upon Lessee providing a lien and completion bond in an
amount equal to one and one-half times the estimated cost of such Alteration or Utility
Installation and/or upon Lessee’s posting an additional Security Deposit with Lessor.

          (c) Indemnification. Lessee shall pay, when due, all claims for labor or materials furnished
or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are
or may be secured by any mechanic’s or materialmen’s lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days’ notice prior to the commencement of
any work in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then
Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the
same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount
equal to one and one-half times the amount of such contested lien, claim or demand, indemnifying
Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee
shall pay Lessor’s attorneys’ fees and costs.

     7.4 Ownership; Removal; Surrender; and Restoration.

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

          (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than ninety
(90) and not later than thirty (30) days prior to the end of the term of this Lease, Lessor may
require that any or all Lessee Owned Alterations or Utility Installations be removed by the
expiration or termination of this Lease. Lessor may require the removal at any time of all or any
part of any Lessee Owned Alterations or Utility Installations made without the required consent.

          (c) Surrender/Restoration. Lessee shall surrender the Premises by the Expiration Date or any
earlier termination date, with all or the improvements, parts and surfaces thereof broom clean and
free of debris, and in good operating order, condition and state of repair, ordinary wear and tear
excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Lessee shall repair any damage occasioned by the
installation, maintenance or removal of Trade Fixtures, Lessee Owned Alterations and/or Utility
Installations, furnishings, and equipment as well as the removal of any storage tank installed by
or for Lessee, and the removal, replacement, or remediation of any soil, material or groundwater
contaminated by Lessee. Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c)
without the express written consent of Lessor shall constitute a holdover under the provisions of
Paragraph 26 below.

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8. Insurance; Indemnity.

     8.1
Payment For Insurance. Lessee shall pay for all insurance required under Paragraph 8 except to
the extent of the cost attributable to liability insurance carried by Lessor under Paragraph 8.2(b)
in excess of $2,000,000 per occurrence. Premiums for policy periods commencing prior to or
extending beyond the Lease term shall be prorated to correspond to the Lease term. Payment
shall be  made by Lessee to Lessor within ten (10) days
following receipt of an invoice.

     8.2 Liability Insurance.

          (a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability Policy
of Insurance protecting Lessee and Lessor against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage
in an amount not less than $2,000,000 per occurrence with an “Additional Insured-Managers or
Lessors of Premises Endorsement” and contain the
“Amendment of the Pollution Exclusion Endorsement ”
for damage caused by  heat, smoke or fumes from a hostile fire. The Policy shall not contain any
intra-insured exclusions as between Insured persons or organizations, but shall include coverage
for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s
Indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by Lessee
shall be primary to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only.

          (b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph
8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee.
Lessee shall not be named as an additional insured therein.

     8.3
Property Insurance — Building, Improvements and Rental Value.

          (a) Building and Improvements. The Insuring Party shall obtain and keep in force a policy
or policies in the name of Lessor, with loss payable to Lessor, any groundlessor, and to any
Lender(s) Insuring loss or damage to the Premises. The amount of such
insurance shall be equal
to the full replacement cost of the Premises, as the same shall exist from time to time, or the
amount required by any Lenders, but in no event more than the commercially reasonable and
available insurable value thereof. If Lessor is the Insuring Party,
however,  Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee’s personal property shall be
insured by Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless required by a
Lender), including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion
of the Premises as the result of a covered loss. Said policy or policies shall also contain an
agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance coverage amount
by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All
Urban Consumers for the city nearest to where the Premises are located. If such insurance
coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured Loss.

          (b) Rental Value. 
The Insuring Party shall obtain and keep in force a policy or policies in
the name of Lessor, with loss payable to Lessor and any Lender, insuring the loss of the full Rent
for one (1) year. Said insurance shall provide that in the event the Lease is terminated by reason
of an insured loss, the period of indemnity for such coverage shall be extended beyond the date of
the completion of repairs or replacement of the Premises, to provide for one full year’s loss of
Rent from the date of any such loss. Said insurance shall contain an agreed valuation provision in
lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect
the projected Rent otherwise payable by Lessee, for the next twelve (12) month period. Lessee
shall be liable for any deductible amount in the event of such loss.

          (c) Adjacent Premises. If the Premises are part of a larger building, or of a group of
buildings owned by Lessor which are adjacent to the Premises, the Lessee shall pay for any
increase in the premiums for the property insurance of such building
or buildings if said increase
is caused by Lessee’s acts, omissions, use or occupancy of the Premises.

     8.4
Lessee’s Property/Business Interruption Insurance.

          (a) Property
Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such
insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.

          (b) Business Interruption. Lessee shall obtain and maintain loss of
Income and extra expense
insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable
to all perils commonly insured against by prudent lessees in the business of Lessee or
attributable to prevention of access to the Premises as a result of such perils.

          (c) No Representation of Adequate Coverage. Lessor makes no representation that the limits
or forms of coverage of insurance specified herein are adequate to cover Lessee’s property,
business operations or obligations under this Lease.

     8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or
admitted to transact business in the state where the Premises are located, and maintaining during
the policy term a “General Policyholders Rating” of at least B+, V, as set forth in the most
current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender.
Lessee shall not do or permit to be done anything which Invalidates the required insurance
policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of
such insurance or certificates evidencing the existence and amounts
of the required insurance. No
such policy shall be cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or “insurance binders” evidencing renewal
thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount
shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less. If either Party
shall fail to procure and maintain the insurance required to be carried by it, the other Party
may, but shall not be required to, procure and maintain the same.

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

     8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct, Lessee shall
Indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s
master or ground lessor, partners and Lenders, from and against any and all claims, loss of
rents and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses
and/or liabilities arising out of, involving, or in connection with, the use and/or occupancy of
the Premises by Lessee. If any action or proceeding is brought against Lessor by reason of any
of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by
counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such
defense. Lessor need not have first paid any such claim in order to
be defended or indemnified.

     8.8
Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to
the person or goods, wares,  merchandise or other property of Lessee, Lessee’s employees,
contractors, invitees, customers, or any other person in or about the Premises, whether such
damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, HVAC or lighting fixtures, or from any other cause, whether
the said injury or damage
results from conditions arising upon the Premises or upon other portions of the Building of which
the Premises are a part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor. Notwithstanding Lessor’s
negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to
Lessee’s business or for any loss of income or profit therefrom.

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9. Damage or Destruction.

     9.1 Definitions.

          (a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be
repaired in six (6) months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within thirty (30) days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.

          (b) “Premises Total Destruction” shall mean damage or destruction to the Premises, other than
Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be
repaired in six (6) months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within thirty (30) days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.

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

          (d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by
Lessor at the time of the occurrence to their condition existing immediately prior thereto,
including demolition, debris removal and upgrading required by the operation of Applicable
Requirements, and without deduction for depreciation.

          (e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition
involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph
6.2(a), in, on, or under the Premises.

     9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs
then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures or
Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease
shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair of which is $10,000
or less, and, in such event, Lessor shall make any applicable Insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required
insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee’s responsibility) as and when required to complete said repairs. In the event,
however, such shortage was due to the fact that, by reason of the unique nature of the
improvements, full replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to
fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to
cover same, or adequate assurance thereof, within ten (10) days following receipt of written notice
of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, the party responsible for making the repairs shall complete them
as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds
or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within ten
(10) days thereafter to: (i) make such restoration and repair as is commercially reasonable with
Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and
effect, or have this Lease terminate thirty (30) days thereafter. Lessee shall not be entitled to
reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such insurance shall be made
available for the repairs if made by either Party.

     9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss
occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make
the repairs at Lessee’s expense). Lessor may either: (i) repair such damage as soon as reasonably
possible at Lessor’s expense, in which event this Lease shall continue in full force and effect,
or (ii) terminate this Lease by giving written notice to Lessee within thirty (30) days after
receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be
effective sixty (60) days following the date of such notice. In the event Lessor elects to
terminate this Lease, Lessee shall have the right within ten (10) days after receipt of the
termination notice to give written notice to Lessor of Lessee’s commitment to pay for the repair
of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within thirty (30) days after
making such commitment. In such event
this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs
as soon as reasonably possible after the required funds are available. If Lessee does not make the
required commitment, this Lease shall terminate as of the date specified in the termination
notice.

     9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction. If the
damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor
shall have the right to recover Lessor’s damages from Lessee,
except as provided in Paragraph 8.6.

     9.5 Damage Near End of Term. If at any time during the last six (6) months of this Lease
there is damage for which the cost to repair exceeds one (1) month’s Base Rent, whether or not an
Insured Loss, Lessor may terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving written termination notice to Lessee within thirty (30) days
after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time
has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in
insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the
earlier of (i) the date which is ten days after Lessee’s receipt of Lessor’s written notice
purporting to terminate this Lease, or (ii) the day prior to the date upon which such option
expires. If Lessee duly exercises such option during such period and provides Lessor with funds
(or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at
Lessor’s commercially reasonable expense, repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee’s option shall be extinguished.

     9.6 Abatement of Rent; Lessee’s Remedies.

          (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent
payable by Lessee for the period required for the repair, remediation or restoration of such
damage shall be abated in proportion to the degree to which Lessee’s use of the Premises is
impaired, but not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability
for any such damage, destruction, remediation, repair or restoration except as provided herein.

          (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not
commence, in a substantial and meaningful way, such repair or restoration within ninety (90) days
after such obligation shall accrue, Lessee may, at any time prior to the commencement of such
repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual
notice, of Lessee’s election to terminate this Lease on a date not less than sixty (60) days
following the giving of such notice. If Lessee gives such notice and such repair or restoration is
not commenced within thirty (30) days thereafter, this Lease
shall terminate as of the date specified in said notice. If the repair or restoration is commenced within said thirty (30)
days, this Lease shall continue in full force and effect. “Commence” shall mean either the
unconditional authorization of the preparation of the required plans, or the beginning of the
actual work on the Premises, whichever first occurs.

     9.7 Termination-Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g)
or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other
advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of
Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.

     9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the
effect of any damage to or destruction of the Premises with respect to the termination of this
Lease and hereby waive the provisions of any present or future statute to the extent inconsistent
herewith.

10. Real Property Taxes.

     10.1 Definition of “Real Property Taxes.” As used herein, the term “Real Property Taxes”
shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or
rental levy or tax (other than Inheritance, personal income or estate taxes); Improvement bond;
and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the
Premises, Lessor’s right to other income therefrom, and/or Lessor’s business of leasing, by any
authority having the direct or indirect

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power to tax and where the funds are generated with reference to the Building address and where
the proceeds so generated are to be applied by the city, county or other local taxing authority
of a jurisdiction within which the Premises are located. The term “Real Property Taxes” shall
also include any tax, fee, levy, assessment or charge, or any increase therein, imposed by reason
of events occurring during the term of this Lease, including but not
limited to, a change in the
ownership of the Premises.

     10.2

          (a) Payment of Taxes. Lessee shall pay the Real Property Taxes applicable to the Premises
during the term of this Lease, Subject to Paragraph 10.2(b), all such payments shall be made at
least ten (10) days prior to any delinquency date. Lessee shall promptly furnish Lessor with
satisfactory evidence that such taxes have been paid. If any such taxes shall cover any period of
time prior to or after the expiration or termination of this Lease, Lessee’s share of such taxes
shall be prorated to cover only that portion of the tax bill
applicable to the period that this
Lease is in effect, and Lessor shall reimburse Lessee for any overpayment. If Lessee shall fall to
pay any required Real Property Taxes, Lessor shall have the right to pay the same, and Lessee shall
reimburse Lessor therefor upon demand.

          (b) Advance Payment. In the event Lessee incurs a late charge on any Rent payment, Lessor may,
at Lessor’s option, estimate the current Real Property Taxes, and require that such taxes be paid
in advance to Lessor by Lessee, either: (i) in a lump sum amount equal to the installment due, at
least twenty (20) days prior to the applicable delinquency date, or (ii) monthly in advance with
the payment of the Base Rent. If Lessor elects to require payment monthly in advance, the monthly
payment shall be an amount equal to the amount of the estimated installment of taxes divided by the
number of months remaining before the month in which said installment becomes delinquent. When the
actual amount of the applicable tax bill is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the applicable taxes. If
the amount collected by Lessor is insufficient to pay such Real Property Taxes when due, Lessee
shall pay Lessor, upon demand, such additional sums as are necessary to pay such obligations. All
monies paid to Lessor under this Paragraph may be intermingled with other monies of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the performance of its obligations
under this Lease, then any balance of funds paid to Lessor under the provisions of this Paragraph
may at the option of Lessor, be treated as an additional Security Deposit.

     10.3
Joint Assessment. If the Premises are not separately assessed, Lessee’s liability shall
be an equitable proportion of the Real Property Taxes for all of the land and improvements included
within the tax parcel assessed, such proportion to be conclusively determined by Lessor from the
respective valuations assigned in the assessor’s work sheets or such other information as may be
reasonably available.

     10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed
against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures,
furnishings, equipment and all personal property of Lessee. When possible, Lessee shall cause such
property to be assessed and billed separately from the real property of Lessor. If any of Lessee’s
said personal property shall be assessed with Lessor’s real property, Lessee shall pay Lessor the
taxes attributable to Lessee’s property within ten (10) days after receipt of a written statement.

11.
Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal
and other utilities and services supplied to the Premises, together with any taxes thereon. If any
such services are not separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.

12. Assignment and Subletting.

     12.1 Lessor’s Consent Required.

          (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or
encumber (collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in
this Lease or in the Premises without Lessor’s prior written consent.

          (b) A change in the control of Lessee shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of twenty-five percent (25%) or more of the voting control of
Lessee shall constitute a change in control for this purpose.

          (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by
way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or
will result in a reduction of the Net Worth of Lessee by an amount greater than twenty-five
percent (25%) of such Net Worth as it was represented at the time of the execution of this Lease
or at the time of the most recent assignment to which Lessor has consented, or as it exists
immediately prior to said transaction or transactions constituting such reduction, whichever was
or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its
consent. “Net Worth of Lessee” shall mean the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles.

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

          (e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited to
compensatory damages and/or injunctive relief.

     12.2 Terms and Conditions Applicable to Assignment and Subletting.

          (a) Regardless
of Lessor’s consent, any assignment or subletting shall not: (i) be effective
without the express written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

          (b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than
Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of Rent or
performance shall constitute a waiver
or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or Breach.

          (c) Lessor’s consent to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting.

          (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against
Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s obligations under this Lease,
including any assignee or sublessee, without first exhausting Lessor’s remedies against any other
person or entity responsible therefore to Lessor, or any security held by Lessor.

          (e) Each request for consent to an assignment or subletting shall be in writing, accompanied
by information relevant to Lessor’s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee, including but not
limited to the intended use and/or required modification of the
Premises, if any, together with a
fee of $1, 000 or ten percent (10%) of the current monthly Base Rent applicable to the portion of
the Premises which is the subject of the proposed assignment or sublease, whichever is greater, as
consideration for Lessor’s considering and processing said request. Lessee agrees to provide
Lessor with such other or additional information and/or documentation as may be reasonably
requested.

          (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment or entering into such sublease, be deemed to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.

     12.3
Additional Terms and Conditions Applicable to Subletting. The following terms and
conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly incorporated therein:

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          (a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent payable
on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under
this Lease; provided, however, that until a Breach shall occur in the performance of Lessee’s
obligations, Lessee may called said Rent. Lessor shall not, by reason of the foregoing or any
assignment of such sublease nor by reason of the collection of Rent, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such
sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of Lessee’s obligations
under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee
shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any
obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from
Lessee to the contrary.

          (b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn
to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.

          (c) Any matter requiring the consent of the sublessor under a sublease shall also require
the consent of Lessor.

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

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

13. Default; Breach; Remedies.

     13. 1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or
perform any of the terms, covenants, conditions or rules under this
Lease. A “Breach” is defined
as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure
such Default within any applicable grace period:

          (a) The abandonment of the Premises; or the vacating of the Premises without providing a
commercially reasonable level of security, or where the coverage of the property insurance
described in Paragraph 8.3 is Jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.

          (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be
made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable
evidence of insurance or surety bond, or to fulfill any obligation under this Lease which
endangers or threatens life or property, where such failure continues for a period of three (3)
business days following written notice to Lessee.

          (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) a Tenancy Statement, (v) a requested subordination, (vi) evidence
concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42
(easements), or (viii) any other documentation or information which Lessor may reasonably require
of Lessee under the terms of this Lease, where any such failure continues for a period of ten (10)
days following written notice to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease,
or of the rules adopted under Paragraph 40 hereof, other than those described in subparagraph 13.1(a),
(b) or (c) above, where such Default continues for a period of thirty (30) days after written
notice; provided, however, that if the nature of Lessee’s Default is such that more than thirty
(30) days are reasonably required for its cure, then it shall not be deemed to be a Breach if
Lessee commences such cure within said thirty (30) day period and thereafter diligently prosecutes
such cure to completion.

          (e) The occurrence of any of the following events: (i) the making of any general arrangement
or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. §
101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where possession is not restored to Lessee within thirty (30) days; or
(iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets
located at the Premises or of Lessee’s interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any provision of this
subparagraph (e) is contrary to any applicable law, such provision shall be of no force or
effect, and not affect the validity of the remaining provisions.

          (f) The discovery that any financial statement of Lessee or of any Guarantor given to
Lessor was materially false.

          (g) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death
of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this Lease other
than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a
Guarantor’s breach of its guaranty obligation on an anticipatory basis, and Lessee’s failure,
within sixty (60) days following written notice of any such event, to provide written alternative
assurance or security, which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of
execution of this Lease.

     13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations,
within ten (10) days after written notice (or in case of an emergency, without notice), Lessor
may, at its option, perform such duly or obligation on Lessee’s behalf, including but not limited
to the obtaining of reasonably required bonds, insurance policies, or governmental licenses,
permits or approvals. The costs and expenses of any such performance by Lessor shall be due and
payable by Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee shall
not be honored by the bank upon which it is drawn, Lessor, at its option, may require all future
payments to be made by Lessee to be by cashier’s check in the event of a Breach, Lessor may,
with or without further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:

          (a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned
at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award exceeds the amount of
such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the term after the time,
of award exceeds the amount of such rental loss that the Lessee proves could be reasonably
avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately
caused by the Lessee’s failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, including but not limited to the
cost of recovering possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys’ fees, and that portion of any
leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term
of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the
immediately preceding sentence shall be computed by discounting such amount at the discount rate
of the Federal Reserve Bank of the District within which the Premises are located at the time of
award plus one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee’s Breach of
this Lease shall not waive Lessor’s right to recover damages under Paragraph 12. If termination of
this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the
right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice
and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or
quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also
constitute the notice required by Paragraph 13.1. In such case, the applicable grace period
required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the
failure of Lessee to cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies
provided for in this Lease and/or by said statute.

          (b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes
due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of
maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s
interests, shall not constitute a termination of the Lessee’s right to possession.

          (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions
of the state wherein the Premises are located. The expiration or termination of this Lease and/or
the termination of Lessee’s right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or
by reason of Lessee’s occupancy of the Premises.

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     13.3 Inducement Recapture.
Any agreement for free or abated rent or other charges, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration
for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as
“Inducement Provisions,” shall be deemed conditioned upon Lessee’s full and faithful performance of
all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any
such Inducement Provision shall automatically be deemed deleted from this Lease and of no further
force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated,
given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in
writing by Lessor at the time of such acceptance.

     13.4 Late Charges.
Lessee hereby acknowledges that late payment by Lessee of Rent will cause
Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be due, then, without
any requirement for notice to Lessee, Lessee shall pay to Lessor a one-time late charge equal to
ten percent (10%) of each such overdue amount. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s
Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other
rights and remedies granted hereunder. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) consecutive installments of Base Rent, then notwithstanding
any provision of this Lease to the contrary, Base Rent shall, at Lessor’s option, become due and
payable quarterly in advance.

     13.5 Interest.
Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent) or within thirty (30)
days following the date on which it was due for non-scheduled payment, shall bear interest from the
date when due, as to scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest (“Interest”) charged shall be equal to the prime rate reported
in the Wall Street Journal as published closest prior to the date when due plus four percent (4%),
but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the
potential late charge provided For in Paragraph 13.4.

     13.6 Breach by Lessor.

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

          (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender
cures said breach within thirty (30) days after receipt of said notice, or if having commenced said
cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at
Lessee’s expense and offset from Rent an amount equal to the greater of one month’s Base Rent or
the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee’s right
to reimbursement from Lessor. Lessee shall document the cost of said cure and supply said
documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this
Lease shall terminate as to the part taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of any building portion of the
premises, or more than twenty-five percent (25%) of the land area portion of the premises not
occupied by any building, is taken by Condemnation, Lessee may, at Lessee’s option, to be
exercised in writing within ten (10) days after Lessor shall have given Lessee written notice of
such taking (or in the absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this
Lease shall remain in full force and effect as to the portion of the Premises remaining, except
that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises
caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value of the leasehold, the
value of the part taken, or for severance damages; provided, however, that Lessee shall be
entitled to any compensation for Lessee’s relocation expenses, loss of business goodwill and/or
Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the
provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by
Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and
Lessee shall be entitled to any and all compensation which is payable therefor. In the event that
this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the
Premises caused by such Condemnation.

15. Brokers’ Fee.

     15.1 Additional Commission.
In addition to the payments owed pursuant to Paragraph 1.10
above, and unless Lessor and the Brokers otherwise agree in writing, Lessor agrees that (a) if
Lessee exercises any Option, (b) if Lessee acquires any rights to the Premises or other premises
owned by Lessor and located within the same Project, if any, within which the Premises is located,
(c) If Lessee remains in possession of the Premises, with the consent of Lessor, after the
expiration of this Lease, or (d) if Base Rent is increased, whether by agreement or operation of
an escalation clause herein, then, Lessor shall pay Brokers a fee in accordance with the schedule
of said Brokers in effect at the time of the execution of this Lease.

     15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s interest
in this Lease
shall be deemed to have assumed Lessor’s obligation hereunder. Each Broker shall be a third party
beneficiary of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to a
Broker any amounts due as and for commissions pertaining to this Lease when due, then such amounts
shall accrue interest. In addition, if Lessor fails to pay any amounts to Lessee’s Broker when
due, Lessee’s Broker may send written notice to Lessor and Lessee of such failure and if Lessor
fails to pay such amounts within ten (10) days after said notice, Lessee shall pay said monies to
its Broker and offset such amounts against Rent. In addition, Lessee’s Broker shall be deemed to
be a third party beneficiary of any commission agreement entered into by and/or between Lessor and
Lessor’s Broker.

     15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each
represent and warrant to the other that it has had no dealings with any person, firm, broker
or finder (other than the Brokers, if any) in connection with this Lease, and that no one other
than said named Brokers is entitled to any commission or finder’s fee in connection herewith.
Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless
from and against liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of the indemnifying
Party, including any costs, expenses, attorneys’ fees reasonably incurred with respect thereto.

16. Estoppel Certificates.

          (a) Each Party (as “Responding Party”)
shall within ten (10) days after written notice from
the other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party
a statement in writing in form similar to the then most current “Estoppel Certificate” form
published by the American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting Party.

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

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

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17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s
Interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by
credit) any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon
such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or covenants under this
Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined. Notwithstanding the above, and subject to the provisions of Paragraph 20
below, the original Lessor under this Lease, and all subsequent holders of the Lessor’s interest
in this Lease shall remain liable and responsible with regard to the potential duties and
liabilities of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6 above.

18. Severability. The invalidity of any provision of this Lease, as determined by a court of
competent jurisdiction, shall in no way affect the validity of any other provision hereof.

19. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this
Lease shall mean and refer to calendar days.

20. Limitation on Liability. Subject to the provisions of Paragraph 17 above, the obligations of
Lessor under this Lease shall not constitute personal obligations of Lessor, the individual
partners of Lessor or its or their individual partners, directors, officers or shareholders, and
Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse against the individual
partners of Lessor, or its or their individual partners, directors, officers or shareholders, or
any of their personal assets for such satisfaction.

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

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the
Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement
or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers
that it has made, and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as to the nature,
quality and character of the Premises. Brokers have no responsibility with respect thereto or with
respect to any default or breach hereof by either Party. The liability (including court costs and
Attorneys’ fees), of any Broker with respect to negotiation, execution, delivery or performance by
either Lessor or Lessee under this Lease or any amendment or modification hereto shall be limited
to an amount up to the fee received by such Broker pursuant to this Lease; provided, however, that
the foregoing limitation on each Broker’s liability shall not be applicable to any gross negligence
or willful misconduct of such Broker.

23. Notices.

     23.1 Notice Requirements. All notices required or permitted by this Lease shall be in writing
and may be delivered in person (by hand or by courier) or may be sent by regular, certified or
registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease shall be that
Party’s address for delivery or mailing of notices. Either Party may by written notice to the other
specify a different address for notice, except that upon Lessee’s taking possession of the
Premises, the Premises shall constitute Lessee’s address for notice. A copy of all notices to
Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may
from time to time hereafter designate in writing.

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

24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof
by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition
hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or
Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of monies or damages
due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection
therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

25. Recording. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and
deliver to the other a short form memorandum of this Lease for recording purposes. The Party
requesting recordation shall be responsible for payment of any fees applicable thereto.

26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part
thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over,
then the Base Rent shall be increased to one hundred fifty percent (150%) of the Base Rent
applicable during the month immediately preceding the expiration or termination. Nothing contained
herein shall be construed as consent by Lessor to any holding over by Lessee.

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

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

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

30. Subordination; Attornment; Non-Disturbance.

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

     30.2 Attornment. Subject to the non-disturbance provisions of Paragraph 30.3, Lessee agrees
to attorn to a Lender or any other party who acquires ownership of the Premises by reason of a
foreclosure of a Security Device, and that in the event of such foreclosure such new owner shall
not: (i) be liable for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses which Lessee might
have against any prior lessor, or (iii) be bound by prepayment of more than one (1) month’s rent.

     30.3 Non-Disturbance.
With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement” ) from the Lender
which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long as Lessee is not in
Breach hereof and attorns to the record owner of the Premises. Further, within sixty (60) days
after the execution of this Lease, Lessor shall use its commercially reasonable

Initials                    
                    

 PAGE 10

 

efforts to obtain a Non-Disturbance Agreement from
the holder of any pre-existing Security Device
which is secured by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at Lessee’s option,
directly contact Lessor’s lender and attempt to negotiate for the execution and delivery of a
Non-Disturbance Agreement.

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

31. Attorneys’ Fees. If any Party or Broker brings an action or
proceeding involving the Premises
to enforce the terms hereof or to declare rights hereunder, the Prevailing party (as hereafter
defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorney’s fees. Such fees may be awarded in the same suit or recovered in a separate suit,
whether or not such action or proceeding is pursued to decision or judgment. The term,
“Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or
the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award
shall not be computed in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to
attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is subsequently
commenced in connection with such Default or resulting Breach.

32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to
enter the Premises at any time,
in the case of an emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers,
lenders, or lessees, and making such alterations, repairs, improvements or additions to the
Premises as Lessor may deem necessary. All
such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time
place on the Premises any ordinary “For Sale” signs and Lessor may during the last six (6) months of the term hereof place on the Premises
any ordinary “For Lease” signs.
Lessee may at any time place on or about the Premises any ordinary “For Sublease” sign.

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

34. Signs. Except for ordinary “For Sublease” signs, Lessee shall not place any sign upon the
Premises without Lessor’s prior written consent. All signs must comply with all Applicable Requirements.

35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary
or other surrender of this Lease by
Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically
terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect
to continue any one or all existing
subtenancies. Lessor’s failure within ten (10) days following any such event to elect to the
contrary by written notice to the holder of any
such lesser interest, shall constitute Lessor’s election to have such event constitute the
termination of such interest.

36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is
required to an act by or for the
other Party, such consent shall not be unreasonably withheld or delayed. Lessor’s actual reasonable
costs and expenses (including but
not limited to architects’, attorneys’, engineers’ and other consultants’ fees) incurred in the
consideration of, or response to, a request by
Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting
or the presence or use of a
Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting
documentation therefor. Lessor’s consent to
any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach
by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing
by Lessor at the time of such consent. The failure to specify herein any particular condition to
Lessor’s consent shall not preclude the
imposition by Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular
matter for which consent is being given. In the event that either Party disagrees with any
determination made by the other hereunder and
reasonably requests the reasons for such determination, the determining party shall furnish its
reasons in writing and in reasonable detail
within ten (10) business days following such request.

37. Guarantor.

     37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the American
Industrial Real Estate Association, and each such Guarantor shall have the same obligations as
Lessee under this Lease.

     37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses
upon request to provide: (a) evidence of
the execution of the guaranty, including the authority of the party signing on Guarantor’s
behalf to obligate Guarantor, and in the case of
a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing
the making of such guaranty, (b) current
financial statements, (c) a Tenancy Statement, or (d) written confirmation that the guaranty
is still in effect.

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on
Lessee’s part to be observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises
during the term hereof.

39. Options.

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

     39.2 Options Personal To Original Lessee. Each Option granted to Lessee in this Lease is
personal to the original Lessee, and
cannot be assigned or exercised by anyone other than said original Lessee and only while the
original Lessee is in full possession of the
Premises and, if requested by Lessor, with Lessee certifying that Lessee has no intention of
thereafter assigning or subletting.

     39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew
this Lease, a later Option cannot be
exercised unless the prior Options have been validly exercised.

     39.4 Effect of Default on Options.

          (a) Lessee shall have no right to exercise an Option: (i) during the period commencing with
the giving of any notice of
Default and continuing until said Default is cured, (ii) during the period of time any Rent is
unpaid (without regard to whether notice
thereof Is given Lessee), (iii) during the time Lessee is in Breach of this Lease, or (iv) in
the event that Lessee has been given three (3)
or more notices of separate Default, whether or not the Defaults are cured, during the twelve
(12) month period immediately preceding
the exercise of the Option.

          (b) The period of time within which an Option may be exercised shall not be extended or
enlarged by reason of Lessee’s
inability to exercise an Option because of the provisions of Paragraph 39.4(a).

          (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s due and
timely exercise of the
Option, if, after such exercise and prior to the commencement of the extended term, (i) Lessee
fails to pay Rent for a period of thirty (30)
days after such Rent becomes due (without any necessity of Lessor to give notice thereof), (ii)
Lessor gives to Lessee three (3) or more
notices of separate Default during any twelve (12) month period, whether or not the Defaults are
cured, or (iii) if Lessee commits a
Breach of this Lease.

40.
Multiple Buildings. If the Premises are part of a group of buildings controlled by Lessor,
Lessee agrees that it will observe all
reasonable rules and regulations which Lessor may make from time to time for the management,
safety, and care of said properties
including the care and cleanliness of the grounds and including the parking, loading and unloading
of vehicles and that Lessee will pay
its fair share of common expenses incurred in connection therewith.

41. Security Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not
include the cost of
guard service or security measures, and that Lessor shall have no obligation whatsover to provide same.
Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and
their property form the acts of third parties.

Initials                                          

© 1997 — American Industrial Real Estate Association

PAGE 11

 

42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the
consent or joinder of Lessee, such
easements, rights and dedications that Lessor deems necessary, and to cause the recordation of
parcel maps and restrictions, so long
as such easements, rights, dedications, maps and restrictions do not
unreasonably interfere with the
use of the Premises by Lessee.
Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement
rights, dedication, map or
restrictions.

43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money
to be paid by one Party to
the other under the provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make
payment “under protest” and such payment shall not be regarded as a voluntary payment and there
shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no
legal obligation on the part of said Party to
pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to
pay.

44. Authority. If either Party hereto is a corporation, trust, limited liability company, partnership, or
similiar entity, each individual
executing this Lease on behalf of such entity represents and warrants that he or she is duly
authorized to execute and deliver this Lease
on its behalf. Each party shall, within thirty (30) days after request, deliver to the other party
satisfactory evidence of such authority.

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

46. Offer. Preparation of this Lease by either Party or their agent and submission of same to
the other Party shall not be deemed an offer to lease to the other Party. This Lease is not
intended to be binding until executed and delivered by all Parties hereto.

47.
Amendments. This Lease may be modified only in writing, signed by the Parties in interest at
the time of the modification. As long
as they do not materially change Lessee’s obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications
to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal
financing or refinancing of the
Premises.

48. Multiple Parties. If more than one person or entity is named herein as either Lessor or Lessee,
such multiple Parties shall have joint
and several responsibility to comply with the terms of this Lease.

49.
Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the
Arbitration of all disputes between the
Parties and/or Brokers arising out of this Lease
o is
o is not attached to this Lease.

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

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL
ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID
INVESTIGATION
SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE
ZONING OF THE
PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE
PREMISES FOR LESSEE’S INTENDED USE.

WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH
THE PREMISES IS LOCATED.

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

	 	 	 	 	 	 	 	 	 
	Executed at:

	 	 	 	 	 	Executed at:	 	 
	 

	 	 
	 	 	 	 	 	 
	on:

	 	 	 	 	 	on:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	By LESSOR:

	 	 	 	 	 	By LESSEE:	 	 
	 

	 	 
	 	 	 	 	 	 
	Kenneth R. Smith and Alice J. Smith	 	 	 	MRV Communications Inc.
	 
	 
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	Name Printed:

	 	Kennth R. Smith
	 	 	 	Name Printed:	 	 
	 

	 	 	 	 	 	 	 	 
	Title: Owner

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	Name Printed:

	 	Alice J. Smith
	 	 	 	Name Printed:	 	 
	 

	 	 	 	 	 	 	 	 
	Title: Owner

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 
	Address:

	 	31117 Via Colinas, Suite 401
	 	 	 	Address:
	 	20415 Nordhoff Street
	 

	 	Westlake Village, CA 91361
	 	 	 	 	 	Chatsworth, CA 91311
	Telephone:

	 	818-707-1433
	 	 	 	Telephone:
	 	818-773-0088
	Facsimile:

	 	818-991-2298
	 	 	 	Facsimile:
	 	818-773-0261
	Federal ID No.

	 	 	 	 	 	Federal ID No.	 	 
	 

	 	 
	 	 	 	 	 	 

     NOTICE: These forms are often modified to meet changing requirements of law and industry
needs. Please Writ or call us to make sure that you are utilizing the most current form. We can
be reached at the American Industrial Real Estate Association, 700 South Flower, Suite 600, Los
Angeles, CA 90017. (213) 687-8777 Fax (213) 687-8616

			
	 	 	 
	© 1997 — American Industrial Real Estate Association
	 	FORM STN-6-2/97 EZ

PAGE 12

 

RENT ADJUSTMENT(S)

STANDARD LEASE ADDENDUM

Dated
November 11, 1997

By and
Between (Lessor) Kenneth R. Smith & Alice J. Smith

(Lessee) MRV Communications Inc.

Address
Of Premises: B917 Fullbright Avenue, Chatsworth, CA 91311

Paragraph 50

A.
RENT ADJUSTMENTS:

     The monthly rent for each month of the adjustment period(s) specified below shall be increased
using the method(s) indicated below:

(Check Method(s) to be Used and Fill in Appropriately)

þ
I. Cost of Living Adjustment(s) (COLA)

     a. On (Fill in COLA Dates): January 1, 1999; January 1, 2000; January 1,
2001; January 1, 2002 the Base Rent shall be adjusted by the change, if any, from the Base
Month specified below, in the Consumer Price Index of the Bureau of Labor Statistics of the U.S.
Department of Labor for (select one): o CPI W (Urban Wage Earners and Clerical Workers)
or þ CPI U (All Urban Consumers),
for (Fill in Urban Area): Los Angeles – Anaheim –
Riverside, All Items (1982-1984 = 100), herein referred to as “CPI”

     b. The monthly rent payable in accordance with paragraph A.l.a. of this Addendum shall be
calculated as follows: the Base Rent set forth in paragraph 1.5 of the attached Lease, shall be
multiplied by a fraction the numerator of which shall be the CPI of the calendar month two months
prior to the month(s) specified in paragraph A.l.a. above during which the adjustment is to take
effect, and the denominator of which shall be the CPI of the calendar month which is two months
prior to (select one): þ the
first month of the term of this Lease as set forth in paragraph 1.3 (“Base Month”) or o
(Fill in Other “Base Month”):                     .
The sum so calculated shall constitute the new monthly rent hereunder, but in no event, shall any
such new monthly rent be less than the rent payable for the month immediately preceding the rent
adjustment.

     c. In the event the compilation and/or publication of the CPI shall be transferred to any
other governmental department or bureau or agency or shall be discontinued, then the index most
nearly the same as the CPI shall be used to make such calculation. In the event that the Parties
cannot agree on such alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said Association and the
decision of the arbitrators shall be binding upon the parties. The cost of said Arbitration shall
be paid equally by the Parties.

o
II. Market Rental Value Adjustment(s) (MRV)

	 
	     a. On (Fill in MRV Adjustment Date(s)):

	 
	the Base Rent shall be adjusted to the “Market Rental Value” of the property as follows:

     1) Four months prior to each Market Rental Value Adjustment Date described above, the Parties
shall attempt to agree upon what the new MRV will be on the adjustment date. If agreement cannot
be reached within thirty days, then:

          (a) Lessor and Lessee shall immediately appoint a mutually acceptable appraiser or broker to
establish the new MRV within the next thirty days. Any associated costs will be split equally
between the Parties, or

          (b) Both Lessor and Lessee shall each immediately make a reasonable determination of the MRV
and submit such determination, in writing, to arbitration in accordance with the following
provisions:

               (i) Within fifteen days thereafter, Lessor and Lessee shall each select an o
appraiser or o broker
(“Consultant”- check one) of their choice to act as an arbitrator.
The two arbitrators so appointed shall immediately select a third mutually acceptable Consultant
to act as a third arbitrator.

               (ii) The three arbitrators shall within thirty days of the appointment of the third
arbitrator reach a decision as to what the actual MRV for the Premises is, and whether Lessor’s
or Lessee’s submitted MRV is the closest thereto. The decision of a majority of the arbitrators
shall be binding on the Parties. The submitted MRV which is determined to be the closest to the
actural MRV shall thereafter be used by the Parties.

               (iii) If either of the Parties fails to appoint an arbitrator within the specified fifteen
days, the arbitrator timely appointed by one of them shall reach a decision on his or her own,
and said decision shall be binding on the Parties.

               (iv) The entire cost of such arbitration shall be paid by the party whose submitted MRV is
not selected, ie. the one that is NOT the closest to the actual MRV.

     2) Notwithstanding the foregoing, the new MRV shall not be less than the rent payable for the
month immediately preceding the rent adjustment.

			
	 	 	 
	Initials:                     
	 	Initials:                     
	 	 	 
	                                  
	 	                    

			
	 	 	 
	TOLD Partners Inc. 5940 Variel
[Avenue] Woodland Hills CA 91367

Phone: 818-593-3800

Fax:     818-593-3850
	 	 

RENT ADJUSTMENT(S)

Page 1 of 2

 

     b. Upon the establishment of each New Market Rental Value:

          1) the new MRV will become the new “Base Rent” for the purpose of calculating any
further Adjustments, and

          2)
the first month of each Market Rental Value term shall become the new “Base Month” for the
purpose of calculating any further Adjustments.

o III. Fixed Rental Adjustment(s) (FRA)

The Base Rent shall be increased to the following amounts on the dates set forth below:

	 	 	 	 	 	 	 	 	 
	On (Fill in FRA* Adjustment Date(s)):
	 	The New Base Rent shall be:	 	 	 	 	 
	 
	 
	 	$	                                         	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	$	                                         	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	$	                                         	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	$	                                         	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

B. NOTICE:

     Unless specified otherwise herein, notice of any rental adjustments, other than Fixed Rental
Adjustments, shall be made as specified in paragraph 23 of the Lease.

C. BROKER’S FEE:

     The Brokers specified in paragraph 1.10 shall be paid a Brokerage Fee for each adjustment
specified above in accordance with paragraph 15 of the Lease.

			
	 	 	 
	Initials:                     
	 	Initials:                     
	 	 	 
	                               
	 	                    

     NOTICE: These forms are often modified to meet changing requirements of law and Industry
needs. Please write or call us to make sure you are utilizing the most current form. We can be
reached at the American Industrial Real Estate Association, 700 South Flower Suite 600, Los
Angeles, CA 90017. (213) 687-8777 Fax (213) 687-8616

			
	 	 	 
	© 1997 — American Industrial Real Estate Association
	 	 

RENT ADJUSTMENT(S)

Page 2 of 2

 

ADDENDUM
TO THE STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE — NET DATED NOVEMBER 11,
1997 BY AND BETWEEN KENNETH R. SMITH AND ALICE J. SMITH AS LESSOR AND MRV COMMUNICATIONS, INC. AS
LESSEE FOR THE PROPERTY COMMONLY KNOWN AS 8917 FULLBRIGHT AVENUE, CHATSWORTH, CA.

50. Rent Adjustment(s). See attached.

51. Please make rent check payable to Kenneth Smith and mail to:

31117 Via Colinas, Suite 401

Westlake Village, CA 91361

52. Physical Inspection. TOLD Partners Inc. is not aware of any physical defects or
deficiencies in the Premises which have not already been disclosed to Lessee. Lessee should
conduct an independent physical inspection of the Premises at Lessee’s sole cost and expense prior
to lease execution. If Lessee shall fail to conduct such an inspection, then Lessee shall hold
Broker harmless for any defects, deficiencies, damage or costs to repair such items which may
result from Lessee’s failure to conduct said physical inspection. Lessee shall indemnify Broker
from any liability in connection with Lessee’s failure to physically inspect the Premises and shall
pay Broker’s attorney fees from any resultant court action. Lessee’s initials below shall witness
Lessee’s acknowledgment of this provision.

53. Condition and Availability of Electrical Services. Lessee is executing this Lease for the
subject Premises with the understanding that existing electrical services may contain amperage and
power ratings that are actually different than what is shown on the power panel itself and/or on
the marketing brochures. Broker cannot confirm, guarantee or substantiate that such amperage or
power ratings are correct. Lessee agrees to confirm the presence and/or the availability of such
electrical services with Lessee’s electrical contractor and/or with the City of Los Angeles or the
Southern California Edison Company, or such applicable utilities service company, and shall hold
Broker harmless from any such electrical service insufficiencies that may exist.

54. CONSULT YOUR ADVISORS. This document has been prepared for approval by your attorney.
No representation or recommendation is made by TOLD Partners Inc. as to the legal sufficiency or
tax consequences of this document or the transaction to which it relates. These are questions for
your attorney.

In any real estate transaction, it is recommended that you consult with a professional, such as a
civil engineer, industrial hygienist or other person, with experience in evaluating the condition
of the property, including the possible presence of asbestos, hazardous materials and underground
storage tanks.

			
	 	 	 
	Initials

	 	Initials

Page 1 of 1

 

EXHIBIT “A”

NOTICE TO BUYERS, TENANTS AND OWNERS CONCERNING HAZARDOUS

WASTES OR SUBSTANCES AND UNDERGROUND STORAGE TANKS AND

AMERICANS WITH DISABILITIES ACT

THIS IS AN IMPORTANT NOTICE — READ IT CAREFULLY

RE: REAL PROPERTY LOCATED AT: 8917 Fullbright Avenue, Chatsworth

The United
States Congress has enacted the Americans With Disabilities Act. Among other
things, this act is Intended to make many business establishments equally accessible to
persons with a variety of disabilities; modifications to real property may be required.
State and local law also may mandate changes. The real estate brokers in this transaction
are not qualified to advise you as to what, if any, changes may be required now, or in the
future. Owners and tenants should consult their attorneys and qualified design
professionals. Attorneys or design professionals have the appropriate expertise in this
area.

Under
recently passed federal and state laws governing the use, storage, handling, cleanup,
removal and disposal of “hazardous wastes or substances”, an owner, buyer, tenant and
other users of real property can be held responsible for the cost to clean up hazardous wastes,
for the payment of damages and for the modification of the real property to conform with
environmental safety standards (for example: the removal of asbestos and the closure of
underground storage tanks). “Hazardous wastes and substances” includes, but is not limited
to : any petroleum based products, paints and solvents, lead, cyanide, DDT, printing inks,
acids, pesticides, ammonium compounds, asbestos, PCBs and toxic chemical products.

Since these laws affect every kind of real property,
it is essential that legal and
technical advice be obtained by you to determine whether the laws have been complied with
and what, if anything, is required to be done in connection with the proposed transaction
involving the real property described above, to minimize your liability. Such professionals
as attorney, engineers and geologists specializing in toxic waste matters are among those
you should consult to obtain a clear understanding of the condition of the real property and
your rights and obligations under the hazardous waste laws in connection with this
transaction. WE STRONGLY RECOMMEND THAT YOU RETAIN LEGAL, ENGINEERING AND GEOLOGICAL EXPERTS
TO ADVISE YOU AS WELL AS ANY OTHER EXPERTS WHICH YOU OR THEY MAY DEEM APPROPRIATE.

Please note that, as your Broker, TOLD Partners Inc. must disclose to all prospective
parties to this transaction any knowledge we actually possess concerning the condition of
the real property described above and the existence of hazardous wastes, substances, or
underground storage tanks on the property. In addition, neither TOLD Partners Inc. nor any
of its employees or agents has made any investigations or obtained reports regarding the
condition of the property or the past or present existence of hazardous wastes or
substances on the property.

Therefore, for the purposes of this transaction, neither TOLD Partners Inc. nor any of
its employees or agents makes any representations to any prospective buyer or tenant
concerning the condition of the property or the existence or nonexistence of hazardous
wastes or substances, or underground storage tanks on the property.

If you own the real property described above,
you are hereby notified that prospective
purchasers or tenants may feel that the potential for liability for remedial costs
necessitates an environmental audit or investigation of the property prior to closing in
order to discover whether the nature and/or quantity of, existence, use, manufacture or
effect of any hazardous substance on the property renders it subject to Federal, State, or
Local Regulation, Investigation, remediation or removal as potentially Injurious to public
health or welfare. TOLD Partners Inc. hereby disclaims any liability for damages to you
stemming from the Initiation, completion or result of any such Investigation.

The signatures affixed below constitute acknowledgment and acceptance of the above
mentioned statements:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	                Lessor/Seller	 	 	 	                Lessee/Buyer	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	   
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	Date:	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 

 

 

1.
Parties: This Lease, dated, for reference purposes only,
July 26, 1988, is made by
and between Kenneth R. Smith and Alice J. Smith, husband and wife (herein called “Lessor”)
and                (herein called “Lessee”).

2.
Premises. Lessor hereby leases to Lessee and Lessee leases from Lessor for the term, at
the rental, and upon all of the conditions set forth
herein, that certain real property situated in the County of Los
Angeles State of California,
commonly known as 8917 Fullbright Avenue, Chartsworth and described as approximately an 5,000 square foot concrete block industrial building
Said real property including the land and all Improvements therein, is herein called “the
Premises”.

3. Term.

     3.1 Term. The term of this Lease shall be for one year commending on August 1, 1988
and ending on July 31, 1989 unless sooner terminated pursuant to any provision thereof.

     3.2
Delay in Possession. Notwithstanding said commencement date, if for any reason Lessor
cannot deliver possession of the Premises to
Lessee on said date. Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the obligations of
Lessee hereunder or extend the term hereof, but in such case, Lessee shall not be obligated
to pay rent until possession of the Premises is tendered
to Lessee: provided, however, that if Lessor shall not have delivered possession of the
Premises within sixty (60) days from said commencement
date, Lessee may, at Lessee’s option, by notice in writing to Lessor within ten (10) days
thereafter, cancel this Lease, in which event the parties shall
be discharged from all obligations hereunder; provided further, however, that if such
written notice of Lessee is not received by Lessor within said
ten (10) day period. Lessee’s right to cancel this Lease hereunder shall terminate and be of
no further force or effect.

     3.3
Early Possession. If Lessee occupies the Premises prior to said commencement date, such
occupancy shall be subject to all provisions
hereof, such occupancy shall not advance the termination date, and Lessee shall pay rent for
such period at the initial monthly rates set forth below.

4. Rent. Lessee shall pay to Lessor as rent for the Premises, monthly payments of
$3,400.00. In advance, on the 1st day of each month of the term thereof. Lessee shall pay
Lessor upon the execution thereof $3,400.00 as rent for August 1988.

 

 

Rent for any period during the term hereof which is for less than one month shall be a pro rata
portion of the monthly installment. Rent shall be
payable in lawful money of the United States to Lessor at the address slated herein or to such
other persons or at such other places as Lessor may
designate in writing.

5.
Security Deposit. Lessee shall deposit with Lessor upon execution
hereof $3,400.00 as security for Lessee’s faithful
performance of Lessee’s obligations hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any
provision of this Lease. Lessor may use, apply or retain all or any portion of said deposit for
the payment of any rent or other charge in default or for
the payment of any other sum to which Lessor may become obligated by reason of Lessee’s default,
or to compensate Lessor for any loss or damage
which Lessor may suffer thereby. If Lessor so uses or applies all or any portion of said deposit.
Lessee shall within ten (10) days after written
demand therefore deposit cash with Lessor in an amount sufficient to restore said deposit to the
full amount hereinabove stated and Lessee’s failure to do so shall be a material breach of
this Lease. If the monthly rent shall, from time to time. Increase during the term of this
Lease, Lessee shall thereupon deposit with Lessor additional security deposit so that the amount
of security deposit held by Lessor shall at all times bear the same proportion to current rent
as the original security deposit bears to the original monthly rent set forth in paragraph 4
hereof. Lessor shall not be required to keep said deposit separate from its general accounts, If
Lessee performs all of Lessee’s obligations hereunder, said
deposit, or so much thereof as has
not theretofore been applied by Lessor, shall be returned, without payment of interest or
other increment for its use, to Lessee (or, at Lessor’s option,
to the last assignee. If any, of
Lessee’s interest hereunder) at the expiration of the term hereof, and after Lessee has vacated
the Premises. No trust relationship is created herein between Lessor and Lessee with respect to
said Security Deposit.

6. Use.

     6.1
Use. The Premises shall be used and occupied only for manufacturing and assembly of
electronic component
or any other use which is reasonably comparable and for no other purpose.

     6.2 Compliance with Law.

          (a) Lessor warrants to lessee that the Premises, in its state existing on the date that
the Lease term commences, but without regard to the use for which
Lessee will use the
Premises, does not violate any covenants or restrictions of record, or any applicable building
code, regulation or ordinance in effect on such Lease term
commencement date. In the event it
is determined that this warranty has been violated, then it shall be the obligation of the
Lessor, after written notice from Lessee, to promptly, at Lessor’s sole cost and expense,
rectify any such violation. In the event Lessee does not give to Lessor written notice of the
violation of this warranty within six months from the date that the
Lease term commences, the
correction of same shall be the obligation of the Lessee at Lessee’s sole cost. The warranty
contained in this paragraph 6,2 (a) shall be of no force or effect if. Prior to the date of
this Lease, Lessee was the owner or occupant of the Premises, and, in such event. Lessee shall
correct any such violation at Lessee’s sole cost.

          (b) Except as provided in paragraph 6.2(a). Lessee shall, at Lessee’s expense, comply
promptly with all applicable statutes, ordinances, rules,
regulations, and orders, covenants and
restrictions of record, and requirements in effect during the term or any part of the term
hereof, regulating
the use by Lessee of the Premises. Lessee shall not use nor permit the use of the Premises in
any manner that will tend to create waste or a nuisance or, if there shall be more than one
tenant in the building containing the Premises, shall tend to disturb such other tenants.

     6.3 Condition of Premises.

          (a) Lessor shall deliver the Premises to Lessee clean and free of debris on Lease
commencement date (unless Lessee is already in possession) and Lessor further warrants to Lessee that the plumbing, lighting, air
conditioning, heating, and loading doors in the Premises shall be
in good operating condition on the Lease commencement date in the event that it is
determined that this warranty has been violated, then it shall be the obligation of Lessor,
after receipt of written notice from Lessee setting forth with specifically the nature of the
violation, to promptly, at Lessor’s sole cost, rectify such violation. Lessee’s failure to give
such written notice to Lessor within thirty (30) days after the Lease commencement date shall
cause the conclusive presumption that Lessor has complied with all of Lessor’s obligations
hereunder. The warranty contained in this
Paragraph 6.3(a) shall be of no force or effect if prior to the dale of this Lease. Lessee
was the owner or occupant of the Premises.

          (b) Except as otherwise provided in this Lease. Lessee hereby accepts the Premises in their
condition existing as of the Lease
commencement date or the date that Lessee takes possession the Premises. Whichever is
earlier, subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations governing and regulating the use of the
Premises, and any covenants or restriction’s of record,
and accepts this Lease subject thereto and to all matters disclosed thereby and by any
exhibits attached hereto. Lessee acknowledges that neither
 lessor nor Lessor’s agent has made any representation or warranty as to the present or
future suitability of the Premises for the conduct of Lessee’s business.

7.
Maintenance, Repairs and Alterations.

     7.1
Lessor Obligations. Subject to the provisions of Paragraphs 6.7.2, and 9 and except for
damage caused by any negligent or intentional
act or omission of Lessee, Lessee’s agents, employees, or invitees in which event Lessee
shall repair the damage. Lessor, at Lessor’s expense, shall
keep in good order, condition and repair the foundations, exterior walls and the exterior
roof of the Premises. Lessor shall not, however, be
obligated to paint such exterior, nor shall Lessor be required to maintain the interior
surface of exterior walls, windows doors or plate glass, Lessor
shall have no obligation to make repairs under this Paragraph 7.1 until a reasonable time
after receipt of written notice of the need for such repairs.
Lessee expressly waives the benefits of any statute now or hereafter in effect which would
otherwise afford Lessee the right to make repairs at
Lessor’s expense or to terminate this Lease because of Lessor’s failure to keep the Premises
in good order, condition and repair.

     7.2 Lessee’s Obligations.

          (a) Subject to the provisions of Paragraphs 6. 7.1 and 9, Lessee, at Lessee’s expense, shell
keep in good order, condition and repair the
Premises and every part thereof (whether or not the damaged portion of the Premises or the means
of repairing the same are reasonably of readily accessible to Lessee) including, without
limiting the generality of the foregoing, all plumbing, healing, air
conditioning, (Lessee shall
proqure and

Initials  Z.R.

					
	©
American Industrial Rest Estate Association 1980
	 	GROSS	 	[ILLEGIBLE]     K.R.S.

 

maintain, at Lessee’s expense, an air conditioning system maintenance contract) ventilating,
electrical and lighting facilities and equipment within the Premises, fixtures, interior walls
and Interior surface of exterior walls, ceilings, windows, doors, plate glass, and skylights,
located within the Premises, and all landscaping, driveways, parking lots, fences and signs
located in the Premises and all sidewalks and parkways adjacent to the Premises.

          (b) If Lessee tails to perform Lessee’s obligations under this Paragraph 7.2 or under any
other paragraph of this Lease, Lessor may at Lessor’s option enter upon the Premises after 10 days
prior written notice to Lessee (except in the case of emergency, In which case no notice shall be
required), perform such obligations on Lessee’s behalf and put the Premises in good order,
condition and repair, and the cost thereof together with interest thereon at the maximum rate then
allowable by law shall be due and payable as additional rent to Lessor together with Lessee’s
next rental installment.

          (c) On the last day of the term hereof, or on any sooner termination, Lessee shall surrender the
Premises to Lessor in the same condition as received, ordinary wear and tear excepted, clean and
free of debris. Lessee shall repair any damage to the Premises occasioned by the installation or
removal of its trade fixtures, furnishings and equipment, Notwithstanding anything to the contrary
otherwise slated in this Lease. Lessee shall leave the air lines, power panels, electrical
distribution systems, lighting fixtures, space healers, air conditioning, plumbing and fencing on
the premises in good operating condition.

     7.3 Alterations
and Additions.

          (a) Lessee shall not without Lessor’s prior written consent make any alterations,
improvements, additions, or Utility Installations in on or about the Premises, except for
nonstructural alterations not exceeding $2.500 in cumulative costs during the term of this Lease.
In any event,whether or not in excess of $2.500 in cumulative cost, Lessee shall make no change or
alteration to the exterior of the Premises nor the exterior of the building(s) on the Premises
without Lessor’s prior written consent. As used in this Paragraph 7.3 the term “Utility
Installation” shall mean carpeting, window coverings, air lines, power panels, electrical
distribution systems, lighting fixtures, space heaters, air conditioning, plumbing and fencing.
Lessor may require that Lessee remove any or all of said alterations, improvements, additions or
Utility Installations at the expiration of the term, and restore the Premises to their prior
condition. Lessor may require Lessee to provide Lessor, at Lessee’s sole cost and expense, a
lien and completion bond in an amount equal to one and one-hall limes the estimated cost of such
improvements, to insure Lessor against any liability for mechanic’s and materialmen’s liens and to
insure completion of the work. Should Lessee make any alterations, improvements, additions
or Utility Installations without the prior approval of Lessor. Lessor may require that Lessee remove
any or all of the same.

          (b) Any alterations, improvements, additions or Utility Installations in, or about the
Premises that Lessee shall desire to make and which requires the consent of the Lessor shall be
presented to Lessor in written form, with proposed detailed plans. If Lessor shall give its
consent, the consent shall be deemed conditioned upon Lessee acquiring a permit to do so from
appropriate governmental agencies, the furnishing of a copy thereof to Lessor prior to the commencement of the work and the compliance by Lessee of all
conditions of said permit in a prompt and expeditious manner.

          (c) Lessee
shall pay, when due, all claims for labor or materials furnished or alleged to
have been furnished to or for Lessee at or for use in the Premises, which claims are or may be
secured by any mechanics’ or materialmen’s lien against the Premises or any Interest therein.
Lessee shall give Lessor not less than ten (10) days notice prior to the commencement of any work
in the Premises, and Lessor shall have the right to post notices of non-responsibility in or on
the Premises as provided by law. If Lessee shall, in good faith, contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense defend itself and Lessor against the
same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises, upon the condition that if Lessor shall
require. Lessee shall furnish to Lessor a surely bond satisfactory to Lessor in an amount equal to
such contested lien claim or demand indemnifying Lessor against liability for the same and holding
the Premises free from the effect of such lien or claim. In addition Lessor may require Lessee to
pay Lessor’s attorneys fees and costs in participating in such action if Lessor shall decide it is
to its best interest to do so.

          (d) Unless Lessor requires their removal, as set forth in Paragraph 7.3(a), all alterations,
improvements, additions and Utility Installations (whether or not such Utility Installations
constitute trade fixtures of Lessee), which may be made on the Premises, shall become the property
of Lessor and remain upon and be surrendered with the Premises at the expiration of the term.
Notwithstanding the provisions of this Paragraph 7.3(d), Lessee’s machinery and equipment, other
than that which is affixed to the Premises so that it cannot be removed without material damage
to the Premises, shall remain the property of Lessee and may be removed by Lessee subject to the
provisions of Paragraph 7.2(c).

8. Insurance; Indemnity.

     8.1 Liability Insurance - Lessee.
Lessee shall, at Lessee’s expense, obtain and keep in force
during the term of this Lease a policy of Combined Single Limit Bodily Injury and Property Damage
Insurance Insuring Lessee and Lessor against any liability arising out of the use, occupancy or
maintenance of the Premises and all other areas appurtenant thereto. Such insurance shall be in an
amount not less than $500.000 per occurrence. The policy shall Insure performance by Lessee of the
indemnity provisions of this Paragraph 8. The limits of said insurance shall not, however, limit the
liability of Lessee hereunder.

     8.2 Liability Insurance - Lessor.
Lessor shall obtain and keep in force during the term of
this Lease a policy of Combined Single Limit Bodily injury and Property Damage Insurance, insuring
Lessor, but not Lessee, against any liability arising out of the ownership, use occupancy
or maintenance of the Premises and all areas appurtenant thereto in an amount not less than $500.000
per occurrence.

     8.3 Properly Insurance.
Lessor shall obtain and keep in force during the term of this Lease a
policy or policies of Insurance covering loss or damage to the Premises, but not Lessee’s fixtures,
equipment or tenant Improvements in an amount not to exceed the full replacement value thereof, as
the same may exist from lime to time, providing protection against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief, flood (In the event same
is required by a lender having a lien on the Premises) special extended perils (“all
risk”, as such term is used in the insurance industry) but not plate glass Insurance. In addition, the Lessor
shall obtain and keep In force during the term of this Lease,
a policy of rental value insurance covering a period of one year, with loss payable to Lessor, which insurance shall also
cover all real estate taxes and insurance costs tor said period.

     8.4 Payment of Premium Increase.

          (a) Lessee shall pay to Lessor, during the term hereof, in addition to the rent, the amount of
any increase in premiums for the insurance required under Paragraphs 8.2 and 8.8 over and above such
premiums paid during the Base Period, as hereinafter defined, whether such premium increase shall be
the result of the nature of Lessee’s occupancy, any act or omission of Lessee, requirements of the
holder of a mortgage or deed of trust covering the Premises. Increased valuation of the Premises, or
general rate increases. In the event that the Premises have been occupied previously the words
“Base Period” shall mean the last twelve months of the prior occupancy. In the event that the
Premises have never been previously occupied, the premiums during the “Base Period” shall be deemed
to be the lowest premiums reasonably obtainable for said insurance assuming the most nominal use of
the Premises. Provided, however, in lieu of the Base Period, the parties may Insert a dollar amount
at the end of this sentence which figure shall be considered as the Insurance premium for the Base Period: $
                    .
In no event, however, shall Lessee be responsible for any portion of the premium cost
attributable to liability insurance coverage in excess of $1,000.000 procured under paragraph 8.2.

          (b) Lessee
shall pay any such premium increases to Lessor within 30 days alter receipt by
Lessee of a copy of the premium statement or other satisfactory evidence of the amount due. If the
insurance policies maintained hereunder cover other improvements in addition to the Premises. Lessor
shall also deliver to Lessee a statement of the amount of such increase attributable to the
Premises and showing in reasonable detail, the manner In which such amount was computed. If the term
of this Lease shall not expire concurrently with the expiration of the period covered by such
Insurance. Lessee’s liability for premium Increases shall be prorated on an annual basis.

          (c) If the
Premises are part of a larger building, then Lessee shall not be responsible for
paying any Increase in the property Insurance premium caused by the acts or omissions of any other
tenant of the building of which the Premises are a part.

     8.5 Insurance Policies.
Insurance required hereunder shall be in companies holding a “General
Policyholders Rating” of at least B plus, or such other rating as may be required by a lender having
a lien on the Premises, as set forth In the most current Issue of “Best’s Insurance Guide”.
Lessee shall deliver to Lessor copies of policies of liability insurance required under Paragraph 8.1 or
certificates evidencing the existence and amounts of such insurance. No such policy shall be
cancellable or subject to reduction of coverage or other modification except after thirty (30) days’
prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to the expiration of
such policies, furnish Lessor with renewals or “binders” thereof, or Lessor may order such Insurance
and charge the cost thereof to Lessee, which amount shall be payable by Lessee upon demand. Lessee
shall not do or permit to be done anything which shall invalidate the insurance policies referred
to in Paragraph 8.3.

     8.6 Waiver of Subrogation. Lessee and Lessor each hereby release and relieve the other, and
waive their entire right of recovery against the other for loss or damage arising out of or
incident to the perils insured against under paragraph 8.3, which perils occur in, on or about the
Premises, whether due to the negligence of Lessor or Lessee or their agents, employees,
contractors and/or invitees. Lessee and Lessor shall, upon obtaining the policies of Insurance
required hereunder, give notice to the insurance carrier or carriers that the foregoing mutual
waiver of subrogation is contained in this Lease.

     8.7 Indemnity. Lessee shall indemnify and hold harmless Lessor from and against any and all
claims arising from Lessee’s use of the Premises, or from the conduct of Lessee’s business or from
any activity, work or things done, permitted or suffered by Lessee in or about the Premises or
elsewhere and shall further indemnity and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation on Lessee’s part to be
performed under the terms of this Lease, or arising from any negligence of the Lessee, or any of
Lessee’s agents, contractors, or employees, and from and against all costs, attorney’s fees,
expenses and liabilities incurred in the defense of any such claim or any action or proceeding
brought thereon; and in case any action or proceeding be brought against Lessor by reason of any
such claim. Lessee upon notice from Lessor shall defend the same at Lessee’s expense by counsel
satisfactory to Lessor. Lessee, as a material part to the consideration to Lessor, hereby assumes
all risk of damage to property or injury to persons, in, upon or about the Premises arising from any
cause and Lessee hereby waives all claims in respect thereof against Lessor.

     8.8 Exemption of Lessor from Liability. Lessee hereby agrees that Lessor shall not be liable
for injury to Lessee’s business or any loss of income therefrom or for damage to the goods, wares,
merchandise or other property of Lessee. Lessee’s employees, invitees, customers, or any other
person in or about the Premises, nor shall Lessor be liable lor injury to the person of Lessee,
Lessee’s employees, agents or contractors,
whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or
rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether the
said damage or injury results from conditions arising upon the Premises or upon other portions of
the building of which the Premises are a part, or from other sources or places and regardless of
whether the cause of such damage or injury or the means of repairing the same is inaccessible to
Lessee. Lessor shall not be liable for any damages arising from any act or neglect of any other
tenant, if any, of the building in which the Premises are located.

					
	GROSS	 	 	 	     K.R.S.
   Z.R.
[ILLEGIBLE]

- 2 -

 

     9.1 Definitions.

          (a) “Premises Partial Damage” shall herein mean damage or destruction to the Premises to
the extent that the cost of repair is less than 50% of the fair market value of the Premises
immediately prior to such damage or destruction. “Premises Building Partial Damage” shall herein
mean damage or destruction to the building of which the Premises are a part to the extent that
the cost of repair, is less than 50% of the fair market value of such building as a whole
immediately prior to such damage or destruction.

          (b) “Premises Total Destruction” shall herein mean damage or destruction to the Premises to
the extent that the cost of repair is 50% or more of the fair market value of the Premises
immediately prior to such damage or destruction. “Premises Building Total Destruction” shall
herein mean damage or destruction to the building of which the Premises are a part to the extent
that the cost of repair is 50% or more of the fair market value of such building as a whole
immediately prior to such damage or destruction.

          (c) “Insured Loss” shall herein mean damage or destruction which was caused by an event
required to be covered by the insurance described in paragraph 8.

     9.2 Partial Damage — Insured Loss. Subject to the provisions of paragraphs 9.4, 9.5 and
9.6. If at any time during the term of this Lease there
is damage which is an Insured Loss and which falls into the classification of Premises
Partial Damage or Premises Building Partial Damage, then
Lessor shall, at Lessor’s sole cost, repair such damage, but not Lessee’s fixtures, equipment
or tenant improvements, as soon as reasonably possible and this Lease shall continue in full
force and effect.

     9.3 Partial Damage — Uninsured Loss. Subject to the provisions of Paragraphs 9.4, 9.5 and
9.6, it at any time during the term of this Lease there is damage which is not an Insured Loss
and which falls within the classification of Premises Partial Damage or Premises Building Partial
Damage, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make
the repairs at Lessee’s expense), Lessor may at Lessor’s option either (i) repair such damage as
soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full
force and effect, or (ii) give written notice to Lessee within thirty (30) days after the date of
the occurrence of such damage of Lessor’s Intention to cancel and terminate this Lease, as of the
date of the occurrence of such damage. In the event Lessor elects to give such notice of Lessor’s
intention to cancel and terminate this Lease, Lessee shall have the right within ten (10) days
after the receipt of such notice to give written notice to Lessor of Lessee’s intention to repair
such damage at Lessee’s expense, without reimbursement from Lessor, in which event this Lease
shall continue in full force and effect. and Lessee shall proceed to make such repairs as soon as
reasonably possible. If Lessee does not give such notice within such 10-day period this Lease
shall be cancelled and terminated as of the date of the occurrence of such damage.

     9.4 Total Destruction. If at any time during the term of this Lease there is damage, whether
or not an Insured Loss, (including destruction required by any authorized public authority),
which falls into the classification of Premises Total Destruction or Premises Building Total
Destruction, this Lease shall automatically terminate as of the date of such total destruction.

     9.5 Damage Near End of Term.

          (a) If at any time during the last six months of the term of this Lease there is damage,
whether or not an Insured Loss, which falls within the classification of Premises Partial Damage,
Lessor may at Lessor’s option cancel and terminate this Lease as of the date of occurrence of
such damage by giving written notice to Lessee of Lessor’s election to do so within 30 days after
the date of occurrence of such damage.

          (b) Notwithstanding paragraph 9.5(a), in the event that Lessee has an option to extend or
renew this Lease, and the time within which said option may be
exercised has not yet expired,
Lessee shall exercise such option, if it is to be exercised at all, no later than 20 days after
the occurrence of an Insured Loss falling within the classification of Premises Partial Damage
during the last six months of the term of this Lease. If Lessee duly exercises such option during
said 20 day period. Lessor shall, at Lessor’s expense, repair such damage as soon as reasonably
possible and this Lease shall continue In full force and effect, If Lessee fails to exercise such
option during said 20 day period, then Lessor may at Lessor’s option terminate and cancel this
Lease as of the expiration of said 20 day period by giving written notice to Lessee of Lessor’s
election to do so within 10 days after the expiration of said 20 day period, notwithstanding any
term or provision in the grant of option to the contrary.

     9.6 Abatement of Rent; Lessee’s Remedies.

          (a) In the event of damage described In paragraphs 9.2 or 9.3. and Lessor or Lessee repairs
or restores the Premises pursuant to the
provisions of this Paragraph 9, the rent payable hereunder for the period during which such
damage, repair or restoration continues shall be abated
In proportion to the degree to which Lessee’s use of the Premises is impaired. Except for
abatement of rent, if any, Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair or restoration.

          (b) If Lessor shall be obligated to repair or restore the Premises under the provisions of
this Paragraph 9 and shall not commence such
repair or restoration within 90 days after such obligations shall accrue. Lessee may at
Lessee’s option cancel and terminate this Lease by giving
Lessor written notice of Lessee’s election to do so at any time prior to the commencement of
such repair or restoration. In such event this Lease
shall terminate as of the date of such notice.

     9.7 Termination — Advance Payments. Upon termination of this Lease pursuant to this Paragraph 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee’s
security deposit as has not theretofore been applied by Lessor.

     9.8 Waiver. Lessor and Lessee waive the provisions of any statutes which relate to
termination of leases when leased property is destroyed and agree that such event shall be
governed by the terms of this Lease.

10. Real Property Taxes.

     10.1 Payment of Tax Increase. Lessor shall pay the real property tax, as defined in
paragraph 10.3, applicable to the Premises; provided however, that Lessee shall pay, in addition
rent, the amount, if any, by which real property taxes applicable to the Premises increase over
the fiscal real estate tax year 1988[ ILLEGIBLE ]1989. Such payment shall be made by Lessee within thirty
(30) days after receipt of Lessor’s writter statement setting forth the amount of such increase
and the computation thereof. If the term of this Lease shall not expire concurrently with the
expiration of the tax fiscal year, Lessee’s liability for increased taxes for the last partial
lease year shall be prorated on an annual basis.

     10.2 Additional Improvements. Notwithstanding paragraph 10.1 hereof, Lessee shall pay to
Lessor upon demand therefor the entirety of any Increase in real property tax if assessed solely
by reason of additional improvements placed upon the Premises by Lessee or at Lessee’s request

     10.3 Definition of “Real Property Tax”. As used herein, the term “real property tax” shall
include any form of real estate tax or assessment general, special, ordinary or extraordinary,
and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other that
inheritance, personal income or estate taxes) imposed on the Premises by any authority having
the direct or indirect power to tax, including an) city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as
against any legal or equitable Interest of Lessor in the Premises or in the real property of
which the Premises are a part, as against Lessor’s right to rent or other income therefrom, and
as against Lessor’s business of leasing the Premises. The term “real property tax” shall also
include any tax, fee, levy assessment or charge (i) in substitution of, partially or totally,
any tax, fee, levy, assessment or charge hereinabove included within the definition or “real
property tax,” or (ii) the nature of which was hereinbefore included within the definition of
“real property tax,” or (iii) which is imposed for a service or right not charged prior
to June 1,1978, or, if previously charged, has been Increased since June 1,1978, or (iv) which
is imposed as a result of a transfer, either partial or total, of Lessor’s interest in the
Premises or which is added to a tax or charge hereinbefore included within the definition of
real property tax by reason of such transfer, or (v) which is imposed by reason of this
transaction, any modifications or changes hereto, or any transfers hereof.

     10.4 Joint Assessment. If the Premises are not separately assessed, Lessee’s liability
shall be an equitable proportion of the real property taxes for all of the land and improvements
included within the tax parcel assessed, such proportion to be determined by Lessor from the
respective valuations assigned in the assessor’s work sheets or such other information as may be
reasonably available. Lessor’s reasonable determination thereof, in good faith, shall be
conclusive.

     10.5 Personal Property Taxes.

          (a) Lessee shall pay prior to delinquency all taxes assessed against and levied upon trade
fixtures, furnishings, equipment and all other personal property of Lessee contained in the
Premises or elsewhere. When possible. Lessee shall cause said trade
fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately from the real
property of Lessor.

          (b) If any of Lessee’s said personal property shall be assessed with Lessor’s real
property, Lessee shall pay Lessor the taxes attributable to Lessee within 10 days after receipt
of a written statement setting forth the taxes applicable to Lessee’s property.

11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone and other
utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered to Lessee, Lessee shall
pay a reasonable proportion to be determined by
Lessor of all charges jointly metered with other premises.

12. Assignment and Subletting.

     12.1 Lessor’s Consent Required. Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of Lessee’s
interest in this Lease or in the Premises, without Lessor’s prior written consent, which Lessor
shall no unreasonably withhold. Lessor shall respond to Lessee’s request for consent hereunder
in a timely manner and any attempted assignment, transfer mortgage, encumbrance or subletting
without such consent shall be void, and shall constitute a breach of this Lease.

     12.2 Lessee Affiliate. Notwithstanding the provisions of paragraph 12.1 hereof. Lessee may
assign or sublet the Premises, or any portion thereof, without Lessor’s consent, to any
corporation which controls, is controlled by or is under common control with Lessee, or to any
corporation resulting from the merger or consolidation with Lessee, or to any person or entity
which acquires all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, provided that said assignee assumes, in full, the obligations of
Lessee under this Lease. Any such assignment shall not, in any way, affect or limit the
liability of Lessee under the terms of this Lease even if after such assignment or subletting the
terms of this Lease are materially changed or altered without the consent of Lessee, the consent
of whom shall not be necessary.

     12.3 No Release of Lessee. Regardless of Lessor’s consent, no subletting or
 assignment shall release Lessee of Lessee’s obligation or after the primary liability of Lessee to pay the
rent and to perform all other obligations to be performed by Lessee hereunder. The acceptance of
rent by Lessor from any other person shall not be deemed to be a waiver by Lessor of any
provision hereof. Consent to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting. In the event of default by any assignee of Lessee or any
successor of Lessee, in the performance of any of the terms hereof, Lessor may proceed directly
against Lessee without the necessity of exhausting remedies against[ILLEGIBLE] assignee. Lessor may
consent to subsequent assignments or subletting of this Lease or amendments or modifications to
this Lease with assignees of Lessee, without notifying Lessee, or any successor of Lessee, and
without obtaining its or their consent thereto and such action shall not [ ILLEGIBLE]Lessee of
liability under this Lease.

     12.4 Attorney’s Fees. In the event Lessee shall assign or sublet the Premises or request the
consent of Lessor to any assignment or subletting or if Lessee shall request the consent of
Lessor for any act Lessee proposes to do then Lessee shall pay Lessor’s reasonable attorneys fees
[ ILLEGIBLE] in connection therewith, such attorneys fees not to exceed $350.00 for each such
request.

	GROSS	 	K.R.S.   
Z.R.
[ILLEGIBLE]

- 3 -

 

[ILLEGIBLE]

     13.1 Defaults. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease
Lessee:

          (a) The vacating or abandonment of the Premises by Lessee.

          (b) The failure by Lessee to make any payment of rent or any other payment required to be made
by Lessee hereunder, as and when [ILLEGIBLE]
where such failure shall continue for a period of three days after written notice thereof from
Lessor to Lessee. In the event that Lessor serves [ILLEGIBLE]
with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer statutes such Notice to
Pay Rent or Quit shall also constitute the [ILLEGIBLE] required by this subparagraph.

          (c) The failure by Lessee to observe or perform any of the covenants, conditions or provisions
of this Lease to be observed or perform
by Lessee, other than described in paragraph (b) above, where such failure shall continue for
a period of 30 days after written notice thereof [ILLEGIBLE]
Lessor to Lessee: provided, however, that if the nature of Lessee’s default is such that more
than 30 days are reasonably required for its cure, [ILLEGIBLE]
Lessee shall not be deemed to be in default if Lessee commenced such cure within said 30-day
period and thereafter diligently prosecutes [ILLEGIBLE]
cure to completion.

          (d) (i) The making by Lessee of any general arrangement or assignment for the benefit of
creditors; (ii) Lessee becomes a [ILLEGIBLE]
defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition
filed against Lessee, the same is dismissed [ILLEGIBLE]
days); (iii) the appointment of a trustee or receiver to take possession of substantially all
of Lessee’s assets located at the Premises or of Lessee
interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the
attachment, execution or other judicial seizure
substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this
Lease, where such seizure is not discharged within 30 [ILLEGIBLE]
Provided, however. In the event that any provision of this paragraph 13.1(d) is contrary to
any applicable law, such provision shall be of no [ILLEGIBLE]
or effect.

          (e) The discovery by Lessor that any financial statement given to Lessor by Lessee, any
assignee of Lessee, any subtenant of Lessee, [ILLEGIBLE]
successor in interest of Lessee or any guarantor of Lessee’s obligation hereunder, and any of
them, was materially false.

     13.2 Remedies. In the event of any such material default or breach by Lessee, Lessor may at
any time thereafter, with or without notice
demand and without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach:

          (a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Lessee [ILLEGIBLE]
immediately surrender possession of the Premises to Lessor. In such event Lessor shall be
entitled to recover from Lessee all damages incurred
Lessor by reason of Lessee’s default including, but not limited to, the cost of recovering
possession of the Premises; expenses of retelling, include
necessary renovation and alteration of the Premises, reasonable attorney’s tees, and any real
estate commission actually paid: the worth at the [ILLEGIBLE]
of award by the court having jurisdiction thereof of the amount by which the unpaid rent for
the balance of the term after the time of such [ILLEGIBLE]
exceeds the amount of such rental loss for the same period that Lessee proves could be
reasonably avoided; that portion of the leasing [ILLEGIBLE]
paid by Lessor pursuant to Paragraph 15 applicable to the unexpired term of this Lease.

          (b) Maintain Lessee’s right to possession in which case this Lease shall continue in effect
whether or not Lessee shall have abandoned
Premises. In such event Lessor shall be entitled to enforce all of Lessor’s rights and
remedies under this Lease, including the right to recover the [ILLEGIBLE]
as it becomes due hereunder.

          (c) Pursue any other remedy now or hereafter available to Lessor under the laws or judicial
decisions of the stale wherein the Premises
located. Unpaid installments of rent and other unpaid monetary obligations of Lessee under the
terms of this Lease shall bear interest from the [ILLEGIBLE]
due at the maximum rate then allowable by law.

     13.3 Default by Lessor. Lessor shall not be in default unless Lessor fails to perform
obligations required of Lessor within a reasonable [ILLEGIBLE]
but in no event later than thirty (30) days after written notice by Lessee to Lessor and to
the holder of any first mortgage or deed of trust covering
Premises whose name and address shall have therefore been furnished to Lessee in writing,
specifying wherein Lessor has failed to perform [ILLEGIBLE]
obligation; provided, however, that if the nature of Lessor’s obligation is such that more
than thirty (30) days are required for performance [ILLEGIBLE]
Lessor shall not be in default if Lessor commences performance within such 30-day period and
thereafter diligently prosecutes the same
completion.

     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will [ILLEGIBLE]
Lessor to incur costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but
not limited to, processing and accounting charges, and late charges which may be imposed on
Lessor by the terms of any mortgage or trust [ILLEGIBLE] covering the Premises. Accordingly, if any
installment of rent or any other sum due from Lessee shall not be received by Lessor or Lessor’s
[ILLEGIBLE]
within ten (10) days after such amount shall be due, then, without any requirement for notice
to Lessee, Lessee shall pay to Lessor a late [ILLEGIBLE]
equal to 6% of such overdue amount. The parties hereby agree that such late charge represents
a fair and reasonable estimate of the costs [ILLEGIBLE]
will incur by reason of late payment by Lessee. Acceptance of such tale charge by Lessor shall
in no event constitute a waiver of Lessee’s [ILLEGIBLE]
with respect to such overdue amount, nor prevent Lessor from exercising any of the other
rights and remedies granted hereunder. In the event [ILLEGIBLE]
late charge is payable hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become [ILLEGIBLE]
and payable quarterly in advance, rather than monthly, notwithstanding paragraph A or any
other provision of this Lease to the contrary.

     13.5 Impounds. In the event that a late charge is payable hereunder, whether or not collected,
for three (3) installments of rent or any [ILLEGIBLE]
monetary obligation of Lessee under the terms of this Lease, Lessee shall pay to Lessor, if
Lessor shall so request. In addition to any other [ILLEGIBLE]
required under this Lease, a monthly advance installment, payable at the same time as the
monthly rent, as estimated by Lessor, for real property
and insurance expenses on the Premises which are payable by Lessee under the terms of this
Lease. Such fund shall be established to [ILLEGIBLE]
payment when due, before delinquency, of any or all such real property taxes and insurance
premiums. If the amounts paid to Lessor
Lessee under the provisions of this paragraph are insufficient to discharge the obligations of
Lessee to pay such real property taxes and [ILLEGIBLE]
premiums as the same become due. Lessee shall pay to Lessor, upon Lessor’s demand, such
additional sums necessary to pay such obligations.
moneys paid to Lessor under this paragraph may be intermingled with other moneys of Lessor and
shall not bear interest. In the event of a default
the obligations of Lessee to perform under this Lease, then any balance remaining from funds
paid to Lessor under the provisions of this paragraph
may, at the option of Lessor, be applied to the payment of any monetary default of Lessee in
lieu of being applied to the payment of real property
and insurance premiums.

14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent
domain, or sold under the threat of the exercise said power (all of which are-herein
called “condemnation”), this Lease shall terminate as to the part so taken as of the date the
[ILLEGIBLE] authority takes title or possession, whichever first occurs. If more than 10% of the
floor area of the building on the Premises, or more than 25% of [ILLEGIBLE] land area of the Premises which
is not occupied by any building, is taken by condemnation. Lessee may, at Lessee’s option, to be
exercise writing only within ten (10) days after Lesser shall have given Lessee written notice of
such taking (or in the absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning authority takes
[ILLEGIBLE] possession. If Lessee does not terminate this Lease in accordance with the foregoing,
this Lease shall remain in full force and effect as to the [ILLEGIBLE] of the Premises remaining,
except that the rent shall be reduced in the proportion that the floor area of the building taken
bears to the total floor [ILLEGIBLE] of the building situated on the Premises. No reduction of
rent shall occur if the only area taken is that which does not have a building [ILLEGIBLE] thereon. Any
award for the taking of all or any part of the Premises under the power of eminent domain or any
payment made under threat of [ILLEGIBLE] exercise of such power shall be the property of Lessor,
whether such award shall be made as compensation for diminution in value of the [ILLEGIBLE] or for
the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled
to any award for loss of or damage to [ILLEGIBLE] trade fixtures and removable personal property. In the
event that this Lease is not terminated by reason of such condemnation. Lessor shall to [ILLEGIBLE] extent
of severance damages received by Lessor in connection with such condemnation, repair any damage to
the Premises caused by [ILLEGIBLE] condemnation except to the extent that Lessee has been
reimbursed therefor by the condemning authority. Lessee shall pay any amount in [ILLEGIBLE] of
such severance damages required to complete such repair.

16. Estoppel Certificate.

          (a) Lessee shall at any time upon not less than ten (10) days’ prior written notice from
Lessor execute, acknowledge and deliver to [ILLEGIBLE]
statement in writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification a
certifying that this Lease, as so modified. is in full force and effect) and the date to which
the rent and other charges are paid in advance, if any, a (ii) acknowledging that there are not, to
Lessee’s knowledge, any uncured defaults on the part of Lessor hereunder, or specifying such
default any are claimed. Any such statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises.

          (b) At Lessor’s option, Lessee’s failure to deliver such statement within such time shall be
a material breach of this lease or shall
conclusive upon Lessee (i) that this Lease is in full force and effect, without modification
except as may be represented by Lessor, (ii) that there
[ILLEGIBLE]
no uncured defaults in Lessor’s performance, and (iii) that not more than one month’s rent
has been paid in advance or such failure may
considered by Lessor as a default by Lessee under this Lease.

K.R.S    Z.R.
 [ILLEGIBLE]

GROSS

-4-

 

[ILLEGIBLE]
 the Premises, or any part thereof. Lessee hereby agrees to deliver
to any lender or purchaser designated by Lessor such financial statements of Lessee as may be reasonably
required by such lender or purchaser. Such statements shall include the past three years’
financial statements of Lessee. All such financial statements shall be received by Lessor and
such lender or
purchaser in confidence and shall be used only for the purposes herein
set forth.

17. Lessor’s Liability. The term “Lessor” as used herein shall mean only the owner or owners at
the time in question of the fee title or a lessee’s interest in a ground lease of the Premises,
and except as expressly provided in Paragraph 15. in the event of any transfer of such title or
interest, Lessor herein named (and in case of any subsequent transfers then the grantor) shall
be relieved from and after the date of such transfer of all liability as respects Lessor’s
obligations thereafter to be performed, provided that any funds in the hands of Lessor or the
then grantor at the time of such transfer, in which Lessee has an interest, shall be delivered
to the grantee. The obligations contained in this Lease to be performed by Lessor shall,
subject as aforesaid, be binding on Lessor’s successors and assigns, only during their
respective periods of ownership.

18. Severability. The invalidity of any provision of this Lease as determined by a court of
competent jurisdiction, shall in no way affect the validity of any other provision hereof.

19. Interest
on Past-due Obligations. Except as expressly herein provided, any amount due to
Lessor not paid when due shall bear interest at the maximum rate then allowable by law from the
date due. Payment of such interest shall not excuse or cure any default by Lessee under this
Lease, provided, however, that interest shall not be payable on late charges incurred by Lessee
nor on any amounts upon which late charges are paid by Lessee.

20. Time of Essence. Time is of the essence.

21. Additional Rent. Any monetary obligations of Lessee to Lessor under the terms of this Lease
shall be deemed lo be rent.

22. Incorporation of Prior Agreements; Amendments. This Lease contains all agreements of the parties
with respect to any matter mentioned herein. No prior agreement or understanding pertaining to any
such matter shall be effective. This Lease may be modified in writing only, signed by the parties in
interest at the time of the modification. Except as otherwise stated in this Lease, Lessee hereby
acknowledges that neither the real estate broker listed in Paragraph 15 hereof nor any cooperating
broker on this transaction nor the Lessor or any employees or agents of any of said persons has
made any oral or written warranties or representations to Lessee relative to the condition or use
by Lessee of said Premises and Lessee acknowledges that Lessee assumes all responsibility regarding
the Occupational Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the term of this Lease
except as otherwise specifically stated in this Lease.

23. Notice. Any notice required or permitted to be given hereunder shall be in writing and may be
given by personal delivery or by certified mail, and if given personally or by mail, shall be
deemed sufficiently given if addressed to Lessee or to Lessor at the address noted below the
signature of the respective parties, as the case may be. Either party may by notice to the other
specify a different address for notice purposes except that upon Lessee’s taking possession of the
Premises, the Premises shall constitute Lessee’s address for notice purposes. A copy of all notices
required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such
party or parties at such addresses as Lessor may from time to time hereafter designate by notice to
Lessee.

24. Waivers. No waiver by Lessor or any provision hereof shall be deemed a waiver of any other
provision hereof or of any subsequent breach by Lessee of the same or any other provision. Lessor’s
consent to, or approval of any act, shall not be deemed to render unnecessary the obtaining of
Lessor’s consent to or approval of any subsequent act by Lessee. The acceptance of rent hereunder
by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof, other
than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor’s knowledge
of such preceding breach at the time of acceptance of such rent.

25. Recording. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge
and deliver to the other a “short form” memorandum of this Lease lor recording purposes.

26. Holding Over. If Lessee, with Lessor’s consent, remains in possession of the premises or any
part thereof after the expiration of the term hereof, such occupancy shall be a tenancy from month
to month upon all the provisions of this Lease pertaining to the obligations of Lessee, but all
options and rights of first refusal, if any, granted under the terms of this Lease shall be deemed
terminated and be of no further effect during said month to month tenancy.

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

28. Covenants and Conditions. Each provision of this Lease performable by Lessee shall be deemed
both a covenant and a condition.

29. Binding Effect; Choice of Law. Subject to any provisions hereof restricting assignment or
subletting by Lessee and subject to the provisions of Paragraph 17. this Lease shall bind the
parties, their personal representatives, successors and assigns. This Lease shall be governed by
the laws of the State wherein the Premises are located.

30. Subordination.

     (a) This Lease, at Lessor’s option, shall be subordinate to any ground lease, mortgage,
deed of trust, or any other hypothecation or security now or hereafter placed upon the real
property of which the Premises are a part and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination. Lessee’s right to quiet possession of the Premises shall not
be disturbed it Lessee is not in default and so long as Lessee shall pay the rent and observe
and perform all of the provisions of this Lease, unless this Lease is otherwise terminated
pursuant to its terms. If any mortgagee, trustee or ground lessor shall elect to have this Lease
prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice
thereof to Lessee, this Lease shall be deemed prior to such mortgage, deed of trust, or ground
lease, whether this Lease is dated prior or subsequent to the date of said mortgage, deed ot
trust or ground lease or the date of recording thereof.

     (b) Lessee agrees to execute any documents required to effectuate an attornment. a
subordination or to make this Lease prior to the lien of any mortgage, deed of trust or ground
lease, as the case may be. Lessee’s failure to execute such documents within 10 days after
written demand shall constitute a material default by Lessee hereunder, or, at Lessor’s option.
Lessor shall execute such documents on behalf of Lessee as Lessee’s attorney-in-fact. Lessee
does hereby make, constitute and irrevocably appoint Lessor as Lessee’s attorney-in-fact and in
Lessee’s name, place and stead, to execute such documents in accordance with this paragraph
30(b).

31. Attorney’s Fees. If either party or the broker named herein brings an action to enforce the
terms hereof or declare rights hereunder, the prevailing party in any such action, on trial or
appeal, shall be entitled to his reasonable attorney’s fees to be paid by the losing party as fixed
by the court. The provisions of this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.

32. Lessor’s Access. Lessor and Lessor’s agents shall have the right to enter the Premises at
reasonable times for the purpose of inspecting the same, showing the same to prospective
purchasers, lenders, or lessees, and making such alterations, repairs, improvements or additions to
the Premises or to the building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises any ordinary “For Sale” signs and Lessor may
at any time during the last 120 days of the term hereof place on or about the Premises any ordinary
“For Lease” signs, all without rebate of rent or liability to Lessee.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, either voluntarily or
involuntarily, any auction upon the Premises without first having obtained Lessor’s prior written
consent. Notwithstanding anything to the contrary in this Lease, Lessor shall not be obligated to
exercise any standard of reasonableness in determining whether to grant such consent.

34. Signs. Lessee shall not place any sign upon the Premises without Lessor’s prior written
consent except that Lessee shall have the right, without the prior permission of Lessor to place
ordinary and usual for rent or sublet signs thereon.

35. Merger. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation
thereof, or a termination by Lessor, shall not work a merger, and shall, at the option of Lessor,
terminate all or any existing subtenancies or may, at the option of Lessor, operate as an
assignment to Lessor of any or all of such subtenancies.

36. Consents. Except for paragraph 33 hereof, wherever in this Lease the consent of one party is
required to an act of the other party, such consent shall not be unreasonably withheld.

37. Guarantor. In the event that there is a guarantor of this Lease, said guarantor shall have the
same obligations as Lessee under this Lease.

38. Quiet possession. Upon Lessee paying the rent for the Premises and observing and performing
all of the covenants, conditions and provisions on Lessee’s part to be observed and performed
hereunder. Lessee shall have quiet possession of the Premises for the entire term hereof subject
to all of the provisions of this Lease. The individuals executing this Lease on behalf of Lessor
represent and warrant to Lessee that they are fully authorized and legally capable of executing
this Lease on behalf of Lessor and that such execution is binding upon all parties holding an
ownership interest in the Premises.

39. Options.

     39.1 Definition. As used in this paragraph the word “Options” has the following meaning: (1)
the right or option to extend the term of this Lease or to renew this Lease or to extend or renew
any lease that Lessee has on other property of Lessor; (2) the option or right of first refusal to
lease the Premises or the right of first offer to lease the Premises of the right of first refusal
to lease other property of lessor or the right of first offer to leasse other property of
Lessor; (3) the right of option to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises or the right or option
to purchase other property of Lessor, or the right of first refusal to purchase other property of Lender or the right of first offer to purchase other property of Lessor.

     39.2 Options Personal. Each Option granted to Lessee in this Lease are personal to Lessee and
may not be exercised or be assigned, voluntarily or involuntarily, by or to any person or entity
other than Lessee, provided, however, the Option may be exercised by or assignable any

K.R.S    Z.R.
 [ILLEGIBLE]

GROSS

- 5 -

 

Lessee Affiliate as defined in paragraph 12.2 of this Lease. The Options herein granted to
Lessee are not assignable separate and apart [ILLEGIBLE] Lease.

     39.3 Multiple Options. In the event that Lessee has any multiple options to extend or renew this
Lease a later option cannot be [ILLEGIBLE] unless the prior option to extend or renew this Lease has been so
exercised.

     39.4 Effect of Default an Options.

          (a) Lessee shall have no right to exercise an Option, not withstanding any provision in the grant
of Option to the contrary, (i) due time commencing from the date Lessor gives to Lessee a notice of
default pursuant to paragraph 13.1(b) or 13.1(c) and continuing until the alleged in said notice of
default is cured, or (ii) during the period of time commencing on the day after a monetary
obligation to Lessor is [ILLEGIBLE] Lessee and unpaid (without any necessity for notice thereof to
Lessee) continuing until the obligation is paid, or (iii) at any time after an [ILLEGIBLE] default
described in paragraphs 13.1(a), 13.1(d), or 13.1(e) (without any necessity of Lessor to give
notice of such default to Lessee), or (iv) event that Lessor has given to Lessee three or more
notices of default under paragraph 13.1(b), where a late charge becomes payable paragraph 13.4 for
each of such defaults, or paragraph 13.1(c), whether or not the defaults are cured, during the 12
month period prior to [ILLEGIBLE] that Lessee Intends to exercise the subject Option.

          (b) The period of time within which an Option may be exercised shall not be extended or enlarged by
reason of Lessee’s [ILLEGIBLE] exercise an Option because of the provisions of paragraph 39.4(a).

          (c) All rights of Lessee under the provisions of an Option shall terminate and be of no further
force or effect, notwithstanding Lessee and timely exercise of the Option, if, after such exercise
and during the term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation Lessee
for a period of 30 days after such obligation becomes due (without any necessity of Lessor to give
notice thereof to Lessee), or (ii) fails to commence to cure a default specified in paragraph
13.1(c) within 30 days after the date that Lessor gives notice to Lessee of such and/or Lessee
fails thereafter to dillgently prosecute said cure to completion, or (iii) Lessee commits a
default described in paragraph [ILLEGIBLE] 13.1(d) or 13.1(e) (without any necessity of Lessor to
give notice of such default to Lessee), or (iv) Lessor gives to Lessee three or more [ILLEGIBLE]
default under paragraph 13.1(b), where a late charge becomes payable under paragraph 13.4 for each
such default, or paragraph 13.1(c), [ILLEGIBLE] or not the defaults are cured.

40. Multiple Tenant Building. In the event that Premises are part of a larger building or group of
buildings then Lessee agrees that it [ILLEGIBLE] by, keep and observe all reasonable rules and
regulations which Lessor may make from time to time for the management, safety, [ILLEGIBLE]
cleanliness of the building and grounds, the parking of vehicles and the preservation of good order
therein as well as for the convenience [ILLEGIBLE] occupants and tenants of the building. The
violations of any such rules and regulations shall be deemed a material breach of this Lease by
[ILLEGIBLE].

41. Security Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does
not include the cost of guard [ILLEGIBLE] other security measures, and
that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility
for the pro of Lessee, its agents and invitees from acts of third parties.

42. Easements. Lessor reserves to itself the right, from time to time, to grant such casements,
rights, and dedications that Lessor deems [ILLEGIBLE] or desirable, and to cause the recordation of
Parcel Maps and restriction, so long as such easements, rights, dedications. Maps and restrictions
not unreasonably interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned mentioned documents upon request of and failure to do so shall constitute a material
breach of this Lease.

43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of
money to be paid by one party to the other [ILLEGIBLE] provisions hereof, the party against whom
the obligation to pay the money is asserted shall have the right to make payment “under [ILLEGIBLE]
such payment shall not be regarded as a voluntary payment, and there shall survive the right on the
part of said party to institute suit for [ILLEGIBLE] such sum. If it shall be adjudged that there
was no legal obligation on the part of said party to pay such sum or any part thereof, said party
[ILLEGIBLE] entitled to recover such sum or so much thereof as it was not legally required to pay
under the provisions of this Lease.

44. Authority. If lessee is a corporation, trust, or general or limited partnership, each
individual executing this Lease on behalf of such represents and warrants that he or she is duly
authorized to execute and deliver this Lease on behalf of said entity. If Lessee is a corporation.
[ILLEGIBLE] partnership, Lessee shall, within thirty (30) days after execution of this Lease,
deliver to Lessor evidence of such authority satisfactory to [ILLEGIBLE].

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

46. Addendum. Attached hereto is an addendum or addenda containing paragraphs 47 through
48 which [ILLEGIBLE] part of this Lease.

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

IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS
AGENTS OR
EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS
LEASE OR THE TRANSACTION RELATING THERETO, THE PARTIES SHALL RELY SOLELY UPON THE
ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
LEASE.

The parties hereto have executed this Lease at the place on the dates specified immediately
adjacent to their respective signatures.

	 	 	 	 	 
	Executed at: Chatsworth, California

	 	 	 	Kenneth R. Smith

Alice J. Smith

	 	 	 	 	 	 	 	 	 
	On:

	 	 
 

	 	By
	 	/s/ Kenneth R. Smith
 

	 	 
	 
	 	 	 	 	 	 	 	 
	Address:

	 	8917 Fullbright AVenue
	 	By
	 	/s/ Alice J. Smith	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	“Lessor”	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Chatsworth, California 91301
	 	 	 	M R V Technologies	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By
	 	/s/ Shlomo Margalit	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Shlomo Margalit, an individual	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By
	 	/s/ Zeev Ravnoy	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Zeev Ravnoy, an individual	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	“Lessee”	 	 

 

	47.	 	Lesee may extend the term of this lease by giving notice, in writing to Lessor on or before
June 1, 1989, of Lessee’s intent to lease the premises for an additional one year period
August 1, 1989 to July 31, 1990 (option term) provided Lessee has not defaulted or is then in
default under the terms of this lease.
	 
	 	 	The terms and conditions for the option term shall be the same as the original lease except for
the paymement of rent. The monthly rent for the option term shall be the base monthly rent of
$3,400.00 (three thousand four hundred dollars) which shall be adjusted upwards only, in
proportion to the increase, if any, in the Consumer Price Index as published by the month of
May 1989 over that for the month of May 1988. Said increase shall continue in effect through
the end of the option period. In the event that said Index shall have been discontinued, the
most nearly comparable Index shall be substituted therefor. Said increase shall not exceed 6%
(six per cent) per annum.
	 
	48.	 	Lessee may extend the term of this lease by giving notice, in writing, to Lessor on or
before June 1, 1990, of Lessee’s intent to lease the premises for an additional one year
period August 1, 1990 to July 31, 1991 (option term) provided Lessee has not defaulted or is
then in default under the terms of this lease.
	 
	 	 	The terms and conditions for the option term shall be the same as the original lease except for
the payment of rent. The monthly rent for the option term shall be the base monthly rent of
$3,400.00 (three thousand four hundred dollars) which shall be adjusted upwards only, in
proportion to the increase, if any, in the Consumer Price Index as published by the month of
May 1990 over that for the month of May 1989. Said increase shall continue in effect through
the end of the option period. In the event that said Index shall have been discontinued, the
most nearly comparable Index shall be substituted therefor. Said increase shall not exceed 6%
(six per cent) per annum.

	 	 	 	 	 	 	 
	 

	 	Initials:	 	 	 	 
	 

	 	[ILLEGIBLE]
	 	 

K.R.S.exv10w19

 

EXHIBIT 10.19

Shenzhen (South) 0039982

Contract Registration (Record) No.: FA001977 6th floor, HYT

Shenzhen Real Estate Lease

Contract

Made by Shenzhen Housing Lease Administration Office

 

 

Real Estate Lease Contract

Lessor (Party A): Shenzhen HYT Science &Technology Co., Ltd.

Address: HYT Tower, Shenzhen Hi-Tech Industrial Park North, Beihuan RD, Shenzhen

Post Code: 518057

Authorized Agent: Xili Lease Agent

Address:

Post Code:

Lessee (Party B): Fiberxon Technology (Shenzhen) Inc.

Address: 4th floor, Weiyong Building, Kefa Road No.10, Science & Technology Park Nanshan District, Shenzhen

Post Code: 518057

Business License or ID card No.: Enterprise of Exclusive Investment in Shenzhen No. 307727A.

Authorized Agent: Xu Yi

Address: as abovementioned

Post Code: 518057

     With mutual negotiation, Party A and Party B conclude this contract in accordance with the
detailed regulations and rules stipulated in the Contract Law of People’s Republic of China, the
Law of People’s Republic of China on Urban Real Estate Administration as well as Shenzhen Economic
Zone’s Housing Lease Regulations.

     Article 1 Party A leases the real estate that is located at 6th Floor HYT
Tower, Shenzhen Hi-Tech Industrial Park North, Beihuan RD, Shenzhen (hereinafter referred to as
The Premises) to Party B. The gross size of The Premises is 3,275 square meters in total.
There are 7 floors in total in the building.

1

 

     The Premises’ rights holder: Shenzhen HYT Science &Technology Co., Ltd.; real estate
rights certificate or the name and number of other valid certificates for the owner’s rights
(rights to use):                                         ; (in transaction)

     Article 2 The Premises’ rent is, according to the space of The Premises, 35 RMB per
square meters per month. The rent amount is 114,625 RMB.

     Article 3 Party B shall pay off the first term of rent that is 114,625 RMB before
January 5, 2005.

     Article 4 Party B shall pay off the rent:

     þ before the 5th date per month;

     o before ___ day ___ month per quarter;

     o before ___ day ___ month per half a year;

     o before ___ day ___ month per year;

     While receiving the rent, Party A shall issue a tax invoice to Party B.

     (The Parties shall choose one from the abovementioned four choices and mark “ü” in “o”
before the chosen one.)

     Article 5 The lease term is from November 8, 2004 till November 7, 2007.

     The lease term defined in this article shall not go beyond the approved term of land use. The
exceeding part is invalid. As for the caused loss, if there is an agreement between the Parties,
the agreement is followed; if there is no agreement, Party A shall undertake.

     Article 6 The usage of The Premises: Production.

     If Party B wants to change the usage of the real estate, Party B shall, with Party A’s written
consent, apply for the usage change of real estate to the real estate’s administrative bureau
pursuant to the relevant laws and regulations. Only with the authorization, the usage can be
changed.

2

 

     Article 7 Party A shall provide it to Party B for use before November 8, 2004
and go through the relevant transfer procedures.

     In case Party A doesn’t make The Premises available before the abovementioned date, Party B
has the right to require that the lease term be postponed. The Parties shall confirm the
postponement with written signature and report to the registration bureau for recording.

     Article 8 While The Premises is handed over, the Parties shall identify current status and
subsidiary properties of The Premises and its subsidiary facilities, which shall be listed in
attached pages.

     Article 9 While handing over The Premises, Party A has the right to ask for the lease deposit
of less than three months’ rent that is 229,250 RMB.

     With the receipt of the lease deposit, Party A shall issue an invoice to Party B.

     The conditions on which Party A shall return the deposit to Party B:

     1. Party B shall completely fulfill this contract.

     2.                                                              
 

     3.                                                              
 

     þ Only one of these conditions shall be satisfied.

     o All these conditions shall be satisfied.

     (If one of the following conditions happen, Party A has the right not to return the deposit:

     1. Party B hasn’t completely fulfilled this contract.

     2.                                                              
 

     3.                                                              
 

     Article 10 During the lease term, Party A shall be responsible for the land use fees of The
Premises, its caused taxes, housing lease administrative fees as well as                      fees; Party
B shall pay for electricity and water supply fees, sanitary fees, house (building) administrative
fees, air conditioning fees and other fees that are caused by the usage of The Premises.

     Article 11 Party A shall guarantee that The Premises and its subsidiary facilities are able to
realize the leasing purpose and their securities comply with the stipulations of relevant laws,
regulations and rules.

3

 

     In case Party A’s intentional or unintentional actions lead to physical or property damages or
losses of Party B in The Premises, Party B has the right to ask for corresponding compensation.

     Article 12 Party B shall make reasonable use of The Premises and its subsidiary facilities and
shall not use The Premises for illegal purposes; Party A shall not interfere or impede Party B’s
appropriate and reasonable use of The Premises.

     Article 13 On the condition that Party B, in its using process, finds that The Premises or its
subsidiary facilities have damages, losses or troubles that impede secure and normal use of The
Premises and are not caused by Party B, Party B shall inform Party A of the situation in time and
take possibly efficient measures to prevent the defects from developing further; Party A shall
repair them or directly authorize Party B to repair in two days of receipt of notification
from Party B; in case Party B cannot reach Party A or Party A doesn’t fulfill its repairing
obligations, Party B can repair only after it is recorded by the contract registration bureau.

     In case the situation is especially urgent and requires an urgent repair, Party B shall repair
for Party A first and notify Party A of the situation in time.

     Party A shall undertake the repairing expenses in the situations mentioned in the above two
paragraphs (including the reasonable expenses of Party B’s repair and actions for the sake of
preventing defects from developing further). In case Party B doesn’t fulfill the obligations
mentioned in the above two paragraphs and cannot notify Party A of the situation and take possibly
efficient measures, which leads to extending losses, the repairing expenses for the losses extended
by Party B shall be undertaken by Party B.

     Article 14 In case Party B’s inappropriate or unreasonable use impedes security of The
Premises, or causes damages or troubles to The Premises, Party B shall make a timely notification
to Party A and is responsible for the repairs or compensation. If Party B refuses the repairs or
compensation, it will be put on record by the contract registration bureau and Party A will repair
for Party B who shall pay for the relevant repairing expenses.

     Article 15 Within the validity period of this contract, if Party A or Party B wants to
reconstruct, extend or renovate The Premises, the Parties shall make another separate written
agreement.

     The situations stipulated in the above paragraph can be carried out only with the approval of
the relevant bureaus in accordance with regulations.

4

 

     Article 16

     o Within the lease term, Party B has the right to transfer fully or partially
 The Premises to
third parties and go through registration procedures in the housing lease administrative bureau.
However, the term for transfer lease shall not exceed the lease term stipulated in this contract.

     o Party B shall not transfer fully or partially The Premises to third parties.
 However,
within the lease term, Party B can, with the written consent of Party A, go through transfer
registration procedures at the housing lease administrative bureau with written proof of Party A’s
consent. The term for transfer lease shall not exceed the lease term stipulated in this contract.

     þ Party B shall not transfer fully or partially The Premises to third parties.

     (The Parties shall choose one from the abovementioned three choices at their disposal and mark
"ü” in “o” before the chosen one.)

     Article 17 Within the validity period of this contract, Party A shall transfer fully or
partially its owner’s rights towards The Premises and notify the transfer to Party B within written
notice one month in advance. Party B has the right of preemption in equal conditions.

     In case The Premises is assigned to third parties, Party A shall tell the assignee to continue
to fulfill this contract while signing the assignment contract.

     Article 18 Within the validity period of this contract, this contract can be terminated or
amended under the following conditions:

     (1) Non-fulfillment of this contract because of force majeure;

     (2) Government’s requisition, purchase, withdrawal or dismantlement of The Premises.

     (3) Mutual agreements of Party A and Party B

     Article 19 Under the following conditions, for the caused losses, Party A has the right:

     o to ask for compensation;

     o to refuse to return the lease deposit;

     o to ask Party B to pay a penalty for the breach that is                      RMB.

     (The Parties shall choose one from the abovementioned three choices with mutual negotiations
and mark “ü” in “o” before the chosen one.):

     (1) Party B is behind in payment for                      days (over one month);

     (2) The various losses caused by Party B’s delayed payment reach over                      RMB;

5

 

     (3) Party B uses The Premises for illegal purposes and is harmful to the public interest or
others’ interest;

     (4) Party B changes The Premises’ structure or use presumptuously;

     (5) Party B breaches Article 14 in this contract and doesn’t undertake repairing
responsibilities or pay for repairing expenses, which lead to serious damages of The Premises or
equipment.

     (6) Without Party A’s consent as well as the relevant bureaus’ approval, Party B renovates The
Premises presumptuously;

     (7) Party B leases The Premises to third parties without authorization.

     Party A has the right not only to seek Party B’s liabilities for compensation or breach of
this contract, but also to terminate this contract or propose the amendments of this contract to
Party B.

     Article 20 Under the following conditions, for the caused losses, Party B has the right:

     o to ask for compensation from Party A;

     o to ask Party A to return the doubled lease deposit;

     o to ask Party A to pay a penalty for the breach that is                      RMB.

     (The Parties shall choose one from the abovementioned three choices with mutual negotiations
and mark “ü” in “o” before the chosen one.):

     (1) Party A is behind in handing over The Premises for                      days (over month);

     (2) Party A breaches the first paragraph of Article 11 in this contract, which leads to Party
B’s failure of achievement of its leasing purpose;

     (3) Party A breaches Article 13 in this contract and doesn’t undertake repairing
responsibilities or pay for repairing expenses;

     (4) Without Party B’s consent or the relevant bureaus’ approval, Party A reconstructs, extends
or renovates The Premises.

     Party B has the right not only to seek Party A’s liabilities for compensation or breach of
this contract, but also to terminate this contract (after the receipt of compensation, Party B
shall notify Party A with written notice and give The Premises back to Party A) or propose the
amendments of this contract to Party A.

6

 

     During the period from Party A’s receipt of notification till Party’s B receipt of
compensation, Party B is not required to pay Party A for rent.

     Article 21 Upon the termination of this contract, Party B shall move from The Premises and
give it back within five days. Additionally, Party B shall guarantee that The Premises and
its subsidiary facilities are in a perfect state (normal wear and tear not included). At the same
time, all the expenses that Party B is liable for shall be paid off and procedures for transfer
shall be handled.

     In case Party B exceeds the time limit for moving out of The Premises or giving it back, Party
A has the right to get back The Premises and to ask for doubled rent for the exceeding period.

     Article 22 At the expiration of the lease term stipulated in this contract, if Party B wants
to continue to lease The Premises, Party B shall ask for lease renewal two months before
the expiration of the lease term; in equal conditions, Party B has the preemptive right to lease
The Premises.

     In case the Parties reach an agreement on renewal of lease, the Parties shall make a new
contract and re-register it at the contract registration bureau.

     Article 23 The Parties shall voluntarily fulfill the articles in this contract. If either
party breaches the contract, the party shall take corresponding liabilities stipulated in this
contract.

     Article 24 In the appendix to this contract, the Parties can reach other agreements on the
issues that are not covered in this contract. The content of the appendix is an integrated part of
this contract and, with the Parties’ signatures, has the equal effect as this contract has.

     In case the Parties reach agreements on the amendments of this contract within the lease term,
they shall register at the original contract registration bureau. The registered agreements have
the equal effect as this contract has.

     Article 25 Disputes of this contract between the Parties shall be solved though mutual
negotiations. Disputes that cannot be solved though negotiations can be submitted to this
contract’s registration bureau for reconciliation; in case the reconciliation doesn’t work, they
can

þ submit the issues to the Shenzhen Arbitration Commission for arbitration;

o submit the issues to the China International Economic and Trade Arbitration Commission
Shenzhen Branch for arbitration;

o bring a lawsuit to the people’s courts.

     (The Parties shall choose one from the abovementioned methods for resolutions of disputes with
mutual negotiations and mark “ü” in “o” before the chosen one.)

     Article 26 The contract shall become effective when it is signed by the Parties.

7

 

     The Parties shall go to the administrative bureau for registration or record in ten days from
the signatures of this contract.

     Article 27 The Chinese text of this contract is regarded as the original copy.

     Article 28 This contract has four copies in which each party has one, the contract
registration bureau has one and the relevant bureau has one.

Party A (Seal and Signature)

[seals]

Legal Representative: [signature]

Telephone:

Bank Account No.:

			
	Authorized Agent (Seal and Signature): Xilin Lease Agent

	 	October 29, 2004

Party B (Seal and Signature)

[seals]

Legal Representative: [signature]

Telephone:

Bank Account No.:

			
	Authorized Agent (Seal and Signature): Xuyi

	 	November 10, 2004

Registering or Record-keeping Person (Seal and Signature):

[seal and signature]

Contract Registration (Record-keeping) Bureau (Seal and Signature):

[seal and signature]

November 11, 2004

8

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